Clean Air Act Section 182(f) NOINFX Exemption Petition; Phoenix Ozone Nonattainment Area

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[AZ-34-1-6823; FRL-5193-4]

Clean Air Act Section 182(f) NOX Exemption Petition; Phoenix

Ozone Nonattainment Area

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is finalizing the approval of a petition submitted by

the Arizona Department of Environmental Quality (ADEQ) requesting that

EPA grant an exemption for the Phoenix ozone nonattainment area

(Phoenix area) from the requirement to implement oxides of nitrogen

(NOX) reasonably available control technology (RACT). EPA

published a proposed action to approve the Phoenix area NOX

exemption in the Federal Register on November 1, 1994. In accordance

with the requirements of the Clean Air Act, as amended in 1990 (the Act

or CAA), the EPA has determined that additional NOX reductions

from major stationary sources in the Phoenix area would not contribute

to attainment of the national ambient air quality standard (NAAQS) for

ozone. The approval of this action exempts the Phoenix area from

implementing the NOX requirements for RACT, new source review

(NSR), and the applicable general and transportation conformity and

inspection and maintenance (I/M) requirements of the CAA. The EPA is

finalizing approval of this action under provisions of the CAA

regarding plan requirements for nonattainment areas.

EFFECTIVE DATE: This action is effective on April 11, 1995.

ADDRESSES: Copies of the petition and EPA's evaluation report is

available for public inspection at EPA's Region IX office during normal

business hours. Copies of the submitted petition is available for

inspection at the following locations:

Rulemaking Section (A-5-3), Air and Toxics Division, U.S. Environmental

Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA

94105

Environmental Protection Agency, Air Docket (6102), 401 ``M'' Street,

SW., Washington, DC 20460

Arizona Department of Environmental Quality, 3033 North Central Avenue,

Phoenix, Arizona 85012

Maricopa County Air Pollution Control District, 2406 South 24th Street,

Suite E214, Phoenix, Arizona 85034

FOR FURTHER INFORMATION CONTACT: Wendy Colombo, Rulemaking Section, Air

and Toxics Division, U.S. Environmental Protection Agency, Region IX,

75 Hawthorne Street, San Francisco, CA 94105, Telephone: (415) 744-

1202.

SUPPLEMENTARY INFORMATION:

Background

On November 1, 1994, EPA proposed to approve the Phoenix area

NOX exemption petition, submitted by the ADEQ on April 13, 1994.

59 FR 54540. The exemption petition is based on urban airshed modeling

(UAM) and makes a demonstration that additional NOX reductions in

the Phoenix area would not contribute to attainment of the NAAQS for

ozone. A detailed discussion of the background concerning the NOX

requirements and the submitted petition is provided in the notice of

proposed rulemaking (NPRM) cited above.

EPA has evaluated the exemption petition for consistency with the

requirements of the CAA, EPA regulations, and EPA interpretation of

these requirements as expressed in the various EPA policy guidance

documents referenced in the NPRM cited above. EPA has found that the

petition satisfies the applicable EPA requirements and is exempting the

Phoenix area from implementing the NOX requirements for RACT,

NSR1, and the applicable general and transportation conformity and

I/M requirements2 of the CAA. A detailed discussion of the

petition and EPA's evaluation have been provided in the NPRM and in the

technical support document (TSD), dated October 1994. A detailed

discussion of the scope of the [[Page 19511]] NOX exemption as

applicable to the Phoenix area is discussed in the TSD dated January

1995 which accompanies this final action. These documents are available

at EPA's Region IX office.

\1\The section 182(f) exemption provisions center on the effect

on ozone concentrations due to NOX emission reductions. In the

case of new or modified sources, even after the application of on-

site controls from NSR programs, the source will result in increases

of NOX emissions. Therefore, the ``substantial NOX

reductions'' analysis used to demonstrate that NOX reductions

do not contribute to attainment should reflect a zero emissions

increase from new or modified stationary sources.

\2\``Scope of Nitrogen Oxides (NOX) Exemptions,'' from G.T.

Helms, Group Leader, Ozone/Carbon Monoxide Programs Branch (MD-15),

to the Air Branch Chiefs, January 12, 1995. ``I/M Requirements in

NOX RACT Exempt Areas'', from Mary T. Smith, Acting Director,

Office of Mobile Sources, to the Air Division Directors, October 14,

1994.

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Response to Public Comments

A 30-day public comment period was provided in 59 FR 54540. EPA

received comment letters of support from two utility companies, the

Arizona transportation authority, and two local governments in the

Phoenix area. Two adverse comment letters were received from

environmental groups and a local public interest law office

In August 1994, three environmental groups submitted joint comments

on the proposed approvals of NOX exemptions for the Ohio and

Michigan ozone nonattainment areas. The comments address EPA's policy

regarding NOX exemptions in general and apply to all actions EPA

takes regarding section 182(f) NOX exemptions. These comments as

well as those received from the local public interest law office are

addressed below.

Comment: Certain commenters argued 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: 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 EPA with discretion

to establish reasonable procedures, consistent with the requirements of

the Administrative Procedures 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 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 EPA by November 15, 1992.

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

exemption would have needed 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 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 and EPA

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

attainment or maintenance demonstrations.

The CAA requires conformity to the applicable SIP with regard to

federally-supported NOX generating activities in relevant

nonattainment and maintenance areas. However, EPA's conformity rules

explicitly provide that these NOX requirements would not apply if

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, EPA notes that this issue has previously been raised

in a formal petition for reconsideration of 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 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

Procedures 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 EPA's final conformity regulations, and EPA

remains bound by their existing terms.

Comment: One commenter contends that because the Arizona SIP is

inadequate to produce attainment, EPA cannot approve the waiver under

section 182(f).

Response: The basis for granting the NOX exemption is that

additional NOX reductions would not contribute to attainment. How

an area demonstrates that NOX reductions do not contribute to

attainment is outlined in EPA's December 1993 exemption guidance.3

The contribute to attainment test is met by demonstrating through UAM

that substantial reductions of VOC emissions result in lower ozone

levels than would result from both substantial reductions of NOX

emissions and combined reductions of VOC and NOX emissions. The

Phoenix petition adequately demonstrates this through UAM modeling

consistent with EPA's guidance. For reasons stated above, EPA does not

agree that the decision to grant or deny the Phoenix petition under

section 182(f) should depend on the approvability of the attainment

demonstration under section 182 (b) or (c).

\3\``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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Comment: Some commenters stated that the modeling required by EPA

guidance 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. The

comments also contend that the NOX reductions modeled specifically

for the Phoenix [[Page 19512]] petition are not sufficient to meet the

requirements of section 182(f), and that if any level of additional

NOX reductions would contribute to attainment (as opposed to one

test showing substantial reductions do not contribute to attainment),

then the waiver must be denied. In addition, the commenters claim that

Arizona did not model scenarios actually presented in the SIP.

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

guidance, 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.

EPA's guidance also states that application of UAM should be

consistent with techniques specified in the EPA document, entitled,

Guideline on Air Quality Models, Revised. Further, application of UAM

should also be consistent with procedures contained in the EPA

document, Guideline for Regulatory Application of the Urban Airshed

Model, issued 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 unspecified ``additional reductions'' of

NOX. EPA's December 1993 exemption guidance specifies that the

analysis should reflect 3 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% VOC reduction is chosen in scenario (1), then

the model for scenario (3) would simulate a 40% VOC reduction and

approximately a 40% 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 EPA's December 1993 guidance may be less

precise than an attainment demonstration required under section 182(c).

By contrast, with respect to the excess reductions provision in section

182(f)(2), 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.

The EPA does not agree that the waiver analysis must consider ``any

level'' of NOX reductions. The EPA guidance requires analysis of

``substantial'' reductions because reductions which are extremely small

or extremely large would bias the model so that the results could be

predetermined. Analyzing very small changes in NOX and/or VOC

emissions would yield a result of no change in the ozone concentrations

since the model cannot assess very small changes. Analysis of very

large NOX emission reductions might be unrealistic (especially

compared to the adopted attainment demonstration) and would result in

concluding that NOX reductions reduce ozone concentrations in all

cases. Also, in developing an attainment demonstration, an area

typically tries to attain the ozone standard in the least costly way by

starting from current conditions and reducing emissions from there.

While 100% VOC reduction alternatives exist, they are not the least

expensive ways to meet the NAAQS, and may not be feasible. Instead,

alternative combinations of VOC and NOX reductions are examined.

If two different strategies show the same ambient ozone concentration,

but one requires greater reductions and cost, the latter is not

considered a preferable strategy.

EPA believes that the main reason for the NOX RACT waiver

provisions in the CAA is the recognition by Congress that under certain

conditions NOX emission reductions can be counterproductive to

ozone attainment, because they could increase ozone levels and

necessitate additional VOC reductions to compensate. Although required

as beneficial to ozone attainment unless demonstrated otherwise,

NOX reductions which achieve the same ozone levels at a greater

cost based on a strategy using extra counterbalancing VOC reductions

does not make sense from an ozone regulatory standpoint. Therefore,

EPA's exemption guidance reflects this rationale in allowing

petitioners the opportunity to demonstrate scenarios where substantial

reductions of NOX are counterproductive to ozone attainment. In

the Arizona petition, both across-the-board NOX reductions and

NOX RACT specific reductions were simulated which consistently

demonstrate that NOX reductions do not contribute to attainment of

the ozone standard.

The EPA believes that the scenarios utilized in the Phoenix

analysis are adequate to determine that NOX reductions that might

reasonably be considered in an attainment strategy would not contribute

to attainment in the Phoenix area.

Comment: Some commenters provided a comment 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 Phoenix area action because the area's section 182(f) petition

is based on modeling rather than ``clean'' monitoring data.

Comment: Some commenters provided a comment on all section 182(f)

actions that a waiver of NOX controls is unlawful if such a waiver

will impede attainment and maintenance of the ozone standard in

separate downwind areas.

Response: The EPA believes that while this comment may be

applicable to proposed NOX exemption actions in other areas, it is

not applicable to the Phoenix exemption action because the EPA is

unaware of, and the comment itself does not specify, any downwind area

for which NOX transport is of concern.

Comment: 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, and do not waive 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 [[Page 19513]] commenters admit that, in prior guidance, 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 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: With respect to conformity, EPA's conformity

rules4,5 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), 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, EPA states in the June 17th 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,

EPA also intends to require consistency with the attainment

demonstration's NOX motor vehicle emissions budget. However, the

exemption for the Phoenix area was submitted pursuant to section

182(f)(3), and EPA does not believe it is appropriate to delay the

statutory deadline for acting on this petition 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.

\4\``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).

\5\``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: Some commenters argue that the CAA does not authorize any

waiver of the NOX reduction requirements until conclusive evidence

exists that such reductions are counter-productive.

Response: 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, EPA has sought an

approach that reasonably accords with Congress' 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, EPA determines that

in certain 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 EPA ``shall consider'' the 185B report taken

together with the timeframe 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 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 EPA from revisiting an approved NOX

exemption if warranted due to better ambient information.

In addition, the EPA believes (as described in 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), 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: One commenter objected to the adequacy of the modeling

demonstration in meeting the fundamental requirements of EPA's guidance

for applying the UAM, because the record reflects that the Phoenix area

is not an area with a single meteorological regime and no intensive

data from a field study was obtained for modeling purposes. In addition

to these reasons, the commenter claims that because there was not a

field study conducted with respect to the emissions inventory and that

modeling performance was not very good at several sites, the petition

should be denied.

Response: EPA's Guideline on Regulatory Application of the Urban

[[Page 19514]] Airshed Model (UAM guidance), EPA-450/91-013, July 1991,

describes procedures for the appropriate use of UAM, such as for

attainment demonstrations required of all ozone nonattainment areas.

This guidance generally requires that for attainment demonstrations, an

area with a single meteorological regime, must model three episodes of

that type of regime. However, EPA believes that the results of

simulating two episodes with intensive data from a field study would be

more reliable than simulating three episodes with merely routine data.

In terms of the meteorological regime issue, every day has

different meteorology and will yield different ozone predictions. This

does not necessarily mean that each varying meteorological day belongs

to a different meteorological regime. Regime refers to a general

pattern responsible for ozone formation. In the case of Phoenix, as

documented in the Systems Applications International (SA) memorandum

dated September 17, 1992,6 a single meteorological regime exists

in the Phoenix area which consists of a low pressure system over

southwestern Arizona, with light southwesterly flow during the

afternoon, and high temperatures. There is nothing in the record that

is inconsistent with this description or conclusion.

\6\``Review of Ozone Episodes (1987-1991) in the Phoenix Area'',

from the Arizona Department of Environmental Quality to Systems

Applications International, September 17, 1992. This memorandum is a

summary of the characteristics of the ozone episodes in the Phoenix

area, including annual, seasonal, and spatial distributions of the

exceedances.

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EPA guidance for UAM states that three episodes should be modeled

for each observed meteorological regime. However, in this case two

episodes were considered sufficient because it was determined that data

beyond that routinely available would be gathered and used to simulate

ozone episodes. A field study, documented in ``Summer 1992 Phoenix

Ozone Field Study'' (ADEQ, 1/93), involved the collection of data

beyond that recorded on a routine basis, such as meteorological and air

quality data aloft, VOC data, and extra background air quality data. In

addition, because of the desire to use a fuller database, episodes were

selected from among those that occurred during the study.

There was not a ``field study'' conducted in regards to the

emissions inventory as field studies usually do not refer to emissions

inventories. The emissions inventory in the Phoenix area was developed

using standard EPA-approved methods.

Because modeling performance is never exact, EPA must evaluate

whether its performance is adequate for regulatory decision-making.

Although modeling performance was not good at several sites, and some

under-prediction occurred, the modeling exercise meets EPA's

performance goals, and appears overall to perform reasonably. Spatial

plots of the whole modeling domain and time-series plots of individual

stations show reasonable performance. This is illustrated by the

model's correct responses to diagnostic and sensitivity tests, in which

various inputs are changed in determining if the model responds

consistently with our scientific understanding of ozone formation.

Therefore, EPA believes that the overall modeling performance is

reasonable and acceptable.

Comment: One commenter contends that the Phoenix modeling tests

failed the alternative ``net air quality benefits'' test because there

were no ozone decreases in some model grid cells on the initial

modeling day.

Response: While there was some discussion, the ``net air quality

benefits'' test was not relied on by Arizona in support of the

petition. Instead, two sets of modeling runs were performed for each

modeling episode to meet the ``contribute to attainment'' test. The two

sets were substantial levels of pollutant reductions and source-

specific NOX reductions. Together, these runs showed that the

specific reductions that would occur under NOX RACT, and also

levels of NOX reductions likely to be examined in an attainment

demonstration, would overall be counterproductive to ozone attainment.

The effect of decreases in NOX will always depend on location

because a decrease can increase ozone nearby in time or space, and

decrease it later and farther away. The fact that various modeling

cells go up and down is far less significant for regulatory purposes

than the effect on the overall peak.

The initial day of a modeling simulation is typically not used, per

EPA guidance, because it is deemed too dependent on uncertain initial

conditions for air quality, which must be extrapolated in time and

space from relatively few measurements. Thus, the decreases in ozone

for the initial days of the episodes modeled are not considered

meaningful. Results for the second and later days of a simulation are

used, since these more closely reflect the area's actual emissions.

EPA Action

EPA is finalizing this action to exempt the Phoenix ozone

nonattainment area from implementing the NOX requirements for

RACT, NSR, and the applicable general and transportation conformity and

I/M requirements.

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). Arizona submitted its ozone attainment demonstration on

November 15, 1994, and EPA is currently in the process of evaluating it

in regards to meeting the CAA requirements.

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 and implement the NOX requirements, except to the extent

that modeling shows NOX reductions to be ``excess reductions''. A

determination that the NOX exemption no longer applies would mean

that the NOX general and transportation conformity provisions

would again be applicable (see 58 FR 63214, 58 FR 62188; 59 FR 31238)

to the affected area. In the rulemaking action which removes the exempt

status, the EPA would specify a schedule for Arizona to adopt the

NOX requirements and for sources to comply with the applicable

requirements.

The subsequent modeling analyses mentioned above need not be

limited to those whose main purpose is to demonstrate attainment in the

1994 SIP revisions without the need for NOX controls required

under section 182(f). State or local officials 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, planning officials 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.

Nothing in this action should be construed as permitting or

allowing or establishing a precedent for any future

[[Page 19515]] request for revision to any state implementation plan.

Each request for revision to the state implementation plan shall be

considered separately in light of specific technical, economic, and

environmental factors and in relation to relevant statutory and

regulatory requirements.

Regulatory Process

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 action is not a ``significant regulatory action'' under the terms

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

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

of this action must be filed in the United States Court of Appeals for

the appropriate circuit by May 19, 1995. Filing a petition for

reconsideration by the Administrator of this 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 a rule. This

action may not be challenged later in proceedings to enforce its

requirements. Section 307(b)(2).

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Hydrocarbons,

Incorporation by reference, Intergovernmental relations, Nitrogen

dioxide, Ozone, Reporting and recordkeeping requirements, Volatile

organic compounds.

Note: Incorporation by reference of the State Implementation Plan

for the State of Arizona was approved by the Director of the Federal

Register on July 1, 1982.

Dated: April 11, 1995.

Carol M. Browner,

Administrator.

Part 52, chapter I, title 40 of the Code of Federal Regulations 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 D--Arizona

2. Subpart D is amended by adding Sec. 52.136 to read as follows:

Sec. 52.136 Control strategy for ozone: Oxides of nitrogen.

EPA is approving an exemption request submitted by the State of

Arizona on April 13, 1994 for the Maricopa County ozone nonattainment

area from the NOX RACT requirements contained in section 182(f) of

the Clean Air Act. This approval exempts the Phoenix area from

implementing the NOX requirements for RACT, new source review

(NSR), and the applicable general and transportation conformity and

inspection and maintenance (I/M) requirements of the CAA. The exemption

is based on Urban Airshed Modeling as lasts for only as long as the

area's modeling continues to demonstrate attainment without NOX

reductions from major stationary sources.

[FR Doc. 95-9568 Filed 4-18-95; 8:45 am]

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