Approval and Promulgation of Temporary Section 182(f) Exemption to the Nitrogen Oxides (NOINFX) Control Requirements for the Houston and Beaumont Ozone Nonattainment Areas; Texas

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[TX-49-1-6831; FRL-5193-8]

Approval and Promulgation of Temporary Section 182(f) Exemption

to the Nitrogen Oxides (NOX) Control Requirements for the Houston

and Beaumont Ozone Nonattainment Areas; Texas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: In this action, the EPA is approving a petition from the State

of Texas requesting that the Houston and Beaumont ozone nonattainment

areas be temporarily exempted 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 upon preliminary photochemical grid modeling

which shows that reductions in NOX would be detrimental to

attaining the National Ambient Air Quality Standards (NAAQS) for ozone

in these areas. This temporary exemption is being requested under

section 182(f) of the CAA.

EFFECTIVE DATE: This action is effective as of April 12, 1995.

ADDRESSES: Copies of the documents relevant to these 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, Dallas, Texas 75202-2733

The Air and Radiation Docket and Information Center, U.S. Environmental

Protection Agency, 401 M Street, SW., Washington, DC 20460

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

Texas 78711-3087

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

Nguyen, Planning Section (6T-AP), Air Programs Branch, EPA Region 6,

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

SUPPLEMENTARY INFORMATION:

I. Background

On August 17, 1994, the Texas Natural Resource Conservation

Commission (TNRCC) submitted to the EPA a petition pursuant to section

182(f) of the CAA which requests that the Houston and Beaumont ozone

nonattainment areas be temporarily exempted by the EPA from the

NOX control requirements of section 182(f). The Houston

nonattainment area includes the cities of Houston and Galveston, and

consists of the following eight counties: Brazoria, Chambers, Fort

Bend, Galveston, Harris, Liberty, Montgomery, and Waller. The Beaumont

nonattainment area includes the cities of Beaumont and Port Arthur, and

consists of the following three counties: Hardin, Jefferson, and

Orange. The State bases its petition on an Urban Airshed Modeling (UAM)

demonstration showing that NOX reductions would not contribute to

attainment in either area because the decrease in ozone concentrations

resulting from volatile organic compound (VOC) reductions alone is

equal to or greater than the decrease obtained from NOX reductions

or a combination of VOC and NOX reductions.

As described in the State's petition, the TNRCC plans to complete

additional UAM modeling between November 1995 and May 1996 using the

results of an intensive 1993 field study, the Coastal Oxidant

Assessment for Southeast Texas (COAST). The data collected through the

COAST study consist of hourly point source emissions, gridded typical

summer day on-road mobile source emissions, hourly air quality data,

and detailed meteorological data for specific ozone exceedance episodes

in the Houston-Beaumont domain. Because it is the most comprehensive

data set available, it should result in greater accuracy in the

modeling and therefore in the [[Page 19516]] attainment control

strategy. Since the modeling is expected to be completed by May 1996,

the TNRCC is requesting only a temporary NOX exemption until May

31, 1997.

The TNRCC had previously adopted and submitted to the EPA complete

NOX Reasonably Available Control Technology (RACT) rules for the

Houston and Beaumont areas. The TNRCC has also adopted and submitted to

the EPA New Source Review (NSR), conformity, and vehicle inspection and

maintenance (I/M) rules, each of which contain NOX provisions. The

EPA's approval of the temporary NOX exemption petition affects the

federal applicability and enforcement of the State's NOX RACT rule

and the NOX provisions contained in the State's NSR, conformity,

and I/M rules.

On December 15, 1994, the EPA proposed to approve the section

182(f) petition for a temporary NOX exemption for the Houston and

Beaumont areas (see 59 FR 64640). The proposed rulemaking notice, the

EPA's Technical Support Document (November 1994) on the proposed

action, and supplemental information are contained in the docket and

provide a detailed discussion of the TNRCC's submittal, applicable

guidance and the EPA's rationale for proposing approval of the State's

petition. Rather than repeating that entire discussion in this

document, that discussion is incorporated by reference herein. Thus,

the public should review the notice of proposed rulemaking for relevant

background on this final rulemaking action.

II. Response to Comments

The EPA requested public comments on all aspects of the proposed

action to approve the section 182(f) petition for a temporary NOX

exemption for the Houston and Beaumont ozone nonattainment areas. The

EPA received 51 letters of support from individuals, industry, local

judges, the State transportation authority, State and Federal

legislators, and local governments.

Six adverse comment letters were received from individuals,

environmental groups, and an association of companies which supply

stationary source air pollution control systems, equipment, and

services. One of the letters was submitted by three environmental

groups and contained generic comments objecting to the EPA's general

policy on section 182(f) exemptions. The three environmental groups who

submitted the generic letter requested that it be included in each EPA

rulemaking action for each section 182(f) petition.

Comment: Two letters of support asked for clarification concerning

when the NOX requirements would take effect if the COAST modeling

results indicate that some or all of the applicable NOX control

requirements would contribute to attainment of the ozone NAAQS.

Response: In the FR notice proposing to approve the temporary

NOX exemption for Houston and Beaumont (see 59 FR 64640, December

15, 1994), the EPA also proposed that upon the expiration of the

temporary exemption on December 31, 1996, if the State had not received

a permanent NOX exemption from the EPA prior to that time, the

NOX RACT, NSR, conformity and I/M requirements would again become

applicable except that the NOX RACT compliance date shall be as

expeditious as practicable but no later than May 31, 1997. The EPA

continues to believe that the above stated requirement is appropriate.

Therefore, through this rulemaking on the temporary NOX exemption

for the Houston and Beaumont areas, the following requirements would

become applicable on January 1, 1997, if the Houston and Beaumont areas

had not received a permanent NOX exemption prior to that time: (1)

The State must have adopted and submitted to the EPA RACT, NSR,

conformity, and I/M regulations to control NOX emissions (note

that these provisions have already been met by the TNRCC), (2) the

State's NOX RACT regulation must require subject sources to comply

with the NOX control requirements as expeditiously as practicable

but no later than May 31, 1997, (3) any NSR permits that had not been

deemed complete prior to January 1, 1997, must comply with the NOX

NSR requirements, consistent with the policy set forth in the EPA's NSR

Supplemental Guidance memo dated September 3, 1992, from John S. Seitz,

Director, EPA's Office of Air Quality Planning and Standards, (4) any

conformity determination (for either a new or revised transportation

plan and transportation improvement program (TIP)) made on or after

January 1, 1997, must comply with the NOX conformity requirements,

and (5) any I/M vehicle inspection made on or after January 1, 1997,

must comply with the I/M NOX requirements.

Comment: One commenter stated that the temporary NOX waiver

would expire on May 15, 1997, and asked for clarification on whether

TIPs being developed this year would be exempted from the NOX

conformity requirements.

Response: The EPA would like to clarify that the NOX waiver

does not expire on May 15, 1997, as stated by the commenter, but rather

will expire on December 31, 1996, as discussed in the EPA's proposed

approval of the State's petition (see 59 FR 64643). Because the State's

petition clearly indicates that the attainment modeling should be

completed between November 1995 and May 1996 (which will determine

whether a VOC, NOX, or combination thereof, strategy is most

beneficial for attainment), the EPA believes that the petition supports

granting the State's request for a temporary exemption only until the

end of 1996. Any conformity determination (for either a new or revised

transportation plan and TIP) made after the effective date of the EPA's

approval of this 182(f) petition for Houston and Beaumont, and before

the expiration of the waiver on December 31, 1996, would be exempted

from the NOX conformity requirements. Any conformity determination

(for either a new or revised transportation plan and TIP) made on or

after January 1, 1997, must comply with the NOX conformity

requirements, unless the State had received a permanent section 182(f)

NOX exemption prior to that time.

Comment: Several adverse comments stated that an area must submit a

complete, approvable attainment State Implementation Plan (SIP) before

a NOX waiver could be granted. Certain comments continued by

stating that NOX exemptions are provided for in two separate parts

of the CAA, section 182(b)(1) and section 182(f). Because the NOX

exemption tests in subsections 182(b)(1) and 182(f)(1) include language

indicating that action on such requests should take place ``when [EPA]

approves a plan or plan revision,'' these commenters conclude that all

NOX exemption determinations by the EPA, including exemption

actions taken under the petition process established by subsection

182(f)(3), must occur during consideration of an approvable attainment

or maintenance plan, unless the area has been redesignated as

attainment. These commenters also argue that even if the petition

procedures of subsection 182(f)(3) may be used to relieve areas of

certain NOX requirements, exemptions from the NOX conformity

requirements must follow the process provided in subsection 182(b)(1),

since this is the only provision explicitly referenced by section

176(c), the CAA's conformity provisions.

Response: The TNRCC petitioned the EPA for an exemption under

section 182(f), as evidenced by the letter from John Hall, Chairman of

the TNRCC, transmitting the petition to the EPA (dated August 17, 1994)

which states, ``The TNRCC is submitting for your review, pursuant to

Section 182(f) of the [[Page 19517]] CAA, a petition requesting a

temporary exemption from NOX RACT * * *'' In addition, on page 3

of the petition, the State also referenced subsection 182(f)(3)

concerning the procedure for petitioning the Administrator.

Section 182(f) contains very few details regarding the

administrative procedure for acting on NOX exemption requests. The

absence of specific guidelines by Congress leaves the EPA with

discretion to establish reasonable procedures, consistent with the

requirements of the Administrative Procedure Act (APA).

The EPA disagrees with the commenters regarding the process for

considering exemption requests under section 182(f), and instead

believes that subsections 182(f)(1) and 182(f)(3) provide independent

procedures by which the EPA may act on NOX exemption requests. The

language in subsection 182(f)(1), which indicates that the EPA should

act on NOX exemptions in conjunction with action on a plan or plan

revision, does not appear in subsection 182(f)(3). And, while

subsection 182(f)(3) references subsection 182(f)(1), the EPA believes

that this reference encompasses only the substantive tests in paragraph

(1) (and, by extension, paragraph (2)), not the procedural requirement

that the EPA act on exemptions only when acting on SIPs. Additionally,

paragraph (3) provides that ``person[s]'' (which section 302(e) of the

CAA defines to include States) may petition for NOX exemptions

``at any time,'' and requires the EPA to make its determination within

six months of the petition's submission. These key differences lead the

EPA to believe that Congress intended the exemption petition process of

paragraph (3) to be distinct and more expeditious than the longer plan

revision process intended under paragraph (1).

With respect to major stationary sources, section 182(f) requires

States to adopt NOX NSR and RACT rules, unless exempted. These

rules were generally due to be submitted to the EPA by November 15,

1992. Thus, in order to avoid the CAA sanctions, areas seeking a

NOX exemption would need to submit their exemption request for EPA

review and rulemaking action several months before November 15, 1992.

In contrast, the CAA specifies that the attainment demonstrations are

not due until November 1993 or 1994 (and the EPA may take 12-18 months

to approve or disapprove the demonstration). For marginal ozone

nonattainment areas (subject to NOX NSR), no attainment

demonstration is called for in the CAA. For maintenance plans, the CAA

does not specify a deadline for submittal of maintenance

demonstrations. Clearly, the CAA envisions the submittal of an EPA

action on exemption requests, in some cases, prior to submittal of

attainment or maintenance demonstrations.

The CAA requires conformity with regard to federally-supported

NOX generating activities in relevant nonattainment and

maintenance areas. However, the EPA's conformity rules explicitly

provide that these NOX requirements would not apply if the EPA

grants an exemption under section 182(f). In response to the comment

that section 182(b)(1) should be the appropriate vehicle for dealing

with exemptions from the NOX requirements of the conformity rule,

the EPA notes that this issue has previously been raised in a formal

petition for reconsideration of the EPA's final transportation

conformity rule and in litigation pending before the U.S. Court of

Appeals for the District of Columbia Circuit on the substance of both

the transportation and general conformity rules. The issue, thus, is

under consideration within the EPA, but at this time remains

unresolved. Additionally, subsection 182(f)(3) requires that NOX

exemption petition determinations be made by the EPA within six months.

The EPA has stated in previous guidance that it intends to meet this

statutory deadline as long as doing so is consistent with the

Administrative Procedure Act. The EPA, therefore, believes that until a

resolution of this issue is achieved, the applicable rules governing

this issue are those that appear in the EPA's final conformity

regulations, and the EPA remains bound by their existing terms.

Comment: Several commenters felt that the UAM computer model is not

sufficiently accurate to allow good predictions of air quality. Some

stated that the modeling performed by the TNRCC was inconclusive. One

commenter argued that focusing on severe rather than more typical ozone

episodes may significantly distort the findings. Another commenter

stated that TNRCC only modeled three episodes, each with varying

performance. Finally, several commenters felt that the emissions

inventories were significantly inaccurate so as to discredit the

modeling results.

Response: The EPA disagrees with the comment that the UAM

demonstration conducted by the TNRCC was insufficient to allow good

predictions of air quality. Due to the large number of factors that

influence ozone formation, the EPA agrees that the UAM model cannot

precisely predict the exact relationship between VOC, NOX, and

ozone. However, Congress clearly intended that photochemical grid

modeling be used for air quality planning purposes. As noted in the

EPA's December 1993 guidance, UAM results are acceptable for the

purpose of the section 182(f) demonstrations and application of UAM

should be consistent with techniques specified in the EPA's ``Guideline

on Air Quality Models (Revised).''

The EPA disagrees with the comment that the episodes analyzed by

the TNRCC may have distorted the findings. The TNRCC followed the EPA's

``Guideline for Regulatory Application of the Urban Airshed Model'' in

selecting the episodes that were used in the 182(f) demonstration. In

accordance with the EPA guidance, the State selected episodes that were

likely to cover different sets of meteorological conditions

corresponding with high ozone concentrations, not necessarily the most

severe ozone exceedance. The EPA recommends that high ozone days be

analyzed to ensure that the control strategy plan developed from the

UAM analysis will result in ozone attainment under most meteorological

conditions, not just the average meteorological condition. The selected

multi-day episodes used in the Houston and Beaumont UAM analyses are

representative of the primary meteorological conditions typically found

on high ozone days.

The EPA's UAM guidance recommends that a minimum of three days from

among all meteorological regimes should be modeled (e.g., three

meteorological regimes each containing one primary episode day, or two

meteorological regimes with at least two primary days from one of those

regimes). The TNRCC's analyses are consistent with the EPA's guidance

in that the two episodes that exhibited satisfactory performance cover

more than three days of ozone exceedances and represent several of the

predominant meteorological regimes for ozone exceedances in the Gulf

Coast. (For further information, see the EPA's proposed approval notice

for the temporary NOX exemption for Houston and Beaumont (59 FR

64640), and the EPA's Technical Support Document for the proposed

action.)

The EPA disagrees with the comment that the emissions inventories

were too inaccurate to produce acceptable modeling results. In

accordance with the EPA's UAM guidance the State used the 1990

emissions inventory for Houston and Beaumont to developing its modeling

demonstration. The EPA evaluated the State's 1990 base year

[[Page 19518]] emissions inventories and a final approval was published

in the FR on November 8, 1994 (see 59 FR 55588).

Comment: Several commenters stated that the modeling required by

the EPA is insufficient to establish that NOX reductions would not

contribute to attainment since only one level of NOX control,

i.e., ``substantial'' reductions, is required to be analyzed. They

argued that larger NOX reductions are realistically available, and

that if Texas had considered large enough reductions in NOX

emissions, the modeling would have shown decreases in ozone. They

further explained that an area must submit an approvable attainment

plan before the EPA can know whether NOX reductions will aid or

undermine attainment.

Response: As described in the EPA's December 1993 NOX

exemption guidance,1 photochemical grid modeling is generally

needed to document cases where NOX reductions are

counterproductive to net air quality, do not contribute to attainment,

do not show a net ozone benefit, or include excess reductions. The UAM

or, in an ozone transport region, the Regional Oxidant Model (ROM) are

acceptable models for these purposes.

\1\``Guideline for Determining the Applicability of Nitrogen

Oxide Requirements under Section 182(f),'' from John S. Seitz,

Director, Office of Air Quality Planning and Standards, to the

Regional Division Directors, December 16, 1993.

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The EPA guidance also states that application of UAM should be

consistent with techniques specified in the EPA ``Guideline on Air

Quality Models (Revised).'' Further, application of UAM should also be

consistent with procedures contained in the EPA ``Guideline for

Regulatory Application of the Urban Airshed Model'' (July 1991). Thus,

episode selection for the section 182(f) demonstration should be

consistent with the UAM guidance for SIP attainment demonstrations.

The section 182(f) contribute to attainment and net ozone benefit

demonstrations concern an unspecified ``additional reductions'' of

NOX. The EPA's December 1993 guidance specifies that the analysis

should reflect three scenarios of ``substantial'' NOX and VOC

emission reductions. The guidance states that, in the first scenario,

the demonstration should use the VOC reductions needed to attain

(demonstrated by EKMA or UAM analyses). Alternatively, if the

attainment demonstration has not been completed, the demonstration may

use some other substantial VOC reduction. In any case, the VOC

reductions should be substantial and documented as reasonable to expect

for the area due to the CAA requirements. In the second scenario,

NOX reductions should be modeled without any VOC reductions above

the attainment year baseline. The level of NOX reductions should

reflect the same percent reduction of anthropogenic VOC emissions in

scenario (1) above. In the third scenario, a similar level of NOX

reductions would be modeled along with the level of VOC reductions

chosen. That is, if a 40 percent VOC reduction is chosen in scenario

(1), then the model for scenario (3) would simulate a 40 percent VOC

reduction and approximately a 40 percent NOX reduction. It would

be inappropriate to select a high level of VOC reductions and a low

level of NOX reductions since this could artificially favor a

finding that NOX reductions are not beneficial; thus, the

scenarios are constrained to avoid an inappropriate analysis.

The EPA believes that these analyses are appropriate to determine

in a directional manner whether or not NOX reductions are expected

to be beneficial with respect to the air quality in the area/region.

These analyses described in the EPA's December 1993 guidance may be

less precise than an attainment demonstration required under section

182(c). With respect to the excess reductions provision in section

182(f)(2), however, the EPA believes that more than a directional

analysis is needed (for reasons described in the December 1993

guidance) and, therefore, requires an analysis based on the attainment

demonstration.

Contrary to the statements of some of the commenters, the State

modeled substantial NOX emission reductions that are significantly

greater than the 10-15 percent reductions cited by the commenters as

projected to result from NOX RACT. In the 1999 projected domain-

wide (i.e., Houston and Beaumont) NOX emissions inventory used in

the State's section 182(f) demonstration, point source emissions

comprise 66 percent of the total NOX inventory. The State modeled

a 50 percent total reduction of NOX (which would represent a 76

percent reduction in the point source NOX inventory) along with a

50 percent reduction of VOC and 50 percent reduction of both VOC and

NOX. Clearly, the TNRCC's section 182(f) modeling demonstration

reflects substantial NOX reductions in addition to substantial VOC

reductions.

Comment: Three groups provided a generic comment on all section

182(f) actions that three years of ``clean'' data fail to demonstrate

that NOX reductions would not contribute to attainment.

Response: The EPA does not believe that this comment is applicable

to the Houston and Beaumont actions because neither area has based its

section 182(f) petition on ``clean'' air monitoring data.

Comment: Several commenters stated that the EPA's December 1993

guidance prohibits granting a section 182(f) waiver based on three

years of clean data if evidence exists showing that the waiver would

interfere with attainment or maintenance in downwind areas. They argued

that the condition should also apply to waiver requests based on

modeling. The commenters felt that a NOX exemption in Houston and

Beaumont would likely exacerbate ozone formation downwind in other

nonattainment areas (e.g., Dallas) or near nonattainment areas (e.g.,

Austin, San Antonio, Corpus Christi, and Longview-Tyler-Marshall).

Response: As a result of the comments, the EPA reevaluated its

position on this issue and has revised the previously issued guidance.

As described below, the EPA intends to use its authority under section

110(a)(2)(D) to require a State to reduce NOX emissions from

stationary and/or mobile sources where there is evidence, such as

photochemical grid modeling, showing that NOX emissions would

contribute significantly to nonattainment in, or interfere with

maintenance by, any other State. This action would be independent of

any action taken by the EPA on a NOX exemption request for

stationary sources under section 182(f). That is, EPA action to grant

or deny a NOX exemption request under section 182(f) would not

shield that area from EPA action to require NOX emission

reductions, if necessary, under section 110(a)(2)(D).

Modeling analyses are underway in many areas for the purpose of

demonstrating attainment in the 1994 SIP revisions. Recent modeling

data suggest that certain ozone nonattainment areas may benefit from

reductions in NOX emissions far upwind of the nonattainment area.

For example, the northeast corridor and the Lake Michigan areas are

considering attainment strategies which rely in part on NOX

emission reductions hundreds of kilometers upwind. The EPA is working

with the States and other organizations to design and complete studies

which consider upwind sources and quantify their impacts. As the

studies progress, the EPA will continue to work with the States and

other organizations to develop mutually acceptable attainment

strategies.

At the same time as these large scale modeling analyses are being

conducted, certain nonattainment areas in the modeling domain have

requested exemptions from NOX requirements [[Page 19519]] under

section 182(f). Some areas requesting an exemption may be upwind of and

impact upon downwind nonattainment areas. The EPA intends to address

the transport issue through section 110(a)(2)(D) based on a domain-wide

modeling analysis.

Under section 182(f) of the CAA, an exemption from the NOX

requirements may be granted for nonattainment areas outside an ozone

transport region if the EPA determines that ``additional reductions of

[NOX] would not contribute to attainment of the national ambient

air quality standard for ozone in the area.''2 As described in

section 4.3 of the December 1993 guidance document, the EPA believes

that the term ``area'' means the ``nonattainment area'' and that the

EPA's determination is limited to consideration of the effects in a

single nonattainment area due to NOX emissions reductions from

sources in the same nonattainment area.

\2\There are 3 NOX exemption tests specified in section

182(f). Of these, 2 are applicable for areas outside an ozone

transport region; the ``contribute to attainment'' test described

above, and the ``net air quality benefits'' test. EPA must

determine, under the latter test, that the net benefits to air

quality in an area ``are greater in the absence of NOX

reductions'' from relevant sources. Based on the plain language of

section 182(f), EPA believes that each test provides an independent

basis for receiving a full or limited NOX exemption.

Consequently, as stated in section 1.4 of the December 16, 1993 EPA

guidance, ``[w]here any one of the tests is met (even if another

test is failed), the section 182(f) NOX requirements would not

apply or, under the excess reductions provision, a portion of these

requirements would not apply.''

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Section 4.3 of the guidance goes on to encourage, but not require,

States/petitioners to include consideration of the entire modeling

domain, since the effects of an attainment strategy may extend beyond

the designated nonattainment area. Specifically, the guidance

encourages States to ``consider imposition of the NOX requirements

if needed to avoid adverse impacts in downwind areas, either intra- or

inter-State. States need to consider such impacts since they are

ultimately responsible for achieving attainment in all portions of

their State (see generally section 110) and for ensuring that emissions

originating in their State do not contribute significantly to

nonattainment in, or interfere with maintenance by, any other State

[see section 110(a)(2)(D)(i)(I)].''

In contrast, section 4.4 of the guidance states that the section

182(f) demonstration would not be approved if there is evidence, such

as photochemical grid modeling, showing that the NOX exemption

would interfere with attainment or maintenance in downwind areas. The

guidance goes on to explain that section 110(a)(2)(D) (not section

182(f)) prohibits such impacts.

Consistent with the guidance in section 4.3, the EPA believes that

the section 110(a)(2)(D) and 182(f) provisions must be considered

independently and hence is withdrawing the guidance presently contained

in section 4.4. Thus, if there is evidence that NOX emissions in

an upwind area would interfere with attainment or maintenance in a

downwind area, that action should be separately addressed by the

State(s) or, if necessary, by the EPA in a section 110(a)(2)(D) action.

In addition, a section 182(f) exemption request should be independently

considered by the EPA. In some cases, then, the EPA may grant an

exemption from across-the-board NOX RACT controls under section

182(f) and, in a separate action, require NOX controls from

stationary and/or mobile sources under section 110(a)(2)(D). It should

be noted that the controls required under section 110(a)(2)(D) may be

more or less stringent than RACT, depending upon the circumstances.

Comment: Several comments were received regarding exemption of

areas from the NOX requirements of the conformity rules. They

argue that such exemptions waive only the requirements of section

182(b)(1) to contribute to specific annual reductions, not the

requirement that conformity SIPs contain information showing the

maximum amount of motor vehicle NOX emissions allowed under the

transportation conformity rules and, similarly, the maximum allowable

amounts of any such NOX emissions under the general conformity

rules. The commenters admit that, in prior guidance, the EPA has

acknowledged the need to amend a drafting error in the existing

transportation conformity rules to ensure consistency with motor

vehicle emissions budgets for NOX, but want the EPA in actions on

NOX exemptions to explicitly affirm this obligation and to also

avoid granting waivers until a budget controlling future NOX

increases is in place.

Response: The EPA's conformity rules3,4 provide a NOX

waiver if an area receives a section 182(f) exemption. In its

``Conformity; General Preamble for Exemption From Nitrogen Oxides

Provisions,'' 59 FR 31238, 31241 (June 17, 1994), the EPA reiterated

its view that in order to conform nonattainment and maintenance areas

must demonstrate that the transportation plan and TIP are consistent

with the motor vehicle emissions budget for NOX even where a

conformity NOX waiver has been granted. Due to a drafting error,

that view is not reflected in the current transportation conformity

rules. As the commenters correctly note, the EPA states in the June 17

notice that it intends to remedy the problem by amending the conformity

rule. Although that notice specifically mentions only requiring

consistency with the approved maintenance plan's NOX motor vehicle

emissions budget, the EPA also intends to require consistency with the

attainment demonstration's NOX motor vehicle emissions budget.

However, the exemptions were submitted pursuant to section 182(f)(3),

and the EPA does not believe it is appropriate to delay the statutory

deadline for acting on these petitions until the conformity rule is

amended. As noted earlier in response to a previous issue raised by

these commenters, this issue has also been raised in a formal petition

for reconsideration of the Agency's final transportation conformity

rule and in litigation pending before the U.S. Court of Appeals for the

District of Columbia Circuit on the substance of both the

transportation and general conformity rules. This issue, thus, is under

consideration within the Agency, but at this time remains unresolved.

The EPA, therefore, believes that until a resolution of this issue is

achieved, the applicable rules governing this issue are those that

appear in the Agency's final conformity regulations, and the Agency

remains bound by their existing terms.

\3\``Criteria and Procedures for Determining Conformity to State

or Federal Implementation Plans of Transportation Plans, Programs,

and Projects Funded or Approved under Title 23 U.S.C. of the Federal

Transit Act,'' November 24, 1993 (58 FR 62188).

4``Determining Conformity of General Federal Actions to

State or Federal Implementation Plans; Final Rule,'' November 30,

1993 (58 FR 63214).

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Comment: One group commented that the CAA does not authorize any

waiver of the NOX reduction requirements until conclusive evidence

exists that such reductions are counter-productive.

Response: The EPA does not agree with this comment since it ignores

Congressional intent as evidenced by the plain language of section

182(f), the structure of the Title I ozone subpart as a whole, and

relevant legislative history. By contrast, in developing and

implementing its NOX exemption policies, the EPA has sought an

approach that reasonably accords with that intent. Section 182(f), in

addition to imposing control requirements on major stationary sources

of NOX similar to those that apply for such sources of VOC, also

provides for an exemption (or limitation) from application of these

requirements if, under one of several tests, the EPA determines that in

certain [[Page 19520]] areas NOX reductions would generally not be

beneficial. In subsection 182(f)(1), Congress explicitly conditioned

action on NOX exemptions on the results of an ozone precursor

study required under section 185B. Because of the possibility that

reducing NOX in a particular area may either not contribute to

ozone attainment or may cause the ozone problem to worsen, Congress

included attenuating language, not just in section 182(f) but

throughout the Title I ozone subpart, to avoid requiring NOX

reductions where it would be nonbeneficial or counterproductive. In

describing these various ozone provisions (including section 182(f)),

the House Conference Committee Report states in pertinent part: ``[T]he

Committee included a separate NOX/VOC study provision in section

[185B] to serve as the basis for the various findings contemplated in

the NOX provisions. The Committee does not intend NOX

reduction for reduction's sake, but rather as a measure scaled to the

value of NOX reductions for achieving attainment in the particular

ozone nonattainment area.'' H.R. Rep. No. 490, 101st Cong., 2d Sess.

257-258 (1990). As noted in response to an earlier comment by these

same commenters, the command in subsection 182(f)(1) that the EPA

``shall consider'' the 185B report taken together with the time frame

the Act provides both for completion of the report and for acting on

NOX exemption petitions clearly demonstrate that Congress believed

the information in the completed section 185B report would provide a

sufficient basis for the EPA to act on NOX exemption requests,

even absent the additional information that would be included in

affected areas' attainment or maintenance demonstrations. However,

while there is no specific requirement in the Act that EPA actions

granting NOX exemption requests must await ``conclusive

evidence'', as the commenters argue, there is also nothing in the Act

to prevent the EPA from revisiting an approved NOX exemption if

warranted due to better ambient information.

In addition, the EPA believes (as described in the EPA's December

1993 guidance) that section 182(f)(1) of the CAA provides that the new

NOX requirements shall not apply (or may be limited to the extent

necessary to avoid excess reductions) if the Administrator determines

that any one of the following tests is met:

(1) In any area, the net air quality benefits are greater in the

absence of NOX reductions from the sources concerned;

(2) In nonattainment areas not within an ozone transport region,

additional NOX reductions would not contribute to ozone attainment

in the area; or

(3) In nonattainment areas within an ozone transport region,

additional NOX reductions would not produce net ozone air quality

benefits in the transport region.

Based on the plain language of section 182(f), the EPA believes that

each test provides an independent basis for receiving a full or limited

NOX exemption.

Only the first test listed above is based on a showing that

NOX reductions are ``counter-productive.'' If one of the tests is

met (even if another test is failed), the section 182(f) NOX

requirements would not apply or, under the excess reductions provision,

a portion of these requirements would not apply.

Comment: Two commenters stated that the health and environmental

benefits of decreasing NOX as well as the likelihood of

concomitant reduction in other criteria pollutants (e.g., CO, SO2

and particulates), provide other reasons to control NOX,

independent of their impact on ozone formation. One commenter listed

various negative health and environmental impacts of NOX and

stated that although Houston does not exceed the NAAQS for nitrogen

dioxide (NO2), current ambient levels are believed to be unsafe.

In addition, the federal standard, 53 parts per billion (ppb) annual

average, is meaningless without a short-term standard.

Response: The EPA agrees that high NOX emissions can

contribute to air pollution problems independent of their role in ozone

formation; however, the EPA disagrees that the NOX controls

required under section 182(f) of the CAA should be implemented in the

Houston or Beaumont area regardless of their impact on ozone. Ambient

concentrations of NO2 in Houston and Beaumont are significantly

below the federal NAAQS for NO2 (in 1993, the annual average

NO2 concentration was 24 ppb in Houston and 10 ppb in Beaumont, as

compared with the federal standard of 53 ppb). Therefore, based on

current federal standards, the EPA does not believe the NO2 levels

in Houston or Beaumont are unsafe.

The EPA is mandated to periodically re-evaluate the NAAQS for each

criteria pollutant based on the best information available. The EPA is

currently reviewing the NO2 standard and will evaluate concerns

over the standard through a separate rulemaking process. As part of

that effort, in October 1994, the EPA issued a draft paper for public

review and comment entitled, ``Review of National Ambient Air Quality

Standards for Nitrogen Dioxide, Assessment of Scientific and Technical

Information, OAQPS Staff Paper,'' concerning the NO2 standard, and

expects to propose rulemaking action in late 1995. If the EPA finds,

based on its review, that the NO2 standard should be revised, then

at that time the Agency will implement NOX control requirements in

areas that become nonattainment for NO2 under the revised

standard.

In addition, as discussed in an earlier response, section

182(f)(1)(A) specifically provides for an exemption in cases where

NOX emission reductions would not contribute to attainment of the

NAAQS for ozone in the area. The TNRCC has demonstrated for the

relevant time period in its petition and in the EPA's proposed action

that the NOX reductions required by section 182(f) would not

contribute to attaining the ozone NAAQS in either area.

Finally, for the purposes of reducing acid rain deposition, certain

NOX sources will still be required to reduce NOX emissions

under Title IV of the CAA. For these reasons, the EPA does not believe

that the NOX controls required under section 182(f) of the CAA

should be implemented in the Houston or Beaumont areas regardless of

their impact on ozone.

Comment: One commenter stated that Houston is not at risk of over

controlling emissions, and that it is important to front end load

emission reductions now so that control strategies would have time to

work.

Response: The TNRCC petition for a temporary NOX exemption

relies not on an excess emission reduction test, but on modeling which

indicates that NOX reductions would be detrimental to attaining

the ozone standard. The EPA agrees that where NOX reductions would

be beneficial to attaining the ozone standard, they should be pursued

expeditiously; however, for Houston and Beaumont, the State's modeling

demonstration shows that NOX reductions will not contribute to

attainment of the ozone NAAQS. As discussed in a previous response,

Congress clearly understood that in certain areas, NOX reductions

may not be beneficial, and for this reason, included a provision to

exempt such areas from NOX control requirements.

Comment: One commenter argued that regardless of the impact

NOX controls might have in the Houston area, NOX controls

should be required in the Beaumont nonattainment area, since point

source emissions are a significant [[Page 19521]] source of NOX in

that area and large NOX reductions would guarantee ozone

reductions.

Response: The EPA disagrees with this comment. As discussed in the

EPA's proposed approval notice for the temporary NOX exemption for

Houston and Beaumont (see 59 FR 64640), and the EPA's Technical Support

Document for the proposed action, the TNRCC modeled substantial

reductions of VOC, NOX and both VOC and NOX in Beaumont and

showed that ozone levels were lowest under the VOC-only reduction

scenario. The State's petition therefore demonstrates that NOX

reductions would not be beneficial to attainment of the ozone standard

in the Beaumont area.

Comment: One commenter stated that there is no congestion

management plan as required by federal transportation law and that the

EPA has allowed the State to illegally wait two additional years before

submitting a plan.

Response: The EPA disagrees with this comment for two reasons.

First, it does not accurately reflect the current status of the

transportation congestion management plan (which is a program

implemented under the Intermodal Surface Transporation Efficiency Act

(ISTEA) by the U.S. Department of Transportation (DOT)) in the Houston

and Beaumont areas. Contrary to the commenter's statement, it is the

EPA's understanding that a congestion management plan for Houston and

Beaumont was submitted in accordance with the DOT regulatory

requirements specified in title 23 of the Code of Federal Regulations

in Sec. 500.509 (see 58 FR 63442, December 1, 1993).

Second, the EPA's approval of the NOX exemption petition does

not adversely impact the requirements and implementation of the

transportation congestion management plan required by the DOT. The EPA

supports this program and believes that it will, at a minimum, identify

the congestion problems in the area and will lead to development of a

traffic management plan which would have positive air quality benefits

for the area. This program is being implemented by the DOT (which is a

separate Federal agency from the EPA) under authority of the ISTEA.

Contrary to the commenter's statement, the EPA's action on the NOX

exemption petition will not result in a two year delay in the

submission of the transportation congestion management plan.

Comment: Two commenters requested that the EPA consider extending

the section 182(f) NOX exemption and the NOX RACT compliance

deadlines past the EPA's proposed deadlines of December 31, 1996 and

May 31, 1997, respectively. One commenter stated that the EPA's revised

ozone attainment planning policy points to the possible extension of

modeling completion deadlines into 1997.

Response: The EPA believes that it is appropriate to maintain the

NOX exemption period and the RACT compliance deadline as

originally proposed by the EPA. The State of Texas has not requested

that the exemption period or compliance dates be extended, nor did it

make such a request during the public comment period for the EPA's

proposed approval of the State's section 182(f) petition. In addition,

the EPA has not received from the State any request that the COAST

modeling schedule described in the State's petition has been delayed or

would need to be modified. The EPA therefore believes that the

rationale (as explained in the notice of proposed rulemaking (see 59 FR

64643)), for the December 31, 1996, and May 31, 1997, dates concerning

the exemption period and the RACT compliance deadline, respectively, is

still valid, and is independent of the EPA's revised ozone attainment

planning policy. Should the EPA subsequently receive a revised section

182(f) petition for the Houston and Beaumont areas, we will evaluate it

at that time for consistency with the CAA and the EPA's guidance on

section 182(f) exemptions.

III. Effective Date

This rulemaking is effective as of April 12, 1995. The

Administrative Procedure Act (APA) 5 U.S.C. 553(d)(1), permits the

effective date of a substantive rule to be less than thirty days after

publication of the rule if the rule ``relieves a restriction.'' Since

the approval of the section 182(f) exemptions for the Houston and

Beaumont areas is a substantive rule that relieves the restrictions

associated with the CAA title I requirements to control NOX

emissions, the NOX exemption approval may be made effective upon

signature by the EPA Administrator.

IV. Final Action

The EPA is taking final action to approve the section 182(f)

petition submitted by the State of Texas requesting a temporary

NOX exemption for the Houston and Beaumont ozone nonattainment

areas. The temporary exemption automatically expires on December 31,

1996, without further notice from the EPA. Approval of the temporary

exemption waives the federal requirements for NOX RACT, NSR,

conformity, and I/M for the period of the temporary exemption.

The State had previously adopted and submitted to the EPA complete

NOX RACT, NSR, conformity, and I/M rules. During the temporary

exemption, the EPA will not act upon the State's NOX RACT rules.

The EPA plans to act upon the State's NOX NSR and conformity

provisions in separate rulemaking actions because those provisions are

contained in broader rules that also control VOC emissions; however,

during the period of the temporary exemption, the State's NOX NSR

and conformity requirements are not federally applicable. The EPA

previously approved the State's I/M rules (see 59 FR 43046, August 22,

1994).

Upon the expiration of the temporary exemption, (1) the

requirements pertaining to NOX RACT, NSR, conformity, and I/M will

again become applicable, except that the NOX RACT implementation

date applicable to the Houston and Beaumont nonattainment areas under

section 182(f) shall be as expeditious as practicable but no later than

May 31, 1997, unless (2) the State has received a permanent NOX

exemption from the EPA prior to that time. The EPA will begin

rulemaking action on the State's NOX RACT SIP upon the expiration

of the temporary exemption if the State has not received a permanent

NOX exemption by that time.

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 [[Page 19522]] U.S. 246, 256-66 (S. Ct. 1976); 42 U.S.C.

7410(a)(2)).

Under section 307(b)(1) of the CAA, petitions for judicial review

of this action must be filed in the U.S. Court of Appeals for the

appropriate circuit by June 19, 1995. Filing a petition for

reconsideration by the Administrator of this final rule does not affect

the finality of this rule for the purposes of judicial review nor does

it extend the time within which a petition for judicial review may be

filed, and shall not postpone the effectiveness of such rule or action.

This action may not be challenged later in proceedings to enforce its

requirements. (See section 307(b)(2).)

Executive Order 12866

The Office of Management and Budget has exempted this action from

review under Executive Order 12866.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Hydrocarbons,

Intergovernmental relations, Nitrogen dioxide, Ozone, Volatile organic

compounds.

Dated: April 12, 1995.

Carol M. Browner,

Administrator.

40 CFR part 52 is amended as follows:

PART 52--[AMENDED]

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

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

Subpart SS--Texas

2. Section 52.2308 is amended by adding paragraph (d) to read as

follows:

Sec. 52.2308 Area-wide nitrogen oxides (NOX) exemptions.

* * * * *

(d) The TNRCC submitted to the EPA on August 17, 1994, with

supplemental information submitted on August 31, 1994, and September 9,

1994, a petition requesting that the Houston and Beaumont ozone

nonattainment areas be temporarily exempted from the NOX control

requirements of section 182(f) of the CAA. The Houston nonattainment

area consists of Brazoria, Chambers, Fort Bend, Galveston, Harris,

Liberty, Montgomery, and Waller counties. The Beaumont nonattainment

area consists of Hardin, Jefferson, and Orange counties. The exemption

request was based on photochemical grid modeling which shows that

reductions in NOX would not contribute to attaining the ozone

NAAQS. On April 12, 1995, the EPA approved the State's request for a

temporary exemption. Approval of the temporary exemption waives the

federal requirements for NOX Reasonably Available Control

Technology (RACT), New Source Review (NSR), conformity, and vehicle

inspection and maintenance (I/M) for the period of the temporary

exemption. The temporary exemption automatically expires on December

31, 1996, without further notice from the EPA. Based on the rationale

provided in the notice of proposed rulemaking on this action, upon the

expiration of the temporary exemption, the requirements pertaining to

NOX RACT, NSR, conformity, and I/M will again become applicable,

except that the NOX RACT implementation date applicable to the

Houston and Beaumont nonattainment areas under section 182(f) shall be

as expeditious as practicable but no later than May 31, 1997, unless

the State has received a permanent NOX exemption from the EPA

prior to that time.

[FR Doc. 95-9567 Filed 4-18-95; 8:45 am]

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