[Federal Register Volume 70, Number 228 (Tuesday, November 29, 2005)]
[Rules and Regulations]
[Pages 71612-71705]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22698]



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Part II





Environmental Protection Agency





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40 CFR Parts 51, 52, and 80



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

  Federal Register / Vol. 70, No. 228 / Tuesday, November 29, 2005 / 
Rules and Regulations  

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, and 80

[OAR 2003-0079; FRL-7996-8]
RIN 2060-AJ99


Final Rule To Implement the 8-Hour Ozone National Ambient Air 
Quality Standard--Phase 2; Final Rule To Implement Certain Aspects of 
the 1990 Amendments Relating to New Source Review and Prevention of 
Significant Deterioration as They Apply in Carbon Monoxide, Particulate 
Matter and Ozone NAAQS; Final Rule for Reformulated Gasoline

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: In this document, we are taking final action on most remaining 
elements of the program to implement the 8-hour ozone national ambient 
air quality standard (NAAQS or standard). This final rule addresses, 
among other things, the following control and planning obligations as 
they apply to areas designated nonattainment for the 8-hour ozone 
NAAQS: reasonably available control technology and measures (RACT and 
RACM), reasonable further progress (RFP), modeling and attainment 
demonstrations, and new source review (NSR). We are issuing this rule 
so that States and Tribes will know how these statutory control and 
planning obligations apply and when State implementation plan (SIP) 
revisions are due for these obligations so that the States may develop 
timely submissions consistent with the statutory obligations and attain 
the NAAQS as expeditiously as practicable but no later than their 
maximum attainment dates. The intended effect of the rule is to provide 
certainty to States and Tribes regarding development of those plans.
    In this rule, we are also finalizing several revisions to the 
regulations governing the nonattainment NSR programs mandated by 
section 110(a)(2)(C) and part D of title I of the Clean Air Act (CAA).
    Finally, this rule addresses what effect the transition to the 8-
hour standard will have on certain aspects of the Reformulated Gasoline 
(RFG) program. The nine original mandatory RFG areas, as well as most 
other areas that have become mandatory RFG areas by being reclassified 
as severe areas under section 181(b) of the CAA, will continue to be 
required to use RFG at least until they are redesignated to attainment 
for the 8-hour NAAQS. The EPA reserves for future consideration what 
effect the transition to the 8-hour standard will have on areas 
reclassified as severe areas for the 1-hour NAAQS under section 181(b) 
of the CAA that were redesignated to attainment for the 1-hour standard 
before revocation of that standard.

EFFECTIVE DATE: This rule is effective on January 30, 2006.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. OAR-2003-0079. 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., Confidential 
Business Information 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 EPA 
Docket Center (Air Docket), EPA/DC, EPA West, Room B102, 1301 
Constitution Ave., NW., Washington, DC. 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, and the telephone number for the Office of Air and Radiation 
Docket and Information Center is (202) 566-1742.
    In addition, we have placed a variety of earlier materials 
regarding implementation of the 8-hour ozone NAAQS on the Web site: 
http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr.

FOR FURTHER INFORMATION CONTACT: For general information: 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, fax number (919) 541-0824 
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, fax number (919) 541-0824 or by e-mail at 
[email protected]. For information concerning new source review: Ms. 
Janet McDonald, Office of Air Quality Planning and Standards, U.S. 
Environmental Protection Agency, Mail Code C539-03, Research Triangle 
Park, NC 27711, phone number (919) 541-1450, fax number (919) 541-5509 
or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION:

Outline

I. What is the Background for this Rule?
II. What is Included in this Rule?
III. In Short, What Does this Final Rule Contain?
IV. Final Rule for Phase 2 Elements Other than NSR and RFG
    A. 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?
    B. How will we address long-range transport of ground-level 
ozone and its precursors when implementing the 8-hour ozone 
standard?
    C. How will we address transport of ground-level ozone and its 
precursors for rural nonattainment areas, areas affected by 
intrastate transport, and areas affected by international transport?
    D. How will EPA address requirements for modeling and attainment 
demonstration SIPs for areas implementing the 8-hour ozone standard?
    E. What requirements for RFP should apply under the 8-hour ozone 
standard?
    F. Are contingency measures required in the event of failure to 
meet a milestone or attain the 8-hour ozone NAAQS?
    G. What requirements should apply for RACM and RACT for 8-hour 
ozone nonattainment areas?
    H. How will the section 182(f) NOX provisions be 
handled under the 8-hour ozone standard?
    I. Should EPA promulgate a NSR provision to encourage 
development patterns that reduce overall emissions?
    J. 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?
    K. What emissions inventory requirements should apply under the 
8-hour ozone NAAQS?
    L. What guidance should be provided that is specific to Tribes?
    M. What are the requirements for Ozone Transport Regions (OTRs) 
under the 8-hour ozone standard?
    N. Are there any additional requirements related to enforcement 
and compliance?
    O. What requirements should apply to emergency episodes?
    P. What ambient monitoring requirements will apply under the 8-
hour ozone NAAQS?
    Q. When will EPA require 8-hour attainment demonstration SIP 
submissions?
    R. How will the statutory time periods in the CAA be addressed 
when we redesignate areas to nonattainment following initial 
designations for the 8-hour NAAQS?
V. EPA's Final Rule for New Source Review
    A. Background
    B. Summary of Final Rule and Legal Basis

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    C. Comments and Responses
    D. NSR Implementation Under the 8-hour ozone NAAQS
VI. Final Rule for RFG
    A. Introduction
    B. Background
    C. What Action is EPA Taking?
    D. Why is EPA Taking This Action?
    E. Future Proceedings
    F. Miscellaneous Administrative Changes to RFG Regulations
    G. Comments and Responses
VII. Other Considerations
    A. How will EPA's implementation of the 8-hour ozone NAAQS 
affect funding under the Congestion Mitigation and Air Quality 
Improvement (CMAQ) Program?
    B. What is the relationship between implementation of the 8-hour 
standard and the CAA's title V permits program?
    C. What action is EPA taking on the Overwhelming Transport 
Classification for Subpart 1 Areas?
VIII. 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
    K. Congressional Review Act
    L. Petitions for Judicial Review
    M. Determination Under Section 307(d)
    Appendix A to Preamble--Methods to Account for Non-Creditable 
Reductions when Calculating ROP Targets for the 2008 and Later ROP 
Milestone Years
    Appendix B to Preamble--Glossary Of Terms and Acronyms

I. What Is the Background for This Rule?

    On June 2, 2003 (68 FR 32805), we published a proposed rule to 
implement the 8-hour ozone NAAQS. The proposal addressed a number of 
implementation issues. We proposed one or more options for each issue 
addressed in the proposal. Please refer to the proposed rule (68 FR 
32802) for a detailed discussion and background information on the 8-
hour ozone NAAQS; the associated litigation; our proposed strategy for 
areas to achieve the NAAQS; and the stakeholder process for gathering 
input into this effort, among other topics.
    On August 6, 2003 (68 FR 46536), we published a notice of 
availability of the draft regulatory text for the proposed rule to 
implement the 8-hour ozone NAAQS. This notice started a 30-day public 
comment period on the draft regulatory text.
    On April 30, 2004 (69 FR 23951), we published a final rule that 
addressed the following key elements related to implementation of the 
8-hour ozone NAAQS: classifications for the 8-hour NAAQS; revocation of 
the 1-hour NAAQS (i.e., when the 1-hour NAAQS will no longer apply); 
how anti-backsliding principles will ensure continued progress toward 
attainment of the 8-hour ozone NAAQS; attainment dates; and the timing 
of emissions reductions needed for attainment.
    Following publication of the April 30, 2004 final rule, the 
Administrator received three petitions, pursuant to section 
307(b)(7)(B) of the CAA requesting reconsideration of a number of 
aspects of the final rule.\1\ On September 23, 2004, we granted 
reconsideration of three issues raised in the Earthjustice Petition. On 
February 3, 2005 (70 FR 5593), we published a proposed rule to take 
comment on two of these issues: (1) The provision that section 185 fees 
would no longer be applicable once the 1-hour NAAQS is revoked and (2) 
the timing for determination of what is an ``applicable requirement.'' 
On May 20, 2005, the final rule on these two issues was signed by the 
Administrator of EPA. On April 4, 2005 (70 FR 17018), we published a 
proposed rule to take comment on the issue of 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. We took final action on the NSR issues on June 30, 
2005 (70 FR 39413; July 8, 2005).
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    \1\ Three petitions for reconsideration of the Phase 1 Rule were 
filed by: (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.
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    On January 10, 2005, we granted reconsideration of the overwhelming 
transport classification issue raised by Earthjustice in their 
Petition. At the same time, we denied reconsideration of the issues 
they raised in their Petition dealing with the applicability of RFG 
when the 1-hour NAAQS is revoked and future 8-hour ozone redesignations 
to nonattainment. We intend to publish a proposed rule on the 
overwhelming transport classification shortly. We are continuing to 
review the issues raised in the National Petrochemical and Refiners 
Association and American Petroleum Institute Petitions. Copies of the 
Petitions for Reconsideration and actions EPA has taken regarding the 
Petitions may be found at: www.epa.gov/ttn/naaqs/ozone/o3imp8hr.
    In addition, in the April 30, 2004 rule, we established a subpart E 
in 40 CFR part 81 ``Identification of Area Designations and 
Classifications for the 1-Hour Ozone NAAQS as of June 15, 2004 
[Reserved].'' We intend to publish that list shortly.
    Concerning the major NSR provisions, today's final regulations were 
proposed as part of two different regulatory packages. On July 23, 1996 
(61 FR 38250), we proposed changes to the major NSR program, including 
codification of the requirements of part D of title I of the 1990 CAA 
Amendments for major stationary sources of volatile organic compounds 
(VOC), NOX, particulate matter having a nominal aerodynamic 
diameter less than or equal to 10 microns (PM10), and CO. On 
June 2, 2003 (68 FR 32802), we proposed a rule to implement the 8-hour 
ozone NAAQS. In the 2003 action, we proposed a rule to identify the 
statutory requirements that apply for purposes of developing SIPs under 
the CAA to implement the 8-hour ozone NAAQS (68 FR 32802). We did not 
propose specific regulatory language for implementation of NSR under 
the 8-hour NAAQS. However, we indicated that we intended to revise the 
nonattainment NSR regulations to be consistent with the rule for 
implementing the 8-hour ozone NAAQS (68 FR 32844). On April 30, 2004 
(69 FR 23951), we published a final rule that addressed classifications 
for the 8-hour NAAQS. The April 2004 rule also included the NSR 
permitting requirements for the 8-hour ozone standard, which 
necessarily follow from the classification scheme chosen under the 
terms of subpart 1 and subpart 2.
    Also, in our 1996 action, and then again in our June 2, 2003 
action, we proposed to amend our nonattainment NSR provisions to 
expressly include NOX as an ozone precursor in nonattainment 
major NSR programs (61 FR 38297 and 68 FR 32847). We also proposed 
that, as provided under CAA section 182(f), a waiver from nonattainment 
NSR for NOX as an ozone precursor would be available for 
both subpart 1 and subpart 2 areas (68 FR 32846). Moreover, we proposed 
to require States to modify their existing programs to include 
NOX as an ozone

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precursor in attainment areas (68 FR 32846).
    In 1996, we proposed to revise the regulations limiting offsets 
from emissions reductions due to shutting down an existing source or 
curtailing production or operating hours below baseline levels 
(``shutdowns/curtailments''). We proposed substantive revisions in two 
alternatives that would ease, under certain circumstances, the existing 
restrictions on the use of emission reduction credits from source 
shutdowns and curtailments as offsets.
    On July 23, 1996, we proposed to revise Sec.  52.24 to incorporate 
changes made by the 1990 CAA Amendments related to the applicability of 
construction bans (61 FR 38305). To clarify our intent, our proposed 8-
hour ozone NAAQS implementation rule in June 2003 explained that Sec.  
52.24(k) remained in effect and would be retained. In that action, we 
also proposed that we would revise Sec.  52.24(k) to reflect the 
changes in the 1990 CAA Amendments (68 FR 32846). On June 2, 2003 (68 
FR 32802), we explained implementation of the major NSR program under 
the 8-hour ozone NAAQS during the SIP development period, and proposed 
flexible NSR requirements for areas that expected to attain the 8-hour 
NAAQS within 3 years after designation.
    In this rule, we are also finalizing several revisions to the 
regulations governing the nonattainment NSR programs mandated by 
section 110(a)(2)(C) and part D of title I of the Clean Air Act (CAA). 
First, we are codifying requirements added to part D of title I of the 
CAA in the 1990 Amendments related to permitting of major stationary 
sources in areas that are nonattainment for the ozone, particulate 
matter (PM), and carbon monoxide (CO) NAAQS. Second, we are revising 
the criteria for crediting emissions reductions credits from shutdowns 
and curtailments as offsets. Third, we are revising the regulations for 
permitting of major stationary sources in nonattainment areas in 
interim periods between designation of new nonattainment areas and 
EPA's approval of a revised SIP. Fourth, we are changing the 
regulations that impose a moratorium (ban) prohibiting construction of 
new or modified major stationary sources in nonattainment areas where 
the State fails to have an implementation plan meeting all of the 
requirements of part D. In addition to the changes to the nonattainment 
NSR regulations, we also are making one change to the Prevention of 
Significant Deterioration (PSD) regulations under part C of title I of 
the CAA. We are codifying nitrogen oxides (NOX) as an ozone 
precursor in attainment and unclassifiable areas.
    Today's changes regarding NSR are based on the proposed rule 
published on June 2, 2003 to Implement the 8-hour Ozone National 
Ambient Air Quality Standard (NAAQS), as well as the proposed rule 
published on July 23, 1996 for ``Prevention of Significant 
Deterioration (PSD) and Non-attainment New Source Review (NSR).'' These 
changes provide a consistent national program for permitting major 
stationary sources under section 110(a)(2)(C) and parts C and D of 
title I, including major stationary sources of ozone precursors in 
ozone nonattainment areas.
    For the reader's convenience, a glossary and list of acronyms 
appears in Appendix B of this preamble.

II. What Is Included in This Rule?

    Today's action, Phase 2 of the implementation rule, addresses 
numerous topics, but primarily focuses on the following key 
implementation obligations for areas designated nonattainment for the 
8-hour NAAQS: RACT and RACM; RFP; modeling and attainment 
demonstrations; and NSR. It also addresses what effect the transition 
to the 8-hour standard will have on certain aspects of the RFG program.

III. In Short, What Does This Final Rule Contain?

    This summary is intended to give only a convenient overview of our 
final rule. It should not be relied on for the details of the actual 
rule. The final rule (regulatory text) and the discussion of it in the 
sections below should be consulted directly.

Summary of Section IV (Below): Final Rule for Phase 2 Elements Other 
Than NSR and RFG

A. 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?

    There may be a basis for waiving a prescribed requirement on a 
case-by-case basis where imposition of the requirement would create an 
absurd result. If a State submits a demonstration that application of a 
specific requirement in a specific nonattainment area would create an 
absurd result, we will consider application of the absurd results 
doctrine at that time. We believe that absurd results that might occur 
from application of mandatory control measures would happen only in 
rare instances, if at all.

B. How will we address long-range transport of ground-level ozone and 
its precursors when implementing the 8-hour ozone standard?

    The EPA has issued two major rules to address interstate transport 
of ozone pollution. The 1998 NOX SIP Call Rule already is 
achieving significant reductions in NOX emissions that 
contribute to interstate ozone pollution in the eastern United States. 
Nineteen States were required to achieve reductions by May 2004, and 
additional reductions are required by May 2007.
    On May 12, 2005, EPA published the Clean Air Interstate Rule (CAIR) 
in the Federal Register (70 FR 25162). It establishes statewide sulfur 
dioxide (SO2) and NOX emissions budgets for 
upwind States that significantly contribute to nonattainment or 
interfere with maintenance of the fine particle or 8-hour ozone air 
quality standards in downwind States. For ozone, this action 
established summertime NOX budgets for the District of 
Columbia and 25 States in the eastern half of the country, with 
reductions to be achieved by 2009 and 2015. The CAIR goes beyond the 
SIP call by requiring reductions from additional States and by 
requiring further emissions reductions in SIP call States.

C. How will we address transport of ground-level ozone and its 
precursors for rural nonattainment areas, areas affected by intrastate 
transport, and areas affected by international transport?

1. Rural Transport Nonattainment Areas
    The final rule does not contain any revisions to current policy on 
rural transport areas under section 182(h). We do not believe there are 
any 8-hour nonattainment areas covered under subpart 2 that are 
``rural'' and therefore eligible for consideration for coverage under 
section 182(h).
2. Intrastate Transport
    The final rule does not contain any additional provisions for 
addressing intrastate transport for the reasons stated in the proposal.
3. How will EPA address transport of ground-level ozone and its 
precursors for areas affected by international transport?
    We are not setting forth any regulatory provisions related to 
international transport in this rule. Section 179B of the CAA applies 
for these purposes. We continue to recommend that States confer with 
the appropriate EPA

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Regional Office to establish on a case-by-case basis the technical 
requirements for these analyses. These analyses will be subject to 
public comment during the State and Federal SIP processes.

D. How will EPA address requirements for modeling and attainment 
demonstration SIPs for areas implementing the 8-hour ozone standard?

    The final rule retains the following three elements that each 
attainment demonstration SIP must include: (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, and (3) 
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 failures to meet RFP milestones and/or 
attainment.
1. Attainment Demonstration Due Date
    Areas required to submit an attainment demonstration must do so no 
later than 3 years after the effective date of designation for the 8-
hour ozone NAAQS.
2. Multi-State Nonattainment Areas
    State partners involved in a multi-State ozone nonattainment area 
must work together to perform the appropriate modeling analyses to 
identify control measures that will enable the area to achieve 
attainment as expeditiously as practicable. Each State will be 
responsible for its portion of the control program and will be held 
accountable for controls identified for implementation within its State 
boundaries.
3. Role of Modeling Guidance in Attainment Demonstrations
    Attainment demonstrations must be consistent with 40 CFR 51.112. We 
will generally review the demonstrations for technical merit using 
EPA's most recent modeling guidance at the time the modeled attainment 
demonstration is performed.
4. Multi-pollutant Assessments (One-Atmosphere Modeling)
    There is no regulatory text on this issue, but the preamble makes 
several recommendations concerning multi-pollutant assessments.

E. What requirements for RFP should apply under the 8-hour ozone 
standard?

1. General Discussion
    We are adopting nearly all the approaches set forth in our proposed 
rule for the various 1-hour rate-of-progress (ROP) and 8-hour RFP 
issues.
2. What is the content and timing of the plan for addressing the RFP 
requirements under section 182(b)(1) for areas covered under subpart 2?
    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. Reasonable further progress for the first 6 years from the 
baseline year would be covered under the more generic RFP requirements 
of subpart 1. Serious and above areas would have to meet 3 percent 
reductions per year starting in the baseline year averaged over each 3-
year period out to the attainment year.
    An 8-hour nonattainment area that is identical, geographically, to 
its predecessor 1-hour nonattainment area (which has already done the 
15 percent reduction) will not be required to do another 15 percent 
VOC-only reduction plan. For an 8-hour moderate or higher nonattainment 
area that contains a 1-hour nonattainment area that has an approved 15 
percent VOC ROP plan but also contains areas that do not have an 
approved 15 percent VOC ROP plan, the final rule allows States the 
choice between two options:
    Option 1. Develop a new baseline and new 15 percent VOC ROP 
emission reduction target for the entire newly expanded area. Determine 
that emissions reductions that occur after the 2002 baseline emissions 
inventory year are creditable in the combined new area. The reductions 
must be of VOC only.
    Option 2. Treat the 8-hour nonattainment area as divided between 
the old 1-hour area(s) and the newly added 8-hour area. For the newly 
added portion (which had not previously implemented a 15 percent plan), 
States must establish a separate 15 percent VOC target under subpart 2. 
The previous nonattainment area that fell under the 1-hour standard 
will now be subject to the subpart 1 provisions of the CAA and will be 
able to credit both VOC and NOX toward meeting the RFP 
target for this portion of the nonattainment area. VOC reductions to 
meet the 15 percent requirement for the portion of the new 8-hour 
nonattainment area that has not yet met this requirement may come from 
across the entire 8-hour area.
    The subpart 1 RFP provisions addressed by the rule below that are 
applicable in the former 1-hour portion of the area depend on the 
subpart 2 area's attainment date as follows:
     In moderate areas that have an attainment date within 5 
years after their 8-hour designation, for which portions of the area 
have previously met their 15 percent requirements under the 1-hour 
standard, the former 1-hour portion will only be subject to subpart 1 
RFP requirements, which will be satisfied with the measures that 
demonstrate attainment as expeditiously as practicable. These areas 
will not be developing RFP plans separate from their attainment plans. 
Thus, for these areas, the only motor vehicle emissions budgets that 
will be developed will be for the attainment year.
     In moderate areas that have an attainment date beyond 5 
years after their 8-hour designation, for which portions of the area 
have previously met their 15 percent requirements under the 1-hour 
standard, the former 1-hour portion will only be subject to subpart 1 
RFP requirements, which will be satisfied with a plan to demonstrate 15 
percent emissions reductions (which may be either VOC or NOX 
or a combination of both) from 2002 to 2008, and any additional 
emissions reductions needed for attainment beyond 2008. Thus, these 
areas (the entire 8-hour nonattainment area) would establish a motor 
vehicle emission budget for 2008 and for their attainment year.
    Serious and above areas will be developing both a 15 percent VOC 
plan for the new portion of the 8-hour nonattainment area and an 18 
percent VOC/NOX plan for the portion of the area that 
previously met its 15 percent requirement. Thus, the RFP plan as a 
whole will establish total allowable emissions for 2008 for the entire 
8-hour nonattainment area. Therefore, the plans for these areas, as 
well as moderate areas that choose option one, will establish motor 
vehicle emissions budgets for both 2008 and the attainment year.
3. What baseline year should be required for the emissions inventory 
for the RFP requirement?
    We are using the 2002 inventory as the baseline inventory for the 
RFP requirement for areas designated nonattainment in 2004 primarily 
because of timing concerns related to attainment dates and when data is 
collected and compiled. However, in response to several comments, we 
are allowing States the option of justifying the use of an alternative 
baseline year inventory year for RFP.

[[Page 71616]]

4. Should moderate and higher classified areas be subject to prescribed 
additional RFP requirements prior to their attainment date?
    Moderate areas would have to provide additional emissions 
reductions (VOC/NOX) needed to provide for attainment by the 
beginning of the ozone season prior to the area's attainment date. 
Serious and higher classified areas would need to provide in their SIPs 
an additional average of three percent per year emission reduction over 
each subsequent 3-year period beyond the initial 6-year period through 
the attainment year.
5. What is the timing of the submission of the RFP plan?
    For moderate and higher classified areas, the first RFP SIP must be 
submitted within 3 years after the area's nonattainment designation. 
For areas with a June 15, 2004 effective date, for the 8-hour 
designations, the SIP would be due by June 15, 2007. This would provide 
up to 3 years for States to develop and submit RFP plans, and 1 
additional year (until the end of 2008) for control measures to be 
implemented. The RFP SIP for any remaining 3-year periods out to the 
attainment date beyond the first 6 years would be required to be 
submitted with the attainment demonstration, i.e., within 3 years after 
designation. We recommend that States complete their RFP plans as soon 
as possible after designation to provide more time for sources to 
implement the emissions reductions.
6. How should CAA restrictions on creditable measures be interpreted? 
Which national measures should count as generating emissions reductions 
credit toward RFP requirements?
    All emissions reductions that occur after the baseline emissions 
inventory year are creditable for purposes of the RFP requirements in 
this section except as specifically provided in section 182(b)(1)(C) 
and (D) and section 182(c)(2)(B) of the CAA which exclude four 
categories of emissions reductions requirements required to be adopted 
prior to 1990.
7. For areas covered only by subpart 1, how should the RFP requirement 
be structured?
    We are finalizing rules for two rather than three categories of 
areas based on the CAA's division of attainment dates for subpart 1 
areas under section 172(a)(2). The following are the two scenarios and 
the RFP requirements for each:
    Scenario A: Areas with attainment dates 5 years or less after 
designation (i.e., for most areas on or before June 15, 2009). 
Reasonable further progress for these areas would be met by ensuring 
emissions reductions needed for attainment are implemented, as noted 
above, by the beginning of the ozone season prior to the attainment 
date. This would be similar to subpart 2 RFP for areas classified as 
marginal.
    Scenario B: Areas with attainment dates beyond 5 years after 
designation (i.e., beyond 2009).
     The RFP plan must show increments of progress from the 
baseline emissions inventory year out to 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 (i.e., out to 2008).
     The 15 percent RFP SIP would have to be submitted within 3 
years after designation (i.e., in 2007).
     Either NOX or VOC emissions reductions (or 
both) could be used to achieve the 15 percent emission reduction 
requirement.
     For each subsequent 3-year period (after 2008) out to the 
attainment date, the RFP SIP would have to provide for an additional 
increment of progress no less than the amount of emissions reductions 
that would be roughly proportional to the time between the end of the 
first increment (in 2008) and the attainment date. This second RFP SIP 
would also have to be submitted within 3 years after the effective date 
of designation (i.e., in 2007).
8. Where part of an 8-hour nonattainment area was a 1-hour 
nonattainment area with a ROP obligation extending past 2002, can 
emissions reductions from the area's 1-hour ROP plan be used as credit 
toward meeting the area's 8-hour RFP plan?
    Where an area has both 1-hour and 8-hour RFP obligations for the 
post-2002 period, the State may rely on emissions reductions from the 
1-hour plan in achieving RFP for the 8-hour standard. The State could 
develop a new baseline and new RFP emission reduction targets for the 
entire 8-hour standard nonattainment area (i.e., the old 1-hour 
standard nonattainment area and any 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) toward meeting the RFP requirement for the entire 8-
hour area.
    This approach would set an RFP target for the entire 8-hour ozone 
nonattainment area. Under this approach, the new RFP target for the 8-
hour standard would replace the previous 1-hour ROP target (while 
ensuring that, at a minimum, the emissions reductions required to meet 
the old target are met; see 40 CFR 51.905(a)(1)(iii)).
9. Will EPA's ``Clean Data Policy'' apply for purposes of 8-hour RFP, 
attainment demonstrations and other related requirements?
    We intend to apply the Clean Data Policy, which we had applied 
under the 1-hour standard, for purposes of the 8-hour standard. In this 
action EPA is finalizing the statutory interpretation that is embodied 
in the policy. The text of the final rule encapsulates the statutory 
interpretation set forth in the policy.
10. How will RFP be addressed in Tribal areas?
    We intend to follow the Tribal Authority Rule (TAR), which provides 
Tribes with the ability to develop Tribal implementation plans (TIPs) 
to address and implement the NAAQS in Indian country. It further 
provides the Tribes with flexibility to develop these plans in a 
modular way, as long as the elements of their TIPs are reasonably 
``severable.''
11. How will RFP targets be calculated?
    Appendix A to the preamble to this final rule provides calculation 
procedures for determining the RFP targets. These have been revised 
from those in the proposal to account for NOX and for 
emissions models in addition to the MOBILE model.
12. Should EPA continue the policy of allowing substitution of controls 
from outside the nonattainment area within 100 kilometers for VOC and 
200 kilometers for NOX?
    We intend to continue to rely on this policy at the current time. 
The use of emissions reductions outside the nonattainment area must be 
shown to be beneficial toward reducing ozone in the nonattainment area 
and must ensure that the reductions meet the standard tests of 
creditability (permanent, enforceable, surplus, and quantifiable).
13. When must RFP emissions reductions be achieved?
    The target level of emissions must be met by the attainment date of 
the attainment year. Section 182(c)(2)(B) requires that RFP be 
continued out to the attainment date.

[[Page 71617]]

14. Banked emission reduction credits (including shutdown credits): Can 
pre-baseline emission reduction credits be used to satisfy the RFP 
requirement?
     The baseline emissions should not include pre-enactment 
banked emission credits since they were not actual emissions during the 
calendar year of enactment of the CAA Amendments of 1990.
     Banked emissions reductions credits created prior to 
enactment of the CAA Amendments of 1990 are not creditable toward the 
15 percent progress requirement. However, for purposes of equity, EPA 
encourages States to allow sources to use such banked emissions credits 
for offsets and netting as authorized.
     When States use such banked credits for offsets and 
netting to the extent otherwise creditable under the part D NSR 
regulations, these pre-enactment emissions credits must be treated as 
growth. Prior guidance on this issue is still relevant for banked 
emission reduction credits in relation to the RFP requirement for the 
8-hour ozone standard. However, because the rule for implementing the 
8-hour ozone standard uses a 2002 baseline year, the prior guidance 
should be interpreted with that baseline in mind instead of enactment 
of the CAA Amendments of 1990.

F. Are contingency measures required in the event of failure to meet a 
milestone or attain the 8-hour ozone NAAQS?

    Contingency measures are required to be implemented in the event of 
failure to meet a milestone or attain the 8-hour ozone NAAQS and must 
accompany the attainment demonstration SIP. All subpart 1 and subpart 2 
areas other than marginal areas need contingency measures.

G. What requirements should apply for RACM and RACT for 8-hour ozone 
nonattainment areas?

1. Reasonably Available Control Technology (RACT)
    For subpart 1 areas that submit a demonstration of attainment for 5 
or less years after designation (i.e., do not request an attainment 
date extension beyond 5 years after designation), the CAA's RACT 
requirement is met with the control requirements associated with a 
demonstration that the NAAQS is attained as expeditiously as 
practicable.
    For subpart 1 areas that submit an attainment demonstration that 
requests an attainment date extension (i.e., beyond 5 years after 
designation), subpart 2 moderate and above areas, and areas within an 
Ozone Transport Region (OTR), a RACT SIP is required covering CTG 
sources and major non-CTG sources. The RACT submittal date is 27 months 
after designation, except a subpart 1 area shall submit the RACT SIP 
with its attainment date extension request.\2\ States must require 
sources to implement RACT no later than the first ozone season or 
portion thereof which occurs 30 months after the required submittal 
date.
---------------------------------------------------------------------------

    \2\ This is generally expected with the submission of the 
attainment demonstration.
---------------------------------------------------------------------------

    Where a RACT SIP is required, State SIPs implementing the 8-hour 
standard generally must assure that RACT is met, either through a 
certification that previously required RACT controls represent RACT for 
8-hour implementation purposes or through a new RACT determination. 
States may use existing EPA guidance in making RACT determinations. 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 adopted by the State and approved by EPA as 
meeting the NOX SIP Call requirements or, in States 
achieving CAIR reductions solely from electric generating units (EGUs), 
the CAIR NOX requirements.\3\ States are free to conduct 
case-by-case RACT determinations, or RACT determinations or 
certifications for groups of sources, at their discretion.
---------------------------------------------------------------------------

    \3\ Alternatively, a State need not perform a NOX 
RACT analysis for sources subject to Federal implementation plan 
that implements the emission reductions required by the 
NOX SIP call or the CAIR.
---------------------------------------------------------------------------

2. Reasonably Available Control Measures (RACM)
    For each nonattainment area required to submit an attainment 
demonstration, the State must submit with the attainment demonstration 
a SIP revision demonstrating that it has adopted all control measures 
necessary to demonstrate attainment as expeditiously as practicable and 
to meet any RFP requirements.

H. How will the section 182(f) NOX provisions be handled 
under the 8-hour ozone standard?

    The final rule allows a person to petition the Administrator for an 
exemption from nonattainment major NSR and/or RACT requirements for 
major stationary sources of NOX in 8-hour ozone 
nonattainment areas and for any area in a section 184 ozone transport 
region. The final rule includes an extension of the NOX 
waiver provisions to 8-hour ozone nonattainment areas covered under 
subpart 1 (as proposed) as well as subpart 2 nonattainment areas. In 
addition, the final rule states that a section 182(f) NOX 
exemption granted under the 1-hour ozone standard does not relieve the 
area from any requirements under the 8-hour ozone standard. A petition 
must contain adequate documentation that the exemption provisions in 
section 182(f) are met. We recently issued updated guidance on 
appropriate documentation regarding section 182(f) for application to 
the 8-hour ozone program.\4\
---------------------------------------------------------------------------

    \4\ Memorandum dated January 14, 2005, ``Guidance on Limiting 
Nitrogen Oxides (NOX) Requirements Related to 8-Hour 
Ozone Implementation'' from Stephen D. Page, Director, Office of Air 
Quality Planning and Standards, to Air Directors, Regions I-X.
---------------------------------------------------------------------------

I. Should EPA promulgate a NSR provision to encourage development 
patterns that reduce overall emissions?

    Section V of this preamble below addresses rules for NSR for the 8-
hour ozone standard. We are not at this time issuing any rule related 
to Clean Air Development Communities (CADCs).

J. 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, 
fine particulate matter PM2.5), and regional haze?

    We are continuing our 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.

K. What emissions inventory requirements should apply under the 8-hour 
ozone NAAQS?

    Existing ozone-relevant emissions data element requirements under 
40 CFR 51 subpart A are sufficient to satisfy the emissions inventory 
data requirements under the 8-hour ozone NAAQS.

L. What guidance should be provided that is specific to Tribes?

    Section 301(d) of the CAA recognizes that American Indian Tribal 
governments are generally the appropriate authority to implement the 
CAA in Indian country. As discussed in the TAR, it is appropriate to 
treat Tribes in the same manner as States for purposes of implementing 
all of the provisions of the CAA, except those provisions for which EPA 
has specifically determined that it is not appropriate to treat Tribes 
in the same

[[Page 71618]]

manner as States. (The CAA provisions for which EPA has determined it 
is not appropriate to treat Tribes in the same manner as States are 
listed in section IV.L. of this preamble.) Examples of CAA provisions 
for which EPA has determined it is not appropriate to treat Tribes in 
the same manner as States include specific plan submittal and 
implementation deadlines.
    In implementing this rule, it is important for both States and 
Tribes to work together to coordinate planning efforts. Other than in 
very limited circumstances, State regulations do not apply to Indian 
Country, but SIP control measures could impact downwind areas, 
including Indian communities. In addition, nonattainment area 
boundaries may include a portion of Indian Country. Coordinated 
planning will help ensure that the planning decisions made by the 
States and Tribes complement each other and achieve progress toward 
meeting the NAAQS.

M. What are the requirements for Ozone Transport Regions (OTRs) under 
the 8-hour ozone standard?

    Section 184 continues to apply for purposes of the 8-hour standard; 
therefore, the current OTR remains in place and the section 184 control 
requirements continue to apply for purposes of the 8-hour standard. 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.

N. Are there any additional requirements related to enforcement and 
compliance?

    We are not setting forth any additional rule related to compliance 
and enforcement.

O. What requirements should apply to emergency episodes?

    We have not yet proposed any rule revision related to emergency 
episodes (at 40 CFR part 51, subpart H), and the final rule below does 
not contain any such rule revision.

P. What ambient monitoring requirements will apply under the 8-hour 
ozone NAAQS?

    No monitoring requirements are being promulgated as part of this 
rulemaking. The preamble discusses current relevant requirements (40 
CFR part 58) and anticipated activities.

Q. When will EPA require 8-hour attainment demonstration SIP 
submissions?

    Modeled attainment demonstrations--where required--must be 
submitted within 3 years after the effective date of the area's 
nonattainment designation.

R. How will the statutory time periods in the CAA be addressed when we 
redesignate areas to nonattainment following initial designations for 
the 8-hour NAAQS?

    For any area that is initially designated attainment or 
unclassifiable for the 8-hour NAAQS and subsequently redesignated to 
nonattainment for the 8-hour ozone NAAQS, the attainment date and dates 
for submittal of any applicable requirements under subpart 1 or subpart 
2 and these regulations would run from the date of redesignation to 
nonattainment for the 8-hour NAAQS.

Summary of Section V (Below): EPA's Final Rule for New Source Review

    In today's action, we are finalizing previously proposed changes to 
three regulations that govern major NSR permitting of major stationary 
sources in nonattainment areas--40 CFR 51.165, appendix S of 40 CFR 
part 51, and 40 CFR 52.24.
    The regulations at 40 CFR 51.165 contain the minimum elements that 
a State's preconstruction permitting program for major stationary 
sources in nonattainment areas must contain in order for EPA to approve 
the State's program into the SIP. In Sec.  51.165, we are making 
revisions to incorporate the major stationary source thresholds, 
significant emission rates, and offset ratios pursuant to part D of 
title I of the CAA, as amended in 1990, for the 8-hour ozone NAAQS, the 
CO NAAQS, and the PM10 NAAQS. We are also promulgating final 
changes to the requirements for emissions reductions achieved from 
shutdowns or curtailments at Sec.  51.165(a)(3)(ii)(C). We are not 
currently acting on any other proposed changes to 40 CFR 51.165.
    Appendix S of 40 CFR part 51 contains the preconstruction 
permitting program that applies to major stationary sources in 
nonattainment areas lacking an approved part D NSR program. It applies 
during the interim period after EPA designates an area as 
nonattainment, but before EPA approves a SIP to implement the 
nonattainment NSR requirements for that pollutant (SIP development 
period). We are making the same changes to appendix S that we are 
making to Sec.  51.165 to implement the CAA as revised by the 1990 
Amendments. In addition, we are finalizing revisions to section VI of 
appendix S to qualify applicability of this section. This revision is 
an outgrowth of the proposed revisions to section VI in the 8-hour 
NAAQS implementation proposal (68 FR 32802). We also are removing an 
outdated exemption for sources increasing emissions less than 50 tons 
per year (tpy).
    The regulations at 40 CFR 52.24 contain restrictions on the 
construction or modification of major stationary sources, including a 
construction ban applicable in circumstances enumerated by the 1977 
CAA. These regulations also apply if the Administrator determines 
pursuant to CAA section 173(a)(4) that the State is not adequately 
implementing the SIP for meeting the part D requirements. today's final 
rules codify requirements of the 1990 CAA Amendments related to the 
applicability of construction bans. The final rules at Sec.  52.24 also 
codify that Sec.  51.165 applies in interpreting the terms in Sec.  
52.24. The regulations at 40 CFR 52.24(k) retain the requirement that 
appendix S governs permits to construct and operate applied for during 
the period between the date of designation as nonattainment and the 
date the part D plan for NSR is approved, but is updated to remove the 
reference to the construction ban.
    In addition to the changes to the nonattainment NSR regulations, we 
also are making one change to the PSD regulations under part C of title 
I of the CAA. We are codifying NOX as an ozone precursor in 
attainment and unclassifiable areas.

Summary of Section VI (Below): Final Rule for RFG

    Today's rule specifies that the nine original RFG mandatory areas 
must continue to use RFG at least until they are redesignated to 
attainment for the 8-hour standard. Similarly, areas that have been 
reclassified as severe areas under section 181(b) of the CAA for the 1-
hour NAAQS, and which were not redesignated to attainment for the 1-
hour NAAQS prior to its revocation, must continue to use RFG at least 
until they are redesignated to attainment for the 8-hour standard. The 
EPA is reserving for future consideration what RFG requirements apply 
to areas that were reclassified as severe under the 1-hour standard, 
but were redesignated to attainment for that standard before its 
revocation. The only such area that was redesignated to attainment 
prior to revocation of the 1-hour standard is Atlanta, Georgia. The EPA 
is also reserving for future consideration whether areas must continue 
using RFG

[[Page 71619]]

after they are redesignated to attainment for the 8-hour standard, for 
the original nine mandatory areas as well as the areas reclassified to 
severe. Finally, EPA clarifies that the current opt-in rules will 
remain in place after the 1-hour standard is revoked. Areas classified 
under subpart 2 as marginal or above are eligible to opt-in to the RFG 
program.

Summary of Section VII (Below): Other Considerations

A. How will EPA's implementation of the 8-hour ozone NAAQS affect 
funding under the Congestion Mitigation and Air Quality Improvement 
(CMAQ) Program?

    This section describes the relationship between the CMAQ program 
and the 8-hour ozone NAAQS implementation program.

B. What is the relationship between implementation of the 8-hour 
standard and the CAA's title V permits program?

    The interrelationship between implementation of the 8-hour ozone 
standard and the title V permits program was not discussed in the 
proposed rule. However, various questions have been raised about the 
interface between the implementation of the 8-hour ozone standard and 
the title V operating permits program. The preamble presents several 
questions and answers, mainly dealing with how title V applicability is 
affected by the new 8-hr ozone standard and the revocation of the 1-
hour ozone standard.

C. What action is EPA taking on the Overwhelming Transport 
Classification for subpart 1 areas?

    We are not completing rulemaking on the overwhelming transport 
classification in this rulemaking. This section discusses the status of 
the rulemaking.

IV. Final Rule for Phase 2 Elements Other Than New Source Review and 
Reformulated Gasoline

    The discussion of many of the regulatory elements below address 
timing of required actions, such as submission dates for SIP revisions. 
The discussion is primarily directed toward 8-hour ozone nonattainment 
areas for which the effective date of the designation was June 15, 
2004. However, a number of areas may have later effective dates for 
their designations, such as early action compact areas and areas 
subsequently redesignated from attainment to nonattainment for the 8-
hour ozone standard. For these situations, the timing will run from the 
effective date of those designations. In cases in this preamble where 
we have used June 15, 2004 as a substitute for the ``effective date,'' 
we are using it only for purposes of those areas with an effective date 
of June 15, 2004.

A. 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?

    [Section VI.D. of June 2, 2003 proposed rule (68 FR 32825); no 
draft or final regulatory text.]
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 approach embodied in subpart 2 was to classify 
areas according to the severity of their pollution. Areas with more 
serious ozone pollution were given a higher classification that did two 
things. First, the successively higher classifications provided a 
successively longer maximum timeframe for attaining the ozone NAAQS. 
Second, each higher classification mandated specific additional and/or 
more stringent obligations than the classification immediately below. 
Specifying mandatory measures in the statute was necessary because 
States and EPA, prior to 1990, had failed to ensure that SIPs achieved 
steady reasonable progress in reducing emissions or to require readily 
available measures that were cost effective and necessary to meet the 
standard. See generally H.R. Rep. No. 101-490 at 144-48 (1990).
    For this rule, we examined the issue of mandatory measures from 
both a legal and policy standpoint. Our legal view is guided by the 
statutory language in part D of title I of the CAA. In addition, we 
were guided by the Supreme Court's view of this language. Our policy 
view is guided by past precedents and also the principles we set forth 
in our proposed rule (June 3, 2003; 68 FR 32802).
    We have consistently interpreted the CAA to mean that once an area 
is classified under subpart 2, the subpart 2 requirements apply. While 
certain requirements allow for some flexibility in how they apply, the 
requirements do not allow for broad waivers. For example, all areas 
classified as serious or above must meet the requirement for an 
enhanced inspection and maintenance (I/M) program, however, there is 
some flexibility in determining what type of I/M program meets the 
requirement for an enhanced I/M program. The Supreme Court, in 
addressing whether the classification provisions in subpart 2 applied 
for purposes of the 8-hour ozone NAAQS found that they did and stated 
that EPA's implementation scheme, which would have avoided 
classifications under subpart 2, was unreasonable because it would 
effectively nullify the subpart 2 provisions that Congress created with 
the intent to limit State and EPA discretion. Whitman v. American 
Trucking Assoc., 531 U.S. 484-85.
    In the proposed rule, we recognized that there is case law doctrine 
that might allow a case-by-case waiver from mandatory requirements when 
sufficient evidence is presented that application of a specific 
requirement in a particular area would cause absurd results.
2. Final Rule
    We continue to interpret the CAA to mean that the prescribed 
requirements for each classification under subpart 2 apply to areas 
with such classification for the 8-hour NAAQS. As we noted in the 
preamble to the proposed rule, there may be a basis for waiving a 
prescribed requirement on a case-by-case basis where imposition of the 
requirement would create an absurd result. However, as stated in the 
proposed rule, we believe that absurd results that might occur from 
application of mandatory control measures would happen only in rare 
instances. If a State submits a demonstration that application of a 
specific requirement in a specific nonattainment area would create an 
absurd result, we will consider application of the absurd results 
doctrine at that time.
3. Comment and Responses
    Comment: A number of commenters supported the approach that we 
discussed in the proposed rule. Other commenters agreed with the 
overall concept that we proposed but felt that we should take 
additional factors into consideration if we make case-by-case waivers 
from subpart 2 requirements. Several commenters suggested that we take 
the cost of controls into consideration when determining if there were 
an absurd result while others suggested that we look at relative 
control strategy effectiveness, e.g., allowing a demonstration that 
NOX reductions are more effective and therefore may be 
substituted for mandatory VOC emissions reductions.
    Several other commenters stated that we should more broadly allow 
substitution of subpart 2 mandatory measures. One commenter felt that 
substitution of subpart 2 measures should be allowed as long as the

[[Page 71620]]

substituted measures are at least equivalent to the mandatory measures. 
Another commenter stated that we should allow areas to adopt substitute 
measures in lieu of subpart 2 measures where the subpart 2 measures 
would not be as effective as the substitute measures in reaching 
attainment. The commenter stated that we have been overly limited in 
our characterization of when subpart 2 measures might be waived to 
avoid an absurd result. The commenter believed that we should create a 
categorical exemption as an exercise of agency power to allow areas to 
substitute NOX for VOC measures or more effective control 
measures for less effective control measures when doing so would 
expedite attainment. Another commenter urged us to limit the strict 
application of subpart 2 measures because the imposition of such 
measures creates economic disincentives for companies to locate and 
expand in nonattainment areas. A number of commenters stated that they 
do not support the vehicle I/M or Stage II vapor recovery programs and 
recommended that we provide States with flexibility in meeting these 
requirements.
    Response: Many of the commenters' suggestions go beyond the 
application of an absurd results doctrine and instead suggest broad 
waiver of subpart 2 requirements based on a determination that an 
alternative or substitute is more effective. We do not believe that we 
have the authority to broadly waive measures mandated by Congress. As 
noted by the Supreme Court, Congress intended to cabin States' 
discretion when it mandated the specific controls under subpart 2. See 
e.g., Whitman, 531 U.S. 484-85. (``Whereas subpart 1 gives EPA 
considerable discretion to shape nonattainment programs, subpart 2 
prescribes large parts of them by law'' and ``EPA may not construe the 
statute in a way that completely nullifies textually applicable 
provisions meant to limit discretion'').
    However, as stated in our proposed rule, we believe that case law 
may provide EPA with limited flexibility to waive federally mandated 
requirements on a case-by-case basis where application of those 
requirements would produce an absurd result. We do not need to conclude 
here what precise circumstances would create an absurd result. Rather, 
that decision would need to be made on a case-by-case basis in the 
context of a specific request. In general, we note that to demonstrate 
an absurd result, a State would need to demonstrate that application of 
the requirement would result in more harm than benefit. For example, 
the programs mandated under subpart 2 are generally effective in 
reducing emissions of the two ozone precursors--NOX and 
VOC--and because reductions of those precursors generally lead to 
improved air quality, we believe that such a demonstration could be 
made, if at all, only in rare instances.
    With regard to the comment relating to Stage II vapor recovery, 
section 202(a)(6) of the CAA does provide for revision or waiver of the 
Stage II vapor recovery requirement under certain conditions: ``The 
requirements of section 182(b)(3) (relating to stage II gasoline vapor 
recovery) for areas classified under section 181 as moderate for ozone 
shall not apply after promulgation of such standards and the 
Administrator may, by rule, revise or waive the application of the 
requirements of such section 182(b)(3) for areas classified under 
section 181 as Serious, Severe, or Extreme for ozone, as appropriate, 
after such time as the Administrator determines that onboard emissions 
control systems required under this paragraph are in widespread use 
throughout the motor vehicle fleet.'' Currently, EPA is formulating 
policy concerning how widespread use will be determined and has been 
seeking participation from affected parties. Further information is 
available at: http://www.epa.gov/ttn/naaqs/ozone/ozonetech/stage2/.
    Comment: A few commenters disagreed with the approach in our 
proposed rule. One commenter stated that we do not have the statutory 
authority to create new waivers to subpart 2 requirements. Another 
commenter stated that the CAA does not allow case-by-case waivers to 
avoid ``absurd'' results. The commenter further stated that doing so 
would in effect require us to rewrite the statute by regulation.
    Response: As stated above, we agree that we do not have broad 
authority to waive subpart 2 requirements and that the CAA itself does 
not expressly create authority to waive such requirements. However, the 
``absurd results'' line of cases provides that where application of a 
statute as written would create a result counter to what Congress 
intended, an Agency has limited authority to construe that provision in 
a manner than would effectuate Congress' intent.\5\
---------------------------------------------------------------------------

    \5\ See Holy Trinity Church v. United States, 143 U.S. 457 
(1892) (``If literal construction of the words of a statute be 
absurd, the act must be so construed to avoid the absurdity.''); 
Griffin v. Oceanic Contractors, Inc. 458 U.S. 564 (1982) 
(recognizing the absurdity exemption, but concluding that a harsh 
penalty provision did not produce results counter to Congress' 
intent); Mova Pharm. Corp. v. Shalala, 140 F. 3d 1060 (D.C. Cir. 
1998) (recognizing the absurdity exemption, but finding that a 
``successful defense'' regulation went beyond the statute was not 
necessary to meet Congressional intent.)
---------------------------------------------------------------------------

B. How will we address long-range transport of ground-level ozone and 
its precursors when implementing the 8-hour ozone standard?

    [Section VI.F. of June 2, 2003 proposed rule (68 FR 32827); no 
draft or final regulatory text.]
1. Background
    Interstate transport can make it difficult or impossible for some 
States to meet attainment deadlines for areas within their boundaries 
solely by regulating sources within their own boundaries. Section 
110(a)(2)(D) of the CAA provides an important tool for addressing the 
problem of interstate transport. It provides that a State must include 
adequate provisions in its SIP to prohibit sources within the 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) of the CAA authorizes EPA to find 
that a SIP is substantially inadequate to meet any CAA requirement, 
including the requirements of section 110(a)(2)(D) of the CAA. If we 
make such a finding, we 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 to regulate emissions from 
significant upwind sources of air pollutants in other States.
    In addition to requiring States to control interstate air pollution 
under section 110(a)(2)(D), the CAA requires States with nonattainment 
areas to develop State plans under part D that provide for meeting the 
NAAQS as expeditiously as practicable, and for maintaining healthy air 
quality in those areas over time. Together, the section 110(a)(2)(D) 
and part D provisions provide for upwind State and in-State controls to 
ensure that national health-based air quality standards are met and 
maintained.

2. Current Approach

    In the NOX SIP Call Rule, EPA found the SIPs for certain 
States in the eastern U.S. to be substantially inadequate to address 
emissions transported to downwind States and required those States to 
select and adopt control measures to meet statewide ozone-season 
NOX emissions budgets based on highly cost-effective 
NOX emissions

[[Page 71621]]

reductions (63 FR 57356, October 27, 1998.) In that rule, we determined 
that the same level of emissions reductions was needed to address 
transport for both the 1-hour and 8-hour standards.\6\
---------------------------------------------------------------------------

    \6\ In light of various challenges to the 8-hour NAAQS, we 
stayed the 8-hour basis for the NOX SIP Call Rule (65 FR 
56245; September 18, 2000).
---------------------------------------------------------------------------

    The NOX SIP Call Rule is achieving substantial emissions 
reductions and air quality improvement well in advance of the 
attainment dates of 8-hour nonattainment areas. In the eastern United 
States, monitoring data shows a 10 percent improvement between 2002 and 
2004 in the seasonal (May-September) average of daily maximum 8-hour 
ozone concentrations, after adjustment for meteorological differences. 
The EPA believes that the NOX reductions achieved as a 
result of the NOX SIP Call are an important factor in this 
improvement. The compliance date for achieving the required 
NOX reductions under phase I of the NOX SIP Call 
was May 31, 2004. All of the 19 affected States and the District of 
Columbia submitted complete Phase I SIPs, which EPA approved, in 
response to the NOX SIP Call and are implementing their 
NOX control programs. State programs to implement the rule 
have focused on reducing emissions from electric power generators and 
large industrial emitters. The phase II NOX SIP Call Rule, 
which responds to court decisions on issues from the original SIP call 
rule involving certain types of sources and geographic coverage, 
requires additional emissions reductions by May 1, 2007.
    The EPA's modeling for the CAIR indicates that ozone levels across 
the eastern half of the country will improve substantially by 2010 
because of existing requirements--including the NOX SIP 
call, federal motor vehicle and nonroad engine regulations, and other 
existing State and federal rules. Last year, EPA designated more than 
100 areas in that region as having ozone levels not meeting the 8-hour 
ozone standard, based on 2001-2003 data. Air quality improvements due 
to existing requirements (i.e., without State measures required for 
areas designated nonattainment for the 8-hour standard) are projected 
to leave only 16 of these areas in nonattainment in 2010. This estimate 
is derived from base case CAIR modeling results shown in the final 
notice for the CAIR (70 FR 25254, Table VI-12).
    On May 12, 2005, EPA published the Clean Air Interstate Rule in the 
Federal Register (70 FR 25162). The EPA determined that 28 States and 
the District of Columbia contribute significantly to downwind 
nonattainment, or interfere with maintenance, of the PM2.5 
and 8-hour ozone NAAQS in other States. The rule requires these States 
to submit SIP revisions to reduce SO2 and/or NOX 
emissions.
    To reduce interstate ozone transport, the rule established 
statewide ozone-season NOX budgets for 25 States and the 
District of Columbia. The budgets are based on the level of emissions 
that can be achieved through highly cost-effective controls that EPA 
determined are available from EGUs; however, States have flexibility to 
choose the measures they will use to achieve the necessary emissions 
reductions. Due to feasibility constraints, EPA is requiring the CAIR 
budgets to be achieved in two phases. For summertime NOX, 
the first phase starts in 2009 (covering 2009-2014); \7\ the second 
phase of NOX reductions begins in 2015 (covering 2015 and 
thereafter).
---------------------------------------------------------------------------

    \7\ The CAIR first phase also provides an annual NOX 
budget, which also starts in 2009.
---------------------------------------------------------------------------

    The 25 States that are required to meet a summertime NOX 
cap for ozone purposes, along with the District of Columbia, are 
Alabama, Arkansas, Connecticut, Delaware, Florida, Illinois, Indiana, 
Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, 
Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, 
Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, and 
Wisconsin.
    The CAIR is geographically broader and more stringent than EPA's 
previous ozone interstate transport rule, the NOX SIP Call, 
adopted in 1998.\8\ The CAIR's ozone requirements are based on updated 
analyses of the impacts of pollution transported across State borders, 
and of highly cost-effective control opportunities for NOX.
---------------------------------------------------------------------------

    \8\ The CAIR requires summertime NOX reductions in 
the following States not covered by the NOX SIP Call: 
Arkansas, Florida, Iowa, Louisiana, Mississippi, and Wisconsin. The 
NOX SIP Call has requirements for two States not covered 
by CAIR ozone requirements: Rhode Island and Georgia. The EPA has 
proposed a stay of applicability of the SIP Call to Georgia as an 
initial response to a petition for reconsideration on whether 
Georgia should be covered.
---------------------------------------------------------------------------

    As detailed in the final CAIR action, the CAIR rule will further 
reduce ozone transport to assist States in their efforts to bring ozone 
nonattainment areas into attainment or--in the case of downwind 
receptor areas that attain prior to some or all CAIR reductions--
maintain air quality meeting the 8-hour ozone NAAQS. In the CAIR 
rulemaking, EPA projected that 39 counties (in the 16 nonattainment 
areas referenced above) would have ozone levels exceeding the standard 
in 2010 in the absence of further control requirements (i.e., the base 
case without CAIR). Most of these counties were projected to be within 
a few parts per billion (ppb) of the standard. For the 39 counties, the 
average reduction in ozone levels estimated from 2009 CAIR 
NOX controls is 0.4 ppb, and the maximum improvement is 1.4 
ppb (70 FR 25254, Table VI-12.) The 2009 CAIR NOX 
requirements will achieve reductions prior to the maximum attainment 
date for downwind 8-hour ozone areas classified as moderate.
    We believe that States will be able to demonstrate timely 
attainment for most 8-hour ozone nonattainment areas with the help of 
emissions reductions from Federal rules. However, we also believe that 
a limited number of downwind areas, while showing improvement, are 
likely to remain in nonattainment after 2009. This is due to the 
severity of projected ozone levels in certain areas, uncertainties 
about the levels of emissions reductions that will actually occur, and 
persistence of historical difficulties with attaining the 1-hour ozone 
standard. The EPA determined in the CAIR that even if all downwind 
receptor areas attained on time, many areas will remain close enough to 
the standard to be at risk of falling back into nonattainment. The EPA 
concluded that the 2015 summertime NOX reductions will 
assist attainment and maintenance of the 8-hour standard.\9\
---------------------------------------------------------------------------

    \9\ For the 22 counties projected to be in nonattainment in 2015 
in the absence of further control requirements (i.e., the CAIR base 
case), the average ozone reduction in 2015 from CAIR is 1.1 ppb, and 
the maximum improvement is 1.6 ppb. (70 FR 25254, 25455, Table VI-
13.)
---------------------------------------------------------------------------

    In addition to controlling interstate air pollution under section 
110(a)(2)(D), EPA national rules and State rules for controlling local 
sources of emissions are significantly reducing, and in the future will 
further reduce, the amount of pollution transported to 8-hour ozone 
nonattainment areas in downwind States. Downwind States, in devising 
their attainment and maintenance plans, will be able to take required 
upwind reductions into account. Depending on the particular area, the 
upwind reductions will help to hasten attainment of the NAAQS, make 
attainment and maintenance of the NAAQS less difficult and costly, or 
both.
    The EPA notes that interstate pollution transport will be further 
reduced through cost-effective measures that individual States adopt 
for purposes of bringing their ozone

[[Page 71622]]

nonattainment areas into attainment.\10\ Given the potential for 
measures adopted by one State to improve air quality downwind, EPA is 
supportive of multi-State cooperation on strategies for attaining the 
8-hour standard.
---------------------------------------------------------------------------

    \10\ Many types of sources contribute to ozone transport. The 
CAIR reduction requirements are based solely upon potential 
reductions from EGUs; EPA did not find other source types highly 
cost effective to control.
---------------------------------------------------------------------------

3. Comments and Responses
    This section addresses the more significant comments received; the 
response to comment document addresses other comments also.
    Comment: Several commenters thought the June 2, 2003, 8-hour 
implementation proposal failed to adequately address transport and 
disagreed with our statement that 8-hour transport has been addressed 
up front by the NOX SIP Call. Some added that this puts 
northeastern States located in the OTR in a situation where their 
citizens and businesses are bearing a disproportionate burden of health 
and economic impacts compared to upwind States that have fewer control 
requirements than OTR States. Some OTR State commenters said that the 
rule should address this inequity. One said we cannot assume that 
transport has been addressed until after the NOX SIP Call is 
implemented and has been evaluated.
    Response: The 8-hour ozone implementation rule is not intended as a 
rule to address interstate transport of pollution and to achieve 
emissions reductions from upwind sources as provided under CAA section 
110(a)(2)(D). Rather, its purpose is to interpret nonattainment 
requirements (in subparts 1 and 2 of part D of title I) for State plans 
to implement the 8-hour NAAQS. We have addressed the section 
110(a)(2)(D) obligation through the NOX SIP Call and CAIR, 
which provide substantial air quality benefit for downwind areas 
significantly affected by transport of pollution from other States.
    Comment: Two commenters recommended a regional approach among 
States to address transport. One commenter thought that Clear Skies is 
the best way to address transport, but absent that, would support a 
regional approach. Some commenters thought the 8-hour ozone 
implementation proposal ignored the issue that ozone is a regional 
problem that can only be solved through regional planning. These 
commenters added that instead of incentives for regional planning there 
were disincentives. Another commenter thought that EPA unrealistically 
expects States to be able to resolve all potential conflicts between 
the States by working together in a collaborative process to identify 
and adopt appropriate controls that provide for attainment. The 
commenter suggested that EPA oversight may be necessary in these 
situations. One commenter thought the development of multiple OTRs for 
regional planning and coordination may be highly desirable to bring 
States with a common problem together to coordinate efforts with the 
strength of several States rather than to go-it alone. Another 
suggested some criteria for EPA to use if we were to choose to 
establish OTRs.
    Response: We believe that addressing interstate transport requires 
regional approaches and regional cooperation. The EPA has ensured 
regional action to reduce interstate ozone transport through the 
NOX SIP Call Rule and CAIR. In addition, we note that groups 
of States have worked effectively together in the past to address 
regional ozone problems. For example, the Lake Michigan Air Directors 
Consortium (LADCO) was established in 1990 by the States of Illinois, 
Indiana, Michigan, and Wisconsin. The main purpose of LADCO is to 
provide technical assessments for and assistance to its member States 
on problems of ozone air quality and to provide a forum for its member 
States to discuss air quality issues. We will continue to encourage 
these multi-State efforts to assess and address ozone nonattainment and 
will work with these States as needed to provide support and ensure 
progress.
    We agree with other commenters that States should work together in 
the SIP development process to ensure localized transport is addressed. 
States that share an interstate nonattainment area are expected to work 
together in developing the nonattainment SIP for that area and in 
reducing emissions that contribute to local-scale interstate transport 
problems. We would also encourage collaborative efforts even in cases 
where there is not a multi-State nonattainment area but where 
significant emissions sources in one State might affect air quality in 
a nonattainment area in an adjacent State.
    In response to comments suggesting that EPA establish additional 
transport regions, at this time we do not anticipate formalizing any 
additional transport regions. We believe that the NOX SIP 
Call and CAIR rules go far to effectively address the kind of transport 
that establishment of a transport region would be intended to address, 
without the costs of setting up a commission to oversee the transport 
region.
    Comment: Some commenters stated that we should not rely on the 
proposed Clear Skies legislation to reduce emissions transport because 
there is no guarantee that the legislation will be enacted. Several 
State commenters added that Clear Skies would not provide adequate or 
timely emissions reductions. Another commenter suggested that we work 
with Congress to enact legislation to allow for the development and use 
of a transport argument in attainment demonstrations.
    Response: While we still hope that Congress will adopt the 
Administration's Clear Skies multi-pollutant legislation, we 
acknowledge that the outcome of that process is uncertain. To ensure 
that regional transport is addressed in a timely manner, EPA finalized 
the CAIR in May 2005 based on our existing regulatory authority.
    Comment: One commenter proposed that rather than addressing 
transport through national measures, we could include transport as one 
of the criteria for determining the adequacy of a SIP. This commenter 
supported the multi-State collaborative effort mentioned in the 
proposed rule, so that areas work together to address transport as 
their SIPs are being developed. The commenter asserted that our 
proposed early, top-down approach could significantly hinder SIP 
planning for local areas considering the complex chemistry of ozone and 
PM2.5 formation.
    Response: We believe that the NOX SIP Call and CAIR 
help, rather than hinder, SIP planning for nonattainment areas. We 
agree that the CAA does allow the States to work together in a 
collaborative fashion to assess regional or sub-national transport. The 
EPA worked with a State-led effort in the mid-to late-1990's [the Ozone 
Transport Assessment Group (OTAG) process] to perform such an 
assessment, which documented the magnitude and extent of long-range 
transport of ozone and its precursors. At that time, EPA concluded that 
without some certainty of what levels of emission controls would be 
required in the larger region, States faced great uncertainty regarding 
the amounts of ozone and precursor concentrations being transported 
into the modeling domain of the nonattainment area for which they were 
required to develop their attainment demonstrations. Therefore, EPA 
issued the NOX SIP Call--and more recently, CAIR--to 
establish the emission reduction responsibilities of upwind States 
under section 110(a)(2)(D). In this way, eastern States could then have 
a fair degree of certainty regarding required upwind reductions and the 
amount of transported emissions to be assumed in their 1-hour ozone

[[Page 71623]]

attainment demonstrations for individual nonattainment areas. Based on 
the OTAG experience, we believed that there was high risk that States 
working together in a collaborative fashion would not agree on a 
regional control strategy within the time the CAA provides for States 
to develop 8-hour attainment demonstrations. Therefore, we believe the 
commenter is incorrect that the ``top-down'' approach will 
significantly hinder SIP planning for the individual areas, and on the 
contrary, will provide the certainty needed to complete the attainment 
demonstrations in a timely manner.
    The commenter also proposed that rather than addressing transport 
through national measures, we could include transport as one of the 
criteria for determining the adequacy of a SIP. It is true that section 
110(a)(2)(D)(i)(I) requires a SIP to ``contain adequate provisions * * 
* prohibiting, consistent with the provisions of this title, any source 
or other type of emissions activity within the State from emitting any 
air pollutant in amounts which will--(I) contribute significantly to 
nonattainment in, or interfere with maintenance by, any other State 
with respect to any such national primary or secondary ambient air 
quality standard * * *'' Furthermore, sections 110(a)(1) and (2) of the 
CAA require States to submit SIPs that implement, maintain, and enforce 
a new or revised NAAQS within 3 years of promulgation of the standard. 
Among other things, these SIP revisions must address a State's 
significant contribution of pollution to nonattainment and maintenance 
problems in other States under section 110(a)(2)(D). On March 10, 2005, 
EPA officially notified States that they have failed to submit SIPs to 
satisfy this requirement of the CAA with respect to the 8-hour ozone 
and PM2.5 NAAQS (70 FR 21147; April 25, 2005). The finding 
starts a 2-year clock for EPA to issue a final Federal Implementation 
Plan (FIP) that will address the requirements of section 110(a)(2)(D) 
unless a SIP revision correcting the deficiency is approved by EPA 
before the FIP is promulgated. The EPA plans to issue guidance 
regarding how States could satisfy the section 110(a)(2)(D) 
requirement. For States affected by CAIR, an approved SIP responding to 
the CAIR would satisfy the requirement and turn off the FIP clock.

C. How will we address transport of ground-level ozone and its 
precursors for rural nonattainment areas, areas affected by intrastate 
transport, and areas affected by international transport?

    [Section VI.G. of June 2, 2003 proposed rule (68 FR 32828); no 
draft or final regulatory text.] \11\
---------------------------------------------------------------------------

    \11\ This section of the proposal also addressed multi-State 
nonattainment areas. The discussion of multi-State nonattainment 
areas is now covered under the discussion below on attainment 
demonstrations and modeling.
---------------------------------------------------------------------------

1. Rural Transport Nonattainment Areas
a. Background
    In the June 2, 2003 proposal, we noted that section 182(h) of the 
CAA (under subpart 2) recognizes that the ozone problem in a rural 
transport area is almost entirely attributable to emissions from upwind 
areas. This section provides that the only requirements applicable to 
an area classified under subpart 2 that we determine is a rural 
transport area are the minimal requirements specified for marginal 
areas, i.e., those areas expected to attain within 3 years after 
designation. The timing for attainment for these areas will depend on 
the schedule for adoption and implementation of control measures in the 
upwind areas. We did not propose any revision to current policy and 
practices related to the rural transport area provisions under section 
182(h).
b. Summary of Final Rule
    The final rule does not contain any revisions to current policy on 
rural transport areas under section 182(h).\12\
---------------------------------------------------------------------------

    \12\ Based on current information, we do not believe there are 
any 8-hour nonattainment areas covered under subpart 2 that are 
``rural'' and therefore eligible for consideration for coverage 
under section 182(h). Existing policy on rural transport areas 
includes the ``General Preamble for the Implementation of Title I of 
the Clean Air Act Amendments of 1990; Proposed Rule,'' April 16, 
1992 (57 FR 13505).
---------------------------------------------------------------------------

c. Comments and Responses
    Comment: Several commenters favored the proposed approach of not 
revising our current policies with regard to subpart 2 areas that meet 
the criteria for being a rural transport area under section 182(h).
    Response: We agree with these comments.
    Comment: Several commenters urged us to provide more flexibility 
such as extending the provision to other areas whose problems are 
caused by transport but that do not qualify as rural under section 
182(h).
    Response: These commenters did not suggest any legal mechanism for 
granting the flexibility provided under section 182(h) to areas that do 
not qualify as rural under section 182(h). We have not found any such 
legal mechanism and, therefore, the final rule does not extend the 
flexibility provided under section 182(h) to additional areas.
2. Intrastate Transport
a. Background
    In the proposed rule, we noted that a number of State air agency 
representatives had voiced concern about intrastate transport of ozone 
and precursor emissions and asked EPA to address this concern. We 
indicated that the CAA requires individual States, as an initial 
matter, to deal with intrastate transport. We also pointed out that a 
State could 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. We also solicited comments on 
other ways of addressing intrastate transport within the context of the 
CAA provisions.
b. Summary of Final Rule
    The final rule does not contain any additional provisions for 
addressing intrastate transport for the reasons stated in the proposal. 
However, as indicated in the Phase 1 Rule published on April 30, 2004, 
for subpart 1 areas, States and EPA could consider intrastate transport 
in determining the attainment date for an area.\13\ In identifying the 
appropriate attainment date for an area, the State should consider 
measures to address intrastate transport of pollution from sources 
within its jurisdiction.
---------------------------------------------------------------------------

    \13\ Intrastate transport also could be considered in 
determining the attainment date that is as expeditious as 
practicable for subpart 2 areas, but if the date were later than 
allowed for the area's classification, the State would need to 
request bump-up of the area to a higher classification for that date 
to be approved.
---------------------------------------------------------------------------

c. Comments and Responses
    Comment: Two commenters recommended that States have regulatory 
authority to require controls as necessary regarding the problem of 
intrastate transport. They asserted that nonattainment areas should 
work with upwind contributing areas within the State to address 
regional transport within the State.
    Response: As provided in the proposed rule (68 FR 32829), we agree 
with the commenters that States have the obligation and authority to 
address the transport of pollution from one area

[[Page 71624]]

of the State to a different area of the State.
    Comment: Several comments recommended an intrastate transport 
classification.
    Response: Our response to those comments is in the response to 
comment document for the Phase 1 Rule of April 30, 2004. (Docket 
document OAR-2003-0079-0717; p. 68.)
3. How will EPA address transport of ground-level ozone and its 
precursors for areas affected by international transport?
a. Background
    As discussed in the proposal, international transboundary transport 
of ozone and ozone precursors can contribute to exceedances of the 
NAAQS. It is possible that the international transport of air 
pollutants may affect the ability of some areas to attain and maintain 
the 8-hour ozone NAAQS. Section 179B of the CAA (International Border 
Areas), applies to nonattainment areas that are affected by emissions 
emanating from outside the United States. This provision requires EPA 
to approve a SIP for an ozone 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 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. The preamble to the proposed 
rule recommended that States should confer with the appropriate EPA 
Regional Office to establish on a case-by-case basis the technical 
requirements for these analyses.
b. Final Rule
    As in the proposal, we are not setting forth any regulatory 
provisions related to international transport. Section 179B of the CAA 
applies for these purposes. We continue to recommend that States confer 
with the appropriate EPA Regional Office to establish on a case-by-case 
basis the technical requirements for analyses to support showings under 
section 179B. These analyses will be subject to public comment during 
the State and Federal SIP processes.
c. Comments and Responses
    Comment: Several commenters addressed the discussion of 
international transport in the proposed rule. Two commenters suggested 
that EPA is placing too high a burden on States to make a demonstration 
that a nonattainment area would attain but for international transport 
(e.g., assessing emissions from foreign countries). These commenters 
stated that EPA has the appropriate resources and technical expertise 
to evaluate international transport and highlighted certain data EPA 
has gathered and modeling EPA has performed. The commenters suggested 
that EPA should re-evaluate relevant policies regarding section 179B of 
the CAA to ensure they are streamlined and not unnecessarily burdensome 
on States in making an international transport demonstration. Another 
commenter thought that the proposed rule does not adequately address 
ozone from international sources, especially in a situation where a 
State does not have jurisdiction over most of the significant sources 
of ozone or access to available data for modeling in that region. 
Another commenter encouraged EPA to expand its view of the 
applicability of section 179B and allow consideration of the impact on 
attainment of smoke from crop burning activities in Southern Mexico and 
Central America.
    Response: The CAA, not EPA's proposed rule, places the burden on 
States to demonstrate that an area would be able to attain but for 
emissions from sources located outside the United States. However, EPA 
agrees with the commenters that EPA has been performing numerous 
activities that will provide data that States may be able to rely on as 
they develop these demonstrations. We recognize that adequate data for 
foreign sources may not be available to States. Therefore, modeling, 
according to the modeling guidance for attainment demonstrations, may 
not be possible in all cases. Because the availability of information 
and the causes of international pollution vary significantly from one 
area to another, EPA continues to believe that the best approach for 
addressing international transport is for States to work with EPA on an 
area-by-area basis to determine what is the best available information 
and the best method for analysis that fits the unique situation for 
each area.
    Regarding consideration under section 179B of the impact on 
attainment of smoke from crop burning activities in Southern Mexico and 
Central America, in many cases it may not be possible to confidently 
quantify the impacts to the total ozone loadings from individual 
foreign sources that are hundreds or even thousands of miles from the 
U.S. border. Particularly since 1998, when spring fires in Mexico and 
Central America were very severe, EPA has received much information 
about the potential impacts from such occurrences on ozone and PM 
levels in the United States. A prime lesson learned from those 
experiences is that a well-designed, detailed analysis is required 
before one can estimate the degree of influence from such fires. In 
many cases, sufficient data will not exist to draw such a conclusion. 
Case-by-case consultation between EPA and the State will help determine 
how best to consider this information in attainment planning.
    With respect to the applicability of section 179B to areas affected 
by emissions from very distant, foreign sources, EPA currently has not 
taken a position. If and when there are any SIP submittals that request 
a section 179B dispensation on such a basis, EPA will examine those 
submittals on a case-by-case basis, including focusing on the 
sufficiency of the technical demonstration, in order to make a 
determination of section 179B applicability.
    The EPA considers international transport of pollution an important 
issue. The EPA is engaged in several international efforts that will 
allow us to better understand the linkages between air pollution 
sources in other countries and their impacts on public health and air 
quality in the United States. The EPA has cooperative agreements with 
both Canada and Mexico to investigate international border transport. 
The information generated by these partnerships will assist States in 
evaluating international transport affecting 8-hour nonattainment 
areas.
    D. How will EPA address requirements for modeling and attainment 
demonstration SIPs for areas implementing the 8-hour ozone standard?
    [Section VI.H. of June 2, 2003 proposed rule (68 FR 32830); Sec.  
51.908 in draft and final regulatory text.]
    As noted in the proposal, 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 (MCR), 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 failures to meet RFP milestones 
and/or

[[Page 71625]]

attainment. The final rule retains three of these four elements, the 
exception being the requirement for a commitment to perform a MCR. As 
noted below, EPA will assess whether a MCR is needed on a case-by-case 
basis in reviewing individual attainment demonstrations.
    In the Phase 1 Rule, Sec.  51.908 contained only the requirement 
related to the timing of implementation of the emissions reductions 
needed for attainment. In today's final rule, that provision is 
retained as paragraph (d) of Sec.  51.908, and other requirements 
related to modeling and attainment demonstrations appear in the 
remaining paragraphs of Sec.  51.908.
    In the proposal, we also solicited public comment on the guidance 
related to multi-pollutant assessments (as discussed below), areas with 
earlier and later attainment dates, MCR, modeling guidance, and multi-
State nonattainment areas. These topics are discussed below. Associated 
with the attainment demonstration also are the RFP/ROP plans and the 
SIP submission concerning RACM, both of which we discussed elsewhere in 
the preamble to the proposed rule and which are discussed in later 
sections of this preamble.
1. Areas With Early Attainment Dates
a. Background
    The proposal noted that under section 182(a), marginal areas, which 
have a maximum attainment date of 3 years after designation, are not 
required to perform a complex modeling analysis using photochemical 
grid modeling. We noted that areas covered under either subpart 1 or 2 
with ozone concentrations close to the level of the NAAQS [e.g., within 
0.005 parts per million (ppm)] \14\ 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 noted that 
regional scale modeling for national rules, such as the NOX 
SIP Call and Tier II motor vehicle tailpipe standards, projects major 
ozone benefits for the 3-year period of 2004-2006. Attainment for many 
areas classified as marginal is further indicated by subsequent 
modeling used to support the CAIR. This 3-year period coincides with 
the period that would be used to determine whether an area attains the 
8-hour standard within 3 years after designation for areas classified 
as marginal.
---------------------------------------------------------------------------

    \14\ Even though the June 2, 2003 proposal contained the 
reference to the 0.005 ppm criterion, the draft regulatory text 
issued for public comment did not contain a reference to this 
criterion.
---------------------------------------------------------------------------

    If existing modeling for a marginal area does not indicate the area 
will attain with the current planned control measures, EPA encouraged 
the areas to request reclassification to moderate and encouraged the 
State or Tribe to develop an attainment demonstration using 
photochemical grid modeling. (See 68 FR 32831; June 2, 2003.) Even 
though modeling is not required, it may be prudent.
    In the proposal, we noted that many subpart 1 areas are projected 
through regional modeling to come into attainment within 3 years after 
designation with current control programs. Therefore, we proposed that 
no additional modeled attainment demonstration would be required for 
areas with air quality observations close to the level of the standard 
and where regional or national modeling exists that is appropriate for 
use to demonstrate the area will attain the 8-hour standard within 3 
years after designation (i.e., based on data from 2004-2006).
    We proposed that areas subject only to subpart 1 may request an 
attainment date no later than 3 years following designation for the 8-
hour NAAQS by submitting within 1 year of the designation a SIP that 
demonstrates the area will attain within 3 years following designation. 
The demonstration must include modeling results and analyses that the 
State is relying on to support its claim. Such modeling must be 
consistent with EPA guidance and must be appropriate for the area.
b. Summary of Final Rule
    Although we proposed that subpart 1 areas requesting an attainment 
date within 3 years after designation should submit their attainment 
demonstration within 12 months, we have removed that provision from the 
final rule. A subpart 1 area is free to choose to submit its attainment 
demonstration at any time prior to the 3-year due date.\15\ As is the 
case with all required attainment demonstrations, the demonstration 
must be submitted no later than 3 years following designation and must 
be appropriate for use in the area. We anticipate that most subpart 1 
areas will be included in the modeling analyses conducted by areas with 
later attainment dates. States are encouraged to use these available 
analyses, as well as future EPA national or regional modeling. The 
demonstration must include modeling results and analyses that the State 
or Tribe is relying on to support its claim. Such modeling should be 
consistent with EPA guidance and should be applicable and appropriate 
for the area.\16\ If acceptable available modeling does not demonstrate 
attainment, the area would need to submit a local modeled attainment 
demonstration.
---------------------------------------------------------------------------

    \15\ The EPA notes that 8-hour ozone nonattainment areas are 
also free to develop early SIPs with motor vehicle emissions budgets 
for transportation conformity purposes in advance of a complete SIP 
attainment demonstration. For more information on establishing an 
early 8-hour ozone SIP and how it could be used for conformity, 
please refer to EPA's July 1, 2004, conformity final rule (69 FR 
40019).
    \16\ If an assessment indicates that a regional modeling 
analysis is not applicable to a particular nonattainment area, 
additional local modeling would be required.
---------------------------------------------------------------------------

c. Comments and Responses
    Comment: Several commenters recommended that the requirement for 
attainment demonstrations from all subpart 1 areas be eliminated.
    Response: Section 172(c)(1) clearly requires that nonattainment 
areas ``* * * shall provide for attainment of the national primary 
ambient air quality standards.'' To meet this requirement, a State must 
demonstrate that the area will attain by a specified date and identify 
and adopt the control measures that will bring the area into 
attainment. We see no authority for waiving this requirement for areas.
    Comment: What are the requirements for subpart 1 areas requesting 
attainment dates within 3 years of designation?
    Response: Subpart 1 areas must submit their attainment 
demonstrations within 3 years after designation.
2. Areas With Later Attainment Dates
a. Background
    For areas with attainment dates of more than 3 years after 
designation, regardless of whether they are covered under subpart 1 or 
subpart 2 (except marginal areas), we proposed to require them to 
submit an attainment demonstration SIP. This proposal was reflected in 
Sec.  51.908(b) and (c) of the draft regulatory text. We stated that 
local, regional and national modeling developed to support Federal or 
local controls could be used provided the modeling is consistent with 
EPA's modeling guidance. Several States have invested considerable time 
and resources in regional 8-hour ozone modeling projects following this 
guidance. Where exceedances of the 8-hour ozone standard are more 
pervasive and widespread than they were for the 1-hour ozone standard, 
we recommended that States work together in multi-State modeling 
efforts and

[[Page 71626]]

leverage off work under development and resources spent on these 
projects.
b. Summary of Final Rule
    Subpart 1 areas with attainment dates later than 3 years after 
designation and areas classified as moderate or higher under Sec.  
51.903, are required to submit an attainment demonstration no later 
than 3 years after the effective date of designation for the 8-hour 
ozone NAAQS. Areas with an effective date of designation of June 15, 
2004 are required to submit an attainment demonstration no later than 
June 15, 2007. These demonstrations must be consistent with section 
51.112, including appendix W. In addition, for the review of technical 
adequacy, we will generally rely on our most recent modeling guidance 
at the time the modeled attainment demonstration is performed. We will 
be making available a final version of the modeling guidance related to 
developing attainment demonstrations for the 8-hour ozone standard.\17\
---------------------------------------------------------------------------

    \17\ U.S. EPA, (November 4, 2005), Guidance on the Use of Models 
and Other Related Analyses in Attainment Demonstrations for the 8-
Hour Ozone NAAQS, EPA-454/R-05-002, http://www.epa.gov/ttn/scram, 
(Modeling Guidance, File name: ozone-final.pdf).
---------------------------------------------------------------------------

    Areas required to submit an attainment demonstration are encouraged 
to follow the procedures described in this guidance. Local, regional 
and national modeling developed to support Federal or local controls 
generally may be used provided the modeling is consistent with EPA's 
modeling guidance at the time the modeled attainment demonstration is 
performed.\18\
---------------------------------------------------------------------------

    \18\ The guidance may not apply to a particular situation, 
depending upon the circumstances. The EPA and State decision makers 
retain the discretion to adopt approaches on a case-by-case basis 
that differ from this guidance where appropriate. Any decisions by 
EPA regarding a particular SIP demonstration will only be made based 
on the statute and regulations, and will only be made following 
notice and opportunity for public review and comment. Therefore, 
interested parties will be able to raise questions and objections 
about the contents of this guidance and the appropriateness of its 
application for any particular situation.
---------------------------------------------------------------------------

c. Comments and Responses
    We received no comments on this topic per se; comments on the 
timing of submission of attainment demonstrations is discussed 
elsewhere. We noted in the proposal that comments on the modeling 
guidance were welcome at any time and that we would consider those 
comments in any future revision of that document. We noted that 
comments submitted on the modeling guidance document would not be 
docketed as part of this rulemaking, nor would 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. We will 
address those comments at the time we issue the final modeling 
guidance.
3. Multi-State Nonattainment Areas
a. Background
    As discussed in the June 2003 proposal, section 182(j) of the CAA 
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 forth 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 us for demonstrating 
attainment. We are prevented by section 182(j) from approving any SIP 
revision submitted under that section if a State has failed to meet the 
above requirements.
    To address the provisions of section 182(j)(1)(A), States that 
include portions of a multi-State ozone nonattainment area should 
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.
    Section 182(j)(2) for multi-State nonattainment areas recognizes 
that one State may not be able to demonstrate attainment for the 
nonattainment area if other States in which portions of the 
nonattainment area are located do not adopt and submit the necessary 
attainment plan for the area. In such cases, even though the area as a 
whole would not have an approvable attainment demonstration, the 
sanction provisions of section 179 will not apply in the portion of the 
nonattainment area located in a State that submitted an attainment 
plan.
b. Summary of Final Rule
    As discussed in the proposal, State partners involved in a multi-
State ozone nonattainment area must work together to perform the 
appropriate modeling analyses to identify control measures that will 
enable the area to achieve attainment as expeditiously as practicable. 
Each State will be responsible for its portion of the control program 
and therefore will be held accountable for controls identified for 
implementation within its State boundaries. The modeling analyses 
should encompass the entire multi-State nonattainment area as well as 
adjacent counties which may contribute to the nonattainment problem. 
State plans should address local transport within the region and its 
contribution to nonattainment in the multi-State area. Consideration of 
long-range transport and its contributions to nonattainment is 
discussed in section IV.B. of this preamble. Multi-State nonattainment 
areas are subject to the same modeling and attainment demonstration 
requirements of the final rule that apply to all other areas. Marginal 
multi-State nonattainment areas do not have to submit a modeled 
attainment demonstration because section 182(a) exempts marginal areas 
from the requirement to submit an attainment demonstration.
c. Comments and Responses
    Comment: Several commenters encouraged us to clearly define in the 
rule how multi-State nonattainment areas will be treated if all or a 
portion of an area is subject only to subpart 1. One of these 
commenters requested a clarification that photochemical grid modeling 
will not be required for multi-State areas classified under subpart 1 
or areas that are classified as marginal. The commenter's reasoning was 
that such modeling is unnecessary since they are close to achieving the 
8-hour NAAQS and will be in attainment before the modeling can be 
completed.
    Response: We agree with these commenters that since section 182(a) 
exempts marginal areas from the requirement to submit an attainment 
demonstration, such areas need not develop an attainment demonstration. 
Section 182(j) of the CAA requires that multi-State areas use 
photochemical grid modeling as part of their attainment demonstrations 
while Section 172 (Subpart 1 areas) of the CAA does not explicitly 
require photochemical grid modeling. For subpart 1 areas that do not 
seek an attainment date of 3 years or less after designation, we make 
no distinction between multi-State and

[[Page 71627]]

single-State subpart 1 nonattainment areas. All subpart 1 nonattainment 
areas are required to submit an attainment demonstration that relies on 
photochemical grid modeling, either one that has already been performed 
that is appropriate for use in the area, or a new one. We do not 
believe that techniques other than those based on photochemical grid 
modeling will provide credible assurance that an area will achieve the 
8-hour ozone standard by the area's attainment date.
    Comment: One commenter requested that we perform the modeling for 
multi-State areas. Two commenters stated that if any additional 
photochemical modeling is required for such areas pursuant to CAA 
182(j)(1)( B), then EPA should refine previous modeling; perform new 
modeling; or approve a less resource-intensive, alternate method that 
fulfills the requirement. The commenters asserted that we should assist 
the States in coordinating the development of the attainment/
maintenance plans and ensure that areas involving multiple EPA Regions 
are not hampered by jurisdictional conflicts and inconsistencies.
    Response: The EPA has conducted, and will continue to conduct, 
regional and national scale modeling that covers most of the ozone 
nonattainment areas. Both single State and multi-State nonattainment 
areas will be able to make use of EPA modeling, where appropriate. The 
EPA will work with States to determine the steps necessary for the 
proper use of EPA modeling in a local attainment demonstration. States 
that plan to use EPA modeling in lieu of local modeling should be 
prepared to justify the local use of the regional projections as well 
as conduct additional analyses to monitor progress towards attainment. 
The EPA will continue to work with States to coordinate the development 
of consistent attainment/maintenance plans.
4. Role of Modeling Guidance in Attainment Demonstrations
a. Background
    The proposal noted that 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. For a subpart 1 area that does not qualify for 
an attainment date within 3 years after designation, we proposed to 
require the State to develop and submit a modeled attainment 
demonstration.\19\
---------------------------------------------------------------------------

    \19\ As noted above in the discussion of subpart 1 areas with 
early attainment dates, although the draft regulatory text in Sec.  
51.908(a) was structured such that no attainment demonstration was 
needed for subpart 1 areas that received an attainment date within 3 
years after the effective date of the nonattainment designation, 
this was misleading, since the draft Sec.  51.904(b)(2) provision 
that affected these areas required submission of a demonstration of 
attainment within 3 years after designation. The final regulatory 
text in Sec.  51.908(b) clarifies this point.
---------------------------------------------------------------------------

    We noted that 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. We noted that, unlike in previous guidance,\20\ we did 
not propose recommending a specific photochemical grid 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. Criteria for attainment demonstrations are contained in 40 CFR 
51.112, including appendix W (i.e., ``EPA's Guideline on Air Quality 
Models,'' 68 FR 18440, April 15, 2003). Appendix W refers to EPA's 
``Use of Models and Other Analyses in Attainment Demonstrations for the 
8-Hour Ozone NAAQS'' and lists 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.\21\ The proposal described 
alternatives available to the States and the scope and coverage of the 
draft guideline. The draft regulatory text of 2003 addressed this 
requirement in Sec.  51.908(d).
---------------------------------------------------------------------------

    \20\ U.S. EPA, (1991), Guideline for Regulatory Application of 
the Urban Airshed Model, EPA-450/4-91-013. Available at: http://www.epa.gov/scram001/tt25.htm; see document DRAFT8HR.
    \21\ U.S. EPA, (May 1998), 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).
---------------------------------------------------------------------------

    We noted that we were planning to make substantial changes to the 
draft version of this document before finalizing the attainment 
demonstration aspects of the implementation rule. We said we welcomed 
public comments on the guidance at any time and would consider those 
comments in any future revision of the document. However, we said we 
would not consider comments on the technical merits of the modeling 
guidance in this present rulemaking.

b. Summary of Final Rule

    The final rule [Sec.  51.908(c)] requires each attainment 
demonstration to be consistent with the provisions of Sec.  51.112, 
including appendix W to 40 CFR part 51. In addition, we will generally 
review the demonstrations for technical merit using EPA's most recent 
modeling guidance at the time the modeling relied on in the attainment 
demonstration is performed. This guidance will generally have the State 
provide (1) technical analyses to locate and identify sources of 
emissions that are causing violations of the 8-hour NAAQS within 
nonattainment areas, (2) adopted measures with schedules for 
implementation and other means and techniques necessary and appropriate 
for attainment that are needed for attainment, with implementation no 
later than the beginning of the attainment year ozone season \22\ 
(e.g., prior to 2009 ozone season for areas with June 15, 2010 
attainment dates), and (3) 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.
---------------------------------------------------------------------------

    \22\ See 40 CFR 51.900(g) for definition.
---------------------------------------------------------------------------

c. Comments and Responses

    Comment: One commenter recommended that EPA must ensure that 
attainment demonstrations are based on scientifically valid regional 
airshed modeling rather than scientifically invalid linear proportional 
rollback and weight-of-evidence methods.
    Response: Criteria for attainment demonstrations are contained in 
40 CFR 51.112, including appendix W (i.e., ``EPA's Guideline on Air 
Quality Models,'' 68 FR 18440, April 15, 2003). Appendix W cites EPA's 
``Use of Models and Other Analyses in Attainment Demonstrations for the 
8-Hour Ozone NAAQS'' and describes a set of general criteria that an 
air quality model and its application should meet to qualify for use in 
an attainment demonstration for the 8-hour ozone NAAQS.\23\ The draft 
guidance was developed through a collaborative process, which included 
review from the scientific community, and it has been revised to 
reflect recent review comments. The procedures described are considered 
a scientifically

[[Page 71628]]

valid use of regional and urban airshed modeling. The modeled 
attainment test makes use of the model derived relationship between 
ozone and its precursors. It does not, as is the case with proportional 
rollback, assume equal proportions of the precursors will provide an 
equally proportional reduction in ozone. For example, it does not 
assume that 20 percent reduction in precursors will provide 20 percent 
improvement in ozone.
---------------------------------------------------------------------------

    \23\ U.S. EPA, (1998), 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 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. The EPA believes 
use of weight of evidence is appropriate as do many in the scientific 
community. Weight of evidence is a credible approach for considering 
inherent uncertainties in a modeling application. As noted above, we 
will be making available a final version of the modeling and attainment 
demonstration guidance for the 8-hour ozone standard.\24\
---------------------------------------------------------------------------

    \24\ U.S. EPA, (2005), Guidance on the Use of Models and Other 
Related Analyses in Attainment Demonstrations for the 8-Hour Ozone 
NAAQS, EPA-454/R-05-002, http://www.epa.gov/ttn/scram, (Modeling 
Guidance, File name: ozone-final.pdf).
---------------------------------------------------------------------------

    Comment: All attainment demonstrations should be subject to the 
same rigorous standards.
    Response: The EPA envisions that the final 8-hour ozone modeling 
guidance will be available for use by the majority of subpart 1 areas 
and subpart 2 areas classified as moderate and above. However, due to 
the unique nature of the ozone problem in many areas, EPA will accept 
various applications of the guidance. Although EPA anticipates all 
areas will follow the guidance closely, there will be variation based 
on availability of new and improved data methods and field study data. 
The EPA is always striving to make best use of available data and 
improvements in methodologies as the science and our understanding of 
ozone formation and transport in different parts of the country 
increases. Unique to many areas is the source receptor configuration, 
level of precursor data collected and the model's ability to simulate 
unique factors influencing the formation and transport of ozone. As 
more information becomes available in particular areas, EPA expects 
more rigorous demonstrations will be provided. Areas close to attaining 
the standard for which there is a better understanding of the 
meteorology and the relationships between precursor emissions and ozone 
may not require as much rigor. These decisions will be made on a case-
by-case basis and the public will be able to express their views during 
the State SIP development and EPA review process.
    Comment: The EPA cannot adopt or change the Draft Guidance, use it 
for regulatory purposes, or require States to use it for regulatory 
purposes, without subjecting it to separate notice-and-comment 
rulemaking.
    Response: The final rule [Sec.  51.908(c)] requires each attainment 
demonstration to be consistent with the provisions of 40 CFR 51.112, 
including appendix W. However, we are not adopting the Guidance as a 
rule. The EPA plans to use the current (2005) guidance and future 
updates as a benchmark for reviewing the technical analysis submitted 
in support of 8-hour ozone attainment demonstrations. The guidance 
document is not a regulation. Therefore, it does not impose binding, 
enforceable requirements on any party, and may not apply to a 
particular situation based upon the circumstances. The EPA and State 
decision makers have the discretion to adopt approaches on a case-by-
case basis that differ from this guidance where appropriate. Any 
decisions by EPA regarding adequacy of a particular SIP to meet the 8-
hour ozone NAAQS will be based on the CAA and our regulations. 
Therefore, interested parties are free to raise questions and 
objections about the appropriateness of the application of this 
guidance to a particular situation during the State SIP development and 
EPA review process.
    Comment: One commenter requested an opportunity to review and 
comment on the revised guidance prior to the ``final'' release.
    Response: States, Tribes and others were given an opportunity to 
comment on the revised draft guidance prior to release. Also, EPA 
received additional comments on the draft guidance during the comment 
period on the implementation rule. The EPA has reviewed and considered 
the comments and will be releasing the final guidance. For more 
information and updates to the modeling guidance for ozone, visit EPA's 
Technology Transfer Network Support Center for Regulatory Air Models 
(TTN/SCRAM) on the Internet, http://www.epa.gov/ttn/scram/. Even though 
the guidance will be issued in final form shortly, EPA is always open 
to suggestions for future improvements to the guidance, including the 
incorporation of methodologies and procedures that increase accuracy 
and credibility of results. Such suggestions may be made to EPA 
regional or headquarters modeling contacts listed at the above TTN/
SCRAM web site.
    Comment: The EPA should carefully consider the resources that will 
be needed to perform the requisite modeling for multiple areas in many 
States.
    Response: States/Tribes are encouraged to share and leverage 
resources currently being used in regional model applications that 
affect multiple areas. There is much opportunity for common use of data 
and methodologies among the modeling requirements for the regional haze 
program, the PM2.5 attainment demonstrations and the ozone 
attainment demonstrations that should make the overall exercise less 
onerous. States and Tribes are encouraged to model multiple precursor 
strategies for multiple areas and review their efficacy for all three 
programs.
    Comment: Any photochemical grid model utilized must either be in 
the public domain or licensed for unlimited use by any person for 
purposes of modeling within the area.
    Response: The EPA modeling guidance supports this comment which is 
addressed in section 10 of the modeling guidance. ``Applicable models'' 
may be used, if they are non-proprietary. A ``non-proprietary'' model 
is one whose source code is available for free or for a reasonable 
cost. Further, the user must be free to revise the code to perform 
diagnostic analyses and/or to improve the model's ability to describe 
observations in a credible manner.
    Comment: One commenter recommended that EPA update its guidance in 
40 CFR 51, appendix W to include a discussion of the role of weight-of-
evidence as part of a modeling demonstration, and to make any updates 
in appendix W subject to public review.
    Response: In regard to the role of weight of evidence, EPA does not 
plan to revise appendix W. Use of weight of evidence is dependent on 
local information only available when the technical analysis for a 
specific model application is under development. Therefore, use of 
weight of evidence is considered on a case-by-case basis as the 
appropriate Regional Office works with the State as it develops its SIP 
and during the State adoption process and during EPA's SIP approval 
process. Any weight of evidence analysis is available for public 
review.
5. Mid-Course Review (MCR)

a. Background

    The proposal noted that 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. We noted that a

[[Page 71629]]

commitment to perform a MCR is a critical element of 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 said we believed 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 participated in a consultative process with EPA, 
which resulted in the development of the 1-hour MCR guidance.\25\ We 
noted that we would update the 1-hour MCR policy and technical guidance 
to include 8-hour metrics and that we were soliciting comment on 
appropriate revisions. We proposed that the final MCR guidance 
incorporating 8-hour metrics would be available at the time we issue 
our final implementation rule.
---------------------------------------------------------------------------

    \25\ 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 proposal briefly described the procedure for performing a MCR. 
The proposal noted that States would not have to commit in advance to 
adopt new control measures as a result of the MCR process. Based on the 
MCR, if we determine sufficient progress has not been made, we would 
determine whether additional emissions reductions are necessary from 
the State(s) in which the nonattainment area is located or upwind 
States or both. We would then require the appropriate State(s) to adopt 
and submit new measures to bring about the necessary emissions 
reductions within a specified period. We anticipated 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, we 
proposed that States 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.

b. Summary of Final Rule

    The final regulatory text does not contain a requirement for the 
MCR. In reviewing attainment demonstrations from individual States, 
however EPA will assess the need for a MCR for areas with an attainment 
date beyond 6 years after the effective date of the area's designation 
in the context of whether the attainment demonstration and any weight 
of evidence analysis is supportable without a commitment by the State 
to perform a MCR.
    The 8-hour ozone modeling guidance \26\ is expected to identify 
measurements and activities to support subsequent reviews of an 
attainment demonstration SIP (i.e., MCR), such as improvements in air 
quality monitoring, meteorology and emission measurements. Even though 
the proposal noted that we expected to revise the existing 1-hour MCR 
guidance, EPA now believes the 1-hour MCR guidance coupled with the 8-
hour modeling guidance provides sufficient guidance. States should 
consult with EPA prior to using a methodology other than the one 
developed through the public consultative process.
---------------------------------------------------------------------------

    \26\ U.S. EPA, (2005), Guidance on the Use of Models and Other 
Related Analyses in Attainment Demonstrations for the 8-Hour Ozone 
NAAQS, EPA-454/R-05-002, http://www.epa.gov/ttn/scram, (Modeling 
Guidance, File name: ozone-final.pdf).
---------------------------------------------------------------------------

    Guidance for performing a MCR for the 1-hour ozone NAAQS identifies 
several methods for reviewing whether the existing SIP is sufficient 
for the area to attain by its attainment date.\27\ These guidance 
documents should provide adequate information for developing protocols 
for performing MCRs for the 8-hour ozone NAAQS. States/Tribes should 
prepare protocols which identify analyses and data bases to be used to 
support a MCR and discuss these with the appropriate EPA Regional 
Office prior to performing a MCR. If we determine that additional 
guidance is needed, we will issue updated guidance in a timeframe 
suitable to support the timely completion of MCRs.
---------------------------------------------------------------------------

    \27\ 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.
---------------------------------------------------------------------------

c. Comments and Responses

    Comment: Requiring the MCR 3 or more years prior to the attainment 
date is not reasonable or feasible for some areas. The EPA needs to 
recognize that for moderate and lower classifications the MCR would be 
due at the time of the SIP submittal. Mid-course review should be 
required only for areas with nonattainment classifications of serious 
or greater, as at least 3 years of monitored data are required for a 
MCR, after the implementation of controls. One commenter recommended 
that EPA make the MCR process part of the requirements for RFP and ROP.
    Response: The final regulatory text does not require a MCR; as 
noted above, EPA will assess on a case-by-case basis whether a MCR 
would be needed in the context of a particular attainment 
demonstration.
    Comment: The EPA should develop proper analysis techniques so that 
meteorological conditions do not affect a nonattainment area's 
perceived progress towards attainment. A MCR should also include an 
evaluation of ozone transport into the nonattainment area and control 
implementation in upwind areas.
    Response: Assessments of transport are covered in the MCR guidance. 
The EPA is improving methods for determining the ozone trends and how 
they are affected by meteorology. The latest information will be made 
available.
    Comment: The EPA needs to release the revised MCR guidance before 
the final rule is issued in order for it to be reviewed and commented 
on during the public comment period.
    Response: The final rule does not incorporate any MCR guidance by 
reference. The 8-hour ozone modeling guidance \28\ is expected to 
identify measurements and activities to support subsequent reviews of 
an attainment demonstration SIP (i.e., MCR), such as improvements in 
air quality monitoring, meteorology and emission measurements. Guidance 
for performing a MCR for the 1-hour ozone NAAQS identifies several 
methods for reviewing whether a SIP is on track to attain within 
prescribed time limits.\29\ These guidance documents should provide 
adequate information for developing protocols for performing MCRs for 
the 8-hour ozone NAAQS. States/Tribes should prepare protocols which 
identify analyses and data bases to be used to support a MCR and 
discuss these with the appropriate EPA Regional Office prior to 
performing a MCR. If we determine that additional guidance is needed, 
we will issue updated guidance in a timeframe suitable to support 
completion of MCR's within established deadlines.
---------------------------------------------------------------------------

    \28\ U.S. EPA, (2005), Guidance on the Use of Models and Other 
Related Analyses in Attainment Demonstrations for the 8-Hour Ozone 
NAAQS, EPA-454/R-05-002, http://www.epa.gov/ttn/scram, (Modeling 
Guidance, File name: ozone-final.pdf).
    \29\ 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.

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

[[Page 71630]]

6. Multi-Pollutant Assessments (One-Atmosphere Modeling) \30\
---------------------------------------------------------------------------

    \30\ 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.
---------------------------------------------------------------------------

a. Background

    The proposal noted that 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. The proposal, therefore, noted that 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 and planning SIPs for the three programs are anticipated 
to be fairly close, the practicality of using common data bases and 
analysis tools for all three programs is viable and encourages use of 
shared resources.
    The proposal noted that States that undertake multi-pollutant 
assessments as part of their attainment demonstration would assess the 
impact of their ozone attainment strategies on secondary fine particles 
and visibility or perform a consistent analysis for ozone, secondary 
fine particles, and visibility. To facilitate such an effort, we 
encouraged States to work closely with established regional haze 
Regional Planning Organizations (RPOs) and the jurisdictions 
responsible for developing PM2.5 implementation plans. We 
encouraged States to perform similar multi-pollutant assessments as 
part of their ozone attainment demonstrations, considering the control 
programs that are in place at the time of the assessment. Multi-
pollutant assessments are discussed elsewhere in this proposed 
rulemaking.

b. Summary of Final Rule

    There is no regulatory text on the issue of multi-pollutant 
assessments, but we recommend the following:
     Attainment demonstration 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 is encouraged to 
promote efficiencies in strategies for achieving all three goals.
     States are also encouraged to use common data bases and 
analysis tools for all three programs and work closely with established 
regional haze RPOs and the jurisdictions responsible for developing 
PM2.5 implementation plans.
     States are encouraged to follow EPA's lead and perform 
similar multi-pollutant assessments as part of their ozone attainment 
demonstrations, considering the control programs that are in place at 
the time of the assessment.

c. Comments and Responses

    Comments: The EPA received several comments on the recommendation 
that States perform multi-pollutant assessments as part of their ozone 
attainment demonstrations. Almost all of the comments agreed with the 
basic rationale behind encouraging an analysis of the expected ozone, 
PM2.5, and visibility impacts of a given set of air quality 
control measures associated with an 8-hour ozone attainment 
demonstration. The comments differed on whether multi-pollutant 
assessments should be required or only encouraged. The commenters who 
urged EPA to encourage rather than require a multi-pollutant assessment 
provided reasons for why they believe a multi-pollutant assessment is 
not possible at this time. One commenter indicated that the proposal 
was unclear as to whether the multi-pollutant assessments were 
required.
    One commenter recommended that EPA require, in certain unspecified 
cases, nonattainment areas to perform an integrated control strategy 
assessment to ensure that ozone controls will not preclude optimal 
controls for secondary fine particles and visibility impairment. 
Conversely, several other commenters expressed the opinion that the 
multi-pollutant assessment should not be a requirement of an ozone 
attainment demonstration. Several reasons were offered for why the 
assessment should remain optional: (1) That the state of the science 
for assessing PM2.5 and visibility is not yet sufficient for 
providing meaningful input to the regulatory process, (2) that the 
additional resources necessary to model the atmosphere as a single 
system would result in an undue burden on the States, and (3) that 
requiring a PM2.5 and visibility assessment would result in 
delayed attainment due to the additional time necessary to complete 
such an analysis.
    Response: The EPA continues to believe that encouraging, but not 
requiring, multi-pollutant assessments is the most sound approach for 
total air quality management given the schedule by which ozone 
attainment demonstrations are legally required. Much progress has been 
made on improving the available PM2.5 models and inputs to 
these models over the past 3 years. As a result, EPA believes that the 
available tools are able to support air quality planning. Further 
improvements are likely over the next several years; much of which will 
be driven by the RPO's. By working closely with the appropriate RPO's, 
States can reduce the burden associated with one-atmosphere modeling 
analyses. However, EPA recognizes that many States have already 
invested resources in an ozone-only modeling platform analysis which is 
typically conducted over a finite number of episode days and for 
geographic regions that are typically less than (in time) and smaller 
than (in space) what might be required in a multi-pollutant assessment. 
By encouraging States to consider such assessments, EPA hopes to speed 
the process of the transition to more integrated air quality planning 
tools while yielding sound multi-pollutant control strategies. It is 
prudent for areas to perform these multi-pollutant assessments earlier 
as it will lessen the planning burden in the long-term since later 
planning activities for PM2.5 and regional haze will need to 
consider the effects of emission control measures adopted for the ozone 
attainment plan.
7. What baseline emission inventory should be used for the attainment 
demonstration?
    [Not addressed in the June 2, 2003 proposal; Sec.  51.909 of the 
draft regulatory text.]
    The June 2, 2003 proposal did not discuss baselines for purposes of 
the attainment demonstration. (It did, however, discuss baselines for 
RFP demonstrations.) Section 51.909 of the draft regulatory text 
provided that 2002 should be used as the baseline emission inventory 
year for purposes of both RFP and the attainment demonstration for 
areas with an effective date of

[[Page 71631]]

designation of June 15, 2004. We recognize, however, that some areas 
have already begun to perform modeling for their attainment 
demonstrations using baseline year inventories earlier than the 2002 
inventory, and because the 2002 inventory may not be in a format to 
readily be used for photochemical grid modeling.\31\ Therefore, the 
final rule does not specify a baseline for purposes of the attainment 
demonstration and modeling. As discussed more fully in the section of 
the preamble regarding RFP, the specification of 2002 as a baseline 
year for RFP purposes (for areas with an effective date of designation 
of June 15, 2004) appears in the RFP provisions of 40 CFR 51.910. 
Section 51.909 remains reserved.
---------------------------------------------------------------------------

    \31\ The EPA guidance on baseline years is found in the 
memorandum of 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.442.1.202baseinv.pdf. That document noted, ``The EPA is 
aware that some areas have already begun on a voluntary basis to 
model for purposes of the 8-hour ozone standard. These areas may 
continue to use modeling from previous base years for each set of 
meteorological episode conditions for use in their SIP submittals if 
these studies are still applicable for an attainment 
demonstration.''
---------------------------------------------------------------------------

8. Voluntary Reclassifications (``Bump-Ups'')
    Although we believe most 8-hour nonattainment areas will attain the 
standard by their statutory attainment date, we recognize that some 
areas classified under subpart 2 may need additional time beyond the 
statutory attainment date for their area to attain as expeditiously as 
practicable. As discussed in the Phase 1 Rule (69 FR at 23959, col. 3), 
in the event an area cannot practicably attain by the maximum date for 
its classification, the Clean Air Act provides the opportunity for more 
time. An area regulated under subpart 2 can receive a later maximum 
attainment date through a State request to bump-up to a higher 
classification (e.g. from moderate to serious). The Act requires EPA to 
grant a State request to reclassify an area to a higher classification; 
the State plan still must provide for attainment as expeditiously as 
practicable. Although bump-up means that certain additional specified 
requirements apply, an area may already be meeting most or all of these 
specified requirements due to controls previously adopted to implement 
the 1-hour ozone standard. This is because some areas had 1-hour 
classifications that were higher (and more restrictive) than the areas' 
8-hour classification,\32\ and because the Phase 1 final implementation 
rule for the 8-hour O3 NAAQS contains anti-backsliding provisions 
generally requiring areas to continue implementing measures required 
for the 1-hour classification. Although there may not be additional 
mandatory control measures required because the areas may already have 
such measures in place, an area that needs more time to attain may need 
additional emission reductions to reach attainment.
---------------------------------------------------------------------------

    \32\ Although some 8-hour ozone nonattainment areas have 
additional areas beyond the boundary of the former 1-hour 
nonattainment area and thus would be faced with new requirements for 
the higher classification.
---------------------------------------------------------------------------

E. What requirements for RFP should apply under the 8-hour ozone 
standard?

    [Section VI.I. of June 2, 2003 proposed rule (68 FR 32832); Sec.  
51.909 and Sec.  51.910 in draft; Sec.  51.910(d) in final regulatory 
text.]
1. General Discussion

a. Background

    As noted in the June 2, 2003 proposal, section 172(c)(2), which is 
located in subpart 1, 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 provides more specific RFP requirements for ozone areas 
classified under section 181.\33\ In particular, subpart 2 specifies 
the base year emissions inventory upon which RFP is to be planned for 
and implemented, the increments of emissions reductions required over 
specified time periods, and the process for determining whether the RFP 
milestones were achieved.
---------------------------------------------------------------------------

    \33\ Note that Sec.  51.900 provides the following definitions:
    (p) Reasonable further progress (RFP) means for the purposes of 
the 8-hour NAAQS, the progress reductions required under section 
172(c)(2) and section 182(b)(1) and (c)(2)(B) and (c)(2)(C) of the 
CAA.
    (q) Rate of progress (ROP) means for purposes of the 1-hour 
NAAQS, the progress reductions required under section 172(c)(2) and 
section 182(b)(1) and (c)(2)(B) and (c)(2)(C) of the CAA.
---------------------------------------------------------------------------

    Subpart 2 does not specify RFP 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 (referred to as the 
post-1996 ROP plan for the 1-hour standard). Section 182(c)(2)(C) of 
the CAA allows for substitution of NOX for VOC emissions 
reductions for reductions required under section 182(c)(2)(B). The 
EPA's policy, 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 emissions inventory for determining the 
required ROP reductions for the 1-hour standard is specified in section 
182 as 1990.
    The requirements for RFP under subparts 1 and 2, as described 
above, are the minimum required for an area. More reductions may be 
necessary for attainment within the nonattainment area. Moreover, an 
upwind area that contributes to nonattainment in a downwind area in the 
same State may need reductions in order for the downwind area to reach 
attainment by its required attainment date. As we noted above in 
section IV.D.8., we recognize that some areas classified under subpart 
2 may need additional time beyond the statutory attainment date for 
their current classification to attain the 8-hour standard as 
expeditiously as practicable. In the event an area cannot practicably 
attain by the maximum date for its classification, the CAA provides the 
opportunity for more time. An area regulated under subpart 2 can 
receive a later maximum attainment date through a State request to 
bump-up to a higher classification (e.g. from moderate to serious). 
Although a higher classification would mandate additional control 
measures, in fact there may not be additional mandatory control 
measures required because the area may already have such measures 
because of its classification for the 1-hour standard and the anti-
backsliding provisions. However, an area that needs more time to attain 
may also need additional emissions reductions to reach attainment. 
These reductions may be achieved through implementation of measures 
that are necessary to demonstrate RFP requirements or additional 
reductions beyond RFP may be needed. Preliminary analyses indicate that 
already required control measures (e.g., motor vehicle and

[[Page 71632]]

nonroad-engine rules, CAIR, etc.) may largely or fully fulfill RFP 
requirements for many areas and that they will provide substantial 
progress toward attainment for most areas.
    Many areas may have significant creditable reductions as a result 
of Federal motor vehicle and nonroad rules, the NOX SIP 
Call, and the CAIR. With the statutory exceptions enumerated above, 
assured emissions reductions that will occur in an area after the base 
year can be credited toward meeting an RFP emission reduction 
milestone.
    To reduce interstate ozone transport, the CAIR (described above in 
section IV.B.) established statewide ozone-season NOX 
budgets for 25 States and the District of Columbia (i.e., the eastern 
part of the U.S. where all 8-hour nonattainment areas are classified as 
moderate or below). As noted above, the first phase of NOX 
reductions under CAIR starts in 2009 (covering 2009-2014); the second 
phase of NOX reductions begins in 2015 (covering 2015 and 
thereafter).
    With respect to timing of reductions, the following table shows how 
summertime NOX reductions from local CAIR sources that will 
be achieved by May 1, 2009, or earlier can assist in demonstrating RFP.

------------------------------------------------------------------------
Type of 8-hour nonattainment                        Relationship of CAIR
            area                RFP requirement *          and RFP
------------------------------------------------------------------------
--Subpart 1 areas with        Meet RFP through      CAIR reductions not
 attainment dates within 5     showing of            required prior to
 years of designation;         expeditious           ozone season
                               attainment.           preceding latest
                                                     attainment date.
--Subpart 2 moderate areas
 for which of expeditious
 attainment is no later than
 5 years after designation.
Subpart 1 areas with          Must demonstrate RFP  CAIR reductions in
 attainment dates 6-10 years   through their         2009 can help
 from designation.             attainment date.      fulfill RFP
                                                     requirement.
Subpart 2 marginal areas....  No subpart 2 RFP      Not applicable.
                               requirement for
                               marginal areas.
Subpart 2 moderate areas      Subject to RFP        CAIR NOX reductions
 with an attainment date       similar to subpart    in 2009 can help
 later than 5 years after      1 areas; must         fulfill RFP
 designation.                  demonstrate RFP       requirement.
                               through their
                               attainment date.
Subpart 2 moderate-and-above  15% VOC reduction     CAIR 2009 NOX
 areas that did not            required between      reductions can help
 implement 15% VOC             2002 and 2008;        demonstrate
 reductions for 1-hour ozone   continued progress    continued progress
 standard.                     required through      after 2008
                               attainment date.      attainment date.
------------------------------------------------------------------------
* RFP requirement descriptions in table are abbreviated; RFP
  requirements are more precisely described elsewhere in preamble and
  rule text.

    The CAIR provisions do not require States to require emissions 
reductions prior to January 1, 2009. However, States may choose to 
require or some sources may elect to apply CAIR-level NOX 
controls earlier than that date. If such controls are made enforceable 
in the SIP (e.g., through a specific rule), the State may take RFP 
credit for such emissions reductions for the RFP period (i.e., an RFP 
period ending earlier than December 31, 2008) during which the 
reductions occur.
    The RFP provisions in the CAA for both subpart 1 and subpart 2 
areas require that actual emissions be reduced from the baseline by the 
milestone year. Only emissions reductions required to be achieved 
during an RFP period may be credited toward the State's RFP obligation 
for that period. In developing their RFP plans, States will have to 
provide their best estimate of the CAIR-affected sources that are 
expected to actually reduce emissions to meet the CAIR requirements and 
those that are expected to meet CAIR through holding allowances and not 
actually reducing emissions.
    Local CAIR NOX reductions that States must require by 
May 1, 2015, could assist in meeting RFP for an area that is bumped up 
to severe and demonstrates attainment cannot be achieved before the end 
of the 2015 ozone season.

b. Summary of Final RFP Features

    We are adopting nearly all the approaches set forth in our proposed 
rule for the various 8-hour RFP issues. We are making exceptions where 
convincing arguments were presented by commenters for a suitable 
alternative or where, through reassessment of the issue, EPA was able 
to develop a better option that still reflects the concepts in the 
original proposal. The issues for which we have adopted approaches that 
vary from the proposal are: (a) The timing of the submission of the RFP 
plan; (b) the structuring of RFP requirements in subpart 1 areas; (c) 
the implementation of RFP in 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; and (d) the substitution 
of controls from outside the nonattainment area within 100 kilometers 
(km) for VOC and 200 km for NOX. These changes are discussed 
in the sections below.
    In developing an approach for addressing the RFP requirements for 
the 8-hour ozone standard, we are adopting 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. The baseline year of 2002 applies for 
areas with an 8-hour ozone nonattainment designation effective in June 
2004.
     Emissions reductions from outside the nonattainment area 
up to 100 km for VOC and 200 km for NOX (and statewide for 
areas that are part of a regional strategy) would be allowed consistent 
with (a) the concepts in EPA's existing December 1997 interim 
implementation policy for 1-hour ozone NAAQS \34\, and (b) with the 
constraint that in all cases the distances in the policy provide only a 
general policy presumption that, if used, would need data in the record 
showing that reductions from sources in the specific locations outside 
the nonattainment area benefit the nonattainment area. This is 
discussed further below in section IV.E.12. of this preamble.
---------------------------------------------------------------------------

    \34\ 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. This policy 
recognized that VOC emissions up to 100 km and NOX 
emissions up to 200 km from the nonattainment area could be relied 
on for RFP. Those distances resulted from Federal Advisory Committee 
Act discussions cited earlier and generally represent transport of 1 
to 2 days. We still believe it is appropriate to allow this credit. 
However, as noted below, because we received concerns about this 
policy outside the rulemaking process, we are in the process of 
subjecting this policy to a technical review and may revise it in 
light of that review.
---------------------------------------------------------------------------

     For all 8-hour nonattainment areas classified under 
subpart 2 as moderate

[[Page 71633]]

and above that had not met the 15 percent VOC emission reduction 
requirement for the 1-hour standard, the RFP 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 all 8-
hour nonattainment areas classified as serious and above, the RFP 
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. 
(See section 182(c)(2)(B)).
     Areas classified under subpart 2 as moderate that had met 
the 15 percent VOC emission reduction requirement for the 1-hour 
standard are treated in the final rule like areas covered under subpart 
1.
     Areas classified under subpart 2 as serious and above that 
had met the 15 percent VOC emission reduction requirement for the 1-
hour standard would be subject to the RFP requirement in section 172(e) 
and the final rule would require them to obtain an average of 3 percent 
annual reductions of VOC and/or NOX emissions reductions for 
the first 6 years after the baseline year and every subsequent 3 years 
out to their attainment date.
     The periods for RFP under subpart 2 for the 8-hour ozone 
NAAQS run from the date of the baseline year, and would be equivalent 
to the periods Congress established in subpart 2, which applied for the 
1-hour NAAQS. Thus, the first 15 percent reduction would be required 
for the 6-year period starting after the end of the last day of the 
baseline year (e.g., January 1, 2003-December 31, 2008). The first 3-
year period for the subsequent (average of) three percent per year 
emission reduction requirement in serious and higher areas would begin 
6 years after the end of the last day of the baseline year (e.g., 
January 1, 2009-December 31, 2011). However, the last period for any 
area would end on the attainment date for the area.
     Subpart 1 areas with attainment dates 5 years or less 
after designation can meet the RFP requirement by achieving the 
emission reductions necessary to attain as expeditiously as 
practicable. These emissions reductions must be implemented by the 
beginning of the full ozone season prior to the attainment date (See 40 
CFR Sec.  1.908).\35\ For subpart 1 areas with attainment dates beyond 
5 years after designation, the RFP SIP must provide for a 15 percent 
emission reduction (either NOX and/or VOC) from the baseline 
year within 6 years after the baseline year. For each subsequent 3-year 
period out to the attainment date, the RFP SIP would have to provide 
for an additional increment of progress. The increment for each 3-year 
period would be a portion of the remaining emission reductions needed 
for attainment beyond those reductions achieved for the first increment 
of progress (e.g., beyond 2008 for areas designated nonattainment in 
June 2004). Specifically, the amount of reductions needed for 
attainment should be divided by the number of years needed for 
attainment after the first increment of progress in order to establish 
an ``annual increment.'' For each 3-year period out to the attainment 
date, the area must achieve roughly the portion of reductions 
equivalent to three annual increments.\36\
---------------------------------------------------------------------------

    \35\ With today's rulemaking, this provision is now codified as 
40 CFR 51.908(d).
    \36\ For example, if the area's attainment date is 2014, and a 
total of 30 percent reduction is needed between the end of 2008 and 
the attainment date (a 6-year period) to reach attainment, the 
``annual increment'' would be 5 percent (i.e., \1/6\ of 30 percent). 
Thus, the area must achieve roughly the portion of reductions 
equivalent to three annual increments or 15 percent during the first 
3 years (2009, 2010, 2011), and the remaining amount over the next 3 
years (2012, 2013, 2014). Additional discussion of what is meant by 
``roughly proportional'' appears in he full discussion of RFP for 
subpart 1 areas in section IV.E.7. of this preamble.
---------------------------------------------------------------------------

     Subpart 2 moderate or higher areas that had not met the 15 
percent VOC reduction requirement under the 1-hour standard would be 
subject to section 182(b)(1) for the 8-hour standard and would need to 
obtain the emissions reductions within 6 years after the baseline year 
(e.g., for areas designated in June 2004, the reductions would need to 
occur by the end of 2008, based on a baseline year 2002).
     Reductions from any Federal and regional measures 
promulgated after 1990 (except those measures that were not creditable 
under the CAAs creditability provisions (section 182(b)(1)(D)) and 
achieved after the baseline year are creditable for the RFP 
requirement.
     Allow use of the ``Clean Data Policy.''
c. Comments and Responses
    This set of comments and responses on our proposal on RFP are of a 
general nature. Comments and responses on specific topics appear with 
the sections below on those topics.
    Comment: One commenter stated that EPA's proposed 8-hour ozone rule 
would sharply slow momentum to implement health protective emission 
reduction strategies in areas with unhealthful air quality. It would 
curtail the effectiveness of transportation conformity in areas with 
inadequate air quality, including both old and new ozone nonattainment 
areas. It would do this by proposing to eliminate any further RFP 
requirements for pollution reduction in existing 1-hour ozone areas.
    Response: The EPA has developed anti-backsliding provisions to 
ensure continuing progress toward attainment of the ozone NAAQS. Under 
these provisions, areas that are nonattainment for the 8-hour standard 
must continue to meet most obligations for the 1-hour standard, 
including RFP requirements. Those provisions (adopted as part of the 
Phase 1 Rule published April 30, 2004) will ensure areas maintain 
progress in achieving emissions reductions in areas with unhealthful 
air quality. Additionally, 8-hour ozone nonattainment areas with 
attainment dates later than 5 years after designation must meet 
specified increments of reductions as provided in more detail below.
    Comment: Another commenter recommends that EPA not strictly 
interpret the CAA requirement of a 15 percent reduction in VOC in the 
first 6 years. If reductions in VOC would not assist the area in 
progress toward attainment and if an area can provide an analysis that 
it is at least as sensitive to NOX controls, then the area 
should be able to reduce NOX emissions for RFP requirements.
    Response: We addressed in general those comments that recommended 
alternatives to the mandatory measures of subpart 2 (which includes the 
RFP requirement) in the response to comments above under the topic, 
``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?'' We conclude 
in that section that EPA has no discretion to broadly waive mandatory 
requirements. However, we noted that case law may provide support for 
case-by-case waivers where implementation of a measure would produce an 
absurd result.
    Comment: One commenter stated that EPA should consider highly 
reactive VOC reductions that achieve ozone reductions equivalent to an 
average of 3 percent per year reduction of VOC and/or NOX as 
meeting RFP requirements.
    Response: The CAA's RFP provisions do not appear to provide for 
variations

[[Page 71634]]

in the required percent reduction in VOC based on differences of 
reactivity of the various VOC compounds. However, EPA is participating 
with a group called the Reactivity Research Working Group, along with 
representatives from States, industry and universities, to study the 
scientific aspects of reactivity and to try to determine if more cost-
effective and greater ozone reductions can be achieved through use of 
the concept. The requirement to obtain the required percent reduction 
of total VOCs remains, and if EPA decides to propose a change, it would 
be undertaken in a separate rulemaking action.
2. What is the content and timing of the plan for addressing the RFP 
requirements under section 182(b)(1) and 182(c)(2)(B) for areas covered 
under subpart 2?
    [Section VI.I.3 of June 2, 2003 proposed rule (68 FR 32833); Sec.  
51.910(a)(1)(ii) of the draft and final regulatory text.]
a. Background
    Section 182(b)(1) requires areas classified as moderate and above 
to submit a plan to achieve a 15 percent reduction in VOC emissions 
over a 6-year period following the baseline year. Section 182(c)(2)(B) 
requires serious and above areas to achieve an average of nine percent 
additional emissions reductions for each subsequent 3-year period. We 
proposed two options regarding how this requirement might apply for 
purposes of implementing the 8-hour NAAQS.
    (i) Option 1. 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, until attainment.
    (ii) Option 2. For those areas that have an approved 15 percent 
plan for their 1-hour ozone SIPs, an additional 15 percent VOC 
reduction is not necessary. Subpart 2 areas that have approved 15 
percent plans for the 1-hour ozone standard would be considered to have 
met the statutory 15 percent requirement. Instead, such an area that is 
classified as moderate for the 8-hour standard would be subject to the 
general RFP requirements of subpart 1 in the same manner as subpart 1 
areas. Such an area that is classified as serious and above for the 8-
hour standard would be subject to the RFP requirement in section 
182(c)(2)(B) and would have to include in their SIPs an RFP plan that 
would achieve an average of three percent per year of VOC and/or 
NOX over each 3-year period starting at the end of the 
baseline year out to their attainment year.
    We recognized in the proposal that for serious and above areas it 
would be difficult to adopt and implement emission controls that would 
provide 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 proposed to allow the first 
RFP increment to be averaged over 6 years. We proposed that an area 
classified serious or above submit its RFP plan within 2 years after 
designation such that it provides for 18 percent emissions reductions 
(VOC and/or NOX) over the first 6 years from the baseline 
year (e.g., January 1, 2003 to December 31, 2008 using the proposed 
2002 baseline year). Then, within 3 years after designation, submit a 
plan that provides 9 percent emissions reductions (VOC and/or 
NOX) over each of the next 3-year periods until the area's 
attainment date (e.g., from January 1, 2009 to the attainment date).
    The proposal noted that 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 as appropriate to meet the additional 
ROP/RFP requirements. 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 to bring 
about reduced ambient ozone levels. Areas do not have the flexibility 
to control NOX under the 15 percent requirement--
NOX substitution is only allowed under section 182 for the 
post-1996 RFP requirement (three percent per year averaged over 3 
years). We believe that the statute can be interpreted to require the 
mandatory 15 percent VOC reduction only once for a given area.
    Once the 15 percent VOC reduction requirements have been met, an 
area would instead be subject to the other RFP requirements of the CAA. 
In some cases, such as for serious and above areas, this might result 
in an obligation to achieve greater emissions reductions, i.e., 18 
percent rather than 15 percent for the 6-year period, but the area 
would have the flexibility to choose either VOC or NOX 
reductions as appropriate. We indicated in the proposal that we 
preferred this second option because it provides more flexibility for 
the RFP plan to be consistent with the area's needs in attaining the 
standard. The draft regulatory text incorporated this option.
    The proposal did not specifically address an 8-hour area that is 
partially comprised of one or more 1-hour ozone nonattainment areas 
with approved 15 percent plans and one or more areas that were not 
previously subject to the 15 percent requirement.
b. Summary of Final Rule
    We are adopting the second option described in the Background 
above, as adjusted in response to comment.
    1. Final rule for 8-hour areas comprised in total of one or more 1-
hour nonattainment areas with approved 15 percent plans for the 1-hour 
standard.
    Those 8-hour areas that are composed entirely of one or more 1-hour 
areas that have approved 15 percent plans for their 1-hour ozone SIPs, 
will be considered to have met the 15 percent VOC requirement in 
section 182(b)(1). Such areas that are classified as moderate would 
instead be subject to the more general RFP requirements of subpart 1. 
As discussed below, the subpart 1 requirement would depend on the 
moderate area's attainment date as follows:
     Moderate areas that have an attainment date of 5 years or 
less after their 8-hour designation, for which all portions of the area 
have previously met their 15 percent requirements under the 1-hour 
standard, will be subject to subpart 1 RFP requirements, which will be 
satisfied with measures that demonstrate attainment as expeditiously as 
practicable.
     Moderate areas that have an attainment date beyond 5 years 
after their 8-hour designation, for which all portions of the area have 
previously met their 15 percent requirements under the 1-hour standard, 
will be subject to subpart 1 RFP requirements, which will be satisfied 
with a plan to demonstrate 15 percent emissions reductions (which may 
be either VOC or NOX or a combination of both) from 2002 to 
2008, and any additional emission reductions needed for attainment 
beyond 2008.
    Such areas that are classified as serious or above would be subject 
to the RFP requirements of section 182(c)(2)(B) and would need to 
submit a plan achieving an average of 3 percent reductions per year 
over the 6 years following the baseline year and then an average of 3 
percent per year for each subsequent 3-year period out to the 
attainment year.\37\
---------------------------------------------------------------------------

    \37\ As discussed below in section 5 (the discussion of the 
timing of submission of the RFP plan) the RFP plan would have to be 
submitted within 3 years after designation (not 2 years as 
proposed).

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

[[Page 71635]]

    2. Final rule for 8-hour areas comprised in part of one or more 1-
hour attainment areas with an approved 15 percent plan for the 1-hour 
standard and in part of one or more areas without approved 15 percent 
plans for the 1-hour standard.
    For 8-hour moderate areas that include all or part of one or more 
1-hour areas with an approved 1-hour 15 percent plan, but also include 
areas that were not subject to the 1-hour 15 percent plan, the final 
rule would allow the area to choose between two alternative approaches 
that are consistent with the proposed rule.
     Approach 1. Develop a new baseline and new 8-hour 15 
percent VOC ROP emission reduction target for the entire 8-hour area. 
Emissions reductions that occur after the 2002 baseline emissions 
inventory year are creditable except as limited by section 182, as 
described elsewhere in this final rule. The reductions must be of VOC 
only.
     Approach 2.
     Treat the 8-hour nonattainment area as divided between 
portions of the area that are subject to an approved 15 percent VOC-
only plan for the 1-hour standard and the portions of the area that are 
not subject to a 15 percent plan for the 1-hour standard.
     For those areas not subject to an approved 15 percent plan 
for the 1-hour standard, States must establish a separate 15 percent 
VOC target under subpart 2. VOC emissions reductions to meet the 15 
percent requirement may, however, come from across the entire 8-hour 
nonattainment area.
     For the portion of the area with an approved 15 percent 
plan for the 1-hour standard, the subpart 1 RFP requirements will apply 
if the area is classified as moderate for the 8-hour standard and the 
section 182(c)(2)(B) RFP requirement will apply if the area is 
classified as serious or above for the 8-hour standard. These 
requirements would apply as described above for areas comprised 
entirely of areas with approved 15 percent plans for the 1-hour 
standard.
c. Comments and Responses
    Comment: One commenter expressed concern that for a number of 
subpart 2 areas that were nonattainment for the 1-hour standard, 
especially those dominated by mobile source emissions and/or those with 
existing stringent stationary source controls, it may be difficult to 
achieve another 18 percent precursor emission reduction within 6 years 
from the baseline year and then an additional 3 percent per year 
precursor reduction after that until the area's attainment date. 
Specific areas were mentioned such as the South Coast District of 
California and the Houston-Galveston Area, which the commenter 
indicated will be well beyond best available control technology (BACT) 
controls and in some cases at or near lowest achievable emission rate 
(LAER) NOX controls on stationary sources making them 
dependent on mobile source fleet turnover for SIP RFP emissions 
reductions. The commenter further suggested that EPA should have 
available approved policy options that allow areas in such predicaments 
to maintain approved SIPs if additional emissions reductions are not 
available to meet RFP requirements and/or if available emission 
reduction techniques might be counterproductive to other local and 
regional air quality goals.
    Response: We addressed in general those comments that recommended 
alternatives to the mandatory measures of subpart 2 (which includes the 
RFP requirement) in the response to comments above under the topic, 
``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?'' We 
concluded in that section that EPA has no discretion to broadly waive 
mandatory requirements. However, we noted that case law may provide 
support for case-by-case waivers where implementation of a measure 
would produce an absurd result. Additionally, we note that section 
182(b)(1)(A)(ii) specifically addresses the situation where an area 
demonstrates that it cannot achieve the required 15 percent reduction. 
It provides that an area may achieve less than the 15 percent VOC 
reduction required where the State demonstrates (1) NSR requirements 
apply as they would in an area classified as extreme except that the 
terms ``major source'' and ``major stationary source'' shall include 
any source with the potential to emit at least 5 tpy of VOCs; (2) RACT 
is required for all major sources (i.e., a source with the potential to 
emit at least 5 tons per year of VOCs; and (3) the plan includes all 
measures that can feasibly be implemented in light of technological 
achievability.\38\
---------------------------------------------------------------------------

    \38\ Section 182(c)(2)(B)(ii) also contains a similar RFP 
provision for serious and higher classified areas that allows less 
than 3 percent of baseline emissions each year after the initial 15 
percent reduction after designation and classification.
---------------------------------------------------------------------------

    Comment: Another commenter supported EPA in recognizing the 
previous efforts of areas to meet ROP requirements under the 1-hour 
standard. The commenter concurred with EPA's preferred option, which 
allows States the flexibility to choose a combination of NOX 
and VOC strategies to meet ROP/RFP requirements consistent with an 
area's need to meet the standard.
    Response: We agree with the commenter that if an area has already 
met the 15 percent VOC emission reduction requirement for the 1-hour 
standard, the area should not be required to meet that requirement a 
second time for the 8-hour standard but instead will be subject to the 
other applicable RFP provisions of the CAA.
    Comment: One commenter preferred Option 1 as more protective of air 
quality and more consistent with the requirements of the CAA. Option 1 
would require States to develop RFP plans based on severity and local 
situation. Option 2 has some attractive features by recognizing 
progress that States have already made. This commenter believed that 
Option 2 is problematic, however, because it relies on plans developed 
based on 1990 to 1996 emissions. This time period has passed.
    One commenter believed EPA to be completely without authority to 
waive the 15 percent RFP plan requirement, which is an explicit mandate 
of subpart 2. A 15 percent ROP plan under the 1-hour standard cannot 
possibly satisfy the 15 percent RFP plan obligation for the 8-hour 
standard, because the new RFP requirement is designed to implement a 
revised NAAQS and is measured from a different baseline year. They 
further believe that EPA offers no plausible legal rationale for 
waiving the 15 percent ROP requirement, and, indeed, none exists. 
Moreover, although the agency proposed to require RFP demonstrations 
for the first 6 years for serious and severe areas, there is no lawful 
or rational basis for exempting moderate areas from this statutory 
requirement. Allowing States to rely on their 1-hour 15 percent ROP 
demonstrations is further unsupportable because those demonstrations 
are almost certainly no longer valid.
    Response: The EPA acknowledges that under subpart 2 we must require 
15 percent VOC reductions for all moderate and above areas, but we 
maintain that if an area has met this requirement while subject to 
section 182(b)(1)(A) for the 1-hour standard, they will not have to 
meet it again for the 8-hour standard. The EPA believes that the CAA is 
quite clear that the SIP must provide for a 15 percent reduction in 
baseline VOC emissions for some period after 1990 in an area subject to 
section 182(b)(1)(A), and, consequently, the SIP for any area newly 
subject to section 182(b)(1)(A) must provide for a 15 percent reduction

[[Page 71636]]

in VOC baseline emissions. But, EPA disagrees that the CAA plainly 
requires that the SIP for an area must require a second 15 percent 
reduction in VOC baseline emissions under a revised ozone standard. The 
EPA believes that section 182(b)(1)(A) limits our discretion only to 
the extent that we cannot let the SIP for any area classified as 
moderate or worse for the 8-hour standard avoid a demonstration that 
the SIP contains sufficient measures to achieve a 15 percent reduction 
in VOC baseline emissions and further limits our discretion to allow 
NOX substitution for the 15 percent RFP demonstration 
requirement under section 182(b)(1)(A).
    If serious and above areas have already met the 15 percent 
requirement under the 1-hour standard, they must meet the next RFP 
requirement, namely, the section 182(c)(2)(B) RFP requirement, which 
will actually achieve greater reductions, i.e., 3 percent per year over 
6 years for a total of 18 percent, but they can meet it with either VOC 
or NOX reductions. For moderate areas that have already met 
the 15 percent VOC emission reduction requirement for the 1-hour 
standard, EPA believes appropriate RFP under subpart 1 should be 
achieved. For purposes of RFP under subpart 1, there is nothing that 
limits such reductions to VOC. This provision simply requires 
reasonable annual incremental reductions towards attainment by the 
applicable attainment date, and this could be achieved by either VOC or 
NOX emissions reductions or a combination of both.
    Section 182(b)(1)(A) is the only statutory provision that limits 
State discretion to substitute NOX reductions for VOC 
reductions. This applies only for purposes of the initial 15 percent 
reduction requirement for the 6-year period after the baseline year.
    Comment: Another commenter believed the subpart 2 provisions of the 
CAA do not allow for NOX for VOC substitutions for the 
initial 15 percent RFP requirements.
    Response: We agree that the 15 percent requirement in section 
182(b)(1) does not allow the substitution of NOX for VOC. 
However, the RFP requirements in section 172(c)(2) and 182(c)(2)(B) are 
not constrained by that limitation and either VOC or NOX 
emissions reductions may be counted toward meeting RFP under those two 
provisions.
    Comment: Some commenters believed an additional 15 percent VOC 
reduction should not be necessary for 8-hour areas that encompass in 
whole or in part a 1-hour nonattainment area with an approved 15 
percent plan. Such areas should simply be required to achieve whatever 
NOX or VOC emissions reductions are needed for attainment.
    One commenter noted that the proposed Sec.  51.910(a)(ii) did not 
address all boundary change scenarios consistent with our proposed 
approach found in section VI.I.9. of the June 2, 2003 proposed rule (68 
FR 32835).
    Response: We agree with the commenter that an area with an approved 
15 percent plan for the 1-hour standard is not required to adopt a 
second 15 percent plan under section 182(b)(1) for purposes of the 8-
hour standard. However, if a portion of the 8-hour area was not subject 
to an approved 15 percent plan for the 1-hour standard, section 
182(b)(1) applies to that portion of the 8-hour area and may be met by 
one of two approaches described above and in the regulatory text. We 
agree with the second commenter who noted that the proposed rule did 
not explicitly address all possible boundary scenarios; we believe we 
have fully addressed these different boundary scenarios in the final 
rule in a manner consistent with the proposal.
    Comment: A commenter indicated that they preferred to work with EPA 
in the development of an alternative that will eliminate or minimize 
the planning burdens associated with development of a 15 percent RFP 
plan for one town. One alternative might be the development of a 
``comparability demonstration,'' showing that the town had implemented 
the same controls that had been previously responsible for achieving a 
15 percent reduction in VOCs in the l-hour ozone nonattainment area 
associated with the 8-hour nonattainment area including this town.
    Response: We are willing to work with individual areas as they 
develop their 8-hour 15 percent plans and to help them avoid 
unnecessary planning burdens. We believe that the portion of an 8-hour 
area not subject to an approved 1-hour 15 percent plan may be able to 
meet the 15 percent obligation for the 8-hour standard if the area 
adopts the same VOC control measures (for example, VOC RACT at the same 
source thresholds, I/M, etc. * * *) as in the portion of the 8-hour 
nonattainment area subject to a 15 percent plan for the 1-hour standard 
and if the area has the same mix of emissions sources as in the area 
subject to the 15 percent plan for the 1-hour standard. We anticipate 
we could propose approval of a SIP on this basis where supported by the 
record.
Comments on Draft Regulatory Text
    Comment: Another commenter generally supported the RFP provisions 
but suggested that in section 51.910(a)(1)(ii)(A) of the draft 
regulatory text, we insert the language shown in bold:

``An area classified as moderate or higher that has the same boundaries 
as an area for which EPA fully approved a 15 percent plan for the 1-
hour NAAQS is not subject to section 182(b)(1) of the CAA for the 8-
hour NAAQS, but instead--(A) If classified as moderate, is subject to 
RFP under section 172(c)(2) of the CAA and shall meet that obligation 
by submitting 3 years after the effective date of its designation a SIP 
revision that provides for implementation of all emission reductions of 
VOCs and/or NOX needed for attainment by the beginning of the ozone 
season in the area's attainment year.'' The commenter claimed this 
language is consistent with the approach EPA has taken in other 
provisions of this draft.
    Response: The commenter's concern is noted. Section 51.910 has been 
restructured for reasons noted elsewhere in this preamble and it 
addresses the commenter's concern.
    Comment: One commenter suggested that Sec.  51.910(a)(3) of the 
draft regulatory text be revised to allow (even if conditional) 
NOX reductions to be substituted for VOC reductions (for any 
ROP or RFP requirement) whenever such reductions would ``result in a 
reduction in ozone concentrations at least equivalent to that which 
would result from the amount of VOC emission reductions required.''
    Response: As noted above we do not believe the CAA allows 
substitution of NOX for VOC to meet the 15 percent 
requirement of section 182(b)(1).
    Comment: One commenter stated that draft Sec.  51.910(a)(1)(ii) 
eliminates the 15 percent requirement for areas that have already 
achieved this requirement under the 8-hour standard and supported that 
change. However, they further state that the strict criteria of ``same 
boundaries'' should be revisited because there may be limited changes 
in the nonattainment areas ``boundaries'' when areas are designated for 
the 8-hour standard. Such changes should not negate this provision. A 
broader definition needs to apply to this section to allow for changes 
to boundaries in nonattainment areas between 1-hour and 8-hour 
designations where such changes do not substantially alter the 
geographical or population characteristics for the area.
    Another commenter supports an exemption for 8-hour nonattainment 
areas that have met the 15 percent ROP requirement for the 1-hour 
NAAQS. The commenter requests that EPA clarify the criteria that the 
area must have the same geographic boundaries to qualify for the

[[Page 71637]]

exemption. This means that in the geographic areas for which a State 
has an approved 15 percent plan, the 15 percent requirement will not 
apply, and the 15 percent requirement is only intended to apply to the 
new geographic areas of the 8-hour nonattainment area, and that the 15 
percent reduction of emissions from the new areas could come from the 
entire nonattainment area to satisfy this requirement.
    Response: As we explain in our summary of the final rule, we have 
recognized that there are a variety of boundary scenarios for 8-hour 
nonattainment areas in relation to the boundaries of areas for the 1-
hour standard. We have modified the draft regulatory text such that the 
final rule speaks in terms of 8-hour areas that include all or part of 
an area with an approved 15 percent plan for the 1-hour standard. For 
those portions of the 8-hour area with an approved 1-hour 15 percent 
plan, the 8-hour area is not required to develop a second 15 percent 
plan under section 182(b)(1) for purposes of the 8-hour standard, but 
instead will be subject to section 172(c)(2) if it is an 8-hour 
moderate area or subject to section 182(c)(2)(B) if it is classified as 
serious or above for the 8-hour standard. If the 8-hour area includes 
both areas that were subject to an approved 15 percent plan for the 1-
hour standard and areas that were not, then the 8-hour area can choose 
whether to develop a section 182(b)(1) 15 percent plan for the entire 
8-hour area or to develop a 182(b)(1) plan only for the area not 
previously subject to such a plan and to treat the remaining portions 
of the area under section 172(c)(2) or 182(c)(2)(B), as described 
above.
    As noted, EPA does not believe the statute allows it to relieve any 
area that has not already met the 15 percent requirement for the 1-hour 
standard from the obligation to meet that requirement except as 
provided in section 182(b)(1)(A)(ii).
3. What baseline year should be required for the emissions inventory 
for the RFP requirement?
    [Section VI.I.4. of June 2, 2003 proposed rule (68 FR 32833); Sec.  
51.909 of the draft regulatory text; Sec.  51.910(d) of the final 
regulatory text.]
a. Background
    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 designated ozone nonattainment areas in 
April 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 proposed to require use of the 
2002 inventory as the baseline inventory for the RFP requirement. This 
would be the most recent inventory available at the time of 
designation. We issued a memorandum identifying 2002 as the anticipated 
emissions inventory base year for the SIP planning process to address 
the 8-hour ozone and the PM2.5 standards.\39\
---------------------------------------------------------------------------

    \39\ Memorandum of 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.
---------------------------------------------------------------------------

b. Summary of Final Rule
    As set forth in our proposed rule, for areas designated 
nonattainment for the 8-hour ozone NAAQS with an effective date of June 
15, 2004, we are requiring States to use the 2002 inventory as the 
baseline inventory for the RFP requirement. As noted in the proposal, 
the inventory for the 2002 calendar year would be the most recently 
available inventory at the time of designation in 2004. However, in 
response to several comments, we are allowing States the option of 
justifying the use of an alternative baseline inventory year for RFP. 
To justify an alternative, the State would have to demonstrate how the 
alternative year meets the CAA's provisions for RFP and provide a 
rationale for why it is appropriate to use the alternative baseline 
year rather than 2002 to comply with the CAA's RFP provisions. We 
believe that for multi-State nonattainment areas, several States must 
agree on a single baseline. Even if a State chooses an alternative 
baseline inventory year for RFP, 2002 remains the valid baseline year 
for transportation conformity purposes as described in 40 CFR 93.119. 
The baseline year test is used only in conformity determinations prior 
to the submission of a SIP that establishes motor vehicle emissions 
budgets (e.g., an RFP SIP). Therefore, areas using the baseline year 
test would continue to use 2002 as the baseline year for conformity 
purposes because an area's baseline year would not be changed until an 
RFP SIP is submitted. Once an RFP SIP is submitted and the motor 
vehicle emissions budgets in that SIP are found adequate or are 
approved the area would no longer use the baseline year test. Instead 
the area would use the adequate or approved budgets in the RFP SIP in 
conformity determinations.
    The baseline emissions inventory is calculated as of the effective 
date of an area's nonattainment designation using the most recent 
calendar year for which a complete inventory is required to be 
submitted to EPA under subpart A of 40 CFR part 51, subpart A. Under 40 
CFR part 51, subpart A, States are required to submit a comprehensive 
inventory on 3-year cycles within 17 months after the close of the 
reporting period. Thus, the 2002 inventory was due 17 months after the 
December 31, 2002 close of the reporting period, i.e., was due by June 
1, 2004. For those areas designated nonattainment for the 8-hour ozone 
NAAQS effective June 15, 2004 (69 FR 23858; April 30, 2004), the 
baseline emissions inventory should be based on the calendar year 2002 
because the 2002 inventory was due under 40 CFR part 51, subpart A, 
prior to the time of designation. For areas with an effective 
nonattainment designation in the future, the baseline inventory will be 
for the calendar year of the most recent triennial inventory as of the 
date of designation.\40\ As provided above, the State may use an 
alternative baseline only if it is demonstrated that it is consistent 
with the CAA and the State demonstrates why it is appropriate.
---------------------------------------------------------------------------

    \40\ For example, where the effective date of designation to 
nonattainment for an area for the 8-hour ozone NAAQS is after June 
1, 2007 but before June 1, 2010, the baseline inventory will be for 
calendar year 2005.
---------------------------------------------------------------------------

c. Comments and Responses
    Comment: Some commenters agreed there is a reasonable basis to 
select 2002 as the date of emissions inventories for the purpose of 
establishing creditable reductions from the inventory. States are not 
required by the CAA to adopt the year of the nonattainment designation 
for the 8-hour standard as the basis for their planning, even though 
that was the case under the 1990 CAA Amendments. The commenter claims 
there are a variety of measures that would be implemented after 2002 
that local jurisdictions would like to be able to account for as new 
emissions reductions in their modeling demonstrations. The commenter 
thus believes that reductions between these years ``should count.'' In 
addition, this was the most recent quality assured/quality controlled 
inventory used to support the States' recommendations for proposed 
nonattainment designations on July 15, 2003.
    Several commenters recommended that the baseline year (starting the 
6-year period for RFP) be set for the year in which designations were 
made (i.e., 2004).

[[Page 71638]]

    Response: The EPA has decided to establish 2002 as the baseline 
year for RFP SIPs in conformity with both the language of the CAA and 
the inventory year cycle. Of reasonable importance is the need to 
maintain consistency with the periodic inventory for use in various 
milestone considerations such as RFP, milestone compliance 
demonstration, attainment, and contingency plans. In addition, while 
there would be a difference in the RFP requirement based on the choice 
of the RFP baseline, there should be little if any difference in terms 
of emissions reductions needed to demonstrate timely attainment. If we 
use 2002, the baseline may be higher but areas can take credit for any 
2002-2004 emissions reductions from federally enforceable control 
measures. If we use 2004, the baseline may be lower but areas can't 
take credit for measures that produce emissions reductions between 
2002-2004. Depending on the area, the difference should be minimal in 
terms of the difference in the amount of reductions needed to reach 
attainment and what new measures are necessary to get there. We believe 
it is reasonable to select an inventory year for which States were 
already required to produce an inventory rather than requiring States 
to produce an additional inventory (e.g., for 2004) that is not 
otherwise required. Moreover, requiring the use of an inventory for the 
designation year would cause delay, as it would take the States 1-2 
years after the end of 2004 to produce the inventory which would be the 
basis for selecting controls to achieve the necessary reductions for 
RFP and for modeling attainment. However, we are allowing States the 
option of justifying the use of an alternative baseline emission 
inventory, provided it meets the requirement of the CAA's RFP 
provisions. As noted above, the use of an alternative year for the 
baseline inventory for RFP does not change the requirement to use 2002 
as the baseline year for transportation conformity as described in 40 
CFR 93.119.
    Comment: Another commenter referred to EPA's proposal language 
regarding the RFP SIP that would have required submission of the RFP 
plan within 2 years after designation. They stated that EPA is missing 
the point in that the attainment and RFP submission dates established 
in subpart 2 are to allow States a sufficient amount of time to achieve 
the mandated goals.
    That commenter referred to another alternative that would amend the 
proposal to require a 1990, rather than 2002 baseline for those areas 
not having a previously-approved 15 percent RFP plan. They further 
commented that although a 1990 baseline would not eliminate the 
planning burden associated with this requirement, it would go far 
towards minimizing the necessary additional work.
    Response: We disagree with the commenters who urged use of the 1990 
inventories as the baseline for planning for the 8-hour NAAQS. Use of 
the 1990 baseline would be unreasonable now since it would have to be 
substantially recalculated due to changes in emission calculating 
methodologies. Furthermore, a 1990 inventory was only required for 
nonattainment areas as of enactment of the 1990 CAA Amendments and 
therefore may not exist for a number of areas that are currently 
designated nonattainment for the 8-hour standard. Finally, we believe 
that reliance on emissions reductions that may have occurred well 
before 8-hour designations and classifications should not be counted as 
making progress toward attainment.
    Comment: Another commenter noted that the 18 percent reduction for 
serious areas would have to be achieved by 2008. This is 6 years after 
the base year. The commenter noted that the 2 years that would remain 
after SIP submission (from the proposed SIP due date of 2006 until 
2008) would be totally inadequate to achieve either the 15 percent 
reduction in VOCs or the 18 percent reduction in VOCs and/or 
NOX. The commenter noted the CAA provides for submission of 
RFP plans within 3 years (from 1990) in section 182(b)(1)(A) and 4 
years in section 182(c)(2).
    Response: The final rule reflects a change from the proposal to 
allow submission of the RFP plan up to 3 years from the date of 
designation. We do not believe the RFP provisions of subpart 2 of the 
Act provides relief from the requirement to obtain the specified 
percent reductions from the RFP baseline within the time constraints 
specified in those provisions.
    Comment: A comment on draft regulatory text Sec.  51.909 noted that 
EPA specified various program milestone dates, which were derived from 
the relationship of these dates to the expected date of initial 
designation. The commenter recommends deleting all such specific date 
references from the regulation, to avoid the need for revising 
regulations if the initial designations are not concluded as expected. 
This should be replaced by a generic approach, for example by requiring 
the most recent year's data to be used as the baseline in the second 
sentence of Sec.  51.909. Deleting the calendar-specific dates would 
not change the result if the designations occur as planned, yet would 
allow for more recent data to be used if factors beyond the agency's 
control create a delay in designations. This approach also will allow 
the regulation to apply to future area designation changes, such as 
areas that are redesignated nonattainment at some point in the future. 
Such specific dates are more appropriately included as examples in 
agency guidance or within the preamble of a final rule with a 
discussion of how they are derived. The regulation itself should retain 
only the generic relationship between the milestone and the effective 
date of designation, which is the approach taken elsewhere in the rule.
    Response: Because the designations have already taken effect at 
this point, we believe it is appropriate to specify 2002 as the 
presumptive baseline year. The final version of the rule (now Sec.  
51.910(d)) provides general language regarding the appropriate baseline 
year for areas that have an effective date of a nonattainment 
designation in the future.\41\
---------------------------------------------------------------------------

    \41\ We note that even though the draft regulatory text was 
structured to place the specification of the baseline year for RFP 
(as well as for attainment demonstrations) in Sec.  51.909, the 
final rule places the RFP baseline year requirement in Sec.  51.910.
---------------------------------------------------------------------------

4. Should moderate and higher classified areas be subject to prescribed 
additional RFP requirements prior to their attainment date?
    [Section VI.I.5 of June 2, 2003 proposed rule (68 FR 32834); no 
draft regulatory text; section 51.910(a)(1)(i) of final regulatory 
text.]
a. Background
    As noted in the proposal, for areas initially classified moderate 
and higher for the 1-hour ozone standard, the baseline inventory was 
defined as 1990 in the CAA Amendments. Therefore, the 6-year period for 
the initial 15 percent RFP 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 
proposed that the 15 percent RFP 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. Since the effective date of designation of 
nonattainment areas is June 15, 2004, the outside statutory attainment 
date would be June 15, 2010. This leaves approximately a 1\1/2\ year 
gap between the end of the 6-year period for the 15 percent RFP 
requirement (i.e., December 31, 2008) and the maximum statutory 
attainment

[[Page 71639]]

date. If we were to also require moderate areas to obtain an additional 
three percent per year emission reduction beyond 2008 for the 1\1/2\ 
additional years out to 2010, the RFP requirement could 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 ozone nonattainment areas. We proposed 
that the only specific RFP 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), which requires areas to meet RFP 
generally, would apply for any period for which RFP is not addressed in 
subpart 2. For purposes of section 172(c)(2), RFP means annual 
incremental reductions as may be required by the Administrator for 
purposes of ensuring attainment [CAA Section 171(1)]. Therefore, we 
proposed a moderate area would need 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 for this 
circumstance, we interpreted 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 
through June 15, 2010).
    We proposed that serious and higher classified areas would need to 
provide in their SIPs an additional average of three percent per year 
emission reduction 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.
b. Summary of Final Rule
    In the final rule, we are taking the approach we proposed. We are 
not prescribing additional increments of reductions for the 1\1/2\ 
years before the maximum attainment date for moderate areas. Such areas 
must provide for any additional emissions reductions (VOC/
NOX) needed to provide for attainment by the beginning of 
the ozone season prior to the area's attainment date.\42\ Serious and 
higher classified areas would need to provide in their SIPs an 
additional average of three percent per year emission reduction over 
each subsequent 3-year period beyond the initial 6-year period through 
the attainment year.
---------------------------------------------------------------------------

    \42\ We note that areas must implement controls prior to the 
beginning of the last full ozone season preceding the attainment 
date. For moderate areas designated as of June 15, 2004, such 
reductions would be needed by the beginning of the 2009 ozone 
season.
---------------------------------------------------------------------------

c. Comments and Responses
    Comment: One commenter suggested that following the statutory 
timetable rather than the one proposed by EPA would eliminate the 
problem of how to handle the ``1\1/2\ year gap between the end of the 
6-year period for the 15 percent RFP requirement (i.e., December 31, 
2008, as proposed by EPA) and the attainment date.'' The commenter 
continued by saying that no such gap is contemplated by subpart 2, 
which provides in section 18l(b)(l) that moderate area's attainment 
dates and their 15-percent VOC RFP date are to be the same: 6 years 
after their designation and classification.
    Response: As provided in an earlier response, we do not believe the 
CAA requires the end of the 15 percent RFP period and the attainment 
date to be the same.
    Comment: Another commenter noted the proposal states that the only 
specific RFP 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 still also have to provide 
any additional emissions reductions--VOC and/or NOX, i.e., 
whatever is needed to provide for attainment by the beginning of the 
ozone season prior to the area's attainment date. The commenter agrees 
that any additional emissions reductions needed to achieve attainment 
are the only reductions that should be required of moderate areas.
    Response: We agree with the commenter, and our rule requires that 
for purposes of meeting RFP beyond 2008 until the area's attainment 
date, moderate areas must reduce VOC and NOX emissions as 
necessary to attain by the area's attainment date.
5. What is the timing of the submission of the RFP plan?
    [Section VI.I.6 of June 2, 2003 proposed rule (68 FR 32834); Sec.  
51.910 of the draft and final regulatory text (several locations).]
a. Background
    As noted in the proposal, section 182(b)(1) requires that moderate 
and higher classified areas submit their 15 percent RFP plans within 3 
years after 1990. Obviously, applying the statute as written is absurd, 
since we are well past that date. The CAA uses identical language for 
identifying area's attainment dates under subpart 2. In our Phase 1 
Rule, for purposes of attainment dates for the 8-hour NAAQS, we 
interpreted 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. We noted in the proposal that if we applied the same 
interpretation for RFP plans, i.e., that they should be submitted 
within 3 years after the area's nonattainment designation date (i.e., 
in 2007 if the area has an effective designation 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 indicated concern that 
this might not provide sources with sufficient time to achieve the 
reductions by the required deadline. Therefore, we proposed that the 
RFP SIP be submitted within 2 years after nonattainment designation--
namely by 2006 for areas designated in 2004. This would provide for 2 
years for the State to develop and submit its RFP plan, and another 2 
years for the control measures to be implemented.
    We also proposed that an area classified serious or above submit 
within 2 years after designation its RFP plan 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 RFP 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.
b. Summary of Final Rule
    In the final rule, we are taking a different approach than proposed 
in light of concerns raised by States in public comments. These 
commenters stated that they would need more than 2 years for 
development, adoption and submission of RFP plans for the increment of 
progress over the first 6 years after the baseline year. The EPA agrees 
with the several commenters who urged that 3 years was more consistent 
with the CAA. Additionally, 3 years is a more reasonable time period 
for submission because it allows States the necessary time to move 
regulatory actions through their legislative processes and allows 
States to consider RFP in conjunction with their attainment 
demonstrations. Therefore, for moderate and higher classified areas, 
the first RFP SIP must be submitted within 3 years after the area's 
nonattainment designation. For areas with a June 15, 2004 effective 
date for the 8-hour designations, the SIP would be due by June 15, 
2007. This would

[[Page 71640]]

provide up to 3 years for States to develop and submit RFP plans, and 1 
additional year (until the end of 2008) for control measures to be 
implemented. The RFP SIP for any remaining 3-year periods out to the 
attainment date beyond the first 6 years also would be submitted with 
the attainment demonstration, i.e., within 3 years after designation. 
However, since States maintain the flexibility to submit plans early to 
provide more time for implementation of their SIP control measures, we 
recommend that States complete their RFP plans as soon as possible 
after designation to provide as much time as possible for sources to 
implement the emissions reductions. Furthermore, States may also begin 
implementing their control measures before submission to EPA as part of 
their SIPs, which would provide additional time sources may need to 
comply.
c. Comments and Responses
    Comment: Several commenters opposed EPA's proposal to shorten to 2 
years the statutory 3-year period for development and submittal of 15-
percent VOC RFP plans. They claim this proposal violates the guarantee 
of 3 years for plan development to the State in section 182(b)(l)(A) 
and is contrary to EPA's basic proposed principle that [quoting from 
the proposal] ``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.'' The 
commenters contended that subpart 2 gives EPA no authority to shorten 
the statutory 3-year period. In contrast, Congress in subpart 1 
authorized EPA to set a schedule for nonattainment SIP submissions. 
Congress, therefore, knew how to give EPA discretion to shorten SIP 
submission deadlines according to the commenters; it did not do so in 
subpart 2.
    Concerning the timing of submission of the RFP plan, another 
commenter was concerned that the States may not have sufficient 
photochemical modeling and ambient air analyses to indicate the best 
mix of RFP SIP controls. Additionally, in areas dominated by mobile 
source emissions, it may not be feasible to implement control measures 
to achieve the RFP target within the 2 years after the proposed 
required RFP SIP submission date as EPA has suggested. The commenter 
suggested that EPA develop policy options that allow areas in such 
predicaments to maintain approved SIPs if emissions reductions are not 
available to meet RFP requirements and/or if available emission 
reduction techniques might be counterproductive to other local and 
regional air quality goals.
    Another commenter stated revisions to State emission reduction 
measures cannot be adopted easily in a 2-year time period because they 
require administrative action and frequently State legislation to 
approve. This period can lengthen when proposed measures like enhanced 
vehicle I/M involve controversial actions affecting the public. 
Logistically, a State must establish a regulation by administrative 
action with public input before (though sometimes after) such a measure 
is approved by the state's legislature. A number of jurisdictions' 
legislatures are only in regular session to consider such measures 
several months or, in alternate years. Thus, it is unreasonable for 
States to have only 2 years from their nonattainment designations to 
adopt new measures.
    Another commenter referenced the case NRDC v. EPA, 22 F. 3d 1125, 
1135 (D.C. Cir., 1994), where the Court considered the propriety of 
EPA's extension of the deadlines by which States had to submit elements 
of their SIPs. The Court upheld EPA's decision to extend the deadline 
for submission of a SIP given EPA's failure to meet its own deadline 
for providing certain necessary guidance to the States. The Court 
allowed EPA to use the extraordinary remedy of a deadline extension in 
this instance because Congress would have intended that the deadline be 
extended to provide a party the full statutory time for acting on the 
agency guidance. The commenter referenced CAA section 126(c) where EPA 
may set a compliance deadline ``as expeditiously as possible, but in no 
case later than 3 years after the date of such finding.''
    One commenter noted that CAA section 182(b)(1)(A) as modified by 
section 181(b)(1) requires for moderate areas that the RFP SIP be 
submitted 3 years after designation. The commenter disagreed with the 
RFP plan requirement to submit the plan 2 years after the effective 
date of the nonattainment designation as not being consistent with or 
supported by these CAA sections. The resources involved in developing, 
proposing and adopting any SIP revision are not insignificant. In order 
to ensure the most efficient use of resources, the commenter contended 
that EPA should not require this SIP revision sooner than the 
submission of the attainment demonstration, 3 years after the effective 
date of the designations. Allowing States 3 years to submit the RFP 
plan is consistent with existing CAA requirements.
    Response: After consideration of the comments, we have changed the 
final rule to be consistent with the approach advocated by a number of 
commenters. In consideration of the 2004 designation and the need to 
achieve the 2008 RFP reductions by December 2008, it seems reasonable 
to EPA that States first be given sufficient time after designation to 
formulate RFP plans. Therefore, the final rule allows States up to 3 
years after designation to submit their RFP SIPs. However, to the 
extent States are relying on newly developed rules to meet all or part 
of the RFP requirement, we recommend that States adopt those rules as 
soon as possible after designation to provide as much time as possible 
for sources to achieve the emissions reductions.
6. How should CAA restrictions on creditable measures be interpreted? 
Which national measures should count as generating emissions reductions 
credit toward RFP requirements?
    [Section VI.I.7 of June 2, 2003 proposed rule (68 FR 32834); Sec.  
51.910(a)(4) of the draft regulatory text; Sec.  51.910(a)(3) of the 
final regulatory text.]
a. Background
    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 noted 
in the proposal that we believe these specific restrictions should 
continue to apply for purposes of the 8-hour NAAQS. The proposal noted 
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 said that this same 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 (or required to be 
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 proposed that all

[[Page 71641]]

emissions reductions that occur from all Federal and any other measures 
not otherwise identified in section 182(b)(1)(C) and (D) and that occur 
after the baseline emissions inventory year would be creditable for the 
RFP requirement. A number of examples demonstrating emissions 
reductions that would be creditable toward the RFP requirement were set 
forth in our proposal.
b. Summary of Final Rule
    We are taking the approach we proposed, under which all emissions 
reductions that occur after the baseline emissions inventory year are 
creditable for purposes of the RFP requirements in this section except 
as specifically provided in section 182(b)(1)(C) and (D) and section 
182(c)(2)(B) of the CAA. The restriction imposed by section 
182(b)(1)(D) limits crediting reductions from the following four 
categories:
     Corrections to or additions of RACT rules as required by 
CAA section 182(a)(2)(A).
     Corrections to I/M programs for areas where the SIP 
included or was required to include a schedule for I/M implementation 
under the CAA in effect immediately before November 15, 1990.
     Regulations concerning Reid Vapor Pressure (RVP) 
promulgated by EPA before November 15, 1990 or required to be 
promulgated under CAA section 211(h).
     Motor vehicle exhaust or evaporative emissions measures 
promulgated by EPA by January 1, 1990.
c. Comments and Responses
    Comment: One commenter supported EPA's proposal to allow credit 
towards RFP requirements of all emissions reductions, which occur after 
the baseline emissions inventory year (2002) from all Federal, and any 
other measures not otherwise identified under section 182(b)(1)(D). 
This would include reductions from cleaner fuels and engines, 
reductions from ongoing 1-hour SIP controls and VOC reductions from 
implementation of MACT standards after the baseline year. The commenter 
stated that this proposed approach would be critical in a number of 
areas that already have stringent stationary source controls and/or in 
areas dominated by mobile source emissions.
    Response: The EPA acknowledges this comment of support for our 
final action.
    Comment: Another commenter believed that early voluntary emissions 
reductions prior to 2003, and not required under the CAA, should also 
be creditable toward RFP requirements. The commenter recommended that 
EPA's final rule clarify that States be allowed credit for RFP for 
early voluntary emissions reductions occurring prior to 2003. As a 
company that has proactively taken measures to reduce NOX 
emissions through innovative Combustion Initiative (an enhanced 
efficiency technology), the commenter believed that EPA's regulations 
should take these efforts into account as they have resulted in real 
improvements to air quality. Another commenter stated that companies 
who made voluntary reductions prior to 2003 would be penalized for 
having undertaken such voluntary measures and, thus disallowing credit 
for these reductions provides disincentives for voluntary reductions.
    Response: Voluntary reductions that occur prior to January 1, 2003 
will be reflected in the area's baseline inventory. This lower baseline 
means that fewer reductions will be needed to achieve RFP.\43\ Allowing 
an area to take credit for reducing emissions that are not included in 
the inventory would result in ``double counting'' of those emissions 
reductions.
---------------------------------------------------------------------------

    \43\ For example, if an area had VOC emissions in 2001 of 100 
tons per day, and a source reduces emissions by 10 tons per day in 
2002, the baseline emissions will be 90 tons per day. Thus, the area 
will need to achieve 13.5 tons per day reduction to meet its 15 
percent requirement, rather than 15 tons per day. However, the area 
cannot take credit in the 15 percent plan for the 10 tons per day of 
emissions that are not part of the baseline inventory.
---------------------------------------------------------------------------

    Comment: One commenter suggested that areas should be able to take 
credit for MACT standards that may reduce VOC for which compliance is 
required after the 2002 baseline year. The commenter said it would be 
helpful to States if EPA produced a document detailing the expected VOC 
reductions after implementation of MACT standards. States could claim 
these reductions toward any reductions required to meet their target. 
The commenter suggested that the most useful way to express the 
reduction would be as a percent of the 2002 emissions.
    Response: The EPA agrees that areas can take credit in RFP plans 
for post-2002 VOC reductions from MACT standards. We are considering 
whether to develop the recommended guidance.
    Comment: One commenter objected to EPA's proposal to allow States 
to claim RFP credit from any reductions achieved through post-1990 
adoption of the types of measures listed in section 182(b)(1)(D). The 
commenter further stated that section 182(b)(1)(D) prohibits granting 
RFP credit for any measures contained on the list. Congress wanted the 
RFP reductions to be new reductions rather than emission cuts that 
would have occurred anyway. In the case of 8-hour nonattainment areas, 
the baseline year will be 2002. Therefore, according to the commenter, 
to be consistent with subpart 2, EPA must disallow RFP credit for 
measures listed in section 182(b)(1)(D) adopted any time prior to 2002.
    Another commenter urged EPA to consider a hybrid approach that 
gives States credit for approved RFP plans that go beyond 2002, 
provided that the Plan is evaluated on a 2002 baseline. This approach 
would give States credit for ongoing emissions reductions, recognize 
the need to address the 8-hour standard as the ozone standard (rather 
than rely on plans developed to meet the 1-hour standard), and 
potentially avoid some unneeded controls.
    Another commenter recommended that EPA not allow emissions 
reductions credit for all emissions reductions occurring after the 
baseline year. Emissions reductions to satisfy the RFP requirements of 
CAA section 182(b)(1) and 182(c)(2)(B) are required to be achieved by 
submitting ``a revision to the applicable implementation plan to 
provide for * * * emissions reductions.'' The commenter argued that 
emissions reductions already required by, or accounted for in, the 
applicable implementation plan may not be credited toward the new RFP 
requirements. For example, reductions that were required to be achieved 
by SIP or other requirements, but which were not achieved in practice 
prior to the baseline year, should not be credited toward meeting the 
new RFP reductions required after the baseline year. Only new measures 
submitted with the new SIP revision may be credited for this purpose.
    Response: The EPA believes that, with certain exceptions (see CAA 
section 182(b)(1)(C) and (D)), any reductions that occur after 2002 are 
creditable towards RFP and attainment and that it should not matter 
when the State initially adopted or EPA promulgated the measures that 
produce those reductions. The CAA does not mandate the approaches 
advocated in the comments. While the comments cite phrases in the CAA 
that might be read to support the approach advocated in the comments, 
EPA believes such an interpretation is at odds with other provisions of 
the CAA. In addition to the restriction imposed by section 182(b)(1)(D) 
on crediting certain measures, section 182(b)(1)(C) places only two 
restrictions on creditability of reductions towards RFP: first, 
reductions are creditable if they result from measures in the 
applicable implementation plan, i.e., the approved

[[Page 71642]]

SIP or from rules promulgated by EPA, or from the applicable 
requirements \44\ that are incorporated into a title V permit; and 
secondly, only those reductions that have actually occurred after the 
baseline year and before the milestone date may be credited towards a 
RFP milestone. The requirement that the reductions result from measures 
in the applicable implementation plan or EPA regulations, or applicable 
requirements contained in a title V operating permit imposes no 
restriction that such measures must be enacted after the date of 
designation or after the baseline year. This restriction only requires 
that the measure approved into the SIP be a rule promulgated by EPA or 
be an applicable requirement included in a title V permit issued before 
or concurrently with approval of the RFP SIP revisions, and that the 
reductions occur after the baseline year and before the milestone date.
---------------------------------------------------------------------------

    \44\ Applicable requirements are federally-enforceable 
requirements under the CAA that are created elsewhere but 
incorporated into a title V permit. See the definition of 
``Applicable requirement'' in 40 CFR 70.2 and 71.2.
---------------------------------------------------------------------------

    While this provision limits EPA's discretion to allow credit 
towards the RFP requirement from any reduction that does not fit into 
any of the three aforementioned classes of measures, EPA does not see 
anything in the statute that mandates the adoption of the approach 
advocated in the comments. In fact, EPA believes the opposite is the 
case.
    The same argument (i.e., that creditable RFP measures must be 
measures adopted/promulgated after designation or after the baseline 
year) could have been made for the various programs mandated by the 
1990 CAA Amendments. These mandated measures included RACT requirements 
under section 182(b)(2), Stage II vapor recovery under section 
182(b)(3), motor vehicle I/M under sections 182(b)(4) and 182(c)(3), 
RFG under section 211(k), and the Tier 1 motor vehicle standards under 
title II. The EPA believes the statute is plain that Congress 
envisioned that all of these would be adopted after 1990 and in most 
cases implemented before 1996 because the statute contains enforceable 
deadlines for submission of the requisite SIP revisions or promulgation 
of the EPA rules. In many cases, they contain required implementation 
dates before 1996. Congress clearly did not limit credit for RFP for 
any of these measures. In our proposed rulemaking, EPA specifically 
proposed allowing use of reductions resulting from any measure as long 
as the reductions meet the creditability criteria of section 
182(b)(1)(C) for the very reason EPA concluded Congress did not intend 
to impose the sort of limit on creditability advocated in the comments 
for the 1-hour standard and for any revised standard.
    In summary, the statute says that only four specific categories of 
emissions reductions are restricted. It does not refer to or include 
any post-1990 rules' emissions reductions as restricted and only speaks 
to creditability in terms of when the reductions occurred, not when the 
rules or measures were adopted. As explained in the proposal and the 
preceding paragraphs, Congress had reason to limit creditability of 
pre-1990 rules, mandated many post-90 rules and allowed these rules to 
be credited towards post-90 RFP, and nothing in the statute leads us to 
believe that Congress would not have wanted them to also be creditable 
to post-2002 RFP. The EPA believes it is appropriate to allow credit 
toward RFP for emissions reductions other than reductions from the four 
categories specified in the CAA pursuant to section 182(b)(1)(D). 
Language that was once pertinent to the schedule of the 1990 CAA 
Amendments should be reinterpreted now to mean emissions reductions are 
creditable toward emissions reductions requirements to the extent they 
actually occur during the relevant ROP period and after the baseline 
year.
7. For areas covered only by subpart 1, how should the RFP requirement 
be structured?
    [Section VI.I.8. of June 2, 2003 proposed rule (68 FR 32834); Sec.  
51.910(b) of the draft and final regulatory text.]
a. Background
    The proposal noted that 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 whereas subpart 2 limits the 
initial 15 percent to VOC emissions reductions. However, we 
acknowledged the concern about treating in a similar manner areas under 
subpart 1 that have an ozone problem similar to areas covered under 
subpart 2.
    We proposed scenarios for three types of subpart 1 areas: (a) Areas 
with attainment dates 3 years or less after designation, (b) Areas with 
attainment dates between 3 to 6 years after designation, and (c) Areas 
with attainment dates beyond 6 years after attainment.
     Areas with attainment dates 3 years or less after 
designation.
    We proposed these areas would be treated similar to areas under 
subpart 2 that are classified as marginal, which do not have an RFP 
requirement. We proposed such an area would not be subject to a 
separate RFP requirement, but RFP would be met by demonstrating the 
area could attain the standard by its attainment date.
     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 proposed two options for these areas:
     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 and RFP would be met by a SIP 
that provides for attainment as expeditiously as practicable. 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 to meet RFP. 
The draft regulatory text incorporated this option.
     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, VOC or 
NOX emissions reductions could be relied on to meet the 15 
percent reduction requirement, consistent with EPA's NOX 
substitution policy.\45\ Also, we solicited 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.
---------------------------------------------------------------------------

    \45\ NOX Substitution Guidance. December 15, 1993 
(available at http://www.epa.gov/ttn/oarpg/t1pgm.html).
---------------------------------------------------------------------------

     Areas with attainment dates beyond 6 years after 
designation.
    These areas would have attainment dates similar to areas classified 
under subpart 2 as serious or higher. We proposed that the RFP plan 
show increments of progress from the baseline emissions inventory year 
out to the attainment date. The RFP SIP would

[[Page 71643]]

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 solicited comment on whether a percentage 
other than 15 percent would be more appropriate. 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 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.
b. Summary of Final Rule
    We are finalizing rules for two, rather than three, categories of 
areas based on the CAA's division of attainment dates for subpart 1 
areas under section 172(a)(2). This provision requires that subpart 1 
areas must attain as expeditiously as practicable but no later than 5 
years after designation as a nonattainment area. It also allows the 
Administrator to extend the attainment date beyond that 5 year period 
``* * * for a period no greater than 10 years from the date of 
designation as nonattainment, considering the severity of nonattainment 
and the availability and feasibility of pollution control measures.'' 
The two scenarios for RFP for subpart 1 areas are based on whether the 
area does or does not receive an extended attainment date. The 
following are the two scenarios and the RFP requirements for each:

Scenario A: Areas with attainment dates 5 years or less after 
designation (i.e., on or before June 15, 2009 for areas designated June 
15, 2004).

    As noted elsewhere in this preamble, for areas classified under 
subpart 1, emissions reductions needed for attainment must occur by the 
beginning of the ozone season preceding the attainment date. Thus, to 
enable a SIP to demonstrate attainment by June 15, 2009, the area must 
achieve all necessary reductions by the beginning of the 2008 ozone 
season. The final rule provides that RFP for these areas would be met 
by ensuring emissions reductions needed for attainment are implemented 
as noted above by the beginning of the ozone season prior to the 
attainment date.

Scenario B: Areas with attainment dates more than 5 years after 
designation (i.e., beyond June 15, 2009 for those areas designated June 
15, 2004). For these areas:

     The RFP plan must show increments of progress from the 
baseline emissions inventory year out to the attainment date.
     The RFP SIP would first have to provide for a 15 percent 
emission reduction from the baseline year through the 6th year after 
the baseline year (e.g., from January 1, 2003 through December 31, 
2008).
     The 15 percent RFP SIP must be submitted within 3 years 
after designation (e.g., by June 15, 2007).
     However, since the area is subject only to subpart 1, 
NOX or VOC emissions reductions (or both) could be used to 
achieve the 15 percent emission reduction requirement.
     For each subsequent 3-year period out to the attainment 
date, the RFP SIP would have to provide for an additional increment of 
progress. The increment for each 3-year period would be a portion of 
the remaining emission reductions needed for attainment beyond those 
reductions achieved for the first increment of progress (e.g., beyond 
2008 for areas designated nonattainment in June 2004). Specifically, 
the amount of reductions needed for attainment should be divided by the 
number of years needed for attainment after the first increment of 
progress in order to establish an ``annual increment.'' For each 3-year 
period out to the attainment date, the area must achieve roughly the 
portion of reductions equivalent to three annual increments.\46\ This 
second RFP SIP must also be submitted within 3 years after the 
effective date of designation (i.e., by June 15, 2007).
---------------------------------------------------------------------------

    \46\ For example, if the area's attainment date is 2014, and a 
total of 30 percent reduction is needed between the end of 2008 and 
the attainment date (a 6-year period) to reach attainment, the 
``annual increment'' would be 5 percent (i.e., \1/6\ of 30 percent). 
Thus, the area must achieve roughly the portion of reductions 
equivalent to 15 percent (3 x 5 percent) during the first 3 years 
(2009, 2010, 2011), and the remaining amount over the next 3 years 
(2012, 2013, 2014). By using the word ``roughly'' in the regulatory 
text, EPA does not intend that States would be able to delay 
substantial emission reductions from one 3-year period to the next. 
Rather, EPA intends this modifier to allow small deviations from the 
amount of emission reductions that would be needed to meet a 3-year 
RFP requirement. For example, assume that the ``annual increment'' 
of reductions needed for an area to reach attainment (after the 
initial 6-year RFP obligation) is 5 tons per day and that the area 
has 6 additional years until attainment. Thus, for each of the two 
3-year periods until attainment, the area would need ``roughly'' 15 
tons per day, so long as the total for both periods is equivalent to 
or greater than 30 tons per day (i.e., the total reductions needed 
for attainment). Assuming the area could achieve 14 tons per day 
during the first 3-year period, and achieve the remaining 16 tons 
per day during the second 3-year period, we believe this would be 
consistent with achieving ``roughly the portion of reductions 
equivalent to three annual increments.'' We do not believe, however, 
that use of the word roughly allows States to delay substantial 
emission reductions. Thus, in the example above, it would not be 
appropriate for the State to delay reductions of several tons per 
day until the second 3-year period.
---------------------------------------------------------------------------

    While the adopted rule is not identical to any of the proposed 
options, we believe it is a logical outgrowth of our three proposed 
scenarios. The adopted approach is more stringent than certain of the 
proposed options and less stringent than others. Since this final 
decision incorporates elements of the three proposed scenarios, we 
believe it is similar in result to the three scenarios proposed.
c. Comments and Responses
    Comment: One commenter stated that EPA has no authority to adopt 
``Option 1'' for areas with attainment dates between 3 and 6 years 
after designation, because that option would waive any showing of RFP.
    Response: The EPA acknowledges that Congress prescribed specific 
RFP requirements under subpart 2, but for subpart 1 provided more 
flexibility.
    Our rule does not eliminate RFP obligations for subpart 1 areas. We 
are not requiring any specific percent reduction for subpart 1 areas 
with near-term attainment dates. The measures that bring about near-
term attainment represent all the reductions that are reasonable to 
require as annual incremental progress towards attainment. The EPA is 
not compelled to require a 15 percent emission reduction for all 
subpart 1 areas, especially in those cases where a full 15 percent is 
not needed in order to reach attainment. However, we believe that it is 
generally appropriate to require the full 15 percent for areas with 
long-term attainment dates to ensure interim progress towards 
attainment.
    Comment: Some commenters supported the proposal that ties the 
required RFP showing to the attainment date. Specifically, these 
commenters supported the proposal that areas with attainment dates of 3 
years or less should have no separate RFP requirement, consistent with 
the requirement applicable to marginal areas under subpart 2. In 
addition, support was shown for Option 1 for subpart 1 areas with an 
attainment date between 3 and 6 years following designations. Under 
Option 1, areas

[[Page 71644]]

would have to show an adequate rate of reduction in order to achieve 
attainment by the deadline, but there would be no specific percentage 
reduction required.
    Response: We acknowledge the support of these comments.
    Comment: Another commenter believed that a 15 percent emissions 
reductions requirement should only be required where such reductions 
would meaningfully advance the date of attainment. The RFP requirement 
in subpart 1 requires that the SIP provide for ``reasonable further 
progress,'' and where emissions reductions would not create 
``reasonable further progress'' either in the area itself or in 
downwind areas, there is no basis under subpart 1 to require such 
specific emissions reductions. They further said that requiring a 
potentially expensive reduction in emissions in those cases where that 
reduction would not improve air quality was not justified based on a 
notion of ``equity'' with similar areas classified under subpart 2 and 
noted that such an interpretation was not required by the statute or 
sensible. That some subpart 2 areas might have to reduce emissions by a 
specified percentage even where such reductions would yield no positive 
environmental benefits is an unfortunate result of the Congress' 
decision to limit EPA's discretion under subpart 2--which in turn is a 
result of a far less sophisticated understanding of the dynamics of 
ozone creation in 1990 than exists now--and where EPA has the 
discretion not to dictate an ineffective and inefficient result, it 
must exercise that discretion.
    Response: We addressed in general those comments that recommended 
alternatives to the mandatory measures of subpart 2 (which includes the 
RFP requirement) in the response to comments above under the topic, 
``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?'' We conclude 
in that section that EPA has no discretion to broadly waive mandatory 
requirements. However, we noted that case law may provide support for 
case-by-case waivers where implementation of a measure would produce an 
absurd result.
8. Where Part of an 8-hour Nonattainment Area Was a 1-hour 
Nonattainment Area With a ROP Obligation Extending Past 2002, Can 
Emissions Reductions From the Area's 1-hour ROP Plan Be Used as Credit 
Toward Meeting the Area's 8-hour RFP Plan?
    [Section VI.I.9. of June 2, 2003 proposed rule (68 FR 32835); no 
draft or final regulatory text.]
a. Background
    We proposed the following approach to address this issue. Where an 
area has both 1-hour and 8-hour RFP obligations for the post-2002 
period, the State may rely on emissions reductions from the 1-hour plan 
in achieving RFP for the 8-hour standard. The State could develop a new 
baseline and new RFP emission reduction targets for the entire 8-hour 
standard nonattainment area (i.e., the old 1-hour standard 
nonattainment area and any 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) 
toward meeting the RFP requirement for the entire 8-hour area.
    This approach would set a RFP target for the entire 8-hour ozone 
nonattainment area. Under this approach, the new RFP target for the 8-
hour standard would replace the previous 1-hour ROP target (while 
ensuring that, at a minimum, the emissions reductions required to meet 
the old target are met; see 40 CFR 51.905(a)(1)(iii)).
b. Summary of Final Rule
    We are adopting the approach from the proposal.
c. Comments and Responses
    Comment: One commenter agreed with the approach outlined in the 
proposal but cautioned that the States would have to ensure that the 
target is at least as stringent as the 1-hour ROP target, thus ensuring 
no backsliding on the 1-hour NAAQS requirements. Under this approach, 
the State would have to develop a new baseline and new RFP emission 
reduction targets for the entire 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 credibility restrictions as discussed in the proposed 
rulemaking) toward meeting the RFP requirement for the entire 8-hour 
area. The new 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).
    Response: We agree with the commenter that the emission reduction 
targets under the 8-hour standard must be at least as stringent as the 
1-hour targets. Section IV.E.3. of this preamble discusses the 
requirements for RFP for several situations relative to the area's 
former obligations under the 1-hour standard and the current 
obligations under the 8-hour standard. The obligations of an area under 
the anti-backsliding provisions of 40 CFR 51.905(a)(1)(iii) would still 
apply, meaning that emissions reductions under the 1-hour ROP 
requirements would still be required as if the 1-hour standard had 
never been revoked. Therefore, the new 8-hour emission target for the 
8-hour area would be logically at least as stringent as under the 1-
hour area for a given time period.
9. Will EPA's ``Clean Data Policy'' Apply for Purposes of 8-hour RFP, 
Attainment Demonstrations and Other Related Requirements?
    [Section VI.I.10 of June 2, 2003 proposed rule (68 FR 32835); no 
draft regulatory text; section 51.918 of final rule.]
a. Background
    As noted in the proposal, we issued a policy on May 10, 1995, which 
allows EPA to determine that an area has attained the standard and that 
certain planning requirements (e.g., RFP and attainment demonstrations) 
will not apply so long as the area remains in attainment.\47\ This is 
referred to as the ``Clean Data Policy.'' We proposed that this policy 
would remain effective for purposes of areas that EPA determines have 
attained the 8-hour ozone NAAQS.
---------------------------------------------------------------------------

    \47\ 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.
---------------------------------------------------------------------------

b. Summary of Final Rule
    In the proposed rule, we indicated that the Clean Data Policy, 
which we had applied under the 1-hour standard, should apply for 
purposes of the 8-hour standard. We are adopting this approach. In this 
action EPA is finalizing the statutory interpretation that is embodied 
in the policy. The text of the final rule encapsulates the statutory 
interpretation set forth in the policy. Determinations as to whether 
individual areas have attained the 8-

[[Page 71645]]

hour standard and thus qualify for application of the policy will be 
made in the context of rulemakings for those individual areas.
    The EPA has applied the Clean Data Policy in rulemakings under the 
1-hour ozone standard to both subpart 1 areas, e.g., San Francisco Bay 
Area (69 FR 21717; April 22, 2004) and subpart 2 areas, e.g., St. 
Louis, Missouri (68 FR 25418; May 12, 2003). The EPA will also apply 
the policy to both subpart 1 and subpart 2 areas under the 8-hour 
standard.
c. Comments and Responses
    Comment: One commenter stated that EPA's ``Clean Data Policy'' is 
unlawful with respect to both the 1-hour and 8-hour NAAQS. A commenter 
argued that EPA also has no authority to waive the attainment 
demonstration and RFP plans mandated by subpart 2 on the pretext that 
an area has clean data. The CAA unambiguously requires these plans for 
any area designated nonattainment for the pollutant ozone, and gives 
EPA no power whatsoever to waive such plan requirements.
    Several other commenters supported the continued use of the ``Clean 
Data Policy.''
    Response: The EPA believes that the Clean Data Policy comports with 
the provisions of the CAA in regard to attainment demonstrations, ROP 
plans, RACM, contingency measures and other related requirements. The 
Clean Data Policy, issued on May 10, 1995, sets forth EPA's 
interpretation that where EPA has determined that an area has attained 
the standard, certain SIP requirements are suspended (e.g., RFP) for so 
long as the area remains in attainment.
    As set forth in its May 10, 1995 policy, EPA believes it is 
reasonable to interpret the provisions regarding RFP and attainment 
demonstrations, along with certain other related provisions, as not 
requiring further submissions to achieve attainment for so long as the 
area is in fact attaining the standard. Under the policy, EPA is not 
granting an exemption from any applicable requirements under part D. 
Rather, EPA has interpreted these requirements of subparts 1 and 2 as 
not applying for so long as the area remains in attainment with the 
standard. This is not a waiver of requirements that by their terms 
apply; it is a determination that certain requirements are written so 
as to be operative only if the area is not attaining the standard.
    The EPA has explained in other rulemaking actions on the 1-hour 
ozone standard its rationale for the reasonableness of this 
interpretation of the CAA and incorporates these explanations by 
reference. See, for example, 67 FR 49600 (July 31, 2002); 65 FR 37879 
(June 19, 2000) (Cincinnati-Hamilton, Ohio-Kentucky); 61 FR 20458 (May 
7, 1996) (Cleveland-Akron-Lorain, Ohio); 66 FR 53094 (October 19, 2001) 
(Pittsburgh-Beaver Valley, Pennsylvania); 60 FR 37366 (July 20, 1995); 
61 FR 31832-33 (June 21, 1996) (Grand Rapids, MI); 60 FR 36723 (July 
18, 1995) (Salt Lake and Davis Counties, Utah); 68 FR 25418 (May 12, 
2003) (St. Louis, Missouri); 69 FR 21717 (April 22, 2004) (San 
Francisco Bay Area). The EPA has also set forth its legal rationale for 
the Clean Data Policy in briefs filed in the 10th, 7th, and 9th 
Circuits, and hereby incorporates those briefs insofar as relevant 
here. See Sierra Club v. EPA, No. 95-9541 (10th Cir.), Sierra Club v. 
EPA, No. 03-2839, 03-3329 (7th Cir.), Our Children's Earth Foundation 
v. EPA, No. 04-73032 (9th Circuit).
    As stated in the policy, the attainment demonstration, RFP 
requirements and contingency measure requirement are designed to bring 
an area into attainment. Once this goal has been achieved, it is 
appropriate to suspend the obligation that States submit plans to meet 
these goals, so long as the area continues to attain the relevant 
standard.
    The Tenth, Seventh and Ninth Circuits have upheld EPA rulemakings 
applying the Clean Data Policy. See Sierra Club v. EPA, 99 F. 3d 1551 
(10th Circuit, 1996), Sierra Club v. EPA, 375 F. 3d 537 (7th Circuit, 
2004) and Our Children's Earth Foundation v. EPA, No. 04-73032 (9th 
Circuit, June 28, 2005) memorandum opinion.
    Comment: A commenter said that although subpart 2 contains some 
narrowly crafted exceptions [e.g., CAA 182(b)(1)(A)(ii)], there are no 
exceptions based on clean data. In the past, EPA has cited a Tenth 
Circuit decision, Sierra Club v. EPA, 99 F. 3d 1551 (10th Circuit, 
1996), as supporting the Clean Data Policy. The commenter contended 
that case was wrongly decided and has been superseded by the Supreme 
Court decision in Whitman v. American Trucking Assoc., Inc., 531 U.S. 
457 (2001). There, the Court held that subpart 2 eliminates regulatory 
discretion previously allowed to EPA under subpart 1, and noted that 
subpart 2 prescribes large parts of nonattainment programs, for 
example, section 182. The requirements for RFP and attainment 
demonstrations are among those subpart 2 nonattainment programs that 
Congress prescribed by law, thereby eliminating EPA discretion to 
accept something less. See also Sierra Club v. EPA, 293 F. 3d 155 (D.C. 
Circuit, 2002) (holding that EPA is without authority to infer 
exceptions to attainment deadlines and to explicit subpart 2 
requirements for RFP plans).
    Response: The EPA believes that the Tenth Circuit correctly decided 
Sierra Club v. EPA and that the comments misconstrue both Whitman and 
Sierra Club v. EPA, 293 F. 3d 155 (D.C. Circuit, 2002) (Sierra Club 
2002). The Sierra Club 2002 case addressed the statutory requirements 
applicable to an area not attaining the standard. The issue of the 
requirements of part D of title I of the CAA that must continue to be 
met by areas that EPA has determined are monitoring attainment of the 
standard was not before the court. As discussed below, the Sierra Club 
2002 decision upheld EPA's determination that the RACM provision under 
section 172(c)(1) requires only additional measures that could 
contribute to RFP or attainment, which is an element of EPA's 
application of the Clean Data Policy. To this limited extent, Sierra 
Club 2002 is relevant to EPA's interpretation that the policy will 
apply for the 8-hour ozone standard, and the decision supports EPA's 
interpretation. However, the other issues addressed in the decision 
(extension of the statutory attainment date for areas affected by ozone 
transport, the content of a demonstration of RFP toward attainment, and 
whether contingency measures must be submitted as part of an attainment 
demonstration or plan for RFP) did not relate to the Clean Data Policy 
or how the subpart 2 requirements apply to areas attaining the 
standard.
    The issue addressed by the Clean Data Policy is whether an area 
that has attained the standard (as evinced by air quality monitoring 
data) still needs to submit a demonstration of how the area will 
achieve enough reductions to demonstrate that it will ``attain the 
NAAQS,'' a plan to obtain reasonable periodic reductions towards the 
goal of attainment and other related requirements.
    The EPA continues to believe that the statutory requirement for an 
attainment demonstration--a SIP revision which identifies the level of 
future reductions needed to achieve the NAAQS and any additional 
adopted measures needed to achieve these future reductions--is written 
so as to be inapplicable once the NAAQS is attained.
    In addition, EPA believes that the RACM requirements are a 
``component'' of an area's attainment demonstration under section 
172(c)(1). General Preamble 57 FR 13560; April 16, 1992. Thus, since 
for the same reason the attainment demonstration no longer

[[Page 71646]]

applies by its own terms, RACM also no longer applies. The EPA has 
consistently interpreted this provision to require only implementation 
of potential RACM measures that could contribute to reasonable further 
progress or to attainment. General Preamble 57 FR 13498; April 16, 
1992. Thus, where an area is already attaining the standard, no 
additional RACM measures are required.\48\
---------------------------------------------------------------------------

    \48\ [The EPA's interpretation that the statute requires only 
implementation of RACM measures that would advance attainment was 
upheld by the United States Court of Appeals for the Fifth Circuit 
(Sierra Club v. EPA, 314 F. 3d 735, 743-745, 5th Cir. 2002) and by 
the United States Court of Appeals for the D.C. Circuit (Sierra Club 
v. EPA, 294 F. 3d 155, 162-163, D.C. Cir. 2002). See also the final 
rulemakings for Pittsburgh-Beaver Valley, Pennsylvania, 66 FR 53096 
(October 19, 2001) and St. Louis, 68 FR 25418 (May 12, 2003).]
---------------------------------------------------------------------------

    Likewise, EPA concludes that the provision for RFP--a plan for 
annual incremental reductions leading to attainment--is also expressed 
in terms that show that RFP is unnecessary in areas attaining the 
standard. For areas in attainment, there is no longer a need to plan 
for measures to meet that goal. Similarly, EPA continues to believe 
that the contingency measure requirements of section 172(c)(9) no 
longer apply in an area that is attaining the standard since those 
``contingency measures are directed at ensuring RFP and attainment by 
the applicable date.'' (See 57 FR 13564; April 16, 1992). The section 
182(c)(9) contingency measure requirement also no longer applies once 
an area has attained the standard.
    Section 172(c)(2) of the CAA and the related provisions of subpart 
2 provide that RFP is required only where an area continues to violate 
the standard. By definition, the ``reasonable further progress'' 
provision requires only such reductions in emissions as are necessary 
to attain the NAAQS by the attainment date. If an area has attained the 
standard, the stated purpose of the RFP provision has been fulfilled. 
Also, section 172(c)(1) and the related provisions of subpart 2 require 
SIPS to provide for attainment of the NAAQS. (See also section 
182(b)(1)(A)(i) which requires that SIPS for moderate ozone 
nonattainment areas must ``provide for such specific annual reductions 
in emissions of [VOCs] and [NOX] as necessary to attain the 
[ozone NAAQS]'' by the applicable attainment date). When an area has 
attained the NAAQS, there is no need for a plan demonstrating how it 
will reach attainment, and thus the attainment demonstration provision 
no longer applies. Similarly section 172(c)(9) and the related 
provisions of subpart 2 provide that SIPs in nonattainment areas shall 
provide for contingency measures to be undertaken if the area fails to 
make RFP or to attain the NAAQS by the applicable attainment date. 
Since contingency measures are required only if RFP or attainment is 
not achieved, there is no need for them where the area has attained the 
standard. The language of these statutory provisions indicates that 
when an area has attained the standard these requirements no longer 
apply as the purpose of these provisions--attainment--has been 
accomplished.
    The EPA believes that Whitman does not provide a basis to 
reconsider our position on the Clean Data Policy. In Whitman, the Court 
was addressing EPA's stated approach that subpart 2 did not apply for 
purposes of implementing the 8-hour NAAQS. In the Phase 1 rule, EPA 
addressed the Court's decision and concluded that subpart 2 does apply. 
The issue here is not whether it applies, but how those requirements 
apply under a specific situation where an area has attained the NAAQS. 
That issue was not addressed by the Court in Whitman. The decision in 
Whitman has no bearing on the question of whether an area that has 
demonstrated attainment must nonetheless submit an attainment 
demonstration plan and related requirements. Thus, Whitman does not 
undermine the Tenth Circuit's reasoning in Sierra Club v. EPA, 99 F. 3d 
1551 (10th Circuit, 1996). See also the post-Whitman decisions in 
Sierra Club v. EPA, 375 F. 3d 537 (7th Circuit, 2004), and Our 
Children's Earth Foundation v. EPA, No. 04-73032, memorandum opinion 
(9th Circuit, June 28, 2005) rejecting challenges to the Clean Data 
Policy and upholding redesignation actions based on the policy.
10. How will RFP be addressed in Tribal areas?
    [Section VI.I.11. of June 2, 2003 proposed rule (68 FR 32835); no 
draft or final regulatory text.]
a. Background
    The TAR provides flexibility for Tribes in the preparation of a TIP 
to address the NAAQS. As mentioned in the proposed rulemaking, the TAR 
provides the Tribes with the ability to develop TIPs to address and 
implement the NAAQS in Indian country. It further provides the Tribes 
with flexibility to develop these plans in a modular way, as long as 
the elements of their TIPs are reasonably ``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. Therefore, it may include one or two source-specific 
requirements but may not include provisions for RFP and other SIP 
requirements. The proposal noted that these TIPs can be an important 
step in addressing an overall air quality plan to achieve health and 
environmental goals on Tribal lands. Where a Tribe chooses not to 
address a specific planning element, EPA may be obligated to step in. 
Such action would not preclude a Tribe from addressing those elements 
at a later time.
b. Summary of Policy
    We intend to take the approach noted in the proposal. There is no 
regulatory text for this intention.
c. Comments and Responses
    No comments were received on this portion of the proposal.
11. How will RFP targets be calculated?
    [Section VI.I.12. of June 2, 2003 proposed rule (68 FR 32836); 
Sec.  51.910(c) of the draft and final regulatory text.]
a. Background
    We proposed a methodology for the calculation of RFP target levels 
of emissions that is based on the method we developed for the 1-hour 
standard, 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 RFP requirement. The CAA 
specifies four types of measures that were not creditable toward the 15 
percent RFP requirement. These are:
    (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 (RVP) promulgated 
after 1990 or required under section 211(h).
    (3) Measures required under section 182(a)(2)(A) to correct 
deficiencies in SIPs regarding VOC RACT regulations required prior to 
enactment of the CAA Amendments of 1990.
    (4) State regulations submitted to correct deficiencies in I/M 
existing or required 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 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.

[[Page 71647]]

    However, the pre-1990 Federal Motor Vehicle Control Program (FMVCP) 
will continue to provide additional benefits during the first two 
decades of the 21st century as remaining vehicles meeting pre-1990 
standards are removed from the vehicle fleet. Because these benefits 
are not creditable for RFP purposes, in order to calculate the target 
level of emissions for future RFP milestone years (i.e., 2008, 2011, 
etc.), States must first calculate the reductions that would occur over 
these future years as a result of the pre-1990 FMVCP. We proposed three 
methods to properly account for the non-creditable reductions when 
calculating RFP targets for the 2008 and later RFP milestone years.
b. Summary of Final Rule
    The calculation methods have been revised slightly from those in 
the proposal. The revisions now account for NOX reductions 
and take account of other mobile emissions models other than the MOBILE 
model. The methods appear as appendix A to this preamble. These methods 
are consistent with the requirements of sections 182(b)(1)(C) and (D) 
and 182(c)(2)(B) of the CAA.
c. Comments and Responses
    Comment: One commenter agreed that the base emission level should 
be decreased by reductions that occur from the pre-1990 FMVCP standards 
(1990 I/M program and fuel RVP of 9.0 or 7.8 psi). However, the 
commenter further recommended that the reductions from pre-1990 FMVCP 
standards be calculated using the I/M program and fuel properties in 
effect during the new baseline year of 2002.
    The commenter claimed an advantage of the recommended change is 
that it removes from the non-creditable reductions from the pre-1990 
FMVCP standards, creditable reductions from controls implemented prior 
to 2003 (such as improvements to the I/M program or cleaner gasoline).
    The commenter claimed that the EPA proposal specifies using the 
MOBILE6 command NO CAA in the calculation of the non-creditable 
emissions reductions. The commenter concurred that this command could 
be used, but recognized that some of the controls in effect during 2002 
cannot be modeled with this command. (Refer to technical specifics of 
this comment in the response to comment document).
    Response: The EPA does not agree with the commenter that the non-
creditable pre-1990 FMVCP reductions should be calculated using the I/M 
program and fuel properties in effect during the new baseline year of 
2002. Including the I/M program and fuel properties in effect in 2002 
in the calculation of non-creditable reductions would not accurately 
account for reductions that are the result of pre-1990 Federal motor 
vehicle control measures. The EPA believes that the methods provided in 
the final rule accurately identify the non-creditable reductions from 
pre-1990 motor vehicle standards and provide appropriate credit for all 
post-1990 control measures.
12. Should EPA continue the policy of allowing substitution of controls 
from outside the nonattainment area within 100 kilometers for VOC and 
200 kilometers for NOX?
    [Section VI.I.2. of June 2, 2003 proposed rule (68 FR 32833); no 
draft or final regulatory text.]
a. Background
    The proposal noted [68 FR 32833] that EPA currently has a policy 
that allows States to take credit for RFP for NOX and VOC 
controls that occur outside the nonattainment areas [``Guidance for 
Implementing the 1-Hour Ozone and Pre-Existing PM10 NAAQS, 
December 29, 1997'']. Specifically, the guidance allows credit for VOC 
reductions occurring up to 100 km outside the area and for 
NOX reductions occurring up to 200 km outside the area 
(statewide where a regional NOX control strategy is being 
implemented). The policy indicates that credit may be taken only for 
emissions reductions from measures not otherwise mandated by the CAA. 
As explained in the policy, EPA believes that this additional 
flexibility for crediting reductions outside nonattainment areas is 
consistent with the CAA. We noted in the proposed policy that 
reductions from outside a nonattainment area within the geographic 
limits contribute to progress toward attainment within the area (61 FR 
65758).
    Under this approach, the geographic area for substitution of VOC 
emissions reductions is 100 km from the nonattainment area and the 
geographic area for substitution of NOX reductions is 200 km 
from the nonattainment area with the possibility for additional 
expansion of the NOX substitution area as follows. Nitrogen 
oxides emissions reductions from anywhere within the State may be 
credited for those States that participate in a regional NOX 
control strategy such as the NOX SIP Call. All other States 
implementing a NOX substitution strategy for RFP would be 
restricted to a distance of 200 km from the nonattainment area, unless 
a substitution for a greater distance is accompanied by adequate 
technical justification. Substitutions are restricted to intrastate 
areas unless two or more States involved reach mutual agreement. The 
EPA notes that in all cases the distances in the policy provide only a 
general policy presumption that, if used, would need data resources in 
the record showing that reductions from sources in the specific 
locations in attainment areas benefit the nonattainment area. See LEAN 
v. EPA, 382 F. 3d 575 5th Circuit, 2004.
b. Summary of Final Rule
    States may continue to rely on emissions reductions from outside 
the nonattainment area for credit toward their RFP obligations.\49\ In 
doing so, States should ensure that the reductions meet the standard 
tests of creditability (permanent, enforceable, surplus, and 
quantifiable) and are shown to be beneficial toward reducing ozone in 
the nonattainment area.
---------------------------------------------------------------------------

    \49\ Last September, the EPA Office of Inspector General 
submitted a report (outside the rulemaking process) outlining 
concerns and recommendations with respect to the potential for 
double counting of emissions reductions and problematic equity 
issues. U.S. EPA Office of the Inspector General. In responding to 
that report, we indicated that we would consider the various 
recommendations as we assess existing policies and guidance in 
parallel to the rulemaking for implementing the 8-hour ozone 
standard. [Evaluation Report: EPA and States Not Making Sufficient 
Progress in Reducing Ozone Precursor Emissions In Some Major 
Metropolitan Areas. Report No. 2004-P-00033. September 29, 2004.] 
[Memorandum from Jeffrey R. Holmstead to J. Rick Beusse, ``Response 
to the Office of the Inspector General (OIG) Evaluation Report, EPA 
and States Not Making Sufficient Progress in Reducing Ozone 
Precursor Emissions in Some Major Metropolitan Areas,'' Report No. 
2004-P-00033. December 29, 2004. March 25, 2005.]
---------------------------------------------------------------------------

c. Comments and Responses
    Comment: Several commenters supported this feature of EPA's 
proposal regarding RFP because it allows the States flexibility to 
tailor control strategies to address the issues specific to a 
particular nonattainment area.
    The commenters supported codification (68 FR 32833, column 1) in 
the final rule of the December 29, 1997 guidance memo (``Guidance for 
Implementing the 1-Hour Ozone and Pre-Existing PM10 NAAQS'') 
that allows emissions reductions from outside the nonattainment area to 
be creditable toward RFP. One commenter agreed that States ought to be 
able to account for regional emissions in their attainment 
demonstrations. On the other hand, the commenter was concerned that the 
Agency might allow jurisdictions to ``credit'' emissions reductions 
from sources up to 100 km for VOC and 200 km for NOX toward 
15 percent RFP plans, and this in turn could encourage jurisdictions in 
need of these tonnage

[[Page 71648]]

reductions to regulate without a sound basis. The commenter contended 
that while ozone is known to be a ``regional pollutant,'' EPA has 
failed to establish in this rulemaking any technical basis for allowing 
States to impose regulations on sources outside the nonattainment area 
boundaries without independent justification of the impact of such 
sources on an area's failure to attain the standard.
    Response: We developed our 1997 policy as a result of the modeling 
results relating to the NOX SIP Call (see, for example, 63 
FR 57355, October 27, 1998, and 69 FR 21604, April 21, 2004). These 
modeling analyses demonstrate that significant contribution to 
nonattainment resulted not only from source emissions within a 
nonattainment area but also from source emissions over a much broader 
area. Not only can these emissions from outside the nonattainment area 
affect air quality within the nonattainment area, in some cases it 
might be necessary to include and control emission sources located in 
the nearby areas in order to attain the standard. We believe it is 
appropriate to allow States to take credit for reductions from sources 
outside their nonattainment areas where data indicate that those 
emissions affect air quality in the nonattainment areas.
    We note that section 182(c)(2)(C), which provides for the 
substitution of NOX controls for VOC, speaks in terms of 
reductions of ozone concentrations rather than strictly reductions in 
emissions. This provision led us to conclude that Congress' intent for 
the ROP requirement is to lower ozone concentrations within the 
nonattainment area. It is consistent with that intent that emissions 
reductions from outside the nonattainment area that will reduce ozone 
concentrations in the nonattainment area should be creditable in RFP 
demonstrations. We also believe that the CAA is clear that both the 15 
percent plan requirement of section 182(b)(1) and the 3 percent per 
year requirement of section 182(c)(2) are specific varieties of RFP 
requirements.\50\ Section 171(1) of the CAA states that, for purposes 
of part D of title I, RFP ``means such annual incremental reductions in 
emissions of the relevant air pollutant as are required by this part or 
may reasonably be required by the Administrator for the purpose of 
ensuring attainment of the applicable NAAQS by the applicable date.'' 
Thus, whether dealing with the general RFP requirement of section 
172(c)(2), or the more specific RFP requirements of subpart 2 for 
classified ozone nonattainment areas (i.e., the 15 percent plan 
requirement of section 182(b)(1) and the 3 percent per year requirement 
of section 182(c)(2)), the purpose of RFP is to ensure attainment by 
the applicable attainment date. Emissions reductions strategies applied 
to sources outside the nonattainment area may help decrease ambient 
ozone levels within the designated area. Since RFP/ROP is progress 
towards attainment, specific, annual emissions reductions from 
geographic areas outside the nonattainment area boundaries that 
contribute to lower ambient ozone levels in the nonattainment area 
would fall within the scope of ``such annual incremental reductions in 
emissions of the relevant air pollutant as are required * * * for the 
purpose of ensuring attainment of the applicable NAAQS by the 
applicable date.''
---------------------------------------------------------------------------

    \50\ The EPA notes that paragraph (1) of subsection 182(b) is 
entitled ``Plan Provisions for Reasonable Further Progress'' and 
that subparagraph (B) of paragraph 182(c)(2) is entitled 
``Reasonable Further Progress Demonstration,'' thereby making it 
clear that both the 15 percent plan requirement of section 182(b)(1) 
and the 3 percent per year requirement of section 182(c)(2) are 
specific varieties of RFP requirements.
---------------------------------------------------------------------------

    Comment: One commenter requested clarification that if the 100 km/
200 km area extends into adjacent States that reductions in those 
States should also be creditable, especially with regard to the 
implementation of Federal measures.
    Response: We intend to look into this issue further in the future 
as part of the overall reassessment of the 100 km/200 km credit issue.
    Comment: Another commenter expressed confusion by the provision to 
allow creditable reductions be made outside nonattainment areas. They 
asked if reductions made outside a nonattainment area actually bring 
that nonattainment area into compliance with the standard, then 
shouldn't those outside areas be designated nonattainment by 
definition? The commenter contended that this contradiction is 
unacceptable, and a fatal flaw of current designation efforts and this 
implementation proposal.
    Response: The commenter appears to be commenting on the designation 
process as well as the implementation rule. To the extent that the 
commenter has concerns about the process EPA used for designating areas 
as nonattainment, those issues should have been raised prior to the 
time EPA promulgated designations in April 2004. The EPA is not taking 
any action in this rulemaking to establish the procedures for 
designating areas or to designate areas. In the designation process 
that was completed in April 2004, EPA provided guidance to areas 
regarding how to determine the boundaries of nonattainment areas in 
light of the statutory definition of ``nonattainment,'' which provides 
that an area will be designated nonattainment if it is either violating 
the NAAQS or is a ``nearby'' area that ``contributes to ambient air 
quality'' in an area that is violating the standard.\51\ The CAA does 
not establish a hard-and-fast set of rules for determining ``nearby'' 
or ``contributes to,''--i.e., it does not specify a distance that is 
nearby or a specific level of emissions that is deemed to ``contribute 
to'' nonattainment. Nor did EPA establish a hard-and-fast set of rules; 
rather the guidance provided a broad set of factors for States and EPA 
to consider in determining the boundaries of each nonattainment area. 
Thus, it is not inconsistent with the statute that there are areas that 
were not designated nonattainment, but that have emissions that affect 
air quality in a nonattainment area.
---------------------------------------------------------------------------

    \51\ Memorandum from John Seitz, ``Boundary Guidance on Air 
Quality Designations for the 8-Hour Ozone National Ambient Air 
Quality Standards (NAAQS or Standard).'' March 28, 2000. Found at: 
http://www.epa.gov/ozonedesignations/guidance.htm.
---------------------------------------------------------------------------

Comments on Draft Regulatory Text
    Comment: One commenter recommended that EPA state, either in the 
preamble to this rule or in the rule itself, that any VOC emissions 
reductions within 100 km and any NOX emissions reductions 
within 200 km of the nonattainment boundary, including reductions in 
adjacent States, are creditable for RFP plan purposes. They also 
suggested that EPA provide that reductions from voluntary measures 
should be incorporated into the baseline emissions inventory 
calculation.
    Another commenter stated that EPA does not specify in Sec.  
51.910(a)(4) that in areas where the 3 percent annual reduction is 
required, those reductions must be achieved within the statutorily 
defined baseline ``area.'' [CAA section 182(b)(1)(B)]. The commenter 
stated that we issued initial NOX substitution guidance in 
1993 that required RFP reductions to be achieved from sources within 
the designated nonattainment area. The commenter noted that 
subsequently, we attempted to unlawfully allow RFP reductions to be 
obtained from sources within the modeling domain. The commenter 
advocated that we clarify that the CAA requires creditable reductions 
to be obtained only from sources within the designated nonattainment 
areas.
    Response: We believe that the policy does not need to be 
incorporated into a rule. Since areas must include record

[[Page 71649]]

support for application of the policy in an area demonstrating that 
emissions from regulated sources affect ambient air quality in the 
specific nonattainment area, individual rulemaking in the context of an 
area's SIP must be conducted in any event to implement the policy. The 
EPA believes that any reductions that in fact result in improved air 
quality within the nonattainment area can be credited to RFP 
demonstrations. Voluntary emissions reductions that are used to satisfy 
RFP requirements--or any requirements under the CAA--must meet EPA's 
criteria for creditability of such reductions, particularly the 
inclusion in the baseline of the emissions from the sources that would 
be producing the voluntary reductions. As explained elsewhere in 
response to another comment on the policy of allowing substitution of 
controls from outside the nonattainment area within 100 km for VOC and 
200 km for NOX, EPA disagrees with the comment that the CAA 
limits the scope of creditable emissions reductions to only those 
reductions in emissions emanating from within the nonattainment area 
boundaries. We also address elsewhere the comment relating to allowance 
of RFP credit from emissions reductions outside the State in which the 
nonattainment area is located.
13. When must RFP emissions reductions be achieved?
    [Section VI.I. of June 2, 2003 proposed rule (several locations 
starting at 68 FR 32832); several locations including Sec.  
51.910(a)(1) of the draft and final regulatory text.]
a. Background
    Section 51.910(a)(1) of the draft regulatory text provided that for 
areas initially designated nonattainment for the 8-hour NAAQS, the 
initial 6-year period for RFP shall run from January 1, 2003 to 
December 31, 2008. Section 182(c)(2)(B), applicable to serious and 
above areas, requires that RFP be continued out to the attainment date. 
Therefore, Sec.  51.910(a)(2) of the draft regulatory text provided, 
``For each area classified as serious or higher under Sec.  51.903, the 
State must submit no later than 3 years after the effective date of the 
area's nonattainment designation a SIP revision consistent with section 
182(c)(2)(B) of the CAA for each 3 year period following the initial 6-
year period addressed under paragraph (a)(1)(ii)(B) of this section 
until the area's attainment date. For areas initially designated 
nonattainment for the 8-hour NAAQS the 3-year periods referenced in 
section 182(c)(2)(B) of the Act shall begin January 1, 2009.''
    In applying the requirement of section 182(c)(2)(B), it is 
necessary to know the attainment date for the area. The attainment date 
is not necessarily the maximum allowed under part D of the CAA, but 
must be ``as expeditious as practicable'' but no later than the maximum 
statutory date (e.g., 9 years after designation for a serious area). 
Thus, for purposes of determining the period for which RFP is needed, 
the State must have completed an attainment demonstration and RACM 
analysis (discussed elsewhere in this preamble) to demonstrate that the 
attainment date selected is as expeditious as practicable.
    There are several other provisions that bear on the issue of when 
emissions reductions must be achieved for purposes of the RFP 
requirements. The Phase 1 Rule, Sec.  51.900(g) sets forth the 
following definition: ``Attainment year ozone season shall mean the 
ozone season immediately preceding a nonattainment area's attainment 
date.'' Also, Sec.  51.908 \52\ (What is the required time frame for 
obtaining emission reductions to ensure attainment by the attainment 
date?) provides: ``For each nonattainment area, the State must provide 
for implementation of all control measures needed for attainment no 
later than the beginning of the attainment year ozone season.'' Thus, 
if the latest attainment date allowed by the CAA for a serious area 
designated in 2004 is June 15, 2013, the (complete) ozone season 
preceding that date would occur in 2012. However, if all of the 
reductions necessary to achieve attainment are in place prior to that 
ozone season, then the most expeditious attainment date would in fact 
be just after the end of that ozone season in 2012 (assuming the RACM 
analysis did not compel a more expeditious attainment year). Thus, in 
light of the Phase 1 rule, the latest possible attainment date for all 
areas will be just after the end of the ozone season in the year prior 
to the outside attainment date identified in the statute for the area's 
classification.\53\
---------------------------------------------------------------------------

    \52\ With this rulemaking, this provision is codified as 40 CFR 
51.908(d).
    \53\ With the exception of areas with year-round ozone seasons, 
in which case the latest attainment date may be earlier in the year 
of the outside attainment date identified in the statute.
---------------------------------------------------------------------------

    Consistent with the manner in which ROP plans under the 1-hour 
ozone standard were developed, the RFP baseline for 2002 will have a 
typical summer day tons/day basis. As such, the attainment year target 
will also be a typical summer day target. Thus, the target level of 
emissions must be met by the attainment date of the attainment 
year.\54\
---------------------------------------------------------------------------

    \54\ Note that 40 CFR 51.900(g) defines ``Attainment year ozone 
season'' as the ozone season immediately preceding a nonattainment 
area's attainment date.
---------------------------------------------------------------------------

    As noted above, section 182(c)(2)(B) requires that RFP be continued 
out to the attainment date. Thus, to some extent, the RFP requirement 
may help determine the attainment date. In the example discussed above 
of a serious area, the first milestone year after 2008 by which an 
annual average of 3 percent emissions reductions would have to be 
achieved over each 3-year period (i.e., 9 percent over 3 years) would 
be 2011, with an additional annual average of 3 percent per year 
between the end of 2011 and the attainment year (if the attainment year 
is beyond 2011). The maximum statutory attainment year under the 
discussion above would be 2013, but, for the reasons explained above 
concerning the date by which emissions reductions must be achieved, the 
actual maximum attainment year would generally be the year prior, viz., 
2012. If for example this area needs an additional 7 percent emission 
reduction for attainment purposes beyond 2008, however, RFP would 
require implementation of the entire 7 percent no later than the end of 
2011. Since that is the amount needed for attainment, the area would 
actually achieve attainment by 2011, and the attainment date would then 
have to be no later than 2011. If the area did not achieve this 7 
percent reduction until the end of 2011, the RFP requirement in this 
case could not require the full 9 percent reduction. Thus, since RFP is 
only needed up to the attainment date, should the area achieve the 7 
percent earlier in the year it would have achieved attainment and no 
further ROP would be required. Therefore, in this example, RFP would 
not require more reductions than needed for attainment. Furthermore, 
the RFP requirement by itself would not force an attainment year 
earlier than 2011 for this case (e.g., 2010--2 years after 2008), since 
the 7 percent reduction over 2 years is greater than an annual average 
of 3 percent, which is beyond that required by the RFP requirement. In 
summary, RFP reductions end at the attainment date, and as shown the 
RFP requirement would not result in emissions reductions greater than 
needed for attainment.
b. Summary of Final Rule
    For each area classified as moderate or higher, the State's 15 
percent VOC

[[Page 71650]]

emission reduction plan must provide for the emissions reductions to be 
achieved by the end of the 6-year period after the baseline year. The 
6-year period referenced in section 182(b)(1) of the CAA shall begin 
January 1 of the year following the year used for the baseline 
emissions inventory. For areas initially designated nonattainment for 
the 8-hour NAAQS, the 6-year period runs from January 1, 2003 to 
December 31, 2008.
    For each area classified as serious or higher, the State's RFP plan 
must provide a 3 percent annual emission reduction requirement averaged 
over every 3-year period after the initial 6-year period. For areas 
initially designated nonattainment for the 8-hour NAAQS, the first 3-
year period would run from January 1, 2009 to December 31, 2011. The 
final increment of progress must be achieved no later than the 
attainment date for the area.
    To summarize, for areas designated nonattainment for the 8-hour 
NAAQS with an effective date of June 15, 2004, the rule would establish 
the following:
     The 6-year period in section 51.910(a)(1)(i)(A) and 
(ii)(C)(1) would run from January 1, 2003 to December 31, 2008.
     The first 3-year period in section 51.910(a)(1)(i)(B) 
would run from January 1, 2009 to December 31, 2011.
     The baseline emissions inventory in section 51.910(d) 
would be for calendar year 2002.
c. Comments and Responses
    No comments were received on the proposal concerning the timing of 
emissions reductions needed for RFP.
14. Banked Emission Reduction Credits (Including Shutdown Credits)
    Can pre-baseline emission reduction credits be used to satisfy the 
RFP requirement? [No discussion in June 2, 2003 proposal; no draft or 
final regulatory text.]
a. Background
    This topic was not discussed in the proposed rulemaking, but we 
believe that questions that have arisen on this topic bear some 
discussion here.
    The CAA provides the following definition in section 182(b)(1)(D) 
regarding the 15 percent VOC RFP requirement:

Baseline emissions. For purposes of subparagraph (A), the term 
``baseline emissions'' means the total amount of actual VOC or 
NOX emissions from all anthropogenic sources in the area 
during the calendar year of the enactment of the Clean Air Act 
Amendments of 1990, excluding * * * [emphasis added.]

The April 1992 General Preamble provides:

The adjusted base year inventory (i.e., baseline emissions) must 
contain only actual emissions occurring in the base year, 1990, 
within the designated nonattainment area boundaries. The baseline 
emissions should not include pre-enactment banked emission credits 
since they were not actual emissions during the calendar year of 
enactment [57 FR 13507; April 16, 1992; emphasis added].

and

Pre-enactment banked emissions reductions credits are not creditable 
toward the 15 percent progress requirement. However, for purposes of 
equity, EPA encourages States to allow sources to use such banked 
emissions credits for offsets and netting. When States use such 
banked credits for offsets and netting to the extent otherwise 
creditable under the Part D NSR regulations, these pre-enactment 
emissions credits must be treated as growth. Consequently, this 
``growth'' must be accounted for, as is the case with all other 
anticipated growth, in order to ensure that it does not interfere 
with the 15 percent rate of progress requirement (which is ``net'' 
of growth). In addition, when such growth emissions are used as 
offsets, they must be applied in accordance with the offset ratio 
prescribed for the area of concern (e.g., 1.3 to 1 for severe areas, 
etc.). All pre-enactment banked credits must be included in the 
nonattainment area's attainment demonstration for ozone to the 
extent that the State expects that such credits will be used for 
offsets or netting prior to attainment of the ambient standards. 
Credits used after that date will need to be consistent with the 
area's plan for maintenance of the ambient standard [57 FR 13508].

    The EPA's 1992 guidance on calculating the 15 percent emission 
target \55\ contained the following:
---------------------------------------------------------------------------

    \55\ Guidance on the Adjusted Base Year Emissions Inventory and 
the 1996 Target for the 15 Percent Rate-of-Progress Plans. Ozone/
Carbon Monoxide Programs Branch, U.S. Environmental Protection 
Agency, Office of Air Quality Planning and Standards, Research 
Triangle Park, NC 27711. EPA-452/R-92-005. October 1992.

4.3 Pre-enactment Banked Emissions Reduction Credits. If the State 
has an emissions credit bank that meets the EPA's requirements under 
an earlier policy statement [\56\], the State is allowed to use its 
pre-enactment banked emissions reduction credits to facilitate the 
location of new sources in nonattainment areas during the 1990-1996 
period. However, because these reduction credits represent emissions 
that are not included in the 1990 base year inventory, any 
additional emissions that result from the use of banked credits must 
be treated as growth in order to ensure that the 15 percent VOC 
emissions reduction requirement is achieved. Also, it is important 
to note that the use of pre-enactment banked emissions credits must 
be in accordance with the offset ratios prescribed in the CAA 
Amendments (e.g., 1.3 to 1 in severe areas.)
---------------------------------------------------------------------------

    \56\ 51 FR 233 ``Emissions Trading Policy Statement; General 
Principles for Creation, Banking and Use of Emission Reduction 
Credits; Final Policy Statement and Technical Issues Document.'' 
December 4, 1986. This document has been replaced by Improving Air 
Quality with Economic Incentive Programs, January 2001, available at 
http://www.epa.gov/region07/programs/artd/air/policy/search.htm.

    The 1992 guidance document provides an example calculation of the 
above guidance.
b. Interpretation for 8-Hour Ozone NAAQS
    The guidance provided above is still relevant for banked emission 
reduction credits in relation to the RFP requirement for the 8-hour 
ozone standard. However, because the rule for implementing the 8-hour 
ozone standard uses a 2002 baseline year, the above guidance should be 
read--for purposes of implementing the 8-hour ozone RFP requirement--by 
substituting ``pre-enactment banked emission credits'' with ``pre-2002 
banked emission credits.'' A pre-2002 banked emission credit is one 
that was generated before January 1, 2002 and that is certified in a 
bank that EPA has approved for such purposes. For a discussion of the 
use of shutdown/curtailment credits for offsets and netting, see 
section V.B.1.a of this preamble. For a discussion of the use of 
emission reduction credits for offsets and netting, see section V.D.5 
of this preamble.

F. Are contingency measures required in the event of failure to meet a 
milestone or attain the 8-hour ozone NAAQS?

    [Section VI.J. of June 2, 2003 proposed rule (68 FR 32837); no 
draft or final regulatory text.]
1. Background
    Under the CAA, 8-hour ozone nonattainment areas subject only to 
subpart 1, as well as those classified under subpart 2 as moderate, 
serious, severe, and extreme must include in their SIPs contingency 
measures consistent with sections 172(c)(9) and 182(c)(9), as 
applicable. 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.
    For additional background information, see the Proposal (68 FR 
32802, June 2, 2003). Other related information can be found in the 
following applicable guidance documents:
     ``Contingency Measures for Ozone and Carbon Monoxide (CO)

[[Page 71651]]

Redesignations,'' Memorandum from G.T. Helms, Chief, Ozone/Carbon 
Monoxide Programs Branch, June 1, 1992,
     ``Procedures for Processing Requests to Redesignate Areas 
to Attainment,'' Memorandum from John Calcagni, Director, Air Quality 
Management Division, September 4, 1992,
     ``Guidance for Growth Factor, Projections, and Control 
Strategies for the 15 percent Rate-of-Progress Plans,'' (EPA-452/R-93-
002), March 1993,
     ``Early Implementation of Contingency Measures for Ozone 
and Carbon Monoxide (CO) Nonattainment Areas,'' Memorandum from G.T. 
Helms, Chief, Ozone/Carbon Monoxide Programs Branch, August 13, 1993,
     ``Guidance on Issues Related to the 15 Percent Rate-of-
Progress Plans,'' Memorandum from Michael H. Shapiro, Acting Assistant 
Administrator for Air and Radiation to the Regional Division Directors, 
August 23, 1993,
     ``Clarification of Issues Regarding the Contingency 
Measures that are due on November 15, 1993 for Moderate and Above Ozone 
Nonattainment Areas,'' Memorandum from D. Kent Berry, Acting Director, 
Air Quality Management Division, November 8, 1993, and
     ``Guidance on the Post 1996 Rate-of-Progress Plan (ROP) 
and Attainment Demonstration,'' (EPA-452/R-93-015), January 1994.
2. Summary of Final Rule
    We are adopting the approach taken in our proposal. All subpart 1 
and subpart 2 areas other than marginal areas are required to adopt 
contingency measures to be implemented in the event of failure to meet 
a RFP milestone or to attain the 8-hour ozone NAAQS. The contingency 
measures SIP should accompany the attainment demonstration SIP required 
for submission by June 15, 2007.
    It should be noted that the CAA requires States to identify 
contingency measures that will go into effect without further action on 
the part of the State or EPA. We believe this language means that 
contingency measures should be adopted regulations but also recognize 
that some additional State or local action may be necessary (such as 
notification of sources) before implementation.
    Under subpart 2, areas that are nonattainment for the 8-hour ozone 
NAAQS 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 NAAQS.
    For subpart 1 areas, States should follow EPA's existing guidance 
for subpart 2 areas. We intend to provide additional guidance only if 
needed.
3. Comments and Responses
    Comment: Two commenters raised concerns about the difficulty some 
areas may have in identifying what they referred to as ``reserve'' or 
``unused'' measures for the 1-hour standard that could be used as 
contingency measures for the 8-hour standard for subpart 2 areas. These 
commenters requested protection for areas that have no ``leftover'' 
measures to be used in the event of failure to meet the milestone. The 
commenters contended that EPA needs to have policies that do not 
penalize areas that have implemented all feasible measures to attain 
the standard and may not have any identified contingency measures left.
    Response: The commenters appear to be asking EPA to drop the 
requirement for a nonattainment area SIP to contain contingency 
measures. The commenters have not provided a legal rationale why they 
believe it is possible to do this. The purpose of contingency measures 
is to have a quickly implementable backup plan of action should primary 
measures fail to bring a nonattaining area to the requisite level (be 
it attainment of the NAAQS or meeting a RFP milestone). It is up to 
each State to determine what measures the State will commit to 
implement should failure occur. We note that States may rely on 
regional and national control measures as well as local control 
measures to meet the contingency measure obligation.
    A list of example contingency measures has been provided. See 
section 9.5 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 States have the responsibility of determining 
what contingency measures are most appropriate for their area(s). To 
allow nonattaining areas with seemingly few potential contingency 
measures to opt out of the contingency measure requirement is counter 
to the contingency measure provision in the CAA. The EPA does not see 
any way to interpret the clear language of the statute other than as 
requiring contingency measures in all nonattainment areas other than 
marginal subpart 2 areas. It should also be noted that the CAA's 
requirement for an area's SIP to demonstrate attainment by the 
attainment date is not limited to the adoption only of those measures 
that are ``feasible.''
    Comment: One commenter alleged EPA's proposal to allow Federal 
measures that result in additional emissions reductions beyond RFP or 
attainment to qualify as contingency measures is legally invalid. The 
commenter further stated that contingency measures must consist of 
control requirements that will be taken off the shelf and undertaken if 
and when a RFP or attainment failure occurs. In other words, 
contingency measures must be new measures not Federal or local measures 
that already exist.
    Response: The CAA states that contingency measures are to be 
``specific measures to be undertaken if the area fails to make 
reasonable further progress, or to attain * * * by the attainment 
date.'' The April 16, 1992 General Preamble provided the following 
guidance: ``States must show that their contingency measures can be 
implemented with minimal further action on their part and with no 
additional rulemaking actions such as public hearings or legislative 
review. In general, EPA will expect all actions needed to affect full 
implementation of the measures to occur within 60 days after EPA 
notifies the State of its failure.'' (57 FR 13512). This could include 
Federal measures and local measures already scheduled for 
implementation.
    The EPA has approved numerous SIPs under this interpretation--i.e., 
that use as contingency measures one or more Federal or local measures 
that are in place and provide reductions that are in excess to the 
attainment demonstration or RFP plan. (62 FR 15844, April 3, 1997; 62 
FR 66279, December 18, 1997; 66 FR 30811, June 8, 2001; 66 FR 586 and 
66 FR 634, January 3, 2001.) The key is that the statute requires extra 
reductions that are not relied on for RFP or attainment and that are in 
the demonstration to provide a cushion while the plan is revised to 
meet the missed milestone. In other words, contingency measures are 
intended to achieve reductions over and beyond those relied on in the 
attainment and RFP demonstrations. Nothing in the statute precludes a 
State from implementing such measures before they are triggered. In 
fact, a recent court ruling upheld contingency measures that were 
previously required and implemented where they were in excess of the 
attainment demonstration and RFP SIP. See LEAN v. EPA, 382 F. 3d 575 
5th Circuit, 2004.
    Comment: One commenter supported EPA's proposal to continue to 
observe existing policies regarding contingency measures for areas 
covered under

[[Page 71652]]

subpart 2 for the 8-hour standard. Additionally, the commenter 
anticipated that EPA's additional guidance on the contingency measure 
requirement for subpart 1 will be patterned after the subpart 2 
requirement.
    Response: The EPA acknowledges the commenter's support of our 
proposal that subpart 2 8-hour ozone nonattainment areas may rely on 
our existing contingency measure guidance. As provided above, both 
subpart 1 and subpart 2 areas should rely on that guidance for purposes 
of adopting contingency measures.

G. What requirements should apply for RACM and RACT for 8-hour ozone 
nonattainment areas?

    [Section VI.K. of June 2, 2003 proposed rule (68 FR 32837); Sec.  
51.912 in draft and final regulatory text.]
    The first subsection of this section covers RACT and the second 
subsection covers RACM.
1. Reasonably Available Control Technology (RACT)
a. Background
    As described in more detail in the June 2 proposal, subpart 1 of 
part D includes a requirement that an attainment plan provide for the 
implementation of all RACM as expeditiously as practicable, including 
such reductions that may be obtained through RACT. Under subpart 2, 
marginal areas are required to correct pre-1990 RACT requirements and 
new RACT requirements are specified for moderate and above ozone 
nonattainment areas. Additionally, States must adopt RACT for all areas 
in an OTR. The RACT requirement applies to both ozone precursors--
NOX and VOC. Since 1990, we have issued guidance documents 
on the RACT requirements in subpart 2. Prior to enactment of the CAA 
Amendments of 1990, EPA also issued detailed guidance documents on RACT 
for ozone nonattainment area SIPs.\57\
---------------------------------------------------------------------------

    \57\ The EPA defined RACT as the lowest emission limitation that 
a particular source is capable of meeting by the application of 
control technology that is reasonably available considering 
technological and economic feasibility (44 FR 53762; September 17, 
1979).
---------------------------------------------------------------------------

    Section 183(c) of the CAA requires EPA to ``revise and update such 
documents [i.e., Control Techniques Guidelines and Alternative Control 
Techniques] as the Administrator determines necessary.'' As new or 
updated information becomes available States should consider the new 
information in their RACT determinations. States should consider the 
new information in any RACT determinations or certifications that have 
not been issued by the State as of the time such an update becomes 
available.\58\
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    \58\ In addition, EPA is considering related recommendations 
from the Air Quality Management Work Group to the Clean Air Act 
Advisory Committee (CAAAC) dated January 2005 [available at: http://www.epa.gov/air/caaac/aqm.html#library] in response to the recent 
National Research Council report on Air Quality Management in the 
United States (January 2004) [available for sale; individual pages 
available for viewing at http://www.nap.edu/books/0309089328/html]. 
One of the recommendations to the CAAAC is that ``for the SIPs 
States are required to submit over the next several years, EPA and 
States, locals, and Tribes should promote the consideration of 
multipollutant impacts, including the impacts of air toxics, and 
where there is discretion, select regulatory approaches that 
maximize benefits from controlling key air toxics, as well as ozone, 
PM2.5 and regional haze.'' As part of this effort, EPA 
intends in the future to develop updated technology guidance with 
respect to source categories emitting multiple pollutants in large 
amounts. At this time, however, we think it is unlikely that updated 
technology guidance will be available in time for the RACT SIPs due 
in 2006.
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    The June 2, 2003 proposal addressed several aspects of the RACT 
requirement. For subpart 1 areas, we proposed several options. We 
proposed in one option 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 
in the area (i.e., the area's design value). In another option, we 
proposed that RACT would be met if the area were able to demonstrate 
attainment of the standard as expeditiously as practicable with 
emission control measures in the SIP. We also proposed as an early 
attainment incentive that RACT would be met in an area which 
demonstrates attainment within 3 years and submits the demonstration 
within 1 year. We proposed the RACT submittal dates for subpart 1 areas 
would be within 2 years after designation.
    For subpart 2 areas, we proposed to apply RACT as specified in 
subpart 2. We proposed (in the draft regulatory text) to require that 
States submit their subpart 2 RACT SIPs within 2 years after the 
nonattainment designation. In addition, we proposed the date for 
affected sources to implement RACT in subpart 2 areas would be 30 
months after the required submittal date. We also proposed that States 
may use current EPA guidance in making RACT determinations; 
consequently, in some cases, sources previously evaluated under the 1-
hour ozone RACT requirement and sources subject to the NOX 
SIP Call cap-and-trade program could be determined to meet the 8-hour 
ozone RACT requirement.
b. Summary of Final Rule
    For subpart 1 areas that do not request an attainment date 
extension (i.e., an attainment date beyond 5 years after designation), 
RACT will be met with control requirements sufficient to demonstrate 
that the NAAQS is attained as expeditiously as practicable. The RACT 
submittal date for these areas is the same as the submittal date for 
the attainment plan. This submission date is no later than 3 years 
after designation.
    For subpart 1 areas that request an attainment date extension 
(i.e., an attainment date beyond 5 years after designation), the State 
shall submit the RACT SIP with its attainment date extension 
request.\59\ For subpart 2 moderate and above areas, and areas within 
an OTR, RACT is required with the RACT submittal and is due 27 months 
after designation. States must require sources to implement RACT no 
later than the first ozone season or portion thereof which occurs 30 
months after the required submittal date.
---------------------------------------------------------------------------

    \59\ This is generally expected with the submission of the 
attainment demonstration.
---------------------------------------------------------------------------

    Where a RACT SIP submission (separate from the attainment 
demonstration) is required (except certain subpart 1 areas, as 
described two paragraphs prior to this, and except certain sources 
subject to the NOX SIP Call or CAIR, as described below), 
State SIPs implementing the 8-hour standard must assure that RACT is 
met, either through a certification that previously required RACT 
controls represent RACT for 8-hour implementation purposes or through a 
new RACT determination. States may use existing EPA guidance in making 
RACT determinations. Where a State has adopted and EPA has approved a 
control measure as RACT for a specific major stationary source or 
source category for the 1-hour ozone NAAQS, and absent data indicating 
that the previous RACT determination is no longer appropriate, the 
State may submit a certification that the source is subject to a SIP-
approved RACT requirement. Such certification shall be accompanied by 
appropriate supporting information, such as consideration of 
information received from public commenters.
    For purposes of meeting the NOX RACT requirement, the 
State need not perform (or submit) a NOX RACT analysis for 
sources subject to the state's emission cap-and-trade program where the 
cap-and-trade program has been adopted by the State that meets the 
NOX SIP Call requirements or, in States achieving CAIR 
reductions solely from EGUs, the CAIR NOX requirements. The 
EPA believes that the SIP provisions for

[[Page 71653]]

those sources meet the ozone NOX RACT requirement. A State 
that is relying on this conclusion for the affected sources should 
document this reliance in its RACT SIP.
    Additionally, RACT is considered met for cement kilns and 
stationary internal combustion engines that are subject to a SIP 
approved as meeting the NOX SIP Call obligation to install 
and operate controls that are expected to achieve at least a 30 percent 
and 82 percent reduction, respectively, from uncontrolled levels. A 
State that is relying on this conclusion for the affected sources 
should document this reliance in its RACT SIP.
    A State may meet the NOX RACT requirement by showing 
that the weighted average emission rate from a broad range of sources 
in the nonattainment area subject to RACT meet RACT requirements.
    At their discretion, States are free to conduct a case-by-case RACT 
determination for any source--or RACT determinations or certifications 
for groups of sources.
    As discussed below in greater detail, States may use information 
gathered from prior BACT or LAER analyses, to the extent it remains 
valid, to help complete a RACT determination. Similarly, emissions 
standards developed under 111(d) and NSR/PSD settlement agreements may 
be considered. This will allow States, in a number of cases, to rely on 
these prior determinations for purposes of showing that a source is 
meeting RACT requirements.
    For VOC sources subject to MACT standards, States may streamline 
their RACT analysis by including a discussion of the MACT controls and 
considerations relevant to VOC RACT. We believe that this will allow 
States, in many cases, to rely on the MACT standards for purposes of 
showing that a source has met VOC RACT.
    Consistent with the proposed regulatory text for this rule [section 
51.912(b)(1)], the final rule provides that, for purposes of meeting 
the RACT obligations under section 182(b)(2)(C) of the CAA for major 
stationary sources of VOCs and under section 182(f) of the CAA for 
major stationary sources of NOX, the definition of major 
stationary source in section 302 of the CAA, as modified by the major 
source definition in either section 182(b), (c), (d) or (e) of the CAA 
as applicable to the area's classification, applies.
    Although we drafted more extensive regulatory language for several 
aspects of the RACT program in the proposal, we believe it is 
sufficient to describe EPA's views on the details of the RACT program 
in today's preamble and in other guidance [e.g., the NOX 
Supplement to the General Preamble, November 25, 1992 (57 FR 55620)]. 
Thus, some detailed portions of the proposed regulatory text regarding 
RACT were not retained in the final rule (in particular paragraph 
(b)(2) ``Prior RACT Determinations'').
c. Comments and Responses
    Comments: For subpart 2 ozone nonattainment areas, several States 
expressed agreement with the proposed approach for implementing RACT 
consistent with section 182 of the CAA.
    Response: The EPA agrees with these comments.
    Comments: For subpart 1 ozone nonattainment areas, EPA received 
several comments for and against the options proposed for addressing 
RACT.
    Several State and industry commenters supported EPA's proposed 
approach that RACT would be met if the area is able to demonstrate 
attainment of the standard as expeditiously as practicable with 
emission control measures in the SIP. The reasons provided by these 
commenters were generally as follows: States should be able to use 
their discretion in determining which control strategies are the most 
effective in addressing a particular area's air quality problem; 
flexibility is needed as areas differ in sensitivity to NOX 
and VOC reductions; EPA's regional modeling shows these requirements 
are unnecessary in many areas; and many of these areas violate the 
ozone standard primarily or entirely due to transport.
    The EPA also received comments, primarily from several States and 
environmental groups, opposing the approach that RACT would be met by 
control measures that are part of a SIP demonstrating attainment of the 
standard as expeditiously as practicable. These commenters made the 
following points: since section 172(c)(1) of the CAA explicitly 
mandates RACT ``at a minimum'' in all nonattainment areas, Congress 
plainly intended to require RACT as a floor level of control technology 
in addition to any measures needed to demonstrate timely attainment; 
even where RACT does not advance attainment, it is needed in order to 
reduce the severity and number of violations; under this approach, the 
statutory RACT provisions add nothing to the statutory attainment 
mandate--which violates basic canons of statutory interpretation; RACT 
in nonattainment areas will substantially reduce transport of ozone and 
ozone precursors; for equity reasons, sources in similar areas should 
be subject to the same control; and RACT is a useful tool that should 
not be abandoned through flexibility mechanisms.
    Response: The general RACT provision under subpart 1 in the 
statute, is found in section 172(c)(1). It is a portion of the RACM 
provision found in that same section. Our long-standing interpretation 
of the RACM provision is that areas need only submit such RACM as will 
contribute to timely attainment and meet RFP, and that measures which 
might be available but would not advance attainment or contribute to 
RFP need not be considered RACM. This interpretation has been upheld in 
several recent court cases. See Sierra Club v. EPA, 294 F.39 155, 162 
(D.C. Circuit, 2002) (concerning the Metropolitan Washington, D.C., 
attainment demonstration) and Sierra Club v. EPA, No. 01-60537 (5th 
Circuit, 2002) (concerning the Beaumont attainment demonstration). 
Since subpart 1 RACT is a portion of RACM, these cases also support a 
conclusion that, where we are dealing only with section 172 RACT, it is 
reasonable to require only such RACT as will meet RFP and advance 
attainment. In view of these court cases, EPA disagrees with the 
comments listed above opposing the approach that, in subpart 1 areas, 
RACT would be met by control measures in a SIP demonstrating attainment 
of the standard as expeditiously as practicable and meeting RFP.
    The EPA generally agrees with comments that States should have 
flexibility to determine which control strategies are the most 
effective in reaching attainment as expeditiously as practicable and 
providing for RFP, and the CAA gives primary authority to States and 
local governments to select the mix of controls necessary to meet the 
NAAQS. In addition, EPA believes that section 172(c) is not the 
appropriate section of the CAA to address the transport of ozone and 
ozone precursors; EPA has conducted and is conducting rulemaking 
pursuant to sections 110 and 126 for that purpose.
    Finally, some commenters suggested, for equity reasons, that 
sources in similar areas should be subject to the same control. In the 
proposal, EPA suggested subpart 1 and 2 areas with the 8-hour ozone 
design values above 91 ppb should be subject to VOC and NOX 
RACT requirements. The EPA also proposed that RACT would be met in an 
area which demonstrates attainment within 3 years and submits the 
demonstration within 1 year. In the final rule, EPA has addressed 
equity concerns by taking portions of these two proposals, such that 
subpart 1 and subpart 2 areas with attainment

[[Page 71654]]

deadlines longer than 5 years after designation must meet the same RACT 
requirements. We believe longer than 5 years is more appropriate than 
the 3 years proposed for this requirement since this approximates the 
maximum attainment date for subpart 2 (moderate) areas subject to RACT 
and since this approach is consistent with the manner in which ROP/RFP 
requirements are treated in the final rule.
    Therefore, in subpart 1 areas that do not request an extension 
beyond the initial 5 years after designation, the final rule indicates 
that RACT would be met by the emission control measures in a SIP that 
demonstrates attainment of the standard as expeditiously as practicable 
and meets RFP. In addition, the final rule requires subpart 1 areas 
with maximum attainment deadlines longer than 5 years after designation 
to meet the same RACT requirements as subpart 2 areas. This approach 
minimizes the RACT inequity with subpart 2 areas and provides 
flexibility for subpart 1 areas demonstrating attainment within 5 
years.
    Comment: One commenter believes that new marginal nonattainment 
areas should be subject to RACT under the 8-hour standard just as they 
would have been subject to RACT immediately prior to the CAA Amendments 
of 1990.
    Response: Section 182(a) provides that marginal and higher 
classified areas for the 1-hour standard with pre-1990 RACT obligations 
had to submit corrections to their RACT rules within 6 months after 
classification under the 1990 CAA Amendments. To the extent that any 8-
hour ozone nonattainment areas did have this obligation, they already 
met it. See footnote 60 in the June 2, 2003 proposal. The CAA does not 
require RACT for marginal areas other than the obligation to 
``correct'' pre-1990 RACT requirements.
    Comment: The EPA received several comments for and against the 
proposal that States may use a prior RACT determination with respect to 
the 1-hour ozone standard for purposes of meeting the RACT requirements 
for the 8-hour ozone standard. Further, EPA received comments on the 
proposal that a new RACT determination is required 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.
    Several State and industry commenters supported EPA's proposed 
approach that a prior RACT analysis under the 1-hour ozone standard 
should meet RACT requirements under the 8-hour standard where major 
sources or source categories were previously reviewed and controls 
applied to meet RACT. These commenters stated that RACT is not specific 
to any particular ozone standard, such that once a source has met RACT, 
it has met RACT, whether or not the ozone standard is revised to become 
more (or less) stringent; just as with the 15 percent VOC requirement, 
the statute provides no basis for duplicative imposition of RACT; and 
there is no basis in the statute to read in a new requirement for RACT. 
In addition, some industry commenters stated that EGUs which meet title 
IV NOX control requirements would also meet the 
NOX RACT requirement.
    The EPA also received comments from several States opposing EPA's 
proposed approach. These commenters believe the NOX and VOC 
guidance is too old, needs updating and, in the case of NOX 
controls, the improvement over the last 3 years has been dramatic with 
controls previously considered to be BACT (and therefore generally 
considered at the time to be more stringent than RACT) are now 
considered to be merely RACT. In addition, one State suggested the 
presumptive RACT level should be revised to at least 85 percent control 
or that NOX RACT should be defined as up to $10,000/ton of 
pollutant removed.
    Two States disagreed with EPA's proposal that a new RACT 
determination should be required in cases where the initial RACT 
analysis under the 1-hour NAAQS found that no additional controls were 
necessary for a specific source or source category. They indicated such 
re-analysis would be an unwise use of resources because it would not 
yield significant benefits. Further, they do not agree that a RACT 
determination is warranted for major VOC or NOX sources not 
in existence during the previous RACT determination, because new 
sources in 1-hour nonattainment areas have been permitted pursuant to 
the requirements for NSR and, where applicable, have already been 
subject to more stringent control requirements.
    Several State and industry commenters recommended that RACT 
requirements apply for major sources in any portion of the 8-hour 
nonattainment area not subject to a RACT program for the 1-hour 
standard.
    Response: In 1992, EPA set presumptive NOX RACT for 
boilers as combustion modification, consistent with title IV acid rain 
requirements. For all other NOX stationary source 
categories, EPA guidance in 1994 indicated States should consider in 
their RACT determinations technologies that achieve 30-50 percent 
reduction within a cost range of $160-1300 per ton of NOX 
removed. In the NOX SIP Call Rule, we reviewed all major 
NOX source categories and stated in the final rule that the 
NOX SIP Call controls, at less than $2,000/ton, represent 
reductions beyond those required by RACT. The suggestion of one State 
that EPA's RACT guidance should be revised to reflect 85 percent 
control and $10,000/ton of pollutant removed is inconsistent with EPA's 
previous conclusions regarding what level of control represents RACT 
and because the comment lacked supporting documentation that the 
suggested values represent feasible control levels for the many source 
categories affected by the RACT program.
    Many areas subject to the major source RACT requirement under the 
8-hour ozone standard have previously addressed the RACT requirement 
with respect to the 1-hour ozone standard. For example, major sources 
located in States of the Ozone Transport Commission 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 
result in the same or similar control technology as the initial RACT 
determination under the 1-hour standard because the fundamental control 
techniques, as described in the CTGs and ACTs, are still applicable. In 
cases where controls were applied due to the 1-hour ozone RACT 
requirement, we expect the incremental emissions reductions from 
application of a second round of controls would be small and, 
therefore, the cost for advancing that small additional increment of 
reduction would not be reasonable. In such cases, EPA believes the cost 
per ton of NOX removed associated with installing a second 
round of RACT controls (and perhaps the removal of initial RACT 
controls) is likely to be beyond the costs assumed in our current 
guidance noted above ($160-$1300/ton). In contrast, a RACT analysis for 
uncontrolled sources would be much more likely to find that RACT level 
controls are economically and technically feasible.
    The CTGs and ACTs for VOC were completed over a period from the 
late 1970s to mid-1990s and have not been updated. The CTGs are still 
used to presumptively define VOC RACT. The EPA issued NOX 
ACT documents between 1992 and 1995. In September 2000, updates to the 
NOX ACT documents were completed for stationary internal 
combustion engines and cement kilns. The NOX and VOC ACTs 
describe available control techniques and their cost effectiveness, but 
do not define presumptive RACT levels as the CTGs do. Updating the

[[Page 71655]]

ACTs would not, by itself, change EPA's NOX or VOC RACT 
guidance, but it could provide information that would lead to a new 
conclusion as to which control measures constitute RACT for a specific 
source or source category. Since RACT can change over time as new 
technology becomes available or the cost of existing technology 
decreases, EPA does not agree with comments that once a source has met 
RACT, it has met RACT whether or not the ozone standard is revised.
    We agree that progress has been made in improving the cost 
effectiveness of some NOX and VOC controls. States and other 
interested parties should consider available information that may 
supplement the CTG and ACT documents. In cases where additional 
information is presented, for example, as part of notice-and-comment 
rulemaking on a RACT SIP submittal, States (and EPA) would necessarily 
consider the additional data in reviewing what control obligation is 
consistent with RACT. Similarly, we encourage States to use the latest 
information available in making RACT determinations, whether that 
information is in CTGs, ACTs, or elsewhere.
    The EPA agrees that it is more efficient for EPA to broadly assess 
what is RACT for a specific source category than for States to conduct 
source-by-source RACT determinations, especially considering that 
States need to initiate RACT programs in the near future (as discussed 
in a separate comment/response). The EPA's current RACT guidance may be 
used for purposes of the 8-hour standard. At the same time, we agree 
with comments that many of the CTGs/ACTs have not been revised since 
issued and thus may not provide the most accurate picture of current 
control options. Therefore, we believe States must consider new 
information that has become available and certify that a 1-hour ozone 
RACT determination, even where controls were required, still represents 
an appropriate RACT level of control for the 8-hour ozone program. In 
the alternative, the State should revise the SIP to reflect a modified 
RACT requirement for specific sources or source categories.
    In summary, we believe the current NOX and VOC RACT 
guidance, including CTGs and ACTs, may continue to be used by States in 
making RACT determinations with respect to the 8-hour ozone standard. 
States should ensure that their SIPs accurately reflect RACT based on 
the current availability of technically and economically feasible 
controls.
    Therefore, in portions of 8-hour ozone nonattainment areas where 
major sources or source categories were previously reviewed and 
controls applied to meet the RACT requirement under the 1-hour 
standard, States should review and, if appropriate, accept the initial 
RACT analysis as meeting the RACT requirements for the 8-hour standard. 
Absent data indicating that the previous RACT determination is no 
longer appropriate, the State need not submit in its SIP a new RACT 
requirement for these sources. In such cases, the State should submit a 
certification as part of its SIP revision, with appropriate supporting 
information, such as consideration of new data, that these sources are 
already subject to SIP-approved requirements that still meet the RACT 
obligation. There are 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. In such cases, a new RACT 
determination is needed to consider whether more cost-effective control 
measures have become available for sources that were not previously 
regulated. A re-analysis may determine that controls are now 
economically and technically feasible and should be required to meet 
RACT. Furthermore, in this situation, we expect the incremental 
emissions reductions to be significant, compared to the uncontrolled 
emissions levels. Thus, the cost per ton of emissions controlled is 
more likely to make controls ``reasonably available'' than where a 
source had already installed controls to meet RACT for the 1-hour 
standard. In all cases where additional information is presented as 
part of notice-and-comment rulemaking, including a RACT SIP submittal 
for sources previously controlled, States (and EPA) must consider the 
additional information as part of that rulemaking.
    We agree with several State and industry comments that RACT 
requirements apply for major sources in any portion of the 8-hour 
nonattainment area not subject to a RACT program for the 1-hour 
standard.
    Some commenters objected to EPA's proposal that any major VOC or 
NOX source 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. These commenters stated that the 
BACT or LAER provisions would assure at least RACT level controls on 
such sources. We agree this should be true in many cases, but not all. 
The BACT/LAER analyses do not automatically ensure compliance with RACT 
since the regulated pollutant or source applicability may differ and 
the analyses may be conducted many years apart. States may, however, 
rely on information gathered from prior BACT or LAER analyses for the 
purposes of showing that a source has met RACT to the extent the 
information remains valid. We believe that the same logic holds true 
for emissions standards for municipal waste incinerators under CAA 
section 111(d) and NSR/PSD settlement agreements. Where the State is 
relying on these standards to represent a RACT level of control, the 
State should present their analysis with their determination during the 
SIP adoption process.
    For VOC sources subject to MACT standards, States may streamline 
their RACT analysis by including a discussion of the MACT controls and 
relevant factors such as whether VOCs are well controlled under the 
relevant MACT air toxics standard, which units at the facility have 
MACT controls, and whether any major new developments in technologies 
or costs have occurred subsequent to the MACT standards. We believe 
that there are many VOC sources that are well controlled (e.g., through 
add-on controls or through substitution of non-VOC non-HAP materials 
for VOC HAP materials) because they are regulated by the MACT 
standards, which EPA developed under CAA section 112. Any source 
subject to MACT standards must meet a level that is as stringent as the 
best-controlled 12 percent of sources in the industry. Examples of 
these HAP sources that may effectively control VOC emissions include 
organic chemical plants subject to the hazardous organic NESHAP (HON), 
pharmaceutical production facilities, and petroleum refineries.\60\ We 
believe that, in many cases, it will be unlikely that States will 
identify emission controls more stringent than the MACT standards that 
are not prohibitively expensive and are thus unreasonable. We believe 
this will allow States, in many cases, to rely on the MACT standards 
for purposes of showing that a source has met VOC RACT.
---------------------------------------------------------------------------

    \60\ However, there are some MACT categories for which it may 
not be possible to determine the degree of VOC reductions from the 
MACT standard without additional analysis; for example, the 
miscellaneous metal parts and products (40 CFR part 60, subpart 
MMMM) due to the uncertainty of the compliance method that will be 
selected.
---------------------------------------------------------------------------

    Comments: Some commenters pointed out that many companies have 
employed averaging programs for NOX SIP Call compliance and 
want this option preserved under the 8-hour ozone standard since 
requiring sources

[[Page 71656]]

to individually meet NOX RACT requirements would greatly 
increase the costs of compliance at sources already subject to the 
NOX cap-and-trade program without achieving greater 
emissions reductions.
    Response: In some cases, a facility or a group of sources in a 
nonattainment area might choose to meet NOX RACT by adopting 
an emissions averaging concept within the area; e.g., over-controlling 
one or more large units and not controlling other units. We agree with 
comments that emission averaging and cap-and-trade programs such as the 
NOX SIP Call Rule achieve emissions reductions at lower 
costs. The EPA's NOX RACT guidance, published on November 
25, 1992 (57 FR 55625), was, in part, for the purpose of ``enhancing 
the ability of States to adopt market-based trading systems for 
NOX'' and to encourage States to ``structure their RACT 
requirements to inherently incorporate an emissions averaging concept 
(i.e., installing more stringent controls on some units in exchange for 
lesser control on others).'' EPA believes that such cap-and-trade 
programs are beneficial ways to achieve the greatest overall reductions 
in the most cost-effective manner. Consistent with previous 
guidance,\61\ EPA continues to believe that RACT can be met on average 
by a group of sources within a nonattainment area rather than at each 
individual source. Therefore, states can show that SIP provisions for 
these sources meet the ozone RACT requirement using the averaging 
approach.
---------------------------------------------------------------------------

    \61\ The 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, EPA's existing policy provides for States to 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 meet RACT requirements.
---------------------------------------------------------------------------

    Finally, EPA believes that sources complying with the 
NOX SIP call trading system meet their RACT obligation, for 
reasons explained later in this section.
    Comments: Several State and industry commenters supported EPA's 
proposed approach concerning RACT and the NOX SIP Call. 
These commenters stated that the level of emissions reductions required 
by the NOX SIP Call is far greater than the level of 
reductions achieved by controls that have been determined to be 
NOX RACT. One State encouraged EPA to provide this approach 
to other areas subject to approved cap-and-trade programs in addition 
to those areas affected by the NOX SIP Call.
    The EPA also received comments, primarily from several States and 
environmental groups, opposing the approach. These commenters stated 
that there are no exceptions to the RACT mandates in either subpart 1 
or subpart 2 for sources subject to NOX SIP Call cap-and-
trade programs, and EPA is without authority to invent such an 
exception. Because the NOX SIP Call's cap-and-trade program 
does not require emission control technologies to be installed at a 
particular source, some commenters conclude that RACT requirements are 
necessary and appropriate to ensure that all sources implement at least 
a minimum level of control. One State indicated there have been 
numerous cases where sources subject to the NOX SIP Call 
have not had to install controls comparable to RACT. Commenters also 
suggested that RACT is intended to be a benchmark for control 
technology at individual stationary sources, not a level of regional 
reductions. In addition, some commenters noted that the NOX 
SIP Call requirements are specific to the ozone season, where RACT 
requirements are year-round. Consequently, these commenters recommended 
that EPA should also consider non-ozone related nitrogen issues, 
including fine particles, visibility, nitrification and acidification 
of watersheds and eutrophication of coastal waters all of which would 
be reduced with year-round controls.
    Response: In 2009, when sources in areas designated nonattainment 
for the 8-hour standard in June 2004 must comply with RACT, the 
NOX SIP call trading program is subsumed by the CAIR trading 
program. As described below, EPA believes that sources meet ozone 
NOX RACT requirements if they comply with the NOX 
SIP Call trading program or, in States where all CAIR reductions are 
achieved by EGUs, rules implementing CAIR. Accordingly, a State need 
not perform a NOX RACT analysis for non-EGU sources that 
after 2008 continue to be subject to a SIP that regulates those non-EGU 
sources equally or more stringently than the State's current rules 
meeting the NOX SIP call. In a NOX SIP Call State 
that ensures such reductions from non-EGUs, the State need not perform 
a NOX RACT analysis for EGU sources if the State retains a 
summer season EGU budget under CAIR that is at least as restrictive as 
the EGU budget that was approved in the State's NOX SIP call 
SIP. In addition, the State need not perform a NOX RACT 
analysis for EGUs subject to a State cap-and-trade program that meets 
CAIR and achieves CAIR NOX reductions solely from EGUs. As 
noted above, the SIP should document that the State is relying on EPA's 
conclusion in this preamble that these levels of control meet RACT for 
the covered sources.
    The EPA believes the RACT mandate in subpart 1 and subpart 2 
applies in specific geographic areas but does not necessarily require 
every major source to install controls. For example, as discussed in a 
separate comment/response, where we are dealing only with subpart 1 
RACT, we only require such RACT as will advance attainment or meet RFP. 
Thus, EPA does not agree with commenters who conclude that RACT 
requirements are necessary and appropriate to ensure that all sources 
implement at least a minimum level of control or that RACT is intended 
to be a benchmark for control technology at all individual stationary 
sources.
    Some commenters pointed out that the NOX SIP Call 
requirements are specific to the ozone season, yet RACT requirements 
are year-round. Although there are some exceptions, EPA agrees that 
RACT usually is an application of controls year-round; thus, there 
would be non-ozone-related nitrogen benefits, including fine particles, 
visibility, nitrification and acidification of watersheds and 
eutrophication of coastal waters due to year-round controls. While the 
commenters are correct that the NOX SIP call reductions must 
be achieved during the 5 months of the ozone season critical for high 
ozone concentrations for affected States, we believe that the RACT 
requirement will be satisfied for sources covered by the NOX 
SIP Call. In addition to operating advanced controls at least in the 
ozone season, many sources have installed combustion controls that 
function all the time; emissions reductions from these controls will 
occur year round.
    (i) NOX SIP Call: All States submitting SIP revisions to 
meet the NOX SIP Call (October 27, 1998; 63 FR 57356) 
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, the covered sources are already subject to a 
stringent control program.\62\ As described in the June 2, 2003 
proposal, these sources collectively achieve more emissions reductions 
within the SIP

[[Page 71657]]

Call area than would be required by application of RACT requirements to 
each source in that area. At the time that EPA promulgated the 
NOX SIP Call rule, EPA estimated that in the NOX 
SIP Call control case, EGUs would achieve a 64 percent reduction beyond 
the base case requirements,\63\ and that the non-EGUs subject to the 
States' cap-and-trade program would achieve a 60 percent reduction from 
uncontrolled levels.\64\ These EGU and non-EGU reductions were clearly 
beyond the 30-50 percent expected from a RACT program.\65\ We stated in 
the final NOX SIP Call rule that the reductions achieved by 
that program ``. . . represent reductions beyond those required by 
Title IV or Title I RACT.'' In addition, because the cap-and-trade 
program covers units serving a 25 megawatt generator, it may achieve 
emission reductions from many units that are below the general 
NOX RACT threshold of 100 tpy for sources in the East.
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    \62\ The cost of purchasing allowances will often be higher than 
the cost for achieving a RACT level of control. In the 1998 
NOX SIP Call Rule, average costs of compliance were 
estimated at about $1500/ton and average RACT level costs are less 
than $1300/ton. Recent estimates of the projected cost of allowances 
are about $2000-4000/ton (NOX Budget Trading Program, 
2003 Progress and Compliance Report, August 2004, EPA-430-R-04-010).
    \63\ The EPA's 1992 NOX RACT guidance provides that 
the controls required under title IV of the CAA are RACT controls 
and specifies emission rates three times larger than the rates later 
used for coal-fired units in the NOX SIP Call (0.45-0.50 
lb/mmBtu versus 0.15). Base case refers to the situation absent 
NOX SIP call controls.
    \64\ 63 FR 57434-5.
    \65\ 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.
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    EPA generally has the discretion to determine whether a State 
submitted rule is consistent with the RACT requirements for a 
particular source in the context of approving individual RACT SIPs. The 
NOX SIP Call is estimated to achieve a beyond-RACT degree of 
control regionally, and sources were required to install any controls 
needed for compliance no later than May 2004. Under these 
circumstances, EPA believes that the NOX SIP call 
constitutes RACT for those sources covered by the NOX SIP 
Call, regardless of the manner of compliance of individual sources 
(e.g., control equipment installation or purchase of allowances from 
other sources). EPA is making this finding now for all areas in the 
NOX SIP call region, such that States need not submit RACT 
analyses for sources subject to the NOX SIP call that are in 
compliance with a SIP approved as meeting the NOX SIP call. 
A State that is relying on this conclusion for affected sources should 
document this reliance in its RACT SIP.
    Whether our judgment that non-EGU sources subject to the 
NOX SIP Call trading system meet RACT will continue to apply 
in the future depends upon how the State chooses to make the transition 
from the NOX SIP Call trading system to the CAIR trading 
system. After 2008, EPA will no longer administer the NOX 
SIP Call trading system and will only administer the CAIR trading 
system. A State subject to the NOX SIP Call has three 
choices for the transition. One, a State can bring its non-EGU sources 
that are subject to the NOX SIP Call trading program into 
the CAIR trading program with the same emissions budget allowed by the 
State's current NOX SIP Call rules. Two, a State can adopt a 
SIP that regulates those non-EGU sources at least as stringently as the 
State's current NOX SIP Call rules, but does not move those 
sources into the CAIR trading program. Three, a State can adopt a new 
SIP that meets its NOX SIP Call responsibilities, in whole 
or in part, by regulating sources other than the non-EGU sources 
regulated by the State's current NOX SIP Call trading 
program rules. We believe it is unlikely that States will choose the 
third option, given that its non-EGU sources already would have 
complied with the NOX SIP Call requirements. Under the first 
two options, we believe that these non-EGU sources would continue to 
satisfy RACT. Under the third option, the State would need to determine 
whether non-EGU sources that had participated in the NOX SIP 
Call trading program continue to meet RACT (either individually, or 
through averaging among sources within the nonattainment area).
    Finally, as proposed, in cases where States have adopted controls 
for cement kilns consistent with the NOX SIP Call (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 perform a new NOX RACT 
analysis for those sources. In its RACT SIP submission, the State 
should identify the cement plants that are subject to NOX 
SIP Call controls and that, therefore, are already subject to a SIP-
approved requirement consistent with RACT. The EPA received comments 
from States supporting the proposal. Similarly, EPA believes a State 
may choose to accept the Phase II NOX SIP Call control level 
for stationary internal combustion engines \66\ as meeting the 
NOX RACT requirements and identify these obligations as RACT 
level controls in its RACT SIP.
---------------------------------------------------------------------------

    \66\ As described in the April 21, 2004 rule (69 FR 21608).
---------------------------------------------------------------------------

    (ii) CAIR: The EPA has determined that EGU sources complying with 
CAIR requirements meet ozone NOX RACT requirements in States 
where CAIR reductions are achieved from EGUs only.
    As discussed more fully in the CAIR final rulemaking, EPA has set 
the 2009 CAIR NOX cap at a level that, assuming the 
reductions are achieved from EGUs, would result in EGUs installing 
emission controls on the maximum total capacity on which it is feasible 
to install emission controls by those dates. The 2015 NOX 
cap is specifically designed to eliminate all NOX emissions 
from EGUs that are highly cost effective to control (the first cap 
represents an interim step toward that end).\67\ In general, we expect 
that the largest-emitting sources will be the first to install 
NOX control technology and that such control technology will 
gradually be installed on progressively smaller-emitting sources until 
the ultimate cap is reached.
---------------------------------------------------------------------------

    \67\ CAIR achieves about 80% of its NOX emission 
reductions in 2009 (remainder in 2015).
---------------------------------------------------------------------------

    We do not believe that requiring source-specific RACT controls on 
EGUs in nonattainment areas will reduce total NOX emissions 
from sources covered by CAIR below the levels that would be achieved 
under CAIR alone. Furthermore, we believe that source-specific RACT 
could result in more costly emission reductions on a per ton basis. If 
States chose to require smaller-emitting sources in nonattainment areas 
to meet source-specific RACT requirements by 2009 (the required 
compliance timing for RACT), they would likely use labor and other 
resources that would otherwise be used for emission controls on larger 
sources. Because of economies of scale, more boiler-makers and other 
resources may be required per megawatt of power generation for smaller 
units than larger units. Thus, the cost of achieving such reductions 
would be greater on a per ton basis. In any event, the imposition of 
source-specific control requirements on a limited number of sources 
also covered by a cap-and-trade program would not reduce the total 
emissions from sources subject to the program. Under a cap-and-trade 
program such as CAIR, there is a given number of allowances that equals 
a given emission level. Source-specific control requirements may affect 
the temporal distribution of emissions (by reducing banking and thus 
delaying early reductions) or the spatial distribution of emissions (by 
moving them around from one place to another), but it does not affect 
total emissions. If source-specific requirements were targeted at the 
units that can be controlled most cost effectively, then the imposition 
of source-specific controls would achieve the same result as the 
projected CAIR cap-and-trade program. If not, however,

[[Page 71658]]

the imposition of source-specific requirements would make any given 
level of emission reduction more costly than it would be under the cap-
and-trade program alone. Thus, the combination of source-specific RACT 
and CAIR would not reduce the collective total emissions from EGUs 
covered by CAIR, but would likely achieve the same total emissions 
reductions as CAIR alone, in a more costly way. As a result, we believe 
that EGUs subject to the CAIR NOX controls meet the 
definition of RACT for NOX (in States that require all CAIR 
NOX reductions from EGUs). EPA is making this finding now 
for all areas in the CAIR region, such that States need not submit RACT 
analyses for sources subject to CAIR that are in compliance with a SIP 
approved as meeting CAIR.
    Under CAIR, a State may elect to meet its State budget for 
NOX emissions solely through requiring reductions from EGUs 
or through requiring reductions from a combination of sources, 
including non-EGUs. If the State requires reductions from sources other 
than EGUs, it is not eligible to participate in the EPA-administered 
CAIR trading program. Additionally, separate provisions of the CAIR 
rule allow States to choose to allow large NOX sources that 
are not EGUs to opt-in to the program. If only part of the CAIR 
reductions are required from EGUs, and the balance of the reductions 
obtained from non-EGU sources, then the stringency of CAIR EGU control 
would be diminished to some extent (an amount that cannot be determined 
until a State submits a SIP indicating which sources are participating 
in the program). Therefore, in these cases, the above rationales for 
our judgment that CAIR satisfies RACT would not apply. However, even 
where a State allows opt-ins from other source categories to meet CAIR 
emission levels, if a State transitions from the NOX SIP 
call level of control to CAIR by the first two transition options for 
non-EGUs discussed above, the NOX RACT requirement would be 
met for EGUs (and the State would not need to conduct RACT analyses for 
these EGUs) if the State retains a summer season EGU budget under CAIR 
that is at least as restrictive as the EGU budget that was set in the 
state's NOX SIP call SIP. Otherwise, the State would need to 
conduct RACT analyses for EGUs (either on an individual basis, or using 
the averaging approach within the nonattainment area).
    For clarity, we would note that a State has discretion to require 
beyond-RACT NOX reductions from any source (including CAIR 
or NOX SIP Call sources), and has an obligation to 
demonstrate attainment as expeditiously as practicable. In certain 
areas, States may require NOX controls based on more 
advanced control technologies to provide for attainment of the ozone 
standards.
    Comments: Several States expressed support for the proposed RACT 
submittal date of 2 years after designation for subpart 1 and subpart 2 
areas. Other commenters suggested the RACT submittal date for subpart 1 
areas should be 3 years after designation in order to coincide with the 
attainment demonstration submittal deadline and to allow a more 
efficient use of resources. In addition, comments from industry 
suggested a 48-60 month period is needed for installation of controls, 
rather than the 30 month period proposed.
    Response: As described in an earlier comment/response, in subpart 1 
areas that do not request an extension of their attainment date, RACT 
is met with the control requirements associated with a demonstration 
that the NAAQS is attained as expeditiously as practicable. The EPA 
agrees with commenters that it would be more efficient, in these areas, 
if the date for submittal of the RACT rules were to coincide with 
submittal of the attainment demonstration since RACT is closely tied to 
the attainment demonstration. Therefore, in the final rule, the RACT 
submittal date for these areas is the same as the submittal date for 
the attainment plan, which is 3 years after designation (June 2007). 
Although EPA is not setting a specific RACT rule implementation 
deadline for these areas, as provided in the Phase 1 rule, all controls 
necessary for attainment must be implemented by the beginning of the 
attainment year ozone season. For example, States would need to require 
implementation no later than May 1, 2008 where the area has a June 15, 
2009 attainment date.\68\ In some cases, the time from State rule 
adoption to installation of controls by sources may be relatively 
short; in other cases, sources may need more time. Therefore, EPA 
encourages States to adopt rules expeditiously (prior to the June 2007 
deadline, where possible) so that sources have more than sufficient 
time to install the controls prior to the start of the attainment year 
ozone season.
---------------------------------------------------------------------------

    \68\ This assumes the ozone season in this example begins May 1.
---------------------------------------------------------------------------

    For subpart 2 moderate and above areas and areas within an OTR, the 
final rule is similar to provisions in section 182 of the CAA which 
require States to submit RACT rules for these areas within 24 months 
after the designation. Several commenters supported this approach. 
Since some States may rely on submittal of SIP revisions meeting CAIR 
to also satisfy RACT for some sources, the final rule extends the 
proposed RACT submittal date of 24 months to 27 months after 
designation (September 15, 2006), to be consistent with the date for 
submittal of the CAIR SIP (September 10, 2006).
    For areas subject to the 27-month RACT submittal date, EPA believes 
the proposed 30-month period for installation of controls is 
reasonable, given that this is the statutorily-prescribed period \69\ 
(for the areas covered under subpart 2) and based on our prior 
experience with States adopting and implementing RACT requirements. For 
instance, subsequent to submission of the NOX RACT SIP 
revisions for the 1-hour standard subject to the 30-month CAA period, 
EPA approved NOX RACT SIP submittals in some areas which had 
been exempt from the requirements, including the Dallas and Houston 
areas, which required implementation within 2 years from the State 
adoption date. Also, the EPA recently determined that a 24-month period 
is adequate for stationary internal combustion engines to install low 
emission combustion controls (April 21, 2004; 69 FR 21633).
---------------------------------------------------------------------------

    \69\ In the 1990 CAA Amendments, Congress specifically added 
RACT requirements for major sources in section 182. Section 182 
required the RACT rules to be implemented ``as expeditiously as 
practicable'' but no later than 30 months after the submittal 
deadline.
---------------------------------------------------------------------------

    The 48 to 60-month period (June 15, 2011) for installation of 
controls suggested by some commenters was not adequately supported with 
a justification that more time is necessary. In addition, as described 
in an earlier comment/response, EPA anticipates that many sources which 
applied controls due to RACT requirements with the 1-hour ozone 
standard will not need to install new controls for the 8-hour standard. 
Thus, because fewer sources will be subject to new requirements to meet 
RACT for the 8-hour standard than were subject to the 1-hour standard, 
there will be less demand for control equipment. States and many 
sources face a reduced burden compared to the same CAA requirement in 
the 1990s.
    Since the ozone season (40 CFR part 58, appendix D) does not begin 
for many areas until May 1, however, for areas with an effective date 
of designation of June 15, 2004, the final rule allows sources until 
the beginning of the area's 2009 ozone season (generally May 1,

[[Page 71659]]

2009) rather than March 15, 2009\70\ to install controls. Installation 
of controls before the 2009 ozone season is sufficient to provide the 
benefits for timely attainment of the ozone standard in areas with a 
2010 or later attainment date.\71\ And the short delay (generally 
between March 15, 2009 and May 1, 2009) will cause no harm since it is 
prior to the ozone season, which is when ozone levels are most likely 
to be at harmful levels. Sources meeting NOX RACT through 
compliance with CAIR would be subject to the CAIR NOX caps 
beginning January 1, 2009. Additionally, some areas have ozone seasons 
that begin earlier than March 15, 2009 and would need to ensure sources 
are complying by that earlier date.
---------------------------------------------------------------------------

    \70\ 57 months from June 15, 2004 effective date of designation 
(27 months to submission plus 30 months to implementation).
    \71\ Note, since the CAA requires attainment as expeditiously as 
practicable, some moderate nonattainment areas may have an 
attainment date earlier than June 15, 2010.
---------------------------------------------------------------------------

    For subpart 1 areas that request an attainment date extension 
(i.e., an attainment date beyond 5 years after designation), the final 
rule sets the RACT submittal and implementation dates the same as 
required for subpart 2 moderate and above areas, except subpart 1 areas 
are required to submit the RACT SIP with its attainment date extension 
request.
2. Reasonably Available Control Measures (RACM)

a. Background

    As noted in the June 2, 2003 proposed rule, 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. We have also issued 
guidance for implementing the RACM provisions of the CAA that 
interprets that provision to require a demonstration that the State has 
adopted all reasonable measures to meet RFP requirements and to 
demonstrate 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.\72\ 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. The June 2, 2003 proposal noted that EPA had issued policies 
and procedures related to RACM. The draft regulatory text (section 
51.912(d)) provided that for each nonattainment area required to submit 
an attainment demonstration under Sec.  51.908, the State would have to 
submit with the attainment demonstration a SIP revision demonstrating 
that it has adopted all control measures necessary to demonstrate 
attainment as expeditiously as practicable and to meet any RFP 
requirements.
---------------------------------------------------------------------------

    \72\ ``State Implementation Plans; General Preamble for Proposed 
Rulemaking on Approval of Plan Revisions for Nonattainment Areas'' 
44 FR 20372 at 20375. ``Provide for implementation of all reasonably 
available control measures (RACM) as expeditiously as practicable, 
insofar as necessary to assure reasonable further progress and 
attainment by the required date * * *''
    ``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). In part this 
guidance said, ``The EPA * * * indicated that where measures that 
might in fact be available for implementation in the nonattainment 
area could not be implemented on a schedule that would advance the 
date for attainment in the area, EPA would not consider it 
reasonable to require implementation of such measures. The EPA 
continues to take this interpretation of the RACM requirement.'' As 
an example, with regard to one possible list of measures (TCMs under 
section 108(f) of the Act) that guidance said, ``* * * based on 
experience with implementing TCM's over the years, EPA now believes 
that local circumstances vary to such a degree from city-to-city 
that it is inappropriate to presume that all section 108(f) measures 
are reasonably available in all areas. It is more appropriate for 
States to consider TCM's on an area-specific, not national, basis 
and to consider groups of interacting measures, rather than 
individual measures.''
    ``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.''
---------------------------------------------------------------------------

b. Summary of final rule

    Section 51.912(d) of the final rule reflects our proposal and draft 
regulatory text. For each nonattainment area required to submit an 
attainment demonstration under Sec.  51.908, the State must submit with 
the attainment demonstration a SIP revision demonstrating that it has 
adopted all control measures necessary to demonstrate attainment as 
expeditiously as practicable and to meet any RFP requirements.
    In the CAIR rulemaking (May 12, 2005, 70 FR 25221 et seq.), EPA 
found that the control installations projected to result from the CAIR 
NOX and SO2 caps in 2009 and 2010 would be as 
much as feasible from EGUs across the CAIR region by those dates. EPA 
concluded that the CAIR compliance dates represent an aggressive 
schedule that reflects the limitations of the labor pool, and 
equipment/vendor availability, and need for electrical generation 
reliability for installation of NOX emission controls. We 
believe that the CAIR rule appropriately reflects the constraints the 
EGU sector faces in achieving NOX reductions (and the CAIR 
SO2 reductions) in a way that is as expeditious as 
practicable. States should recognize these constraints in developing 
their own compliance schedules for NOX emission controls in 
meeting their CAIR and RACM responsibilities. However, the CAIR rule 
did not specify which sources should install emissions control 
equipment or reduce emission rates to a specific level in order to meet 
the SO2 and NOX caps under CAIR.
    Based on our experience developing the NOX SIP Call, 
CAIR, and the proposed Clear Skies Legislation, we believe that many 
power companies will develop their strategies for complying with CAIR 
based, in part, on consultations with air quality officials in the 
areas in which their plants are located. Because power plants are 
generally major emission sources, the operators of those plants 
typically have ongoing relationships with State and local officials 
that will be involved in developing air quality plans. We are aware 
that, in the past, companies have worked with air quality officials to 
meet their emission control obligations under a cap-and-trade approach 
such as the NOX SIP Call while also addressing the concerns 
of air quality officials about the air quality impacts of specific 
plants. This has led to controlling emissions from power plants located 
in or near specific ozone nonattainment areas. A number of companies 
have indicated that such collaboration will be even more important as 
the States in which they are located address multiple air quality goals 
(e.g., visibility, interstate air pollution, local attainment of 
standards for multiple pollutants).
    The EPA expects similar consultations between States and power 
sector companies on which plants will be controlled under CAIR, 
considering local attainment needs in planning for CAIR compliance. 
This consultation might promote opportunities to provide improved air 
quality earlier for large numbers of people. Power companies may 
identify economic advantages in situating CAIR controls to help the 
local area attain; for example, it might need to control fewer 
facilities for the area to reach attainment. These benefits may 
outweigh any additional marginal costs

[[Page 71660]]

the company might incur by forgoing less costly controls on another 
more distant plant. In any event, the intent of these consultations 
would not be to upset market behavior or incentives. With respect to 
ozone, we anticipate that these consultations will affect individual 
control decisions for a few areas.
    In this regard, EPA notes that CAIR SIPs will be due in 2006, while 
local 8-hour ozone attainment plans will be due in 2007. The EPA 
suggests that consultations on location of CAIR controls would be 
timely during State development of the CAIR SIP.
    As States implement the RACM provisions in conjunction with their 
attainment demonstration, we recognize that for some moderate areas and 
some subpart 1 areas it may be difficult to demonstrate attainment in 
less than 5 years due to the time needed to adopt and implement 
controls, and the need to achieve significant emissions reductions to 
advance the attainment date. However, the State will need to assess 
RACM to determine whether the attainment date could be sooner than 5 
years from designation for each nonattainment area.
    EPA believes that while areas projected to attain within 5 years of 
designation as a result of existing national measures should still be 
required to conduct a RACM analysis, such areas may be able to conduct 
a limited RACM analysis that does not involve additional air quality 
modeling beyond that used for the attainment demonstration. A limited 
analysis of this type could involve the review of available reasonable 
measures, the estimation of potential emissions reductions, the 
evaluation of the time needed to implement these measures, and 
anticipated levels of regional controls affecting ozone in the 
nonattainment area. In lieu of conducting air quality modeling to 
assess the impact of potential RACM measures, existing modeling 
information could be considered in determining the magnitude of 
emissions reductions that could significantly affect air quality and 
potentially result in earlier attainment. If the State, in consultation 
with EPA, determines from this initial, more limited RACM analysis that 
the area may be able to advance its attainment date through 
implementation of reasonable measures, then the State must conduct a 
more detailed RACM analysis, involving air quality modeling analyses, 
to assess whether it can advance the attainment date.

c. Comments and Responses

    Comment: One commenter asked that we clarify whether old SIP 
measures become RACM.
    Response: Under EPA's policy concerning RACM, there are no measures 
that are automatically deemed RACM. The determination of whether a SIP 
contains all RACM requires an area-specific analysis that there are no 
additional economically and technologically feasible control measures 
(alone or in conjunction with others) that will advance the attainment 
date.\73\ The April 16, 1992, ``General Preamble'' provides some 
guidance on measures that the State should consider in making its RACM 
determination, including ``any measure that a commenter indicates 
during a public comment period is reasonably available should be 
closely reviewed by the planning agency to determine if it is in fact 
reasonably available for implementation in the area in light of local 
circumstances.'' Such measures can be rejected as not being RACM if 
they will not advance attainment or provide for RFP or if they are not 
economically or technologically feasible.
---------------------------------------------------------------------------

    \73\ Ibid.
---------------------------------------------------------------------------

    Comment: One commenter recommended that EPA revise its policy 
permitting SIPs to exclude otherwise feasible and potentially RACM that 
achieve emissions reductions in increments less than the amount 
necessary to advance the attainment date by a full year. The commenter 
believed this was an onerous standard that has stymied development of 
new control measures, particularly transportation control measures. The 
commenter believed EPA's RACM standard is especially harmful to the 
ability to provide SIP credit for Smart Growth land use, due to the 
long timeframe over which land is developed and redeveloped. The 
commenter believes that ever-increasing suburbanization of our nation 
inflates the growth rate in VMT, thereby neutralizing improvements in 
vehicle emissions. The commenter claimed that a significant air quality 
improvement strategy for the 21st Century is compact mixed use 
pedestrian-friendly development near frequent transit and believed that 
changing land use plans in this direction will benefit air quality by 
reducing the rate of growth in VMT and emissions. The commenter 
recommended that EPA be aware of this and revise its RACM standard to 
encourage local governments to alter their land use plans by providing 
a mechanism to give credit for air quality beneficial land use changes.
    Response: We do not believe our RACM policy has ``stymied'' 
development of new control technologies. New emission reduction 
technologies have surfaced and continue to surface to meet market 
demands resulting in part from CAA requirements, which include the 
requirements to demonstrate attainment as expeditiously as practicable 
and to make RFP toward attainment. In addition, control measures that 
produce emissions reductions can be approved into SIPs whether or not 
such measures meet the definition of RACM. Our RACM policy merely 
interprets the CAA as not mandating measures that do not contribute to 
expeditious attainment and timely RFP. The policy does not limit the 
potential for States to develop any control measures they wish, 
including land use measures. In fact, we have prepared a separate 
guidance document on how areas can develop and receive SIP credit for 
land use control measures.\74\ We conclude, however, that to require 
areas to adopt and implement as RACM every control technology or 
measure that obtains a small amount of emissions reductions--even if 
such measure would not advance the attainment date or is not required 
to meet RFP requirements--is not justified. Such a policy would be 
extremely burdensome to planning agencies, would detract from the 
effort to develop more reasonable and effective controls to meet the 
NAAQS, and would not be necessary to meet the statutory goal of 
expediting attainment. For these reasons, and because such a 
requirement is not mandated by the statute, we are not adopting such a 
policy.
---------------------------------------------------------------------------

    \74\ Improving Air Quality Through Land Use Activities; 
Transportation and Regional Programs Division, Office of 
Transportation and Air Quality, U.S. Environmental Protection 
Agency. EPA420-R-01-001. January 2001.
---------------------------------------------------------------------------

    Comment: One commenter believed that the RACM requirements for 
subpart 1 areas should be designed so as to not require extensive and 
unneeded control due to the fact that in most or all cases these 
controls will not be needed for the area to attain.
    Response: We believe the current RACM guidance, which applies to 
both subpart 1 and subpart 2 areas, works to avoid extensive and 
unneeded controls, while ensuring that areas meet the health-based 
NAAQS as expeditiously as practicable.
    Comment: One commenter believed our RACM guidance provides only 
minimum requirements to ensure attainment as expeditiously as

[[Page 71661]]

practicable and believes that every nonattainment area must be required 
to consider adoption of measures that have been implemented in other 
areas, including the South Coast of California, so as to achieve 
progress and attainment as expeditiously as practicable. An area should 
be allowed to reject such measures only upon a showing that they are 
not practicable due to specified unique circumstances. The commenter 
urged that given the importance of this issue to fair, expeditious and 
lawful implementation of the 8-hour standard, EPA's final 8-hour 
standard implementation rule must explicitly require compliance with 
this guidance.
    Response: To meet the RACM provision of the CAA, the State must 
determine as part of its attainment demonstration whether there are 
additional measures that are feasible that would expedite attainment. 
In addition, EPA's RACM policy indicates that areas should consider all 
candidate measures that are potentially available, including any that 
have been suggested for the particular nonattainment area.\75\ Although 
areas should consider all available measures, including those being 
implemented in other areas such as California, areas need adopt 
measures only if they are both economically and technologically 
feasible and will advance the attainment date or are necessary for RFP. 
This interpretation of the section 172 requirements has recently been 
upheld by several courts. See, e.g., Sierra Club v. EPA, et al., 294 F. 
3d 155 (D.C. Circuit, 2002).
---------------------------------------------------------------------------

    \75\ In ``AState Implementation Plans; General Preamble for the 
Implementation of Title I of the Clean Air Act Amendments of 1990; 
Proposed Rule,'' we noted in the discussion of the RACM requirement 
that ``In addition, any measure that a commenter indicates during 
the public commenter period is reasonably available for a given area 
should be closely reviewed by the planning agency to determine if it 
is in fact reasonably available for implementation in the area in 
light of local circumstances.'' The discussion of RACM in that 
document contains other relevant history concerning the RACM 
requirement.
---------------------------------------------------------------------------

    Comment: Several commenters agreed with our proposal to require 
that the RACM analysis and measures be submitted within 3 years after 
the effective date of designation for the 8-hour NAAQS.
    Response: We acknowledge the support of the comments on the 
submission timing of the RACM requirements.

H. How will the section 182(f) NOX provisions be handled under the 8-
hour ozone standard?

    [Section VI.L. of June 2, 2003 proposed rule (68 FR 32840); Sec.  
51.913 in draft and final regulatory text.]
1. Background
    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 
the NOX exemption provisions in section 182(f) of the CAA 
for areas classified under subpart 2. 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 under 
subpart 2. The relevant requirements are RACT and nonattainment major 
NSR for major stationary sources of NOX in certain ozone 
nonattainment areas and throughout States in the OTR.\76\ In addition, 
section 182(f) specifies circumstances under which these NOX 
requirements would be limited or would not apply (``NOX 
exemption''). Further, areas granted a NOX exemption under 
section 182(f) may be exempt from certain requirements of EPA's motor 
vehicle I/M regulations and from certain Federal requirements of 
general and transportation conformity.\77\
---------------------------------------------------------------------------

    \76\ See 57 FR 55622 (``Nitrogen Oxides Supplement to the 
General Preamble,'' published November 25, 1992).
    \77\ As stated in EPA's I/M (November 5, 1992; 57 FR 52950) and 
conformity rules (60 FR 57179 for transportation rules and 58 FR 
63214 for general rules), certain NOX requirements in 
those rules do not apply where EPA grants an areawide exemption 
under section 182(f).
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    In the June 2, 2003 action, we indicated the NOX 
requirements and exemption provisions in section 182(f) would apply for 
subpart 2 nonattainment areas and in OTRs.\78\ In addition, we proposed 
to allow subpart 1 nonattainment areas to seek a NOX 
exemption, where appropriate. Further, we proposed that areas 
previously granted a NOX exemption under the 1-hour ozone 
standard would need to request an exemption for purposes of the 8-hour 
standard in order to account for any new information that may point to 
a different conclusion with respect to the 8-hour standard. Recently, 
we invited comment \79\ on draft guidance intended to update the 
existing 1-hour ozone guidance \80\ regarding section 182(f) for 
application to the 8-hour ozone program. We issued the updated final 
guidance regarding section 182(f) on January 14, 2005.\81\
---------------------------------------------------------------------------

    \78\ 68 FR 32840.
    \79\ September 1, 2004 at 69 FR 53378.
    \80\ 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.
    \81\ Memorandum dated January 14, 2005, ``Guidance on Limiting 
Nitrogen Oxides (NOX) Requirements Related to 8-Hour 
Ozone Implementation'' from Stephen D. Page, Director, Office of Air 
Quality Planning and Standards, to Air Directors, Regions I-X.
---------------------------------------------------------------------------

2. Summary of Final Rule
    As proposed, the final rule allows a person to petition the 
Administrator for a NOX exemption under section 182(f) for 
an area classified under subpart 2 or located in an OTR or under our 
regulations for any other area designated nonattainment for the 8-hour 
ozone NAAQS. As with the 1-hour ozone standard, the NOX 
exemption provision in section 182(f) applies to subpart 2 ozone 
nonattainment areas and in a section 184 OTR. In addition, the final 
rule extends to subpart 1 ozone nonattainment areas the opportunity to 
petition the Administrator for an exemption from nonattainment major 
NSR and/or RACT requirements in a manner consistent with section 182(f) 
provisions. The petition must contain adequate documentation that the 
provisions of section 182(f) and/or our regulations are met. We 
recently issued \82\ updated guidance on appropriate documentation 
regarding section 182(f) for application to the 8-hour ozone program. 
In addition, the final rule states that a section 182(f) NOX 
exemption granted under the 1-hour ozone standard does not relieve the 
area from any requirements under the 8-hour ozone standard. That is, a 
new petition with respect to 8-hour ozone must be submitted to EPA and 
must be approved by EPA before an area is exempt from any 8-hour ozone 
standard NOX requirements.
---------------------------------------------------------------------------

    \82\ Memorandum dated January 14, 2005, ``Guidance on Limiting 
Nitrogen Oxides (NOX) Requirements Related to 8-Hour 
Ozone Implementation'' from Stephen D. Page, Director, Office of Air 
Quality Planning and Standards, to Air Directors, Regions I-X.
---------------------------------------------------------------------------

3. Comments and Responses
    Comments: Several commenters supported EPA's proposal to make 
NOX waivers available to 8-hour nonattainment areas and all 
areas in an OTR under either subpart 1 or subpart 2, pursuant to the 
provisions of section 182(f) of the CAA. Some commenters stated that 
requiring a new NOX waiver for the 8-hour standard amounts 
to rescinding the existing waivers. Another commenter asked what is 
needed to maintain an exemption. One commenter stated that EPA should 
make it clear that there is no presumption that a NOX waiver 
granted under section 182(f) of the CAA for the 1-hour ozone standard

[[Page 71662]]

is continued for the 8-hour standard. Other commenters recommended that 
the NOX waiver should automatically apply for the 8-hour 
ozone standard in areas where EPA previously granted a NOX 
waiver under the 1-hour ozone standard. One commenter stated that the 
technical basis for granting waivers under the l-hour NAAQS remains 
valid.
    Response: We agree with comments supporting the proposal to apply 
the section 182(f) exemption provisions to subpart 2 nonattainment 
areas and OTRs and to extend these protections to subpart 1 areas 
through regulation.
    Since a NOX exemption granted for the 1-hour ozone 
standard was completed through notice-and-comment rulemaking, the 
exemption remains effective for the 1-hour standard unless and until 
EPA completes rulemaking to remove or revise the waiver for a specific 
area. This rulemaking on the 8-hour ozone implementation program does 
not rescind any existing 1-hour NOX waiver provision.
    However, for areas previously granted a NOX waiver under 
the 1-hour ozone standard, a petitioner would need to seek a new waiver 
for purposes of the 8-hour ozone standard. The EPA does not believe 
NOX waivers--including those granted under the 1-hour ozone 
standard--should always be permanent. As sources are regulated and the 
mix of pollutants is altered, circumstances could show that 
NOX reductions will begin to provide a benefit. In several 
cases, the 1-hour NOX waiver has been removed in subsequent 
rulemaking actions.\83\ Indeed, when EPA issued waivers under the 1-
hour ozone standard, we stated that the NOX waivers would be 
removed where new information became available and the rationale for 
the initial NOX waiver no longer was supported. For example, 
the waiver may be removed through rulemaking if subsequent modeling 
data demonstrated an ozone attainment benefit from NOX 
emission controls.
---------------------------------------------------------------------------

    \83\ E.g: Recision of NOX waiver for the Dallas-Fort 
Worth area on April 20, 1999 (64 FR 19283). Also, the temporary 
waiver for Houston and Beaumont (originally granted April 19, 1995, 
expired December 31, 1997). (60 FR 19515).
---------------------------------------------------------------------------

    Given that many NOX waiver actions were based on air 
quality and dispersion modeling analyses made in the mid-1990s for 
purposes of the 1-hour standard, EPA believes that newer data and 
analyses should be used to determine if a NOX waiver under 
the 8-hour ozone standard is warranted. Many NOX waivers 
were simply based on whether an area had ambient air quality showing 
attainment of the 1-hour ozone standard; this is not an appropriate 
basis for a waiver under the 8-hour ozone standard since areas may be 
attaining the 1-hour standard but exceeding the 8-hour standard. Some 
NOX waivers were based on dispersion modeling. In some 
cases, the modeling later proved inadequate as attainment was not met 
in the forecast year. In other cases, those modeling analyses have been 
replaced with more recent analyses. The EPA believes that 
NOX waivers under the 8-hour ozone standard should be 
supported by analyses specific to the 8-hour ozone standard and should 
consider relevant information developed after the 1-hour waivers were 
granted.
    The EPA believes the NOX waivers may not be granted 
except through notice-and-comment rulemaking action. That is, since EPA 
approval of a waiver request would change SIP requirements, EPA must 
conduct notice-and-comment rulemaking on that request. The EPA believes 
this requirement precludes automatic approval of 8-hour NOX 
waiver requests based on previously issued 1-hour NOX 
waivers.
    Comment: Some commenters urged EPA to expand the section 182(f) 
waiver to VOC RACT as well as NOX RACT. One commenter states 
that EPA has substantially more discretion under subpart 1 than it does 
under subpart 2, and to fail to exercise that discretion to avoid 
ineffective and inefficient requirements (through NOX and 
VOC waivers) would be irresponsible, and an abuse of its discretion.
    Response: The EPA disagrees with these comments. We do not see any 
provision in the CAA that would give us the authority to create such an 
exemption. While Congress could have created a VOC waiver at the same 
time the section 182(f) NOX waiver provisions were enacted, 
Congress chose not to do so. The Congress further provided for 
additional review and study under section 185B ``to serve as the basis 
for the various findings contemplated in the NOX 
provisions'' (H.R. Rep. 490 at 257). Under section 185B, EPA, in 
conjunction with the National Academy of Sciences (NAS), conducted a 
study on the role of ozone precursors in tropospheric ozone formation. 
The final section 185B report incorporates this NAS report along with 
an EPA report addressing the availability and extent of NOX 
controls. With respect to VOC, the NAS report states that ``control of 
VOCs never leads to a significant increase in ozone.'' \84\ Thus, the 
section 185B report does not support a waiver provision for VOC. While 
dispersion modeling analyses show that NOX emissions 
reductions can be counterproductive under certain circumstances (the 
reason for the NOX waiver provision), we do not see a 
similar case for VOC.
---------------------------------------------------------------------------

    \84\ December 1991 NAS report, Rethinking the Ozone Problem in 
Urban and Regional Air Pollution, page 377.
---------------------------------------------------------------------------

    Comment: One commenter stated that the draft guidance does not 
contain a discussion of the linkages between 182(f) NOX 
exemptions and certain other regional NOX reduction 
requirements such as the NOX SIP Call and the proposed 
``Clean Air Interstate Rule.'' The commenter believed EPA has an 
obligation to assess the impact of any section 182(f) exemption request 
under the provisions of section 110(a)(2)(D), including the potential 
for emissions exempted from controls to contribute to downwind 
nonattainment or to interfere with the maintenance of any NAAQS.
    Response: As discussed in section 4.2 of the draft 8-hour exemption 
guidance, EPA encourages States/petitioners to include consideration of 
air quality effects that may extend beyond the designated nonattainment 
area. States should consider such impacts since they are ultimately 
responsible for achieving attainment in all portions of their State and 
for ensuring that emissions originating in their State do not 
contribute significantly to nonattainment in, or interfere with 
maintenance by, any other State. However, EPA believes NOX 
exemptions under section 182(f) of the CAA and interstate transport of 
emissions under section 110(a)(2)(D) of the CAA can be considered 
independently. Section 110(a)(2)(D) requires States to reduce emissions 
from stationary and/or mobile sources where there is evidence showing 
that such emissions would contribute significantly to nonattainment or 
interfere with maintenance in other States. In some cases, then, EPA 
may grant an exemption from certain NOX requirements and, in 
a separate action, require NOX emission decreases under 
section 110(a)(2)(D). Thus, a NOX exemption doesn't affect 
an obligation of a State to meet a NOX budget established 
under a NOX SIP Call or other transport rule.

I. Should EPA promulgate a NSR provision to encourage development 
patterns that reduce overall emissions?

    [Section 0.9. of the June 2, 2003 proposed rule (68 FR 32849). No 
draft or final regulatory text.]


    Note: Section V of this preamble below addresses rules for NSR 
for the 8-hour ozone standard. This section addresses only the June 
2, 2003 proposal related to Clean Air Development Communities 
(CADC).


[[Page 71663]]


1. Background
    In the June 2, 2003 proposal, we considered two options designed 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. We proposed to define a community that changes its 
development patterns in such a way that air emissions within the 
nonattainment area are demonstrably reduced as a CADC. As a result of 
becoming a CADC, an area would obtain a certain amount of flexibility 
in its NSR program.
    In the first option, we proposed that 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, we proposed that 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.
    We also requested comments on the options and encouraged comments 
suggesting other ways of encouraging development patterns that would 
result in lower emissions.
2. Summary of Final Rule
    The EPA is not at this time issuing any rule related to CADCs.
3. Comments and Responses
    Comments: The EPA received numerous comments on the proposal, some 
supporting and others opposing the CADC provision. A number of the 
commenters noted that the proposal did not appear to have enough 
detail. A summary of the comments appears in the response to comment 
document.
    Response: The EPA appreciates the many comments it has received on 
this section. The EPA agrees with a number of commenters that while the 
ideas in this section are interesting and designed to achieve useful 
goals, much more work is needed in a separate effort to work through 
the many issues involved. Therefore, EPA will not move forward with 
this particular effort at this time.
    However, EPA does not plan to ignore the issue. The EPA will be 
looking to bring a group of stakeholders together to see if the group 
can come up with and support one or more ways that we can use existing 
programs and authorities to create positive incentives and tools for 
communities to reduce sprawl. The process will not be designed to work 
only through the specific issues in establishing a program to encourage 
CADCs as outlined in the proposal, but will be open to all ideas.
    Issues related to community development, land use and ``sprawl'' 
will have transportation and air quality implications. Therefore, EPA 
will work closely with DOT in addressing these issues.

J. 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?

    [Section VI.P. of June 2, 2003 proposed rule (68 FR 32852); no 
draft or final regulatory text.]
1. Background
    As noted in the proposal, in many cases, States will be developing 
strategies to attain both the 8-hour ozone and PM2.5 NAAQS 
in the same nonattainment area or in nonattainment areas that have some 
area or areas in common. Additionally, requirements for regional haze 
apply to all areas. Certain ozone control measures may also be helpful 
as part of a PM2.5 control strategy or a regional haze plan. 
Similarly, controls for PM2.5 may lead to reductions in 
ozone or regional haze. Because the precursors for ozone and 
PM2.5 may be transported hundreds of kilometers, regional 
scale impacts may also be relevant to consider. While EPA expects that 
strategies to decrease ozone concentrations will not adversely affect 
strategies to attain the PM2.5 NAAQS, we also believe 
integration of ozone, PM2.5, and regional haze planning will 
reduce overall costs of meeting multiple air quality goals.
2. Summary of final rule
    We are encouraging each State with an ozone nonattainment area that 
overlaps or is nearby a PM2.5 nonattainment area to take all 
reasonable steps to coordinate the SIP development processes for these 
nonattainment areas and to coordinate the development of these SIPs 
with the state's SIP to address the reasonable progress goals for 
regional haze. Specifically, EPA encourages 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. However, while we believe such 
coordination may reduce the overall costs to States for implementing 
these programs, this final rule does not require the State to 
coordinate these three planning efforts.
3. Comments and Responses
    Comments: Several commenters supported EPA's recommendation for 
States to integrate planning for 8-hour ozone, PM2.5, and 
regional haze. These commenters agreed that the integration of ozone, 
PM2.5 and regional haze controls will reduce the overall 
costs of meeting multiple air quality goals and that EPA should 
continue to synchronize the SIP planning requirements for these 
pollutants to aid in this integration. One commenter asked EPA to 
clarify that this analysis is not an approvability issue associated 
with an 8-hour attainment demonstration. Other commenters recommended 
that EPA require nonattainment areas to perform an integrated control 
strategy assessment to ensure ozone controls will not preclude optimal 
controls for secondary fine particles and visibility impairment.
    Response: We recognize the importance of integrating planning for 
8-hour ozone, PM2.5, and regional haze as much as possible, 
given the overlap in technical work and likely control strategies. None 
of the commenters, however, has identified legal authority that allows 
EPA to require nonattainment areas to perform an integrated control 
strategy assessment to ensure ozone controls will not preclude optimal 
controls for secondary fine particles and visibility impairment. 
Therefore, we will continue to encourage States to coordinate their 
work, but it is not a requirement and, thus, not an approvability 
issue.
    Comments: Other commenters encouraged EPA to identify flexibility 
so that areas may be provided more time if they are developing a multi-
pollutant strategy. Commenters stated that it is imperative that SIP 
obligations and attainment dates with respect to these regulated air 
pollutants be harmonized and that regulatory requirements and deadlines 
be closely coordinated. One commenter stated this may require certain 
deadlines be extended and that they believe Congress would not be 
opposed to extending deadlines in the name of efficiency.
    Response: To the extent our legal authority allows, we are working 
to harmonize SIP timelines for ozone, PM2.5, and regional 
haze. This 8-hour ozone implementation rule is necessarily based on the 
existing CAA and does not assume any changes to the CAA that may occur 
in the future. Thus, we cannot extend the submission dates for 8-hour 
ozone SIPs so that they match

[[Page 71664]]

the later submission dates for PM2.5 and regional haze SIPs. 
However, there is a substantial overlap in planning periods that will 
allow States to coordinate planning efforts among programs, without 
postponing implementation.

K. What emissions inventory requirements should apply under the 8-hour 
ozone NAAQS?

    [Section VI.Q. of June 2, 2003 proposed rule (68 FR 32853); Sec.  
51.915 in draft and final regulatory text.]
1. Background
    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 proposed 
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 Consolidated Emission Reporting Rule (CERR) in 40 CFR part 
51, subpart A, requires States to submit comprehensive statewide 
triennial emission inventories, beginning with the 2002 inventory year, 
regardless of an area's attainment status. Because these emission 
inventories will be available, we proposed that the data elements 
required for emission inventories by the CERR could be used to prepare 
the emissions inventories under the 8-hour NAAQS. The draft regulatory 
text, however, did not contain a specific requirement that the emission 
inventory be submitted as a SIP revision within 2 years after 
designation.
    For subpart 1 areas, section 172, paragraphs (b) and (c)(3) require 
submission of the nonattainment area emission inventory as part of the 
SIP by a date established by EPA, which cannot be later than 3 years 
after designation as a nonattainment area. However, the June 2, 2003 
proposal did not specify a deadline for submission of the emission 
inventory for subpart 1 areas.
    The proposal also noted that we would be updating the April 1999 
``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. This guidance has been 
updated and now is available as: ``Emission Inventory Guidance for 
Implementation of Ozone and Particulate Matter National Ambient Air 
Quality Standards (NAAQS) and Regional Haze Regulations'', EPA-454/R-
05-001.\85\ This guidance complements the CERR by providing guidance on 
how to prepare data for emissions inventory SIP submissions.
---------------------------------------------------------------------------

    \85\ (available at: http://www.epa.gov/ttn/chief/eidocs/eiguid/index.html)
---------------------------------------------------------------------------

2. Summary of Final Rule
    Section 51.915 of the final rule reflects our June 2, 2003 proposal 
but is different from the draft regulatory text. To ensure 
comprehensive treatment of emission inventory requirements, the final 
rule contains language addressing the deadlines for submission of 
emission inventories for both subpart 1 and subpart 2 areas. The 
deadlines reflect the statutory requirements of no later than 3 years 
after designation for a subpart 1 area, and no later than 2 years after 
designation for subpart 2 areas. Existing emissions reporting 
requirements in 40 CFR part 51, subpart A are sufficient to satisfy the 
emissions inventory data requirements under the 8-hour ozone NAAQS. 
Consistent with the statutory schedule in section 182(a)(1) of the CAA, 
the final regulatory text in section 51.915 requires submission of an 
emission inventory no later than 2 years after designation as part of a 
subpart 2 SIP. Consistent with the statutory schedule in paragraphs (b) 
and (c)(3) of section 172 of the CAA, the final regulatory text in 
section 51.915 requires submission of an emission inventory no later 
than 3 years after designation as part of a subpart 1 SIP.
    In its guidance titled, ``Public Hearing Requirements for 1990 
Base-Year Emissions Inventories for Ozone and Carbon Monoxide 
Nonattainment Areas,'' September 29, 1992, EPA set forth its 
interpretation of a ``de minimis'' deferral of the public hearing 
requirement and the requirement for EPA to approve or disapprove 
emissions inventories under section 110(k). The EPA intends to follow 
this guidance in implementation of the emissions inventory requirements 
under the 8-hour ozone standard, under which areas could defer holding 
public hearings on their inventories and EPA could defer approving such 
inventories until the time the areas adopt and submit their attainment 
demonstrations and/or RFP plans.
    Existing emissions reporting requirements in 40 CFR part 51, 
subpart A can be applied to determine the data elements required for 
emissions inventories under the 8-hour ozone NAAQS (see, e.g. Tables 
2A, 2B, 2C, and 2D). Where appropriate, the State may use the data 
elements developed under part 51, subpart A in preparing its emissions 
inventory under the 8-hour ozone NAAQS. Also, EPA expects the States to 
consult the guidance document ``Emission Inventory Guidance for 
Implementation of Ozone and Particulate Matter National Ambient Air 
Quality Standards (NAAQS) and Regional Haze Regulations'', EPA-454/R-
05-001, and to submit inventories that are appropriate for the 
geographic area at issue and consistent with this guidance.\86\ We 
expect the State to include in its SIP submission documentation 
explaining how the emissions data were calculated.
---------------------------------------------------------------------------

    \86\ The CERR requires emissions inventory data on a statewide 
basis.
---------------------------------------------------------------------------

3. Comments and Responses
    Comment: Several commenters said that the proposal does not discuss 
specific requirements above and beyond those in the CERR. However, the 
proposal does mention one EPA guidance document, ``Emissions Inventory 
Guidance for Implementation of Ozone and Particulate Matter National 
Ambient Air Quality Standards (NAAQS) and Regional Haze Regulations''. 
This document states that ``The EPA developed this guidance document to 
complement the CERR and to provide specific guidance to State and local 
agencies and Tribes on how to develop emissions inventories for 8-hour 
ozone, PM2.5, and regional haze SIPs.'' Since the 8-hour 
emissions inventory requirements are the same for the CERR, there 
should be no additional, special requirements needed in emissions 
inventory development for the proposed 8-hour rule.
    Response: In its proposal, when EPA referred to the CERR emissions 
inventory requirements as satisfying requirements for emissions 
inventories under the 8-hour standard, EPA was referring to the 
requirements for data elements. The EPA did not mean to imply that the 
emissions inventories developed under the CERR, which are statewide, 
would satisfy all aspects of SIP inventories developed for SIP 
submissions under the 8-hour standard. While the CERR sets forth 
requirements for data elements, EPA guidance complements these 
requirements and indicates how the data should be prepared for SIP 
submissions. The 2002 emission inventory submitted as a SIP element 
under the 8-hour ozone SIP process is not necessarily the same as the 
2002 emission inventory submitted under the CERR. The two inventories 
differ in some important ways. For example, the CERR inventory was due 
June 1, 2004, while the SIP inventory due dates are later. Because of 
this time

[[Page 71665]]

lapse, the State may choose to revise some of the data from the CERR 
when it prepares its SIP inventory because of improvements in emission 
estimates. The SIP inventory also must be approved by EPA as a SIP 
element and is subject to public hearing requirements where the CERR is 
not. Because of the regulatory significance of the SIP inventory, EPA 
will need more documentation on how the SIP inventory was developed by 
the State as opposed to the documentation required for the CERR 
inventory. In addition, the geographic area encompassed by some aspects 
of the SIP submission inventory will be different from the statewide 
area covered by the CERR emissions inventory. The guidance document 
``Emissions Inventory Guidance for Implementation of Ozone and 
Particulate Matter National Ambient Air Quality Standards (NAAQS) and 
Regional Haze Regulations'' \87\ provides details on how States should 
prepare their emission inventory SIP submittals and discusses these and 
other relevant topics. If a State's 2005 emission inventory (or a later 
one) becomes available in time to use for an area subsequently 
redesignated nonattainment, then that inventory should be used. We also 
encourage the cooperation of the Tribes and the State and local 
agencies in preparing their emissions inventories.
---------------------------------------------------------------------------

    \87\ EPA-454/R-05-001, August 2005 (available at: http://www.epa.gov/ttn/chief/eidocs/eiguid/index.html).
---------------------------------------------------------------------------

    Comment: One commenter was concerned with the timing of the release 
of the final version of the NONROAD model (used to estimate mobile 
source emissions from nonroad sources). The commenter agreed that the 
draft version out for comment during the comment period was superior to 
previous calculation methodology and should be used for planning 
purposes. However, EPA needs to be cognizant of how disruptive to the 
planning process it is for new versions of emissions models to be 
released and incorporated in the middle of the development of a SIP. 
The commenter strongly encourages EPA to expedite the review and 
approval of any new models that will ultimately be used by States.
    Response: We acknowledge that the timing of the release of new 
models can sometimes complicate the SIP planning process. In this case, 
the timing of the final release of the NONROAD is dependent on the 
timing of the new nonroad standards final rule. We will do what we can 
to expedite the release of a new version of NONROAD that reflects the 
emissions benefits of the nonroad rule as soon as possible. In 
addition, we intend to provide guidance on the use of NONROAD that 
allows for completion of ongoing work with the current version of 
NONROAD if switching to the new version would cause significant delay. 
The EPA has included similar language in previous SIP policy guidance 
for the MOBILE model.
    Comment: One commenter urged EPA to improve the quality of 
PM2.5 rates in MOBILE6.2 so that areas will have a more 
reliable tool for creating a 2002 base-year inventory and for 
developing SIP revisions. The commenter was concerned about developing 
PM2.5 emissions inventories because PM2.5 
emissions factors in MOBILE6.2 are based largely on the old Part 
5 emission model and are not as sophisticated as the rates for 
CO, NOX, and VOC. The commenter also expressed concern about 
the lack of knowledge and techniques available for performing on-road 
mobile source fine particulate emissions inventories. Metropolitan 
Planning Organizations (MPOs) and air quality agency staff need to have 
a more reliable tool and acceptable methods for creating base year 
PM2.5 inventories and for SIP planning.
    Response: This comment is not directly relevant to the 8-hour ozone 
implementation rule. However in the interest of providing clarification 
on the issues raised by the commenter, we provide the following 
background information. Particulate emission factors in MOBILE6.2 are 
based on the best technical information available at the time the model 
was developed and we believe that it is the best available tool for 
estimating on-road emission factors for PM2.5. We are 
currently collecting additional PM data which will be incorporated in 
future versions of the EPA mobile source emission factor model. We 
continue to work to improve models and inventory methods for all 
pollutants. We have released technical guidance on the use of MOBILE6.2 
and on methods for developing annual inventories in SIPs and conformity 
analyses to help MPOs and air quality agency staff perform on-road 
mobile source fine particulate analyses.
    Comment: One commenter stated that since the CERR requires 
inventories every 3 years, that the CERR should replace the Emission 
Statement Reporting Program (ESRP) requirement, which was required 
before the CERR was adopted.
    Response: The ESRP is statutorily prescribed in section 182 
(a)(3)(B) of the CAA. The emission statement requirement satisfies a 
different need from the periodic emissions inventory requirement, 
namely that affected sources themselves have to report to the State 
their updated emissions information, whereas the emissions inventory 
requirement is a requirement on States to compile and make available to 
EPA an emissions inventory. We believe that the ESRP is a complementary 
program to the CERR and makes it easier for States to satisfy their 
CERR reporting requirements by providing data to the States from the 
sources.
    Comment: One commenter said that persistent inaccuracies in 
official emissions inventories have hindered regulatory acknowledgment 
and mitigation of the automobile VOC and CO gross polluter problem. The 
EPA should develop realistic emissions inventories and require States 
to do the same. Known errors in these inventories continue to misdirect 
emission reduction efforts. In particular, too little focus has been 
placed on the potential for rapid, substantial VOC and CO reductions 
from the in-use automobile fleet.
    Response: We agree that realistic emissions inventories are 
important to properly direct emission reduction efforts. Current 
emission factor models and inventory methods are far superior to 
previous models and methods and we are working to continually improve 
models and methods for developing emissions inventories for on-road and 
nonroad vehicles and equipment.
    Comment: One commenter stated that the official emissions 
inventories generated and used by EPA and State regulatory agencies for 
SIP planning and implementation have been shown repeatedly to suffer 
from serious inaccuracies and biases. Problems with inventories include 
errors in the total amount of emissions, as well as errors in the 
apportionment of emissions among various source categories. The most 
serious inventory problems center on VOC and CO, while problems with 
NOX inventories appear to be more modest. Since emissions 
inventories are a fundamental input to the process of choosing 
pollution reduction measures and to the modeling used to demonstrate 
future attainment of NAAQS, an inaccurate inventory is likely to lead 
to poor policy choices in terms of cost, effectiveness, or both.
    Response: We agree that emissions inventories are fundamental 
inputs to the air quality management process. We continue to strive to 
work with State and local agency partners to develop emissions 
inventories that best reflect the real world and will thus assist in 
identifying control strategies to make

[[Page 71666]]

RFP and attain the NAAQS. One should be aware, however, that it is 
impossible to develop an emissions inventory for an area that is 100 
percent accurate. Part of the problem is that most sources--including 
mobile sources--don't monitor and report emissions continuously, and 
therefore we and the States must use other methods to estimate 
emissions from them. Thus, emission inventories are by nature estimates 
of actual releases to the atmosphere. The EPA believes that current 
emission inventories are sufficiently accurate to support the air 
quality management decisions that are derived from the application of 
emission inventories and air quality models. The emissions data 
generated and used by EPA and State regulatory agencies for SIP 
planning and implementation is the best available. Although inventories 
are often criticized as lacking accuracy, seldom do critics supply 
better information.
    Comment: One commenter stated that the Agency proposes that the 
latest approved version of the MOBILE model should be used to estimate 
emissions from on-road transportation systems. The commenter 
recommended that if there are other models that meet EPA performance 
criteria and are scientifically peer reviewed, they should also be 
acceptable [e.g., the California mobile model, ``EMission FACtor'' 
(EMFAC)].
    Response: We believe that MOBILE is the best available tool for 
estimating emissions from on-road transportation systems outside of 
California. We are working to continually improve emission factor 
models and inventory methods for on-road vehicles. The EMFAC is not 
designed to be able to estimate fleet, activity, fuel, and 
environmental characteristics outside of California and is not a 
reasonable substitute for MOBILE in States other than California.
    Comment: One commenter supported the use of MOBILE6 in the 8-hour 
emissions inventory analyses and believed that EPA should change the 
guidance with respect to the use of MOBILE6 from ``should be used'' to 
``must be used.'' The commenter cautioned that MOBILE6 still 
significantly over-predicts emissions from passenger cars and light 
duty trucks for many reasons including the following: (1) The model 
does not adequately account for the benefits of onboard diagnostic 
regulation in non-I/M areas; and (2) the model does not reflect the 
decline in trips per day versus vehicle age.
    Response: The EPA's January 18, 2002 SIP and conformity policy 
guidance document (``Policy Guidance on the Use of MOBILE6 for SIP 
Development and Transportation Conformity,'' memo from John Seitz and 
Margo Oge to EPA Regional Air Division Directors) states, ``In general, 
EPA believes that MOBILE6 should be used as expeditiously as possible. 
The Clean Air Act requires that SIP inventories and control measures be 
based on the most current information and applicable models that are 
available when a SIP is developed.'' The EPA's February 14, 2004 SIP 
and conformity policy guidance document (``Policy Guidance on the Use 
of MOBILE6.2 and the December 2003 AP-42 Method for Re-Entrained Road 
Dust for SIP Development and Transportation Conformity'', memo from 
Margo Oge and Steve Page to EPA Regional Air Division Directors) 
updates this by stating that ``All states other than California should 
use MOBILE6.2 for future VOC, NOX, and CO SIP and conformity 
analyses in order to take full advantage of the improvements 
incorporated in this version.'' MOBILE6.2 is the most current 
applicable model and is based on the best information available at the 
time of its development and release. Therefore, EPA has indicated that 
it should be used.
    We do not believe that more on-board diagnostic benefits in non-I/M 
areas was justified based on available data at the time of the release 
of MOBILE6.2. Likewise, we did not have sufficient data to develop 
alternative assumptions about the relationship between trips per day 
and vehicle age. We are working to continually improve emission factor 
models and inventory methods for on-road vehicles and will review these 
issues during the development of the next emission factor model.

L. What guidance should be provided that is specific to Tribes?

    [Section VI.R. of June 2, 2003 proposed rule (68 FR 32854); no 
draft or final regulatory text.]
1. Background
    As noted in the preamble to the proposal, the TAR (40 CFR, part 
49), which implements section 301(d) of the CAA, gives Tribes the 
option of developing TIPs which can then be submitted to EPA for 
approval. Unlike States, Tribes are not required to develop 
implementation plans. Under the TAR, eligible Tribes are treated in the 
same manner as a State when implementing the CAA; however, EPA has 
determined that Tribes are not required to meet plan submittal and 
implementation deadlines in the CAA, e.g., 110(a)(1), 172(a)(2), 182, 
187, and 191.\88\
---------------------------------------------------------------------------

    \88\ See 40 CFR part 49.4(a). In addition, EPA determined it was 
not appropriate to treat Tribes similarly to States with respect to 
provisions of the CAA requiring as a condition of program approval 
the demonstration of criminal enforcement authority or providing for 
the delegation of such criminal enforcement authority. See 40 CFR 
part 49.4(g). To the extent a Tribe is precluded from asserting 
criminal enforcement authority, the Federal government will exercise 
primary criminal enforcement responsibility. See 40 CFR part 49.8. 
In such circumstances, Tribes seeking approval for CAA programs 
provide potential investigative leads to an appropriate Federal 
enforcement agency.
---------------------------------------------------------------------------

    The TAR provides flexibility for Tribes in the preparation of a TIP 
to address the NAAQS. The ``modular approach'' was described in the 
June 2, 2003 proposal of this rule. The TAR indicates that EPA 
ultimately has the responsibility for implementing CAA programs in 
Indian country, as necessary or appropriate, if Tribes choose not to 
implement those provisions. The EPA may find it necessary to develop a 
FIP to reduce emissions from sources in Indian country where the Tribe 
has not developed a TIP to address an air quality problem.
    Finally, as discussed in the June 2, 2003 proposal, it is important 
for both States and Tribes to work together to coordinate planning 
efforts since many nonattainment areas may include both Tribal land and 
non-Tribal land. Coordinated planning will help ensure that the 
planning decisions made by the States and Tribes complement each other 
and that the nonattainment area makes reasonable progress toward 
attainment and ultimately attains the NAAQS. In reviewing and approving 
the individual TIPs and SIPs, we will make certain they do not conflict 
with the overall air quality plan for an area.
    Section 301(d) of the CAA recognizes that eligible Indian Tribes 
are generally the appropriate non-Federal authority to implement the 
CAA in Indian country. As stated in the TAR, it is appropriate to treat 
eligible Tribes in the same manner as States, except for certain 
identified provisions, including provisions relating to plan submittal 
and implementation deadlines, 40 CFR section 49.3, 49.4. Therefore, 
when we discuss the role of the State in implementing this rule, we are 
also generally referring to eligible Tribes, with the above exception.
    As we noted in the June 2, 2003 proposal, 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(d)(5), States must notify the

[[Page 71667]]

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 in the same 
manner as States'' status must be informed of the contents of such 
plans and the extent of documentation to support the plans. In addition 
to this mandated process, we encourage States to extend the same notice 
to all Tribes for the reasons noted in the comment and response below. 
As a matter of policy, EPA intends to consult with and assist all 
Tribes, regardless of whether a Tribe has received Treatment in the 
same manner as a State (TAS) approval for the purpose of implementing 
its own TIP, and we encourage States to do the same.
    Understanding the content of a SIP will be important to Tribes 
located next to areas that are required to adopt SIPs, particularly to 
Tribes who do not choose or have the capacity to develop a TIP. 
Therefore, EPA intends to offer Tribes the opportunity for consultation 
on activities potentially affecting the achievement and maintenance of 
the NAAQS in Indian country. In addition, we expect States to work with 
Tribes with land that is part of the same air quality area during the 
SIP development process and to coordinate with Tribes as they develop 
the SIPs. 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 analysis.
    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, in the June 2, 2003 proposal, we took 
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 Tribes in reviewing 
upwind area SIPS during the State public comment period.
2. Summary of Policy
    We intend to take the approach noted in the proposal.
3. Comments and Responses
    Comment: One commenter was concerned about the transport of 
pollutants, including ozone precursors from urbanized areas into areas 
of Indian country. The commenter expressed strong support for the 
proposed 8-hour implementation rule statement that ``EPA will review 
SIPS for their effectiveness in preventing significant contributions to 
nonattainment in downwind Tribal areas with the same scrutiny it 
applies 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.'' This 
commenter asked for clarification on the nature of EPA's support for 
Tribes without TAS status. The commenter also asked if EPA would 
support Tribes without TAS approval in reviewing upwind area SIPs and 
provide technical assistance in interpreting SIP documentation.
    Response: In the TAR, we stated that the CAA protections against 
interstate pollutant transport apply with equal force to States and 
eligible Tribes. We stated that the prohibitions and authority 
contained in sections 110(a)(2)(D) and 126 of the CAA apply to eligible 
Tribes in the same manner as States. (See 63 FR 7254, 7260; February 
12, 1998). Section 110(a)(2)(D) requires, among other things, that 
States include provisions in their SIPs that prohibit any emissions 
activity within the State from significantly contributing to 
nonattainment, interfering with maintenance of the NAAQS or PSD or 
visibility protection programs in another State. In addition, section 
126 authorizes any State or eligible Tribe to petition EPA to enforce 
these prohibitions against a State containing an allegedly offending 
source or group of sources.
    We intend to consult with and assist Tribes during the TIP and SIP 
development process, regardless of whether a Tribe has received TAS 
approval for the purpose of implementing its own TIP. Executive Orders 
and EPA Indian policy generally call for EPA to be proactive with the 
Tribes. Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' 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.'' 
As part of EPA's ongoing efforts to actively involve Tribal officials 
in the development of programs which have Tribal implications, EPA in 
the July 18, 2000 ``Guidance on 8-hour Ozone Designations for Indian 
Tribes'' established a consultation process with each Tribe that EPA 
used throughout the designations process regardless of whether a 
particular Tribe has received an eligibility determination to implement 
section 107 of the CAA. In summary, EPA intends, as a matter of policy, 
to consult with and assist interested Tribal governments, regardless of 
their TAS status, in ensuring that the NAAQS are achieved in Indian 
country, including working with those Tribes located downwind from a 
polluting area.
    Comment: One commenter also asked us to explain how we envision our 
role in maintaining continued consultation with Tribes throughout the 
SIP development process.
    Response: We intend to continue to offer Tribes the opportunity for 
consultation on activities potentially affecting attainment and 
maintenance of the NAAQS in Indian country. In addition, we expect 
States to work with Tribes with land that is part of a nonattainment 
area in the SIP development process and to inform Tribes of the content 
of these SIPs as they develop them. States should coordinate with 
Tribes when projecting emissions from counties or other areas which 
include areas of Indian country to ensure that assumptions regarding 
demographics, economic activity, commuting patterns, etc. are accurate 
for the Tribal portions. Where the State models project future 
emissions under the SIP and their effect on air quality, then Tribes 
should be made aware of these modeling analyses in order to determine 
if their Indian country is being affected by upwind pollution and 
whether this impact has been considered in the modeling analyses.

[[Page 71668]]

    States have an obligation under 40 CFR 51.102(d)(5) to notify other 
States in advance of any public hearing(s) on their State plans which 
will significantly impact those other entities. This CAA requirement 
for States to notify other parties extends to Tribes under section 
301(d) and the TAR.
    Historically, States have not always understood their 
responsibility to coordinate with other affected entities, including, 
where appropriate, Tribes. States may not know how to contact Tribes, 
particularly when Tribal air programs are not well developed. It may be 
difficult for a State to obtain a copy of the control requirements for 
Indian country. We can assist States in identifying and contacting 
Tribes. When developing control strategies and making policy decisions, 
States, should as appropriate, coordinate with Tribes at the earliest 
opportunity. Where States utilize stakeholder-based consensus processes 
to develop SIP strategies, we recommend that Tribes be provided the 
opportunity to participate in the process.
    We have begun providing training to Tribes about how to participate 
in SIP development and implementation. Many Tribes may not possess the 
resources to develop a TIP or may decide not to develop a TIP. Some 
will develop robust air quality programs, which may or may not include 
a TIP. We intend to work with Tribes with all levels of air management 
programs. In general, where areas of Indian country have poor air 
quality, it is most likely as a result of transported pollution 
sources. We recognize that the manner in which States construct the SIP 
and what sources the SIP controls may impact Indian country located in 
downwind areas.
    Comment: One commenter raised concerns about the practical impacts 
of the NSR program on Indian Tribes. The commenter noted that Tribes 
have long traditions of environmental stewardship and recognize their 
responsibility to protect the health of their citizens. However, the 
commenter noted that Tribes have the right to pursue industrial and 
economic development. While that development must comply with all 
current environmental standards, the Tribes should not be burdened with 
requirements that in effect subsidize non-Tribal sources of pollution.
    Under the nonattainment NSR program, new major sources locating in 
a nonattainment area are required to obtain emissions reductions, 
referred to as offsets. The commenter stated that this requirement 
poses a hardship on an Indian reservation located in a larger 
nonattainment area. The new source wishing to locate on the reservation 
must obtain offsets from elsewhere in the nonattainment area; there are 
not usually enough sources on the reservation to supply the needed 
emissions reductions. When a Tribe is located in such a nonattainment 
area, efforts to increase economic development may be stalled by an 
inability of new sources to obtain offsets. The commenter concluded 
that this requirement is unfair to Tribes because of past barriers to 
economic development in Indian country. The commenter also stated that 
in many cases air pollution is transported onto the reservation.
    Response: The EPA acknowledges that offsets are a concern for 
Tribes. We are currently evaluating potential options for addressing 
this concern.

M. What are the requirements for OTRs under the 8-hour ozone standard?

    [Section VI.S. of June 2, 2003 proposed rule (68 FR 32855); Sec.  
51.916 in draft and final regulatory text.]
1. Background
    Section 176A of the CAA provides EPA with 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.
    Section 184 of the CAA 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. To date, the existing OTR is the only transport region for any 
pollutant that has been established. The general provisions of section 
176A apply to any OTR established under section 184.
    Section 184(b) sets forth specific VOC and NOX 
regulatory requirements to be applied throughout the entire OTR, in 
both attainment and nonattainment areas, to reduce interstate 
pollution. These additional regional regulatory requirements are 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. In general, these requirements 
duplicate requirements for certain ozone nonattainment areas that are 
classified under subpart 2. In the proposal, we indicated that we 
believed that under section 184 the current OTR will remain in place 
and remain subject to the section 184 control requirements for purposes 
of the 8-hour standard.
2. Summary of Final Rule
    Section 184 continues to apply for purposes of the 8-hour standard. 
The current OTR remains in place and the section 184 control 
requirements continue to apply for purposes of the 8-hour standard.
    Today's rule describes RACT requirements for portions of an OTR 
that are not classified moderate or above. Consistent with the RACT 
requirement for areas classified as moderate and above for the 8-hour 
standard, the State must submit a SIP revision that meets the RACT 
requirements of section 184 of the CAA for each area in the OTR that is 
designated as attainment or unclassifiable or that may be classified 
marginal, or that is under Sec.  51.904 of this subpart. A major 
stationary source for these areas is defined as a source which directly 
emits, or has the potential to emit, 100 tpy or more of NOX 
or 50 tpy or more of VOC. For any areas in the OTR, the State is 
required to submit the RACT revision no later than September 16, 2006 
(27 months after designation for the 8-hour NAAQS) and must provide for 
implementation of RACT as expeditiously as practicable but no later 
than May 1, 2009 (first day of the first ozone season that is 30 months 
after the RACT SIP is due).
    We believe that this does not result in any new regulatory 
requirements for any area in the OTR because these regulatory 
requirements are not associated with an area's designation or 
classification and already apply regionwide under the 1-hour ozone 
standard. 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 control requirements of section 184.
3. Comments and Responses
    Comments: The EPA received two comments supporting our 
interpretation of section 184 with regard to the 8-hour standard. One 
commenter further asserted that for any areas that might be added to 
the OTR, or for any new OTR, if modeling shows that the control 
requirements from section 184 are not appropriate and should not be 
required, then EPA has the discretion to exempt such areas from those 
requirements. The commenter pointed to a portion of the decision in 
Alabama Power v. Costle, 636 F. 2d. 323 (D.C. Circuit, 1979).
    Response: Regarding the comment about modeling, we are not prepared 
to determine whether the de minimis doctrine established by the court 
in Alabama Power would be available in the situation the commenter 
describes.

[[Page 71669]]

As the court in that case explained, such a determination would first 
require EPA to assess whether Congress, in enacting section 184 of the 
CAA, was so prescriptive as to foreclose granting such waivers. Since 
that issue of statutory interpretation for the described situation is 
not presently before the Agency, EPA is not addressing whether de 
minimis authority exists under section 184.

N. Are there any additional requirements related to enforcement and 
compliance?

    [Section VI.T. of June 2, 2003 proposed rule (68 FR 32855); no 
draft or final regulatory text.]
1. Background
    In the proposal, we noted that 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 * * *'' We also noted that 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). We 
proposed no specific regulatory provisions related to compliance and 
enforcement.
2. Summary of Final Rule
    As in the proposal, we are not setting forth any additional 
regulatory text related to compliance and enforcement.
3. Comments and Responses
    We received no comments on the proposed approach of handling 
enforcement and compliance provisions related to SIPs for the 8-hour 
ozone standard.

O. What requirements should apply to emergency episodes?

    [Section VI.U. of June 2, 2003 proposed rule (68 FR 32856); no 
draft or final regulatory text.]
1. Background
    In the June 2, 2003 proposal, we noted that 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 noted that we anticipate proposing a separate rulemaking in 
the future to update portions of that rule.
2. Summary of Final Rule
    We have not yet proposed any rule revision related to emergency 
episodes, and the final rule below does not contain any such rule 
revision.
3. Comments and Responses
    We received no comments on this aspect of the proposal.

P. What ambient monitoring requirements will apply under the 8-hour 
ozone NAAQS?

    [Section VI.V. of June 2, 2003 proposed rule (68 FR 32856); no 
draft or final regulatory text.]
1. Background
    Ozone monitoring data play an important role in designations, 
control strategy development, and related implementation activities. We 
did not propose any revisions to current ambient monitoring 
requirements listed in 40 CFR part 58.
    We indicated in the proposal that we do plan to modify the existing 
ozone monitoring requirements in a separate rulemaking as part of 
implementation of the National Ambient Air Monitoring Strategy (NAAMS), 
including adoption of a national strategy introducing national core 
monitoring sites (NCore) 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 would include the existing ozone monitoring sites that 
currently support the NAAQS-related activities. 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.
    We indicated in the proposal that as part of ongoing air quality 
monitoring network assessments (outside the scope of this present 
rulemaking), 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 said we would 
work with these agencies to develop network plans to ensure approval of 
all network designs. It is expected that the number and location of the 
original sites will be very similar to the current network. However, on 
a local basis, there will be some relocation, addition, and removal of 
ozone sites as a result of regional network assessments.
    In addition, we stated that we anticipate that we will include a 
requirement for measuring multiple air pollutants, including ozone 
precursors 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 emission reduction strategy efforts such as the 
NOX SIP Call, the CAIR and, if created, a statute codifying 
the Administration's Clear Skies Act, which addresses NOX 
reductions across the nation.
    Section 182(c)(1) of the CAA requires that enhanced ozone (e.g., 
precursor) monitoring be conducted in any ozone nonattainment area 
classified as serious, severe, or extreme. Our regulations reflecting 
the statutory requirements are found at 40 CFR part 58. This is known 
as the Photochemical Assessment Monitoring Stations (PAMS) program.
    The proposal noted that the PAMS monitoring requirements (referred 
to as ``enhanced monitoring'' under section 182(c)(1) of the CAA) are 
retained in areas designated as 1-hour ozone serious, severe, and 
extreme nonattainment areas. Areas that are designated serious or above 
under the 8-hour ozone NAAQS are not currently addressed in 40 CFR part 
58 for ozone precursor monitoring, although such areas are subject to 
the section 182(c)(1) provision. We anticipated that the revisions to 
the monitoring regulations would also cover all areas that are 
classified as serious or above for the 8-hour NAAQS, including any area 
that is bumped up to serious or above for the 8-hour NAAQS.
2. Summary of Final Rule
    There is no change from the proposal. No monitoring requirements 
are being promulgated as part of this rulemaking. EPA still expects to 
separately propose a number of amendments to the monitoring 
requirements, along the lines described above, in December 2005.
3. Comments and Responses
    Comment: One commenter noted that the NAAMS, which will likely 
influence the future of the ozone monitoring network, is based on the 
presumption that less criteria pollutant monitoring is needed and that 
resources must be shifted into measures that support other analyses. 
The commenter pointed out that many States have already curtailed their 
criteria pollutant monitoring networks in order to meet program 
requirements. The commenter argued that we should support and maintain 
the ozone monitoring network since the

[[Page 71670]]

data is used as the basis of attainment determinations and the tracking 
of progress.
    Response: While we did discuss some aspects of the NAAMS in the 
proposed rule, this rulemaking effort does not affect the ambient 
monitoring requirements listed in 40 CFR part 58. As such, comments on 
the NAAMS are not germane to this action. As noted above, we are 
working on a separate rulemaking effort to amend the ambient monitoring 
requirements. Commenters should raise any concerns they have regarding 
the NAAMS during the comment period on that action.
    We recognize that ozone continues to pose a significant 
environmental threat. The NAAMS does not recommend curtailing ozone 
monitoring, but rather recommends that State and local agencies perform 
assessments of their ozone networks to assure that the available 
resources are used to maximum benefit. We do not foresee significant 
changes to the existing ozone network as a result of these assessments. 
The NAAMS does recommend that resources be shifted from criteria 
pollutant monitoring to other monitoring initiatives (e.g., air toxics) 
for those criteria pollutants whose ambient concentrations are well 
below their respective NAAQS. Specifically, the strategy recommends 
significant reductions in total suspended particulate (TSP), 
PM10, SO2, CO and NO2 monitoring.
    Comment: Two commenters questioned the appropriateness of making 
high sensitivity NOX and CO measurements at NCore Level 2 
sites which may be in urban areas.
    Response: This rulemaking effort does not affect the ambient 
monitoring requirements listed in 40 CFR part 58. As such, comments on 
the appropriateness of making high sensitivity NOX and CO 
measurements in urban areas are not germane to this action.
    Comment: One commenter urged the continued support of the PAMS 
program. The commenter points out that the PAMS' data has been used to 
evaluate (and improve) emissions inventories, apply observation-based 
models, evaluate photochemical grid-based models, and assess 
effectiveness of control programs. The commenter argues that while 
fine-tuning the PAMS requirements may be appropriate, the program 
should be maintained.
    Response: As part of the anti-backsliding provisions of the Phase 1 
rule, the PAMS monitoring requirements are retained in areas designated 
as 1-hour ozone serious, severe, and extreme nonattainment areas at the 
time of a designation of nonattainment for the 8-hour standard. [See 40 
CFR 51.900(f)(9)]. In addition, areas that are designated serious or 
above under the 8-hour ozone NAAQS will also be required to comply with 
the PAMS monitoring requirements. Also, if an area is bumped up to 
serious or above for the 8-hour NAAQS, it would be required to conduct 
the appropriate PAMS monitoring.
    Currently, 40 CFR part 58 does not specifically apply to areas for 
purposes of the 8-hour standard. As discussed above, we are working on 
a separate rulemaking effort to amend the ambient monitoring 
requirements. We expect these revisions to ensure that all areas that 
are classified as serious or above for the 8-hour NAAQS are covered by 
the PAMS regulations. However, even in the absence of the applicability 
of these regulations, the enhanced monitoring requirement of section 
182(c)(1) applies.

Q. When will EPA require 8-hour attainment demonstration SIP 
submissions?

    [Section VI.W. of June 2, 2003 proposed rule (68 FR 32856); Sec.  
51.908(e) in draft regulatory text and Sec.  51.908(d) of final 
regulatory text.]
1. Background
    In the June 2, 2003 action, we proposed that required attainment 
demonstrations, which will be based on photochemical grid modeling for 
all areas must be submitted within 3 years after designation. However, 
we proposed that a subpart 1 area that desires an attainment date 
within 3 years after designation would have to provide a demonstration 
within 1 year after designation.
    We noted that the proposed time of submission is expected to result 
in as close as possible a synchronization of the 8-hour ozone and 
PM2.5 attainment demonstration SIP submittal dates.
2. Summary of Final Rule
    The final rule provides that attainment demonstrations--where 
required--must be submitted within 3 years after the effective date of 
the area's nonattainment designation. As noted in section IV.D.1. 
above, the final rule does have a separate provision addressing 
submission of an early attainment demonstration.
    On June 18, 2004 (69 FR 34076), EPA announced it was reconsidering 
the boundaries of the Las Vegas, NV, 8-hour ozone nonattainment area. 
The EPA deferred the effective date of the designation until September 
13, 2004, and that this reconsideration would not affect the time SIPs 
would be due for the Clark County nonattainment area.
3. Comments and Responses
    Comment: Several commenters believed some areas would need longer 
than 3 years to submit their attainment demonstration. At least one of 
these commenters noted that section 182(c)(2) allows up to 4 years 
(rather than 3 years) for submission of a modeled attainment 
demonstration for serious and above areas. One commenter recommended 
that EPA should consider extending attainment-modeling deadlines for 
nonattainment areas that are not currently contained within the 1-hour 
boundary, but will now be included in the 8-hour boundary. At least one 
commenter agreed with the timing we proposed.
    Response: For the reasons stated in the proposal, we believe it is 
appropriate to require that the modeled attainment demonstrations be 
submitted within 3 years after designation. In addition, we note the 
following:
     In general, the CAA requires these submissions no later 
than 3 years following designation. See sections 172(b) and 182(b) of 
the CAA. At the time of enactment of the CAA Amendments of 1990, 
Congress allowed areas that used the recently developed and complex 
photochemical grid model an extra year (4 years rather than 3 years) to 
submit their attainment demonstration. Photochemical grid modeling is 
now a process more familiar to users for purposes of developing 
attainment demonstrations, and all areas will be using these models for 
purposes of their attainment demonstrations and can be completed with 
the time frame established in this rule. There is no distinction 
between the tools used for attainment modeling that would justify 
additional time for these areas to submit attainment demonstrations. 
Further, where appropriate, existing modeling exercises (e.g., regional 
analyses, RPO analyses, older 1-hour analyses) may be leveraged for use 
in certain cases. In most cases, it will not be necessary to conduct a 
modeling exercise ``from scratch.''
     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 different times for 
different areas. 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

[[Page 71671]]

areas. These numerous nonattainment areas may differ by classification 
(some areas may be intrastate moderate areas, some interstate 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.
     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.
     We also note that an area's RFP plan and the RACM 
demonstration under section 172(c)(1) are due within 3 years after 
designation. For the reasons stated in sections describing those 
requirements, it is appropriate that the attainment demonstration, the 
RFP plan, and the RACM demonstration be submitted at the same time.
    In light of these reasons, we do not believe it is consistent with 
the CAA and reasonable to require submission of attainment 
demonstrations no later than 3 years following designation.
    Although we proposed that subpart 1 areas requesting an attainment 
date within 3 years after designation should submit their attainment 
demonstration within 12 months, the final rule does not include such a 
provision (see section IV.D.1 above for a further discussion of this).

R. How will the statutory time periods in the CAA be addressed when we 
redesignate areas to nonattainment following initial designations for 
the 8-hour NAAQS?

    [Section VI.B. of June 2, 2003 proposed rule (68 FR 32816); Sec.  
51.906 in draft and final regulatory text.]
1. Background
    We noted in the proposal that section 181(b) of the CAA provides 
that for areas designated attainment or unclassifiable for ozone 
immediately following enactment of the 1990 CAA Amendments and 
subsequently redesignated to nonattainment, the period to the maximum 
statutory attainment date would run from the date the area is 
classified under subpart 2.\89\ Thus, if an area designated as 
attainment for the 1-hour ozone standard in 1990 was redesignated to 
nonattainment for the 1-hour ozone standard in January 2002 and 
classified as moderate, the area's 1-hour attainment date would be no 
later than 6 years following January 2002, i.e., January 2008. Section 
172(a)(2) of the CAA provides for attainment dates to be calculated 
from the time the area is designated nonattainment.
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    \89\ 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 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.
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    We also noted in the proposal that most of the SIP submittal dates 
in subpart 2 are set as a fixed period from the date of enactment of 
the 1990 CAA Amendments, which was also the date of designation and 
classification by operation of law for most subpart 2 areas. Section 
181(b)(1) of the CAA provides that any fixed dates applicable in 
connection with any such requirements under section 110, subpart 1 and 
subpart 2 will be extended by operation of law to a period equal to the 
length of time between the date of enactment of the 1990 CAA Amendments 
and the date that an area is subsequently designated and classified.
2. Final Rule
    We are adopting the approach set forth in the proposed rule. For 
any area that is initially designated attainment or unclassifiable for 
the 8-hour NAAQS and subsequently redesignated to nonattainment for the 
8-hour ozone NAAQS, the periods for the attainment date and dates for 
submittal of any applicable requirements under subpart 1 or subpart 2 
would run from the date of redesignation to nonattainment of the 8-hour 
NAAQS. This is consistent with section 181(b), which gives areas 
redesignated to nonattainment the same amount of time to submit plans 
and to attain the standard as areas initially designated nonattainment.
3. Comments and Responses
    Comment: One commenter asked what the reasoning was behind the time 
period extension and if this is an attempt to provide equity, based on 
the wording of the draft regulatory text.
    Response: As stated above, section 181(b)(1) of the CAA provides 
for extending by operation of law any absolute, fixed date applicable 
in connection with a nonattainment requirement by a period equal to the 
length of time between the date of enactment of the CAA Amendments of 
1990 and the date the area is classified and redesignated as 
nonattainment. Thus, an area redesignated to nonattainment for the 1-
hour standard and classified as moderate would have been given 3 years 
to submit an attainment demonstration and up to 6 years to attain, 
which are the same time periods given to an area designated 
nonattainment and classified by operation of law at the time of the 
1990 CAA Amendments. Since it does not make sense to run deadlines from 
the date of the CAA Amendments of 1990, we have adopted an approach 
consistent with the intent of that section--that the statutory time 
periods run from the date of redesignation to nonattainment.

V. EPA's Final Rule for New Source Review

A. Background

1. The Major NSR Program
    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 and modified major stationary sources of air pollutants regulated 
under the CAA. In areas not meeting health-based NAAQS and in OTRs, the 
program is implemented under the requirements of section 110(a)(2)(C) 
and part D of title I of the CAA. We call this program the 
``nonattainment'' major NSR program. Subpart 1 of part D of title I 
contains general requirements for nonattainment areas for any criteria 
pollutant and subpart 2 contains provisions specifically for ozone 
nonattainment areas. Subparts 3 and 4 contain provisions specifically 
for CO monoxide and PM10, respectively. In Whitman v. 
American Trucking Associations, [531 U.S. 457, 482-86 (2001)], the 
Supreme Court reviewed EPA's implementation strategy for the revised 8-
hour ozone NAAQS, and remanded it to EPA to develop a reasonable 
resolution of the roles of subparts 1 and 2 in classifying areas for 
and implementing the revised ozone standard.\90\
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    \90\ For a more complete discussion of this decision and its 
implications, see 69 FR 23956; April 30, 2004.
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    In areas meeting the NAAQS (``attainment'' areas) or for which 
there is insufficient information to determine whether they meet the 
NAAQS (``unclassifiable'' areas), the NSR requirements under part C of 
title I of the CAA apply. We call this program the PSD program. 
Collectively, we also commonly refer to the attainment and 
nonattainment 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. Of these, the nonattainment area regulations are contained in 40 CFR 
51.165, 52.24, and part 51, appendix S.
    The major NSR provisions of the CAA are implemented primarily 
through SIP-approved State preconstruction permitting programs. As 
provided in section 172(c)(5) of the CAA, the SIP

[[Page 71672]]

must require permits for the construction and operation of new or 
modified major stationary sources in accordance with section 173 of the 
CAA. Subpart 2 of title I of the CAA sets forth additional SIP 
requirements for ozone nonattainment areas, including preconstruction 
permitting requirements.\91\
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    \91\ In some cases, subpart 1 and subpart 2 requirements are 
inconsistent or overlap. To the extent that subpart 2 addresses a 
specific obligation, the provisions in subpart 2 control (68 FR 
32811; June 2, 2003).
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    The minimum permitting requirements States must meet before EPA can 
approve a State's nonattainment major NSR program into a SIP are found 
in part D of title I and 40 CFR 51.165. However, some States are 
lacking a SIP-approved major NSR program for the 8-hour ozone NAAQS. 
This may be because the State has never had a nonattainment area in 
which it needed to apply a nonattainment NSR program or because the 
approved program does not apply to an 8-hour ozone nonattainment area. 
As discussed in section V.D of this preamble, EPA is providing States 3 
years to develop and submit an approvable nonattainment major NSR 
program for the 8-hour NAAQS. The regulations at 40 CFR 52.24(k) 
specify that appendix S governs permits to construct and operate in a 
nonattainment area or in any area designated under section 107(d) of 
the CAA as attainment or unclassifiable for ozone that is located in an 
OTR that a source applies for during this SIP development period (the 
interim period between the effective date of designations and the date 
that EPA approves a nonattainment major NSR program).
    Appendix S is an interpretation of 40 CFR subpart I (including 
Sec.  51.165), and has historically reflected substantially the same 
requirements as those in Sec.  51.165, subject to a limited exemption 
in section VI. This includes the requirement that a source comply with 
LAER and obtain offsetting emissions reductions. Pursuant to section 
52.24(k), where necessary, appendix S governs nonattainment major NSR 
permitting of ozone precursors in 8-hour ozone nonattainment areas and 
all areas within the OTR, including areas designated attainment/
unclassifiable, during the SIP development period. Thus, consistent 
with section 110(a)(2)(C), permitting of new and modified stationary 
sources in the area will be regulated as necessary to ensure that the 
NAAQS are achieved.
    As we describe further in section V.A.2 of this preamble, today's 
final regulations were proposed as part of two different regulatory 
packages. On July 23, 1996 (61 FR 38250), we proposed changes to the 
major NSR program, including codification of the requirements of part D 
of title I of the 1990 CAA Amendments.\92\ On June 2, 2003 (68 FR 
32802), we proposed a rule to implement the 8-hour ozone NAAQS. On 
April 30, 2004, we promulgated the Phase 1 final rule and you will find 
a summary of the regulatory development process and stakeholder 
development for that rulemaking at 69 FR 23951.
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    \92\ On December 31, 2002, we finalized five actions from that 
proposal related to the applicability of the NSR regulations. For a 
summary of the regulatory development process and stakeholder 
development for that rulemaking, see 67 FR 80188.
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2. What We Proposed

a. Proposed Changes to Incorporate the 1990 CAA Amendments

    On July 23, 1996 (61 FR 38250), we proposed changes to Sec.  51.165 
and appendix S to incorporate requirements in part D of title I of the 
1990 CAA Amendments for ozone, CO, and PM10 nonattainment 
areas. Concerning ozone, we proposed (among other things) to codify the 
following provisions from section 182 of the CAA:
     Major stationary source thresholds (ranging from 10 to 100 
tpy, depending on classification),
     Significant emission rates (ranging from 0 to 25 tpy),
     Offset ratios (ranging from 1.1:1 to 1.5:1), and
     Special modification provisions implementing CAA sections 
182(c), (d), and (e) for serious, severe, and extreme ozone 
nonattainment areas.
    In the 1996 proposal, we proposed that the major stationary source 
thresholds and offset ratios of CAA section 182 (subpart 2 of part D) 
would apply to all major stationary sources of VOC and NOX 
to implement major NSR under the 1-hour ozone NAAQS. This proposal is 
consistent with the 1991 and 1992 Transition Policy Memos explaining 
major NSR requirements under the 1990 CAA Amendments.\93\ These memos 
also explained that permits must comply with the new statutory 
requirements for major NSR under the 1-hour NAAQS after the deadlines 
set by Congress, regardless of the delay in incorporating them into 
SIPs.
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    \93\ John S. Seitz, ``New Source Review (NSR) Program 
Transitional Guidance,'' March 11, 1991. We provided additional 
transitional guidance for nonattainment areas in our September 3, 
1992 memorandum, New Source Review (NSR) Program Supplemental 
Transitional Guidance on Applicability of New Part D NSR Permit 
Requirements, from John S. Seitz, Director, Office of Air Quality 
Planning and Standards.
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    Our 1996 proposal predated promulgation of the 8-hour ozone NAAQS 
and thus did not explain the details of implementation of these 
standards under Sec.  51.165 or appendix S. For a discussion of 
implementation of the 1-hour and 8-hour ozone NAAQS under Sec.  51.165 
and appendix S, see section V.D. of this preamble.
    Also, in our 1996 action, and then again in our June 2, 2003 
action, we proposed to amend our nonattainment NSR provisions to 
expressly include NOX as an ozone precursor in nonattainment 
major NSR programs (61 FR 38297, 68 FR 32847). We also proposed that, 
as provided under CAA section 182(f), a waiver from nonattainment NSR 
for NOX as an ozone precursor would be available for both 
subpart 1 and subpart 2 areas (68 FR 32846).
    On June 2, 2003, we proposed a rule to identify the statutory 
requirements that apply for purposes of developing SIPs under the CAA 
to implement the 8-hour ozone NAAQS (68 FR 32802). Specifically, we 
proposed two options-one in which all nonattainment areas would be 
classified and regulated under subpart 2 of part D of title I, and one 
in which some nonattainment areas would be regulated under the less 
restrictive requirements of subpart 1 and some would be classified and 
regulated under subpart 2. For areas classified under subpart 2--those 
with a 1-hour ozone design value at or above 0.121 ppm--the 
classifications set forth in subpart 2 (marginal, moderate, etc.) would 
govern part D SIPs for the 8-hour ozone standard, with each area's 
classification determined by a modified version of the subpart 2 
classification table containing 1-hour design values and translated 8-
hour design values for each classification. The NSR permitting 
requirements for the 8-hour ozone standard necessarily follow from the 
classification scheme chosen under the terms of subpart 1 and subpart 
2. We did not propose specific regulatory language for implementation 
of NSR under the 8-hour NAAQS. However, we indicated that we intended 
to revise the nonattainment NSR regulations to be consistent with the 
rule for implementing the 8-hour ozone NAAQS (68 FR 32844).
    Concerning CO, in 1996 we proposed the following:
     Major stationary source threshold of 50 tpy for serious 
nonattainment areas in which the Administrator has determined that 
stationary sources are significant contributors to CO levels,

[[Page 71673]]

     Significant emission rate of 50 tpy for serious 
nonattainment areas in which the Administrator has determined that 
stationary sources are significant contributors to CO levels.
    Concerning PM10, in 1996, we proposed to amend our 
nonattainment NSR regulations to incorporate requirements of the 1990 
CAA Amendments and establish significant emission rates. Specifically, 
we proposed the following:
     Major stationary source threshold of 100 tpy 
PM10 or any specific PM10 precursor in moderate 
PM10 nonattainment areas,
     Major stationary source threshold of 70 tpy 
PM10 or any specific PM10 precursor in serious 
PM10 nonattainment areas, and
     Significant emission rate of 15 tpy PM10 and 40 
tpy PM10 precursors.
b. Proposed Changes To Criteria for Emission Reduction Credits From 
Shutdowns and Curtailments
    In 1996 we proposed to revise the regulations limiting offsets from 
emissions reductions due to shutting down an existing source or 
curtailing production or operating hours below baseline levels 
(``shutdowns/curtailments''). The prior regulations at Sec.  
51.165(a)(3)(ii)(C) provided that such emissions reductions could be 
used as offsets if the State lacked an approved attainment 
demonstration, unless the shutdown/curtailment occurred after the date 
the new source permit application was filed or the applicant could 
establish that the proposed new source is a replacement for the 
shutdown/curtailed source. We proposed to revise the existing 
provisions for crediting emissions reductions by restructuring existing 
Sec.  51.165(a)(3)(ii)(C)(1) and (2) for clarity without changing the 
current requirements therein. [See proposed Sec.  51.165 
(a)(3)(ii)(C)(1) through (4)]. We also proposed substantive revisions 
in two alternatives that would ease, under certain circumstances, the 
existing restrictions on the use of emission reduction credits from 
source shutdowns and curtailments as offsets. We explained that easing 
the restrictions may be warranted by the 1990 CAA Amendments, in which 
Congress significantly reworked the attainment planning requirements of 
part D of title I of the CAA such that an approved attainment 
demonstration is unnecessary.
    The revised CAA emphasizes the emission inventory as the first 
requirement in planning, includes new provisions keyed to the inventory 
requirements, and mandates several adverse consequences for States that 
fail to meet the planning or emissions reductions requirements related 
to inventories.\94\ In 1993, we issued a policy memorandum addressing 
the use of shutdown credits for offsets in ozone nonattainment areas 
and areas in the OTR in light of the new statutory requirements.\95\ 
According to our longstanding policy, we emphasized that sources may 
use emission reduction credits generated from shutdowns and 
curtailments as offsets if the State continues to include the emissions 
in the emissions inventory for attainment demonstration and RFP 
milestone purposes. We proposed two alternatives to revise the 
regulations that limit a source's use of emissions reductions as 
offsets if the reductions were achieved by shutting down an existing 
emissions unit or curtailing production or operating hours of a unit 
(shutdowns/curtailments).
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    \94\ For a complete discussion of how the 1990 CAA Amendments 
attainment planning requirements relate to shutdown/curtailment 
credits (61 FR 38311; July 23, 1996).
    \95\ Use of Shutdoen Credits for Offsets, July 21, 1993, John S. 
Seitz, Director, Office of Air Quality Planning and Standards.
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    Under Alternative 1, we proposed to allow emissions reductions from 
shutdowns and curtailments from sources located in ozone nonattainment 
areas that lack an EPA-approved attainment demonstration to be used as 
offsets or netting credits, if the emissions reductions occur after 
November 15, 1990 and the area is current with part D ozone 
nonattainment planning requirements. See proposed Sec.  
51.165(a)(3)(ii)(C)(5) and (6) [Alternative 1]. Proposed Alternative 2 
generally would have allowed emissions reductions from source shutdowns 
and source curtailments in all nonattainment areas and for all 
pollutants to be used as offsets or netting credits when such 
reductions occur after the base year of the emissions inventory for 
that pollutant. See proposed Sec.  51.165(a)(3)(ii)(C)(5) [Alternative 
2]. The 1996 proposal retained the provision that the permitting 
authority may consider the shutdown or curtailment to have occurred 
after the date of its most recent emissions inventory if the inventory 
explicitly includes as current existing emissions the emissions from 
such previously shutdown or curtailed sources.
c. Proposed Changes to Revise the Construction Ban Provisions
    On July 23, 1996, we proposed to revise Sec.  52.24(a) to 
incorporate changes made by the 1990 CAA Amendments related to the 
applicability of construction bans. Under the 1977 Amendments, section 
110(a)(2)(I) of the CAA required EPA to place certain areas under a 
federally imposed construction moratorium (ban) that prohibited the 
construction of new or modified major stationary sources in 
nonattainment areas where the State failed to have an implementation 
plan meeting all of the requirements of part D. The 1990 CAA Amendments 
removed these provisions from the CAA. However, in section 110(n)(3) of 
the CAA (Savings Clause), the 1990 CAA Amendments retained the 
prohibition in cases where it was applied prior to the 1990 CAA 
Amendments based upon a finding by the Administrator that the area: (1) 
Lacked an adequate NSR permitting program (as required by section 
172(b)(6) of the 1977 CAA); or (2) the State plan failed to achieve the 
timely attainment of the NAAQS for SO2 by December 31, 1982. 
All other construction bans pursuant to section 110(a)(2)(I) are lifted 
as a result of the new statutory provision. This includes previously 
imposed construction bans based upon a finding that the plan for the 
area did not demonstrate timely attainment and maintenance of the ozone 
or CO NAAQS. In accordance with the amended section 110(n)(3) of the 
CAA, any remaining construction ban continues in effect until the 
Administrator determines that the SIP meets either the amended part D 
permit requirements, or the requirements under subpart 5 of part D for 
attainment of the NAAQS for SO2, as applicable.
    We note that Sec.  52.24(k) was not retained in our proposed rule 
text. However, the preamble did not in any manner indicate that EPA 
believed that NSR permits complying with appendix S were not required 
during the SIP development period where necessary. To clarify our 
intent, our proposed 8-hour ozone NAAQS implementation rule explained 
that Sec.  52.24(k) remained in effect and would be retained. In that 
action, we also proposed that we would revise Sec.  52.24(k) to reflect 
the changes in the 1990 CAA Amendments (68 FR 32846). The prior 
language at section 52.24(k) allowed States to issue permits under 
appendix S for a maximum period of 18 months after designation. After 
this time, if the nonattainment area did not have an approved part D 
NSR permit program, the construction ban would apply. However, the 1990 
CAA Amendments to the construction ban provisions altered the 
provisions of the construction ban such that it would not apply when a 
State lacked an approved part D NSR program in the

[[Page 71674]]

future. Thus, the 1990 CAA Amendments supersede that portion of prior 
Sec.  52.24 dealing with the construction ban but leave unaltered the 
requirement that appendix S continues to apply through Sec.  52.24(k). 
We explained that we have interpreted this language to allow States or 
EPA to issue permits under appendix S from designation to approval even 
if the time period between designation and approval exceeds 18 months, 
and proposed to revise Sec.  52.24(k) to properly reflect this 
interpretation.
    We also proposed regulatory text to reflect the revisions to CAA 
section 173(a)(4). Before the State can issue a nonattainment major NSR 
permit, the reviewing authority must first find pursuant to section 
173(a)(4) that the ``Administrator has not determined that the 
applicable implementation plan is not being adequately implemented for 
the nonattainment area'' in accordance with the requirements of part D. 
We stated our intent to make this determination by sending a letter to 
the permitting authority, and publishing a subsequent action in the 
Federal Register, but we solicited comment on the need to undertake 
notice-and-comment procedures before taking final action.
    Section 113(a)(5) of the CAA provides that EPA may issue an order 
prohibiting the construction or modification of any major stationary 
source in any area, including an attainment area, where the 
Administrator finds that the State is not in compliance with the NSR 
requirements. Specifically, EPA may issue an order under section 
113(a)(5) banning construction in an area whenever the Administrator 
finds that a State is not acting in compliance with any requirement or 
prohibition of the CAA relating to construction of new sources or the 
modification of existing sources. To codify the requirements of section 
113(a)(5), we proposed new language in Sec.  52.24(c).
    We proposed to remove the transition provisions under existing 
Sec.  52.24(c) and (g). These paragraphs were proposed to be removed 
because they were originally designed to clarify the applicable 
requirements for permits issued prior to the initial SIP revisions 
required by the 1977 CAA Amendments.
    In addition to the significant changes already discussed, we 
proposed several minor changes to Sec.  52.24. These minor changes 
included: (1) The addition of requirements applicable to transport 
regions; (2) the inclusion of requirements applicable to criteria 
pollutant precursors; (3) incorporation of the definitions proposed in 
Sec.  51.165(a); (4) revisions to the language at Sec.  52.24(h)(2); 
and (5) revisions to Sec.  52.24(j).
d. Proposed Changes on Applicability of Appendix S and the Transitional 
NSR Program
    On June 2, 2003 (68 FR 32802), we explained implementation of the 
major NSR program under the 8-hour ozone NAAQS during the SIP 
development period, and proposed flexible NSR requirements for areas 
that expected to attain the 8-hour NAAQS within 3 years after 
designation. We stated that the existing regulation codified at 40 CFR 
Sec.  52.24(k) requires that permits be issued in compliance with 
appendix S during this time, and that a State would have to continue 
implementing part D nonattainment requirements under appendix S unless 
the source was eligible for flexibility under section VI of the 
appendix (68 FR 32846-48).
    Our June 2, 2003 proposal would limit the circumstances under which 
section VI of appendix S applies (68 FR 32844). Under the existing 
regulatory structure of section VI, major new sources and major 
modifications located in nonattainment areas for which the attainment 
date has not yet passed may avoid the requirement to comply with LAER 
and obtain source-specific offsets if the new emissions will not 
interfere with an area's ability to reach attainment by its attainment 
date. Because we believed that most new emissions in 8-hour 
nonattainment areas would generally not meet this criteria of non-
interference, we proposed to apply section VI only in areas that 
qualify for a ``transitional classification'' (68 FR 32846). 
Accordingly, we called this revised section VI the Transitional NSR 
Program. We proposed that the program would apply only in nonattainment 
areas that: (1) Are attaining the 1-hour NAAQS; (2) are subject to 
subpart 1 (rather than subpart 2) of part D of title I; (3) for which 
the State submitted an attainment plan by April 15, 2004 that 
demonstrates attainment within 3 years after designation; (4) and for 
which the State submitted an attainment plan containing any additional 
local control measures needed for attainment of the 8-hour standard (68 
FR 32847). We also proposed that the sources using section VI would be 
required to comply with BACT.
    On August 6, 2003 (68 FR 46536), we solicited comment on additional 
options for implementing major NSR under the 8-hour NAAQS, including a 
major rewrite of appendix S that would include the proposed changes to 
section VI. We also solicited comment on two alternatives to appendix S 
for implementing NSR in newly designated nonattainment areas during the 
transitional SIP development period. One alternative was a Federal part 
D NSR regulatory program for major new and modified sources, to be 
codified at 40 CFR 52.10, under which EPA would be responsible for 
permitting unless a State took delegation of the program. The other 
alternative was application of the Federal PSD program at 40 CFR 52.21 
in such newly designated nonattainment areas. Commenters stated that 
neither of those alternatives was sufficiently developed for public 
comment, and we have not pursued them further.
    One other proposal affects appendix S applicability. In 1978 (43 FR 
26408; June 19, 1978) and 1979 (44 FR 3276; January 16, 1979), we 
proposed that applicability under PSD and appendix S respectively be 
based on uncontrolled emissions, but sources would be exempt from 
control requirements unless the increase in allowable emissions was at 
least 50 tpy, 1,000 pounds per day, or 100 pounds per hour. The U.S. 
Court of Appeals for the District of Columbia Circuit, however, ruled 
that major source applicability should be based on potential to emit, 
rather than uncontrolled emissions. Alabama Power Co. v. Costle, 606 
F.2d 1068 (D.C. Circuit, 1979), amended 636 F. 3d 323, 356-57 (D.C. 
Circuit, 1980). The court also ruled that EPA had exceeded its 
authority in establishing the 50 tpy exemption and remanded the 
exemption for reconsideration. In response, we proposed removing the 50 
tpy exemption from the PSD rules and appendix S in the 1979 Notice of 
Proposed Rulemaking (NPRM) (44 FR 51930). We finalized these changes in 
1980, but we inadvertently did not remove the change in all the places 
in appendix S where it was located, specifically footnotes 5 and 8 to 
IV.D.
e. Proposed Changes To Identify NOX as an Ozone Precursor in 
Attainment and Unclassifiable Areas
    Currently, only VOCs are expressly regulated as ozone precursors 
under the PSD regulations. Recognizing the role of NOX in 
ozone formation and transport, we proposed to amend our PSD regulations 
to expressly include NOX as an ozone precursor in attainment 
and unclassifiable areas. Moreover, we proposed to require States to 
modify their existing programs to include NOX as an ozone 
precursor in these areas (68 FR 32846).

[[Page 71675]]

B. Summary of Final Rule and Legal Basis

1. Final Action and Legal Basis for Changes to Incorporate the 1990 CAA 
Amendments
a. Final Changes to Incorporate the 1990 CAA Amendments
    In today's final action, we revised Sec.  51.165 and appendix S to 
incorporate the major stationary source thresholds, significant 
emission rates, and offset ratios for sources of ozone precursors 
pursuant to part D, subpart 1 and subpart 2 of title I of the 1990 CAA 
Amendments. [See Sec.  51.165(a)(1)(iv), (a)(1)(v), (a)(1)(x), (a)(8), 
(a)(9) and section II. A. 4, 5, and 10 and section IV.G and H of 
appendix S.] Accordingly, consistent with statutory requirements and 
the final rules in 40 CFR part 51, subpart X (Provisions for 
Implementation of 8-hour Ozone NAAQS), today's final rules in Sec.  
51.165 require States' part D NSR SIPs implementing the 8-hour ozone 
standard to include provisions meeting subpart 1 of part D of the CAA, 
and subpart 2 as applicable, based on the area's classification. (We 
note 40 CFR part 51, subpart X includes the specific provisions for 
determining whether an area is designated and classified under subpart 
1 or subpart 2 and these rules are explained in the preamble to those 
final rules at 69 FR 23954.) Also, appendix S requires States or EPA to 
issue permits during the SIP development period consistent with these 
requirements. Specifically, under subpart 1, the major stationary 
source threshold is 100 tpy, and an offset ratio of at least 1:1 
applies. Under subpart 2, the major stationary source threshold ranges 
from 10 to 100 tpy, depending on the classification of the 
nonattainment area in which the source is located. The applicable 
offset ratios range from 1:1 to 1:5, also depending on the 
classification of the nonattainment area in which the source is 
located.
    We also finalized as proposed in 1996 and 2003 that the NSR 
requirements applicable to major stationary sources of VOC (including 
provisions regarding major modifications, significant emission rates, 
and offsets) apply to NOX emissions. These requirements 
apply in all 8-hour ozone nonattainment areas, including subpart 1 and 
subpart 2 areas. These requirements apply except where the 
Administrator determines, according to the standards set forth in 
section 182(f), that NOX requirements for major stationary 
sources, including nonattainment major NSR requirements, would not 
apply or would be limited (``NOX waiver''). [See Sec.  
51.165(a)(8) and appendix S.] According to Sec.  51.913(c), a section 
182(f) NOX exemption granted under the 1-hour ozone standard 
does not relieve the area from any requirements under the 8-hour ozone 
standard, including nonattainment major NSR for major stationary 
sources of NOX. We discuss whether a NOX waiver 
under section 182(f) applies in a particular area and the effects of 
NOX waivers on RACT in section IV.H. of this preamble.
    We are not taking final action to implement the special 
modification provisions at CAA sections 182(c), (d), and (e) for 
serious, severe, and extreme ozone nonattainment areas at this time. We 
are evaluating additional issues related to implementation of these 
requirements and anticipate taking final action in the future.
    As proposed on July 23, 1996 (61 FR 38250), we have incorporated 
requirements in part D of title I of the 1990 CAA Amendments for CO. 
[See Sec.  51.165(a)(1)(iv)(A)(1)(v) and (a)(1)(x)(D) and appendix S.]
    We have also made final changes to incorporate the requirements of 
the 1990 CAA Amendments concerning PM10 nonattainment areas. 
Specifically, we have promulgated as proposed in 1996 the major 
stationary source thresholds and significant emission rates for 
PM10 in PM10 nonattainment areas. [See Sec.  
51.165(a)(1)(iv)(A)(1)(vi) and (a)(1)(x). See also appendix S at 
II.A.4.(i)(a)(6) and II.A.4.(i).] We have not taken final action on our 
1996 proposed rules for PM10 precursors. Instead, we plan to 
propose regulations concerning PM precursors as part of the 
PM2.5 NAAQS implementation rule. We also plan to address 
requirements for stationary sources of PM in that action.

b. Legal Basis for Changes To Incorporate the 1990 CAA Amendments

    In areas not meeting health-based NAAQS and in the OTR, the major 
NSR program is implemented under the requirements of section 
110(a)(2)(C) and part D of title I of the CAA. Subpart 1 of part D of 
title I contains general requirements for nonattainment areas for any 
criteria pollutant. Subpart 2 contains provisions specifically for 
ozone nonattainment areas. Subpart 3 contains provisions specifically 
for CO nonattainment areas. Subpart 4 contains provisions specifically 
for PM10 nonattainment areas. On July 23, 1996 (61 FR 
38250), we proposed changes to Sec.  51.165 and appendix S to 
incorporate requirements in part D of title I of the 1990 CAA 
Amendments for ozone, CO, and PM10 nonattainment areas.
    We promulgated a new 8-hour ozone NAAQS on July 18, 1997. We 
indicated that we anticipated that States would implement the 8-hour 
ozone NAAQS under the less prescriptive subpart 1 requirements. 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 ozone NAAQS. In Whitman v. American Trucking Associations, 
[531 U.S. 457, 482-86 (2001)], the Supreme Court reviewed EPA's 
implementation strategy for the revised 8-hour ozone NAAQS, and 
remanded it to EPA to develop a reasonable resolution of the roles of 
subparts 1 and 2 in classifying areas for and implementing the revised 
ozone standard. On April 30, 2004, we promulgated a final rule to 
implement the 8-hour ozone NAAQS (69 FR 23951), in which some 
nonattainment areas would be regulated under the less restrictive 
requirements of subpart 1 and some would be classified and regulated 
under subpart 2. All ozone nonattainment areas have now been 
categorized subpart 1 or subpart 2 areas in 40 CFR part 81. Now that we 
have designated and classified nonattainment areas, the NSR program 
requirements (including the specific major stationary source 
thresholds, significant emission rates, and offset ratios associated 
with each classification) are determined by reference to subpart 1 and 
subpart 2, as codified in Sec.  51.165 and appendix S through this 
rulemaking. Thus, as described in further detail in section V.A.2 of 
this preamble, we have incorporated the requirements of the 1990 CAA 
Amendments for major stationary sources of ozone precursors in ozone 
nonattainment areas as proposed in 1996, and codified those 
requirements for the 8-hour standard consistent with the designation 
and classification scheme finalized in the 8-hour ozone implementation 
rule (69 FR 23951) promulgated in response to Whitman v. American 
Trucking Associations, 531 U.S. 457 (2001).
    Concerning CO, section 187(c) of the CAA unambiguously establishes 
the major stationary source threshold of 50 tpy codified today for 
serious nonattainment areas where the Administrator has determined that 
stationary sources contribute significantly. It is also reasonable to 
set the significant emission rate at 50 tpy in those serious 
nonattainment areas where 50 tpy is the major stationary source 
threshold. The regulations at Sec.  51.165(a)(1)(iv)(A)(2) require that 
if a modification itself would constitute a major stationary source, 
the modification is subject to major NSR.
    Concerning PM10, section 189 of the CAA unambiguously 
establishes the

[[Page 71676]]

major stationary source threshold as 70 tpy in serious nonattainment 
areas. Also, EPA has the authority to exempt de minimis emissions from 
the reach of a rule. See Alabama Power, 636 F.2d at 360-61. Previously, 
EPA has defined the PM10 significant emission rate (that is, 
de minimis cut-off level) as at or above 15 tpy for purposes of 
determining which modifications are insignificant and thus exempt from 
PSD review (52 FR 24672, 24694-96; July 1, 1987). We believe it is 
reasonable to use the same significant emission rate in the 
nonattainment NSR program. This is consistent with our past practice of 
applying the same significant emissions rates for each pollutant in the 
PSD and nonattainment NSR programs.
    We also revised appendix S to incorporate the requirements of the 
1990 CAA Amendments to part D of title I of the CAA. These changes are 
necessary to make appendix S consistent with part D. As we discuss in 
section V.B.3.b of this preamble, we have determined that Congress 
intended for permitting equivalent to the part D NSR provisions to 
apply during the SIP development period through the use of appendix S 
(subject to the limited section VI exemption). In light of this 
determination, there is no reasonable basis for declining to implement 
the NSR requirements in the 1990 CAA Amendments during that period.\96\ 
Additionally, appendix S provides on its face that it is an 
interpretation of the NSR permitting rules in 40 CFR subpart I, 
including Sec.  51.165. Therefore, it is necessary to have appendix S 
reflect substantially the same requirements as are in Sec.  51.165.\97\ 
Thus, we proposed to amend appendix S in this manner in the 1996 NSR 
proposal. We also are mindful of the Supreme Court's decision in 
American Trucking Associations. Although the decision did not directly 
address NSR implementation during the SIP development period, the Court 
emphasized the importance of creating a role for subpart 2 in 
implementation of the 8-hour ozone NAAQS. We believe this suggests the 
need to create a role for subpart 2 in appendix S, in contrast to the 
exclusive subpart 1 scheme currently embodied in appendix S.
---------------------------------------------------------------------------

    \96\ The 1991 NSR transitional guidance issued to address 
implementation of the 1990 CAA Amendments acknowledged that appendix 
S did not contain at that time the newly enacted part D provisions, 
and further provided that the new requirements of part D to title I 
did not apply until November 15, 1992 for the ozone nonattainment 
areas; June 30, 1992, for the PM10 nonattainment areas; 
and 3 years from designation for most CO nonattainment areas. NSR 
Program Transitional Guidance, at A5 (March 11, 1991). We later 
clarified that the 1990 CAA Amendments did apply to all permits 
after those deadlines passed. NSR Supplemental Program Transitional 
Guidance on Applicability of New Part D NSR Requirements at 3 
(September 3, 1992).
    \97\ Thus, EPA has typically conformed appendix S to the part D 
nonattainment NSR permitting provisions governing SIPs at 40 CFR 
Sec.  51.165 (originally codified at Sec.  51.18) whenever those 
regulations were revised. See, for example, 45 FR 52676 (August 7, 
1980); 47 FR 27554 (June 25, 1982); 49 FR 43210 (October 26, 1984); 
54 FR 27274 (June 28, 1989); 57 FR 3941 (February 3, 1992).
---------------------------------------------------------------------------

2. Final Action and Legal Basis for Changes to Criteria for Emission 
Reduction Credits From Shutdowns and Curtailments
a. Final Changes to Criteria for Emission Reduction Credits From 
Shutdowns and Curtailments
    The final revisions lift the requirement to have an approved 
attainment plan before using preapplication credits from shutdowns or 
curtailments as offsets. They also facilitate the availability of 
creditable offsets, consistent with the requirements of section 173 of 
the CAA. We revised the provisions at Sec.  51.165(a)(3)(ii)(C) and 
appendix S concerning emission reduction credits generated from 
shutdowns and curtailments as proposed in Alternative 2 of the 1996 
proposal, with one exception. We agree with the commenter who found the 
regulatory term ``most recent emissions inventory'' confusing. We have 
revised Sec.  51.165(a)(3)(C)(1) accordingly, specifying that the 
shutdown or curtailment must have occurred after ``the last day of the 
base year for the SIP planning process.'' For the 8-hour ozone NAAQS, 
the base year is 2002.\98\ Additionally, today's final provisions allow 
a reviewing authority to consider a prior shutdown or curtailment to 
have occurred ``after the last day of the base year if the projected 
emission inventory used to develop the attainment demonstration 
explicitly includes the emissions from such previously shutdown or 
curtailed emissions unit.'' This provision is consistent with the 
previous regulation which also allowed the reviewing authority to treat 
prior shutdowns or curtailments as occurring after the date of the most 
recent emissions inventory, but we have modified the regulatory 
language to clarify the appropriate emissions inventory. This 
regulatory language is consistent with our previous guidance on how 
emission reduction credits from shutdowns and curtailments are used in 
attainment planning.\99\ The base year inventory includes actual 
emissions from existing sources and would not reflect emissions from 
units that were shutdown or curtailed before the base year, as these 
emissions are not ``in the air.'' To the extent that these emission 
reduction credits are considered available for use as offsets and are 
thus ``in the air'' for purposes of demonstrating attainment, they must 
be included in the projected emissions inventory used in the attainment 
demonstration along with other growth in emissions over the base year 
inventory. This step assures that emissions from shutdown and curtailed 
units are accounted for in attainment planning.\100\ As with the prior 
rules, reviewing authorities thus retain the ability to consider a 
prior shutdown or curtailment to have occurred after the last day of 
the base year if emissions from the shutdown or curtailment are 
accounted for in the attainment demonstration. However, in no event may 
credit be given for shutdowns that occurred before August 7, 1977, a 
provision carried over from the previous regulation.
---------------------------------------------------------------------------

    \98\ 68 FR 32833. See also ``2002 Base Year Emission Inventory 
SIP Planning: 8-hr Ozone, PM2.5 and Regional Haze Programs,'' U.S. 
EPA, pg. 1 (November 18, 2002).
    \99\ See 57 FR 13553. After the 1990 CAA Amendments were 
enacted, 1990 was the base year for 1-hour ozone NAAQS attainment 
planning purposes. See 57 FR 13502. The EPA encouraged States to 
allow sources to use pre-enactment banked emissions reductions 
credits for offsetting purposes. States have been allowed to do so 
if the restored credits meet all other offset creditability 
criteria, and States consider such credits as part of the attainment 
emissions inventory when developing their post-enactment attainment 
demonstration.
    \100\ For a discussion of emission inventories for the 8-hour 
ozone standard, see our emission inventory guidance, ``Emissions 
Inventory Guidance for Implementation of Ozone and Particulate 
Matter National Ambient Air Quality Standards (NAAQS) and Regional 
Haze Regulations--Final,'' at http://www.epa.gov/ttn/chief/eidocs/eiguid/index.html. For a discussion of emission projections used in 
attainment demonstrations, see Emission Inventory Improvement 
Program, Volume X, Emission Projections, December 1999, available at 
http://www.epa.gov/ttn/chief/eiip/techreport/.
---------------------------------------------------------------------------

    The other changes to the proposed rule text also are nonsubstantive 
and instead clarify the restrictions on credits from shutdowns or 
curtailments. Specifically, the proposed rule retained the requirement 
for an approved attainment demonstration, but made that requirement 
inapplicable where the credits occurred after the last day of the base 
year for the SIP planning process or where they were included in the 
most recent emissions inventory. The final rule recognizes there is no 
requirement for an approved attainment demonstration in those 
circumstances, and thus deletes the reference to that former 
requirement.
    We note that the requirements for emissions reductions used as 
offsets and for netting differ from those for emission reduction 
credits used for RFP and ROP.

[[Page 71677]]

Section IV.E.14. of this preamble discusses requirements for emission 
reduction credits used for RFP and ROP. For a more detailed discussion 
of emission reduction credits for offsets and netting under the 8-hour 
ozone NAAQS, see section V.D.5. of this preamble.
b. Legal Basis for Changes to Criteria for Emission Reduction Credits 
From Shutdowns and Curtailments
    The revisions to the rules governing use of emissions reductions 
from shutdowns/curtailments as offsets are warranted by the more 
detailed attainment planning and sanction provisions of the 1990 CAA 
Amendments. These provisions specifically address air quality concerns 
in nonattainment areas lacking EPA-approved attainment demonstrations. 
As a threshold matter, we note that CAA section 173 does not mandate 
the prior restrictions on shutdown credits, specifically, the 
requirement to have an approved attainment demonstration. (See 48 FR 
38742, 38751; August 25, 1983). Rather, in promulgating these 
restrictions in 1989, EPA recognized that it had a large degree of 
discretion under the CAA to shape implementing regulations, as well as 
the need to exercise that discretion such that offsets are consistent 
with RFP as required in CAA section 173. (See 54 FR 27286, 27292; June 
28, 1989). Originally, EPA believed that areas without approved 
attainment demonstrations lacked adequate safeguards to ensure that 
shutdown/curtailment credits would be consistent with RFP. We thus 
subjected those areas to more restrictive requirements to ensure a link 
between the new source and the source being shutdown/curtailed (that 
is, shutdown/ curtailment must occur after application for a new or 
modified major source is filed).
    The 1990 CAA Amendments changed the considerations involved. As 
discussed above, for areas subject to subpart 2, Congress emphasized 
the emission inventory requirement in section 172(c)(3) as a 
fundamental tool in air quality planning. Congress also added new 
provisions keyed to the inventory requirement, including specific 
reduction strategies and Amilestones@ that measure progress toward 
attainment from the base year emissions inventory or subsequent revised 
inventories. Where the emission reduction credits pre-date the base 
year, State and local agencies must include the credits from the 
shutdown/curtailment in the projected emissions inventory used to 
develop the attainment demonstration. Subpart 4 sets forth specific 
reduction strategies and milestones for attainment of the PM\10\ 
standards. Additionally, there are now several adverse consequences 
where States fail to meet the planning or emissions reductions 
requirements of the CAA. For example, the CAA contains mandatory 
increased new source offset sanctions at a 2:1 ratio where the 
Administrator finds that a State failed to submit a required attainment 
demonstration. In areas that are subject to subpart 2 and subpart 4, 
failure to attain the air quality standard by the attainment deadline 
results in the area being bumped up to a higher classification. 
Additional regulatory requirements are imposed as a result of the 
higher classification. These statutory changes justify shifting the 
focus of the current regulations from individual offset transactions 
between a specific new source and shutdown source and towards a 
systemic approach. Considering the changes to the 1990 CAA Amendments, 
we now believe that continuing the prohibition on the use of shutdown/
curtailment credits generated where there is no approved attainment 
demonstration is not warranted. We believe that use of emission 
reduction credits from shutdowns/curtailments will be consistent with 
RFP towards attainment under CAA section 173, even in the absence of an 
approved attainment demonstration, if they occur after the last day of 
the base year for the SIP planning process or are included in the 
projected emissions inventory used to develop the attainment 
demonstration. From an air quality planning perspective, emissions from 
the shutdown source actually impacted the measurements of air quality 
used in determining the nonattainment status of an area. Subsequently, 
emissions reductions from such source shutdowns/curtailments are actual 
emissions reductions, and their use as emission offsets at a ratio of 
1:1 or greater is consistent with RFP towards improved air quality as 
set forth in CAA section 173(a)(1)(A).
3. Final Action and Legal Basis for Changes to the Construction Ban 
Provisions
a. Final Action for Changes to the Construction Ban Provisions
    We are promulgating final changes to Sec.  52.24 to implement the 
construction ban provisions and other changes, as proposed in 1996 and 
2003.\101\ We believe these changes are beneficial to conform the 
regulatory text with the requirements that apply under the 1990 CAA 
Amendments.
---------------------------------------------------------------------------

    \101\ We note that we are changing the cross-reference in Sec.  
52.24(f) to ``Sec.  51.165'' instead of the definitions section at 
Sec.  51.165(a), to ensure that all of the provisions of ``51.165 
apply in interpreting the terms of Sec.  52.24.
---------------------------------------------------------------------------

    As noted in our June 2003 proposal, we are retaining the provision 
in Sec.  52.24(k) that specifies that appendix S governs permits to 
construct and operate applied for during the SIP development period. 
Although the regulatory text proposed in 1996 omitted Sec.  52.24(k), 
the 1996 preamble also explained that the changes to Sec.  52.24 were 
intended only to update and clarify the regulation with regard to the 
changes to the construction ban made by the 1990 CAA Amendments. (61 FR 
38250, 38305). The preamble did not in any manner indicate that EPA 
believed that NSR permits complying with appendix S were not required 
during the SIP development period where necessary. Additionally, it did 
not contemplate nonattainment major NSR permitting in light of the 
situation that today's final action addresses, which is the need to 
permit nonattainment area sources during a transition period in which a 
substantial number of new nonattainment areas are being created. 
Therefore, we are retaining Sec.  52.24(k).
    As we proposed in the 8-hour ozone NAAQS implementation rule (68 FR 
32846), we made one change to the regulatory language in Sec.  
52.24(k). The previous language at Sec.  52.24(k) only allowed States 
to issue permits under appendix S for a maximum period of 18 months 
after designation. This language was consistent with the previous SIP 
development period and construction ban under the 1977 CAA, which no 
longer apply under the 1990 CAA Amendments. We have revised Sec.  
52.24(k) to allow States to issue permits under appendix S from 
designation until the SIP is approved, even if this exceeds 18 months. 
As we noted in our proposal, this change implements the removal of the 
construction ban from the 1990 CAA Amendments and is consistent with 
our 1991 policy memo, ``New Source Review (NSR) Program Transitional 
Guidance,'' John S. Seitz, March 11, 1991.
b. Legal Basis for Changes to the Construction Ban Provisions
    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 the NAAQS are achieved. This general duty, often referred 
to as ``minor NSR,'' exists during all periods, including before a

[[Page 71678]]

State has an approved part D NSR permit program.
    Section 110(a)(2)(c) of the CAA 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''). However, EPA's 
regulations at Sec.  52.24(k) require States to follow EPA's Emission 
Offset Interpretative Ruling, 40 CFR part 51, appendix S, during this 
time.
    This approach is consistent with Congressional intent, as indicated 
in the 1977 CAA Amendments providing for major NSR permitting during 
the SIP development period in accordance with appendix S. [See Public 
Law No. 95-95, section 129(a), 91 Statute 685 (1977)]. Specifically, 
Congress enacted a moratorium on construction in any area lacking an 
approved part D NSR SIP, with a delayed effective date of July 1, 1979. 
Congress also provided that appendix S, as modified by rule of the 
Administrator, govern permitting of sources constructing in such areas 
before that date, subject to a limited waiver by the Administrator. Id. 
108(b), 129(a). We subsequently codified the use of appendix S as the 
interim major NSR program in 40 CFR Sec.  52.24(k), reasoning (in the 
context of implementing a delay in the construction ban for then-
recently designated nonattainment areas) that Congress had provided 
that appendix S should remain in effect to protect air quality while 
State plans were being designed (45 FR 65209). When Congress removed 
the construction ban [(except as provided in section 110(n)(3)), it 
left in place 40 CFR Sec.  52.24(k)], implementing the interim major 
NSR program under appendix S.
    Accordingly, we have historically recognized that the SIP 
development period provided for in section 172(b) leaves a gap in part 
D major NSR permitting and have determined that this gap is to be 
filled with an interim major NSR program that is substantially similar 
to the requirements of part D. This includes the LAER and offset 
requirements from part D (57 FR 18070, 18076). Appendix S has been used 
by EPA and the States as this interim major NSR program.\102\
---------------------------------------------------------------------------

    \102\ Appendix S was originally promulgated in 1976 to address 
whether, and to what extent, new and modified sources would be 
allowed to construct in nonattainment areas whose attainment 
deadlines had already passed, in light of the regulatory requirement 
that new or modified sources be disapproved where the source would 
interfere with attainment of the NAAQS (41 FR 55524; December 21, 
1976). It required, inter alia, compliance with the LAER and 
offsetting emissions reductions in excess of the new source's 
emissions. At that time, part D NSR was not part of the CAA.
    When the part D NSR provisions were added in the 1977 CAA 
Amendments, Congress added the requirement that SIPs contain 
nonattainment NSR provisions as set forth in CAA section 173, 
including LAER and the requirement to either offset the increase in 
new source emissions or ensure that emissions fell within a growth 
allowance. (The growth allowance provision was repealed in 1990). 
Additionally, Congress provided that appendix S, as modified by rule 
of the Administrator, would govern preconstruction permitting in 
areas lacking approved part D SIPs before a construction ban went 
into effect, as discussed in more detail above.
---------------------------------------------------------------------------

    Our regulations at 40 CFR 52.24(k) require permits issued during 
this period to be consistent with the requirements in appendix S. The 
continued application of appendix S through Sec.  52.24(k) is also 
supported by the purpose of the CAA, specifically, section 101(b)(1), 
``to protect and enhance the quality of the Nation's air resources so 
as to promote the public health and welfare and the productive capacity 
of its population.'' This provision was the basis for the original 
judicial finding that the CAA imposed an obligation to prevent 
significant deterioration in areas that meet the NAAQS, prior to 
Congress' enactment of the PSD program at part C of the CAA.\103\ This 
policy of non-degradation applies with even greater force in areas that 
fail to meet the NAAQS. Thus, we believe that an interim major NSR 
program for the SIP development period--as codified at appendix S and 
updated to reflect CAA amendments--is supported by section 
110(a)(2)(C), section 101(b)(1), Congressional intent, and our 
gapfilling authority under section 301(a).
---------------------------------------------------------------------------

    \103\ See Alabama Power Co. v. Costle, 636 F. 3d 323, 346-047 
(D.C. Circuit, 1980) (discussing Sierra Club v. Ruckelshaus, 344 F. 
Supp. 253 (D.D.C. 1972), aff'd per curiam 4 ERC 1815 (D.C. Circuit, 
1972), aff'd by an equally divided court, sub nom Fri v. Sierra 
Club, 412 U.S. 541 (1973).
---------------------------------------------------------------------------

4. Final Action and Legal Basis for Changes on Applicability of 
Appendix S and the Transitional NSR Program
a. Final Changes on Applicability of Appendix S and the Transitional 
NSR Program
    We are not finalizing the transitional NSR program under section VI 
of appendix S as proposed, which would have established limited 
criteria for determining in which nonattainment areas section VI could 
apply. Upon consideration of public comments, we decided to retain the 
original eligibility conditions, but added a procedural requirement 
that the Administrator determine whether section VI applies for a 
specific situation.
    As we noted at 68 FR 32848, on its surface section VI could apply 
in any nonattainment area where the dates for attainment have not 
passed if the source meets all applicable SIP emission limitations and 
would not interfere with the area's ability to meet its attainment 
date, without providing any specific safeguards for such 
noninterference. We noted at proposal, however, that States generally 
would not be able to show that a nonattainment area would continue to 
meet its attainment date if it does not apply LAER or offsets to major 
new sources and major modifications in the absence of safeguards (68 FR 
32848).
    We continue to believe, as stated in the proposal, that States 
should not interpret section VI as allowing a blanket exemption from 
LAER and offsets for all major new sources and major modifications in a 
given area before attainment dates have passed for that area. However, 
based on public comment, we now believe that the program as proposed at 
69 FR 32846 is not implementable. As many commenters noted, the April 
15, 2004 deadline for submission of attainment plans and December 31, 
2004 deadline for implementation of all necessary attainment controls 
were impracticable. We agree with the many commenters who supported 
flexible NSR requirements under section VI for some areas and 
maintained that attainment would not be in jeopardy due to such 
programs. While we do not identify any such particular instances in 
today's final rule, we believe that participation in programs such as 
the NOX SIP Call and the CAIR (70 FR 25162, May 12, 2005) 
will achieve significant emissions reductions across broad geographical 
areas. Certainly, we want to encourage development of programs that 
address transported air pollution. We recognize that these and other 
programs may prove to be more effective and practical in assuring that 
there is no interference with an area's ability to meet its attainment 
deadline than relying on offsets from a single source.
    For these reasons, we have retained the original eligibility 
conditions for determining when section VI applies, but added a 
procedural requirement that the Administrator provide public notice 
that section VI applies for a specific situation. This requirement will 
achieve the proposal's purpose of assuring that States do not interpret 
section VI to provide a broad exemption to all major new sources and 
major modifications in any nonattainment area for which the attainment 
date has not passed.
    We also are taking final action to remove the 50 tpy exemption from 
appendix S. As discussed in section V.A.2.f of this preamble, we 
proposed this change in 1979 and finalized it in

[[Page 71679]]

most respects in 1980. However, we inadvertently did not remove the 
exemption in all the places in appendix S where it was located, 
specifically footnotes 5 and 8 to IV.D. We are now finalizing the 1979 
proposal to the extent it remained incomplete, by removing these last 
two references to the 50 tpy exemption in appendix S.
b. Legal Basis for Changes to Applicability of Appendix S and the 
Transitional NSR Program
    The legal basis for appendix S itself, including section VI, is 
discussed in detail in section V.B.3.b. of this preamble. We have 
historically recognized that the SIP development period provided for in 
section 172(b) leaves a gap in part D major NSR permitting and have 
determined that this gap is to be filled with an interim major NSR 
program that is substantially similar to the requirements of part D, 
including the LAER and offset requirements from part D, subject to a 
limited exemption where the attainment deadline will be met (57 FR 
18070, 18076). This interim NSR program has been implemented to date 
through appendix S.
    We also believe that, contrary to objections made by some 
commenters, appendix S--and in particular, section VI--has not been 
superseded by the 1990 CAA Amendments to title I of the CAA. In short, 
appendix S only applies where a NSR permitting program for the new or 
revised NAAQS is not otherwise in effect, and thus does not replace any 
part D NSR SIP provisions, as many commenters erroneously believed. 
That is, it applies only in newly designated or redesignated 
nonattainment areas lacking approved part D programs for a new or 
revised NAAQS, such as the 8-hour ozone NAAQS. Thus, the evasion of 
subpart 2 requirements posited by commenters and the anti-backsliding 
concerns they raise are not triggered, as nothing in the SIP is 
replaced. Our detailed response to those comments is set forth in 
section V.C.4. of this preamble.
    The section VI exemption, as limited by this final rule, is 
consistent with the section 110(a)(2)(C) requirement that the 
preconstruction permitting is implemented ``as necessary to assure that 
the [NAAQS] are achieved.'' We are not adopting the eligibility 
criteria that were proposed to ensure satisfaction of the original 
section VI conditions. However, we have added a requirement that the 
Administrator determine that sources exempted from LAER and offsets 
under section VI will meet those conditions, in particular, 
noninterference with the attainment deadline. Section VI also is 
consistent with the exercise of our gapfilling authority under section 
301, as informed by the legislative history. That is, appendix S 
reflects Congressional intent that standards equivalent to part D 
govern the issuance of NSR permits, subject to a limited degree of 
flexibility under conditions where attainment of the NAAQS by the 
attainment deadline is assured.
    The removal of the 50 tpy exemption from appendix S is based on 
Alabama Power Co. v. Costle, 636 F. 3d 323, 356-57 (D.C. Circuit, 
1980), in which the court held that EPA had exceeded its authority to 
establish the exemption, as discussed in more detail in section 
V.A.2.f. above.
5. Final Action and Legal Basis for Changes to Identify NOX 
as an Ozone Precursor in Attainment and Unclassifiable Areas
a. Final Changes to Identify NOX as an Ozone Precursor in 
Attainment and Unclassifiable Areas
    Our existing PSD regulations in Sec.  51.166 and Sec.  52.21 define 
regulated NSR pollutants, which includes any pollutant for which we 
promulgate a NAAQS and any constituents or precursors for such 
pollutants as identified by the Administrator. [See Sec.  
51.166(b)(49)(i) and Sec.  52.21(b)(50)(i)]. Today, the Administrator 
is identifying NOX as an ozone precursor in attainment and 
unclassifiable areas. Accordingly, as proposed, we amended our PSD 
regulations in Sec.  51.166 and Sec.  52.21 to expressly include 
NOX as an ozone precursor. Specifically, we have amended the 
definitions of major stationary source, major modification, 
significant, and regulated NSR pollutant to include NOX as 
an ozone precursor. [See Sec.  51.166(b)(1)(ii), (b)(2)(ii), (b)(23), 
and (b)(49). See also Sec.  52.21(b)(1)(ii), (b)(2)(ii), (b)(23), and 
(b)(50)]. We have also amended the footnote to Sec.  51.166(i)(5)(i)(e) 
and Sec.  52.21(i)(5)(i) to require sources with a net increase of 100 
tpy or more of NOX to perform an ambient impact analysis.
b. Legal Basis To Identify NOX as an Ozone Precursor in 
Attainment and Unclassifiable Areas
    The nonattainment provisions of the CAA, as amended in 1990, 
recognize NOX as an ozone precursor; section 182(f) of the 
CAA established nonattainment requirements for NOX. The 
definition of air pollutant under section 302(g) of the CAA includes, 
``* * * any precursors to the formation of any air pollutant * * *'' 
Also, the definition of regulated NSR pollutant in Sec.  51.166 and 
Sec.  52.21 specifically recognizes that a regulated NSR pollutant is 
``any pollutant for which a national ambient air quality standard has 
been promulgated and any constituents or precursors for such pollutant 
identified by the Administrator (e.g., volatile organic compounds are 
precursors for ozone).''
    The EPA has recognized NOX as an ozone precursor in 
several national rules because of its contribution to ozone transport 
and the ozone nonattainment problem. The EPA's recognition of 
NOX as an ozone precursor is supported by scientific 
studies, which have long recognized the role of NOX in ozone 
formation and transport.\104\ Such formation and transport is not 
limited to nonattainment areas. Therefore, we believe NOX 
should be treated consistently as an ozone precursor in both our PSD 
and nonattainment NSR regulations. For these reasons we have 
promulgated final regulations providing that NOX is an ozone 
precursor in attainment areas.
---------------------------------------------------------------------------

    \104\ See 68 FR 32805-06, 32840, footnote 58 (discussing 
national rules for controlling VOC and NOX emissions); 
and 68 FR 32840 footnote 57.
---------------------------------------------------------------------------

6. Final Changes and Legal Basis for Changes to Emission Offset 
Provisions of Appendix S
a. Final Changes to Emission Offset Provisions of Appendix S
    We are revising certain provisions in appendix S to reflect 
requirements of the 1990 CAA Amendments concerning offsets and RFP. 
Specifically, we have conformed appendix S at IV.D. to the 1990 CAA 
Amendments by replacing the interim policy on offsetting emissions with 
the statutory language at section 173(c)(1). We also have removed the 
language concerning reasonable progress in section IV.E. of appendix S 
and replaced it with the statutory requirements at 173(a)(1)(A).
    Also, we note that the definition of net emissions increase at 
Sec.  51.165(a)(1)(vi)(E) requires that a decrease in actual emissions 
is creditable only to the extent that the State has not relied on it in 
demonstrating attainment or RFP. This requirement has never been 
codified in appendix S. However, the 1990 CAA Amendments at sections 
172(b)(1) and 182 codifies the requirements concerning RFP. State and 
local agencies should consider the effect of creditable decreases from 
permitting under appendix S in their planning for demonstrating 
attainment and RFP.
    We are also restating our policy on offsets from resource recovery 
facilities

[[Page 71680]]

under appendix S. Appendix S at IV.B.(i) exempts resource recovery 
facilities from permitting under certain circumstances. Our 1988 policy 
memo indicates that as a matter of policy, EPA no longer adheres to the 
offset exemption for resource recovery facilities in appendix S.\105\ 
As we did not propose to change this provision, we are not revising the 
final rules today regarding resource recovery facilities. However, we 
plan to remove this exemption in a future rulemaking.
---------------------------------------------------------------------------

    \105\ See Emission Offset Exemptions for Resource Recovery 
Facilities from Gerald A. Emison, Director, Office of Air Quality 
Planning and Standards, December 28, 1988.
---------------------------------------------------------------------------

b. Legal Basis for Changes to Emission Offset Provisions of Appendix S
    Because we have not revised the regulatory text in appendix S since 
the latest revision to the statute, the 1990 CAA Amendments provisions 
limiting the use of offsets are not explicitly included in appendix S. 
Nonetheless, these requirements apply to sources permitted using 
appendix S because appendix S is intended to reflect the same offset 
requirements contained in part D of the CAA. These provisions relate to 
offsets and RFP.

    We are revising appendix S to incorporate the statutory 
restrictions on offsets and remove the existing regulatory text that 
is outdated. The 1977 CAA is silent concerning the location of 
offsetting emissions. As we noted in footnote 9 to section IV.D. of 
appendix S, in the absence of specific statutory language, we 
developed an interim policy on offset locations. The 1990 CAA 
Amendments at section 173(c)(1), however, placed specific limits on 
the location of offsets and therefore superceded the interim policy 
in appendix S. Accordingly, we conformed appendix S at IV.D. to the 
1990 CAA Amendments by replacing the interim policy on offsetting 
emissions with the statutory language at section 173(c)(1).

    Appendix S at section IV.E. contains provisions regarding the 
relationship between offsets, reasonable progress towards attainment, 
and RFP. Under the 1990 CAA Amendments, section 173(a)(1)(A) was 
revised to set forth the extent to which offsets must represent RFP, as 
defined in section 171. Therefore, we removed the language concerning 
reasonable progress in section IV.E. of appendix S and replaced it with 
the statutory requirements at 173(a)(1)(A).

C. Comments and Responses

1. Comments on Proposed Changes to Incorporate the 1990 CAA Amendments
    In today's final action, we have revised Sec.  51.165 and appendix 
S to incorporate the major stationary source thresholds, significant 
emission rates, and offset ratios pursuant to part D of title I of the 
1990 CAA Amendments for major stationary sources of ozone precursors. 
As we noted in section V.A.2.a. of this preamble, now that the 
designations and classifications have been made, the provisions of 
subpart 1 and subpart 2 determine the NSR program requirements. Those 
requirements are codified in this rulemaking. For a summary of comments 
and responses related to when subpart 1 or subpart 2 applies, please 
see the preamble to those final rules at 69 FR 23961.
    Commenters on both the 1996 and 2003 proposals generally supported 
applying the nonattainment major NSR requirements applicable to major 
stationary sources of VOC (including provisions regarding major 
modifications, significant emission rates, and offsets) to 
NOX emissions, except where the Administrator determines 
pursuant to section 182(f) that NOX requirements for major 
stationary sources, including NSR requirements, would not apply or 
would be limited (``NOX waiver''). A few commenters opposed 
waivers under section 182(f) for exemptions from NOX 
requirements, due to their effect on NOX emissions in 
downwind States.
    We agree with the commenters supporting NOX as an ozone 
precursor for nonattainment major NSR applicability, and have retained 
it in the final rule. We note that whether a NOX waiver 
applies in a particular area and the effects of NOX waivers 
on RACT are discussed in section IV.H. of this preamble.
2. Comments on Proposed Revisions to Criteria for Emission Reduction 
Credits From Shutdown and Curtailments
    Many commenters generally supported EPA's conclusion that emission 
reduction credits from shutdowns and curtailments can be used for NSR 
offsets. These commenters believed the safeguards in the 1990 CAA 
Amendments justified removing the previous requirement for an approved 
attainment plan before such credits can be used as offsets. One 
commenter opposed lifting the restrictions, believing that the cited 
1990 CAA Amendment provisions, including submittal of SIP attainment 
demonstrations, have not been implemented.
    While no commenters supported the adoption of Alternative 1 
exclusively, a few commenters supported both proposed Alternatives. 
However, many commenters strongly supported Alternative 2. These 
commenters asserted that the safeguards in the 1990 CAA Amendments 
address progress in nonattainment areas and that an approved attainment 
demonstration is no longer necessary to ensure shutdown/curtailment 
credits are accounted for in the attainment demonstration. These 
commenters also believed Alternative 2 was more flexible and would 
encourage stable banking programs. Many commenters believed that State 
agencies would be unable to meet the deadlines in Alternative 1. They 
also believed that Alternative 1 was unnecessarily restrictive, and 
would cause confusion.
    We agree with the commenters who supported Alternative 2. We have 
promulgated final regulations that allow emission reduction credits to 
be used as offsets in the absence of an approved attainment 
demonstration, provided that these emission reduction credits were 
generated from shutdowns or curtailments that are included in the base 
year emission inventory as current actual emissions.
    One commenter stated that the regulatory language concerning the 
``most recent emissions inventory'' is confusing. The commenter 
believed this language could be mistaken to mean that the base year 
would continue to shift. The commenter noted that it would be more 
accurate to state that the base year emissions inventory is the 
starting point and all creditable emissions reductions must have been 
reported in the base year inventory or a subsequent emissions 
inventory. We agree with the commenter that the terminology ``most 
recent emissions inventory'' is confusing and have revised Sec.  
51.165(a)(3)(C)(1) accordingly, specifying the cutoff date as ``the 
last day of the base year if the projected emissions inventory used to 
develop the attainment demonstration explicitly includes the emissions 
from such previously shutdown or curtailed emission units.'' As we 
discussed in section V.B.2.a. of this preamble, this regulatory 
language is consistent with our previous guidance on how emission 
reduction credits from shutdowns and curtailments are used in 
attainment planning. Most importantly, it assures that emissions from 
shutdown and curtailed units are accounted for in attainment planning.
    We disagree with the commenter who opposed the revisions. Since the 
submission of this comment in 1997, States have made substantial 
progress in implementing the 1990 CAA Amendments. This progress 
includes submitting the required inventories to which attainment 
planning is keyed, along with the required attainment

[[Page 71681]]

demonstrations.\106\ We believe that implementation of the 1990 CAA 
Amendments to date supports the conclusion that emission inventories 
have been effective in attainment planning, and will continue to be 
effective in implementing the 8-hour standard. Therefore, we disagree 
with the commenter that the 1990 CAA Amendments do not justify the 
revisions due to inadequate implementation.
---------------------------------------------------------------------------

    \106\ Of the 135 areas designated as nonattainment for the 1-
hour ozone NAAQS in 1991, 69 have been redesignated as attainment. 
See hhtp://www.epa.gov/oar/oaqps/greenbk/onsum2.html. Of the 55 
nonattainment areas with classifications of moderate and higher that 
were required to submit SIPs and attainment demonstrations, all but 
4 have an approved SIP or have requested redesignation to 
attainment.
---------------------------------------------------------------------------

3. Comments on Construction Ban Provisions
    We received comments on the following procedural issue. In the 
proposal, we stated our intent to issue determinations of inadequate 
SIP implementation under section 173(a)(4) by letter, followed by 
publication in the Federal Register, and explained that such 
determinations would result in a prohibition on construction in the 
area pursuant to that provision (61 FR 38305). We also solicited 
comment on whether an opportunity for public notice and comment should 
be provided. A few State commenters believed that EPA should provide 
such notice and comment, but did not state a basis for their position.
    The text of Sec.  52.24(b) as proposed tracked the language of 
section 173(a)(4) and did not include a provision on the process to be 
used for issuing a determination of inadequate SIP implementation. We 
have finalized Sec.  52.24(b) in substantially the same form as we 
proposed. The Agency is still considering the appropriate process to 
use in issuing a determination under CAA section 173(a)(4).
4. Comments on Applicability of Appendix S and the Transitional Program
    Many commenters opposed our proposed Transitional NSR Program, 
stating that it would not be protective of air quality. Many other 
commenters supported the proposed program, believing that it would 
provide needed flexibility and would not interfere with achieving 
attainment. Many commenters, including some who supported the 
Transitional Program, believed the schedule for submitting attainment 
plans and control requirements was impracticable. Some commenters 
opposed the Transitional NSR Program on legal grounds, arguing that 
section VI does not authorize any NSR flexibility or that appendix S 
has been superseded in its entirety by various sections of the CAA.
    We agree with commenters that the schedule in the proposed rule for 
submitting attainment plans to be eligible for Transitional NSR was 
impracticable. On the other hand, however, we do agree with the many 
commenters who urged us to provide flexible NSR requirements for some 
areas. While we have not promulgated specific criteria for when such 
flexibility would apply, we have promulgated final regulations 
specifying that section VI applies where the original conditions are 
met (that is, the attainment deadline has not passed, the source would 
not interfere with attainment by the deadline, and the source meets all 
applicable SIP emissions limitations) and the Administrator has 
determined and provided public notice that section VI applies.
    Regarding the objections to our legal authority to implement 
flexible NSR under appendix S, some commenters argued that the section 
VI exemption is potentially applicable only where an attainment date 
for the secondary standards has not yet passed. However, this comment 
ignores the plain language of section VI, which references primary 
standards. It states: ``In some cases, the dates for attainment of 
primary standards have not yet passed due to the delay in the 
promulgation of a plan under this section of the Act.'' It then goes on 
to note that the attainment deadlines for the secondary standards may 
also not yet have passed. It then states: ``In such cases [a reference 
to attainment dates that have not passed for both primary and second 
standards], a new source locating in an area designated in 40 CFR 
81.3000 et seq. as nonattainment may be exempt from the conditions of 
Section IV.A'' \107\ where certain requirements are met. Thus, the 
section VI exemption is applicable where the attainment date for the 
primary standard has not passed.
---------------------------------------------------------------------------

    \107\ Designations are in 40 CFR 81.300. This citation has been 
corrected in today's final rule.
---------------------------------------------------------------------------

    Other commenters argued that appendix S and 40 CFR 52.24(k) have 
been superseded by or prohibited by various sections of the CAA. (The 
EPA will use the term ``appendix S'' in this section of the preamble to 
refer to these collectively). Although commenters made this argument in 
the context of opposing the proposed revisions to section VI of 
appendix S, this comment applies to any use of appendix S for 
permitting, including the LAER and offset requirements of section IV, 
and the existing version of section VI. First, the commenter contended 
that appendix S has been superseded by section 181(b)(1) within subpart 
2 of the CAA, under which it believes a newly designated nonattainment 
area receives its nonattainment classification by operation of law and 
immediately becomes subject to all of the requirements--including 
section 110, subpart 1, and subpart 2--that apply to that 
classification. The EPA disagrees with the commenter. As a threshold 
matter, even if the commenter were correct that both subpart 1 and 
subpart 2 applied upon an area's nonattainment classification, the 
statute provides that the area may have a period of time to develop and 
submit a SIP or SIP revision meeting the preconstruction permitting 
requirements of section 173. See CAA sections 172(b)(5) and 
182(a)(2)(C). For the SIP development period, part D leaves a gap as to 
the NSR requirements applicable to the newly designated nonattainment 
area (if the state's part D NSR SIP does not automatically cover the 
area). This gap exists even if EPA were to accept the commenter's 
contention that subpart 2 applies. Pursuant to 40 CFR 52.24(k), this 
gap is filled by appendix S, which requires NSR permitting that mirrors 
part D, subject to the section VI exemption.
    Additionally, EPA disagrees with the commenter's contention that 
subpart 2 must apply to all newly designated nonattainment areas. As 
discussed in more detail in the preamble to the Phase 1 8-hour ozone 
implementation rule (69 FR 23951), EPA has determined that it has 
discretion in determining whether subpart 2 applies to these areas 
because subpart 2 does not dictate whether it applies where the 1-hour 
design value falls below the lowest value in the subpart 2 
classification table. The EPA has described in that rule the 
circumstances in which subpart 2 applies.
    The commenter also contends that section 193 has superseded 
appendix S. The EPA disagrees. The commenter relies on the following 
language in section 193: ``No control requirement in effect, or 
required to be adopted by a[] * * * [implementation] plan in effect 
before November 15, 1990, in any area which is a nonattainment area for 
any air pollutant may be modified after November 15, 1990, in any 
manner unless the modification insures equivalent or greater emission 
reductions of such air pollutant.'' However, this part of section 193 
is of no relevance to appendix S because

[[Page 71682]]

appendix S does not replace any existing SIP requirements. An area is 
only required to apply appendix S where it does not have a part D NSR 
SIP covering permitting for the 8-hour standard. In other words, it 
covers only the gap in the SIP caused by the lack of a part D NSR 
program for the relevant NAAQS, and is supplemental to any existing SIP 
requirements.\108\
---------------------------------------------------------------------------

    \108\ Although EPA did state in the proposal that States with 
already applicable part D NSR SIPs may choose to amend their SIPs to 
allow them to take advantage of the proposed revisions to section VI 
(68 FR 32844 n.67), the decision not to go forward with the section 
VI revisions as proposed makes that issue moot. New source review 
under section VI, as finalized, will involve notification by the 
Administrator that it applies for new sources meeting the section VI 
criteria in areas lacking approved part D NSR programs, rather than 
replacement of a NSR program in the SIP with an alternative NSR 
program.
---------------------------------------------------------------------------

    The commenter also believes that use of appendix S for permitting 
would violate section 110(l), which provides, in relevant part, that: 
``The Administrator shall not approve a revision of a plan if the 
revision would interfere with any applicable requirement concerning 
attainment and reasonable further progress * * *'' The commenter states 
that nonattainment preconstruction permitting requirements ``concern[] 
attainment and reasonable further progress,'' so if a SIP is already 
written such that nonattainment NSR will apply in an area as soon as it 
is designated nonattainment under the 8-hour standard, then any 
revision that would thwart the automatic effectiveness of those 
requirements would violate section 110(l). Again, appendix S is not an 
amendment to a SIP, and does not replace any existing SIP requirements. 
Rather, it covers the gap caused by the lack of a part D NSR SIP for 
the newly designated nonattainment area. If a SIP applies the 
nonattainment NSR program to a newly designated nonattainment area, 
appendix S does not apply to that area. [See 40 CFR 52.24(k) and 
appendix S, section I.] For these same reasons, the commenter is 
incorrect that NSR permitting under appendix S violates Congressional 
intent not to relax pollution control requirements when the NAAQS are 
revised, as expressed in section 172(e). One commenter stated that any 
major revisions to appendix S should be subject to additional notice-
and-comment because such revisions could not be a logical outgrowth of 
the June 2, 2003 proposal. We disagree that the public lacked adequate 
notice and opportunity to comment. The changes to incorporate the 1990 
CAA Amendments to part D of title I of the CAA (for example, major 
stationary source thresholds, significant emission rates, and offset 
ratios) and the revisions to the rule governing creditable emissions 
reductions from shutdowns and curtailments were proposed in 1996 for 
the major NSR program, including appendix S (61 FR 38252). The method 
for making designations and classifications specific to the 8-hour 
standard under subparts 1 and 2 was proposed on June 2, 2003 (68 FR 
32802). Although rule language was not proposed specifically for 
appendix S, the rule language could be discerned from the rule language 
proposed for Sec.  51.165, as appendix S states it is an interpretation 
of 40 CFR subpart I, which includes Sec.  51.165. Additionally, the CAA 
does not require that the Agency provide notice of the exact rule 
language that will be finalized, but rather that the Agency provide a 
statement of basis, including, among other things, the major legal 
interpretations and policy considerations underlying the proposal. 
These were provided by the 1996 and 2003 proposals and, in the case of 
the removal of the 50 tpy exemption, in the 1979 proposal.
    With regard to the changes to section VI of appendix S, the Agency 
notes that because it declined to adopt the extensive revisions 
proposed, the changes are minimal. The additional condition regarding 
approval by the Administrator is a logical outgrowth of the proposed 
revisions to section VI, which explained that the Agency's goal was to 
limit the applicability of section VI to situations where the new 
source would comply with all of the conditions in section VI, most 
notably, not interfering with an area's ability to meet its attainment 
deadline.
5. Comments on Changes To Identify NOX as an Ozone Precursor 
in Attainment and Unclassifiable Areas
    Commenters supported our proposal to amend our PSD regulations to 
expressly include NOX as an ozone precursor. We agree with 
these commenters.
6. Comments on Removing the 50-Ton Exemption
    For comments on removing the 50-ton exemption, see the discussion 
in the 1980 final rules at 45 FR 52689-90.

D. NSR Implementation Under the 8-Hour Ozone NAAQS

    As promulgated at 69 FR 23858, the designation and classifications 
for the 8-hour NAAQS became effective June 15, 2004. The transition to 
NSR under the 8-hour NAAQS raises multiple implementation questions, 
which are discussed below. We intend to address additional issues in 
the future.
1. Areas That Have Never Been Nonattainment for Ozone
    If an area has never been nonattainment for ozone and is 
nonattainment for the 8-hour ozone NAAQS, it became subject to 
nonattainment major NSR under the 8-hour standard on June 15, 2004. 
Permits for new or modified major stationary sources in such areas 
issued on or after June 15, 2004 must reflect NSR requirements under 
the 8-hour ozone NAAQS. Some States may already have in place a part D 
major source permitting 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, the State can continue to issue 
nonattainment NSR permits for new and modified major stationary sources 
under the part D NSR SIP on or after June 15, 2004. For a nonattainment 
area in a State with a SIP that specifically lists the areas in which 
part D NSR applies, or in an area that currently has no nonattainment 
plan or otherwise lacks authority to implement NSR for the 8-hour ozone 
NAAQS through a SIP-approved permitting program, there will be an 
interim period between June 15, 2004 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, pursuant to Sec.  52.24(k), 
permits for new and modified major stationary sources in such areas 
must be consistent with the requirements in appendix S. Where a State 
or local agency lacks authority to issue permits consistent with 
appendix S, EPA is the reviewing authority.
    States may not issue PSD permits to address major NSR obligations 
arising from nonattainment classifications. As we stated at 69 FR 
23992, PSD permits may not be issued after June 14, 2004, to satisfy 
permitting obligations under the 8-hour nonattainment designation. We 
clarify here that States are not precluded from issuing PSD permits 
based on the 1-hour attainment classifications, but such actions do not 
relieve States or sources from addressing nonattainment NSR obligations 
based on the 8-hour classification.
2. Areas That Are Nonattainment for the 1-Hour NAAQS and the 8-Hour 
NAAQS
    New source review under the 8-hour NAAQS became effective in 8-hour 
nonattainment areas on June 15, 2004.

[[Page 71683]]

Currently, the 1-hour NAAQS remains in effect. Thus, there is a period 
of time when major NSR requirements for both the 1-hour and 8-hour 
NAAQS applies in an area or parts of an area. During this period, 
different major stationary source thresholds and offset ratios may 
apply in a given nonattainment area under the 1-hour and 8-hour ozone 
NAAQS, due to a change in its classification. Permits issued during 
this transition period will assure compliance with both programs if the 
permit requirements are based on the highest classification that 
applies to the area. If the area's 1-hour classification is higher than 
its 8-hour classification, the NSR SIP program under the 1-hour NAAQS 
will satisfy the requirements of both programs. If the 8-hour 
classification is higher, then the NSR program under the 8-hour 
classification will determine the NSR requirements. For example, 
suppose a source is locating in an area that is now classified as 
moderate nonattainment under the 8-hour ozone NAAQS but was previously 
classified as a serious ozone nonattainment area under the 1-hour 
NAAQS. Any permit the State issues during the transition would be based 
on the 50 tpy major stationary source threshold and at least 1.2:1 
offset ratio that apply to serious ozone nonattainment areas under the 
1-hour ozone NAAQS.
    Pursuant to 40 CFR 50.9(b), EPA revoked the 1-hour NAAQS effective 
June 15, 2005 for areas designated for the 8-hour ozone standard 
effective June 15, 2004. We anticipate that, upon revocation of the 1-
hour ozone NAAQS, States will submit requests for approval of SIP 
revisions removing NSR requirements based on the 1-hour 
classifications, where such SIP revisions are necessary to achieve this 
result. At 69 FR 23985, we stated that upon revocation of the 1-hour 
ozone NAAQS, for any area that was designated nonattainment for the 1-
hour ozone NAAQS, the area's implementation plan provisions satisfying 
sections 172(c)(5) and 173 (including provisions satisfying section 
182) based on the area's previous 1-hour ozone NAAQS classification are 
no longer required elements of an approvable implementation plan. We 
also indicated that a State may request approval of a SIP revision to 
remove its 1-hour nonattainment NSR program from its SIP. We further 
stated that we will approve such changes to a state's SIP because we 
have determined based on 110(l) of the CAA that such changes will not 
interfere with any state's ability to reach attainment of the 8-hour 
standard and will be consistent with RFP.
    On June 29, 2004, we received a Petition for Reconsideration from 
Earthjustice concerning these statements on removing the 1-hour NSR SIP 
and on the 110(l) determination related to removing the 1-hour NSR SIP. 
You can find a copy of this Petition for Reconsideration at http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr/materials.html. We have granted 
reconsideration on these two narrow NSR issues in the Phase 1 Ozone 
Implementation Rule. We published a proposed rule on these issues on 
April 4, 2005 (70 FR 17018). We published a final rule on these two 
issues on July 8, 2005 (70 FR 39413).
    As we stated at 69 FR 23986 (Column 1), emission limitations and 
other requirements in major NSR permits issued under 1-hour NSR 
programs will continue to be in force when the 1-hour NAAQS is revoked. 
For example, suppose an existing source is located in an area 
classified as serious nonattainment under the 1-hour ozone NAAQS and 
has a nonattainment major NSR permit based on its potential to emit 75 
tpy VOC. That major NSR permit (including emission limitations and 
other requirements) remains in force on and after June 15, 2005 even if 
the area that the source is located in is now classified moderate 
nonattainment (with a major stationary source threshold of 100 tpy) 
under the 8-hour ozone NAAQS.
3. Part D NSR SIP Submittals
    Today's final action on the regulations at Sec.  51.165 establishes 
the minimum requirements for part D SIPs implementing major NSR under 
the 8-hour NAAQS. Some States may find it unnecessary to revise their 
SIPs to implement NSR under the 8-hour NAAQS. This can happen when the 
approved part D NSR and ozone classification scheme SIP applies to any 
areas designated as nonattainment under section 107 of the CAA or 
listed in 40 CFR 81.300 et seq. In States that do not have authority to 
implement a part D program for the 8-hour NAAQS, a SIP revision for 
major NSR under the 8-hour NAAQS must be submitted.\109\ The revised 
implementation plan must include requirements to implement the 
provisions of sections 172(c)(5) and 173 of the CAA based on the area's 
8-hour ozone NAAQS classification under 40 CFR part 81, and the 
provisions of Sec.  51.165 as amended in today's final action.
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    \109\ As noted in section V.D.2 of this preamble, we will 
complete our reconsideration on issues related to NSR SIP submittals 
and announce our final action by May 20, 2005.
---------------------------------------------------------------------------

    States must submit SIP provisions incorporating today's final rules 
at Sec.  51.165 no later than June 15, 2007, which is 3 years after 
designation. This schedule is consistent with the schedule set forth in 
CAA sections 172(b) and 110(a)(1).\110\ This date facilitates 
coordination of NSR program changes with the submission of the 
attainment plan, which is also due within 3 years. Part D NSR SIPs to 
implement the 8-hour NAAQS should reflect the requirements of today's 
final action, as well as the requirements in subpart X of part 51 
promulgated on April 30, 2004 at 69 FR 23951. Before EPA can approve a 
program into the SIP to implement a nonattainment major NSR program for 
the 8-hour ozone NAAQS, State and local agency programs implementing 
part D (nonattainment NSR permit program in Sec.  51.165) must include 
today's changes as minimum program elements. States must also submit 
SIP provisions incorporating today's final rules at Sec.  51.166 no 
later than June 15, 2007.
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    \110\ CAA Section 182(a)(2)(C)(i) requires NSR SIPs to meet the 
1-hour ozone NAAQS to be submitted within 2 years after the date of 
the enactment of the 1990 CAA Amendments. This requirement has been 
met by the submission of NSR SIPs due on November 15, 1992, which 
EPA requested on April 16, 1992 at 57 FR 13499. We have interpreted 
the 2-year schedule not to apply for the NSR SIPs implementing the 
8-hour ozone NAAQS.
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4. Effective Date for Today's Requirements
    All of these changes will take effect in the NSR permitting 
programs for nonattainment areas codified at appendix S of part 51 and 
Sec.  52.24 on January 30, 2006. This means that appendix S as amended 
in today's final action will apply on January 30, 2006 in any 
nonattainment area without an approved part D NSR SIP that applies to 
major sources in the nonattainment area for the nonattainment 
pollutant. These changes will take effect in the Federal PSD program 
(codified at 40 CFR 52.21) on January 30, 2006 in any area without an 
approved PSD program, for which we are the reviewing authority, or for 
which we have delegated our authority to issue permits to a State or 
local reviewing authority. The provisions of Sec.  51.165 and Sec.  
52.24, as amended in today's final action, also apply on January 30, 
2006. State and local agency programs implementing part C (PSD permit 
program in Sec.  51.166) and part D (nonattainment NSR permit program 
in Sec.  51.165) are effective when they are approved by us.
5. Requirements for Offsets
    Offsets under CAA section 173 are typically based on emissions 
reductions

[[Page 71684]]

achieved through installation of control technology, shutdown of a 
source, or curtailment of production or operating hours below baseline 
levels. Offsets must meet several requirements set forth in section 173 
of the CAA, including the following:
     Offsets must be obtained by the time the source is to 
commence operation [CAA section 173(a)(1)(A)].
     Offsets must be consistent with RFP [CAA section 
173(a)(1)(A)].
     Offsets must be federally enforceable before permit 
issuance [CAA section 173(a)].
     Offsets must be in effect and enforceable by the time a 
new or modified source commences operation [CAA section 173(c)(1)(B)].
     Emissions reductions that are otherwise required under the 
CAA cannot be creditable as offsets [CAA section 173(c)(2)].
     Offsets must come from a source in the same nonattainment 
area, unless it comes from an area that has an equal or higher 
nonattainment classification and the emissions from such other area 
contribute to a violation of the national in the nonattainment area in 
which the source is located [CAA section 173(c)(1)].
    If an emission reduction credit (including an emission reduction 
credit generated from a shutdown or curtailment) has been used to meet 
ROP or RFP milestones, it is not available for use as an offset or in 
netting. This is because section 173(c)(2) of the CAA prohibits use of 
emissions reductions as offsets where the reductions are ``otherwise 
required by the Act.'' Thus, reductions that are used to meet Federal 
requirements, including SIP-approved ROP and RFP obligations under CAA 
section 182, are not creditable. Where emissions reductions pre-dating 
2002 have not been used to meet ROP and RFP obligations, or other 
Federal requirements, CAA section 173(c)(2) does not prohibit their 
use. Thus, EPA believes that such credits may be used as offsets 
consistent with the CAA. The EPA encourages States to allow sources to 
use pre-2002 banked emissions reductions credits (that is, those that 
were generated before January 1, 2002, which is the first day of the 
emissions inventory base year for the base year inventory used to 
develop the attainment demonstration) for offsetting purposes. States 
may do so as long as the banked credits meet all other offset 
creditability criteria and such credits are included by States as 
growth in developing the attainment demonstration as discussed 
elsewhere in this preamble. See also 57 FR 13508-09. The credits must 
be certified and approved for such purposes.
    Additional requirements apply to credits generated from shutdowns 
or curtailments. Pursuant to today's final rule, States may revise 
their SIPs to remove the requirement for an approved attainment 
demonstration as a condition of using shutdown/curtailment credits pre-
dating the new source application. Under the revised rule, emissions 
from the shutdown/curtailed source can be creditable if they are 
included in the projected emissions inventory used to develop the 
attainment demonstration. For emissions reductions from shutdowns or 
curtailments to be creditable for offset purposes, the State must also 
certify that emissions from the shutdown or curtailed source have not 
been used and are not necessary to meet any other requirement under the 
CAA, including RFP or ROP.
    Use of emission reduction credits banked before the base year (that 
is, those generated before January 1, 2002) for netting continues to be 
available to the extent allowed under State rules. However, because 
these emission reduction credits represent emissions that are not 
included in the 2002 base year inventory, States should consider net 
emission increases occurring on or after January 1, 2002 as growth even 
though, for applicability purposes, the source does not have a 
significant net emissions increase.

VI. Final Rule for RFG

A. Introduction

    This portion of the rule addresses what effect the transition to 
the 8-hour NAAQS will have on certain aspects of the federal RFG 
program. Under the CAA, the RFG requirements apply in certain areas of 
the country. First, there are nine areas that Congress identified 
pursuant to section 211(k)(10)(D) of the CAA as mandatory RFG areas. 
Second, there are five RFG areas that are mandatory areas based on 
their reclassification to a severe ozone classification. These areas 
are typically called ``bump-up'' areas. See CAA section 211(k)(10)(D), 
211(k)(6), and 211(k)(5). Finally, there are a number of areas that 
have voluntarily opted in to the RFG program. The purpose of the RFG 
program is to improve air quality through the use in certain areas of 
gasoline that is reformulated to reduce motor vehicle emissions of 
tropospheric ozone-forming compounds and toxics, as set forth in 
section 211(k)(1) of the CAA.

B. Background

    In the Phase 1 Rule, EPA addressed two key issues regarding the 
transition from the 1-hour NAAQS to the 8-hour NAAQS. First, when will 
the 1-hour NAAQS no longer apply (i.e., be ``revoked'')? Second, what 
protections are in place to ensure that, once the 1-hour NAAQS is 
revoked, air quality will not degrade and that progress toward 
attainment will continue as areas transition from implementing the 1-
hour NAAQS to implementing the 8-hour NAAQS?
    On the first issue, EPA decided that the 1-hour NAAQS will be 
revoked in full, including the associated designations and 
classifications, 1 year following the effective date of the 
designations for the 8-hour NAAQS. Most areas were designated effective 
June 15, 2004, and for those areas the 1-hour NAAQS and the related 
designation and classification will no longer apply as of June 15, 
2005.
    On the second issue, the anti-backsliding portion of the Phase 1 
rule established that all areas designated nonattainment for the 8-hour 
ozone NAAQS, that were designated nonattainment for the 1-hour NAAQS at 
the time of designation for the 8-hour NAAQS, remain subject to 
mandatory control measures that applied by virtue of the area's 
classification for the 1-hour NAAQS. These control measures are called 
``applicable requirements.'' \111\ Also, EPA decided that areas 
designated nonattainment for the 8-hour NAAQS, that were designated 
attainment subject to a section 175A maintenance for the 1-hour NAAQS 
at the time of designation for the 8-hour NAAQS, must continue to 
implement all applicable requirements that have been approved into the 
SIP.\112\
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    \111\ In the Phase 1 Rule, EPA defined applicable requirements 
as those control measures in place as of the date of signature of 
the Phase 1 Rule, (i.e., April 15, 2004). The EPA recently 
reconsidered this issue and changed this date to the effective date 
of the 8-hour designations--for most areas this would be June 15, 
2004 (70 FR 30596).
    \112\ While the Phase 1 Rule also addressed the transition to 
the 8-hour NAAQS for areas recently designated as attainment for the 
8-hour NAAQS, all relevant RFG areas are designated as 8-hour 
nonattainment areas (69 FR 23858).
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    In the June 2003 proposal, EPA identified Federal RFG as an 
applicable requirement (68 FR 32867). In the final rule, however, EPA 
did not include RFG in the list of applicable requirements. The EPA 
instead clarified that RFG is required under a Federal program, and 
thus differs significantly from the other programs on the list of 
applicable requirements, which are developed and adopted by States for 
inclusion in the

[[Page 71685]]

SIP. The EPA recognized that various issues exist regarding the scope 
and applicability of the RFG program during and after implementation of 
the 8-hour NAAQS that need further clarification. The EPA stated that 
we were still considering how to treat RFG and that we would address 
these issues in an action separate from the Phase 1 Rule (69 FR 23973). 
Thus, EPA did not include RFG in the list of applicable requirements in 
the Phase 1 Rule, and EPA made no decision at that time concerning RFG 
treatment in the transition to the 8-hour NAAQS.

C. What action is EPA taking?

    As discussed in more detail below, EPA is clarifying today that the 
nine original mandatory RFG areas, as well as most other areas that 
have become mandatory RFG areas by being ``bumped up'' to a severe 
classification, will continue to be required to use RFG at least until 
they are redesignated to attainment for the 8-hour NAAQS. The EPA is 
not deciding at this time what will happen when the original nine areas 
and the bump-up areas covered by this rule are redesignated to 
attainment for the 8-hour NAAQS. The EPA is also not deciding at this 
time what RFG requirements apply for any bump-up areas that are 
redesignated to attainment for the 1-hour NAAQS before the 1-hour NAAQS 
is revoked. The only such area that was redesignated to attainment 
prior to revocation of the 1-hour NAAQS is Atlanta, Georgia. That issue 
will be addressed in an action separate from this final rule.

The RFG areas that opted into the program will continue to be RFG 
areas unless they opt-out pursuant to EPA's opt-out regulations. The 
transition to the 8-hour NAAQS does not change the terms and 
conditions that apply to opting-out of the RFG program. Likewise, 
EPA's current rules on opting-in to RFG will apply in the same 
manner under the 8-hour NAAQS as under the 1-hour NAAQS--i.e., 8-
hour nonattainment areas that are classified as marginal or above 
under subpart 2 will be able to opt-in to the RFG program.

D. Why is EPA taking this action?

1. RFG Mandatory Areas
    Under section 211(k)(5), RFG is required in any ``''covered area.'' 
The term ``covered area'' is defined in section 211(k)(10)(D) as:

[t]he 9 ozone nonattainment areas having a 1980 population in excess 
of 250,000 and having the highest ozone design value during the 
period 1987 through 1989 shall be ``covered areas'' for purposes of 
this subsection. Effective one year after the reclassification of 
any ozone nonattainment area as a severe ozone nonattainment area 
under section 181(b) of this title, such severe area shall also be a 
``covered area'' for purposes of this subsection.

    In the June 2003 proposed Phase 1 Rule, EPA proposed that RFG be 
considered an applicable requirement and treated like the various 
mandatory control obligations that States remained obligated to adopt 
and implement after revocation of the 1-hour NAAQS. Under that 
proposal, the nine original mandatory areas and all bump-up areas would 
have continued to be covered areas after revocation of the 1-hour 
NAAQS. For the reasons discussed below, EPA is adopting this basic 
approach for the nine original mandatory areas as well as those bump-up 
areas covered by this final rule.
a. Nine Original Mandatory Areas
    The first sentence of section 211(k)(10)(D) identifies certain 
covered areas by reference to their 1980 population and their 1987-1989 
ozone design value. The nine areas that meet these criteria are Los 
Angeles, San Diego, Hartford, New York, Philadelphia, Chicago, 
Baltimore, Houston, and Milwaukee. It is clear that transition to the 
8-hour NAAQS does not change the historical facts that define these 
areas. In addition, all of these areas are designated as nonattainment 
areas under the 8-hour NAAQS. Thus, they will continue to be ``ozone 
nonattainment areas'' until they are redesignated to attainment for the 
8-hour NAAQS. Revocation of the 1-hour NAAQS and transition to the 8-
hour NAAQS does not change the fact that each of these nine mandatory 
areas will continue to meet the definition of covered area at least 
until it is redesignated to attainment for the 8-hour NAAQS. As 
discussed below, EPA is not deciding at this time whether these areas 
will continue to be covered areas upon redesignation to attainment for 
the 8-hour NAAQS. The EPA reserves any determination on that issue for 
a future action.
    The EPA believes that this is a straightforward and clear 
application of the plain language of the statute. However, even if the 
statutory terms were considered ambiguous on this issue, EPA believes 
that the same statutory interpretation and policy considerations 
described below for the ``bump-up'' areas covered by this final rule 
apply to the nine mandatory areas and would lead EPA to require 
continued use of RFG in the nine areas at least until they are 
redesignated to attainment for the 8-hour NAAQS.
    Since EPA regulations at 40 CFR 80.70 currently define the term 
``covered area'' to include the original nine mandated areas, no change 
in EPA regulations is needed at this time. The EPA will address in a 
future action what RFG requirements, if any, apply to the original nine 
RFG covered areas when they are redesignated to attainment for the 8-
hour NAAQS.
b. Bump-Up Areas
    The second sentence of section 211(k)(10)(D) identifies areas that 
become covered areas because they have been reclassified as a severe 
area under CAA section 181(b). These are called ``bump-up'' areas. To 
date, five areas have been reclassified to severe for the 1-hour NAAQS. 
They became RFG covered areas 1 year after their reclassification--
Baton Rouge, Atlanta, Sacramento, San Joaquin Valley, and Washington, 
DC--which was already an opt-in area.
    The areas that are RFG covered areas based on the bump-up provision 
were designated as ozone nonattainment areas and classified by 
operation of law at the time of the 1990 CAA Amendments, and their 
bump-up to severe occurred by operation of law based on EPA's 
determination under section 181(b) that the areas failed to attain the 
1-hour NAAQS by the applicable attainment date. Thus, their 
reclassification to severe was not based on a determination that their 
air quality met the severe area design value. Instead, reclassification 
was based on their failure to meet the applicable attainment date. The 
bump-up to severe has two effects--a later attainment date is set for 
the area, and a variety of additional control measures become mandatory 
for the area. The Federal RFG program becomes a mandatory control 
measure in an area 1 year after it is bumped up to a severe 
classification.
    There are two ways that a bump-up area classified as severe could 
lose its severe classification. First, it could do so through 
redesignation to attainment for the 1-hour NAAQS. (This is no longer an 
option for areas where the 1-hour NAAQS was revoked on June 15, 2005.) 
Second, since the 1-hour NAAQS is revoked, a bump-up area will no 
longer be classified as severe under the 1-hour NAAQS and may have a 
lower classification (i.e., subpart 1, marginal, moderate or serious) 
for the 8-hour NAAQS. This rule only addresses the second situation.
    The bump-up areas in this second situation are all designated as 8-
hour ozone nonattainment areas, with classifications under the 8-hour 
NAAQS that are a lower classification than severe. This raises the 
issue of whether the bump-up areas that lose their severe 
classification through revocation of the

[[Page 71686]]

1-hour NAAQS should continue to be covered areas once the 1-hour NAAQS 
and the areas' related severe classifications are revoked.
    The EPA believes that section 211(k)(10)(D) is ambiguous on the 
issue of whether a bump-up area continues to be a covered area when it 
is no longer classified as severe. The text of the provision could be 
read to set the defining criteria as the occurrence of reclassification 
to severe, a historical fact that does not change based on subsequent 
changes in classification. It could also be read as identifying areas 
that are reclassified to severe, but as leaving unresolved what happens 
when they are no longer so classified. Given this ambiguity, EPA has 
discretion to determine whether section 211(k)(10)(D) authorizes 
removal of a bump-up area from the RFG program when it is no longer 
classified as severe, and to set appropriate criteria for such 
removal.\113\
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    \113\ While this final rule only addresses bump-up areas that 
lose their severe classification based upon revocation of the 1-hour 
NAAQS, the ambiguity in section 211(k)(10)(D) extends to all bump-up 
areas, including those not covered by this final rule. As noted 
above, EPA intends to address and resolve this ambiguity for any 
bump-up areas not covered by this rule in an action separate from 
this final rule.
---------------------------------------------------------------------------

    For a bump-up area covered by this rule, it is instructive to 
consider what would happen if EPA had never revised the 1-hour NAAQS. 
In that case, the area would continue to be a covered area at least 
until it was redesignated to attainment for the 1-hour NAAQS. While 
section 211(k)(10)(D) does not directly address whether a bump-up area 
would continue to be a covered area after redesignation, it is clear 
that if EPA had never revised the 1-hour NAAQS, the area would continue 
to be a covered area at least as long as it was a severe area, and it 
would be a severe area as long as it was still designated as an ozone 
nonattainment area.
    The EPA does not believe that Congress would have intended that 
removal of the severe classification based solely on revocation of the 
less protective 1-hour NAAQS should result in backsliding of the RFG 
requirement. For example, as noted above, if EPA had not adopted a more 
protective 8-hour NAAQS, with the related revocation of the 1-hour 
NAAQS and removal of the severe classification, then the bump-up areas 
covered by this rule would remain covered areas at least until they 
were redesignated to 1-hour attainment, at which point they would no 
longer be designated as ozone nonattainment areas. Here, the removal of 
the severe classification is through revocation of the 1-hour NAAQS, 
not through redesignation to 1-hour attainment. These bump-up areas are 
still designated as ozone nonattainment areas. The EPA believes the 
removal of the severe classification for these areas as a result of 
revocation of the 1-hour standard should not lead to removal of the RFG 
requirement. The EPA believes the RFG requirement should continue 
beyond revocation of the 1-hour NAAQS, and it should continue at least 
until the areas are redesignated to attainment for the 8-hour NAAQS. 
This does not change or affect any discretion EPA may otherwise have 
under the RFG provisions to modify or remove RFG requirements.
    This is consistent with the approach taken in the Phase 1 Rule for 
the mandatory obligations that EPA identified there as ``applicable 
requirements.'' In that rule, EPA determined that a number of 
provisions of the CAA evidence Congress' intent that certain 
obligations that applied to an area by virtue of the area's 
classification for the 1-hour NAAQS should continue to apply despite 
EPA's determination the 1-hour NAAQS is no longer necessary to protect 
public health. While some of these various statutory provisions do not 
have direct bearing on Federal RFG and section 211(k), the issues are 
closely analogous. For example, the inclusion of a bump-up area in the 
RFG program is integrally tied to the subpart 2 provisions that 
establish the original classification and attainment date for an area 
and its later reclassification as severe under section 181(b). The 
Supreme Court cautioned in Whitman v. American Trucking Assn., 531 U.S. 
457 (2001), against EPA making subpart 2 ``abruptly obsolete.'' 
Although the RFG requirement itself is not set forth in subpart 2, the 
requirement to use it in severe bump-up areas is tied directly to the 
classifications that arise by operation of subpart 2. Thus, it would 
appear that the Supreme Court's caution should be as relevant for RFG 
bump-up areas as it is for the subpart 2 control obligations. For 
further discussion of the reasoning behind anti-backsliding provisions 
in the Phase 1 Rule, see 69 FR 23951, 23972. The reasoning presented 
there also supports EPA's interpretation of section 211(k)(10)(D) 
regarding RFG requirements for bump-up areas covered by today's rule.
    One issue addressed in the Phase 1 Rule involved setting the 
trigger date for determining what 1-hour SIP-related requirements would 
continue as mandatory ``applicable requirements'' after revocation of 
the 1-hour NAAQS. The EPA considered three possible trigger dates for 
the Phase 1 Rule--the date of signature of the Phase 1 Rule, the 
effective date of the 8-hour nonattainment designation, and the date of 
revocation of the 1-hour NAAQS.\114\ For purposes of this final rule, 
it is not necessary to decide on a similar date for determining the 
continued applicability of RFG for these bump-up areas. Under all 
potential trigger date options, RFG would be a requirement on the 
trigger date for the bump-up areas covered by this rule, as they would 
all be classified as severe areas on any of the trigger dates that were 
considered.
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    \114\ May 26, 2005 (70 FR 30596).
---------------------------------------------------------------------------

    Based on the above, EPA has determined that bump-up areas that lose 
their severe classification based solely on revocation of the 1-hour 
NAAQS should remain RFG covered areas at least until they are 
redesignated to attainment for the 8-hour NAAQS. As indicated above, 
this does not change or affect any discretion EPA may otherwise have 
under the RFG provisions to modify or remove RFG requirements.
2. RFG Opt-In Areas
    Under section 211(k)(6) of the CAA, certain ozone nonattainment 
areas may opt-in to the RFG program. That provision limits opt-ins to 
areas ``classified under subpart 2 of part D of title I as a marginal, 
moderate, serious, or severe Area.'' The EPA's regulation implementing 
this provision is at 40 CFR 80.70(j), which states that ``[a]ny * * * 
area classified under 40 CFR part 81, subpart C as a marginal, 
moderate, serious, or severe ozone nonattainment area may be included 
as a covered area on petition of the Governor of the State in which the 
area is located.''
    Some areas designated nonattainment for the 8-hour NAAQS are 
subject only to the planning requirements of subpart 1, while others 
are also subject to the planning requirements of subpart 2 of part D of 
title I. The 8-hour nonattainment areas subject to the planning 
requirements of subpart 2 were all classified as marginal, moderate, 
serious, or severe (69 FR 23951, 23954; April 30, 2004). The 8-hour 
nonattainment areas subject only to subpart 1 are not subject to those 
classifications. Thus the only 8-hour nonattainment areas that would be 
able to opt-in under the terms of section 80.70(j) are areas classified 
under subpart 2 as marginal, moderate, serious, or severe, consistent 
with the terms of section 211(k)(6).
    In a prior rulemaking, EPA initially expanded the scope of this 
opt-in provision, interpreting section 211(k)(6) as authorizing opt-in 
for any current or prior 1-hour ozone nonattainment area,

[[Page 71687]]

including areas that were not classified marginal or above. In that 
rulemaking, EPA reserved judgment on whether it would apply the same 
expanded interpretation to areas designated as nonattainment for the 
then recently adopted 8-hour NAAQS (63 FR 52094, 52101; September 29, 
1998). The EPA's expanded view of the scope of section 211(k)(6) was 
subject to judicial review and was rejected as inconsistent with the 
terms of section 211(k)(6), as ``Congress provided for opt-in only for 
areas classified as marginal, moderate, serious, or severe.'' API and 
NPRA v. EPA, 198 F. 3d 275, 281 (D.C. Cir. 2000).
    The text of EPA's current opt-in regulation is limited as a result, 
is consistent with the limitation in section 211(k)(6), and only allows 
opt-in for areas classified under subpart 2 as marginal or above. The 
EPA interprets the current opt-in regulation as allowing opt-in for 
those 8-hour nonattainment areas that are classified as marginal or 
above under subpart 2. The EPA believes this is consistent with section 
211(k)(6) and with the API and NPRA case, and therefore sees no need to 
revise the current regulation.

E. Future Proceedings

    Today, EPA is reserving for future consideration what RFG 
requirements, if any, should apply to the nine mandatory areas and the 
bump-up areas covered by this final rule when they are redesignated to 
attainment for the 8-hour NAAQS. The Phase 1 Rule provides that upon 
redesignation to attainment for the 8-hour NAAQS, SIP measures may be 
moved to the contingency measure portion of the SIP if the State 
demonstrates in accordance with section 110(l) that doing so will not 
interfere with maintenance of the 8-hour NAAQS or any other applicable 
requirement of the CAA (69 FR 23951, 23998; April 30, 1994)(40 CFR 
51.905(b)). This SIP process does not apply to RFG, since it is not a 
SIP measure. However, EPA will need in the future to consider whether 
it should develop a similar scheme for RFG. Specifically, EPA will 
consider the following issues. Should a State be allowed to drop the 
RFG requirement when a covered area is redesignated to attainment for 
the ozone NAAQS, or should the requirement remain in place? If it can 
be dropped, under what conditions? Once dropped, would the requirement 
to use it spring back if a State backslides into nonattainment? If it 
springs back, what lead time should be provided? If it does not spring 
back automatically, should EPA nevertheless reserve the discretion to 
require a former covered area to use RFG if it slips back into 
nonattainment? The EPA anticipates considering these and related issues 
in a future notice-and-comment proceeding. The EPA is not soliciting 
comment on these issues at this time.
    As noted above, EPA is not deciding at this time what RFG 
requirements apply for any bump-up areas that are redesignated to 
attainment for the 1-hour NAAQS before the 1-hour NAAQS is revoked. The 
only such area that was redesignated to attainment prior to revocation 
of the 1-hour NAAQS is Atlanta, Georgia. That issue will be addressed 
in an action separate from this final rule.

F. Miscellaneous Administrative Changes to the RFG Regulations

    Today, EPA is making a non-substantive formatting change to its RFG 
regulations. The regulations are currently structured to envision a 
complete list of all bump-up areas required to use RFG. However, EPA 
has not made timely amendments to these regulations to keep the list of 
bump-up areas up to date, so the regulations may appear to be 
misleading. Although EPA could take the opportunity to revise the list 
at this time to include all current bump-up areas, EPA believes that it 
would be best to amend the regulations to omit the list. The EPA will 
maintain a list of bump-up areas on its RFG Web site: http://www.epa.gov/otaq/rfg/whereyoulive.htm. This list can more quickly and 
easily be amended in the future to be kept up-to-date.

G. Comments and Responses

    Comment: One commenter noted EPA has proposed that all areas 
designated 8-hour nonattainment remain subject to control measures that 
apply by virtue of the area's classification for the 1-hour standard. 
For control measures that the State has not adopted, the State remains 
obligated to adopt and submit such controls. The commenter believes 
that such a policy may have unintended negative consequences for the 
few areas that recently bumped-up as the result of EPA's failed 
transport policy. Specifically, most of these areas will bump-up to 
either the serious or severe subpart 2 classification triggering higher 
classification controls. Some of these controls, and in particular VOC 
controls and RFG, may not benefit and/or may even be counterproductive 
to attaining the 8-hour standard. The commenter believes that for these 
few areas that recently bumped-up as the result of the failed transport 
policy, EPA should allow those States to evaluate the relative ozone 
reduction benefits of the higher classification controls and, where 
appropriate, substitute for more effective ozone controls. The 
commenter believes this is important to ensure continued progress 
towards attainment in the most cost-effective manner.
    Response: Congress specified use of RFG for areas bumped up to 
severe nonattainment status without providing an opportunity for such 
areas to substitute other controls that may be more effective. 
Specifying mandated controls for areas that have failed to achieve 
timely attainment is one of the specific provisions added by Congress 
in the 1990 CAA Amendments. The EPA does not believe that the 
transition to a more protective 8-hour standard should result in less 
restrictive requirements for RFG, such as allowing substitution of 
other control measures for RFG, than would apply if EPA had never 
revised the 1-hour standard. Substitution was not allowed under the 1-
hour standard.
    However, EPA notes that Congress established a mechanism to address 
adverse impacts of the RFG program on attainment of the NAAQS by 
authorizing EPA to waive the RFG oxygen content requirement where it is 
clearly demonstrated that the oxygen content requirement prevents or 
interferes with NAAQS attainment [section 211(k)(2)(B)]. This provides 
additional support for the view that the transition to the 8-hour 
standard should not establish a right to substitute other measures for 
RFG as the statute provides a different way to address potential 
concerns over the effectiveness of RFG in addressing ozone attainment.
    Comment: The local experts have estimated that RFG will cost 
consumers in the 5-parish nonattainment area an additional $48 to $72 
million annually. The Department of Environmental Quality, using 
MOBILE6 modeling has projected that RFG will provide no measurable 
benefits for NOX and less than 2 tons per day of VOC 
reductions. Recent UAM-V modeling for the Baton Rouge area shows an 
ozone benefit for RFG of around 0.26 ppb. Earlier UAM-V sensitivity 
modeling showed only a 1 ppb reduction in ozone with a 30 percent 
reduction in local anthropogenic VOC emissions from all sources. Thus, 
for an expenditure of up to $72 million annually, we can expect a 
negligible ozone benefit. Employing the usual cost-benefit analysis for 
cost per ton of pollutant removed, we arrive at a cost of around $36 
million per daily ton removed or around $100,000 per annual ton 
removed. Since the reduction would be expected to produce no measurable 
ozone benefit anyway, wouldn't this qualify as an ``absurd result'' and 
be subject to consideration

[[Page 71688]]

for waiver as discussed in the proposed 8-hour implementation rules? 
(p.3-4).
    Response: Baton Rouge has submitted requests for an RFG waiver and 
for a waiver of the RFG oxygen content requirement, which are currently 
before the Agency. With respect to EPA's authority to grant a waiver of 
the entire RFG requirement for bump-up areas on the basis of claims of 
``absurd results'' allegedly caused by the oxygen content requirement 
of RFG, please see EPA's September 30, 2004, response to Georgia's 
request for an RFG waiver, which is available at: www.epa.gov/otaq/regs/fuels/rfg/420s04006.pdf. As noted above, EPA does not believe that 
the transition to the more protective 8-hour standard should result in 
less restrictive requirements for RFG than would apply if EPA had never 
revised the 1-hour standard. The appropriate mechanism to address Baton 
Rouge's concerns is therefore in the context of Baton Rouge's petitions 
for relief under the RFG program, and not by establishing different, 
less restrictive RFG requirements as part of the transition to the 8-
hour standard.
    Comment: Several commenters oppose any attempts to liberalize 
procedures allowing for voluntary opt-ins to the Federal RFG program. 
Simply stated, further fuels restrictions are not an appropriate local 
control strategy. There is little justification for automatic 
proliferation of RFG. The industry is currently working hard to 
implement far-reaching fuels regulations that will result in 
significant environmental improvement. It does not need additional fuel 
reformulation requirements while this implementation work is going 
forward.
    The commenter notes under section 211(k)(6)(A) of the CAA, only 
areas classified under subpart 2 of Part D of Title I as a marginal, 
moderate, serious or severe area (without regard to whether or not the 
1980 population of the area exceeds 250,000) can opt-in to RFG. 
Therefore, ``Gap'' Areas--those attaining the 1-hour, but not the 8-
hour standard--would be subject to implementation under subpart 1 of 
the CAA. Those areas not attaining the 1-hour standard and reclassified 
as 8-hour nonattainment areas would be subject to implementation 
procedures under subpart 2.
    Response: Section 211(k)(6)(A) specifies which ozone nonattainment 
areas may opt-in to the RFG program. The EPA's implementation plan for 
the 8-hour standard does not change or liberalize this statutory 
provision or EPA's regulations implementing it, but rather provides for 
continued availability of opt-ins consistent with the statutory scheme. 
After revocation of the 1-hour standard, opt-ins will be possible for 
areas classified under subpart 2 as marginal, moderate, serious or 
severe ozone nonattainment areas under the 8-hour standard. The EPA 
will continue after transition to the 8-hour standard to use its 
existing regulations at 40 CFR 80.70(j) and 80.72 regarding procedures 
for opt-ins and opt-outs.
    Comment: The American Road and Transportation Builders Association 
(ARTBA) believes States should be able to choose their own devices for 
improving air quality. As a result, ARTBA would like EPA to liberalize 
its procedures for allowing a voluntary opt-in for the Federal RFG 
program. While ARTBA understands new national fuel standards are in the 
developmental process, the transportation conformity requirement often 
mandates short-term solutions with a limited number of options. We 
believe the RFG opt-in should be one of the tools available for States.
    Response: Section 211(k)(6) of the CAA specifies which ozone 
nonattainment areas are eligible to opt-in to the RFG program and the 
procedures (petition by governor of the State) for opting in. Opt-in is 
limited to areas classified under subpart 2 as marginal, moderate, 
serious or severe ozone nonattainment areas. The EPA does not have the 
authority to ``liberalize'' these provisions in a manner inconsistent 
with the statute. See American Petroleum Institute v. EPA, 198 F. 3d 
275 (D.C. Cir. 2000)(RFG opt-ins limited to areas classified under 
subpart 2 as marginal, moderate, serious or severe nonattainment 
areas).
    Comment: One commenter believes EPA's proposed incentive feature 
undercuts controls aimed at reducing ozone precursor emissions from 
mobile sources. For example, areas that are bumped down from severe to 
serious will no longer need to sell less-polluting reformulated gas.
    Response: The EPA's final rule does not provide for areas to be 
``bumped down'' after final designation and thereby drop the 
requirement to use RFG. On the contrary, the original nine mandated RFG 
covered areas, and any other nonattainment area bumped up to a severe 
classification, will be required to use RFG at least until redesignated 
to attainment of the 8-hour ozone NAAQS.
    Comment: One commenter notes that, in the proposed rule, EPA 
includes the requirement for RFG in severe areas in its list of 
applicable requirements that will remain in effect after full 
revocation of the 1-hour standard (68 FR 32802 appendix B). This 
commenter requests that EPA remove the RFG requirement from appendix B 
before promulgation of the final implementation plan.
    The commenter notes that within 1 year of reclassification as a 
``severe'' nonattainment area under the 1-hour standard, gasoline 
distributors in the 13-county Metro Atlanta nonattainment area will be 
required to distribute reformulated gasoline. [42 U.S.C. 
7545(k)(10)(D)]. Reformulated gasoline, however, will not be as 
beneficial to the air quality in Atlanta as other types of fuel. After 
significant study, the Georgia Environmental Protection Division (EPD) 
has implemented a fuel program tailored to the atmospheric conditions 
and air quality problems in the metro area that are primarily related 
to NOX emissions and not VOC emissions. House Hearing (July 
22, 2003). Reformulated gasoline, however, is designed to reduce VOC 
emissions rather than NOX emissions. Therefore, EPD's fuel 
program that requires the distribution of fuel that is specifically 
designed to reduce NOX will do more to clean the air in 
Atlanta than RFG. If Atlanta is ``bumped up'' to a ``severe'' 
nonattainment area, it will lose the benefits of its beneficial fuel 
program in place of the less effective RFG.
    The commenter requests EPA to remove RFG as an applicable 
requirement that will remain in effect after implementation of the 8-
hour standard. The requirement for RFG under the 1-hour standard is 
flawed in that it does not address the specific ozone nonattainment 
issues of areas such as Atlanta in which NOX rather than 
VOCs is the pollutant of concern. Therefore, the commenter urges EPA to 
allow the revocation of the RFG requirement associated with areas 
classified as severe and higher under the 1-hour standard to allow 
areas that will be classified as a lower designation under the new, 
more stringent 8-hour standard the flexibility to utilize a gasoline 
formulated specifically to address the air quality issues in those 
particular areas.
    Response: The final rule adopted today specifies that areas bumped 
up to a severe classification under the 1-hour standard that are 
designated nonattainment for the 8-hour standard must continue to use 
RFG at least until redesignated as attainment for the 8-hour standard. 
The reasons for this approach are described in the preamble and do not 
change or affect any discretion EPA may otherwise have under the RFG 
provisions to modify or remove RFG requirements. The EPA did remove RFG 
from the list of applicable requirements identified in the Phase 1 
Rule, because the applicable

[[Page 71689]]

requirements provision in the Phase 1 Rule addresses State controls and 
SIP requirements. The final rule adopted today treats RFG, a Federal 
control, in basically the same manner as applicable requirements are 
treated in the Phase 1 Rule.
    With respect to the specific comments regarding the impact of using 
RFG in the Atlanta area, please see EPA's analysis of these issues in 
its September 30, 2004, response to Georgia's request for an RFG waiver 
for Atlanta.

VII. Other Considerations

A. How will EPA's implementation of the 8-hour ozone NAAQS affect 
funding under the congestion mitigation and air quality improvement 
(CMAQ) program?

1. Background
    In the proposal, we noted that the Transportation Equity Act for 
the 21st Century (TEA-21) established eligibility for the use of CMAQ 
program funds in certain nonattainment and maintenance areas, 
designated under section 107(d) of the CAA (42 U.S.C. 7407(d)), 
provided the area is, or was, also classified in accordance with CAA 
subpart 2, sections 181, 186, and 188. All areas designated 
nonattainment after December 31, 1997 were also eligible, but without 
regard to classification.
    2. Current Position
    Since the proposal, new transportation legislation was passed by 
Congress and signed into law. The amount of CMAQ funds available to 
States is now set at levels authorized by the Safe, Accountable, 
Flexible, Efficient Transportation Equity Act: A Legacy for Users 
(SAFETEA-LU). The funds are still apportioned to States through the 
statutory formula contained in section 104(b) of title 23. The formula 
is still based on the designations and classifications of ozone and CO 
nonattainment and maintenance areas, and the population in such areas.
    The formula for determining the amount of funds apportioned to the 
States takes into account the areas that are designated under both 
subpart 1 and subpart 2 of part D of title I, of the CAA. How funding 
is affected for any specific area is determined by the U.S. DOT in 
accordance with SAFETEA-LU.
3. Comments and Responses
    Comments: The EPA received several comments expressing concern that 
implementation of the 8-hour ozone standard may negatively impact an 
area's eligibility for CMAQ Program funds and/or the amount of CMAQ 
funding the State would receive. The comments indicated that projects 
and programs to reduce air pollution in their area was supported 
through CMAQ funding. Some stated that their area was attaining the 8-
hour ozone standard, and thus would become ineligible for CMAQ funding 
when the 1-hour ozone standard is revoked. Others expressed concern 
that any increases to the number of nonattainment areas or changes to 
classifications of nonattainment areas could reduce the amount of CMAQ 
funds available to the area.
    Response: The impact of the implementation of the 8-hour standard 
and enactment of SAFETEA-LU result in the geographic eligibility and 
apportionment of funds for the CMAQ programs as follows:
CMAQ Eligible Areas
     Designated 8-hour nonattainment and maintenance areas.
     Former 1-hour ozone nonattainment and maintenance areas, 
that are attaining the 8-hour standard, but must submit a section 
110(a)(1) maintenance plan in compliance with EPA's anti-backsliding 
provisions.
     CO, PM10 and PM-2.5 nonattainment 
and maintenance areas. Additionally, Nashville, TN; Greensboro, NC; and 
Denver, CO are Early Action Compact areas under the 8-hour ozone 
standard that were excepted from the revocation of the 1-hour standard. 
As a result, their CMAQ eligibility and apportionment are based on 
their status as maintenance areas under the 1-hour ozone standard.
     If the State does not have, and has never had, a 
nonattainment area designated under the CAA (42 U.S.C. 7401 et seq.), 
the State may use the funds for any project in the State that would 
otherwise be eligible under the CMAQ program as if the project were 
carried out in a nonattainment or maintenance area, or is eligible 
under section 133 of the surface transportation program. This 
flexibility is in reference to the CMAQ Program's minimum apportionment 
provision.
Apportionment (ozone-based)
     Nonattainment areas designated under subpart 1 receive a 
weighting factor of 1.0
     Nonattainment areas designated and classified under 
subpart 2 retain the same apportionment weighting factors as under TEA-
21
     Maintenance areas receive a weighting factor of 1.0.
    Apportionment of CMAQ funds is carried out yearly and varies 
according to the severity of air pollution and changes in nonattainment 
and maintenance area population as estimated by the U.S. Census for 
each affected county. The program is administered by the U.S. DOT with 
EPA in a consultative role. The EPA is only taking action to implement 
the 8-hour ozone standard and has no authority to make changes to the 
eligibility criteria or apportionment formula contained in SAFETEA-LU. 
We understand the importance of CMAQ funding to States and 
nonattainment areas and are prepared to work with the U.S. DOT to 
minimize any unintended impact of the 8-hour ozone NAAQS on 
transportation programs in those areas.

B. What is the relationship between implementation of the 8-hour 
standard and the CAA's title V permits program?

1. Background
    The interrelationship between implementation of the 8-hour ozone 
standard and the title V permits program was not discussed in the 
proposed rule. However, various questions have been raised about the 
interface between the implementation of the 8-hour ozone standard and 
the title V operating permits program. The following questions and 
answers address these questions.
    Question 1: How is title V applicability affected by the new 8-hour 
ozone standard and the revocation of the 1-hour ozone standard? \115\
---------------------------------------------------------------------------

    \115\ The 1-hour standard was revoked for most areas, including 
the associated area designations and classifications, on June 15, 
2005, 1 year following June 15, 2004, the effective date of 
designations for the 8-hour standard. The 1-hour standard was 
revoked for most areas, including the associated area designations 
and classifications, on June 15, 2005, 1 year following June 15, 
2004, the effective date of designations for the 8-hour standard. 
However, for early action compact areas that were not designated 
attainment for the 8-hour standard, the effective date of 8-hour 
designations and classifications was deferred, and the 1-hour 
standard remains applicable and will not be revoked until 1 year 
after the effective date of the 8-hour designations for these areas. 
As a result, although this section of the preamble continually 
refers to the June 15, 2004, and June 15, 2005, dates, the title V 
major source thresholds are currently determined only by the 1-hour 
standard in areas where the 8-hour designations and classifications 
are not effective and the 1-hour standard has not been revoked. The 
scenarios described in this preamble section will not begin to be 
applicable to these areas until the effective date of the 8-hour 
designations in these areas.
---------------------------------------------------------------------------

    Response: Section 502(a) of the CAA and 40 CFR 70.3 and 71.3 
establish specific criteria for determining whether a source is subject 
to the title V operating permits program. A source that meets one or 
more of these criteria is subject to title V: title IV affected 
sources, major sources, sources subject to standards or regulations 
under

[[Page 71690]]

section 111 or 112,\116\ sources required to have a permit under part C 
or D of title I, or any other stationary source in a category 
designated by the Administrator. Although a source is required to 
obtain a title V permit if it meets one or more of these criteria, only 
sources which are brought into title V as a result of their major 
source status and/or the requirement to obtain a part C or D permit may 
be directly affected by the transition from the 1-hour ozone standard 
to the 8-hour ozone standard.
---------------------------------------------------------------------------

    \116\ 40 CFR 70.3(b) and 71.3(b) provide for certain area source 
deferrals and exemptions, which are not detailed here.
---------------------------------------------------------------------------

    For example, a source subject to title V solely because it was 
major for VOCs under a 1-hour ozone classification is no longer subject 
to title V after the revocation of the 1-hour ozone standard (on June 
15, 2005) if its actual and potential emissions of VOCs under an 8-hour 
ozone designation or classification are minor. However, if the same 
source was also subject to title V for other reasons, the source would 
remain subject to title V. See question 4 for further information. In 
addition, the source's title V applicability could also be affected by 
future changes, such as becoming subject to PSD or major nonattainment 
NSR.
    Question 2: When do the 8-hour major source thresholds apply for 
determining major source status under title V?
    Response: For purposes of title V, section 501(2) of the CAA 
defines ``major source'' in part as ``a major stationary source as 
defined in section 302 or part D of title I.'' The part 70 and part 71 
regulations incorporate this definition and the part D major source 
thresholds. ``Major source'' for ozone nonattainment areas include 
sources which emit or which have the potential to emit 100 tpy or more 
of VOCs or oxides of nitrogen in areas classified as ``marginal'' or 
``moderate,'' 50 tpy or more of these ozone precursors in areas 
classified as ``serious,'' 25 tpy or more of these ozone precursors in 
areas classified as ``severe,'' and 10 tpy or more of these ozone 
precursors in areas classified as ``extreme.''
    On or after June 15, 2004, until June 15, 2005, the major source 
thresholds for the 1-hour ozone designations and classifications and 
the 8-hour ozone designations and classifications were in effect under 
part D of title I, and therefore under title V as well. Since 
revocation of the 1-hour ozone standard and the corresponding area 
designations and classifications on June 15, 2005, only the major 
source thresholds for the 8-hour ozone designations and classifications 
continue to determine whether a source is major for ozone precursors 
under title V. Our review of the 1-hour and 8-hour designations and 
nonattainment classifications indicates that no additional sources 
became subject to title V on June 15, 2004 (the effective date of the 
8-hour ozone NAAQS designations and classifications (40 CFR part 81, 
subpart C)) based solely on the 8-hour designations and classifications 
and corresponding major source thresholds. This is because the 8-hour 
designations and classifications effective on June 15, 2004 did not 
result in a lowering of the title V major source threshold for any area 
compared to the 1-hour designations and classifications. Rather, the 
title V major source thresholds either stayed the same or were raised 
to a higher threshold in all cases, e.g., 50 tpy to 100 tpy.
    Question 3: Are title V permits required for sources that trigger 
the major source applicability cut-offs for RACT in 40 CFR 51.900(f)(3) 
due to the 8-hour ozone anti-backsliding provisions in 40 CFR part 51, 
subpart X?
    Example: An area is classified as extreme under the 1-hour ozone 
standard. In an extreme area, the major source threshold for ozone 
precursors is 10 tpy. Under the 8-hour standard in this example, this 
same area is classified as a severe-17 area. In a severe-17 area, the 
major source threshold for ozone precursors is 25 tpy. Under the anti-
backsliding provisions, this area would be required to continue its 
application of RACT to sources with potential emissions of 10 or more 
tpy of ozone precursors. However, is the title V major source threshold 
for ozone precursors in this area 10 tpy or 25 tpy since June 15, 2005?
    Response: Since revocation of the 1-hour ozone standard on June 15, 
2005, the title V major source thresholds for ozone are now based 
solely on the 8-hour designations and classifications and thus in the 
above example will be 25 tpy for ozone precursors. As discussed in 
Question 1 above, section 502(a) and 40 CFR Sec. Sec.  70.3 and 71.3 
include criteria for determining title V applicability. These criteria 
do not specifically include sources subject to RACT, but do include 
major sources. As discussed in Question 2 above, section 501(2) defines 
a title V ``major source'' in part as ``a major stationary source as 
defined in section 302 or part D of title I'' and 40 CFR 70.2 and 71.2 
incorporate this definition.
    In terms of the language in 40 CFR 51.900(f)(3) regarding ``major 
source applicability cut-offs for purposes of RACT,'' this provision 
does not apply for purposes of defining a ``major source'' under title 
V (nor could it, since major source is statutorily defined and cannot 
be revised by regulation). Rather, the cut-offs referenced in this 
anti-backsliding provision apply in determining which 1-hour 
nonattainment requirements are ``applicable requirements'' for an 
area--requirements which will be continued in implementing the 8-hour 
standard. Additionally, 40 CFR 51.900 specifies that the definition of 
``applicable requirements'' and other definitions in this section only 
``apply for purposes of this subpart [subpart X].'' Thus, in short, the 
major source applicability cut-offs for purposes of RACT referenced in 
40 CFR 51.900(f)(3) are not relevant in determining whether a source is 
a major source under title V.
    Question 4: In many nonattainment areas, the major stationary 
source threshold under the 8-hour ozone standard is currently higher 
than the major stationary source threshold for the same area under the 
1-hour ozone standard.
    Example: Under the 1-hour ozone standard, an area is classified as 
serious with a 50 tpy major stationary source threshold for ozone 
precursors. Under the 8-hour standard, this same area is classified as 
moderate with a 100 tpy major stationary source threshold for ozone 
precursors. If a source in this area has a potential to emit VOCs at 75 
tpy, but also has a part D permit obtained under the 1-hour standard, 
is this source subject to title V since revocation of the 1-hour ozone 
standard on June 15, 2005? \117\
---------------------------------------------------------------------------

    \117\ A source with a part D permit obtained under the 1-hour 
standard must retain its part D permit under the 8-hour standard 
even though it is now in an area with a higher major stationary 
source threshold.
---------------------------------------------------------------------------

    Response: Yes. Under the 1-hour standard, this source was subject 
to title V both because it was a major source and also because it was 
required to have a part D permit. Under the 8-hour standard, this 
source remains subject to title V because it was required to have a 
part D permit under the 1-hour standard even though it is no longer 
subject to title V due to its major source status.
    Sources that are, at any time, required to have a permit under part 
C or D of title I must obtain a title V permit. This interpretation is 
consistent with the CAA and EPA's implementation policy history. See 
the Vastar letter discussed below. Section 502(a) states in part that 
``any other source required to have a permit under part C or D of title 
I'' is required to have a title V permit. We interpret the phrase 
``required to have a permit under part C or D of title I'' to include 
any source required to obtain a

[[Page 71691]]

permit under part C or D of title I regardless of whether the permit 
was actually obtained by the source. This interpretation is consistent 
with the legislative history which indicates Congress intended that 
sources ``subject to * * * requirements'' from PSD and NSR be required 
to have a title V permit. H.R. Rep. No. 101-490, 101st Congress, 2nd 
Session, at 344 (May 17, 1990); see also S. Rep. 101-228, 101st 
Congress, 1st Session, at 349 (December 20, 1989).
    Note that the exemption in 40 CFR 70.3(b)(1) and 71.3(b)(1) for 
nonmajor sources does not apply to sources required to have a part C or 
D permit. As EPA has previously stated: ``* * * section 70.3(b)(1) 
cannot be appropriately interpreted as allowing title V permitting 
authorities to exempt nonmajor part C or D sources from title V, 
especially in light of the explicit requirement in sections 
71.5(a)(1)(ii) and 70.5(a)(1)(ii) that these sources obtain title V 
permits.'' See letter from R. Long, EPA Region 8, to M. Tarrillion, 
Vastar Resources, Inc., September 10, 1999. See also 66 FR 59161, 
59163; November 27, 2001 (``A source required to have a part C or D 
permit but considered nonmajor for part 70 would be subject to part 70 
* * *'')
    Title V permit content may be affected for sources in the above-
noted situation because, pursuant to 40 CFR 70.3(c)(2) and 71.3(c)(2), 
for any nonmajor source subject to title V, the permit is required at a 
minimum to include the applicable requirements for the emissions units 
that cause the source to be subject to the part 70 or part 71 programs. 
If an emissions unit at the nonmajor source did not trigger the 
requirement to apply for a title V permit, then none of that unit's 
applicable requirements are required to be included in the source's 
title V permit. See 66 FR 59163 and footnote 2. However, nothing in 40 
CFR 70.3(c)(2) or 71.3(c)(2) precludes States from including Federal 
applicable requirements for other emissions units at a nonmajor source 
in the source's title V permit if States require it.
2. Summary of Final Rule
    There has been no change in the final rule as a result of the above 
clarifications regarding the interface between the 8-hour ozone 
standard and the title V operating permits program.
3. Comments and Responses
    Comment: One commenter stated support of the anti-backsliding 
regulations to maintain the requirements established under the 1-hour 
standard nonattainment area classifications when 8-hour classification 
requirements would be less stringent. However, the commenter requested 
that EPA consider using the major source thresholds as defined by the 
8-hour standard classifications for title V permitting purposes. The 
commenter further suggested that EPA evaluate whether a lower title V 
major source threshold provides sufficient protections to justify the 
added costs involved, especially in areas such as that of the 
commenter's where 75 percent of the reactive organic gases (ROG) and 
NOX emissions are from mobile sources, which are not subject 
to control under title V.
    Response: We agree that, since revocation of the 1-hour ozone 
standard, the title V major stationary source thresholds are only 
determined by the 8-hour designations and classifications. 
Additionally, as stated in response to question 3 in the above 
questions and answers, the language in 40 CFR 51.900(f)(3) regarding 
``major source applicability cut-offs for purposes of RACT'' does not 
apply for purposes of defining a ``major source'' under title V (nor 
could it, since major source is statutorily defined and cannot be 
revised by regulation). Rather, the cut-offs referenced in this anti-
backsliding provision apply in determining which 1-hour nonattainment 
requirements are ``applicable requirements'' for an area--requirements 
which will be continued in implementing the 8-hour standard. 
Additionally, 40 CFR 51.900 specifies that the definition of 
``applicable requirements'' and other definitions in this section only 
``apply for purposes of this subpart [subpart X].'' Thus, in short, the 
major source applicability cut-offs for purposes of RACT referenced in 
40 CFR 51.900(f)(3) are not relevant in determining whether a source is 
a major source under title V.

C. What Action Is EPA Taking on the Overwhelming Transport 
Classification for Subpart 1 Areas?

    The Phase 1 Rule created an overwhelming transport classification 
that would be available to subpart 1 areas that demonstrate they are 
affected by overwhelming transport of ozone and its precursors and 
demonstrate they meet the definition of a rural transport area in 
section 182(h) of the CAA [40 CFR 51.904(a)]. We received a petition 
for reconsideration of the overwhelming transport classification from 
Earthjustice,\118\ who claimed that our final rule of April 30, 2004, 
relied on guidance that was not publicly available during the comment 
period and was still unavailable at the time of final rulemaking. In 
addition, we noted in the Phase 1 Rule that we were considering the 
comments we received on the issue of applicable requirements for these 
subpart 1 areas and that we would address this issue after we issue 
guidance on how areas should assess whether they are subject to 
overwhelming transport. We granted the Earthjustice petition concerning 
the overwhelming transport classification on January 10, 2005. In a 
separate rulemaking action, we are inviting comment on the overwhelming 
transport classification, the draft overwhelming transport guidance, 
and the requirements that would apply to such areas.
---------------------------------------------------------------------------

    \118\ Filed June 29, 2004 by Earthjustice on behalf of American 
Lung Association, Environmental Defense, Natural Resources Defense 
Council, Sierra Club, Clean Air Task Force, Conservation Law 
Foundation, and Southern Alliance for Clean Energy.
---------------------------------------------------------------------------

    We will address any comments on the applicable control requirements 
for an area that receives an overwhelming transport classification in 
the context of the reconsideration action.

VIII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and, therefore, subject to the 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

[[Page 71692]]

recommendations are documented in the public record.

B. Paperwork Reduction Act

    The information collection requirements in this rule will be 
submitted for approval to OMB under the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq. The information collection requirements are not 
enforceable until OMB approves them other than to the extent required 
by statute.
    This rule provides the framework for the States to develop SIPs to 
achieve a new or revised NAAQS. This framework reflects the 
requirements prescribed in CAA sections 110 and part D, subparts 1 and 
2 of title I. In that sense, the present final rule does not establish 
any new information collection burden on States. Had this rule not been 
developed, States would still have the legal obligation under law to 
submit nonattainment area SIPs under part D of title I of the CAA 
within specified periods after their nonattainment designation for the 
8-hour ozone standard, and the SIPs would have to meet the requirements 
of part D.
    A SIP contains rules and other requirements designed to achieve the 
NAAQS by the deadlines established under the CAA, and also contains a 
demonstration that the State's requirements will in fact result in 
attainment. The SIP must meet the CAA requirements in subparts 1 or 2 
to adopt RACM, RACT, and provide for RFP toward attainment for the 
period prior to the area's attainment date. After a State submits a 
SIP, the CAA requires EPA to approve or disapprove the SIP. If EPA 
approves the SIP, the rules in the SIP become federally enforceable. If 
EPA disapproves the SIP (or if EPA finds that a State fails to submit a 
SIP), the CAA requires EPA to impose sanctions (2:1 offsets for major 
new or modified sources and restrictions on Federal highway funding) 
within specified timeframes; additionally, EPA must prepare and publish 
a FIP within 2 years after a disapproval or finding of failure to 
submit. The SIP must be publicly available. States must maintain 
confidentiality of confidential business information, however, if used 
to support SIP analyses. The SIP is a one-time submission, although the 
CAA requires States to revise their SIPs if EPA requests a revision 
upon a finding that the SIP is inadequate to attain or maintain the 
NAAQS. The State may revise its SIP voluntarily as needed, but in doing 
so must demonstrate that any revision will not interfere with 
attainment or RFP or any other applicable requirement under the CAA 
(see section 110(l)).
    This rule does not establish requirements that directly affect the 
general public and the public and private sectors, but, rather, 
interprets the statutory requirements that apply to States in preparing 
their SIPs. The SIPs themselves will likely establish requirements that 
directly affect the general public, and the public and private sectors.
    The EPA has not yet projected cost and hour burden for the 
statutory SIP development obligation but has started that effort and 
will shortly prepare an Information Collection Request (ICR) request. 
However, EPA did estimate administrative costs at the time of 
promulgation of the 8-hour ozone standard in 1997. See 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, N.C., July 16, 1997. Assessments of some of the 
administrative cost categories identified as a part of the SIP for an 
8-hour standard are already conducted as a result of other provisions 
of the CAA and associated ICRs (e.g. emission inventory preparation, 
air quality monitoring program, conformity assessments, NSR, I/M 
program).
    The burden estimates in the ICR for this rule are incremental to 
what is required under other provisions of the CAA and what would be 
required under a 1-hour standard. Burden means the total time, effort, 
or financial resources expended by persons to generate, maintain, 
retain, or disclose 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. When this ICR is 
approved by OMB, the Agency will publish a technical amendment to 40 
CFR part 9 in the Federal Register to display the OMB control number 
for the approved information collection requirements contained in this 
final rule. However, the failure to have an approved ICR for this rule 
does not affect the statutory obligation for the States to submit SIPs 
as required under part D of the CAA.
    The information collection requirements associated with NSR 
permitting for ozone are covered by EPA's request to renew the approval 
of the ICR for the NSR program, ICR 1230.17, which was approved by OMB 
on January 25, 2005. The information collection requirements associated 
with NSR permitting were previously covered by ICR 1230.10 and 1230.11. 
The OMB previously approved the information collection requirements 
contained in the existing NSR regulations at 40 CFR parts 51 and 52 
under the provisions of the Paperwork Reduction Act, and assigned OMB 
control number 2060-0003. A copy of the approved 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.
    For the portion of this rulemaking on RFG, this action does not add 
any new requirements under the provisions of the Paperwork Reduction 
Act. The OMB has approved the information collection requirements 
contained in the final RFG/anti-dumping rulemaking (see 59 FR 7716, 
February 16, 1994) and has assigned OMB control number 2060-0277 (EPA 
ICR No. 1951.08).

C. Regulatory Flexibility Act

    The EPA has determined that it is not necessary to prepare a 
regulatory flexibility analysis in connection with this final rule.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business as defined 
by the Small Business Administrations' regulations at 13 CFR 121.201; 
(2) a small governmental jurisdiction that is a government of a city, 
county, town, school district or special district with a population of 
less than 50,000; and (3) a small organization that is any not-for-
profit enterprise which is independently owned and operated and is not 
dominant in its field.
    After considering the economic impacts of today's final Phase 2 
Rule for implementation of the 8-hour ozone standard on small entities, 
EPA has concluded that this action will not have a significant economic 
impact on a substantial number of small entities. This final rule will 
not impose any new

[[Page 71693]]

or additional requirements on small entities.
    Concerning the NSR portion of this rule, a Regulatory Flexibility 
Act Screening Analysis (RFASA) was developed as part of a 1994 draft 
Regulatory Impact Analysis (RIA) and incorporated into the September 
1995 ICR renewal. This analysis showed that the changes to the NSR 
program due to the 1990 CAA Amendments would not have an adverse impact 
on small entities. This analysis encompassed the entire universe of 
applicable major sources that were likely to also be small businesses 
(approximately 50 ``small business'' major sources). Because the 
administrative burden of the NSR program is the primary source of the 
NSR program's regulatory costs, the analysis estimated a negligible 
``cost to sales'' (regulatory cost divided by the business category 
mean revenue) ratio for this source group. The incorporation of the 
major source thresholds and offset ratios from the 1990 CAA Amendments 
in Sec.  51.165 and appendix S for the purpose of implementing NSR for 
the 8-hour standard does not change this conclusion. Under section 
110(a)(2)(C), all States must implement a preconstruction permitting 
program ``as necessary to assure that the [NAAQS] are achieved,'' 
regardless of changes to today's regulations. Thus, small businesses 
continue to be subject to regulations for construction and modification 
of stationary sources, whether under State and local agency minor NSR 
programs, SIPs to implement Sec.  51.165, or appendix S, to ensure that 
the 8-hour standard is achieved.

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, 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.
    The RFG-related portions of this rule contain no new Federal 
mandates (under the regulatory provisions of title II of the UMRA) for 
State, local or Tribal governments or the private sector. The rule 
imposes no new enforceable duty, since it merely clarifies that in the 
transition to the 8-hour ozone standard the pre-existing opt-in rules 
remain in place, as does the pre-existing requirement that RFG be used 
in mandatory RFG-covered areas within the scope of this rule until such 
areas are redesignated to attainment for the ozone standard. Although 
EPA does not believe that UMRA imposes requirements regarding the RFG-
related portions of this rulemaking, EPA notes that the environmental 
and economic impacts of the RFG program were assessed in EPA's RIA for 
the 1994 RFG rules.
    The EPA has determined that all other portions of this rule do 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 NAAQS 
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. Thus, today's rule is not subject to the 
requirements of sections 202 and 205 of the UMRA. At the time EPA 
proposed its Implementation Rule, EPA noted that if it chose a 
classification option that classified all areas under subpart 2 of part 
D, these costs may increase modestly, but would not reach $100 million. 
However, in promulgating the Phase 1 Rule, EPA adopted a classification 
scheme that resulted in approximately half of the areas designated 
nonattainment being subject only to the subpart 1 requirements.
    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)]. As noted below under ``L. Petitions for 
Judicial Review,'' this rule is covered under section 307(d) of the 
CAA.
    The EPA has determined that this 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 rule does not have federalism implications. It will not have 
substantial direct effects on the States, on the

[[Page 71694]]

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. The RFG-related 
portions of the rule impose requirements on certain refiners and other 
entities in the gasoline distribution system, and not on States. In 
addition, 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. The CAA establishes the scheme whereby 
States take the lead in developing plans to meet the NAAQS. This rule 
would not modify the relationship of the States and EPA for purposes of 
developing programs to implement the NAAQS. In the non-RFG portions of 
this rule, EPA is interpreting the statutory SIP submission 
requirements that apply to areas designated. As described above, EPA 
has generally adopted the more flexible options proposed in the June 
2003 proposal. Thus, Executive Order 13132 does not apply to this rule.
    Although section 6 of Executive Order 13132 does not apply to this 
rule, EPA actively engaged the States in the development of this rule. 
The EPA held regular calls with representatives of State and local air 
pollution control agencies. Also, EPA held three public meetings 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. Finally, EPA held three public 
hearings after the proposed rule was published to obtain public 
comments.

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.''
    The portions of this rulemaking that relate to RFG do not create a 
mandate for any Tribal government. The rule does not impose any 
enforceable duties on these entities. Rather, the rule will affect only 
those refiners, importers or blenders of gasoline that choose to 
produce or import RFG for sale in the nonattainment areas addressed in 
the rule, and the gasoline distributors and retail stations in those 
areas. The following discussion relates to the non-RFG portions of the 
rule.
    This rule concerns the implementation of the 8-hour ozone NAAQS in 
areas designated nonattainment for that NAAQS. The CAA provides for 
States and Tribes to develop plans to regulate emissions of air 
pollutants within their jurisdictions. The non-RFG portions of this 
rule flesh out the statutory obligations of States and Tribes that 
develop plans to implement the 8-hour ozone NAAQS. The TAR and the CAA 
give 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 rule does not have Tribal implications as defined by Executive 
Order 13175. There are 126 designated nonattainment areas. Although 
there are 61 Tribes estimated to be in one or more of those 
nonattainment areas, this rule does not have a substantial direct 
effect on one or more Indian Tribes, since no Tribe is required to 
implement a CAA program to attain the 8-hour ozone NAAQS. See: http://www.epa.gov/oar/oaqps/glo/designations/tribaldesig.htm for the list of 
Tribes included as part of a designated nonattainment area. 
Furthermore, this rule does not affect the relationship or 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 
rule does nothing to modify that relationship. Because this rule does 
not have Tribal implications, Executive Order 13175 does not apply.
    Although Executive Order 13175 does not apply to this rule, EPA did 
consult with Tribal leaders and environmental staff in developing this 
rule and encouraged Tribal input at an early stage. The EPA supports 
the national ``Tribal Designations and Implementation Work Group'' 
which provided an open forum for all Tribes to voice concerns to EPA 
about the designation and implementation process for the 8-hour ozone 
NAAQS. These discussions have given EPA valuable information about 
Tribal concerns regarding implementation of the 8-hour ozone NAAQS. The 
work group sent issue summaries and suggestions for addressing them to 
the newly formed National Tribal Air Association (NTAA), which in turn 
sent them to Tribal leaders. The project lead for this rule informed 
interested Tribal leaders about progress on the rule and invited input. 
The EPA encouraged Tribes to participate in the national public 
meetings held to take comment on early approaches to the rule. Several 
Tribes made public comments at the April 2002 public meeting in Tempe, 
Arizona.
    Furthermore, EPA sent individualized letters to all federally-
recognized Tribes inviting Tribal leaders to consult with EPA on the 
proposed implementation rule. The EPA received comment from the NTAA on 
several questions: (1) the NTAA asked for clarification on the nature 
of EPA's support for Tribes without TAS status and asked if EPA would 
provide technical assistance in interpreting SIP documentation to a 
Tribe without TAS approval; (2) the NTAA asked EPA to explain how it 
envisions its role in continuing consultation with Tribes throughout 
the execution of SIPs. We respond to these comments in the technical 
support document. The NTAA's final comment cited concerns with the 
impact of NSR requirements on the Tribes. The EPA acknowledges that 
offsets are a concern for Tribes. We are currently evaluating potential 
options for addressing this concern.

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 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 rule is not subject to Executive Order 13045 because it 
implements a previously promulgated health-based Federal standard--the 
8-hour ozone NAAQS--and contains a non- health-based determination of 
the extent to which the existing RFG program remains in place under the 
8-hour standard. We have evaluated the environmental health and safety 
effects of the 8-hour ozone NAAQS on children as part of this 
previously promulgated Federal standard. 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, July 18, 1997;

[[Page 71695]]

specifically, 62 FR 38855, 62 FR 38860 and 62 FR 38865).

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

    This 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.
    At the time of proposal, information on the methodology and data 
regarding the assessment of potential energy impacts regarding 
implementation of the 8-hour standard was addressed 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, 
NC, April 24, 2003. Subsequently, EPA issued an Addendum 1 to that 
analysis for the Phase 1 final rule and designated nonattainment areas. 
For purposes of this final rule, EPA has issued Addendum 2. By adopting 
the more flexible approaches while providing for attainment and 
maintenance of the 8-hour NAAQS as required by the CAA, additional 
energy cost associated with more extensive use of less flexible 
approaches would be averted. The portions of this rule that relate to 
RFG merely clarify that the existing program continues under the 8-hour 
standard in the areas addressed by the rule, so the rule does not have 
a significant affect on energy supply, distribution or use. The EPA 
evaluated energy impacts of the RFG program in the RIA for the 1994 
rulemaking establishing the RFG program.

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 rulemaking does not involve technical standards. Therefore, 
EPA is not considering the use of any VCS.
    The 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, disproportionately high and adverse human 
health or environmental effects of its programs, policies, and 
activities on minorities and low-income populations.
    The EPA believes that this rule does not raise any environmental 
justice concerns. Today's rule helps establish a framework for bringing 
all areas of the country into attainment with the 8-hour ozone 
standards, an important environmental justice goal. The health and 
environmental risks associated with ozone were considered in the 
establishment of the 8-hour, 0.08 ppm ozone NAAQS, and the standard was 
set at a level requisite to protect public health with an adequate 
margin of safety. In setting this standard, EPA considered the effects 
on sensitive subpopulations, such as those with respiratory problems.
    The EPA has designated as nonattainment these areas of the country 
that are not meeting the 8-hour ozone standard. This rule will assist 
States as they develop plans to bring these nonattainment areas into 
attainment in accordance with the CAA schedule. By establishing 
guidelines for bringing these areas into attainment with the 8-hour 
ozone standard, the Phase 2 Rule advances an important environmental 
justice goal and will help make significant progress in providing for 
the fair treatment of all people with respect to air pollution.
    In the preamble to the proposed rule, EPA took comment on the Clean 
Air Development Communities (CADC) concept (regarding possible State 
adoption of land use planning as a pollution reduction strategy) and 
noted that it might raise environmental justice concerns. Public 
comments were submitted that raised environmental justice concerns with 
this concept. As noted earlier in the preamble to this Phase 2 Rule, 
EPA is not finalizing the CADC concept and has therefore not responded 
to these (or any other) comments on the CADC concept.
    The RFG program is designed to reduce vehicle emissions of toxic 
and ozone-forming substances. This rule will not alter the air quality 
benefits associated with the RFG program.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The EPA will submit a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective January 30, 2006.

L. Petitions for Judicial Review

    Under section 307(b)(1) of the CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the District of Columbia Circuit by January 30, 2006. Filing a petition 
for reconsideration by the Administrator of this final rule does not 
affect the finality of this rule for the purposes of judicial review 
nor does it extend the time within which a petition for judicial review 
may be filed, and shall not postpone the effectiveness of such rule or 
action. This action may not be challenged later in proceedings to 
enforce its requirements. See CAA section 307(b)(2).

M. Determination Under Section 307(d)

    Pursuant to sections 307(d)(1)(E) and 307(d)(1)(V) of the CAA, the 
Administrator determines that this action is subject to the provisions 
of section 307(d). Section 307(d)(1)(V) provides that the provisions of 
section 307(d) apply to ``such other actions as the Administrator may 
determine.'' While the Administrator did not make this determination 
earlier, the Administrator believes that all of the procedural 
requirements, e.g., docketing, hearing and comment periods, of section 
307(d) have been complied with during the course of this rulemaking.

[[Page 71696]]

Appendix A to Preamble--Methods to Account for Non-Creditable 
Reductions When Calculating ROP Targets for the 2008 and Later ROP 
Milestone Years

    The following methods properly account for the non-creditable 
emissions reductions when calculating ROP targets for the 2008 and 
later ROP milestone years.\119\ They are consistent with requirements 
of sections 182(b)(1)(C) and (D) and 182(c)(2)(B) of the CAA.
---------------------------------------------------------------------------

    \119\ These methods assume the use of EPA's on-road motor 
vehicle emissions model in all States other than California. All of 
the methods given here require the user to turn off all post-1990 
CAA measures as part of the calculation. In EPA's current motor 
vehicle emissions model, MOBILE6.2, this is accomplished using the 
NO CLEAN AIR ACT command as described in the MOBILE6.2 User's Guide 
(found at http://www.epa.gov/otaq/m6.htm). Users of future versions 
of EPA's motor vehicle emissions model should consult the 
appropriate User's Guide for the version of the model they are using 
for instructions on what model command to use. For California 
nonattainment areas, the current motor vehicle emissions model is 
EMFAC2002. Users modeling California nonattainment areas should 
consult with the EPA Regional Office for information on doing 
equivalent calculations in that model and in future versions.
---------------------------------------------------------------------------

    (1) Method 1: For areas that must meet a 15 percent VOC reduction 
requirement by 2008:
    (A) Estimate the actual anthropogenic base year VOC inventory in 
2002 with all 2002 control programs in place for all sources.
    (B) Using the same highway vehicle activity inputs used to 
calculate the actual 2002 inventory, run the appropriate motor vehicle 
emissions model for 2002 and for 2008 with all post-1990 CAA measures 
turned off. Any other local inputs for vehicle inspection and 
maintenance (I/M) programs should be set according to the program that 
was required to be in place in 1990. Fuel Reid Vapor Pressure (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.
    (C) Calculate the difference between the 2002 and 2008 VOC emission 
factors calculated in Step B and multiply by 2002 vehicle miles 
traveled (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.
    (D) Subtract the non-creditable reductions calculated in Step C 
from the actual anthropogenic 2002 inventory estimated in Step A. This 
adjusted VOC inventory is the basis for calculating the target level of 
emissions in 2008.
    (E) Reduce the adjusted VOC inventory calculated in Step D 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 for all sources with all control measures in place and 
including projected 2008 growth in activity must be at or lower than 
this target level of emissions.
    (2) Method 2: For areas covered under 40 CFR 51.910(a)(1)(ii)(C) 
and that meet an 18 percent VOC emission reduction requirement by 2008 
with NOX substitution allowed, following EPA's 
NOX Substitution Guidance:
    (A) Estimate the actual anthropogenic base year inventory for both 
VOC and NOX in 2002 with all 2002 control programs in place.
    (B) Using the same highway vehicle activity inputs used to 
calculate the actual 2002 inventory, run the appropriate motor vehicle 
emissions model for 2002 and for 2008 with all post-1990 CAA measures 
turned off. 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.
    (C) Calculate the difference between 2002 and 2008 VOC emissions 
factors calculated in Step B 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 VOC reductions that occur over this period. Calculate the 
difference between 2002 and 2008 NOX emissions factors 
calculated in Step B and multiply by 2002 VMT. This result is the 
NOX emissions reductions that will occur between 2002 and 
2008 without the benefits of any post-1990 CAA measures. These are the 
non-creditable NOX reductions that occur over this period.
    (D) Subtract the non-creditable VOC reductions calculated in Step C 
from the actual anthropogenic 2002 VOC inventory estimated in Step A. 
Subtract the non-creditable NOX reductions calculated in 
Step C from the actual anthropogenic 2002 NOX inventory 
estimated in Step A. These adjusted VOC and NOX inventories 
are the basis for calculating the target level of emissions in 2008.
    (E) The target level of VOC and NOX emissions in 2008 
needed to meet the 2008 ROP requirement is any combination of VOC and 
NOX reductions from the adjusted inventories calculated in 
Step D that total 18 percent. For example, the target level of VOC 
emissions in 2008 could be a 10 percent reduction from the adjusted VOC 
inventory in Step D and an 8 percent reduction from the adjusted 
NOX inventory in Step D. The actual projected 2008 VOC and 
NOX inventories for all sources with all control measures in 
place and including projected 2008 growth in activity must be at or 
lower than the target levels of VOC and NOX emissions.
    (3) Method 3: For all areas that have used Method 1 above (and 
therefore do not have a NOX target level of emissions for 
2008) and 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 an 
emission reduction from the previous target.
    (A) Estimate the actual anthropogenic base year NOX 
inventory in 2002 with all 2002 control programs in place for all 
sources.
    (B) Using the same highway vehicle activity inputs used to 
calculate the actual 2002 inventory, run the appropriate emissions 
model for VOC and NOX in 2002 and 2008 (previously done in 
Step B in Method 1 for VOC but not necessarily for NOX) and 
2011 with all post-1990 CAA measures turned off. 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.
    (C) Calculate the difference between 2008 and 2011 VOC emission 
factors calculated in Step B and multiply by 2002 VMT. The result is 
the VOC emissions reductions that will occur between 2008 and 2011 
without the benefits of any post-1990 CAA measures. These are the non-
creditable VOC reductions that occur over this period. Calculate the 
difference between 2002 and 2011 NOX emission factors 
calculated in Step B and multiply by 2002 VMT. The result is the 
NOX emissions reductions that will occur between 2002 and 
2011 without the benefits of any post-1990 CAA measures. These are the 
non-creditable NOX reductions that occur over this period.
    (D) Subtract the non-creditable VOC reductions calculated in Step C 
from the 2008 VOC target level of emissions calculated previously. 
Subtract the non-creditable NOX reductions calculated in 
Step C from the actual 2002 NOX inventory of emissions 
calculated in Step A. These adjusted VOC and NOX inventories 
are the basis for calculating the target level of emissions in 2011.

[[Page 71697]]

    (E) The target level of VOC and NOX emissions in 2011 
needed to meet the 2011 ROP requirement is any combination of VOC and 
NOX reductions from the adjusted inventories calculated in 
Step E that total 9 percent. For example, the target level of VOC 
emissions in 2011 could be a 4 percent reduction from the adjusted VOC 
inventory in Step C and a 5 percent reduction from the adjusted 
NOX inventory in Step C. The actual projected 2011 VOC and 
NOX inventories for all sources with all control measures in 
place and including projected 2011 growth in activity must be at or 
lower than the target levels of VOC and NOX emissions.
    (F) For subsequent 3-year periods until the attainment date, repeat 
the process for VOC. For subsequent 3-year periods, the adjusted 
NOX inventory should be based on the difference in 
NOX emissions during that 3-year period when all post-1990 
CAA measures are turned off, subtracted from the previous 
NOX target level of emissions. For example, for 2014, take 
the difference in NOX emissions reductions that will occur 
between 2011 and 2014 without the benefits of any post-1990 CAA 
measures. This value is subtracted from the 2011 target level of 
NOX emissions calculated in Step D to get the adjusted 
NOX inventory to be used as the basis for calculating the 
target level of NOX emissions in 2014.
    (4) Method 4: For all areas that have used Method 2 above (and 
therefore do have a NOX target level of emissions for 2008) 
and 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 an emissions 
reductions from the previous target.
    (A) Using the same highway vehicle activity inputs used to 
calculate the actual 2002 inventory, run the appropriate emissions 
model for VOC and NOX in 2008 (previously done in Step B in 
Method 2) and 2011 with all post-1990 CAA measures turned off. 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.
    (B) Calculate the difference between 2008 and 2011 VOC emission 
factors calculated in Step A and multiply by 2002 VMT. The result is 
the VOC emissions reductions that will occur between 2008 and 2011 
without the benefits of any post-1990 CAA measures. These are the non-
creditable VOC reductions that occur over this period. Calculate the 
difference between 2008 and 2011 NOX emission factors 
calculated in Step A and multiply by 2002 VMT. The result is the 
NOX emissions reductions that will occur between 2008 and 
2011 without the benefits of any post-1990 CAA measures. These are the 
non-creditable NOX reductions that occur over this period.
    (C) Subtract the non-creditable VOC reductions calculated in Step B 
from the 2008 VOC target level of emissions calculated previously. 
Subtract the non-creditable NOX reductions calculated in 
Step B from the 2008 NOX target level of emissions 
calculated previously. These adjusted VOC and NOX 
inventories are the basis for calculating the target level of emissions 
in 2011.
    (D) The target level of VOC and NOX emissions in 2011 
needed to meet the 2011 ROP requirement is any combination of VOC and 
NOX reductions from the adjusted inventories calculated in 
Step E that total 9 percent. For example, the target level of VOC 
emissions in 2011 could be a 4 percent reduction from the adjusted VOC 
inventory in Step C and a 5 percent reduction from the adjusted 
NOX inventory in Step C. The actual projected 2011 VOC and 
NOX inventories for all sources with all control measures in 
place and including projected 2011 growth in activity must be at or 
lower than the target levels of VOC and NOX emissions.
    (E) Repeat entire process for subsequent 3-year periods until the 
attainment date.

Appendix B to Preamble--Glossary of Terms and Acronyms

ACT--Alternative Control Techniques
ARTBA--American Road and Transportation Builders Association
BACT--Best Available Control Technology
BART--Best Available Retrofit Technology
CAA--Clean Air Act
CAAAC--Clean Air Act Advisory Committee
CADCs--Clean Air Development Communities
CAIR--Clean Air Interstate Rule
CERR--Consolidated Emissions Reporting Rule
CFR--Code of Federal Regulations
CMAQ--Congestion Mitigation and Air Quality
CMSA--Consolidated Metropolitan Statistical Area
CO--Carbon Monoxide
CTG--Control Technique Guideline
DOT--Department of Transportation
EMFAC--EMissions FACtors (a mobile emissions model)
ESRP--Emissions Statement Reporting Program
CTG--Control Technique Guidelines
EGUs--Electricity Generating Units
EPA--Environmental Protection Agency
FIP--Federal Implementation Plan
FMVCP--Federal Motor Vehicle Control Program
HON--Hazardous Organic NESHAP
ICR--Information Collection Requirement
I/M--Inspection and Maintenance Area
km--Kilometers
LADCO--Lake Michigan Air Directors Consortium
LAER--Lowest Achievable Emission Rate
MACT--Maximum Achievable Control Technology
MCR--Mid-course Review
MPO--Metropolitan Planning Organization
MSA--Metropolitan Statistical Area
NAA--Nonattainment Area
NAAMS--National Ambient Air Modeling Strategy
NAAQS--National Ambient Air Quality Standards
NAMS/SLAMS--National Air Monitoring Stations/State and Local Air 
Monitoring Stations
NAS--National Academy of Sciences
NCore--National Core Monitoring Stations
NESHAP--National Emission Standards for Hazardous Air Pollutants
NOX--Nitrogen Oxides
NOy--Reactive Oxides of Nitrogen
NPRM--Notice of Proposed Rulemaking
NSR--New Source Review
NTAA--National Tribal Air Association
NTTAA--National Technology Transfer Advancement Act of 1995
OMB--Office of Management and Budget
OTAG--Ozone Transport Assessment Group
OTR--Ozone Transport Region
PAMS--Photochemical Assessment Monitoring Stations
PM--Particulate Matter
PM2.5--Fine Particulate Matter
PM10--Particulate Matter Having a Nominal Aerodynamic 
Diameter Less than or Equal to 10 Microns
ppb--Parts per Billion
ppm--Parts per Million
PSD--Prevention of Significant Deterioration
psi--Pounds Per Square Inch
RACM--Reasonably Available Control Measures
RACT--Reasonably Available Control Technology
RFASA--Regulatory Flexibility Act Screening Analysis
RFP--Reasonable Further Progress
RIA--Regulatory Impact Analysis
ROG--Reactive Organic Gases
ROP--Rate of Progress
RPOs--Regional Planning Organizations
RVP--Reid Vapor Pressure
SBA--Small Business Administration
SCR--Selective Catalytic Reduction
SIPs--State Implementation Plans
SO2--Sulfur Dioxide
TAR--Tribal Authority Rule
TAS--(Treatment in the Same Manner as a State ``Treatment as 
State'')
TEA-21--Transportation Equity Act for the Twenty-first Century
TIPs--Tribal Implementation Plans
tpy--Tons Per Year
TSP--Total Suspended Particulates
TTN/SCRAM--Technical Transfer Network/Support Center for Regulatory 
Air Models

[[Page 71698]]

UMRA--Unfunded Mandates Reform Act of 1995
U.S. DOT--United States Department of Transportation
VCS--Voluntary Consensus Standards
VMT--Vehicle Miles Traveled
VOC--Volatile Organic Compound

List of Subjects

40 CFR Part 51

    Air pollution control, Carbon monoxide, Intergovernmental 
relations, Ozone, Particulate matter, Transportation, Volatile organic 
compounds.

40 CFR Part 52

    Air pollution control, Carbon monoxide, Intergovernmental 
relations, Ozone, Particulate matter.

40 CFR Part 80

    Fuel additives, Gasoline, Motor vehicle pollution, Ozone.

    Authority: 42 U.S.C. 7408; 42 U.S.C. 7410; 42 U.S.C. 7501-7511f; 
42 U.S.C. 7601(a)(1); 42 U.S.C. 7401.

    Dated: November 9, 2005.
Stephen L. Johnson,
Administrator.

0
For the reasons stated in the preamble, title 40, chapter I of the Code 
of Federal Regulations is amended as follows:

PART 51--REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF 
IMPLEMENTATION PLANS

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Subpart I--[Amended]

0
2. Section 51.165 is amended as follows:
0
a. By revising paragraphs (a)(1)(iv)(A)(1) and (2).
0
b. By adding paragraph (a)(1)(iv)(A)(3).
0
c. By adding paragraphs (a)(1)(v)(E) and (F).
0
d. By revising paragraph (a)(1)(x).
0
e. By revising paragraph (a)(3)(ii)(C).
0
f. By adding paragraphs (a)(8), (a)(9), and (a)(10).


Sec.  51.165  Permit requirements.

    (a) * * *
    (1) * * *
    (iv) * * *
    (A) * * *
    (1) Any stationary source of air pollutants that emits, or has the 
potential to emit, 100 tons per year or more of any regulated NSR 
pollutant, except that lower emissions thresholds shall apply in areas 
subject to subpart 2, subpart 3, or subpart 4 of part D, title I of the 
Act, according to paragraphs (a)(1)(iv)(A)(1)(i) through (vi) of this 
section.
    (i) 50 tons per year of volatile organic compounds in any serious 
ozone nonattainment area.
    (ii) 50 tons per year of volatile organic compounds in an area 
within an ozone transport region, except for any severe or extreme 
ozone nonattainment area.
    (iii) 25 tons per year of volatile organic compounds in any severe 
ozone nonattainment area.
    (iv) 10 tons per year of volatile organic compounds in any extreme 
ozone nonattainment area.
    (v) 50 tons per year of carbon monoxide in any serious 
nonattainment area for carbon monoxide, where stationary sources 
contribute significantly to carbon monoxide levels in the area (as 
determined under rules issued by the Administrator).
    (vi) 70 tons per year of PM-10 in any serious nonattainment area 
for PM-10;
    (2) For the purposes of applying the requirements of paragraph 
(a)(8) of this section to stationary sources of nitrogen oxides located 
in an ozone nonattainment area or in an ozone transport region, any 
stationary source which emits, or has the potential to emit, 100 tons 
per year or more of nitrogen oxides emissions, except that the emission 
thresholds in paragraphs (a)(1)(iv)(A)(2)(i) through (vi) of this 
section shall apply in areas subject to subpart 2 of part D, title I of 
the Act.
    (i) 100 tons per year or more of nitrogen oxides in any ozone 
nonattainment area classified as marginal or moderate.
    (ii) 100 tons per year or more of nitrogen oxides in any ozone 
nonattainment area classified as a transitional, submarginal, or 
incomplete or no data area, when such area is located in an ozone 
transport region.
    (iii) 100 tons per year or more of nitrogen oxides in any area 
designated under section 107(d) of the Act as attainment or 
unclassifiable for ozone that is located in an ozone transport region.
    (iv) 50 tons per year or more of nitrogen oxides in any serious 
nonattainment area for ozone.
    (v) 25 tons per year or more of nitrogen oxides in any severe 
nonattainment area for ozone.
    (vi) 10 tons per year or more of nitrogen oxides in any extreme 
nonattainment area for ozone; or
    (3) Any physical change that would occur at a stationary source not 
qualifying under paragraphs (a)(1)(iv)(A)(1) or (2) of this section as 
a major stationary source, if the change would constitute a major 
stationary source by itself.
* * * * *
    (v) * * *
    (E) For the purpose of applying the requirements of (a)(8) of this 
section to modifications at major stationary sources of nitrogen oxides 
located in ozone nonattainment areas or in ozone transport regions, 
whether or not subject to subpart 2, part D, title I of the Act, any 
significant net emissions increase of nitrogen oxides is considered 
significant for ozone.
    (F) Any physical change in, or change in the method of operation 
of, a major stationary source of volatile organic compounds that 
results in any increase in emissions of volatile organic compounds from 
any discrete operation, emissions unit, or other pollutant emitting 
activity at the source shall be considered a significant net emissions 
increase and a major modification for ozone, if the major stationary 
source is located in an extreme ozone nonattainment area that is 
subject to subpart 2, part D, title I of the Act.
* * * * *
    (x)(A) Significant means, in reference to a net emissions increase 
or the potential of a source to emit any of the following pollutants, a 
rate of emissions that would equal or exceed any of the following 
rates:

Pollutant Emission Rate

Carbon monoxide: 100 tons per year (tpy)
Nitrogen oxides: 40 tpy
Sulfur dioxide: 40 tpy
Ozone: 40 tpy of volatile organic compounds or NOX
Lead: 0.6 tpy
PM-10: 15 tpy PM-10

    (B) Notwithstanding the significant emissions rate for ozone in 
paragraph (a)(1)(x)(A) of this section, significant means, in reference 
to an emissions increase or a net emissions increase, any increase in 
actual emissions of volatile organic compounds that would result from 
any physical change in, or change in the method of operation of, a 
major stationary source locating in a serious or severe ozone 
nonattainment area that is subject to subpart 2, part D, title I of the 
Act, if such emissions increase of volatile organic compounds exceeds 
25 tons per year.
    (C) For the purposes of applying the requirements of paragraph 
(a)(8) of this section to modifications at major stationary sources of 
nitrogen oxides located in an ozone nonattainment area or in an ozone 
transport region, the significant emission rates and other requirements 
for volatile organic compounds in paragraphs (a)(1)(x)(A),

[[Page 71699]]

(B), and (E) of this section shall apply to nitrogen oxides emissions.
    (D) Notwithstanding the significant emissions rate for carbon 
monoxide under paragraph (a)(1)(x)(A) of this section, significant 
means, in reference to an emissions increase or a net emissions 
increase, any increase in actual emissions of carbon monoxide that 
would result from any physical change in, or change in the method of 
operation of, a major stationary source in a serious nonattainment area 
for carbon monoxide if such increase equals or exceeds 50 tons per 
year, provided the Administrator has determined that stationary sources 
contribute significantly to carbon monoxide levels in that area.
    (E) Notwithstanding the significant emissions rates for ozone under 
paragraphs (a)(1)(x)(A) and (B) of this section, any increase in actual 
emissions of volatile organic compounds from any emissions unit at a 
major stationary source of volatile organic compounds located in an 
extreme ozone nonattainment area that is subject to subpart 2, part D, 
title I of the Act shall be considered a significant net emissions 
increase.
* * * * *
    (3) * * *
    (i) * * *
    (ii) * * *
    (C)(1) Emissions reductions achieved by shutting down an existing 
emission unit or curtailing production or operating hours may be 
generally credited for offsets if they meet the requirements in 
paragraphs (a)(3)(ii)(C)(1)(i) through (ii) of this section.
    (i) Such reductions are surplus, permanent, quantifiable, and 
federally enforceable.
    (ii) The shutdown or curtailment occurred after the last day of the 
base year for the SIP planning process. For purposes of this paragraph, 
a reviewing authority may choose to consider a prior shutdown or 
curtailment to have occurred after the last day of the base year if the 
projected emissions inventory used to develop the attainment 
demonstration explicitly includes the emissions from such previously 
shutdown or curtailed emission units. However, in no event may credit 
be given for shutdowns that occurred before August 7, 1977.
    (2) Emissions reductions achieved by shutting down an existing 
emissions unit or curtailing production or operating hours and that do 
not meet the requirements in paragraph (a)(3)(ii)(C)(1)(ii) of this 
section may be generally credited only if:
    (i) The shutdown or curtailment occurred on or after the date the 
construction permit application is filed; or
    (ii) The applicant can establish that the proposed new emissions 
unit is a replacement for the shutdown or curtailed emissions unit, and 
the emissions reductions achieved by the shutdown or curtailment met 
the requirements of paragraph (a)(3)(ii)(C)(1)(i) of this section.
* * * * *
    (8) The plan shall provide that the requirements of this section 
applicable to major stationary sources and major modifications of 
volatile organic compounds shall apply to nitrogen oxides emissions 
from major stationary sources and major modifications of nitrogen 
oxides in an ozone transport region or in any ozone nonattainment area, 
except in ozone nonattainment areas or in portions of an ozone 
transport region where the Administrator has granted a NOX 
waiver applying the standards set forth under section 182(f) of the Act 
and the waiver continues to apply.
    (9)(i) The plan shall require that in meeting the emissions offset 
requirements of paragraph (a)(3) of this section for ozone 
nonattainment areas that are subject to subpart 2, part D, title I of 
the Act, the ratio of total actual emissions reductions of VOC to the 
emissions increase of VOC shall be as follows:
    (A) In any marginal nonattainment area for ozone--at least 1.1:1;
    (B) In any moderate nonattainment area for ozone--at least 1.15:1;
    (C) In any serious nonattainment area for ozone--at least 1.2:1;
    (D) In any severe nonattainment area for ozone--at least 1.3:1 
(except that the ratio may be at least 1.2:1 if the approved plan also 
requires all existing major sources in such nonattainment area to use 
BACT for the control of VOC); and
    (E) In any extreme nonattainment area for ozone--at least 1.5:1 
(except that the ratio may be at least 1.2:1 if the approved plan also 
requires all existing major sources in such nonattainment area to use 
BACT for the control of VOC); and
    (ii) Notwithstanding the requirements of paragraph (a)(9)(i) of 
this section for meeting the requirements of paragraph (a)(3) of this 
section, the ratio of total actual emissions reductions of VOC to the 
emissions increase of VOC shall be at least 1.15:1 for all areas within 
an ozone transport region that is subject to subpart 2, part D, title I 
of the Act, except for serious, severe, and extreme ozone nonattainment 
areas that are subject to subpart 2, part D, title I of the Act.
    (iii) The plan shall require that in meeting the emissions offset 
requirements of paragraph (a)(3) of this section for ozone 
nonattainment areas that are subject to subpart 1, part D, title I of 
the Act (but are not subject to subpart 2, part D, title I of the Act, 
including 8-hour ozone nonattainment areas subject to 40 CFR 
51.902(b)), the ratio of total actual emissions reductions of VOC to 
the emissions increase of VOC shall be at least 1:1.
    (10) The plan shall require that the requirements of this section 
applicable to major stationary sources and major modifications of PM-10 
shall also apply to major stationary sources and major modifications of 
PM-10 precursors, except where the Administrator determines that such 
sources do not contribute significantly to PM-10 levels that exceed the 
PM-10 ambient standards in the area.
* * * * *

0
3. Section 51.166 is amended as follows:
0
a. By revising paragraph (b)(1)(ii).
0
b. By revising paragraph (b)(2)(ii).
0
c. By revising the entry for ``ozone'' in the list in paragraph 
(b)(23)(i).
0
d. By revising paragraph (b)(49)(i).
0
e. By revising footnote 1 to paragraph (i)(5)(i)(e).


Sec.  51.166  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *
    (1) * * *
    (ii) A major source that is major for volatile organic compounds or 
NOX shall be considered major for ozone.
* * * * *
    (2) * * *
    (ii) Any significant emissions increase (as defined at paragraph 
(b)(39) of this section) from any emissions units or net emissions 
increase (as defined in paragraph (b)(3) of this section) at a major 
stationary source that is significant for volatile organic compounds or 
NOX shall be considered significant for ozone.
* * * * *
    (23)(i) * * *
* * * * *
Ozone: 40 tpy of volatile organic compounds or NOX
* * * * *
    (49) * * *
    (i) Any pollutant for which a national ambient air quality standard 
has been promulgated and any constituents or precursors for such 
pollutants identified by the Administrator (e.g., volatile

[[Page 71700]]

organic compounds and NOX are precursors for ozone);
* * * * *
    (i) * * *
    (5) * * *
    (i) * * *
    (e) * * *

    \1\ No de minimis air quality level is provided for ozone. 
However, any net emissions increase of 100 tons per year or more of 
volatile organic compounds or nitrogen oxides subject to PSD would 
be required to perform an ambient impact analysis, including the 
gathering of air quality data.

Subpart X [Amended]

0
4. Section 51.906 is added to read as follows:


Sec.  51.906  Redesignation to nonattainment following initial 
designations for the 8-hour NAAQS.

    For any area that is initially designated attainment or 
unclassifiable for the 8-hour NAAQS and that is subsequently 
redesignated to nonattainment for the 8-hour ozone NAAQS, any absolute, 
fixed date applicable in connection with the requirements of this part 
is extended by a period of time equal to the length of time between the 
effective date of the initial designation for the 8-hour NAAQS and the 
effective date of redesignation, except as otherwise provided in this 
subpart.

0
5. Section 51.908 is amended as follows:
0
a. By revising the section heading.
0
b. By designating the existing text as paragraph (d).
0
c. By adding paragraphs (a), (b), and (c).


Sec.  51.908  What modeling and attainment demonstration requirements 
apply for purposes of the 8-hour ozone NAAQS?

    (a) What is the attainment demonstration requirement for an area 
classified as moderate or higher under subpart 2 pursuant to Sec.  
51.903? An area classified as moderate or higher under Sec.  51.903 
shall be subject to the attainment demonstration requirement applicable 
for that classification under section 182 of the Act, except such 
demonstration is due no later than 3 years after the area's designation 
for the 8-hour NAAQS.
    (b) What is the attainment demonstration requirement for an area 
subject only to subpart 1 in accordance with Sec.  51.902(b)? An area 
subject to Sec.  51.902(b) shall be subject to the attainment 
demonstration under section 172(c)(1) of the Act and shall submit an 
attainment demonstration no later than 3 years after the area's 
designation for the 8-hour NAAQS.
    (c) What criteria must the attainment demonstration meet? An 
attainment demonstration due pursuant to paragraph (a) or (b) of this 
section must meet the requirements of Sec.  51.112; the adequacy of an 
attainment demonstration shall be demonstrated by means of a 
photochemical grid model or any other analytical method determined by 
the Administrator, in the Administrator's discretion, to be at least as 
effective.
* * * * *

0
6. Section 51.910 is added to read as follows:


Sec.  51.910  What requirements for reasonable further progress (RFP) 
under sections 172(c)(2) and 182 apply for areas designated 
nonattainment for the 8-hour ozone NAAQS?

    (a) What are the general requirements for RFP for an area 
classified under subpart 2 pursuant to Sec.  51.903? For an area 
classified under subpart 2 pursuant to Sec.  51.903, the RFP 
requirements specified in section 182 of the Act for that area's 
classification shall apply.
    (1) What is the content and timing of the RFP plan required under 
sections 182(b)(1) and 182(c)(2)(B) of the Act for an area classified 
as moderate or higher pursuant to Sec.  51.903 (subpart 2 coverage)?
    (i) Moderate or Above Area. (A) Except as provided in paragraph 
(a)(1)(ii) of this section, for each area classified as moderate or 
higher, the State shall submit a SIP revision consistent with section 
182(b)(1) of the Act no later than 3 years after designation for the 8-
hour NAAQS for the area. The 6-year period referenced in section 
182(b)(1) of the Act shall begin January 1 of the year following the 
year used for the baseline emissions inventory.
    (B) For each area classified as serious or higher, the State shall 
submit a SIP revision consistent with section 182(c)(2)(B) of the Act 
no later than 3 years after designation for the 8-hour NAAQS. The final 
increment of progress must be achieved no later than the attainment 
date for the area.
    (ii) Area with Approved 1-hour Ozone 15 Percent VOC ROP Plan. An 
area classified as moderate or higher that has the same boundaries as 
an area, or is entirely composed of several areas or portions of areas, 
for which EPA fully approved a 15 percent plan for the 1-hour NAAQS is 
considered to have met section 182(b)(1) of the Act for the 8-hour 
NAAQS and instead:
    (A) If classified as moderate, the area is subject to RFP under 
section 172(c)(2) of the Act and shall submit no later than 3 years 
after designation for the 8-hour NAAQS a SIP revision that meets the 
requirements of paragraph (b)(2) of this section, consistent with the 
attainment date established in the attainment demonstration SIP.
    (B) If classified as serious or higher, the area is subject to RFP 
under section 182(c)(2)(B) of the Act and shall submit no later than 3 
years after designation for the 8-hour NAAQS an RFP SIP providing for 
an average of 3 percent per year of VOC and/or NOX emissions 
reductions for
    (1) the 6-year period beginning January 1 of the year following the 
year used for the baseline emissions inventory; and
    (2) all remaining 3-year periods after the first 6-year period out 
to the area's attainment date.
    (iii) Moderate and Above Area for Which Only a Portion Has an 
Approved 1-hour Ozone 15 Percent VOC ROP Plan. An area classified as 
moderate or higher that contains one or more areas, or portions of 
areas, for which EPA fully approved a 15 percent plan for the 1-hour 
NAAQS as well as areas for which EPA has not fully approved a 15 
percent plan for the 1-hour NAAQS shall meet the requirements of either 
paragraph (a)(1)(iii)(A) or (B) below.
    (A) The State shall not distinguish between the portion of the area 
that previously met the 15 percent VOC reduction requirement and the 
portion of the area that did not, and
    (1) The State shall submit a SIP revision consistent with section 
182(b)(1) of the Act no later than 3 years after designation for the 8-
hour NAAQS for the entire area. The 6-year period referenced in section 
182(b)(1) of the Act shall begin January 1 of the year following the 
year used for the baseline emissions inventory.
    (2) For each area classified as serious or higher, the State shall 
submit a SIP revision consistent with section 182(c)(2)(B) of the Act 
no later than 3 years after designation for the 8-hour NAAQS. The final 
increment of progress must be achieved no later than the attainment 
date for the area.
    (B) The State shall treat the area as two parts, each with a 
separate RFP target as follows:
    (1) For the portion of the area without an approved 15 percent VOC 
RFP plan for the 1-hour standard, the State shall submit a SIP revision 
consistent with section 182(b)(1) of the Act no later than 3 years 
after designation for the 8-hour NAAQS for the area. The 6-year period 
referenced in section 182(b)(1) of the Act shall begin January 1 of the 
year following the year used for the baseline emissions inventory. 
Emissions reductions to meet this requirement may

[[Page 71701]]

come from anywhere within the 8-hour nonattainment area.
    (2) For the portion of the area with an approved 15 percent VOC 
plan for the 1-hour NAAQS, the State shall submit a SIP as required 
under paragraph (b)(2)of this section.
    (2) What restrictions apply on the creditability of emission 
control measures for the RFP plans required under this section? Except 
as specifically provided in section 182(b)(1)(C) and (D) and section 
182(c)(2)(B) of the Act, all SIP-approved or federally promulgated 
emissions reductions that occur after the baseline emissions inventory 
year are creditable for purposes of the RFP requirements in this 
section, provided the reductions meet the requirements for 
creditability, including the need to be enforceable, permanent, 
quantifiable and surplus, as described for purposes of State economic 
incentive programs in the requirements of Sec.  51.493 of this part.
    (b) How does the RFP requirement of section 172(c)(2) of the Act 
apply to areas subject to that requirement? (1) An area subject to the 
RFP requirement of subpart 1 pursuant to Sec.  51.902(b) or a moderate 
area subject to subpart 2 as covered in paragraphs (a)(1)(ii)(A) of 
this section shall meet the RFP requirements of section 172(c)(2) of 
the Act as provided in paragraph (b)(2) of this section.
    (2) The State shall submit no later than 3 years following 
designation for the 8-hour NAAQS a SIP providing for RFP consistent 
with the following:
    (i) For each area with an attainment demonstration requesting an 
attainment date of 5 years or less after designation for the 8-hour 
NAAQS, the attainment demonstration SIP shall require that all 
emissions reductions needed for attainment be implemented by the 
beginning of the attainment year ozone season.
    (ii) For each area with an attainment demonstration requesting an 
attainment date more than 5 years after designation for the 8-hour 
NAAQS, the attainment demonstration SIP--
    (A) Shall provide for a 15 percent emission reduction from the 
baseline year within 6 years after the baseline year.
    (B) May use either NOX or VOC emissions reductions (or 
both) to achieve the 15 percent emission reduction requirement. Use of 
NOX emissions reductions must meet the criteria in section 
182(c)(2)(C) of the Act.
    (C) For each subsequent 3-year period out to the attainment date, 
the RFP SIP must provide for an additional increment of progress. The 
increment for each 3-year period must be a portion of the remaining 
emission reductions needed for attainment beyond those reductions 
achieved for the first increment of progress (e.g., beyond 2008 for 
areas designated nonattainment in June 2004). Specifically, the amount 
of reductions needed for attainment is divided by the number of years 
needed for attainment after the first increment of progress in order to 
establish an ``annual increment.'' For each 3-year period out to the 
attainment date, the area must achieve roughly the portion of 
reductions equivalent to three annual increments.
    (c) What method should a State use to calculate RFP targets? In 
calculating RFP targets for the initial 6-year period and the 
subsequent 3-year periods pursuant to this section, the State shall use 
the methods consistent with the requirements of sections 182(b)(1)(C) 
and (D) and 182(c)(2)(B) to properly account for non-creditable 
reductions.
    (d) What is the baseline emissions inventory for RFP plans? For the 
RFP plans required under this section, the baseline emissions inventory 
shall be determined at the time of designation of the area for the 8-
hour NAAQS and shall be the emissions inventory for the most recent 
calendar year for which a complete inventory is required to be 
submitted to EPA under the provisions of subpart A of this part or a 
more recent alternative baseline emissions inventory provided the State 
demonstrates that the baseline inventory meets the CAA provisions for 
RFP and provides a rationale for why it is appropriate to use the 
alternative baseline year rather than 2002 to comply with the CAA's RFP 
provisions.

0
7. Section 51.912 is added to read as follows:


Sec.  51.912  What requirements apply for reasonably available control 
technology (RACT) and reasonably available control measures (RACM) 
under the 8-hour NAAQS?

    (a) What is the RACT requirement for areas subject to subpart 2 in 
accordance with Sec.  51.903? (1) For each area subject to subpart 2 in 
accordance with Sec.  51.903 of this part and classified moderate or 
higher, the State shall submit a SIP revision that meets the 
NOX and VOC RACT requirements in sections 182(b)(2) and 
182(f) of the Act.
    (2) The State shall submit the RACT SIP for each area no later than 
27 months after designation for the 8-hour ozone NAAQS.
    (3) The State shall provide for implementation of RACT as 
expeditiously as practicable but no later than the first ozone season 
or portion thereof which occurs 30 months after the RACT SIP is due.
    (b) How do the RACT provisions apply to a major stationary source? 
Volatile organic compounds and NOX are to be considered 
separately for purposes of determining whether a source is a major 
stationary source as defined in section 302 of the Act.
    (c) What is the RACT requirement for areas subject only to subpart 
1 pursuant to Sec.  51.902(b)? Areas subject only to subpart 1 pursuant 
to Sec.  51.902(b) are subject to the RACT requirement specified in 
section 172(c)(1) of the Act.
    (1) For an area that submits an attainment demonstration that 
requests an attainment date 5 years or less after designation for the 
8-hour NAAQS, the State shall meet the RACT requirement by submitting 
an attainment demonstration SIP demonstrating that the area has adopted 
all control measures necessary to demonstrate attainment as 
expeditiously as practicable.
    (2) For an area that submits an attainment demonstration that 
requests an attainment date more than 5 years after designation for the 
8-hour NAAQS, the State shall submit a SIP consistent with the 
requirements of Sec.  51.912(a) and (b) except the State shall submit 
the RACT SIP for each area with its request pursuant to Clean Air Act 
section 172(a)(2)(A) to extend the attainment date.
    (d) What is the Reasonably Available Control Measures (RACM) 
requirement for areas designated nonattainment for the 8-hour NAAQS? 
For each nonattainment area required to submit an attainment 
demonstration under Sec.  51.908, the State shall submit with the 
attainment demonstration a SIP revision demonstrating that it has 
adopted all RACM necessary to demonstrate attainment as expeditiously 
as practicable and to meet any RFP requirements.

0
8. Section 51.913 is added to read as follows:


Sec.  51.913  How do the section 182(f) NOX exemption 
provisions apply for the 8-hour NAAQS?

    (a) A person may petition the Administrator for an exemption from 
NOX obligations under section 182(f) for any area designated 
nonattainment for the 8-hour ozone NAAQS and for any area in a section 
184 ozone transport region.
    (b) The petition must contain adequate documentation that the 
criteria in section 182(f) are met.
    (c) A section 182(f) NOX exemption granted for the 1-
hour ozone standard does not relieve the area from any NOX

[[Page 71702]]

obligations under section 182(f) for the 8-hour ozone standard.

0
9. Section 51.914 is added to read as follows:


Sec.  51.914  What new source review requirements apply for 8-hour 
ozone nonattainment areas?

    The requirements for new source review for the 8-hour ozone 
standard are located in Sec.  51.165 of this part.

0
10. Section 51.915 is added to read as follows:


Sec.  51.915  What emissions inventory requirements apply under the 8-
hour NAAQS?

    For each nonattainment area subject to subpart 2 in accordance with 
Sec.  51.903, the emissions inventory requirements in sections 
182(a)(1) and 182(a)(3) of the Act shall apply, and such SIP shall be 
due no later 2 years after designation. For each nonattainment area 
subject only to title I, part D, subpart 1 of the Act in accordance 
with Sec.  51.902(b), the emissions inventory requirement in section 
172(c)(3) of the Act shall apply, and an emission inventory SIP shall 
be due no later 3 years after designation. For purposes of defining the 
data elements for the emissions inventories for these areas, the ozone-
relevant data element requirements under 40 CFR part 51 subpart A 
apply.

0
11. Section 51.916 is added to read as follows:


Sec.  51.916  What are the requirements for an Ozone Transport Region 
under the 8-hour NAAQS?

    (a) In General. Sections 176A and 184 of the Act apply for purposes 
of the 8-hour NAAQS.
    (b) RACT Requirements for Certain Portions of an Ozone Transport 
Region.
    (1) The State shall submit a SIP revision that meets the RACT 
requirements of section 184 of the Act for each area that is located in 
an ozone transport region and that is--
    (i) Designated as attainment or unclassifiable for the 8-hour 
standard;
    (ii) Designated nonattainment and classified as marginal for the 8-
hour standard; or
    (iii) Designated nonattainment and covered solely under subpart 1 
of part D, title I of the CAA for the 8-hour standard.
    (2) The State is required to submit the RACT revision no later than 
September 16, 2006 and shall provide for implementation of RACT as 
expeditiously as practicable but no later than May 1, 2009.

0
12. Section 51.917 is added to read as follows:


Sec.  51.917  What is the effective date of designation for the Las 
Vegas, NV, 8-hour ozone nonattainment area?

    The Las Vegas, NV, 8-hour ozone nonattainment area (designated on 
September 17, 2004 (69 FR 55956)) shall be treated as having an 
effective date of designation of June 15, 2004, for purposes of 
calculating SIP submission deadlines, attainment dates, or any other 
deadline under this subpart.

0
13. Section 51.918 is added to read as follows:


Sec.  51.918  Can any SIP planning requirements be suspended in 8-hour 
ozone nonattainment areas that have air quality data that meets the 
NAAQS?

    Upon a determination by EPA that an area designated nonattainment 
for the 8-hour ozone NAAQS has attained the standard, the requirements 
for such area to submit attainment demonstrations and associated 
reasonably available control measures, reasonable further progress 
plans, contingency measures, and other planning SIPs related to 
attainment of the 8-hour ozone NAAQS shall be suspended until such time 
as: the area is redesignated to attainment, at which time the 
requirements no longer apply; or EPA determines that the area has 
violated the 8-hour ozone NAAQS.

Appendix S to Part 51--[Amended]

0
Appendix S to part 51 is amended as follows:
0
1. By revising the second sentence of paragraph I and the the fourth 
sentence of paragraph.
0
2. By revising paragraph II.A.4(i)(a) and (b).
0
3. By adding paragraph II.A.4(i)(c).
0
4. By revising paragraph II.A.4(ii).
0
5. By revising paragraph II.A.5 (ii).
0
6. By adding paragraphs II.A.5(iv) through (v).
0
7. By revising paragraph II.A.6(v)(c).
0
8. By revising the table in paragraph II.A.10(i).
0
9. By adding paragraphs II.A.10(ii) through (v).
0
10. By amending paragraph IV.A Condition 1 by removing footnote 5.
0
11. By amending paragraph IV.A Condition 3 by redesignating footnote 6 
as footnote 5 and by redesignating footnote 7 as footnote 6.
0
12. By amending paragraph IV.A Condition 4 by removing footnote 8.
0
13. By revising paragraph IV.C.3.
0
14. By revising paragraph IV.D.
0
15. By revising paragraph IV.E.
0
16. By adding paragraphs IV.G through H.
0
17. By amending paragraph V.A by redesignating footnote 10 as footnote 
7.
0
18. By revising the last sentence of paragraph VI and adding paragraphs 
VI.A, VI.B and VI.C.
    The revisions and additions read as follows:

Appendix S to Part 51--Emission Offset Interpretative Ruling

    I.
    * * * A major new source or major modification which would 
locate in any area designated under section 107(d) of the Act as 
attainment or unclassifiable for ozone that is located in an ozone 
transport region or which would locate in an area designated in 40 
CFR part 81, subpart C, as nonattainment for a pollutant for which 
the source or modification would be major may be allowed to 
construct only if the stringent conditions set forth below are met. 
* * *
    For each area designated as exceeding a NAAQS (nonattainment 
area) under 40 CFR part 81, subpart C, or for any area designated 
under section 107(d) of the Act as attainment or unclassifiable for 
ozone that is located in an ozone transport region, this 
Interpretative Ruling will be superseded after June 30, 1979 (a) by 
preconstruction review provisions of the revised SIP, if the SIP 
meets the requirements of Part D, Title 1, of the Act; or (b) by a 
prohibition on construction under the applicable SIP and section 
110(a)(2)(I) of the Act, if the SIP does not meet the requirements 
of Part D. * * *
* * * * *
    II. * * *
    A. * * *
    4.(i) * * *
    (a) Any stationary source of air pollutants which emits, or has 
the potential to emit, 100 tons per year or more of any pollutant 
subject to regulation under the Act, except that lower emissions 
thresholds shall apply in areas subject to subpart 2, subpart 3, or 
subpart 4 of part D, title I of the Act, according to paragraphs 
II.A.4(i)(a)(1) through (6) of this Ruling.
    (1) 50 tons per year of volatile organic compounds in any 
serious ozone nonattainment area.
    (2) 50 tons per year of volatile organic compounds in an area 
within an ozone transport region, except for any severe or extreme 
ozone nonattainment area.
    (3) 25 tons per year of volatile organic compounds in any severe 
ozone nonattainment area.
    (4) 10 tons per year of volatile organic compounds in any 
extreme ozone nonattainment area.
    (5) 50 tons per year of carbon monoxide in any serious 
nonattainment area for carbon monoxide, where stationary sources 
contribute significantly to carbon monoxide levels in the area (as 
determined under rules issued by the Administrator)
    (6) 70 tons per year of PM-10 in any serious nonattainment area 
for PM-10;
    (b) For the purposes of applying the requirements of paragraph 
IV.H of this Ruling to stationary sources of nitrogen oxides located 
in an ozone nonattainment area or in an ozone transport region, any 
stationary source which emits, or has the potential to emit, 100 
tons per year or more of nitrogen oxides emissions, except that the 
emission thresholds in paragraphs II.A.4(i)(b)(1) through (6) of 
this Ruling apply in areas

[[Page 71703]]

subject to subpart 2 of part D, title I of the Act.
    (1) 100 tons per year or more of nitrogen oxides in any ozone 
nonattainment area classified as marginal or moderate.
    (2) 100 tons per year or more of nitrogen oxides in any ozone 
nonattainment area classified as a transitional, submarginal, or 
incomplete or no data area, when such area is located in an ozone 
transport region.
    (3) 100 tons per year or more of nitrogen oxides in any area 
designated under section 107(d) of the Act as attainment or 
unclassifiable for ozone that is located in an ozone transport 
region.
    (4) 50 tons per year or more of nitrogen oxides in any serious 
nonattainment area for ozone.
    (5) 25 tons per year or more of nitrogen oxides in any severe 
nonattainment area for ozone.
    (6) 10 tons per year or more of nitrogen oxides in any extreme 
nonattainment area for ozone; or
    (c) Any physical change that would occur at a stationary source 
not qualifying under paragraph II.A.4(i)(a) or (b) of this Ruling as 
a major stationary source, if the change would constitute a major 
stationary source by itself.
    (ii) A major stationary source that is major for volatile 
organic compounds or nitrogen oxides is major for ozone.
* * * * *
    5. * * *
    (ii) Any net emission increase that is considered significant 
for volatile organic compounds shall be considered significant for 
ozone.
* * * * *
    (iv) For the purpose of applying the requirements of paragraph 
IV.H of this Ruling to modifications at major stationary sources of 
nitrogen oxides located in ozone nonattainment areas or in ozone 
transport regions, whether or not subject with respect to ozone to 
subpart 2, part D, title I of the Act, any significant net emissions 
increase of nitrogen oxides is considered significant for ozone.
    (v) Any physical change in, or change in the method of operation 
of, a major stationary source of volatile organic compounds that 
results in any increase in emissions of volatile organic compounds 
from any discrete operation, emissions unit, or other pollutant 
emitting activity at the source shall be considered a significant 
net emissions increase and a major modification for ozone, if the 
major stationary source is located in an extreme ozone nonattainment 
area that is subject to subpart 2, part D, title I of the Act.
    6. * * *
    (v) * * *
    (c) The reviewing authority has not relied on it in issuing any 
permit under regulations approved pursuant to 40 CFR 51.165;
* * * * *
    10. (i) * * *

Pollutant and Emissions Rate

Carbon monoxide: 100 tons per year (tpy)
Nitrogen oxides: 40 tpy
Sulfur dioxide: 40 tpy
Ozone: 40 tpy of volatile organic compounds or NOX
Lead: 0.6 tpy
Particulate matter: 25 tpy of particulate matter emissions
PM-10: 15 tpy PM-10

    (ii) Notwithstanding the significant emissions rate for ozone in 
paragraph II.A.10(i) of this Ruling, significant means, in reference 
to an emissions increase or a net emissions increase, any increase 
in actual emissions of volatile organic compounds that would result 
from any physical change in, or change in the method of operation 
of, a major stationary source locating in a serious or severe ozone 
nonattainment area that is subject to subpart 2, part D, title I of 
the Act, if such emissions increase of volatile organic compounds 
exceeds 25 tons per year.
    (iii) For the purposes of applying the requirements of paragraph 
IV.H of this Ruling to modifications at major stationary sources of 
nitrogen oxides located in an ozone nonattainment area or in an 
ozone transport region, the significant emission rates and other 
requirements for volatile organic compounds in paragraphs 
II.A.10(i), (ii), and (v) of this Ruling shall apply to nitrogen 
oxides emissions.
    (iv) Notwithstanding the significant emissions rate for carbon 
monoxide under paragraph II.A.10(i) of this Ruling, significant 
means, in reference to an emissions increase or a net emissions 
increase, any increase in actual emissions of carbon monoxide that 
would result from any physical change in, or change in the method of 
operation of, a major stationary source in a serious nonattainment 
area for carbon monoxide if such increase equals or exceeds 50 tons 
per year, provided the Administrator has determined that stationary 
sources contribute significantly to carbon monoxide levels in that 
area.
    (v) Notwithstanding the significant emissions rates for ozone 
under paragraphs II.A.10(i) and (ii) of this Ruling, any increase in 
actual emissions of volatile organic compounds from any emissions 
unit at a major stationary source of volatile organic compounds 
located in an extreme ozone nonattainment area that is subject to 
subpart 2, part D, title I of the Act shall be considered a 
significant net emissions increase.
* * * * *
    IV. * * *
    C. * * *
    3. Emission Reduction Credits from Shutdowns and Curtailments.
    (i) Emissions reductions achieved by shutting down an existing 
source or curtailing production or operating hours may be generally 
credited for offsets if they meet the requirements in paragraphs 
IV.C.3.i.1. through 2 of this section.
    (1) Such reductions are surplus, permanent, quantifiable, and 
federally enforceable.
    (2) The shutdown or curtailment occurred after the last day of 
the base year for the SIP planning process. For purposes of this 
paragraph, a reviewing authority may choose to consider a prior 
shutdown or curtailment to have occurred after the last day of the 
base year if the projected emissions inventory used to develop the 
attainment demonstration explicitly includes the emissions from such 
previously shutdown or curtailed emission units. However, in no 
event may credit be given for shutdowns that occurred before August 
7, 1977.
    (ii) Emissions reductions achieved by shutting down an existing 
source or curtailing production or operating hours and that do not 
meet the requirements in paragraphs IV.C.3.i.1. through 2 of this 
section may be generally credited only if:
    (1) The shutdown or curtailment occurred on or after the date 
the new source permit application is filed; or
    (2) The applicant can establish that the proposed new source is 
a replacement for the shutdown or curtailed source, and the 
emissions reductions achieved by the shutdown or curtailment met the 
requirements of paragraphs IV.C.3.i.1. through 2 of this section.
    D. Location of offsetting emissions. The owner or operator of a 
new or modified major stationary source may comply with any offset 
requirement in effect under this Ruling for increased emissions of 
any air pollutant only by obtaining emissions reductions of such air 
pollutant from the same source or other sources in the same 
nonattainment area, except that the reviewing authority may allow 
the owner or operator of a source to obtain such emissions 
reductions in another nonattainment area if the conditions in IV.D.1 
and 2 are met.
    1. The other area has an equal or higher nonattainment 
classification than the area in which the source is located.
    2. Emissions from such other area contribute to a violation of 
the national ambient air quality standard in the nonattainment area 
in which the source is located.
    E. Reasonable further progress. Permits to construct and operate 
may be issued if the reviewing authority determines that, by the 
time the source is to commence operation, sufficient offsetting 
emissions reductions have been obtained, such that total allowable 
emissions from existing sources in the region, from new or modified 
sources which are not major emitting facilities, and from the 
proposed source will be sufficiently less than total emissions from 
existing sources prior to the application for such permit to 
construct or modify so as to represent (when considered together 
with the plan provisions required under CAA section 172) reasonable 
further progress (as defined in CAA section 171).
* * * * *
    G. Offset Ratios. 1. In meeting the emissions offset 
requirements of paragraph IV.A, Condition 3 of this Ruling for ozone 
nonattainment areas that are subject to subpart 2, part D, title I 
of the Act, the ratio of total actual emissions reductions of VOC to 
the emissions increase of VOC shall be as follows:
    (i) In any marginal nonattainment area for ozone--at least 
1.1:1;
    (ii) In any moderate nonattainment area for ozone--at least 
1.15:1;
    (iii) In any serious nonattainment area for ozone--at least 
1.2:1;
    (iv) In any severe nonattainment area for ozone--at least 1.3:1 
(except that the ratio may be at least 1.2:1 if the State also 
requires all existing major sources in such nonattainment area to 
use BACT for the control of VOC); and

[[Page 71704]]

    (v) In any extreme nonattainment area for ozone--at least 1.5:1 
(except that the ratio may be at least 1.2:1 if the State also 
requires all existing major sources in such nonattainment area to 
use BACT for the control of VOC); and
    2. Notwithstanding the requirements of paragraph IV.G.1 of this 
Ruling for meeting the requirements of paragraph IV.A, Condition 3 
of this Ruling, the ratio of total actual emissions reductions of 
VOC to the emissions increase of VOC shall be at least 1.15:1 for 
all areas within an ozone transport region that is subject to 
subpart 2, part D, title I of the Act, except for serious, severe, 
and extreme ozone nonattainment areas that are subject to subpart 2, 
part D, title I of the Act.
    3. In meeting the emissions offset requirements of paragraph 
IV.A, Condition 3 of this Ruling for ozone nonattainment areas that 
are subject to subpart 1, part D, title I of the Act (but are not 
subject to subpart 2, part D, title I of the Act, including 8-hour 
ozone nonattainment areas subject to 40 CFR 51.902(b)), the ratio of 
total actual emissions reductions of VOC to the emissions increase 
of VOC shall be at least 1:1.
    H. Additional provisions for emissions of nitrogen oxides in 
ozone transport regions and nonattainment areas. The requirements of 
this Ruling applicable to major stationary sources and major 
modifications of volatile organic compounds shall apply to nitrogen 
oxides emissions from major stationary sources and major 
modifications of nitrogen oxides in an ozone transport region or in 
any ozone nonattainment area, except in ozone nonattainment areas 
where the Administrator has granted a NOX waiver applying 
the standards set forth under 182(f) and the waiver continues to 
apply.
* * * * *

VI. Policy Where Attainment Dates Have Not Passed

    * * * In such cases, a new source locating in an area designated 
in 40 CFR 81.300 et seq. as nonattainment (or, where section III of 
this Ruling is applicable, a new source that would cause or 
contribute to a NAAQS violation) may be exempt from the Conditions 
of section IV.A if the conditions in paragraphs VI.A through C are 
met.
    A. The new source meets the applicable SIP emission limitations.
    B. The new source will not interfere with the attainment date 
specified in the SIP under section 110 of the Act.
    C. The Administrator has determined that conditions A and B of 
this section are satisfied and such determination is published in 
the Federal Register.

PART 52--[Amended]

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart A--[Amended]

0
2. Section 52.21 is amended as follows:
0
a. By revising paragraph (b)(1)(ii).
0
b. By revising paragraph (b)(2)(ii).
0
c. By revising the entry for ``ozone'' in list to paragraph (b)(23)(i).
0
d. By revising paragraph (b)(50)(i).
0
e. By revising the second sentence of footnote 1 to paragraph 
(i)(5)(i).


Sec.  52.21  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *
    (1) * * *
    (ii) A major source that is major for volatile organic compounds or 
NOX shall be considered major for ozone.
* * * * *
    (2) * * *
    (ii) Any significant emissions increase (as defined at paragraph 
(b)(40) of this section) from any emissions units or net emissions 
increase (as defined in paragraph (b)(3) of this section) at a major 
stationary source that is significant for volatile organic compounds or 
NOX shall be considered significant for ozone.
* * * * *
    (23)(i) * * *
* * * * *
Ozone: 40 tpy of volatile organic compounds or NOX
* * * * *
    (50) * * *
    (i) Any pollutant for which a national ambient air quality standard 
has been promulgated and any constituents or precursors for such 
pollutants identified by the Administrator (e.g., volatile organic 
compounds and NOX are precursors for ozone);
* * * * *
    (i) * * *
    (5) * * *
    (i) * * *

    \1\ No de minimis air quality level is provided for ozone. 
However, any net emissions increase of 100 tons per year or more of 
volatile organic compounds or nitrogen oxides subject to PSD would 
be required to perform an ambient impact analysis, including the 
gathering of ambient air quality data.
* * * * *

0
3. Section 52.24 is revised to read as follows:


Sec.  52.24  Statutory restriction on new sources.

    (a) Any area designated nonattainment pursuant to section 107(d) of 
the Act to which, immediately prior to the enactment of the Amendments 
to the Act of 1990 (November 15, 1990), a prohibition of construction 
or modification of major stationary sources was applied, shall retain 
that prohibition if such prohibition was applied by virtue of a finding 
of the Administrator that the State containing such an area:
    (1) Failed to submit an implementation plan meeting the 
requirements of an approvable new source review permitting program; or
    (2) Failed to submit an implementation plan that provided for 
timely attainment of the national ambient air quality standard for 
sulfur dioxide by December 31, 1982. This prohibition shall apply until 
the Administrator approves a plan for such area as meeting the 
applicable requirements of part D of title I of the Act as amended (NSR 
permitting requirements) or subpart 5 of part D of title I of the Act 
as amended (relating to attainment of the national ambient air quality 
standards for sulfur dioxide), as applicable.
    (b) Permits to construct and operate as required by permit programs 
under section 172(c)(5) of the Act may not be issued for new or 
modified major stationary sources proposing to locate in nonattainment 
areas or areas in a transport region where the Administrator has 
determined that the applicable implementation plan is not being 
adequately implemented for the nonattainment area or transport region 
in which the proposed source is to be constructed or modified in 
accordance with the requirements of part D of title I of the Act.
    (c) Whenever, on the basis of any information, the Administrator 
finds that a State is not in compliance with any requirement or 
prohibition of the Act relating to the construction of new sources or 
the modification of existing sources, the Administrator may issue an 
order under section 113(a)(5) of the Act prohibiting the construction 
or modification of any major stationary source in any area to which 
such requirement applies.
    (d) The restrictions in paragraphs (a) and (b) of this section 
apply only to major stationary sources of emissions that cause or 
contribute to concentrations of the pollutant (or precursors, as 
applicable) for which the transport region or nonattainment area was 
designated such, and for which the applicable implementation plan is 
not being carried out in accordance with, or does not meet, the 
requirements of part D of title I of the Act.
    (e) For any transport region or any area designated as 
nonattainment for any national ambient air quality standard, the 
restrictions in paragraphs (a) and (b) of this section shall apply to 
any major stationary source or major modification that would be major 
for the pollutant (or precursors, where applicable) for which the area 
is designated nonattainment or a transport region, if the stationary 
source or major

[[Page 71705]]

modification would be constructed anywhere in the designated 
nonattainment area or transport region.
    (f) The provisions in Sec.  51.165 of this chapter shall apply in 
interpreting the terms under this section.
    (g) At such time that a particular source or modification becomes a 
major stationary source or major modification solely by virtue of a 
relaxation in any enforceable limitation which was established after 
August 7, 1980, on the capacity of the source or modification otherwise 
to emit a pollutant, such as a restriction on hours of operation, then:
    (1) If the construction moratorium imposed pursuant to this section 
is still in effect for the nonattainment area or transport region in 
which the source or modification is located, then the permit may not be 
so revised; or
    (2) If the construction moratorium is no longer in effect in that 
area, then the requirements of Sec.  51.165 of this chapter shall apply 
to the source or modification as though construction had not yet 
commenced on the source or modification.
    (h) This section does not apply to major stationary sources or 
major modifications locating in a clearly defined part of a 
nonattainment area or transport region (such as a political subdivision 
of a State), where EPA finds that a plan which meets the requirements 
of part D of title I of the Act is in effect and is being implemented 
in that part.
    (i) [Reserved]
    (j) [Reserved]
    (k) For an area designated as nonattainment after July 1, 1979, the 
Emission Offset Interpretative Ruling, 40 CFR part 51, appendix S shall 
govern permits to construct and operate applied for during the period 
between the date of designation as nonattainment and the date the NSR 
permit program meeting the requirements of part D is approved. The 
Emission Offset Interpretative Ruling, 40 CFR part 51, appendix S, 
shall also govern permits to construct and operate applied for in any 
area designated under section 107(d) of the CAA as attainment or 
unclassifiable for ozone that is located in an ozone transport region 
prior to the date the NSR permitting program meeting the requirements 
of part D is approved.

PART 80--[AMENDED]

0
1. The authority citation for part 80 continues to read as follows:

    Authority: 42 U.S.C. 7414, 7545, and 7601(a).

Subpart D--[Amended]

0
2. Section 80.70 is amended as follows:
0
a. In the second sentence of paragraph (m) introductory text remove the 
words ``included in'' and add in their place the words ``identified 
pursuant to''.
0
b. In the third sentence of paragraph (m) introductory text remove the 
words ``listed in'' and add in their place the words ``identified 
pursuant to''.
0
c. By revising paragraphs (m)(1) and (2).


Sec.  80.70  Covered areas.

* * * * *
    (m) * * *
    (1) An area identified as a covered area pursuant to this paragraph 
(m), whose classification as a severe nonattainment area under the 1-
hour ozone NAAQS is removed as a result of removal of the 1-hour ozone 
NAAQS, remains a covered area as follows:
    (i) Prior to redesignation as attainment for the 8-hour ozone NAAQS 
the area remains a covered area;
    (ii) After redesignation as attainment for the 8-hour ozone NAAQS--
[RESERVED].
    (2) An area identified as a covered area pursuant to this paragraph 
(m), whose classification as a severe nonattainment area under the 1-
hour ozone NAAQS is removed as a result of redesignation to attainment 
for the 1-hour ozone NAAQS, remains a covered area as follows: 
[RESERVED]

[FR Doc. 05-22698 Filed 11-28-05; 8:45 am]
BILLING CODE 6560-50-P