Approval and Promulgation of State Implementation Plans; ArizonaMaricopa County Ozone and PMINF10/INF Nonattainment Areas

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[AZ 071-009; FRL-5957-4]

Approval and Promulgation of State Implementation Plans;

Arizona--Maricopa County Ozone and PM10 Nonattainment Areas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is taking final action approving a State Implementation

Plan (SIP) revision submitted by the State of Arizona on September 15,

1997, establishing Cleaner Burning Gasoline (CBG) fuel requirements for

gasoline distributed in the Phoenix (Maricopa County) ozone

nonattainment area. Arizona has developed these fuel requirements to

reduce emissions of volatile organic compounds (VOC) and particulates

(PM10) in accordance with the requirements of the Clean Air

Act (CAA). EPA is approving Arizona's fuel requirements into the

Arizona SIP because either they are not preempted by federal fuels

requirements, or to the extent that they are or may be preempted, EPA

finds that the requirements are necessary for the Maricopa area to

attain the national ambient air quality standards (NAAQS) for ozone and

particulates. EPA intends to publish a separate document in the Federal

Register approving Arizona's opt-out from the federal reformulated

gasoline (RFG) program to be effective 90 days from the effective date

of this EPA final action.

DATES: This final rule is effective on March 12, 1998.

ADDRESSES: Copies of the SIP revision and EPA's proposed and final

[[Page 6654]]

rulemakings are available for public inspection at EPA's Region IX

office during normal business hours. Copies of the submitted rule

revisions are available for inspection at the following locations:

Planning Office (AIR-2), Air Division, U.S. Environmental

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

94105.

Arizona Department of Environmental Quality, Office of Outreach and

Information, First Floor, 3033 N. Central Avenue, Phoenix Arizona

85012.

A copy of this notice is also available on EPA Region IX's website

at http://www.epa.gov/region09.

FOR FURTHER INFORMATION CONTACT: Karina O'Connor, Air Planning Office,

AIR-2, Air Division, U.S. Environmental Protection Agency, Region IX,

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

1247.

SUPPLEMENTARY INFORMATION:

I. Clean Air Act Requirements

In determining the approvability of a SIP revision, EPA must

evaluate the SIP revision for consistency with the requirements of the

CAA and EPA regulations, as found in section 110 and part D of the CAA

and 40 CFR part 51 (Requirements for Preparation, Adoption, and

Submittal of Implementation Plans).

For SIP revisions addressing certain fuel measures, an additional

statutory requirement applies. CAA section 211(c)(4)(A) prohibits state

regulation respecting a fuel characteristic or component for which EPA

has adopted a control or prohibition under section 211(c)(1), unless

the state control is identical to the federal control. Section

211(c)(4)(C) provides an exception to this preemption if EPA approves

the state requirements in a SIP. Section 211(c)(4)(C) states that the

Administrator may approve preempted state fuel standards in a SIP:

. . . only if [s]he finds that the State control or prohibition is

necessary to achieve the national primary or secondary ambient air

quality standard which the plan implements. The Administrator may

find that a State control or prohibition is necessary to achieve

that standard if no other measures that would bring about timely

attainment exist, or if other measures exist and are technically

possible to implement, but are unreasonable or impracticable.

EPA's August 1997 Guidance on Use of Opt-in to RFG and Low RVP

Requirements in Ozone SIPs gives further guidance on what EPA is likely

to consider in making a finding of necessity.

Detailed discussions of the issues relating to federal preemption

and the necessity finding are discussed more fully in the proposal for

this final rule (62 FR 61942 (November 20, 1997)) and in section III

below.

II. Background

Under the Clean Air Act Amendments of 1990, the Phoenix area was

classified as a moderate nonattainment area for both ozone and

PM10. The moderate ozone attainment deadline was November

15, 1996; the moderate PM10 attainment deadline was December

31, 1994. In 1997, the Phoenix area was reclassified as serious for

ozone with an attainment deadline of no later than November 15, 1999.

In 1996, the Phoenix area was reclassified as serious for

PM10 with an attainment deadline of no later than December

31, 2001.1

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\1 \ See 56 FR 56694 (November 6, 1991), CAA Sections 181(a)(1)

and 188(c)(1), 62 FR 60001 (November 6, 1997) and CAA Section

181(a)(1), 61 FR 21372 (May 10, 1996) and CAA Section 188(c)(2).

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On January 17, 1997, Governor Symington applied to EPA to include

the Maricopa County ozone nonattainment area in the federal

reformulated gasoline (RFG) program and the State submitted section 13

of HB 2001 to EPA as a SIP revision on April 29, 1997. Because this

State fuel requirement established a control on Reid Vapor Pressure

(RVP) of 7.0 psi, not identical to the federal fuel RVP requirements

adopted under section 211(c)(1) authority applicable to the area (i.e.,

federal conventional gasoline RVP limit of 7.8 psi, federal phase I RFG

RVP limit of 7.2 psi or federal phase II volatility limit of 7.8 psi),

Arizona's fuel requirement was preempted under section 211(c)(4)(A) of

the CAA. EPA approved Governor Symington's request to opt in to the

federal RFG program on June 3, 1997. 62 FR 30260. EPA also published a

direct final approval of Arizona's low RVP SIP revision on June 11,

1997. 62 FR 31734. In approving the RVP SIP revision, EPA found under

section 211(c)(4)(C) that the State's fuel requirement is necessary for

the Maricopa area to attain the NAAQS for ozone.

The State also enacted HB 2307 which authorized the establishment

of a more stringent State reformulated gasoline program.2

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\2\ The State reformulated gasoline rules are codified in the

ARS as section 41-2124. Section 41-2123 of HB 2307 also contains

wintertime oxygenate requirements for fuels. The bill changed the

effective dates of the oxygenate requirements from October 15 to

November 15 through March 31 of each year.

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In a September 12, 1997, letter, Russell Rhoades, Director, ADEQ,

requested that EPA approve the CBG Interim Rule as a revision to the

Arizona SIP based in part on a waiver of preemption under CAA section

211(c)(4)(C). To allow the Arizona CBG program to substitute for the

federal RFG program, on September 15, 1997, the State also submitted a

separate letter to Administrator Browner, requesting to opt out of the

federal RFG program, effective June 1, 1998, contingent upon EPA

approval of the Arizona SIP revision and the associated waiver request.

Upon publication of this final approval of CBG Interim Rule, EPA will

publish a notice in the Federal Register approving Arizona's opt-out

from the federal RFG program.

For a more detailed discussion of the CBG program and EPA's

evaluation of it, and the history of fuels regulation in Arizona, see

EPA's proposed approval at 62 FR 61942.

III. Summary of Proposal

A. Arizona CBG Fuel Program

The State CBG fuel program for the Maricopa area establishes limits

on gasoline properties and gasoline emission standards which will

reduce emissions of volatile organic compounds (VOCs), oxides of

nitrogen (NOX), carbon monoxide (CO) and particulates (PM).

Under the program, a variety of different fuels will be able to meet

the fuel standards during different implementation periods. These

emissions reductions will help the Maricopa area attain the NAAQS for

both ozone and particulates.

On November 22, 1997, EPA proposed to approve the CBG SIP revision

submitted by the State of Arizona for the Phoenix ozone and

PM10 nonattainment areas under section 110(k)(3) of the CAA

as meeting the requirements of section 110(a) and part D. The proposed

approval was based upon the finding that the CBG SIP revision was

consistent with the CAA and EPA regulations and that the various CBG

requirements are either not preempted by federal fuel requirements or

are necessary for the Phoenix nonattainment area to attain the ozone

and PM10 NAAQS. Issues relating to federal preemption and

the necessity finding are discussed further below. See also 62 FR

61942.

B. Section 211(c)(4)

1. Federal Preemption

As discussed above, CAA section 211(c)(4)(A) preempts certain state

fuel regulations by prohibiting a state from prescribing or attempting

to enforce any control or prohibition respecting any characteristic or

component of a fuel or fuel additive for the purposes of motor

[[Page 6655]]

vehicle emission control, if the Administrator has prescribed under

section 211(c)(1), a control or prohibition applicable to such

characteristic or component of the fuel or fuel additive, unless the

state prohibition is identical to the prohibition or control prescribed

by the Administrator.

The CBG Interim Rule establishes three types of gasoline standards.

For 1998, the requirements for CBG Types 2 and 3 gasoline 3

apply. In addition, all Arizona CBG must meet specified fuel property

limits for that year.4 For 1999 and beyond, the requirements

for CBG Types 1 and 2 gasoline would apply. In addition, all Arizona

CBG would have to meet the fuel property limits specified for that time

period.5 These proposed types of gasoline include

performance standards as well as requirements for specific fuel

parameters. EPA's analysis in the proposal of preemption addressed the

following standards in the CBG Interim Rule: performance standard for

NOX (under gasoline Types 1, 2, and 3); parameter

specifications for sulfur, olefins, and aromatic HC (under gasoline

Type 2); performance standard for VOC (under gasoline Types 1 and 3);

parameter specification for oxygen content (under gasoline Types 1 and

3); performance standard for HC (under Type 2); and parameter

specifications for oxygen, aromatic HC, T50, and T90 (under gasoline

Type 2).6

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\3\ Under the CBG program, a variety of different fuels will be

able to meet the fuel standards during different implementation

periods. The fuel types, designations and implementation schedule

are described in the proposal at 62 FR 61942-64923.

\4\ AAC R20-2-751.01.A.

\5\ AAC R20-2-751.A.

\6\ The CBG Type 2 gasoline allows refiners to comply with a

group of fuel parameter specifications or to meet performance

standards using the Predictive Model and set individual alternative

fuel parameter specifications.

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To determine whether a state fuel requirement is preempted by a

federal requirement, EPA compares the applicable federal fuel

requirements in the area with the proposed state fuel requirements. For

the purposes of this analysis, the federal fuel requirement in the

Phoenix ozone nonattainment area is federal conventional gasoline.

While Arizona has opted into the federal RFG program for the 1997

season, the State has requested to opt out of the program before the

State CBG requirements would apply. Once the State has opted out of the

federal RFG program, the applicable federal requirements would be those

for conventional gasoline. The federal requirements for conventional

gasoline include a NOX performance standard. CBG Types 1 and

3 also contain a NOX performance standard, so the CBG

NOX performance standard is preempted. The CBG Interim Rule

would allow refiners to meet the requirements for Type 2 gasoline in

lieu of the requirements for CBG Type 1 or 3 gasoline. Whether the

specifications for CBG Type 2 are preempted is less clear. The CBG Type

2 specifications include performance standards for NOX and

requirements for the fuel parameters sulfur, olefins and aromatic HCs.

The federal conventional gasoline standards do not include requirements

for these specific parameters. However, refiners are required to use an

emissions performance model that determines NOX performance

based in part on these fuel parameters.

As stated in the proposal, in this rulemaking, EPA does not need to

determine whether these types of State fuel requirements are preempted

under section 211(c)(4)(A) prior to acting on the proposed revision to

the Arizona SIP. If the sulfur, olefins and aromatic HC requirements

are not preempted, there is no bar to EPA approving them as a SIP

revision. If they are preempted, section 211(c)(4)(C) would allow EPA

to approve each requirement in a SIP if EPA determines that such

controls are necessary to achieve the NAAQS that the SIP implements.

EPA can approve such a State SIP provision as necessary if it finds

that no other measures that would bring about timely attainment exist,

or that other measures exist but are unreasonable or impracticable.

Thus, if a State shows that the reductions that would be produced by

the State's NOX performance standard are necessary under

section 211(c)(4)(C) to achieve a NAAQS, EPA could approve the

NOX performance standard as a SIP revision. Under Type 1 or

3 CBG, refiners would obtain NOX reductions through a

NOX performance standard, and under Type 2 CBG, refiners

would obtain comparable NOX reductions through sulfur,

olefins and aromatic HC requirements. If EPA finds the NOX

reductions produced by the NOX performance standard under

CBG Types 1 and 3 to be necessary, then the comparable reductions

produced by the alternative of CBG Type 2 gasoline would also be

necessary. Thus, based on EPA's finding, discussed below and in the

proposal, that NOX reductions are necessary under section

211(c)(4)(C), EPA proposed to approve the sulfur, olefins and aromatic

HC requirements as well.

The CBG Interim Rule also requires refiners to meet a VOC

performance standard and oxygen content standard (under CBG Types 1 and

3 gasoline); or a HC performance standard and oxygen content standard;

or oxygen, T50, T90, and aromatic HC requirements (under CBG Type 2

gasoline) 7. Federal conventional gasoline requirements do

not include a VOC or HC performance standard or controls on these

specific parameters. However, refiners are required to meet summertime

volatility limits, and are required to use an emissions performance

model that determines VOC performance based in part on the same fuel

parameters as those used in the CBG Interim Rule. In this rulemaking,

EPA does not need to determine whether these types of state fuel

requirements are preempted under section 211(c)(4)(A) if EPA finds that

these fuel requirements are necessary for the Phoenix nonattainment

area to meet the ozone NAAQS. Of course, if these requirements are not

preempted, there is no bar to approving them as a SIP revision. If they

are preempted, section 211(c)(4)(C) would allow EPA to approve each

requirement in a SIP if EPA determines that such controls are necessary

to achieve the NAAQS that the SIP implements.

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\7\ Under gasoline Type 2 using the Predictive model, refiners

are required to meet the oxygen content standard only during the

winter months.

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Each type of CBG gasoline would reduce VOC emissions. Under Type 1

or 3 CBG, refiners would obtain VOC reductions through a VOC

performance standard and oxygen content standard, and under Type 2 CBG,

refiners would obtain comparable VOC reductions through either a HC

performance standard and oxygen content standard; or through oxygen,

T50, T90, and aromatic HC requirements. If EPA finds the VOC reductions

produced by the VOC performance standard and oxygen content standard

under CBG Types 1 and 3 to be necessary, then the comparable reductions

produced by either of the alternatives of CBG Type 2 gasoline would

also be necessary. Thus, based on EPA's finding, discussed in the

proposal and below, that VOC reductions are necessary under section

211(c)(4)(C), EPA proposed to approve the HC performance standard; and

the oxygen, T50, T90, and aromatic HC requirements as well.

Arizona has already demonstrated that its 7.0 psi RVP requirement

is necessary under section 211(c)(4)(C) to meet the ozone NAAQS in the

Phoenix area.8 Compliance with either the VOC performance

standard and oxygen content standard; or the HC performance standard

and the oxygen standard; or the oxygen, T50, T90, and aromatic HC

requirements would produce some additional VOC

[[Page 6656]]

reductions beyond those produced by the 7.0 psi RVP requirement. As

with the NOX performance standard and the alternative fuel

parameter requirements discussed above, refiners would obtain

comparable VOC reductions through either the VOC performance standard

and oxygen content standard; the HC performance standard and the oxygen

content standard, or the oxygen, T50, T90, and aromatic HC

requirements. Thus, if EPA finds the VOC reductions produced by the VOC

performance standard and oxygen content standard under CBG Type 1 and 3

gasoline to be necessary, then the comparable emissions reductions

produced by the alternative of CBG Type 2 gasoline would also be

necessary. EPA proposed to approve the VOC performance standard; the HC

performance standard and the oxygen content standard; and the oxygen,

T50, T90, and aromatic HC requirements because either they are not

preempted under section 211(c)(4)(C) or to the extent that they are or

may be preempted, EPA proposed, as discussed below, that they are

necessary and hence approvable under section 211(c)(4)(C).

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\8\ See 62 FR 31734 (June 11, 1997).

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2. Finding of Necessity

EPA proposed to find that the CBG NOX performance

standards and the sulfur, olefins and aromatic HC requirements are

necessary for the Phoenix PM10 nonattainment area to meet

the PM10 NAAQS; and that the CBG VOC performance standard

and oxygen content standard; the HC performance standard and the oxygen

content standard; and the oxygen, T50, T90, and aromatic HC

requirements are necessary for the Phoenix ozone nonattainment area to

meet the ozone NAAQS.

In the proposal, EPA explained its reasoning that to make a

determination that the CBG requirements are necessary, it must consider

whether there are other reasonable and practicable measures available

that would produce sufficient emissions reductions to attain the ozone

and PM10 standards without implementation of the CBG

requirements. In considering other measures for the purpose of

demonstrating necessity under section 211(c)(4)(C), EPA agreed in the

proposal that Arizona need not submit an evaluation of alternative

fuels measures. See the proposed approval of the CBG SIP revision at 62

FR 61942 and the response to comments below for a more detailed

discussion of this issue. Thus, to determine whether the State gasoline

VOC performance standards (and the HC performance standards; and the

oxygen, T50 and T90 requirements) are necessary to meet the ozone

NAAQS, EPA must consider whether there are other reasonable and

practicable non-fuel measures available to produce the needed emission

reductions for ozone control.

IV. Response to Public Comments on the Proposal

EPA received four comment letters in response to its November 22,

1997 proposal. Comments were received from the Arizona Department of

Environmental Quality and three gasoline marketers in Maricopa County:

Chevron Products Company, Mobil Oil Corporation, and Stancil & Co.

representing Navajo Refining Company. EPA wishes to express its

appreciation to each of these individuals and organizations for taking

the time to comment on the proposal. All of the commenters supported

approval of the CBG SIP revision, however two of the commenters also

raised technical concerns to which EPA responds below.

Comment: One commenter, while urging EPA to approve the SIP

revision, indicated that they disagreed with the CBG rule being

portrayed as an important control measure for PM10 in the

proposed rulemaking. The commenter noted that the emission reductions

associated with the NOX performance standard are small in

comparison to the total amount of the PM10 inventory.

Response: EPA agrees with the commenter that the associated

particulate emission reductions are only a small part of the entire

inventory. However, for the purposes of finding necessity under section

211(c)(4)(C), the CAA does not impose a legal criterion for approval of

a measure that depends on the magnitude of reductions that the measure

would achieve, and it is not critical whether the emission reductions

associated with the measure are large or small. Rather, section

211(c)(4)(C) focuses on whether there are other measures available that

would achieve attainment of a NAAQS. As described in the proposal for

this final rule (62 FR 61942, 61946), the information submitted by ADEQ

indicates that even with implementation of all measures that are

reasonable and practicable in light of the availability of the fuel

control, the state cannot fill the projected shortfall in emission

reductions needed for attainment of the PM10 NAAQS. Also,

while the effect of the NOX performance standard on

PM10 levels is small, the NOX performance

standard will reduce PM10. Hence, EPA is today finding that

the NOX performance standards in the CBG requirements are

necessary for attainment of the PM10 standard, and EPA is

approving them as a revision to the Arizona SIP for the Phoenix

PM10 nonattainment area.9

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\9\ In its September 12, 1997 letter, ADEQ submitted

the CBG Interim Rule as a revision to the Arizona ozone SIP only.

However, on January 21, 1998 the State also submitted the rule as a

revision to the Arizona PM10 SIP.

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Comment: One commenter argued that the April 1--October 31

(``summertime'') minimum oxygen requirement for the RFG-type fuel (CBG

types 1 and 3 gasoline) should not be approved as part of the CBG

regulations. The commenter stated that the federal conventional

gasoline requirements do not include a summertime oxygen requirement,

so the State of Arizona is preempted from a summertime oxygen content

standard. The commenter added that if the State were preempted, the

State must make the necessity showing for a waiver under section

211(c)(4)(C).

Response: As stated above, EPA believes it does not need to address

in today's action whether a State requirement for oxygen is preempted

under section 211(c)(4)(A). If the standard is not preempted, there is

no bar to EPA approving it in the SIP revision. If the State meets the

requirement under section 211(c)(4)(C) by showing that the requirement

is necessary to meet the ozone NAAQS, EPA does not need to address

whether a summertime oxygen requirement is preempted. If the State

demonstrates that it needs a quantity of VOC reductions during the

ozone season to reach attainment, that there are no other reasonable

and practicable measures available to produce all of those reductions,

and that the fuel (Type 1 and Type 3 CBG gasoline requirements for VOC

performance standard and oxygen content standard) will produce

additional VOC reductions during the ozone season, the State has shown

necessity for the fuel requirement. EPA finds that Arizona has made

this showing, as discussed elsewhere in this notice and the proposal at

62 FR 61942.

In addition, EPA notes that the commenter is not accurate in

stating that because the federal conventional gasoline requirements do

not include a summertime oxygen content requirement the State is

preempted from adopting such a requirement. A state is preempted from

adopting a control or prohibition respecting a fuel characteristic or

component where EPA has prescribed under section 211(c)(1) a control or

prohibition applicable to such characteristic or component, unless the

state control or prohibition is identical to the federal control or

prohibition. Thus, where there is no federal control

[[Page 6657]]

or prohibition on a fuel characteristic or component, a state is not

preempted from adopting regulations respecting that characteristic or

component. As noted above, EPA has not determined whether the Arizona

fuel requirement is preempted under this provision.

Comment: This commenter further argued that the CBG summertime

oxygen requirement is both unreasonable and impracticable and therefore

not necessary to meet the ozone NAAQS. The commenter argued that the

intent of the Clean Air Act is that all non-fuel measures with similar

or lesser cost effectiveness must be implemented prior to fuel control

measures. The commenter asserted that the State had failed to address

the cost-effectiveness or justification of this measure versus other

non-fuel control measures not implemented, such as controls on

stationary sources and full implementation of an inspection and

maintenance program for vehicles.

Response: Section 211(c)(4)(C) provides that EPA can approve an

otherwise preempted state fuel control only if there are no other

reasonable and practicable measures available to achieve the NAAQS.

Thus, EPA is directed to consider not whether the state fuel control at

issue is reasonable and practicable, but whether other control measures

are reasonable and practicable. If the state fuel control did not

reduce emissions, EPA could not find it necessary to achieve a NAAQS,

but the CAA does not otherwise direct EPA to assess the reasonableness

and practicability of the state's chosen control measure. EPA believes

that in determining whether other ozone control measures are

unreasonable or impracticable, reasonableness and practicability should

be determined in comparison to the fuel measure that the state is

proposing to adopt. This is not an abstract consideration of whether

the other measures are reasonable or practicable, but rather a

consideration of whether it would be reasonable or practicable to

require such other measures in light of the potential availability of

the preempted state fuel control. Thus, the relative cost-effectiveness

of other control measures would be one factor that EPA would consider

in determining whether they are reasonable and practicable, but it

would not necessarily be the only or deciding factor. See EPA's August

1997 ``Guidance on Use of Opt-in to RFG and Low RVP Requirements in

Ozone SIPs'' for further guidance on what EPA considers in making a

finding of necessity.

Moreover, EPA does not believe it is appropriate or necessary to

second guess the State's choice of this particular fuel control by

inquiring whether the State could have limited the oxygen content

standard to the winter season rather than applying it year-round.

Essentially, the commenter is suggesting that a wintertime oxygen

content requirement is a reasonable and practicable alternative control

measure and that EPA should evaluate that measure before concluding

that there are not sufficient reasonable and practicable other control

measures available to achieve the NAAQS. As discussed in the proposal,

EPA interprets the reference to other measures that must be evaluated

as generally not encompassing other state fuels measures. The Agency

believes that the Act does not call for a comparison between state

fuels measures to determine which measures are unreasonable or

impracticable, but rather section 211(c)(4) is intended to ensure that

a state resorts to a fuel measure only if there are no available

practicable and reasonable non-fuels measures. This interpretation

minimizes the burden on the oil industry of different state fuel

measures where non-fuel measures are available, and thereby satisfies

one of the underlying purposes of section 211(c)(4), but where the

state must turn to a fuel measure, it gives the state flexibility to

choose whatever particular fuel measure best suits its needs. Under

this interpretation, EPA retains the ability not to approve a state

fuel measure that is grossly over-burdensome, however, because the

state must show that whatever fuel measure it selects is necessary to

achieve needed emissions reductions. Thus, in demonstrating that

measures other than requiring CBG gasoline are unreasonable or

impracticable, Arizona need not address the reasonableness or

practicability of other possible state fuel measures, such as a

wintertime only oxygen content standard.

Arizona must still demonstrate that its chosen fuel control measure

achieves emissions reductions necessary for attainment of a NAAQS,

which is discussed below and in the proposal.

With regard to the other measures identified by the commenter,

Arizona believes its I/M program is as stringent as possible. EPA has

been working with ADEQ over the last year to improve its I/M program

due to problems with preconditioning. As discussed further below,

current modeling 10 by ADEQ indicates that a large reduction

in ozone precursors is needed to attain the ozone standard. Previous

modeling analysis of a full I/M 240 program indicates that the

associated emission reductions, combined with all other reasonable and

practicable measures are significantly below this amount. The current

proposed I/M program includes an alternative test cycle which will

result in improved throughput of the I/M 240 test. EPA has informally

given the alternative program conditional approval. We anticipate, that

with the collection of additional data during the summer of 1998, that

the program will be granted full approval.

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\10\ Arizona completed the Reanalysis of the Metropolitan

Phoenix Voluntary Early Ozone Plan (REOP) modeling analysis in

October of 1997. This modeling analysis indicated that a 23 percent

reduction in ozone values was needed to reach attainment. The total

impact of all control measures included in that analysis on ozone

values was 4.4 precent, significantly below the 23 percent needed to

reach attainment. Additional analysis of this modeling was completed

in November of 1997, indicating that emission reductions of ozone

precursors of at least 70 percent are needed to attain the one-hour

ozone standard.

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Regarding stationary measures, the State has provided additional

preliminary modeling 11 that indicates that Phoenix needs to

achieve sustaintial percent reductions in both VOCs and NOX

in order to reach attainment in 1999, the attainment deadline for

serious areas. The State believes that even if it implements all

possible stationary source requirements (in addition to those

stationary source measures currently in place), it will still need

additional reductions to achieve these reductions and reach attainment.

For example, the REOP modeling analysis indicates that stationary point

source emissions contribute only 4.5 percent and stationary area source

emissions contribute only 20 percent of the total VOC emission

inventory in 1999. Stationary point sources contribute 7 percent and

stationary area source contribute 3.6 percent of the total

NOX emissions in 1999. Based on all the evidence available,

even with the elimination of all of these stationary source emissions

(which is not technically feasible), substantial additional emission

reductions above 25 percent will be needed to reach attainment by 1999.

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\11\ See footnote 10

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Comment: One commenter stated that ADEQ used a flawed analysis in

its attempt to show that non-winter minimum-oxygen control is necessary

for ozone attainment by calculation of an ``equivalent'' VOC impact.

The commenter argues that ADEQ's inaccurate analysis resulted in an

overstatement of the VOC emissions impact of a non-winter oxygen

content control.

Response: EPA believes that this commenter is referencing ADEQ's

[[Page 6658]]

discussion and analysis regarding the relationship between carbon

monoxide (CO) reductions and VOC reductions. ADEQ stated in its SIP

submittal that one comment regarding Arizona's proposed CBG rule

challenged the summertime oxygen content standard. Thus, ADEQ developed

an analysis of the potential impact of preemption of a State oxygen

content standard on ozone attainment. ADEQ stated that because

oxygenation of gasoline reduces CO emissions and CO is an ozone

precursor, it was determined that preemption of the oxygen content

standard would reduce the potential ozone reduction benefits of the

Arizona CBG program.12

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\12\ ADEQ Technical Support Document at page 7. This analysis is

contained in appendices K and L to the Technical Support Document.

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EPA has reviewed ADEQ's analyses 13 and believes that

these analyses are insufficient to show that a summertime oxygen

content gasoline requirement is necessary for Phoenix to achieve the

ozone NAAQS. EPA believes more in-depth analysis would need to be done

by EPA, states, and industry before EPA could make any conclusions on

this issue. Nonetheless, EPA believes ADEQ does not need this analysis

to show that the year-round oxygen content requirement is necessary

under section 211(c)(4)(C) to meet the ozone NAAQS.

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\13\ Appendix K, entitled CO reductions and equivalent VOC

reductions from an increase in Gasoline Oxygen Content and Appendix

L, entitled Ozone sensitivity to CO expressed in relation to VOC.

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As stated above, if EPA finds the VOC reductions produced by the

VOC performance standard and oxygen content standard under CBG Types 1

and 3 to be necessary, then the comparable reductions produced by

either of the alternatives of CBG Type 2 gasoline would also be

necessary. In today's action EPA is finding that VOC reductions are

necessary under section 211(c)(4)(C) and is approving the VOC

performance standard (and oxygen content standard); the HC performance

standard (and the oxygen content standard); and the oxygen, T50, T90,

and aromatic HC requirements because either they are not preempted

under section 211(c)(4)(C) or to the extent that they are or may be

preempted, they are necessary and hence approvable under section

211(c)(4)(C).

Arizona has already demonstrated that its 7.0 psi RVP requirement

is necessary under section 211(c)(4)(C) to meet the ozone NAAQS in the

Phoenix area.14 Compliance with the VOC performance standard

and oxygen content standard (required by CBG gasoline types 1 and 3)

would produce some additional VOC reductions beyond those produced by

the 7.0 psi RVP requirement. ADEQ's modeling shows that federal RFG

would provide additional reductions of 8 percent over a baseline fuel

of conventional gasoline with a 7.0 RVP requirement. In addition, EPA's

complex model indicates that an increase in oxygen weight percent leads

to a reduction in total VOC emissions.15 Refiners would also

obtain comparable VOC reductions through the HC performance standard,

or the oxygen, T50, T90, and aromatic HC requirements. Thus, EPA is

finding in today's action that the VOC reductions produced by the VOC

performance standard and oxygen content standard under CBG Type 1 and 3

gasoline are necessary; and the comparable emissions reductions

produced by the alternative of CBG Type 2 gasoline are also necessary.

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\14\ See 62 FR 31734 (June 11, 1997).

\15\ 40 CFR 80.45(c)(1) (i) and (ii)

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V. Action

EPA has evaluated the submitted SIP revision and has determined

that it is consistent with the CAA and EPA regulations. EPA has also

found that the various CBG requirements are either not preempted by

federal fuel requirements or are necessary for the Phoenix

nonattainment area to attain the ozone and PM10 NAAQS,

pursuant to the CAA. Therefore, EPA approves the Arizona CBG Interim

Rule into the Arizona SIP for the Phoenix ozone and PM10

nonattainment areas under section 110(k)(3) of the CAA as meeting the

requirements of section 110(a) and part D.

Nothing in this action should be construed as permitting or

allowing or establishing a precedent for any future implementation

plan. Each request for revision to the state implementation plan shall

be considered separately in light of specific technical, economic, and

environmental factors and in relation to relevant statutory and

regulatory requirements.

VI. Administrative Requirements

A. Executive Order 12866

The Office of Management and Budget (OMB) has exempted this

regulatory action from E.O. 12866 review.

B. Regulatory Flexibility Act

Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA

must prepare a regulatory flexibility analysis assessing the impact of

any proposed or final rule on small entities. 5 U.S.C. 603 and 604.

Alternatively, EPA may certify that the rule will not have a

significant impact on a substantial number of small entities. Small

entities include small businesses, small not-for-profit enterprises,

and government entities with jurisdiction over populations of less than

50,000.

This final rule will not have a significant impact on a substantial

number of small entities because this federal action authorizes and

approves into the Arizona SIP requirements previously adopted by the

State, and imposes no new requirements. Therefore, I certify that it

does not have a significant impact on any small entities affected.

Moreover, due to the nature of the Federal-State relationship under the

CAA, preparation of a flexibility analysis would constitute Federal

inquiry into the economic reasonableness of state action. The Clean Air

Act forbids EPA to base its actions concerning SIPs on such grounds.

Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C.

7410(a)(2).

C. Unfunded Mandates

Under Section 202 of the Unfunded Mandates Reform Act of 1995

(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA

must prepare a budgetary impact statement to accompany any proposed or

final rule that includes a Federal mandate that may result in estimated

costs to State, local, or tribal governments in the aggregate; or to

private sector, of $100 million or more. Under Section 205, EPA must

select the most cost-effective and least burdensome alternative that

achieves the objectives of the rule and is consistent with statutory

requirements. Section 203 requires EPA to establish a plan for

informing and advising any small governments that may be significantly

or uniquely impacted by the rule.

EPA has determined that this action promulgated does not include a

Federal mandate that may result in estimated costs of $100 million or

more to either State, local, or tribal governments in the aggregate, or

to the private sector, in any one year. This Federal action authorizes

and approves requirements previously adopted by the State, and imposes

no new requirements. Accordingly, no additional costs to State, local,

or tribal governments, or to the private sector, will result from this

action.

D. Submission to Congress and the General Accounting Office

Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business

Regulatory Enforcement Fairness Act of 1996, EPA submitted a report

containing this rule and other required information to the U.S. Senate,

the U.S. House of

[[Page 6659]]

Representatives and the Comptroller General of the General Accounting

Office prior to publication of the rule in today's Federal Register.

This rule is not a ``major'' as defined by 5 U.S.C. 804(2).

E. Petitions for Judicial Review

Under section 307(b)(1) of the Clean Air Act, petitions for

judicial review of this action must be filed in the United States Court

of Appeals for the appropriate circuit by April 13, 1998. Filing a

petition for reconsideration by the Administrator of this final rule

does not affect the finality of this rule for the purposes of judicial

review nor does it extend the time within which a petition for judicial

review may be filed, and shall not postpone the effectiveness of such

rule or action. This action may not be challenged later in proceedings

to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Hydrocarbons,

Volatile organic compounds, Nitrogen oxides, Particulate matter,

Incorporation by reference, Intergovernmental relations, Ozone,

PM10, Reporting and recordkeeping requirements.

Note: Incorporation by reference of the State Implementation

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

Federal Register on July 1, 1982.

Dated: January 23, 1998.

Felicia Marcus,

Regional Administrator, Region IX.

Part 52, chapter I, title 40 of the Code of Federal Regulations is

amended as follows:

PART 52--[AMENDED]

1. The authority citation for part 52 continues to read as follows:

Authority: 42 U.S.C. 7401 et seq.

Subpart D--Arizona

2. Section 52.120 is amended by adding paragraph (c)(89) and

(c)(90) to read as follows:

Sec. 52.120 Identification of plan.

* * * * *

(c) * * *

(89) Plan revisions were submitted on September 12, 1997 by the

Governer's designee.

(i) Incorporation by reference

(A) Arizona Cleaner Burning Gasoline Interim rule submitted as a

revision to the Maricopa Country Ozone Nonattainment Area Plan, adopted

on September 12, 1997.

(90) Plan revisions were submitted on January 21, 1998 by the

Governer's designee.

(i) Incorporation by reference.

(A) Arizona Cleaner Burning Gasoline Interim rule submitted as a

revision to the PM-10 Maricopa County State Implementation Plan,

adopted on September 12, 1997.

* * * * *

[FR Doc. 98-3327 Filed 2-9-98; 8:45 am]

BILLING CODE 6560-50-P