Findings of Significant Contribution and Rulemaking on Section 126 Petitions for Purposes of Reducing Interstate Ozone Transport

SUMMARY: In accordance with sections 126 and 110(a)(2)(D) of the Clean

Air Act (CAA), EPA plans to take rulemaking action on petitions filed

by eight Northeastern States seeking to mitigate what they describe as

significant transport of one of the main precursors of ozone smog,

nitrogen oxides (NOX), across State boundaries. Each

petition specifically requests that EPA make a finding that

NOX emissions from certain major stationary sources

significantly contribute to ozone nonattainment problems in the

petitioning State. If EPA makes such a finding, EPA would be authorized

to establish Federal emissions limits for the sources. The petitions

recommend control levels for EPA to consider. The eight Northeastern

States that filed petitions are Connecticut, Maine, Massachusetts, New

Hampshire, New York, Pennsylvania, Rhode Island, and Vermont.

This notice announces the Agency's schedule for rulemaking on the

section 126 petitions, provides EPA's preliminary identification of

sources named in the petitions that significantly contribute to

nonattainment problems in the petitioning States, provides EPA's

preliminary assessment of the types of recommended emission limitations

and compliance schedules set forth in the petitions, and discusses

legal and policy issues raised under section 126.

The transport of ozone is important because ozone has long been

recognized, in both clinical and epidemiological research, to affect

public health. There is a wide range of ozone-induced health effects,

including decreased lung function (primarily in children active

outdoors), increased respiratory symptoms (particularly in highly

sensitive individuals), increased hospital admissions and emergency

room visits for respiratory causes (among children and adults with pre-

existing respiratory disease such as asthma), increased inflammation of

the lung, and possible long-term damage to the lungs.

DATES: The EPA is establishing an informal 30-day comment period for

today's advance notice of proposed rulemaking (ANPR), ending on June 1,

1998. Please direct correspondence to the address specified below. See

SUPPLEMENTARY INFORMATION for further information on the ANPR comment

period.

A public hearing for the future proposed rulemaking on the section

126 petitions will be held on October 28 and 29, 1998.

ADDRESSES: Documents relevant to this action are available for

inspection at the Air and Radiation Docket and Information Center

(6101), Attention: Docket A-97-43, U.S. Environmental Protection

Agency, 401 M Street SW, room M-1500, Washington, DC 20460, telephone

(202) 260-7548, between 8:00 a.m. and 4:00 p.m., Monday through Friday,

excluding legal holidays. A reasonable copying fee may be charged for

copying.

Written comments should be submitted to this address. Comments and

data may also be submitted electronically by following the instructions

under SUPPLEMENTARY INFORMATION of this document. No confidential

business information should be submitted through e-mail.

The public hearing on the future proposed rulemaking on the section

126 petitions will be held on October 28 and 29, 1998 at the EPA

Auditorium at 401 M Street SW, Washington, DC 20460.

FOR FURTHER INFORMATION CONTACT: Carla Oldham, Office of Air Quality

Planning and Standards, Air Quality Strategies and Standards Division,

MD-15, Research Triangle Park, NC, 27711, telephone (919) 541-3347.

SUPPLEMENTARY INFORMATION:

Comment Period

This ANPR gives EPA's preliminary assessment of the petitions and

raises a number of legal and policy issues related to the section 126

provisions. If comments are submitted within 30 days of publication of

this notice, EPA will have adequate time to take the comments into

account in the deliberative process for the rulemaking proposal. As

discussed in Section V of this notice, under a proposed consent decree,

EPA must publish the section 126 rulemaking proposal in the Federal

Register by September 30 of this year. A formal comment period and

public hearing will be provided for the proposal. The EPA will respond

to comments on this ANPR, if any comment is appropriate, when it

responds to comments on the proposal.

Availability of Related Information

The official record for this rulemaking, as well as the public

version, has been established under docket number A-97-43 (including

comments and data submitted electronically as described below). The

eight petitions are contained in this docket. A public version of this

record, including printed, paper versions of electronic comments, which

does not include any information claimed as confidential business

information, is available for inspection from 8 a.m. to 4 p.m., Monday

through Friday, excluding legal holidays. The official rulemaking

record is located at the address in ADDRESSES at the beginning of this

document. Electronic comments can be sent directly to EPA at: A-and-R-

D[email protected]. Electronic comments must be submitted as an

ASCII file avoiding the use of special characters and any form of

encryption. Comments and data will also be accepted on disks in

WordPerfect in 5.1 file format or ASCII file format. All comments and

data in electronic form must be identified by the docket number A-97-

43. Electronic comments on this ANPR rule may be filed online at many

Federal Depository Libraries.

The EPA is conducting a separate rulemaking action that contain

actions and information related to this ANPR, ``Finding of Significant

Contribution and Rulemaking for Certain States in the Ozone Transport

Assessment Group Region for Purposes of Reducing Regional Transport of

Ozone,'' (see 62 FR 60318; November 7, 1997 and a supplemental proposal

being published in late April or early May 1998.) Documents related to

these proposals are available for inspection in Docket No. A-96-56 at

the address and times given above. This rulemaking action is hereafter

referred to as the proposed NOX State implementation plan

(SIP) call (proposed NOX SIP call). The proposed

NOX SIP call and associated documents are located at http://

www.epa.gov/ttn/oarpg.otagsip.html.

Additional information relevant to this ANPR concerning the Ozone

Transport Assessment Group (OTAG) is available on the Agency's Office

of Air Quality Planning and Standards' (OAQPS) Technology Transfer

Network (TTN) via the web at http://www.epa.gov/ttn/. If assistance is

needed in accessing the system, call the help desk at (919) 541-5384 in

Research Triangle Park, NC. Documents related to OTAG can be downloaded

directly from OTAG's webpage at http://

[[Page 24059]]

www.epa.gov/ttn/otag. The OTAG's technical data are located at http://

www.iceis.mcnc.org/OTAGDC.

Outline

I. Background

A. Ozone Transport, Ozone Transport Commission NOX

Memorandum of Understanding (OTC NOX MOU), OTAG, the

Proposed NOX SIP Call, and the Revised Ozone National

Ambient Air Quality Standard (NAAQS)

B. Section 126

C. Summary of Section 126 Petitions

D. Relationship to NOX SIP Call

E. Proposed Rulemaking Schedule

II. Preliminary Analysis of Significant Contribution

A. Background

B. Regional Ozone and Interstate Transport

C. Collective Contribution to Nonattainment

D. Weight of Evidence Approach and Findings of Significant

Contribution

E. Technical Approach to Preliminary Analysis of Petitions

F. Results of Preliminary Assessment of Section 126 Petitions

III. Preliminary Assessment of Emissions Limitations and Compliance

Schedules

A. Remedies Recommended in Petitions

B. EPA's Analytic Approach

C. Intent to Implement Controls Through Cap-and-Trade Program

IV. Legal and Policy Issues

A. Issues Involving Significant Contribution

B. Issues Involving Trading

C. Cost-Effectiveness Issues

D. Legal Issues

V. Schedule for Rulemaking Action of Section 126 Petitions

VI. Impact on Small Entities

I. Background

A. Ozone Transport, Ozone Transport Commission NOX

Memorandum of Understanding (OTC NOX MOU), OTAG, the

Proposed NOX SIP Call, and the Revised Ozone National

Ambient Air Quality Standard (NAAQS)

Today's action occurs against a background of a major national

effort, spanning at least the last 10 years, to analyze and take steps

to mitigate the problem of the transport of ozone and its precursors

across State boundaries. This effort has grown more intensive in the

past several years with the approval of the OTC NOX MOU by

11 of the Northeastern States and the District of Columbia included in

the OTC, the completion of the OTAG process, and the publication of

EPA's proposed NOX SIP call. In addition, in July 1997, EPA

issued a revised NAAQS for ozone, which is determined over an 8-hour

period (the 8-hr standard). This new 8-hr standard must now be taken

into account, along with the pre-existing 1-hr standard, in resolving

transport issues. These issues and events are detailed in the proposed

NOX SIP call (62 FR 60318) and familiarity with that notice

is assumed for purposes of today's notice.

B. Section 126

Today's action focuses on section 126 of the CAA. Subsection (a) of

section 126 requires, among other things, that SIPs require major

proposed new (or modified) sources to notify nearby States for which

the air pollution levels may be affected by the fact that such sources

have been permitted to commence construction. Subsection (b) provides:

Any State or political subdivision may petition the

Administrator for a finding that any major source or group of

stationary sources emits or would emit any air pollutant in

violation of the prohibition of section 110(a)(2)(D)(ii) * * * or

this section.

Subsection (c) of section 126 states that--

[I]t shall be a violation of this section and the applicable

implementation plan in such State [in which the source is located or

intends to locate]--

(1) for any major proposed new (or modified) source with respect

to which a finding has been made under subsection (b) of this

section to be constructed or to operate in violation of the

prohibition of section 110(a)(2)(D)(ii) * * * or this section, or

(2) for any major existing source to operate more than three

months after such finding has been made with respect to it.

However, subsection (c) further provides that EPA may permit the

continued operation of such major existing sources beyond the 3-month

period, if such sources comply with EPA-promulgated emissions limits

within 3 years of the date of the finding.

Section 110(a)(2)(D) provides the requirement that a SIP contain

adequate provisions--

(i) prohibiting, consistent with the provisions of this title,

any source or other type of emissions activity within the State from

emitting any air pollutant in amounts which will--

(I) contribute significantly to nonattainment in, or interfere

with maintenance by, any other State with respect to [any] national

* * * ambient air quality standard, or

(II) interfere with measures required to be included in the

applicable implementation plan for any other State under part C to

prevent significant deterioration of air quality or to protect

visibility.

(ii) insuring compliance with the applicable requirements of

sections 126 and 115 (relating to interstate and international

pollution abatement) * * *

For purposes of today's ANPR, it is EPA's preliminary view that,

with respect to existing stationary sources, sections 126(b)-(c) and

110(a)(2)(D), read together, authorize a downwind State to petition EPA

for a finding that emissions from major stationary sources upwind of

the State contribute significantly to nonattainment, or interfere with

maintenance, of a NAAQS in the State. If EPA grants the requested

finding, EPA must directly regulate the sources. Sources would have to

comply with the emissions limits within 3 years from the finding. The

EPA acknowledges that others have urged different readings of sections

126(b)-(c) and 110(a)(2)(D), and EPA solicits comments thereon, as

described in Section IV below.

In a letter dated August 8, 1997, to Michael J. Walls, Chief,

Environmental Protection Bureau, Office of Attorney General, State of

New Hampshire, from Mary D. Nichols, Assistant Administrator for Air

and Radiation, EPA provided preliminary and general guidance concerning

section 126 and the process of submitting petitions (Nichols letter).

This letter has been placed in the docket for today's action.

In Section IV of this notice, below, EPA discusses legal and policy

issues raised under section 126 and requests comments on the various

issues.

C. Summary of Section 126 Petitions

On August 14-15, 1997, EPA received eight section 126 petitions

submitted individually by eight Northeastern States. The petitioning

States are Connecticut, Maine, Massachusetts, New Hampshire, New York,

Pennsylvania, Rhode Island, and Vermont. Each petition requests EPA to

make a finding that certain major stationary sources in upwind States

contribute significantly to nonattainment, or interfere with

maintenance, in the petitioning State. All of the petitions seek a

finding and relief under the 1-hr standard; Massachusetts,

Pennsylvania, and Vermont also seek a finding and relief with respect

to the 8-hr standard.

The petitions vary as to the type and geographic location of the

sources identified as significant contributors. Some petitions identify

specific sources, others list source categories. The sources and source

categories include electric generating plants, fossil fuel-fired

boilers and other indirect heat exchangers, and certain other related

stationary sources that emit NOX. All the petitions target

sources in the Midwest; some also target sources in the South and

Northeast.

The petitions also vary as to the level of controls they recommend

be applied to the sources to mitigate the transport problem. Several

recommend EPA establish a 0.15 lb/mmBtu NOX

[[Page 24060]]

emission limitation implemented through a cap-and-trade program. The

petitions are described in greater detail in Sections II and III of

this notice.

All of the petitions rely, in part, on OTAG analyses for technical

support. In addition, the States submitted a variety of other technical

analyses which include computerized urban airshed modeling, wind

trajectory analyses, results of a transport study by the Northeast

States for Coordinated Air Use Management, and culpability analyses.

D. Relationship to NOX SIP Call

The sources, or groups of sources, identified in the petitions may

also be subject to State-adopted emission limitations and control

schedules in response to a separate rulemaking action on regional ozone

transport--the NOX SIP call.

In the proposed NOX SIP call, EPA made a proposed

determination that NOX emissions from 22 eastern States and

the District of Columbia significantly contribute to nonattainment

problems in downwind States with respect to both the long-standing 1-hr

NAAQS and the new 8-hr NAAQS. The EPA proposed that these jurisdictions

be required to revise their SIPs to reduce Statewide NOX

emissions to a specified level. The proposal is designed to assure that

SIPs meet the requirements of section 110(a)(2)(D), which mandates that

SIPs contain adequate provisions prohibiting emissions that

significantly contribute to downwind nonattainment.

The proposed NOX SIP call is the result of technical

analyses and recommendations by the OTAG, a group comprised of EPA and

the 37 eastern-most States in the Nation, as well as industry and

environmental groups. Because the NOX SIP call process

overlaps considerably with the section 126 petition process, EPA

believes it is important to coordinate the two actions as much as

possible.

E. Proposed Rulemaking Schedule

Section 126(b) requires EPA to make the requested finding, or deny

the petition, within 60 days of receipt. It also requires EPA to

provide a public hearing for the petition. In addition, EPA's action

under section 126 is subject to the procedural requirements of section

307(d) of the Act. One of these requirements is notice-and-comment

rulemaking. Section 307(d) provides for a time extension, under certain

circumstances, for rulemakings subject to that provision. Specifically,

it allows statutory deadlines that require promulgation in less than 6

months from proposal to be extended to not more than 6 months from

proposal to afford the public and the Agency adequate opportunity to

carry out the purposes of section 307(d). In three notices dated

October 22, 1997 (62 FR 55769), November 20, 1997 (62 FR 6194), and

January 2, 1998 (63 FR 26), EPA ultimately extended the deadline for

action to December 18, 1997.

On February 25, 1998, the eight petitioning States filed a

complaint in the U.S. District Court for the Southern District of New

York to compel EPA to take action on the States' section 126 petitions.

The EPA and the eight States filed a proposed consent decree that would

establish a schedule for acting on the petitions. Pursuant to CAA

section 113(g), the EPA has solicited comments on the proposed consent

decree, by notice dated March 5, 1998 (63 FR 10874). The comment period

closed April 6, 1998.

The schedule recommended in the proposed consent decree would

require EPA to take final action on at least the technical merits of

the petitions by April 30, 1999. The recommendation would further

provide for an alternative schedule under which EPA could delay final

action on the petitions until May 1, 2000. The section 126 rulemaking

schedule is described in more detail in Section V of this notice.

II. Preliminary Analysis of Significant Contribution

A. Background

This section describes EPA's preliminary analysis of whether the

sources identified in the section 126 petitions significantly

contribute to nonattainment problems in the eight petitioning States.

The EPA is relying on information included in the proposed

NOX SIP call on significant contribution for this analysis.

The proposed NOX SIP call significance determination was

based upon a ``weight of evidence'' approach in which a range of

technical information was evaluated against a set of factors, as

described below. This section presents: (1) General information on the

importance of transport to ozone formation, (2) the collective nature

of the contribution of man-made emissions to ozone formation, (3)

factors considered in the weight of evidence approach and findings of

significant contribution in the proposed NOX SIP call, and

(4) analysis of these findings relative to each of the petitions.

B. Regional Ozone and Interstate Transport

The importance of interstate transport to the regional ozone

problem and contributions from upwind States to downwind States is

supported by numerous studies of air quality measurements and modeling

analyses. In general, ozone episodes occur on many spatial and temporal

scales ranging from localized subregional events lasting a day or two,

up to regionwide episodes lasting as long as 10-14 days. The frequency

of localized versus regional episodes depends on the characteristics of

the large-scale meteorological patterns which control the weather in a

particular summer season. In some cases, local controls alone are not

sufficient to reduce ozone during regionwide episodes since a

substantial amount of ozone may be transported into the area from

upwind sources.

The National Research Council report, ``Rethinking the Ozone

Problem in Urban and Regional Air Pollution,'' 1 cites

numerous studies of widespread ozone episodes during summertime

meteorological conditions in the East. These episodes typically occur

when a large, slow-moving, high pressure system envelopes all, or a

large portion of, the Eastern United States. The relatively clear skies

normally associated with such weather systems favor high temperatures

and strong sunlight, which enhances the formation of high ozone

concentrations. In addition, the wind flow patterns can lead to a build

up of ozone concentrations and the potential for long-range ozone

transport. Specifically, winds are generally light in the center of

high pressure systems so that areas under the center may have near-

stagnation conditions resulting in the formation of high ozone levels.

As the high pressure system moves eastward, winds become stronger on

the ``backside'' which increases the potential for these high ozone

levels to be transported to more distant downwind locations. Over

several days, the emissions from numerous small, medium, and large

cities, major stationary sources in rural areas, as well as natural

sources, combine to form a ``background'' of moderate hourly ozone

levels ranging from 80 to 100 ppb 2 of

[[Page 24061]]

which only 30 to 40 ppb may be due to natural sources. Hourly ozone

concentration levels in the range of 80 to 100 ppb and higher have also

been measured by aircraft aloft, across portions of the Northeast

3. Because this level of background ozone is so close to the

ozone NAAQS, even a small amount of locally-generated ozone will result

in an exceedance.

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

\1\ National Research Council, Committee on Tropospheric Ozone

Formation and Measurement, ``Rethinking the Ozone Problem in Urban

and Regional Air Pollution,'' pp. 93-107, National Academy Press,

Washington, DC, 1991.

\2\ Northeast States for Coordinated Air Use Management, ``The

Long-Range Transport of Ozone and Its Precursors in the Eastern

United States,'' March 1997, Boston, MA. (Document is available in

Docket A-96-56 for the NOX SIP call.)

\3\ Ibid.

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C. Collective Contribution to Nonattainment

Ozone is generally the result of cumulative emissions of

NOX and volatile organic compounds (VOC) from hundreds of

stationary sources and millions of vehicles, each of which is likely to

be responsible for much less than 1 percent of the overall inventory of

precursor emissions. A source (or group of sources) should not be

exempted from treatment as a significant contributor merely because it

may be a small part, in terms of total emissions, of the overall

problem when all or most other contributors, individually, are also

relatively small parts of the overall problem. This situation, in which

a number of individual (and sometimes small) sources collectively cause

a significant impact on air quality, is a major aspect of the

contribution issue. As noted above, the moderate-to-high ozone levels

which cover broad regions are the result of emissions from millions of

individual sources interacting over multiple days. The contribution to

downwind nonattainment results from the cumulative contribution from

all sources involved in this process.

In light of these considerations, in the proposed NOX

SIP call, EPA believed it not appropriate to define a bright line test

for significant contribution. Instead, EPA relied on a weight of

evidence approach, based on a range of information, for determining

whether a State makes a significant contribution to downwind

nonattainment.

D. Weight of Evidence Approach and Findings of Significant Contribution

The factors considered by the EPA in the proposed NOX

SIP call for determining whether a contribution is significant include:

the transport distance between the upwind source area and

the downwind problem area;

the amount of the contribution (ppb above the level of the

ozone standard) made to the downwind nonattainment area;

the geographic extent of the contribution downwind; and

the level of emissions in the area upwind of a

nonattainment area.

Details of the methodology and approaches followed by EPA in its

analysis of these factors are documented in the proposed NOX

SIP call.4

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\4\ For a technical description of this modeling, see proposed

NOX SIP call, 62 FR 60,335-60,337.

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In brief, the results of the OTAG air quality, trajectory, and wind

vector analyses indicate that the 1- to 2-day transport distance scale

for the northern portion of the OTAG domain is generally in the range

of 150 to 500 miles. This information was used to identify a set of

States which could potentially contribute to downwind nonattainment.

The amount of contribution and geographic extent of contribution from

upwind areas to downwind nonattainment were quantified by EPA based on

analysis of the OTAG subregional modeling. In these model runs, all

manmade emissions were removed in each of 12 subregions (see Figure 1),

individually. The resulting ``ppb'' contributions were tabulated by

State for areas within the State which (a) currently violate the NAAQS,

based on 1993-1995 ambient monitoring data and (b) which are also

expected to continue to violate the NAAQS, based on future-year 2007

modeling of CAA controls.5 Contributions to 1-hr and 8-hr

nonattainment were considered separately. The modeling results indicate

that emissions from States wholly or partially contained in Subregions

1 through 9 produce large and frequent contributions to downwind

nonattainment for both NAAQS. The EPA then examined NOX

emissions data along with the OTAG trajectory and modeling results to

identify 23 jurisdictions which it proposed to determine make a

significant contribution to nonattainment of both the 1-hr and 8-hr

NAAQS in downwind States. These jurisdictions are: Alabama,

Connecticut, Delaware, District of Columbia, Georgia, Illinois,

Indiana, Kentucky, Maryland, Massachusetts, Michigan, Missouri, New

Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island,

South Carolina, Tennessee, Virginia, West Virginia, and Wisconsin.

BILLING CODE 6560-50-P

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\5\ These areas are considered as having a ``monitored'' plus

``modeled'' ozone problem and are referred to as ``nonattainment''

for the purposes of this discussion.

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[[Page 24062]]

Figure 1. Location of Subregions

[GRAPHIC] [TIFF OMITTED] TP30AP98.000

BILLING CODE 6560-50-C

E. Technical Approach to Preliminary Analysis of Petitions

The EPA is in the process of gathering and reviewing technical

information to determine whether EPA should find that certain large

upwind stationary sources and/or source categories of NOX

named in each petition contribute significantly to nonattainment in the

petitioning States. The EPA expects to propose its findings in a

subsequent notice of proposed rulemaking. The following preliminary

analysis should not be interpreted as a proposed finding of significant

contribution for these petitions.

The EPA has examined the petitions based on the significant

contribution analysis in the proposed NOX SIP call. First,

EPA determined if those source areas identified by the petitioners are

located in States which EPA, in the proposed NOX SIP call,

proposed to determine make a significant contribution to downwind

nonattainment. Second, EPA examined subregional modeling results to

ascertain the predicted contributions to nonattainment relative to the

source areas named in each petition.

The source areas named in petitions submitted by Connecticut,

Massachusetts, New Hampshire, New York, Rhode Island and Vermont are

generally limited to States which were found in the proposed

NOX SIP call to make a significant contribution to downwind

nonattainment. The geographic area covered by each petition is shown in

Figure 2. Specifically, the New York and Connecticut petitions cover

sources in areas extending west and south of each of these States up to

the western boundaries of Subregions 2 and 6 and the southern

boundaries of Subregions 6 and 7. For the New York petition, this

includes all or portions of the following States: Delaware, Indiana,

Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio,

Pennsylvania, Tennessee, Virginia, and West Virginia. In addition to

these States, the Connecticut petition also covers sources in portions

of New York. The Massachusetts and Rhode Island petitions name specific

sources in individual counties within the Subregion 6 States of

Indiana, Kentucky, Ohio, and West Virginia. The New Hampshire petition

includes sources in upwind portions of the Ozone Transport Region and

in Subregions 1 through 7, which includes all or portions of

Connecticut, Delaware, District of Columbia, Illinois, Indiana,

Kentucky, Maryland, Massachusetts, Michigan, Missouri, New Jersey, New

York, Ohio, Pennsylvania, Rhode Island, Virginia, West Virginia, and

Wisconsin. Also, the New Hampshire petition includes a portion of

eastern Iowa (which is part of Subregion 1) which EPA, in the proposed

NOX SIP call, proposed to determine did not make a

significant contribution to downwind nonattainment problems. The

Vermont petition named sources in upwind portions of the Ozone

Transport Region and in all or portions of Illinois, Indiana, Kentucky,

Michigan, North Carolina, Ohio, Tennessee, Virginia, and West Virginia.

Further, the petition notes that it intends to cover additional

unidentified sources within an area extending 1,000 miles Southwest of

Vermont if EPA determines the sources to be significantly contributing

to Vermont. This broader geographic area includes South Carolina and

portions of Alabama, Georgia, Missouri, and Wisconsin. The Vermont

petition also

[[Page 24063]]

includes a portion of eastern Iowa which EPA, in the proposed

NOX SIP call, proposed to determine did not make a

significant contribution to downwind nonattainment problems. The

Pennsylvania petition named Alabama, Georgia, Illinois, Indiana,

Kentucky, Michigan, Missouri, North Carolina, Ohio, South Carolina,

Tennessee, Virginia, West Virginia, and Wisconsin. However, the

Pennsylvania petition also named several States which EPA, in the

proposed NOX SIP call, proposed to determine did not make a

significant downwind contribution including: Arkansas, Iowa, Louisiana,

Minnesota, and Mississippi. The petition from Maine named source

categories for sources in upwind portions of the Ozone Transport Region

and generally within all or portions of Subregions 2, 3, 4, 6, and 7.

The Maine petition includes all or parts of the following

jurisdictions: Connecticut, Delaware, District of Columbia, Maryland,

Massachusetts, New Jersey, New York, North Carolina, Ohio,

Pennsylvania, Rhode Island, Virginia, and West Virginia. The Maine

petition also identified New Hampshire and Vermont as containing

sources which contribute significantly to nonattainment in Maine, but

in the proposed NOX SIP call these States were not found to

make a significant contribution downwind.

BILLING CODE 6560-50-P

[[Page 24064]]

Figure 2a. Areas Covered by the Section 126 Petitions: New York

(Top) and Connecticut (Bottom)

[GRAPHIC] [TIFF OMITTED] TP30AP98.001

[[Page 24065]]

Figure 2b. Areas Covered by the Section 126 Petitions: Pennsylvania

(Top), Massachusetts and Rhode Island (Bottom)

[GRAPHIC] [TIFF OMITTED] TP30AP98.002

[[Page 24066]]

Figure 2c. Areas Covered by the Section 126 Petitions: Maine (Top)

and New Hampshire (Bottom)

[GRAPHIC] [TIFF OMITTED] TP30AP98.003

[[Page 24067]]

Figure 2d. Areas Covered by the Section 126 Petitions: Vermont

[GRAPHIC] [TIFF OMITTED] TP30AP98.004

BILLING CODE 6560-50-C

Although there are differences between the petitions in terms of

the sources named as significant contributors, the petitions have

generally targeted NOX emissions from utility and large non-

utility (>250 mmBtu/Hr) fossil fuel-fired boilers. In this regard,

analyzing the contributions from these emissions categories (i.e.

utility and large non-utilities) is somewhat complicated because the

subregional modeling in the proposed NOX SIP call quantifies

the contributions from all man-made emissions in each subregion, not

just these categories. It is likely that the emissions from these

categories produce downwind contributions which are at least roughly

proportional to their relative amount of emissions, compared to the

total man-made emissions in the subregion. As shown in Table 1,

NOX emissions from these categories combined, range from 33

percent to 60 percent of the total 2007 projected NOX

emissions within Subregions 1-9 6. Thus, the utility and

large non-utility emissions combined represent a relatively large

portion of total NOX emissions within these nine subregions.

The collective contribution approach discussed above suggests that if

total emissions in an upwind area are found to make a significant

contribution to downwind nonattainment, then the individual components

of the areas' emissions are considered to be part of the significant

contribution. Thus, the subregional modeling results are relevant to

the source categories identified in the petitions because these

categories are a large component of the total man-made NOX

emissions and are therefore expected to produce contributions in

proportion to their emissions.

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\6\ Note that these subregions are important because all man-

made emissions in these subregions were found to make large and

frequent contributions to downwind nonattainment.

Table 1.--Percent of total subregion NOX emitted by Utility and Large

Non-Utility Sources (OTAG 2007 Base Case)

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

Subregion Percent

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

1............................................................ 39

2............................................................ 37

3............................................................ 46

4............................................................ 33

5............................................................ 60

6............................................................ 53

7............................................................ 39

8............................................................ 36

9............................................................ 39

10........................................................... 38

11........................................................... 29

12........................................................... 32

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

Table 2 provides the contributions to 1-hr and 8-hr nonattainment

in each of the petitioning States from those upwind subregions which

(a) correspond to upwind areas named in the petitions and (b) contain

States which were found to make a significant contribution to downwind

nonattainment in the proposed NOX SIP call. These

contributions are based on zero-out modeling of all man-made emissions

in the subregion. Data are provided for the areas which have both

``monitored'' violations and ``modeled'' concentrations exceeding the

NAAQS. This information was extracted from Tables II-10 and II-12 in

the proposed NOX SIP call. Note that 2 ppb is the lower

range of the tabulated contributions, following the convention adopted

by OTAG.

These results are discussed for each petition:

New York--This petition named sources in Subregions 2, 6, and 7.

The subregional modeling results indicate a number of contributions in

the range of 5-10 ppb or more from each of these subregions to both 1-

hr and 8-hr nonattainment in New York. Contributions of 15-20 ppb are

predicted from Subregion 7 to 1-hr nonattainment and from Subregions 2

and 7 to 8-hr nonattainment.

Connecticut--Subregions 2, 6, and 7 were named as source areas by

Connecticut. For the both 1-hr and 8-hr nonattainment, frequent

contributions are predicted from each of these subregions. The

magnitude of the contributions ranges up to 15-20 ppb for 1-hr

nonattainment and up to 10-15 ppb for 8-hr nonattainment.

[[Page 24068]]

Table 2.--Contributions to 1-Hour and 8-Hour Nonattainment in Each

Petitioning State From Selected Subregions (Sub)

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

Impacts (ppb) Sub 2 Sub 6 Sub 7

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

NEW YORK

Contributions to 1-Hour Nonattainment

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

2-5.............................. 47 41 30

5-10............................. 6 16 52

10-15............................ 0 4 15

15-20............................ 0 0 4

20-25............................ 0 0 0

>25.............................. 0 0 0

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

Contributions to 8-Hour Nonattainment

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

2--5............................. 25 15 39

5--10............................ 4 3 16

10-15............................ 4 0 4

15-20............................ 0 0 0

20-25............................ 0 0 0

>25.............................. 0 0 0

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

CONNECTICUT

Contributions to 1-Hour Nonattainment

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

2-5.............................. 65 4 50

5-10............................. 3 9 31

10-15............................ 0 0 8

15-20............................ 0 0 2

20-25............................ 0 0 0

>25.............................. 0 0 0

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

Contributions to 8-Hour Nonattainment

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

2-5.............................. 19 44 36

5-10............................. 0 2 16

10-15............................ 0 0 1

15-20............................ 0 0 0

20-25............................ 0 0 0

>25.............................. 0 0 0

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

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

Impacts (ppb) Sub 1 Sub 2 Sub 5 Sub 6 Sub 7 Sub 8 Sub 9

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

PENNSYLVANIA

Contributions to 1-Hour Nonattainment

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

2-5.......................................................... 0 1 2 4 3 4 0

5-10......................................................... 0 0 0 4 2 0 0

10-15........................................................ 0 0 0 2 13 0 0

15-20........................................................ 0 0 0 0 11 0 0

20-25........................................................ 0 0 0 0 2 0 0

>25.......................................................... 0 0 0 0 7 0 0

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

Contributions to 8-Hour Nonattainment

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

2-5.......................................................... 14 42 71 72 57 13 0

5-10......................................................... 0 26 10 53 66 0 0

10-15........................................................ 0 6 0 40 30 0 0

15-20........................................................ 0 2 0 10 4 0 0

20-25........................................................ 0 5 0 7 0 0 0

>25.......................................................... 0 1 0 0 0 0 0

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

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

Sub 6 1- Sub 6 8-

Impacts (ppb) hour hour

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

MASSACHUSETTS

Contributions to 1-hour and 8-hour Nonattainment

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

2-5........................................... 0 22

5-10.......................................... 0 0

10-15......................................... 0 0

15-20......................................... 0 0

20-25......................................... 0 0

[[Page 24069]]

>25........................................... 0 0

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

RHODE ISLAND

Contributions to 1-hour and 8-hour Nonattainment

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

2-5........................................... 0 1

5-10.......................................... 2 0

10-15......................................... 0 0

15-20......................................... 0 0

20-25......................................... 0 0

>25........................................... 0 0

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

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

Impacts (ppb) Sub 2 Sub 3 Sub 4 Sub 6 Sub 7

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

MAINE

Contributions to 1-Hour Nonattainment

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

2-5............................................ 0 7 0 0 0

5-10........................................... 0 0 2 0 0

10-15.......................................... 0 0 15 0 0

15-20.......................................... 0 0 0 0 0

20-25.......................................... 0 0 0 0 0

>25............................................ 0 0 0 0 0

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

Contributions to 8-Hour Nonattainment

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

2-5............................................ 8 28 0 0 3

5-10........................................... 0 0 20 0 0

10-15.......................................... 0 0 6 0 0

15-20.......................................... 0 0 4 0 0

20-25.......................................... 0 0 0 0 0

>25............................................ 0 0 0 0 0

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

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

Impacts (ppb) Sub 1 Sub 2 Sub 3 Sub 4 Sub 5 Sub 6 Sub 7

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

NEW HAMPSHIRE

Contributions to 1-Hour Nonattainment

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

2-5.......................................................... 0 0 4 8 0 0 0

5-10......................................................... 0 0 0 1 0 0 0

10-15........................................................ 0 0 0 11 0 0 0

15-20........................................................ 0 0 0 3 0 0 0

20-25........................................................ 0 0 0 1 0 0 0

25......................................................... 0 0 0 1 0 0 0

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

Contributions to 8-Hour Nonattainment

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

2-5.......................................................... 0 8 12 2 0 0 0

5-10......................................................... 0 0 1 6 0 0 0

10-15........................................................ 0 0 0 0 0 0 0

15-20........................................................ 0 0 0 0 0 0 0

20-25........................................................ 0 0 0 0 0 0 0

>25.......................................................... 0 0 0 0 0 0 0

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

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

Impacts (ppb) Sub 1 Sub 2 Sub 3 Sub 4 Sub 5 Sub 6 Sub 7 Sub 8 Sub 9

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

VERMONT

Contributions to 1-Hour Nonattainment

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

2-5................................ 0 0 0 0 0 0 0 0 0

5-10............................... 0 0 0 0 0 0 0 0 0

10-15.............................. 0 0 0 6 0 0 0 0 0

15-20.............................. 0 0 0 0 0 0 0 0 0

20-25.............................. 0 0 0 0 0 0 0 0 0

2 ppb are predicted from Subregions

1 or 9. For 8-hr nonattainment, the largest contributions are from

Subregions 2, 6, and 7. The magnitude of the contributions from these

three subregions is in the range of 15-20 ppb or more. No contributions

to 8-hr nonattainment >2 ppb were predicted from Subregion 9.

Massachusetts--This petition named sources within a portion of

Subregion 6. However, no contributions >2 ppb were predicted to 1-hr

nonattainment from this subregion to nonattainment in Massachusetts.

Contributions to 8-hr nonattainment from this subregion were in the

range of 2-5 ppb.

Rhode Island--This petition also named sources within a portion of

Subregion 6. Contributions from this subregion to 1-hr nonattainment

were 5-10 ppb. The predicted contribution to 8-hr nonattainment from

this subregion was in the range of 2-5 ppb.

Maine--Of the five subregions (i.e. Subregions 2, 3, 4, 6, and 7)

which are associated with sources named in Maine's petition,

contributions to 1-hr nonattainment were predicted from Subregions 3

and 4, with contributions to 8-hr nonattainment from Subregions 2, 3,

4, and 7. The largest contributions were from Subregion 4 at 10-15 ppb

for 1-hr contributions and 15-20 ppb for 8-hr contributions. No

contributions were predicted from Subregion 6 to either 1-hr or 8-hr

nonattainment.

New Hampshire--Subregions 1 through 7 are associated with sources

named in the New Hampshire petition. Of these subregions, however, only

Subregions 3 and 4 are predicted to contribute >2 ppb to 1-hr

nonattainment with the largest contributions, >25 ppb, from Subregion

4. Subregions 2, 3, and 4 are predicted to contribute >2 ppb to 8-hr

nonattainment with contributions of 10-15 ppb from Subregion 4.

Vermont--There is no current or predicted ``nonattainment'' in

Vermont, based on 1993-1995 ambient monitoring data and/or model

predictions from the OTAG 2007 Base Case.

F. Results of Preliminary Assessment of Section 126 Petitions

As indicated above, the purpose of this preliminary analysis is not

to make a proposed finding of ``significance'' relative to the sources

and/or source categories named in each petition. Rather, the intent is

to identify the contributions to 1-hr and 8-hr nonattainment in each

State based on information developed in the proposed NOX SIP

call as part of the significant contribution determination. As a whole,

the eight petitions cover sources in States within OTAG Subregions 1,

2, 3, 4, 5, 6, 7, 8, 9, 11, and 12, as well as in Massachusetts, New

Hampshire, Rhode Island, and Vermont. Of these, emissions in States

covered by Subregions 1, 2, 3, 4, 5, 6, 7, 8, and 9 along with

Massachusetts and Rhode Island were proposed, by EPA, to make a

significant contribution to downwind nonattainment in the

NOX SIP call.

This preliminary assessment indicates that sources in Subregions 2,

3, 4, 5, 6, and 7 contribute to 1-hr nonattainment in at least one of

the petitioning States. The 16 States and the District of Columbia that

are wholly or partially within these subregions include: Connecticut,

Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, Missouri,

New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee

7, Virginia, and West Virginia. Based on these results,

EPA's preliminary assessment indicates that the source categories

identified by the petitions that are located within these 16 States and

the District of Columbia make a significant contribution to

nonattainment of the 1-hr standard. In addition, in the proposed

NOX SIP call, EPA proposed that Massachusetts and Rhode

Island be considered significant contributors to nonattainment in

downwind States, including Maine and New Hampshire. Accordingly,

sources in these two States are preliminarily included in this

assessment as significant contributors.

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

\7\ Tennessee is included because it is part of Subregions 5 and

6. Tennessee is also part of Subregion 9 which, based on the

subregional modeling, does not contribute to 1-hr nonattainment in

any of the petitioning States.

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

Sources in Subregions 1, 2, 3, 4, 5, 6, 7, and 8 contribute to 8-hr

nonattainment in at least one of the petitioning States. However, it

should be noted that sources in only Subregions 1, 2, 5, 6, 7, and 8

contribute to 8-hr nonattainment in one of the three petitioning States

(Massachusetts, Pennsylvania, and Vermont) that requested EPA to make a

finding under the 8-hr NAAQS. The 15 States and the District of

Columbia which are wholly or partially within the subregions

contributing to 8-hr nonattainment in Pennsylvania (i.e. subregions 1,

2, 5, 6, 7, and 8) and Massachusetts (i.e., subregion 6) and which were

proposed to make a significant contribution to downwind nonattainment

in the proposed NOX SIP call are Delaware, Georgia

8, Illinois, Indiana, Kentucky, Maryland, Michigan,

Missouri, North Carolina, Ohio, South Carolina, Tennessee 9,

Virginia, West Virginia, and Wisconsin. The EPA's preliminary

assessment indicates that the source categories identified by the

petitions that are located within these States make a significant

contribution to nonattainment of the 8-hr standard (or interfere with

maintenance of that standard) in the petitioning States. Because there

are no current or predicted nonattainment problems in Vermont, there

are no upwind source areas that are included in the preliminary

assessment of significant contribution due to the Vermont petition.

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

\8\ Georgia is included because it is part of Subregion 8.

Georgia is also part of Subregion 9 which, based on subregional

modeling, does not contribute to 8-hr nonattainment in any of the

petitioning States.

\9\ Tennessee is included because it is part of Subregions 5 and

6. Tennessee is also part of Subregion 9 which, based on the

subregional modeling, does not contribute to 1-hr nonattainment in

any of the petitioning States.

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

As noted above, the petitioning States submitted technical data in

addition to the zero-out modeling data just described. The EPA is

continuing to review the States' technical data, as well as other data

relevant to the petitions, to develop a proposed finding for each

petition.

By comparison to the above section 126 analysis, in the proposed

NOX SIP call, EPA determined that sources in 22 States and

the District of Columbia are significantly contributing to 1-hr and 8-

hr nonattainment problems. In the proposed NOX SIP call, EPA

considered nonattainment problems throughout the Eastern half of the

United States. In the section 126 rulemaking action, EPA is limited to

considering nonattainment problems in the 8 petitioning States, which

are all located in the Northeast.

III. Preliminary Assessment of Emission Limitations and Compliance

Schedules

The EPA is currently analyzing each of the section 126 petitions to

determine whether to propose to grant the States' requests for findings

of significant contribution or to deny the petitions; as a result, EPA

is not prepared to propose a response at this time. If EPA does propose

to find that certain source categories described in one or more of the

petitions significantly contribute to nonattainment or interfere with

maintenance of an ozone standard in a downwind State, then EPA would be

[[Page 24071]]

authorized to propose new control requirements for those sources.

The EPA anticipates that any requirements it may eventually propose

would resemble the controls described in the proposed NOX

SIP call. As noted above, it is EPA's preliminary view that the

NOX SIP call rulemaking overlaps considerably with EPA

action on the section 126 petitions because both are governed by the

requirements of section 110(a)(2)(D) with respect to ozone for a

similar geographic region. The EPA intends to employ the extensive

analysis in the proposed NOX SIP call action, including the

NOX Budget Trading Program (described in a supplemental

rulemaking), in developing any proposed remedy for the petitions. Thus,

if EPA were to propose to grant any or all of the section 126

petitions, EPA's response would include the proposal of a cap-and-trade

program. The EPA expects to base any remedy granted under section 126

on the assumption of a uniform control level for the covered universe

of sources, based on the criteria delineated in Section III.C. The

following sections outline the remedies sought by petitioners and

discuss how EPA would address the petitions if it were to propose

granting any or all of them.

A. Remedies Recommended in Petitions

The eight petitions submitted to EPA collectively cover the 23

jurisdictions named by EPA in the proposed NOX SIP call, as

well as seven additional States that were not named (Iowa, New

Hampshire, Vermont, Arkansas, Louisiana, Mississippi, and Minnesota).

This section focuses on the source categories named in the petitions as

significant contributors and the requested relief sought by

petitioners.

Several of these petitions reference the OTC NOX MOU,

agreed to by eleven Northeastern States and the District of Columbia to

implement NOX emissions reductions across the Ozone

Transport Region (OTR). The OTC NOX MOU signatories were

Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode

Island, New York, New Jersey, Pennsylvania, Maryland, Delaware, and the

District of Columbia. The OTC NOX MOU commits these States

to reductions in ozone season NOX emissions from large

utility and industrial combustion sources through implementation of a

phased-in regionwide cap-and-trade program. Specifically, affected

sources in the OTR are fossil fuel-fired boilers and other indirect

heat exchangers with a maximum rated heat input capacity of 250 mmBtu/

hr or greater, and electric generating facilities with a rated output

of 15 megawatts (MW) or greater.

The OTC NOX MOU established emissions reduction

requirements for these sources in the OTR, creating emissions budgets

for 1999 (Phase II) and 2003 (Phase III). (Phase I required the

installation of reasonably available control technology (RACT) by May

1995.) The requirements vary across three control zones in the region:

an inner zone ranging from the District of Columbia metropolitan area

northeast to southeastern New Hampshire (covering all contiguous

moderate and above nonattainment areas), an outer zone ranging out from

the inner zone to western Pennsylvania, and a northern zone which

includes much of northern New York and northern New England (including

most of New Hampshire).

For Phase II of the OTC NOX MOU, which begins in 1999,

sources in the inner zone are subject to emissions reduction

requirements based on the less stringent of an emission rate of 0.20

pounds NOX per million British thermal units of heat input

(lb/mmBtu), or a 65 percent reduction from 1990 NOX levels;

sources in the outer zone are subject to emissions reduction

requirements based on the less stringent of a 0.20 lb/mmBtu rate, or a

55 percent reduction from 1990 NOX levels; and sources in

the northern zone must adopt RACT. The Phase III requirements, which

may be altered by a ``mid-course correction'' based on new information

such as refined air quality modeling, establish emissions reduction

requirements based on the lesser of a 0.15 lb/mmBtu rate, or a 75

percent reduction from 1990 levels for sources in both the inner and

outer zones. Northern zone sources would face emissions reduction

requirements based on the lesser of a 0.20 lb/mmBtu rate, or a 55

percent reduction from 1990 levels. In both Phase II and III in all

three zones, electric generating facilities less than 250 mmBtu/hr but

above 15 MW are subject only to a capping of emissions at 1990 levels

for purposes of budget calculation. However, individual States

determine specific allocations for each source from their overall

budget based on independent allocation formulas, and thus the

allocation for these sources will not necessarily reflect this level.

All of the section 126 petitions, except Pennsylvania's,

Massachusetts' and Rhode Island's, named States in the OTR as

significant contributors. However, only New Hampshire and Maine

requested relief beyond OTC NOX MOU requirements from

sources in the OTR. It may be noted that the OTC NOX MOU

requirements are not federally enforceable at this time since these

requirements have not been adopted into SIPs.

Table 3 shows, by petitioner, the named source categories, the

named geographic areas, and the requested remedy sought by the

petitioning States. Please note that the named source categories are

worded as they appear in the petitions.

Table--3. EPA's Summary of Section 126 Petitions

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

Named source

State categories Named states Request

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

NY................ Fossil fuel- All or parts of Establish, at a

fired boilers IN, KY, MI, NC, minimum,

or indirect OH, TN, VA, WV. emission

heat exchangers Also lists OTR limitations and

with a maximum States DE, MD, a schedule of

heat input rate NJ, PA, but compliance

of 250 mmBtu/hr does not consistent with

or greater and request relief. the OTC NOX

electric MOU, and a cap-

utility and-trade

generating program.

facilities with

a rated output

of 15 MW or

greater.

CT................ Fossil fuel- All or parts of Establish, at a

fired boilers IN, KY, MI, NC, minimum,

or other OH, TN, VA, WV. emission

indirect heat Also lists OTR limitations and

exchangers with States DE, MD, a schedule of

a maximum gross NJ, NY, PA, but compliance

heat input rate does not consistent with

of 250 mmBtu/hr request relief. the OTC NOX

or greater and MOU, and a cap-

electric and-trade

utility program.

generating

facilities with

a rated output

of 15 MW or

greater.

[[Page 24072]]

PA................ Fossil fuel- AL, AR, GA, IL, Establish

fired indirect IN, IA, KY, LA, emission

heat exchange MI, MN, MS, MO, limitations and

combustion NC, OH, SC, TN, a compliance

units with a VA, WV, WI. schedule for a

maximum rated cap-and-trade

heat input program

capacity of 250 requiring: (a)

mmBtu/hr or Seasonal

greater, and reductions of

fossil fuel- the less

fired electric stringent of

generating 55% from 1990

facilities baseline

rated at 15 MW levels, or 0.20

or greater. lbs/mmBtu,

beginning by

May 1999; (b)

if necessary,

seasonal

reductions of

the less

stringent of

75% from 1990

baseline

levels, or 0.15

lbs/mmBtu,

beginning by

May 2003; (c)

such additional

reductions as

necessary

beginning in

2005.

MA................ Electricity Parts of IN, KY, Establish

generating OH, WV. Also emissions

plants. names sources limitation of

in OTR States, 0.15 lbs/mmBtu

but does not or 1.5 lbs/MWh

request relief. and a

compliance

schedule.

RI................ Electricity Parts of IN, KY, Establish

generating OH, WV. Also emissions

plants. names sources limitation of

in OTR States, 0.15 lbs/mmBtu

but does not or 1.5 lbs/MWh

request relief. and a

compliance

schedule.

ME................ Electric Sources within Establish

utilities and 600 miles of compliance

steam- Maine's ozone schedule and

generating nonattainment emissions

units with a areas (all or limitation of

heat input parts of NC, 0.15 lbs/mmBtu

capacity of 250 OH, VA, WV, and for electric

mmBtu/hr or OTR States CT, utilities and

greater. DE, DC, MD, MA, the OTC NOX MOU

NJ, NY, NH, PA, level of

RI, VT). control for

steam

generating

units, in a

multi-state cap-

and-trade NOX

market system.

NH................ Fossil fuel- All or parts of Establish

fired indirect IL, IN, IA, KY, compliance

heat exchange MI, MO, OH, VA, schedule and

combustion WV, WI. Also emission

units and names sources limitations no

fossil fuel- in OTR States less stringent

fired electric CT, DE, DC, MD, than: (a) Phase

generating MA, NJ, NY, PA, III OTC NOX MOU

facilities RI. reductions; and/

which emit ten or (b) 85%

tons of NOX or reductions from

more per day. projected 2007

baseline; and/

or (c) An

emission rate

of 0.15 lbs/

mmBtu.

VT................ Fossil fuel- All or parts of Establish

fired electric IL, IN, KY, MI, emissions

utility NC, OH, TN, VA, limitation of

generating WV. Also AL GA, 0.15 lbs/mmBtu

facilities with IA, MO, SC, WI. or 1.5 lbs/MWh

a maximum gross Also names OTR and a

heat input rate sources, but compliance

of 250 mmBtu/hr does not schedule.

or greater and request relief.

potentially

other

unidentified

major sources.

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

The petitions vary somewhat with regard to the universe of sources

they name as significant contributors to their ozone problem. Three of

the petitioning States--New York, Connecticut, and Pennsylvania--name

the same universe of sources covered by the OTC NOX MOU. New

Hampshire names fossil fuel-fired indirect heat exchangers and electric

generating facilities as well, but uses a tonnage applicability cut-off

to include only sources that emit ten tons or more of NOX

per day. Massachusetts and Rhode Island name ``electricity generating

plants'' as the universe requiring controls, without naming a specific

size cutoff. Finally, Vermont names fossil fuel-fired electric

generating facilities of 250 mmBtu or greater.

The petitions also vary regarding the remedy requested. Though all

of the petitions request that EPA impose controls in terms of various

emissions limitations, four of the eight petitions--New York,

Connecticut, Pennsylvania, and Maine--also request that a trading

program with a cap, or emissions budget, be established to implement

these controls. Massachusetts, Rhode Island, and Vermont request that

limitations be established for all named sources at 0.15 lbs/mmBtu,

which is the level of control for electric generating facilities used

to calculate the budget in the proposed NOX SIP call. Maine

requests an emission limitation of 0.15 lbs/mmBtu for named electric

utilities, but the OTC NOX MOU level of control for named

steam generating units. New Hampshire requests emission limitations no

less stringent than the Phase III OTC NOX MOU reductions,

and/or 85 percent reductions from projected 2007 baseline, and/or an

emission rate of 0.15 lbs/mmBtu. New York, Connecticut and Pennsylvania

all request that emissions limitations consistent with the OTC

NOX MOU be imposed on named sources, but only Pennsylvania

specifies the outer zone requirements; neither Connecticut nor New York

specifies a zone. The level of reduction requested for 2003 in these

three petitions specifying basic OTC NOX MOU requirements

appears to be less stringent than that in the petitions requesting 0.15

lbs/mmBtu, since the remedy requested would allow sources the option to

implement the less stringent of a percentage reduction or an emission

rate. In terms of smaller sources named by these three States,

Pennsylvania's petition appears to seek somewhat more reductions than

the OTC NOX MOU by requiring the same emission level for

electric generating facilities less than 250 mmBtu/hr and greater than

15MW as for larger units. Both Connecticut and New York appear to be

aligned with the OTC NOX MOU in seeking only a capping of

emissions at 1990 levels for these smaller sources.

New York, Connecticut and Pennsylvania recommend a date for the

implementation by sources of control requirements: the OTC

NOX MOU schedule of compliance, including its phased-in

controls and implementation dates of 1999 and 2003. The remaining

States request that EPA establish a schedule of compliance requiring

sources to comply with emission limitations as expeditiously as

practicable.

B. EPA's Analytic Approach

If EPA proposes to grant a section 126 petition, and thereby

proposes to find that identified sources either contribute

[[Page 24073]]

significantly to nonattainment or interfere with maintenance in the

petitioning State, EPA intends to propose emissions reduction

requirements for those sources. The EPA would not, however, propose

controls on sources other than those named in the petitions under

section 126.

To determine the level of requirements to propose, EPA intends to

consider the remedies described in the petitions (see III.A. of this

section), relevant comments received in a timely manner on today's

notice, the availability and cost effectiveness of potential control

measures, the ambient impact of the control measures, OTAG's

recommendations, and the similar efforts EPA is already undertaking to

address the transport problem in the proposed NOX SIP call.

In developing proposed budgets for States as part of the proposed

NOX SIP call, EPA assumed the application of a uniform

NOX emission rate of 0.15 lb/mmBtu to projected electricity

generating activity levels at large electric generating devices, and 70

percent control for other large stationary sources. The EPA's rationale

for assuming these control levels is explained in the proposed

NOX SIP call, and is based upon cost effectiveness, OTAG

recommendations, the collective contribution approach described in the

NOX SIP call notice, equity concerns, EPA's air quality

modeling approach, and concerns over emissions shifting (62 FR 60342).

The EPA believes that it needs to coordinate and integrate the

proposed NOX SIP call and the section 126 rulemaking to the

greatest extent possible in order to reduce the possibility that

affected sources would be faced with inconsistent or conflicting

control requirements and deadlines. Such inconsistency could hamper the

sources' abilities to plan and achieve the needed reductions as cost-

effectively as possible. Further discussion of the proposed integration

of these two efforts is included in Section IV.B.

The EPA believes that promoting consistent requirements among the

States affected by the NOX SIP call and the section 126

rulemaking would greatly facilitate participation in a common trading

program to address the transport problem on a regional scale.

Therefore, EPA anticipates that any section 126 proposed rulemaking

will attempt to coordinate the schedules for the SIP revisions, and the

implementation of reductions required under the proposed NOX

SIP call, with the schedule for completing the rulemaking on the

section 126 petitions in accordance with the consent decree proposed by

the petitioning States and EPA.

In determining the appropriate control requirements to propose in

response to the granted section 126 findings, EPA would use the same

cost effectiveness approach that it used in the proposed NOX

SIP call with respect to stationary sources. In the upcoming proposed

rulemaking for the section 126 petitions, EPA intends to present

analyses conducted for the proposed NOX SIP call regarding

the feasibility, performance, and cost of NOX controls, and

factor this into the control level recommendation. The application of

this control level would determine the allocation of NOX

allowances each source would receive under a trading program.

The EPA's preliminary assessment is that it would propose the

control levels assumed in formulating the budgets for the proposed

NOX SIP call in response to the section 126 petitions. In

addition, EPA's preliminary assessment is that it would propose the

full 3-year period for sources to implement those controls. Comments

are sought on these approaches, as indicated in Section IV of today's

notice.

Also in the proposal, EPA intends to use the Integrated Planning

Model (IPM) to explore the cost of achieving emission levels among

sources affected by the section 126 rulemaking. The EPA uses the IPM to

evaluate the emissions and cost impacts expected to result from the

requirements of the proposed NOX SIP call on the electric

power generation sector. The IPM has been used for over 10 years to

address a wide range of electric power market issues, including

environmental policy and compliance planning, and undergoing frequent

and extensive review and validation. The EPA has used IPM for many

analytic efforts, most recently as a tool to analyze alternative

trading and banking programs during the OTAG process in 1996 and 1997,

and to analyze the economic impacts of the proposed NOX SIP

call.

C. Intent To Implement Controls Through Cap-and-Trade Program

A cap-and-trade program is expected to be the most cost-effective

approach to achieving any emissions reductions required under section

126. Under such a program, the sources for which EPA proposes a

positive finding would be limited to specified amounts of emissions as

a group, but would be authorized to trade emissions. Four of the eight

petitioning States (New York, Connecticut, Pennsylvania, and Maine)

requested that EPA establish such a trading program to implement the

required reductions. The EPA is proposing a framework for a cap-and-

trade program in a supplemental notice to the proposed NOX

SIP call to facilitate cost effective achievement of the proposed

reductions, (``Purpose of the NOX Budget Trading Program''

and ``Benefits of Participating in the NOX Budget Trading

Program''). If one or more of the section 126 petitions are granted, a

remedy can be integrated with this program, consolidating the two

actions and lowering the cost of compliance.

The EPA anticipates defining all the program elements for a cap-

and-trade program in the proposed rulemaking for the section 126

petitions, including a list of covered sources, monitoring requirements

for these sources, an allowance allocation methodology, source-specific

NOX allowance allocations for the initial control period,

timing of the program, and permitting requirements.

IV. Legal and Policy Issues

A. Issues Involving Significant Contribution

As discussed earlier in Sections I.A and I.C. of this notice, both

the section 126 petitions and proposed NOX SIP call are

premised on a violation of section 110(a)(2)(D) of the CAA. This

section requires that SIPs prohibit emissions that contribute

significantly to nonattainment or that interfere with maintenance

downwind.10 Because of the link between section 126 and

section 110, EPA should use similar criteria in its analysis for each

case.

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

\10\ As indicated earlier, it is EPA's preliminary

interpretation that the cross reference in section 126(b) to section

110(a)(2)(D) should be treated as a cross reference to sentence (i)

of the provision, which includes the significant contribution test.

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

As described in the proposed NOX SIP call and earlier in

this notice, EPA used a ``weight of evidence'' approach in determining

whether sources in one State significantly contributed to ozone

nonattainment in another State. This approach applies multiple factors

which focus on emission quantities and air quality impacts, as well as,

under certain formulations, control costs. It is EPA's intent to use

this same ``weight of evidence'' approach in determining whether or not

to grant any of the section 126 petitions.

The EPA is soliciting comment on whether there is any reason why it

should rely on a different approach and, if so, what that approach

should be. It should be noted that EPA is not soliciting comment on the

issues of significant contribution discussed in the proposed

NOX SIP call. It is only asking

[[Page 24074]]

for comment on whether or not the same approach should be used in

evaluating the section 126 petitions.

Additionally, EPA is asking for comment on whether it should focus

on the contributions to the downwind areas of named sources in a each

petition, considered by themselves, or whether EPA should consider the

named sources in one petition in conjunction with the named sources in

all the other petitions under a type of ``collective contribution''

approach. In the latter case, even if the emissions from the named

sources in a single petition have a relatively minor impact on downwind

areas, the emissions may be considered significant if they are

considered as part of a broader set of emissions from all the sources

named in all the petitions, which together have a larger impact on the

same downwind areas.

B. Issues Involving Trading

The EPA is proposing the framework for a cap-and-trade program in

its supplemental notice to the proposed NOX SIP call. As

noted previously, EPA believes a trading program should be part of any

remedy it proposes in response to the section 126 petitions. At this

time, EPA is not prepared to define the scope of the trading program it

would propose in response to the section 126 petitions, but would like

to solicit comment on some important issues regarding trading program

development.

First, EPA believes that when a petition identifies as significant

contributors both named sources and generally identified source

categories, EPA may make findings of significant contribution, apply

controls, and implement a trading program, with respect to all sources

within those source categories in geographic areas named in the

petitions. Second, EPA foresees that the proposed response to the

section 126 petitions would resemble the proposed NOX Budget

Trading Program in EPA's supplemental proposed NOX SIP call

and that the two efforts could be integrated into one common trading

program. Under this common trading program, sources subject to controls

under the section 126 rulemaking, or sources in States choosing to

participate in the NOX Budget Trading Program in response to

the NOX SIP call, or sources in States subject to a Federal

implementation plan (FIP) under the NOX SIP call, could

trade with one another under a regionwide NOX cap. The EPA

solicits comments as to whether the trading program that EPA would

propose in response to the section 126 petitions should be essentially

the same trading program proposed by EPA in its proposed NOX

SIP call, and whether there are any reasons why the programs should not

be integrated.

In order to address the ozone transport problem in the most cost-

effective manner, EPA believes one trading program can and should be

established in response to both the final NOX SIP call and

the section 126 petitions. The EPA believes that there are two

principal criteria that sources must meet to be eligible to participate

in a cap-and-trade program, as stated in the supplemental notice for

the proposed NOX SIP call. The first criterion requires that

sources be able to account accurately and consistently for all of their

emissions to ensure the trading program goal of maintaining emissions

within a cap. The second criterion for participation in a trading

program is the ability to identify a responsible party for each

regulated source who would be accountable for demonstrating and

ensuring compliance with the program's provisions. The EPA solicits

comment on these, or additional, criteria that should be considered.

Assuming that these criteria are met, and consistent control levels are

used in setting emission requirements for the affected sources, EPA

supports the establishment of a common trading program for all sources

in States subject to the final NOX SIP call who hold EPA-

approved SIPs and choose to participate, and all sources subject to any

section 126 remedy established by EPA. The EPA would administer this

common trading program in collaboration with affected States. The EPA

anticipates proposing to establish the geographic boundaries of the

common trading program as those States submitting SIPs in response to

the final NOX SIP call or subject to FIPs and/or the sources

in geographic areas for which EPA makes a finding for the section 126

petitions.

A common trading program integrating the NOX Budget

Trading Program and the section 126 actions would necessarily include

those source categories in States for which EPA makes a finding in the

section 126 process, sources located in States that are both named in

the final NOX SIP Call and which choose to participate in

the NOX Budget Trading Program, as well as sources subject

to a FIP. States choosing to participate through the NOX SIP

call would be required to include a core group of sources in the

trading program, but would be provided the option to include additional

stationary source categories, and certain qualifying individual

stationary sources would be provided the opportunity to opt in. Sources

subject to section 126 findings would be required to participate in the

common trading program under EPA's section 126 authority. However, EPA

does not believe that section 126 provides EPA authority to make

findings or require controls beyond the named sources or source

categories in the petitions. The EPA seeks comment on this issue of

whether it may include additional sources beyond the named sources or

source categories in the petitions through the section 126 remedy.

Specifically, EPA requests comment on whether the sources EPA includes

in the common trading program under the section 126 petitions should be

confined to source categories in geographic areas for which petitioning

States request, and EPA grants, a finding of significant contribution.

In the alternative, EPA requests comment as to whether additional

sources not named in a petition, but located in a State where a finding

is made under section 126, should be able to voluntarily participate in

a trading program remedy. Further, EPA requests comment on whether such

a trading program may include sources in other States subject to the

NOX SIP call.

Because sources may be included in the common trading program

through one of three possible mechanisms (section 126 petitions,

NOX SIP Call, and FIP), the sources included in the trading

program for purposes of the NOX SIP call may vary from

sources included for purposes of the section 126 remedy. The EPA

solicits comment as to whether this is problematic for integration

concerns.

The EPA does not anticipate that a trading program designed for

sources subject to the final NOX SIP call and the section

126 petitions for which EPA makes a finding could be expanded

geographically to include sources in geographic areas not subject to

requirements under either program. The EPA solicits comment on this

preliminary view.

The effect of NOX emissions on air quality in downwind

nonattainment areas depends, in part, on the distance between sources

and receptor areas. Sources that are closer to the nonattainment areas

tend to have much larger effects on air quality than sources that are

far away. In light of this and as discussed in Section IV.C, the EPA

plans to evaluate alternative approaches, other than one based on the

application of uniform controls, in developing the rulemaking proposal.

The Agency solicits comments on whether a trading program should

factor in differential effects of NOX emissions in an

attempt to strike a balance

[[Page 24075]]

between achieving the cost savings from a broader geographic scope of

trading and avoiding the adverse effects on air quality that could

result if the geographic domain for trading is inappropriately large or

trades across areas are not appropriately adjusted to reflect

differential environmental effects. The EPA could consider establishing

``exchange ratios'' for tons traded between areas. The large number of

areas in the petitioning States that are violating the standards and

the several different weather patterns associated with summertime ozone

pollution episodes complicate the development of a stable set of

trading ratios. Alternatively, the Agency could consider establishing

subregions for trading within the geographic area that may ultimately

be subject to any section 126 findings and apply a discount to or

prohibit trades between regions. The Agency solicits comments on this

issue.

C. Cost-Effectiveness Issues

Where EPA proposes to grant a section 126 petition and, therefore,

also to propose control measures, it plans to use the cost-

effectiveness approach used in the proposed NOX SIP call

action with respect to stationary sources. This approach focuses on the

selection of reasonable, cost-effective control measures and the

application of uniform controls. Further, as in the proposed

NOX SIP call, EPA plans to propose to require sources in

upwind areas to decrease emissions through cost-effective controls that

compare favorably, at least qualitatively, with the costs of controls

downwind and that reduce ozone levels downwind.

However, the effect of NOX emissions on air quality in

areas violating the ozone air quality standard depends, in part, on the

distance between sources and receptor areas. Sources that are closer to

areas violating the air quality standards tend to have larger effects

on air quality than sources that are far away. If there is a

significant variation in the contribution of emissions in different

subregions within the geographic area that may be subject to any

section 126 findings, alternative approaches to developing a remedy,

other than one based on the application of uniform control measures,

will be evaluated. On the other hand, the large number of nonattainment

areas in the States that filed petitions and the several different

weather patterns associated with summertime ozone pollution episodes

should also be considered when evaluating a subregional approach. The

EPA plans to evaluate alternative approaches at levels below and above

the levels used in the calculation of the budgets in the proposed

NOX SIP call as well as regional approaches that apply

different control levels to different geographic regions.

The EPA is soliciting comment on approaches for the section 126

control remedy that factor in the differential effects on air quality

in areas violating the standard. Comments advocating alternative

approaches would be most helpful if they set forth concrete proposals

on what analysis should form the basis of the remedy. For example, some

have suggested an approach that would attempt to quantify more

explicitly the cost-effectiveness of emissions reductions in terms of

improvements in ambient ozone concentrations in areas violating a

standard (measures, for example, as cost per population-weighted

changes in parts per billion peak ozone concentration) taking into

account the location of control measures through subregional modeling.

The EPA invites comment on whether the criteria for cost

effectiveness applied in any section 126 petition decision should be

the same as the criteria used in the proposed NOX SIP call

action; or whether the criteria should be different because, for

example, there are fewer sources involved in the section 126 petitions

than in the proposed NOX SIP call. (The EPA is not asking

for comment, in this notice, on the issue of cost effectiveness as it

applies to the proposed NOX SIP call, but only on whether

the approach taken in the proposed NOX SIP call is

appropriate for the section 126 action.) Similarly, EPA invites comment

on whether to consider the cost effectiveness of controls for sources

named in a single petition or whether EPA should look at the collective

cost effectiveness of controls for all the sources named in all the

petitions which EPA may propose to grant. In both cases, even if some

sources' emissions reduction requirements taken by themselves are not

cost effective, EPA believes that these controls may be considered cost

effective if they are part of a set of controls which, when taken as a

whole, are considered cost effective.

The EPA also invites comments on whether and to what extent cost

effectiveness should differentiate between large and small sources

within a specific source category. Specifically, EPA notes that its

proposed NOX SIP call included a cutoff of 25 MWe for

utility boilers and 250 mmBtu for non-utility boilers; units below

these cutoffs were not included in emissions decrease calculations for

the statewide budgets. Because certain petitions suggest controlling

15-25 MWe generators, and one suggests controlling all electric

generators, EPA specifically invites comment on the cost effectiveness

of these requests.

As a preliminary matter, EPA anticipates making determinations as

to cost effectiveness through the same approach as discussed in the

proposed NOX SIP call. Specifically, EPA would employ the

following steps in proposing the control levels: First, EPA would

compile a list of available NOX control measures for the

various emissions sectors named in the petitions. For the control

measures on this list, EPA would estimate the average cost

effectiveness of those controls. The average cost effectiveness is

defined as the cost of a ton of reductions from the source category

based on full implementation of the proposed controls, as compared to

the pre-existing level of controls.

Second, EPA would determine the average cost effectiveness of a

representative sample of recently proposed and adopted State and

Federal controls. The EPA believes that the average cost effectiveness

for measures that would form the basis of the remedy to the petitions

should be comparable to the average cost effectiveness of those

controls recently proposed and adopted. Third, EPA would use this

information to determine which controls may be appropriate to propose

as the remedy for any petitions that are proposed to be granted.

Fourth, EPA would determine that the proposed controls--or generally

comparable levels--result in an adequate level of ambient reductions

downwind. The EPA used this approach to propose the level of control

assumed in the proposed NOX SIP call. The EPA solicits

comments on whether this approach should be changed in the section 126

rulemaking.

D. Legal Issues

The EPA also solicits comment on a series of issues concerning the

legal interpretation of section 126(b) and associated provisions.

Section 126(b) provides that a State may petition EPA for a finding

that specified sources in other States emit air pollutants ``in

violation of the prohibition of section 110(a)(2)(D)(ii) of this title

or this section.'' Section 110(a)(2)(D) provides the requirement that a

SIP contain adequate provision:

(i) prohibiting, consistent with the provisions of this title,

any source or other type of emissions activity within the State from

emitting any air pollutant in amounts which will--

(I) contribute significantly to nonattainment in, or interfere

with

[[Page 24076]]

maintenance by, any other State with respect to [any] national * * *

ambient air quality standard, or

(II) interfere with measures required to be included in the

applicable implementation plan for any other State under part C to

prevent significant deterioration of air quality or to protect

visibility.

(ii) insuring compliance with the applicable requirements of

sections 126 and 115 (relating to interstate and international

pollution abatement)* * *

One issue is whether the cross-reference in section 126(b) to

``section 110(a)(2)(D)(ii)'' is valid, or instead should be considered

to be a typographical error that should be read to refer to section

110(a)(2)(D)(i). The EPA has offered this view in general and

preliminary guidance. (Nichols Letter cited earlier in Section I.B.)

Some have argued that section 126(b) should be read literally, and

that this reading would require EPA to deny the petitions submitted to

date on grounds that section 126 allows a State to file a petition with

EPA only to force other States to meet the requirements of section 126

itself, (i.e., the requirement in section 126(a) that SIPs include

provisions to require new and modified major stationary sources to give

preconstruction notification to nearby States under certain

circumstances). (Letter from Henry V. Nickel, et.al, Counsel for the

Utility Air Regulatory Group, to Carol M. Browner, Administrator, U.S.

EPA, November 21, 1997 (UARG Letter); Letter from Betty D. Montgomery,

Attorney General of Ohio, et. al., to Richard Wilson, Acting Assistant

Administrator for Air & Radiation, U.S. EPA, November 5, 1997 (letters

included in the docket to this rulemaking).)

If the proper interpretation of section 126(b) is that the cross-

reference represents a typographical error, an issue arises as to what

the appropriate cross-reference should be. The EPA has offered the

view, in general and preliminary guidance, that the proper cross-

reference should be to section 110(a)(2)(D)(i) (Nichols Letter). Some

have argued that the appropriate cross-reference should be to section

110(a)(2)(D)(i)(II), and not section 110(a)(2)(D)(i)(I) (UARG letter).

The effect of this reading would be to limit section 126 petitions to

cases in which the upwind sources are adversely affecting: (i) Clean

areas under the prevention of significant deterioration requirements of

part C of Title I of the CAA; or (ii) visibility.

A further issue arises as to the interpretation of the requirement

of section 110(a)(2)(D)(i) that the ``SIP contain adequate provisions

prohibiting, consistent with the provisions of this title,'' sources

from emitting air pollutants in amounts that contribute significantly

to nonattainment problems downwind. Some have argued that the phrase

``consistent with the provisions of this title'' should be interpreted

to limit the requirements imposed with respect to sources in a

contributing State to the control requirements that the petitioning

State demonstrates would be necessary to allow the petitioning State to

reach attainment of the NAAQS after the petitioning State implements

the applicable requirements under section 182 (requirements for

nonattainment areas), and under sections 176A and 184 (transport region

provisions). The EPA solicits comments on each of the issues of

interpretation noted earlier.

Additional legal issues, which assume that section 126(b) should be

read to authorize EPA to grant the petitions if they have an adequate

technical basis, concern:

Whether, if EPA grants a section 126 petition, EPA may

allow sources a period longer than 3 years from the date of granting

the petition to implement required controls under section 126(c).

Whether administrative complexity is an appropriate factor

to consider in determining whether to grant a petition with respect to

certain sources, so that EPA would have the discretion to determine not

to grant a finding with respect to, for example, smaller sources that

would be administratively complex for EPA to regulate.

Whether EPA should evaluate each of the section 126

petitions under both the 1-hr ozone NAAQS and the 8-hr ozone NAAQS or

whether EPA should limit its evaluation of the 8-hr standard only to

those petitions which cite the 8-hr standard as a basis for their

petition.

Whether EPA has the authority to evaluate petitions under

the 8-hr standard in light of the fact that EPA has not yet designated

areas under the 8-hr standard or required SIP revisions under that

standard.

Whether EPA, in determining whether sources are

significant contributors to nonattainment problems downwind, may

consider the impact of upwind sources named in a petition on only the

petitioning State, or whether EPA may consider the impact of upwind

sources named in one petition on other petitioning States (or non-

petitioning States).

V. Schedule for Rulemaking Action on Section 126 Petitions

As discussed in the Section I Background, the eight petitioning

States have sued EPA to establish a schedule for rulemaking on the

section 126 petitions, and EPA and those States have filed with the

court a proposed consent decree. The EPA took comment on the proposed

consent decree under section 113(g) of the CAA and is considering those

comments. The EPA has not asked the court to lodge the consent decree.

Section 2(b) of the proposed consent decree requires that EPA

publish in today's ANPR ``the schedule set forth in [the] consent

decree for finalizing action on the section 126 petitions, including

the date and location of the public hearing.''

The proposed consent decree sets forth the relevant schedule as

follows:

3. EPA will publish in the Federal Register a notice of proposed

rulemaking regarding the section 126 petitions no later than

September 30, 1998.* * *

5. a. EPA will take a final action on the section 126 petitions

no later than April 30, 1999.

b. Unless EPA takes the final action described in paragraph 6,

as to each individual petition, EPA's final action will be to--

(i) Grant the requested finding, in whole or part; and/or

(ii) Deny the petition, in whole or part.

c. Unless EPA denies a petition in whole, its final action will

include promulgation of the Proposed Remedy for sources to the

extent that a requested finding is granted with respect to those

sources.

6. EPA shall be deemed to have complied with the requirements of

Paragraph 5(a) if it instead takes a final action by April 30, 1999,

that--

a. Makes an affirmative determination concerning the technical

components of the ``contribute significantly to nonattainment'' or

``interfere with maintenance'' tests under CAA section

110(a)(2)(D)(i), 42 U.S.C. sec. 7410(a)(2)(D)(i);

b. Further provides that--

(i) If EPA does not issue a proposed approval of the relevant

upwind State's SIP revision (submitted in response to the

NOX SIP call) by November 30, 1999, then the finding will

be deemed to be granted as of November 30, 1999, without any further

action by EPA;

(ii) If EPA issues a proposed approval of said SIP revision by

November 30, 1999, but does not issue a final approval of said SIP

revision by May 1, 2000, then the finding will be deemed to be

granted as of May 1, 2000, without any further action by EPA;

(iii) If EPA issues a final approval of said SIP revision by May

1, 2000, EPA must take any and all further actions, if necessary to

complete its action under section 126, no later than May 1, 2000;

and

c. Promulgates the Proposed Remedy for sources to the extent

that an affirmative determination is made with respect to those

sources.

A public hearing on the future proposed rulemaking on the section

126 petitions will be held on October 28 and 29, 1998 at the EPA

Auditorium at 401 M Street SW,

[[Page 24077]]

Washington, DC, 20460. The oral testimonies, as well as all written

comments received during the comment period for the proposed

rulemaking, will be considered in the development of the final

rulemaking.

VI. Impact on Small Entities

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq.,

provides that whenever an agency is required to publish a general

notice of proposed rulemaking, it must prepare and make available a

regulatory flexibility analysis, unless it certifies that the proposed

rule, if promulgated, will not have ``a significant economic impact on

a substantial number of small entities.'' Id., section 605(b).

No such requirements or certification apply in the case of an

advance notice of proposed rulemaking. However, in accordance with

section 609(a)(1) of the RFA, EPA is today notifying the public that if

EPA grants the findings requested by the petitioning States, the

controls that EPA would promulgate may have a significant economic

impact on a substantial number of small entities. Accordingly, EPA has

begun an informal outreach process to work with the Small Business

Administration (SBA), the Office of Management and Budget (OMB), and a

number of small-entity representatives. On April 14, 1998, EPA held a

meeting in Washington, D.C. to provide an opportunity for small-entity

representatives to provide advice and recommendations and to join in a

discussion of the issues related to small-entities. Representatives

from SBA and OMB also participated in the meeting. If this outreach and

further analysis show that EPA's action appears likely to have a

significant adverse impact on a substantial number of small entities,

EPA would then convene a Federal Small Business Advocacy Panel for this

rulemaking under the Small Business Regulatory Enforcement Fairness Act

(SBREFA). The EPA would examine such issues as the number of small

entities likely to be affected by the rule; the associated compliance,

reporting and recordkeeping burdens; Federal rules which might

duplicate, overlap, or conflict with the rule; and alternative

compliance strategies and approaches that would help to minimize any

significant economic impact on small entities.

Dated: April 24, 1998.

Carol M. Browner,

Administrator.

[FR Doc. 98-11475 Filed 4-29-98; 8:45 am]

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