[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Notices]
[Pages 6509-6522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01097]


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ENVIRONMENTAL PROTECTION AGENCY

[EPA-OAR-2016-0596; FRL-9958-48-OAR]
RIN 2060-AT22


Response to December 9, 2013, Clean Air Act Section 176A Petition 
From Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New 
York, Pennsylvania, Rhode Island and Vermont

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed action on petition.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to deny 
the Clean Air Act (CAA or Act) petition filed on December 9, 2013 (and 
amended on December 17, 2013), by the states of Connecticut, Delaware, 
Maryland, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode 
Island and Vermont. The petition requested that the EPA add the states 
of

[[Page 6510]]

Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, 
West Virginia and Virginia to the Ozone Transport Region (OTR). As a 
result of this denial, the geographic scope or requirements of the OTR 
will remain unchanged.

DATES: Comments. Comments must be received on or before February 21, 
2017.
    Public Hearing. If anyone contacts us requesting to speak at a 
public hearing by January 30, 2017, we will hold a public hearing. 
Additional information about the hearing would be published in a 
subsequent Federal Register notice. For updates and additional 
information on a public hearing, please check the EPA's Web site for 
this notice at https://www.epa.gov/implementation-2008-national-ambient-air-quality-standards-naaqs-ozone-state.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2016-0596, at http://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot 
be edited or removed from Regulations.gov. The EPA may publish any 
comment received to its public docket. Do not submit electronically any 
information you consider to be Confidential Business Information (CBI) 
or other information whose disclosure is restricted by statute. 
Multimedia submissions (audio, video, etc.) must be accompanied by a 
written comment. The written comment is considered the official comment 
and should include discussion of all points you wish to make. The EPA 
will generally not consider comments or comment contents located 
outside of the primary submission (i.e., on the Web, Cloud, or other 
file sharing system). For additional submission methods, the full EPA 
public comment policy, information about CBI or multimedia submissions, 
and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Questions concerning this proposed 
notice should be directed to Ms. Gobeail McKinley, U.S. Environmental 
Protection Agency, Office of Air Quality Planning and Standards, Air 
Quality Policy Division, Mail code C539-01, Research Triangle Park, NC 
27711, telephone (919) 541-5246; email at [email protected].
    To request a public hearing or information pertaining to a public 
hearing on this document, contact Ms. Pamela Long, U.S. Environmental 
Protection Agency, Office of Air Quality Planning and Standards, Air 
Quality Policy Division, (C504-01), Research Triangle Park, NC 27711; 
telephone number (919) 541-0641; fax number (919) 541-5509; email at: 
[email protected] (preferred method of contact).

SUPPLEMENTARY INFORMATION:

I. General Information

    Throughout this document wherever ``we,'' ``us,'' or ``our'' is 
used, we mean the U.S. EPA.
    The information in this Supplementary Information section of this 
preamble is organized as follows:

I. General Information
    A. Where can I get a copy of this document and other related 
material?
    B. What acronyms, abbreviations and units are used in this 
preamble?
II. Executive Summary of the EPA's Proposed Decision on the CAA 
Section 176A Petition
III. Background and Legal Authority
    A. Ozone and Public Health
    B. Sections 176A and 184 of the CAA and the OTR Process
    C. Legal Standard for this Action
    D. The CAA Section 176A Petition and Related Correspondence
IV. The EPA's Proposed Decision on the CAA Section 176A Petition
    A. The CAA Good Neighbor Provisions
    B. The EPA's Interstate Transport Rulemakings under the Good 
Neighbor Provision
    C. Additional Rules that Reduce NOX and VOC Emissions
    D. Rationale for the Proposed Decision on the CAA 176A Petition
V. Judicial Review and Determinations Under Section 307(b)(1) of the 
CAA
VI. Statutory Authority

I. General Information

A. Where can I get a copy of this document and other related 
information?

    In addition to being available in the docket, an electronic copy of 
this document will be posted at https://www.epa.gov/implementation-2008-national-ambient-air-quality-standards-naaqs-ozone-state.

B. What acronyms, abbreviations and units are used in this preamble?

APA Administrative Procedures Act
CAA or Act Clean Air Act
CFR Code of Federal Regulations
CH4 Methane
D.C. Circuit United States Court of Appeals for the District of 
Columbia Circuit
EGU Electric Generating Unit
EPA U.S. Environmental Protection Agency
FIP Federal Implementation Plan
FR Federal Register
NAAQS National Ambient Air Quality Standard
NEI National Emissions Inventory
NESHAP National Emission Standard for Hazardous Air Pollutants
NOX Nitrogen Oxides
NSPS New Source Performance Standard
NSR New Source Review
OMB Office of Management and Budget
OTAG Ozone Transport Assessment Group
OTC Ozone Transport Commission
OTR Ozone Transport Region
PM Particulate Matter
RACT Reasonably Available Control Technology
SIP State Implementation Plan
SO2 Sulfur Dioxide
UMRA Unfunded Mandates Reform Act
VOC Volatile Organic Compound

II. Executive Summary of the EPA's Proposed Decision on the CAA Section 
176A Petition

    The EPA is proposing to deny a petition filed pursuant to CAA 
section 176A(a) that requests the states of Illinois, Indiana, 
Kentucky, Michigan, North Carolina, Ohio, Tennessee, West Virginia and 
Virginia \1\ (the upwind states) be added to the OTR, which was 
established pursuant to section 184 of the CAA. The petitioning states 
of Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New 
York, Pennsylvania, Rhode Island and Vermont (the petitioning states, 
downwind states, or petitioners) submitted a technical analysis 
intended to demonstrate that these nine upwind states significantly 
contribute to violations of the 2008 ozone national ambient air quality 
standard (NAAQS) in one or more of the current OTR states.
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    \1\ The parts of northern Virginia included in the Washington, 
DC Consolidated Metropolitan Statistical Area are already in the 
OTR. The petition seeks to add the remainder of the state of 
Virginia to the OTR as well.
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    Section 176A(a) of the CAA provides the Administrator with the 
authority to develop interstate transport regions for particular 
pollutants where the Administrator determines that interstate transport 
of air pollutants from one or more states contributes significantly to 
violations of air quality standards in other states. The creation of 
such an interstate transport region requires the establishment of a 
transport commission with representatives from each state that make 
recommendations for the mitigation of the interstate pollution. 
Congress created one such transport region by statute in CAA section 
184(a) in 1990 in order to address the interstate transport of ozone 
pollution, referred to as the OTR. The statute establishes certain 
minimum control requirements that apply to sources of emissions in each 
state in the OTR intended to address transported ozone pollution and 
provides the Ozone Transport Commission (OTC), comprised of 
representatives of each state in the OTR, with the authority to 
recommend

[[Page 6511]]

additional controls within the region. The downwind states' petition 
seeks to expand the OTR to include additional states and would thereby 
subject sources in those states to the requirements applicable in the 
OTR.
    The CAA provides other provisions for addressing the interstate 
transport of ozone pollution besides sections 176A and 184. In 
particular, the Act includes a specific provision addressing how the 
EPA and the states are to mitigate the specific sources of emissions 
that contribute to interstate ozone pollution transport. Section 
110(a)(2)(D)(i)(I) of the CAA, also referred to as the ``good 
neighbor'' provision, requires that states develop state implementation 
plans (SIPs) to prohibit emissions that will ``contribute significantly 
to nonattainment in, or interfere with maintenance by, any other 
state'' with respect to a NAAQS. Pursuant to this provision, states 
have the primary responsibility for reducing the interstate transport 
of pollutants, including ozone. Should the states fail to fulfill this 
responsibility, the EPA is obligated to develop federal implementation 
plans (FIPs) to ensure that appropriate emissions reductions are 
achieved and that the air quality standards downwind are attained and 
maintained. The CAA also contains a provision in section 126(b) that 
permits states and political subdivisions to petition the Administrator 
for a finding that any major source or group of stationary sources 
emits in violation of the prohibition in the good neighbor provision. 
In response to such a finding, the EPA may promulgate additional limits 
on such sources, and these limits must then be included in a state's 
good neighbor SIP pursuant to CAA section 110(a)(2)(D)(ii). This 
provision provides a means for the EPA to mediate disputes between the 
states regarding the compliance of specific sources with the 
requirements of the good neighbor provision. As described in detail 
later in this document, states and the EPA have historically used their 
authority under CAA sections 110(a)(2)(D)(i)(I) and section 126 to 
develop SIPs and FIPs that target specific sources of ozone precursor 
emissions to address interstate ozone transport across the U.S., 
including with respect to air quality concerns stemming from interstate 
transport of ozone within the OTR.
    Pursuant to these and other CAA authorities, the EPA and states 
within and outside the OTR have taken significant actions independently 
and in collaboration for many years to address ozone pollution problems 
by reducing precursor emissions (i.e., nitrogen oxides (NOX) 
and volatile organic compounds (VOC)) that contribute to the formation 
of ozone. The EPA and states have promulgated a number of rules that 
have already or are expected in the future to result in reductions in 
ozone concentrations that will help areas attain the 2008 ozone NAAQS. 
Several of these rules were developed specifically to address the 
interstate transport of ozone pollution. With respect to the 2008 ozone 
NAAQS, the EPA recently promulgated FIPs to address the requirements of 
CAA section 110(a)(2)(D)(i)(I) to specifically address interstate 
transport of ozone pollution in the eastern U.S. from power plants 
during the ozone season.\2\ Other rules reduce ozone precursor 
emissions to address other ozone pollution challenges (e.g., ozone 
attainment demonstrations) and impact the interstate transport of ozone 
pollution as a co-benefit. Further, several other state and federal air 
quality regulations reduce emissions of other air pollutants, such as 
rules targeted to reduce air toxics from industrial boilers, which 
often also result in the reduction of ozone precursors (e.g., 
NOX) and thereby reduce interstate ozone transport as a co-
pollutant benefit.
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    \2\ See 81 FR 74504, October 26, 2016, Cross-State Air Pollution 
Rule Update for the 2008 Ozone NAAQS.
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    Section 176A of the CAA provides the Administrator with discretion 
to determine whether to establish a new transport region or expand an 
existing transport region. The EPA has reviewed the request of the 
petitioners in light of the control requirements that apply to sources 
located in states now included in the OTR and that would apply to 
states if they were added and the other statutory authorities provided 
for addressing the interstate transport of ozone pollution. The EPA 
proposes to deny the CAA section 176A petition to add states to the OTR 
for the purpose of addressing the interstate ozone transport problem 
with respect to the 2008 ozone NAAQS. The EPA believes that, based on 
the reasons fully described in Section IV of this document, other CAA 
provisions (e.g., CAA sections 110 or 126) provide a better alternative 
pathway for states and the EPA to develop a targeted remedy to address 
interstate ozone transport that focuses on the precursor pollutants and 
sources most effective at addressing the nature of the downwind air 
quality problems identified by the petitioning states. The states and 
the EPA have historically and effectively reduced ozone and the 
interstate transport of ozone pollution using these CAA authorities to 
implement necessary emissions reductions. For purposes of addressing 
interstate transport of ozone with respect to the 2008 ozone NAAQS, the 
EPA believes that continuing its longstanding and effective utilization 
of the existing and expected control programs under the CAA's mandatory 
good neighbor provision embodied in CAA section 110(a)(2)(D)(i)(I) is a 
more effective means of addressing regional ozone pollution transport 
with respect the 2008 ozone NAAQS for the areas within the OTR that 
must attain the NAAQS. Thus, the EPA believes that regulation pursuant 
to these other CAA authorities together with the implementation of 
existing EPA and state rules expected to further reduce precursor 
pollutant emissions that contribute to the interstate transport of 
ozone are the more effective means for addressing the interstate ozone 
transport problem with respect to the 2008 ozone NAAQS. Accordingly, 
the EPA is proposing to deny the CAA section 176A petition filed by the 
petitioning states. This proposed denial is specific to the 2008 ozone 
NAAQS, but the EPA notes that under different circumstances the OTR 
provisions have been an effective tool for air quality management, and 
could be similarly effective in the future. The EPA requests comment on 
the proposed denial of the petition based on the EPA's preferred 
approach to addressing interstate transport with respect to the 2008 
ozone NAAQS pursuant to these other CAA authorities.

III. Background and Legal Authority

A. Ozone and Public Health

    Ground-level ozone causes a variety of negative effects on human 
health, vegetation, and ecosystems. In humans, acute and chronic 
exposure to ozone is associated with premature mortality and a number 
of morbidity effects, such as asthma exacerbation. In ecosystems, ozone 
exposure causes visible foliar injury, decreases plant growth, and 
affects ecosystem community composition. Ground-level ozone is not 
emitted directly into the air, but is a secondary air pollutant created 
by chemical reactions between NOX, carbon monoxide (CO), 
methane (CH4), and non-methane VOCs in the presence of 
sunlight. Emissions from electric generating utilities (EGUs), 
industrial facilities, motor vehicles, gasoline vapors, and chemical 
solvents are some of the major anthropogenic sources of ozone 
precursors. The potential for ground-level ozone formation increases 
during periods with warmer temperatures and stagnant air masses;

[[Page 6512]]

therefore ozone levels are generally higher during the summer 
months.\3\ Ground-level ozone concentrations and temperature are highly 
correlated in the eastern U.S. with observed ozone increases of 2-3 
parts per billion (ppb) per degree Celsius reported.\4\ Increased 
temperatures may also increase emissions of volatile man-made and 
biogenic organics and can indirectly increase anthropogenic 
NOX emissions as well (e.g., through increased electricity 
generation to power air conditioning).
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    \3\ Rasmussen, D.J. et al. (2011) Ground-level ozone-temperature 
relationship in the eastern US: A monthly climatology for evaluating 
chemistry-climate models. Atmospheric Environment 47: 142-153.
    \4\ Bloomer, B.J., J.W. Stehr, C.A. Piety, R.J. Salawitch, and 
R.R. Dickerson (2009), Observed relationships of ozone air pollution 
with temperature and emissions, Geophysical Research Letters, 36, 
L09803.
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    Precursor emissions can be transported downwind directly or, after 
transformation in the atmosphere, as ozone. Studies have established 
that ozone formation, atmospheric residence, and transport occurs on a 
regional scale (i.e., hundreds of miles) over much of the eastern U.S., 
with elevated concentrations occurring in rural as well as metropolitan 
areas. As a result of ozone transport, in any given location, ozone 
pollution levels are impacted by a combination of local emissions and 
emissions from upwind sources. The transport of ozone pollution across 
state borders compounds the difficulty for downwind states in meeting 
the health-and-welfare based NAAQS. Numerous observational studies have 
demonstrated the transport of ozone and its precursors and the impact 
of upwind emissions on high concentrations of ozone pollution.
    While substantial progress has been made in reducing ozone in many 
urban areas, regional-scale ozone transport is still an important 
component of peak ozone concentrations during the summer ozone season. 
Model assessments have looked at impacts on peak ozone concentrations 
after potential emission reduction scenarios for NOX and 
VOCs for NOX-limited and VOC-limited areas. For example, one 
study \5\ concluded that NOX emission reductions strategies 
would be effective in lowering ozone mixing ratios in urban areas and 
another study showed NOX reductions would reduce peak ozone 
concentrations in non-attainment areas in the Mid-Atlantic (i.e., a 10 
percent reduction in electric generating unit (EGU) and non-EGU 
NOX emissions would result in approximately a 6 ppb 
reduction in peak ozone concentrations in Washington, DC).\6\
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    \5\ Jiang, G.; Fast, J.D. (2004) Modeling the effects of VOC and 
NOX emission sources on ozone formation in Houston during 
the TexAQS 2000 field campaign. Atmospheric Environment 38: 5071-
5085.
    \6\ Liao, K. et al. (2013) Impacts of interstate transport of 
pollutants on high ozone events over the Mid-Atlantic U.S. 
Atmospheric Environment 84, 100-112.
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    On March 12, 2008, the EPA promulgated a revision to the NAAQS, 
lowering both the primary and secondary standards to 75 ppb.\7\ On 
October 1, 2015, the EPA strengthened the ground-level ozone NAAQS, 
based on extensive scientific evidence about ozone's effects on public 
health and welfare.\8\ This document does not address any CAA 
requirements with respect to the 2015 ozone NAAQS.
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    \7\ See National Ambient Air Quality Standards for Ozone, Final 
Rule, 73 FR 16436 (March 27, 2008).
    \8\ See National Ambient Air Quality Standards for Ozone, Final 
Rule, 80 FR 65292 (October 26, 2015).
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B. Sections 176A and 184 of the CAA and the OTR Process

    Subpart 1 of part D of title I of the CAA provides provisions 
governing general plan requirements for designated nonattainment areas. 
This subpart includes provisions providing for the development of 
transport regions to address the interstate transport of pollutants 
that contribute to NAAQS violations. In particular, section 176A(a) of 
the CAA provides that, on the EPA's own motion or by a petition from 
the Governor of any state, whenever the EPA has reason to believe that 
the interstate transport of air pollutants from one or more states 
contributes significantly to a violation of the NAAQS in one or more 
other states, the EPA may establish, by rule, a transport region for 
such pollutant that includes such states. The provision further 
provides that the EPA may add any state or portion of a state to any 
transport region whenever the Administrator has reason to believe that 
the interstate transport of air pollutants from such state 
significantly contributes to a violation of the standard in the 
transport region.
    Section 176A(b) of the CAA provides that when the EPA establishes a 
transport region, the Administrator shall establish an associated 
transport commission, comprised of (at a minimum) the following: 
Governor or designee of each state, the EPA Administrator or designee, 
the Regional EPA Administrator and an air pollution control official 
appointed by the Governor of each state. The purpose of the transport 
commission is to assess the degree of interstate transport throughout 
the transport region and assess control strategies to mitigate the 
interstate transport.
    Subpart 2 of part D of title I of the CAA provides provisions 
governing additional plan requirements for designated ozone 
nonattainment areas. Consistent with CAA section 176A found in subpart 
1, subpart 2 included specific provisions focused on the interstate 
transport of ozone. In particular, CAA section 184(a) established a 
single transport region for ozone--the OTR--comprised of the states of 
Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, 
New Jersey, New York, Pennsylvania, Rhode Island, Vermont and the 
Consolidated Metropolitan Statistical Area that includes the District 
of Columbia and certain parts of northern Virginia.
    Section 184(b) of the CAA established certain control requirements 
that each state in the OTR is required to implement within the state 
and which require certain controls on sources of NOX and 
VOCs statewide. These include the following. Section 184(b)(1)(A) of 
the CAA requires OTR states to include in their SIPs enhanced vehicle 
inspection and maintenance (I/M) programs.\9\ Section 184(b)(2) of the 
CAA requires SIPs to subject major sources of VOCs in ozone transport 
regions to the same requirements that apply to major sources in 
designated ozone nonattainment areas classified as moderate, regardless 
of whether the source is located in a nonattainment area. Thus, the 
state must adopt rules to apply the nonattainment new source review 
(NNSR) (pursuant to CAA section 173) and reasonably available control 
technology (RACT) (pursuant to CAA section 182(b)(2)) provisions for 
major VOC sources statewide. Section 184(b)(2) of the CAA further 
provides that, for purposes of implementing these requirements, a major 
stationary source shall be defined as any source that emits or has the 
potential to emit at least 50 tons per year of VOCs. Under CAA section 
184(b)(2) states must also implement Stage II vapor recovery programs, 
incremental to Onboard Refueling Vapor Recovery achievements, or 
measures that achieve comparable emissions reductions for both 
attainment and nonattainment areas.\10\ These programs are required to 
be implemented statewide in any state

[[Page 6513]]

included within the OTR, not just in areas designated as nonattainment.
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    \9\ Enhanced vehicle inspection and maintenance programs are 
required in metropolitan statistical areas in the OTR with a 1990 
Census population of 100,000 or more regardless of ozone attainment 
status.
    \10\ See 72 FR 28772, May 16, 2012, Air Quality: Widespread Use 
for Onboard Refueling Vapor Recovery and Stage II Waiver.
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    Section 182(f) of the CAA requires states to apply the same 
requirements to major stationary sources of NOX as are 
applied to major stationary sources of VOCs under subpart 2. Thus, the 
same NNSR and RACT requirements that apply to major stationary sources 
of VOC in the OTR also apply to major stationary sources of 
NOX.\11\ 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, creating potential ``NOX disbenefits.'' 
Accordingly, CAA section 182(f) provides for an exemption of the 
NOX requirements where the Administrator determines that 
such NOX reductions would not contribute to the attainment 
of the NAAQS in a particular area. Areas granted a NOX 
exemption under CAA section 182(f) may be exempt from certain 
requirements of the EPA's motor vehicle I/M regulations and from 
certain federal requirements of general and transportation 
conformity.\12\
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    \11\ See 57 FR 55622 (Nitrogen Oxides Supplement to the General 
Preamble, published November 25, 1992).
    \12\ As stated in the 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 the EPA grants an area-wide exemption 
under CAA section 182(f).
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    Additionally, under CAA section 184(c), the OTC may, based on a 
majority vote of the Governors on the Commission, recommend additional 
control measures not specified in the statute to be applied within all 
or part of the OTR if necessary to bring any areas in the OTR into 
attainment by the applicable attainment dates. If EPA approves such a 
recommendation, under CAA section 184(c)(5) the Administrator must 
declare each state's implementation plan inadequate and it must order 
the states to include the approved control measures in their revised 
plans pursuant to CAA section 110(k)(5) for the state to meet the 
requirements of CAA section 110(a)(2)(D). If a CAA section 110(k)(5) 
finding is issued, states have 1 year to revise their SIPs to include 
the approved measures.
    States included in the OTR by virtue of CAA section 184(b)(1) were 
required to submit SIPs to the EPA addressing these requirements within 
2 years of the 1990 CAA Amendments, or by November 15, 1992. Section 
184(b)(1) of the CAA further provides that if states are later added to 
the OTR pursuant to CAA section 176A(a)(1), such states must submit 
SIPs addressing these requirements within 9 months after inclusion in 
the OTR.

C. Legal Standard for This Action

    Section 176A(a)(1) of the CAA states that the Administrator may add 
a state to a transport region if the Administrator has reason to 
believe that emissions from the state significantly contribute to a 
violation of the NAAQS within the transport region. For the reasons 
discussed in this section, the use of the discretionary term ``may'' in 
CAA section 176A(a) means that the Administrator may exercise 
reasonable discretion in implementing the requirements of the CAA with 
respect to interstate pollution by determining whether or not to 
approve or deny a CAA section 176A petition.
    The Administrator's discretion pursuant to CAA section 176A(a) has 
been affirmed by the U.S. District Court for the District of Columbia 
Circuit (D.C. Circuit). In Michigan v. EPA, plaintiffs challenged 
whether the EPA may exercise its authority pursuant to CAA sections 
110(k)(5) and 110(a)(2)(D) of the statute to address interstate 
transport without first forming a transport commission pursuant to CAA 
section 176A(b). 213 F.3d 663, 672 (2000). The D.C. Circuit held that 
the agency shall only establish a transport commission ``if the agency 
exercises its discretion to create a transport region pursuant to 
section 176A(a).'' Id. The court explained that ``EPA can address 
interstate transport apart from convening a 176A/184 transport 
commission as subsection (a) provides that EPA `may' establish a 
transport region . . . .'' Id. Thus, the court held that the statute 
clearly provides that the discretion to create a transport region rests 
with the Administrator. So, too, does the discretion to add states to 
or remove states from a transport commission.
    Several courts have held that the use of similarly non-mandatory 
language such as that found in CAA section 176A confers discretion on 
the agency to grant or deny a petition so long as it is supported by a 
``reasonable explanation.'' For example, in Massachusetts v. 
Environmental Protection Agency, the Supreme Court was considering 
whether the EPA's denial of a petition to regulate greenhouse gases 
under CAA section 202(a)(1) was reasonable. 549 U.S. 497 (2007). 
Section 202(a)(1) of the CAA states that the Administrator ``shall by 
regulation prescribe (and from time to time revise) . . . standards 
applicable to the emission of any air pollutant from any class or 
classes of new motor vehicles or new motor vehicle engines, which in 
his judgment cause, or contribute to, air pollution which may 
reasonably be anticipated to endanger public health or welfare.'' The 
EPA denied the petition, reasoning that the Act does not authorize the 
agency to issue mandatory regulations to address global climate change. 
Id. at 500. The Court concluded that the EPA has statutory authority to 
regulate emissions of greenhouse gases, and that the phrases ``from 
time to time'' and ``in his judgment'' conferred discretion on the 
Administrator to determine whether to promulgate an endangerment 
finding. Thus, ``[u]nder the clear terms of the Clean Air Act, EPA can 
avoid taking further action . . . if it provides some reasonable 
explanation as to why it cannot or will not exercise its discretion.'' 
Id. at 533. The Supreme Court confirmed that the review of an agency's 
denial of a petition for rulemaking is very narrow: ``Refusals to 
promulgate rules are . . . susceptible to judicial review, though such 
review is extremely limited and highly deferential.'' Id. at 527-28 
(quotations omitted). Further, the court explained that the EPA's 
reason should conform to the authorizing statute, and that the agency 
could avoid taking further regulatory action if it provides some 
reasonable explanation as to why it cannot or will not exercise its 
discretion. Id. at 533 (citations omitted).
    Consistent with Massachusetts, the D.C. Circuit has held that 
agencies have the discretion to determine how to best allocate 
resources in order to prioritize regulatory actions in a way that best 
achieve the objectives of the authorizing statute. In Defenders of 
Wildlife v. Gutierrez, the court rejected a challenge to the National 
Marine Fisheries Service's (NMFS) denial of a petition for emergency 
rulemaking to impose speed restrictions to protect the right whale from 
boating traffic pursuant to section 553(e) of the Endangered Species 
Act, which requires agencies to ``give an interested person the right 
to petition for the issuance, amendment, or repeal of a rule.'' 532 
F.3d 913 (D.C. Cir. 2008). The NMFS denied the petition on the grounds 
that imposing such restrictions would divert resources from, and delay 
development of, a more comprehensive strategy for protecting the whale 
population. Id. at 916. The court determined that NMFS's explanation 
for the denial was a reasonable decision to focus its resources on a 
comprehensive strategy, which in light of the information before the 
NMFS at the time, was reasoned and adequately supported by the record. 
Id.

[[Page 6514]]

    Similarly, in WildEarth Guardians v. EPA, the court reviewed the 
EPA's denial of a petition to list coal mines for regulation under CAA 
section 111(b)(1)(A). 751 F.3d 651 (D.C. Cir. 2014). Section 
110(b)(1)(A) of the CAA provides that, as a means of developing 
standards of performance for new stationary sources, the EPA shall, by 
a date certain publish ``(and from time to time thereafter shall 
revise) a list of categories of stationary sources.'' (emphasis added) 
The provision provides that the Administrator ``shall include a 
category of sources in such list if in his judgment it causes, or 
contributes significantly to, air pollution which may reasonably be 
anticipated to endanger public health and welfare.'' The EPA denied the 
petition, explaining that it must prioritize its actions in light of 
limited resources and ongoing budget uncertainties, and that denial of 
the petition was not a determination as to whether coal mines should be 
regulated as a source of air pollutants. 751 F.3d at 650. The EPA also 
noted as part of its denial that it might in the future initiate a 
rulemaking to do so. The D.C. Circuit held that the language in CAA 
section 111(b)(1)(A)--``from time to time'' and ``in his judgment''--
means that the Administrator may exercise reasonable discretion in 
determining when to add new sources to the list of regulated 
pollutants, and that such language afforded agency officials discretion 
to prioritize sources that are the most significant threats to public 
health to ensure effective administration of the agency's regulatory 
agenda. Id. at 651.
    In each of these cases previously discussed, the acting agency has 
been entitled to broad discretion to act on a pending petition so long 
as the agency provided a reasoned explanation. Notably, as each of 
these decisions focused on the case-specific circumstances relied upon 
by the acting agency to deny the pending petition, the courts did not 
speak to whether the agency might reach a different conclusion under 
different circumstances. Like the statutory provisions evaluated by the 
courts in these cases, the term ``may'' in CAA section 176A(a) means 
that the Administrator is permitted to exercise reasonable discretion 
in determining when to add new states to a transport region. While the 
Administrator must adequately explain the facts and policy concerns she 
relied on in acting on the petition and conform such reasons with the 
authorizing statute, review of such a decision is highly deferential. 
Thus, the agency is entitled to broad discretion when determining 
whether to grant or deny such a petition.

D. The CAA Section 176A Petition and Related Correspondence

    On December 9, 2013, the states of Connecticut, Delaware, Maryland, 
Massachusetts, New Hampshire, New York, Rhode Island and Vermont 
submitted a petition under CAA section 176A requesting that the EPA add 
to the OTR the states of Illinois, Indiana, Kentucky, Michigan, North 
Carolina, Ohio, Tennessee, West Virginia and the portion of Virginia 
currently not within the OTR. On December 17, 2013, the petition was 
amended to add the state of Pennsylvania as an additional state 
petitioner.
    The petitioning states submitted a technical analysis which the 
petitioning states contend demonstrates that the nine named upwind 
states significantly contribute to violations of the 2008 ozone NAAQS 
in the OTR. The petitioning states acknowledge and include data used to 
support rulemakings promulgated by the EPA that addressed interstate 
transport with respect to both the 2008 ozone NAAQS and prior ozone 
NAAQS in order to further support their request. Moreover, the 
petitioners identified those areas that are designated nonattainment 
with respect to the 2008 ozone NAAQS within and outside the OTR and 
conducted a linear extrapolation to predict that certain areas will 
continue to be in nonattainment or will have difficulty maintaining 
attainment of the NAAQS after the EPA's 2008 ozone NAAQS final area 
designations in 2012. The petitioning states' 2018 modeling showed 
that, with on-the-way OTR measures, areas within the OTR and non-OTR 
would continue to have problems attaining the 2008 ozone NAAQS. Lastly, 
their 2020 modeling showed that with a 58 percent NOX and 3 
percent VOC emissions reduction over the eastern U.S., there would only 
be one area in New Jersey that could have trouble maintaining the 
NAAQS.
    The petitioners further note that the OTR states have adopted and 
implemented numerous and increasingly stringent controls on sources of 
VOCs and NOX that may not currently be required for sources 
in the upwind states. Petitioners contend that expansion of the OTR to 
include these upwind states will help the petitioning states attain the 
2008 ozone NAAQS. The petitioning states include two case studies that 
identify the types of measures adopted throughout the current OTR 
including mobile source and stationary source control measures that 
have been enacted to minimize emissions of NOX and VOCs. The 
petitioners contend that the expansion of the OTR is warranted so that 
the downwind states and the upwind states can work together to address 
interstate ozone transport for the 2008 ozone NAAQS. Also, the 
petitioners assert that without immediate expansion of the OTR, 
attainment of the 2008 ozone NAAQS in many areas in the U.S. will 
remain elusive.
    At the time the petition was submitted, the EPA's most recent 
effort to address the interstate transport of ozone pollution was 
subject to litigation in the D.C. Circuit. As discussed in more detail 
later in this document, the EPA issued the Cross-State Air Pollution 
Rule (CSAPR) pursuant to section 110(a)(2)(D)(i)(I) of the CAA in order 
to address interstate transport with respect to the 1997 ozone NAAQS as 
well as the 1997 and 2006 fine particulate matter (PM2.5) 
NAAQS. 76 FR 48208 (August 8, 2011). On August 21, 2012, the D.C. 
Circuit issued a decision in EME Homer City Generation, L.P. v. EPA, 
696 F.3d 7 (D.C. Cir. 2012), vacating CSAPR based on several holdings 
that would have limited the EPA's authority pursuant to section 
110(a)(2)(D)(i)(I). The petitioners subsequently submitted the section 
176A petition. Thereafter, on April 29, 2014, the Supreme Court issued 
a decision reversing the D.C. Circuit's decision and upholding the 
EPA's interpretation of its authority pursuant to CAA section 110. EPA 
v. EME Homer City Generation, L.P., 134 S. Ct. 1584 (2014).
    Since the petition was submitted, the EPA has received 
correspondence from both the upwind states and the petitioning states 
regarding the EPA's pending action on the petition. On February 14, 
2014, the EPA received a letter from the environmental commissioners 
and directors representing the states of Illinois, Ohio, Indiana, 
Tennessee, Kentucky, Virginia, Michigan, West Virginia and North 
Carolina (in collaboration with LADCO) disagreeing with the basis for 
the petition and requesting that the EPA deny the petition. On May 29, 
2015, the EPA received a letter from the Midwest Ozone Group urging 
that the EPA consider recent air quality, on-the-books measures between 
now and 2018 and other related information prior to any action on the 
petition. On July 7, 2015, the EPA received a letter from state 
representatives from the states of Ohio, Kentucky, Indiana, West 
Virginia, North Carolina and Michigan communicating the progress of the 
voluntary dialogue called the State Collaborative on Ozone Transport 
(SCOOT) that according to the letter, resulted in commitments, from

[[Page 6515]]

utilities in the upwind states to operate NOX controls 
during the summer of 2015. The upwind states believed that the requests 
from some Northeast states to sign a memorandum of understanding to 
require additional emission control and reporting requirements from 
facilities and place such requirements into SIPs to be unnecessary and 
requested that the CAA section 176A petition be withdrawn by the 
petitioning states or denied by the EPA given the forecasted air 
quality improvements and declining ozone trends. On October 30, 2015, 
the EPA received a letter from environmental commissioners (or their 
designated representatives) from the petitioning states that provided 
an update on the SCOOT process and responded to the July 7, 2015, 
letter expressing a need for federally enforceable commitments from 
states to operate exiting controls.
    On April 6, 2016, the EPA received a letter from the petitioning 
states requesting immediate action to grant the CAA section 176A 
petition. The letter acknowledged the EPA's recent proposal to update 
the CSAPR to address interstate transport for the 2008 ozone NAAQS and 
urged the EPA to grant the petition because the proposed rulemaking 
would only partially address ozone transport problems in the eastern 
U.S. Further, the letter noted that granting the petition will also 
facilitate efforts to attain the 2015 ozone NAAQS, as well as future 
updates to the ozone NAAQS. On May 16, 2016, the EPA received a letter 
from the upwind states of Ohio, Kentucky, Indiana, West Virginia and 
Michigan requesting that the EPA deny the petition, claiming that the 
technical information used to support the petition was not comparable 
to current air quality and noting the EPA's proposed transport rule to 
address the 2008 ozone NAAQS. These communications can be found in the 
docket for this action.

IV. The EPA's Proposed Decision on the CAA Section 176A Petition

    This section describes the basis for the EPA's proposed denial of 
this CAA section 176A petition. Section IV.A of this document describes 
the alternative authorities provided by the CAA for addressing the 
interstate transport of ozone pollution and the flexibilities those 
provisions provide. Section IV.B of this document describes EPA's 
historical use of these authorities to address the interstate transport 
of ozone pollution and the advantages of those rulemakings for 
addressing current ozone nonattainment problems. Section IV.C of this 
document describes other measures that have achieved, and will continue 
to achieve, significant reductions in emissions of NOX and 
VOCs resulting in lower levels of transported ozone pollution that 
impact downwind attainment and maintenance of the 2008 ozone NAAQS. 
Finally, Section IV.D of this document describes the EPA's rationale, 
based on these considerations, for proposing to deny this CAA section 
176A petition.
    As explained more fully later, the EPA believes an expansion of the 
OTR is unnecessary at this time and would not be the most efficient way 
to address the remaining interstate transport issues for the 2008 ozone 
NAAQS in states currently included in the OTR. Additional local and 
regional ozone precursor emissions reductions are expected in the 
coming years from already on-the-books rules (see Sections IV. B and C 
of this document for more details) and as described elsewhere in this 
document, the EPA has the authority through other CAA provisions 
(including CAA sections 110 and 126) to develop a more effective remedy 
to address the particular pollutants and sources for this air quality 
situation.

A. The CAA Good Neighbor Provisions

    The CAA provision that states and the EPA have used most for 
addressing interstate transport is section 110(a)(2)(D)(i)(I), often 
referred to as the ``good neighbor'' or ``interstate transport'' 
provision, requires states to prohibit certain emissions from in-state 
sources if such emissions impact the air quality in downwind states. 
Specifically, in keeping with the CAA's structure of shared state and 
federal regulatory responsibility, CAA section 110(a)(2)(D)(i)(I) 
requires all states, within 3 years of promulgation of a new or revised 
NAAQS, to submit SIPs that contain adequate provisions prohibiting any 
source or other type of emissions activity within the state from 
emitting any air pollutant in amounts which will contribute 
significantly to nonattainment in, or interfere with maintenance by, 
any other state with respect to any NAAQS. Thus, each state is required 
to submit a SIP that demonstrates the state is adequately controlling 
sources of emissions that would impact downwind states' air quality 
relative to the NAAQS in violation of the good neighbor provision.
    Once a state submits a good neighbor SIP, the EPA must evaluate the 
SIP to determine whether it meets the statutory criteria of the good 
neighbor provision, and then approve or disapprove, in whole or in 
part, the state's submission in accordance with CAA section 110(k)(3). 
In the event that a state does not submit a required SIP addressing the 
good neighbor provision, the EPA publishes in the Federal Register a 
``finding of failure to submit'' that a state has failed to make the 
required SIP submission. If the EPA disapproves a state's SIP 
submission or if the EPA issues a finding of failure to submit, then 
the action triggers the EPA's obligations under section 110(c) of the 
CAA, to promulgate a FIP within 2 years, unless the state corrects the 
deficiency, and the EPA approves the plan or plan revision before the 
EPA promulgates a FIP. Thus, in the event that a state does not address 
the good neighbor provision requirements in a SIP submission, the 
statute provides that the EPA must address the requirements in the 
state's stead.
    Section 110(k)(5) of the CAA also provides a means for the EPA to 
reopen previously approved SIPs, including good neighbor SIPs, if the 
EPA determines that an approved SIP is substantially inadequate to 
attain or maintain the NAAQS, to adequately mitigate interstate 
pollutant transport, or to otherwise comply with requirements of the 
CAA. The EPA can use its authority under CAA section 110(k)(5) to call 
for re-submission of the SIP to correct the inadequacies under CAA 
110(a)(2)(D)(i)(I), and if the state fails to make the required 
submission, the EPA can promulgate a FIP under CAA section 110(c) to 
address the inadequacies.
    Finally, section 126 of the CAA provides states with an additional 
opportunity to bring to the EPA's attention specific instances where a 
source or a group of sources in a specific state may be emitting in 
excess of what the good neighbor provision would allow. Section 126(b) 
of the CAA provides that any state or political subdivision may 
petition the Administrator of the EPA to find that any major source or 
group of stationary sources in upwind states emits or would emit any 
air pollutant in violation of the prohibition of CAA section 
110(a)(2)(D)(i).\13\ Petitions submitted pursuant to this section are 
referred to as CAA section 126 petitions. Section 126(c) of the CAA 
explains the impact of such a finding and establishes the conditions 
under which continued operation of a source subject to such a finding 
may be permitted. Specifically,

[[Page 6516]]

CAA section 126(c) provides that it would be a violation of section 126 
of the Act and of the applicable SIP: (1) For any major proposed new or 
modified source subject to a CAA section 126 finding to be constructed 
or operate in violation of the good neighbor prohibition of CAA section 
110(a)(2)(D)(i); or (2) for any major existing source for which such a 
finding has been made to operate more than 3 months after the date of 
the finding. The statute, however, also gives the Administrator 
discretion to permit the continued operation of a source beyond 3 
months if the source complies with emission limitations and compliance 
schedules provided by the EPA to bring about compliance with the 
requirements contained in CAA sections 110(a)(2)(D)(i) and 126 as 
expeditiously as practicable but no later than 3 years from the date of 
the finding. Where the EPA provides such limitations and compliance 
schedules, it promulgates these as a revision to the upwind state's 
good neighbor SIP, and CAA section 110(a)(2)(D)(ii) further requires 
that good neighbor SIPs ensure compliance with these limitations and 
compliance schedules.\14\
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    \13\ The text of CAA section 126 codified in the U.S. Code cross 
references CAA section 110(a)(2)(D)(ii) instead of CAA section 
110(a)(2)(D)(i). The courts have confirmed that this is a 
scrivener's error and the correct cross reference is to CAA section 
110(a)(2)(D)(i), See Appalachian Power Co. v. EPA, 249 F.3d 1032, 
1040-44 (D.C. Cir. 2001).
    \14\ The EPA has received, but not yet acted upon, several CAA 
section 126 petitions from a number of the petitioning states 
regarding the contribution of specific EGUs to interstate ozone 
transport with respect to the 2008 and 2015 ozone NAAQS. Petitions 
have been submitted by Delaware, Maryland, and Connecticut. The list 
of EGUs identified in one or more of these petitions includes EGUs 
operating in Pennsylvania, West Virginia, Ohio, Kentucky, and 
Indiana.
---------------------------------------------------------------------------

    The flexibility provided by these statutory provisions is different 
from that provided by the requirements imposed upon states in the OTR. 
With limited exceptions described previously, states in the OTR must 
impose a uniform set of requirements on sources within each state. 
While the OTR states may impose additional requirements with the 
consent of the OTC and the EPA, the states generally must comply with 
the minimum requirements imposed by the statute. The good neighbor 
provision, by contrast, provides both the states and the EPA with the 
flexibility to develop a remedy targeted at a particular air quality 
problem, including the flexibility to tailor the remedy to address the 
particular precursor pollutants and sources that would most effectively 
address the downwind air quality problem. As described later, the EPA 
has previously promulgated four interstate transport rulemakings 
pursuant to these authorities in order to quantify the specific 
emission reductions required in certain eastern states in order to 
comply with the requirements of CAA section 110(a)(2)(D)(i)(I) with 
respect to downwind nonattainment and maintenance concerns with respect 
to the NAAQS for ozone and PM2.5. In Section IV.B. of this 
document, the EPA describes the importance of these transport rules as 
they relate to regional ozone pollution transport.

B. The EPA's Interstate Transport Rulemakings Under the Good Neighbor 
Provision

    In order to address the regional transport of ozone pursuant to the 
CAA's good neighbor provision under section 110(a)(2)(D)(i)(I), the EPA 
has promulgated four regional interstate transport rules focusing on 
the reduction of NOX emissions, as the primary meaningful 
precursor to address regional ozone, from certain sources located in 
states in the eastern half of the U.S.\15\ \16\ States and the EPA have 
implemented the emission reductions required by these rulemakings 
pursuant to the various authorities for implementing the good neighbor 
provision, including CAA sections 110(a)(1), 110(c), 110(k)(5) and 126.
---------------------------------------------------------------------------

    \15\ For purposes of these rulemakings, the western U.S. (or the 
West) consists of the 11 western contiguous states of Arizona, 
California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, 
Utah, Washington and Wyoming.
    \16\ Two of these rulemakings also addressed the reduction of 
NOX and SO2 emissions for the purposes of 
addressing the interstate transport of particulate matter pollution 
pursuant to the good neighbor provision.
---------------------------------------------------------------------------

    In each of these rulemakings, the EPA identified those sources and 
pollutants that were most effective in addressing the particular air 
quality problem identified through the course of the EPA's analysis. 
This allowed the EPA to craft targeted remedies that provided efficient 
and effective means of addressing the particular air quality problem. 
In each of the regional transport rules, the EPA analysis has continued 
to demonstrate that NOX is the ozone precursor that is most 
effective to reduce when addressing regional transport of ozone in the 
eastern U.S. The EPA has also focused each rule on those sources that 
can most cost-effectively reduce emissions of NOX, such as 
EGUs and, in one rule, certain large non-EGUs. These rulemakings 
demonstrate that the EPA has used and is continuing to use its 
authority under CAA section 110(a)(2)(D)(i)(I) to target those sources 
and precursors that most efficiently address the particular interstate 
ozone transport problem. Accordingly, the EPA believes that it is 
unnecessary to include additional states, and sources within those 
states, in OTR in order to address the current nonattainment situation 
for the 2008 ozone NAAQS in the petitioning states. Prior to the EPA's 
promulgation of some of those federal transport rules, the EPA worked 
with states and provided guidance to help states submit approvable good 
neighbor SIPs to address the CAA good neighbor provision. States have 
the first responsibility to address these CAA requirements pursuant to 
section 110(a)(1), and the EPA issued those transport rules only after 
states had the opportunity to address their CAA interstate transport 
obligation. While some states have state-developed and EPA-approved 
good neighbor SIPs, other states are covered by EPA-issued FIPs.
1. NOX SIP Call
    Through a 2-year effort (starting in 1995 and ending in 1997) known 
as the Ozone Transport Assessment Group (OTAG), the EPA worked in 
partnership with the 37 eastern-most states and the District of 
Columbia, industry representatives, and environmental groups to address 
the interstate transport of ozone pollution. OTAG identified and 
evaluated flexible and cost-effective strategies for reducing long-
range transport of ozone and ozone precursors. Based on the OTAG 
process, the EPA engaged in a rulemaking to promulgate a final action 
commonly referred to as the NOX SIP Call in order to address 
the requirements of the good neighbor provision (CAA section 
110(a)(2)(D)(i)(I)) with respect to the 1979 1-hour ozone NAAQS and the 
1997 8-hour ozone NAAQS. 63 FR 57356 (October 27, 1998). The rule 
required 22 eastern states and the District of Columbia to amend their 
SIPs and limit NOX emissions that contribute to ozone 
nonattainment. The rule set a NOX ozone season emission 
budget for each covered state, essentially a cap on all ozone season 
NOX emissions in the state. Covered states were given the 
option to participate in a regional allowance trading program, known as 
the NOX Budget Trading Program (NBP) in order to achieve 
most of the necessary emissions reductions.
    Through the OTAG process, the states concluded that widespread 
NOX reductions were necessary to enable areas to attain and 
maintain the ozone NAAQS.\17\ The OTAG's recommendations identified 
control

[[Page 6517]]

measures for states to achieve additional reductions in emissions of 
NOX but did not identify such measures for VOC, beyond the 
EPA's promulgation of national VOC measures, at that time. The OTAG 
Regional and Urban Scale Modeling and Air Quality Analysis Work Groups 
reached the following relevant conclusions (with which the EPA agreed): 
Regional NOX emissions reductions are effective in producing 
ozone benefits; the more NOX emissions reduced, the greater 
the benefit to air quality; and VOC controls are effective in reducing 
ozone locally and are most advantageous to urban nonattainment areas. 
The EPA concluded in its rulemaking that, ``a regional strategy 
focusing on NOX reductions across a broad portion of the 
region will help mitigate the ozone problem in many areas of the East 
.'' 63 FR 57381. The EPA did not propose any new SIP requirements for 
VOC reductions for the purpose of reducing the interstate transport of 
ozone, however, the agency suggested that states may consider 
additional reductions in VOC emissions as they develop local attainment 
plans.
---------------------------------------------------------------------------

    \17\ See 62 FR 60320, November 7, 1997, Notice of proposed 
rulemaking, Finding of Significant Contribution and Rulemaking for 
Certain States in the Ozone Transport Assessment Group Region for 
Purposes of Reducing Regional Transport of Ozone.
---------------------------------------------------------------------------

    In order to quantify necessary NOX emission reductions, 
the EPA developed statewide NOX emissions budgets based on 
recommendations from OTAG on how to cost-effectively reduce emissions 
from utilities and other sources of NOX. Thus, the EPA 
established NOX emission budgets based on the conclusion 
that EGUs and large non-EGU point sources could cost-effectively 
achieve emissions reductions by the implementation of controls costing 
$2,000 per ton of NOX emissions reduced, including controls 
such as selective catalytic reduction (SCR) and selective non-catalytic 
reduction (SNCR) that could be required on a number of units in the 
OTAG region. Although the NOX SIP Call did not specify which 
sources must reduce NOX, consistent with OTAG's 
recommendations, the EPA encouraged states to consider controls on EGUs 
and large non-EGU point sources under an allowance trading program as a 
cost effective strategy for complying with the NOX emissions 
budgets.
    At the time the NOX SIP Call was finalized, the EPA had 
already approved good neighbor SIPs for many states with respect to the 
1-hour ozone standard. Accordingly, the EPA initiated a SIP call 
pursuant to CAA section 110(k)(5) requiring states covered by the rule 
to amend their SIPs in order to limit NOX emissions that 
significantly contribute to ozone nonattainment in other states 
consistent with the budgets finalized in the rule.
    In parallel with issuing the SIP call, the EPA reviewed petitions 
submitted pursuant to CAA section 126(b) by eight states requesting 
that the EPA find that stationary sources in upwind states contribute 
significantly to ozone nonattainment in the petitioning states. Because 
the section 126 petitions raised many of the same issues as those being 
addressed in NOX SIP call, the EPA coordinated its response 
to the CAA section 126 petitions with the NOX SIP Call 
rulemaking. The EPA issued findings that NOX emissions in 
twelve states and the District of Columbia contribute significantly to 
nonattainment of the 1-hour ozone NAAQS in three downwind states, but 
the EPA determined that it was appropriate to postpone CAA section 126 
findings pending the resolution of the NOX SIP call process. 
64 FR 28250 (May 25, 1999). Accordingly, the EPA issued a rule 
providing that the findings would automatically be deemed made with 
regard to sources from a given state should that state fail to submit a 
SIP revision as required by the NOX SIP Call. The rulemaking 
further established the NBP as the remedy that would apply pursuant to 
CAA section 126(c) for any state subject to such a finding.
    The D.C. Circuit subsequently issued two orders affecting 
implementation of the NOX SIP Call: (1) An order remanding 
the 1997 8-hour ozone standard to the EPA, American Trucking Ass'ns v. 
EPA, 175 F.3d 1027, reh'g granted in part and denied in part, 195 F.3d 
4 (D.C. Cir.1999), rev'd in part sub nom. Whitman v. American Trucking 
Ass'ns, 531 U.S. 457, 121 S.Ct. 903 (2001), and (2) an order staying 
the NOX SIP Call deadline pending further litigation, 
Michigan v. EPA, No. 98-1497 (D.C. Cir. May 25, 1999) (order granting 
stay in part). In response to these court decisions, the EPA took two 
actions. First, the EPA indefinitely stayed the technical 
determinations of the prior section 126 action as they applied to the 
8-hour ozone NAAQS, pending further developments in the litigation. 65 
FR 2674, 2685 (January 18, 2000). Second, with respect to the 1-hour 
standard, the EPA made the requested findings of significant 
contributions, granting the relevant portions of the section 126 
petitions. Id. at 2684-85. The EPA further imposed the NBP on affected 
sources as the remedy pursuant to section 126(c). Id. at 2686.
    Ultimately, the NOX SIP Call was largely upheld by the 
D.C. Circuit in Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000), cert. 
denied, 532 U.S. 904 (2001).\18\ States chose to use the NBP to achieve 
the majority of the NOX reductions required by the 
NOX SIP Call. Subsequent rules have required additional 
reductions from certain sources regulated by the NOX SIP 
Call, but the rules have not replaced the NOX SIP Call 
reduction requirements and the rule remains in effect.
---------------------------------------------------------------------------

    \18\ The EPA's January 18, 2000, action on the CAA section 126 
petitions was also challenged and upheld by the D.C. Circuit in 
Appalachian Power Company v. EPA, 249 F.3d 1032 (2001).
---------------------------------------------------------------------------

2. Clean Air Interstate Rule (CAIR)
    The CAIR was published in May 2005 and addressed both the 1997 
PM2.5 and the 1997 ozone standards under the good neighbor 
provision. 70 FR 25162 (May 12, 2005). CAIR required SIP revisions in 
28 eastern states and the District of Columbia to ensure that certain 
emissions of sulfur dioxide (SO2) and/or NOX--
important precursors of regionally transported PM2.5 
(SO2 and NOX) and ozone (NOX)--were 
prohibited.
    The rule set statewide emission budgets for large EGUs that reduced 
emissions of annual SO2 and annual NOX 
(particulate matter precursors) and summertime NOX (ozone 
precursor). As in the NOX SIP Call, the EPA identified 
reductions in NOX emissions as the most efficient and 
effective way to achieve the greatest reduction of interstate ozone 
pollution. Id. at 25185-8, 25195. The EPA also determined that 
emissions reductions from EGUs were the most cost-effective and 
efficient means of achieving necessary NOX emissions 
reductions. 70 FR 25173. As in the NOX SIP Call, affected 
states were given the option to participate in a regional allowance 
trading program to satisfy their SIP obligations.
    When the EPA promulgated the final CAIR, the EPA also issued a 
national rule finding that certain states had failed to submit SIPs to 
address the requirements of CAA section 110(a)(2)(D)(i) with respect to 
the 1997 PM2.5 and the 1997 ozone NAAQS by the CAA deadline 
for those standards of July 2000. 70 FR 21147. The findings of failure 
to submit triggered a 2-year clock for the EPA to issue FIPs to address 
the good neighbor provision with respect to those standards, and the 
EPA subsequently promulgated FIPs to ensure that the emission 
reductions required by CAIR would be achieved on schedule. 71 FR 25328 
(April 28, 2006). Upon review, the D.C. Circuit determined that CAIR 
was ``fundamentally flawed,'' and the rule was remanded to the EPA to 
be replaced ``from the ground up.'' North Carolina v.

[[Page 6518]]

EPA, 531 F.3d 896, 929 (D.C. Cir. 2008), modified on reh'g, 550 F.3d 
1176.
3. CSAPR
    In response to the court's remand of CAIR, on July 6, 2011, the EPA 
promulgated CSAPR, which requires certain states to significantly 
improve air quality by reducing power plant emissions that contribute 
to ozone and/or fine particle pollution in other states. CSAPR requires 
sources in a total of 28 states to reduce annual SO2 
emissions, annual NOX emissions and/or ozone season 
NOX emissions to assist in attaining the 1997 ozone and 
PM2.5 and 2006 PM2.5 NAAQS. 76 FR 48208. The EPA 
found that each CSAPR state had failed to submit a complete SIP or the 
EPA disapproved a submitted SIP for the relevant NAAQS. To accomplish 
implementation aligned with the applicable NAAQS attainment deadlines, 
the EPA promulgated FIPs for each affected state which require affected 
sources to participate in the regional allowance trading program to 
achieve the necessary emission reductions. These states have the option 
of replacing each FIP with a SIP that could achieve the same emissions 
reductions in other ways.
    CSAPR set emissions budgets for certain states according to the 
applicable NAAQS--annual NOX and annual SO2 
budgets for PM2.5, and ozone season NOX budgets 
for ozone--to eliminate a state's significant contribution or 
interference with maintenance of a NAAQS in other states. With respect 
to the ozone NAAQS, the EPA determined that NOX emissions 
had the most meaningful interstate impacts based on air quality 
modeling that examined upwind state emissions of all ozone precursors 
(including VOCs and NOX). 75 FR 45230 (August 2, 2010) and 
76 FR 48222. Moreover, the EPA noted that the other recent assessments 
of ozone, for example those conducted for the Regulatory Impact 
Analysis for the ozone standards in 2008, continue to show the 
importance of NOX emissions on ozone transport. 75 FR 45236. 
Accordingly, the EPA quantified NOX emissions budgets for 
each affected state by quantifying the emissions reductions achievable 
by applying cost-effective controls to EGUs. 76 FR 48256. The EPA 
determined that controls at other sources were generally not available 
at similar cost levels.
    The timing of CSAPR's implementation was affected by a number of 
court actions. CSAPR was the subject to nearly four years of litigation 
in both the D.C. Circuit and the Supreme Court. CSAPR was generally 
upheld by the courts, but for the remand of certain state budgets, and 
implementation of the trading programs began in 2015. See EPA v. EME 
Homer City Generation, L.P., 134 S. Ct. 1584 (2014); EME Homer City 
Generation, L.P. v. EPA, 795 F.3d 118 (D.C. Cir. 2015).
4. The CSAPR Update To Address the 2008 Ozone NAAQS
    On October 26, 2016, the EPA published an update to CSAPR intended 
to respond to the D.C. Circuit's remand of certain NOX ozone 
season budgets from the original CSAPR and to address the good neighbor 
provision with respect to the 2008 ozone NAAQS. 81 FR 74504 (CSAPR 
Update). The CSAPR Update requires 22 states to reduce ozone season 
NOX emissions that significantly contribute to nonattainment 
or interfere with maintenance of the 2008 ozone NAAQS in certain 
downwind states. The EPA found that each CSAPR state had failed to 
submit a complete SIP or the EPA disapproved a submitted SIP for the 
2008 ozone NAAQS. To accomplish implementation aligned with the 
applicable attainment deadline for the 2008 ozone NAAQS, the EPA 
promulgated FIPs for each of the 22 states covered by CSAPR Update 
which require affected sources to participate in the regional allowance 
trading program to achieve the necessary emission reductions beginning 
with the 2017 ozone season.
    The CSAPR Update analysis found that emissions from eight of the 
nine states named in the section 176A petition, in addition to a number 
of other states, were linked to downwind projected nonattainment and/or 
maintenance receptors, in the eastern U.S., in 2017 with respect to the 
2008 ozone NAAQS. 81 FR 74506, 74538-39. For one state named in the CAA 
section 176A petition, North Carolina, the EPA determined in the CSAPR 
Update that the state was not linked to any downwind receptors and, 
therefore, will not significantly contribute to nonattainment or 
interfere with maintenance of the 2008 ozone NAAQS in any other state 
pursuant to the good neighbor provision. 81 FR 74506, 74537-38.
    For those states linked to downwind air quality problems, the EPA 
evaluated timely and cost-effective emissions reductions achievable in 
each state in order to quantify the amount of emissions constituting 
each state's significant contribution to nonattainment and interference 
with maintenance of the standard pursuant to the good neighbor 
provision. The EPA focused its analysis on: (1) Emissions reductions 
achievable by 2017 in order to assist downwind states with meeting the 
applicable attainment deadline for the 2008 ozone NAAQS (81 FR 74521), 
(2) reductions in only NOX emissions, consistent with past 
ozone transport rules (81 FR 74514), and (3) achievable, cost effective 
NOX emissions reductions from EGUs. The EPA, therefore, 
calculated emissions budgets for each affected state based on the cost-
effective NOX emissions reductions achievable from EGUs by 
the 2017 ozone season.
    The EPA concluded that the emissions reductions achieved by 
implementation of the budgets constitute a portion of most affected 
states' significant contribution to nonattainment or interference with 
maintenance of the 2008 ozone NAAQS at these downwind receptors. 81 FR 
74508, 74522.\19\ However, because downwind air quality problems were 
projected to remain after implementation of the quantified emissions 
reductions, the EPA could not determine that it had fully quantified 
the affected states' emissions reduction obligations pursuant to the 
good neighbor provision to the extent upwind states remain linked to 
the downwind receptors and further emission reductions from EGUs and 
non-EGUs could be available. In order to determine the level of 
NOX control stringency necessary to quantify those emissions 
reductions that fully constitute each state's significant contribution 
to downwind nonattainment or interference with maintenance, the EPA 
explained in promulgating the final CSAPR Update that it must evaluate 
further emission reductions from EGU and non-EGU strategies that can be 
implemented on longer timeframes. The CSAPR Update represents a 
significant first step by the EPA to quantify states' emission 
reduction obligations under the good neighbor provision for the 2008 
ozone NAAQS. Even though the CSAPR Update did not fully address upwind 
states' emission reduction obligation pursuant to the good neighbor 
provision, the implementation of the emissions budgets quantified in 
that rule will help to resolve a number of projected air quality 
problems in the Philadelphia, Pennsylvania, Jefferson County, Kentucky 
and Hamilton County, Ohio areas and will help make progress to reduce 
upwind

[[Page 6519]]

contributions to high ozone levels in Baltimore, Maryland, and the New 
York City area (including parts of Connecticut and New Jersey).
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    \19\ For one state named in the CAA section 176A petition, 
Tennessee, the EPA determined that the emissions reductions required 
by the CSAPR Update would fully address the state's significant 
contribution to nonattainment and interference with maintenance of 
the 2008 ozone NAAQS in other states.
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    The EPA is continuing the work necessary to address its remaining 
obligation to promulgate FIPs fully addressing the good neighbor 
provision with respect to the 2008 ozone NAAQS for 21 states. The EPA 
intends to continue to collect information and undertake analyses to 
evaluate potential future emission reductions from non-EGUs and EGUs 
that may be necessary to fully quantify each state's interstate 
transport obligations for the 2008 ozone NAAQS in a future action.\20\ 
The EPA expects to continue to fulfill its obligation to promulgate 
FIPs fully addressing interstate transport with respect to the 2008 
ozone NAAQS consistent with the authority and flexibility provided by 
the good neighbor provision to tailor a remedy based on those sources 
and precursor pollutants (i.e., NOX) that can most 
effectively address the downwind air quality problems identified by the 
EPA's analysis.
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    \20\ Moreover, in support of this effort, on December 28, 2016, 
the EPA shared updated preliminary modeling information providing 
air quality projections for areas in the contiguous U.S. for the 
2015 ozone NAAQS, which the EPA anticipates will assist states with 
the development of SIPs. See, ``Notice of Availability of the 
Environmental Protection Agency's Preliminary Interstate Ozone 
Transport Modeling Data for the 2015 Ozone National Ambient Air 
Quality Standard (NAAQS)'' available at: https://www.epa.gov/airmarkets/notice-data-availability-preliminary-interstate-ozone-transport-modeling-data-2015-ozone.
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C. Additional Rules That Reduce NOX and VOC Emissions

    In addition to the significant efforts to implement the good 
neighbor provision for the 2008 and prior ozone NAAQS described in 
Section IV.B of this document, there are numerous federal and state 
emission reduction rules that have already been adopted which have 
resulted or will result in the further reduction of ozone precursor 
emissions, including emissions from states named in the section 176A 
petition. Many of these rules directly require sources to achieve 
reductions of NOX, VOC, or both, and others require actions 
that will indirectly result in such reductions. As a result of these 
emissions reductions, the interstate transport of ozone has been and 
will continue to be reduced over time.
    The majority of man-made NOX and VOC emissions that 
contribute to ozone formation in the U.S. comes from the following 
sectors: on-road and nonroad mobile sources, industrial processes 
(including solvents), consumer and commercial products, and the 
electric power industry. In 2014, the most recent year for which the 
National Emissions Inventory (NEI) is available, on-road and nonroad 
mobile sources accounted for about 56 percent of annual NOX 
emissions; and the electric power industry (EGUs) accounted for about 
13 percent. With respect to VOCs, industrial processes (including 
solvents) accounted for about 48 percent of manmade VOC emissions; and 
mobile sources accounted for about 27 percent.\21\ \22\
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    \21\ The VOC percentages are for manmade VOCs only. Emissions 
from natural sources, such as trees, also comprise around 70 percent 
of total VOC emissions nationally, with a higher proportion during 
the ozone season and in areas with more vegetative cover.
    \22\ For more information, see the ``2014 NEI Summary 
Spreadsheet'' in the docket.
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    The EPA establishes emissions standards under various CAA 
authorities for numerous classes of automobile, truck, bus, motorcycle, 
earth mover, aircraft, and locomotive engines, and for the fuels used 
to power these engines. The pollutant reduction benefits from new 
engine standards increase each year as older and more-polluting 
vehicles and engines are replaced with newer, cleaner models. The 
benefits from fuel programs generally begin as soon as a new fuel is 
available. Further, the ongoing emission reductions from mobile source 
federal programs such as those listed previously will provide for 
substantial emissions reductions well into the future, and will 
complement state and local efforts to attain the 2008 ozone NAAQS.
    There are several existing national rules that continue to achieve 
emission reductions through 2025 and beyond with more protective 
emission standards for on-road vehicles that include: Control of Air 
Pollution from Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel 
Standards; \23\ Control of Air Pollution from New Motor Vehicles: Tier 
2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control 
Requirements; \24\ Control of Air Pollution from New Motor Vehicles: 
Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur 
Control Requirements; \25\ Model Year 2017 and Later Light-Duty Vehicle 
Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards; 
\26\ Model Year 2012-2016 Light-Duty Vehicle Greenhouse Gas Emission 
Standards and Corporate Average Fuel Economy Standards; \27\ Greenhouse 
Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty 
Engines and Vehicles--Phase 2; \28\ Phase 1 Greenhouse Gas Emissions 
Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty 
Engines and Vehicles \29\ and Control of Hazardous Air Pollutants from 
Mobile Sources.\30\
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    \23\ 81 FR 23414 (April 28, 2014).
    \24\ 65 FR 6698 (February 10, 2000).
    \25\ 66 FR 5002 (January 18, 2001).
    \26\ 77 FR 62624 (October 15, 2012).
    \27\ 75 FR 25324, (May 7, 2010).
    \28\ 81 FR 73478, (October 25, 2016).
    \29\ 76 FR 57106, (September 15, 2011).
    \30\ 72 FR 8428, (February 26, 2007).
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    Similarly, already adopted regulations for non-road engines and 
equipment that will achieve further reductions include: Control of 
Emissions of Air Pollution from Nonroad Diesel Engines and Fuel; \31\ 
Republication for Control of Emissions of Air Pollution from Locomotive 
Engines and Marine Compression-Ignition Engines Less Than 30 Liters per 
Cylinder; \32\ Control of Emissions from New Marine Compression-
Ignition Engines at or Above 30 Liters per Cylinder; \33\ the 
International Maritime Organization's Emission Control Area to Reduce 
Emissions from Ships in the U.S. Caribbean; Control of Air Pollution 
From Aircraft and Aircraft Engines; \34\ Emission Standards and Test 
Procedures; Control of Emissions from Nonroad Large Spark-Ignition 
Engines, and Recreational Engines (Marine and Land-Based); \35\ and 
Control of Emissions from Nonroad Spark-Ignition Engines and 
Equipment.\36\
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    \31\ 69 FR 38958, (June 29, 2004).
    \32\ 73 FR 37096, (June 30, 2008).
    \33\ 75 FR 22896, (April 30, 2010).
    \34\ 77 FR 36342, (June 18, 2012).
    \35\ 67 FR 68242, (November 8, 2002).
    \36\ 73 FR 59034, (October 8, 2008).
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    Similarly, a number of already-adopted stationary source rules will 
drive further regional reductions in ozone precursor emissions, 
including: boiler maximum achievable control technology standards under 
CAA section 112 and the Mercury and Air Toxics Standards. These rules 
target specific sources and have the co-benefit of reducing ozone 
precursors which also reduce interstate ozone pollution transport. For 
example, the measures to address Regional Haze best available retrofit 
technology determinations often include power plant pollution controls 
that can achieve NOX reductions of at least 80 to 90 percent 
from a particular source.
    Other existing rules that will achieve NOX and VOC 
emissions reductions include: New Source Performance Standards (NSPS) 
for reciprocating internal combustion engines; NSPS for gas turbines; 
NSPS for process heaters;

[[Page 6520]]

Hospital/Medical/Infectious Waste Incinerators: New Source Performance 
Standards and Emission Guidelines: Final Rule Amendments; and 
NOX Emission Standard for New Commercial Aircraft Engines. 
The EPA's regulations for commercial, industrial and solid waste 
incinerators set standards for NOX and several air toxics 
for all commercial incinerators, as required under CAA section 129. Air 
toxics rules for industrial boilers will yield co-benefit 
NOX reductions as a result of tune-ups and energy efficiency 
measures, especially from boilers that burn coal.
    The EPA expects existing federal and state rules, and also those 
that may be promulgated in the future, will have the co-benefit of 
reducing ozone precursor emissions even if they do not directly address 
interstate transport of ozone pollution. These rules will result in 
reductions in ozone concentrations that will help areas attain the 2008 
ozone NAAQS. For example, the Regional Haze Rule requires states to 
revise their regional haze SIPs \37\ to assess whether additional 
measures are necessary for continued visibility progress. On December 
14, 2016, the EPA signed a final rule that could influence state 
regional haze plans to include measures to further reduce 
NOX in light of its role as a visibility impairing 
pollutant.\38\ Further, to address interstate transport with respect to 
the 2015 ozone NAAQS, states are required to submit additional SIPs 
addressing the good neighbor provision by October 2018. Measures 
designed to address the interstate transport of ozone with respect to 
the 2015 standard will necessarily assist with addressing interstate 
transport with respect to the less-stringent 2008 standard. Lastly, in 
response to actions such as the 2012 PM2.5 SIP Requirements 
Rule and nonattainment designations under the 2010 primary 
SO2 NAAQS, many states will be submitting SIPs that reduce 
pollution, some of which reduce ozone precursor emissions as a co-
benefit.
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    \37\ The EPA extended the due date to 2021, but is not changing 
dates for the implementation of further pollution reductions needed 
to address regional haze, which are required over the 2018-2028 time 
frame. See https://www.epa.gov/visibility/final-rulemaking-amendments-regulatory-requirements-state-regional-haze-plans.
    \38\ See https://www.epa.gov/sites/production/files/2016-12/documents/regional_haze_2060-as55_final_preamblerule_final_12-14-16_disclaimer_0.pdf.
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    As a result of the rules and programs listed previously, various 
other state programs and efforts, and wider economic trends, ozone 
levels across the nation and the OTR have been declining. Ozone levels 
across the nation are expected to further decline over the next several 
years due to emissions controls already in place. The EPA's emissions 
projections in support of the 2015 ozone NAAQS modeling show declining 
emissions of NOX and VOCs between 2017 and 2025. In the 
states comprising the OTR plus the nine upwind states named in the CAA 
section 176A petition, total NOX emissions over the upcoming 
7-year period (2017-2025) are expected to decline by almost 20 percent 
on average and VOC emissions are expected to decline by more than 10 
percent on average over the same period.

D. Rationale for the Proposed Decision on the CAA 176A Petition

    The EPA is proposing to deny the CAA section 176A petition because 
we believe that the statute provides other, more effective means of 
addressing the impact of interstate ozone transport on the states 
within the OTR with respect to the 2008 ozone NAAQS. As described in 
Section IV of this document, the statute provides several provisions 
that allow states and the EPA to address interstate ozone transport 
with a remedy better tailored to the nature of the air quality problem, 
focusing on those precursor emissions and sources that most directly 
impact downwind ozone nonattainment and maintenance problems and which 
can be controlled most cost-effectively. The EPA and states are 
actively using these provisions, as demonstrated by the numerous 
federal and state measures that have reduced, and will continue to 
reduce, the VOC and NOX emissions that contribute to ozone 
formation and the interstate transport of ozone pollution. The EPA does 
not believe that it is necessary to add more states to the OTR at this 
time in order to effectively address transported pollution in the OTR 
relative to the 2008 ozone NAAQS.
    While the Act contains several provisions, both mandatory and 
discretionary, to address interstate pollution transport, the EPA's 
decision whether to grant or deny a CAA section 176A petition to expand 
an existing transport region is discretionary. Section 176A of the CAA 
states that the Administrator may add any state or portion of a state 
to an existing transport region whenever the Administrator has reason 
to believe that the interstate transport of air pollutants from such 
state significantly contributes to a violation of the standard in the 
transport region. The EPA does not dispute that certain named upwind 
states in the petition might significantly contribute to violations of 
the 2008 ozone NAAQS in one or more downwind states. However, the EPA 
believes that it can fully and more effectively address the upwind 
states' impacts on downwind ozone air quality through the good neighbor 
provision and the various statutory provisions that provide for its 
implementation. The EPA has already taken steps to address interstate 
transport with respect to the 2008 ozone NAAQS through the promulgation 
of the CSAPR Update, which reduces emissions in the 2017 ozone season 
and beyond. The EPA used the authority of CAA sections 
110(a)(2)(D)(i)(I) and 110(c) to tailor a remedy focused on the 
precursor pollutant most likely to improve ozone levels (currently 
NOX) and those sources that can most cost-effectively reduce 
emissions (i.e., EGUs). The EPA further implemented the remedy through 
an allowance trading program that achieves necessary emission 
reductions while providing sources with the flexibility to implement 
the control strategies of their choice.
    We believe that the continued use of the authority provided by the 
good neighbor provision to address the interstate transport of ozone 
pollution plus other regulations that are already in place will permit 
the states and EPA to achieve necessary additional reductions to 
address the 2008 ozone NAAQS without the need to implement the 
additional requirements that inclusion in the OTR would entail. As 
described in Section IV.A and B of this document, this approach to 
address the interstate transport of ozone is a proven, efficient, and 
cost-effective means of addressing downwind air quality concerns that 
the agency has employed and refined over nearly two decades. However, 
the EPA notes that the addition of states to the OTR pursuant to the 
section 176A authority--and the additional planning requirements that 
would entail--could be given consideration as an appropriate means to 
address the interstate transport requirements of the CAA should the 
agency depart from its current approach to addressing these 
requirements.
    As described in this document, the CAA provides the agency with the 
authority to mitigate the specific sources that contribute to 
interstate pollution through the approval of SIPs or promulgation of 
FIPs to satisfy the requirements of the good neighbor provision, CAA 
section 110(a)(2)(D)(i)(I), and through the related petition process 
under section 126. This authority gives the EPA and states numerous 
potential policy approaches to address interstate pollution transport 
of ozone, and the EPA has consistently and repeatedly used its 
authority under CAA section 110(a)(2)(D)(i)(I) to approve state plans

[[Page 6521]]

for reducing ozone transport or to promulgate its own federal 
implementation plan to specifically target the sources of ozone 
transport both within and outside the OTR. The NOX SIP call, 
CAIR, CSAPR, CSAPR Update and numerous individual SIP approvals 
demonstrate that the EPA has a long history of using its section 110 
authority to specifically address interstate pollution transport in a 
targeted way that is tailored to a specific NAAQS and set of pollution 
sources which are the primary contributors to interstate pollution 
transport. As described in Section IV.B of this document, using the 
authority of the good neighbor provision has allowed the EPA to focus 
its efforts on pollution sources that are responsible for the largest 
contributions to ozone transport and that can cost-effectively reduce 
emissions, and also enables the agency to focus on NOX as 
the primary driver of long range ozone transport--an approach the 
courts have found to be a reasonable means of addressing interstate 
ozone transport. EPA v. EME Homer City Generation, L.P., 134 S. Ct. at 
1607 (affirming as ``efficient and equitable'' the EPA's use of cost to 
apportion emission reduction responsibility pursuant to the good 
neighbor provision); Michigan v. EPA, 213 F.3d at 688 (``EPA reasonably 
concluded that long-range ozone transport can only be addressed 
adequately through NOX reductions'').
    As explained previously, it does not appear that adding states to 
an OTR under CAA section 176A will afford the states and EPA with the 
flexibility to focus on specific sources and ozone precursor emissions 
tailored to address the downwind state's current air quality and needed 
remedy to achieve attainment of the 2008 NAAQS. The statute prescribes 
a specific set of controls for a variety of sources to control 
emissions of both VOCs and NOX. CAA section 
110(a)(2)(D)(i)(I) on the other hand permits the EPA and the regulated 
community the flexibility to focus controls on specific sources and 
pollutants that most efficiently address the air quality problem being 
targeted. The EPA determined in the CSAPR Update that regional 
NOX emissions reductions from upwind states are the most 
effective means for providing ozone benefits to an area in the OTR 
currently violating the 2008 ozone NAAQS, and that NOX 
reductions can be most efficiently achieved by focusing on those 
sources that can cost-effectively reduce emissions. Accordingly, the 
EPA does not believe that the requirements imposed upon states added to 
the OTR would be the most effective means of addressing any remaining 
interstate transport concerns with respect to the 2008 ozone NAAQS.
    The implementation of controls within the OTR, when combined with 
the numerous federal and state emission reduction programs that have 
already been adopted that have resulted in the reduction of ozone 
precursor emissions either directly or as a co-benefit of those 
regulations, have helped to significantly reduce ozone levels. These 
programs will continue to reduce ozone precursor emissions and ozone 
concentrations both within and outside of the OTR over many years to 
come. However, the EPA believes the most efficient way to address the 
current 2008 ozone NAAQS nonattainment and interstate transport 
problems is to continue to rely on the ability to flexibly target the 
necessary reductions through this combination of targeted programs such 
as the implementation of the CSAPR Update Rule, the further utilization 
of the CSAPR framework, development of local attainment plans, and 
consideration of additional emissions limitations resulting from action 
on CAA section 126 petitions.
    As discussed in Section III.C. of this document, CAA section 176A 
provides that the Administrator may exercise reasonable discretion in 
administering the agency's regulatory agenda by determining whether or 
not to approve or deny a section 176A petition, so long as the EPA's 
action is supported by a reasonable interpretation within the context 
of the statute. The EPA has reviewed the request of the petitioners to 
add additional states to the OTR in light of required control 
strategies for ozone transport regions and the other statutory tools 
available to the agency and states to address the interstate transport 
of ozone pollution. The agency believes that continuing its 
longstanding and effective use of the existing and expected control 
programs under the CAA's mandatory good neighbor provision embodied in 
section 110(a)(2)(D)(i)(I), including implementation of the CSAPR 
Update beginning in 2017 and technical work now underway to establish a 
full remedy for the 2008 NAAQS as well as to implement the good 
neighbor provision for the more stringent 2015 NAAQS, is a more 
effective approach for addressing regional interstate ozone transport 
problems relative to the 2008 ozone standard.
    The EPA is proposing to deny the petitioning states' request to add 
additional states to the OTR for the purpose of addressing interstate 
transport of the 2008 ozone NAAQS at this time. The agency will instead 
continue to use other authorities available within the CAA in order to 
address the long range interstate transport of ozone pollution. This 
document is specific to the 2008 ozone NAAQS, but the EPA notes that 
under different circumstances the OTR provisions have been an effective 
tool for air quality management, and could be similarly effective in 
the future for addressing interstate transport of ozone pollution. 
Accordingly, nothing in this document should be read to limit states' 
ability to file a different petition under 176A or to prejudge the 
outcome of such a petition if filed. The EPA requests comment on the 
proposed denial of the petition based on the EPA's preferred approach 
to addressing interstate transport with respect to the 2008 ozone NAAQS 
pursuant to these other CAA authorities.\39\
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    \39\ The EPA's proposal as to the pending section 176A petition 
is focused on the appropriate mechanism to address interstate 
transport issues relative to the 2008 ozone NAAQS rather than the 
scope of remaining air quality problems or the level of controls 
necessary to address any such problems. Comment on any 
determinations made in prior rulemaking actions to identify downwind 
air quality problems relative to the ozone NAAQS or to quantify 
upwind state emission reduction obligations relative to those air 
quality problems, including the EPA's decision to focus on certain 
precursor emissions or sources, are not within the scope of this 
proposal. To the extent the EPA evaluates these issues in a future 
rulemaking to address remaining air quality problems relative to the 
2008 ozone NAAQS, comments will be welcomed in the context of that 
rulemaking.
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V. Judicial Review and Determinations Under Section 307(b)(1) of the 
CAA

    Section 307(b)(1) of the CAA indicates which Federal Courts of 
Appeal have venue for petitions of review of final actions by the EPA. 
This section provides, in part, that petitions for review must be filed 
in the Court of Appeals for the District of Columbia Circuit if (i) the 
agency action consists of ``nationally applicable regulations 
promulgated, or final action taken, by the Administrator,'' or (ii) 
such action is locally or regionally applicable, if ``such action is 
based on a determination of nationwide scope or effect and if in taking 
such action the Administrator finds and publishes that such action is 
based on such a determination.'' The EPA finds that any final action 
related to this document is ``nationally applicable'' and of 
``nationwide scope and effect'' within the meaning of CAA section 
307(b)(1). Through this document, the EPA interprets section 176A of 
the CAA, a provision which has nationwide applicability. In addition, 
this document is a response to a petition which would, if granted, 
extend

[[Page 6522]]

regulatory requirements to nine states in multiple different circuits, 
and if denied could impact the 13 states within the ozone transport 
region established in CAA section 184. This proposed action also 
discusses at length prior EPA action and analyses concerning the 
transport of pollutants between the different states under CAA section 
110. For these reasons, the Administrator determines that, when 
finalized, this action is of nationwide scope and effect for purposes 
of section 307(b)(1). Thus, pursuant to CAA section 307(b) any 
petitions for review of any final action regarding this document would 
be filed in the Court of Appeals for the District of Columbia Circuit 
within 60 days from the date any final action is published in the 
Federal Register.

VI. Statutory Authority

    42 U.S.C. 7401 et seq.

    Dated: January 11, 2017.
Gina McCarthy,
Administrator.
[FR Doc. 2017-01097 Filed 1-18-17; 8:45 am]
 BILLING CODE 6560-50-P