For subpart 2 moderate and above areas and areas within an OTR, the final rule is similar to provisions in section 182 of the CAA which require States to submit RACT rules for these areas within 24 months after the designation. Several commenters supported this approach. Since some States may rely on submittal of SIP revisions meeting CAIR to also satisfy RACT for some sources, the final rule extends the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 65In the 1990 CAA Amendments, Congress specifically added RACT requirements for major sources in section 182. Section 182 required the RACT rules to be implemented " as expeditiously as practicable" but no later than 30 months after the submittal deadline.

277 proposed RACT submittal date of 24 months to 27 months after designation ( September 15, 2006), to be consistent with the date for submittal of the CAIR provisionsSIP ( September 10,

2006).

For areas subject to the 27 month RACT submittal date,

EPA believes the proposed 30 month period for installation of controls is reasonable, given that this is the statutorily prescribed period65 ( for the areas covered under subpart 2) and based on our prior experience with States adopting and implementing RACT requirements. SFor instance,

subsequent to submission of the NOx RACT SIP revisions for the 1 hour standard subject to the 30 month CAA period, EPA approved NOx RACT SIP submittals in some areas which had been exempt from the requirements, including the Dallas and Houston areas, which required implementation within 2 years from the State adoption date. TAlso, the EPA recently determined that a 24 month period is adequate for stationary internal combustion engines to install low emission combustion controls ( April 21, 2004; 69 FR 21633). PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 6657 months from June 15, 2004 effective date of designation ( 27 months to submission plus 30 months to implementation).

278 The 48 to 60 month period ( June 15, 2011) for installation of controls suggested by some commenters was not adequately supported, i. e., there was with a lack of detailed justification that more time is necessary. In addition, as described in an earlier comment/ response, EPA anticipates that many sources which applied controls due to RACT requirements with the 1 hour ozone standard will not need to install new controls for the 8 hour standard. Thus,

because fewer sources will be subject to a new RACT requirement requirements to meet RACT for the 8 hour standard than were subject to the 1 hour standard, there will be less demand for control equipment. States and many sources face a reduced burden compared to the same CAA requirement in the 1990s.

Since the ozone season ( 40 CFR part 58, appendix D)

does not begin for many areas until May 1, however, for areas with an effective date of designation of June 15,

2004, the final rule allows sources until the beginning of the area's 2009 ozone season ( generally May 1, 2009) rather than March 15, 200966 to install controls. Installation of PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 67Note, since the CAA requires attainment as expeditiously as practicable, some moderate nonattainment areas may have an attainment date earlier than June 15, 2010.

279 controls before the 2009 ozone season is sufficient to provide the benefits for timely attainment of the ozone standard in areas with a 2010 or later attainment date. 67 And the short delay ( generally between March 15, 2009 and May 1, 2009) will cause no harm since it is prior to the ozone season, which is when ozone levels are most likely to be at harmful levels. Sources meeting NOx RACT through compliance with CAIR would be subject to the CAIR NOx caps beginning January 1, 2009. Additionally, some areas have ozone seasons that begin earlier than March 15, 2009 and would need to ensure sources are complying by that earlier date.

For subpart 1 areas that request an attainment date extension ( i. e., an attainment date beyond 5 years after designation), the final rule sets the RACT submittal and implementation dates the same as required for subpart 2 moderate and above areas, except subpart 1 areas shallare required to submit the RACT SIP with its attainment date extension request. The EPA believes this approach is reasonable and provides equity for subpart 1 and 2 areas PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 68" State Implementation Plans; General Preamble for Proposed Rulemaking on Approval of Plan Revisions for Nonattainment Areas" 44 FR 20372 at 20375. " Provide for implementation of all reasonably available control measures ( RACM) as expeditiously as practicable, insofar as necessary to assure reasonable further progress and attainment by the required date. . ."

" State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 280 with attainment dates beyond 5 years after designation.

2. Reasonably Available Control Measures ( RACM)

a. Background As noted in the June 2, 2003 proposed rule, subpart 1 of part D includes general requirements for all designated nonattainment areas, including a requirement that a nonattainment plan provide for the implementation of all RACM as expeditiously as practicable, including such reductions that may be obtained through RACT. We have also issued guidance for implementing the RACM provisions of the CAA that interprets thosethat provisions to require a demonstration that the State has adopted all reasonable measures to meet RFP requirements and to demonstrate attainment as expeditiously as practicable and thus that no additional measures that are reasonably available will advance the attainment date or contribute to RFP for the area. 68 The RACM requirement, which is set forth in section PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 1990; Proposed Rule." 57 FR 13498 at 13560 ( April 16, 1992). In part this guidance said, " The EPA . . . indicated that where measures that might in fact be available for implementation in the nonattainment area could not be implemented on a schedule that would advance the date for attainment in the area, EPA would not consider it reasonable to require implementation of such measures. The EPA continues to take this interpretation of the RACM requirement." As an example, with regard to one possible list of measures ( TCMs under section 108( f) of the Act) that guidance said, ". . . based on experience with implementing TCM's over the years, EPA now believes that local circumstances vary to such a degree from city to city that it is inappropriate to presume that all section 108( f) measures are reasonably available in all areas. It is more appropriate for States to consider TCM's on an areaspecific not national, basis and to consider groups of interacting measures, rather than individual measures." " Guidance on the Reasonably Available Control Measures ( RACM) Requirement and Attainment Demonstration Submissions for Ozone Nonattainment Areas." John S. Seitz, Director, Office of Air Quality Planning and Standards. November 30, 1999. Web site: www. epa. gov/ ttn/ oarpg/ t1pgm. html. Memorandum of December 14, 2000, from John S. Seitz, Director, Office of Air Quality Planning and Standards, re: " Additional Submission on RACM from States with Severe One Hour Ozone Nonattainment Area SIPs."

281 172( c)( 1) of the CAA, applies to all nonattainment areas that are required to submit an attainment demonstration,

whether covered under only subpart 1 or also subpart 2. The June 2, 2003 proposal impliednoted that the currentEPA had issued policies and procedures related to RACM would continue to apply for the 8 hour ozone standard. The draft regulatory text ( section 51.912( d)) provided that for each nonattainment area required to submit an attainment PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 282 demonstration under § 51.908, the State would have to submit with the attainment demonstration a SIP revision demonstrating that it has adopted all control measures necessary to demonstrate attainment as expeditiously as practicable and to meet any RFP requirements.

b. Summary of final rule Section 51.912( d) of the final rule reflects our proposal and draft regulatory text. For each nonattainment area required to submit an attainment demonstration under § 51.908, the State must submit with the attainment demonstration a SIP revision demonstrating that it has adopted all control measures necessary to demonstrate attainment as expeditiously as practicable and to meet any RFP requirements.

Finally, inWe believe CAIR constitutes control as expeditious as practicable for EGUs for the area covered by the CAIR. In the CAIR rulemaking ( May 12, 2005 ( 70 FR at 25221 et seq.)) EPA concluded that the CAIR compliance dates represent an agressive schedule that reflects the limitations of the labor pool, and equipment/ vendor availability, and need for electrical generation reliability for installation of NOx emission controls. Thus, we believe CAIR constitutes control as expeditious as practicable for PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 69Ibid.

283 EGUs for the area covered by the CAIR. States should recognize these constraints in developing their own compliance schedules for NOx emission controls in meeting their CAIR and RACT responsibilities.

c. Comments and responses Comment: One commenter asked that we clarify whether old SIP measures become RACM.

Response: Under EPA's policy concerning RACM, there are no measures that are automatically deemed RACM. The determination of whether a SIP contains all RACM requires an area specific analysis that there are no additional economically and technologically feasible control measures ( alone or in conjunction with others) that will advance the attainment date. 69 The April 16, 1992, " General Preamble"

provides some guidance on measures that the State should consider in making its RACM determination, including " any measure that a commenter indicates during a public comment period is reasonably available should be closely reviewed by the planning agency to determine if it is in fact reasonably available for implementation in the area in light of local circumstances." Such measures can be rejected as not being PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 284 RACM if they will not advance attainment or provide for RFP or if they are not economically or technologically feasible.

Comment: One commenter recommended that EPA revise its policy permitting SIPs to exclude otherwise feasible and potentially RACM that achieve emissions reductions in increments less than the amount necessary to advance the attainment date by a full year. The commenter believed this was an onerous standard that has stymied development of new control measures, particularly transportation control measures. The commenter believed EPA's RACM standard is especially harmful to the ability to provide SIP credit for Smart Growth land use, due to the long timeframe over which land is developed and redeveloped. The commenter believes that ever increasing suburbanization of our nation inflates the growth rate in VMT, thereby neutralizing improvements in vehicle emissions. The commenter claimed that a significant air quality improvement strategy for the 21st Century is compact mixed use pedestrian friendly development near frequent transit and believed that changing land use plans in this direction will benefit air quality by reducing the rate of growth in VMT and emissions. The commenter recommended that EPA be aware of this and revise its RACM standard to encourage local governments to alter their land PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 70Improving Air Quality Through Land Use Activities; Transportation and Regional Programs Division, Office of Transportation and Air Quality, U. S. Environmental Protection Agency. EPA420 R 01 001. January 2001.

285 use plans by providing a mechanism to give credit for air quality beneficial land use changes.

Response: We do not believe our RACM policy has " stymied" development of new control technologies. New emission reduction technologies have surfaced and continue to surface to meet market demands resulting in part from CAA requirements, which include the requirements to demonstrate attainment as expeditiously as practicable and to make RFP toward attainment. In addition, viable control measures that produce emissions reductions can be approved into SIPs whether or not such measures meet the definition of RACM.

Our RACM policy merely interprets the CAA as not mandating measures that do not contribute to expeditious attainment and timely RFP. The policy does not limit the potential for States to develop any control measures they wish, including land use measures. In fact, we have prepared a separate guidance document on how areas can develop and receive SIP credit for land use control measures. 70 We conclude,

however, that to require areas to adopt and implement as RACM every control technology or measure that obtains a PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 286 small amount of emissions reductions   even if such measure would not advance the attainment date or is not required to meet RFP requirements   is not justified. Such a policy would be extremely burdensome to planning agencies, would detract from the effort to develop more reasonable and effective controls to meet the NAAQS, and would not be necessary to meet the statutory goal of expediting attainment. For these reasons, and because such a requirement is not mandated by the statute, we are not adopting such a policy.

Comment: One commenter believed that the RACM requirements for subpart 1 areas should be designed so as to not require extensive and unneeded control due to the fact that in most or all cases these controls will not be needed for the area to attain.

Response: We believe the current RACM guidance, which applies to both subpart 1 and 2 areas, works to avoid extensive and unneeded controls, while ensuring that areas meet the health based NAAQS as expeditiously as practicable.

Comment: One commenter believed our RACM guidance provides only minimum requirements to ensure attainment as expeditiously as practicable and believes that every nonattainment area must be required to consider adoption of PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 71In " State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990; Proposed Rule," we noted in the discussion of the RACM requirement that " In addition, any measure that a commenter indicates during the public commenter period is reasonably available for a given area should be closely reviewed by the planning agency to determine if it is in fact reasonably available for implementation in the area in light of local circumstances." The discussion of RACM in that document contains other 287 measures that have been implemented in other areas,

including the South Coast of California, so as to achieve progress and attainment as expeditiously as practicable. An area should be allowed to reject such measures only upon a showing that they are not practicable due to specified unique circumstances. The commenter urged that given the importance of this issue to fair, expeditious and lawful implementation of the 8 hour standard, EPA's final 8 hour standard implementation rule must explicitly require compliance with this guidance.

Response: To meet the RACM provision of the CAA, the State must determine as part of its attainment demonstration whether there are additional measures that are feasible that would expedite attainment. In addition, EPA's RACM policy indicates that areas should consider all candidate measures that are potentially available, including any that have been suggested for the particular nonattainment area. 71 Although PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version relevant history concerning the RACM requirement.

288 areas should consider all available measures, including those being implemented in other areas such as California,

areas need adopt measures only if they are both economically and technologically feasible and will advance the attainment date or are ncessary for RFP. This interpretation of the section 172 requirements has recently been upheld by several courts. See, e. g., Sierra Club v. EPA, et al., 294 F. 3d 155 ( D. C. Circuit, 2002).

Comment: Several commenters agreed with our proposal to require that the RACM analysis and measures be submitted within 3 years after the effective date of designation for the 8 hour NAAQS.

Response: We acknowledge the support of the comments on the submission timing of the RACM requirements.

H. How will the section 182( f) NOx provisions be handled under the 8 hour ozone standard?

[ Section VI. L. of June 2, 2003 proposed rule ( 68 FR 32840); § 51.913 in draft and final regulatory text.]

1. Background While NOx emissions are necessary for the formation of ozone in the lower atmosphere, a local decrease in NOx PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 72See 57 FR 55622 (" Nitrogen Oxides Supplement to the General Preamble," published November 25, 1992).

73As stated in EPA's I/ M ( November 5, 1992, 57 FR 52950) and conformity rules ( 60 FR 57179 for transportation rules and 58 FR 63214 for general rules), certain NOx requirements in those rules do not apply where EPA granteds an areawide exemption under section 182( f).

289 emissions can, in some cases, increase local ozone concentrations. This potential " NOx disbenefit" resulted in Congress including the NOx exemption provisions in section 182( f) of the CAA for areas classified under subpart 2.

Section 182( f) requires States to apply the same requirements to major stationary sources of NOx as are applied to major stationary sources of VOC under subpart 2.

The applicablerelevant requirements are RACT and nonattainment major NSR for major stationary sources of NOx in certain ozone nonattainment areas and throughout States in the OTR. 72 In addition, section 182( f) specifies circumstances under which these NOx requirements would be limited or would not apply (" NOx exemption"). Further, areas granted a NOx exemption under section 182( f) may be exempt from certain requirements of EPA's motor vehicle I/ M regulations and from certain Federal requirements of general and transportation conformity. 73 In the June 2, 2003 action, we proposed to PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 74See 57 FR 55620, " Nitrogen Oxides Supplement to the General Preamble," published November 25, 1992. 68 FR 32840.

75September 1, 2004 at 69 FR 53378.

76The EPA's primary guidance regarding section 182( f) is contained in the " Guideline for Determining the Applicability of Nitrogen Oxide Requirements under Section 182( f)," issued by John S. Seitz, Director, Office of Air Quality Planning and Standards, to the Regional Division Directors, December 16, 1993.

77Memorandum dated January 14, 2005, " Guidance on Limiting Nitrogen Oxides ( NOx) Requirements Related to 8 Hour Ozone Implementation" from Stephen D. Page, Director, Office of Air Quality Planning and Standards, to Air 290 applyindicated the NOx requirements and exemption provisions in section 182( f) would apply for subpart 2 nonattainment areas and in OTRs. 74 In addition, we proposed to allow subpart 1 nonattainment areas to seek a NOx exemption, where appropriate. Further, we proposed that areas previously granted a NOx exemption under the 1 hour ozone standard would need to request an exemption for purposes of the 8 hour standard in order to account for any new information that may point to a different conclusion with respect to the 8

hour standard. Recently, we invited comment75 on draft guidance intended to update the existing 1 hour ozone guidance76 regarding section 182( f) for application to the 8

hour ozone program. We issued the updated final guidance regarding section 182( f) on January 14, 2005.77 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version Directors, Regions I X.

78Memorandum dated January 14, 2005, " Guidance on Limiting Nitrogen Oxides ( NOx) Requirements Related to 8 Hour Ozone Implementation" from Stephen D. Page, Director, Office of Air Quality Planning and Standards, to Air Directors, Regions I X.

291 2. Summary of final rule As proposed, the final rule allows a person to petition the Administrator for a NOx exemption under either section 182( f) orfor an area classified under subpart 2 or located in an OTR or under our regulations for any other area designated nonattainment for the 8 hour ozone NAAQS and for any area in a section 184 OTR. As with the 1 hour ozone standard, the NOx exemption provision in section 182( f)

applies to subpart 2 ozone nonattainment areas and in a section 184 OTR. In addition, the final rule extends to subpart 1 ozone nonattainment areas the opportunity to petition the Administrator for an exemption from nonattainment major NSR and/ or RACT requirements in a manner consistent with section 182( f) provisions. The petition must contain adequate documentation that the provisions of section 182( f) and/ or our regulations are met. We recently issued78 updated guidance on appropriate documentation PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 292 regarding section 182( f) for application to the 8 hour ozone program. In addition, the final rule states that a section 182( f) NOx exemption granted under the 1 hour ozone standard does not relieve the area from any requirements under the 8

hour ozone standard. That is, a new petition with respect to 8 hour ozone must be submitted to EPA and must be approved by EPA before an area is exempt from any 8 hour ozone standard NOx requirements.

3. Comments and responses Comments: Several commenters supported EPA's proposal to make NOx waivers available to 8 hour nonattainment areas and Statesall areas in an OTR under either subpart 1 or subpart 2, pursuant to the provisions of section 182( f) of the CAA. Some commenters stated that requiring a reapproval of existingnew NOx waiverswaiver for the 8 hour standard amounts to rescinding the existing waivers.

Another commenter asked what is needed to maintain an exemption. One commenter stated that EPA should make it clear that there is no presumption that a NOx waiver granted under section 182( f) of the CAA for the 1 hour ozone standard is continued for the 8 hour standard. Other commenters recommended that the NOx waiver should automatically apply for the 8 hour ozone standard in areas PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 293 where EPA previously granted a NOx waiver under the 1 hour ozone standard. One commenter stated that the technical basis for granting waivers under the l hour NAAQS remains valid.

Response: We agree with comments supporting the proposal to apply the section 182( f) exemption provisions to subpart 2 nonattainment areas and OTRs and to extend these protections to subpart 1 areas through regulation.

Since a NOx exemption granted for the 1 hour ozone standard was completed through notice and comment rulemaking, the exemption remains effective for the 1 hour standard unless and until EPA completes rulemaking to remove or revise the waiver for a specific area. This rulemaking on the 8 hour ozone implementation program does not rescind any existing 1 hour NOx waiver provision.

However, for areas previously granted a NOx waiver under the 1 hour ozone standard, a petitioner would need to seek a new waiver for purposes of the 8 hour ozone standard.

The EPA does not believe NOx waivers   including those granted under the 1 hour ozone standard   should always be permanent. As sources are regulated and the mix of pollutants is altered, circumstances could show that NOx reductions will begin to provide a benefit. In several PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 79E. g: Recision of NOx waiver for the Dallas Fort Worth area on April 20, 1999 ( 64 FR 19283). Also, the temporary waiver for Houston and Beaumont ( originally granted April 19, 1995) expired December 31, 1997). ( 60 FR 19515)

294 cases, the 1 hour NOx waiver has been removed in subsequent rulemaking actions. 79 Indeed, when EPA issued waivers under the 1 hour ozone standard, we stated that the NOx waivers would be removed where new information became available and the rationale for the initial NOx waiver no longer was supported. For example, the waiver may be removed through rulemaking if subsequent modeling data demonstrated an ozone attainment benefit from NOx emission controls.

Given that many NOx waiver actions were based on air quality and dispersion modeling analyses made in the mid

1990s for purposes of the 1 hour standard, EPA believes that newer data and analyses should be used to determine if a NOx waiver under the 8 hour ozone standard is warranted. Many NOx waivers were simply based on whether an area had ambient air quality showing attainment of the 1 hour ozone standard;

this is not an appropriate basis for a waiver under the 8

hour ozone standard since areas may be attaining the 1 hour standard but exceeding the 8 hour standard. Some NOx waivers were based on dispersion modeling. In some cases, the modeling later proved inadequate as attainment was not met PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 295 in the forecast year. In other cases, those modeling analyses have been replaced with more recent analyses. The EPA believes that NOx waivers under the 8 hour ozone standard should be supported by analyses specific to the 8 hour ozone standard and should consider relevant information developed after the 1 hour waivers were granted.

The EPA believes the NOx waivers may not be granted except through notice and comment rulemaking action. That is, since EPA approval of a waiver request would change SIP requirements, EPA must conduct notice and comment rulemaking on that request. The EPA believes this requirement precludes automatic approval of 8 hour NOx waiver requests based on previously issued 1 hour NOx waivers.

Comment: Some commenters urged EPA to expand the section 182( f) waiver to VOC RACT as well as NOx RACT. One commenter states that EPA has substantially more discretion under subpart 1 than it does under subpart 2, and to fail to exercise that discretion to avoid ineffective and inefficient requirements ( through NOx and VOC waivers) would be irresponsible, and an abuse of its discretion.

Response: The EPA disagrees with these comments. We do not see any provision in the CAA that would give us the authority to create such an exemption. While Congress could PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 80December 1991 NAS report, Rethinking the Ozone Problem in Urban and Regional Air Pollution, page 377.

296 have created a VOC waiver at the same time the section 182( f) NOx waiver provisions were enacted, Congress chose not to do so. The Congress further provided for additional review and study under section 185B " to serve as the basis for the various findings contemplated in the NOx provisions"

( H. R. Rep. 490 at 257). Under section 185B, EPA, in conjunction with the National Academy of Sciences ( NAS),

conducted a study on the role of ozone precursors in tropospheric ozone formation. The final section 185B report incorporates this NAS report along with an EPA report addressing the availability and extent of NOx controls. With respect to VOC, the NAS report states that " control of VOCs never leads to a significant increase in ozone." 80 Thus, the section 185B report does not support a waiver provision for VOC. Thus, wWhile dispersion modeling analyses show that NOx emissions reductions can be counterproductive under certain circumstances ( the reason for the NOx waiver provision), we do not see a similar case for VOC. Therefore, we are not expanding the section 182( f) exemption concept to VOC.

Comment: One commenter stated that the draft guidance does not contain a discussion of the linkages between 182( f) PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 297 NOx exemptions and certain other regional NOx reduction requirements such as the NOx SIP Call and the proposed " Clean Air Interstate Rule." The commenter believed EPA has an obligation to assess the impact of any section 182( f)

exemption request under the provisions of section 110( a)( 2)( D), including the potential for emissions exempted from controls to contribute to downwind nonattainment or to interfere with the maintenance of any NAAQS.

Response: As discussed in section 4.2 of the draft 8

hour exemption guidance, EPA encourages States/ petitioners to include consideration of air quality effects that may extend beyond the designated nonattainment area. States should consider such impacts since they are ultimately responsible for achieving attainment in all portions of their State and for ensuring that emissions originating in their State do not contribute significantly to nonattainment in, or interfere with maintenance by, any other State.

However, EPA believes NOx exemptions under section 182( f) of the CAA and interstate transport of emissions under section 110( a)( 2)( D) of the CAA can be considered independently.

The EPA has separate authority under sSection 110( a)( 2)( D)

to require as States to reduce emissions from stationary and/ or mobile sources where there is evidence showing that PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 298 such emissions would contribute significantly to nonattainment or interfere with maintenance in other States.

In some cases, then, EPA may grant an exemption from certain NOx requirements and, in a separate action, require NOx emission decreases under section 110( a)( 2)( D). Thus, a NOx exemption doesn't affect an obligation of a State to meet a NOx budget established under a SIP call or other transport rule.

I. Should EPA promulgate a NSR provision to encourage development patterns that reduce overall emissions?

[ Section O. 9. of the June 2, 2003 proposed rule ( 68 FR 32849). No draft or final regulatory text.]

Note: Section V of this preamble below addresses rules for NSR for the 8 hour ozone standard. This section addresses only the June 2, 2003 proposal related to Clean Air Development Communities ( CADC).

1. Background In the June 2, 2003 proposal, we considered two options designed to recognize the air quality benefits which can accrue when areas site new sources and plan development in a manner that results in overall reduced emissions. We proposed to define a community that changes its development patterns in such a way that air emissions within the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 299 nonattainment area are demonstrably reduced as a CADC. As a result of becoming a CADC, an area would obtain a certain amount of flexibility in its NSR program.

In the first option, we proposed that a CADC would have a more flexible NSR program by: 1) being subject to subpart 1 NSR as opposed to subpart 2 NSR; 2) lowering NSR major source thresholds for these areas to make them similar to the thresholds for PSD areas; and 3) allowing areas that meet certain development criteria ( development zones) to receive NSR offsets from State offset pools. In the second option, we proposed that a CADC would be able to receive a pool of NSR offset credits equal to the reduced emissions from new development patterns. Credits from the pool could be provided to any new or modified source in a " development zone" as offsets.

We also requested comments on the options and encouraged comments suggesting other ways of encouraging development patterns that would result in lower emissions.

2. Summary of final rule The EPA is not at this time issuing any rule related to CADCs.

3. Comments and Responses Comments: The EPA received numerous comments on the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 300 proposal, some supporting and others opposing the CADC provision. A number of the commenters noted that the proposal did not appear to have enough detail. A summary of the comments appears in the response to comment document.

Response: The EPA appreciates the many comments it has received on this section. The EPA agrees with a number of commenters that while the ideas in this section are interesting and designed to achieve useful goals, much more work is needed in a separate effort to work through the many issues involved. Therefore, EPA will not move forward with this particular effort at this time.

However, EPA does not plan to ignore the issue. The EPA will be looking to bring a group of stakeholders together to see if the group can come up with and support one or more ways that we can use existing programs and authorities to create positive incentives and tools for communities to reduce sprawl. The process will not be designed to work only through the specific issues in establishing a program to encourage CADCs as outlined in the proposal, but will be open to all ideas.

Issues related to community development, land use and " sprawl" will have transportation and air quality implications. Therefore, EPA will work closely with DOT in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 301 addressing these issues.

J. How will EPA ensure that the 8 hour ozone standard will be implemented in a way which allows an optimal mix of controls for ozone, PM2.5, and regional haze?

[ Section VI. P. of June 2, 2003 proposed rule ( 68 FR 32852); no draft or final regulatory text.]

1. Background As noted in the proposal, in many cases, States will be developing strategies to attain both the 8 hour ozone and PM2.5 NAAQS in the same nonattainment area or in nonattainment areas that have some area or areas in common.

RAdditionally, requirements for regional haze apply to all areas. Certain ozone control measures may also be helpful as part of a PM2.5 control strategy or a regional haze plan.

Similarly, controls for PM2.5 may lead to reductions in ozone or regional haze. Because the precursors for ozone and PM2.5 may be transported hundreds of kilometers, regional scale impacts may also be relevant to consider. TheWhile EPA expects that strategies to decrease ozone concentrations will not adversely affect strategies to attain the PM2.5 NAAQS. We, we also believe integration of ozone, PM2.5, and regional haze planning will reduce overall costs of meeting multiple air quality goals. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 302 2. Summary of final rule We are encouraging each State with an ozone nonattainment area whichthat overlaps or is nearby a PM2.5 nonattainment area to take all reasonable steps to coordinate the required revisionsSIP development processes for these nonattainment areas and meetto coordinate the development of these SIPs with the State's SIP to address the reasonable progress goals for regional haze.

Specifically, EPA encourages States conducting modeling analyses for ozone to separately estimate effects of a strategy on the following: mass associated with sulfates,

nitrates, organic carbon, elemental carbon, and all other species. However, thewhile we believe such coordination may reduce the overall costs to States for implementing these programs, this final rule does not contain any requirements/ regulatory text on this subjectrequire the State to coordinate these three planning efforts.

3. Comments and responses Comments: Several commenters supported EPA's recommendation for States to integrate planning for 8 hour ozone, PM2.5, and regional haze. These commenters agreed that the integration of ozone, PM2.5 and regional haze controls will reduce the overall costs of meeting multiple PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 303 air quality goals and that EPA should continue to synchronize the SIP planning requirements for these pollutants to aid in this integration. One commenter asked EPA to clarify that this analysis is not an approvability issue associated with an 8 hour attainment demonstration.

Other commenters recommended that EPA require nonattainment areas to perform an integrated control strategy assessment to ensure ozone controls will not preclude optimal controls for secondary fine particles and visibility impairment.

Response: We recognize the importance of integrating planning for 8 hour ozone, PM2.5, and regional haze as much as possible, given the overlap in technical work and likely control strategies. None of the commenters, however, has identified legal authority that allows EPA to require nonattainment areas to perform an integrated control strategy assessment to ensure ozone controls will not preclude optimal controls for secondary fine particles and visibility impairment. Therefore, we will continue to encourage States to coordinate their work, but it is not a requirement and, thus, not an approvability issue.

Comments: Other commenters encouraged EPA to identify flexibility so that areas may be provided more time if they are developing a multi pollutant strategy. Commenters PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 304 stated that it is imperative that SIP obligations and attainment dates with respect to these regulated air pollutants be harmonized and that regulatory requirements and deadlines be closely coordinated. One commenter stated this may require certain deadlines be extended and that they believe Congress would not be opposed to extending deadlines in the name of efficiency.

Response: To the extent our legal authority allows, we are working to harmonize SIP timelines for ozone, PM2.5, and regional haze. This 8 hour ozone implementation rule is necessarily based on the existing CAA and does not assume any changes to the CAA that may occur in the future. Thus,

we cannot fully harmonize the deadlinesextend the submission dates for 8 hour ozone SIPs so that they match the later submission dates for PM2.5 and regional haze SIPs. However,

thethere is a substantial overlap in planning periods that will allow States to coordinate planning efforts among programs, without postponing implementation.

K. What emissions inventory requirements should apply under the 8 hour ozone NAAQS?

[ Section VI. Q. of June 2, 2003 proposed rule ( 68 FR 32853); § 51.915 in draft and final regulatory text.]

1. Background PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 305 Section 182( a)( 1) requires that marginal and above ozone nonattainment areas submit an emission inventory 2 years after designation as nonattainment in 1990. For nonattainment areas classified under subpart 2 for the 8

hour ozone standard, we proposed to interpret this to mean that an emission inventory would be required 2 years after designation ( i. e., in 2006 if EPA designates areas in 2004).

The Consolidated Emission Reporting Rule ( CERR) in 40 CFR part 51, subpart A, requires States to submit comprehensive Statewide triennial emission inventories,

beginning with the 2002 inventory year, regardless of an area's attainment status. Because these emission inventories will be available, we proposed that the data elements required for emission inventories by the CERR could be used to prepare the emissions inventories under the 8

hour NAAQS. The draft regulatory text, however, did not contain a specific requirement that the emission inventory be submitted as a SIP revision within 2 years after designation.

For subpart 1 areas, section 172, paragraphs ( b) and ( c)( 3) require submission of the nonattainment area emission inventory as part of the SIP withinby a date established by EPA, which cannot be later than 3 years after designation as PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 306 a nonattainment area. However, the June 2, 2003 proposal did not specify a deadline for submission of the emission inventory for subpart 1 areas.

The proposal also noted that we would be updating the April 1999 Emissions Inventory Guidance for Implementation of Ozone and Particulate Matter National Ambient Air Quality Standards ( NAAQS) and Regional Haze Regulations," EPA 454/ R

99 006. The proposal noted that a review draft of the updated guidance was available for review. This guidance complements the CERR by providing guidance on how to prepare data for emissions inventory SIP submissions.

2. Summary of final rule Section 51.915 of the final rule reflects our June 2,

2003 proposal but is different from the draft regulatory text. To ensure comprehensive treatment of emission inventory requirements, the final rule contains language addressing the deadlines for submission of emission inventories for both subpart 1 and subpart 2 areas. The deadlines reflect the statutory requirements of no later than 3 years after designation for a subpart 1 area, and no later than 2 years after designation for subpart 2 areas.

Existing emissions reporting requirements in 40 CFR part 51,

subpart A are sufficient to satisfy the emissions inventory PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 307 data requirements under the 8 hour ozone NAAQS. Consistent with the statutory schedule in section 182( a)( 1) of the CAA,

the final regulatory text in section 51.915 requires submission of an emission inventory no later than 2 years after designation as part of a subpart 2 SIP. Consistent with the statutory schedule in paragraphs ( b) and ( c)( 3) of section 172 of the CAA, the final regulatory text in section 51.915 requires submission of an emission inventory no later than 3 years after designation as part of a subpart 1 SIP.

In its Guidance titled, " Public Hearing Requirements for 1990 Base Year Emissions Inventories for Ozone and Carbon Monoxide Nonattainment Areas", September 29, 1992,

EPA set forth its interpretation of a " de minimis" deferral of the public hearing requirement and the requirement for EPA to approve or disapprove emissions inventories under section 110( k). EPA intends to follow this guidance in implementation of the emissions inventory requirements under the 8 hour ozone standard, under which areas could defer holding public hearings on their inventories and EPA could defer approving such inventories until the time the areas adopt and submit their attainment demonstrations and/ or RFP plans.

Existing emissions reporting requirements in 40 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 81The CERR requires emissions inventory data on a statewide basis.

308 CFR part 51, subpart A can be applied to determine the data elements required for emissions inventories under the 8

hour ozone NAAQS. ( See, e. g. Tables 2A, 2B, 2C, 2D.) Where appropriate, the State may use the data elements developed under part 51, subpart A in preparing its emissions inventory under the 8 hour ozone NAAQS. EPA also expects the States to consult the most recent guidance on emissions inventories, and to submit inventories that are appropriate for the geographic area at issue and consistent with EPA guidance. 81 We expect the State to include in its SIP submission documentation explaining how the emissions data were calculated.

3. Comments and responses Comment: Several commenters said that the proposal does not discuss specific requirements above and beyond those in the Consolidated Emissions Reporting Rule ( CERR).

However, the proposal does mention one EPA guidance document, Emissions Inventory Guidance for Implementation of Ozone and Particulate Matter National Ambient Air Quality Standards ( NAAQS) and Regional Haze Regulations. This document states that " The EPA developed this guidance PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 309 document to complement the CERR and to provide specific guidance to State and local agencies and Tribes on how to develop emissions inventories for 8 hour ozone, PM2.5, and regional haze SIPs." Since the 8 hour emissions inventory requirements are the same for the CERR, there should be no additional, special requirements needed in emissions inventory development for the proposed 8 hour rule.

Response: In its proposal, when EPA referred to the CERR emissions inventory requirements as satisfying requirements for emissions inventories under the 8 hour standard, EPA was referring to the requirements for data elements. EPA did not mean to imply that the emissions inventories developed under the CERR, which are statewide,

would satisfy all aspects of SIP inventories developed for SIP submissions under the 8 hour standard. While the CERR sets forth requirements for data elements, EPA guidance complements these requirements and indicates how the data should be prepared for SIP submissions. The 2002 emission inventory submitted as a SIP element under the 8 hour ozone SIP process is not necessarily the same as the 2002 emission inventory submitted under the CERR. The two inventories differ in some important ways. For example, the CERR inventory was due June 1, 2004, while the SIP inventory due PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 82EPA 454/ R 05 001, JulyAugust 2005 ( available at: http:// www. epa. gov/ ttn/ chief/ eidocs/ eiguid/ index. html).

310 dates are later. Because of this time lapse, the State may choose to revise some of the data from the CERR when it prepares its SIP inventory because of improvements in emission estimates. The SIP inventory also must be approved by EPA as a SIP element and is subject to public hearing requirements where the CERR is not. Because of the regulatory significance of the SIP inventory, EPA will need more documentation on how the SIP inventory was developed by the State as opposed to the documentation required for the CERR inventory. In addition, the geographic area encompassed by some aspects of the SIP submission inventory will be different from the statewide area covered by the CERR emissions inventory. The guidance document " Emissions Inventory Guidance for Implementation of Ozone and Particulate Matter National Ambient Air Quality Standards ( NAAQS) and Regional Haze Regulations" 82 provides details on how States should prepare their emission inventory SIP submittals and discusses these and other relevant topics.

If a State's 2005 emission inventory ( or a later one)

becomes available in time to use for an area subsequently redesignated nonattainment, then that inventory should be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 311 used. We also encourage the cooperation of the Tribes and the State and local agencies in preparing their emissions inventories.

Comment: One commenter was concerned with the timing of the release of the final version of the NONROAD model ( used to estimate mobile source emissions from nonroad sources). The commenter agreed that the draft version out for comment during the comment period was superior to previous calculation methodology and should be used for planning purposes, however EPA needs to be cognizant of how disruptive to the planning process it is for new versions of emissions models to be released and incorporated in the middle of the development of a SIP. The commenter strongly encourages EPA to expedite the review and approval of any new models that will ultimately be used by States.

Response: We acknowledge that the timing of the release of new models can sometimes complicate the SIP planning process. In this case, the timing of the final release of the NONROAD is dependent on the timing of the new nonroad standards final rule. We will do what we can to expedite the release of a new version of NONROAD that reflects the emissions benefits of the nonroad rule as soon as possible. In addition, we intend to provide guidance on PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 312 the use of NONROAD that allows for completion of ongoing work with the current version of NONROAD if switching to the new version would cause significant delay. The EPA has included similar language in previous SIP policy guidance for the MOBILE model.

Comment: One commenter urged EPA to improve the quality of PM2.5 rates in MOBILE6.2 so that areas will have a more reliable tool for creating a 2002 base year inventory and for developing SIP planningrevisions. The commenter was concerned about developing PM2.5 emissions inventories because PM2.5 emissions factors in MOBILE6.2 are based largely on the old Part # 5 emission model and are not as sophisticated as the rates for CO, NOx, and VOC. The commenter also expressed concern about the lack of knowledge and techniques available for performing on road mobile source fine particulate emissions inventories. Metropolitan Planning Organizations ( MPOs) and air quality agency staff need to have a more reliable tool and acceptable methods for creating base year PM2.5 inventories and for SIP planning.

Response: This comment is not directly relevant to the 8 hour ozone implementation rule. However in the interest of providing clarification on the issues raised by the commenter, we provide the following background information. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 313 Particulate emission factors in MOBILE6.2 are based on the best technical information available at the time the model was developed and we believe that it is the best available tool for estimating on road emission factors for PM2.5. We are currently collecting additional PM data which will be incorporated in future versions of the EPA mobile source emission factor model. We continue to work to improve models and inventory methods for all pollutants. We have released technical guidance on the use of MOBILE6.2 and on methods for developing annual inventories in SIPs and conformity analyses to help MPOs and air quality agency staff perform on road mobile source fine particulate analyses.

Comment: One commenter stated that since the CERR requires inventories every 3 years, that the CERR should replace the Emission Statement Reporting Program ( ESRP)

requirement, which was required before the CERR was adopted.

Response: The ESRP is statutorily prescribed in section 182 ( a)( 3)( B) of the CAA and cannot be replaced by rulemaking. In addition, tThe emission statement requirement satisfies a different need from the periodic emissions inventory requirement, namely that affected sources themselves have to report to the State their updated PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 314 emissions information, whereas the emissions inventory requirement is a requirement on States to compile and make available to EPA an emissions inventory. We believe that the ESRP is a complementary program to the CERR and makes it easier for States to satisfy their CERR reporting requirements by providing data to the States from the sources.

Comment: One commenter said that persistent inaccuracies in official emissions inventories have hindered regulatory acknowledgment and mitigation of the automobile VOC and CO gross polluter problem. The EPA should develop realistic emissions inventories and require States to do the same. Known errors in these inventories continue to misdirect emission reduction efforts. In particular, too little focus has been placed on the potential for rapid,

substantial VOC and CO reductions from the in use automobile fleet.

Response: We agree that realistic emissions inventories are important to properly direct emission reduction efforts. Current emission factor models and inventory methods are far superior to previous models and methods and we are working to continually improve models and methods for developing emissions inventories for on road and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 315 nonroad vehicles and equipment.

Comment: One commenter stated that the official emissions inventories generated and used by EPA and State regulatory agencies for SIP planning and implementation have been shown repeatedly to suffer from serious inaccuracies and biases. Problems with inventories include errors in the total amount of emissions, as well as errors in the apportionment of emissions among various source categories.

The most serious inventory problems center on VOC and CO,

while problems with NOx inventories appear to be more modest.

Since emissions inventories are a fundamental input to the process of choosing pollution reduction measures and to the modeling used to demonstrate future attainment of NAAQS, an inaccurate inventory is likely to lead to poor policy choices in terms of cost, effectiveness, or both.

Response: We agree that emissions inventories are fundamental inputs to the air quality management process.

We continue to strive to work with State and local agency partners to develop emissions inventories that best reflect the real world and will thus assist in identifying control strategies to make RFP and attain the NAAQS. One should be aware, however, that it is impossible to develop an emissions inventory for an area that is 100 percent PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 316 accurate. Part of the problem is that most sources   including mobile sources   don't monitor and report emissions continuously, and therefore we and the States must use other methods to estimate emissions from them. Thus,

emission inventories are by nature estimates of actual releases to the atmosphere. The EPA believes that current emission inventories are sufficiently accurate to support the air quality management decisions that are derived from the application of emission inventories and air quality models. The emissions data generated and used by EPA and State regulatory agencies for SIP planning and implementation is the best available. Although inventories are often criticized as lacking accuracy, seldom do critics supply better information.

Comment: One commenter stated that the Agency proposes that the latest approved version of the MOBILE model should be used to estimate emissions from on road transportation systems. The commenter recommended that if there are other models, which that meet EPA performance criteria and are scientifically peer reviewed, they should also be acceptable ( e. g., the California mobile model, " EMission FACtor"

( EMFAC)).

Response: We believe that MOBILE is the best available PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 317 tool for estimating emissions from on road transportation systems outside of California. We are working to continually improve emission factor models and inventory methods for on road vehicles. The EMFAC is not designed to be able to estimate fleet, activity, fuel, and environmental characteristics outside of California and is not a reasonable substitute for MOBILE in States other than California.

Comment: One commenter supported the use of MOBILE6 in the 8 hour emissions inventory analyses and believed that EPA should change the guidance with respect to the use of MOBILE6 from " should be used" to " must be used." The commenter cautioned that MOBILE6 still significantly overpredicts emissions from passenger cars and light duty trucks for many reasons including the following: 1) the model does not adequately account for the benefits of onboard diagnostic regulation in non IM areas; and 2) the model does not reflect the decline in trips per day versus vehicle age.

Response: EPA's January 18,2002 SIP and conformity policy guidance document (" Policy Guidance on the Use of MOBILE6 for SIP Development and Transportation Conformity",

memo from John Seitz and Margo Oge to EPA Regional Air PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 318 Division Directors) states, " In general, EPA believes that MOBILE6 should be used as expeditiously as possible. The Clean Air Act requires that SIP inventories and control measures be based on the most current information and applicable models that are available when a SIP is developed." EPA's February 14, 2004 SIP and conformity policy guidance document (" Policy Guidance on the Use of MOBILE6.2 and the December 2003 AP 42 Method for Re

Entrained Road Dustfor SIP Development and Transportation Conformity", memo from Margo Oge and Steve Page to EPA Regional Air Division Directors) updates this by stating that " All states other than California should use MOBILE6.2 for future VOC, NOx, and CO SIP and conformity analyses in order to take full advantage of the improvements incorporated in this version." MOBILE6.2 is the most current applicable model and is based on the best information available at the time of its development and release. Therefore, EPA has indicated that it should be used.

We do not believe that more on board diagnostic benefits in non I/ M areas was justified based on available data at the time of the release of MOBILE6.2. Likewise, we did not have sufficient data to develop alternative assumptions about the relationship between trips per day and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 83See 40 CFR part 49.4( a). In addition, EPA determined it was not appropriate to treat Tribes similarly to States with respect to provisions of the CAA requiring as a condition of program approval the demonstration of criminal enforcement authority or providing for the delegation of such criminal enforcement authority. See 40 CFR part 319 vehicle age. We are working to continually improve emission factor models and inventory methods for on road vehicles and will review these issues during the development of the next emission factor model.

L. What guidance should be provided that is specific to Tribes?

[ Section VI. R. of June 2, 2003 proposed rule ( 68 FR 32854); no draft or final regulatory text.]

1. Background As noted in the preamble to the proposal, the TAR( 40 CFR, part 49), which implements section 301( d) of the CAA,

gives Tribes the option of developing TIPs which can then be submitted to EPA for approval. Unlike States, Tribes are not required to develop implementation plans. Under the TAR, eligible Tribes are treated in the same manner as a State when implementing the CAA; however, EPA has determined that Tribes are not required to meet plan submittal and implementation deadlines in the CAA, e. g., 110( a)( 1),

172( a)( 2), 182, 187, and 191.83 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 49.4( g). To the extent a Tribe is precluded from asserting criminal enforcement authority, the Federal government will exercise primary criminal enforcement responsibility. See 40 CFR part 49.8. In such circumstances, Tribes seeking approval for CAA programs provide potential investigative leads to an appropriate Federal enforcement agency.

320 The TAR provides flexibility for Tribes in the preparation of a TIP to address the NAAQS. The " modular approach" was described in the June 2, 2003 proposal of this rule. The TAR indicates that EPA ultimately has the responsibility for implementing CAA programs in Indian country, as necessary or appropriate, if Tribes choose not to implement those provisions. The EPA may find it necessary to develop a Federal Implementation Plan ( FIP) to reduce emissions from sources in Indian country where the Tribe has not developed a TIP to address an air quality problem.

Finally, as discussed in the June 2, 2003 proposal, it is important for both States and Tribes to work together to coordinate planning efforts since many nonattainment areas may include both Tribal land and non Tribal land.

Coordinated planning will help ensure that the planning decisions made by the States and Tribes complement each other and that the nonattainment area makes reasonable progress toward attainment and ultimately attains the NAAQS. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 321 In reviewing and approving the individual TIPs and SIPs, we will make certain they do not conflict with the overall air quality plan for an area, when.

Text Moved Here: 1 Section 301 ( d) of the CAA recognizes that eligible Indian Tribes are generally the appropriate non Federal authority to implement the CAA in Indian country. As stated in the TAR, it is appropriate to treat eligible Tribes in the same manner as States, except for certain identified provisions, including provisions relating to plan submittal and implementation deadlines, 40 CFR section 49.3, 49.4.

Therefore, when we discuss the role of the State in implementing this rule, we are also generally referring to eligible Tribes, with the above exception.

As we noted in the June 2, 2003 proposal, States have an obligation to notify Tribes as well as other States in advance of any public hearing( s) on their State plans that will significantly impact such jurisdictions. Under 40 CFR 51.102( d)( 5), States must notify the affected States of hearings on their SIPs; this requirement extends to Tribes under 301( d) of the CAA and the TAR. ( 40 CFR part 49).

Therefore, affected Tribes that have achieved " treatment in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 322 the same manner as States" status must be informed of the contents of such plans and the extent of documentation to support the plans. In addition to this mandated process, we encourage States to extend the same notice to all Tribes for the reasons noted in the comment and response below. As a matter of policy, EPA intends to consult with and assist all Tribes, regardless of whether a Tribe has received Treatment in a similarthe same manner as a State ( TAS) approval for the purpose of implementing its own TIP, and we encourage States to do the same.

Understanding the content of a SIP will be important to Tribes located next to areas wherethat are required to adopt SIPs apply, particularly to Tribes who do not choose or have the capacity to develop a TIP. Therefore, EPA intends to offer Tribes the opportunity for consultation on activities potentially affecting the achievement and maintenance of the NAAQS in Indian country. In addition, we expect States to work with Tribes with land that is part of the same air quality area during the SIP development process and to coordinate with Tribes as they develop the SIPs. In the case where the State models projected emissions and air quality under the SIP, the Tribes should be made aware of these modeling analyses. Tribes may wish to determine if PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 323 the Tribal area has been affected by upwind pollution and whether projected emissions from the Tribal area have been considered in the modeling analysis.

Generally, Tribal lands have few major sources, but in many cases, air quality in Indian country is affected by the transport  both long range and shorter distance transport

of pollutants. In many cases, Tribal nonattainment problems caused by upwind sources will not be solved by long range transport policies, as the Tribes' geographic areas are small. Tribes are sovereign entities, and not political subdivisions of States. Strategies used for intrastate transport are not always available. Most of the strategies and policies used by States in dealing with short range transport are not available to Tribes, e. g., requiring local governments to work together and expanding the area to include the upwind sources. Unlike Tribes, States can generally require local governments to work together, or make the nonattainment area big enough to cover contributing and affected areas. We believe that it is also unfair to Tribes to require disproportionate local regulatory efforts to compensate for upwind emissions. In many cases,

attainment could not be reached even if emissions from the Tribe were zero. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 324 End Of Moved Text Indian country lands are part of a multi jurisdictional area To address these concerns, in the June 2, 2003 proposal, we took comment on the following: EPA will review SIPs for their effectiveness in preventing significant contributions to nonattainment in downwind Tribal areas with the same scrutiny it applies to reviewing SIPs with respect to impacts on downwind States. Where a Tribe has " treatment in the same manner as States," EPA will support the Tribes in reviewing upwind area SIPS during the State public comment period.

2. Summary of policy Text Was Moved From Here: 1 To address these concerns, in the June 2, 2003 proposal, we took comment on the following: EPA will review SIPs for their effectiveness in preventing significant contributions to nonattainment in downwind Tribal areas with the same scrutiny it applies to reviewing SIPs with respect to impacts on downwind States. Where a Tribe has " treatment in the same manner as States," EPA will support the Tribes in reviewing upwind area SIPS during the State public comment period. We intend to take the approach noted in the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 325 proposal. There is no regulatory text for this intention.

3. Comments and responses Comment: One commenter stated awas concerned about the transport of pollutants, including ozone precursors from urbanized areas into areas of Indian country. The commenter expressed strong support for the proposed 8 hour implementation rule language which addresses these transport concerns. He supported the EPA proposal language: statement that " EPA will review SIPS for their effectiveness in preventing significant contributions to nonattainment in downwind Tribal areas with the same scrutiny it applies to impacts on downwind States. Where a Tribe has ` treatment in the same manner as States,' EPA will support the Tribe in reviewing upwind area SIPs during the State public comment period." This commenter asked for clarification on the nature of EPA's support for Tribes without TAS status. The commenter also asked if EPA would support Tribes without TAS approval in reviewing upwind area SIPs and provide technical assistance in interpreting SIP documentation.

Response: In the TAR, we stated that the CAA protections against interstate pollutant transport apply with equal force to States and eligible Tribes. We stated that the prohibitions and authority contained in sections PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 326 110( a)( 2)( D) and 126 of the CAA apply to eligible Tribes in the same manner as States. ( See 63 FR 7254, 7260; February 12, 1998). Section 110( a)( 2)( D) requires, among other things, that States include provisions in their SIPs that prohibit any emissions activity within the State from significantly contributing to nonattainment, interfering with maintenance of the NAAQS or PSD or visibility protection programs in another State. In addition, section 126 authorizes any State or eligible Tribe to petition EPA to enforce these prohibitions against a State containing an allegedly offending source or group of sources.

We intend to consult with and assist Tribes during the TIP and SIP development process, regardless of whether a Tribe has received TAS approval for the purpose of implementing its own TIP. Executive Orders and EPA Indian policy generally call for EPA to be proactive with the Tribes. Executive Order 13175, entitled " Consultation and Coordination with Indian Tribal Governments" requires EPA to develop an accountable process to ensure " meaningful and timely input by Tribal officials in the development of regulatory policies that have Tribal implications." As part of EPA's ongoing efforts to actively involve tribal officials in the development of programs which have Tribal PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 327 implications, EPA in the July 18, 2000 " Guidance on 8 hour Ozone Designations for Indian Tribes" established a consultation process with each Tribe that EPA used throughout the designations process regardless of whether a particular Tribe has received an eligibility determination to implement section 107 of the CAA. In summary, EPA intends, as a matter of policy, to consult with and assist interested Tribal governments, regardless of their TAS status, in ensuring that the NAAQS are achieved in Indian country, including working with those Tribes located downwind from a polluting area.

Comment: One commenter also asked us to explain how we envision our role in maintaining continued consultation with Tribes throughout the SIP development process.

Response: We intend to continue to offer Tribes the opportunity for consultation on activities potentially affecting the achievementattainment and maintenance of the NAAQS in Indian country. In addition, we expect States to work with Tribes with land that is part of a nonattainment area in the SIP development process and to inform Tribes of the content of these SIPs as they develop them. States should coordinate with Tribes when projecting emissions from counties or other areas which include areas of Indian PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 328 country to ensure that assumptions regarding demographics,

economic activity, commuting patterns, etc. are accurate for the Tribal portions. Where the State models project future emissions under the SIP and their effect on air quality,

then Tribes should be made aware of these modeling analyses in order to determine if their Indian country has beenis being affected by upwind pollution and whether this impact has been considered in the modeling analyses.

States have an obligation under 40 CFR 51.102( d)( 5) to notify other States in advance of any public hearing( s) ofn their State plans which will significantly impact those other entities. This CAA requirement for States to notify other parties extends to Tribes under section 301( d) and the TAR.

Historically, States have not always understood their responsibility to coordinate with other affected entities,

including, where appropriate, Tribes. States may not know how to contact Tribes, particularly when Tribal air programs are not well developed. It may be difficult for a State to obtain a copy of the control requirements for Indian country. We can assist States in identifying and contacting Tribes that they should be consulting. When developing control strategies and making policy decisions, States, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 329 should as appropriate, coordinate with Tribes at the earliest opportunity. Where States utilize stakeholderbased consensus processes to develop SIP strategies, we recommend that Tribes be provided the opportunity to participate in the process to the extent they can.

We are considering providing Tribes with guidance describing how to include Tribeshave begun providing training to Tribes about how to participate in SIP development and implementation. Many Tribes may not possess the resources to develop a TIP or may decide not to develop a TIP, while others. Some will develop robust air quality programs, which may or may not include a TIP. We intend to work with Tribes with all levels of air management programs.

In general, where areas of Indian country have poor air quality, it is most likely as a result of transported pollution sources. We recognize that the manner in which States construct the SIP and what sources the SIP controls may impact Indian country located in downwind areas. We intend to develop guidance, tools and training sessions for interested Tribal communities to understand the SIP development process and to become active participants if they wish.

Comment: One commenter representing a Tribal PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 330 organization raised concerns about the practical impacts of the NSR program on Indian Tribes. The commenter noted that Tribes have long traditions of environmental stewardship and recognize their responsibility to protect the health of their citizens. However, he notesthe commenter noted that Tribes have the right to pursue industrial and economic development. While that development must comply with all current environmental standards, the Tribes should not be burdened with requirements that in effect subsidize non

Tribal sources of pollution.

Under the nonattainment NSR program, new major sources locating in a nonattainment area are required to obtain emission reductions, referred to as offsets. The commenter statesd that this requirement poses a hardship on an Indian reservation located in a larger nonattainment area. The new source wishing to locate on the reservation must obtain offsets from elsewhere in the nonattainment area; there are not usually enough sources on the reservation to supply the needed emissions reductions. When a Tribe is located in such a nonattainment area, efforts to increase economic development may be stalled by an inability of new sources to obtain offsets. The commenter concludesd that this requirement is unfair to Tribes because of past barriers to PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 331 economic development in Indian country. The commenter also statesd that in many cases air pollution is transported onto the reservation.

Response: The EPA acknowledges that offsets are a concern for Tribes. We are currently evaluating potential options for addressing this concern.

M. What are the requirements for OTRs under the 8 hour ozone standard?

[ Section VI. S. of June 2, 2003 proposed rule ( 68 FR 32855); § 51.916 in draft and final regulatory text.]

1. Background Section 176A of subpart 1the CAA provides EPA with authority to establish interstate transport regions where transport of air pollutants from one or more States contributes significantly to a violation of a NAAQS in one or more other States.

Section 184 of subpart 2the CAA establishes additional provisions for OTRs. Section 184( a) specifically established an OTR comprising 12 Northeast and Mid Atlantic States and the District of Columbia in order to address the longstanding problem of interstate ozone pollution in that region. To date, the existing OTR is the only transport region for any pollutant that has been established. The PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 332 general provisions of section 176A apply to any OTR established under section 184.

Section 184( b) sets forth specific VOC and NOx controlregulatory requirements to be applied throughout the entire OTR, in both attainment and nonattainment areas, to reduce interstate pollution. These additional regional controlregulatory requirements are part D NSR ( for VOC and NOx), RACT ( for VOC and NOx), enhanced vehicle I/ M, and Stage II vapor recovery ( for vehicle refueling) or a comparable measure. In general, these requirements duplicate requirements for certain ozone nonattainment areas that are classified under subpart 2. In the proposal, we indicated that we believed that under section 184 the current OTR will remain in place and remain subject to the section 184 control requirements for purposes of the 8 hour standard.

2. Summary of final rule In today's rule we are determining that sSection 184 continues to apply for purposes of the 8 hour standard.

Therefore, theThe current OTR remains in place and the section 184 control requirements continue to apply for purposes of the 8 hour standard.

Today's rule also describes RACT requirements for portions of an OTR that are not classified moderate or PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 333 above. TConsistent with the RACT requirement for areas classified as moderate and above for the 8 hour standard,

the State must submit a SIP revision that meets the RACT requirements of section 184 of the CAA for each area in the OTR that is designated as attainment or unclassifiable or that may be classified marginal, or that is under § 51.904 of this subpart, but which is located in an OTR. A major stationary source for these areas is defined as a source which directly emits, or has the potential to emit, 100 tpy or more of NOx or 50 tpy or more of VOC. For any areas in the OTR, the State is required to submit the RACT revision no later than September 16, 2006 ( 27 months after designation for the 8 hour NAAQS) and must provide for implementation of RACT as expeditiously as practicable but no later than May 1, 2009 ( first day of the first ozone season that is 30 months after the RACT SIP is due).

We believe that this does not result in any new controlregulatory requirements for any area in the OTR because these controlregulatory requirements are not associated with an area's designation or classification and already apply regionwide under the 1 hour ozone standard.

If a new OTR is established for purposes of the 8 hour standard pursuant to section 176A, that area would also be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 334 subject to the provisions and control requirements of section 184.

3. Comments and responses Comments: The EPA received two comments supporting our interpretation of section 184 with regard to the 8 hour standard. One commenter further asserted that for any areas that might be added to the OTR, or for any new OTR, if modeling shows that the control requirements from section 184 are not appropriate and should not be required, then EPA has the discretion to exempt such areas from those requirements. The commenter pointed to a portion of the decision in Alabama Power v. Costle, 636 F. 2d. 323 ( DC Circuit, 1979).

Response: Regarding the comment about modeling, we are not prepared to determine whether the de minimis doctrine established by the court in Alabama Power would be available in the situation the commenter describes. As the court in that case explained, such a determination would first require EPA to assess whether Congress, in enacting section 184 of the CAA, was so prescriptive as to foreclose granting such waivers. Since that issue of statutory interpretation for the described situation is not presently before the Agency, EPA is not addressing whether de minimis authority PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 335 exists under section 184.

N. Are there any additional requirements related to enforcement and compliance?

[ Section VI. T. of June 2, 2003 proposed rule ( 68 FR 32855); no draft or final regulatory text.]

1. Background In the proposal, we noted that section 172( c)( 6)

requires nonattainment SIPs to " include enforceable emission limitations, and such other control measures, means or techniques . . . as well as schedules and timetables for compliance , as may be necessary or appropriate to provide for attainment . . ." We also noted that the current guidance, " Guidance on Preparing Enforceable Regulations and Compliance Programs for the 15 Percent Rate of Progress Plans ( EPA 452/ R 93 005, June 1993)" is relevant to rules adopted for SIPs under the 8 hour ozone NAAQS and should be consulted for purposes of developing appropriate nonattainment plan provisions under section 172( c)( 6). We proposed no specific regulatory provisions related to compliance and enforcement.

2. Summary of final rule As in the proposal, we are not setting forth any additional ruleregulatory text related to compliance and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 336 enforcement.

3. Comments and responses We received no comments on the proposed approach of handling enforcement and compliance provisions related to SIPs for the 8 hour ozone standard.

O. What requirements should apply to emergency episodes?

[ Section VI. U. of June 2, 2003 proposed rule ( 68 FR 32856); no draft or final regulatory text.]

1. Background In the June 2, 2003 proposal, we noted that subpart H of 40 CFR part 51 specifies requirements for SIPs to address emergency air pollution episodes and for preventing air pollutant levels from reaching levels determined to cause significant harm to the health of persons. We noted that we anticipate proposing a separate rulemaking in the future to update portions of that rule.

2. Summary of final rule We have not yet proposed any rule revision related to emergency episodes, and the final rule below does not contain any such rule revision.

3. Comments and responses We received no comments on our proposed approachthis aspect of the proposal. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 337 P. What ambient monitoring requirements will apply under the 8 hour ozone NAAQS?

[ Section VI. V. of June 2, 2003 proposed rule ( 68 FR 32856); no draft or final regulatory text.]

1. Background Ozone monitoring data play an important role in designations, control strategy development, and related implementation activities. We did not propose any revisions to current ambient monitoring requirements listed in 40 CFR part 58.

We indicated in the proposal that we do plan to modify the existing ozone monitoring requirements in a separate rulemaking as part of implementation of the National Ambient Air Monitoring Strategy ( NAAMS), including adoption of a national strategy introducing national core monitoring sites ( NCore) as a replacement for traditional national air monitoring stations/ State and local air monitoring stations ( NAMS/ SLAMS) monitoring currently codified at 40 CFR part 58. Part of the NCore network would include the existing ozone monitoring sites that currently support the NAAQS related activities. The regulatory modifications are expected to include ozone monitoring requirements based upon the population of an area and its historical/ forecasted PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 338 ozone air quality values.

We indicated in the proposal that as part of ongoing air quality monitoring network assessments ( outside the scope of this present rulemaking), each State, local, and Tribal air monitoring agency is being asked to assess the adequacy of its air pollution monitoring networks, including those sites that measure ozone. We willsaid we would work with these agencies to develop network plans to ensure approval of all network designs. It is expected that the number and location of the original sites will be very similar to the current network. However, on a local basis,

there will be some relocation, addition, and removal of ozone sites as a result of regional network assessments.

In addition, we stated that we anticipate that we will include a requirement for measuring multiple air pollutants,

including ozone precursors at select locations. The NCore sites are expected to include high sensitivity nitrogen oxide ( NO) and total reactive oxides of nitrogen ( NOy)

measurements at locations across the nation to support the tracking of emission reduction strategy efforts such as the NOx SIP Call, the CAIR if promulgated, and, if created, a statute codifying the Administration's Clear Skies Act,

which addresses NOx reductions across the nation. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 339 TSection 182( c)( 1) of the CAA requires that enhanced ozone ( e. g., precursor) monitoring be conducted in any ozone nonattainment area classified as serious, severe, or extreme. We adoptedOur regulations reflecting the statutory requirements inare found at 40 CFR part 58 in 1994. This is known as the Photochemical Assessment Monitoring Stations ( PAMS) program.

The proposal noted that the PAMS monitoring requirements ( referred to as " enhanced monitoring" of ambient air under section 182( c)( 1) of the CAA) are retained in areas currently designated as 1 hour ozone serious,

severe, and extreme nonattainment areas. Areas that are designated serious or above under the 8 hour ozone NAAQS are not currently addressed in 40 CFR part 58 for ozone precursor monitoring, although such areas are subject to the section 182( c)( 1) provision. TWe anticipated that the revisions to the monitoring regulations willwould also cover all areas that are classified as serious or above for the 8 hour NAAQS. If, including any area that is bumped up to serious or above for the 8 hour NAAQS, it would be subject to the enhanced monitoring rule and would be required to conduct the appropriate PAMS monitoring.

2. Summary of final rule PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 340 There is no change from the proposal. No monitoring requirements are being promulgated as part of this rulemaking. EPA still expects to separately propose a number of amendments to the monitoring requirements, along the lines described above, in December 2005.

3. Comments and responses Comment: One commenter noted that the NAAMS, which will likely influence the future of the ozone monitoring network, is based on the presumption that less criteria pollutant monitoring is needed and that resources must be shifted into measures that support other analyses. The commenter pointed out that many States have already curtailed their criteria pollutant monitoring networks in order to meet program requirements. The commenter argued that we should support and maintain the ozone monitoring network since the data is used as the basis of attainment determinations and the tracking of progress.

Response: While we did discuss some aspects of the NAAMS in the proposed rule, this rulemaking effort does not affect the ambient monitoring requirements listed in 40 CFR part 58. As such, comments on the NAAMS are not germane to this action. As noted above, we are working on a separate rulemaking effort to amend the ambient monitoring PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 341 requirements. We will address comments on the NAAMS underCommenters sshould raise any concerns they have regarding the NAAMS during the comment period on that action.

We recognize that ozone continues to pose a significant environmental threat, and agree that the current ozone network should be maintained. The NAAMS does not recommend curtailing ozone monitoring, but rather recommends that State and local agencies perform assessments of their ozone networks to assure that the available resources are used to maximum benefit. We do not foresee significant changes to the existing ozone network as a result of these assessments.

The NAAMS does recommend that resources be shifted from criteria pollutant monitoring to other monitoring initiatives ( e. g., air toxics) for those criteria pollutants whose ambient concentrations are well below their respective NAAQS. Specifically, the strategy recommends significant reductions in total suspended particulate ( TSP), PM10, SO2,

CO and NO2 monitoring.

Comment: Two commenters questioned the appropriateness of making high sensitivity NOx and CO measurements at NCore Level 2 sites which may be in urban areas.

Response: This rulemaking effort does not affect the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 342 ambient monitoring requirements listed in 40 CFR part 58.

As such, comments on the appropriateness of making high sensitivity NOx and CO measurements in urban areas are not germane to this action.

Comment: One commenter urged the continued support of the PAMS program. The commenter points out that the PAMS'

data has been used to evaluate ( and improve) emissions inventories, apply observation based models, evaluate photochemical grid based models, and assess effectiveness of control programs. The commenter argues that while fine tuning the PAMS requirements may be appropriate, the program should be maintained.

Response: As part of the anti backsliding provisions of the Phase 1 rule, the PAMS monitoring requirements are retained in areas currently designated as 1 hour ozone serious, severe, and extreme nonattainment areas at the time of a designation of nonattainment for the 8 hour standard.

( See 40 CFR 51.900( f)( 9).) In addition, areas that are designated serious or above under the 8 hour ozone NAAQS will also be required to comply with the PAMS monitoring requirements. Also, if an area is bumped up to serious or above for the 8 hour NAAQS, it would be subject to the enhanced monitoring rule ( section 182( c)( 5) of the CAA) and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 343 would be required to conduct the appropriate PAMS monitoring.

Currently, areas that are designated serious or above under the 8 hour ozone NAAQS are not addressed in 40 CFR part 58 for ozone precursor monitoring40 CFR part 58 does not specifically apply to areas for purposes of the 8 hour standard. As discussed above, we are working on a separate rulemaking effort to amend the ambient monitoring requirements. We expect these revisions to ensure that all areas that are classified as serious or above for the 8 hour NAAQS are covered by the PAMS requirementsregulations.

However, even in the absence of the applicability of these regulations, the enhanced monitoring requirement of section 182( c)( 1) applies.

Q. When will EPA require 8 hour attainment demonstration SIP submissions?

[ Section VI. W. of June 2, 2003 proposed rule ( 68 FR 32856); § 51.908( e) in draft regulatory text and § 51.908( d)

of final regulatory text.]

1. Background In the June 2, 2003 action, we proposed that required attainment demonstrations, which will be based on photochemical grid modeling for all areas must be submitted PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 344 within 3 years after designation. However, we proposed that a subpart 1 area that desires an attainment date within 3 years after designation would have to provide a demonstration within 1 year after designation that it would attain by that date.

We noted that the proposed time of submission is expected to result in a closers close as possible a synchronization of the 8 hour ozone and PM2.5 attainment demonstration SIP submittal dates.

2. Summary of final rule The final rule statesprovides that attainment demonstrations   where required   must be submitted within 3 years after the effective date of the area's nonattainment designation. As noted in section IV. D. 1. above, the final rule does have a separate provision addressing submission of an early attainment demonstration.

On June 18, 2004 ( 69 FR 34076), EPA announced it was reconsidering the boundaries of the Las Vegas, NV, 8 hour ozone nonattainment area. The EPA deferred the effective date of the designation until September 13, 2004, and that this reconsideration would not affect the time SIPs would be due for the Clark County nonattainment area.

3. Comments and responses PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 345 Comment: Several commenters noted that they believed some areas would need longer than 3 years to submit their attainment demonstration. At least one of these commenters noted that section 182( c)( 2) allows up to 4 years ( rather than 3 years) for submission of a modeled attainment demonstration for serious and above areas. One commenter recommended that for areas that are violating the 8 hour standard and that are currently not contained within the 1

hour boundary, EPA should consider extending attainmentmodeling deadlines for nonattainment areas that are not currently contained within the 1 hour boundary, but will now be included in the 8 hour boundary. At least one commenter agreed with the timing we proposed.

Response: For the reasons stated in the proposal, we believe it is appropriate to require that the modeled attainment demonstrations be submitted within 3 years after designation. In the proposal, we noted the following:

°

Text Was Moved From Here: 2 ° The control strategies that may be modeled for all the areas in the modeling domain will likely be modeled simultaneously, especially if all the areas are located in a single State. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 346 ° In general, the CAA requires these submissions no later than 3 years following designation. See sections 172( b) and 182( b) of the CAA. At the time of enactment of the CAA Amendments of 1990, Congress allowed areas that used the recently developed and complex photochemical grid model an extra year ( 4 years rather than 3 years) to submit their attainment demonstration.

Photochemical grid modeling is now a standardized model for purposes of developing attainment demonstrations,

and all areas will be using these models for purposes of their attainment demonstrations. Thus, there is no distinction between the tools used for attainment modeling that would justify additional time for these areas to submit attainment demonstrations.

In light of these reasons, we °

Text Moved Here: 2 We do not believe it is appropriate or desirable to require States to submit attainment demonstrations for areas designated nonattainment under the 8 hour standard at greatly different times for different areas. We recognize that photochemical grid modeling   required by the CAA for interstate moderate nonattainment areas, as well as serious and higher classified areas   will be performed on large PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 347 enough scales to address transport and will in most cases encompass a number of nonattainment areas. These numerous nonattainment areas may differ by classification ( some areas may be intrastate moderate areas, some interstate moderate areas, and others serious and above nonattainment areas).

Some areas that may require attainment demonstrations may be subject to subpart 1 while others may be subject to subpart 2.

End Of Moved Text do not believe it is reasonable to defer submission of attainment demonstrations beyond 3 years after designation°

T h e c o n t r o l s t PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 348 r a t e g i e s t h a t m a y b e m o d e l e PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 349 d f o r a l l t h e a r e a s i n t h e m o d PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 350 e l i n g d o m a i n w i l l l i k e l y b e PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 351 m o d e l e d s i m u l t a n e o u s l y ,

e PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 352 s p e c i a l l y i f a l l t h e a r e a s a PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 353 r e l o c a t e d i n a s i n g l e S t a t e PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 354 .

° We also note that an area's RFP plan and the RACM demonstration under section 172( c)( 1) are due within 3 years after designation. For the reasons stated in sections describing those requirements, it is appropriate that the attainment demonstration, the RFP plan, and the RACM demonstration be submitted at the same time.

In light of these reasons, we do not believe it is consistent with the CAA and reasonable to require submission of attainment demonstrations no later than 3 years following designation.

Although we proposed that subpart 1 areas requesting an attainment date within 3 years after designation should submit their attainment demonstration within 12 months, we have removed that provision from the final rule because it is unnecessary. That is, a subpart 1 area is free to choose submit its attainment demonstration at any time prior to the 3 year due datedoes not include such a provision ( see section IV. D. 1 above for a further discussion of this).

R. How will the statutory time periods in the CAA be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 84Section 181( b) provides that " any absolute, fixed date applicable in connection with any such requirement is extended by operation of law by a period equal to the length of time between the date of enactment of the CAAA of 1990 and the date the area is classified under this paragraph." Under section 181( b), the date of classification is the same as the date of redesignation to nonattainment.

355 addressed when we redesignate areas to nonattainment following initial designations for the 8 hour NAAQS?

[ Section VI. B. of June 2, 2003 proposed rule ( 68 FR 32816); § 51.906 in draft and final regulatory text.]

1. Background We noted in the proposal that section 181( b) of the CAA provides that for areas designated attainment or unclassifiable for ozone immediately following enactment of the 1990 CAA Amendments and subsequently redesignated to nonattainment, the period to the maximum statutory attainment date would run from the date the area is classified under subpart 2.84 Thus, if an area designated as attainment for the 1 hour ozone standard in 1990 was redesignated to nonattainment for the 1 hour ozone standard in January 2002 and classified as moderate, the area's 1

hour attainment date would be no later than 6 years following January 2002, i. e., January 2008. Section 172( a)( 2) of the CAA provides for attainment dates to be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 356 calculated from the time the area is designated nonattainment.

We also noted in the proposal that most of the SIP submittal dates in subpart 2 run forare set as a fixed period from the date of enactment of the 1990 CAA Amendments, which was also the date of designation and classification by operation of law for most subpart 2 areas.

Section 181( b)( 1) of the CAA provides that any fixed dates applicable in connection with any such requirements under section 110, subpart 1 and subpart 2 will be extended by operation of law to a period equal to the length of time between the date of enactment of the 1990 CAA Amendments and the date that an area is subsequently designated and classified.

2. Final rule We are adopting the approach set forth in the proposed rule. For any area that is initially designated attainment or unclassifiable for the 8 hour NAAQS and subsequently redesignated to nonattainment for the 8 hour ozone NAAQS,

the periods for the attainment date and dates for submittal of any applicable requirements under subpart 1 or subpart 2 would run from the date of redesignation to nonattainment of the 8 hour NAAQS. This is consistent with section 181( b), PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 357 which gives areas redesignated to nonattainment the same amount of time to submit plans and to attain the standard as areas initially designated nonattainment.

3. Comments and responses Comment: One commenter asked what the reasoning was behind the time period extension and if this is an attempt to provide equity, based on the wording of the draft regulatory text.

Response: As stated above, section 181( b)( 1) of the CAA provides for extending by operation of law any absolute,

fixed date applicable in connection with a nonattainment requirement by a period equal to the length of time between the date of enactment of the CAA Amendments of 1990 and the date the area is classified and designated ( or redesignated)

as nonattainment. Thus, an area redesignated to nonattainment for the 1 hour standard and classified as moderate would have been given 3 years to submit an attainment demonstration and up to 6 years to attain, which are the same time periods given to an area designated nonattainment and classified by operation of law at the time of the 1990 CAA Amendments. Since it does not make sense to run deadlines from the date of the CAA Amendments of 1990,

we have adopted an approach consistent with the intent of PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 358 that section   that the statutory time periods run from the date of designationredesignation to nonattainment.

V. EPA's Final Rule for New Source Review A. Background 1. The Major NSR Program The major NSR program contained in parts C and D of title I of the CAA is a preconstruction review and permitting program applicable to new and modified major stationary sources of air pollutants regulated under the CAA. In areas not meeting health based NAAQS and in OTRs,

the program is implemented under the requirements of section 110( a)( 2)( C) and part D of title I of the CAA. We call this program the " nonattainment" major NSR program. Subpart 1 of part D of title I contains general requirements for nonattainment areas for any criteria pollutant and subpart 2 contains provisions specifically for ozone nonattainment areas. Subparts 3 and 4 contain provisions specifically for CO monoxide and PM10, respectively. In Whitman v. American Trucking Associations, [ 531 U. S. 457, 482 86 ( 2001)], the Supreme Court reviewed EPA's implementation strategy for the revised 8 hour ozone NAAQS, and remanded it to EPA to develop a reasonable resolution of the roles of subparts 1 and 2 in classifying areas for and implementing the revised PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 85 For a more complete discussion of this decision and its implications, see 69 FR 23956.

359 ozone standard. 85 In areas meeting the NAAQS (" attainment" areas) or for which there is insufficient information to determine whether they meet the NAAQS (" unclassifiable" areas), the NSR requirements under part C of title I of the CAA apply. We call this program the PSD program. Collectively, we also commonly refer to the attainment and nonattainment programs as the major NSR program. These regulations are contained in 40 CFR § § 51.165, 51.166, 52.21, 52.24, and part 51,

appendix S. Of these, the nonattainment area regulations are contained in 40 CFR § § 51.165, 52.24, and part 51,

appendix S.

The major NSR provisions of the CAA are implemented primarily through SIP approved State preconstruction permitting programs. As provided in section 172( c)( 5) of the CAA, the SIP must require permits for the construction and operation of new or modified major stationary sources in accordance with section 173 of the CAA. Subpart 2 of title I of the CAA sets forth additional SIP requirements for ozone nonattainment areas, including preconstruction PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 86 In some cases, subpart 1 and subpart 2 requirements are inconsistent or overlap. To the extent that subpart 2 addresses a specific obligation, the provisions in subpart 2 control ( 68 FR 32811; June 2, 2003).

360 permitting requirements. 86 The minimum permitting requirements States must meet before EPA can approve a State's nonattainment major NSR program into a SIP are found in part D of title I and 40 CFR 51.165. However, some States are lacking a SIP approved major NSR program for the 8 hour ozone NAAQS. This may be because the State has never had a nonattainment area in which it needed to apply a nonattainment NSR program or because the approved program does not apply to an 8 hour ozone nonattainment area. As discussed in Section V. D of this preamble, EPA is providing States 3 years to develop and submit an approvable nonattainment major NSR program for the 8 hour NAAQS. The regulations at 40 CFR 52.24( k)

specify that Appendix S governs permits to construct and operate in a nonattainment area or in any area designated under section 107( d) of the CAA as attainment or unclassifiable for ozone that is located in an ozone transport region that a source applies for during this SIP development period ( the interim period between the effective date of designations and the date that EPA approves a PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 87 On December 31, 2002, we finalized five actions from that proposal related to the applicability of the NSR 361 nonattainment major NSR program).

Appendix S is an interpretation of 40 CFR subpart I ( including § 51.165), and has historically reflected substantially the same requirements as those in § 51.165,

subject to a limited exemption in section VI. This includes the requirement that a source comply with LAER and obtain offsetting emissions reductions. Pursuant to section 52.24( k), where necessary, appendix S governs nonattainment major NSR permitting of ozone precursors in 8 hour ozone nonattainment areas and all areas within the OTR, including areas designated attainment/ unclassifiable, during the SIP development period. Thus, consistent with section 110( a)( 2)( C), permitting of new and modified stationary sources in the area will be regulated as necessary to ensure that the NAAQS are achieved.

As we describe further in section V. A. 2 of this preamble, today's final regulations were proposed as part of two different regulatory packages. On July 23, 1996 ( 61 FR 38250), we proposed changes to the major NSR program,

including codification of the requirements of part D of title I of the 1990 CAA Amendments. 87 On June 2, 2003 ( 68 FR PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version regulations. For a summary of the regulatory development process and stakeholder development for that rulemaking, see 67 FR 80188.

362 32802), we proposed a rule to implement the 8 hour ozone NAAQS. On April 30, 2004, we promulgated the Phase 1 final rule and you will find a summary of the regulatory development process and stakeholder development for that rulemaking at 69 FR 23951.

2. What we proposed a. Proposed changes to incorporate the 1990 Clean Air Act Amendments On July 23, 1996 ( 61 FR 38250), we proposed changes to § 51.165 and appendix S to incorporate requirements in part D of title I of the 1990 CAA Amendments for ozone, CO, and PM10 nonattainment areas. Concerning ozone, we proposed ( among other things) to codify the following provisions from section 182 of the CAA:

° major stationary source thresholds ( ranging from 10 to 100 tpy, depending on classification),

° significant emission rates ( ranging from 0 to 25 tpy) m ° offset ratios ( ranging from 1.1: 1 to 1.5: 1), and ° special modification provisions implementing CAA sections 182( c), ( d), and ( e) for serious, severe, and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 88 John S. Seitz, " New Source Review ( NSR) Program Transitional Guidance," March 11, 1991. We provided additional transitional guidance for nonattainment areas in our September 3, 1992 memorandum, New Source Review ( NSR) Program Supplemental Transitional Guidance on Applicability of New Part D NSR Permit Requirements, from John S. Seitz, Director, Office of Air Quality Planning and Standards.

363 extreme ozone nonattainment areas.

In the 1996 proposal, we proposed that the major stationary source thresholds and offset ratios of CAA section 182 ( subpart 2 of part D) would apply to all major stationary sources of VOC and NOx to implement major NSR under the 1 hour ozone NAAQS. This proposal is consistent with the 1991 and 1992 Transition Policy Memos explaining major NSR requirements under the 1990 CAA Amendments. 88 These memos also explained that permits must comply with the new statutory requirements for major NSR under the 1 hour NAAQS after the deadlines set by Congress, regardless of the delay in incorporating them into SIPs.

Our 1996 proposal predated promulgation of the 8 hour ozone NAAQS and thus did not explain the details of implementation of these standards under § 51.165 or appendix S. For a discussion of implementation of the 1 hour and 8

hour ozone NAAQS under § 51.165 and appendix S, see section V. D. of this preamble. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 364 Also, in our 1996 action, and then again in our June 2,

2003 action, we proposed to amend our nonattainment NSR provisions to expressly include NOx as an ozone precursor in nonattainment major NSR programs ( 61 FR 38297,68 FR 32847).

We also proposed that, as provided under CAA section 182( f),

a waiver from nonattainment NSR for NOx as an ozone precursor would be available for both subpart 1 and subpart 2 areas ( 68 FR 32846).

On June 2, 2003, we proposed a rule to identify the statutory requirements that apply for purposes of developing SIPs under the CAA to implement the 8 hour ozone NAAQS ( 68 FR 32802). Specifically, we proposed two options one in which all nonattainment areas would be classified and regulated under subpart 2 of part D of title I, and one in which some nonattainment areas would be regulated under the less restrictive requirements of subpart 1 and some would be classified and regulated under subpart 2. For areas classified under subpart 2   those with a 1 hour ozone design value at or above 0.121 ppm   the classifications set forth in subpart 2 ( marginal, moderate, etc.) would govern part D SIPs for the 8 hour ozone standard, with each area's classification determined by a modified version of the subpart 2 classification table containing 1 hour design PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 365 values and translated 8 hour design values for each classification. The NSR permitting requirements for the 8

hour ozone standard necessarily follow from the classification scheme chosen under the terms of subpart 1 and subpart 2. We did not propose specific regulatory language for implementation of NSR under the 8 hour NAAQS.

However, we indicated that we intended to revise the nonattainment NSR regulations to be consistent with the rule for implementing the 8 hour ozone NAAQS ( 68 FR 32844).

Concerning CO, in 1996 we proposed the following:

° Major stationary source threshold of 50 tpy for serious nonattainment areas in which the Administrator has determined that stationary sources are significant contributors to CO levels,

° Significant emission rate of 50 tpy for serious nonattainment areas in which the Administrator has determined that stationary sources are significant contributors to CO levels.

Concerning PM10, in 1996, we proposed to amend our nonattainment NSR regulations to incorporate requirements of the 1990 CAA Amendments and establish significant emission rates. Specifically, we proposed the following:

53. Major stationary source threshold of 100 tpy PM10 or any PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 366 specific PM10 precursor in moderate PM10 nonattainment areas,

54. Major stationary source threshold of 70 tpy PM10 or any specific PM10 precursor in serious PM10 nonattainment areas, and 55. Significant emission rate of 15 tpy PM10 and 40 tpy PM10 precursors.

b. Proposed changes to criteria for emission reduction credits from shutdowns and curtailments In 1996 we proposed to revise the regulations limiting offsets from emissions reductions due to shutting down an existing source or curtailing production or operating hours below baseline levels (" shutdowns/ curtailments"). The prior regulations at § 51.165( a)( 3)( ii)( C) provided that such emissions reductions could be used as offsets if the State lacked an approved attainment demonstration, unless the shutdown/ curtailment occurred after the date the new source permit application was filed or the applicant could establish that the proposed new source is a replacement for the shutdown/ curtailed source. We proposed to revise the existing provisions for crediting emission reductions by restructuring existing § 51.165( a)( 3)( ii)( C)( 1) and ( 2) for clarity without changing the current requirements therein. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 89 For a complete discussion of how the 1990 CAA Amendments attainment planning requirements relate to shutdown/ curtailment credits ( 61 FR 38311; July 23, 1996).

90 Use of Shutdown Credits for Offsets, July 21, 1993, John S. Seitz, Director, Office of Air Quality Planning and 367 [ See proposed § 51.165 ( a)( 3)( ii)( C)( 1) through ( 4)]. We also proposed substantive revisions in two alternatives that would ease, under certain circumstances, the existing restrictions on the use of emission reduction credits from source shutdowns and curtailments as offsets. We explained that easing the restrictions may be warranted by the 1990 CAA Amendments, in which Congress significantly reworked the attainment planning requirements of part D of title I of the CAA such that an approved attainment demonstration is unnecessary.

The revised CAA emphasizes the emission inventory as the first requirement in planning, includes new provisions keyed to the inventory requirements, and mandates several adverse consequences for States that fail to meet the planning or emissions reductions requirements related to inventories. 89 In 1993, we issued a policy memorandum addressing the use of shutdown credits for offsets in ozone nonattainment areas and areas in the OTR in light of the new statutory requirements. 90 According to our longstanding PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version Standards.

368 policy, we emphasized that sources may use emission reduction credits generated from shutdowns and curtailments as offsets if the State continues to include the emissions in the emissions inventory for attainment demonstration and RFP milestone purposes. We proposed two alternatives to revise the regulations that limit a source's use of emission reductions as offsets if the reductions were achieved by shutting down an existing emissions unit or curtailing production or operating hours of a unit ( shutdowns/ curtailments).

Under Alternative 1, we proposed to allow emissions reductions from shutdowns and curtailments from sources located in ozone nonattainment areas that lack an EPAapproved attainment demonstration to be used as offsets or netting credits, if the emissions reductions occur after November 15, 1990 and the area is current with part D ozone nonattainment planning requirements. See proposed § 51.165( a)( 3)( ii)( C)( 5) and ( 6)[ Alternative 1]. Proposed Alternative 2 generally would have allowed emission reductions from source shutdowns and source curtailments in all nonattainment areas and for all pollutants to be used as PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 369 offsets or netting credits when such reductions occur after the base year of the emissions inventory for that pollutant.

See proposed § 51.165( a)( 3)( ii)( C)( 5)[ Alternative 2]. The 1996 proposal retained the provision that the permitting authority may consider the shutdown or curtailment to have occurred after the date of its most recent emissions inventory if the inventory explicitly includes as current existing emissions the emissions from such previously shutdown or curtailed sources.

c. Proposed changes to revise the construction ban provisions On July 23, 1996, we proposed to revise § 52.24( a) to incorporate changes made by the 1990 CAA Amendments related to the applicability of construction bans. Under the 1977 Amendments, section 110( a)( 2)( I) of the CAA required EPA to place certain areas under a federally imposed construction moratorium ( ban) that prohibited the construction of new or modified major stationary sources in nonattainment areas where the State failed to have an implementation plan meeting all of the requirements of part D. The 1990 CAA Amendments removed these provisions from the CAA. However,

in section 110( n)( 3) of the CAA ( Savings Clause), the 1990 CAA Amendments retained the prohibition in cases where it PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 370 was applied prior to the 1990 CAA Amendments based upon a finding by the Administrator that the area: ( 1) lacked an adequate NSR permitting program ( as required by section 172( b)( 6) of the 1977 CAA); or ( 2) the State plan failed to achieve the timely attainment of the NAAQS for sulfur dioxide by December 31, 1982. All other construction bans pursuant to section 110( a)( 2)( I) are lifted as a result of the new statutory provision. This includes previously imposed construction bans based upon a finding that the plan for the area did not demonstrate timely attainment and maintenance of the ozone or CO NAAQS. In accordance with the amended section 110( n)( 3) of the CAA, any remaining construction ban continues in effect until the Administrator determines that the SIP meets either the amended part D permit requirements, or the requirements under subpart 5 of part D for attainment of the NAAQS for sulfur dioxide, as applicable.

We note that § 52.24( k) was not retained in our proposed rule text. However, the preamble did not in any manner indicate that EPA believed that NSR permits complying with appendix S were not required during the SIP development period where necessary. To clarify our intent, our proposed 8 hour ozone NAAQS implementation rule explained that PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 371 § 52.24( k) remained in effect and would be retained. In that action, we also proposed that we would revise § 52.24( k) to reflect the changes in the 1990 CAA Amendments ( 68 FR 32846). The prior language at section 52.24( k) allowed States to issue permits under appendix S for a maximum period of 18 months after designation. After this time, if the nonattainment area did not have an approved part D NSR permit program, the construction ban would apply. However,

the 1990 CAA Amendments to the construction ban provisions altered the provisions of the construction ban such that it would not apply when a State lacked an approved part D NSR program in the future. Thus, the 1990 CAA Amendments supersede that portion of prior § 52.24 dealing with the construction ban but leave unaltered the requirement that appendix S continues to apply through § 52.24( k). We explained that we have interpreted this language to allow States or EPA to issue permits under appendix S from designation to approval even if the time period between designation and approval exceeds 18 months, and proposed to revise § 52.24( k) to properly reflect this interpretation.

We also proposed regulatory text to reflect the revisions to CAA section 173( a)( 4). Before the State can issue a nonattainment major NSR permit, the reviewing PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 372 authority must first find pursuant to section 173( a)( 4) that the " Administrator has not determined that the applicable implementation plan is not being adequately implemented for the nonattainment area" in accordance with the requirements of part D. We stated our intent to make this determination by sending a letter to the permitting authority, and publishing a subsequent action in the Federal Register, but we solicited comment on the need to undertake notice

andcomment procedures before taking final action.

Section 113( a)( 5) of the CAA provides that EPA may issue an order prohibiting the construction or modification of any major stationary source in any area, including an attainment area, where the Administrator finds that the State is not in compliance with the NSR requirements.

Specifically, the EPA may issue an order under section 113( a)( 5) banning construction in an area whenever the Administrator finds that a State is not acting in compliance with any requirement or prohibition of the CAA relating to construction of new sources or the modification of existing sources. To codify the requirements of section 113( a)( 5), we proposed new language in § 52.24( c).

We proposed to remove the transition provisions under existing § 52.24( c) and ( g). These paragraphs were proposed PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 373 to be removed because they were originally designed to clarify the applicable requirements for permits issued prior to the initial SIP revisions required by the 1977 CAA Amendments.

In addition to the significant changes already discussed, we proposed several minor changes to § 52.24.

These minor changes included: ( 1) the addition of requirements applicable to transport regions; ( 2) the inclusion of requirements applicable to criteria pollutant precursors; ( 3) incorporation of the definitions proposed in § 51.165( a); ( 4) revisions to the language at § 52.24( h)( 2);

and ( 5) revisions to § 52.24( j).

d. Proposed changes on applicability of appendix S and the transitional NSR program On June 2, 2003 ( 68 FR 32802), we explained implementation of the major NSR program under the 8 hour ozone NAAQS during the SIP development period, and proposed flexible NSR requirements for areas that expected to attain the 8 hour NAAQS within 3 years after designation. We stated that the existing regulation codified at 40 CFR § 52.24( k) requires that permits be issued in compliance with appendix S during this time, and that a State would have to continue implementing part D nonattainment requirements PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 8/ 24/ 05 redline strikeout compared to 8/ 12/ 05 version 374 under appendix S unless the source was eligible for flexibility under section VI of the appendix ( 68 FR 32846

48).

Our June 2, 2003 proposal would limit the circumstances under which section VI of appendix S applies. ( 68 FR 32844)