Kentucky); 61 FR 20458 ( May 7, 1996) ( Cleveland Akron Lorain, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 191 Ohio); 66 FR 53094 ( October 19, 2001) ( Pittsburgh Beaver Valley, Pennsylvania); 60 FR 37366 ( July 20, 1995), 61 FR 31832 33 ( June 21, 1996) ( Grand Rapids, MI); 60 FR 36723 ( July 18, 1995) ( Salt Lake and Davis Counties, Utah); 68 FR 25418 ( May 12, 2003) ( St. Louis, Missouri) 69 FR 21717 ( April 22, 2004)( San Francisco Bay Area). The EPA has also set forth its legal rationale for the Clean Data Policy in briefs filed in the 10th, 7th, and 9th Circuits, and hereby incorporates those briefs insofar as relevant here. See Sierra Club v. EPA, No. 95 9541 ( 10th Cir.), Sierra Club v.

EPA, No. 03 2839, 03 3329 ( 7th Cir.), Our Children's Earth Foundation v. EPA, No. 04 73031 ( 9th Circuit).

As stated in the policy, the attainment demonstration,

RFP requirements and contingency measure requirement are designed to bring an area into attainment. Once this goal has been achieved, it is appropriate to suspend the obligation that States submit plans to meet these goals, so long as the area continues to attain the relevant standard.

The Tenth Circuit has upheld the use of this policy.

See Sierra Club v. EPA, 99 F. 3d 1551 ( 10th Circuit, 1996).

See also Sierra Club v. EPA, 375 F. 3d 537 ( 7th Circuit, 2004)

( rejecting a challenge to the policy).

Comment: A commenter said that although subpart 2 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 192 contains some narrowly crafted exceptions ( e. g., CAA 182( b)( 1)( A)( ii)), there are no exceptions based on clean data. In the past, EPA has cited a Tenth Circuit decision,

Sierra Club v. EPA, 99 F. 3d 1551 ( 10th Circuit 1996), as supporting the Clean Data Policy. The commenter contended that case was wrongly decided and has been superseded by the Supreme Court decision in Whitman v. American Trucking Assoc., Inc., 531 U. S. 457 ( 2001). There, the Court held that subpart 2 eliminates regulatory discretion previously allowed to EPA under subpart 1, and noted that subpart 2 prescribes large parts of nonattainment programs, for example, section 182. The requirements for RFP and attainment demonstrations are among those subpart 2 nonattainment programs that Congress prescribed by law,

thereby eliminating EPA discretion to accept something less.

See also Sierra Club v. EPA, 293 F. 3d 155 ( D. C. Circuit 2002)

( holding that EPA is without authority to infer exceptions to attainment deadlines and to explicit subpart 2 requirements for RFP plans).

Response: The EPA believes that the Tenth Circuit correctly decided Sierra Club v. EPA and that the comments misconstrue both Whitman and Sierra Club v. EPA, 293 ( Sierra Club 2002)

F. 3d 155 ( D. C. Circuit. 2002). The Sierra Club 2002 case PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 193 addressed the statutory requirements applicable to an area not attaining the standard. The issue of the requirements of part D of Title I of the CAA that are applicable to areas monitoring attainment of the standard was not before the court. As discussed below, the Sierra Club 2002 decision upheld EPA's determination that the RACM provision under section 172( c)( 1) requires only additional measures that could contribute to reasonable further progress or attainment, which is an element of EPA's application of the Clean Data Policy. To this limited extent, Sierra Club 2002 is relevant to EPA's interpretation that the policy will apply for the 8 hour ozone standard, and the decision supports EPA's interpretation. However, the other issues addressed in the decision ( extension of the statutory attainment date for areas affected by ozone transport, the content of a demonstration of reasonable further progress toward attainment, and whether contingency measures must be submitted as part of an attainment demonstration or plan for RFP) did not relate to the Clean Data Policy or the requirements applicable to areas attaining the standard.

The issue addressed by the Clean Data Policy is whether an area that has attained the standard ( as evinced by air quality monitoring data) still needs to submit a PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 194 demonstration of how the area will achieve enough reductions to demonstrate that it will " attain the NAAQS", a plan to obtain reasonable periodic reductions towards the goal of attainment and other related requirements.

The EPA continues to believe that the statutory requirement for an attainment demonstration   a SIP revision which identifies the level of future reductions needed to achieve the NAAQS and any additional adopted measures needed to achieve these future reductions   is written so as to be inapplicable once the NAAQS is attained.

In addition, EPA believes that the RACM requirements are a " component" of an area's attainment demonstration under section 172( c)( 1). General Preamble 57 FR 13560 ( April 16,

1992). Thus, since the attainment demonstration is no longer an applicable requirement, RACM is also no longer an applicable requirement. The EPA has consistently interpreted this provision to require only implementation of potential RACM measures that could contribute to reasonable progress or attainment General Preamble 57 FR 13498 ( April 16, 1992).

Thus, where an area has already attained the standard, no additional RACM measures are required. The EPA's interpretation that the statute requires only implementation of RACM measures that would advance attainment was upheld by PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 195 the United States Court of Appeals for the Fifth Circuit ( Sierra Club v. EPA, 314 F. 3d 735, 743 745 ( 5th Cir. 2002)

and by the United States Court of Appeals for the D. C.

Circuit ( Sierra Club v. EPA, 294 F. 3d 155, 162 163 ( D. C.

Cir. 2002). See also the final rulemakings for Pittsburgh

Beaver Valley, Pennsylvania, 66 FR 53096 ( October 19, 2001)

and St. Louis, 68 FR 25428 ( May 12, 2003).

Likewise, EPA concludes that the provision for RFP   a plan for annual incremental reductions leading to attainment   is also expressed in terms that show that RFP is unnecessary once attainment is reached. If the goal of attainment has been met, there is no longer a need to plan for measures to meet that goal. Similarly, EPA continues to believe that the contingency measure requirements of section 172( c)( 9) are no longer applicable once an area has attained the standard since those " contingency measures are directed at ensuring RFP and attainment by the applicable date." ( See 57 FR 13564; April 16, 1992). The section 182( c)( 9)

contingency measure requirement also no longer applies once an area has attained the standard. The EPA's interpretation of the statute is consistent with the statute's plain language. To the extent that the statutory language is ambiguous, the interpretation is reasonable and must be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 196 upheld under Chevron, USA Inc v. NRDC , 467 US 837, 842 45 ( 1984). CAA section 172( c)( 2) and the related provisions of Subpart 2 provide that reasonable further progress is required only where an area continues to violate the standard. By definition, the " reasonable further progress"

provision requires only such reductions in emissions as are necessary to attain the NAAQS by the attainment date. If an area has attained the standard, the stated purpose of the reasonable further progress provision has been fulfilled.

Section 172( c)( 1) and the related provisions of Subpart 2 provide that SIPS shall provide for attainment of the NAAQS. See also section 182( b)( 1)( A)( i) which requires that SIPS for moderate ozone nonattainment areas must " provide for such specific annual reductions in emissions of [ VOCs] and [ NOx] as necessary to attain the [ ozone NAAQS]" by the applicable attainment date When an area has attained the NAAQS, there is no need for a plan demonstrating how it will reach attainment, and thus the attainment demonstration provision is no longer applicable. Similarly section 172( c)( 9) and the related provisions of Subpart 2 provide that SIPs in nonattainment areas shall provide for contingency measures to be undertaken if the area fails to make reasonable further progress or to attain the NAAQS by PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 197 the applicable attainment date. Since contingency measures are required only if reasonable further progress or attainment is not achieved, there is no need for them were the area has attained the standard. The language of these statutory provisions indicates that Congress intended that when an area has attained the standard the requirements designed to attain the standard are no longer applicable to it.

The EPA believes that Whitman does not provide a basis to reconsider our position on the Clean Data Policy. In Whitman, the Court was addressing EPA's stated approach that subpart 2 did not apply for purposes of implementing the 8

hour NAAQS. In the Phase 1 rule, EPA addressed the Court's decision and concluded that subpart 2 does apply. The issue here is not whether it applies, but how those requirements apply under a specific situation where an area has attained the NAAQS. That issue was not addressed by the Court in Whitman. In Whitman the Supreme Court was considering which subpart of part D of the CAA should be used for implementation of the newly promulgated 8 hour NAAQS. The decision in Whitman has no bearing on the question of whether an area that has demonstrated attainment must nonetheless submit an attainment demonstration plan and related PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 198 requirements. Thus, Whitman does not undermine the Tenth Circuit's reasoning in Sierra Club v. EPA, 99 F. 3d 1551 (

10th Circuit, 1996). See also the post Whitman decision in Sierra Club v. EPA, 375 F. 3d 637 ( 7th Circuit, 2004),

rejecting a challenge to the Clean Data Policy and upholding a redesignation action based on the policy.

10. How will RFP be addressed in Tribal areas?

[ Section VI. I. 11. of June 2, 2003 proposed rule ( 68 FR 32835); no draft or final regulatory text.]

a. Background The TAR provides flexibility for Tribes in the preparation of a TIP to address the NAAQS. As mentioned in the proposed rulemaking, the TAR provides the Tribes with the ability to develop TIPs to address and implement the NAAQS in Indian country. It further provides the Tribes with flexibility to develop these plans in a modular way, as long as the elements of their TIPs are reasonably " severable."

For example, each TIP submission must include a demonstration that the Tribe has authority to develop and run its program,

the ability to enforce its rules, and the capacity and resources to implement the program it adopts. Therefore, it may include one or two source specific requirements but may not include provisions for RFP and other SIP requirements. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 199 The proposal noted that these TIPs can be an important step in addressing an overall air quality plan to achieve health and environmental goals on Tribal lands. Where a Tribe chooses not to address a specific planning element, EPA may be obligated to step in. Such action would not preclude a Tribe from addressing those elements at a later time.

b. Summary of policy We intend to take the approach noted in the proposal.

There is no regulatory text for this intention.

c. Comments and responses No comments were received on this portion of the proposal.

11. How will RFP targets be calculated?

[ Section VI. I. 12. of June 2, 2003 proposed rule ( 68 FR 32836); § 51.910( c) of the draft and final regulatory text.]

a. Background We proposed a methodology for the calculation of RFP target levels of emissions that is based on the method we developed for the 1 hour standard, while taking into account our interpretation of CAA restrictions on creditable emissions and our proposal to use the 2002 inventory as the baseline inventory for the RFP requirement. The CAA specifies four types of measures that were not creditable PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 200 toward the 15 percent RFP requirement. These are:

( 1) Any measure relating to motor vehicle exhaust or evaporative emissions promulgated by the Administrator by January 1, 1990.

( 2) Regulations concerning Reid Vapor Pressure ( RVP)

promulgated after 1990 or required under section 211( h).

( 3) Measures required under section 182( a)( 2)( A) to correct deficiencies in SIPs regarding VOC RACT regulations required prior to enactment of the CAA Amendments of 1990.

( 4) State regulations submitted to correct deficiencies in I/ M existing or required programs.

These four types of measures were all expected to result in a decrease in emissions between 1990 and 1996. Of these four types of measures, RACT and I/ M program corrections and the 1992 RVP requirements were completely in place by 1996 and therefore are already accounted for in the 2002 baseline. As a result, they would produce no additional reductions between 2002 and 2008 or later milestone years.

However, the pre 1990 Federal Motor Vehicle Control Program ( FMVCP) will continue to provide additional benefits during the first two decades of the 21st century as remaining vehicles meeting pre 1990 standards are removed from the vehicle fleet. Because these benefits are not creditable for PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 201 RFP purposes, in order to calculate the target level of emissions for future RFP milestone years ( i. e., 2008, 2011,

etc.), States must first calculate the reductions that would occur over these future years as a result of the pre 1990 FMVCP. We proposed three methods to properly account for the non creditable reductions when calculating RFP targets for the 2008 and later RFP milestone years.

b. Summary of final rule The calculation methods have been revised to account for NOx and for other emissions models. They appear as appendix A of this preamble. These methods are consistent with the requirements of sections 182( b)( 1)( C) and ( D) and 182( c)( 2)( B) of the CAA.

c. Comments and responses Comment: One commenter agreed that the base emission level should be decreased by the pre 1990 FMVCP reductions ( 1990 I/ M program and fuel RVP of 9.0 or 7.8 psi). However,

the commenter further recommended that the pre 1990 FMVCP reductions be calculated using the I/ M program and fuel properties in effect during the new baseline year of 2002.

The commenter claimed an advantage of the recommended change is that it removes from the non creditable pre 1990 FMVCP reductions, creditable reductions from controls PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 202 implemented prior to 2003 ( such as improvements to the I/ M program or cleaner gasoline).

The commenter claimed that the EPA proposal specifies using the MOBILE6 command NO CAA in the calculation of the non creditable emissions reductions. The commenter concurred that this command could be used, but recognized that some of the controls in effect during 2002 cannot be modeled with this command. ( Refer to technical specifics of this comment in the response to comment document.)

Response: The EPA does not agree with the commenter that the non creditable pre 1990 FMVCP reductions should be calculated using the I/ M program and fuel properties in effect during the new baseline year of 2002. Including the I/ M program and fuel properties in effect in 2002 in the calculation of non creditable reductions would not accurately account for reductions that are the result of pre 1990 Federal motor vehicle control measures. The EPA believes that the methods provided in the final rule accurately identify the non creditable reductions from pre 1990 motor vehicle standards and provide appropriate credit for all post 1990 control measures.

12. Should EPA continue the policy of allowing substitution of controls from outside the nonattainment area within 100 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 37The final interim implementation guidance of 1997 referenced the proposed interim implementation policy of December 13, 1996, which said, " The EPA believes that this additional flexibility for States in their ROP SIP's is consistent with the CAA, since reductions from outside a nonattainment area within these limits contribute to progress toward attainment within the area. The 3 percent per year ROP requirement is a general rate of progress 203 kilometers for VOC and 200 kilometers for NOx?

[ Section VI. I. 2. of June 2, 2003 proposed rule ( 68 FR 32833); no draft or final regulatory text.]

a. Background The proposal noted that EPA currently has a policy that allows States to take credit for RFP for NOx and VOC controls that occur outside the nonattainment areas [" Guidance for Implementing the 1 Hour Ozone and Pre Existing PM10 NAAQS,

December 29, 1997, 68 FR 32833]. Specifically, the guidance generally allows credit for VOC reductions occurring up to 100 km outside the area and for NOx reductions occurring up to 200 km outside the area ( Statewide where a regional NOx control strategy is being implemented). The policy indicates that credit may be taken only for the emissions reductions from measures not otherwise mandated by the CAA. As explained in the policy, EPA believes that this additional flexibility for crediting reductions outside nonattainment areas is consistent with the CAA. 37 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 requirement, not a requirement for specific programs or measures such as vehicle inspection and maintenance. Allowing this flexibility would continue to provide the same rate of progress in terms of reducing emissions." ( 61 FR 65758).

204 Under this approach, the geographic area for substitution of VOC emission reductions is 100 km from the nonattainment area and the geographic area for substitution of NOx reductions is 200 km from the nonattainment area with the possibility for additional expansion of the NOx substitution area as follows. Nitrogen oxides emissions reductions from anywhere within the State may be credited for those States that participate in a regional NOx control strategy such as the NOx SIP Call. All other States implementing a NOx substitution strategy for RFP would be restricted to a distance of 200 km from the nonattainment area, unless a substitution for a greater distance is accompanied by adequate technical justification.

Substitutions are restricted to intrastate areas unless two or more States involved reach mutual agreement. There are some cases in the western portions of the United States where 100 km for VOC substitution or 200 km for NOx substitution from the nonattainment areas are not appropriate for RFP credit. In those cases, States should obtain approval from PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 38U. S. EPA Office of the Inspector General. Evaluation Report: EPA and States Not Making Sufficient Progress in Reducing Ozone Precursor Emissions In Some Major Metropolitan Areas. Report No. 2004 P 00033. September 29, 2004.

205 the appropriate Regional Office to verify credit and applicability prior to implementing such a substitution. The EPA notes that in all cases the distances in the policy provide only a general policy presumption that, if used,

would need data resources in the record showing that reductions from sources in the specific locations in attainment areas benefit the nonattainment area. See LEAN v.

EPA, 382 F. 3d 575 5th Circuit, 2004.

b. Summary of final rule We believe that States should continue to be able to rely on emissions reductions from outside the nonattainment area for credit toward their RFP obligations. However, we are reassessing the current policy in light of concerns and recommendations raised outside the rulemaking process by the EPA Office of Inspector General that indicated a potential for double counting of emissions reductions and problematic equity issues. 38 We responded to that report that we are considering the various components of the recommendations as we assess existing policies and guidance in parallel to the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 39Memorandum from Jeffery R. Holmstead to J. Rick Beusse, " Response to the Office of the Inspector General ( OIG) Evaluation Report, EPA and States Not Making Sufficient Progress in Reducing Ozone Precursor Emissions in Some Major Metropolitan Areas, Report No. 2004 P 00033 ( December 29, 2004). March 24, 2005.

206 rulemaking for implementing the 8 hour ozone standard. 39 We fully expect that any revisions to the policy will continue to allow States to take credit toward their RFP obligation from emission reductions outside the nonattainment area, but will ensure that the reductions meet the standard tests of creditability ( permanent, enforceable, surplus, and quantifiable) and are shown to be beneficial toward reducing ozone in the nonattainment area.

c. Comments and responses Comment: Several commenters supported this feature of EPA's proposal regarding RFP because it allows the States flexibility to tailor control strategies to address the issues specific to a particular nonattainment area.

The commenters supported codification ( 68 FR 32833,

column 1) in the final rule of the December 29, 1997,

guidance memo (" Guidance for Implementing the 1 Hour Ozone and Pre Existing PM10 NAAQS") that allows emissions reductions from outside the nonattainment area to be creditable toward RFP. One commenter agreed that States ought to be able to PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 207 account for regional emissions in their attainment demonstrations. On the other hand, the commenter was concerned that the Agency might allow jurisdictions to " credit" emissions reductions from sources up to 100 km for VOC and 200 km for NOx toward 15 percent RFP plans, and this in turn could encourage jurisdictions in need of these tonnage reductions to regulate without a sound basis. The commenter contended that while ozone is known to be a " regional pollutant", EPA has failed to establish in this rulemaking any technical basis for allowing States to impose regulations on sources outside the nonattainment area boundaries without independent justification of the impact of such sources on an area's failure to attain the standard.

Response: We developed our 1997 policy as a result of the modeling results relating to the NOx SIP Call ( see, for example, 63 FR 57355, October 27, 1998, and 69 FR 21604,

April 21, 2004). These modeling analyses demonstrate that significant contribution to nonattainment resulted not only from source emissions within a nonattainment area but also from source emissions over a much broader area. Not only do these emissions from outside the nonattainment area affect air quality within the nonattainment area, in some cases it might be necessary to include and control emission sources PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 40The EPA notes that paragraph ( 1) of subsection 182( b) is entitled " Plan Provisions for Reasonable Further Progress" and that subparagraph ( B) of paragraph 182( c)( 2) is entitled " Reasonable Further Progress Demonstration," thereby making it clear that both the 15 percent plan requirement of section 182( b)( 1) and the 3 percent per year requirement of section 182( c)( 2) are specific varieties of RFP requirements.

208 located in the nearby areas in order to attain the standard.

We believe it is appropriate to allow States to take credit for reductions from sources outside their nonattainment areas where data indicate that those emissions affect air quality in the nonattainment areas.

We note that section 182( c)( 2)( C), which provides for the substitution of NOx controls for VOC, speaks in terms of reductions of ozone concentrations rather than strictly reductions in emissions. This provision led us to conclude that Congress' intent for the ROP requirement is to lower ozone concentrations within the nonattainment area. It is consistent with that intent that emissions reductions from outside the nonattainment area that will reduce ozone concentrations in the nonattainment area should be creditable in RFP demonstrations. We also believe that the CAA is clear that both the 15 percent plan requirement of section 182( b)( 1) and the 3 percent per year requirement of section 182( c)( 2) are specific varieties of RFP requirements. 40 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 209 Section 171( 1) of the CAA states that, for purposes of part D of title I, RFP " means such annual incremental reductions in emissions of the relevant air pollutant as are required by this part or may reasonably be required by the Administrator for the purpose of ensuring attainment of the applicable NAAQS by the applicable date." Thus, whether dealing with the general RFP requirement of section 172( c)( 2), or the more specific RFP requirements of subpart 2 for classified ozone nonattainment areas ( the 15 percent plan requirement of section 182( b)( 1) and the 3 percent per year requirement of section 182( c)( 2)), the purpose of RFP is to ensure attainment by the applicable attainment date. Emissions reductions strategies applied to sources outside the nonattainment area may have a beneficial effect on the nonattainment problem within the designated area. Since RFP/ ROP is progress towards attainment, specific, annual emissions reductions from geographic areas outside the nonattainment area boundaries that contribute to attainment in the nonattainment area would fall within the scope of " such annual incremental reductions in emissions of the relevant air pollutant as are required . . . for the purpose of ensuring attainment of the applicable NAAQS by the applicable date." PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 41U. S. EPA Office of the Inspector General. Evaluation Report: EPA and States Not Making Sufficient Progress in Reducing Ozone Precursor Emissions In Some Major Metropolitan Areas. Report No. 2004 P 00033. September 29, 2004.

210 However, as noted above in the Background portion, we intend to reassess whether the policy should be revised in light of concerns brought to our attention outside the rulemaking process pertaining to its technical feasibility. 41 Comment: One commenter requested clarification that if the 100 km/ 200 km area extends into adjacent States that reductions in those States should also be creditable,

especially with regard to the implementation of federal measures.

Response: We intend to look into this issue further in the future as part of the overall reassessment of the 100km/ 200km credit issue.

Comment: Another commenter expressed confusion by the provision to allow creditable reductions be made outside nonattainment areas. They asked if reductions made outside a nonattainment area actually bring that nonattainment area into compliance with the standard, then shouldn't those outside areas be designated nonattainment by definition? The commenter contended that this contradiction is unacceptable, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 211 and a fatal flaw of current designation efforts and this implementation proposal.

Response: The EPA disagrees with the comment that the area in which creditable ROP/ RFP reductions are obtained must be part of the nonattainment area. Emissions are only one of many factors to determine if an area should be part of the nonattainment area built around a violating monitor. Once we determine that a monitor is recording a violation, the next step is to determine if there are any nearby areas that are contributing to the violation and include them in the designated nonattainment area. For guidance on determining the nonattainment boundary for the 8 hour ozone standard, we look to CAA section 107( d)( 4) that established the Consolidated Metropolitan Statistical Area ( CMSA) or Metropolitan Statistical Area ( MSA) presumptive boundary for more polluted areas when we promulgated our designation actions in 1991 for the 1 hour ozone standard. We generally started with counties in the CMSA or MSA because that area,

defined by the Office of Management and Budget ( OMB),

generally shares economic, transportation, population and other linkages that are similar to air quality related factors that produce ozone pollution. The actual size of the nonattainment area may be larger or smaller than the CMSA or PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 42Memorandum from John Seitz, " Boundary Guidance on Air Quality Designations for the 8 Hour Ozone National Ambient Air Quality Standards ( NAAQS or Standard)." March 28, 2000. Found at: http:// www. epa. gov/ ozonedesignations/ guidance. htm.

43 Generally counties ( in the case of parts of New England, the township) were used as the basic jurisdictional unit for defining nonattainment area boundaries. But consideration of topographical/ geographical factors could lead to splitting counties ( 69 FR at 23861, April 30, 2004).

212 the MSA boundaries, or, than the single county with a violating monitor ( in the case of a single county not in any MSA/ CMSA area) and depends on a number of air quality related technical factors contained in our designation guidance. 42 After identifying such areas   MSAs/ CMSAs/ single counties   with violating monitors, we then determined which nearby jurisdictional units43 were contributing to the nearby violation even those not monitoring violations. We considered each of 11 applicable factors identified in our designation guidance in making our assessment of whether a jurisdictional unit was a nearby area contributing to the violation that should be included in the designated nonattainment area. These factors include emissions, traffic patterns, population density, and area growth. Only after consideration of all 11 factors did we add a jurisdictional unit to a nonattainment area. In sum, for purposes of PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 213 designating an area, we are required to designate the area violating the standard and any " nearby" area that is contributing to the violation. We complied with that statutory obligation in the designation process. However,

there may be emissions from areas that were not designated as part of the nonattainment area that contribute to violations of the standard. Our approach to allowing credit for reductions in these emissions is not inconsistent with the designation process.

Comments on draft regulatory text Comment: One commenter recommended that EPA state,

either in the preamble to this rule or in the rule itself,

that any VOC emissions reductions within 100 km and any NOx emissions reductions within 200 km of the nonattainment boundary, including reductions in adjacent States, are creditable for RFP plan purposes. They also suggested that EPA address voluntary reductions for RFP purposes to state that reductions from voluntary measures should be incorporated into the baseline emissions inventory calculation.

Another commenter stated that EPA does not specify in § 51.910( a)( 4) that in areas where the 3 percent annual reduction is required, those reductions must be achieved PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 214 within the statutorily defined baseline " area." ( CAA section 182( b)( 1)( B)). The commenter stated that we issued initial NOx substitution guidance in 1993 that required RFP reductions to be achieved from sources within the designated nonattainment area. The commenter noted that subsequently,

we attempted to unlawfully allow RFP reductions to be obtained from sources within the modeling domain. The commenter advocated that we clarify that the CAA requires creditable reductions to be obtained only from sources within the designated nonattainment areas.

Response: We believe that the policy does not need to be incorporated into a rule. Since areas must include record support for application of the policy in an area demonstrating that such reductions will have a positive impact on the specific nonattainment area, individual rulemaking in the context of an area's SIP must be conducted in any event to implement the policy. The EPA believes that any reductions that in fact result in improved air quality within the nonattainment area can be credited to RFP demonstrations. Voluntary emissions reductions that are used to satisfy RFP requirements   or any requirements under the CAA   must meet EPA's criteria for creditability of such reductions, including inclusion of the emissions reductions PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 215 in the baseline. As explained elsewhere in response to another comment on the policy of allowing substitution of controls from outside the nonattainment area within 100 km for VOC and 200 km for NOx, EPA disagrees with the comment that the CAA limits the scope of creditable emissions reductions to only those reductions in emissions emanating from within the nonattainment area boundaries. Our full rationale is set forth in a previous response. We also address elsewhere the comment relating to allowance of RFP credit from emissions reductions outside the State in which the nonattainment area is located.

13. When must RFP emissions reductions be achieved?

[ Section VI. I. of June 2, 2003 proposed rule ( several locations starting at 68 FR 32832); several locations including § 51.910( a)( 1) of the draft and final regulatory text.]

a. Background Section 51.910( a)( 1) of the draft regulatory text that was made available for public comment provided that for areas initially designated nonattainment for the 8 hour NAAQS, the initial 6 year period for RFP shall run from January 1, 2003 to December 31, 2008. Section 182( c)( 2)( B), applicable to serious and above areas, requires that RFP be continued out PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 216 to the attainment date. Therefore, § 51.910( a)( 2) of the draft regulatory text provided, " For each area classified as serious or higher under § 51.903, the State must submit no later than 3 years after the effective date of the area's nonattainment designation a SIP revision consistent with section 182( c)( 2)( B) of the CAA for each 3 year period following the initial 6 year period addressed under paragraph ( a)( 1)( ii)( B) of this section until the area's attainment date. For areas initially designated nonattainment for the 8 hour NAAQS the 3 year periods referenced in section 182( c)( 2)( B) of the Act shall begin January 1, 2009."

In applying the requirement of section 182( c)( 2)( B), it is necessary to know the attainment date for the area. The attainment date is not necessarily the maximum allowed under part D of the CAA, but must be " as expeditious as practicable" but no later than the outermost date provided in the CAA ( e. g., 9 years after designation for a serious area).

Thus, the State must theoretically have completed an attainment demonstration and RACM analysis ( discussed elsewhere in this preamble) to demonstrate that the attainment date selected is as expeditious as practicable.

The Phase 1 rule, § 51.900( g) sets forth the following definition: " Attainment year ozone season shall mean the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 44With this rulemaking, this provision is codified as 40 CFR 51.908( d).

45With the exception of areas with year round ozone seasons, in which case the latest attainment date may be earlier in the year of the outside attainment date identified in the statute.

217 ozone season immediately preceding a nonattainment area's attainment date." Also, § 51.90844 ( What is the required time frame for obtaining emission reductions to ensure attainment by the attainment date?) provides: " For each nonattainment area, the State must provide for implementation of all control measures needed for attainment no later than the beginning of the attainment year ozone season." Thus, if the latest attainment date allowed by the CAA for a serious area designated in 2004 is June 15, 2013, the ( complete) ozone season preceding that date would occur in 2012. However, if all of the reductions necessary to achieve attainment are in place prior to that ozone season, then the most expeditious attainment date would in fact be just after the end of that ozone season in 2012 ( assuming the RACM analysis did not compel a more expeditious attainment year). Thus, in light of the Phase 1 rule, the latest possible attainment date for all areas will be just after the end of the ozone season in the year prior to the outside attainment date identified in the statute for the area's classification. 45 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 46Note that 40 CFR 51.900( g) defines " Attainment year ozone season" as the ozone season immediately preceding a nonattainment area's attainment date.

218 Consistent with the manner in which ROP plans under the 1 hour ozone standard were developed, the RFP baseline for 2002 will have a typical summer day tons/ day basis. As such,

the attainment year target will also be a typical summer day target. Thus, the target level of emissions must be met by the attainment date of the attainment year. 46 As noted above, section 182( c)( 2)( B) requires that RFP be continued out to the attainment date.

Therefore, if the area's last increment of progress ( out to the area's attainment date) would result in emissions reductions greater than needed for attainment, then that final increment of progress still needs to be implemented by the area's attainment date. However, we do not believe that there will likely be a situation where RFP requirements will result in emission reductions that will be greater than the reductions needed for attainment. The reason is that the RFP requirement is based on reducing typical summer day emissions. The last increment of progress would be in the attainment year, and would be achieved for the ozone season prior to the attainment date. We do not consider partial PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 219 years in the calculation of the RFP requirement ( thus, there would not be an " extra increment" between the beginning of the ozone season and the attainment date that would occur after the ozone season). The emission reductions needed for attainment must also be achieved prior to the ozone season prior to the attainment date; therefore the emission reductions needed by the attainment date would satisfy the last RFP increment out to the attainment date. An example of how this might play out appears in Appendix C of this preamble.

b. Summary of final rule For each area classified as moderate or higher, the State's 15 percent VOC emission reduction plan must provide for the emissions reductions to be achieved by the end of the 6 year period after the baseline year. The 6 year period referenced in section 182( b)( 1) of the CAA shall begin January 1 of the year following the year used for the baseline emissions inventory. For areas initially designated nonattainment for the 8 hour NAAQS, the 6 year period runs from January 1, 2003 to December 31, 2008.

For each area classified as serious or higher, the State's RFP plan must provide a 3 percent annual emission reduction requirement averaged over every 3 year period after PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 220 the initial 6 year period. For areas initially designated nonattainment for the 8 hour NAAQS, the first 3 year period shall run from January 1, 2009 and end December 31, 2011.

The final increment of progress must be achieved no later than the attainment date for the area. An example of the recommended approach is shown in Table 1 for serious and above areas; assume the area has already completed its 15 percent VOC reduction under the 1 hour ozone standard.

To summarize, for areas designated nonattainment for the 8 hour NAAQS with an effective date of June 15, 2004, the rule would establish the following:

° The 6 year period in section 51.910( a)( 1)( i)( A) and ( ii)( C)( 1) would run from January 1, 2003 to December 31, 2008.

° The first 3 year period in section 51.910( a)( 1)( i)( B)

would run from January 1, 2009 and end December 31,

2011.

° The baseline emissions inventory in section 51.910( d)

would be for calendar year 2002.. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 221 Table 1 Reduction Requirements for Periods for Areas Classified as Serious and above with an approved 1 hour 15 percent Plan in the SIP ( assumes spring to fall ozone season)

RFP Requirement  As a Percentage of Baseline VOC and/ or NOx Emissions NOTE 2 Classification Row Time Period / Terminal Period NOTE 1 Serious Severe 15 Severe 17 Extreme 1 First 6 years after the Baseline Year ( Typical summer day, 2002 to December 31, 2008) 18 percent 18 percent 18 percent 18 percent 2 Next Full 3 year Period ( January 1, 2009 to December 31, 2011) 9 percent 9 percent 9 percent 9 percent 3 Next Full 3 year Period ( January 1, 2012 to December 31, 2014) 3 percent in the 2012 attainment year 9 percent 9 percent 9 percent PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 Table 1 Reduction Requirements for Periods for Areas Classified as Serious and above with an approved 1 hour 15 percent Plan in the SIP ( assumes spring to fall ozone season)

RFP Requirement  As a Percentage of Baseline VOC and/ or NOx Emissions NOTE 2 Classification Row Time Period / Terminal Period NOTE 1 Serious Severe 15 Severe 17 Extreme 222 4 Next Full 3 year Period ( January 1, 2015 to December 31, 2017) 9 percent 9 percent 9 percent 5 Next Full 3 year Period ( January 1, 2017 to December 31, 2019) 6 percent in 2018 attainment year 9 percent 9 percent 6 Next Full 3 year Period ( January 1, 2020 to December 31, 2022) 3 percent in 2020 attainment year 9 percent PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 223 7 The period terminating in extreme area attainment date ( January 1, 2022 to attainment date at end of 2023) 6 percent in 2023 attainment year NOTES:

1. Time periods in parentheses are for areas designated and classified effective June 15, 2004.

2. RFP credit allowed for NOx reductions using substitution under section 182( c)( 2)( C). PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 224 c. Comments and responses No comments were received on the proposal concerning the timing of emission reductions needed for RFP.

14. Banked emission reduction credits ( including shutdown credits)

Can pre baseline emission reduction credits be used to satisfy the RFP requirement? [ No discussion in June 2, 2003 proposal; no draft or final regulatory text.]

a. Background This topic was not discussed in the proposed rulemaking,

but we believe that questions that have arisen on this topic bear some discussion here.

The CAA provides the following definition in section 182( b)( 1)( D) regarding the 15 percent VOC RFP requirement:

Baseline emissions. For purposes of subparagraph ( A), the term " baseline emissions" means the total amount of actual VOC or NOx emissions from all anthropogenic sources in the area during the calendar year of the enactment of the Clean Air Act Amendments of 1990, excluding . . . [ emphasis added.]

The April 1992 General Preamble provides:

The adjusted base year inventory ( i. e., baseline emissions) must contain only actual emissions occurring in the base year, 1990, within the designated nonattainment area boundaries. The baseline emissions should not include pre enactment banked emission credits since they were not actual emissions during the calendar year of enactment [ 57 FR 13507; April 16, 1992; emphasis added]. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 47Guidance on the Adjusted Base Year Emissions Inventory and the 1996 Target for the 15 Percent Rate of Progress Plans. Ozone/ Carbon Monoxide Programs Branch, U. S. Environmental Protection Agency, Office of Air Quality Planning and Standards, Research Triangle Park, NC 27711. EPA 452/ R 92 005. October 1992.

4851 FR 233 " Emissions Trading Policy Statement; General Principles for Creation, Banking and Use of Emission Reduction Credits; Final Policy Statement and Technical 225 and Pre enactment banked emissions reductions credits are not creditable toward the 15 percent progress requirement. However, for purposes of equity, EPA encourages States to allow sources to use such banked emissions credits for offsets and netting. When States use such banked credits for offsets and netting to the extent otherwise creditable under the Part D NSR regulations, these pre enactment emissions credits must be treated as growth. Consequently, this " growth" must be accounted for, as is the case with all other anticipated growth, in order to ensure that it does not interfere with the 15 percent rate of progress requirement ( which is " net" of growth). In addition, when such growth emissions are used as offsets, they must be applied in accordance with the offset ratio prescribed for the area of concern ( e. g., 1.3 to 1 for severe areas, etc.). All pre enactment banked credits must be included in the nonattainment area's attainment demonstration for ozone to the extent that the State expects that such credits will be used for offsets or netting prior to attainment of the ambient standards. Credits used after that date will need to be consistent with the area's plan for maintenance of the ambient standard [ 57 FR 13508].

The EPA's 1992 guidance on calculating the 15 percent emission target47 contained the following:

4.3 Pre enactment Banked Emissions Reduction Credits. If the State has an emissions credit bank that meets the EPA's requirements under an earlier policy statement[ 48], PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 Issues Document." December 4, 1986. This document has been replaced by Improving Air Quality with Economic Incentive Programs, January 2001, available at http:// www. epa. gov/ region07/ programs/ artd/ air/ policy/ search. htm.

226 the State is allowed to use its pre enactment banked emissions reduction credits to facilitate the location of new sources in nonattainment areas during the 1990 1996 period. However, because these reduction credits represent emissions that are not included in the 1990 base year inventory, any additional emissions that result from the use of banked credits must be treated as growth in order to ensure that the 15 percent VOC emissions reduction requirement is achieved. Also, it is important to note that the use of pre enactment banked emissions credits must be in accordance with the offset ratios prescribed in the CAA Amendments ( e. g., 1.3 to 1 in severe areas.)

The 1992 guidance document provides an example calculation of the above guidance.

b. Interpretation for 8 hour ozone NAAQS The guidance provided above is still relevant for banked emission reduction credits in relation to the RFP requirement for the 8 hour ozone standard. However, because the rule for implementing the 8 hour ozone standard uses a 2002 baseline year, the above guidance should be read   for purposes of implementing the 8 hour ozone RFP requirement   by substituting " pre enactment banked emission credits" with " pre 2002 banked emission credits." A pre 2002 banked emission credit is one that was generated before January 1, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 227 2002 and that is certified in a bank that EPA has approved for such purposes. For a discussion of the use of shutdown/ curtailment credits for offsets and netting, see section V. B. 1. a of this preamble. For a discussion of the use of emission reduction credits for offsets and netting,

see section V. D. 5 of this preamble.

F. Are contingency measures required in the event of failure to meet a milestone or attain the 8 hour ozone NAAQS?

[ Section VI. J. of June 2, 2003 proposed rule ( 68 FR 32837); no draft or final regulatory text.]

1. Background Under the CAA, nonattainment areas subject only to subpart 1, as well as those classified under subpart 2 as moderate, serious, severe, and extreme must include in their SIPs contingency measures consistent with sections 172( c)( 9)

and 182( c)( 9), as applicable. Contingency measures are additional controls to be implemented in the event the area fails to meet a RFP milestone or fails to attain by its attainment date. These contingency measures must be fully adopted rules or measures which are ready for implementation quickly upon failure to meet milestones or attainment.

For additional background information, see the Proposal ( 68 FR 105, June 2, 2003). Other related information can be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 228 found in the following applicable guidance documents:

° " Contingency Measures for Ozone and Carbon Monoxide ( CO)

Redesignations," Memorandum from G. T. Helms, Chief,

Ozone/ Carbon Monoxide Programs Branch, June 1, 1992,

° " Procedures for Processing Requests to Redesignate Areas to Attainment," Memorandum from John Calcagni, Director,

Air Quality Management Division, September 4, 1992,

° " Guidance for Growth Factor, Projections, and Control Strategies for the 15 percent Rate of Progress Plans,"

( EPA 452/ R 93 002), March 1993 ° " Early Implementation of Contingency Measures for Ozone and Carbon Monoxide ( CO) Nonattainment Areas,"

Memorandum from G. T. Helms, Chief, Ozone/ Carbon Monoxide Programs Branch, August 13, 1993,

° " Guidance on Issues Related to the 15 Percent Rate of

Progress Plans," Memorandum from Michael H. Shapiro,

Acting Assistant Administrator for Air and Radiation to the Regional Division Directors, August 23, 1993,

° " Clarification of Issues Regarding the Contingency Measures that are due on November 15, 1993 for Moderate and Above Ozone Nonattainment Areas," Memorandum from D.

Kent Berry, Acting Director, Air Quality Management Division, November 8, 1993, and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 229 ° " Guidance on the Post 1996 Rate of Progress Plan ( ROP)

and Attainment Demonstration," ( EPA 452/ R 93 015),

January 1994.

2. Summary of final rule Contingency measures are required to be implemented in the event of failure to meet a milestone or attain the 8 hour ozone NAAQS. We are adopting the approach taken in our proposal. All subpart 1 and subpart 2 areas other than marginal areas need contingency measures. The contingency measures SIP should accompany the attainment demonstration SIP required for submission by June 15, 2007.

It should be noted that the CAA requires States to identify contingency measures that will go into effect without further action on the part of the Federal government.

We have recognized, however, that some additional State or local action may be necessary ( such as notification of sources) before implementation.

Under subpart 2, areas that are nonattainment for the 8

hour ozone NAAQS that have unused adopted contingency measures for the 1 hour ozone NAAQS may use those measures as appropriate as contingency measures for the 8 hour NAAQS.

For subpart 1, States should follow the same guidance used for subpart 2 areas. We intend to provide any PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 230 additional guidance if needed.

3. Comments and responses Comment: Two commenters raised concerns about the difficulty some areas may have in identifying what they referred to as " reserve" or " unused" measures for the 1 hour standard that could be used as contingency measures for the 8 hour standard for subpart 2 areas. These commenters requested protection for areas that have no " leftover"

measures to be used in the event of failure to meet the milestone. The commenters contended that EPA needs to have policies that do not penalize areas that have implemented all feasible measures to attain the standard and may not have any identified contingency measures left.

Response: The commenters appear to be asking EPA to drop the requirement for a nonattainment area SIP to contain contingency measures. The commenters have not provided a legal rationale why they believe it is possible to do this.

The purpose of contingency measures is to have a quickly implementable backup plan of action should primary measures fail to bring a nonattaining area to the requisite level ( be it attainment of the NAAQS or meeting a RFP milestone). It is up to each State to determine what measures the State will commit to implement should failure occur. We note that PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 231 States may rely on regional and national control measures as well as local control measures to meet the contingency measure obligation.

A list of example contingency measures has been provided. See section 9.5 of " Guidance for Growth Factor,

Projections, and Control Strategies for the 15 percent Rateof Progress Plans," ( EPA 452/ R 93 002), March 1993. The States have the responsibility of determining what contingency measures are most appropriate for their area( s).

To allow nonattaining areas with seemingly few potential contingency measures to opt out of the contingency measure requirement is counter to the contingency measure provision in the CAA. The EPA does not see any way to interpret the clear language of the statute other than as requiring contingency measures in all nonattainment areas other than marginal subpart 2 areas. It should also be noted that the CAA's requirement for an area's SIP to demonstrate attainment by the attainment date is not limited to " feasible" or RACM.

Comment: One commenter alleged EPA's proposal to allow Federal measures that result in additional emission reductions beyond RFP or attainment to qualify as contingency measures is legally invalid. The commenter further stated that contingency measures must consist of control PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 232 requirements that will be taken off the shelf and undertaken if and when an RFP or attainment failure occurs. In other words, new measures not Federal or local measures that already exist.

Response: The CAA states that contingency measures are to be " specific measures to be undertaken if the area fails to make reasonable further progress, or to attain . . . by the attainment date." The April 16, 1992 General Preamble provided the following guidance: " States must show that their contingency measures can be implemented with minimal further action on their part and with no additional rulemaking actions such as public hearings or legislative review. In general, EPA will expect all actions needed to affect full implementation of the measures to occur within 60 days after EPA notifies the State of its failure." ( 57 FR at 13512.) This could include Federal measures and local measures already scheduled for implementation.

The EPA has approved numerous SIPs under this interpretation   i. e., that use as contingency measures one or more Federal or local measures that are in place and provide reductions that are in excess to the attainment demonstration or RFP plan. ( 62 FR 15844, April 3, 1997; 62 FR 66279, December 18, 1997; 66 FR 30811, June 8, 2001; 66 FR PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 233 586 and 66 FR 634, January 3, 2001.) The key is that the statute requires extra reductions that are not relied on for RFP or attainment and that are in the demonstration to provide a cushion while the plan is revised to meet the missed milestone. In other words, contingency measures are intended to achieve reductions over and beyond those relied on in the attainment and RFP demonstrations. Nothing in the statute precludes a State from implementing such measures before they are triggered. In fact, a recent court ruling upheld contingency measures that were previously required and implemented where they were in excess of the attainment demonstration and RFP SIP. See LEAN v. EPA, 382 F. 3d 575 5th Circuit, 2004.

Comment: One commenter supported EPA's proposal to continue to observe existing policies regarding contingency measures for areas covered under subpart 2 for the 8 hour standard. Additionally, the commenter anticipated that EPA's additional guidance on the contingency measure requirement for subpart 1 will be patterned after the subpart 2 requirement.

Response: The EPA acknowledges the commenter's support of our proposal regarding contingency measures. As to the commenter's anticipation of how additional guidance will be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 234 patterned, as stated in both our proposed and final rule regarding subpart 1, we intend to develop guidance as needed.

G. What requirements should apply for RACM and RACT for 8

hour ozone nonattainment areas?

[ Section VI. K. of June 2, 2003 proposed rule ( 68 FR 32837); § 51.912 in draft and final regulatory text.]

The first subsection of this section covers RACT and the second subsection covers RACM.

1. Reasonably Available Control Technology ( RACT)

a. Background As described in more detail in the June 2 proposal,

subpart 1 of part D includes a requirement that an attainment plan provide for the implementation of all RACM as expeditiously as practicable, including such reductions that may be obtained through RACT. Under subpart 2, marginal areas are required to correct pre 1990 RACT requirements and new RACT requirements are specified for moderate and above ozone nonattainment areas. Additionally, States must adopt RACT for all areas in an ozone transport region ( OTR). The RACT requirement applies to both ozone precursors   NOx and VOC. Since 1990, we have issued guidance documents on the RACT requirements in subpart 2. Prior to enactment of the CAA Amendments of 1990, EPA also issued detailed guidance PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 235 documents on RACT for ozone nonattainment area SIPs.

In the period prior to enactment of the 1990 CAA Amendments, only the general requirements for RACM and RACT existed. Also, prior to the 1990 Amendments, EPA had issued control technique guideline ( CTG) documents to provide presumptive norms for RACT for VOC controls for States to follow in adopting RACT for ozone nonattainment areas. In 1990, Congress specified more detailed RACT provisions and explicitly required RACT for NOx as well as for VOC. Also in 1990, section 183( c) required EPA to issue technical documents which identify alternative control techniques ( ACT documents) for large stationary sources of NOx and VOC. The EPA completed 12 ACT documents for VOC source categories.

Over a 5 year period, 1991 94, EPA issued nine ACT guideline documents for large stationary sources of NOx. In 2000,

updates to the NOx ACT documents were completed for stationary internal combustion engines and cement kilns.

Although the ACT documents do not set a presumptive RACT level as do CTGs, they are intended to help States in making RACT determinations.

Section 183( c) of the CAA also requires EPA to " revise and update such documents [ i. e., CTGs and ACTs] as the Administrator determines necessary." In addition, EPA is PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 236 considering related recommendations from the Clean Air Act Advisory Committee that were sent to EPA in January 2005 in response to the recent National Research Council report on Air Quality Management in the United States ( January 2004).

One of the CAAAC recommendations is that " for the SIPs States are required to submit over the next several years, EPA and States, locals, and Tribes should promote the consideration of multipollutant impacts, including the impacts of air toxics, and where there is discretion, select regulatory approaches that maximize benefits from controlling key air toxics, as well as ozone, PM2.5 and regional haze." As part of this effort, EPA intends in the future to develop updated technology guidance with respect to source categories emitting multiple pollutants in large amounts.

As new or updated EPA RACT guidance becomes available States should consider the new information in their RACT determinations. States should consider the updated guidance in any RACT determinations or certifications that have not been issued as of the time such an update becomes available.

In addition to the ACTs and CTGs, information developed as part of the process of determining BACT, BART, LAER, and MACT, can be very useful in supplementing or, in some cases,

substituting for information to support a RACT determination. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 237 In the June 2, 2003 proposal, we proposed several requirements with respect to RACT. For subpart 1 areas, we proposed several options. We proposed in one option to interpret the CAA in a manner similar to that under subpart 2 by requiring areas covered under subpart 1 to face different RACT requirements based on the magnitude of the ozone problem in the area ( i. e., the area's design value). In another option, we proposed that RACT would be met if the area were able to demonstrate attainment of the standard as expeditiously as practicable with emission control measures in the SIP. We also proposed as an early attainment incentive that RACT would be met in an area which demonstrates attainment within 3 years and submits the demonstration within 1 year.

For subpart 2 areas, we proposed to apply RACT as specified in subpart 2. We proposed the RACT submittal dates for subpart 1 areas would be either the same as the submittal date for the attainment plan ( within 3 years) or the same as the deadline for subpart 2 areas ( within 2 years). In addition, we proposed the date for affected sources to implement RACT in subpart 2 areas would be 30 months after the required submittal date. We also proposed that States may use current EPA guidance in making RACT determinations; PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 238 consequently, in some cases, sources previously evaluated under the 1 hour ozone RACT requirement and sources subject to the NOx SIP Call cap and trade program could be determined to meet the 8 hour ozone RACT requirement.

b. Summary of final rule For subpart 1 areas that do not request an attainment date extension ( beyond 5 years after designation), RACT will be met with control requirements sufficient to demonstrate that the NAAQS is attained as expeditiously as practicable.

The RACT submittal date for these areas is the same as the submittal date for the attainment plan. This submission date is no later than 3 years after designation.

For subpart 1 areas that request an attainment date extension ( beyond 5 years after designation), subpart 2 moderate and above areas, and areas within an OTR, RACT is required with the RACT submittal and is due 27 months after designation, except a subpart 1 area shall submit the RACT SIP with its attainment date extension request. States must require sources to implement RACT no later than the first ozone season or portion thereof which occurs 30 months after the required submittal date.

Where RACT applies ( except certain subpart 1 areas, as described above, and except certain sources subject to the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 239 NOx SIP Call or CAIR, as described below), State SIPs implementing the 8 hour standard must assure that RACT is met, either through a certification that previously required RACT controls represent RACT for 8 hour implementation purposes or through a new RACT determination. States may use existing EPA guidance in making RACT determinations. Where a State has adopted and EPA has approved a control measure as RACT for a specific major stationary source or source category for the 1 hour ozone NAAQS, and absent data indicating that the previous RACT determination is no longer appropriate in lieu of a RACT rule, the State may submit a certification that the source is subject to RACT. Such certification shall be accompanied by appropriate supporting information, such as consideration of information received from public commenters.

For purposes of meeting the NOx RACT requirement in areas located in a State subject to the NOx SIP Call or CAIR for NOx, the State may conduct case by case RACT determinations or consider the RACT SIP requirements met for sources subject to the State's emission cap and trade program where the cap and trade program has been approved by EPA as part of a SIP meeting the NOx SIP Call or CAIR NOx requirements. Additionally, RACT is considered met for PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 240 cement kilns and stationary internal combustion engines that are subject to a SIP approved obligation to install and operate controls that are expected to achieve at least a 30 percent and 82 percent reduction, respectively, from uncontrolled levels.

States are free to conduct case by case RACT determinations   or RACT determinations or certifications for groups of sources   at their discretion. A State may meet the NOx RACT requirement by showing that the weighted average emission rate from sources in the nonattainment area subject to RACT   including sources subject to the NOx SIP Call or CAIR NOx requirements   meet RACT requirements.

As described in the proposed regulatory text for this rule [ section 51.912( b)( 1)], for purposes of meeting the RACT obligations under section 182( b)( 2)( C) of the CAA for major stationary sources of VOCs and under section 182( f) of the CAA for major stationary sources of NOx, the definition of major stationary source in section 302 of the CAA, as modified by the major source definition in either section 182( b), ( c), ( d) or ( e) of the CAA as applicable to the area's classification, applies.

Although we drafted regulatory language for several aspects of the RACT program, we believe it is sufficient to PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 241 describe EPA's views on the details of the RACT program in today's preamble and in other guidance ( e. g., the NOx Supplement to the General Preamble, 11 25 92). Thus, some detailed portions of the proposed regulatory text regarding RACT were not retained in the final rule.

A Note About Recommended Consultation. Based on our experience developing the NOx SIP call, CAIR, and the proposed Clear Skies legislation, we believe that many power companies will develop their strategies for complying with CAIR based, in part, on consultations with air quality officials in the areas in which their plants are located.

Because power plants are generally major emission sources,

the operators of those plants typically have ongoing relationships with state and local officials that will be involved in developing air quality plans. We are aware that,

in the past, companies have worked with air quality officials to meet their emission control obligations under a cap

andtrade approach such as the NOx SIP call while also addressing the concerns of air quality officials about the air quality impacts of specific plants. This has led to controlling emissions from power plants located in or near specific ozone nonattainment areas. A number of companies have indicated that such collaboration will be even more important as the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 242 States where they are located address multiple air quality goals ( e. g., visibility, interstate air pollution, local attainment).

EPA encourages similar consultations between States and power sector companies on the location of plants to be controlled under CAIR, considering local attainment needs in planning for CAIR compliance. This consultation might reveal opportunities to provide improved air quality for large numbers of people in a nonattainment area, or to promote more expeditious attainment for the area. Power companies may identify economic advantages in situating CAIR controls to help the local area attain; for example, it might need to control fewer facilities for the area to reach attainment.

These benefits may outweigh any additional marginal costs the company might incur by forgoing controls on another more distant plant.

In this regard, EPA notes that CAIR SIPs will be due in 2006, while local 8 hour ozone attainment plans will be due in 2007. EPA suggests that consultations on location of CAIR controls would be timely during state development of the CAIR SIP.

c. Comments and responses Comments: For subpart 2 ozone nonattainment areas, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 243 several States expressed agreement with the proposed approach for implementing RACT consistent with section 182 of the CAA.

Response: The EPA agrees with these comments.

Comments: For subpart 1 ozone nonattainment areas, EPA received several comments for and against the options proposed for addressing RACT.

Several State and industry commenters supported EPA's proposed approach that RACT would be met if the area is able to demonstrate attainment of the standard as expeditiously as practicable with emission control measures in the SIP. The reasons provided by these commenters were generally as follows: States should be able to use their discretion in determining which control strategies are the most effective in addressing a particular area's air quality problem;

flexibility is needed as areas differ in sensitivity to NOx and VOC reductions; EPA's regional modeling shows these requirements are unnecessary in many areas; and many of these areas violate the ozone standard primarily or entirely due to transport.

The EPA also received comments, primarily from several States and environmental groups, opposing the approach that RACT would be met by control measures that are part of a SIP PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 244 demonstrating attainment of the standard as expeditiously as practicable. These commenters made the following points:

since section 172( c)( 1) of the CAA explicitly mandates RACT " at a minimum" in all nonattainment areas, Congress plainly intended to require RACT as a floor level of control technology in addition to any measures needed to demonstrate timely attainment; even where RACT does not advance attainment, it is needed in order to reduce the severity and number of violations; under this approach, the statutory RACT provisions add nothing to the statutory attainment mandate   which violates basic canons of statutory interpretation; RACT in nonattainment areas will substantially reduce transport of ozone and ozone precursors;

for equity reasons, sources in similar areas should be subject to the same control; and RACT is a useful tool that should not be abandoned through flexibility mechanisms.

Response: The general RACT provision under subpart 1 in the statute, is found in section 172( c)( 1). It is a portion of the RACM provision found in that same section. Our longstanding interpretation of the RACM provision is that areas need only submit such RACM as will contribute to timely attainment and meet RFP, and that measures which might be available but would not advance attainment or contribute to PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 245 RFP need not be considered RACM. This interpretation has been upheld in several recent court cases. See Sierra Club v. EPA, 294 F. 39 155, 162 ( DC Circuit, 2002) ( concerning the Metropolitan Washington, D. C., attainment demonstration) and Sierra Club v. EPA, No. 01 60537 ( 5th Circuit, 2002)

( concerning the Beaumont attainment demonstration). Since subpart 1 RACT is a portion of RACM, these cases also support a conclusion that, where we are dealing only with section 172 RACT, it is reasonable to require only such RACT as will meet RFP and advance attainment. In view of these court cases,

EPA disagrees with the comments listed above opposing the approach that, in subpart 1 areas, RACT would be met by control measures in a SIP demonstrating attainment of the standard as expeditiously as practicable and meeting RFP.

The EPA generally agrees with comments that States should have flexibility to determine which control strategies are the most effective in reaching attainment as expeditiously as practicable and providing for RFP, and the CAA gives primary authority to States and local governments to select the mix of controls necessary to meet the NAAQS.

In addition, EPA believes that section 172( c) is not the appropriate section of the CAA to address the transport of ozone and ozone precursors; EPA has conducted and is PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 246 conducting rulemaking pursuant to sections 110 and 126 for that purpose.

Finally, some commenters suggested, for equity reasons,

that sources in similar areas should be subject to the same control. In the proposal, EPA suggested subpart 1 and 2 areas with the 8 hour ozone design values above 91 ppb should all be required to meet RACT. The EPA also proposed that RACT would be met in an area which demonstrates attainment within 3 years and submits the demonstration within 1 year.

In the final rule, EPA has addressed equity concerns by taking portions of these two proposals, such that subpart 1 and 2 areas with attainment deadlines longer than 5 years after designation must meet the same RACT requirements. We believe ( longer than) 5 years is more appropriate than the 3 years proposed for this requirement since this approximates the maximum attainment date for subpart 2 ( moderate) areas subject to RACT and since this approach is consistent with the manner in which ROP/ RFP requirements are treated in the final rule.

Therefore, in subpart 1 areas that do not request an extension beyond the initial 5 years after designation, the final rule indicates that RACT would be met by the emission control measures in a SIP that demonstrates attainment of the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 247 standard as expeditiously as practicable and meets RFP. In addition, the final rule requires subpart 1 areas with maximum attainment deadlines longer than 5 years after designation to meet the same RACT requirements as subpart 2 areas. This approach minimizes the RACT inequity with subpart 2 areas and provides flexibility for subpart 1 areas demonstrating attainment within 5 years.

Comment: One commenter believes that new marginal nonattainment areas should be subject to RACT under the 8

hour standard just as they would have been subject to RACT immediately prior to the CAA Amendments of 1990.

Response: Section 182( a) provides that marginal and higher classified areas for the 1 hour standard with pre 1990 RACT obligations had to submit corrections to their RACT rules within 6 months after classification under the 1990 CAA Amendments. To the extent that any 8 hour ozone nonattainment areas did have this obligation, they already met it. See footnote 60 in the June 2, 2003 proposal. The CAA does not require RACT for marginal areas other than the obligation to " correct" pre 1990 RACT requirements.

Comment: The EPA received several comments for and against the proposal that States may use a prior RACT determination with respect to the 1 hour ozone standard for PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 248 purposes of meeting the RACT requirements for the 8 hour ozone standard. Further, EPA received comments on the proposal that a new RACT determination is required in cases where the initial RACT analysis under the 1 hour standard for a specific source or source category concluded that no additional controls were necessary.

Several State and industry commenters supported EPA's proposed approach that a prior RACT analysis under the 1 hour ozone standard should meet RACT requirements under the 8 hour standard where major sources or source categories were previously reviewed and controls applied to meet RACT. These commenters stated that RACT is not specific to any particular ozone standard, such that once a source has met RACT, it has met RACT, whether or not the ozone standard is revised to become more ( or less) stringent; just as with the 15 percent VOC requirement, the statute provides no basis for duplicative imposition of RACT; and there is no basis in the statute to read in a new requirement for RACT. In addition,

some industry commenters stated that electric generating units which meet title IV NOx control requirements would also meet the NOx RACT requirement.

The EPA also received comments from several States opposing EPA's proposed approach. These commenters believe PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 249 the NOx and VOC guidance is too old, needs updating and, in the case of NOx controls, the improvement over the last three years has been dramatic with controls previously considered to be BACT ( and therefore generally considered at the time to be more stringent than RACT) are now considered to be merely RACT. In addition, one State suggested the presumptive RACT level should be revised to at least 85 percent control or that NOx RACT should be defined as up to $ 10,000/ ton of pollutant removed.

Two States disagreed with EPA's proposal that a new RACT determination should be required in cases where the initial RACT analysis under the l hour NAAQS found that no additional controls were necessary for a specific source or source category. They indicated such re analysis would be an unwise use of resources because it would not yield significant benefits. Further, they do not agree that a RACT determination is warranted for major VOC or NOx sources not in existence during the previous RACT determination, because new sources in 1 hour nonattainment areas have been permitted pursuant to the requirements for NSR and, where applicable,

have already been subject to more stringent control requirements.

Response: In 1992, EPA set presumptive NOx RACT for PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 250 boilers as combustion modification, consistent with title IV acid rain requirements. For all other NOx stationary source categories, EPA guidance in 1994 indicated States should consider in their RACT determinations technologies that achieve 30 50 percent reduction within a cost range of $ 160

1300 per ton of NOx removed. In the NOx SIP Call Rule, we reviewed all major NOx source categories and stated in the final rule that the NOx SIP Call controls, at less than $ 2,000/ ton, represent reductions beyond those required by RACT. We cannot agree with the suggestion of one State that EPA's RACT guidance should be revised to reflect 85 percent control and $ 10,000/ ton of pollutant removed because the comment lacked supporting documentation that these values represent feasible control levels for the many source categories affected by the RACT program.

Many areas subject to the major source RACT requirement under the 8 hour ozone standard have previously addressed the RACT requirement with respect to the 1 hour ozone standard.

For example, major sources located in States of the OTC were subject to the NOx RACT requirement in the mid 1990s. We believe that, in many cases, a new RACT determination under the 8 hour standard would result in the same or similar control technology as the initial RACT determination under PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 251 the 1 hour standard because the fundamental control techniques, as described in the CTGs and ACTs, are still applicable. In cases where controls were applied due to the 1 hour ozone RACT requirement, we expect the incremental emissions reductions from application of a second round of controls would be small and would not be cost effective. In such cases, EPA believes the cost per ton of NOx removed associated with installing a second round of RACT controls ( and perhaps the removal of initial RACT controls) is likely to be beyond the RACT levels in our current guidance ($ 160

$ 1300/ ton). In contrast, a RACT analysis for uncontrolled sources would be much more likely to find that RACT level controls are economically and technically feasible.

The CTGs and ACTs for VOC were completed over a period from the late 1970s to mid 1990s and have not been updated.

The CTGs are still used to presumptively define VOC RACT.

The EPA issued NOx ACT documents between 1992 and 1995. In September 2000, updates to the NOx ACT documents were completed for stationary internal combustion engines and cement kilns. The NOx and VOC ACTs describe available control techniques and their cost effectiveness, but do not define presumptive RACT levels as the CTGs do. Updating the ACTs would not, by itself, change EPA's NOx or VOC RACT PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 252 guidance, but it could provide information that would lead to a new conclusion as to which control measures constitute RACT for a specific source or source category. Since RACT can change over time as new technology becomes available or the cost of existing technology decreases, EPA does not agree with comments that once a source has met RACT, it has met RACT whether or not the ozone standard is revised.

We agree that progress has been made in improving the cost effectiveness of some NOx and VOC controls. States and other interested parties should consider available information that may supplement the CTG and ACT documents.

In cases where additional information is presented, for example, as part of notice and comment rulemaking on a RACT SIP submittal, States ( and EPA) would necessarily consider the additional data in reviewing what control obligation is consistent with RACT. Similarly, we encourage States to use the latest information available in making RACT determinations, whether it is in CTGs, ACTs, or elsewhere.

The EPA agrees that it is more efficient for EPA to broadly assess what is RACT for a specific source category than for States to conduct source by source RACT determinations, especially considering that States need to initiate RACT programs in the near future ( as discussed in a PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 253 separate comment/ response). The EPA's current RACT guidance may be used for purposes of the 8 hour standard. At the same time, we agree with comments that many of the CTGs/ ACTs have not been revised since issued and thus may not provide the most accurate picture of current control options. Therefore,

we believe States must consider new information that has become available and certify that a 1 hour ozone RACT determination, even where controls were required, still represents an appropriate RACT level of control for the 8

hour ozone program. In the alternative, the State should revise the SIP to reflect a modified RACT requirement for specific sources or source categories.

In summary, we believe the current NOx and VOC RACT guidance, including CTGs and ACTs, may continue to be used by States in making RACT determinations with respect to the 8

hour ozone standard. States should ensure that their SIPs accurately reflect RACT based on the current availability of technically and economically feasible controls.

Therefore, in portions of 8 hour ozone nonattainment areas where major sources or source categories were previously reviewed and controls subsequently applied to meet the RACT requirement under the 1 hour standard, EPA allows States to review and, if appropriate, accept the initial RACT PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 254 analysis as meeting the RACT requirements for the 8 hour standard. Absent data indicating that the previous RACT determination is no longer appropriate, the State need not submit a new RACT SIP for these sources. In such cases, the State should submit a certification as part of its SIP revision, with appropriate supporting information, such as consideration of new data , that it previously met the RACT requirement for these sources and that the previous determination still represents an appropriate RACT level of control. Where the initial RACT analysis under the 1 hour standard for a specific source or source category concluded that no additional controls were necessary, EPA believes a new RACT determination is needed. The new RACT determination is needed to consider whether more cost effective control measures have become available for sources that were not previously regulated. A re analysis may determine that controls are now economically and technically feasible and should be required to meet RACT. Furthermore, in this situation, we expect the incremental emissions reductions to be significant, compared to the uncontrolled emissions levels, thereby reducing the cost per ton of emissions controlled and therefore more reasonably available. In all cases where additional information is presented as part of PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 255 notice and comment rulemaking, including a RACT SIP submittal for sources previously controlled, States ( and EPA) must consider the additional information as part of that rulemaking.

We agree with several State and industry comments that RACT requirements apply for major sources in any portion of the 8 hour nonattainment area not subject to a RACT program for the 1 hour standard.

Some commenters objected to EPA's proposal that any major VOC or NOx source that did not exist during a previous RACT determination must be subject to a RACT determination as part of the SIP for the 8 hour ozone standard. These commenters stated that the BACT or LAER provisions would assure at least RACT level controls on such sources. We agree this should be true in many cases, but not all. The BACT/ LAER analyses do not automatically ensure compliance with RACT since the applicability thresholds may differ and the analyses may be conducted many years apart. States may,

however, use information gathered from prior BACT or LAER analyses to help complete a RACT analysis. For VOC sources subject to MACT standards, States may streamline their RACT analysis by including a discussion of the MACT controls and whether any major new technologies have been developed PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 256 subsequent to the MACT standards. We believe that there are many VOC sources that are well controlled ( e. g., through addon controls or through substitution of non VOC non HAP materials for VOC HAP materials) because they are regulated by the MACT standards, which EPA developed under CAA section 112. Any source subject to MACT standards must meet a level that is as stringent as the best controlled 12 percent of sources in the industry. Examples of these HAP sources that may effectively control VOC emissions include organic chemical plants subject to the hazardous organic NESHAP ( HON), pharmaceutical production facilities, and equipment leads and wastewater operations at petroleum refineries. We believe that, in many cases, it will be unlikely that States will identify emission controls more stringent than the MACT standards without identifying control options that would cost many thousands of dollars per ton. Unless the MACT standards do not actually result in decreases in VOC ( such as substitution of a non HAP VOC for a HAP VOC) and unless there are new technologies subsequent to the MACT standards that would lead to cost effective increases in the level of VOC control, States may rely on the MACT standards for purposes of VOC RACT.

Comments: Several State and industry commenters PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 257 supported EPA's proposed approach. These commenters stated that the level of emissions reductions required by the NOx SIP Call is far greater than the level of reductions achieved by controls that have been determined to be NOx RACT. Other commenters pointed out that many companies have employed averaging programs for NOx SIP Call compliance and want this option preserved under the 8 hour ozone standard since requiring sources to individually meet NOx RACT requirements would greatly increase the costs of compliance at sources already subject to the NOx cap and trade program without achieving greater emissions reductions. One State encourages EPA to provide this exemption to other areas subject to approved cap and trade programs in addition to those areas affected by the NOx SIP Call.

The EPA also received comments, primarily from several States and environmental groups, opposing the approach.

These commenters stated that there are no exceptions to the RACT mandates in either subpart 1 or subpart 2 for sources subject to SIP call cap and trade programs, and EPA is without authority to invent such an exception. Because the NOx SIP Call's cap and trade program does not require emission control technologies to be installed at a particular source, some commenters conclude that RACT requirements are PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 258 necessary and appropriate to ensure that all sources implement at least a minimum level of control. One State indicated there have been numerous cases where sources subject to the NOx SIP Call have not had to install controls comparable to RACT. Commenters also suggested that RACT is intended to be a benchmark for control technology at individual stationary sources, not a level of regional reductions. In addition, some commenters noted that the NOx SIP Call requirements are specific to the ozone season, where RACT requirements are year round. Consequently, these commenters recommended that EPA should also consider nonozone related nitrogen issues, including fine particles,

visibility, nitrification and acidification of watersheds and eutrophication of coastal waters all of which would be reduced with year round controls.

Response: As described below, EPA believes the sources that comply with the CAIR or NOx SIP Call cap and trade programs meet NOx RACT requirements. Accordingly, the State need not perform a NOx RACT analysis for sources subject to the State's emission cap and trade program where the cap

andtrade program has been adopted by the State or approved by EPA or a Federal implementation plan is in place meeting the NOx SIP Call or CAIR ( without opt in units) NOx requirements. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 259 In addition, the State need not submit a new NOx RACT SIP for those sources.

The EPA believes the RACT mandate in subpart 1 and subpart 2 applies in specific geographic areas but does not necessarily require every major source to install controls.

For example, as discussed in a separate comment/ response,

where we are dealing only with subpart 1 RACT, we only require such RACT as will advance attainment or meet RFP.

Thus, EPA does not agree with commenters who conclude that RACT requirements are necessary and appropriate to ensure that all sources implement at least a minimum level of control or that RACT is intended to be a benchmark for control technology at all individual stationary sources.

Some commenters pointed out that the NOx SIP Call requirements are specific to the ozone season, yet RACT requirements are year round. While there are some exceptions, EPA agrees that RACT usually is an application of controls year round; thus, there would be non ozone related nitrogen benefits, including fine particles, visibility,

nitrification and acidification of watersheds and eutrophication of coastal waters due to year round controls.

With respect to CAIR and the NOx SIP Call, EPA believes that the vast majority of sources in the cap and trade program PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 260 will install combustion controls to decrease NOx emissions because it is almost always the most cost effective strategy.

Since combustion controls meet EPA's NOx RACT guidance for level of control and since these controls would be operated year round, EPA believes the RACT requirement would be met year round in the vast majority of cases. Further, because many affected sources also installed post combustion controls to meet the NOx SIP Call requirements, these additional emissions reductions provide further assurance that RACT equivalent emissions reductions will occur, on average, at sources affected by the cap and trade program. We agree that there would be non ozone related nitrogen benefits, including fine particles, visibility, nitrification and acidification of watersheds and eutrophication of coastal waters due to year round controls.

We expect the vast majority of sources subject to RACT and rules implemented by the State under CAIR or the NOx SIP Call would choose to install RACT level control equipment rather than meet the NOx SIP Call requirements solely by purchasing allowances. Most likely the cost for purchasing allowances will be higher than the cost for achieving a RACT PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 49In the 1998 NOx SIP Call Rule, average costs of compliance were estimated at about $ 1500/ ton and average RACT level costs are less than $ 1300/ ton. Recent estimates of the projected cost of allowances are about $ 2000 4000/ ton ( NOx Budget Trading Program, 2003 Progress and Compliance Report, August 2004, EPA 430 R 04 010). With respect to RACT, we would note that in some cases, the State may determine that additional controls are not technically and economically feasible. Thus, even if the State analyzed RACT for each source subject to the cap and trade program, that would not guarantee additional emissions reductions at each source because the RACT determination for some could conclude no additional controls are required.

261 level of control. 49 In addition, many units subject to CAIR or the NOx SIP Call will install beyond RACT controls, as discussed below. We believe the combination of RACT level controls on the vast majority of sources and the installation of beyond RACT controls on many units will achieve at least a RACT level of control, on average, among sources subject to RACT in each nonattainment area. Meeting RACT in this way is consistent with EPA guidance allowing RACT to be met in the aggregate within a nonattainment area, rather than by each individual source.

The EPA's NOx RACT guidance ( NOx General Preamble at 57 FR 55625) encourages States to develop RACT programs that are based on " areawide average emission rates." Thus, States can submit a demonstration as part of their RACT submittal showing that the weighted average emission rate from sources PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 50The EPA's 1992 NOx RACT guidance sets title IV equal to RACT and specifies emission rates three times larger than the rates later used for coal fired units in the NOx SIP Call ( 0.45 0.50 lb/ mmBtu versus 0.15).

262 in the nonattainment area subject to RACT   including sources reducing emissions to meet the NOx SIP Call or CAIR NOx requirements   meet RACT requirements.

We agree with comments indicating the overall emission reduction due to the NOx SIP Call would be greater overall than with a RACT program alone, and we believe they would be greater within each nonattainment area. All States submitting SIP revisions to meet the NOx SIP Call ( October 27, 1998, 63 FR 57356) elected to require large boilers and turbines to comply with an emissions cap and trade program consistent with EPA's model cap and trade rule. As a result,

all these sources are already subject to stringent control requirements. As described in the June 2, 2003 proposal,

these sources collectively achieve more emissions reductions than would be required by application of RACT requirements to each source. In the NOx SIP Call control case, electricity generating units ( EGUs) achieve a 64 percent reduction beyond the base case requirements. 50 The non EGUs subject to the States' cap and trade program achieve a 60 percent reduction from uncontrolled levels. These EGU and non EGU reductions PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 51 Memorandum of March 16, 1994, from D. Kent Berry re: " Cost Effective Nitrogen Oxides ( NOx) Reasonably Available Control Technology ( RACT)." U. S. Environmental Protection Agency, Research Triangle Park, North Carolina.

263 are clearly beyond the 30 50 percent expected from a RACT program. 51 We stated in the final rule that the NOx SIP Call controls " represent reductions beyond those required by Title IV or Title I RACT." In addition, because the cap and trade program covers units serving a 25 megawatt generator, it requires emission reductions at many units emitting at less than the general RACT threshold of 100 tpy.

In some cases, a facility or a group of sources in a nonattainment area might choose to meet NOx RACT through emissions averaging; e. g., over controlling one large unit and not controlling other smaller units because the smaller units may be retired in the near future or labor or capital is not immediately available. We agree with comments that emission averaging programs such as the NOx SIP Call Rule achieve emission reductions at lower costs. The EPA's NOx RACT guidance, published on November 25, 1992 ( 57 FR 55625),

was, in part, for the purpose of " enhancing the ability of States to adopt market based trading systems for NOx" and to encourage States to " structure their RACT requirements to inherently incorporate an emissions averaging concept ( i. e., PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 264 installing more stringent controls on some units in exchange for lesser control on others)." Since the NOx SIP Call requires greater reductions, on average, than RACT, ( see proposal notice at 68 FR 32839 and discussion below) we believe the average emissions at the facility in this example would be less than its emissions under application of a RACT program alone. We would also expect this scenario to be a short term case since the facility may choose later to install controls on the smaller units and sell any excess allowances, depending on the projected cost of allowances.

Further, to help determine if sources meeting the NOx SIP Call requirements and subject to NOx RACT requirements for the 8 hour ozone standard will be operating RACT level combustion controls by 2010, EPA analyzed data from base case IPM runs for the Clean Air Interstate final rule ( CAIR). The data, " IPM Base Case 2010 Parsed," are available in the CAIR docket ( at http:// www. epa. gov/ airmarkets/ epa ipm/ iaqr. html)

and show which electricity generating units ( EGUs) are projected to have NOx controls in 2010 before consideration of the CAIR requirements. As described below, the results of the analysis support the conclusion that the vast majority of sources meeting the NOx SIP Call requirements and subject to NOx RACT requirements for the 8 hour ozone standard would be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 265 operating RACT level combustion controls by 2010.

The data base included 8,517 EGUs in the CAIR 2010 emission inventory. Our analysis considered the 681 EGUs in the data base which are projected to emit more than 1 ton per day of NOx in 2010. This level of emissions approximates the cutoff level for " large" EGUs in the NOx SIP Call Rule. Of the 681 EGUs, as few as 3  11 are projected to be without NOx controls in 2010 CAIR base case and subject to an 8 hour ozone NOx RACT determination.

It should be noted that 8 of these EGUs are located in the Chicago area which was granted a waiver from NOx RACT under the 1 hour ozone standard based on a dispersion modeling analysis. Since the area may request a waiver from NOx RACT under the 8 hour standard, these 8 EGUs might not be subject to a NOx RACT determination for ozone. The remaining 3 EGUs are located in the Cleveland area; because there are 7 additional large EGUs in the same area, all of which are expected to have NOx controls ( low NOx burners, selective noncatalytic reduction ( SNCR) and/ or selective catalytic reduction ( SCR)), the area may meet RACT by averaging.

Additionally, because installation of combustion controls to decrease NOx emissions is almost always the most costeffective strategy and since the 2010 CAIR base case did not PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 266 take into consideration that both areas are subject to RACT and attainment demonstration requirements for both ozone and PM2.5 ( the highest particulate nitrate concentrations in the East tend to occur in cooler regions, xxx add cite to CAIR preamble) EPA expects sources subject to the CAIR or NOx SIP Call cap and trade programs in these areas will install at least RACT level controls.

In a similar manner, the same 2010 CAIR base case data was used to determine if EGUs emitting more than one ton/ day of NOx will be operating RACT level combustion controls by 2010 in the following scenario: ( 1) subject to CAIR for ozone, ( 2) not subject to the NOx SIP Call requirements and ( 3) subject to NOx RACT requirements for the 8 hour ozone standard. That is, how many EGUs outside the NOx SIP Call area may meet 8 hour ozone RACT through CAIR and what controls are expected to be in place at those EGUs in the 2010 base case?

The following 6 States are subject to CAIR for ozone but are not included in the NOx SIP Call: Arkansas, Florida,

Iowa, Louisiana , Mississippi and Wisconsin. The following States do not contain areas subject to NOx RACT for the 8

hour ozone standard: Florida, Iowa, Louisiana ( Baton Rouge is marginal), and Mississippi. Crittenden County in Arkansas is PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 267 subject to NOx RACT for the 8 hour ozone standard; however,

there are no large EGUs in the data base for this area. The Milwaukee and Sheboygan areas in Wisconsin are subject to NOx RACT for the 8 hour ozone standard; in these areas 11 of 13 large EGUs have combustion controls for NOx in the 2010 base case. The 2 without NOx controls are both located in Milwaukee County ( South Oak Creek). Thus, there may be only 2 EGUs at one site which are subject to CAIR and NOx RACT for ozone, are outside the NOx SIP Call area, and are expected to be uncontrolled for NOx in the 2010 CAIR base case. Because there are 6 additional EGUs in Milwaukee County with NOx controls in the 2010 base case, the area may be able to demonstrate RACT by averaging emissions over all the affected sources. Further, because installation of combustion controls to decrease NOx emissions is almost always the most cost effective strategy and since the 2010 CAIR base case did not take into consideration that the area is subject to RACT and attainment demonstration requirements for both ozone and PM2.5 ( the highest particulate nitrate concentrations in the East tend to occur in cooler regions, xxx cite to CAIR preamble), EPA expects sources subject to the CAIR cap and trade program in Milwaukee will install at least RACT level controls. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 268 Under CAIR, a State may elect to meet its state caps for NOx emissions by allowing large NOx sources that are not electric generating units to opt in to the program. If only part of the CAIR reductions are required from EGUs, and the balance of the reductions obtained from non EGU sources, then the stringency of CAIR EGU control would be diminished to some extent ( an amount that cannot currently be determined).

In that event, States would need to conduct individual RACT analyses for EGUs to determine whether or not the lesser EGU reductions satisfied RACT.

As explained above, we believe that the vast majority of sources subject to NOx RACT and rules implemented by the State under CAIR or the NOx SIP call cap will install combustion controls at a minimum, which will meet our existing NOx RACT guidance. We also believe sources could meet NOx RACT through emissions averaging, recognizing that CAIR and/ or the NOx SIP Call will achieve more emissions reductions than would be achieved through a RACT program alone.

As proposed, in cases where States have adopted controls for cement kilns consistent with the NOx SIP Call ( i. e., 30 percent reduction), the State may choose to accept the NOx SIP Call requirements as meeting the NOx RACT requirements PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 52As described in the April 21, 2004 rule ( 69 FR 21608).

269 for the 8 hour standard and need not submit a new NOx RACT SIP for those sources. In its RACT SIP submission, the State should identify the cement plants that are subject to NOx SIP Call controls and that, therefore, already meet RACT. The EPA received comments from States supporting the proposal.

For the same reasons, EPA believes a State may choose to accept the Phase II NOx SIP Call control level for stationary internal combustion engines52 as meeting the NOx RACT requirements.

It should also be noted that this action in no way limits States' discretion to require beyond RACT NOx reductions from any source ( including CAIR or NOx SIP Call sources) in a plan to demonstrate attainment of the healthbased ozone standards. In certain areas, States may choose to require NOx controls based on more advanced control technologies to provide for attainment of the ozone standards.

Although it is not the basis for the decision in the ozone implementation rule, we intend to propose in the PM2.5 implementation rulemaking an alternative interpretation that would also support a finding that in states which fulfill PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 270 their CAIR emission reductions entirely through emission reductions from EGUs, CAIR would satisfy RACT requirements for EGU sources. This alternative is outlined below.

As discussed more fully in the CAIR final rulemaking notice, EPA has set the 2009 CAIR NOx cap at a level that will require EGUs to install emission controls on the maximum total capacity on which it is feasible to install emission controls by those dates. The 2015 NOx cap is specifically designed to eliminate all NOx emissions from EGUs that are highly cost effective to control ( the first cap represents an interim step toward that end). In general, we expect that the largest emitting sources will be the first to install NOx control technology and that such control technology will gradually be installed on progressively smaller emitting sources until the ultimate cap is reached.

We do not believe that requiring source specific RACT controls on EGUs in nonattainment areas will reduce total NOx emissions from sources covered by CAIR below the levels that would be achieved under CAIR alone. In fact, if states chose to require smaller emitting sources in nonattainment areas to meet source specific RACT requirements by 2009, they would likely use labor and other resources that would otherwise be used for emission controls on larger sources. Because of PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 271 economies of scale, more boiler makers may be required per megawatt of power generation for smaller units than larger units. In this case, the imposition of source specific RACT on smaller emitting sources by 2009 could actually reduce the amount of " banking" that would otherwise occur and result in higher emissions in 2009 as compared to the level that would result from CAIR alone. In any event, the imposition of source specific control requirements on a limited number of sources also covered by a cap and trade program would not reduce the total emissions from sources subject to the program. Under a cap and trade program such as CAIR, there is a given number of allowances that equals a given emission level. Source specific control requirements may affect the temporal distribution of emissions ( by reducing banking and thus delaying early reductions) or the spatial distribution of emissions ( by moving them around from one place to another), but it does not affect total emissions. If sourcespecific requirements were targeted at the units that can be controlled most cost effectively, then the imposition of source specific controls would likely achieve the same result as the cap and trade program. If not, however, the imposition of source specific requirements would make any given level of emission reduction more costly than it would PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 272 be under the cap and trade program alone. Thus, the imposition of source specific RACT on EGUs covered by CAIR would not reduce total emissions, but would likely achieve the same total emission reductions in a more costly way.

Comments: Several States expressed support for the proposed RACT submittal date of 2 years after designation for subpart 1 and 2 areas. Other commenters suggested the RACT submittal date for subpart 1 areas should be 3 years after designation in order to coincide with the attainment demonstration submittal deadline and to allow a more efficient use of resources. In addition, comments from industry suggested a 48 60 month period is needed for installation of controls, rather than the 30 month period proposed.

Response: As described in an earlier comment/ response,

in subpart 1 areas that do not request an extension of their attainment date, RACT is met with the control requirements associated with a demonstration that the NAAQS is attained as expeditiously as practicable. The EPA agrees with commenters that it would be more efficient, in these areas, if the date for submittal of the RACT rules were to coincide with submittal of the attainment demonstration since RACT is closely tied to the attainment demonstration. Therefore, in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 53This assumes the ozone season in this example begins May 1. The maximum statutory timeframe for subpart 1 areas that do not seek an extension is June 15, 2009. Since the CAA requires attainment as expeditiously as practicable, some subpart 1 nonattainment areas may have an attainment date earlier than June 15, 2009.

273 the final rule, the RACT submittal date for these areas is the same as the submittal date for the attainment plan, which is 3 years after designation ( June 2007). Although EPA is not setting a specific RACT rule implementation deadline for these areas, as provided in the Phase 1 rule, controls must be implemented by the beginning of the attainment year ozone season. Thus, for example, States would need to require implementation no later than May 1, 2008 in order to help areas attain the ozone standard by a June 15, 2009 attainment date. 53 In some cases, the time from State rule adoption to installation of controls by sources may be relatively short;

in other cases, sources may need more time. Therefore, EPA encourages States to adopt any necessary rules expeditiously ( prior to the June 2007 deadline, where possible) so that sources have more than sufficient time to install the controls prior to the start of the attainment year ozone season.

For subpart 2 moderate and above areas and areas within an OTR, the final rule is similar to provisions in section PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 54In 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.

274 182 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 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 provisions ( 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 statutorilyprescribed period54 ( for the areas covered under subpart 2)

and based on our prior experience with States adopting and implementing RACT requirements. Subsequent to 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 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 275 within 2 years from the State adoption date. 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).

The 60 month period ( June 15, 2011) for installation of controls suggested by some commenters was not adequately supported, i. e., there was 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, 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, the final rule allows sources until the beginning of the area's 2009 ozone season ( generally May 1, 2009) rather than March 15, 2009 to install controls. Installation of 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 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 55Note, since the CAA requires attainment as expeditiously as practicable, some moderate nonattainment areas may have an attainment date earlier than June 15, 2010.

276 later attainment date. 55 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 implement controls by January 1, 2009, as required under CAIR.

For subpart 1 areas that request an attainment date extension ( 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 shall 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 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 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 56" State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990; Proposed Rule." 57 FR 13498 at 13560 ( April 16, 1992). " 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."

277 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 those provisions to require a demonstration that the State has adopted all reasonable measures to meet RFP and 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. 56 The RACM requirement, which is set forth in section 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 implied that the current policies and procedures related to RACM would continue to apply for the 8

hour ozone standard. The draft regulatory text provided that PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 278 for each nonattainment area required to submit an attainment 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.

In performing their RACM analysis, States should be aware of EPA's conclusions concerning compliance dates in the CAIR rulemaking ( May 12, 2005 ( 70 FR at 25221 et seq.)) that represents 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. States should be aware of these limitations in developing their own compliance PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 57" State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 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)

279 schedules for NOx emission controls in meeting their CAIR and RACT responsibilities and use EPA's schedule as a guide. We believe CAIR constitutes control as expeditious as practicable for EGUs for the area covered by the CAIR.

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. 57 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 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."

280 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 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 58Improving 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.

281 encourage local governments to alter their land 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. 58 We conclude, however,

that to require areas to adopt and implement as RACM every PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 282 control technology or measure that obtains a small amount of emissions reductions even if such measure would not advance the attainment date or contribute to RFP 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 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 7/ 8/ 05 59In " 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 283 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. 59 Although PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 relevant history concerning the RACM requirement.

284 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. This interpretation of the section 172 requirements has recently been upheld by several courts. See, e. g.,