Regulation of Fuels and Fuel Additives; Standards for Reformulated Gasoline
Federal RegisterMar 12, 1997
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[FRL-57-02-2]
RIN 2060-AD27
Regulation of Fuels and Fuel Additives; Standards for
Reformulated Gasoline
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of denial of petition for reconsideration.
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SUMMARY: Pursuant to section 553(e) of the Administrative Procedure
Act, the American Petroleum Institute requested that EPA reconsider and
repeal the Phase II reformulated gasoline emission reduction standard
for oxides of nitrogen. For the reasons provided below, EPA is denying
this petition. EPA's review of new data concerning the air quality
benefits and cost-effectiveness of the reformulated gasoline emission
reduction standard for oxides of nitrogen demonstrates the continued
appropriateness of the standard.
EFFECTIVE DATE: March 12, 1997.
ADDRESSES: Information relevant to this action is contained in Docket
No. A-96-27 at the EPA Air and Radiation Docket, room M-1500 (mail code
6102), 401 M St., SW., Washington, DC 20460. The docket may be
inspected at this location from 8:30 a.m. until 5:30 p.m. weekdays. The
docket may also be reached by telephone at (202) 260-7548. As provided
in 40 CFR part 2, a reasonable fee may be charged by EPA for
photocopying.
FOR FURTHER INFORMATION CONTACT: Debbie Wood, Office of Mobile Sources,
Fuels and Energy Division, (202) 233-9000.
SUPPLEMENTARY INFORMATION
I. Introduction and Background
On February 16, 1994, EPA published a final rule establishing
various content and emission reduction standards for reformulated
gasoline (RFG), including provisions for the certification of RFG and
enforcement of RFG standards, and establishing certain requirements
regarding unreformulated or conventional gasoline (59 FR 7716). The
purpose of the RFG program is to improve air quality by requiring that
gasoline sold in certain areas of the U.S. be reformulated to reduce
emissions from motor vehicles of toxics and tropospheric ozone-forming
compounds, as specified by section 211(k) of the Clean Air Act (CAA or
the Act). Section 211(k) mandates that RFG be sold in nine specific
metropolitan areas with the most severe summertime ozone levels; RFG
must also be sold in any ozone nonattainment area reclassified as a
severe area, and in other ozone nonattainment areas that choose to
participate or ``opt in'' to the program. The Act further requires that
conventional gasoline sold in the rest of the country not become any
more polluting than it was in 1990 by requiring that each refiner's and
importer's gasoline be as clean, on average, as it was in 1990. This
has resulted in regulatory requirements referred to as the ``anti-
dumping'' program.
The Act mandates certain requirements for the RFG program. Section
211(k)(1) directs EPA to issue regulations that:
Require the greatest reduction in emissions of ozone forming
volatile organic compounds (during the high ozone season) and
emissions of toxic air pollutants (during the entire year)
achievable through the reformulation of conventional gasoline,
taking into consideration the cost of achieving such emission
reductions, any nonair-quality and other air-quality related health
and environmental impacts and energy requirements.
Section 211(k) specifies the minimum requirement for reduction of
volatile organic compounds (VOCs) and toxics for 1995 through 1999, or
Phase I of the RFG program; the section specifies that EPA must require
the more stringent of a formula fuel or an emission reduction
performance standard, measured on a mass basis, equal to 15 percent of
baseline emissions. Baseline emissions are the emissions of 1990 model
year technology vehicles operated on a specified baseline gasoline.
Section 211(k)(2) compositional specifications for RFG include a 2.0
weight percent oxygen standard and a 1.0 volume percent benzene
standard. Section 211(k)(2) also specifies that emissions of oxides of
nitrogen (NOX) may not increase in RFG over baseline emissions.
For the year 2000 and beyond, or Phase II of the RFG program, the
Act specifies that the VOC and toxic performance standards must be no
less than either a formula fuel or a 25 percent reduction from baseline
emissions, whichever is more stringent. EPA can adjust these standards
upward or downward taking into account such factors as technological
feasibility and cost, but in no case can the standards be less than 20
percent.
Shortly after passage of the CAA Amendments in 1990, EPA entered
into a regulatory negotiation with interested parties to develop
specific proposals for implementing both the RFG and anti-dumping
programs. In August 1991, the negotiating committee reached
[[Page 11347]]
consensus on a program outline that would form the basis for a notice
of proposed rulemaking, addressing emission content standards for Phase
I (1995-1999), emission models, certification, use of averaging and
credits, and other important program elements.
The regulatory negotiation conducted by EPA did not address the
Phase II VOC and toxic standards for RFG, nor did it address a
reduction in NOX emissions beyond the statutory cap imposed under
section 211(k)(2)(A). The final rule promulgated by EPA closely
followed the consensus outline agreed to by various parties in the
negotiated rulemaking process. The final rule also adopted a NOX
emission reduction performance standard for Phase II RFG, relying on
authority under section 211(c)(1)(A).
In December 1995, the American Petroleum Institute (API) submitted
a petition to EPA requesting reconsideration and repeal of the Phase II
RFG NOX standard. API also requested suspension of the effective
date of the standard, pending deliberations on the cost-effectiveness
of NOX control. EPA's initial review of the API petition indicated
that it presented no compelling new evidence or argument that would
warrant revisiting the decision made in promulgating the Phase II RFG
NOX reduction standard. EPA also conducted a review of relevant
and available new information on costs and benefits developed since
promulgation of the final rule to ensure that EPA's conclusions on the
appropriateness of the Phase II RFG NOX reduction standard remain
well-founded. EPA published a Federal Register notice requesting
comment on the issues raised in the API petition.1 In December
1996, EPA reopened the comment period, to allow public comment on a
draft Department of Energy report on RFG costs, and held a meeting with
interested parties to discuss the draft report.
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\1\ 61 FR 35960 (July 9, 1996).
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The arguments presented in the API petition are summarized below,
followed by a summary of the public comments received, and EPA's
response to the petition and comments. A complete copy of the API
petition, public comments, and new information generated by EPA may be
found in the docket for this action.
II. Summary of API Petition
A. Consistency With CAA and Negotiated Rulemaking
In its petition, API argues that the Phase II RFG NOX emission
reduction standard is inconsistent with the 1990 Clean Air Act
Amendments and the 1991 regulatory negotiation.2 API cites
provisions of the statute that specifically require reductions in
various pollutants, and contrasts those explicit NOX reduction
mandates with the ``no NOX increase'' approach toward RFG in
section 211(k).3 API also argues that the 1991 agreement reached
in the regulatory negotiation does not address a Phase II NOX
reduction, and that the focus of debate during the regulatory
negotiation was whether de minimis increases in NOX would satisfy
the no NOX increase standard.4
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\2\ API Petition for Reconsideration and Rulemaking on NOX
Reduction Portion of the Reformulated Gasoline Rule (hereinafter
``Pet.'') at p. 1.
\3\ Pet. at p. 2.
\4\ Pet. at p. 3.
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B. Air Quality Benefits
In its petition, API argues that ozone benefits for the Phase II
NOX standard are overstated. 5 API states that the primary
basis for the NOX standard is ozone attainment, because of the
role NOX emissions play with VOC emissions in the formation of
ozone. 6 API cites EPA's 1994 Trends Report 7 to support its
statement that substantial progress toward ozone attainment has been
made. 8 API argues that progress toward attainment of the National
Ambient Air Quality Standard (NAAQS) for ozone can be expected to
continue because of new federal programs and state obligations
established under the Clean Air Act Amendments of 1990. 9
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\5\ Pet. at p. 5.
\6\ Ibid.
\7\ U.S. EPA, National Air Quality and Emissions Trends Report
1993, EPA 454/R-94-026, October 1994, p. 6.
\8\ Pet. at p. 6.
\9\ Ibid.
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API further argues that EPA's section 182(f) waiver decisions show
that NOX reductions are not always warranted for ozone
attainment.10 API states that, in establishing section 182(f)
waivers, Congress recognized that NOX reductions do not always
contribute to ozone attainment, because of atmospheric meteorology and
the complex relationship of NOX and VOC emissions. 11 API
characterizes section 182(f) as stating that major stationary source
requirements for NOX do not apply where NOX reductions do not
contribute to ozone NAAQS attainment or do not yield net air quality
benefits in the affected nonattainment area. 12 API argues that
the Phase II RFG NOX standard emphasizes those portions of a 1991
National Research Council study 13 and other studies that show
NOX control to be an effective ozone control strategy, while
discounting those parts of the same studies showing that NOX
control may be counterproductive in a particular area. 14 API
cites studies to contradict EPA's discounting of the adverse effects of
NOX reductions on ozone. 15 API points to parts of EPA's 1993
report to Congress (pursuant to section 185B of the CAA) to support its
contention that NOX control may not always be appropriate to
reduce ozone.16
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\10\ Pet. at p. 7.
\11\ Pet. at p. 8.
\12\ Ibid.
\13\ National Research Council, Rethinking the Ozone Problem in
Urban and Regional Air Pollution, National Academy Press,
Washington, DC., 1991.
\14\ Pet. at p. 9.
\15\ Pet. at p. 10.
\16\ Pet. at p. 11.
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API argues that in granting section 182(f) waivers, EPA has
concluded in most cases that additional NOX reductions are not
needed for ozone attainment; however, in a few cases, EPA has found
that NOX reductions would be detrimental to ozone
attainment.17 Moreover, three waivers would suspend major
stationary source NOX control in cities required to use RFG:
Chicago, Milwaukee, and Houston.18 API states that the waivers
have no set period of duration and stay in place so long as the
conditions in section 182(f) are met.19 API concludes that the
Phase II NOX standard is incongruous with the granting of section
182(f) waivers in RFG areas.20 API also argues that the Phase II
RFG NOX standard is incongruous with the two-phased approach EPA
adopted for submittal of ozone SIP attainment demonstrations.21
API concludes that given the substantial progress toward ozone NAAQS
attainment, and the CAA requirement of continued steady progress, EPA's
Phase II RFG NOX standard applicable in all RFG areas is
incongruous with the granting of state
[[Page 11348]]
petitions for waiver from section 182 NOX reduction
requirements.22
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\17\ Pet. at p. 12.
\18\ Pet. at p. 13. API also points out that Dallas, which chose
to implement the RFG program, has been granted a section 182(f)
waiver. The Dallas waiver is based on a showing that Dallas would
attain the ozone NAAQS without implementation of the additional
NOX controls required under section 182. 59 FR 44386 (August
29, 1994).
\19\ Ibid.
\20\ Pet. at p. 14.
\21\ Ibid.
\22\ Id.
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API also argues that non-ozone benefits claimed for the Phase II
RFG NOX standard are wholly speculative; no evidence is offered by
EPA to show that the assumed effects are measurable, let alone
significant.23 Non-ozone benefits claimed include less acid rain,
reduced toxic nitrated compounds, reduced nitrate deposition, improved
visibility, lower levels of nitrogen dioxide, lower levels of PM-10,
and protection against increases in fuel olefin content which could
increase the reactivity of vehicle emissions. 24
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\23\ Pet. at p. 15.
\24\ Ibid.
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C. Cost-Effectiveness
API argues that the impact of the NOX reduction standard on
gasoline refining costs and on refinery flexibility is
understated.25 API cites statements by EPA acknowledging that a
NOX performance standard restricts the flexibility of refiners in
producing qualifying RFG.26 API discounts EPA's assertion that the
performance standard is not a fuel recipe and refiners may produce
gasoline in any way that achieves the desired result.27 According
to API, any NOX reduction ``interferes with refining flexibility
and leaves refiners with unduly costly and narrow choices for producing
RFG.'' 28
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\25\ Pet. at p. 16.
\26\ Ibid.
\27\ Id.
\28\ Pet. at pp. 17-18.
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API argues that the cost-effectiveness of NOX reduction is
overstated because sulfur removal costs are understated and ozone
benefits are overstated. 29 API references detailed information
submitted during the RFG rulemaking that criticizes inadequacies in the
Bonner & Moore refinery model used by EPA.30 API also cites a 1994
DOE study 31 that API characterizes as suggesting that EPA's
desulfurization costs are too low.32 API cites cost estimates
recently prepared by EPA for the Ozone Transport Assessment Group
(OTAG) to illustrate its point that EPA and API are far apart on cost
estimates.33 API states that if EPA used more accurate
desulfurization costs, the cost of Phase II NOX reductions would
increase above the $10,000 per ton benchmark EPA rejected as too high
during the RFG rulemaking.34
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\29\ Pet. at pp. 18-19.
\30\ Pet. at p. 19.
\31\ U.S. DOE, Estimating the Costs and Effects of Reformulated
Gasolines, DOE/PO-0030, December 1994 (hereinafter ``1994 DOE
study'').
\32\ Pet. at p. 20.
\33\ Pet. at pp. 20-21.
\34\ Pet. at p. 21.
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API also argues that EPA's analysis of cost-effectiveness does not
take into account that NOX reductions do not contribute to ozone
attainment in certain areas.35 API states that the Chicago,
Milwaukee, Houston and Dallas areas each have section 182(f) waivers
and comprise 33 percent of the non-California RFG market. 36 API
argues that the benefit of NOX reductions in these areas is at
least zero, if not less than zero, thereby driving EPA's cost-
effectiveness up to about $7,500 per ton, based on this factor
alone.37
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\35\ Pet. at p. 22.
\36\ Pet. at p. 22.
\37\ Pet. at p. 22.
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API further argues that EPA understated the relative cost-
effectiveness of major stationary source NOX control strategies,
by dwelling on motor vehicle and engine controls.38 API argues
that stationary source controls can discriminate between areas where
NOX reductions contribute to ozone attainment and areas where they
do not, unlike motor vehicle, engine, and fuel controls.39 API
cites several studies conducted by or for EPA between July 1991 and
July 1994 that contain more comprehensive information about stationary
source controls, including cost-effectiveness.40 API provides a
table citing data from those studies, and includes its estimate of
incremental cost-effectiveness for several technologies.41 API
concludes that its incremental cost-effectiveness values compare
favorably even to EPA's incremental cost-effectiveness estimate of
$5,000 per ton of NOX removed for a 6.8 percent NOX emission
reduction.42
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\38\ Pet. at p. 23.
\39\ Pet. at p. 23.
\40\ Pet. at pp. 23-24.
\41\ Pet. at p. 25.
\42\ Pet. at p. 26.
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API argues that control of major stationary sources for NOX
offers a far larger potential for overall reduction in air
pollution.43 API cites EPA's 1994 Trends Report that combustion
stationary sources account for about 50 percent of national NOX
emissions with a NOX reduction potential of 75 to 95
percent.44 API further argues that major stationary source
controls can be targeted to avoid the economic waste of NOX
controls where they are not needed and the adverse effect on ozone
because of atmospheric chemistry.45
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\43\ Pet. at p. 27.
\44\ Pet. at p. 27.
\45\ Pet. at p. 29.
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API concludes that EPA should repeal the Phase II RFG NOX
emission reduction standard or, at least, suspend the effective date
until a comprehensive consideration of NOX control cost-
effectiveness is performed.46 API claims EPA should sequence
NOX controls where NOX reductions are appropriate, targeting
major stationary source NOX controls first as they are claimed to
be more cost-effective and can be targeted where needed geographically.
Other controls should not be considered until major stationary source
controls are employed and evaluated, according to API.47 Finally,
API concludes that Phase II RFG NOX emission reductions are not
compelled by the statute, are not necessary, and are not the most cost-
effective controls for NOX reduction and, thus, satisfy none of
the criteria for regulatory action set out in Executive Order
12866.48
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\46\ Pet. at p. 31.
\47\ Pet. at p. 30.
\48\ Pet. at pp. 30-31.
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III. Summary of Public Comment
EPA received public comment on the API petition from 26 commenters,
including the oil, automotive, and utility industries, and from states
and state organizations. This section summarizes those comments.
A. Consistency With CAA and Regulatory Negotiation Agreement in
Principle
Whether the Phase II RFG NOX reduction standard is consistent
with the CAA and the regulatory negotiation is addressed in comments by
several oil companies, and by oil, automotive, utility, and state
associations. Most comments from the oil industry restate the points
made by API in its petition to EPA, described in the previous section.
One oil company also argued that EPA did not give proper consideration
to the statutory factors required under section 211(c)(1)(A) of the
Act, given that EPA is still trying to define the complex relationships
involving NOX, atmospheric chemistry, and ozone formation.
The automotive, utility, and state association comments argue that
although the Phase II RFG NOX reduction standard is not mandated
by section 211(k) of the CAA, it is not inconsistent with the CAA, and
that the Phase II program was not addressed by the regulatory
negotiation's Agreement in Principle, so the NOX reduction
standard does not contradict or supersede any specific term of the
agreement.
[[Page 11349]]
B. Air Quality Benefits
Most comments address the issue of whether EPA overstated the air
quality benefits of the Phase II RFG NOX emission reduction
standard. Several oil industry comments cite air quality modeling data
generated by OTAG to support the API argument that NOX reductions
may cause urban ozone increases, also referred to as NOX
disbenefits. One oil company argues that the OTAG modeling results
present compelling new evidence against the Phase II RFG NOX
emission reduction standard, citing one day each of two modeling runs
as evidence that aggressive NOX controls significantly increase
ozone concentrations in the urban areas where ozone levels are highest.
Those runs include a 60 percent reduction in elevated NOX
emissions, and a 60 percent reduction in elevated NOX emissions
plus a 30 percent reduction in low-level NOX emissions.
Another oil company argues that the OTAG modeling results are
significant new evidence to support the API petition, and show that the
NOX disbenefit phenomenon is consistently present and most
pronounced in the Chicago metropolitan area. That company further
argues that OTAG modeling results show that urban VOC reductions do not
eliminate the disbenefit from NOX reductions, although the company
notes that VOC reductions do mitigate the disbenefit. That company
argues that the scale of significant ozone transport tends to be
substantially localized rather than OTAG domain-wide, undercutting the
transport rationale for widespread imposition of NOX controls. The
commenter bases its arguments on modeling results for three days for
each of three ozone episodes; one with 60 percent elevated point source
NOX reductions, the second with 60 percent elevated point source
NOX reductions plus 30 percent low-level NOX reductions, and
the third with 30 percent VOC reductions plus 60 percent elevated
NOX reductions and 30 percent low-level NOX reductions. Also
included was one day of a run of 30 percent low-level NOX
reductions only.
In its comments on the petition, API argues that OTAG air quality
modeling sensitivity runs as of August 1996 show that downwind air
quality benefits of NOX control are far less than expected,
undercutting the core transport rationale for widespread imposition of
RFG NOX controls. API argues that OTAG modeling confirms its
central thesis that NOX emissions reductions increase ozone levels
immediately downwind of several urban nonattainment areas, notably
Chicago and New York. Finally, API argues that the OTAG modeling shows
that the ozone increases were not fully ameliorated by larger NOX
reductions or VOC reductions; even if VOC controls were effective, this
would put affected states in the position of imposing extra VOC
controls to offset the adverse air quality impact of RFG NOX
controls.
Several states, and state and utility associations also addressed
the air quality benefits issue. States and state associations stress
the importance of the Phase II RFG NOX standard in state ozone
attainment and maintenance planning. State associations argue that OTAG
has projected that, in 2007, mobile sources will still contribute 43
percent of all NOX after implementation of CAA controls; given the
challenges facing so many areas in identifying and implementing
programs that will lead to attainment of the ozone standard, the air
quality benefits associated with the NOX reduction potential of
Phase II RFG cannot be overstated. One state points out that with the
anticipated lowering of the federal ozone standard, the Phase II RFG
NOX emission reduction standard will become even more critical for
states. A state association argues that although there has been
progress toward attainment, loss of a tool as significant as Phase II
RFG in reducing VOC and NOX would only exacerbate state emission
reduction shortfalls.
While state and state association comments acknowledge that in
certain urban areas, NOX reductions can increase ozone, state
associations argue that API's advocacy of repeal of the NOX
standard is both premature and shortsighted; premature because OTAG is
still seeking to define the extent and impact of NOX disbenefits
and how disbenefits should be accommodated, and shortsighted because
for many areas of the country it has been conclusively ascertained that
NOX reductions will be imperative if the ozone standard is to be
attained and maintained.
Several states and state associations argue that modeling
demonstrates that NOX reductions are beneficial, and for many
areas imperative, notwithstanding potential disbenefits in some limited
geographic areas. One state and a state association argue that all
major regional modeling efforts performed or underway through such
organizations as OTAG and the Ozone Transport Commission have
demonstrated that NOX reductions are beneficial in reducing ozone
levels and will be needed to achieve attainment of the ozone standard
in many areas, and particularly in the eastern U.S. They argue that the
importance of NOX reductions in reducing ozone levels is becoming
even more pronounced as modeling efforts utilize the newer and more
accurate methodology for estimating biogenic VOC emissions.
A state association argues that the regional photochemical modeling
results prepared for OTAG are confirmatory of previous modeling that
both elevated and low-level control of NOX are beneficial at
reducing the regional extent of ozone, and that the combination of
NOX and VOC control, especially in urban areas, can be very
effective in reducing regional ozone levels. Another state association
also argues that modeling studies have shown that urban VOC reductions,
such as those provided by RFG, are effective at addressing any limited
NOX disbenefits, while leaving in place the very extensive
regional benefits of NOX emission reductions. One state argues
that there is no definitive data that Phase II RFG could be a
significant disbenefit to ground level ozone attainment and, in the
absence of evidence to the contrary, the state will operate under the
assumption that all reductions of ground level ozone precursors are
both important and beneficial.
A state association argues that granting contingent waivers on a
local nonattainment area basis does not negate EPA recognition and
support for regional efforts to use NOX reductions to address
ozone transport and attainment issues. It argues that NOX waivers
do not take into account that when controls are removed or absent in
one area, particularly a control of regional significance, this would
generally cause or exacerbate problems for any area downwind of that
area. It argues that while the understanding and development of
mechanisms for regional ozone reductions over large areas is still
evolving, mechanisms that have the greatest potential continue to rely
on a balance of both VOC and NOX control.
A utility industry group argues that the API petition fails to
buttress its argument that EPA overstated the air quality benefits of
the Phase II RFG NOX standard with new evidence; instead, API
relies upon arguments already rejected by EPA. API's section 182(f)
waiver argument fails because the grant of a waiver says nothing about
the value of the Phase II RFG NOX standard; the utility group
argues that the section 182(f) waiver provisions do not apply to the
RFG program and that, although temporary waivers have been granted in
some places based on highly specific localized facts, the Agency has
made it clear waivers would be reevaluated in
[[Page 11350]]
light of additional data. The utility group also argues that progress
by the states toward attainment as indicated in the 1994 Trends Report
does not establish that the Phase II RFG NOX standard is
unnecessary or unwise; although progress has been made toward
attainment, more still needs to be done.
C. Cost-Effectiveness
Most commenters addressed whether EPA understated the cost-
effectiveness of the Phase II RFG NOX standard. Several oil
companies cite data from OTAG both on the comparative cost of
stationary source reduction measures and the cost of implementing Phase
II RFG throughout the OTAG region. Several companies submitted or cite
a ranking developed by the New Hampshire Department of Environmental
Services for OTAG of cost per ton ranges for NOX reduction
measures. The ranking places Phase II RFG as the second most expensive
NOX control measure at $25,000 to $45,000 per ton. The cost ranges
are comprised of the lowest and highest marginal cost estimates
provided by EPA, the states, industry, and other OTAG participants, and
represents the extent of disagreement over the ``true'' costs of each
measure, according to one oil company comment. One company argues that
these data may be interpreted to show that a NOX reduction
strategy that includes the Phase II RFG NOX reduction standard is
purchasing a much smaller reduction at a much higher price than is
available from alternative measures. That commenter also claims that
DOE's analysis indicates a significantly higher cost per ton of
NOX removed than estimated by EPA in its Regulatory Impact
Analysis (RIA) for the final RFG rule.
In its comments, API also cites the OTAG region-wide cost-
effectiveness estimate for the Phase II RFG NOX standard. API
argues that even if that figure is adjusted for comparison with only
those areas that will use Phase II RFG, the adjusted figure would still
``dwarf'' EPA's $5,000 per ton estimate; however, API did not include
such an adjusted figure in its comments. API also cites the New
Hampshire list as evidence that the NOX standard is not cost-
effective.
Two state associations argue that it would be more accurate to
characterize the cost of Phase II RFG from combined VOC and NOX
reductions; the combined OTAG range for the OTAG region is $3,500 to
$6,200. One state argues that the cost of the NOX standard is
within a reasonable range of cost-effectiveness. That state also argues
that the cost of the NOX standard is highly favorable compared to
the cost of typical transportation control measures.
An automobile industry association argues that the API focus on
sulfur reduction overlooks the fact that sulfur reductions also
decrease hydrocarbon (HC) and carbon monoxide (CO) emissions. That
association argues that recent industry data show that when advanced
technology vehicles are operated on high sulfur fuels, their emissions
will be no better than Tier 0 level vehicles; comparing those new data
with expected costs of compliance compiled by Turner, Mason & Company
in April 1992 yields a cost-effectiveness estimate of about $200 per
ton of pollutant removed when the benefits of sulfur removal on HC, CO,
and NOX are considered.
A clean fuel industry association evaluated capital investment
options for reducing the sulfur level in gasoline to meet the Phase II
RFG NOX emission reduction standard. That association argues that
average costs from the investment options evaluated were generally
equal to or less than EPA's original cost estimates for reducing sulfur
levels in RFG; therefore, that association argues, the cost of the
Phase II RFG NOX emission reduction standard has not fundamentally
changed and it is still a cost-effective standard.
The utility industry argues that API presented no compelling new
evidence that desulfurization costs are understated. One utility
industry group argues that API's claim that EPA underestimated
desulfurization costs does not address the fact that desulfurization is
not required; nor did API address the ability of industry to meet the
standard without desulfurization. That group also argues that the fact
that it might be cheaper to reduce emissions from stationary sources
than to reduce NOX in fuels does not mean the same ozone reduction
benefits would be produced. Another utility industry association argues
that, even if API's claim that regulating stationary sources is more
cost-effective is true, that does not justify forcing stationary
sources to subsidize the petroleum industry by paying for that
industry's share of clean air compliance costs.
IV. EPA Response
A. Consistency With CAA and Negotiated Rulemaking
As EPA pointed out in the RFG final rule, the regulatory
negotiation conducted by EPA did not address Phase II RFG VOC and toxic
standards; neither did it address a reduction in NOX emissions
beyond the statutory cap imposed under section 211(k)(2)(A).49
Because the regulatory negotiation did not address Phase II RFG
standards, including the NOX reduction standard, Phase II RFG
standards are consistent with the Agreement in Principle that resulted
from the regulatory negotiation. A reduction in NOX emissions does
not interfere with or reduce the benefits gained by the parties from
the elements of the Agreement in Principle that were finally adopted in
the RFG rule. While it adds costs and gains benefits, these are in
addition to, and not at the expense of, the elements addressed in the
regulatory negotiation. The costs and air quality benefits of the Phase
II RFG NOX emission reduction standard are discussed in more
detail in later sections of this notice.
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\49\ 59 FR 7744 (February 16, 1994).
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The Phase II RFG NOX standard is also fully consistent with
the Act. EPA proposed and finalized the NOX emission reduction
performance standard for Phase II RFG relying on EPA's authority under
section 211(c)(1)(A) of the Act, based on EPA's view that NOX
reductions from summertime RFG are important to achieve attainment of
the ozone NAAQS in many nonattainment areas.50 Section
211(c)(1)(A) of the Act allows the Administrator to regulate fuels or
fuel additives if ``any emission product of such fuel or fuel additive
causes, or contributes to, air pollution which may reasonably be
anticipated to endanger the public health or welfare.'' Section
211(c)(2)(A) further provides that EPA may control those fuels and fuel
additives ``after consideration of all relevant medical and scientific
evidence available * * * including consideration of other
technologically or economically feasible means of achieving emissions
standards under [section 202 of the Act].''
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\50\ Ibid.
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EPA used this authority to require reformulated fuels to also
achieve NOX reductions in order to reduce ozone formation, based
on scientific evidence regarding the benefits of NOX control and
on the cost-effectiveness of NOX reductions. A detailed discussion
of the determination of the need for and scientific justification for
NOX control is presented in the RIA for the final rule.51 The
fact that scientific understanding of atmospheric chemistry and ozone
formation continues to evolve does not
[[Page 11351]]
negate that determination. In addition, as discussed below, EPA's
review of the air quality benefits and cost-effectiveness of the
NOX reduction standard does not show that the rulemaking
determinations supporting this standard were inappropriate.
---------------------------------------------------------------------------
\51\ U.S. EPA, Final Regulatory Impact Analysis for Reformulated
Gasoline, December 13, 1993, pp. 313-326.
---------------------------------------------------------------------------
B. Air Quality Benefits
1. The Need for Regional NOX Reduction
At present, there are 74 areas in the United States, with a
population exceeding one hundred million, that do not meet the ozone
NAAQS of 120 parts per billion (ppb) for a one-hour daily maximum. The
following section describes ozone formation, the regional scale of the
ozone problem, and the reductions needed to meet the ozone standard.
Ozone Formation. Ozone is a naturally occurring trace constituent
of the atmosphere. Background ozone concentrations vary by geographic
location, altitude, and season. Part of this background ozone
concentration is due to natural sources and part is due to long-range
transport of anthropogenic or man-made precursor emissions. The natural
component of background ozone originates from three sources: (1)
Stratospheric ozone (which occurs at about ten to 50 kilometers
altitude) that is transported down to the troposphere (i.e., from the
ground level through about ten kilometers), (2) ozone formed from the
photochemically-initiated oxidation of biogenic (i.e., produced by
living organisms) and geogenic (i.e., produced by the earth) methane
and carbon monoxide with nitric oxide, and (3) ozone formed from the
photochemically-initiated oxidation of biogenic VOCs with NOX.
NOX plays an important role in the oxidation of methane, carbon
monoxide, and biogenic VOC, though the magnitude of this natural
component cannot be precisely determined.52 The background ozone
concentration near sea level in the U.S. for a one-hour daily maximum
during the summer is usually in the range of 30-50 ppb.53
---------------------------------------------------------------------------
\52\ U.S. EPA, Office of Air Quality Planning and Standards,
``Review of National Ambient Air Quality Standards for Ozone,
Assessment of Scientific and Technical Information,'' OAQPS Staff
Paper, EPA-452/R-96-007, June 1996.
\53\ Ibid.
---------------------------------------------------------------------------
While ozone formation in the atmosphere involves complex non-linear
processes, a simplified description is offered here. For more
information on ozone chemistry, see, for example, the 1991 National
Research Council study. In short, nitric oxide (NO) is formed during
combustion or any high temperature process involving air (air being
largely N2 and O2). NO is formed, for example, when fuel is
burned to generate power for stationary or mobile sources. The NO is
converted to NO2 by reacting with certain compounds formed from
oxidized VOCs, called radicals. It is also converted to NO2 by
reacting with ozone (O3). Sunlight then causes the NO2 to
decompose, leading to the formation of ozone and NO. The NO that
results is then able to start this cycle anew. A reaction path that
converts NO to NO2 without consuming a molecule of ozone allows
ozone to accumulate; this can occur by the presence of oxidized
VOCs.54 That is:
---------------------------------------------------------------------------
\54\ Seinfeld, John H., ``Urban Air Pollution: State of the
Science,'' February 10, 1989 vol., Science.
---------------------------------------------------------------------------
1. NO is formed from combustion involving air:
N2+O2==>NO molecules.
2. NO2 (nitrogen dioxide) is formed when NO reacts with
radicals from oxidized VOCs.
3. NO2 is also formed when NO reacts with ozone; this removes
ozone:
NO+O3==>NO2+O2.
4. Sunlight causes NO2 to decompose, or photolyze, into NO and
O. Ozone is formed when an oxygen molecule (O2) reacts with the
oxygen element (O), formed from the decomposition of NO2:
NO2==>NO+O; and
O+O2==>Ozone.
A general explanation for the formation of ozone in or near urban
areas follows.55 NOX is produced when combustion temperatures
are above 2500 deg.K, and air is used as an oxidizer in the combustion
process. Incomplete combustion of the fuel also results in the emission
of raw fuel components and oxygenated organic components or VOCs from
the fuels. In sunlight, these components form free radicals (e.g., OH,
HO2, RO, RO2) that oxidize NO to NO2 (reaction 2 above).
The free radical is recreated in the process. Each free radical is
cycled up to five times. The NO2 then reacts with sunlight to
recreate NO and to produce ozone (reaction 4 above). After the first
oxidation of NO to NO2, every subsequent operation of the cycle
produces ozone with an efficiency greater than 90 percent. In current
chemical reaction mechanisms, a typical nitrogen is cycled three to
five times. Some of the ozone produced reacts with organics and with
sunlight to produce more free radicals to maintain the cyclic oxidation
process.
---------------------------------------------------------------------------
\55\ Jeffries, H.E., communication to Clinton Burklin, ERG,
October 27, 1996.
---------------------------------------------------------------------------
Ozone itself is a major source of the free radicals that oxidize NO
into NO2. This represents a powerful positive feedback process on
the formation of more ozone, given available NOX. The oxidation of
the VOCs also leads to the production of more free radicals. As the
cycle operates, NO2 reacts with free radicals and is converted
into nitrates. This form of nitrogen cannot cycle. This also removes
free radicals. A system that converts all NOX to nitrogen products
cannot create any more ozone.
NO2 reacts rapidly with free radicals. In situations that have
a limited supply of radicals, NO2 effectively competes with VOCs
for the limited free radicals, and is converted into nitrates. This
results in virtually no production of ozone. Where there are large
amounts of NO relative to the sources of radicals (such as VOCs), then
the reaction between NO and existing ozone removes ozone (a radical
source), and the large amount of NO2 formed competes effectively
with VOCs for the other available radicals, thus leading to an overall
suppression of ozone.
In general, areas with high VOC to NOX concentration ratios
(greater than eight to ten) can effectively reduce local ozone
concentrations with local NOX emission reductions.56 In areas
where VOCs are abundant relative to NOX, ozone formation is
controlled primarily by the amount of NOX available to react with
the oxidized VOCs (reaction 2 above).57 These ``NOX limited''
areas generally include rural, suburban, and downwind areas.58 In
contrast, in areas with low VOC to NOX ratios, ozone formation is
controlled primarily by the amount of VOC available. Ozone scavenging
by the NO-O3 reaction (reaction 3 above) is more effective than
the reaction of oxidized VOC with NO producing NO2 (reaction 2
above).59 Such areas are ``VOC limited'' and generally include the
central core areas of large urban areas with significant vehicle
emissions.
---------------------------------------------------------------------------
\56\ National Research Council, Rethinking the Ozone Problem in
Urban and Regional Air Pollution, National Academy Press,
Washington, D.C., 1991.
\57\ Seinfeld, John H., ``Urban Air Pollution: State of the
Science,'' February 10, 1989 vol., Science.
\58\ Finlayson-Pitts, B.J. and J.N. Pitts, Jr., ``Atmospheric
Chemistry of Tropospheric Ozone Formation: Scientific and Regulatory
Implications,'' Air and Waste Management Association, Vol. 43,
August 1993.
\59\ Seinfeld, John H., ``Urban Air Pollution: State of the
Science,'' February 10, 1989 vol., Science.
---------------------------------------------------------------------------
The rate of ozone formation varies with the VOC to NOX ratio.
By reducing local emissions of VOC, the formation rate generally slows
down, leading to lower ozone levels locally, but with eventual
production of approximately the same total amount of ozone. Reduction
of NOx emissions can lead to
[[Page 11352]]
a more rapid formation of ozone, though with less total amount of ozone
formed.60
---------------------------------------------------------------------------
\60\ Ibid.
---------------------------------------------------------------------------
Different mixtures of VOC and NOX, therefore, can result in
different ozone levels such that the total system is non-linear. That
is, large amounts of VOC and small amounts of NOX make ozone
rapidly but are quickly limited by removal of the NOX. VOC
reductions under these circumstances show little effect on ozone. Large
amounts of NO and small amounts of VOC (which usually implies smaller
radical source strengths) result in the formation of inorganic
nitrates, but little ozone. In these cases, reduction of NOX
results in an increase in ozone.
The preceding is a static description. In the atmosphere, physical
processes compete with chemical processes and change the outcomes in
complex ways. The existence of feedback and non-linearity in the
transformation system confound the description. Competing processes
determine the ambient concentration and there are an infinite set of
process magnitudes that can give rise to the same ambient
concentrations and changes in concentrations. Lack of any direct
measurement of process magnitudes results in the need to use
inferential methods to confirm any explanation of a particular ozone
concentration.
The formation of ozone is further complicated by biogenic
emissions, meteorology, and transport of ozone and ozone precursors.
The contribution of ozone precursor emissions from biogenic sources to
local ambient ozone concentrations can be significant, especially
emissions of biogenic VOCs. Important meteorological factors include
temperature, and wind direction and speed. Long-range transport results
in interactions between distant sources in urban or rural areas and
local ambient ozone. Peroxyacetyl nitrate (PAN), formed from the
reaction of radicals with NO2, can transport NOX over
relatively large distances through the atmosphere. Its rate of
decomposition significantly increases with temperature, so that it can
be formed in colder regions, transported, and then decomposed to
deliver NO2 to downwind areas.61
---------------------------------------------------------------------------
\61\ National Research Council, Rethinking the Ozone Problem in
Urban and Regional Air Pollution, National Academy Press,
Washington, D.C., 1991.
---------------------------------------------------------------------------
Regional Scale of the Ozone Problem. Peak ozone concentrations
typically occur during hot, dry, stagnant summertime conditions. Year-
to-year meteorological fluctuations and long-term trends in the
frequency and magnitude of peak ozone concentrations can have a
significant influence on an area's compliance status.
Typically, ozone episodes last from three to four days on average,
occur as many as seven to ten times per year, and are of large spatial
scale. In the eastern United States, high concentrations of ozone in
urban, suburban, and rural areas tend to occur concurrently on scales
of over 1,000 kilometers.62 Maximum values of non-urban ozone
commonly exceed 90 ppb during these episodes, compared with average
daily maximum values of 60 ppb in summer. Thus, an urban area need
contribute an increment of only 30 ppb over the regional background
during a high ozone episode to cause a violation of the ozone NAAQS of
120 ppb.63
---------------------------------------------------------------------------
\62\ Ibid.
\63\ Id.
---------------------------------------------------------------------------
The precursors to ozone and ozone itself are transported long
distances under some commonly occurring meteorological conditions. The
transport of ozone and precursor pollutants over hundreds of kilometers
is a significant factor in the accumulation of ozone in any given area.
Few urban areas in the U.S. can be treated as isolated cities
unaffected by regional sources of ozone.64
---------------------------------------------------------------------------
\64\ Id.
---------------------------------------------------------------------------
NOX Reductions Needed to Meet the Ozone Standard. Over the
past two decades, great progress has been made at the local, state and
national levels in controlling emissions from many sources of air
pollution. Substantial emission reductions are currently being achieved
through implementation of the 1990 CAAA measures for mobile and
stationary sources. These measures include the retrofit of reasonably
available control technology on existing major stationary sources of
NOX and implementation of enhanced vehicle inspection and
maintenance programs under Title I; new emission standards for new
motor vehicles and nonroad engines, and the RFG program under Title II;
and controls on certain coal-fired electric power plants under Title
IV. The effects of these programs on total NOX emissions over time
indicate a decline in emissions from 1990 levels of about 12 percent
until the year 2007. However, continued industrial growth and expansion
of motor vehicle usage threaten to reverse these past achievements;
NOX emissions will gradually increase for the foreseeable future,
unless new initiatives are implemented to reduce NOX emissions.
For many years, control of VOCs was the main strategy employed in
efforts to reduce ground-level ozone. More recently, it has become
clearer that additional NOX controls will be needed in many areas,
especially areas where ozone concentrations are high over a large
region (as in the Midwest and Northeast, where RFG is mandated in
several nonattainment areas). The extent of local controls that will be
needed to attain and maintain the ozone NAAQS in and near seriously
polluted cities is sensitive both to the amount of ozone and precursors
transported into the local area and to the specific photochemistry of
the area.
In some cases, preliminary local modeling performed by the states
indicates that it may not be feasible to find sufficient local control
measures for individual nonattainment areas unless transport into the
areas is significantly reduced; this may include transport from
attainment areas and from other nonattainment areas. These modeling
studies suggest that reducing NOX emissions on a regional basis is
the most effective approach for reducing ozone over large geographic
areas, even though local NOX controls may not be effective by
themselves in the urban centers of selected nonattainment areas. Thus,
large reductions in NOX emissions may be needed over much of the
nation if all areas are to attain the ozone standard.
The following discussion examines the need for NOX reductions
in those regions of the country where RFG is required.
California. The State of California adopted its ozone SIP on
November 15, 1994. The SIP covers most of the populated portion of the
state and relies on both NOX and VOC reductions for most
California nonattainment areas to demonstrate compliance with the ozone
NAAQS. Specifically, the revised SIP projects that the following
NOX reductions are needed (from a 1990 baseline): South Coast, 59
percent; Sacramento, 40 percent; Ventura, 51 percent; San Diego, 26
percent; and San Joaquin Valley, 49 percent.
The South Coast's control strategy for attainment of the ozone
standard specifies a 59 percent reduction in NOX emissions. The
design of this strategy took into account the need to reduce NOX
as a precursor of particulate matter, as described in the SIP
submittal. This represents a reduction of over 800 tons of NOX per
day. The reductions are to be achieved from a combination of national,
state, and local control measures.
The Sacramento metropolitan area's control strategy for attainment
of the ozone standard specifies a 40 percent reduction in NOX
emissions. Modeling results indicate that NOX reductions are
[[Page 11353]]
more effective than VOC reductions on a tonnage basis in reducing
ambient ozone concentrations. The reductions are to be achieved from a
combination of national, state, and local control measures, especially
mobile source measures such as standards for heavy duty vehicles and
nonroad engines.
Lake Michigan Region. Modeling and monitoring studies performed to
date for the states surrounding Lake Michigan (Illinois, Indiana,
Michigan, and Wisconsin) indicate that reducing ozone and ozone
precursors transported into the region's nonattainment areas would have
a significant effect on the number and stringency of local control
measures necessary to meet the ozone NAAQS. In many cases, boundary
conditions appear to contribute significantly to peak ozone
concentrations; ozone and ozone precursors flowing into a metropolitan
area can greatly influence the peak ozone concentration experienced in
the metropolitan area. For example, the 1991 Lake Michigan Ozone Study
found that transported ozone concentrations entering the region were 40
to 60 percent of the peak ozone concentrations in some of the region's
metropolitan areas. That is, the air mass entering the study area was
measured by aircraft at 70 to 110 ppb (compared to the ozone NAAQS of
120 ppb) on episode days.65
---------------------------------------------------------------------------
\65\ Roberts, P.T., T.S. Dye, M.E. Korc, H.H. Main, ``Air
Quality Data Analysis for the 1991 Lake Michigan Ozone Study,''
final report, STI-92022-1410-FR, Sonoma Technology, 1994.
---------------------------------------------------------------------------
Separate modeling analyses in the Lake Michigan region indicate
that reduction in ozone and ozone precursor emissions would be
effective at reducing peak ozone concentrations. In the Lake Michigan
case, a modeled 30 percent reduction in boundary conditions was found
to reduce peak ozone concentrations as much as a 60 percent decrease in
local VOC emissions.66
---------------------------------------------------------------------------
\66\ Lake Michigan Air Directors Consortium, ``Lake Michigan
Ozone Study--Evaluation of the UAM-V Photochemical Grid Model in the
Lake Michigan Region,'' 1994.
---------------------------------------------------------------------------
These studies suggest that without reductions in transport and
boundary conditions, the necessary degree of local control will be
difficult to achieve, even with very stringent local controls. The EPA
Matrix Study 67 looked at region-wide NOX control, and the
results indicate it would be effective in reducing ozone across the
Midwest. The objective of the EPA Matrix Study was to obtain a
preliminary estimate of the sensitivity of ozone in the eastern U.S.,
from Texas to Maine, to changes in VOC and NOX emissions applied
region-wide. The modeled control strategy of region-wide 75 percent
NOX reduction with 50 percent VOC reduction produced substantial
ozone reductions throughout the eastern U.S., with ozone standard
exceedances limited to several grid cells in the southeast corner of
Lake Michigan, over Toronto, and immediately downwind of New York City.
---------------------------------------------------------------------------
\67\ Chu, Shao-Hung and W.M. Cox, ``Effects of Emissions
Reductions on Ozone Predictions by the Regional Oxidant Model during
the July 1988 Episode,'' Journal of Applied Meteorology, Vol. 34,
No. 3, March 1995.
---------------------------------------------------------------------------
Taken together, the information available to date suggests that
additional reductions in regional NOX emissions will be necessary
to attain the ozone NAAQS in the Chicago/Gary/Milwaukee area and
downwind (including western Michigan). NOX control in
nonattainment areas, such as RFG provides, contributes to regional
NOX emission reductions. The information available to date has not
shown that upwind controls are all that is needed. Emerging data
indicates that NOX controls in Lake Michigan nonattainment areas
can contribute to the ozone reduction benefits derived from regional
NOX reductions. See discussion infra.
New York Study. New York State's recent urban airshed modeling
(UAM) studies show that substantial reductions in the ozone transported
from other regions would be necessary for several areas within the UAM
domain to achieve ozone attainment.68 The UAM domain includes
areas in New York and Connecticut within and surrounding the New York
Consolidated Metropolitan Statistical Area (CMSA). This UAM study
demonstrates the potential effectiveness of a regional NOX
reduction strategy in combination with a local VOC reduction strategy.
The New York study showed that the combination of a regional strategy
reflecting a 25 percent reduction in VOCs and a 75 percent reduction in
NOX outside the New York urban airshed, with a local strategy
reflecting a 75 percent reduction in VOCs and a 25 percent reduction in
NOX inside the New York urban airshed, would be necessary for all
areas throughout the New York UAM domain to reduce predicted ozone
levels to 120 ppb or less during adverse meteorological conditions.
---------------------------------------------------------------------------
\68\ John, K., S.T. Rao, G. Sistla, W. Hao, and N. Zhou,
``Modeling Analyses of the Ozone Problem in the Northeast,'' EPA-
230-R-94-018, 1994. John, K., S.T. Rao, G. Sistla, N. Zhou, W. Hao,
K. Schere, S. Roselle, N. Possiel, R. Scheffe, ``Examination of the
Efficacy of VOC and NOX Emissions Reductions on Ozone
Improvement in the New York Metropolitan Area,'' printed in Air
Pollution Modeling and Its Application, Plenum Press, NY, 1994.
---------------------------------------------------------------------------
Northeast Ozone Transport Region. The Northeast Ozone Transport
Region (OTR) includes the states of Maine, New Hampshire, Vermont,
Massachusetts, Rhode Island, Connecticut, New York, New Jersey,
Pennsylvania, Delaware, Maryland, and the CMSA that includes the
District of Columbia and northern Virginia. In its analysis supporting
the approval of a Low Emission Vehicle program in the mid-Atlantic and
Northeast states comprising the OTR, EPA reviewed existing work and
performed analyses to evaluate in detail the degree to which NOX
controls are needed.69 These studies showed that NOX
emissions throughout the OTR must be reduced by 50 to 75 percent from
1990 levels to obtain predicted ozone levels of 120 ppb or less
throughout the OTR.
---------------------------------------------------------------------------
\69\ 60 FR 48673 (January 24, 1995).
---------------------------------------------------------------------------
Other recent studies have confirmed these conclusions.70
Additional modeling simulations suggest that region-wide NOX
controls coupled with urban-specific VOC controls would be needed for
ozone attainment in the northeastern United States.71 Taken
together, these studies point to the need to reduce NOX emissions
in the range of 50 to 75 percent throughout the OTR, and VOC emissions
by the same amount in and near the Northeast urban corridor, to reach
and maintain predicted hourly maximum ozone levels of 120 ppb or less.
---------------------------------------------------------------------------
\70\ Kuruville, John et al., ``Modeling Analyses of Ozone
Problem in the Northeast,'' prepared for EPA, EPA Document No. EPA-
230-R-94-108, 1994. Cox, William M. and Chu, Shao-Hung,
``Meteorologically Adjusted Ozone Trends in Urban Areas: A
Probabilistic Approach,'' Atmospheric Environment, Vol. 27B, No. 4,
pp 425-434, 1993.
\71\ Rao, S.T., G. Sistla, W. Hao, K. John and J. Biswas, ``On
the Assessment of Ozone Control Policies for the Northeastern United
States,'' presented at the 21st NATO/CCMS International Technical
Meeting on Air Pollution Modeling and Its Application, Nov. 6-10,
1995.
---------------------------------------------------------------------------
Eastern Texas. There has been limited modeling work to date that
focuses on the air quality characteristics of the eastern Texas region.
The State of Texas has been granted section 182(f) waivers for the
Houston/Galveston and Beaumont/Port Arthur nonattainment areas based on
preliminary UAM modeling which predicted that local NOX reductions
would not contribute to ozone attainment because predicted area ozone
concentrations are lowest when only VOC reductions are modeled.72
Additional modeling is underway by the State, including UAM modeling
using data from the Coastal Oxidant Assessment for Southeast Texas
[[Page 11354]]
(COAST) study, but there is not yet enough data to draw conclusions
about the potential effect of transport of ozone and its precursors on
these areas. This uncertainty has led the State to request that the
waivers from local NOX controls in these areas be granted on a
temporary basis while more sophisticated modeling is conducted. Texas
has requested a one-year extension of its temporary waivers for
Houston/Galveston and Beaumont/Port Arthur, citing the need for
additional time to complete its UAM modeling.73
---------------------------------------------------------------------------
\72\ 60 FR 19515 (April 19, 1995).
\73\ 61 FR 65505 (December 13, 1996).
---------------------------------------------------------------------------
Ozone Transport Assessment Group. EPA is supporting a consultative
process involving 37 eastern states that includes examination of the
extent to which NOX emissions from as far as hundreds of
kilometers away are contributing to smog problems in downwind cities in
the eastern U.S. Known as the Ozone Transport Assessment Group (OTAG)
and chaired by the State of Illinois, this group is looking into ways
of achieving additional cost-effective reductions in ground-level ozone
throughout a region consisting of the eastern half of the U.S.
Preliminary findings from the first and second of three rounds of
control strategy modeling indicate that regional reductions in NOX
emissions would be effective in lowering ozone on a regional scale. The
relative effectiveness varies by subregion and episode modeled.74
Preliminary OTAG modeling results are described in more detail later in
this section.
---------------------------------------------------------------------------
\74\ Ozone Transport Assessment Group, joint meetings of RUSM
and ISI workgroups, ``First Round Strategy Modeling,'' October 25,
1996, and ``Round 2 Strategy Modeling,'' December 17, 1996.
---------------------------------------------------------------------------
Summary. The preceding discussion demonstrates that substantial
region-wide NOX reductions will be needed in regions of the
country where RFG is required for those regions to reach attainment of
the ozone standard. Reduction in NOX emissions is needed locally
in some areas in order to attain the ozone NAAQS while, in some of
these or other areas, NOX emission reductions may be needed to
help attain the ozone NAAQS in downwind areas or to help maintain ozone
levels below the standard in attainment areas. As a local control
(except along the Northeast corridor where its use is so widespread as
to constitute a regional control), the RFG program will reduce NOX
emissions in nonattainment areas and contribute to needed regional
NOX reductions.
Control strategies must consider efforts to reduce regional scale
NOX emissions as well as local emissions. In general, NOX
emissions reductions in upwind, rural areas coupled with VOC reductions
in urban nonattainment areas appears to be an effective strategy in
some cases. In some cases however, the urban nonattainment area is also
upwind of another urban nonattainment area or contains so much biogenic
VOC emissions that reducing only anthropogenic VOC emissions has too
little ozone benefit. For example, the Atlanta nonattainment area has
very high biogenic VOC, while in the Northeast, many urban
nonattainment areas are upwind of other urban nonattainment areas. In
cases like these, local NOX reductions may be needed in urban
nonattainment areas in addition to, or instead of, VOC reductions for
purposes of ozone attainment. Thus, effective ozone control will
require an integrated strategy that combines cost-effective reductions
in emissions at the local, state, regional, and national levels.
2. Section 182(f) Waivers and State Implementation Plans for Ozone
Attainment
Because Title I focuses on measures needed to bring nonattainment
areas into attainment, the CAA requires EPA to view section 182(f)
NOX waivers in a narrow manner. In part, section 182(f) provides
that waivers must be granted if states outside an ozone transport
region (OTR) show that reducing NOX within a nonattainment area
would not contribute to attainment of the ozone NAAQS in that
nonattainment area.75 Only the role of local NOX emissions on
local attainment of the ozone standard is considered in nonattainment
areas outside an OTR. Any exemption may be withdrawn if the basis for
granting it no longer applies. For modeling-based exemptions, this will
occur if updated modeling analyses reach a different conclusion than
the modeling on which the exemption was based.76 Thus all local
NOX waivers should be considered temporary and do not shield an
area from NOX requirements demonstrated to be needed for ozone
attainment in that area or in downwind areas.
---------------------------------------------------------------------------
\75\ 42 U.S.C. Sec. 7511a(f)(1)(A).
\76\ Seitz, John S., Director, OAQPS, EPA, ``Section 182(f)
Nitrogen Oxides (NOX) Exemptions--Revised Process and
Criteria,'' EPA memoranda to Regional Air Directors, dated May 27,
1994, and revised February 8, 1995.
---------------------------------------------------------------------------
EPA has independent statutory authority under CAA section
110(a)(2)(D) to require a state to reduce emissions from sources where
there is evidence that transport of such emissions contributes
significantly to nonattainment or interferes with maintenance of
attainment in other states. That is, the CAA requires a SIP to conform
provisions addressing emissions from one state that significantly
pollute another downwind state. EPA has stated, in all Federal Register
notices approving section 182(f) NOX petitions, that it will use
its section 110(a)(2)(D) authority where evidence of significant
contribution is found to require needed NOX (and/or VOC)
reductions. EPA recently published a notice of intent that it plans to
call for SIP revisions in the eastern half of the U.S. to reduce
regional ozone transport across state boundaries, in accordance with
section 110(a)(2)(D) and (k)(5).77
---------------------------------------------------------------------------
\77\ 62 FR 1420 (January 10, 1997).
---------------------------------------------------------------------------
EPA's granting of exemptions from local NOX controls should be
seen in the broader context of SIP attainment plans. For ozone
nonattainment areas designated as serious, severe, or extreme, state
attainment demonstrations involve the use of dispersion modeling for
each nonattainment area. Although these attainment demonstrations were
due November 15, 1994, the magnitude of this modeling task, especially
for areas that are significantly affected by transport of ozone and
ozone precursors generated outside of the nonattainment area, has
delayed many states in submitting complete modeling results.
Recognizing these challenges, EPA issued guidance on ozone
demonstrations 78 that includes an intensive modeling effort to
address the problem of long distance transport of ozone, NOX, and
VOCs, and submittal of attainment plans in 1997. Considering its
modeling results, a state must select and adopt a control strategy that
provides for attainment as expeditiously as practicable.
---------------------------------------------------------------------------
\78\ Nichols, Mary D., Assistant Administrator for Air and
Radiation, ``Ozone Attainment Demonstrations,'' memorandum to EPA
Regional Administrators, March 2, 1995.
---------------------------------------------------------------------------
When the attainment plans are adopted by the states, these new
control strategies will, in effect, replace any NOX waivers
previously granted. To the extent the attainment plans include NOX
controls on certain major stationary sources in the nonattainment
areas, EPA will remove the NOX waiver for those sources. To the
extent the plans achieve attainment without additional NOX
reductions from certain sources, the waived NOX reductions would
be considered excess reductions and, thus, the exemption would
continue. EPA's rulemaking action to reconsider the initial NOX
waiver may occur simultaneously with rulemaking action on the
attainment plans. Thus,
[[Page 11355]]
many or all areas, including NOX waiver areas, are potentially
subject to NOX controls as needed to attain the ozone standard
throughout the nation and/or meet other NAAQSs.
API selectively cites to those portions of EPA's 1993 section 185B
report to Congress that support its contention that NOX control
may not always be appropriate to reduce ozone, but ignores the report's
overall conclusions regarding the need for many areas across the nation
to reduce NOX emissions if ozone attainment is to be achieved. API
in particular overlooks the report's finding that, in some cases, even
if ozone initially increases in response to small NOX reductions,
ozone levels in many areas will decline if NOX levels are more
significantly reduced. See section 2.2.2. Thus, in some cases, state
and local agencies may need to reduce NOX emissions even though
doing so may cause a potential increase in ozone concentrations in
central urban areas, as part of a larger plan to enable many
nonattainment areas to meet the ozone NAAQS. For example, NOX
reductions in the New York metropolitan area are needed for downwind
areas within the state and in other states to attain the ozone
standard; yet additional VOC controls may be needed in the metropolitan
area to offset the local impact of NOX reductions. Similarly,
NOX reductions in areas upwind of the Northeast Ozone Transport
Region may be needed to help downwind areas attain and maintain the
ozone standard, even though those NOX reductions may not in some
cases help the upwind areas reduce local peak ozone concentrations. In
such cases, a previously granted NOX waiver will not allow an area
to avoid implementing NOX control requirements deemed necessary
for itself or another area's attainment.
The progress toward ozone attainment that has been achieved by
states to date and the continued progress by states toward ozone
attainment, required by the CAA, are not convincing rationales to EPA
for dropping the Phase II RFG NOX standard, as suggested in the
API petition. The previous discussion demonstrates that substantial
region-wide reductions in NOX will be needed in areas of the
country where RFG is required for those areas to reach attainment of
the ozone standard. Progress toward attainment achieved by states to
date and the continued progress toward attainment required under the
CAA will not be sufficient without additional combined NOX and VOC
emission reductions for some RFG areas, including the Northeast
corridor and the Lake Michigan region, as discussed above, to achieve
attainment. Moreover, a NOX waiver does not excuse an area from
reasonable further progress (RFP) requirements. Thus, progress toward
attainment is not a convincing rationale for dropping the Phase II RFG
NOX standard, because progress toward attainment is not the same
as attainment and, thus, doesn't demonstrate that the Phase II RFG
NOX standard is unnecessary or inappropriate. Because the need for
extensive NOX control is clear, it is not necessary or appropriate
for EPA to delay establishing federal NOX control programs until
individual state ozone attainment demonstrations have been developed
and presented. EPA agrees with comments that loss of the Phase II RFG
NOX standard would only exacerbate state emission reduction
shortfalls.
Moreover, for the reasons discussed above, EPA does not agree that
the Phase II RFG NOX standard is incongruous or at odds with the
granting of section 182(f) waivers in RFG areas, as suggested in the
API petition. EPA does agree with API's comments that point out that
the section 182(f) waiver process alone does not take into account the
downwind impact of NOX controls, but notes that API, in doing so,
has ignored EPA's stated intent to require NOX reductions from
states with areas that received NOX exemptions, pursuant to its
section 110(a)(2)(D) authority if such areas are shown to contribute
significantly to downwind states' ozone problems.
3. Comparison of Benefits and Disbenefits From NOX Reductions
The following discussion focuses on another aspect of API's section
182(f) argument: the potential for disbenefits, or increases in urban
ozone, that occur as a result of reductions in NOX. The best data
currently available to examine this air quality and ozone attainment
issue are the photochemical grid modeling results being generated by
OTAG. The OTAG model (UAM-V) includes the best emission inventory
information available, provided by the states and reviewed by
stakeholders and experts, an improved biogenic inventory (BEIS2), and
updated chemistry (CB-IV). Data are available from four ozone episodes.
79 All stakeholders, including states and the oil, automotive, and
utility industries, have been involved in OTAG modeling inputs and
modeling runs. Further information describing OTAG is available
electronically on the OTAG Home Page at http://www.epa.gov/oar/OTAG/
otag.html. All OTAG data discussed here are available electronically on
the TTN2000 Web Site at http://ttnwww.rtpnc.epa.gov.
---------------------------------------------------------------------------
\79\ July 1-11, 1988; July 13-21, 1991; July 20-30, 1993; and
July 7-18, 1995.
---------------------------------------------------------------------------
OTAG modeling conducted to date consistently demonstrates that
NOX reductions applied equally by source type throughout the 37
state OTAG region result in widespread ozone reductions across most of
that region, and in geographically and temporally limited increases in
urban ozone. 80 The OTAG sensitivity modeling cited in oil
industry comments included large NOX reductions (i.e., a 60
percent reduction in elevated utility system point source NOX
emissions plus a 30 percent reduction in low-level, or non-utility
point and area source and mobile source, including nonroad and on-
highway, NOX emissions), or large NOX reductions combined
with VOC reductions (i.e., a 60 percent reduction in elevated NOX
emissions with a 30 percent reduction in low-level NOX emissions
plus a 30 percent reduction in VOC emissions) over the 37 state OTAG
region. That modeling indicates that such emission reductions would
result in widespread ozone decreases in high ozone areas. That modeling
also indicates ozone increases, or disbenefits, particularly within the
Northeast corridor and southwestern Lake Michigan area but only in some
grid cells on some days of some episodes.
---------------------------------------------------------------------------
\80\ Ozone Transport Assessment Group, joint meeting of the
RUSM and ISI workgroups, ``Sensitivity Modeling'' and 5g scatter
plots, August 22, 1996, ``First Round Strategy Modeling,'' October
25, 1996, and ``Round 2 Strategy Modeling,'' December 17, 1996.
---------------------------------------------------------------------------
For example, for July 8, 1988, the OTAG modeling run of a 60
percent reduction in elevated NOX emissions plus a 30 percent
reduction in low-level NOX emissions, throughout the 37 state
region (OTAG run 5e), shows decreases in ozone throughout most of the
37 state region ranging from four to at least 36 ppb. 81 That
modeling run also shows increases in ozone of four to 12 ppb in Boston,
Savannah, Wheeling, and Houston, and increases of four to 28 ppb in the
Norfolk/Virginia Beach area and along the coasts of Connecticut, New
York, and New Jersey.
---------------------------------------------------------------------------
\81\ The upper end of the scale of changes in ozone
concentrations modeled by OTAG was 36 ppb.
---------------------------------------------------------------------------
For July 18, 1991, the same modeling run shows decreases in ozone
ranging from four to at least 36 ppb throughout most of the 37-state
region. Ozone increases of four to 12 ppb appear in Nashville, Paducah,
Detroit, Bay City, and Philadelphia, and increases of four to at least
36 ppb in the Lake Michigan area and in Memphis, Louisville,
Indianapolis, and Cincinnati. For July
[[Page 11356]]
15, 1995, modeling shows ozone decreases ranging from four to at least
36 ppb throughout most of the OTAG region, and ozone increases of four
to 12 ppb in Milwaukee, Chicago, Youngstown, and Philadelphia, and
increases of four to 28 ppb on Long Island and in Memphis.
OTAG modeling indicates that urban ozone increases from region-wide
NOX control are smaller in magnitude and area when NOX
reductions are combined with VOC reductions. In a modeling run with a
60 percent elevated source NOX reduction, a 30 percent low-level
NOX reduction and a 30 percent VOC reduction (OTAG run 5c), for
July 8, 1988, ozone increases of four to 12 ppb were confined to
Memphis and Norfolk/Virginia Beach, with increases of four to 28 ppb
along the coast of Connecticut, New York, and New Jersey. For July 18,
1991, ozone increases of four to 12 ppb appear in Paducah and
Philadelphia, with increases of four to 20 ppb in Chicago, Milwaukee,
Cincinnati, and Louisville. For July 15, 1995, increases of four to 12
ppb appear in Memphis, Youngstown, Philadelphia, and Long Island.
The above OTAG results for ozone changes were cited without regard
to the actual ozone levels. A closer look at OTAG modeling indicates
that urban NOX reductions, as part of region-wide reductions,
produce widespread decreases in ozone concentrations on high ozone
days. Urban NOX reductions also produce limited increases in ozone
concentrations, but the magnitude, time, and location of these
increases generally do not cause or contribute to high ozone
concentrations; most urban ozone increases occur in areas already below
the ozone standard and, thus, in most cases, urban ozone increases
resulting from NOX reductions do not cause exceedance of the ozone
standard. There are a few days in a few urban areas where NOX
reductions produce ozone increases in portions of an urban area that
are detrimental. OTAG defined detrimental as an increase exceeding four
ppb in a grid cell on a day with ozone exceeding 100 ppb. However,
those portions of an urban area with disbenefits on one day of an ozone
episode get benefits on later days of the same episode, and later days
generally are higher ozone days. 82
---------------------------------------------------------------------------
\82\ Lopez, Bob, ``Localized Ozone Increases Due to NOX
Control--Transmittal of Technical Evaluation Summary and Draft
Policy Options Paper,'' memorandum and attachments from OTAG Task
Group on Criteria for Modeling and Strategy Refinement Regarding
NOX Disbenefits to OTAG Implementation and Strategies Workgroup
and Criteria Evaluation Miniworkgroup, second draft, December 12,
1996, and Koerber, Mike, OTAG Policy Group Meeting, December 18,
1996.
---------------------------------------------------------------------------
In other words, OTAG has found that, in general, NOX reduction
disbenefits are inversely related to ozone concentration. On the low
ozone days leading up to an ozone episode (and sometimes the last day
or so) the increases are greatest, and on the high ozone days, the
increases are least (or nonexistent); the ozone increases generally
occur on days when ozone is low and the ozone decreases generally occur
on days when ozone is high. This indicates that, in most cases, urban
ozone increases may not produce detrimental effects when viewed alone,
and the overall effects over the episode are positive. However, OTAG
modeling (run 5e) indicates that at least one area for one day of one
episode experienced an increase in ozone on a high ozone day.
Concentration difference plots show ozone increases over Lake Michigan
and the adjacent shoreline at least as high as 36 ppb on July 18, 1991,
when the highest modeled ozone concentration was about 110 ppb.
However, concentration difference plots also show ozone decreases in
downwind states. Decreases in ozone of five ppb extend into Michigan,
and decreases of one ppb extend as far as New York, New Hampshire,
Vermont, and Maine. The magnitude of the ozone decrease is as high as
ten ppb. 83
---------------------------------------------------------------------------
\83\ Ibid.
---------------------------------------------------------------------------
For July 19, 1991, with peak ozone levels of 130 ppb and, therefore
higher than for July 18, OTAG modeling (run 4b) 84 showed ozone
increases for only two of the 20 highest grid cells in the Lake
Michigan region. On July 20, ozone increases are only apparent for
ozone levels less than 100 ppb. OTAG modeling thus demonstrates that
the ozone reduction benefits of urban NOX control far outweigh the
disbenefits of urban ozone increases in both magnitude of ozone
reduction and geographic scope.
---------------------------------------------------------------------------
\84\ OTAG run 4b represents the deepest level of controls that
has been modeled by OTAG for nonutility point source NOX
emissions, and for NOX and VOC emissions from area and mobile
sources. If the deepest level of NOX controls being modeled by
OTAG for utility NOX and for utility and nonutility point
source VOC is then added (OTAG run 2), ozone increases are not as
large on July 19, 1991 and some become ozone reductions.
---------------------------------------------------------------------------
Ozone benefits and disbenefits occur from both elevated and low-
level NOX reductions; the relative effectiveness of elevated and
low-level NOX reductions varies by region and ozone episode,
according to OTAG modeling.85 Elevated and low-level NOX
reductions appear to act independently, with little synergistic effect.
The pattern of ozone benefits and disbenefits is similar whether the
one-hour or the proposed eight-hour ozone standard is modeled.
---------------------------------------------------------------------------
\85\ Koerber, Mike, OTAG Policy Group Meeting, December 18,
1996.
---------------------------------------------------------------------------
The NOX reduction scenarios modeled by OTAG are for large
NOX reductions, greater than the Phase II RFG NOX emission
reduction standard of 6.8 percent of gasoline-fueled vehicle emissions
on average. Although EPA believes the direction of the effect is
reliable, disbenefits from the Phase II RFG NOX emission reduction
standard would be smaller than the urban disbenefits modeled by OTAG
for larger NOX reductions. EPA recognizes that the OTAG model's
coarse grid size (even in fine part of the domain) may cause the
modeling to show fewer disbenefit areas than actually exist and would
be revealed by finer grid modeling, such as urban-scale modeling. As
API points out, urban-scale modeling demonstrations of NOX
disbenefits supported the section 182(f) waivers approved by EPA for
three mandated RFG areas (Chicago, Milwaukee, and Houston). The OTAG
model's grid size and wide field treatments are not precise enough to
be used to balance population exposures to ozone benefits and
disbenefits from NOX control. However, these facts do not change
EPA's conclusion that OTAG modeling demonstrates that the ozone
reduction benefits of NOX control far outweigh the disbenefits of
urban ozone increases in both magnitude of ozone reduction and
geographic scope.
It should be noted that no scenario modeled by OTAG to date
completely mitigates the ozone problem throughout the 37 state domain,
so some areas, including the Northeast and the Lake Michigan region,
will have to go beyond OTAG scenarios to reach attainment. Since OTAG
modeling shows that more NOX emission reductions produce more
ozone reductions, the ultimate ozone mitigation level of emissions may
not produce urban disbenefits.
OTAG modeling of the transport of ozone and ozone precursors among
subregions is less complete than its modeling of various region-wide
emission reduction scenarios. Preliminary OTAG sensitivity tests did
include a set of four regional impact runs to examine the effect of
controls applied differently within the OTAG domain. For this purpose,
OTAG was divided into four subregions: Northeast, Midwest, Southeast,
and Southwest.86 The regional impact runs provide
[[Page 11357]]
preliminary information on the spatial and temporal scales of ozone
transport. NOX reductions of 60 percent from elevated sources and
30 percent from low level sources plus a VOC reduction of 30 percent
(OTAG run 5c) were applied to one region at a time for each of the four
OTAG ozone episodes. In general, surface plots show that emission
reductions in a given region have the most ozone reduction benefit in
that same region, although downwind benefits outside the region were
also apparent. Northeast reductions benefited the Southeast in one
episode. Midwest reductions benefited the Northeast in four episodes
and the Southeast in one episode. Southeast reductions benefited the
Midwest during two episodes and the Southwest during two episodes.
Southwest reductions benefited the Midwest during two episodes.87
---------------------------------------------------------------------------
\86\ Subsequent to the subregional modeling described here, OTAG
has further divided its modeling domain into 13 smaller subregions
for purposes of assessing transport between these subregions. This
modeling was not complete enough to have been considered in the
decision announced today.
\87\ Ozone Transport Assessment Group, joint meeting of the RUSM
and ISI workgroups, ``Sensitivity Modeling,'' August 22, 1996.
---------------------------------------------------------------------------
Although OTAG modeling of ozone transport is incomplete, it
indicates that NOX reductions have downwind ozone reduction
benefits, although those benefits attenuate with distance. NOX
reductions in Chicago and Milwaukee may help nearby states such as
Michigan and perhaps, to some extent, the Northeast as well. NOX
reductions in the southern end of the Northeast corridor will help the
northern end.
The API petition requests that EPA eliminate or delay the Phase II
RFG NOX emission reduction standard.88 EPA disagrees, as the
evidence does not support eliminating or delaying the Phase II RFG
NOX standard. The NOX reductions obtained from RFG in the
metropolitan nonattainment areas are an important component of a
regional NOX reduction strategy, and modeling and analysis to date
strongly supports the need for such regional NOX reductions. Such
reductions, especially when combined with urban VOC reductions, lead to
ozone reductions on high ozone days across large areas of the country,
including all of the major ozone nonattainment areas covered by the RFG
program. While the potential for disbenefits is clear, with few
exceptions, disbenefits appear on low ozone days and do not cause
exceedance of the ozone standard, while benefits appear on high ozone
days when they are most needed. As described above, OTAG found only one
day of one episode in one area where an urban ozone increase could be
classified as detrimental, with detrimental being defined as an
increase in ozone of four ppb in a grid cell on a day with ozone
exceeding 100 ppb.89 NOX control resulted in ozone decreases
for the following days of that episode . EPA does not believe the
evidence when viewed overall supports forgoing the ozone reduction
benefits of NOX reduction from RFG.
---------------------------------------------------------------------------
\88\ One commenter suggested that an ``opt out'' provision from
the NOX reduction standard be provided for areas that can
document a disbenefit from NOX reductions. For the reasons
discussed above, the evidence does not support such a waiver for RFG
standards at this time.
\89\ Lopez, Bob, ``Localized Ozone Increases Due to NOX
Control--Transmittal of Technical Evaluation Summary and Draft
Policy Options Paper,'' memorandum and attachments from OTAG Task
Group on Criteria for Modeling and Strategy Refinement Regarding
NOX Disbenefits to OTAG Implementation and Strategies Workgroup
and Criteria Evaluation Miniworkgroup, second draft, December 12,
1996, and Koerber, Mike, OTAG Policy Group Meeting, December 18,
1996.
---------------------------------------------------------------------------
In conclusion, API's arguments that the Phase II RFG NOX
standard may cause limited urban disbenefits, and that additional VOC
reductions may be necessary to ameliorate such disbenefits, are not
compelling new evidence or arguments that support elimination or delay
of the Phase II RFG NOX emission reduction standard. 90 EPA
has concluded that reducing NOX emissions in required RFG areas as
part of a region-wide strategy will contribute to attainment of the
ozone standard, even if those NOX emission reductions do not
improve air quality in some portions of some RFG areas on some low
ozone days. Additional VOC reductions are an option states may choose
to avoid or reduce urban ozone increases from NOX control.
---------------------------------------------------------------------------
\90\ See discussion in the RFG final rule at 59 FR 7751.
---------------------------------------------------------------------------
API recently submitted the results of air quality modeling
undertaken by Systems Applications International on API's behalf. API's
modeling used the same photochemical grid model, inventory, and episode
data as OTAG. API examined the effect in 2007 of a 6.8 percent
reduction in mobile source NOX emissions in RFG areas during the
1991 episode. API's modeling shows benefits and disbenefits in RFG
areas, and no change in most non-RFG areas throughout the OTAG domain.
91 On the basis of this modeling, API argues that the Phase II RFG
NOX standard will be ineffective in reducing ozone, underscoring
the cost-ineffectiveness of the Phase II RFG NOX standard,
according to API.
---------------------------------------------------------------------------
\91\ EPA was puzzled by effects that appear in Georgia and
Alabama, which are not RFG areas, and contacted API for an
explanation. API's contractor, SAI, explained in a February 14, 1997
telephone call that some anomalies of the modeled results can be
explained by the differences in the results when directly comparing
modeling runs made on two different computers. However, the
differences in results from directly comparing modeling runs made on
two different computers may also confound the modeled effects of RFG
in terms of ozone concentration differences, casting doubt on the
credibility of the results, since the modeled effects of RFG are in
the same range as the anomalies claimed by SAI.
---------------------------------------------------------------------------
However, API's modeling does not indicate whether disbenefits
occurred in grid cells with high or low ozone, so EPA cannot determine
if the projected disbenefit would actually be detrimental. As discussed
previously, OTAG modeling demonstrates that most urban ozone increases
from NOX control occur on low ozone days and do not cause
exceedance of the ozone standard, while ozone reductions occur on high
ozone days when reductions are most needed. Moreover, API's modeling
sets the threshold level of ozone reduction at two ppb, which
effectively eliminates benefits below two ppb. The Phase II RFG
NOX standard is estimated to achieve a one to two percent
reduction in the national NOX inventory, and that reduction would
translate into a relatively small reduction in the ozone level at
levels above 100 ppb. By setting the threshold at two percent, API's
modeling may not capture the benefits of the standard. Thus, EPA is not
persuaded by API's modeling that the Phase II RFG NOX standard
will be ineffective in reducing ozone; nor does EPA agree that API's
modeling underscores the Phase II RFG NOX standard's cost-
ineffectiveness.
4. Non-ozone Benefits
In the RFG final rule, EPA cited non-ozone benefits of NOX
control, such as reductions in emissions leading to acid rain
formation, reductions in toxic nitrated polycyclic aromatic compounds,
lower secondary airborne particulate (i.e., ammonium nitrate)
formation, reduced nitrate deposition from rain, improved visibility,
and lower levels of nitrogen dioxide. A complete discussion of these
benefits can be found in the RIA accompanying the RFG final rule.
92 EPA did not attempt to quantify the non-ozone benefits of
NOX control in the rulemaking, and did not include non-ozone
benefits in its cost-effectiveness determination.
---------------------------------------------------------------------------
\92\ See the RIA at pp. 321-322. See also 59 FR 7751.
---------------------------------------------------------------------------
API claims that because EPA did not quantify non-ozone benefits,
such benefits are speculative; API presented no evidence to support
this claim. EPA does not agree. The fact that EPA did not quantify non-
ozone benefits of NOX control does not render those benefits
speculative. In a directional sense, at least, the non-ozone benefits
of NOX reductions, including the Phase II RFG NOX standard,
are clear.
[[Page 11358]]
Since publication of the RFG final rule, EPA has identified
additional non-ozone benefits from NOX reductions. The following
describes how NOX emissions contribute to adverse impacts on the
environment:
Acid Rain. NOX and sulfur dioxide are the two key air
pollutants that cause acid rain and result in adverse effects on
aquatic and terrestrial ecosystems, materials, visibility, and public
health. Nitric acidic deposition plays a dominant role in the acid
pulses associated with the fish kills observed during the springtime
melt of the snowpack in sensitive watersheds and recently has also been
identified as a major contributor to chronic acidification of certain
sensitive surface waters.
Drinking Water Nitrate. High levels of nitrate in drinking water
are a health hazard, especially for infants. Atmospheric nitrogen
deposition in sensitive forested watersheds can increase stream water
nitrate concentrations; the added nitrate can remain in the water and
be transported long distances downstream because plants in most
freshwater systems do not take up the added nitrate.
Eutrophication. NOX emissions contribute directly to the
widespread accelerated eutrophication of U.S. coastal waters and
estuaries. Atmospheric deposition direct to surface waters and
deposition to watershed and subsequent transport into the tidal waters
has been documented to contribute from 12 to 44 percent of the total
nitrogen loadings to U.S. coastal water bodies. Nitrogen is the
nutrient limiting growth of algae in most coastal waters and estuaries.
Thus addition of nitrogen results in accelerated algal and aquatic
plant growth in the water body causing adverse ecological effects and
economic impacts that range from nuisance algal blooms to oxygen
depletion and fish kills.
Global Warming. Nitrous oxide (N2O) is a greenhouse gas.
Anthropogenic nitrous oxide emissions in the U.S. contribute about two
percent of the greenhouse effect, relative to total U.S. anthropogenic
emissions of greenhouse gases. In addition, emissions of NOX lead
to the formation of tropospheric ozone, which is another greenhouse
gas.
Nitrogen Dioxide (NO2). Exposure to NO2 is associated with a
variety of acute and chronic health effects. The health effects of most
concern at ambient or near-ambient concentrations of NO2 include mild
changes in airway responsiveness and pulmonary function in individuals
with preexisting respiratory illnesses, and increases in respiratory
illnesses in children.
Nitrogen Saturation of Forest Ecosystems. Forests accumulate
nitrogen inputs. While nitrogen inputs in forest ecosystems have
traditionally been considered beneficial, recent findings in North
America and Europe suggest that, because of chronic nitrogen deposition
from air pollution, some forests are showing signs of nitrogen
saturation, including undesirable nitrate leaching to surface and
ground water and decreased plant growth.
Particulate Matter. NOX compounds react with other compounds
to form fine nitrate particles and acid aerosols. Nitrates are
especially damaging because of their small size, which results in
penetration deep into the lungs. Particulate matter has a wide range of
adverse health effects, including premature death.
Stratospheric Ozone Depletion. A layer of ozone located in the
upper atmosphere (stratosphere) protects the surface of the earth
(troposphere) from excessive ultraviolet radiation. Tropospheric
emissions of nitrous oxide (N2O) are very stable and slowly migrate to
the stratosphere, where solar radiation breaks it into nitric oxide
(NO) and nitrogen (N). The nitric oxide reacts with ozone to form
nitrogen dioxide and oxygen. Thus, additional N2O emissions would
result in a slight decrease in stratospheric ozone.
Toxics. In the atmosphere, NOX emissions react to form
nitrogen compounds, some of which are toxic. Compounds of concern
include transformation products, nitrate radical, peroxyacetyl
nitrates, nitroarenes, and nitrosamines.
Visibility and Regional Haze. NOX emissions can interfere with
the transmission of light, limiting visual range and color
discrimination. Most visibility and regional haze problems can be
traced to carbon, nitrates, nitrogen dioxide, organics, soil dust, and
sulfates.
Cost-Effectiveness
1. Cost-Effectiveness of Phase II RFG NOX Standard
To update its evaluation of the cost-effectiveness of the Phase II
RFG NOX standard, EPA asked DOE to update the 1994 DOE study. EPA
used the Bonner & Moore refinery model to estimate costs in the RFG
rulemaking, and included the 1994 DOE study and additional industry
cost studies in its consideration. EPA determined to update the DOE
study for purposes of considering API's petition, rather than the
Bonner & Moore analysis, because since the 1994 study, EPA, DOE, and
API have worked closely to improve the refinery modeling used by DOE to
develop cost estimates. Over 200 improvements and changes to the model
have been made in response to suggestions from API.
EPA notified each party that commented on the API petition when
DOE's draft report became available and sent copies to interested
parties for their review. EPA also reopened the comment period and held
a meeting with interested parties to discuss the draft DOE report.
DOE's improved model provides a range of cost-effectiveness, rather
than a single number. DOE's regionally-weighted cost range per summer
ton of NOX removed is $5,400 to $11,300. Based on that range, EPA
calculated the annual incremental cost range at $2,180 to $6,000 per
ton of NOX removed. Although the high end of EPA's cost-
effectiveness range exceeds $5,000, EPA does not consider that to be
significant, since the midpoint of the range is $4,090. EPA views DOE's
updated estimate as new information that confirms the information
relied upon in the RFG rulemaking to evaluate the cost-effectiveness of
the Phase II RFG NOx standard. The improvements to the DOE model
and EPA's updated cost-effectiveness calculations are described in
detail in an EPA technical memorandum available in the docket for this
action. 93
---------------------------------------------------------------------------
\93\ See A-96-27, Memorandum dated February 1997 from Lester
Wyborny, Chemical Engineer, Fuels and Energy Division, ``Cost of
Phase II RFG NOX Control,'' to Charles Freed, Director, Fuels
and Energy Division.
---------------------------------------------------------------------------
EPA received comments from the oil and automotive industries on
DOE's draft report. Both the oil and automotive industries' comments
are critical of certain technical aspects of DOE's refinery modeling.
These comments and EPA's responses are discussed in an EPA technical
memorandum, and in DOE's final report; both documents are available in
the docket for this action. 94
---------------------------------------------------------------------------
\94\ Ibid and U.S. DOE, Re-estimation of the Refining Cost of
Reformulated Gasoline NOX Control, February 1997.
---------------------------------------------------------------------------
Overall, oil industry comments argued that the lower end of the DOE
cost range should be dropped because the model form that produced it is
not representative. DOE produced a cost range by using both a ``ratio
free'' and ``ratio constrained'' form of its refinery model. The ratio
free form is similar to the model version used for the 1994 DOE study,
with improvements in process descriptions. The ratio free model
includes a modeling concept in which refinery streams with identical
[[Page 11359]]
distillation cut points are kept separate through different processes,
and this modeling concept may produce over-optimized results. The ratio
constrained form has the same improvements in process descriptions as
the ratio free form, with added constraints on the proportions of
streams entering a process, to avoid unrealistic stream separation;
however, the ratio constrained form may under-optimize refinery
operations. DOE has concluded that both model forms can provide
credible estimates of the refining cost range, given the variations
within and among refineries, uncertainties in the range of refinery
costs, and the over-optimization and under-optimization possibilities
of the model forms. EPA agrees with DOE that both model forms are
useful in exploring the plausible range of refining costs.
Oil industry comments argue that the upper end of DOE's range
exceeds a benchmark of $5,000 per ton of NOX removed. DOE's
regionally-weighted cost-effectiveness estimate for the ratio
constrained model form is $11,300 per summer ton of NOX removed,
which DOE calculates as $5,200 per annual ton, and which EPA calculates
as $6,000 per annual ton. 95 Both EPA and DOE believe that the
high end of the range reflected by the ratio constrained model estimate
is not significantly different from the benchmark of $5,000 per annual
ton.
---------------------------------------------------------------------------
\95\ The annual per ton cost estimates of DOE and EPA differ
because EPA uses a different method of annualizing costs than DOE.
EPA's calculations are described in a technical memorandum to docket
A-96-27; see the memorandum dated February 1997 from Lester Wyborny,
Chemical Engineer, Fuels and Energy Division, ``Cost of Phase II RFG
NOX Control,'' to Charles Freed, Director, Fuels and Energy
Division. Although Phase II RFG NOX emission reductions are
required only during the summer ozone season, EPA annualizes the
cost so that it may be compared with other emission reduction
programs.
---------------------------------------------------------------------------
EPA believes that the updated DOE cost study is the best available
evidence concerning the costs of the Phase II RFG NOX standard,
including the desulfurization processes that drive those costs. This
evidence indicates that the cost-effectiveness analysis used by EPA
when setting the standard continues to be valid. The detailed
information on desulfurization costs submitted by API to support its
petition was previously submitted during the RFG rulemaking and was
considered at that time; it is not new information and does not change
EPA's view, based on the updated DOE cost modeling, that the Phase II
RFG NOX standard remains cost-effective.
API argues that the 1994 DOE study supports its argument that EPA's
desulfurization costs are too low, citing the study's observation that:
``The actual NOX reduction standard for Phase II RFG should
reflect margins for enforcement tolerance, temporal production
variations* * *, variations among refiners of differing capability, and
potential inaccuracies and over-optimization in the refinery yield
model* * *,96 However, the 1994 DOE study supports EPA's view that
the 6.8 percent average NOX emission reduction standard will cost
approximately $5,000 per annual ton of NOX removed. The 1994 DOE
study's reference to $10,000 per summer ton is equivalent to EPA's
$5,000 per annual ton.97 Furthermore, the 1994 DOE study used
inflated year 2000 dollars, while EPA's estimates were in 1990 dollars.
---------------------------------------------------------------------------
\96\ Pet. at p. 20, citing the 1994 DOE study at xii.
\97\ 1994 DOE study, pp. 56-58.
---------------------------------------------------------------------------
Oil industry comments also point out that DOE's updated report
states that its cost estimates do not include the impact of the
requirement that RFG achieve a three percent minimum NOX reduction
per batch under the averaging provisions, or the impact of any
potential enforcement tolerance associated with that three percent
minimum NOX standard. EPA believes that any costs associated with
the minimum NOX reduction requirement and any associated
enforcement tolerance compliance costs are separate costs associated
with these provisions and do not change the cost-effectiveness analysis
of the 6.8 percent average NOX emission reduction standard. While
EPA is denying API's petition to reconsider the 6.8 percent average
standard, it will continue to evaluate and plans to reach a decision on
the separate issues associated with the three percent minimum
requirement under the averaging provisions.
As discussed above, NOX reductions from Phase II RFG in
several cities with NOX waivers are expected to contribute to
ozone attainment in those areas, downwind areas, or both. As discussed
previously, EPA believes that the benefits of NOX reduction in
these and other RFG areas far outweigh the disbenefits. Thus, EPA does
not believe that the benefit of the NOX reductions in Chicago,
Milwaukee, and Houston should be calculated as zero when analyzing the
cost-effectiveness of the Phase II RFG NOX reduction standard.
API also argues that the Phase II RFG NOX emission reduction
standard interferes with refining flexibility and leaves refiners with
unduly costly and narrow choices for producing RFG. However, as the
updated DOE study indicates, as discussed above, the Phase II RFG
NOX standard is not unduly costly even considering the high end of
the range reflected by the ratio constrained model estimate. In the
final rule, EPA clarified that the Phase II RFG standards are
performance standards and may be met by the refiner's choice of fuel
parameter controls. In addition, EPA elected to allow both a per gallon
and an averaging standard for NOX to provide greater flexibility
to refiners. API has provided no compelling new evidence or argument to
the contrary.
2. Stationary Source Cost-Effectiveness
API argues that EPA understated the relative cost-effectiveness of
major stationary source NOX controls. API cites incremental cost-
effectiveness estimates for coal-fired utility boilers of $1,300 to
$2,200 per ton for selective non-catalytic reduction and $1,250 to
$6,600 per ton for selective catalytic reduction.98 For gas and
oil-fired utility boilers, API cites $2,100 to $5,650 per ton for
selective catalytic reduction, and for gas-fired industrial boilers,
$3,300 to $5,500 per ton for selective catalytic reduction.99 In
its RIA, EPA cited cost-effectiveness estimates for stationary source
NOX emission controls based on utility boilers. Low NOX
burner technology was cited at $1,000 per ton and selective catalytic
reduction at $3,000 to $10,000 per ton.100
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\98\ Pet. at p. 26.
\99\ Ibid.
\100\ RIA at p. 385.
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In stationary source regulations promulgated since the RFG rule,
cost-effectiveness estimates have ranged from $200 per ton for certain
coal fired power plants 101 to about $3,000 per ton for municipal
waste combustors.102 Recent NOX control estimates developed
by the Mid-Atlantic Regional Air Management Association (MARAMA) and
Northeast States for Coordinated Air Use Management (NESCAUM) for those
regions for retrofits range from a low of $320 to $1,800 for natural
gas reburn for oil and gas boilers to $3,400 to $6,900 for natural gas
conversion for coal-fired boilers.103
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\101\ 60 FR 18751 (April 13, 1995).
\102\ 54 FR 52293 (December 20, 1989); 60 FR 65387 (December 19,
1995).
\103\ Phase II NOX Controls for the MARAMA and NESCAUM
Regions, EPA-453/R-96-002, November 1995, Table 1-7.
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API and other oil industry sources cited cost-effectiveness
estimates and rankings that were developed in the OTAG process for
Phase II RFG and other NOX reduction programs, as evidence that
the Phase II RFG NOX standard is not cost-effective compared to
other NOX reduction programs, particularly stationary source
programs.
[[Page 11360]]
API argues these other programs offer a larger potential for overall
reduction in NOX emissions. The figure of $25,000 to $45,000 per
ton of NOX reduced developed in the OTAG process ascribes all the
costs of RFG to NOX control, including costs incurred to reduce
toxics and VOCs, and to meet the various content requirements. If VOC
and NOX reductions are valued equally, as OTAG has done, the
incremental cost per ton of NOX removed falls by more than a
factor of four to under $7,000 per ton, and the average cost falls to
$3,000 to $4,000 per ton. That incremental cost is higher than
projected by EPA for the Phase II RFG NOX standard because it
assumes that all the gasoline in the 37 state OTAG region, over 90
percent of the gasoline sold in the U.S. outside of California, would
be included in the RFG program. Costs rise rather than fall as volume
of RFG produced increases because less efficient refineries would be
drawn into producing RFG. Moreover, EPA's $5,000 per ton cost estimate
for the Phase II RFG NOX standard applies to the final increment
of emission reduction pursued under the program, while API compares
this incremental cost to average costs of other control programs.
Average costs are always less than incremental costs; if Phase II RFG
costs are evaluated on an average-cost basis, the cost per ton for RFG
areas falls to between $2,000 and $3,000.
Based on the evidence presented, EPA concludes that some stationary
source NOX controls are more cost-effective than the Phase II RFG
NOX standard, and some are not. The fact that some stationary
source NOX controls are more cost-effective does not vitiate the
cost-effectiveness of the Phase II RFG NOX standard. EPA cited
stationary source costs both above and below the cost of Phase II RFG
NOX standard in the RFG rulemaking. EPA does not find that it
understated the relative cost-effectiveness of stationary source
NOX controls.
API argues that stationary sources offer more potential for
reducing air pollution. API argues that EPA should sequence NOX
controls and target major stationary sources first, since stationary
source NOX control is more cost-effective and can be targeted
geographically to avoid controls where controls are not needed. Other
NOX controls should not be considered until major stationary
source controls are employed and evaluated, according to API.
As discussed previously, some stationary source NOX controls
are more cost-effective than the Phase II RFG NOX standard, and
some are not. However, OTAG has projected that, in 2007, mobile sources
will still contribute 42 percent of all NOX after implementation
of 1990 CAAA controls for mobile and stationary sources. These measures
include the retrofit of reasonably available control technology on
existing major stationary sources of NOX and implementation of
enhanced inspection and maintenance programs under Title I; new
emission standards for new motor vehicles and nonroad engines, and the
RFG program under Title II; and controls on certain coal-fired electric
power plants under Title IV. Given the challenges facing so many areas
in identifying and implementing programs that will lead to attainment
of the ozone standard, and the need for additional NOX controls,
EPA believes that NOX reductions in urban areas where mobile
sources are concentrated, as part of a region-wide NOX reductions,
are still essential to achieve ozone attainment. In addition, OTAG
modeling demonstrates that even with unrealistically large NOX
reductions, such as an 80 percent reduction in elevated NOX plus a
60 percent reduction in low level NOX, without VOC reductions,
attainment still would not be reached throughout the OTAG region. EPA
believes that both stationary source and mobile source controls will be
necessary for many areas to reach attainment.
3. Executive Order 12866
API argues that the Phase II RFG NOX emission reduction
standard does not satisfy the provisions of Executive Order 12866. API
argues that the Phase II RFG NOX standard is not compelled by
statute or necessary to interpret the statute, or made necessary by
public need, or the most cost-effective NOX control to achieve the
regulatory objective.
EPA believes the Phase II RFG NOX reduction standard meets the
substantive requirements of the Executive Order 12866. Although the
Phase II RFG NOX standard is not required by statute, it is ``made
necessary by compelling public need'' 104 and is a cost-effective
standard. As discussed earlier, the authority EPA used to establish the
standard, section 211(c)(1)(A), allows EPA to regulate fuels or fuel
additives if their emission products cause or contribute to air
pollution that may reasonably be anticipated to endanger public health
or welfare. EPA used this authority based on scientific evidence
regarding the benefits of NOX control and the cost-effectiveness
of NOX reductions. The preceding discussion indicates that EPA's
RFG rulemaking properly complied with Executive Order 12866.
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\104\ 58 FR 51735 (October 4, 1993), section 1(a) at 51735.
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V. Conclusion
A detailed discussion of the determination of the need for,
scientific justification for, and cost-effectiveness of NOX
control is presented in the RIA for the final rule.105 EPA's
review here of the air quality benefits and cost-effectiveness of the
Phase II RFG NOX reduction standard does not show that the prior
rulemaking determinations supporting this standard were inappropriate.
After considering API's petition, public comment, and other relevant
information available to EPA, API's petition for reconsideration of the
Phase II RFG NOX emission reduction standard is denied.
\105\ RIA at pp. 313-326.
Dated: February 28, 1997.
Mary D. Nichols,
Assistant Administrator, Office of Air and Radiation.
[FR Doc. 97-6217 Filed 3-11-97; 8:45 am]
BILLING CODE 6560-50-P
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