Approval and Promulgation of Section 182(f) Exemption to the Nitrogen Oxides (NOINFX) Control Requirements for the Baton Rouge Ozone Nonattainment Area; Louisiana

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[LA-22-1-7184; FRL-5402-7]

Approval and Promulgation of Section 182(f) Exemption to the

Nitrogen Oxides (NOX) Control Requirements for the Baton Rouge

Ozone Nonattainment Area; Louisiana

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: As requested by the State of Louisiana in a petition submitted

to the EPA pursuant to section 182(f)(3) of the Clean Air Act (CAA),

the EPA is granting an exemption from the Reasonably Available Control

Technology (RACT) and New Source Review (NSR) requirements for major

stationary sources of Oxides of Nitrogen (NOX), from the vehicle

Inspection/Maintenance (I/M) NOX requirements, and general

conformity NOX requirements for the Baton Rouge, Louisiana serious

ozone nonattainment area. The EPA is approving the exemption based on a

demonstration that additional NOX reductions would not contribute

to attainment of the National Ambient Air Quality Standard (NAAQS) for

ozone in the nonattainment area. The EPA is not taking final action at

this time on the granting of an exemption from the transportation

conformity requirements of the CAA for the Baton Rouge area. The EPA is

reserving the right to reverse the approval of the exemption if

subsequent modeling data demonstrate an ozone attainment benefit from

NOX emission controls.

EFFECTIVE DATE: This action is effective as of January 18, 1996.

ADDRESSES: Copies of the exemption request, public comments and EPA's

responses are available for inspection at the following address:

United States Environmental Protection Agency, Region 6, Multimedia

Planning and Permitting Division, 1445 Ross Avenue, Suite 700, Dallas,

Texas 75202-2733.

Louisiana Department of Environmental Quality, H.B. Garlock Building,

7290 Bluebonnet, Baton Rouge, Louisiana 70810.

FOR FURTHER INFORMATION CONTACT:

Ms. Jeanne McDaniels or Mr. Quang Nguyen, Air Planning Section (6PD-L),

Multimedia Planning and Permitting Division, U.S. EPA Region 6, 1445

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

SUPPLEMENTAL INFORMATION:

I. Background

On November 17, 1994, the State of Louisiana submitted a petition

to the EPA requesting that the Baton Rouge serious ozone nonattainment

area be exempted from requirements to implement NOX controls

pursuant to section 182(f) of the CAA. The exemption request is based

on modeling that demonstrates additional NOX emission controls

within the nonattainment area will not contribute to attainment of the

ozone NAAQS within the area. The Baton Rouge ozone nonattainment area

consists of the following parishes: East Baton Rouge, West Baton Rouge,

Pointe Coupee, Livingston, Iberville, and Ascension. The State also

provided supplemental technical reports pertaining to the modeling as

part of the Baton Rouge post-1996 rate-of-progress plan submitted to

the EPA on November 15, 1994. In addition, the State submitted several

follow-up letters to the petition to: (1) revise a number of tables in

the November 17, 1994, petition, and (2) broaden the scope of the

original request to also include exemptions under section 182(f) for

NOX NSR, general conformity, and I/M NOX requirements.

On August 18, 1995, the EPA published a rulemaking proposing

approval of the NOX exemption petition for the six-parish ozone

nonattainment area (60 FR 43100). During the 30-day public comment

period, the EPA received two letters commenting on the proposal. Both

expressed opposition to the exemption. In addition to these comments,

in August 1994 three environmental groups submitted joint adverse

comments on the proposed approvals of NOX exemptions for the Ohio

and Michigan ozone nonattainment areas. The comments addressed the

EPA's general policy regarding NOX exemptions. The commenters

requested that these comments be addressed in all EPA rulemakings

dealing with section 182(f) exemptions.

II. Public Comments

The following discussion summarizes the comments received regarding

the State's petition and/or the EPA's proposed rulemaking and presents

the EPA's responses to these comments.

Comment: Commenters argued that NOX exemptions are provided

for in two separate parts of the CAA, in sections

[[Page 2439]]

182(b)(1) and 182(f). Because the NOX exemption tests in sections

182(b)(1) and 182(f)(1) include language indicating that action on such

requests should take place ``when (the 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 section 182(f)(3), must occur during

consideration of an approvable attainment or maintenance plan, unless

the area has been redesignated as attainment. The commenters also

argued that, even if the petition procedures of section 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 section 182(b)(1), since section 182(b)(1) 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 procedures 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 NOX exemption requests under section 182(f) and

instead, believes that sections 182(f)(1) and 182(f)(3) provide

independent procedures by which the EPA may act on NOX exemption

requests. The language in section 182(f)(1), which indicates that the

EPA should act on NOX exemptions in conjunction with action on a

plan or a plan revision, does not appear in section 182(f)(3). While

section 182(f)(3) references section 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 State Implementation

Plans (SIPs).

Additionally, section 182(f)(3) provides that ``a person'' (which

section 302(e) of the CAA defines to include a State) 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 RACT and NSR 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 have needed to submit this exemption request

for EPA review and rulemaking action several months before November 15,

1992. In contrast, the CAA specifies that the attainment demonstrations

were not due until November 1993 or 1994 (and the EPA may take up to 12

months to approve or disapprove the demonstrations). For marginal ozone

nonattainment areas (subject to NOX NSR), no attainment

demonstrations are called for in the CAA. For areas seeking

redesignation to attainment of the ozone NAAQS, the CAA does not

specify a deadline for submittal of maintenance demonstrations (in

reality, the EPA would generally consider redesignation requests

without accompanying maintenance plans to be unacceptable). Clearly,

the CAA envisions the submittal of and EPA action on NOX exemption

requests, in some cases, prior to submittal of attainment or

maintenance demonstrations.

With respect to the comment that section 182(b)(1) is the

appropriate authority for granting interim period transportation

conformity NOX exemptions, the EPA agreed with the commenters and

published an interim final rule that changed the transportation

conformity rule's reference to section 182(b)(1) as the correct

authority under the CAA for waiving the NOX ``build/no-build'' and

``less-than-1990 emissions'' tests for certain areas. See 60 FR 44762,

dated August 29, 1995. A related proposed rule (60 FR 44790), published

on the same day, invited public comment on how the Agency plans to

implement section 182(b)(1) transportation conformity NOX

exemptions. That proposal has since been finalized. See 60 FR 57179

(November 14, 1995). However, the EPA also notes that section

182(b)(1), by its terms, only applies to moderate and above ozone

nonattainment areas. Consequently, the EPA believes that the interim

reductions requirements of section 176(c)(3)(A)(iii), and hence the

authority provided in section 182(b)(1) to grant relief from those

interim reduction requirements, apply only with respect to those areas

that are subject to section 182(b)(1). The EPA intends to continue to

apply the transportation conformity rule's ``build/no-build'' and

``less-than-1990 emissions'' tests for purposes of implementing the

requirements of section 176(c)(1). In addition, because general Federal

actions are not subject to section 176(c)(3)(A)(iii), which explicitly

references section 182(b)(1), the EPA will also continue to offer

relief under section 182(f)(3) from the applicable NOX

requirements of the general conformity rule.

In order to demonstrate conformity, transportation related federal

actions that are taken in ozone nonattainment areas not subject to

section 182(b)(1) and, hence, not subject to section 176(c)(3)(A)(iii)

must still be consistent with the criteria specified under section

176(c)(1). Specifically, these actions must not, with respect to any

standard, cause or contribute to new violations, increase the frequency

or severity of existing violations, or delay attainment. In addition,

such actions must comply with the relevant requirements and milestones

contained in the applicable state implementation plan, such as

reasonable further progress schedules, assumptions specified in the

attainment or maintenance demonstrations, numerical emission limits, or

prohibitions. The EPA believes that the ``build/no-build'' and ``less-

than-1990 emissions'' tests provide an appropriate basis for such areas

to demonstrate compliance with the above criteria.

As noted earlier, the EPA intends to continue to offer relief under

section 182(f)(3) from the interim NOX requirements of the

conformity rules that would apply under section 176(c)(1) for the areas

not subject to section 182(b)(1) in the manner described above. The EPA

believes this approach is consistent both with the way NOX

requirements in ozone nonattainment areas are treated under the CAA

generally, and under section 182(f) in particular. The basic approach

of the CAA is that NOX reductions should apply when beneficial to

an area's attainment goals, and should not apply when unhelpful or

counterproductive. Section 182(f) reflects this approach but also

includes specific substantive tests which provide a basis for the EPA

to determine when NOX requirements should not apply. There is no

substantive difference between the technical analysis required to make

an assessment of NOX impacts on attainment in a particular area

whether undertaken with respect to mobile source or stationary source

NOX emissions. Moreover, where the EPA has determined that

NOX reductions will not benefit attainment or would be

counterproductive in an area, the EPA believes it would be unreasonable

to insist on NOX reductions for purposes of meeting reasonable

further progress or other milestone requirements. Thus, even concerning

the conformity

[[Page 2440]]

requirements of section 176(c)(1), the EPA believes it is reasonable

and appropriate to (1) offer relief from the applicable NOX

requirements of the general and transportation conformity rules in

areas where such reductions would not be beneficial, and (2) rely in

doing so on the exemption tests provided in section 182(f).

For moderate and above ozone nonattainment areas which are relying

on modeling data in petitioning for a transportation conformity

NOX exemption, the final rule (60 FR 57179) affects the process

for applying for such waivers. Unlike section 182(f)(3), section

182(b)(1) requires that the EPA approve a NOX waiver (i.e.,

determine that additional reductions of NOX would not contribute

to attainment) as part of a SIP revision. Thus, under section

182(b)(1), petitions for transportation conformity NOX waivers for

areas subject to that section must be submitted as formal SIP revisions

by the Governor (or designee) following a public hearing. As explained

previously, the EPA will continue to process and approve, under section

182(f)(3), conformity NOX waivers for areas not subject to section

182(b)(1) without public hearings or submission by the Governor. The

Baton Rouge serious ozone nonattainment area is subject to the

requirements of section 182(b)(1). Hence, a transportation conformity

NOX waiver would have to be submitted as a revision to the SIP. As

mentioned previously, in this rulemaking, the EPA is not taking a final

action on a NOX exemption for transportation conformity for the

Baton Rouge area. The State of Louisiana has requested a transportation

conformity NOX exemption for the Baton Rouge area through a formal

SIP revision pursuant to section 182(b)(1) of the CAA. The EPA proposed

approval of the revision on October 6, 1995 (60 FR 52348). A final

action on the SIP submittal will be taken in a subsequent rulemaking by

the EPA.

Finally, as noted earlier, the NOX provisions of the general

conformity rule would not be affected by this proposal. A NOX

waiver under section 182(f) removes the NOX general conformity

requirements entirely and would continue to do so. The CAA's provision

for transportation conformity NOX waivers stems from section

176(c)(3)(A)(iii), which addresses only transportation conformity, and

not general conformity. Therefore, the statutory authority for general

conformity NOX waivers is not required to be section 182(b) for

any areas and may continue to be section 182(f) for all areas.

Comment: Commenters argued that waiver of NOX control

requirements is unlawful if such a waiver would impede attainment and

maintenance of the ozone standard in downwind areas.

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

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

Memorandum, ``Section 182(f) Nitrogen Oxides (NOX) Exemptions--

Revised Process and Criteria,'' dated February 8, 1995, from John

Seitz. As described in this memorandum, 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 the

NOX emissions would contribute significantly to nonattainment in,

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

nonattainment area within the same State. This action would be

independent of any action taken by the EPA on a NOX exemption

request under section 182(f). That is, the EPA's action to grant or

deny a NOX exemption request under section 182(f) for any area

would not shield that area from the EPA's action to require NOX

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

Modeling analyses are underway or will soon be conducted in many

areas for the attainment demonstration SIP revisions required pursuant

to section 182(c)(2)(A). Recent modeling data suggest that certain

ozone nonattainment areas may benefit from reductions in NOX

emissions upwind of the nonattainment areas. For example, the Northeast

Corridor States and the Lake Michigan Ozone Study are considering

attainment strategies which may 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 the large scale modeling analyses are being

conducted, States have requested exemptions from NOX requirements

under section 182(f) for certain nonattainment areas in the modeling

domains. Some of these nonattainment areas may impact downwind

nonattainment areas. The EPA intends to address the transport issue

under section 110(a)(2)(D), based on a regional modeling analysis.

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

requirements may be granted for nonattainment areas outside of 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.'' 1 As described in

section 4.3 of the December 13, 1993, EPA guidance document,

``Guideline for Determining the Applicability of Nitrogen Oxides

Requirements Under Section 182(f),'' the EPA encourages, but does not

require, States/petitioners to consider the impacts on the entire

modeling domain since the effects of an attainment strategy may extend

beyond a 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

interstate. States need to consider such impacts since they are

ultimately responsible for achieving attainment in all portions of

their State 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) of the

CAA.

\1\ There are three NOX exemption tests specified in

section 182(f). Of these, two are applicable for areas outside of 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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In contrast, section 4.4 of the December 16, 1993, 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 further explains that section 110(a)(2)(D)

(not section 182(f)) prohibits such impacts. Consistent with section

4.3 of the guidance, the EPA believes that the section 110(a)(2)(D) and

182(f) provisions must be considered independently, and hence, has

revised section 4.4 of the December 16, 1993, guidance document. Thus,

if there is evidence that NOX emissions in an upwind area would

interfere with attainment or maintenance in a downwind area, that

problem should be

[[Page 2441]]

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,

therefore, 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 on the circumstances.

The State of Louisiana is being included in one of the new modeling

analyses referred to above that is being conducted by the EPA, States,

and other agencies as part of the Ozone Transport Assessment Group

(OTAG). The OTAG process is a consultative process among the eastern

States and the EPA which was initiated by the EPA in a March 2, 1995,

policy memorandum.2 The OTAG assessment process, which is

scheduled to end at the close of 1996, will evaluate regional and

national emission control strategies using improved regional modeling

analyses. The goal of the OTAG process is to reach consensus on

additional regional and national emission reductions that are needed to

support efforts to attain the ozone standard in the eastern United

States. Based on the results of the OTAG process, States have committed

to submit plans (SIP revisions) by mid-1997 which show attainment of

the ozone standard through local, regional, and national emission

controls.

\2\ Memorandum, ``Ozone Attainment Demonstrations,'' dated March

2, 1995, from Mary Nichols, Assistant Administrator for Air and

Radiation, U.S. Environmental Protection Agency.

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The OTAG plans to complete additional modeling between now and

September 1996 using emissions data and emission control strategies

currently being developed among OTAG workgroups.

As noted in a prior EPA rulemaking dated November 28, 1994 (59 FR

60709), NOX waivers are approved on a contingent basis; the waiver

applies only so long as air quality analyses, such as from additional

ozone modeling, in an exempted area continue to show an attainment

disbenefit or lack of benefit from NOX emission reductions.

Additionally, in the notice of proposed rulemaking on the Baton Rouge

exemption request, 60 FR 43100 (August 18, 1995), the EPA indicated

that the NOX exemption would remain effective for only as long as

modeling continued to show that NOX control activities would not

contribute to attainment in the Baton Rouge area.

The State of Louisiana has conducted a number of additional

modeling analyses (subsequent to the preparation of the NOX waiver

request) to assess the impact of specific emission controls on peak

ozone concentrations. These additional modeling analyses have been

performed to support the State's demonstration of attainment, which is

under development. These modeling analyses are well documented and are

based on a modeling system which has been accepted by the EPA as being

validated for the Baton Rouge modeling domain. EPA continues to believe

that the modeling completed thus far supports granting a NOX

waiver.

As discussed above, the State of Louisiana has been included in the

superregional photochemical modeling of the eastern United States

(U.S.) by the OTAG. The EPA expects the OTAG to complete their work as

scheduled. The EPA will then evaluate the modeling results and their

implications concerning NOX versus volitle organic compound (VOC)

emission controls. The results of this modeling may supersede the urban

airshed model (UAM) demonstration that the EPA is using as the basis

for granting this waiver. To continue the waiver for all NOX

source categories, the modeling must continue to show attainment of the

ozone standard without the use of additional NOX emission

controls. The final modeling may demonstrate attainment of the ozone

standard using a subset of the possible NOX emission controls. In

this situation, the EPA may continue the waiver for the remaining

``non-controlled'' NOX sources under section 182(f)(2) of the CAA.

Comment: Comments were received regarding the scope of exemption of

areas from the NOX requirements of the conformity rules. The

commenters argued 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 admitted 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 transportation conformity rule 3

originally provided a NOX transportation conformity waiver if an

area received a section 182(f) exemption. As indicated in a previous

response, the EPA has changed the reference from section 182(f) to

section 182(b)(1) in the transportation conformity rule since that

section is specifically referenced by the transportation conformity

provisions of the CAA. See 60 FR 44762. The EPA has also consistently

held the view that, in order to conform, nonattainment and maintenance

areas must demonstrate that the transportation plan and the

Transportation Improvement Program (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 was not

reflected in the transportation conformity rule. The EPA has amended

the rule to correct this error. See 60 FR 57179. However, the

exemptions that are the subject of this final action do not include

transportation conformity NOX requirements and are being processed

under section 182(f)(3), which requires the EPA to act within 6 months

on the submitted petition. The EPA believes it is appropriate to act on

received petitions as close to the prescribed 6 month time frame as

practicable. Therefore, the EPA intends to process this exemption

request without further delay.

\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).

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Comment: Commenters argued that the CAA does not authorize any

waiver of the NOX reduction requirements until conclusive evidence

exists that such reductions are counterproductive.

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

the 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. In addition to

imposing control requirements on major stationary sources of NOX

similar to those that apply for sources of VOC, section 182(f), also

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

requirements if, under one of several tests, the EPA

[[Page 2442]]

determines that, in certain areas, NOX reductions would generally

not be beneficial towards attainment of the ozone standard. In section

182(f)(1), Congress explicitly conditioned action on NOX

exemptions on the results of an ozone precursor study required under

section 185B of the CAA. Because of the possibility that reducing

NOX in an 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 Title I of the

CAA, to avoid requiring NOX reductions where such would not be

beneficial or would be counterproductive. In describing these various

ozone provisions, including section 182(f), the House Conference

Committee Report states in the 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 the response to an earlier comment, the command in

section 182(f)(1) that the EPA ``shall consider'' the section 185B

report taken together with the timeframe the CAA provides 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 in the absence of the

additional information that would be included in affected areas'

attainment or maintenance demonstrations. While there is no specific

requirement in the CAA that EPA actions granting NOX exemption

requests must await ``conclusive evidence,'' as the commenters argue,

there is also nothing in the CAA to prevent the EPA from revisiting an

approved NOX exemption if warranted by additional, current

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 a full or limited NOX exemption.

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

NOX reductions are ``counterproductive.'' If one of the tests is

met (even if another test is failed or not applied), the section 182(f)

NOX requirements would not apply or, under the excess reductions

provision, a portion of these requirements would not apply.

Comment: Commenters 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 Baton Rouge action because the area has not based its section

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

Comment: 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 control, ``substantial''

reductions, is required to be analyzed. As such, the waiver does not

provide a complete picture of the effect larger amounts of NOX

reductions will have on ozone levels. 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, 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 a transport

region, the Regional Oxidant Model are acceptable models for these

purposes.

The EPA guidance also states that application of UAM should be

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

Quality Models (Revised)'' (December 1993). 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

scenario (1), the demonstration should use the VOC reductions needed to

attain, as demonstrated by Empirical Kinetic Modeling Approach 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 scenario (2), 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 scenario (3),

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 these analyses are appropriate to determine, in a

directional manner, whether or not NOX reductions are expected to

be beneficial 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.

The State's modeling demonstration reflected substantial NOX

reductions in addition to substantial VOC reductions in order to more

accurately characterize near-term VOC and NOX control

[[Page 2443]]

scenarios. In fact, for the NOX waiver, the State modeled a 100

percent reduction in the point source NOX inventory (which

represented a 57 percent reduction in total projected NOX

emissions), along with a 100 percent reduction in point source VOC

emissions (which represented a 46 percent reduction in the total

projected anthropogenic VOC emissions). The analyses showed that the

modeled domain-wide peak ozone concentrations exceeding 120 parts per

billion decreased in response to substantial VOC emission reductions

and increased in response to substantial NOX emission reductions

for all episodes.

Comment: Commenters argued that the CAA does not authorize delaying

implementation of NOX controls if attainment modeling is not

complete.

Response: The EPA believes the modeling analyses submitted 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.

Comment: One commenter argued that, while NOX controls may be

less beneficial than VOC-only controls in reducing ozone concentrations

in some areas of the Baton Rouge region on some days, the State has not

demonstrated that VOC-only controls will sufficiently reduce ozone

concentrations for the majority of episodes, particularly in areas

farther downwind.

Response: The modeling analyses performed examined the relative

benefits of VOC versus NOX emissions reductions primarily in the

ozone nonattainment and surrounding areas as required by the EPA's

NOX exemption guidance. An assessment of the impact of VOC versus

NOX emission reductions in areas farther downwind (beyond the

modeling domain) was not required by the EPA and, thus, was not

considered in the State analyses submitted in support of the NOX

exemption. The modeling domain selected, however, was large enough to

ensure that it provided resolution of ozone and precursor advection

upwind and downwind of the area of interest. The Baton Rouge modeling

domain, which includes all or part of 20 parishes in Louisiana, covers

both attainment as well as nonattainment parishes. As mentioned

earlier, the analyses showed that the modeled domain-wide peak ozone

concentrations exceeding 120 parts per billion decreased in response to

VOC emission reductions and increased in response to NOX emission

reductions for all episodes.

As noted in the response to an earlier comment, the State of

Louisiana has been included in the OTAG regional modeling domain to

address the impact that transport may have on downwind areas in the

eastern U.S. Based on the outcome of the modeling analyses, the EPA may

require, pursuant to section 110(a)(2)(D), NOX reductions in

upwind areas to address the transport issue.

Comment: One commenter stated that the EPA must rely on the recent

National Academy of Sciences (NAS) report in its review of NOX

waivers. The commenter pointed out that the NAS report found that to

reduce transported ozone NOX reductions are needed.

Response: The NAS report and the EPA's companion report both

support the conclusion that, as a general matter for ozone

nonattainment areas across the country, NOX reductions in addition

to VOC reductions will be needed to achieve attainment. This general

conclusion, however, must be assessed in the context of the more

detailed analysis provided in those same reports. For example, the NAS

report notes that NOX reductions can have either a beneficial or

detrimental effect on ozone concentrations, depending on the locations

and emission rates of VOC and NOX sources in a region. The effect

of NOX reductions depends on the local VOC/NOX ratio and a

variety of other factors. In its report issued pursuant to section 185B

of the CAA, the EPA stated that ``[a]pplication of gridded

photochemical models on a case by case basis is required to determine

the efficacy of NOX controls, because the ozone response to

precursor reductions is area specific.''

The analyses performed in the Baton Rouge area demonstrate a local

disbenefit from NOX control in the modeling domain. Based on these

modeling results, the area meets the test under section 182(f)(1)(A) of

the CAA required to support a waiver from the NOX requirements of

section 182(f). The effect that NOX controls in the Baton Rouge

area may have on ozone levels in the eastern U.S. will be addressed in

the OTAG process.

Comment: NOX emission reductions will not only reduce

transported ozone, but will also improve visibility, especially in

downwind Class I areas.

Response: The NOX control waiver request was submitted based

on sensitivity analyses performed on the episodes selected for the

attainment demonstration required for moderate and above ozone

nonattainment areas. To this end, the focus is on the local ozone

problem in the Baton Rouge area. Other air pollution problems will be

dealt with as part of separate regulatory activities. Moreover, the

NOX exemption test Louisiana is relying on (pursuant to section

182(f)(1)(A)) requires an assessment of only the contribution of

NOX emissions reductions toward ozone attainment.

Comment: One commenter argued that the EPA Administrator has an

obligation, under section 110(a)(2)(D), to prohibit any activity in a

State which will contribute significantly to nonattainment in, or

interfere with maintenance by, any other State. To this end, a

``superregional'' NOX strategy should be adopted before the

Administrator grants any section 182(f) NOX exemption or, at the

very least, NOX exemptions should be restricted to expire if the

OTAG and the EPA are unsuccessful in completing the requirements

outlined in the EPA's March 2, 1995, attainment guidance document.

Response: As discussed earlier in the response concerning transport

to downwind areas, 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 the NOX emissions would

contribute significantly to nonattainment in, or interfere with

maintenance by, any other State or in another nonattainment area within

the same State. This action would be independent of any action taken by

EPA on a NOX exemption request under section 182(f).

Comment: One commenter stated that the current ozone standard, 120

parts per billion, may not be adequately protective of public health

and even greater reductions in ozone levels could be required.

Response: The adequacy of the current ozone standard is not the

subject of this rulemaking. The EPA will reserve discussions regarding

the adequacy of the ozone standard for future rulemaking actions on

that subject.

Comment: One commenter argued that biogenic VOC emissions are

underestimated, which would cause a bias in the model towards favoring

VOC control. The commenter further stated that, in the petition, no

mention is made of what an upward revision in the biogenic VOC

emissions inventory would mean for the effectiveness of a VOC-based

control strategy. The commenter argued that mobile source VOC emissions

are significantly underestimated, which would compound with the

possible underestimation of biogenic VOC emissions to make VOC controls

even less effective in reality than they appear in modeling studies.

Also, the commenter asserted that a significant

[[Page 2444]]

underestimation of the mobile source VOC inventory has large

implications because it comprises the largest portion of the

anthropogenic inventory.

Response: Depending on the locality, the mobile source inventory

could comprise a major portion of the anthropogenic inventory. However,

in the case of the Baton Rouge area, the mobile source inventory

accounts for only 18 percent of the total VOC inventory, whereas the

biogenic emissions inventory, which is the major source of VOC

emissions in the Baton Rouge area, accounts for 57 percent of the total

VOC emissions inventory.

In calculating the mobile source emissions inventory for the Baton

Rouge area, the State used the EPA recommended method (i.e., MOBILE5a

for mobile source emission factors and area-specific data for vehicle

miles traveled).

Biogenic hydrocarbon emissions have been determined to play an

important role in the chemistry of urban ozone formation, especially in

warm southern cities. In light of this, the State developed the

biogenic emission inventory for the Baton Rouge area based on area-

specific data. For instance, the area-specific land use database used

in the biogenic emission development was derived from four different

sources: the Louisiana Department of Transportation and Development, a

study of Baton Rouge's biogenic hydrocarbon emissions by Carlos

Cardolino and William Chameides 4 at the Georgia Institute of

Technology using Landsat imagery, the U.S. Geological Survey's Geo-

ecology database, and the U.S. Forest Service's 1991 Forest Statistics

for the Southeast Louisiana Parishes and Forest Statistics of South

Delta Louisiana Parishes. Meanwhile, the emission factors used in

estimating biogenic emissions in the Baton Rouge area were obtained

from the Rasmussen and Khalil 5 and Zimmermann 6 studies of

biogenic sources. (The emission factors from the Rasmussen and Khalil

and Zimmermann studies were derived from direct measurements of various

types of vegetation in the Baton Rouge and Tampa Bay, Florida areas,

respectively.)

\4\ Cardelino, C.A., and W.L. Chameides. ``A Gridded Inventory

of Biogenic Hydrocarbon Emissions for the Baton Rouge Non-attainment

Area.'' October 1989.

\5\ Rasmussen, R.A., and M.A.K. Khalil. ``Forest Hydrocarbon

Emissions: Relationships Between Fluxes and Ambient

Concentrations.'' Journal of the Air and Waste Management

Association. Volume 42, No. 6 (June 1992), p. 5.

\6\ Zimmermann, P.R. ``Testing for Hydrocarbon Emissions from

Vegetation Leaf Litter and Aquatic Surfaces, and Development of a

Methodology for Compiling Biogenic Emission Inventories.'' EPA-450,

4-4-79-004 (1979).

---------------------------------------------------------------------------

The EPA believes that the mobile and biogenic VOC inventories are

sufficiently accurate to produce acceptable modeling results. In

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

emissions inventory for developing its modeling demonstration. (The EPA

evaluated the State's 1990 base year emissions inventory for Baton

Rouge and published a final approval in the Federal Register on March

15, 1995. See 60 FR 13908.)

Comment: One commenter stated that uncertainties in meteorology can

act as a source of compensating errors for erroneously low VOC

inventories. In the Baton Rouge area, the regions of high anthropogenic

NOX emissions are generally well-separated from the regions of

highest biogenic VOC emissions. This creates uncertainty in accurately

modeling the transport of a high-NOX plume into high biogenic VOC

areas under stagnant wind conditions.

Response: The EPA believes that the conditions described above

(i.e., regions of high-NOX emissions generally well-separated from

high biogenic VOC emissions under stagnant wind conditions) are not

characteristic of the Baton Rouge area, where many major NOX point

sources are either collocated or located within the regions of highest

biogenic VOC emissions. Many of the major NOX point sources, which

are located within the Baton Rouge modeling domain, were taken into

account in the simulations. The model performed well for the episodes

selected, providing a good representation of the spatial and temporal

characteristics of the episode, and generally simulating the observed

peaks well. Also, consistent with EPA guidance, the State performed

diagnostic and sensitivity simulations to determine whether

compensating errors occurred as a result of meteorology and other

inputs and found that no such errors occurred.

Comment: One commenter stated that the EPA should place the burden

of proof on Louisiana to provide affirmative evidence that no negative

impact will occur in downwind areas if NOX reductions are not

imposed in the Baton Rouge area.

Response: Modeling and data analyses addressed in the State's

NOX waiver request demonstrate the positive benefits of VOC

control in the modeling domain. And, as required under section 182(f),

the State has demonstrated that implementing NOX emission controls

will result in greater domain-wide peak ozone concentrations throughout

the Baton Rouge modeling domain. Since the State is relying on the

section 182(f)(1)(A) ``contribute to attainment'' test, it does not

also need to demonstrate that no negative impact will occur in downwind

areas if NOX reductions are not imposed in the Baton Rouge area.

(Also, see the EPA's previous response to comment on transport issues.)

Comment: One commenter stated that NOX reductions have other

air quality benefits in addition to their effect on ozone, and that

granting a NOX waiver will undermine the EPA's efforts to improve

a broad range of air and water quality values in several regional

efforts to address regional environmental problems (i.e., acid rain and

nitrogen deposition into estuaries).

Response: The EPA agrees that 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 Baton Rouge area

regardless of their impact on ozone. As noted in the response to an

earlier comment, 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 LDEQ

has demonstrated 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 the Baton Rouge area and, thus, the

area qualifies for an exemption from the CAA's NOX requirements.

At this time, ambient concentrations of nitrogen dioxide (NO2)

in the Baton Rouge area are significantly below the federal NAAQS for

NO2. Therefore, based on the current federal standards, the EPA

does not believe the NO2 levels in Baton Rouge are unsafe. The EPA

is mandated to periodically reevaluate the NAAQS for each criteria

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

reviewing the NO2 standard and will evaluate any potential

concerns over the standard through a separate rulemaking process.

Additionally, 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. Other air pollution problems

(i.e., nitrogen deposition into estuaries) will be dealt with as part

of separate regulatory activities.

For these reasons, the EPA does not believe that the NOX

controls required under section 182(f) of the CAA should

[[Page 2445]]

be implemented in the Baton Rouge area regardless of the impact on

ozone.

Comment: One commenter argued that, since the OTAG's assessment of

the influence of NOX on regional transport will not be completed

until late-1996, in the interim, the EPA should, at a minimum, cap

NOX emissions at current levels in the Baton Rouge area, and

require offsets for new emission sources to prevent NOX emissions

increases.

Response: The EPA disagrees with this comment as it pertains to

this action. The CAA authorizes the EPA to grant NOX exemptions

for areas, like Baton Rouge, that qualify under section 182(f) and

requires that the EPA make such determinations within 6 months of

submission of a petition. Also, the EPA anticipates that the State will

submit a modeled attainment demonstration for the six-parish Baton

Rouge nonattainment area well ahead of the schedule outlined in the

EPA's March 2, 1995, attainment guidance. (The State has developed an

attainment demonstration submittal for the Baton Rouge area, which was

put forth for public comment in the October 20, 1995, edition of the

Louisiana Register.) The attainment demonstration establishes a target

level for both VOC and NOX emissions in the area. Additionally, if

a NOX waiver is approved, major point sources of NOX

emissions are still subject to Prevention of Significant Deterioration

requirements. Moreover, in the section 182(f) modeling demonstration,

the State has projected negative growth in point source NOX

emissions from the base year (1990) out to the attainment year (1999).

As noted previously, the EPA's action to grant or deny a NOX

exemption under section 182(f) would not shield the area from EPA

action, under section 110(a)(2)(D), to require even further NOX

emission reductions (beyond those modeled in the attainment

demonstration) if, through the OTAG process or other subsequent

modeling, such reductions are determined to be necessary to address

transport to downwind areas.

III. Effective Date

This rulemaking is effective as of January 18, 1996. 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 if the rule ``relieves a restriction.'' Since the approval

of the section 182(f) exemption for the Baton Rouge ozone nonattainment

area 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 comments received were found to warrant no significant changes

from proposed to final action on this NOX exemption request. The

primary difference between the proposed and final rulemaking is the

addition of the statement that the EPA may require NOX emission

controls in general or on a source-specific basis under section

110(a)(2)(D) of the CAA if future ozone modeling (for example, the OTAG

modeling expected to be completed in late-1996) demonstrates that such

controls are needed to achieve the ozone standard in downwind areas.

Based on subsequent modeling results, the EPA may rescind all or

part(s) of the NOX waiver. Approval of the exemption waives the

Federal requirements for NOX RACT, NOX NSR, vehicle I/M

NOX requirements, and NOX general conformity applicable to

the Baton Rouge ozone nonattainment area. To maintain the waiver,

future modeling must demonstrate attainment of the ozone standard

without the use of additional NOX emission controls. (The modeling

may demonstrate the need for some NOX emission controls,

necessitating the need for a reduction in the source coverage of the

NOX waiver under section 182(f)(2) of the CAA.) Should the EPA

rescind the exemption, the State would be required to begin

implementing applicable NOX RACT, NOX NSR, vehicle I/M

NOX requirements, and NOX general conformity. (To allow point

sources time to purchase NOX control equipment, install it, etc.,

NOX RACT compliance would be required as expeditiously as

practicable, but no later two years following the rescission.)

This action stops the mandatory sanctions clock started on July 1,

1994, as a result of the EPA's finding of failure to submit the

NOX RACT SIP pursuant to section 179(a) of the CAA.

V. Miscellaneous

A. Applicability to Future SIP Decisions

Nothing in this action should be construed as permitting, allowing

or establishing a precedent for any future request for revision to any

state implementation plan. The EPA shall consider each request for

revision to the state implementation plan in light of specific

technical, economic, and environmental factors and in relation to

relevant statutory and regulatory requirements.

B. Executive Order 12866

The Office of Management and Budget has exempted this regulatory

action from review under Executive Order 12866.

C. Regulatory Flexibility

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 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.

This approval does not create any new requirements. Therefore, I

certify that this action does not have a significant impact on any

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

State relationship under the CAA, preparation of the regulatory

flexibility analysis would constitute Federal inquiry into the economic

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

actions concerning state implementation plans 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)).

D. Unfunded Mandates

Under sections 202, 203, and 205 of the Unfunded Mandates Reform

Act of 1995 (Unfunded Mandates Act), signed into law on March 22, 1995,

the EPA must assess whether various actions undertaken in association

with proposed or final regulations include a Federal mandate that may

result in estimated costs of $100 million or more to the private

sector, or to State, local, or tribal governments in the aggregate.

The EPA's final action will relieve requirements otherwise imposed

under the CAA and, hence, does not impose any federal intergovernmental

mandate, as defined in section 101 of the Unfunded Mandates Act. This

action also will not impose a mandate that may result in estimated

costs of $100 million or more to either State, local, or tribal

governments in the aggregate, or to the private sector.

E. Petitions for Judicial 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 March 26, 1996. Filing a petition for

reconsideration by the Administrator of this final rule does not affect

the finality of this rule for the

[[Page 2446]]

purpose of judicial rule, 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)

of the CAA.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Oxides of

nitrogen, Incorporation by reference, Intergovernmental relations,

Ozone.

Dated: January 18, 1996.

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 T--Louisiana

2. Section 52.992 is amended by adding paragraph (b) to read as

follows:

Sec. 52.992 Area-wide nitrogen oxides (NOX) exemptions.

* * * * *

(b) The LDEQ submitted to the EPA on November 17, 1994, a petition

requesting that the Baton Rouge serious ozone nonattainment area be

exempted from the NOX control requirements of the CAA. In

addition, supplemental information was submitted to the EPA by the LDEQ

on January 26, 1995, June 6, 1995, and June 16, 1995. The Baton Rouge

nonattainment area consists of East Baton Rouge, West Baton Rouge,

Pointe Coupee, Livingston, Iberville, and Ascension Parishes. The

exemption request was based on photochemical grid modeling which shows

that reductions in NOX would not contribute to attainment in the

nonattainment area. On January 18, 1996, the EPA approved the State's

request for an areawide exemption from the following requirements:

NOX new source review, NOX reasonably available control

technology, NOX general conformity, and NOX inspection and

maintenance requirements.

[FR Doc. 96-1288 Filed 1-25-96; 8:45 am]

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