Conditional Approval and Promulgation of Section 182(f) Exemption to the Nitrogen Oxides (NOINFx) Control Requirements for the Dallas- Fort Worth and El Paso Ozone Nonattainment Areas; Texas

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[TX-45-1-6566; FRL-5060-2]

Conditional Approval and Promulgation of Section 182(f) Exemption

to the Nitrogen Oxides (NOx) Control Requirements for the Dallas-

Fort Worth and El Paso Ozone Nonattainment Areas; Texas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rulemaking.

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SUMMARY: The EPA proposes to conditionally approve two petitions from

the State of Texas requesting that the Dallas-Fort Worth (DFW) and El

Paso ozone nonattainment areas be exempt from NOx control

requirements of section 182(f) of the Clean Air Act (CAA) as amended in

1990. The State of Texas bases its request for DFW upon a demonstration

that the DFW nonattainment area would attain the National Ambient Air

Quality Standards (NAAQS) for ozone by the CAA mandated deadline

without the implementation of the additional NOx controls required

under section 182(f). Similarly, the State bases its exemption request

for El Paso on a demonstration that the El Paso nonattainment area

would attain the ozone NAAQS by the CAA mandated deadline without

implementing the additional NOx controls required under section

182(f), but for emissions emanating from Mexico. These exemptions are

being requested under authority similarly granted under section 182(f)

of the CAA.

DATES: Comments on these proposed actions must be received in writing

on or before September 28, 1994.

ADDRESSES: Written comments on these actions should be addressed to Mr.

Thomas Diggs, Chief, Planning Section, at the EPA Regional Office

listed below. Copies of the documents relevant to these proposed

actions are available for public inspection during normal business

hours at the following locations. The interested persons wanting to

examine these documents should make an appointment with the appropriate

office at least 24 hours before the visiting day.

U.S. Environmental Protection Agency, Region 6, Air Programs Branch

(6T-A), 1445 Ross Avenue, suite 700, Dallas, Texas 75202-2733.

Texas Natural Resource Conservation Commission, P. O. Box 13087,

Austin, Texas 78711-3087.

FOR FURTHER INFORMATION CONTACT: Ms. Leila Yim Surratt or Mr. Matthew

Witosky, Planning Section (6T-AP), Air Programs Branch, USEPA Region 6,

1445 Ross Avenue, Dallas, Texas 75202-2733, telephone (214) 665-7214.

SUPPLEMENTARY INFORMATION:

Background

NOx are precursors to ground level (tropospheric) ozone, or

urban ``smog.'' When released into the atmosphere, NOx will react

with volatile organic compounds (VOC) in the presence of sunlight to

form ozone. Tropospheric ozone is an important factor in the Nation's

urban air pollution problem.

The 1990 Clean Air Act Amendments (CAAA) made significant changes

to the air quality planning requirements for areas that do not meet the

ozone NAAQS. Subparts 1 and 2 of part D, title I of the CAA as amended

in 1990 contain the air quality planning requirements for ozone

nonattainment areas. Title I includes new requirements to control

NOx emissions in certain ozone nonattainment areas and ozone

transport regions. Section 182(f) requires States to apply the same

requirements to major stationary sources of NOx as are applied to

major stationary sources of VOC. The new NOx requirements are

reasonably available control technology (RACT) and new source review

(NSR). These provisions are explained more fully in the EPA's NOx

Supplement to the General Preamble published in the Federal Register

(FR) on November 25, 1992 (see 57 FR 55620). In addition, the general

and transportation conformity rules (conformity) required by section

176(c) contain new NOx requirements (see 58 FR 63214 and 58 FR

62188).

El Paso, Texas, was designated nonattainment for ozone and

classified as serious pursuant to sections 107(d)(4) and 181(a) of the

CAA. The El Paso nonattainment area consists of El Paso County and

shares a common airshed with Juarez, Mexico. Under section 181(a),

serious areas must attain the ozone NAAQS by 1999. DFW was classified

as moderate with an attainment deadline of 1996. The DFW nonattainment

area consists of Dallas, Tarrant, Denton, and Collin Counties. Please

reference 56 FR 56694 (November 6, 1991, codified for Texas at title 40

of the Code of Federal Regulations in Sec. 81.344).

Applicable EPA Guidance

The CAA specifies in section 182(f) that if one of the conditions

listed below is met, the new NOx requirements would not apply:

1. In any area, the net air quality benefits are greater without

NOx reductions from the sources concerned;

2. In a nontransport region, additional NOx reductions would

not contribute to ozone attainment in the nonattainment area; or

3. In a transport region, additional NOx reductions would not

produce net ozone benefits in the transport region.

In addition, section 182(f)(2) states that the application of the

new NOx requirements may be limited to the extent that any portion

of those reductions are demonstrated to result in ``excess reductions''

of NOx. The NOx provisions of the conformity requirements

would also not apply in an area that is granted a section 182(f)

exemption (see 58 FR 63214 and 58 FR 62188).

The EPA's Guideline for Determining the Applicability of Nitrogen

Oxides Requirements under Section 182(f) (December 1993) describes how

the EPA will interpret the NOx exemption provisions of section

182(f). In addition, a memorandum signed by John S. Seitz, Director of

the EPA Office of Air Quality Planning and Standards, dated May 27,

1994, describes certain revisions to the process the EPA currently

intends to follow for granting exemptions from NOx control

requirements.

As described more fully in the Seitz memorandum, petitions

submitted under section 182(f)(3) are not required to be submitted as

State Implementation Plan (SIP) revisions. Consequently, the State is

not required under the CAA to hold a public hearing in order to

petition for an areawide NOx exemption determination. Similarly,

it is not necessary to have the Governor submit the petition.

International Border Area

Section 818 of the 1990 CAAA incorporates a new section 179B into

the CAA which contains special provisions for nonattainment areas that

are affected by emissions emanating from outside the United States. The

section 818 provisions are hereinafter referred to as section 179B.

Because the El Paso nonattainment area shares a common airshed with

Juarez, Mexico, the section 179B provisions apply to El Paso.

Under section 179B, the EPA will approve a SIP if the area meets

all other CAA requirements and establishes that implementation of the

plan would achieve attainment of the ozone standard by the CAA

statutory deadline ``but for emissions emanating from outside the

United States.'' Customarily, an area must demonstrate, using EPA

guideline models, that it would attain the relevant NAAQS. Since El

Paso and Juarez, Mexico, share an airshed and data are not available

for a Juarez emission inventory, modeling of the entire airshed is not

possible at this time. Current EPA policy allows an area subject to

section 179B, such as El Paso, to perform modeling using only U.S. air

emission data. Such modeling may form an acceptable basis for

demonstrating attainment for analysis purposes required under section

179B. As applied under EPA guidance, for areas that demonstrate

attainment, ``but for emissions emanating from a foreign country,'' the

provisions of section 179B will keep an area on an international border

from being subject to the ``bump up'' provisions of section 181(b)(2)

requiring reclassification to the next higher ozone nonattainment

classification if the area fails to attain the relevant NAAQS by the

applicable attainment date. See 57 FR 13498, 57 FR 13569-13570 (April

16, 1992).

The State of Texas performed Urban Airshed Modeling (UAM) using

only El Paso emissions data, which demonstrates that El Paso would

attain the ozone standard by 1996 ``but for emissions emanating from

Mexico.'' The El Paso UAM ozone modeling analysis will be referred to

in this document as the ``attainment demonstration'' for El Paso.

Although the EPA allows an area such as El Paso to demonstrate

attainment on a basis of U.S.-only modeling, it is understood that

ultimately basin-wide modeling must occur in order to develop a control

strategy in El Paso that will achieve the NAAQS. The United States

entered into the Agreement for Environmental Cooperation along the

U.S.-Mexico Border, referred to as the La Paz Agreement, with Mexico in

1983 to address environmental concerns along the border between the two

countries. Annex V of the Agreement, negotiated in 1989, calls for

basin-wide modeling to be accomplished for the El Paso/Juarez airshed.

The EPA has been working with Mexico and with the Texas Natural

Resource Conservation Commission (TNRCC) to accomplish the basin-wide

modeling. Since the statutory attainment date for serious ozone

nonattainment areas such as El Paso is 1999, concerned agencies intend

to complete such modeling by 1999.

State Submittal

On June 17, 1994, the TNRCC submitted to the EPA two petitions

pursuant to section 182(f) which request that the DFW and El Paso

nonattainment areas be exempted by the EPA from the NOx control

requirements of section 182(f) of the CAA.

The State bases its petitions on a demonstration that NOx

reductions would not contribute to attainment in either area, as

allowed for under the test (2) listed above, because such NOx

reductions would be in excess of the reductions necessary for

attainment. Consistent with the EPA's December 1993 section 182(f)

guidance, the State's excess emissions reductions demonstration is tied

to the attainment demonstration SIP required under section 182(c)(2)(A)

of the CAA.

The State's submission for each petition includes: (1) A letter

from Anthony C. Grigsby, Executive Director of the TNRCC, to Jane N.

Saginaw, Regional Administrator of the EPA Region 6, transmitting the

NOx exemption petition; (2) the petition from the TNRCC

summarizing the State's UAM attainment demonstration results; and (3)

technical reports documenting the State's base case UAM inputs. The

State has also previously submitted to the EPA the 15 percent

Reasonable Further Progress (RFP) SIPs for the DFW and El Paso areas,

as required by section 182(b)(1) of the CAA. The 15 percent RFP SIPs

contain regulations that are estimated to reduce VOC emissions in each

area by 15 percent from 1990 levels, net of any growth that may occur.

The State of Texas supplemented its petitions by submitting to the EPA

in July 1994, two additional technical reports on the UAM for each

area, which contained the following: base case performance evaluation,

attainment year emissions report, and attainment year modeling report.

These additional technical reports provided supplemental detail and

documentation on the modeling information already provided to the EPA

in the State's petitions. Finally, in the petitions, the State commits

to taking its attainment demonstration SIPs through public hearing,

adopting them, and submitting them to the EPA by November 15, 1994, as

required by section 182(c)(2)(A) of the CAA.

Analysis of State Submission

The following items are the basis for the EPA's action proposing to

conditionally approve the State of Texas section 182(f) NOx

exemption petitions for the DFW and El Paso ozone nonattainment areas.

Please refer to the EPA's Technical Support Document and the State's

submittal for more detailed information.

A. Consistency with EPA Section 182(f) Guidance

Chapter 6 of the EPA's December 1993 section 182(f) guidance

requires that the excess reductions demonstration for the ``contribute

to attainment'' test, i.e., test (2) listed above, must be tied to the

area's attainment demonstration SIP. This test must show that the

excess reductions are reductions in excess of those specified in the

attainment demonstration required by section 182, and either contained

in the approved SIP or as adopted by the State to meet the section 182

attainment demonstration requirement, and submitted to the EPA for

approval. The EPA believes that the more precise modeling analysis

contained in the State's attainment demonstration SIP is required for

the excess reduction test because the demonstration must show that a

specific portion of the total areawide NOx emissions is not

beneficial under one of the three tests listed above. The tie to the

attainment demonstration assures that an excess reductions petition

would not arbitrarily be based on small emissions and would not

undermine the State's control strategy.

The State has completed its modeling demonstrating attainment in

both areas and has committed to taking the attainment demonstrations

through public hearing, adopting them and submitting them to the EPA by

November 15, 1994. Because the attainment demonstrations rely on VOC

regulations contained in the 15 percent RFP SIPs which have been

adopted by the State and submitted to the EPA, the EPA does not

anticipate that the content of the final attainment demonstration SIPs

will differ from what has already been submitted to the EPA by the

TNRCC in the section 182(f) exemption petitions.

Chapter 7 of the EPA section 182(f) guidance requires that

photochemical grid modeling be used to demonstrate that NOx

reductions would be excess reductions for attainment. The guidance also

specifies that application of UAM should be consistent with the

techniques specified in the EPA ``Guideline on Air quality Models

(Revised),'' and ``Guideline for Regulatory Application of the UAM,''

(July 1991). As discussed in the next section, the State has met these

requirements by using the UAM consistent with the EPA's guidance.

B. UAM Modeling Analysis

The TNRCC used UAM version IV, an EPA-approved photochemical grid

model, to develop the attainment demonstration for the DFW and El Paso

areas. The State's modeling activities were performed as outlined in

the UAM modeling protocols, according to the EPA's ``Guideline for

Regulatory Application of the Urban Airshed Model.'' A specific

modeling protocol was developed by the State for its modeling

activities. The State's modeling protocol was reviewed and approved by

the EPA. The discussion below summarizes the EPA's analysis on how the

State's modeling demonstrations complied with the EPA's guidance.

Please refer to the EPA's Technical Support Document for more detailed

information.

1. Episode Selection

The State used the EPA ``Guideline For Regulatory Application of

The Urban Airshed Model'' to select episodes for use in the DFW and El

Paso UAM modeling exercises. Data from 1987 through 1991 were examined

for episodes which cover at least 48 consecutive hours and the worst-

case meteorological conditions. Four episodes were selected for the UAM

analysis for each area.

2. Model Domain and Meteorological Input

The TNRCC used sufficiently large modeling domains for DFW and El

Paso to ensure that the model captures the movement of ozone episodes

as a result of the VOC and NOx emissions emitted from the surface

sources. Meteorological data were collected from numerous monitoring

stations in both areas. The TNRCC followed the methods described in the

UAM User's Guides to develop model inputs for wind field data, mixing

heights, temperature, and meteorological scalars for both areas.

3. Emissions Inventory

The DFW and El Paso modeling exercises were conducted using VOC and

NOx emission inventories compiled by survey and direct measurement

by the TNRCC. The modeling emissions inventories are composed of point

source, area, on-road mobile, off-road mobile, and biogenic emissions.

Where applicable, emissions were adjusted for pertinent conditions

related to the episode day to be modeled, thus producing day-specific

emissions. The EPA procedures for developing episode-specific emission

inventories were followed.

For El Paso, as discussed above, the modeling exercise was

conducted based on an emission inventory consisting of the U.S. sources

only. Using this limited data set, the TNRCC was able to demonstrate

attainment for the El Paso side of the airshed using the 1996 emissions

inventory. Therefore, the State plans to submit an attainment

demonstration SIP that reflects an attainment year of 1996, three years

earlier than the CAA mandated deadline of 1999. Although a basin-wide

emissions inventory that includes Juarez, Mexico, emissions is

necessary to conduct reliable basin-wide modeling, such an inventory is

not presently available due to the lack of data on Juarez sources.

Therefore, the modeling for El Paso is based on a limited set of

emissions data. As discussed above, however, pursuant to Annex V of the

La Paz Agreement, basin-wide modeling will be performed once a complete

emissions inventory is available and the question of whether more

permanent improvements in air quality are achievable in El Paso will be

revisited at that time.

For both DFW and El Paso, the 1996 attainment year modeling

inventory was developed from the 1990 base year emission inventory and

adjusted to reflect the projected conditions for the attainment year.

Demographic and econometric forecasting methods were employed to

project activities levels to 1996, which in turn were used to develop a

projected emissions inventory for 1996. The State then applied the VOC

emission reductions that are projected to be realized from the control

regulations contained in the 15 percent RFP SIPs for each area. The

1996 inventories did not incorporate any NOx emission reductions

that would have been achieved through implementation of the NOx

RACT, NSR, or conformity provisions.

4. Model Performance

For DFW, both graphical and statistical performance measures were

used to evaluate the model. Using these analyses, the predicted results

from the model were compared to the observed results for each episode.

These analyses demonstrated that the model performed satisfactorily for

three of the episodes that were used for the attainment demonstration.

For El Paso, neither graphical nor statistical performance measures

could be used for the performance evaluation, because it is impossible

to estimate ozone formation in the atmosphere without complete

emissions data for the airshed. As described more fully in the EPA's

Technical Support Document, the State developed several alternative

diagnostic tests to evaluate the model's performance. Based on these

tests, the model exhibited satisfactory performance on two of the

episodes that were used for the attainment demonstration.

5. Demonstration of Attainment Without NOx Reductions

For the DFW attainment demonstration, all three episodes that

provided adequate performance with the base case inventory were used

with the DFW 1996 modeling inventory to model attainment of the ozone

NAAQS. The DFW 1996 modeling inventory incorporates approximately 75

percent of the emission reductions that are projected to be achieved

from the State's 15 percent RPF SIP. In each case, the predicted

domain-wide maximum ozone concentration was less than the NAAQS of 120

parts per billion (ppb). Sensitivity studies performed during the model

performance evaluation demonstrated that when all the reductions from

the 15 percent RFP SIP are included, the modeling demonstration results

in even lower predicted ozone concentrations.

For the El Paso attainment demonstration, TNRCC repeated UAM using

the El Paso 1996 modeling inventory, which incorporated the 15 percent

RFP SIP reductions, for the two 1987 summer episodes that exhibited

satisfactory performance as described above. In each case, the

predicted domain-wide maximum ozone concentration for 1996 was

significantly below the NAAQS of 120 ppb.

Proposed Rulemaking Action

In this action, the EPA proposes to conditionally approve1 the

182(f) NOx exemption petitions submitted by the State of Texas for

the DFW and El Paso ozone nonattainment areas. The EPA will not take

final action to conditionally approve the petitions for each area

unless and until the State submits the attainment demonstration SIPs to

the EPA in accordance with section 182(c)(2)(A) of the CAA. If the

attainment SIPs are not submitted in accordance with section

182(c)(2)(A), the EPA will issue a final disapproval of the State's

exemption petitions.

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\1\This conditional approval is distinct from the conditional

approval authority granted under section 110(k)(4), which pertains

to SIP actions. As discussed in the previously cited John S. Seitz

memorandum dated May 27, 1994, concerning the EPA's processing of

section 182(f) petitions, these NOx exemptions petitions are

not revisions to the SIP.

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If the State submits the attainment demonstration SIPs for DFW and

El Paso in accordance with section 182(c)(2)(A) of the CAA, the EPA

will issue a final conditional approval of the section 182(f) NOx

exemption petitions for each area, conditioned upon the EPA approving

the modeling portion of the attainment demonstration SIPs. If the EPA

proposes to disapprove the modeling portion of the SIPs, the EPA will

also propose disapproval of the section 182(f) NOx exemption

petitions, based on the fact that the technical basis for the exemption

is no longer valid. Upon final disapproval of the modeling portion of

the attainment SIPs, the EPA will issue a final disapproval of the

section 182(f) NOx exemption petitions as well.

There are several consequences if the EPA disapproves the section

182(f) NOx exemption petitions based on the conclusion that either

the attainment SIPs were not submitted by the State of Texas or they

were submitted but not approved by the EPA. The State would be required

to submit NOx RACT and NSR rules and implement the NOx

conformity requirements for the DFW and El Paso areas. The EPA would

issue a finding of nonsubmittal of the NOx RACT and NSR rules. As

provided under section 179(a) of the CAA, if the State did not make a

complete submittal within 18 months after the finding of failure to

submit, the EPA would be required to impose the requirement to provide

two-to-one NSR offsets. If the State had not corrected its deficiency

within six months after imposing the offset sanction, the EPA would

impose a second sanction, on highway funding. Any sanction the EPA

imposes must remain in place until the EPA determines that the State

has corrected the deficiency. In addition, the finding of failure to

submit would trigger the 24-month clock for the EPA to impose a Federal

Implementation Plan as provided under section 110(c)(1) of the CAA.

The EPA believes that all section 182(f) exemptions that are

approved, should be approved only on a contingent basis. As described

in the EPA's NOx Supplement to the General Preamble (57 FR 55628,

November 25, 1992), the EPA would rescind a NOx exemption in cases

where NOx reductions were later found to be beneficial in the

area's attainment plan. That is, a modeling based exemption would last

for only as long as the area's modeling continued to demonstrate

attainment without the additional NOx reductions required by

section 182(f).

If the EPA later determines that NOx reductions are beneficial

based on new photochemical grid modeling in an area initially exempted,

the area would be removed from exempt status and would be required to

adopt the NOx RACT and NSR rules, except to the extent that

modeling shows NOx reductions to be ``excess reductions.'' In the

rulemaking action which removes the exempt status, the EPA would

specify a schedule for States to adopt the NOx RACT and NSR rules

and for sources to comply with the NOx RACT emission limits.

The subsequent modeling analyses mentioned above need not be

limited to the purpose of demonstrating attainment in the 1994 SIP

revisions without the need for NOx RACT and NSR. For example,

future modeling might also be initiated to resolve issues related to

transport of ozone and ozone precursors into downwind nonattainment

areas. An area might want to consider a strategy that phases-in

NOx reductions only after certain VOC reductions are implemented.

As improved emission inventories and ambient data become available,

areas may choose to remodel. In addition, alternative control strategy

scenarios might be considered in subsequent modeling analyses in order

to improve the cost-effectiveness of the attainment plan.

In summary, the EPA proposes to approve exemptions for the DFW and

El Paso areas conditioned upon EPA approval of the modeling portion of

the attainment demonstrations for these areas. These exemptions will

remain effective for only as long as modeling in each nonattainment

area continues to show that NOx control activities would not be

beneficial in the DFW or El Paso nonattainment areas.

In addition, the State of Texas and EPA have committed to data-

gathering and modeling throughout the El Paso-Juarez air basin in

accordance with Annex V of the La Paz Agreement for Environmental

Cooperation on the U.S.-Mexico Border. Once the data are collected and

basin-wide modeling is concluded, the EPA, the State of Texas, and the

Republic of Mexico can develop a binational control strategy that will

result in improved air quality throughout the airshed. If EPA review of

modeling and air quality data confirms that NOx control

requirements on local U.S. sources would not be beneficial, the

exemption would be sustained. In contrast, if the EPA determines that

NOx control requirements would be beneficial, the exemption would

be rescinded.

Request for Public Comments

The EPA requests comments on all aspects of this proposal. As

indicated at the outset of this action, the EPA will consider any

comments received by September 28, 1994.

Regulatory Process

Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., the EPA

must prepare a regulatory flexibility analysis assessing the impact of

any proposed or final rule on small entities (5 U.S.C. 603 and 604).

Alternatively, the EPA may certify that the rule will not have a

significant economic impact on a substantial number of small entities.

Small entities include small businesses, small not-for-profit

enterprises, and government entities with jurisdiction over populations

of less than 50,000.

Approvals of NOx exemption petitions under section 182(f) of

the CAA do not create any new requirements. Therefore, because the

Federal approval of the petition does not impose any new requirements,

the EPA certifies that it does not have a significant impact on

affected small entities. Moreover, due to the nature of the Federal-

State relationship under the CAA, preparation of a regulatory

flexibility analysis would constitute Federal inquiry into the economic

reasonableness of State action. The CAA forbids the EPA to base its

actions concerning SIPs on such grounds (Union Electric Co. v. U.S.

E.P.A. , 427 U.S. 246, 256-66 (S. Ct. 1976); 42 U.S.C. 7410 (a)(2)).

If the conditional approval is converted to a disapproval based on

the State's failure to meet the condition upon which the approval is

granted, it will not affect any existing State requirements applicable

to small entities. Federal disapproval of the State submittal does not

affect its State-enforceability. Moreover, the EPA's disapproval of the

submittal does not impose a new Federal requirement. Therefore, the EPA

certifies that this disapproval action would not have a significant

impact on a substantial number of small entities because such

disapproval would not remove existing State requirements, nor does it

substitute a new Federal requirement.

Executive Order 12866

Under Executive Order 12866, (58 FR 51735 (October 4, 1993)), the

EPA must determine whether the regulatory action is ``significant'',

and therefore subject to Office of Management and Budget (OMB) review

and the requirements of the Executive Order. It has been determined

that this rule is not a ``significant regulatory action'' under the

terms of Executive Order 12866, and is therefore not subject to OMB

review.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Hydrocarbons,

Intergovernmental relations, Nitrogen dioxide, Ozone, Volatile organic

compounds.

Authority: 42 U.S.C. 7401-7671q.

Dated: August 22, 1994.

Carol M. Browner,

Administrator.

[FR Doc. 94-21253 Filed 8-26-94; 8:45 am]

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