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

Federal RegisterJun 2, 2003

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 51

[FRL-7504-2]

RIN: 2060-AJ99

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

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Proposed rulemaking.

SUMMARY:

In this document, EPA is proposing two discrete frameworks to implement the 8-hour ozone national ambient air quality standard (NAAQS or standard). We are proposing this rule so that States may know which statutory requirements apply for purposes of developing State implementation plans (SIPs) under the Clean Air Act (CAA) to implement the 8-hour ozone NAAQS. The intended effect of the rule is to provide certainty to States regarding their planning obligations such that States may begin SIP development upon designation and classification for the 8-hour standard. Following are the principles that guided us in the development of these frameworks to implement the 8-hour ozone standard: To protect public health, provide incentives for expeditious attainment of the 8-hour ozone standard and avoid incentives for delay; to provide reasonable but expeditious attainment deadlines; to have a basic, straightforward structure that can be communicated easily; to provide flexibility to States and EPA on implementation approaches and control measures while ensuring that the implementation strategy is supported by the CAA; to emphasize national and regional measures to help areas come into attainment and, where possible, reduce the need for those local controls that are more expensive than national and regional measures; and to provide a smooth transition from implementation of the 1-hour ozone NAAQS to implementation of the 8-hour ozone NAAQS. In addition, we intend to clarify the role of Tribes in implementing the 8-hour ozone NAAQS.

The two frameworks we are proposing are based on two different classification options, which affect the requirements that would apply to individual nonattainment areas. We prefer classification option 2 because it provides more flexibility to States and Tribes as they address their unique air quality problems. This is likely to allow some areas to attain the standard at a lower cost. However, we are also soliciting comments on option 1, in part because it is less complex and may be easier to communicate, as well as on other ways to classify nonattainment areas.

This proposed rulemaking does not propose to establish attainment/nonattainment designations nor does it address the principles that will be considered in the designation process; we have already issued guidance on the principles that States should consider in making designation recommendations, and we will issue further guidance separate from this rulemaking if appropriate. Finally, we are not taking comment at this time on appropriate tests under the 8-hour standard for demonstrating conformity of Federal actions to SIPs. We intend to conduct a separate rulemaking on this issue prior to designating areas under the 8-hour ozone standard.

In this proposal, we do not yet propose regulatory text, primarily because a number of options are being proposed for many of the implementation elements, and we believe it would be better to obtain public comment on the options conceptually first. After we receive and consider comment on the proposed options, but before publishing a final rule, we will issue proposed regulatory text.

DATES:

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

ADDRESSES:

All comments should be submitted to Docket #OAR 2003-0079. When mailing documents, comments, or requests to the EPA Docket Center through the U.S. Postal Service, please use the following address: U.S. Environmental Protection Agency, EPA West (Air Docket), 1200 Pennsylvania Avenue, NW., Room: B108; Mail Code: 6102T, Washington, DC 20460. To mail comments or documents through a courier service, the mailing address is: EPA Docket Center (Air Docket), U.S. Environmental Protection Agency, 1301 Constitution Avenue, NW., Room: B108; Mail Code: 6102T, Washington, DC 20460. The normal business hours are 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding Federal holidays. Comments can be submitted to the address above, by fax (202) 566-1741, or by e-mail to

A-and-R-Docket@epa.gov.

The voice telephone number is (202) 566-1742. In addition, we have placed a variety of materials regarding implementation options on the Web site:

http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr.

While this Web site is not an exact duplicate of the Air Docket, we have placed materials that we have generated and materials that have been submitted in an electronic format on the Web site. We request that comments be submitted by e-mail to facilitate expeditious distribution within EPA and placement on the Web site.

The public hearings will be held from 8:30 a.m. to 5 p.m. at the following locations: Marriott Dallas/Ft. Worth Airport North, 8440 Freeport Parkway, Irving, Texas, 75063, on June 17, 2003; Palace Hotel, 2 New Montgomery Street, San Francisco, California 94105, on June 19, 2003; and Holiday Inn Select Old Town Alexandria, 480 King Street, Alexandria, Virginia 22314, on June 27, 2003. Persons wishing to speak at the public hearings should contact: Ms. Barbara Bauer, E. H. Pechan, at phone number (919) 493-3144 ext. 188 or by e-mail at

barbara.bauer@pechan.com.

Oral testimony may be limited to 3 to 5 minutes depending on the number of people who sign up to speak. Commenters may also supplement their oral testimony with written comments. The hearing will be limited to the subject matter of the proposal, the scope of which is discussed below. The public hearing schedule, including lists of speakers, will be posted on EPA's Web site at

http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr.

A verbatim transcript of the hearing and written statements will be made available for copying during normal working hours at the Office of Air and Radiation Docket and Information Center at the above address listed for inspection of documents.

FOR FURTHER INFORMATION CONTACT:

Mr. John Silvasi, Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Mail Code C539-02, Research Triangle Park, NC 27711, phone number (919) 541-5666 or by e-mail at:

silvasi.john@epa.gov

or Ms. Denise Gerth, Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Mail Code C539-02, Research Triangle Park, NC 27711, phone number (919) 541-5550 or by e-mail at:

gerth.denise@epa.gov.

SUPPLEMENTARY INFORMATION:

This notice uses a number of acronyms and terms that are defined when first used. A list appears in appendix D for convenience.

In a number of places, this document refers to time periods (

e.g.,

so many years) after designation or after the designation date. By this, we mean the effective date of designation by EPA.

Outline

I. What is the 8-hour ozone problem and EPA's strategy for addressing it?

A. What is the ozone standard and the health problem?

B. What is the geographic extent of the 8-hour ozone problem?

C. What is EPA's overall strategy for reducing ozone pollution?

1. The SIP system

2. National rule

D. What is the relationship between the SIP system proposed and the proposed Clear Skies legislation?

II. What is the background on the 8-hour ozone standard?

A. What is the legal background?

B. What technical work influenced EPA's implementation approach?

III. How did EPA obtain stakeholder input for this effort?

IV. What is EPA's schedule for issuing an 8-hour ozone implementation rule?

V. In short, what does this proposed rulemaking contain?

A. Classification of areas

B. Attainment deadlines

C. Transition from the 1-hour to the 8-hour standard

D. Mandatory measures

E. Consequences of failure to attain

F. Interstate transport

G. Modeling and attainment demonstration

H. Reasonable Further Progress (RFP)

1. Requirement for 15 percent VOC reductions for moderate and above areas during the first 6 years after the base year

2. Base year

I. Reasonably available control measures/Reasonably available control technology (RACM/RACT)

J. Conformity

K. New Source Review

VI. What are EPA's proposed frameworks for implementing the 8-hour ozone standard?

A. How will EPA reconcile subparts 1 and 2? How will EPA classify nonattainment areas for the 8-hour standard? What attainment dates would apply?

1. Statutory framework and Supreme Court decision

2. EPA's development of options

3. Options for classification

4. Under classification option 2, how would EPA classify subpart 1 areas?

5. Rationale for regulating all “gap” areas under subpart 1 only

6. Proposed incentive feature

7. Other options EPA considered

8. Implications for the options

9. Other considerations

B. How will EPA treat attainment dates and other dates including SIP submittal dates for the 8-hour ozone standard?

1. Background

2. How will EPA address the provision regarding 1-year extensions?

3. How do attainment dates apply to Indian country?

4. How will EPA establish attainment dates for areas classified as marginal under the “incentive” feature proposed under the classification section or areas covered under subpart 1 with a requested attainment date of 3 years or less after the designation date?

C. How will EPA implement the transition from the 1-hour to the 8-hour standard in a way to ensure continued momentum in States' efforts toward cleaner air?

1. Background

2. When will EPA revoke the 1-hour standard?

3. What obligations should continue to apply as an area begins to implement the 8-hour ozone NAAQS and what obligations should no longer apply?

4. Does the requirement for continued implementation of the obligations addressed above expire at some point?

5. How will EPA ensure that the public knows which areas must continue provisions under the 1-hour SIPs if EPA revokes the 1-hour standard?

D. Should prescribed requirements of subpart 2 apply in all 8-hour nonattainment areas classified under subpart 2, or is there flexibility in application in certain narrowly defined circumstances?

1. Background

2. Approach being proposed

3. Other approaches considered

E. What is the required timeframe for obtaining emissions reductions to ensure attainment by the attainment date?

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

1. Background

2. EPA's anticipated approach

3. Other concerns about transport

4. Other options considered

G. How will EPA address transport of ground-level ozone and its precursors for rural nonattainment areas, multi-State nonattainment areas, areas affected by intrastate transport, and international transport?

1. Rural transport nonattainment areas

2. Multi-state nonattainment areas

3. Intrastate transport

4. International transport

5. Additional ways of addressing transport

6. State-Tribal transport

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

1. Multi-pollutant assessments (one-atmosphere modeling)

2. Areas with early attainment dates

3. Areas with later attainment dates

4. Modeling guidance

5. Mid-Course review

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

1. Background

2. Proposed features in general

3. For subpart 2 areas, should the initial 15 percent RFP requirement be limited to VOC emissions?

4. What baseline year should be required for the emission inventory for the RFP requirement?

5. Should moderate areas be subject to prescribed additional RFP requirements prior to their attainment date?

6. What is the timing of the submission of the ROP plan?

7. How should CAA restrictions on creditable measures be interpreted? Which national measures should count as generating emissions reductions credit toward RFP requirements?

8. For areas covered by subpart 1 instead of subpart 2, how should the RFP requirement be structured?

9. How should the RFP requirements be implemented for areas designated for the 8-hour ozone standard that entirely or in part encompass an area that was designated nonattainment for the 1-hour ozone standard?

10. Will EPA's “Clean Data Policy” continue to apply under the 8-hour standard for RFP?

11. How will RFP be addressed in Tribal areas?

12. How will RFP targets be calculated?

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

1. Background

2. Proposal

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

1. Background

2. Proposed approach for RACT in general for areas covered under subpart 2

3. Proposed approach for RACT in general for areas covered under subpart 1

4. Proposed approach for previous source-specific major source RACT determinations

5. Proposed approach for NO

RACT determinations in areas affected by the NO

SIP Call

6. Proposed approach for NO

as an ozone precursor

7. Proposed approach for RACM

8. Proposed submission date for RACT and RACM requirements

L. How will the section 182(f) NO

provisions be handled under the 8-hour ozone standard?

M. What aspects of transportation conformity and the 8-hour ozone standard are addressed in this proposal?

1. What is transportation conformity?

2. Why is EPA discussing transportation conformity in this proposed rulemaking?

3. Are any changes being made to transportation conformity in this proposed rulemaking?

4. When does transportation conformity apply to 8-hour ozone nonattainment areas?

5. How does the 1-year grace period apply in metropolitan areas?

6. How does the 1-year grace period apply in “donut” areas?

7. How does the 1-year grace period apply in isolated rural areas?

8. Does conformity apply for the 1-hour ozone standard once the 1-hour ozone standard is revoked?

9. What are EPA's plans for amending the conformity rule to address the 8-hour ozone standard?

10. What impact will the implementation of the 8-hour ozone standard have on a State's Transportation Conformity SIP?

11. What other parts of this proposal could affect transportation conformity determinations?

N. What requirements for General Conformity should apply to the 8-hour ozone standard?

1. What is the purpose of the General Conformity regulations?

2. How is the General Conformity program currently structured?

3. Who runs the General Conformity program?

4. How does an agency demonstrate conformity?

5. General Conformity regulation revisions for the 8-hour ozone standard

6. How does the 1-year grace period apply to General Conformity determinations?

O. How should the NSR Program be implemented under the 8-hour ozone NAAQS?

1. Background

2. Nonattainment NSR under the 8-hour ozone standard

3. Under what circumstances is a transitional program needed during the interim period?

4. Elements of the Appendix S transitional program

5. Will a State be required to assure that the increased emissions from a new major source do not cause or contribute to a violation in a nearby nonattainment area before it issues a preconstruction permit under Appendix S?

6. What happens at the end of the interim period?

7. What is the legal basis for providing this transitional program?

8. How should the NSR requirements be implemented for new 8-hour ozone areas that encompass the old 1-hour ozone nonattainment areas after EPA revokes the 1-hour ozone standard?

9. NSR option to encourage development patterns that reduce overall emissions—Clean Air Development Communities

10. Tribal concerns

P. How will EPA ensure that the 8-hour ozone standard will be implemented in a way which allows an optimal mix of controls for ozone, PM

2.5

, and regional haze?

1. Could an area's 8-hour ozone strategy affect its PM

2.5

and/or regional haze strategy?

2. What guidance has EPA provided regarding ozone, PM

2.5

and regional haze interaction?

3. What is EPA proposing?

Q. What emission inventory requirements should apply under the 8-hour ozone NAAQS?

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

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

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

U. What requirements should apply to emergency episodes?

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

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

1. Background

2. Option being proposed

VII. Proposal of integrated frameworks using various options

VIII. Other Considerations

A. Will EPA be contemplating incentives for areas that want to take early action for reducing ozone under the 8-hour standard?

1. What are the Ozone Flex Guidelines for the 1-hour ozone NAAQS?

2. What is the “Early Action Compact” for implementing the 8-hour ozone NAAQS?

3. What is EPA's response to the Texas “Early Action Compact?”

4. Did EPA consider other options for incentives for areas that take early actions for reducing ozone?

5. What is the difference between the early action compact program and the transitional NSR program?

B. Clarification of how transition from 1-hour to 8-hour standard will work for early action compact areas, for conformity, and for NSR and PSD.

C. How will EPA's proposal affect funding under the Congestion Mitigation and Air Quality Improvement (CMAQ) Program?

D. Are there any environmental impact differences between the two major classification options being proposed?

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

B. Paperwork Reduction Act

C. Regulatory Flexibility Act

D. Unfunded Mandates Reform Act

E. Executive Order 13132: Federalism

F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments

G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks

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

I. National Technology Transfer Advancement Act

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

X. Appendices

Appendix A—Comparison of Subpart 1 & 2 Requirements

Appendix B—“Applicable Requirements” under Subpart 2

Appendix C—Comparison of Transitional NSR and Early Action Compact Programs

Appendix D—Glossary of Terms and Acronyms

Appendix E—Application of Conformity, New Source Review and Prevention of Significant Deterioration under Various Transition Cases

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

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

Ground-level ozone pollution is formed by the reaction of volatile organic compounds (VOC) and nitrogen oxides (NO

) in the atmosphere in the presence of sunlight. These two pollutants, often referred to as ozone precursors, are emitted by many types of pollution sources, including on-road and off-road motor vehicles and engines, power plants and industrial facilities, and smaller “area” sources.

In 1979, we promulgated the 0.12 ppm, 1-hour ozone standard, (44 FR 8202, February 8, 1979). On July 18, 1997, we promulgated a revised standard of 0.08 ppm, measured over an 8-hour period (

i.e.

, the 8-hour standard). In general, the 8-hour standard is more protective of public health and more stringent than the 1-hour standard, and there are more areas that do not meet the 8-hour standard than there are areas that do not meet the 1-hour standard. At the time that we promulgated the revised 8-hour standard, we also promulgated a rule providing for the phase-out of the 1-hour standard, (62 FR 38856 (codified at 50.9(b)). That rule provided that the 1-hour standard would no longer apply to an area once we determined that the area had attained the 1-hour standard.

Due to the continued litigation over the 8-hour standard, EPA revised 40 CFR 50.9(b) in July 2000, to limit its authority to revoke the 1-hour standard until such time as the 8-hour standard became fully enforceable and no longer subject to legal challenge. (65 FR 45182, July 20, 2000).

Ozone can irritate the respiratory system, causing coughing, throat irritation, and/or uncomfortable sensation in the chest. Ozone can reduce lung function and make it more difficult to breathe deeply, and breathing may become more rapid and shallow than normal, thereby limiting a person's normal activity. Ozone also can aggravate asthma, leading to more asthma attacks that require a doctor's attention and/or the use of additional medication. In addition, ozone can inflame and damage the lining of the lungs, which may lead to permanent changes in lung tissue, irreversible reductions in lung function, and a lower quality of life if the inflammation occurs repeatedly over a long time period (months, years, a lifetime). People who are particularly susceptible to the effects of ozone include children and adults who are active outdoors, people with respiratory disease, such as asthma, and people with unusual sensitivity to ozone.

More detailed information on health effects of ozone can be found at the following Web site:

http://www.epa.gov/ttn/naaqs/standards/ozone/s_o3_index.html

The focus of today's proposed rule is implementation of the revised 8-hour ozone air quality standard issued by EPA in 1997, including the transition from implementation of the 1-hour

standard to implementation of the 8-hour standard.

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

Although the nation as a whole has made significant progress since 1970 in reducing ground-level ozone pollution (sometimes called “smog”), ozone remains a significant public health concern. At present, unhealthy ozone levels—exceeding the 8-hour standard—occur over wide geographic areas including most of the nation's major population centers. These areas include much of the eastern half of the United States and large areas of California.

The geographic extent of the 8-hour ozone problem is expected to shrink between now and 2020 due to existing regulatory requirements. We estimate that existing control measures (

e.g.

, Federal motor vehicle standards, EPA's regional NO

rule known as the NO

SIP Call, and local measures already adopted under the CAA) will dramatically reduce the number of areas

not attaining the 8-hour ozone standard—from 122 in 2000 (using data from 1998, 1999, and 2000), to 51 in 2007, to 30 in 2010 and 13 in 2020. See Table 1 below.

See discussion below on how EPA has developed hypothetical nonattainment areas for purposes of analysis of this proposed rulemaking and options. Modeling analyses for projections to 2007 are found in: U.S. Environmental Protection Agency, Office of Air and Radiation, Technical Support Document for the Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements: Air Quality Modeling Analyses. EPA420-R-00-028. December 2000. Located at:

http://www.epa.gov/otaq/regs/hd2007/frm/r00028.pdf.

Information on the modeling analyses for projections to 2010 and 2020 are found in “Technical Addendum: Methodologies for the Benefit Analysis of the Clear Skies Initiative.” September 2002. This can be found at the following Web site:

http://www.epa.gov/clearskies/Tech_adden.PDF.

Results are summarized in “Human Health and Environmental Benefits Achieved by the Clear Skies Initiative.” July 1, 2002.

http://www.epa.gov/clearskies/CSIhealth_env_benefits7-01.ppt.

The total population living in areas that we have hypothesized may be designated nonattainment is also projected to decline over time—from 178 million in 2000, to 143 million in 2007, to 116 million in 2010, to 82 million in 2020. However, the number of people living in areas with excessive ozone levels remains high for the foreseeable future because existing control programs alone will not eliminate unhealthy ozone levels in some of the nation's largest population centers.

Based on information in EPA's Trends Report issued in 2002,

over the past 20 years, national ambient ozone levels decreased 18 percent based on 1-hour data and 11 percent based on 8-hour data. Between 1982 and 2001, emissions of VOCs decreased 16 percent. During that same time period, emissions of NO

increased 9 percent. For the period 1982 to 2001, the downward trend in 1-hour ozone levels seen nationally is reflected in every broad geographic area in the country. The Northeast and West exhibited the most substantial improvement over the last 20 years, while the South and North Central regions experienced the least rapid progress in lowering ozone concentrations. Similar to the 1-hour ozone trends, all regions experienced improvements in 8-hour ozone levels between 1982 and 2001 except the North Central region, which showed little change during this period.

Latest Findings on National Air Quality—2001 Status and Trends. U.S. EPA; Office of Air Quality Planning and Standards; Emissions, Monitoring and Analysis Division; Research Triangle Park, NC. September 2002. EPA 454/K-02-001. Found at:

http://www.epa.gov/airtrends/ozone.html.

Table 1.—8-Hour Ozone Hypothetical Nonattainment Areas and Population

[Projected by modeling]

2000

2007

2010

2020

Number of areas—base case (without Clear Skies Act controls)

122

Number of areas with Clear Skies Act controls

122

Population (millions)—base case (without Clear Skies Act controls)

178

143

116

82.4

Population (millions)—with Clear Skies Act controls

178

143

103

82.1

Note:

The number of areas

projected to each future year is based on modeled projections without consideration of application of new emission control measures that would be required under the SIP process for areas designated nonattainment for the 8-hour NAAQS.

See discussion below on how we have developed hypothetical nonattainment areas for purposes of analysis of this proposed rulemaking and options.

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

Our overall strategy for achieving the 8-hour ozone standard is based on the structure outlined in the CAA. The CAA gives both the States and EPA important roles in implementing national air quality standards.

States have primary responsibility for developing and implementing SIPs that contain local and in-State measures needed to achieve the air quality standards in each area. We assist States by providing technical assistance and guidance, including guidance on control measures. In addition, we set national emissions limits for sources such as motor vehicles. Where upwind sources contribute to downwind problems in other States, we can also ensure that the upwind States address these contributing emissions or regulate them federally, where a State fails to act to address them.

We intend to work closely with States and Tribes to use an appropriate combination of national, regional and local pollution reduction measures to meet the standard expeditiously and in a cost-effective manner.

1. The SIP System

States use the SIP process to identify the emissions sources that contribute to the nonattainment problem in a particular area, and to select the emissions reductions measures most appropriate for that area, considering costs and a variety of local factors. Under the CAA, SIPs must ensure that areas reach attainment as expeditiously as practicable. However, other programs, such as Federal controls, also provide reductions, and States may rely on those reductions when developing their attainment plans.

The SIP system for nonattainment areas is an important component of the CAA's overall strategy for meeting the 8-hour ozone standard, but it is not the only component. As noted below, the CAA also requires or anticipates the use of national rules that will reduce emissions and help achieve cleaner air.

2. National Rules

For the States to be successful in developing local plans showing attainment of standards, EPA must do its part to control the sources that are

more effectively and efficiently controlled at the national level and to ensure that interstate transport is addressed through SIPs or other means. We already have issued key national and regional control requirements for motor vehicles, power plants and other sources that will enable many areas to meet the 8-hour standard in the near term.

Current emissions standards for new cars, trucks and buses are reducing motor vehicle emissions of VOCs (sometimes referred to as hydrocarbons) and NO

as older vehicles are retired. Other rules are reducing emissions from several categories of non-road engines. EPA's Tier 2 motor vehicle emission standards, together with the associated sulfur in gasoline requirements, will provide additional benefits nationally within the time period of many 8-hour ozone nonattainment areas' anticipated attainment dates (65 FR 6698, February 10, 2000). Also, we published the heavy duty diesel rule on January 18, 2001 (66 FR 5002), which will contribute to reductions needed to meet the 8-hour ozone standard in areas with later attainment dates.

In the eastern U.S., dramatic reductions in NO

emissions from power plants and large industrial sources will occur by May 2004 under our rules to reduce interstate transport of ozone pollution in the East. These rules are the NO

SIP Call, published October 27, 1998 (63 FR 57356), and the Section 126 Rule, published January 18, 2000 (65 FR 2674).

Also, under the requirements of section 183(e) of the CAA, we are contemplating either Federal rules or control techniques guidelines (CTGs) for controlling VOCs from 15 additional categories of consumer and commercial products. The CTGs assist States in determining required controls for facilities in nonattainment areas. The 15 categories are in addition to 6 CTGs already published under this provision of the CAA (consumer products, architectural coatings, automobile refinishing coatings, aerospace coatings, wood furniture coatings, and shipbuilding and ship repair coatings). These additional rules or CTGs are expected to be completed over the next few years.

Control measures targeting hazardous air pollutants (HAPs) also result in control of VOCs and, in some cases, NO

. Under section 112 of the CAA, EPA was required to identify and list categories of industrial facilities that emit significant quantities of one or more of 188 HAPs and establish maximum achievable control technology (MACT) standards for each category of sources. Because most of the organic HAPs are also VOCs, in many cases, control of organic HAP emissions also achieves reductions in VOC emissions.

Rules for most of the listed MACT categories have been promulgated. Although many of the earlier promulgated rules have already resulted in emissions reductions of VOCs, the more recent rules will not begin achieving reductions until the compliance date, which is generally 3 years following promulgation. Therefore, the amount of reductions achieved through control of HAPs that are VOCs will continue to grow over the next several years.

We see the potential for significant further emissions reductions from power plants and non-road engines at the national level. The Administration has proposed nationwide legislation, the “Clear Skies Act” (CSA), to reduce power plant emissions of NO

nationwide, as well as sulfur dioxide and mercury. We are also proposing a national rule that would significantly reduce NO

emissions from non-road diesel-powered equipment. These non-road sources constitute an important fraction of the NO

emissions inventory.

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

A basic issue for implementation of the 8-hour ozone standard is how to treat areas projected to attain the standard based on existing controls. We believe that an appropriate balance should be struck between two goals: Avoiding requirements for unnecessary additional controls that increase cost, and ensuring expeditious attainment to protect public health.

Today's proposal contains options that strive to balance these two goals under the authority of current law. The proposal contains two options for classifying areas under the 8-hour ozone standard. Both options contain features to ensure that areas projected to attain compliance in the near term based on existing requirements are not subject to additional prescribed control obligations. Of course, these areas would be subject to the same requirements that apply to all areas designated nonattainment, such as new source review (NSR) and conformity. However, we are considering options for providing for more flexible implementation of these requirements, as described elsewhere in this proposed rulemaking, and are actually proposing an option related to NSR in this proposed rulemaking.

The proposed Clear Skies legislation takes a different approach to requirements for areas projected to attain through controls that are already mandated. The proposed CSA includes a provision that would create a new designation of “transitional” for areas that are projected to attain compliance by 2015 based on existing controls, or with the aid of additional SIP controls approved by December 31, 2004. The proposed CSA provides that areas designated transitional would be subject to the requirements of the prevention of significant deterioration (PSD) program for new sources, which applies in attainment areas. Because “transitional” would be the designation for such areas, they would not be required to adopt additional control measures that would be required for areas designated nonattainment, nor would they be subject to conformity provisions. The provision includes a mid-course check to ensure that the area remains on-track toward attainment. In case of failure to attain by 2015, the area would be re-designated as a nonattainment area and would be subject to the nonattainment area requirements. We expect that most areas currently exceeding the 8-hour ozone standard could qualify for this designation, in many cases, without further local controls.

However, because the Clear Skies legislation has not been enacted, we have not considered it in this proposed rulemaking. Should the Clear Skies legislation be enacted into law, we would conduct further rulemaking on implementation of the 8-hour ozone standard under such law, if necessary.

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

A. What Is the Legal Background?

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

In May

1999, the Appeals Court remanded the ozone standard to EPA on the basis that our interpretation of its authority under the standard-setting provisions of the CAA resulted in an unconstitutional delegation of authority.

American Trucking Assns., Inc.

EPA,

175 F.3d 1027, 1034-1040 (ATA I)

aff'd,

195 F.3d 4 (D.C. Cir., 1999) (ATA II). In addition, the Court held that the CAA clearly provided for implementation of a revised ozone standard under subpart 2, not subpart 1.

Id.

at 1048-1050.

We sought review of these two issues in the U.S. Supreme Court. In February 2001, the Supreme Court held that EPA's action in setting the NAAQS was not an unconstitutional delegation of authority.

Whitman

American Trucking Assoc.,

121 S.Ct. 903, 911-914 (2001) (Whitman). In addition, the Supreme Court held that the D.C. Circuit incorrectly determined that the CAA was clear in requiring implementation only under subpart 2, but determined that our implementation approach, which did not provide a role for subpart 2 in implementing the 8-hour NAAQS, was unreasonable.

Id.

at 916-919. Specifically, the Court noted we could not ignore the provisions of subpart 2 that “eliminate[] regulatory discretion” allowed by subpart 1.

Id.

at 918. The Court also identified several portions of the CAA's classification scheme under subpart 2 that are “ill-fitted” to the revised standard and remanded the implementation strategy to EPA to develop a reasonable approach for implementation.

Id.

Because the D.C. Circuit had not addressed all of the issues raised in the underlying case, the court remanded the case to the D.C. Circuit for disposition of those issues.

Id.

at 919. On March 26, 2002, the D.C. Circuit Court rejected all remaining challenges to the ozone and fine particle (PM

2.5

) standards.

American Trucking Assoc.

EPA,

283 F.3d 355 (D.C. Cir. 2002) (ATA III). With that ruling, EPA began to move forward with programs to protect Americans from the wide variety of health problems that these air pollutants can cause, such as respiratory illnesses and premature death.

On July 18, 1997, we also promulgated a revised particulate matter (PM) standard (62 FR 38652). Litigation on the PM standard paralleled the litigation on the ozone standard and the court issued one opinion addressing both challenges. However, issues regarding implementation of the revised PM NAAQS were not litigated.

The Court addressed a number of other issues, which are not relevant here.

The implementation rule proposed herein will provide specific requirements for State, local, and Tribal air pollution control agencies to address as they prepare implementation plans to attain and maintain the 8-hour NAAQS. Each State with an area that is not attaining the 8-hour ozone NAAQS will have to develop—as part of its SIP—emission limits and other requirements to attain the NAAQS within the timeframes set forth in the CAA.

Tribes with jurisdiction over Tribal lands that are not attaining the 8-hour ozone standard could voluntarily submit a Tribal implementation plan (TIP) but would not be required to do so. However, in cases where a TIP is not submitted, EPA, working with the Tribes, would have the responsibility for planning in those areas.

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

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

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

http://www.epa.gov/ttn/naaqs/ozone/rto/otag/index.html.

That OTAG process resulted in a report to EPA with the conclusions that included the following:

—Regional NO

reductions are effective in producing ozone benefits; the more NO

reduced, the greater the benefit.

—Ozone benefits are greatest where emissions reductions are made; benefits decrease with distance.

—Elevated and low-level NO

reductions are both effective.

—Volatile organic compound controls are effective in reducing ozone locally and are most advantageous to urban nonattainment areas.

—Air quality data indicate that ozone is pervasive, that ozone is transported, and that ozone aloft is carried over and transported from one day to the next.

As a result of these recommendations, EPA called for SIP revisions from 22 States and the District of Columbia and established Statewide budgets on NO

emissions that those jurisdictions would have to meet by 2007. Stationary source emissions reductions to meet the budgets were required to be implemented by May 2004.

The purpose of the rule was to address long-range transport by eliminating the significant contribution that each State's NO

emissions made to both 1-hour and 8-hour ozone nonattainment problems in downwind areas. The call for SIP revisions was challenged by a number of States, industry and interest groups but was largely upheld by the court and has remained a viable means for obtaining significant NO

emissions reductions.

The EPA's NO

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

The OTAG report also recognized that VOC emissions reductions do not play much of a role in long-range transport, and concluded that VOC reductions are effective in reducing ozone locally and are most advantageous to urban nonattainment areas.

Under the Federal Advisory Committee Act (FACA), we also formed a Subcommittee for Development of Ozone, Particulate Matter and Regional Haze Implementation Programs that provided recommendations and ideas to assist us in developing implementation approaches for these programs. We have incorporated ideas from the FACA process for a number of SIP elements, particularly those related to transport of ozone, the process for demonstrating attainment of the ozone standard, and requirements for ensuring reasonable further progress. Further information on the FACA process and its reports is found at the following Web site:

http://www.epa.gov/ttn/faca/.

As noted above, we have also promulgated national rules that reduce VOC and NO

emissions (ozone precursors) from mobile and stationary sources, which also help address ozone nonattainment problems. A number of commenters recommended that we set additional national standards for more source categories such that States and Tribes do not have to control these sources locally. They suggest that such standards would eliminate the inconsistent regulation that occurs when each nonattainment area chooses how to regulate sources within its jurisdiction. We continue to review source categories for possible Federal measure development.

This technical backdrop led us to be guided by the principle of emphasizing national and regional measures to help areas come into attainment and, where possible, reducing the need for those

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

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

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

We received comments in response to the meetings and conference calls. The comments from the public meetings addressed a number of issues related to the implementation approach.

In addition to comments received at the public meetings, we received a number of written comments on how to implement the 8-hour ozone NAAQS. We have considered these comments in the implementation approach proposed below.

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

We plan to issue a final rule on an implementation approach by the end of 2003. While there is not a CAA deadline for promulgating a strategy to implement the 8-hour ozone NAAQS, the CAA does establish a deadline for EPA to promulgate designations of nonattainment areas under section 107 of the CAA.

We have entered into a consent decree that requires us to promulgate designations by April 15, 2004.

Section 107(d) of the CAA sets forth a schedule for designations following the promulgation of a new or revised NAAQS. The Transportation Equity Act for the Twenty-first Century (TEA-21) revised the deadline to publish nonattainment designations to provide an additional year (to July 2000), but HR3645 (EPA's appropriation bill in 2000) restricted EPA's authority to spend money to designate areas until June 2001 or the date of the Supreme Court ruling on the standard, whichever came first.

American Lung Association

EPA

(D.D.C. No. 1:02CV02239).

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

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

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

A. Classification of Areas

Under the CAA, an ozone nonattainment area's classification determines the minimum measures that must be included in the area's SIP for meeting the 8-hour standard and the maximum time period allowed for the area to meet the standard. We are proposing two options for classifying areas.

Under option 1, all areas would be classified under subpart 2 according to 8-hour ozone levels. As a result, all areas would be classified as marginal, moderate, serious, or severe or extreme (based on the most recent air quality data, no areas would fall in the “extreme” classification), and would be subject to control requirements specified in the CAA for each classification.

Under option 2, more than half the nonattainment areas would likely be regulated under subpart 1. All of these would be areas meeting the 1-hour ozone standard. The rest of the areas—those exceeding, and a few that may be meeting the 1-hour standard—would be classified under subpart 2 in the same manner as option 1.

We are also proposing an “incentive feature” that would allow areas to qualify for a lower classification under subpart 2 than their air quality would dictate if they demonstrate they will attain by the earlier attainment date of a lower classification. For example, an area that would be classified “moderate” could qualify for a “marginal” classification by showing it will attain within 3 years of designation. The “incentive feature” is proposed for use in conjunction with either classification option.

B. Attainment Deadlines

We are proposing that for areas classified under subpart 2, the periods for attainment (running from the date of designation/classification) would be 3 years for marginal areas, 6 years for moderate areas, 9 years for serious areas, and 15 years for severe-15 areas, and 17 years for severe-17 areas.

If classification option 2 were selected, some areas would be classified under subpart 1. Attainment dates for these areas would be no later than 5 years after designation, although they could be extended up to 10 years after designation depending on the severity of the area's air pollution and the availability and feasibility of pollution control measures.

For all areas, the CAA requires each plan to be designed to meet the standard as expeditiously as practicable, regardless of the maximum statutory period specified for attainment.

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

This section discusses which obligations would remain in effect for areas that were designated nonattainment under the 1-hour ozone NAAQS on or after November 15, 1990, as areas begin to implement the 8-hour standard. It also proposes two alternatives for revoking the 1-hour ozone standard: revocation in whole and revocation in part.

Areas designated nonattainment under the 8-hour standard.

We are proposing that all areas designated nonattainment for the 8-hour ozone NAAQS remain subject to certain obligations that applied by virtue of the area's classification for the 1-hour standard where the area's 1-hour classification was higher than the area's classification for the 8-hour standard. These obligations include major source thresholds, inspection and maintenance (I/M) programs and fuel programs. However, these obligations would not apply to portions of an 8-hour ozone nonattainment area that was not a part of a 1-hour ozone nonattainment area. We believe that Congress intended these requirements to continue to apply to areas as they move forward to address an ozone NAAQS. We are soliciting comment whether areas that have not yet met the attainment demonstration obligation for the 1-hour standard

should remain obligated to submit a 1-hour ozone attainment demonstration.

Areas designated attainment under the 8-hour standard.

Since attainment areas are subject to PSD, not nonattainment NSR, we propose that these areas would not remain subject to the nonattainment NSR offset and major source thresholds that might otherwise apply due to their classification for the 1-hour standard. However, we are proposing that control obligations that applied based on an area's 1-hour classification would remain. We are proposing that these areas are obligated to submit a maintenance plan under section 110(a)(1). Consistent with EPA's “Clean Data Policy,” we are proposing that these areas not be required to meet outstanding attainment demonstration and rate-of-progress (ROP) requirements, so long as they remain in attainment. However, if the area violates the 8-hour standard and does not have an approved maintenance plan for the 8-hour standard under section 110(a)(1), those obligations will once again apply. We are proposing that these areas would need contingency measures in their section 110(a)(1) maintenance plans. However, unlike contingency measures under section 175A, these contingency measures need not include an obligation to implement all control obligations in the previously approved SIP. For all areas designated attainment for the 8-hour ozone NAAQS the requirement to demonstrate conformity to the 1-hour standard would no longer apply once the 1-hour standard is revoked or determined not to apply for that purpose.

Concerning the NO

SIP Call.

We are proposing that States must continue to adhere to the emission budgets established by the NO

SIP Call after the 1-hour standard is revoked in whole or in part. Similarly, we are not proposing to revoke or modify the section 126 regulation.

Obligations under part D of title I of the CAA that would not continue to apply.

We are proposing that areas would not be obligated to continue to demonstrate conformity for the 1-hour standard once the 1-year grace period for application of conformity for the 8-hour standard has elapsed. We are also proposing that we would no longer make findings of failure to attain the 1-hour standard and, therefore, also would not reclassify areas to a higher classification for the 1-hour standard based on a failure to meet the 1-hour standard.

How long would the obligations discussed under the 1-hour standard last?

We are proposing that these measures would not expire. However, we are proposing two options for when the State may relegate these measures to contingency measures:

Option 1.

When the area achieves the level of the 1-hour ozone standard (even if the area has not yet attained the 8-hour standard).

Option 2.

When the area attains the 8-hour standard and is designated attainment (regardless of when, if ever, the area attains the 1-hour standard).

Mechanism to effect the transition from the 1-hour to the 8-hour standard.

We are proposing 2 mechanisms. For both of these mechanisms, we are proposing that the revocation of the 1-hour standard would occur 1 year following designations for the 8-hour NAAQS.

Option 1:

Complete revocation of the 1-hour standard.

Option 2:

Partial revocation of 1-hour standard.

D. Mandatory Measures

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

E. Consequences of Failure To Attain

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

F. Interstate Transport

EPA recognizes that ozone and ozone precursors are often transported across State boundaries, and that interstate transport can make it difficult—or impossible—for some States to meet their attainment deadlines solely by regulating sources within their own boundaries. To address this concern, the Agency recently adopted two rules (the NO

SIP Call and the Section 126 Rule) to reduce interstate ozone transport in the eastern U.S. These rules were developed based on the level of reductions needed to address transport for both the 1-hour and 8-hour standards. For both rules, the compliance date for achieving the required emissions reductions is May 31, 2004. Thus, unlike in the past, States affected by transport can develop their local ozone implementation plans with the knowledge that the issue of interstate transport has already been addressed “up front.”

The President recently proposed legislation known as the Clear Skies Act that, among other things, would further reduce interstate transport of ozone and NO

(an ozone precursor) from the power sector through a cap-and-trade program similar to the acid rain program. These reductions are beyond the levels required under the NO

SIP Call and the Section 126 Rule. The Clear Skies reductions would enable several additional areas to meet the 8-hour standard without imposing any additional local controls. A number of other areas would find it easier to meet the 8-hour standard because of the additional reductions in power plant emissions that would be required under Clear Skies. However, the Agency has not made a determination that such reductions are warranted under the transport provisions of the CAA. In order to evaluate this issue, the Agency intends to investigate the extent, severity and sources of interstate ozone transport that will exist after the existing transport rules are implemented in 2004.

Modeling and Attainment Demonstration

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

Reasonable Further Progress (RFP)

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

1. Requirement for 15 Percent VOC Reductions for Moderate and Above Areas During the First 6 Years After the Base Year

We are proposing two ways to implement the 15 percent requirements for moderate-and-above areas to meet numerical emissions reductions milestones (also known as rate-of-progress, or ROP, requirements).

Under the first option, all such areas would be required to reduce baseline VOC emissions by 15 percent over the first 6 years after a baseline year.

Under the second option, areas that previously reduced VOC emissions by 15 percent as part of implementing the 1-hour standard would be viewed as having already met the requirement. Moderate areas meeting this criterion would comply with the general subpart 1 requirement to demonstrate “reasonable further progress” toward meeting the standard. Serious-and-above areas meeting the criterion would be required to achieve an 18 percent reduction in VOC and/or NO

over the first 6 years and 9 percent over subsequent 3-year periods until the area's attainment date.

2. Base Year

We are proposing 2002 as the baseline year, and that the 6-year period for reductions would run from January 1, 2003 until December 31, 2008. We propose that States be allowed credit toward meeting the ROP requirements for all emissions reductions that occur after the 2002 base year—including reductions from all post-1990 Federal or other measures (except those specifically excluded under section 182(b)(1)) of the CAA. We have also recently issued a memorandum that sets forth 2002 as the baseline year for planning purposes.

We are also proposing options for other RFP issues, including:

• The timing of ROP reductions relative to attainment date for moderate areas.

• Timing of submission of ROP plan.

• CAA requirements for creditability of control measures.

• Subpart 1 RFP.

• Cases where 8-hr NA area encompasses and is larger than current 1-hr NA area.

RACM/RACT

In the event classification option 2 is selected, we are proposing an interpretation of the requirements for reasonably available control measures (RACM) and reasonably available control technology (RACT) for areas covered by subpart 1.

For RACT, for areas with 8-hour ozone levels that would place them in a moderate or above classification under subpart 2, we are proposing two options. Under the first option, these areas would be required to meet the traditional technology-based RACT control requirement that are applicable to moderate and above areas under subpart 2. Under the second option, if the area is able to demonstrate attainment of the standard as expeditiously as practicable with emission control measures in the SIP, then RACT will be met, and additional measures would not be required as being reasonably available.

For subpart 1 areas with 8-hour ozone levels that would place them in a marginal classification if classified under subpart 2, the RACT requirement would be similar to that for marginal areas covered under subpart 2. This RACT approach also would be available to areas that qualified for marginal status via the incentive feature.

The RACT requirements for areas under subpart 1 would have to be submitted within 2 years after an area's nonattainment designation.

We are proposing that the State does not need to perform a RACT analysis for sources subject to the State's emission cap-and-trade program where we have approved the cap-and-trade program as meeting the NO

SIP Call requirements and it does not need to submit a new NO

RACT SIP for those sources.

We propose to formally recognize NO

, as well as VOC, as an ozone precursor, so that RACT for NO

would be required for areas classified under either subpart 1 or subpart 2 for the same kinds of sources covered under the 1-hour ozone standard.

For RACM, we propose to continue with the same interpretation that we have used for implementing the 1-hour ozone standard. To show that all RACM have been included in the plan, the State must show that there are no additional measures that are technically and economically feasible that will advance the attainment date.

Conformity

No changes to the transportation conformity rule are proposed in this rulemaking. Transportation conformity is discussed in this proposal for informational purposes. By statute, transportation conformity applies to 8-hour nonattainment areas 1 year after the effective date of an area's designation. Our proposal to revoke the 1-hour standard 1 year after 8-hour ozone area designations means that transportation conformity requirements under the 1-hour standard would end at the same time 8-hour transportation conformity requirements begin. We are proposing that conformity would not apply in 1-hour ozone standard maintenance areas after we revoke the 1-hour ozone standard.

For the general conformity program, which ensures that federal actions will not interfere with an area's air quality plan, we are not proposing to revise its General Conformity Regulations in this rulemaking. We plan to retain the existing

de minimis

emissions levels for actions exempt from the rule. Our proposal to revoke the 1-hour standard one year after 8-hour ozone area designations means that general conformity requirements under the 1-hour standard would end at the same time 8-hour general conformity requirements begin. We are proposing that general conformity would not apply in 1-hour ozone standard maintenance areas after we revoke the 1-hour ozone standard.

K. New Source Review

We are proposing three options for NSR, which could be implemented in conjunction with each other:

1. A “status quo” NSR program under which subpart 1 areas would be covered by subpart 1 NSR, while subpart 2 areas would be covered by subpart 2 NSR.

2. A more flexible “Transitional” NSR program for areas that submit early SIPs and that attain early. This program would be available to areas covered under subpart 1 and that are attaining the 1-hour ozone standard.

3. A “Clean Air Development Community” program that would allow a more flexible NSR program for areas that manage growth in emissions-producing activities.

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

As noted above, we originally intended to implement the 8-hour ozone standard under subpart 1 of part D, title I of the CAA. This would have allowed areas more flexibility to determine whether to regulate NO

, VOC or both to address ozone nonattainment.

As also noted above, however, the Supreme Court determined that an approach that did not provide for classifying areas under subpart 2—and thus subjecting those areas to the subpart 2 control requirements—in implementing the 8-hour standard was unreasonable. In structuring a proposed implementation rule, we have tried to stay as close as possible to the principles noted above, particularly with regard to seeking flexible ways for States to address their 8-hour ozone

problems by avoiding measures that may be unreasonable for an area. We have spent a large amount of time investigating possible legal theories and policy options to find flexibility within the statute, as interpreted by the Supreme Court. We have also had the benefit of ideas and recommendations from many interested stakeholders, who also have spent much time developing their own theories and ideas. Based on these efforts, we believe that we have developed options for an implementation program that are workable under the constraints of the CAA. Nonetheless, we recognize that those constraints will still require a number of areas to adopt certain control measures that may not be as effective as others in achieving the 8-hour ozone standard. We are soliciting any further ideas for addressing this situation.

To describe our proposed frameworks for implementing the 8-hour ozone standard, it is necessary to examine all the components or elements of the process used to implement the standard. Therefore, the issues and options that we are proposing that deal with the aspects of preparing SIPs for the standard are presented below individually. Following that, we present two possible alternative frameworks that blend one or more options from each of the elements to illustrate how they may work in conjunction with each other. We are soliciting comment on the options presented for the individual elements, and also on how the options can be grouped into a consolidated implementation framework.

The proposal below describes only those options or approaches we are proposing. We considered a number of other options and approaches for the elements discussed below. These other options that were considered but are not being proposed are described in a separate document available in the docket.

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

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

1. Statutory Framework and Supreme Court Decision

The CAA contains two sets of requirements—subpart 1 and subpart 2—that establish requirements for State plans implementing the national ozone air quality standards in nonattainment areas. (Both are found in title I, part D.) Subpart 1 contains general requirements for SIPs for nonattainment areas for any pollutant—including ozone—governed by a NAAQS. Subpart 2 provides more specific requirements for ozone nonattainment SIPs.

Throughout this proposed rulemaking, we repeatedly discuss whether an area is subject to the planning requirements of subpart 1 or subpart 2. This language is convenient shorthand for purposes of this proposal. Actually, if an area is subject to subpart 2 requirements, it is also subject to subpart 1 requirements. In some cases, subpart 1 and subpart 2 requirements are inconsistent or overlap. To the extent that subpart 2 addresses a specific planning obligation, the provisions in subpart 2 control. For example, under section 182(b), moderate areas are subject to 15 percent ROP requirements rather than the more general RFP requirements of section 172(c)(2). However, moderate areas remain subject to the contingency measure requirement of section 172(c)(9), as that requirement is not addressed for moderate areas in subpart 2.

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

When we published the 8-hour ozone standard on July 18, 1997, we indicated that we anticipated that States would implement that standard under the less prescriptive subpart 1 requirements. More specifically, we provided that areas designated nonattainment for the 1-hour ozone standard would remain subject to the subpart 2 planning requirements for purposes of the 1-hour standard until such time as they met that standard. But those areas and all other areas would only be subject to subpart 1 for purposes of planning for the 8-hour ozone standard.

As noted above, in February 2001, the Supreme Court ruled that the statute was ambiguous as to the relationship of subparts 1 and 2 for purposes of implementing the 8-hour NAAQS. However, the Court also ruled that our implementation approach, which provided no role for subpart 2 in implementing the 8-hour NAAQS, was unreasonable.

Id.

Specifically, with respect to classifying areas, the Supreme Court stated:

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

Whitman,

121 S.Ct. at 917.

However, despite recognizing that subpart 2 does provide classifications applicable for the 8-hour standard, the Supreme Court also recognized that the subpart 2 classification scheme, specified in section 181, did not entirely fit with the revised 8-hour standard and left it to EPA to develop a reasonable resolution of the roles of subparts 1 and 2 in implementing a revised ozone standard.

Id.

at 482-486.

In particular, the Court noted three portions of section 181—the classification provision in subpart 2—that it indicated were “ill-fitted to implementation of the revised standard.”

• First, the Court recognized that 1-hour design values used for establishing the classifications in Table 1 in section 181 “would produce at best an inexact estimate of the new 8-hour averages * * *” 121 S.Ct. at 918.

• Second, the Court recognized that the design values in Table 1 start at the level of the 1-hour NAAQS—0.12 ppm. The Court noted that “to the extent the new ozone standard is stricter than the old one, * * * the classification system of Subpart 2 contains a gap, because it fails to classify areas whose ozone levels are greater than the new standard (and thus nonattaining) but less than the approximation of the old standard codified by Table 1.”

Id.

• Third, the Court recognized that “Subpart 2's method for calculating attainment dates—which is simply to count forward a certain number of years from November 15, 1990 * * * seems to make no sense for areas that are first classified under a new standard after November 15, 1990.” More specifically, the Court recognized that attainment dates for marginal (1993), moderate (1996), and serious (1999) areas had passed.

Id.

at 483-484.

2. EPA's Development of Options

In light of the Supreme Court's ruling, we examined the statute to determine the manner in which the subpart 2 classifications should apply for purposes of the 8-hour ozone NAAQS. We paid particular attention to the three portions of section 181 that the Supreme Court noted were ill-fitted for implementation of the revised 8-hour standard. We examined those provisions in light of the legislative history and the overall structure of the CAA to determine what Congress intended for purposes of implementing a revised, more stringent ozone standard. We believe that we need to take a narrow reading consistent with what we believe Congress intended. Consistent with those principles, we developed several options.

3. Options for Classification

We are proposing two options for comment. We prefer classification option 2 because it provides more flexibility to States and Tribes as they address their unique air quality problems. This is likely to allow some areas to attain the standard at a lower cost. However, we are also soliciting comments on option 1, in part, because it is less complex and may be easier to communicate, in addition to any other ideas on how to classify nonattainment areas.

Option 1.

Under the first option, we would classify 8-hour ozone nonattainment areas according to the severity of their ozone pollution based on 8-hour ozone levels.

Under this option, all 8-hour nonattainment areas would be classified under subpart 2 as marginal, moderate, serious, severe-15, severe-17, or extreme. The CAA gives areas in higher classifications—which are those with more serious ozone pollution problems—longer time periods for attaining the standard, but also requires these areas to meet a longer list of requirements than areas in lower classifications.

A key feature of this option is the use of 8-hour ozone design values in determining the severity of an area's 8-hour ozone problem. However, the subpart 2 classification table (Table 1 of CAA section 181) is based on 1-hour ozone design values (because it was designed for implementation of the standard in effect in 1990—the 1-hour ozone standard). Therefore, this option would require us to adapt the subpart 2 classification scheme. Specifically, we would adopt by regulation a modified version of the subpart 2 classification table that contains 8-hour design value thresholds for each classification, rather than the statutory 1-hour ozone design value thresholds. Using 8-hour design values for classifying areas for the 8-hour standard would reflect the magnitude of the 8-hour ozone problem more accurately than would the 1-hour design values in Table 1.

We are proposing to translate the classification thresholds in Table 1 of section 181 from 1-hour values to 8-hour values in the following manner: Determine the percentage by which each classification threshold in Table 1 of section 181 exceeds the 1-hour ozone standard and set the 8-hour threshold value at the same percentage above the 8-hour ozone standard. For example, the threshold separating marginal and moderate areas in Table 1 is 15 percent above the 1-hour standard, so we would set the 8-hour moderate area lower threshold value at 15 percent above the 8-hour standard.

An examination of the percentages derived indicated that Congress set the classification thresholds at certain percentages or fractions above the level of the standard.

These are the percentages above the standard that we used and applied to the level of the 8-hour standard to yield new threshold levels for the 8-hour standard. Table 2 of this proposed rulemaking below depicts how the translation would be done and the results.

The upper thresholds of the marginal, moderate, serious, severe-15, and severe-17 classifications are precise percentages or fractions above the level of the standard, namely 15.000 percent (

3/20

ths more than the standard), 33.333 percent (one-third more than the standard), 50.000 percent (one-half more than the standard), 58.333 percent (

7/12

ths more than the standard) and 133.333 percent (one and one-third more than the standard).

There are other ways of performing the translation as described further below, some of which have been suggested in public comment, but we believe that the translation described here is most consistent with the apparent intent of Congress in establishing the thresholds in the classification system in section 181.

As mentioned above, under this option all 8-hour nonattainment areas would be classified under subpart 2 and receive attainment dates consistent with their classification. Elsewhere in this proposed rule, we discuss how it would interpret the attainment dates in Table 1 of section 181 for purposes of areas classified under subpart 2 for the 8-hour standard. Areas that do not attain by their attainment date would be reclassified to a higher classification and be given a later attainment date and would be subject to the measures of the higher classification (section 181(b)(2)).

Table 2.—Table 1 of Subpart 2 1-Hour Ozone Classification Table

[Translation to 8-Hour Design Values]

Area class

CAA design value thresholds 1-hour ozone ppm

Percent above 1-hour ozone NAAQS

Translated 8-hour design value thresholds ppm ozone

Marginal

from

0.121

0.833

0.085

up to

0.138

15.000

0.092

Moderate

from

0.138

15.000

0.092

up to

0.160

33.333

0.107

Serious

from

0.160

33.333

0.107

up to

0.180

50.000

0.120

Severe-15

from

0.180

50.000

0.120

up to

0.190

58.333

0.127

Severe-17

from

0.190

58.333

0.127

up to

0.280

133.333

0.187

Extreme

equal to or above

0.280

133.333

0.187

The percentages used were calculated based on the level of the 1-hour standard as it appears in 40 CFR 51.9, viz., 0.12 ppm. The percentages were applied to the 8-hour standard as it appears in 40 CFR 51.10, viz., 0.08 ppm. Our guidance uses a rounding convention for 1-hour air quality data such that values less than 0.125 round down to 0.12 and therefore represent attainment; values of 0.125 up to and including 0.129 round up to 0.13, and therefore indicate nonattainment. An exact translation of the 0.121 1-hour threshold would have produced 0.081 ppm as the corresponding 8-hour threshold; however, since any value less than 0.085 ppm would indicate an area is attaining the 8-hour ozone standard, the table's lowest value reflects the lowest value representing nonattainment, viz., 0.085 ppm.

Option 2—2-step approach.

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

standard under subpart 2. This option relies on language in the Supreme Court decision, which is described in detail below.

In brief, the option that we are proposing would work as follows:

• First, we would determine which 8-hour areas must be classified under subpart 2. These would be areas with ozone levels that exceed the 1-hour ozone design values that Congress specified in Table 1 of section 181. For the remaining areas, we would have discretion to place them under subpart 1 or subpart 2.

• Second, we would classify all areas. Subpart 2 areas would be classified in the same manner described above under option 1. Options for classifying subpart 1 areas are described below.

(i)

Legal framework for 2-step approach.

Under this approach, we first determine the universe of areas that must be subject to the provisions of subpart 2 and the universe of areas that fall into a “gap” in subpart 2's classification scheme. Then, we proceed to determine how to classify the areas.

(ii)

Legal framework—Step 1—Which subpart applies for an area?

With respect to the first step, the Supreme Court noted that “to the extent that the new ozone standard is stricter than the old one, * * * the classification system of Subpart 2 contains a gap, because it fails to classify areas whose ozone levels are greater than the new standard * * * but less than the approximation of the old standard codified by Table 1 [in section 181(a)].” 121 S.Ct. at 918. Thus, for those areas with a 1-hour ozone design value above the level identified in Table 1 (

i.e.

, 0.121 ppm), Table 1 “specifies” a classification for the area. For those areas, we would not have authority to establish classifications under subpart 1 because section 172(a)(1)(C) prohibits the use of the classification authority in section 172(a)(1)(A) for those areas.

However, for areas with 1-hour ozone design values below 0.121 ppm, Table 1 does not specify a classification, and those areas fall into a gap in the statute. Thus, we must reasonably determine whether such areas should be subject to the planning obligations of subpart 1 or subpart 2. This issue is discussed more fully below under “Rationale for regulating all “gap” areas under subpart 1 only.”

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

In summary, under the first step of this approach, we examine each nonattainment area's most recent 1-hour design value at the time of designation under the 8-hour NAAQS to determine whether the area must be subject to the classification under subpart 2. If an area's 1-hour design value is 0.121 or higher, then it must be subject to a subpart 2 classification. If its 1-hour design value is lower than 0.121, it falls into a gap and we must determine a reasonable implementation scheme—either subpart 1 or subpart 2—for such area.

(iii)

Legal framework-—Step 2—How should areas be classified under subparts 1 and 2?

Under step 2 of this approach, we must determine how to classify areas subject to the classification provisions of subpart 2. For those areas subject to the classification provisions of subpart 2, we believe that it is most reasonable to use the area's 8-hour design value to determine the appropriate classification. This would be done in the same manner as option 1, proposed above, in which the Table 1 threshold design values are converted from 1-hour values to 8-hour values.

Another option would have been to apply Table 1 as it is written. Some might argue that this approach is better because it is consistent with the design value EPA would use under this option to determine whether Congress mandated that the area be subject to subpart 2. We do not believe that Congress would have intended the use of 1-hour design values for determining the classification “ and therefore the control obligations and attainment dates—of 8-hour areas. While we believe it is reasonable to use the 1-hour design values as a barometer of Congress' intent as to which areas should be subject to the more prescriptive requirements of subpart 2, we do not believe it makes sense to use the 1-hour values to establish each area's classification under that subpart. The area's classification identifies the specific control requirements applicable to each area within that classification and the period of time the area has to attain. As enacted, the Table provides that areas having a more significant ozone pollution problem for the 1-hour standard and thus a higher classification are subject to more stringent controls and have a longer period to attain. Because of the different form and averaging times of the 1-hour and 8-hour standards, areas with significant 1-hour problems may not have as significant an 8-hour problem and vice versa. Using the 1-hour design values to classify areas, therefore, could result in areas with less significant ozone problems being subject to stricter planning obligations (and later attainment dates) than those with a more significant problem. Thus, we believe it is more consistent with Congressional intent to use 8-hour design values as the means for specifying the stringency of controls needed to attain the 8-hour ozone standard and the associated attainment dates. We also believe that this is consistent with the Supreme Court decision, in which the Court recognized that the “1-hour averages” in Table 1 “produce at best an inexact estimate of the new 8-hour averages.”

See

121 S.Ct. at 918.

As discussed in the following section, for areas that EPA determines would be subject only to subpart 1, section 172(a)(1)(A) grants EPA discretion to develop a classification scheme.

4. Under Classification Option 2, How Would EPA Classify Subpart 1 Areas?

Background.

As noted above, classification option 2 above could result in a number of areas not being classified under subpart 2. Section 172(a)(1)(A) grants EPA discretion to establish a classification system for areas covered under subpart 1 but does not mandate classifications. Section 172(a)(1)(A) provides that

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

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

Proposed Implementation Guidance for the Revised Ozone and Particulate Matter (PM) National Ambient Air Quality Standards (NAAQS) and the Regional Haze Program. November 17, 1998. Found at:

http://www.epa.gov/ttn/oarpg/t1pgm.html.

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

classified under subpart 1, we have determined the classification scheme it proposed earlier is not appropriate. We are now proposing, as described below, two new options for classifying subpart 1 areas for the 8-hour standard.

Options for classifying subpart 1 areas

(i)

Option 1—no classifications.

Under this option, subpart 1 areas would not have different classifications. When submitting an attainment demonstration, each area would need to establish an attainment date consistent with section 172(a)(2)(A),

i.e.

, demonstrating attainment as expeditiously as practicable, but no later than 5 years after designation or 10 years after designation if the severity of the area's air pollution and the availability and feasibility of pollution control measures indicate more time is needed.

(ii)

Option 2—create an overwhelming interstate transport classification.

This option could be implemented in addition to option 1 (no classifications) for areas that qualify; in other words, we would not classify areas that do not qualify for this transport classification. Under this option, an area could be classified as a “Transport Area” upon submission of a SIP that demonstrates, using modeling, that the nonattainment problem in the area is due to “overwhelming transport” emissions.

We are proposing that for subpart 1 areas to qualify for an overwhelming transport classification, the area would have to meet the same criteria as specified for rural transport areas under section 182(h) (of subpart 2). This section restricts treatment as a rural transport area to an area that does not include, and is not adjacent to, any part of a Metropolitan Statistical Area or, where one exists, a Consolidated Metropolitan Statistical Area (as defined by the United States Bureau of the Census). The area may be treated as a rural transport area if we find that sources of VOC (and, where we determine relevant, NO

) emissions within the area do not make a significant contribution to the ozone concentrations measured in the area or in other areas.

Since this classification would only apply to subpart 1 areas, areas classified under subpart 2 would not qualify for this classification.

EPA's guidance on such determinations appears in “Criteria for Assessing the Role of Transport of Ozone/Precursors in Ozone Nonattainment Areas,” May 1991. U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, Technical Support Division, Research Triangle Park, NC 27711. Available at:

http://www.epa.gov/scram001/tt25.htm.

Look for zip file name UAMIVGUIDE. Unzip to access file name UAMCRIT.

The following are features of this option:

• The area would be treated similar to areas classified marginal under subpart 2 for purposes of emission control requirements.

• Less restrictive NSR and conformity requirements could be proposed for the area. If we include the transport classification option in the final implementation rule, we would consider proposing a separate rulemaking on the details of NSR and conformity requirements.

• The area would receive an attainment date that is consistent with section 172(a)(2)(A), but that takes into consideration the following:

• The attainment date of upwind nonattainment areas that contribute to the downwind area's problem; and

• The implementation schedule for upwind area controls, regardless of their geographic scope (

e.g.

, national, regional, statewide, local).

This option would partially address Tribal concerns about designations where a Tribal area designated nonattainment does not contribute significantly to its own problem. This is one of the key issues for the Tribes who seek to have economic growth from new sources within their jurisdiction but that have difficulty obtaining emission reduction offsets from sources located either inside or outside Tribal areas.

Interstate, intrastate, and international transport are also discussed elsewhere in this proposed rulemaking.

5. Rationale for Regulating All “Gap” Areas Under Subpart 1 Only

This section is aimed solely at providing a rationale for why all gap areas should be placed under the subpart 1 regulatory framework rather than the subpart 2 regulatory framework. Issues regarding what specific requirements should apply to subpart 1 areas are addressed in later sections of this preamble.

In developing classification option 2, we explored a number of options regarding how to interpret the relationship of subpart 1 and subpart 2 for areas with 1-hour design values less than 0.121. These areas are referred to below as “gap” areas because their 1-hour design value falls below the lowest value in the subpart 2 classification table and thus Congress did not dictate whether subpart 2 or subpart 1 applies. The options we explored ranged from placing all of these areas into the subpart 2 classification scheme to placing none of these areas into the subpart 2 classification scheme. We are proposing the latter approach—that all areas that fall into the gap should be subject only to the planning obligations of subpart 1. When faced with a similar issue following enactment of the CAA Amendments of 1990, we determined that areas that Congress did not mandate fall into the classification scheme of subpart 2 should be subject to only the planning obligations of subpart 1.

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

See

57 FR 13498 at 13524 col. 3

et seq.

(April 16, 1992).

For classification option 2, we believe it is appropriate to continue that interpretation of the CAA for 8-hour ozone areas, despite the fact that a significant number of areas designated nonattainment for the 8-hour NAAQS will fall into this group. Congress enacted subpart 2 with the understanding that all areas (except marginal areas, for which no new controls were required) would have to employ additional local controls to meet the 1-hour ozone standard in a timely fashion. Since then, many control measures have been implemented, our understanding of the importance of interstate pollution transport has improved, and we have promulgated interstate NO

transport rules. Regional modeling by EPA indicates that the majority of potential 8-hour nonattainment areas that fall into the gap will attain the 8-hour standard by 2007 based on reductions from the NO

SIP Call, the Federal Motor Vehicle Emissions Control Program, and other existing Federal and State control measures, without further local controls.

Of the 76 hypothetical areas that would fall into the gap (and would thus be covered under subpart 1 under classification option 2), 27 would have been classified as moderate if classified under option 1 based on their 8-hour design values. Eighteen of these 27 areas are projected to attain by 2007 through existing regional or national measures. If these areas were to be classified as moderate (under classification option 1), these areas would nonetheless be required to implement statutorily specified controls for moderate areas. Using our discretion to regulate gap areas under subpart 1 is one way (the proposed incentive feature, discussed below in this section on classifications, is another way) to avoid requiring unnecessary new local controls in areas

already projected to meet the standard in the near term.

The other 49 gap areas could be regulated either under subpart 1 (under option 2) or as marginal areas if classified by 8-hour design value under subpart 2 (under option 1). These areas already are meeting the 1-hour standard and are close to meeting the 8-hour standard. Because control requirements for marginal areas are similar to those for subpart 1 areas, and because most of these areas are projected to attain within 3 years, the difference in regulatory category may make no practical difference for many of these areas. A potential rationale for placing these areas under subpart 1 is to provide States and EPA with greater discretion to handle implementation difficulties that might arise in some of these areas. For example, a gap area might fail to attain within the maximum attainment date for marginal areas (3 years after designation) because of pollution transport from an upwind nonattainment area with a later attainment deadline. In that event, subpart 2 calls for the area to be reclassified as moderate and for the area to implement additional local controls specified for moderate areas. For areas under subpart 1, however, we could provide additional time for the area to attain while the upwind sources implemented required controls if this were determined to be a more effective or more appropriate solution. Although regional modeling projections indicate that the NO

SIP Call will bring most gap areas into attainment by 2007, some States have voiced concern to us that interstate or intrastate pollution transport may affect future 8-hour areas with near-term attainment deadlines. Subpart 1 would provide States and EPA with more flexibility on the remedy in any such cases.

Although we believe that there are reasons to place gap areas in subpart 1, and have the legal authority to do so, we are not suggesting that subpart 2 is unreasonable for any area that would be subject to subpart 2 under either classification option. Also, our analysis here should not be taken as inconsistent with its proposal under classification option 1, whereby all 8-hour ozone nonattainment areas would be subject to the subpart 2 planning obligations. That simpler option, in conjunction with the incentive feature for classifications (if ultimately adopted), described below in this section on classification, could provide similar flexibility on control measures for most (though not quite all) areas. In addition, we are proposing ways in which to build some flexibility into some of the mandated VOC control obligations in subpart 2, in areas where it would make sense to provide such flexibility. A final observation is that Congress did recognize some benefit in prescribing measures for areas because of past failure to attain under less prescriptive provisions of the CAA.

Placing all gap areas in subpart 1 would result in over half of the hypothetical nonattainment areas being covered by subpart 1. To be fair, this option might appear to result in some areas being placed in subpart 1 even though they have 8-hour ozone design values as high or higher than some areas that fall under Table 1 in section 181 and thus are covered under subpart 2. As explained above, we believe the most effective way to deal with that issue is not to exercise our discretion and make those areas subject to subpart 2. Rather, we can use our discretion under subpart 1 to determine how to define the controls required under subpart 1 for such areas in order to assure the most equitable, yet effective, means for these areas to attain the 8-hour ozone NAAQS. For example, in the section of this proposed rulemaking addressing RFP under subpart 1, we explore an option of defining RFP in the same manner as it is defined under subpart 2. EPA is open to suggestions as to how to make the subpart 1 planning process that would apply to these areas effective and also equitable in light of the subpart 2 planning obligations to which areas with a similar 8-hour ozone problem may be subject.

6. Proposed Incentive Feature

In addition to the two basic classification options being proposed above, we are also proposing an early attainment incentive feature that could be applicable to either of the options proposed above. Under this feature, for areas classified under subpart 2, we would classify an area at a lower classification than it would receive based on its design value, if a modeled demonstration indicates the area will attain by an attainment date that is consistent with the lower classification. For instance, if a subpart 2 area has an 8-hour ozone design value of 0.094 ppm, it would ordinarily be classified as moderate, with an attainment date 6 years after the area's designation as nonattainment for the 8-hour standard. If modeling acceptable to EPA demonstrates that this area will attain within 3 years after designation, the area would be eligible for classification as a marginal area, since marginal areas would have a maximum attainment date of 3 years after their nonattainment designation date. (See our proposal on attainment dates elsewhere in this proposed rulemaking.)

The lower classification would provide additional flexibility to the area in that it would avoid the mandatory control requirements of the higher classification. Appendix A of this proposal provides a comparison of requirements under subparts 1 and 2.

In granting a lower classification to an 8-hour ozone nonattainment area based on this option, we propose to take into account the extent to which the area significantly contributes to downwind nonattainment or interferes with maintenance under section 110(a)(2)(D) of the CAA. We solicit comment on possible mechanisms for assessing this contribution for purposes of granting the lower classification, and possible tests for whether to grant or deny the lower classification.

In addition to soliciting comment on this proposed incentive feature itself, we are soliciting comment on whether such modeled demonstration would have to be made prior to the initial classification of areas, or whether it could be submitted after we have already classified the area initially at the higher classification, in which case we would have to revise the classification downward at a subsequent time.

We also solicit comment on whether EPA, prior to initial classifications, should use EPA regional-scale modeling (rather than urban-scale modeling) to make determinations of which areas would receive a lower classification. Under this suboption, an area would qualify for the lower classification if EPA's regional modeling indicated that, based on emissions reductions from existing national and regional programs, the area would attain the 8-hour standard by the attainment deadline for the next lower classification. In requesting comment on this suboption, EPA notes that regional-scale modeling alone is not considered sufficient for an approvable attainment demonstration. We request comment on whether regional-scale modeling would nonetheless be adequate for purposes of lowering an area's classification. (Under this approach, if regional modeling did not provide grounds for the lower classification, States would need to perform local attainment demonstrations to take advantage of the incentive feature.)

It should be noted that an option was presented and discussed at the public meetings similar to this incentive feature in conjunction with the option that would have classified all areas based on their 8-hour design values but also relied on modeled results to adjust the classification. The option received

criticism from a wide variety of commenters, who argued that modeling could be applied inappropriately in classifying areas. We nonetheless believe it is appropriate to propose this feature to alleviate some of the other concerns that many commenters raised about the mandatory measures required under the higher classifications of subpart 2. Furthermore, we believe this option is justified by the intent of the CAA, in which an area's classification is generally linked to the amount of time the area is anticipated to need to attain the NAAQS. We recognize that the CAA was not originally structured to allow lower classifications based on an area being projected to attain earlier. However, under the Supreme Court ruling that required that we interpret the law regarding subpart 2's application to the 8-hour ozone standard, we believe it may reasonably give areas that are projected to attain the 8-hour ozone standard by an earlier date a classification that is consistent with that attainment date.

7. Other Options EPA Considered

We considered many other options for classification and for the translation of the classification table in the CAA. These options are discussed in a separate document available in the docket.

These other possible ways of translating the classification table, in our opinion, do not have the same degree of consonance with the intent of Congress when it enacted subpart 2 as those we are proposing. We are therefore not proposing them.

8. Implications for the Options

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

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

http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr/.

Table 3.—Proposed Classification Options Counts of Hypothetical Nonattainment Areas

Subpart 2

Extreme

Severe-17

Severe-15

Serious

Moderate

Marginal

Subpart 1

Total

Option 1 (8-hour design value)

122

Option 1 (8-hour design value)-with incentive feature*

122

Option 2 (2-step approach—areas < 0.121 ppm = subpart 1)

122

Option 2 (2-step approach—areas < 0.121 ppm = subpart 1)-with incentive feature

122

Areas that would be moderate using their 8-hour design value but that are projected to attain by 2007 would be classified marginal.

9. Other Considerations

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

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

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

This provision does not establish a mechanism for removing areas from the subpart 2 classification scheme.

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

1. Background

Under subpart 2 of the CAA, maximum attainment dates and most SIP submittal dates are fixed as a function of a nonattainment area's classification under Table 1. The CAA provides that an area's attainment date must be “as expeditious as practicable but no later than” the date prescribed in Table 1 for that area's classification. The statutory dates are specified as a number of years (

e.g.

, 6 years) from the date of enactment of the CAA Amendments, which was November 15, 1990. Because these dates are a set number of years after enactment of the CAA Amendments, one might initially

conclude that the subpart 2 classifications, with their associated attainment dates, should not apply for the 8-hour standard. The Supreme Court, however, rejected a conclusion that the subpart 2 classifications do not apply, although it noted that the attainment dates “seem[ ] to make no sense” for areas classified under a new standard after November 15, 1990. 121 S.Ct. at 918.

We believe that applying the attainment dates as expressly provided under Table 1 would produce absurd results. For example, a strict application of Table 1 would result in areas classified as marginal for the 8-hour NAAQS as having an attainment date of November 15, 1993 and areas classified as moderate as having an attainment date of November 15, 1996. Since these dates have long passed, it makes no sense to establish them as the applicable dates.

Many provisions of the CAA, however, indicate what Congress' intent was in setting attainment dates. For example, section 181(b), provides that for areas designated attainment or unclassifiable for ozone immediately following enactment of the 1990 CAA Amendments and subsequently redesignated to nonattainment, the attainment date would run from the date the area is classified under subpart 2.

Thus, if an area designated as attainment for the 1-hour ozone standard in 1990 were redesignated to nonattainment for the 1-hour ozone standard in January 2002 and classified as moderate, the area's attainment date would be 6 years following January 2002,

i.e.

, January 2008. Similarly, section 172(a)(2) provides for attainment dates to be calculated from the time the area is designated nonattainment. We believe that Congress would have intended for areas designated nonattainment and classified under subpart 2 for the 8-hour standard to have attainment periods consistent with those in Table 1 (

e.g.

, 3 years for a marginal area, 6 years for a moderate area, etc.), but running from the date the area is designated and classified for purposes of the 8-hour NAAQS. We are proposing for areas classified under subpart 2, the period for attainment (running from date of designation/classification) would be:

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

• Marginal—3 years.

• Moderate—6 years.

• Serious—9 years.

• Severe—15 or 17 years.

• Extreme—20 years (no areas currently expected to be in this category for the 8-hour ozone standard).

Note that the CAA requires each area to demonstrate attainment as expeditiously as practicable, regardless of maximum statutory periods.

Most SIP submittal dates in subpart 2 run for a fixed period from the date of enactment of the 1990 CAA, which was also the date of designation and classification by operation of law for most subpart 2 areas. Under section 181(b)(1), the statute provides that any fixed dates will be extended by operation of law to a period equal to the length of time between that date of enactment and the date an area is subsequently designated and classified. Thus, unless EPA has reason to create a different time period, either as explained specifically below or in any subsequent specific rulemaking applicable to a particular subpart 2 requirement, subpart 2 SIP submittals will be due as a general matter by the same period of time after designation and classification under the 8-hour standard as provided in subpart 2 for areas designated and classified at the time of enactment of the 1990 CAA.

For areas classified under subpart 1, attainment dates would be set under section 172(a)(2)(A), which provides that the SIP must demonstrate attainment as expeditiously as practicable, but no later than 5 years after designation or 10 years after designation if the severity of the area's air pollution and the availability and feasibility of pollution control measures indicate more time is needed.

Note that in determining whether an area actually attains the NAAQS at the time of the attainment date, EPA would use the ambient air quality data for the three ozone seasons prior to the attainment date. As an example, if the effective date of the nonattainment designations is May 15, 2004, the maximum attainment date for an area classified marginal would be May 15, 2007. In this example, EPA would consider the 8-hour ozone data for the three previous ozone seasons—2004, 2005 and 2006.

2. How Will EPA Address the Provision Regarding 1-Year Extensions?

Both subpart 1 and subpart 2 provide for two brief attainment date extensions for areas in limited circumstances where they do not attain by their attainment date. Section 172(a)(2)(C) (under subpart 1) provides for EPA to extend the attainment date for 1 year if the State has complied with all requirements and commitments pertaining to the area in the applicable implementation plan, and no more than a minimal number of exceedances of the relevant NAAQS has occurred in the area in the attainment year. No more than two 1-year extensions may be issued under this subparagraph for a single nonattainment area. Section 181(a)(5) (under subpart 2) contains a similar provision, but instead of allowing a “minimal” number of exceedances, it provides for only one exceedance of the standard in the year preceding the extension year. This reflects the form of the 1-hour ozone standard, which is exceedance-based. The 8-hour ozone standard, however, is not an exceedance form of standard, but rather a concentration-based standard.

We have issued guidance on the portion of these two provisions relating to the State's compliance with all requirements and commitments pertaining to the area in the applicable implementation plan.

However, for purposes of section 181(a)(5), we need to determine a reasonable interpretation in light of the fact that the statute, as written, does not fit the form of the 8-hour standard. Because Congress has addressed this issue elsewhere in the statute, we believe it is reasonable to adopt that formulation. Therefore, we would apply the same test under subparts 1 and 2 for determining whether to grant a 1-year extension,

i.e.

, whether there was a minimal number of exceedances. For both subparts, we propose to interpret this to mean for the 8-hour standard, the area would be eligible for the first of the 1-year extensions under the 8-hour standard if, for the attainment year, the area's 4th highest daily 8-hour average is 0.084

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

See

40 CFR 50.9(a); the 1-hour standard for ozone “* * * is attained when the expected number of days per calendar year with maximum hourly average concentrations above 0.12 parts per million (235 μg/m

) is equal to or less than 1 in order for the area to be considered attaining the standard, as determined by Appendix H to this part.” Thus, the 1-hour standard is an “exceedance” based standard, since the number of exceedances of the standard (yearly average over 3 years under appendix H) must be equal to or less than 1. In contrast,

see

40 CFR 50.10(b); the 8-hour standard for ozone is “* * * met at an ambient air quality monitoring site when the average of the annual fourth-highest daily maximum 8-hour average ozone concentration is less than or equal to 0.08 ppm, as determined in accordance with Appendix I to this part.” Thus, this is a concentration-based standard, because meeting the standard is determined by calculating the concentration, not the number of exceedances as under the 1-hour standard.

Memorandum of February 3, 1994, from D. Kent Berry re: “Procedures for Processing Bump Ups and Extension Requests for Marginal Ozone Nonattainment Areas.” U.S. Environmental Protection Agency, Research Triangle Park, North Carolina.

3. How Do Attainment Dates Apply to Indian Country?

As discussed elsewhere in this proposed rulemaking, the Tribal Authority Rule (TAR), 40 CFR 49.9 provides that Tribes should not be treated in a manner similar to States with regard to schedules, including the attainment dates. However, the TAR also requires EPA to develop Federal implementation plans (FIPs) where necessary and appropriate. (40 CFR 49.11). Because we believe that public health considerations are of primary concern, the attainment dates for primary NAAQS should be met. Therefore, EPA, in consultation with the Tribes, will work to ensure that the standards are addressed as soon as possible, considering the needs of the Tribes, and ensure that attainment in other jurisdictions is not adversely affected.

4. How Will EPA Establish Attainment Dates for Areas Classified as Marginal Under the “Incentive” Feature Proposed Under the Classification Section or Areas Covered Under Subpart 1 With a Requested Attainment Date of 3 Years or Less After the Designation Date?

EPA would ordinarily have established attainment dates for areas through a review of the SIP and whether attainment is as expeditious as practicable but no later than the date prescribed in the CAA. Elsewhere in this proposal, we are providing that marginal areas (under subpart 2) and areas under subpart 1 with an attainment date within 3 years after designation would not actually have to submit an attainment demonstration within 3 years after designation. Therefore, we must establish another procedure for establishing the attainment dates for these areas. We are proposing the following procedure.

Areas that are classified marginal based solely on their 8-hour ozone design value.

For these areas, we are proposing that the CAA attainment date under Table 1 of section 181 would be the area's attainment date (namely, 3 years after designation).

Areas that are classified marginal based on the proposed incentive feature proposed elsewhere and areas covered under subpart 1 with a requested attainment date of 3 years or less after the designation date.

These are areas that are projected through modeling to attain within 3 years following designation. For these areas, we are proposing that these States must submit a SIP—within 1 year after designation—that provides documentation (viz., concerning the modeling and analyses that the area is relying on to support its claim) that the area will attain within 3 years following designation. Such a SIP submission must undergo the normal public hearing and comment procedures as for any SIP submission.

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

As areas are designated for the 8-hour ozone NAAQS, we must address how those areas will transition from current implementation of the 1-hour standard to implementation of the 8-hour standard. In addressing this issue, we considered a number of factors, including the existing “anti-backsliding” provisions of the CAA, Congress’ intent, as evidenced in the statute, to ensure continued progress toward attainment of the ozone standard, and the Supreme Court's interpretation of the CAA and Congressional intent. In subsection 1 of this section, we provide background information on the transition process we set forth in 1997 (and subsequently amended through regulation) and we summarize the statutory anti-backsliding provisions and the Congressional intent in enacting these provisions and subpart 2 of the CAA. In subsection 2, we identify two proposed options to effect the transition from implementation of the 1-hour standard to the 8-hour standard that concern the revocation of the 1-hour standard in whole or revocation of the 1-hour standard in part. In subsection 3, we indicate—in light of the CAA provisions and Congressional intent—which requirements that applied for purposes of the 1-hour standard should continue to apply to areas after they are designated for the 8-hour standard. Next, in subsection 4, we consider whether there is a point at which the States should no longer be required to implement those obligations EPA determines continue to apply after areas are designated for the 8-hour standard. Finally, in subsection 5, we indicate how it will ensure through regulation that the public knows which “1-hour” obligations remain in place and for which areas.

1. Background

Background on EPA's current regulation for governing the transition.

At the time we promulgated the 8-hour ozone NAAQS in July 1997, we issued a rule (40 CFR 50.9(b)) providing that the 1-hour standard would no longer apply to an area once we determined that the area had attained the 1-hour NAAQS. (62 FR 38856, July 18, 1997). This process became known as “revocation” of the 1-hour NAAQS. We interpreted that provision to mean that once the 1-hour standard was revoked, the area's 1-hour ozone designation no longer applied. Due to the ongoing litigation concerning the 8-hour ozone NAAQS and our implementation strategy for that standard, we subsequently modified 40 CFR 50.9(b) in part to provide that “after the 8-hour standard has become fully enforceable under part D of title I of the CAA and subject to no further legal challenge, the 1-hour standards set forth in this section will no longer apply to an area once we determine that the area has air quality meeting the 1-hour standard.” (65 FR 45181, July 20, 2000).

Thus, currently, three criteria would need to be met before we could revoke the 1-hour standard for an area: (1) The 8-hour standard would need to be fully enforceable, (2) all legal challenges to the 8-hour ozone NAAQS would need to be resolved; and (3) we would need to determine that an area had attained the 1-hour standard.

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

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

Supreme Court's ruling that we cannot ignore subpart 2 for purposes of implementing a revised ozone NAAQS, we believe it is appropriate to reconsider how to transition from the 1-hour NAAQS to the 8-hour NAAQS in light of the statutory structure of the CAA, as amended in 1990.

Our principal objectives for the mechanism that would ensure a smooth transition to implementation of the 8-hour standard are to ensure (1) that there will be no degradation of air quality, (2) that areas continue to make progress toward ozone attainment, and (3) consistency with the intent of Congress when it originally established the implementation structure for ozone in subpart 2 of the CAA.

We believe the several alternative approaches proposed below are more consistent with the implementation path we are proposing in light of the Supreme Court's remand. These alternatives would more effectively continue the momentum towards cleaner air than would have been accomplished under the current 40 CFR 50.9(b) structure while allowing 8-hour ozone nonattainment areas to more readily focus on their 8-hour ozone standard SIP obligations.

Background on the CAA's anti-backsliding provisions.

The CAA contains a number of provisions that indicate that Congress did not intend to allow States to alter or remove provisions from implementation plans if the plan revision would jeopardize the air quality protection provided in the approved plan. Section 110(l) provides that EPA may not approve a SIP revision if it interferes with any applicable requirement concerning attainment and ROP or any other applicable requirement of the CAA. Congress created a tougher test for areas that might want to relax control requirements that were in SIPs prior to the CAA Amendments of 1990. Section 193 of the CAA prohibits modification of a control requirement in effect or required to be adopted as of November 15, 1990 (

i.e.

, enactment of the 1990 CAA Amendments), unless such a modification would ensure equivalent or greater emissions reductions.

We also believe that Congress set an additional statutory bar for 1-hour ozone areas that were designated nonattainment and classified at the time of the 1990 CAA Amendments. For these areas, Congress classified the areas “as a matter of law” and provided that even upon redesignation to attainment, such areas could not remove from the SIP control measures specified in subpart 2 (“applicable requirements”), but could shift them to contingency measures that would be implemented to “promptly correct any violation of the standard.”

For these reasons, we believe that although Congress gave EPA the power to revise the existing ozone standard, Congress did not open the door for States to remove SIP-approved measures or to avoid control obligations with which they have not yet complied.

One other provision, though not directly applicable, sheds light on Congress' intent. In 1990, Congress enacted section 172(e), which applies when EPA revises a NAAQS and makes it less stringent. This provision specifies that in those circumstances, States cannot relax control obligations that apply in nonattainment area SIPs or avoid adopting those that they have not yet adopted.

Because Congress specifically mandated that such control measures need to be adopted or retained even when EPA relaxes a standard, we believe that Congress did not intend to permit States to remove control measures when EPA revises a standard to make it more stringent, as in the case of the 8-hour standard.

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

We also note that in finding EPA's subpart 1-only implementation approach unlawful, the Supreme Court voiced concern that EPA not render subpart 2 “abruptly obsolete” because “Subpart 2 obviously was enacted to govern implementation for some time. * * * A plan reaching so far into the future was not enacted to be abandoned the next time EPA reviewed the ozone standard—which Congress knew could happen at any time, since technical staff papers already had been completed in 1989.” In response to the decision, we are now proposing (as noted above in the discussion on classifications) to use subpart 2 in implementing the 8-hour standard. However, the classification systems we are proposing today would result in the majority of ozone nonattainment areas that are currently classified for the 1-hour standard being placed in a lower classification for the 8-hour standard. Our proposed anti-backsliding approaches, discussed below, would not render obsolete the congressionally-specified control measure requirements of subpart 2 for 1-hour ozone nonattainment areas at a time when those areas have not yet met either of the health-based ozone standards.

2. When Will EPA Revoke the 1-Hour Standard?

We are proposing to revoke the 1-hour standard either in part or in whole 1 year following designations for the 8-hour NAAQS. As discussed below, we are proposing two different legal mechanisms for achieving the revocation. Under either approach, however, the same stipulations continue to apply to areas currently or formerly designated nonattainment for the 1-hour standard.

The deciding factor supporting the schedule for the revocation in our proposal is to ensure areas do not have to perform conformity analyses for both the 1-hour and 8-hour standards at the same time. As background, areas designated nonattainment for the first time for a new standard (

e.g.,

the 8-hour ozone standard) have a 1-year grace period before conformity applies for that standard (

i.e.,

a 1-year grace period before conformity applies for the 8-hour ozone standard). This 1-year grace period before conformity is required for the 8-hour standard applies to all areas designated nonattainment for the 8-hour standard, regardless of their 1-hour NAAQS designation status. Thus, under either of the mechanisms described below, we are proposing that conformity for the 1-hour standard no longer apply 1 year following the effective date of the 8-hour designation (

i.e.,

when the standard is revoked in whole or in part). However, conformity obligations for the 1-hour ozone standard would remain applicable during the grace period and would not be affected by the designation of areas for the 8-hour standard. Our intentions regarding conformity—as well as a more complete discussion of transportation conformity appear elsewhere in this proposal.

(i)

Option 1: Revocation in whole of the 1-hour standard.

Under this option, which is our preferred option, EPA would revoke the 1-hour standard and the associated designations and classifications 1 year following the effective date of the designations for the 8-hour NAAQS. The complete revocation of the 1-hour standard would occur in late spring of 2005 on the effective date of the 8-hour NAAQS designations, which will be issued by April 15, 2004. In order to address the anti-backsliding issues discussed in section 3, below, EPA would promulgate regulations specifying those requirements that would continue to apply after the revocation of the 1-hour standard. The regulations would also specify the geographic areas in which those obligations continue to apply, since areas designated nonattainment

for the 8-hour standard may include counties that were not designated nonattainment for the 1-hour standard. The anti-backsliding regulations would apply only to the portion of the 8-hour nonattainment area that was designated nonattainment for the 1-hour standard.

(ii)

Option 2: Partial revocation of 1-hour standard.

Under this mechanism, EPA would retain the 1-hour standard and its associated designations and classifications for limited purposes (viz., those discussed and proposed below in section 3) until the area meets the 1-hour standard. For many areas, this is likely to extend well beyond May 2005, the date of likely revocation under option 1.

For all remaining purposes, EPA would revoke the 1-hour standard and the associated designations and classifications 1 year after the effective date of designations for the 8-hour standard. As noted above, we believe that Congress initially intended the State's obligations under subpart 2 to continue to apply “as a matter of law,” and the 1-hour designations and classifications—established for the circumstances present when the requirements were enacted—are the mechanism Congress identified for triggering the applicability of these requirements. Under this theory, Congress would have intended the standard to remain in place for purposes of control measures and NSR requirements, as discussed above.

A number of commenters in the pre-proposal phase recommended an approach premised on retention of the standard. See,

e.g.,

Letter of December 5, 2002 from Michael P. Kenny, Executive Director, California Air Resources Board, to Jeffrey R. Holmstead, EPA Assistant Administrator for Air and Radiation. Available at:

http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr/.

While the partial retention of the standard itself and the associated designations and classifications would be the mechanism used to retain the specified obligations, we would need to promulgate regulations similar to those described in option 1 to ensure that it is clear for which purposes the standard is being retained.

(iii)

Request for comment.

Both of these options would achieve the same result—ensuring the continued applicability of certain control requirements in subpart 2 and ensuring continued improvement in air quality, while shifting the focus from modeling and other planning requirements for the 1-hour standard to analyses for the 8-hour standard. We solicit comment on which mechanism is preferable for accomplishing the overriding objective of preventing backsliding from statutory and SIP requirements while achieving a smooth transition to implementation of the new standard. In addition, EPA also solicits comment on whether to retain the limit in current 40 CFR 50.9(b) that the 1-hour standard will not be revoked for any area until the 8-hour standard is no longer subject to legal challenge.

(iv)

Other possible approaches for the transition from the 1-hour to the 8-hour standard.

EPA considered other approaches for the timing of the revocation of the 1-hour ozone standard; these are discussed in a separate document available in the docket.

3. What Obligations Should Continue To Apply as an Area Begins To Implement the 8-Hour Ozone NAAQS and What Obligations Should no Longer Apply?

In this section, we consider what obligations from subpart 2 relative to the 1-hour ozone standard should continue to apply to areas after they have been designated for the 8-hour standard. We are proposing that the continuity of particular obligations should vary depending on the attainment status of an area for both the 1-hour and 8-hour standard. We first discuss those obligations that we propose should continue to apply to an area that is designated nonattainment for the 8-hour NAAQS, and that was designated nonattainment for the 1-hour ozone standard on or after November 15, 1990. Second, we discuss those obligations that should continue to apply to an area that is designated attainment for the 8-hour NAAQS, and that was designated nonattainment for the 1-hour standard on or after November 15, 1990. (This section addresses only the continued application of requirements that applied by virtue of an area having been designated nonattainment for the 1-hour standard at some point following enactment of the CAA Amendments of 1990. It does not address areas that have been designated attainment for the 1-hour standard at all times since November 15, 1990, because they would not have any continuing obligations under subpart 2 for purposes of the 1-hour standard.) Finally, we address States' continued obligations with respect to the NO

SIP Call. We address this issue separately since this obligation applies statewide and without respect to the designation status of areas within the State.

In general, the types of obligations that apply to areas by virtue of their 1-hour classification can be broken into three groups: control obligations; measures to address growth in new sources; and planning obligations. Control measures include specific emission reduction obligations such as NO

RACT, I/M, and fuel programs, which are mandated in subpart 2. Measures to address growth are NSR (required under subpart 1 and subpart 2) and conformity (required by subpart 1). Planning obligations consist of attainment and maintenance demonstrations and RFP plans. For purposes of clarifying what we are proposing with respect to control measures, we also discuss in this section “discretionary” control measures that are not specified in subpart 2. Generally, these are control measures or other obligations the State selected and adopted into the SIP for purposes of attainment, ROP or any other goal to benefit air quality, but which are not specifically mandated by subpart 2.

What obligations should continue to apply for an area that is designated nonattainment for the 8-hour NAAQS and that was designated nonattainment for the 1-hour ozone NAAQS on or after November 15, 1990?

We believe that Congress intended each area that was classified for the 1-hour ozone NAAQS under subpart 2 to adopt the specified control obligations in subpart 2 for the area's 1-hour classification. We interpret the mandated obligations in subpart 2 for purposes of an area's 1-hour ozone classification to remain applicable to such areas by virtue of the area's classification “as a matter of law” in 1990. (Appendix B of this proposed rulemaking contains a list of the subpart 2 requirements that remain applicable.) The three types of obligations described above (control obligations, measures to address growth in new sources, and planning obligations) are discussed separately below.

(i)

Control measures.

We are proposing that all areas designated nonattainment for the 8-hour ozone NAAQS remain subject to control measures that applied by virtue of the area's classification for the 1-hour standard. To the extent the area has met the obligation and the control measure is a part of the approved SIP, the State could not modify or remove that measure except to the extent that it could modify or remove that measure for purposes of the 1-hour standard and subject to a demonstration under section 110(l) that modification or removal would not interfere with attainment or maintenance of the 8-hour ozone

NAAQS.

For control measures that the State has not yet adopted, the State remains obligated to adopt and submit such controls. And, once adopted into the approved SIP, the State could not modify or remove that measure except to the extent that it could modify or remove that measure for purposes of the 1-hour standard and subject to a demonstration under section 110(l) that modification or removal would not interfere with attainment or maintenance of the 8-hour ozone NAAQS. This obligation would apply only to the part of the 8-hour ozone nonattainment area that was designated nonattainment for the 1-hour ozone NAAQS.

In addition, for a revision to an obligation that was in effect prior to November 15, 1990, section 193 prohibits a SIP revision without a showing that it would result in equivalent or greater emission reductions. For purposes of avoiding repetition, we do not mention section 193 in each of the examples discussed in this section. However, States remain obligated to make the section 193 demonstration for any revision to a requirement that applied prior to November 15, 1990.

To illustrate what we are proposing, we provide the following example, which will also be used in the next section discussing discretionary control measures. Assume an area is classified as marginal for the 8-hour ozone NAAQS and was classified as serious for the 1-hour ozone NAAQS at the time of the 8-hour designations. Also assume RACT for a particular source category is considered an 80 percent reduction in uncontrolled emissions of VOCs at all major sources. In its 1-hour SIP, the State chose to require emissions reductions of 90 percent and the RACT requirement applied to all major stationary sources, which for a serious area includes all sources that emit greater than 50 tons/year VOCs. After designation for the 8-hour standard, the State wants to modify this RACT requirement to require only 80 percent reduction in emissions and to limit the requirement to sources that emit 100 tons/year of VOCs. Because the State could not have modified the RACT obligation to apply only to sources emitting 100 tons/year or more of VOCs for purposes of the 1-hour standard, the State could not change the source cut-off from 50 tons/year for purposes of the 8-hour standard. The 50 tons/year major source threshold would continue to be an “applicable requirement” for the part of the area that was designated nonattainment for the 1-hour NAAQS. The State, however, could apply RACT only to sources that emit 100 tons/year or more for any portion of the area that was not a part of the 1-hour serious nonattainment area. While the 80 percent control level would be considered mandatory, the 90 percent control level was not mandated by the CAA and thus is considered a “discretionary control measure.” We address below how modification of a discretionary control measure would be treated under this proposal.

The same principle would hold true for control measures in a maintenance plan for an area that was designated nonattainment for the 1-hour standard at or after November 15, 1990 and that was subsequently redesignated to attainment under the 1-hour ozone standard.

Subpart 2 control measures (including those that had been shifted to contingency measures) could not be removed from the SIP and could be modified only to the extent that they could have been modified if the 1-hour standard remained in effect for the area. If the State had previously shifted a mandated subpart 2 control measure to its contingency plan, we would not require that the area begin to implement that measure as part of its 8-hour implementation plan, if the measure was not required under its classification under the 8-hour standard. However, the measure would need to remain as a contingency measure for the area and could not be removed from the SIP.

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

(ii)

Discretionary control measures.

Many approved SIPs contain control measures that are not specified under subpart 2 for the area, but that the State chose to adopt as part of the demonstration of attainment or part of the ROP requirement for the 1-hour NAAQS. For these kinds of measures, we are proposing that no additional burden be placed on the State. For purposes of the 1-hour standard, States may currently revise or remove those requirements so long as they make a demonstration consistent with section 110(l) that such removal or modification would not interfere with attainment of or progress toward the 1-hour ozone NAAQS (or any other applicable requirement of the CAA). Under the CAA, for purposes of the 8-hour standard, the same obligation would apply except the State would need to make the demonstration with respect to the 8-hour standard instead of the 1-hour standard.

In the example above, if a State wants to revise the control level for certain sources from 90 percent control to 80 percent control, the State may do so because subpart 2 mandated RACT in this example is an 80 percent level of control rather than a 90 percent control level. The 90 percent control level thus was “discretionary.” We are proposing that no additional burden, beyond the statutory section 110(l) test, be placed on the State to alter this requirement. Thus, to revise the control level, the State would need to demonstrate, consistent with section 110(l), that the lower control level of 80 percent would not interfere with attainment of the 8-hour standard or RFP for the 8-hour standard (or any other applicable requirement of the CAA).

A number of SIPs contain enforceable commitments to adopt additional discretionary emission reduction control measures in the future. The State remains obligated to these commitments to the same extent as if they were adopted measures. The only way a State may modify or remove such a commitment is through a demonstration under section 110(l).

(iii)

Measures to address growth.

For 1-hour nonattainment NSR requirements in place at the time an area is designated nonattainment for the 8-hour standard, we are proposing that the major source applicability cut-offs and offset ratios continue to apply to the extent the area has a higher classification for the 1-hour standard than for the 8-hour standard. We see no rationale under the CAA—given the Congressional intent for areas “classified by operation of law”—why the existing NSR requirements should not remain “applicable requirements” for the portion of the 8-hour nonattainment area that was classified higher for the 1-hour standard. However, if an area has been redesignated to attainment for the 1-hour standard as of the date of designation for the 8-hour standard, and is thus no longer implementing the nonattainment NSR program for its previous 1-hour ozone classification, it would not need to revert back to the program it had for purposes of the 1-hour standard. For example, if an area is classified moderate under the 8-hour standard, but was classified severe under the 1-hour standard at the time of the 8-hour designations, the portion of the 8-hour nonattainment area that was classified severe for the 1-hour standard would remain subject to an offset ratio of 1.3:1 and a major source threshold of 25 tons/year. The remaining portions of the 8-hour area would be subject to the offset ratio for moderate areas (1.15:1)

and the moderate area major source threshold (100 tons/year). If the severe 1-hour area had been redesignated to attainment prior to the time of the 8-hour designations and was subject to PSD rather than NSR, however, the entire designated area for the 8-hour standard would be subject to the offset ratio and major source threshold for a moderate area.

(iv)

Planning SIPs.

Most areas that are nonattainment under the 1-hour standard have already adopted attainment and ROP plans. However, there are a few areas that remain obligated to submit attainment or ROP SIPs. We have outlined our proposal for addressing ROP elsewhere in this proposed rulemaking and will not repeat those options in detail here. In general, however, we are proposing that States are still obligated to address separately ROP that does not overlap with ROP obligations for the 8-hour NAAQS. Where the ROP obligations overlap, the area need not separately address ROP for the 1-hour standard. For ROP already adopted into the SIP, we are proposing that the State may remove or revise control measures needed to meet the ROP milestone if such control measures were “discretionary,” as discussed above. But, a State could not revise or remove control measures if they would interfere with meeting the ROP goals. In other words, the CAA-mandated ROP emission reduction targets that applied for the 1-hour standard would still have to be met, but discretionary measures adopted to meet those targets could be modified, if the State makes the necessary showing under section 110(l).

With respect to attainment demonstrations, we are soliciting comment on the interpretation we should take for the two scenarios we believe exist. The first scenario would be a State that does not have a fully approved attainment demonstration under the 1-hour standard because it has failed to act in a timely manner. The second scenario is an area subject to an obligation to submit an attainment demonstration under the 1-hour standard in the future. In general, since attainment demonstrations are planning SIPs, and States must now be planning to attain the 8-hour NAAQS, one might argue that Congress could not have intended areas to continue to plan to meet a standard that EPA no longer considers to be adequately protective of public health. This is especially true when to do so would divert resources from planning to meet the 8-hour standard. In contrast, one could argue that allowing areas to bypass planning obligations under the 1-hour standard will delay attainment of health protection since States have more time to submit attainment plans under the 8-hour standard than under the 1-hour standard.

For instance, an area with a past-due obligation to revise its SIP to develop a new attainment demonstration for the 1-hour standard could possibly submit such a revision within the next year or so (2004-2005), with emissions reductions beginning to occur likely within 1 or 2 years (by 2006-2007). If this area were now only required to address the 8-hour standard, it would not have to submit a new attainment demonstration until 2007, as proposed elsewhere in this proposed rule, with emissions reductions occurring from that demonstration likely a year or more after 2007, which is several years after the time period possible by fulfilling the existing obligation.

There are some cases where a State does not have a fully-approved attainment demonstration because it has failed to act in a timely manner. To lift that obligation from those areas simply because EPA had adopted a more stringent NAAQS could result in a more preferential treatment of those areas over areas that did adopt fully-approvable attainment demonstrations with the requisite controls. For example, if an area has adopted controls to demonstrate attainment of the 1-hour standard, it may not remove those controls from its SIP without a demonstration that those controls would not interfere with attainment or progress toward the 8-hour standard (or any other applicable requirement of the CAA). Such an area likely would have more stringent control obligations in place than the area without a fully-approved attainment SIP and would have a high hurdle to removing or altering those controls. In contrast, the area without a fully-approved attainment demonstration would likely make slower progress toward attaining the 8-hour NAAQS (at least in the short-term) because it does not have all necessary measures in its approved SIP and—without a clear requirement to the contrary—would be under no pressure to have those measures in its SIP until its attainment demonstration for the 8-hour NAAQS is due.

For the following examples of actual situations, we are soliciting comment on whether to retain the obligation to develop a 1-hour attainment demonstration or to determine that the requirement no longer applies. In addition, we are soliciting comment on two alternatives that might address some of the inequities, while not subjecting States to the more complicated planning associated with developing two separate attainment demonstrations (one under the 1-hour standard and another under the 8-hour standard). Under the first alternative approach, areas that are subject to an obligation to submit a new or revised attainment demonstration would instead be required to submit a SIP revision that would obtain an advance increment of emissions reductions toward attainment of the 8-hour ozone standard within a specified, short-term timeframe. For example, we could require these areas to submit within 1 year of promulgation of the implementation rule a plan revision that requires a specific percentage of emissions reductions (

e.g.

, 5 percent or 10 percent) from the baseline emissions for the 8-hour NAAQS. In addition, we could require that the measures be implemented in the near term,

e.g.

, no more than 2 years after the required submission date. Under the second alternative, areas with an outstanding obligation to submit a 1-hour attainment demonstration would be required to submit their 8-hour ozone attainment demonstration early in lieu of being required to submit a 1-hour attainment demonstration. Submittal of an early 8-hour attainment demonstration would likely prevent the inequity of areas avoiding emissions reductions in the short term, as described in the preceding footnote.

•

Example 1:

An area has not met in part or in full a past-due obligation to submit a 1-hour attainment demonstration required because EPA reclassified the area to a higher classification after it failed to attain the 1-hour standard by its attainment date.

•

Example 2:

An area is subject to an obligation to submit an attainment demonstration in the future, as is the case where EPA applied its attainment date extension policy rather than reclassifying an area that failed to meet its attainment date and EPA has subsequently reclassified the area or soon will do so, because of the courts' rejection of the extension policy.

(v)

Other obligations.

A number of areas have SIPs that contain commitments to review their progress toward attaining the 1-hour NAAQS (in some cases, these are called “mid-course reviews”). These SIP-approved commitments are enforceable, and EPA and the States can use these mid-course reviews to ensure that progress is being made consistent with the analysis in the area's 1-hour attainment demonstration. The State remains obligated to honor these commitments.

What obligations continue to apply for areas that are designated attainment under the 8-hour standard and that were designated nonattainment for the 1-hour standard on or after November 15, 1990?

(i)

Obligations related to NSR.

Areas that are in attainment for the 8-hour ozone NAAQS would not be subject to nonattainment NSR for the 8-hour standard. We believe it makes little sense to require nonattainment NSR to continue simply because these areas were previously designated nonattainment for the 1-hour standard. Thus, we propose that these areas would be subject to PSD and would not be subject to the nonattainment NSR offset and major source thresholds that applied under their classification for the 1-hour standard.

(ii)

Obligations related to planning obligations other than maintenance plans.

With respect to SIP planning obligations (ROP plans and attainment demonstrations), we are proposing that the SIP planning requirements that applied for purposes of the 1-hour standard would not continue to apply to these areas as long as they continue to maintain the 8-hour NAAQS. Thus, even if these areas have failed to meet ROP or attainment plan obligations for the 1-hour standard, they would not be required to meet them for so long as they remain in attainment with the 8-hour standard. (As discussed below, however, we are proposing that such areas develop a maintenance plan under section 110(a)(1).) This approach is consistent with EPA's “Clean Data Policy”

under the 1-hour standard, which provides for these planning obligations to be stayed once an area attains the standard, but only for so long as an area remains in attainment of the 1-hour standard. If such an area violates the 8-hour NAAQS-prior to having an approved maintenance plan in effect (as proposed below to be required for these areas)—those obligations would once again apply in the same manner that they apply in areas designated nonattainment for the 8-hour ozone NAAQS.

Memorandum of May 10, 1995, “RFP, Attainment Demonstration, and Related Requirements for Ozone Nonattainment Areas Meeting the Ozone National Ambient Air Quality Standard,” from John S. Seitz, Director, Office of Air Quality Planning and Standards. Available at:

http://www.epa.gov/ttn/oarpg/t1/memoranda/clean15.pdf.

(iii)

Obligations related to control measures and maintenance plans.

The issue of what obligation remains with respect to “non-discretionary” control measures approved into the SIP or required under the CAA is more difficult. Our approach for these is based on the CAA's requirements for maintenance plans. (Consistent with our proposal for discretionary control measures in areas designated nonattainment for the 8-hour NAAQS, we would permit areas to modify discretionary measures for areas designated attainment for the 8-hour NAAQS so long as section 110(l) is met.)

If EPA determined that these areas

were required to develop maintenance plans pursuant to section 175A, then they would need to keep (or to adopt and then keep) those control measures in the SIP, though they could shift them to contingency measures. Some commenters urged us to require all areas previously designated nonattainment for the 1-hour NAAQS to retain (where the area had been redesignated to attainment) or develop (where the area was still designated nonattainment for the 1-hour NAAQS at the time of 8-hour designations) a section 175A maintenance plan. However, we do not believe that a section 175A maintenance plan is mandated or is necessary for areas initially designated attainment for the 8-hour NAAQS.

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

Section 175A maintenance plans are required for areas that were designated nonattainment for a NAAQS and then subsequently redesignated to attainment for that NAAQS. The areas addressed in this section have never been designated nonattainment for the 8-hour ozone NAAQS. Moreover, they have a maintenance obligation that already applies: Section 110(a)(1) requires areas to demonstrate how they will attain and maintain a new or revised NAAQS.

Therefore, we do not believe that Congress mandated that such areas be subject to the section 175A maintenance plan obligation for the 8-hour NAAQS, nor do we believe it is necessary to interpret that provision to apply.

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

For an area that was never redesignated to attainment for the 1-hour standard and never had a section 175A maintenance plan, we are proposing that if the area wants to revise any part of its current 1-hour SIP, the area must first adopt and submit a maintenance plan consistent with section 110(a)(1). Moreover, even if the State elects not to revise its existing SIP, we are proposing that the area submit a section 110(a)(1) maintenance plan within 3 years of designation as attainment for the 8-hour NAAQS. We believe that the maintenance plan should provide for continued maintenance of the 8-hour standard for 10 years following designation for the 8-hour NAAQS and should include contingency measures. Unlike section 175A, section 110(a)(1) does not address contingency measures and thus does not specify that mandated controls in the existing SIP must be shifted to contingency measures if modified or removed. We are proposing that if the State adopts sufficient contingency measures, and if it makes a demonstration consistent with section 110(1), it can modify or remove contr

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