Finding of Significant Contribution and Rulemaking for Certain States in the Ozone Transport Assessment Group Region for Purposes of Reducing Regional Transport of Ozone

SUMMARY: In accordance with the Clean Air Act (CAA), today's action is

a final rule to require 22 States and the District of Columbia to

submit State implementation plan (SIP) revisions to prohibit specified

amounts of emissions of oxides of nitrogen (NOX)--one of the

precursors to ozone (smog) pollution--for the purpose of reducing

NOX and ozone transport across State boundaries in the

eastern half of the United States.

Ground-level 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.

In today's action, EPA finds that sources and emitting activities

in each of the 22 States and the District of Columbia (23

jurisdictions) emit NOX in amounts that significantly

contribute to nonattainment of the 1-hour and 8-hour ozone national

ambient air quality standards (NAAQS), or will interfere with

maintenance of the 8-hour NAAQS, in one or more downwind States.

Further, by today's action, EPA is requiring each of the affected

upwind jurisdictions (sometimes referred to as upwind States) to submit

SIP revisions prohibiting those amounts of NOX emissions

which significantly contribute to downwind air quality problems. The

reduction of those NOX emissions will bring NOX

emissions in each of those States to within the resulting statewide

NOX emissions budget levels established in today's rule. The

23 jurisdictions are: Alabama, Connecticut, Delaware, District of

Columbia, Georgia, Illinois, Indiana, Kentucky, Massachusetts,

Maryland, Michigan, Missouri, North Carolina, New Jersey, New York,

Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia,

West Virginia, and Wisconsin. These States will be able to choose any

mix of pollution-reduction measures that will achieve the required

reductions.

EFFECTIVE DATES: This rule is effective December 28, 1998. The

incorporation by reference of certain publications listed in the

regulations is approved by the Director of the Federal Register as of

December 28, 1998.

ADDRESSES: Dockets containing information relating to this rulemaking

(Docket No. A-96-56 and Docket No. A-9-35) are available for public

inspection at the Air and Radiation Docket and Information Center

(6102), US 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 fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: General questions concerning today's

action should be addressed to Kimber S. Scavo, Office of Air Quality

Planning and Standards, Air Quality Strategies and Standards Division,

MD-15, Research Triangle Park, NC 27711, telephone (919) 541-3354; e-

mail: [email protected]. Please refer to SUPPLEMENTARY INFORMATION

below for a list of contacts for specific subjects described in today's

action.

SUPPLEMENTARY INFORMATION:

Availability of Related Information

Documents related to the Ozone Transport Assessment Group (OTAG)

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

located at http://www.iceis.mcnc.org/OTAGDC. The notice of proposed

rulemaking for this final action, the supplemental notice of proposed

rulemaking, and associated documents are located at http://epa.gov/ttn/

oarpg/otagsip.html. Information related to Sections II, Weight of

Evidence Determination of Covered States, and IV, Air Quality

Assessment, can be obtained in electronic form from the following EPA

website: http://www.epa.gov/scram001/regmodcenter/t28.htm. Information

related to Section III, Determination of Budgets, may be found on the

following EPA website: http://www.epa.gov/capi. All information in

electronic form may also be found on diskettes that have been placed in

the docket to this rulemaking.

For Additional Information

For technical questions related to the air quality analyses, please

contact Norm Possiel; Office of Air Quality Planning and Standards;

Emissions, Monitoring, and Analysis Division; MD-14, Research Triangle

Park, NC 27711, telephone (919) 541-5692. For legal questions, please

contact Howard J. Hoffman, Office of General Counsel, 401 M Street SW,

MC-2344, Washington, DC 20460, telephone (202) 260-5892. For questions

concerning the statewide emissions budget revisions, please contact

Laurel Schultz; Office of Air Quality Planning and Standards;

Emissions, Monitoring, and Analysis Division; MD-14, Research Triangle

Park, NC 27711, telephone (919) 541-5511. For questions concerning SIP

reporting requirements, please contact Bill Johnson, Office of Air

Quality Planning and Standards, Air Quality Strategies and Standards

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

5245. For questions concerning the model cap-and-trade rule, please

contact Rob Lacount, Office of Atmospheric Programs, Acid Rain

Division, MC-6204J, 401 M Street SW, Washington, DC 20460, telephone

(202) 564-9122. For questions concerning the regulatory cost analysis

of electricity generating sources, please contact Ravi Srivastava,

Office of Atmospheric Programs, Acid Rain Division, MC-6204J, 401 M

Street SW, Washington DC 20460, telephone (202) 564-9093. For questions

concerning the regulatory cost analysis of other stationary sources and

questions concerning the Regulatory Impact Analysis (RIA), please

contact Scott Mathias, Office of Air Quality Planning and Standards,

Air Quality Strategies and Standards Division, MD-15, Research Triangle

Park, NC 27711, telephone (919) 541-5310.

Outline

I. Background

A. Summary of Rulemaking and Affected States

B. General Factual Background

C. Statutory and Regulatory Background

1. CAA Provisions

a. 1970 and 1977 CAA Amendments

b. 1990 CAA Amendments

2. Regulatory Structure

a. March 2, 1995 Policy

b. OTAG

[[Page 57357]]

c. EPA's Transport SIP Call Regulatory Efforts

d. Revision of the Ozone NAAQS

D. Section 126 Petitions

E. OTAG

F. Discussion of Comment Period and Availability of Key

Information

1. Request for Extension of the Comment Period

2. Request for Time to Conduct Additional Modeling

3. Availability of Key Information

4. Public Hearings

G. Implementation of Revised Air Quality Standards

H. Summary of Major Changes between Proposals and Final Rule

1. EPA's Analytical Approach (Section II.A)

2. Cost Effectiveness of Emissions Reductions (Section II.D)

3. Determination of Budgets (Section III)

4. NOX Control Implementation and Budget Achievement

Dates (Section V)

5. SIP Criteria (Section VI.A)

6. Emissions Reporting Requirements for States (Section VI.B)

7. NOX Budget Trading Program (Section VII)

8. Interaction with Title IV NOX Rule (Section VIII)

9. Administrative Requirements (Section X)

II. EPA's Analytical Approach

A. Interpretation of the CAA's Transport Provisions

1. Authority and Process for Requiring SIP Submissions under the

1-Hour Ozone NAAQS

a. Authority for Requiring SIP Submissions under the 1-Hour

NAAQS

b. Process for Requiring SIP Submissions under the 1-Hour NAAQS

2. Authority and Process for Requiring SIP Submissions under the

8-Hour Ozone NAAQS

a. Authority for Requiring SIP Submissions under the 8-Hour

NAAQS

b. Process for Requiring SIP Submissions under the 8-hour

Standard

3. Requirements of Section 110(a)(2)(D)

a. Summary

b. Determination of Meaning of ``Nonattainment'

c. Definition of Significant Contribution

d. Multi-factor Test for Determining Significant Contribution

e. Air Quality Factors

f. Determination of Highly Cost-effective Reductions and of

Budgets

g. Other Considerations in Determination of Significant

Contribution

h. Interfere with Maintenance

i. Dates

j. Downwind Areas' Control Obligations

k. Section 110(a)(2)(D) Caselaw

B. Alternative Interpretation of Section 110(a)(2)(D)

C. Weight-of-Evidence Determination of Covered States

1. Major Findings from OTAG-Related Technical Analyses

2. Summary of Notice of Proposed Rulemaking Weight-of-Evidence

Approach

a. Quantification of Contributions

b. Evaluation of 1-Hour and 8-Hour Contributions

c. Comments and Responses on Proposed Weight-of-Evidence

Approach to Significant Contribution

3. Analysis of State-specific Air Quality Factors

a. Overall Nature of Ozone Problem (``Collective Contribution'')

b. Extent of Downwind Nonattainment Problems

c. Air Quality Impacts of Upwind Emissions on Downwind

Nonattainment

4. Confirmation of States Making a Contribution to Downwind

Nonattainment

a. Analysis Approach

b. States Which Contain Sources That Significantly Contribute to

Downwind Nonattainment

c. Examples of Contributions From Upwind States to Downwind

Nonattainment

d. Conclusions From Air Quality Evaluation of Downwind

Contributions

5. States Not Covered by This Rulemaking

D. Cost Effectiveness of Emissions Reductions

1. Sources Included in the Cost-Effectiveness Determination

a. Electricity Generating Boilers and Turbines

b. Other Stationary Sources

2. Sources Not Included in the Cost-Effectiveness Determination

a. Area Sources

b. Small Point Sources

c. Mobile Sources

d. Other Stationary Sources

e. Conclusion

E. Other Considerations

1. Consistency of Regional Reductions with Attainment Needs of

Downwind Areas

a. General Discussion

b. 8-hour Nonattainment Problems

c. Commenters' Concerns

2. Equity Considerations

3. General Cost Considerations

4. Conclusion

III. Determination of Budgets

A. General Comments on the Base Emission Inventory

1. Quality

2. Availability

B. Electricity Generating Units (EGUs)

1. Base Inventory

2. Growth

a. Growth Rates

b. Use of IPM

c. Use of ``Corrected'' Growth Rates

3. Budget Calculation

a. Input vs. Output

b. Alternative Emission Limits

c. Consideration of the Climate Change Action Plan

C. Non-EGU Point Sources

1. Base Inventory

2. Growth

3. Budget Calculation

a. Proposed Control Assumptions

b. Small Source Exemption

c. Exemptions for Other Non-EGU Point Sources

d. Sources Without Adequate Control Information

e. Case-By-Case Analysis of Control Measures

f. Cost Effectiveness

g. Industrial Boiler Control Costs

h. Cement Manufacturing

i. Stationary Internal Combustion Engines

j. Industrial Boilers and Turbines

k. Municipal Waste Combustors (MWCs)

D. Highway Mobile Sources

1. Base Inventory

2. Growth

3. Budget Calculation

a. I/M Program Coverage

b. Emissions Cap

c. Tier 2 Standards

d. Low Sulfur Fuel

e. Conformity

E. Stationary Area and Nonroad Mobile Sources

1. Base Inventory

2. Growth

3. Budget Calculation

F. Other Budget Issues

1. Uniform vs. Regional Controls

2. Seasonal vs. Annual Controls

3. Full vs. Partial States

4. NOx Waivers

5. Recalculation of Budgets

6. Compliance Supplement Pool

a. Size of the Compliance Supplement Pool

b. State Distribution of the Compliance Supplement Pool

7. Banking

a. Banking Starting in 2003

b. Management of Banked Allowances

c. Early Reduction Credits

G. Final Statewide Budgets

1. EGU

a. Description of Selected Approach

b. Summary of Budget Component

2. Non-EGU Point Sources

a. Description of Selected Approach

b. Summary of Budget Component

3. Mobile and Area Sources

a. Description of Selected Budget Approach

b. Summary of Budget Component

4. Potential Alternatives to Meeting the Budget

5. Statewide Budgets

IV. Air Quality Assessment

A. Assessment of Proposed Statewide Budgets

B. Comments and Responses

C. Assessment of Alternative Control Levels

1. Scenarios Modeled

2. Emissions for Model Runs

3. Modeling Results

a. Impacts of Alternative Controls

b. Impacts of Upwind Controls on Downwind Nonattainment

c. Summary of Findings

V. NOx Control Implementation and Budget Achievement Dates

A. NOx Control Implementation Date

1. Practicability

a. Combustion Controls

b. Post-Combustion Controls

2. Relationship to SIP Submittal Date

3. Rationale

B. Budget Achievement Date

VI. SIP Criteria and Emissions Reporting Requirements

A. SIP Criteria

1. Schedule for SIP Revision

2. Approvability Criteria

a. Source Categories Subject to Additional Approvability

Criteria

[[Page 57358]]

b. Pollution Abatement Requirements

c. Monitoring Requirements

d. Approvability of Trading Program

3. Sanctions

4. FIPs

B. Emissions Reporting Requirements for States

1. Use of Inventory Data

2. Response to Comments

3. Final Rule

4. Data Elements to be Reported

5. 2007 Report

6. Ozone Season Reporting

7. Data Reporting Procedures

8. Confidential Data

C. Timeline

VII. NOX Budget Trading Program

A. General Background

B. NOX Budget Trading Program Rulemaking Overview

C. General Design of NOX Budget Trading Program

1. Appropriateness of Trading Program

2. Alternative Market Mechanisms

3. State Adoption of Model Rule

a. Process for Adoption

b. Model Rule Variations

4. Unrestricted Trading Market

a. Geographic Issues

b. Episodic Issues

D. Applicability

1. Core Sources

a. Commenters Who Felt the Core Group Should Not Be Changed

b. Commenters Who Felt the Core Group Should Be Expanded

c. Commenters Who Felt the Core Group Is Overly Inclusive

2. Mobile/Area Sources

3. Monitoring

a. Use of Part 75 to Ensure Compliance with the NOX

Budget Trading Program

b. Use of CEMS on Large Units

c. Commenters Who do not Believe that CEMS are Necessary

d. Issues Related to Monitoring and Reporting Needed to Support

a Heat Input Allocation Methodology

e. Amendments to Part 75

E. Emission Limitations/Allowance Allocations

1. Timing Requirements

2. Options for NOX Allowance Allocation Methodology

3. New Source Set-Aside

4. Optional NOX Allocation Methodology in Model Rule

F. Banking Provisions

1. Banking Starting in 2003

2. Management of Banked Allowances

3. Early Reduction Credits

4. Optional Methodology for Issuing Early Reduction Credits

5. Integrating the OTC Program with the NOX Budget

Trading Program's Banking Provisions

G. New Source Review

VIII. Interaction with Title IV NOX Rule

IX. Non-Ozone Benefits of NOX Emissions Decreases

A. Summary of Comments

B. Response to Comments

1. Drinking Water Nitrate

2. Eutrophication

3. Regulatory Impact Analysis

4. Justification for Rulemaking

X. Administrative Requirements

A. Executive Order 12866: Regulatory Impact Analysis

B. Regulatory Flexibility Act: Small Entity Impacts

C. Unfunded Mandates Reform Act

D. Paperwork Reduction Act

E. Executive Order 13045: Protection of Children from

Environmental Health Risks and Safety Risks

1. Applicability of E.O. 13045

2. Children's Health Protection

F. Executive Order 12898: Environmental Justice

G. Executive Order 12875: Enhancing the Intergovernmental

Partnerships

H. Executive Order 13084: Consultation and Coordination with

Indian Tribal Governments

I. Judicial Review

J. Congressional Review Act

K. National Technology Transfer and Advancement Act

Appendix A--Detailed Discussion of Changes to Part 75

CFR Revisions and Additions

Part 51

Sec. 51.121

Sec. 51.122

Part 72

Part 75

Part 96

I. Background

A. Summary of Rulemaking and Affected States

By notice of proposed rulemaking (NPR, proposal, or ``proposed SIP

call'') (62 FR 60318, November 7, 1997) and by supplemental notice

(SNPR or supplemental proposal) (63 FR 25902, May 11, 1998), EPA

proposed to find that NOX emissions from sources and

emitting activities (sources) in 23 jurisdictions (hereinafter also

referred to as States) will significantly contribute to nonattainment

of the 1-hour and 8-hour ozone NAAQS, or will interfere with

maintenance of the 8-hour NAAQS, in one or more downwind States

throughout the Eastern United States. The EPA based these proposals on

data generated by OTAG, public comments, and other relevant

information. Today's final action confirms that proposed finding. It

also requires, under CAA section 110(a)(1) and 110(k)(5), that the 23

jurisdictions adopt and submit SIP revisions that, in order to assure

that their SIPs meet the requirements of section 110(a)(2)(D)(i)(I),

contain provisions adequate to prohibit sources in those States from

emitting NOX in amounts that ``contribute significantly to

nonattainment in, or interfere with maintenance by,'' a downwind State.

The 23 jurisdictions are: Alabama, Connecticut, Delaware, District of

Columbia, Georgia, Illinois, Indiana, Kentucky, Massachusetts,

Maryland, Michigan, Missouri, North Carolina, New Jersey, New York,

Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia,

West Virginia, and Wisconsin.

Each of these States and the District of Columbia is required to

adopt and submit by September 30, 1999, a SIP revision. The SIP

revision must contain measures that will assure that sources in the

State reduce their NOX emissions sufficiently to eliminate

the amounts of NOX emissions that contribute significantly

to nonattainment, or that interfere with maintenance, downwind. By

eliminating these amounts of NOX emissions, the control

measures will assure that the remaining NOX emissions will

meet the level identified in today's rule as the State's NOX

emissions budget. For simplicity, this final rule may refer to the

amounts that such SIP provisions must prohibit in order to meet the

statute as the ``significant amounts'' of NOX emissions.

After prohibiting these significant amounts of NOX, the

remaining amounts emitted by sources in the covered States will not

``significantly contribute to nonattainment, or interfere with

maintenance by,'' a downwind State, under section 110(a)(2)(D)(i)(I).

Section II.C, Weight-of-Evidence Determination of Covered States,

describes how EPA determined which States include sources that emit

NOX in amounts of concern (the ``covered'' States), and

Sections II.D, Cost Effectiveness of Emissions Reductions; II.E,

Comparison of Upwind and Downwind Costs; and III, Determination of

Budgets, describe how EPA determined the significant amounts of

emissions and the resulting statewide emissions budgets for the States

identified above. Section IV, Air Quality Assessment, discusses air

quality analyses conducted by EPA which help confirm the decisions and

requirements set forth in this rulemaking. Section V, NOX

Control Implementation and Budget Achievement Dates, primarily

discusses the dates by which (1) the States must submit SIP revisions

in response to today's action, (2) the sources must implement the

measures the States choose for the purpose of prohibiting the

significant amounts of NOX, and (3) the States are projected

to achieve the budget levels. Section VI, SIP Criteria and Emissions

Reporting Requirements, describes the SIP requirements themselves.

The SIP requirements permit each State to determine what measures

to adopt to prohibit the significant amounts and hence meet the

necessary emissions budget. Consistent with OTAG's recommendations to

achieve

[[Page 57359]]

NOX emissions decreases primarily from large stationary

sources in a trading program, EPA encourages States to consider

electric utility and large boiler controls under a cap-and-trade

program as a cost-effective strategy. The recommended cap-and-trade

program is described in more detail in Section VII, NOX

Budget Trading Program. The EPA also recognizes that promotion of

energy efficiency can contribute to a cost-effective strategy. In

Section VIII, Interaction with Title IV NOX rule, EPA

explains that it is not adopting proposed revisions to the title IV

NOX rule concerning the relationship between this rulemaking

and the title IV NOX rule. The remaining parts of today's

action include Section IX, Non-Ozone Benefits of NOX

Reductions, and Section X, Administrative Requirements.

The EPA also conducted a RIA which is available in the docket to

this rulemaking as a technical support document (TSD), entitled

``Regulatory Impact Analysis for the Regional NOX SIP Call''

(docket no. VI-B-09). A detailed explanation of how EPA calculated the

budgets is also available as a TSD entitled ``Development of Modeling

Inventory and Budgets for the Regional NOX SIP Call''

(docket no. VI-B-10). These two TSDs have been revised for the final

rulemaking. A detailed explanation of the air quality modeling analyses

is also available, entitled ``Air Quality Modeling Technical Support

Document for the Regional NOX SIP Call'' (docket no. VI-B-

11) for this final rulemaking. This preamble for today's notice

responds to some of the comments, but another document, entitled

``Response to Significant Comments on the Finding of Significant

Contribution and Rulemaking for Certain States in the OTAG Region for

Purposes of Reducing Regional Transport of Ozone,'' is included in the

docket (docket no. VI-C-01).

B. General Factual Background

In today's action, EPA takes a significant step toward reducing

ozone in the eastern half of the country. Ground-level ozone, the main

harmful ingredient in smog, is produced in complex chemical reactions

when its precursors, volatile organic compounds (VOC) and

NOX, react in the presence of sunlight. The chemical

reactions that create ozone take place while the pollutants are being

blown through the air by the wind, which means that ozone can be more

severe many miles away from the source of emissions than it is at the

source.

The science of ozone formation, transport, and accumulation is

complex. Ozone is produced and destroyed in a cyclical set of chemical

reactions involving NOX, VOC and sunlight. Emissions of

NOX and VOC are necessary for the formation of ozone in the

lower atmosphere. In part of the cycle of reactions, ozone

concentrations in an area can be lowered by the reaction of nitric

oxide with ozone, forming nitrogen dioxide; as the air moves downwind

and the cycle continues, the nitrogen dioxide forms additional ozone.

The importance of this reaction depends, in part, on the relative

concentrations of NOX, VOC and ozone, all of which change

with time and location.

At ground level, ozone can cause a variety of ill effects to human

health, crops and trees. Specifically, ground-level ozone has been

shown in clinical and/or epidemiologial studies to have the following

health effects:

Decreased lung function, primarily in children

active outdoors

Increased respiratory symptoms, particularly in

highly sensitive individuals

Hospital admissions and emergency room visits for

respiratory causes among children and adults with pre-existing

respiratory disease such as asthma

Inflammation of the lung

Possible long-term damage to the lungs or even

premature death.

The new 8-hour primary ambient air quality standard (62 FR 38856,

July 18, 1997) will provide increased protection to the public from

these health effects.

Each year, ground-level ozone above background is also responsible

for significant agricultural crop yield losses. Ozone also causes

noticeable foliar damage in many crops, trees, and ornamental plants

(i.e., grass, flowers, shrubs, and trees) and causes reduced growth in

plants. Studies indicate that current ambient levels of ozone are

responsible for damage to forests and ecosystems (including habitat for

native animal species).

As part of the efforts to reduce harmful levels of smog, EPA,

today, is establishing a requirement for certain States to revise their

SIPs in order to implement the necessary regional-scale reductions in

NOX emissions, and, thereby, reduce transported

NOX and ozone. Since air pollution travels across county and

State lines, it is essential for State governments and air pollution

control agencies to cooperate to solve the problem.

Currently, the following areas, impacted by the 23 jurisdictions

that are the subject of today's rulemaking, are designated

nonattainment areas for ozone under the 1-hour NAAQS:

Atlanta, GA

Baltimore, MD

Birmingham, AL

Boston-Lawrence-Worcester (eastern MA), MA-NH

Chicago-Gary-Lake County, IL-IN

Cincinnati-Hamilton, OH-KY

Door County, WI

Greater Connecticut

Kent & Queen Anne's Counties, MD

Lancaster, PA

Louisville, KY-IN

Manitowoc County, WI

Milwaukee-Racine, WI

Muskegon, MI

New York-Northern New Jersey-Long Island, NY-NJ-CT

Philadelphia-Wilmington-Trenton, PA-NJ-DE-MD

Pittsburgh-Beaver Valley, PA

Portland, ME

Portsmouth-Dover-Rochester, NH

Providence (All RI), RI

St. Louis, MO-IL

Springfield (western MA), MA

Washington, DC-MD-VA

These areas include many of the major urban centers in the eastern

half of the Nation. The combined population for these areas is

approximately 61.5 million. As described elsewhere, the reductions

called for in today's action will reduce ozone levels throughout these

areas.

Many more areas currently violate the 8-hour NAAQS. The EPA

estimates that a total population of approximately 73 million in the 23

jurisdictions live in counties for which air quality is monitored to be

in violation of that NAAQS. The reductions called for in today's action

will reduce ozone levels throughout these areas as well.

Moreover, as discussed below, many of these areas are expected to

be classified as ``transitional,'' which means, in most cases, that

they are expected to come into attainment solely as a result of the

reductions required by today's action. Thus, for those who live in

these areas, the reductions required under today's action, in-and-of-

themselves, are expected to mean the difference between unhealthful

ozone levels and acceptable ozone levels.

Please note that EPA will not designate ozone nonattainment areas

for the 8-hour NAAQS until 2000, and these designations will be based

on the data that are most recently available at that time.

C. Statutory and Regulatory Background

1. CAA Provisions

a. 1970 and 1977 CAA Amendments. For almost 30 years, Congress has

focused major efforts on curbing ground-level ozone. In 1970, Congress

amended the CAA to require, in title I, that EPA issue, and

periodically review

[[Page 57360]]

and if necessary revise, NAAQS for ubiquitous air pollutants (sections

108 and 109). Congress required the States to submit SIPs to attain and

maintain those NAAQS, and Congress included, in section 110, a list of

minimum requirements that SIPs must meet. Congress anticipated that

areas would attain the NAAQS by 1975.

In 1977, Congress amended the CAA by providing, among other things,

additional time for areas that were not attaining the ozone NAAQS to do

so, as well as by imposing specific SIP requirements for those

nonattainment areas. These provisions first required the designation of

areas as attainment, nonattainment, or unclassifiable, under section

107; and then required that SIPs for ozone nonattainment areas include

the additional provisions set out in part D of title I, as well as

demonstrations of attainment of the ozone NAAQS by either 1982 or 1987

(section 172).

In addition, the 1977 Amendments included two provisions focused on

interstate transport of air pollutants: the predecessor to current

section 110(a)(2)(D), which requires SIPs for all areas to constrain

emissions with certain adverse downwind effects; and section 126,

which, in general, authorizes a downwind State to petition EPA to

impose limits directly on upwind sources found to adversely affect that

State. Section 110(a)(2)(D), which is key to the present action, is

described in more detail below.

b. 1990 CAA Amendments. In 1990, Congress amended the CAA to better

address, among other things, continued nonattainment of the 1-hour

ozone NAAQS; the requirements that would apply if EPA revised the 1-

hour standard; and transport of air pollutants across State boundaries

(Pub. L. 101-549, Nov. 15, 1990, 104 Stat. 2399, 42 U.S.C., 7401-

7671q). Numerous provisions added, or revised, by the 1990 Amendments

are relevant to today's proposal.

(1) 1-Hour Ozone NAAQS. In the 1990 Amendments, Congress required

the States and EPA to review and, if necessary, revise the designation

of areas as attainment, nonattainment, and unclassifiable under the

ozone NAAQS in effect at that time, which was the 1-hour standard

(section 107(d)(4)). Areas designated as nonattainment were divided

into, primarily, five classifications based on air quality design

values (section 181(a)(1)). Each classification carries specific

requirements, including new attainment dates (sections 181-182). In

increasing severity of the air quality problem, these classifications

are marginal, moderate, serious, severe and extreme. The OTAG region

includes nonattainment areas of all classifications except extreme.

As amended in 1990, the CAA requires States containing ozone

nonattainment areas classified as moderate or above to submit several

SIP revisions at various times. One set of SIP revisions included

specified control measures, such as reasonably available control

technology (RACT) for existing VOC and NOX sources (section

182(b)(2), 182(f)). In addition, the CAA requires the reduction of VOC

in the amount of 15 percent by 1996 from a 1990 baseline (section

182(b)(1)). Further, for nonattainment areas classified as serious and

above, the CAA requires the reduction of VOC or NOX

emissions in the amount of 9 percent over each 3-year period from 1996

through the attainment date (the rate-of-progress (ROP) SIP

submittals), under section 182(c)(2)(B). In addition, the CAA requires

a demonstration of attainment, including air quality modeling, for the

nonattainment area (the attainment demonstration), as well as SIP

measures containing any additional reductions that may be necessary to

attain by the applicable attainment date (section 182(c)-(e)). The CAA

established November 15, 1994 as the required date for the ROP and

attainment demonstration SIP submittals for areas classified as serious

and above.1

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

\1\ For moderate ozone nonattainment areas, the attainment

demonstration was due November 15, 1993 (section 182(b)(1)(A)),

except that if the State elected to conduct an urban airshed model,

EPA allowed an extension to November 15, 1994.

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

(2) Revised NAAQS. Section 109(d) of the CAA requires periodic

review and, if appropriate, revision of the NAAQS. As amended in 1990,

the CAA further requires EPA to designate areas as attainment,

nonattainment, and unclassifiable under a revised NAAQS (section

107(d)(1); section 6103, Pub. L. 105-178). The CAA authorizes EPA to

classify areas that are designated nonattainment under the new NAAQS

and to establish for those areas attainment dates that are as

expeditiously as practicable, but not to exceed 10 years from the date

of designation (section 172(a)).

(3) General Requirements. The CAA continues, in revised form,

certain requirements, dating from the 1970 Amendments, which pertain to

all areas, regardless of their designation. All areas are required to

submit SIPs within certain timeframes (section 110(a)(1)), and those

SIPs must include specified provisions, under section 110(a)(2). In

addition, SIPs for nonattainment areas are generally required to

include additional specified control requirements, as well as controls

providing for attainment of any revised NAAQS and periodic reductions

providing ``reasonable further progress'' in the interim (section

172(c)).

(4) Provisions Concerning Transport of Ozone and Its Precursors.

The 1990 Amendments reflect general awareness by Congress that ozone is

a regional, and not merely a local, problem. As described above, ozone

and its precursors may be transported long distances across State lines

to combine with ozone and precursors downwind, thereby exacerbating the

ozone problems downwind. The phenomenon of ozone transport was not

generally recognized until relatively recently. Yet, ozone transport is

a major reason for the persistence of the ozone problem,

notwithstanding the imposition of numerous controls, both Federal and

State, across the country.

Section 110(a)(2)(D) provides one of the most important tools for

addressing the problem of transport. This provision, which applies by

its terms to all SIPs for each pollutant covered by a NAAQS, and for

all areas regardless of their attainment designation, provides that a

SIP must contain adequate provisions prohibiting its sources from

emitting air pollutants in amounts that will contribute significantly

to nonattainment, or interfere with maintenance, in one or more

downwind States.

Section 110(k)(5) authorizes EPA to find that a SIP is

substantially inadequate to meet any CAA requirement. If EPA makes such

a finding, it must require the State to submit, within a specified

period, a SIP revision to correct the inadequacy.

The CAA further addresses interstate transport of pollution in

section 126, which Congress revised slightly in 1990. Subsection (b) of

that provision authorizes each State (or political subdivision) to

petition EPA for a finding designed to protect that entity from upwind

sources of air pollutants.2

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

\2\ In addition, section 115 authorizes EPA to require a SIP

revision when one or more sources within a State ``cause or

contribute to air pollution which may reasonably be anticipated to

endanger public health or welfare in a foreign country.''

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

In addition, the 1990 Amendments added section 184, which

delineates a multistate ozone transport region (OTR) in the Northeast,

requires specific additional controls for all areas (not only

nonattainment areas) in that region, and establishes the Ozone

Transport Commission (OTC) for the purpose of recommending to EPA

regionwide controls affecting all areas in that region. At the same

time, Congress added section 176A, which authorizes

[[Page 57361]]

the formation of transport regions for other pollutants and in other

parts of the country.

2. Regulatory Structure

a. March 2, 1995 Policy. Notwithstanding significant efforts, the

States generally were not able to meet the November 15, 1994 statutory

deadline for the attainment demonstration and ROP SIP submissions

required under section 182(c). The major reason for this failure was

that at that time, States with downwind nonattainment areas were not

able to address transport from upwind areas. As a result, in a

memorandum from Mary D. Nichols, Assistant Administrator for Air and

Radiation, dated March 2, 1995, entitled ``Ozone Attainment

Demonstrations,'' (March 2, 1995 Memorandum or the Memorandum), EPA

recognized the efforts made by States and the remaining difficulties in

making the ROP and attainment demonstration submittals. The EPA

recognized that development of the necessary technical information, as

well as the control measures necessary to achieve the large level of

reductions likely to be required, had been particularly difficult for

the States affected by ozone transport.

Accordingly, as an administrative remedial matter, the Memorandum

indicated that EPA would establish new timeframes for SIP submittals.

The Memorandum indicated that EPA would divide the required SIP

submittals into two phases. Phase I generally consisted of (i) SIP

measures providing for ROP reductions due by the end of 1999, (ii) an

enforceable SIP commitment to submit any remaining required ROP

reductions on a specified schedule after 1996, and (iii) an enforceable

SIP commitment to submit the additional SIP measures needed for

attainment. Phase II consists of the remaining submittals, beginning in

1997.

The Phase II submittals primarily consisted of the remaining ROP

SIP measures, the attainment demonstration and additional rules needed

to attain, and any regional controls needed for attainment by all areas

in the region. The March 2, 1995 Memorandum indicated that the

attainment demonstration, target calculations for the post-1999 ROP

milestones, and identification of rules needed to attain and for post-

1999 ROP were due in mid-1997. To allow time for States to incorporate

the results of the OTAG modeling into their local plans, EPA extended

the mid-1997 submittal date to April 1998.3

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

\3\ Guidance for Implementing the 1-hour Ozone and Pre-Existing

PM10 NAAQS, Memorandum from Richard D. Wilson, dated December 29,

1997.

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

b. OTAG. In addition, the March 2, 1995 Memorandum called for an

assessment of the ozone transport phenomenon. The Environmental Council

of the States (ECOS) had recommended formation of a national work group

to allow for a thoughtful assessment and development of consensus

solutions to the problem. The OTAG was a partnership between EPA, the

37 easternmost States and the District of Columbia, industry

representatives, and environmental groups. The OTAG's air quality

modeling and recommendations formed the basis for today's action.

c. EPA's Transport SIP Call Regulatory Efforts. Shortly after OTAG

began its work, EPA began to indicate that it intended to issue a SIP

call to require States to implement the reductions necessary to address

the ozone transport problem. On January 10, 1997 (62 FR 1420), EPA

published a notice of intent that articulated this goal and indicated

that before taking final action, EPA would carefully consider the

technical work and any recommendations of OTAG. The EPA published the

NPR for the NOX SIP call by notice dated November 7, 1997

(62 FR 60319). The NPR proposed to make a finding of significant

contribution due to transported NOX emissions to

nonattainment or maintenance problems downwind and to assign

NOX emissions budgets for 23 jurisdictions. The EPA

published a supplemental notice of proposed rulemaking (SNPR) by notice

dated May 11, 1998 (63 FR 25902) which proposed a model NOX

budget trading program and State reporting requirements and provided

the air quality analyses of the proposed statewide NOX

emissions budgets. The EPA received approximately 700 comments on these

proposals. The comment periods are described in Section I.F, Discussion

of Comment Period and Availability of Key Information. Throughout the

course of the rulemaking, EPA has added information to the docket. By

notice dated August 24, 1998 (63 FR 45032), EPA published a notice of

availability listing the additional documents placed in the docket.

d. Revision of the Ozone NAAQS. On July 18, 1997 (62 FR 38856), EPA

issued its final action to revise the NAAQS for ozone. The EPA's

decision to revise the standard was based on the Agency's review of the

available scientific evidence linking exposures to ambient ozone to

adverse health and welfare effects at levels allowed by the pre-

existing 1-hour ozone standards. The 1-hour primary standard was

replaced by an 8-hour standard at a level of 0.08 parts per million

(ppm), with a form based on the 3-year average of the annual fourth-

highest daily maximum 8-hour average ozone concentration measured at

each monitor within an area. The new primary standard will provide

increased protection to the public, especially children and other at-

risk populations, against a wide range of ozone-induced health effects.

Health effects are described in paragraph I.B, General Factual

Background. The EPA retained the applicability of the 1-hour NAAQS for

existing nonattainment areas until such time as EPA determines that an

area has attained the 1-hour NAAQS (40 CFR 50.9(b)).

The pre-existing 1-hour secondary ozone standard was replaced by an

8-hour standard identical to the new primary standard. The new

secondary standard will provide increased protection to the public

welfare against ozone-induced effects on vegetation.

D. Section 126 Petitions

In a separate rulemaking, EPA is proposing action on petitions

submitted by eight northeastern States under section 126 of the CAA.

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. The eight States are Connecticut, Massachusetts,

Maine, New Hampshire, New York, Pennsylvania, Rhode Island, and

Vermont.

Both the NOX SIP call and the section 126 petitions are

designed to address ozone transport through reductions in upwind

NOX emissions. However, the EPA's response to the section

126 petitions differs from EPA's action in the NOX SIP call

rulemaking in several ways. In today's NOX SIP call, EPA is

determining that certain States are or will be significantly

contributing to nonattainment or maintenance problems in downwind

States. The EPA is requiring the upwind States to submit SIP provisions

to reduce the amounts of each State's NOX emissions that

significantly contribute to downwind air quality problems. The States

will have the discretion to select the mix of control measures to

achieve the necessary reductions. By contrast, under section 126, if

findings of significant contribution are made for any sources

identified in the petitions, EPA would determine the necessary

emissions

[[Page 57362]]

limits to address the amount of significant contribution and would

directly regulate the sources. A section 126 remedy would apply only to

sources in States named in the petitions.

Based on the view that the SIP call and section 126 petitions are

both designed to achieve the same goal, several commenters urged EPA to

coordinate the two actions to the maximum extent possible. The EPA

agrees that the two actions are closely related and, therefore, should

be coordinated. This will help provide certainty for State and business

planning requirements. In addition, this coordination can help to

facilitate a trading program among sources in SIP call States that

choose to participate in the NOX trading program, and any

section 126 sources that would be subject to a Federal NOX

trading program.

The section 126 provisions require that any control remedy be

implemented within 3 years from the date of the finding that major

sources or a group of stationary sources emit or would emit in

violation of the relevant prohibition in section 110(a)(2)(D). Under

EPA's anticipated rulemaking schedule 4 on the petitions,

the compliance date for sources for which EPA makes such a finding

could be April 30, 2002; November 30, 2002; or May 1, 2003. Several

commenters expressed concern that the compliance deadline under section

126 was driving EPA's decision on the compliance deadline for the

NOX SIP call. Therefore, they believed that no changes would

be made in the proposed NOX SIP call deadline in response to

comments.

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

\4\ The eight northeastern States that filed section 126

petitions also filed suit in the District Court for the Southern

District of New York, to compel EPA to take action on those

petitions within prescribed periods. State of Connecticut v.

Browner, No. 98-1376 (S.D.N.Y., filed Feb. 25, 1998). The EPA and

the eight northeastern States jointly filed a motion to enter a

consent order prescribing certain dates for EPA action.

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

While EPA believes it is advantageous to coordinate the section 126

and NOX SIP call actions, EPA disagrees that this constrains

EPA from being responsive to public comments and considering

alternative compliance dates. See discussion below in Section V,

NOX Control Implementation and Budget Attainment Dates.

In the NOX SIP call NPR, EPA proposed that States be

required to submit SIPs within 12 months of the final SIP call. One

commenter asserted that the timing and terms of the rulemaking schedule

for the section 126 petitions precludes EPA from considering public

comments advocating different SIP due dates for the NOX SIP

call. The section 126 rulemaking schedule provides several options. One

option would allow findings on the petitions to be deferred pending

certain actions by the States and EPA on State submittals in response

to the NOX SIP call. The premise for the specified schedule

is that the SIP due date would be September 30, 1999 (i.e., roughly 12

months from signature of the notice on the final NOX SIP

call). As discussed below in Section VI, SIP Revision Criteria and

Schedule, EPA continues to believe 12 months is an appropriate

timeframe. However, had EPA determined that a longer timeframe for SIP

submittal was warranted, the section 126 rulemaking schedule would not

have restricted EPA from establishing a later due date.

One commenter supported the section 126 rulemaking schedule because

they thought it had the effect of using the SIP process rather than the

source-based petitions in that it provides an option of deferring

section 126 findings if EPA approves a State's NOX SIP.

Another commenter thought that the conditions for deferring section 126

findings were too stringent, and, therefore, section 126 would

inevitably be triggered prior to approval of any SIP provisions. This

issue is discussed in detail in Section II.A.2.c. in the NPR EPA just

issued on the section 126 petitions, which appears in the docket.

E. OTAG

As discussed in the proposed SIP call, OTAG completed the most

comprehensive analyses of ozone transport ever conducted. The EPA

participated extensively in this process. The EPA believes that the

OTAG process was successful and generated much useful technical and

modeling information on regional ozone transport. This information

provided EPA with the foundation for this rulemaking.

The EPA received numerous comments regarding the relationship

between the OTAG recommendations and EPA's proposed SIP call. Some

commenters asserted that the Agency's proposal was inconsistent with

the OTAG recommendations, while others believed that EPA used the

information and recommendations from OTAG appropriately. Primarily,

commenters stated that OTAG recommended a range of controls for utility

sources instead of a uniform level of control for all of the included

States.

The OTAG did recommend consideration of a range of controls, and

although it did not specifically recommend uniform controls across a

broad region, such a control scheme is within the range of its

recommendation. The EPA's action today is based on its consideration of

OTAG's recommendations, as well as information resulting from EPA's

additional work, and extensive public input generated through notice-

and-comment rulemaking. The EPA continues to believe, for reasons

explained in Section III.F.1, Uniform vs. Regional Controls, that

requiring NOX emissions reductions across the region in

amounts achievable by uniform controls is a reasonable, cost-effective

step to take at this time to mitigate ozone nonattainment in downwind

States for both the 1-hour and 8-hour standards.

Commenters also stated that EPA applied an electric utility control

level that was more stringent than the upper limit of the OTAG range of

utility controls. The OTAG recommended a range of utility controls that

falls between specific CAA-required controls and the less stringent of

85 percent reduction from the 1990 rate (lb/mmBtu), or 0.15 lb/mmBtu.

In determining the appropriate level of emissions reductions, EPA

considered what levels of NOX reductions could be obtained

by applying, to various source sectors, controls that are among the

most cost effective and feasible with today's proven pollution control

technologies. The EPA chose emissions reductions that are equivalent to

an emission limit from utilities of 0.15 lb/mmBtu. The EPA acknowledges

that this level may be more protective than the most protective level

contained in the OTAG recommendation in some cases, but, as discussed

below in Section IV, Air Quality Assessment, EPA believes that it

provides the most improvement in air quality while staying within the

bounds of the most highly cost-effective technology available. (Cost

effectiveness is discussed in Section II.D.) In addition, by relying on

actual 1995-1996 continuous emission monitoring data, rather than

relying on estimated 1990 emission data, this approach provides a more

accurate way of determining the States' budgets since it minimizes any

chances of over-or under-estimation of emissions.

Commenters asserted that OTAG recommended 12 months for additional

modeling--especially subregional modeling--before promulgating the SIP

call; and these commenters expressed concern that EPA did not provide

this amount of time following publication of the NPR. As discussed in

more detail in Section I.F, Discussion of Comment Period and

Availability of Key

[[Page 57363]]

Information, the Agency ultimately provided approximately 1 year from

the conclusion of OTAG for States and other members of the public to

complete and submit subregional and other types of modeling. The EPA

has considered this additional modeling in finalizing today's rule.

Some commenters stated that the goal of OTAG was to address

attainment of the ozone NAAQS. This is incorrect. The OTAG's goal was

to reduce ozone transport, which is one of the steps necessary to

enable attainment; the goal was not to recommend an overall strategy

that would yield attainment through regional measures alone. The OTAG

articulated its overall goal as follows:

* * * identify and recommend a strategy to reduce transported

ozone and its precursors which, in combination with other measures,

will enable attainment and maintenance of the national ambient ozone

standard in the OTAG region. A number of criteria will be used to

select the strategy including, but not limited to, cost

effectiveness, feasibility, and impacts on ozone levels.5

\5\ Ozone Transport Assessment Group Policy Paper approved by

the Policy Group on December 4, 1995.

It is also EPA's goal to ensure that sufficient regional reductions

are achieved to mitigate ozone transport in the eastern half of the

United States and thus, in conjunction with local controls, enable

nonattainment areas to attain and maintain the ozone NAAQS.

Commenters indicated that OTAG focused only on the 1-hour standard

nonattainment problem and did not assess compliance implications of the

8-hour standard. For this reason, according to commenters, EPA should

not base today's action on the nonattainment of the 8-hour NAAQS. It is

true that OTAG was established to address transport issues associated

with meeting the 1-hour standard. The EPA did not promulgate the 8-hour

standard until shortly after OTAG concluded; thus, OTAG did not

recommend strategies to address the 8-hour NAAQS. However, because EPA

had proposed an 8-hour standard, OTAG did examine the impacts of

different strategies on 8-hour average ozone predictions.

In light of OTAG's work and additional information, EPA is able to

assess ozone transport as it relates to the 8-hour NAAQS and to set

forth requirements as necessary to address the 8-hour standard in this

rulemaking. Ozone transport causes problems for downwind areas under

either the 1-hour or 8-hour standard. The regional reductions of

NOX that will be achieved through this SIP call for the 1-

hour NAAQS are key components for meeting the new 8-hour ozone standard

in a cost-effective manner. Therefore, EPA believes that the OTAG

recommendations for how to address ozone transport are valid for both

NAAQS.

Several commenters urged EPA to adopt and implement all Federal

measures identified in the OTAG recommendations.6 The Agency

is committed to continue implementing national control measures for

NOX, as recommended by OTAG. In addition, EPA has adopted

the following national measures for purposes of reducing VOC:

architectural and industrial maintenance coatings, consumer/commercial

products, and autobody refinishing. The EPA has made no decisions

regarding further VOC reductions beyond the reductions specified as

phase I in the OTAG recommendations.7

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

\6\ The OTAG recommendations are located in Appendix B of the

November 7, 1997 NPR (62 FR 60376).

\7\ Letter to the Honorable Ken Calvert, Chairman, Subcommittee

on Energy and Environment, U.S. House of Representatives, from

Robert D. Brenner, Acting Deputy Assistant Administrator for Air and

Radiation, U.S. EPA, June 26, 1998, transmitting EPA's responses to

questions following the May 20, 1998 congressional hearing on EPA's

proposed rule on paints and coatings.

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

Other more specific comments concerning the OTAG recommendations

will be addressed throughout this rulemaking as the issues are

discussed.

F. Discussion of Comment Period and Availability of Key Information

The EPA received numerous comments concerning the adequacy of the

comment period for the November 7, 1997 NPR and May 11, 1998 SNPR. Some

commenters remarked that the comment period for the NPR should be

extended to allow for development and review of technical information,

including inventory data, growth factors, and the resulting budget.

Commenters stated that the additional time was particularly necessary

for subregional air quality modeling, which is modeling designed to

isolate the impacts of emissions from a particular State or group of

States on downwind areas. Many specifically requested an additional 120

days, and one requested an additional 9 months. Some commenters

indicated that EPA did not incorporate their comments from the NPR into

the SNPR. Other commenters insisted that key information supporting the

rule is not publicly available. The EPA also received comments that

additional public hearings should be held in other locations of the

OTAG region.

1. Request for Extension of the Comment Period

The EPA allowed a 120-day public comment period for the November 7,

1997 NPR, which closed on March 9, 1998. By notice (63 FR 17349, April

9, 1998), EPA reopened the comment period for members of the public to

submit additional modeling analyses, as well as comments concerning the

implications that any additional modeling may have for the State NOx

budgets under consideration in the November 7, 1997 proposal. The

comment period was reopened through the end of the comment period on

the SNPR. The SNPR, which was published on May 11, 1998, allowed a

comment period until June 25, 1998. Thus, for most issues addressed in

the NPR, including air quality modeling issues, commenters received an

almost 8-month formal comment period. Indeed, many commenters had

access to the NPR immediately after October 10, 1997, when it was

signed and posted on an EPA website. The Agency also received a number

of comments after June 25, 1998, which were also reviewed and

considered in developing the final rule.

The EPA believes this additional opportunity for the public to

submit comments was reasonable. After March 9, 1998--the initial date

for close of the comment period on the NPR--EPA received numerous

comments on various issues raised in the NPR, including air quality

issues. Many of these comments were extensive, which indicates that

commenters received adequate time.

With respect to the concern that EPA did not incorporate comments

received on the NPR into the SNPR, it would not have been practical for

EPA to incorporate comments received on the NPR into the SNPR because

the SNPR was completed soon after the close of the comment period for

the NPR. In general, the SNPR addressed different aspects of the rule

than the NPR, and one of the purposes of the SNPR was to take comment

on several new issues, as noted above. The EPA has addressed comments

on both the NPR and SNPR in today's action.

The major issues raised in the comments are responded to throughout

the preamble of this final rule. A comprehensive summary of all

significant comments, along with EPA's response to the comments which

have not been responded to in the preamble (Response to Comments), can

be found in the docket for this rulemaking (Docket No. A-96-56).

[[Page 57364]]

2. Request for Time to Conduct Additional Modeling

The OTAG Policy Group, at its June 3, 1997 meeting, recommended

that States have the opportunity to conduct additional local and

subregional modeling and air quality analyses, as well as to develop

and propose appropriate levels and timing of controls. The EPA received

numerous comments related to OTAG's recommendation. The commenters

requested that the Agency give States more time to conduct this

additional modeling so that EPA could more accurately assess each

State's contribution to downwind nonattainment.

The EPA signed the NPR on October 10, 1997, and posted it on a

website at that time, although it was not published in the Federal

Register until November 7, 1997. As noted above, EPA reopened the

comment period through June 25, 1998 for submittal of additional air

quality modeling runs. In effect, this has extended the amount of time

for modeling analyses to over a year from the date OTAG submitted its

recommendations, and to over 8 months from the signature date for the

NPR. By the close of the comment period on June 25, 1998, EPA had

received numerous comments containing new and extensive air quality

modeling studies. Accordingly, EPA believes that commenters received

adequate time.

3. Availability of Key Information

A number of commenters asserted that EPA failed to make publicly

available key information, such as modeling and emissions inventory

data. Specifically, commenters stated that they did not have access to

the emissions data on which EPA based the air quality modeling for the

NPR. In addition, according to some commenters, several models used by

EPA and OTAG are proprietary models and have not been generally

available to the public.

In Section III.A.2, Availability, the Agency discusses the

availability of emissions inventory data to the public.

The OTAG and EPA conducted air quality modeling runs to determine

the level of contribution from emissions in upwind areas to ozone

nonattainment in downwind areas. Some of this modeling employed UAM-

V.8 The UAM-V has generally been available to the public for

the purpose of analyzing information relevant to today's rulemaking.

State and local agencies, as well as utility companies and other

stakeholders, have had access to licenses to use UAM-V.

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

\8\ Variable-Grid Urban Airshed Model.

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

Commenters objected that they were obliged either to purchase

licenses for use of the UAM-V model or to employ as a contractor the

model owner, and that these financial constraints restricted their

access to the model. Because this model has, in general, been privately

developed, EPA believes that reasonable fees for its use should be

expected. The EPA did not receive information indicating that the

associated expenses were other than reasonable. To the extent that

commenters experienced delays in obtaining the UAM-V model, EPA

believes that the extensions of the comment period resulted in adequate

time for comment. In any event, any commenter who was not able to gain

access in the timeframe desired was able to use a comparable model,

such as the Comprehensive Air Quality Model with Extensions (CAMx),

which is not proprietary. For the purpose of responding to public

comments, EPA is considering all information based on CAMx and similar

models.

The Agency made available additional modeling runs used to

determine emissions changes, costs and cost effectiveness for

electricity generating units (EGUs). These runs were placed on the IPM

Analyses web site at www.epa.gov/capi, with links to EPA's Office of

Air and Radiation Policy and Guidance web site.

On August 10, the EPA placed in the docket and made available on

the web site, modeling analyses and other information supporting

today's action. As noted above, by notice dated August 24, 1998 (63 FR

45032), EPA published a notice of availability which stated that

throughout the course of the rulemaking, EPA had placed information in

the docket or made it available on various web sites. This information

included inventory data and additional modeling runs. By placing those

materials in the docket and informing the public of their availability,

EPA provided 4-6 weeks for review and comment by the public. The EPA

did receive comments concerning this information from the Utility Air

Regulatory Group on September 9, and EPA is responding to those

comments in the Response To Comments document. The EPA notes that the

additional modeling analyses were performed in response to comments

received on the NPR urging EPA to conduct State-by-State modeling. The

Agency does not believe it is required to provide for additional

comment on every action it takes in response to comment, particularly

where, as here, the new information confirms the Agency's proposed

conclusions. Therefore, the Agency did not further extend the comment

period.

4. Public Hearings

The Agency conducted two hearings in Washington, DC, including a 2-

day hearing on February 3-4, 1998 for the NPR, and a 1-day hearing on

May 29, 1998 for the SNPR. Some commenters believe that additional

public hearings should have been held in other locations in the OTAG

region. The EPA believes these hearings provided reasonable opportunity

for oral comment on the proposed rulemaking given the timeframes

associated with this rulemaking. Therefore, the Agency did not schedule

any additional hearings. The public also had an opportunity to submit

written testimony within approximately 30 days after each hearing date.

G. Implementation of Revised Air Quality Standards

On July 18, 1997, EPA published its final rule for strengthening

the NAAQS for ozone by establishing an 8-hour standard (62 FR 38856).

Current monitoring data indicate that many areas in the East, Midwest

and South violate the 8-hour NAAQS. Along with areas violating the 1-

hour NAAQS, areas violating the 8-hour NAAQS are also affected by the

transport of ozone across the East. The regional NOX

reduction strategy finalized in today's action will provide a mechanism

to achieve reductions that will assist States in attaining and

maintaining this revised standard. In fact, the regional reductions

alone should be enough to enable the vast majority of the new counties

violating the 8-hour NAAQS that are located in States throughout the

East to attain the revised 8-hour standard.\9\

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

\9\ In the NPR (62 FR 60318, 60363), EPA provided estimates of

the number of counties expected to attain as a result of the

NOX SIP call. The EPA will update this list in the coming

months. The updated estimates of which counties will attain will be

based on more current air quality data and on the State-by-State

emissions budgets contained in today's final rule.

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

On July 16, 1997, President Clinton issued a directive on the

implementation of the revised air quality standards. This

implementation policy was described in the NPR (62 FR 60318, 60362-64).

The EPA received numerous comments on this implementation policy and on

EPA's plan to create a transitional classification\10\ for 8-hour ozone

nonattainment areas that meet certain

[[Page 57365]]

criteria. Since these comments concern implementation efforts for the

revised 8-hour ozone standard and do not relate directly to the

NOX SIP call on which EPA is taking final action in this

rulemaking, EPA is not responding in detail to the comments. The EPA

will address implementation of the revised standard separately. In

August 1998, EPA issued proposed guidance for public comment to explain

the implementation policy in further detail and to provide details on

SIP requirements for transitional areas (63 FR 45060, August 24, 1998).

The EPA expects to finalize the August 1998 draft guidance, as well as

guidance for areas other than transitional, by December 1998.\11\

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

\10\ The ``transitional classification'' EPA intends for 8-hour

ozone nonattainment areas is further discussed in the NPR (62 FR

60318, 60363).

\11\ For a complete listing of the guidance and other actions

EPA plans to issue to implement the revised ozone and PM NAAQS, see

a table on EPA's implementation website: http://

ttnwww.rtpnc.epa.gov/implement/actions.htm.

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

H. Summary of Major Changes Between Proposals and Final Rule

This summary describes the major changes that have occurred since

the NPR and SNPR in each of the following sections of today's final

rule.

1. EPA's Analytical Approach (Section II.A)

The NPR proposed two interpretations for the section

110(a)(2)(D)(i)(I) provisions concerning the ``significant

contribution'' test. Under the first, EPA would examine certain factors

relating to level of emissions and their ambient impact to determine

whether to make a finding that all of the emissions from a particular

State's sources contribute significantly to nonattainment or

maintenance problems downwind. If EPA made such a finding, then EPA

would examine certain cost factors to determine the extent to which the

SIP for the State must mitigate (reduce) its emissions. Under the

second interpretation, EPA would examine all of those factors

together--level of emissions, ambient impact, and costs--to determine

whether to make the finding with respect to a specified amount of

emissions. If EPA made the finding, then it would require the SIP to

eliminate that amount. In today's final rule, EPA is adopting the

second interpretation. The EPA indicates, however, that it would adopt

the same rule if it were instead implementing the first interpretation.

2. Cost Effectiveness of Emissions Reductions (Section II.D.)

The methodology of determining cost effectiveness has not

changed. For all sources, the inventory and as a result, the source-

specific costs, in some cases, have changed. This results in a

different overall budget level and a different overall cost-

effectiveness value. For the non-EGUs, while the methodology has not

changed, the analysis focuses on large non-EGU sources. The methodology

in the NPR focused on all non-EGU sources.

3. Determination of Budgets (Section III.)

For EGU, the EPA maintained the approach to use the

higher, by State, of 1995 or 1996 heat input data to calculate baseline

heat input rates for the NFR, and added 577 smaller units to the State

budget inventories which had erroneously been omitted from the NPR.

These units included electricity generating sources of 25 megawatts

(MW) or less of electrical output and additional units not affected

under the Acid Rain Program. Additional controls are not assumed for

these sources, but they are added to the budget at baseline levels. The

Agency has decided to use State-specific growth factors derived from

application of the IPM using the 1998 Base Case and chose to retain the

0.15 lbs/mmBtu as the assumed uniform control level for EGU budget

emissions determination.

The EPA examined alternatives that focus on non-EGU point

source reductions from the largest source categories, and within each

of these categories assumed controls that would result in a regionwide

average cost effectiveness less than $2000/ton. The resulting budget

assumes the emissions reductions from large non-EGU sources that are

among the most cost effective to control and does not include

reductions from smaller sources and sources that, as a group, are not

quite as cost effective or efficient to control, or are already covered

by other Federal measures. As a result, this final rule assumes, for

purposes of calculating the State NOX budgets, the following

emissions decreases from uncontrolled levels for the large (generally

greater than 250 mmBtu or 1 ton/day non-EGU sources (no emission

reductions are assumed for the smaller sources):

--Non-EGU boilers and turbines--60 percent decrease.

--Stationary internal combustion engines--90 percent decrease.

--Cement manufacturing plants--30 percent decrease.

It should be noted that point sources with capacities less than 250

mmBtu/hr but with emissions greater than 1 ton/day are not treated

differently from sources with capacities greater than 250 mmBtu/hr for

purposes of calculating the budget. This is a change from the NPR which

included RACT controls on units with capacities less than 250 mmBtu/hr

and emissions greater than 1 ton/day (see Section III.G.2.a). As under

the proposal, the rule allows States to choose control measures other

than the EPA-assumed controls to meet the numerical budgets.

The EPA has implemented the following changes that the

Agency proposed in the NPR for calculating baseline NOX

emissions from highway vehicles. A 1995 baseline is used for the final

rule in place of the 1990 baseline used in the NPR. The Highway

Performance and Monitoring System data were used to estimate States'

1995 vehicle miles traveled (VMT) by vehicle category, except in those

cases where EPA accepted revisions offered in the comments. Today's

action includes those mobile source reductions which EPA has determined

are appropriate to implement on a national basis, and which have been

promulgated in final form or are expected to be promulgated in final

form before States are required to comply with their budgets. The

highway vehicle budget components include the emission reductions

resulting from implementation of the National Low Emitting Vehicle

(NLEV) program, including the phase-in schedule agreed to by the

States, automobile manufacturers, and EPA. The highway budget

components do not include the effect of Tier 2 light-duty vehicle and

truck standards and any associated fuel standards since these standards

have not yet been proposed. The extent of the reformulated gasoline

(RFG) and inspection and maintenance (I/M) programs was not assumed to

change beyond that assumed for the NPR, except for those States that

were able to demonstrate that the NPR's modeling assumptions did not

conform to the State's SIP and did not reflect CAA requirements.

The EPA has chosen to retain the 1990 baseline inventories

for nonroad mobile sources presented in the NPR for today's action,

with additional changes made in response to public comments. The

control strategies assumed for calculating the nonroad and stationary

area source budget components have not changed from the SNPR.

4. NOX Control Implementation and Budget Achievement Dates

(Section V)

The EPA proposed that the SIP revisions require full

implementation of the necessary State measures by September 2002 and

took comment on a range of dates from September 2002 through September

2004. Based on

[[Page 57366]]

public comments and feasibility analyses conducted by EPA, the Agency

is requiring an implementation date of May 1, 2003. The Agency is also

providing some compliance flexibility to States for the 2003 and 2004

ozone seasons by establishing State compliance supplement pools. This

is described in Section III.F.6.

5. SIP Criteria (Section VI.A)

The Agency has determined that the additional SIP

approvability criteria, as proposed in the SNPR, should apply not only

when States choose to regulate EGUs (63 FR 25912), but also when States

choose to regulate large steam-producing units (i.e., combustion

turbines and combined cycle systems with a capacity greater than 250

mmBtu/hr).

The Agency proposed revisions to part 51 requiring

continuous emissions monitoring systems (CEMS) on all large electrical

generating and steam-producing sources which States elect to subject to

emissions reduction requirements in response to this rulemaking. The

EPA took comment on requiring that, if a State chooses to regulate

these sources to meet the SIP call, the SIP must require these sources

to use the NOX mass monitoring provisions of part 75,

subpart H, to demonstrate compliance with applicable emissions control

requirements. After considering comments, the Agency is requiring that,

in these circumstances, the SIP specify that large sources comply with

the monitoring provisions of part 75, subpart H, which includes non-

CEMS monitoring options for units that are infrequently operated or

units that have low mass emissions.

6. Emissions Reporting Requirements for States (Section VI.B)

The proposed rule required that States report full-year,

as well as ozone-season, emissions from all sources for the triennial

inventories commencing with year 2002 emissions and the 2007 inventory,

and for those sources for which reports had to be submitted annually

starting with year 2003 emissions. The final rule requires only ozone-

season emissions reporting for all sources.

In the SNPR, the EPA proposed, for purposes of reporting

requirements, to define a point source as a non-mobile source which has

NOX emissions of 100 tons/year or greater. Under today's

action, States have the option of establishing a smaller emission

threshold than 100 tons/year of NOX emissions in defining

point source. This will allow the definition of point source to remain

consistent with current definitions in local areas.

7. NOX Budget Trading Program (Section VII.)

For States that choose to participate in the

NOX Budget Trading Program, the preamble clarifies the

intent of the model rule and identifies areas of the rule where States

have flexibility to include variations in their State rules.

In the SNPR, the Agency solicited comment on a range of

options for incorporating banking into the trading program. After

considering these comments, the Agency is including banking provisions

in the final rule. The provisions allow for unlimited banking starting

in 2003 and includes a flow control mechanism to limit the emissions

variability associated with banking.

One of the banking approaches presented in the SNPR

included the option for sources to generate and use early reduction

credits. Consistent with the provisions of the NOX SIP call

which provide for State compliance supplement pools, the final rule

allows States to issue early reduction credits for certain

NOX emissions reductions achieved between September 30, 1999

and May 1, 2003.

The final rule clarifies the timing requirements for State

submission of allowance allocations to EPA and, as proposed, lays out

an allocation approach. Each State remains free to adopt the final

rule's allocation approach or adopt an allocation scheme of its own,

provided it meets the specified timing requirements, requires new

sources to hold allowances, and does not allocate more allowances than

are available in the State trading budget.

8. Interaction with Title IV NOX Rule (Section VIII.)

In the SNPR, EPA proposed revisions to part 76 addressing

the interaction between title IV and the NOX SIP call. In

this final rule, EPA explains that the Agency is not adopting any of

the proposed revisions to part 76.

9. Administrative Requirements (Section X.)

NPR Section VIII, Regulatory Analyses, has been replaced

in the final rule by Section X.A, Executive Order 12866: Regulatory

Impacts Analysis. The new final rule Section X.A indicates that EPA has

prepared a RIA for the final rule and cites the cost and benefit

estimates from that analysis.

The final rule adds several Sections under X,

Administrative Requirements, that were absent from the NPR. These

include: Paperwork Reduction Act; Executive Order 13045: Protection of

Children from Environmental Health Risks and Safety Risks; Executive

Order 12898: Environmental Justice; Executive Order 12875: Enhancing

the Intergovernmental Partnerships; Executive Order 13084: Consultation

and Coordination with Indian Tribal Governments; Judicial Review; and

Congressional Review Act. These new Sections provide a more

comprehensive summary of the Acts and Executive Orders that could apply

to the final rule. Each Section identifies the requirements of the

relevant Act or Executive Order, indicates EPA's interpretation of

whether the Act or Executive Order actually applies to this rulemaking,

and, if so, indicates how the Agency has addressed the Act or Executive

Order.

II. EPA's Analytical Approach

A. Interpretation of the CAA's Transport Provisions

As indicated in the NPR, 62 FR 60323, the primary statutory basis

for today's action is the ``good neighbor'' provision of section

110(a)(2)(D)(i)(I), under which, in general, each SIP is required to

include provisions assuring that sources within the State do not emit

pollutants in amounts that significantly contribute to nonattainment or

maintenance problems downwind. This statutory requirement applies to

SIPs under both the 1-hour ozone NAAQS and the 8-hour ozone NAAQS.

1. Authority and Process for Requiring SIP Submissions Under the 1-Hour

Ozone NAAQS

a. Authority for Requiring SIP Submissions under the 1-Hour NAAQS.

Each State is currently required to have in place a SIP that implements

the 1-hour ozone NAAQS for areas to which that standard still applies.

In the NAAQS rulemaking, EPA determined that the 1-hour NAAQS would

cease to apply to areas that EPA determines have air quality in

attainment of that NAAQS (40 CFR 50.9(b)). In two recent rulemakings,

EPA identified numerous areas of the country to which the 1-hour NAAQS

no longer applies. ``Final Rule: Identification of Ozone Areas

Attaining the 1-Hour Standard and to Which the 1-Hour Standard is No

Longer Applicable,'' (63 FR 31014, June 5, 1998); ``Final Rule:

Identification of Additional Ozone Areas Attaining the 1-Hour Standard

and to Which the 1-Hour Standard is No Longer Applicable,'' (63 FR

27247, July 22, 1998).

The 1-hour NAAQS remains applicable to areas whose air quality

continues to monitor nonattainment. As noted above in Section I.B,

General

[[Page 57367]]

Factual Background, these include many major urban areas in the eastern

half of the United States. States that contain these areas remain

responsible for meeting CAA requirements applicable to those areas for

the purpose of attaining the 1-hour NAAQS. For example, States are

responsible for attainment demonstrations for areas designated

nonattainment and classified as moderate or higher.

By the same token, States that are upwind of these areas are

responsible to meet the ``good neighbor'' requirements of section

110(a)(2)(D). This responsibility is not alleviated simply because, for

areas other than the current nonattainment areas, the 8-hour NAAQS has

replaced the 1-hour NAAQS.

b. Process for Requiring SIP Submissions under the 1-Hour NAAQS. As

explained in the NPR, the appropriate route for EPA to require SIP

submissions under section 110(a)(2)(D)(i)(I) with respect to the 1-hour

standard is issuance of a ``SIP call'' under section 110(k)(5).\12\

Section 110(k)(5) authorizes EPA to find that a SIP is substantially

inadequate to meet a CAA requirement and to require (``call for'') the

State to submit, within a specified period, a SIP revision to correct

the inadequacy. Specifically, section 110(k)(5) provides, in relevant

part:

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

\12\ As discussed in the NPR and in greater detail further

below, the basis for requiring a transport-related SIP revision for

the 8-hour standard is the requirement in section 110(a)(1) that

States submit SIPs meeting the requirements of section 110(a)(2)

within 3 years (or an earlier date established by EPA) of

promulgation of a new or revised NAAQS. This is discussed in further

detail below.

Whenever the Administrator finds that the applicable

implementation plan for any area is substantially inadequate to

attain or maintain the relevant [NAAQS], to mitigate adequately the

interstate pollutant transport described in section 176A or section

184, or to otherwise comply with any requirement of this Act, the

Administrator shall require the State to revise the plan as

necessary to correct such inadequacies. The Administrator shall

notify the State of the inadequacies, and may establish reasonable

deadlines (not to exceed 18 months after the date of such notice)

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

for the submission of such plan revisions.

By today's action, EPA is determining that the SIPs for the

specified jurisdictions are substantially inadequate to comply with the

requirements of section 110(a)(2)(D)(i)(I) because the relevant SIPs do

not contain adequate provisions prohibiting their sources from emitting

amounts of NOX emissions that contribute significantly to

nonattainment in downwind areas that remain subject to the 1-hour

NAAQS. Based on these determinations, EPA is requiring the identified

States to submit SIP revisions containing adequate provisions to limit

emissions to the appropriate amount.

If a State does not submit the required SIP provisions in response

to this SIP call, EPA will issue a finding that the State failed to

make a required SIP submittal under section 179(a). This finding has

implications for sanctions as well as for EPA's promulgation of Federal

implementation plans (FIPs). Sanctions and FIPs are discussed in

Section VI, SIP Criteria and Emissions Reporting Requirements.

(1) Commenters' Arguments Concerning the Transport Provisions.

Commenters argued that EPA does not have unilateral authority to issue

a SIP call under section 110(k)(5) to require States to remedy SIPs

that do not meet the requirements of section 110(a)(2)(D). The

commenters noted that when Congress amended the CAA in 1990, Congress

provided that the sole authority for EPA and States to address

interstate transport of pollution is through transport commissions. In

support, the commenters state that Congress: (i) Added sections 176A

and 184, which authorize the establishment of transport regions and the

formation of transport commissions; (ii) revised section 110(k)(5) to

refer to those transport provisions; and (iii) revised section

110(a)(2)(D)(i) to require that SIP provisions designed to eliminate

interstate pollutant transport be consistent with other CAA

requirements. According to the commenters, these provisions, read as a

whole, mandate that if EPA believes that a transport problem exists,

EPA's sole recourse is to form a transport region under sections 176A

and/or 184; EPA may issue a SIP call to mandate compliance with section

110(a)(2)(D)(i) only in response to a recommendation of the transport

region. The commenters also claim that this scheme is sensible because

it provides a consensual forum for States to address interstate

pollution rather than allowing unilateral action on the part of EPA or

a State.

The EPA disagrees with the commenters' conclusion that these

statutory provisions make clear that EPA cannot require a State to

address interstate transport without first establishing a transport

commission and in the absence of a recommendation from the transport

commission. There is no language of limitation in sections 110(a)(2)(D)

or (k)(5), or 176A, or 184. Nor is there any support in the legislative

history for such a narrow reading of the statute. Moreover, under the

commenters' interpretation, the CAA Amendments of 1990 have placed

greater constraints on States' and EPA's ability to address the

interstate transport of pollution. Such an interpretation would be

inconsistent with the overall purpose of the CAA to ensure healthful

air. Thus, EPA believes that the transport provisions were added as an

additional tool to address interstate transport but were not intended

to preclude other methods of addressing interstate pollution than prior

to passage of the amendments.

Under the 1990 Amendments, Congress recognized the growing evidence

that ozone and its precursors can be transported over long distances

and that the control of transported ozone was a key to achieving

attainment of the ozone standard across the nation (Cong. Rec. S16903

(daily ed. Oct. 27, 1990) (statement of Sen. Mitchell); S16970

(conference report) S16986-87 (statement of Sen. Lieberman)). Thus, in

1990, Congress added a new mechanism to address interstate transport.

Specifically, Congress enacted sections 176A and 184, which provide a

mechanism for States to work together to address the interstate

transport problem. However, by their terms, these sections simply

provide authority for EPA to designate transport regions and establish

transport commissions. There is nothing in the language of these

provisions that indicates that they supersede the other statutory

mechanisms for addressing interstate transport, or that they now

provide the sole mechanism for resolving interstate pollution

transport.

Moreover, although Congress expressly added these two provisions

through the 1990 Amendments, Congress did not in any way limit section

110(a)(2)(D), which requires States to address interstate transport in

their SIPs. The addition of the language providing that States' actions

under section 110(a)(2)(D) be ``consistent with [title I] of the Act''

cannot be read to limit the controls States may adopt to meet section

110(a)(2)(D) to those recommended by a transport

commission.13 After all, the transport region provisions are

only two of many provisions in title I. Rather, this

[[Page 57368]]

language concerning consistency should be read as clarifying that any

section 110(a)(2)(D) requirement must be consistent with other

provisions of title I. Similarly, this language makes explicit that SIP

revisions required in accordance with the procedures of the transport

provisions would meet the requirements of section 110(a)(2)(D)(i).

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

\13\ Taken to its logical conclusion, the commenters' argument

would mean that States are precluded from submitting a section

110(a)(2)(D) SIP unless it reflects measures recommended through the

transport commission process. The EPA does not believe that Congress

would first establish a specific mandate (to submit a SIP to address

interstate transport) and then limit it in such a cryptic fashion.

If Congress intended section 110(a)(2)(D) SIPs to only reflect

transport commission recommendations, Congress could have

specifically referenced sections 176A and 184 in section

110(a)(2)(D), rather than generally providing that SIPs be

``consistent'' with title I of the CAA.

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

Furthermore, it is significant that Congress did not in any sense

bind EPA's ultimate discretion to determine whether State plans

appropriately address interstate transport. Under sections 176A and

184, the States may only make recommendations to EPA. Thus, under the

transport provisions, as well as the general SIP requirements of

section 110(a)(2), EPA must ultimately decide whether the SIP meets the

applicable requirements of the CAA. If, as the commenters contend, EPA

is limited to calling on States to address interstate transport only by

strategies recommended by the State, then EPA would be precluded from

ensuring that States address interstate transport. For example, EPA

could establish a transport commission but the commission could fail to

make recommendations or make insufficient recommendations. (Section

176A provides that transport commissions may make recommendations to

EPA only by ``majority vote of all members'' other than those

representing EPA.) Such a reading of the statute would be absurd in

light of the growing recognition at the time of the 1990 Amendments

that transport is a real threat to the primary purpose of title I of

the CAA--attainment of the NAAQS.

By the same token, in amending section 110(k)(5) in the 1990

Amendments, Congress did not add anything that explicitly provides

that, in the case of interstate transport, section 110(k)(5) would

apply only when EPA approved (or substituted measures for) a transport

commission's recommendations. The reference in section 110(k)(5) to the

transport provisions of sections 176A and 184 does not preclude EPA's

use of the SIP call provision to call on States to ensure their SIPs

meet the requirements of section 110(a)(2)(D)(i). Section 110(k)(5)

also provides for EPA to call on States ``to otherwise comply with

requirements of this Act;'' among the requirements in chapter I of the

CAA is the requirement in section 110(a)(2)(D). The reference in

section 110(k)(5) to the transport provisions simply makes explicit

that EPA may employ section 110(k)(5) for the additional purpose of

requiring SIPs to include the control measures as recommended by

transport commissions and approved by EPA under the transport

provisions.

Moreover, there is no indication in the legislative history of the

1990 Amendments that Congress intended the sections 176A and 184

transport provisions to supersede the section 110(k)(5) SIP call

mechanism for ensuring compliance with section 110(a)(2)(D)(i). Reading

the transport provisions to supersede the SIP call mechanism would

constitute a significant change from the CAA as it read prior to the

1990 Amendments. Even if the statute is ambiguous as to whether the

transport provisions supersede the SIP call mechanism--and EPA believes

the statute is clear that the transport provisions do not supersede--

congressional silence would suggest that Congress did not intend such a

significant change (See generally Harrison v. PPG Industries, Inc., 446

U.S. 578, 602, 100 S.Ct. 1889, 1902, 64 L.Ed.2d 525 (1980) (Rehnquist,

J., dissenting), cited with approval in Chisom v. Roemer, 501 U.S. 380,

396 n. 23, 111 S.Ct. 2354, 2364 n. 23, 115 L.Ed.2d 348 (1991)).

Finally, the commenter asserts that EPA's interpretation of the CAA

to allow a SIP call in the absence of a transport commission

recommendation reads out of the CAA the consensual transport commission

procedures under sections 176A and 184. This is simply not true. The

EPA interprets the transport commission process to be one tool to

assess and address interstate transport. In fact, the Northeast Ozone

Transport Commission, under section 184, has been active since

enactment of the 1990 Amendments. In 1995, EPA approved a

recommendation of that commission (60 FR 4712 14). Transport

commissions remain a viable means for dealing with interstate

transport. Furthermore, contrary to the general implication of the

commenter's remark, the OTAG process, though not a formal transport

commission, provided an opportunity not only for Federal and State

governments to assess jointly the transport issue, but also involved

industry, environmental groups and others. The EPA based its SIP call

on information developed through OTAG, as well as additional analyses

performed by the Agency and information submitted by a variety of

groups during the comment period on the proposed rule. Thus, the OTAG

process contained consensual elements.

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

\14\ In Commonwealth of Virginia v. EPA, 108 F.3d 1397 (D.C.

Cir. 1997), the court vacated EPA's SIP call in response to the

Northeast Ozone Transport Commission's recommendation on the basis

that the EPA could not require States to adopt a specific control

measure under its section 110(k)(5) authority and that, in any

event, EPA could not require States to adopt stricter motor vehicle

emission standards under either section 110(k)(5) or section 184.

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

(2) Commenters' Arguments Concerning the Virginia case. Under one

of the approaches described in the proposed rule, EPA proposed to

determine, for each of various upwind States, the aggregate ``amounts''

of air pollutants (NOX) that contribute significantly to

nonattainment, and that, therefore must be prohibited by the various

SIPs. The NOX emissions budget for each State is an

expression of the amount of NOX emissions that would remain

after the State prohibits the amount that contributes significantly to

downwind nonattainment. In the final rule issued today, EPA has

continued this approach, establishing emissions budgets for each of the

23 jurisdictions based on required reductions. This determination is an

important step toward assuring that overall air quality standards are

met downwind.

Commenters argue that even if EPA has authority to call on States

to address interstate transport, EPA does not have the authority under

section 110(a)(2)(D) to mandate that upwind States limit NOX

emissions to specified amounts. Rather, according to this view, EPA's

authority is limited to determining that the upwind States' SIPs are

inadequate, and generally requiring the upwind States to submit SIP

revisions to correct the inadequacies. The upwind States would then,

according to this view, submit a SIP revision that implements what the

upwind States determine to be the appropriate amount of NOX

reductions. If EPA believes that those amounts are too small to correct

the inadequacy, EPA could disapprove the SIP revisions.

Proponents of this view rely on the recent decision in Virginia v.

EPA, 108 F.3d 1397, 1406-10 (D.C. Cir. 1997) (Virginia) (citing Train

v. NRDC), in which the court vacated EPA's SIP call on the basis that

through it, EPA gave States no choice but to adopt the California low

emission vehicle (LEV) program. The court found that the language in

section 110(k)(5) that provides EPA with the authority to call on a

State to revise its SIP ``as necessary'' to correct a substantial

inadequacy did not change the longstanding precept that States have the

primary authority for determining the mix of control measures needed to

attain the NAAQS.

The EPA disagrees that the CAA prohibits EPA from establishing an

emissions budget through a SIP call requiring upwind States to prohibit

emissions that contribute significantly to downwind nonattainment.

Section

[[Page 57369]]

110(a)(2)(D) is silent regarding whether States or EPA are to determine

the level of emission reductions necessary to mitigate significant

contribution. The caselaw cited by the commenters only provides that

States are primarily responsible for determining the mix of control

measures--not the aggregate emission reduction levels that are

necessary. Moreover, Train v. NRDC, which underlies the Virginia

court's decision, relied on section 107(a) of the CAA, which specifies

only that each State is primarily responsible for determining a control

strategy to attain the NAAQS ``within such State.''

Section 110(a)(2)(D) does not provide who--EPA or the States--is to

determine the level of emission reductions necessary to address

interstate transport. As quoted above, section 110(a)(2)(D)(i)(I)

requires that SIPs contain ``adequate provisions prohibiting * * *

[sources] from emitting any air pollutant in amounts which will

contribute significantly to nonattainment'' downwind. Nor does this

provision indicate the criteria for determining the ``amounts'' of

pollutants that contribute significantly to nonattainment downwind. Nor

does this provision indicate the process for determining those

``amounts,'' including whether EPA or the States should carry out this

responsibility. 15 Under Chevron U.S.A., Inc. v. Natural

Resources Defense Council, 468 U.S. 1227, 105 S.Ct. 28, 82 L.Ed.2d 921

(1984) (Chevron), because the statute does not answer these specific

issues, EPA has discretion to provide a reasonable interpretation.

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

\15\ The EPA is not contending that the ``as necessary''

language in section 110(k)(5) provides the basis for EPA's authority

to identify the emissions budget for upwind States.

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

Neither the decision in Virginia, nor the body of caselaw upon

which it relies, addresses this issue. Rather, these cases address

solely the division between the States and EPA regarding the initial

identification of control measures necessary to attain the ambient air

quality standards. The issue before the court in Virginia was whether

EPA had offered States a choice in selecting control measures or

instead had mandated the adoption of a specific control measure.

Relying on Train v. NRDC, 421 U.S. 60, 95 S.Ct. 1470, 43 L.Ed.2d 731

1975), the Virginia court found that under title I of the CAA, EPA is

required to establish the overall air quality standards, but the States

are primarily responsible for determining the mix of control measures

needed to meet those standards and the sources that must implement

controls, as well as the applicable level of control for those sources.

The EPA must then review the State's determination only to the extent

of assuring that the overall air quality standards are met. If EPA

determines that the SIP's mix of control measures does not result in

achieving the overall air quality standards, EPA is required to

disapprove the SIP and promulgate a FIP, under which EPA selects the

sources for emissions reductions (Virginia, 108 F.3d at 1407-08, citing

Train v. NRDC, 421 U.S. 60, 95 S.Ct. 1470, 43 L.Ed.2d 731 (1975); Union

Electric Co. v. EPA, 427 U.S. 246, 96 S.Ct. 2518, 49 L.Ed.2d 474

(1976)). This line of cases, which focuses on the selection of

controls, does not address whether EPA or the States--in the first

instance--should determine the aggregate amount of reductions necessary

to address interstate transport.

Moreover, NRDC v. Train addresses State plans for purposes of

intrastate emissions planning. In determining that States have the

primary authority for determining the control measures needed to attain

the standard, the court relied on section 107(a) of the CAA, which

provided (and still provides) that:

Each State shall have the primary responsibility for assuring

air quality within the entire geographic area comprising such State

by submitting an implementation plan which will specify the manner

in which national primary and secondary ambient air quality

standards will be achieved and maintained within each air quality

region in such State.''

(421 U.S. at 64, 95 S.Ct at 1474-75 (emphasis added)).

Thus, the underlying support for the court's determination in Train

v. NRDC applies only where a State is determining the mix of controls

within its boundaries, not to the broader task of determining the

aggregate emissions reductions needed in conjunction with emissions

reductions from a number of other States in order to address the impact

of transported pollution on downwind States. 16

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

\16\ The court's decision in Train v. NRDC appears to rely on

the plain language of the statute in holding that a State is

primarily responsible for determining the mix of control measures

necessary to demonstrate attainment within that State's borders. The

court in Virginia appears to adopt this ``plain meaning''

interpretation without addressing that the language in section

107(a) applies only to intrastate issues. This issue is not relevant

in the present case, however, since States are free to decide the

mix of control measures under today's final action.

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

Although the cases to date have not addressed directly whether it

is the province of EPA or the States to determine the aggregate amounts

of emissions to be prohibited (and hence, the amounts that may remain--

i.e., the emissions budgets), EPA believes it reasonable to interpret

the ambiguity in section 110(a)(2)(D)(i)(I) to include this

determination among EPA's responsibilities, particularly in the current

circumstances. Determining the overall level of air pollutants allowed

to be emitted in a State is comparable to determining overall standards

of air quality, which the courts have recognized as EPA's

responsibility, and is distinguishable from determining the particular

mix of controls among individual sources to attain those standards,

which the caselaw identifies as a State responsibility. In Train, a

State was required to assure that its own air quality attained overall

air quality standards and to implement emissions controls to do so.

Under these circumstances, the court clarified that while the

responsibility for determining the overall air quality standards was

EPA's, the responsibility for determining the specific mix of controls

designed to achieve that air quality was the State's. By comparison, as

stated earlier, a transport case, under section 110(a)(2)(D)(i), does

not concern any requirement of the upwind State to assure that its own

air quality attains overall air quality standards. Rather, a transport

case concerns the upwind State's requirement to assure that its

emissions are reduced to a level that will not contribute significantly

to nonattainment downwind. Determining this overall level of reductions

for the upwind State is analogous to determining overall air quality

standards, and, thus, should be the responsibility of EPA.

Once EPA determines the overall level of reductions (by assigning

the aggregate amounts of emissions that must be eliminated to meet the

requirements of section 110(a)(2)(D)), it falls to the State to

determine the appropriate mix of controls to achieve those reductions.

Unlike the regulation at issue in Virginia, today's regulation

establishing emission budgets for the States does not limit the States

to one set of emission controls. Rather, the States will have

significant discretion to choose the appropriate mix of controls to

meet the emissions budget. The EPA has based the aggregate amounts to

be prohibited on the availability of a subset of cost-effective

controls that are among the most cost effective available. As explained

elsewhere in this final rule and the NPR, the State may choose from a

broader menu of cost-effective, reasonable alternatives, including some

(e.g., vehicle inspection and maintenance programs and reformulated

[[Page 57370]]

gasoline) that may even be more advantageous in light of local

concerns.

The task of determining the reductions necessary to meet section

110(a)(2)(D) involves allocating the use of the downwind States' air

basin. This area is a commons in the sense that the contributing State

or States have a greater interest in protecting their local interests

than in protecting an area in a downwind State over which they do not

have jurisdiction and for which they are not politically accountable.

Thus, in general, it is reasonable to assume that EPA may be in a

better position to determine the appropriate goal, or budget, for the

contributing States, while leaving to the contributing States'

discretion to determine the mix of controls to make the necessary

reductions.

The EPA's decision to assign the budgets in the final rule is

particularly reasonable. Today's rulemaking involves almost half the

States in the Nation, and although these States participated in OTAG

beginning more than 3 years ago, they still have not agreed on whether

particular upwind States should be treated as having sources whose

emissions contribute significantly to downwind nonattainment, what the

aggregate level of emissions reductions should be, or what the State-

by-State reductions should be. The sharply divergent positions taken by

the States in their comments on the NPR and SNPR raise doubts that

those disagreements could ever be resolved by consensus. It is most

efficient--indeed necessary--for the Federal government to establish

the overall emissions levels for the various States. This is

particularly true for an interstate pollution problem such as the one

being dealt with in this action where the downwind areas at issue are

affected by pollution coming from several States and the actions taken

by each of the concerned States could have an effect on the appropriate

action to be taken by another State. For example, if EPA did not

specify the emissions to be prohibited from each of the various States

affecting New York City, each of those States might claim it could

reduce its emissions less provided other States did more. Or, a State

close to New York might assert that it could just as effectively deal

with its contribution to New York through additional VOC, rather than

NOX, reductions and submit a section 110(a)(2)(D) SIP based

on a VOC-control rather than NOX-control strategy. These

choices, however, even assuming they were valid, necessarily relate to

the choices that would need to be made by the other upwind States

(e.g., Pennsylvania's choice of a VOC-dominated 110(a)(2)(D) control

strategy to deal with its contribution to New York could affect what

Ohio or New Jersey would need to do to deal with their own

contributions by lowering the overall level of NOX

reductions being obtained throughout the pertinent region). Where many

States are involved and the choices of each individual State could

affect the choices and decisions of the other States the need for

initial federal action is manifest. The EPA's action to determine the

amount of NOX emissions that each of the States must

prohibit in this widespread geographic area is needed to enable the

States to decide expeditiously how to achieve those reductions in an

efficient manner that will not undermine the actions of another State.

By notifying each State in advance of its reduction requirements, EPA

enables each State to develop its plan with full knowledge of the

amount and kind of reductions that must be achieved both by itself and

other affected States. The EPA's action provides the minimum framework

necessary for a multi-state solution to a multi-state problem while

preserving the maximum amount of state flexibility in terms of the

specific control measures to be adopted to achieve the needed emission

reductions. The reasonableness of EPA's approach to the interstate

ozone transport problem was recently recognized by a US Court of

Appeals in the context of upholding EPA's redesignation of the

Cleveland ozone nonattainment area to attainment in light of EPA's

approach to the regional transport problem. In the course of doing so

the court rejected the contention that a separate analysis of the

current adequacy of the Cleveland SIP under section 110(a)(2)(D) was

required as a prerequisite to redesignation. The court, after

describing the November 7, 1997 proposed SIP call and the path EPA was

on to deal with this multi-state regional problem, upheld EPA's

redesignation and stated that ``[w]e find that the EPA's approach to

the regional transport problem is reasonable and not arbitrary or

capricious.'' Southwestern Pennsylvania Growth Alliance v. Browner, 144

F.3d 984, 990 (6th Cir. 1998).

As noted above, commenters have argued that if EPA determines to

issue any SIP call, the SIP call must be more general (i.e., one that

simply requires revised SIPs from upwind areas) and not specify the

amounts of NOX emissions that those areas must prohibit.

However, if EPA issued a general SIP call and an upwind State responded

by submitting an inadequate SIP revision, EPA would disapprove that

SIP, and in the disapproval rulemaking, EPA would be obliged to justify

why the submitted SIP was unacceptable. Without determining an

acceptable level of NOX reductions, the upwind State would

not have guidance as to what is an acceptable submission. The EPA's

determination, as part of the issuance of the SIP call, of the amounts

of NOX emissions the SIPs must prohibit obviously provides

for more efficient and smooth-running administrative processes at both

the State and Federal levels. For the same reasons that EPA believes it

is appropriate for the Agency to establish the emissions budgets under

the authority of section 110(a)(2)(D) and (k)(5), EPA believes that it

is necessary to do so through a rule under the general rulemaking

authority of section 301(a). Setting such a rule is necessary, as a

practical matter, for the Administrator's effective implementation of

section 110(a)(2)(D). See NRDC v. EPA, 22 F.3d 1125, 1146-48. Without

such a rule the States could be expected to submit SIPs reflecting

their conflicting interests, which could result in up to 23 separate

SIP disapproval rulemakings in which EPA would need to define the

requirements that each of those States would need to meet in their

later, corrective SIPs. That in turn would trigger a new round of SIP

rulemakings to judge those corrective SIPs. The delay attendant to that

process would thwart timely attainment of the ozone standards.

2. Authority and Process for Requiring SIP Submissions under the 8-Hour

Ozone NAAQS

a. Authority for Requiring SIP Submissions under the 8-Hour NAAQS.

(1) SIP Submissions Under CAA Section 110(a)(1). In the NPR and SNPR,

EPA proposed to require the 23 upwind jurisdictions to submit SIP

revisions to reduce emissions that exacerbate ozone problems in

downwind States under the 8-hour ozone NAAQS, as well as the 1-hour

NAAQS. The EPA recognized that under the 8-hour NAAQS, areas have not

yet been designated as attainment, nonattainment, or unclassifiable,

and are not yet required to have SIPs in place. Even so, EPA proposed

that upwind areas be required to submit SIPs meeting the requirements

of section 110(a)(2)(D)(i)(I) with respect to the 8-hour NAAQS.

In today's action, EPA is confirming its view that it has authority

under the 8-hour NAAQS to require SIP submittals under section

110(a)(2)(D)(i)(I) to reduce NOX emissions by the prescribed

amounts. Section 110(a)(1) provides, in relevant part--

[[Page 57371]]

Each State shall * * * adopt and submit to the Administrator,

within 3 years (or such shorter period as the Administrator may

prescribe) after the promulgation of a national primary ambient air

quality standard (or any revision thereof) * * * a plan which

provides for implementation, maintenance, and enforcement of such

primary standard in each (area) within such State.

Section 110(a)(2) provides, in relevant part--

Each implementation plan submitted by a State under this Act

shall be adopted by the State after reasonable notice and public

hearing. Each such plan shall [meet certain requirements, including

those found in section 110(a)(2)(D)].

The provisions of section 110(a)(1) and (a)(2) apply by their terms

to all areas, regardless of whether they have been designated as

attainment, nonattainment, or unclassifiable under section 107. The

plain meaning of these provisions, read together, is that SIP revisions

are required under the revised NAAQS within 3 years of the date of

revision, or earlier if EPA so requires, and that those SIP revisions

must meet the requirements of section 110(a)(2), including subparagraph

(D).

That the SIP submission requirements of section 110(a)(1) are

triggered by the promulgation of a new or revised NAAQS is made even

clearer by comparing section 172(b), which applies by its terms only to

areas that have been designated nonattainment under section 107.

Section 172(b) provides, in relevant part--

At the time the Administrator promulgates the designation of any

area as nonattainment with respect to a [NAAQS] under section 107(d)

* * *, the Administrator shall establish a schedule according to

which the State containing such area shall submit a plan or plan

revision * * * meeting the applicable requirements of subsection (c)

of this section and section 110(a)(2) * * * Such schedule shall at a

minimum, include a date or dates, extending no later than 3 years

from the date of the nonattainment designation, for the submission

of a plan or plan revision * * * meeting the applicable requirements

of subsection (c) of this section and section 110(a)(2) * * *

Section 172(b) establishes the schedule for submissions due with

respect to nonattainment areas under sections 172(c) and 110(a)(2). The

section 172(c) requirements apply only with respect to areas designated

nonattainment.17

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

\17\ As quoted above, section 172(b) refers to ``applicable

requirements of * * * section 110(a)(2).'' This reference appears to

mean those requirements of section 110(a)(2) that either (i) relate

to all SIP submissions, such as the requirement for reasonable

notice and public hearing in the language at the beginning of

section 110(a)(2); or (ii) relate particularly to SIP submissions

required for nonattainment areas, but that have not yet been

submitted by the State.

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

In the NPR, EPA proposed that section 110(a)(1) mandates SIP

submissions meeting the requirements of section 110(a)(2)(D) and

provides full authority for EPA to establish a submission date within 3

years of the July 18, 1997 8-hour ozone NAAQS promulgation date (62 FR

38856 (NAAQS rulemaking): 62 FR 60325 (NOx SIP call NPR)). The EPA

further asserted in the NPR that EPA has the authority to establish

different submittal schedules for different parts of the section

110(a)(1) SIP revision, and that EPA may require the section

110(a)(2)(D) submittal first so that upwind reductions may be secured

at an earlier stage in the regional SIP planning process (62 FR 60325).

Subsections (ii) and (iii) of this section further elaborates on the

reasoning underlying EPA's decision to retain its proposal to require

SIP submissions under section 110(a)(2)(D) for the 8-hour standard.

(2) Commenters and the Definition of ``Nonattainment.'' Commenters

challenged several aspects of EPA's proposal to evaluate the

contribution of upwind areas under the 8-hour NAAQS. Commenters

asserted that section 110(a)(2)(D)(i) applies to constrain emissions

from upwind sources only with respect to downwind areas that are

designated nonattainment. According to these commenters, until EPA

designates areas nonattainment under the 8-hour NAAQS, EPA has no

authority to require SIP submissions, under section 110(a)(1), from

upwind areas with respect to the 8-hour NAAQS. One commenter pointed

out that the new source review requirements and ozone nonattainment

requirements enacted in the 1990 Amendments apply only to areas

designated nonattainment.

The EPA disagrees with this comment. Section 110(a)(2)(D)(i)(I)

provides that a SIP must prohibit emissions that ``contribute

significantly to nonattainment in * * * any other State.''

18 The provision does not, by its terms, indicate that this

downwind ``nonattainment'' must already have been designated under

section 107 as a nonattainment ``area.'' If the provision were to

employ the term ``area'' in conjunction with the term

``nonattainment,'' then it would have to be interpreted to apply only

to areas designated nonattainment. Other provisions of the CAA do

employ the term ``area'' in conjunction with ``nonattainment,'' and

these provisions clearly refer to areas designated nonattainment (e.g.,

sections 107(d)(1)(A)(i), 181(b)(2)(A), 211(k)(10)(D)). Similarly, the

provisions to which the commenter appeared to refer--section 172(b)/

172(c)(5) (new source review) and section 181(a)(1)/182 (classified

ozone nonattainment area requirements)--by their terms apply to a

nonattainment ``area.'' In contrast, section 110(a)(2)(D) refers to

only ``nonattainment,'' not to a nonattainment ``area.''

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

\18\ Section 110(a)(2)(D)(i)(I) further provides that a SIP must

prohibit emissions that ``interfere with maintenance by * * * any

other State.''

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

By the same token, section 176A(a) authorizes EPA to establish a

transport region whenever ``the Administrator has reason to believe

that the interstate transport of air pollutants from one or more States

contributes significantly to a violation of a [NAAQS] in one or more

other States.'' This reference to ``a violation of a [NAAQS]'' makes

clear that EPA is authorized to form a transport region when an upwind

State contributes significantly to a downwind area with nonattainment

air quality, regardless of whether the downwind area is designated

nonattainment. The EPA believes that section 110(a)(2)(D) should be

read the same way in light of the parallels between section

110(a)(2)(D) and section 176A(a). Both provisions address transport and

both are triggered when emissions from an upwind area ``contribute

significantly'' downwind. It seems reasonable to apply a consistent

approach to the type of affected downwind area, which would mean

interpreting the term ``nonattainment'' in section 110(a)(2)(D) as

synonymous with the phrase ``a violation of a [NAAQS]'' in section

176A(a). The CAA contains other provisions, as well, that refer to the

factual, air quality status of a particular area as opposed to its

designation status. These provisions include, among others, (i)

sections 172(c)(2) and 171(1), the reasonable further progress

requirement, which requires nonattainment SIPs to provide for ``such

annual incremental reductions in emissions * * * as * * * may * * * be

required * * * for the purpose of ensuring attainment of the [NAAQS]''

(emphasis added); and (ii) section 182(c)(2), the attainment

demonstration requirement, which mandates a ``demonstration that the

[SIP] * * * will provide for attainment of the [NAAQS]'' (emphasis

added). The emphasized terms clearly refer to air quality status. In a

series of notices in the Federal Register, EPA relied on these

references to air quality status in determining that areas seeking to

redesignate from nonattainment to attainment did not need to complete

ROP SIPs or attainment demonstrations--even though those requirements

generally applied to areas

[[Page 57372]]

designated nonattainment--as long as the air quality for those

redesignating areas was, in fact, in attainment. See ``State

Implementation Plans; General Preamble for the Implementation of Title

I of the Clean Air Act Amendments of 1990; Proposed Rule,'' 57 FR

13498, 13564 (April 16, 1992); ``Determination of Attainment of Ozone

Standard for Salt Lake and Davis Counties, Utah, and Determination

Regarding Applicability of Certain Reasonable Further Progress and

Attainment Demonstration Requirements: Direct Final Rule,'' 60 FR

30189, 30190 (June 8, 1995); and ``Determination of Attainment of Ozone

Standard for Salt Lake and Davis Counties, Utah, and Determination

Regarding Applicability of Certain Reasonable Further Progress and

Attainment Demonstration Requirements: Final Rule,'' 60 FR 36723, 36724

(July 18, 1995). The EPA's interpretation was upheld by the Court of

Appeals for the 10th Circuit, in Sierra Club v. EPA, 99 F.3d 1551, 1557

(10th Cir. 1996).

Accordingly, EPA believes it clear that the reference in section

110(a)(2)(D)(i)(I) to ``nonattainment'' refers to air quality, not

designation status. The EPA believes this matter is clearly resolved by

reference to the terms of the provision itself, so that under the first

step of the Chevron analysis, no further inquiry is needed. If,

however, it were concluded that the provision is ambiguous on this

point, then EPA believes that, under the second step in the Chevron

analysis, EPA should be given deference for any reasonable

interpretation. Interpreting ``nonattainment'' to refer to air quality

is reasonable for the reasons described above.19

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

\19\ Similarly, EPA believes that the term ``maintenance'' in

another clause of section 110(a)(2)(D)(i)(I) refers to air quality

status as well. This clause includes only the term ``maintenance,''

and does not include the term ``area.''

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

The structure of the schedules for requiring SIP submissions and

designating areas nonattainment provides support for EPA's

interpretation. As noted above, section 110(a)(1) requires States to

submit SIPs covering all their areas--regardless of whether designated,

or how designated-- within 3 years of a NAAQS revision and requires

that those SIPs include provisions meeting the requirements of section

110(a)(2)(D).20 When a new or revised NAAQS is promulgated,

section 107(d)(1) authorizes a process of up to 3 years for

designations. States must recommend designations within one year of

promulgation of a new or revised NAAQS and EPA must designate areas

within 2 years of promulgation; EPA may take up to 3 years to designate

areas if insufficient information prevents designations within 2 years.

In the case of the 8-hour ozone NAAQS, Congress provided specific

legislation for designations (Pub. L. 105-178 Sec. 6103). Under this

new legislation, States are provided 2 years to make recommendations

and EPA must designate areas within 1 year of the time State

recommendations are due. Because of this legislation, designations must

occur 3 years following promulgation of the NAAQS (July 2000). The EPA

believes that it is not sensible to interpret the term

``nonattainment'' in section 110(a)(2)(D)(i)(I) to refer to

nonattainment designations because those designations may not be made

until 3 years after the promulgation of a new or revised NAAQS, and the

section 110(a)(2)(D) submittals are due within 3 years.

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

\20\ See ``Re-issue of the Early Planning Guidance for the

Revised Ozone and Particulate Matter (PM) National Ambient Air

Quality Standards (NAAQS),'' memorandum from Sally L. Shaver, dated

June 16, 1998.

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

Further, interpreting the reference to ``nonattainment'' as a

reference to air quality, and not designation, is consistent with the

air quality goals of section 110(a)(2)(D) and the CAA as a whole. In

the present case, it is clear from air quality monitoring and modeling

that large areas of the eastern part of the United States are in

violation of the 8-hour NAAQS, and it is also clear from air quality

modeling studies that NOX emissions from sources in upwind

States contribute to those air quality violations. The EPA currently

has available all the information that it needs to determine whether

upwind States should be required to revise their SIPs to implement

appropriate reductions in NOX emissions. The designation

process will clarify the precise boundaries of the downwind areas, but

because ozone is a regional phenomenon, information as to the precise

boundaries of the downwind areas is not necessary to implement the

requirements of section 110(a)(2)(D)(i). As a result, no air quality

purpose will be served by waiting until the downwind areas are

designated nonattainment.

On the contrary, taking action now is necessary to protect public

health. As described in Section I.G., the regional NOX

reductions required under today's action will allow numerous areas

currently in violation of the 8-hour NAAQS to attain that standard. For

the millions of people living in those areas, today's action will

advance the date by which these areas will meet the revised ozone

standard. Taking action now is particularly important because one of

the sub-population groups at higher risk to ozone health effects is

children who are active and spend more time outdoors during the summer

months when ozone levels are elevated.

(3) EPA's Authority to Require Section 110(a)(2)(D) Submissions in

Accordance with section 110(a)(1). Commenters argue that sections

110(a)(1), (a)(2), and 172(b) should be read so that only requirements

under section 110(a)(2) that are unrelated to nonattainment are due

under the section 110(a)(1) timetable. These commenters contend that

requirements under section 110(a)(2) that are related to

nonattainment--including section 110(a)(2)(D)--are due under the

section 172(b) timetable, that is, within 3 years of the designation of

areas as nonattainment. In support, these commenters rely on language

in section 110(a)(1) indicating that the submissions are for plans for

air quality regions ``within such State.'' Finally, certain commenters

cite as further support for their position the definition of the term

``nonattainment'' as found in section 107(d)(1)(A), claiming that the

definition includes interstate transport areas.

As noted above, section 110(a)(1) provides that States must submit

SIP revisions providing ``for the implementation, maintenance and

enforcement'' of the NAAQS in each area of the State within 3 years (or

a shorter time prescribed by the Administrator) following promulgation

of a new or revised NAAQS. Section 110(a)(2) then sets forth the

applicable elements of a SIP. These provisions apply to all areas

within the State, regardless of designation. Section 172(b) establishes

a SIP submission schedule for nonattainment areas. It provides that at

the time EPA designates areas as nonattainment, EPA shall establish a

SIP submission schedule for the submission of a SIP meeting the

requirements of section 172(c).

While EPA agrees that there is overlap between the submission

requirements under sections 110(a)(1)-(2) and 172(c), EPA believes that

the plain language of section 110(a)(1)-(2) authorizes EPA to require

the section 110(a)(2)(D) SIPs on the schedule described today, and that

there is nothing to the contrary in section 172. Sections 110(a)(2) and

172 contain cross-references to each other.21

[[Page 57373]]

These cross-references indicate that under certain circumstances, the

section 110(a)(2)(D) submittal may be required under section 110(a)(1);

and under other circumstances, the section 110(a)(2)(D) submittal may

be required under section 172(b). These cross-references are

particularly relevant with respect to nonattainment areas, which are

subject to both sections 110(a) (1) and (2) and 172. In the current

situation, EPA believes that it is appropriate to require the

submissions to meet section 110(a)(2)(D) in accordance with the

schedule in section 110(a)(1) rather than under the schedule for

nonattainment areas in section 172(b).22

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

\21\ Section 110(a)(2)(D) provides that areas designated

nonattainment must submit SIPs in accordance with ``part D'' (which

includes section 172). Section 172(b) requires EPA to establish a

schedule for designated nonattainment areas to meet the requirements

of sections 172(c) and 110(a)(2); section 172(c)(7) requires that

nonattainment SIPs shall meet the requirements of section 110(a)(2).

\22\ In other situations, EPA has indicated that certain

elements of section 110(a)(2) would be better addressed in

accordance with the timeframe established in section 172. See e.g.,

60 FR 12492, 12505 (March 7, 1995) Proposed Requirements for

Implementation Plans and Ambient Air Quality Surveillance for Sulfur

Oxides (Sulfur Dioxide) National Ambient Air Quality Standard.

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

The EPA has provided that, for the revised ozone and particulate

matter NAAQS, States must assess their section 110 SIPs by July 18,

2000 to ensure that they adequately provide for implementing the

revised standards. See Re-issue of the Early Planning Guidance for the

Revised Ozone and Particulate Matter (PM) National Ambient Air Quality

Standards (NAAQS), memorandum from Sally L. Shaver, dated June 16,

1998. The EPA recognized that the section 110 SIP should generally be

sufficient to address the revised NAAQS. However, the Agency noted

three areas that the States particularly needed to assess, including

whether the SIP adequately addressed section 110(a)(2)(D). The EPA also

provided that the States should submit revisions to address section

110(a)(2)(D) on the timeframe established by the final NOX

SIP call, when issued. The submittal date that EPA has specified in the

final NOX SIP call rule is consistent with both the Early

Planning Guidance and with section 110(a)(1) and (2) of the CAA.

The EPA acknowledges that it has not historically required an

affirmative submission under section 110(a)(2)(D), applicable to

specific sources of emissions, in response to the promulgation of a new

or revised NAAQS. In part, this is because sufficient technical

information was not available to determine which sources ``contribute

significantly'' to nonattainment in a downwind area. In the absence of

such a determination, States were unable to regulate sources under this

provision in any meaningful way. However, based on the many analyses

performed over the last several years, EPA believes that there is now

affirmative information regarding significant contribution to ozone

violations in the eastern portion of the country; in light of that

evidence, it would not be appropriate to defer action under section

110(a)(2)(D) until a later time.

Moreover, as noted above, the section 172(c) SIP submissions apply

only to areas designated nonattainment. Specifically, section 172(b)

provides that ``[a]t the time'' EPA designates an area as

nonattainment, EPA shall set a schedule ``according to which the State

containing such area shall submit'' SIPs. Section 171(2) provides

further clarification by providing that for purposes of part D of title

I of the CAA (CAA sections 171-193) ``[t]he term `nonattainment area'

means, for any air pollutant, an area which is designated

`nonattainment' with respect to that pollutant within the meaning of

section 107(d).'' By its terms then, section 172 does not apply to

areas designated attainment or unclassifiable (even if such areas are

not attaining the standard) or for areas not yet designated. Thus,

section 110(a)(1) provides the only submission schedule for areas not

designated nonattainment. For those areas, the commenters' argument

that section 172(b) should establish the timetable for section

110(a)(2)(D)(i) SIPs clearly fails. Since certain portions of the 23

jurisdictions covered by this rule likely will not be designated

nonattainment for the 8-hour standard, EPA believes that the section

110(a)(1) schedule is the only schedule (and thus is the reasonable

schedule) to follow for purposes of the SIP call.

Furthermore, contrary to the commenters' assertions, the definition

of nonattainment does not broadly include areas that contribute to

nonattainment in a downwind State. The definition of nonattainment

includes areas that have monitored violations of the standard and areas

that ``contribute to ambient air quality in a nearby area'' that is

violating the standard (section 107(d)(1)(A)(i) (emphasis added)).

Thus, only ``nearby'' areas that contribute to violations of a standard

will be included in the nonattainment designation; areas contributing

to longer-range transport will not be designated nonattainment based

solely on that longer-range transport. Therefore, they will not be

subject to section 172(c) requirements and timing.

The commenters argue that EPA's position that section 110(a)(1)

governs the section 110(a)(2)(D) SIP submittal schedule leads to the

absurd result that upwind areas will be required to submit SIPs dealing

with their contribution to a nonattainment problem downwind before the

downwind area will be required to submit SIPs under section 172(b). The

commenters explain that section 110(a)(2) requires SIP submittals on a

faster timetable (within 3 years from the date of promulgation or

revision of a NAAQS) than section 172(b) (within 3 years from the date

of designation as nonattainment). The commenters also contend that

section 107 provides that States have the primary responsibility for

ensuring attainment within their boundaries; only after a State

implements all statutorily required and necessary measures can it

pursue reductions in other areas through a SIP call or section 126. The

commenters contend that the SIP call is contrary to the plain language

of section 107 and congressional intent because it would require upwind

areas to implement controls before the downwind area has implemented

all statutorily required or necessary controls.

While it is true that plans to meet the emissions budget for the

SIP call will be due prior to nonattainment designations and attainment

plans for areas designated nonattainment for the 8-hour standard, EPA

does not consider this result to be absurd in the present case.

The CAA, at least since its amendment in 1970, has required States

to regulate ozone. For more than the past 25 years, States have focused

on the adoption and implementation of local controls for the purpose of

bringing nonattainment areas into attainment. Thus, historically, the

downwind nonattainment areas have borne the brunt of the control

obligations through the implementation of local controls. In

comparison, areas in attainment of the NAAQS, but upwind of

nonattainment areas, have not been required to implement controls

designed to ameliorate the air quality problems experienced by their

downwind neighbors.

Since the CAA Amendment of 1977, designated nonattainment areas

have been subject to specific local control obligations, such as

vehicle I/M and, for stationary sources, the requirement to implement

RACT. The CAA Amendments of 1990 tightened these control obligations

for many areas. Moderate, serious, severe and extreme areas were

required to reduce emissions by 15 percent between 1990 and 1996. In

addition, each serious, severe and extreme area is required to achieve

9 percent reductions over the succeeding 3 year periods until the area

attains the

[[Page 57374]]

standard. Additional requirements, such as the use of RFG and the use

of vapor recovery devices on gasoline pumps, are also required for

certain areas (see generally, CAA section 182 and, e.g., section

211(k)). Thus, downwind areas with nonattainment problems under the 1-

hour NAAQS are under current obligations to submit SIP revisions

containing local control measures for that standard. For these areas,

local reductions needed to meet the 1-hour standard are already

occurring and will be achieved prior to or on the same schedule as

reductions States may require in response to the SIP call.

Furthermore, in many of the downwind areas, States have been taking

action to reduce ozone levels for many years in order to meet the 1-

hour ozone NAAQS. Although the fact that the 8-hour ozone NAAQS is a

new form of the ozone standard, however, should not obscure the fact

that the downwind States have been making efforts to reduce ozone

levels for decades. The EPA believes that the history of implementation

by downwind areas of ozone pollution controls further mitigates the

commenters' argument that it is absurd to require upwind areas to

implement controls in advance of downwind attainment demonstrations

under the 8-hour NAAQS.23

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

\23\ Although the SIP call will provide a benefit to a wide

number of areas, the focus of the SIP call is to reduce boundary

conditions for a number of areas that will have difficulty attaining

either the 1-hour or 8-hour standard (or both) without the benefit

of reductions from outside the nonattainment area. Based on current

monitoring data and modeling, EPA predicts that there will be a

number of areas that are meeting the 1-hour standard that will be

designated nonattainment for the 8-hour standard. The EPA further

predicts that many of these areas will come back into attainment due

solely to the emission reductions achieved by the NOX SIP

call. However, this incidental benefit--which likely will occur

without the need for local emission reductions--does not preclude

EPA from requiring the SIP call reductions, which are needed to help

other more seriously polluted areas that have long-standing

pollution problems.

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

Moreover, virtually all of the downwind States affected by today's

rulemaking, due to 8-hour ozone nonattainment or maintenance problems,

are themselves upwind contributors to problems further downwind, and,

thus, are subject to the same requirements as the States further

upwind.24 The reductions these downwind States must

implement due to their additional role as upwind States will help

reduce their own 8-hour ozone problems on the same schedule as

emissions reductions for the upwind States. Accordingly, for the most

part, this rulemaking does not require upwind areas to take action in

advance of any action by downwind areas to ameliorate the downwind

problems.

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

\24\ Maine, New Hampshire, and Vermont are the only downwind

States that are not subject to today's action.

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

Finally, even if EPA were requiring upwind States to take action to

reduce downwind nonattainment and maintenance in advance of action by

the downwind States, this would simply require upwind areas to take the

first step by developing SIPs to eliminate their significant

contribution to the downwind problem. The downwind areas will be

required to take the next step by developing SIPs that address their

share. Generally, an agency may resolve a problem (in this case,

downwind nonattainment) on a step-by-step basis (see e.g., Group

Against Smog and Pollution, Inc. v. EPA, 665 F.2d 1284, 1291-92 (D.C.

Cir. 1981)).

A commenter has observed that under section 110(a)(1), EPA may

authorize section 110(a)(2) submittals as late as 3 years after

revision of a NAAQS, which, in this case, would run until July 2000.

The Early Planning Guidance, described above, indicates that States are

allowed until July 2000 to make submissions concerning other elements

of section 110(a)(2). However, as described elsewhere, EPA has

determined that the section 110(a)(2)(D) submittals should be submitted

by the end of September 1999 to assure that the required NOX

reductions will be implemented as expeditiously as practicable, which

EPA has determined is no later than the May 1 start of the 2003 ozone

season (see Section V, below).

Citing section 107(a) of the CAA, the commenters assert that the

CAA requires downwind areas to fully adopt and implement all

statutorily required or necessary measures before EPA can require

upwind areas to control emissions. Section 107 provides that States

shall have the primary responsibility for assuring air quality within

the State by submitting a plan that specifies how the NAAQS will be

achieved and maintained in the State. The commenters attempt to read

this statement regarding a State's authority to choose the mix of

control measures within State boundaries as barring the control of

emissions from upwind States.

This provision may be read as focusing on the State-Federal balance

in controlling criteria pollutants, such as ozone, not any upwind-

State, downwind-State balance. The provision indicates that although

EPA may promulgate Federal measures that provide reductions to help

States reach attainment, States bear the ultimate responsibility for

assuring attainment. Further, this provision may be read to indicate

that States may choose the mix of controls to reach attainment within

their own boundaries. Nothing in this provision purports to address the

need for upwind controls. By comparison, section 110(a)(2)(D)

affirmatively requires States to submit a SIP prohibiting emissions

that significantly contribute to downwind nonattainment or interfere

with maintenance of the NAAQS. Thus, the statute, read as a whole,

contemplates that interstate transport will be addressed as part of the

downwind States' attainment responsibilities. Indeed, determining the

upwind area's share of the problem is necessary in order for downwind

attainment planning. In the absence of the upwind reductions that will

be achieved, the downwind area would be required to submit an

attainment plan to demonstrate attainment regardless of cost and

without benefit of the reduction of upwind emissions that significantly

contribute to nonattainment. In light of the statute as a whole, it is

absurd to argue that Congress intended downwind areas to reduce

emissions at any cost while upwind sources that significantly

contribute to that nonattainment remain unregulated. Congress attempted

to balance responsibilities, providing that States could choose the mix

of controls within the State's borders (CAA section 107(a)) and are

ultimately responsible for assuring attainment, but also recognizing

that emissions reductions from upwind States may be needed for

attainment (CAA section 110(a)(2)(D)(i)).

b. Process for Requiring SIP Submissions under the 8-Hour Standard.

The time by which the section 110(a)(2)(D) SIP revision under the 8-

hour NAAQS must be submitted is governed by section 110(a)(1), which

requires the SIP revision to be ``adopt[ed] and submit[ed] to the

Administrator, within 3 years (or such shorter period as the

Administrator may prescribe) after the promulgation of a [NAAQS] (or

any revision thereof) . . . .'' In the NPR, EPA indicated that the SIP

revision would be due by the end of September 1999, which EPA expected

to be 12 months from the date of completing today's final rule. In

today's action, EPA is confirming that the SIP revision will be due

September 30, 1999, for the reasons described below in Section VI.A.1,

Schedule for SIP Revision.

3. Requirements of Section 110(a)(2)(D)

a. Summary. Today's action is driven by the requirements of CAA

section 110(a)(2)(D). This provides that each SIP must--

[[Page 57375]]

* * * 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 such national primary or secondary ambient air quality

standard * * *

According to section 110(a)(2)(D), the SIP for each area,

regardless of its designation as nonattainment or attainment (including

unclassifiable), must prohibit sources within the area from emitting

air pollutants in amounts that will ``contribute significantly'' to

``nonattainment'' in a downwind State, or that ``interfere with

maintenance'' in a downwind State.

b. Determination of Meaning of ``Nonattainment'' (1) Geographic

Scope. In determining the meaning and scope of section 110(a)(2)(D), it

is useful first to determine the geographic scope of ``nonattainment''

downwind.

At proposal, EPA stated that it--

* * * proposes to interpret this term to refer to air quality

and not to be limited to currently-designated nonattainment areas.

Section 110(a)(2)(D) does not refer to ``nonattainment areas,''

which is a phrase that EPA interprets to refer to areas that are

designated nonattainment under * * * section 107(d)(1)(A)(I) * * * .

Rather, the provision includes only the term `nonattainment' and

does not define that term. Under these circumstances, EPA has

discretion to give the term a reasonable definition, and EPA

proposes to define it to include areas whose air quality currently

violates the NAAQS, and will likely continue [to violate in the

future], regardless of the designation of those areas * * *

(62 FR 60324).

To determine whether areas would continue to violate in the future,

EPA proposed to take into account the reductions that would result from

current CAA control requirements (apart from controls that may be

required under section 110(a)(2)(D)). To take these reductions into

account, EPA determined whether the area would be in nonattainment in

the future based on air quality modeling that assumed CAA-mandated

reductions and that accounted for growth. If an area would reach

attainment based on required controls, EPA would not view that area as

having a nonattainment problem to which any upwind areas may be

considered to contribute.

As explained earlier, in today's action, EPA has determined that

for purposes of the 8-hour NAAQS, the reference to ``nonattainment''

should be defined as EPA proposed. Thus, in determining whether an

upwind area contributes significantly to ``nonattainment'' downwind,

EPA would evaluate downwind areas for which monitors indicate current

nonattainment, and air quality models indicate future nonattainment,

taking into account CAA control requirements and growth.

For the 1-hour standard, EPA proposed to define nonattainment to

include all grid cells within a county when a monitor in that county

indicated nonattainment. Upon further study, EPA found that in some

instances, a metropolitan area may consist of numerous counties, only a

few of which contain monitors indicating nonattainment. The EPA

recognizes that under the 1-hour NAAQS, nonattainment boundaries are

generally used to describe the area with the nonattainment problem;

accordingly, EPA believes that this geographic vicinity offers an

appropriate indication of an area that may be expected to have

nonattainment air quality. The EPA predicts that many 1-hour

nonattainment areas that currently monitor nonattainment somewhere

within the area will remain in nonattainment in 2007, in some cases

because of predicted violations in counties that currently monitor

attainment. The EPA believes that the entire area should be considered

to be in nonattainment until all monitors in the area indicate

attainment of the NAAQS. Thus, in today's action, EPA used the

designated nonattainment area in determining the downwind nonattainment

problem.25

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

\25\ It should be reiterated that EPA relied on the designated

area solely as a proxy to determine which areas have air quality in

nonattainment. This proxy is readily available under the 1-hour

NAAQS because areas have long been designated nonattainment. The

EPA's reliance on designated nonattainment areas for purposes of the

1-hour NAAQS does not indicate that the reference in section

110(a)(2)(D)(i)(I) to ``nonattainment'' should be interpreted to

refer to areas designated nonattainment.

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

As noted above, commenters disagreed with EPA's view that the term

``nonattainment'' covers areas with air quality that is currently in

nonattainment, regardless of designation. The EPA's response to those

comments is also set forth above.

(2) 2007 Projection Year. In the NPR, EPA indicated that it would

adopt the year 2007 as the year for determining whether areas achieved

their required NOX budget levels. Accordingly, in

determining whether downwind areas should be considered to be, and

remain in, ``nonattainment,'' EPA would model their air quality in

2007, based on the implementation of CAA required controls by that

date, and growth in emissions--generally due to economic growth and

greater use of vehicles--by that date. At proposal, EPA adopted this

same approach with respect to both the 1-hour and the 8-hour NAAQS (62

FR 60325). The EPA is continuing this approach.

c. Definition of Significant Contribution. As indicated in the NPR,

neither the CAA nor its legislative history provides meaningful

guidance for interpreting the term ``contribute significantly'' under

section 110(a)(2)(D)(i)(I).

(1) ``Contribute.'' The initial step in defining the ``contribute

significantly'' term is to determine the meaning of the term

``contribute.'' In the NPR, EPA stated that it believes this term

should be defined broadly, so that emissions ``contribute'' to

nonattainment downwind if they have an impact on nonattainment downwind

(62 FR 60325). Air quality modeling indicated that emissions from the

upwind States clearly impact downwind nonattainment problems; as a

result, EPA generally folded this step of determining whether sources

``contribute'' to nonattainment downwind into the step of determining

whether that contribution is ``significant,'' discussed below.

In addition, section 110(a)(2)(D)(i)(I) requires the SIP to

prohibit amounts of emissions ``which will contribute significantly * *

*'' (emphasis added). The EPA believes that the term ``will'' means

that SIPs are required to eliminate the appropriate amounts of

emissions that presently, or that are expected in the future,

contribute significantly to nonattainment downwind.

Because ozone is a secondary pollutant formed as a result of

complex chemical reactions involving numerous sources, it is not

possible to determine the downwind impact on each individual source. In

addition, ozone generally results from the contributions of numerous

sources. As indicated in the NPR:

[U]nhealthful levels of ozone result from emissions of

NOX and VOCs from thousands of stationary sources and

millions of mobile sources [and consumer products and other sources]

across a broad geographic area. Each source's contribution is a

small percentage of the overall problem; indeed, it is rare for

emissions from even the largest single sources to exceed one percent

of the inventory of ozone precursors even for a single metropolitan

area. Under these circumstances, even complete elimination of any

given source's emissions may well have no measurable impact in

ameliorating the nonattainment problem. Rather, attainment requires

controls on numerous sources across a broad area. Ozone is a

regional scale

[[Page 57376]]

problem that requires regional scale reductions

(62 FR 60326).

Accordingly, EPA has adopted a ``collective contribution'' approach

to determining whether sources ``contribute'' to nonattainment

downwind: EPA determines the impact downwind of emissions in the

aggregate from a particular geographic region. If the aggregated

emissions are considered to contribute to nonattainment downwind, then

all of the emissions in that region should be considered as

contributors to that nonattainment problem. In today's action, EPA is

continuing the same interpretation of the term ``contribute,'' for the

reasons just described.

(2) ``Significantly''. (a) Notice of Proposed Rulemaking. In the

NPR, EPA proposed a ``weight-of-evidence,'' or multi-factor, approach

for determining whether a contribution is ``significant.''

The EPA proposed two separate interpretations for the term

``contribute significantly,'' which had implications as to which

factors were to be considered in what parts of the analysis. Under the

first interpretation, significant contribution is determined with

reference to--

* * * factors concerning amounts of emissions and their ambient

impact, including the nature of how the pollutant is formed, the

level of emissions and emissions density (defined as amount of

emissions per square mile) in the particular upwind area, the level

of emissions in other upwind areas, the amount of contribution to

ozone in the downwind area from the upwind areas, and the distance

between the upwind sources and the downwind nonattainment problem.

Under this approach, when emissions and ambient impact reach a

certain level, as assessed by reference to the factors identified

above, those emissions would be considered to ``contribute

significantly'' to nonattainment.

(62 FR 60325).

Under this interpretation, after identifying amounts of emissions

that constitute a significant contribution, EPA then determines the

amount of emissions reductions necessary to adequately mitigate these

contributions. This determination entails--

* * * [e]valuation of the costs of available measures for

reducing upwind emissions * * * as well as to the extent known (at

least qualitatively), the relative costs of, amounts of reductions

from, and ambient impact of measures available in the downwind

areas.

Id.

Under the second interpretation, EPA considers all of the factors

under both the significant contribution prong and the mitigation prong

of the first interpretation, and, once EPA determines an amount of

emissions that does significantly contribute to downwind nonattainment,

then EPA would determine that the SIP must contain provisions adequate

to prohibit that amount of emissions. Id. at 60325-26.

(b) Today's Action. The EPA has determined that the second

interpretation should be used; that is, that the determination of

significant contribution includes both air quality factors relating to

amounts of upwind emissions and their ambient impact downwind, as well

as cost factors relating to the costs of the upwind emissions

reductions. Once an amount of emissions is identified in an upwind

State that contributes significantly to a nonattainment problem

downwind, or interferes with maintenance downwind, the SIP must include

provisions to eliminate that amount of emissions.

To reiterate, section 110(a)(2)(D)(i)(I) provides that the SIP must

``prohibit[]'' sources from ``emitting any air pollutant in amounts

which will contribute significantly to nonattainment in, or interfere

with maintenance by, any other State.'' The term ``prohibit'' is

defined as ``to forbid by authority'' or ``prevent,'' or ``preclude.''

``The American Heritage Dictionary of the English Language'' (3d ed.

1992, 1448). The EPA believes that the term ``prohibit'' means that

SIPs must eliminate those amounts of emissions determined to contribute

significantly to nonattainment or interfere with maintenance downwind.

Moreover, EPA believes that whether emissions ``contribute

significantly'' depends on a multifactor test, as described below.

Thus, section 110(a)(2)(D)(i)(I) does not require the elimination of

all upwind source emissions that impact downwind air quality problems,

but only those amounts of emissions that, based on a multi-factor test,

significantly contribute to downwind air quality problems.

d. Multi-factor Test for Determining Significant Contribution. In

the NPR, EPA proposed a multi-factor test for determining whether

emissions from an upwind State contribute significantly to a

nonattainment or maintenance problem downwind. The EPA received

numerous comments on the factors. Based on the comments and EPA's

further analysis, EPA, in today's action, is continuing the multi-

factor approach, with some refinements in response to comments, with

respect to the factors EPA considered and the manner in which EPA

considered them.

In determining whether emissions from upwind States affected by

today's action contribute significantly to downwind nonattainment or

maintenance problems, EPA specifically considered the following factors

with respect to each such upwind State. These factors were the primary

components in EPA's consideration.

The overall nature of the ozone problem (i.e.,

``collective contribution'')

The extent of the downwind nonattainment problems to

which the upwind State's emissions are linked, including the ambient

impact of controls required under the CAA or otherwise implemented in

the downwind areas

The ambient impact of the emissions from the upwind

State's sources on the downwind nonattainment problems

The availability of highly cost effective control

measures for upwind emissions.

The first three of these factors are related to air quality; the

fourth is related to costs.

In addition, EPA generally reviewed several other considerations

before concluding that upwind emissions contribute significantly to

downwind nonattainment. The EPA did not consider it necessary, or did

not have adequate information, to apply each of these factors with

specificity with respect to each upwind State's emissions. In addition,

in some instances, EPA did not have quantitative information to assess

certain of these factors, and instead relied on qualitative

information. These considerations were secondary aspects of EPA's

analysis. They include:

The consistency of the regional reductions with the

attainment needs of the downwind areas with nonattainment problems

The overall fairness of the control regimes required of

the downwind and upwind areas, including the extent of the controls

required or implemented by the downwind and upwind areas

General cost considerations, including the relative

cost-effectiveness of additional downwind controls compared to upwind

controls

All of these factors and considerations are described in the

following sections.

e. Air Quality Factors. As noted above, EPA specifically considered

three air quality factors with respect to each upwind State, which

factors, in conjunction with the cost factor discussed in the next

section, were the primary components in EPA's consideration:

The overall nature of the ozone problem (i.e.,

``collective contribution'')

The extent of the downwind nonattainment problems to

which the upwind State's emissions are linked,

[[Page 57377]]

including the ambient impact of controls required under the CAA or

otherwise implemented in the downwind areas

The ambient impact of the emissions from the upwind

State's sources on the downwind nonattainment problems

(1) Collective Contribution. As indicated elsewhere, ozone

generally results from the collective contribution of emissions from

numerous sources over a large geographic area. For example, for urban

nonattainment areas under the 1-hour NAAQS, the downwind sources,

comprise numerous stationary sources as well as mobile on-road sources,

mobile off-road sources, and consumer and commercial products. Further,

additional contributions are made by numerous upwind States, both

adjacent to and further away from the nonattainment area itself. The

fact that virtually every nonattainment problem is caused by numerous

sources over a wide geographic area is a factor suggesting that the

solution to the problem is the implementation ove

This text is long and has been trimmed here. Open the source document for the complete record.