PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 6560 50 P H ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 51, 52, and 5280 [ OAR 2003 0079, FRL ]

RIN 2060 AJ99 Final Rule to Implement the 8 Hour Ozone National Ambient Air Quality Standard   Phase 2; Final Rule to Implement Certain Aspects of the 1990 Amendments Relating to New Source Review and Prevention of Significant Deterioration as they Apply in Carbon Monoxide, Particulate Matter and Ozone NAAQS; Final Rule for Reformulated Gasoline AGENCY: Environmental Protection Agency ( EPA).

ACTION: Final rRule.

SUMMARY: In this document, we are taking final action on most remaining elements of the program to implement the 8

hour ozone national ambient air quality standard ( NAAQS or standard). This final rule addresses, among other things,

the following control and planning obligations as they apply to areas designated nonattainment for the 8 hour ozone NAAQS: reasonably available control technology and measures ( RACT and RACM), reasonable further progress ( RFP), modeling PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 2 and attainment demonstrations, and new source review ( NSR).

We are issuing this rule so that States and Tribes will know how these statutory control and planning obligations apply and when State implementation plan ( SIPs) revisions are due for these obligations so that the States may develop timely submissions consistent with the statutory obligations and attain the NAAQS as expeditiously as practicable but no later than their maximum attainment dates. The intended effect of the rule is to provide certainty to States and Tribes regarding development of those plans. The first phase of the final rule was published on April 30, 2004.

In this rule, we are also finalizing several revisions to the regulations governing the nonattainment new source review ( NSR) programs mandated by section 110( a)( 2)( C) and part D of title I of the Clean Air Act ( CAA). First, we are codifying requirements added to part D of title I of the CAA in the 1990 aAmendments related to permitting of major stationary sources in areas that are nonattainment for the ozone, particulate matter ( PM10PM), and carbon monoxide ( CO)

NAAQS. Second, we are revising the criteria for crediting emissions reductions credits from shutdowns and curtailments as offsets. Third, we are revising the regulations for permitting of major stationary sources in nonattainment PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 3 areas in interim periods between designation of new nonattainment areas and EPA's approval of a revised State Implementation Plan ( SIP). Fourth, we are changing the regulations that impose a moratorium ( ban) prohibiting construction of new or modified major stationary sources in nonattainment areas where the State fails to have an implementation plan meeting all of the requirements of part D. In addition to the changes to the nonattainment NSR regulations, we also are making one change to the Prevention of Significant Deterioration ( PSD) regulations under part C of title I of the ActCAA. We are codifying nitrogen oxides ( NOx) as an ozone precursor in attainment and unclassifiable areas.

Today's changes regarding NSR are based on the proposed rule published on June 2, 2003 to Implement the 8 hour Ozone National Ambient Air Quality Standard ( NAAQS), as well as the proposed rule published on July 23, 1996 for " Prevention of Significant Deterioration ( PSD) and Non attainment New Source Review ( NSR).". These changes provide a consistent national program for permitting major stationary sources under section 110( a)( 2)( C) and parts C and D of title I,

including major stationary sources of ozone precursors in ozone nonattainment areas. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 4 Finally, this rule addresses what effect the transition to the 8 hour standard will have on certain aspects of the Reformulated Gasoline ( RFG) program. The nine original mandatory RFG areas, as well as most other areas that have become mandatory RFG areas by being reclassified as severe areas under section 181( b) of the Act, will continue to be required to use RFG at least until they are redesignated to attainment for the 8 hour NAAQS. The EPA reserves for future consideration what effect the transition to the 8

hour standard will have on areas reclassified as severe areas for the 1 hour NAAQS under section 181( b) of the Act that are redesignated to attainment for the 1 hour standard before revocation of that standard.

EFFECTIVE DATE: This rule for portions other than NSR is effective on xxxx 2005.[ insert 60 days from date of signature]. xxx For NSR, the effective date is [ insert date of publication].

ADDRESSES: The EPA has established a docket for this action under Docket ID No. OAR 2003 0079. All documents in the docket are listed in the EDOCKET index at http:// www. epa. gov/ edocket. Although listed in the index,

some information is not publicly available, i. e.,

Confidential Business Information or other information whose PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 5 disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically in EDOCKET or in hard copy at the EPA Docket Center ( Air Docket), EPA/ DC, EPA West, Room B102,

1301 Constitution Ave., NW, Washington, DC. The Public Reading Room is open from 8: 30 a. m. to 4: 30 p. m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is ( 202) 566 1744, and the telephone number for the Office of Air and Radiation Docket and Information Center is ( 202) 566 1742.

In addition, we have placed a variety of earlier materials regarding implementation of the 8 hour ozone NAAQS on the web site:

http:// www. epa. gov/ ttn/ naaqs/ ozone/ o3imp8hr.

FOR FURTHER INFORMATION CONTACT: For general information:

Mr. John Silvasi, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Mail Code C539 02, Research Triangle Park, NC 27711, phone number ( 919) 54l 5666, fax number ( 919) 54l 0824 or by e mail at silvasi. john@ epa. gov or Ms. Denise Gerth, Office of Air Quality Planning and Standards, U. S. Environmental PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 6 Protection Agency, Mail Code C539 02, Research Triangle Park, NC 27711, phone number ( 919) 54l 5550, fax number ( 919) 54l 0824 or by e mail at gerth. denise@ epa. gov. For information concerning new source review: Ms. Janet McDonald, Office of Air Quality Planning and Standards,

U. S. Environmental Protection Agency, Mail Code C539 023,

Research Triangle Park, NC 27711, phone number ( 919) 54l

551450, fax number ( 919) 54l 145054l 5509 or by e mail at mcdonald. janet@ epa. gov .

SUPPLEMENTARY INFORMATION:

Outline I. What is the bBackground for this rRule?

II. What is Included in this Rule?

III. In Short, What Does this Final Rule Contain?

IV. Final Rule for Phase 2 Elements oOther than New Source Review A. Should prescribed requirements of subpart 2 apply in all 8 hour nonattainment areas classified under subpart 2, or is there flexibility in application in certain narrowly  defined circumstances? 1. Background 2. Final Rule 3. Comment and Responses B. How will we address long range transport of ground level ozone and its precursors when implementing the 8 hour ozone standard? 1. Background 2. Current Approach 3. Comments and Responses C. How will we address transport of ground level ozone and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 7 its precursors for rural nonattainment areas, areas affected by intrastate transport, and areas affected by international transport? 1. Rural transport nonattainment areas a. Background b. Summary of final rule c. Comments and Responses 2. Intrastate Transport a. Background b. Summary of Final Rule c. Comments and Responses 3. How will EPA address transport of ground level ozone and its precursors for [...] areas affected by international transport? a. Background b. Final Rule c. Comments and Responses D. How will EPA address requirements for modeling and attainment demonstration SIPs for areas implementing the 8 hour ozone standard? 1. Areas with early attainment dates a. Background b. Summary of Final Rule c. Comments and Responses 2. Areas with later attainment dates a. Background b. Summary of Final Rule c. Comments and Responses 3. Multi State nonattainment areas a. Background b. Summary of final rule c. Comments and Responses 4. Role of modeling guidance in attainment demonstrations a. Background b. Summary of Final Rule c. Comments and Responses 5. Mid course review ( MCR) a. Background b. Summary of Final Rule c. Comments and Responses 6. Multi pollutant assessments ( one atmosphere modeling) a. Background b. Summary of final rule c. Comments and Responses E. What requirements for RFP should apply under the 8 hour PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 8 ozone standard? 1. General Discussion a. Background b. Summary of Final RFP and rate of progress ( ROP) Features c. Comments and responses 2. For subpart 2 areas, should the initial 15 percent RFP requirement be limited to volatile organic compounds ( VOC) emissions? a. Background b. Summary of Final Rule c. Comments and responses 3. What baseline year should be required for the emissions inventory for the RFP requirement? a. Background b. Summary of Final Rule c. Comments and responses 4. Should moderate and higher classified areas be subject to prescribed additional RFP requirements prior to their attainment date? a. Background b. Summary of Final Rule c. Comments and responses 5. What is the timing of the submission of the RFP plan? a. Background b. Summary of Final Rule c. Comments and responses 6. How should CAA restrictions on creditable measures be interpreted? Which national measures should count as generating emissions reductions credit toward RFP requirements? a. Background b. Summary of Final Rule c. Comments and responses 7. For areas covered only by subpart 1, how should the RFP requirement be structured? a. Background b. Summary of Final Rule c. Comments and responses 8. How should the RFP requirements be implemented for areas designated for the 8 hour ozone standard that entirely or in part encompass areas that were designated nonattainment for the 1 hour ozone standard? a. Background b. Summary of Final Rule PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 9 c. Comments and responses 9. Will EPA's " Clean Data Policy" apply for purposes of 8 hour RFP? a. Background b. Summary of Final Rule c. Comments and responses 10. How will RFP be addressed in Tribal areas? a. Background b. Summary of Final Rule c. Comments and responses 11. How will RFP targets be calculated? a. Background b. Summary of Final Rule c. Comments and responses 12. Should EPA continue the policy of allowing substitution of controls from outside the nonattainment area within 100 kilometers for VOC and 200 kilometers for NOx? a. Background b. Summary of Final Rule c. Comments and responses 13. When must RFP emission reductions be achieved? a. Background b. Summary of Final Rule. c. Comments and Responses. 14. Banked Emission Reduction Credits ( Including Shutdown Credits) a. Background F. Are contingency measures required in the event of failure to meet a milestone or attain the 8 hour ozone NAAQS? 1. Background 2. Summary of final rule 3. Comments and Responses G. What requirements should apply for RACM and RACT for 8 hour ozone nonattainment areas? 1. Reasonably Available Control Technology ( RACT) a. Background b. Summary of Final Rule c. Comments and responses 2. Reasonably Available Control Measures ( RACM) a. Background b. Summary of final rule c. Comments and Responses H. How will the section 182( f) NOx provisions be handled under the 8 hour ozone standard? PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 10 1. Background 2. Summary of Final Rule 3. Comments and responses I. Should EPA promulgate an NSR provision to encourage development patterns that reduce overall emissions? 1. Background 2. Summary of Final Rule 3. Comments and Responses J. How will EPA ensure that the 8 hour ozone standard will be implemented in a way which allows an optimal mix of controls for ozone, PM2.5, and regional haze? 1. Background 2. Summary of Final Rule 3. Comments and responses K. What emissions inventory requirements should apply under the 8 hour ozone NAAQS? 1. Background 2. Summary of final rule 3. Comments and Responses L. What guidance should be provided that is specific to Tribes? 1. Background 2. Summary of final rule 3. Comments and Responses M. What are the requirements for Ozone Transport Regions ( OTRs) under the 8 hour ozone standard? 1. Background 2. Summary of Final Rule 3. Comments and Responses N. Are there any additional requirements related to enforcement and compliance? 1. Background 2. Summary of final rule 3. Comments and Responses O. What requirements should apply to emergency episodes? 1. Background 2. Summary of final rule 3. Comments and Responses P. What ambient monitoring requirements will apply under the 8 hour ozone NAAQS? 1. Background 2. Summary of final rule 3. Comments and Responses Q. When will EPA require 8 hour attainment demonstration SIP submissions? PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 11 1. Background 2. Summary of final rule 3. Comments and Responses R. How will the statutory time periods in the ActCAA be addressed when we redesignate areas to nonattainment following initial designations for the 8 hour NAAQS? 1. Background 2. Final Rule 3. Comments and Responses V. EPA's Final Rule for New Source Review A. Background 1. The Major NSR Program 2. What We Proposed a. Proposed Changes to Incorporate the 1990 Clean Air Act Amendments b. Proposed Changes to Criteria for Emission Reduction Credits from Shutdowns and Curtailments c. Proposed Changes to Revise the Construction Ban Provisions d. Proposed Changes On Applicability of Appendix S and the Transitional NSR Program e. Proposed Changes to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable areas. B. Summary of Final Rule and Legal Basis 1. Final Action and Legal Basis for Changes to Incorporate the 1990 Clean Air Act Amendments a. Final Changes to Incorporate the 1990 Clean Air Act Amendments b. Legal Basis for Changes to Incorporate the 1990 Clean Air Act Amendments 2. Final Action and Legal Basis for Changes to Criteria for Emission Reduction Credits from Shutdowns and Curtailments a. Final Changes to Criteria for Emission Reduction Credits from Shutdowns and Curtailments b. Legal Basis for Changes to Criteria for Emission Reduction Credits from Shutdowns and Curtailments 3. Final Action and Legal Basis for Changes to the Construction Ban Provisions a. Final Action for Changes to the Construction Ban Provisions b. Legal Basis for Changes to the Construction Ban Provisions 4. Final Action and Legal Basis for Changes on Applicability of Appendix S and the Transitional NSR Program PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 12 a. Final Changes on Applicability of Appendix S and the Transitional NSR Program b. Legal Basis for Changes to Applicability of Appendix S and the Transitional NSR Program 5. Final Action and Legal Basis for Changes to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable Areas a. Final Changes to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable Areas. b. Legal Basis to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable areas 6. Final Changes and Legal Basis for Changes to Emission Offset Provisions of Appendix S. a. Final Changes to Emission Offset Provisions of Appendix S. b. Legal Basis for Changes to Emission Offset Provisions of Appendix S. C. Comments and Responses 1. Comments on Proposed Changes to Incorporate the 1990 Clean Air Act Amendments 2. Comments on Proposed Revisions to Criteria for Emission Reduction Credits from Shutdown and Curtailments 3. Comments on Construction Ban Provisions 4. Comments on Applicability of Appendix S and the Transitional Program 5. Comments on Changes to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable Areas 6. Comments on Removing the 50 ton Exemption D. NSR Implementation Under the 8 hour ozone NAAQS 1. Areas That Have Never Been Nonattainment for Ozone 2. Areas That Are Nonattainment for the 1 hour NAAQS and the 8 hour NAAQS 3. Part D NSR SIP Submittals 4. Effective Date for Today's Requirements 5. Requirements for Offsets VI VI. Final rule for RFG A. Introduction B. Background C. What Action is EPA Taking? D. Why is EPA Taking This Action? E. Future Proceedings F. Miscellaneous Administrative Changes to RFG Regulations VII. OTHER CONSIDERATIONS PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 13 A. How will EPA's actionimplementation of the 8 hour ozone NAAQS affect funding under the Congestion Mitigation and Air Quality Improvement ( CMAQ) Program? 1. Background 2. Current Position 3. Comments and Responses B. What is the relationship between implementation of the 8 hour standard and the CAA's Title V permit program? 1. Background 2. Current Position 3. Comments and Responses VIII. STATUTORY AND EXECUTIVE ORDER REVIEWS A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer Advancement Act J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low Income Populations K. Congressional Review Act L. Petitions for Judicial Review I. What is the bBackground for this rRule?

On June 2, 2003 ( 68 FR 32805), we published a proposed rule to implement the 8 hour ozone NAAQS. The proposal addressed a number of implementation issues. We proposed one or more options for each issue addressed in the proposal. Please refer to the proposed rule ( 68 FR 32802,

June 2, 2003) for a detailed discussion and background PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 1Three petitions for reconsideration of the Phase 1 Rule were filed by: 1) Earthjustice on behalf of the 14 information on the 8 hour ozone NAAQS; the associated litigation; our proposed strategy for areas to achieve the NAAQS; and the stakeholder process for gathering input into this effort, among other topics.

On August 6, 2003 ( 68 FR 46536), we published a notice of availability of the draft regulatory text for the proposed rule to implement the 8 hour ozone NAAQS. This notice started a 30 day public comment period on the draft regulatory text.

On April 30, 2004 ( 69 FR 23951), we published a final rule that addressed the following key elements related to implementation of the 8 hour ozone NAAQS: classifications for the 8 hour NAAQS; revocation of the 1 hour NAAQS ( i. e.,

when the 1 hour NAAQS will no longer apply); how antibacksliding principles will ensure continued progress toward attainment of the 8 hour ozone NAAQS; attainment dates; and the timing of emissions reductions needed for attainment.

Following publication of the April 30, 2004 final rule,

the Administrator received three petitions, pursuant to section 307( b)( 7)( B) of the CAA requesting reconsideration of a number of aspects of the final rule. 1 On September 23, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 American Lung Association, Environmental Defense, Natural Resources Defense Council, Sierra Club, Clean Air Task Force, Conservation Law Foundation, and Southern Alliance for Clean Energy; 2) the National Petrochemical and Refiners Association and the National Association of Manufacturers; and 3) the American Petroleum Institute, American Chemistry Council, American Iron and Steel Institute, National Association of Manufacturers and the U. S. Chamber of Commerce.

15 2004, we granted reconsideration of three issues raised in the Earthjustice Petition. On XXX_____________________ February 3, 2005 ( 70 FR 5593), we published a proposed rule to take comment on two of these issues: 1) the provision that section 185 fees would no longer be applicable once the 1 hour NAAQS is revoked and 2)

the timing for determination of what is an " applicable requirement." On xxx___________________________ May 20,

2005, the final rule on these two issues was signed by the Administrator of EPA. On April 4, 2005 ( 70 FR 17018), we published a proposed rule to take comment on the issue of the NSR anti backsliding provisions. We took final action on these three NSR issues on May 20June 30, 2005 ( July 8,

2005 ( 70 FR 39413)).

[ XXX THIS MAY NEED TO BE REVISED ]

On January 10, 2005, we granted reconsideration of the overwhelming transport classification issue raised by PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 16 Earthjustice in their Petition. At the same time, we denied reconsideration of the issues they raised in their Petition dealing with the applicability of reformulated gasoline when the 1 hour NAAQS is revoked and future 8 hour ozone redesignations to nonattainment. We published a proposed rule on the overwhelming transport classification on ___________________. We are continuing to review the remaining issues raised in the Earthjustice Petition, as well as the issues raised in the National Petrochemical and Refiners Association and American Petroleum Institute Petitions. Copies of the Petitions for Reconsideration and actions EPA has taken regarding the Petitions may be found at: www. epa. gov/ ttn/ naaqs/ ozone/ o3imp8hr.

In addition, in the April 30, 2004 rule, we established a subpart E in 40 CFR part 81 " Identification of Area Designations and Classifications for the 1 Hour Ozone NAAQS as of June 15, 2004 [ Reserved]." We will not publish the list of areas under subpart E of part 81 until we address the petitions for reconsiderationintend to publish that list shortly.

Concerning the major NSR provisions, today's final regulations were proposed as part of two different regulatory packages. On July 23, 1996 ( 61 FR 38250), we PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 17 proposed changes to the major NSR program, including codification of the requirements of part D of title I of the 1990 CAA Amendments for major stationary sources of VOC, NOx,

PM 10, and CO. On June 2, 2003 ( 68 FR 32802), we proposed a rule to implement the 8 hour ozone NAAQS. In the 2003 action, we proposed a rule to identify the statutory requirements that apply for purposes of developing SIPs under the CAA to implement the 8 hour ozone NAAQS ( 68 FR 32802). We did not propose specific regulatory language for implementation of NSR under the 8 hour NAAQS. However, we indicated that we intended to revise the nonattainment NSR regulations to be consistent with the rule for implementing the 8 hour ozone NAAQS ( 68 FR 32844). On April 30, 2004 ( 69 FR 23951), we published a final rule that addressed classifications for the 8 hour NAAQS. The April 2004 rule also included the NSR permitting requirements for the 8 hour ozone standard, which necessarily follow from the classification scheme chosen under the terms of subpart 1 and subpart 2.

Also, in our 1996 action, and then again in our June 2,

2003 action, we proposed to amend our nonattainment NSR provisions to expressly include NOx as an ozone precursor in nonattainment major NSR programs ( 61 FR 38297 and 68 FR PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 18 32847). We also proposed that, as provided under CAA section 182( f), a waiver from nonattainment NSR for NOx as an ozone precursor would be available for both subpart 1 and subpart 2 areas ( 68 FR 32846). Moreover, we proposed to require States to modify their existing programs to include NOx as an ozone precursor in attainment areas ( 68 FR 32846).

In 1996 we proposed to revise the regulations limiting offsets from emissions reductions due to shutting down an existing source or curtailing production or operating hours below baseline levels (" shutdowns/ curtailments"). We proposed substantive revisions in two alternatives that would ease, under certain circumstances, the existing restrictions on the use of emission reduction credits from source shutdowns and curtailments as offsets.

On July 23, 1996, we proposed to revise § 52.24 to incorporate changes made by the 1990 CAA Amendments related to the applicability of construction bans ( 61 FR 38305). To clarify our intent, our proposed 8 hour ozone NAAQS implementation rule in June 2003 explained that § 52.24( k)

remained in effect and would be retained. In that action,

we also proposed that we would revise § 52.24( k) to reflect the changes in the 1990 CAA Amendments ( 68 FR 32846). On June 2, 2003 ( 68 FR 32802), we explained implementation of PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 19 the major NSR program under the 8 hour ozone NAAQS during the SIP development period, and proposed flexible NSR requirements for areas that expected to attain the 8 hour NAAQS within 3 years after designation.

For the reader's convenience, a glossary and list of acronyms appears in Appendix B of this preamble.

II. What is Included in this Rule?

Today's action, Phase 2 of the implementation rule,

addresses numerous topics, but primarily focuses on the following key implementation obligations for areas designated nonattainment for the 8 hour NAAQS: reasonably available control technology and measures ( RACT and RACM);

RFP; modeling and attainment demonstrations; and new source review ( NSR). NSR. It also addresses what effect the transition to the 8 hour standard will have on certain aspects of the RFG program.

III. In Short, What Does this Final Rule Contain?

This summary is intended to give only a convenient overview of our final rule. It should not be relied on for the details of the actual rule. The final rule ( regulatory text) and the discussion of it in the next sections below should be consulted directly.

Summary of Section IV: Final Rule for Phase 2 Elements PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 20 Other than New Source Review A. Should prescribed requirements of subpart 2 apply in all 8 hour nonattainment areas classified under subpart 2, or is there flexibility in application in certain narrowly defined circumstances?

There may be a basis for waiving a prescribed requirement on a case by case basis where imposition of the requirement would create an absurd result. If a State submits a demonstration that application of a specific requirement in a specific nonattainment area would create an absurd result, we will consider application of the absurd results doctrine at that time. We believe that absurd results that might occur from application of mandatory control measures would happen only in rare instances, if at all.

B. How will we address long range transport of ground level ozone and its precursors when implementing the 8 hour ozone standard?

We are addressing the long range transport of ozone and its precursors through a separate rulemaking. Based on a reassessment ofEPA has issued two major rules to address interstate transport for the 8 hour standard, we proposed the " Rule to Reduce Interstate Transport of Fine Particulate PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 21 Matter and Ozone," now known as the proposedof ozone pollution. On May 12, 2005, EPA published the Clean Air Interstate Rule ( CAIR) on January 30, 2004 ( 69 FR 4566).

This action proposed statewidein the Federal Register ( 70 FR 25162). It establishes statewide SO2 and NOx emissions budgets for upwind States that significantly contribute to nonattainment or interfere with maintenance of the fine particle or 8 hour ozone air quality standards in downwind States. For ozone, this action established summertime NOx budgets for 25 States and the District of Columbia. These budgets are based on a proposed determination that emissions from these 26 jurisdictions are significantly contributing to 8 hour ozone ( and fine particulate matter) problems in downwind States. On June 10, 2004 ( 69 FR 32684), we issued a supplemental proposal for the CAIR, which included a proposed model cap and trade program that States could use to meet the NOx budgets and 25 States in the eastern half of the country, with reductions to be achieved by 2009 and 2015.

The 1998 NOx SIP Call Rule already is achieving significant reductions in NOx emissions that contribute to interstate ozone pollution in the eastern U. S. Nineteen States were required to achieve reductions by May 2004, and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 22 additional reductions are required by May 2007. CAIR goes beyond the SIP call by requiring reductions from additional States and by requiring further emissions reductions in SIP call States.

C. How will we address transport of ground level ozone and its precursors for rural nonattainment areas, areas affected by intrastate transport, and areas affected by international transport?

1. Rural transport nonattainment areas The final rule does not contain any revisions to current policy on rural transport areas under section 182( h). We do not believe there are any 8 hour nonattainment areas covered under subpart 2 that are " rural"

and therefore eligible for consideration for coverage under section 182( h).

2. Intrastate Ttransport The final rule does not contain any additional provisions for addressing intrastate transport for the reasons stated in the proposal.

3. How will EPA address transport of ground level ozone and its precursors for [...] areas affected by international transport?

We are not setting forth any regulatory provisions PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 23 related to international transport in this rule as s.

Section 179B of the CAA applies for these purposes. We continue to recommend that States confer with the appropriate EPA Regional Office to establish on a case

bycase basis the technical requirements for these analyses.

These analyses will be subject to public comment during the State and fFederal SIP processes.

D. How will EPA address requirements for modeling and attainment demonstration SIPs for areas implementing the 8

hour ozone standard?

The final rule retains the following fourthree elements that each attainment demonstration SIP must include: ( 1)

technical analyses to locate and identify sources of emissions that are causing violations of the 8 hour NAAQS within nonattainment areas ( i. e., analyses related to the emissions inventory required for the nonattainment area),

( 2) adopted measures with schedules for implementation and other means and techniques necessary and appropriate for attainment, ( 3) commitments, in some cases, to perform a mid course review ( MCR), and ( 43) contingency measures required under section 172( c)( 9) of the CAA that can be implemented without further action by the State or the Administrator to cover failures to meet RFP milestones PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 24 and/ or attainment.

1. Areas with early attainment dates Subpart 1 areas may rely on acceptable available modeling to demonstrate attainment within 3 years after the effective date of the designation. If acceptable available modeling does not demonstrate attainment within three years after the area's designation, the area would need to submit a local modeled attainment demonstration.

2. Areas with later attainment dates Areas with later attainment dates such as other subpart 1 areas and areas classified as moderate or higher under section 51.903 areAttainment Demonstration Due Date.

Areas required to submit an attainment demonstration must do so no later than 3 years after the effective date of designation for the 8 hour ozone NAAQS.

32. Multi State nonattainment areas State partners involved in a multi State ozone nonattainment area must work together to perform the appropriate modeling analyses to identify control measures that will enable the area to achieve attainment as expeditious as practicable. Each State will be responsible for its portion of the control program and will be held accountable for controls identified for implementation PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 25 within its State boundaries.

43. Role of modeling guidance in attainment demonstrations Attainment demonstrations must be consistent with 40 CFR 51 § 51.112. We will generally review the demonstrations for technical merit using EPA's most recent modeling guidance at the time the modeled attainment demonstration is performed.

5. Mid course review ( MCR)

Areas with an attainment date beyond 6 years after the effective date of the area's designation are required to commit to perform a MCR midway between the due date for the area's attainment demonstration SIP and the area's attainment date.

64. Multi pollutant assessments ( one atmosphere modeling)

There is no regulatory text on this issue, but the preamble makes several recommendations concerning multipollutant assessments.

E. What requirements for RFP should apply under the 8 hour ozone standard?

1. General Ddiscussion We are adopting nearly all the approaches set forth in our proposed rule for the various 1 hour rate of progress ( ROP) and 8 hour RFP issues. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 26 2. For subpart 2 areas, shouldWhat is the initial 15 percentcontent and timing of the plan for addressing the RFP requirement be limited to VOC emissionss under section 182( b)( 1) for areas covered under subpart 2??

Areas that are classified as moderate under the 8 hour standard that have already implemented their 15 percent plans under their 1 hour ozone SIPs would be considered to have met the statutory 15 percent requirement.

RFPReasonable further progress for the first 6 years from the baseline year would be covered under the more generic RFP requirements of subpart 1. Serious and above areas would have to meet 3 percent reductions per year starting in the baseline year averaged over each three year3 year period out to the attainment year.

3. What baseline year should be required for the emissions inventory for the RFP requirement?

We are using the 2002 inventory as the baseline inventory for the ROP requirement for areas designated nonattainment in 2004 primarily because of timing concerns related to attainment dates and when data is collected and compiled.

4. Should moderate and higher classified areas be subject to prescribed additional RFP requirements prior to their PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 27 attainment date?

Moderate areas would have to provide additional emissions reductions ( VOC/ NOx) needed to provide for attainment by the beginning of the ozone season prior to the area's attainment date. Serious and higher classified areas would need to provide in their SIPs an additional average of three percent per year emission reduction over each subsequent 3 year period beyond the initial 6 year period through the attainment year.

5. What is the timing of the submission of the RFP plan?

For moderate and higher classified areas, the first RFP SIP must be submitted within 3 years after the area's nonattainment designation. For areas with a June 15, 2004 effective date, for the 8 hour designations, the SIP would be due by June 15, 2007. This would provide up to 3 years for States to develop and submit RFP plans, and one1 additional year ( until the end of 2008) for control measures to be implemented. The RFP SIP for any remaining 3 year periods out to the attainment date beyond the first 6 years would be required to be submitted with the attainment demonstration, i. e., within 3 years after designation.

However, wWe recommend that States complete their RFP plans as soon as possible after designation to provide more time PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 28 for sources to implement the emissions reductions.

6. How should CAA restrictions on creditable measures be interpreted? Which national measures should count as generating emissions reductions credit toward RFP requirements?

b. Summary of Final Rule.

All emissions reductions that occur after the baseline emissions inventory year are creditable for purposes of the RFP requirements in this section except as specifically provided in section 182( b)( 1)( C) and ( D) and section 182( c)( 2)( B) of the ActCAA which exclude four categories of pre 1990 emissions reductions requirements required to be adopted prior to 1990.

7. For areas covered only by subpart 1, how should the RFP requirement be structured?

We are finalizing rules for two rather than three categories of areas based on the Act'sCAA's division of attainment dates for subpart 1 areas under section 172( a)( 2). The following are the two scenarios and the RFP requirements for each:

Scenario A: Areas with attainment dates 5 years or less after designation ( i. e., for most areas on or before June 15, 2009). RFPReasonable further progress for these areas PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 29 would be met by ensuring emissions reductions needed for attainment are implemented, as noted above, by the beginning of the ozone season prior to the attainment date. This would be similar to subpart 2 RFP for areas classified as marginal.

Scenario B: Areas with attainment dates beyond 5 years after designation ( i. e., beyond 2009).

° The RFP plan must show increments of progress from the baseline emissions inventory year out to the attainment date.

° The RFP SIP would first have to provide for a 15 percent emission reduction from the baseline year within 6 years after the baseline year ( i. e., out to 2008).

° The 15 percent RFP SIP would have to be submitted within 3 years after designation ( i. e., in 2007).

° However, since the area is subject only to subpart 1,

eEither NOx or VOC emissions reductions ( or both) could be used to achieve the 15 percent emission reduction requirement.

° For each subsequent 3 year period ( after 2008) out to the attainment date, the RFP SIP would have to provide for an additional increment of progress no less than PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 30 the amount of emissions reductions that would be roughly proportional to the time between the end of the first increment ( in 2008) and the attainment date.

This second RFP SIP would also have to be submitted within 3 years after the effective date of designation ( i. e., in 2007).

8. How should the RFP requirements be implemented for areas designated for the 8 hour ozone standard that entirely or in part encompass areas that were designated nonattainment for the 1 hour ozone standard?

An 8 hour nonattainment area that is identical,

geographically, to its predecessor 1 hour nonattainment area ( which has already done the 15 percent reduction) will not be required to do another 15 percent VOC only reduction plan. For an 8 hour moderate or higher nonattainment area that contains a 1 hour nonattainment area that has an approved 15 percent VOC ROP plan but also contains areas that do not have an approved 15 percent VOC ROP plan, the final rule allows States the choice between two options:

Option 1. Develop a new baseline and new 15 percent VOC ROP emission reduction target for the entire newly expanded area. Determine that emissions reductions that occur after the 2002 baseline emissions inventory year are creditable in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 31 the combined new area. The reductions must be of VOC only.

Option 2. Treat the 8 hour nonattainment area as divided between the old 1 hour area( s) and the newly added 8 hour area. For the newly added portion ( which had not previously implemented a 15 percent plan), States must establish a separate 15 percent VOC target under subpart 2. The previous nonattainment area that fell under the 1 hour standard will now be subject to the subpart 1 provisions of the CAA and will be able to credit both VOC and NOx toward meeting the RFP target for this portion of the nonattainment area. VOCVolatile organic compounds reductions to meet the 15 percent requirement for the portion of the new 8 hour nonattainment area that has not yet met this requirement may come from across the entire 8 hour area.

EPA notes that where a moderate area with a previously approved 15% plan for a The subpart 1 RFP provisions addressed by the rule below that are applicable in the former 1 hour portion of the 8 hour nonattainment area chooses the second option of developing a new 15% plan for only the new portion of the 8 hour nonattainment area, the emissions projections included in such plans will not constitute motor vehicle emissions budgets for purposes of the transportation conformity rules because they will be not PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 32 establish total allowable emissions for 2008 for the nonattainment area as a whole. Since the portions of moderate areas thatarea depend on the subpart 2 area's attainment date as follows:

° In subpart 2 areas that have an attainment date within 5 years after their 8 hour designation, for which portions of the area have previously met their 15% 15 percent requirements under the 1 hour standard, the former 1 hour portion will only be subject to subpart 1 RFP requirements, which will be satisfied with the measures that demonstrate attainment as expeditiously as practicable, these areas will not be developing RFP plans separate from their attainment plans. Thus, for these areas, the only motor vehicle emissions budgets that will be developed will be for the attainment year.

In contrast, for 2008 serious ° In subpart 2 areas that have an attainment date beyond 5 years after their 8 hour designation, for which portions of the area have previously met their 15 percent requirements under the 1 hour standard, the former 1 hour portion will only be subject to subpart 1 RFP requirements, which will be satisfied with a plan to demonstrate 15 percent emission reductions ( which PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 33 may be either VOC or NOx or a combination of both) from 2002 to 2008, and any additional emission reductions needed for attainment beyond 2008. Thus, these areas ( the entire 8 hour nonattainment area) would establish a motor vehicle emission budget for 2008 and for their attainment year.

Serious and above areas will be developing both a 15% 15 percent VOC plan for the new portion of the 8 hour nonattainment area and an 18% VOC/ NOx18 percent VOC/ NOx plan for the portion of the area that previously met its 15% 15 percent requirement. Thus, the RFP plan as a whole will establish total allowable emissions for 2008 for the entire 8 hour nonattainment area. Therefore, the plans for these areas, as well as moderate areas that choose option one,

will establish motor vehicle emissions budgets for both 2008 and the attainment year.

9. Will EPA's " Clean Data Policy" apply for purposes of 8

hour RFP, attainment demonstrations and other related requirements?

We intend to apply the Clean Data Policy for the 8 hour standard in the same manner as we applied it for the 1 hour standard. In this notice EPA is taking final rulemaking action on the statutory interpretation that we are applying PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 34 in the policy.

10. How will RFP be addressed in Tribal areas?

We intend to follow the Tribal Authority Rule ( TAR),

which provides Tribes with the ability to develop Tribal implementation plans ( 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."

11. How will RFP targets be calculated?

Appendix A to the preamble to this final rule provides calculation procedures for determining the RFP targets.

These have been revised from those in the proposal to account for NOx and for other emissions models in addition to the MOBILE model.

12. Should EPA continue the policy of allowing substitution of controls from outside the nonattainment area within 100 kilometers for VOC and 200 kilometers for NOx?

We intend to continue to rely on this policy at the current time, but also intend to reassess whether the policy should be revised in light of comments related to issues of equity and the potential for double counting of emission reductions. The use of emission reductions outside the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 35 nonattainment area must be shown to be beneficial toward reducing ozone in the nonattainment area. We fully expect that any revisions to the policy will to 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).

13. When must RFP emissions reductions be achieved?

The target level of emissions must be met by the attainment date of the attainment year. 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.

14. Banked Eemission Rreduction Ccredits ( Iincluding Sshutdown Ccredits): Can pre baseline emission reduction credits be used to satisfy the RFP requirement?

° The baseline emissions should not include pre enactment banked emission credits since they were not actual emissions during the calendar year of enactment of the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 36 CAA Amendments of 1990.

° Pre enactment bBanked emissions reductions credits created prior to enactment of the CAA Amendments of 1990 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 as authorized.

° When States use such banked credits for offsets and netting to the extent otherwise creditable under the Ppart D NSR regulations, these pre enactment emissions credits must be treated as growth. Prior guidance on this issue 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 prior guidance should be interpreted with that baseline in mind instead of enactment of the 1990 Amendments.

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

Contingency measures are required to be implemented in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 37 the event of failure to meet a milestone or attain the 8

hour ozone NAAQS and must accompany the attainment demonstration SIP. All subpart 1 and subpart 2 areas other than marginal areas need contingency measures.

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

hour ozone nonattainment areas?

1. Reasonably Available Control Technology ( RACT)

For subpart 1 areas that submit a demonstration of attainment for 5 or less years after designation ( i. e., do not request an attainment date extension ( beyond 5 years after designation), RACT is met with the control requirements associated with a demonstration that the NAAQS is attained as expeditiously as practicable.

For subpart 1 areas that submit an attainment demonstration that requests an attainment date extension ( i. e., beyond 5 years after designation), subpart 2 moderate and above areas, and areas within an Ozone Transport Region ( OTR), RACT is required. The RACT submittal date is two years27 months after designation, except a subpart 1 areas 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. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 38 Where RACT is required, State SIPs implementing the 8

hour standard generally 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.

Sources subject to the NOx SIP Call or CAIR trading program meet NOx RACT requirements under existing RACT guidance.

States are free to conduct case by case RACT determinations,

or RACT determinations or certifications for groups of sources, at their discretion.

2. Reasonably Available Control Measures ( RACM)

For each nonattainment area required to submit an attainment demonstration, 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.

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

The final rule allows a person to petition the Administrator for an exemption from nonattainment major NSR and/ or RACT requirements for major stationary sources of NOsx PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 2Memorandum dated January 14, 2005, " Guidance on Limiting Nitrogen Oxides ( NOx) Requirements Related to 8 Hour Ozone Implementation" from Stephen D. Page, Director, Office of Air Quality Planning and Standards, to Air Directors, Regions I X.

39 in 8 hour ozone nonattainment areas and for any area in a section 184 ozone transport region. The final rule includes an extension of the NOx waiver provisions to 8 hour ozone nonattainment areas covered under subpart 1 ( as proposed) as well as subpart 2 nonattainment areas. In addition, the final rule states that a section 182( f) NOx exemption granted under the 1 hour ozone standard does not relieve the area from any requirements under the 8 hour ozone standard. A petition must contain adequate documentation that the exemption provisions in section 182( f) are met. We recently issued updated guidance on appropriate documentation regarding section 182( f) for application to the 8 hour ozone program. 2 I. Should EPA promulgate an NSR provision to encourage development patterns that reduce overall emissions?

Section V of this preamble below addresses rules for NSR for the 8 hour ozone standard. We are not at this time issuing any rule related to Clean Air Development Communities ( CADCs). PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 40 J. How will EPA ensure that the 8 hour ozone standard will be implemented in a way which allows an optimal mix of controls for ozone, PM2.5, and regional haze?

We are continuing our policy of encouraging each State with an ozone nonattainment area which overlaps or is nearby a PM2.5 nonattainment area to take all reasonable steps to coordinate the required revisions for these nonattainment areas and meet reasonable progress goals for regional haze.

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

Existing emissions reporting requirements in 40 CFR Ppart 51 subpart A are sufficient to satisfy the emissions inventory data requirements under the 8 hour ozone NAAQS.

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

CAAClean Air Act section 301( d) recognizes that American Indian Tribal governments are generally the appropriate authority to implement the CAA in Indian country. As discussed in the Tribal Authority Rule ( TAR),

it is appropriate to treat Tribes in the same manner as States for purposes of implementing all of the provisions of the CAA, except those provisions for which EPA has specifically determined that it is not appropriate to treat PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 41 Tribes in the same manner as States. ( The CAA provisions for which EPA has determined it is not appropriate to treat Tribes in the same manner as States are listed in Ssection IV. L. of this preamble.) Examples of CAA provisions for which EPA has determined it is not appropriate to treat Tribes in the same manner as States include specific plan submittal and implementation deadlines.

In implementing this rule, it is important for both States and Tribes to work together to coordinate planning efforts. Other than in very limited circumstances, State regulations do not apply to Indian Country, but SIP control measures could impact downwind areas, including Indian communities. In addition, nonattainment area boundaries may include a portion of Indian Country. Coordinated planning will help ensure that the planning decisions made by the States and Tribes complement each other and achieve progress toward meeting the NAAQS.

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

Section 184 continues to apply for purposes of the 8

hour standard; therefore, the current OTR remains in place and the section 184 control requirements continue to apply for purposes of the 8 hour standard. If a new OTR is PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 42 established for purposes of the 8 hour standard pursuant to section 176A, that area would also be subject to the provisions and additional control requirements of section 184.

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

We are not setting forth any additional rule related to compliance and enforcement.

O. What requirements should apply to emergency episodes?

We have not yet proposed any rule revision related to emergency episodes ( at 40 CFR 51, subpart H), and the final rule below does not contain any such rule revision.

P. What ambient monitoring requirements will apply under the 8 hour ozone NAAQS?

No monitoring requirements are being promulgated as part of this rulemaking. The preamble discusses current relevant requirements ( 40 CFR Part 58) and anticipated activities.

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

Modeled attainment demonstrations   where required   must be submitted within 3 years after the effective date of the area's nonattainment designation. A subpart 1 area that PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 43 desires an attainment date within 3 years after designation would have to provide a demonstration within 18 months after designation.

R. How will the statutory time periods in the ActCAA be addressed when we redesignate areas to nonattainment following initial designations for the 8 hour NAAQS?

For any area that is initially designated attainment or unclassifiable for the 8 hour NAAQS and subsequently redesignated to nonattainment for the 8 hour ozone NAAQS,

the attainment date and dates for submittal of any applicable requirements under subpart 1 or subpart 2 and these regulations would run from the date of redesignation to nonattainment offor the 8 hour NAAQS.

Summary of Section V: EPA's Final Rule for New Source Review In today's action, we are finalizing previously proposed changes to three regulations that govern major NSR permitting of major stationary sources in nonattainment areas areas  40 CFR 51.165, Aappendix S of 40 CFR part 51,

and 40 CFR 52.24.

The regulations at 40 CFR 51.165 contain the minimum elements that a State's preconstruction permitting program for major stationary sources in nonattainment areas must PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 44 contain in order for EPA to approve the State's program into the SIP. In section 51 § 51.165, we are making revisions to incorporate the major stationary source thresholds,

significant emission rates, and offset ratios pursuant to part D of title I of the CAA, as amended in 1990 Amendments to the CAA, for the 8 hour ozone NAAQS, the carbon monoxide NAAQS, and the PM10 ( particulate matter having a nominal aerodynamic diameter less than or equal to 10 microns)

NAAQS. We are also promulgating final changes to the requirements for emissions reductions achieved from shutdowns or curtailments at 51 § 51.165( a)( 3)( ii)( C). We are not currently acting on any other proposed changes to 40 CFR 51.165.

Appendix S of 40 CFR part 51 contains the preconstruction permitting program that applies to major stationary sources in nonattainment areas lacking an approved part D NSR program. It applies during the interim period after EPA designates an area as nonattainment, but before EPA approves a SIP to implement the nonattainment NSR requirements for that pollutant ( SIP development period).

We are making the same changes to Aappendix S that we are making to section 51 § 51.165 to implement the CAA as revised by the 1990 Amendments. In addition, we are finalizing PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 45 revisions to Ssection VI of Aappendix S to qualify applicability of this section. This revision is an outgrowth of the proposed revisions to Ssection VI in the 8

hour NAAQS implementation proposal ( 68 FR 32802). We also are removing an outdated exemption for sources increasing emissions less than 50 tons per year ( tpy).

The regulations at 40 CFR 52.24 contain restrictions on the construction or modification of major stationary sources, including a construction ban applicable in circumstances enumerated by the 1977 Clean Air ActCAA.

These regulations also apply if the Administrator determines pursuant to CAA section 173( a)( 4) that the State is not adequately implementing the SIP for meeting the part D requirements. Today's final rules codify requirements of the 1990 amendments related to the applicability of construction bans. The final rules at section 52 § 52.24 also codify that section 51 § 51.165 applies in interpreting the terms in section 52 § 52.24. The regulations at 40 CFR 52.24( k) retain the requirement that Aappendix S governs permits to construct and operate applied for during the period between the date of designation as nonattainment and the date the part D plan for NSR is approved, but is updated to remove the reference to the construction ban. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 46 In addition to the changes to the nonattainment NSR regulations, we also are making one change to the PSD regulations under part C of title I of the ActCAA. We are codifying NOx as an ozone precursor in attainment and unclassifiable areas.

Summary of Section VI: Final Rule for RFG Today's rule specifies that the nine original RFG mandatory areas must continue to use RFG at least until they are redesignated to attainment for the 8 hour standard.

Similarly, areas that have been reclassified as severe areas under section 181( b) of the Act for the 1 hour NAAQS, and which were not redesignated to attainment for the 1 hour NAAQS prior to its revocation, must continue to use RFG at least until they are redesignated to attainment for the 8

hour standard. The EPA is reserving for future consideration what RFG requirements apply to areas that were reclassified as severe under the 1 hour standard, but were redesignated to attainment for that standard before its revocation. The only such area that was redesignated to attainment prior to revocation of the 1 hour standard is Atlanta, Georgia. The EPA is also reserving for future consideration whether areas must continue using RFG after they are redesignated to attainment for the 8 hour standard, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 47 for the original nine mandatory areas as well as the areas reclassified to severe. Finally, EPA clarifies that the current opt in rules will remain in place after the 1 hour standard is revoked. Areas classified under subpart 2 as marginal or above are eligible to opt in to the RFG program.

Summary of Section VI. I: Other Considerations A. How will EPA's actionimplementation of the 8 hour ozone NAAQS affect funding under the Congestion Mitigation and Air Quality Improvement ( CMAQ) Program?

Depending on the specific characteristics of a nonattainment area, implementation of the 8 hour ozone standard will have varying effects on CMAQ funding eligibility. Nonattainment areas designated under the 8

hour ozone standard are eligible for CMAQ funding. However,

the formula for determining the amount of funds apportioned to the States only takes into account the areas that are classified pursuant to CAA sections 181, 186, and 188.

Hence, under the transportation statute, CMAQ funds cannot be apportioned to the States on the basis of the designationsareas designated as nonattainment for the 8 hour ozone standard that are not also classified under subpart 2.

B. What is the relationship between implementation of the 8 hour standard and the CAA's Ttitle V permit program? PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 48 The interrelationship between implementation of the 8

hour ozone standard and the Title V permit program was not discussed in the proposed rule. Various questions have been raised about the interface between the implementation of the 8 hour ozone standard and the title V operating permits program. The preamble presents several questions and answers, mainly dealing with how title V applicability is affected by the new 8 hr ozone standard and the revocation of the 1 hr ozone standard.

C. What action is EPA taking on the Overwhelming Transport Classification for subpart 1 areas? This section discusses the petition for reconsideration ofWe are not completing rulemaking on the overwhelming transport classification that we received from Earth Justice, guidance on overwhelming transport, and the applicable requirements for subpart 1 areas that are classified as overwhelming transport.

in this rulemaking. This section discusses the status of the rulemaking.

Summary of Section VI: Final Rule for RFG Today's rule specifies that the nine original RFG mandatory areas must continue to use RFG at least until they are redesignated to attainment for the 8 hour standard.

Similarly, areas that have been reclassified as severe areas PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 under section 181( b) of the Act for the 1 hour NAAQS, and which were not redesignated to attainment for the 1 hour NAAQS prior to its revocation, must continue to use RFG at least until they are redesignated to attainment for the 8

hour standard. The EPA is reserving for future consideration what RFG requirements apply to areas that were reclassified as severe under the 1 hour standard, but were redesignated to attainment for that standard before its revocation. At this time the only such area that has been proposed to be redesignated to attainment for the 1 hour standard is Atlanta, Georgia. Finally, EPA clarifies that the current opt in rules will remain in place after the 1

hour standard is revoked. Areas classified under subpart 2 as marginal or above are eligible to opt in to the RFG program.

IV. Final Rule for Phase 2 Elements oOther than New Source Review [ NOTE: The discussion of many of the regulatory elements below address timing of required actions, such as submission dates for SIP revisions. The discussion is primarily directed toward 8 hour ozone nonattainment areas for which the effective date of the designation was June 15, 2004.

However, a number of areas may have later effective dates for their designations, such as early action compact areas PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 50 and areas subsequently redesignated from attainment to nonattainment for the 8 hour ozone standard. For these situations, the timing will run from the effective date of those designations. In cases in this preamble where we have used June 15, 20054 as a substitute for the " effective date," we are using it only for purposes of those areas with an effective date of June 15, 2004.]

A. Should prescribed requirements of subpart 2 apply in all 8 hour nonattainment areas classified under subpart 2, or is there flexibility in application in certain narrowly

defined circumstances?

[ Section VI. D. of June 2, 2003 proposed rule ( 68 FR 32825); no draft or final regulatory text.]

1. Background The 1990 Clean Air Act ( CAA) Amendments ( CAAA)

overhauled the Clean Air Act's ( CAA) CAA's requirements for ozone nonattainment areas and, in doing so, specified new mandatory measures for many areas. The approach embodied in subpart 2 was to classify areas according to the severity of their pollution. Areas with more serious ozone pollution were given a higher classification that did two things.

First, the successively higher classifications provided a successively longer maximum time frametimeframe for PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 51 attaining the ozone NAAQS. Second, each higher classification mandated specific additional and/ or more stringent obligations than the classification immediately below. Congressional proponents of this approach argued that specifying mandatory measures in the statute was necessary because States and EPA, prior to 1990, had failed to ensure that SIPs achieved steady reasonable progress in reducing emissions or to require readily available measures that were cost effective and necessary to meet the standard.

( xxx Need Jan to provide citation).

For this rule, we examined the issue of mandatory measures from both a legal and policy standpoint. Our legal view is guided by the statutory language in Ppart D of title I of the CAA. In addition, we were guided by the Supreme Court's view of this language. Our policy view is guided by past precedents and also the principles we set forth in our proposed rule ( June 3, 2003; 68 FR 32802).

We have consistently interpreted the CAA to mean that once an area is classified under subpart 2, the subpart 2 requirements apply. While certain requirements allow for some flexibility in how they apply, the requirements do not allow for broad waivers. For example, all areas classified as serious or above must meet the requirement for an PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 52 enhanced inspection and maintenance ( I/ M) program, however,

there is some flexibility in determining what type of I/ M program meets the requirement for an enhanced I/ M program.

The Supreme Court, in addressing whether the classification provisions in subpart 2 applied for purposes of the 8 hour ozone NAAQS found that they did and stated that EPA's implementation scheme, which would have avoided classifications under subpart 2, was unreasonable because it would effectively nullify the subpart 2 provisions that Congress created with the intent to limit State and EPA discretion. Whitman v. American Trucking Assoc., __ US ___ 531 U. S. XXX NEED CITATION 484 85.

In the proposed rule, we recognized that there is case law doctrine that might allow a case by case waiver from mandatory requirements when sufficient evidence is presented that application of a specific requirement in a particular area would cause absurd results.

2. Final Rrule We continue to interpret the ActCAA to mean that the prescribed requirements for each classification under subpart 2 apply to areas with such classification for the 8

hour NAAQS. As we noted in the preamble to the proposed rule, there may be a basis for waiving a prescribed PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 53 requirement on a case by case basis where imposition of the requirement would create an absurd result. As we stated in the proposed ruleHowever, we believe that absurd results that might occur from application of mandatory control measures would happen only in rare instances, if at all. If a State submits a demonstration that application of a specific requirement in a specific nonattainment area would create an absurd result, we will consider application of the absurd results doctrine at that time.

3. Comment and Rresponses Comment: A number of commenters supported the approach that we discussed in the proposed rule. Other commenters agreed with the overall concept that we proposed but felt that we should take additional factors into consideration if we make case by case waivers from subpart 2 requirements.

Several commenters suggested that we take the cost of controls into consideration when determining if there were an absurd result while others suggested that we look at relative control strategy effectiveness, e. g., allowing a demonstration that NOx reductions are more effective and therefore may be substituted for mandatory VOC emissions reductions. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 54 Several other commenters stated that we should more broadly allow substitution of subpart 2 mandatory measures.

One commenter felt that substitution of subpart 2 measures should be allowed as long as the substituted measures are at least equivalent to the mandatory measures. Another commenter stated that we should allow areas to adopt substitute measures in lieu of subpart 2 measures where the subpart 2 measures would not be as effective as the substitute measures in reaching attainment. The commenter stated that we have been overly limited in our characterization of when subpart 2 measures might be waived to avoid an absurd result. The commenter believed that we should create a categorical exemption as an exercise of agency power to allow areas to substitute NOx for VOC measures or more effective control measures for less effective control measures when doing so would expedite attainment. Another commenter urged us to limit the strict application of subpart 2 measures because the imposition of such measures creates economic disincentives for companies to locate and expand in nonattainment areas. A number of commenters stated that they do not support the vehicle inspection and maintenance ( I/ M) or stage II vapor recovery PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 55 programs and recommended that we provide States with flexibility in meeting these requirements.

Response: Many of the commenters' suggestions go beyond the application of an absurd results doctrine and instead suggest broad waiver of subpart 2 requirements based on a determination that an alternative or substitute is more effective. We do not believe that we have the authority to broadly waive measures mandated by Congress. As indicated in the legislative history and noted by the Supreme Court,

Congress intended to cabin States' discretion when it mandated the specific controls under subpart 2. See e. g.,

Whitman, __ US ___ [ xxx531 U. S. 484 85. NEED CITATION]

(" Whereas subpart 1 gives EPA considerable discretion to shape nonattainment programs, subpart 2 prescribes large parts of them by law" and " EPA may not construe the statute in a way that completely nullifies textually applicable provisions meant to limit discretion"). xxx ADD CITE] We do not believe that we or the States can take action to override this Congressional intentthese provisions of the statute.

However, as stated in our proposed rule, we believe that case law may provide EPA with limited flexibility to waive federally mandated requirements on a case by case PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 56 basis where application of those requirements would produce an absurd result. We do not need to conclude here what precise circumstances would create an absurd result.

Rather, that decision would need to be made on a case

bycase basis in the context of a specific request. In general, we note that to demonstrate an absurd result, a State would need to demonstrate that application of the requirement would result in more harm than benefit. Because the programs mandated under subpart 2 are generally effective in reducing emissions of the two ozone precursors   NOx and VOC   and because reductions of those precursors generally lead to improved air quality, we believe that such a demonstration could be made, if at all, only in rare instances.

Comment: A few commenters disagreed with the approach in our proposed rule. One commenter stated that we do not have the statutory authority to create new waivers to subpart 2 requirements. Another commenter stated that the CAA does not allow case by case waivers to avoid " absurd"

results. The commenter further stated that doing so would in effect require us to rewrite the statute by regulation.

Response: As stated above, we agree that we do not have broad authority to waive subpart 2 requirements and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 57 that the CAA itself does not expressly create authority to waive such requirements. However, the " absurd results" line of cases provides that where application of a statute as written would create a result counter to what Congress intended, an Agency has limited authority to construe that provision in a manner than would effectuate Congress'

intent. [ XXX ADD ABSURD RESULTS CITES]

B. How will we address long range transport of ground level ozone and its precursors when implementing the 8 hour ozone standard?

[ Section VI. F. of June 2, 2003 proposed rule ( 68 FR 32827); no draft or final regulatory text.]

1. Background Interstate transport can make it difficult or impossible for some States to meet their attainment deadlines for areas within their boundaries solely by regulating sources within their own boundaries. Section 110( a)( 2)( D) of the ActCAA provides an important tool for addressing the problem of interstate transport. It provides that a State must include adequate provisions in its SIP to prohibit sources within the State from emitting air pollutants in amounts that contribute significantly to nonattainment, or interfere with maintenance, in one or more PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 58 downwind States. Section 110( k)( 5) of the ActCAA authorizes EPA to find that a SIP is substantially inadequate to meet any CAA requirement, including the requirements of section 110( a)( 2)( D) of the ActCAA. If we make such a finding, we must require the State to submit, within a specified period,

a SIP revision to correct the inadequacy. The CAA further addresses interstate transport of pollution in section 126,

which authorizes any State to petition EPA for a finding designed to protect the State from transport ofregulate emissions from significant upwind sources of air pollutants fromin other States.

In 1998, we issued the NOx SIP Call, which found the SIPs for certain States in the eastern U. S. to be substantially inadequate to address emissions transported to downwind States and required those States to select and adopt control measures to meet statewide NOx emissions budgets ( 63 FR 57356, October 27, 1998.) State programs to implement the rule have focused on reducing emissions from electric power generators and large industrial emitters. In the NOx SIP Call, we made determinations of whether emissions from sources in upwind States are significantly contributingaddition to requiring states to control interstate air pollution under section 110( a)( 2)( D), the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 59 Clean Air Act requires states with nonattainment areas to develop state plans under Part D that provide for meeting the NAAQS as expeditiously as practicable, and for maintaining healthy air quality in those areas over time.

Together, the section 110( a)( 2)( D) and Part D provisions provide for upwind state and in state controls to ensure that national health based air quality standards are met and maintained.

Current approach On May 12, 2005, EPA published the Clean Air Interstate Rule in the Federal Register ( 70 FR 25162). The EPA determined that 28 States and the District of Columbia contribute significantly to downwind nonattainment problems under both the 1 hour and/ or 8 hour ozone standards. In the final SIP Call rule, we determined that the same level of reductions was needed to address transport for both the 1

hour and 8 hour standards. The compliance date for achieving the required NOx reductions under the NOx SIP Call was May 31, 2004. All of the affected States submitted approvable SIPs in response to the NOx SIP Call and are implementing their NOx control programs. The NOx SIP Call is ensuring substantial emissions reductions from sources in upwind States, and these reductions will significantly PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 60 improve the boundary conditions that downwind States must consider as they work to identify how areas within the State will attain and maintain the NAAQS. By reducing the level of transported emissions at the boundaries of the States,

there will be less burden to achieve additional emission reductions from areas within the State. In the proposed rule, we said that unlike in the past, States affected by transport can develop their local ozone implementation plans with the knowledge that the issue of interstate transport has already been addressed " up front." However, in the 8

hour implementation proposal, we also indicated that we intended to investigate the extent, severity, and sources of, or interfere with maintenance, of the PM2.5 and 8 hour ozone NAAQS in other States. The rule requires these States to submit SIP revisions to reduce SO2 and/ or NOx emissions.

To reduce interstate ozone transport that will exist after implementation of the NOx SIP Call.

2. Current Approach. Since the 8 hour implementation proposal, we have conducted a reassessment of interstate transport for the 8 hour standard. Based on these analyses,

on January 30, 2004 ( 69 FR 4566), we proposed the " Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone," now known as the proposed Clean Air Interstate Rule PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 61 ( CAIR). This action proposed statewide, the rule established statewide ozone season NOx budgets for 25 States and the District of Columbia. These budgets are based on a proposed determination that emissions from these 26 jurisdictions are significantly contributing to 8 hour ozone ( and fine particulate matter) problems in downwind States.

On June 10, 2004 ( 69 FR 32684), we issued a supplemental proposal for the CAIR, which included a proposed model capand trade program that States could use to meet the NOx budgets. 3. Comments and Responses Text Was Moved From Here: 1 Response: The 8 hour implementation rule is not intended as a rule to address interstate transport of pollution and to achieve emission reductions from upwind sources. Rather, its purpose is to explain how the provisions of subparts 1 and 2 of part D of title I of the CAA apply for purposes of the 8 hour NAAQS. We continue to believe that the NOx SIP call provides substantial benefit for areas that are affected by the significant transport of pollution from other States and will ease the planning burden for those areas. Under the CAIR, we have proposed to find that there is a need forthe level of emissions that can be achieved through highly cost effective controls that EPA PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 3The CAIR first phase also provides an annual NOx budget, which also starts in 2009.

62 determined are available from electrical generating units;

however, States have flexibility to choose the measures they will use to achieve the necessary emissions reductions. Due to feasibility constraints, EPA is requiring the CAIR budgets to be achieved in two phases. For summertime NOx,

the first phase starts in 2009 ( covering 2009 2014); 3 the second phase of NOx reductions beyond those required by the NOx SIP Call to further reduce thebegins in 2015 ( covering 2015 and thereafter).

The 25 States that are required to meet a summertime NOx cap for ozone purposes, along with the District of Columbia,

are Alabama, Arkansas, Connecticut, Delaware, Florida,

Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland,

Massachusetts, Michigan, Mississippi, Missouri, New Jersey,

New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, and Wisconsin.

CAIR is geographically broader and more stringent than EPA's previous ozone interstate transport of ozone and the precursor NOx for purposes of addressing significant contribution for the 8 hour ozone standard. Comment:

Two commenters recommended a regional approach among States PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 63 to address transport. One commenter thought that Clear Skies is the best way to address transport, but absent that,

would support a regional approach. Some commenters thought the 8 hour implementation proposal ignored the issue that ozone is a regional problem that can only be solved through regional planning. These commenters added that instead of incentives for regional planning there were disincentives.

Another commenter thought that EPA unrealistically expects States to be able to resolve all potential conflicts between the States by working together in a collaborative process to identify and adopt appropriate controls that provide for attainment. The commenter suggested that EPA oversight may be necessary in these situations. One commenter thought the development of multiple ozone transport regions for regional planning and coordination may be highly desirable to bring States with a common problem together to coordinate efforts with the strength of several States rather than to go it alone. Another suggested some criteria for EPA to use if we were to choose to establish OTRs.

Response: We believe that addressing interstate transport requires regional cooperation. Therule, the NOx PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 4CAIR requires summertime NOx reductions in the following States not covered by the NOx SIP call: Arkansas, Florida, Iowa, Louisiana, Mississippi, and Wisconsin. The NOx SIP call has requirements for two States not covered by CAIR ozone requirements: Rhode Island and Georgia. EPA has proposed a stay of applicability of the SIP Call to Georgia as an initial response to a petition for reconsideration on whether Georgia should be covered.

64 SIP Call, adopted in 1998.4 CAIR's ozone requirements are based on updated analyses of the impacts of pollution transported across State borders, and of highly costeffective control opportunities for NOx.

In the NOx SIP Call is providing significant benefit to areas affected by transported pollution. In addition, we have proposed to require additionalRule, EPA found the SIPs for certain States in the eastern U. S. to be substantially inadequate to address emissions transported to downwind States and required those States to select and adopt control measures to meet statewide ozone season NOx emissions budgets based on highly cost effective NOx emissions reductions from a number of States covered by( 63 FR 57356, October 27,

1998.) In that rule, we determined that the same level of emissions reductions was needed to address transport for both the 1 hour and 8 hour standards.

The NOx SIP Call Rule is achieving substantial emissions reductions and air quality improvement well in advance of PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 65 the attainment dates of 8 hour nonattainment areas. In the eastern United States, monitoring data shows a 10 percent improvement between 2002 and 2004 in the seasonal ( May

September) average of daily maximum 8 hour ozone concentrations, after adjustment for meteorological differences. The EPA believes that the NOx reductions achieved as a result of the NOx SIP Call are an important factor in this improvement. The compliance date for achieving the required NOx reductions under phase I of the NOx SIP Call was May 31, 2004. All of the 19 affected States and the District of Columbia submitted complete and Phase I SIPs, which EPA approved, in response to the NOx SIP Call and are implementing their NOx control programs. State programs to implement the rule have focused on reducing emissions from electric power generators and large industrial emitters. The phase II SIP call rule, which responds to court decisions on issues from the original SIP call rule involving certain types of sources and geographic coverage,

requires additional emissions reductions by May 1, 2007.

The EPA'S modeling for the CAIR indicates that ozone levels across the eastern half of the country will improve substantially by 2010 because of existing requirements   including the NOx SIP call and to required several other PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 66 States to reduce NOx emissions. We note that groups of States have worked effectively together in the past to address regional ozone problems. For example the Lake Michigan Air Directors Consortium ( LADCO) was established in 1990 by the States of Illinois, Indiana, Michigan, and Wisconsin. The main purpose of LADCO is to provide technical assessments for and assistance to its member States on problems of ozone air quality and to provide a forum for its member States to discuss air quality issues.

We will continue to encourage these multi State efforts to assess and address, federal motor vehicle and nonroad engine regulations, and other existing State and federal rules.

Last year, EPA designated more than 100 areas in that region as having ozone levels not meeting the 8 hour ozone standard, based on 2002 2004 data. Air quality improvements due to existing requirements ( i. e., without State measures required for areas designated nonattainment for the 8 hour standard) are projected to leave only 16 of these areas in nonattainment in 2010. This estimate is derived from base case CAIR modeling results shown in the final notice for the CAIR ( 70 FR 25254, Table VI   12).

As detailed in the final CAIR notice, the CAIR rule will further reduce ozone transport to assist States in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 67 their efforts to bring ozone nonattainment and will work with these States as needed to provide support and ensure progress. We believe these federal rules in conjunction with voluntary cooperation between States will be effective in addressingareas into attainment or  in the case of downwind receptor areas that attain prior to some or all CAIR reductions  maintain air quality meeting the 8 hour ozone problem.

At this time, we do not anticipate formalizing any additional transport regions. Thus, it would not only be premature but would also be an inefficient use of resources to develop criteria that we would apply in establishing additional transport regions.

Comment: Many commenters supported our intention to investigate the extent, severity, and sources of interstate transport that will exist after the NOx SIP Call is implemented in 2004. Two commenters said this investigation should be preceded by rigorous, peer reviewed modeling and observation analyses in an open public process. One commenter thought we should conduct modeling similar to the NOx SIP Call modeling and assign the transport responsibility to States. Another recommended that the States be involved PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 68 from the beginning. Several urged us to issue a transport rule as soon as possible.

Several State commenters claimed that the air coming into their States is often at or above the levelNAAQS. In the CAIR rulemaking, EPA projected that 39 counties ( in the 16 nonattainment areas referenced above) would have ozone levels exceeding the standard in 2010 in the absence of further control requirements ( i. e., the base case without CAIR). Most of these counties were projected to be within a few ppb of the standard. For the 39 counties, the average reduction in ozone levels estimated from 2009 CAIR NOx controls is 0.4 ppb, and the maximum improvement is 1.4 ppb.

( 70 FR 25254, Table VI   12.) The 2009 CAIR NOx requirements will achieve reductions prior to the maximum attainment date for downwind 8 hour ozone areas classified as moderate.

We believe that States will be able to demonstrate timely attainment for most 8 hour ozone nonattainment areas with the help of emissions reductions from Federal rules.

However, we also believe that a limited number of downwind areas, while showing improvement, are likely to remain in nonattainment after 2009. This is due to the severity of projected ozone levels in certain areas, uncertainties about the levels of emissions reductions that will actually occur, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 69 and persistence of historical difficulties with attaining the 1 hour ozone standard. The EPA determined in the CAIR rule that even if all downwind receptor areas attained on time,

many areas will remain close enough to the standard to be at risk of falling back into nonattainment. The EPA concluded that the 2015 summertime NOx reductions will assist attainment and maintenance of the 8 hour standard and thus it would not be possible to solve nonattainment within their boundaries without reducing the amount of ozone and its precursors being transported into the State. Others said our preliminary modeling indicates that ozone concentrations in air being transported to the Northeast will be at levels near or above the 8 hour standard, even after the implementation of the NOx SIP Call. One commenter said upwind States are not reducing emissions sufficiently to ensure a downwind State can meet its legal obligations. Several commenters thought upwind areas should be held accountable for their impacts by implementing controls similar to those required in the downwind areas they impact. One commenter believes that the same type of control measures already in place throughout the OTR should be applied in upwind areas affecting the air quality in the OTR. One suggested that as a starting point upwind areas should be required to implement PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 5For the 22 counties projected to be in nonattainment in 2015 in the absence of further control requirements ( i. e., the CAIR base case), the average ozone reduction in 2015 from CAIR is 1.1 ppb, and the maximum improvement is 1.6 ppb. ( 70 FR 25254, 25455, Table VI   13.)

70 requirements such as RACT, I/ M, and NSR. Several commenters stated that all types of industrial facilities should be controlled to prevent transport. Another urged us to do our part to adopt national controls on fuels and mobile sources.

One commenter said that we have not demonstrated that the existing and anticipated control programs in upwind States will solve the transport problem for northeastern States despite our assertion that interstate transport has already been addressed. Response: In certain cases, for the States to be successful in developing local plans demonstrating attainment of the 8 hour standard, we agree that upwind. 5 In addition to controlling interstate air pollution under section 110( a)( 2)( D), EPA national rules and State rules for controlling local sources of emissions must be effectively and efficiently controlled. These emission reductions may be achieved through federal rules ( such as those regulating engines and vehicles) or through rules requiring upwind States to address the interstate transport PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 71 of pollutants through SIP revisions. However, in any rule issued by EPA under sections 110( a)( 2)( D) and ( k)( 3), EPA cannot mandate the specific controls the State must adopt   such as RACT, I/ M and NSR   as suggested by the commenters.

We may identify the level of contribution that needs to be addressed, but the State has the responsibility to identify the controls to achieve those reductions. For the proposed CAIR, we conducted new analyses of the degree of transport that will remain after implementation of the NOx SIP Call. In assessing whether emissions from upwind States significantly contributeare significantly reducing, and in the future will further reduce, the amount of pollution transported to 8 hour ozone nonattainment in downwind States,

we followed the general approach used in the NOx SIP Call.

However, we used an updated model and updated inputs that reflect current requirements ( including the NOx SIP Call itself). We proposed to conclude that certain States and the District of Columbia are significantly contributing to 8 hour ozone problemsareas in downwind States and proposed statewide NOx budgets for these jurisdictions. In the rulemaking process, we have made all of the transport analyses available for public comment and review. Comment: Two commenters thought that we should not evaluate what actions are needed PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 72 to address transport beyond the existing NOx SIP Call until after States have had a chance to address the new standard with SIPs. The commenters pointed out that the SIP Call reductions will just be implemented in 2004. One pointed out that the NOx SIP Call was designed to address both 1 hour and 8 hour transport. Several commenters thought that because the existing NOx SIP Call eliminates significant contribution from other States, under that rule there is no basis for any further requirements to reduce NOx for the purpose of addressing long range transport issues. Another stated that any changes to the NOx SIP Call should be limited to expanding the geographic coverage of the requirements. The commenter said we should not, and have not, justified modifying the NOx SIP call for States that have fully controlled under the NOx SIP Call. Response: As discussed above, we are addressing the issue of transport in CAIR, and the sufficiency of the analysis in that rule or the legal authority of such action is not an issue for this rulemaking. We agree that States should work together in the SIP development process to ensure localized transport is addressed. States that share an interstate nonattainment area are expected to work together in developing the nonattainment SIP for that area and in reducing emissions PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 73 that contribute to local scale interstate transport problems.

We would also encourage collaborative efforts even in cases where there is not a multi State nonattainment area but where significant emissions sources in one State might affect air quality in a nonattainment area in an adjacent State.

Comment: One commenter said that in order for areas to attain the 8 hour standard by the applicable attainment date,

a regional strategy with deeper and quicker ( i. e., by the end of this decade) reductions than has been offered to date is needed. The commenter urged us to reconsider the options submitted in April 2002, through the Ozone Transport Commission, regarding transport and ozone implementation.

Another commenter agreed that significant regional or national reductions that coincide with attainment dates are essential. The commenter pointed out that Clear Skies and Tier IV nonroad engine standards are not yet in place and in any event would not bring timely relief from transport. One State commenter urged us to quickly promulgate a transport rule to address 8 hour ozone problems in a time frame to help areas attain the standards. Several commenters thought that any results from EPA's investigation of interstate transport that will exist after the NOx SIP Call will likely come too PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 74 late to help downwind 8 hour areas meet. Downwind States, in devising their attainment dates.

Response: As noted above, the issues raised by these commenters are being considered separately in the CAIR and are not part of this rulemaking. In both the January 2004 proposal and the June 2004 supplemental proposal for the CAIR, we solicited comment on the proposed compliance deadlines for Phase I ( 2010) and Phase II ( 2015) reductions.

In that rulemaking, we are evaluating the balance between the need for near term reductions to attain the 8 hour ozone and PM2.5 standards, the ability of States to develop firm plans for achieving the required reductions, and the ability of affected emissions sources to install pollution controls in a fashion that is least disruptive to the economy. We are currently reviewing the comments we have received and will make final decisions on the timing for compliance with the CAIR after we have carefully considered all relevant policy issues. xxx may need to be revised and updated based on what we say in the CAIR] Comment: Two commenters expressed concern that if upwind emissions are not controlled, downwind local areas will be driven to adopt more costly ( and less cost effective) measures. One added that this would exacerbate the existing inequity between upwind sources and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 75 the OTR States. Another thought that areas affected by transport should not be required to achieve all reductions from local controls even if local control would achieve attainment, since local measures may be extremely expensive when compared either to control measures that could be implemented in upwind areas or compared to regional measures.

Two commenters stated that the cost and benefit of controls to address transported emissions should be carefully evaluated and compared to the cost and benefits of downwind local control measures.

Response: We agree that upwind States have the responsibility to control emissions that are significantly contributing to downwind nonattainment problems. Although numerous areas will attain the 8 hour ozone standard in the near term with existing controls, we believe that other areas will need further emissions reductions ( in some cases, large reductions) to attain the 8 hour standard. Many of these areas have already adopted significant local control measures to reduce 1 hour ozone levels. As discussed in the proposed CAIR, we conducted an analysis to evaluate the effect of local measures on 8 hour ozone attainment. In this analysis,

hypothetical total NOx and VOC emissions reductions of 25 percent were applied in all projectedand maintenance plans, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 6 Many types of sources contribute to ozone transport. CAIR reduction requirements are based solely upon potential reductions from EGUs; EPA did not find other source types highly cost effective to control.

76 will be able to take required upwind reductions into account.

Depending on the particular area, the upwind reductions will help to hasten attainment of the NAAQS, make attainment and maintenance of the NAAQS less difficult and costly, or both.

EPA notes that interstate pollution transport will be further reduced through cost effective measures that individual States adopt for purposes of bringing their ozone nonattainment areas east of the continental divide in 2010.

Despite these substantial reductions, approximately eight areas were projected to have ozone levels exceeding the 8

hour standard in 2010. We believe that this hypothetical local control scenario is an indication thatinto attainment. 6 Given the potential for measures adopted by one State to improve air quality downwind, EPA is supportive of multistate cooperation on strategies for attaining the 8 hour standard will entail substantial cost in a number of areas,

and that further regional reductions are warranted. The NOx reductions proposed under the CAIR would greatly assist the downwind 8 hour ozone nonattainment areas in achieving the 8

hour NAAQS. Moreover, as we stated in the proposed CAIR, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 77 addressing upwind emissions would help ensure that attainment would be achieved in a more equitable, cost effective manner than if each nonattainment area attempted to achieve attainment by implementing local emissions reductions without the benefit of these upwind emission reductions. [ xxx NEED TO CONTINUE TO CONSIDER THIS RESPONSE IN LIGHT OF HOW WE ULTIMATELY ADDRESS THE NPRA & API PETITIONS FOR RECONSIDERATION. MAYBE MOVE THIS COMMENT/ RESPONSE TO RTC DOC?] Comment: Three commenters thought the NOx SIP Call was not designed to address the 8 hour standard. One said that the NOx SIP Call was based largely on the work of the Ozone Transport Assessment Group ( OTAG), which was established to address transport under the 1 hour standard.

Two stated that even with the NOx SIP Call's significant emission reductions, our preliminary modeling indicates that air being transported to the Northeast will be at levels above the 8 hour health standard. Response: Although the NOx SIP Call relies in part on the OTAG analyses, we conducted additional analyses of interstate transport with respect to both the 1 hour and 8 hour standards and promulgated the NOx SIP Call to address transport for both standards ( see 62 FR 60318; November 7, 1997 and 63 FR 57356;

October 27, 1998). Several years have passed since PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 78 promulgation of the NOx SIP Call and updated data are available. Therefore, we are reassessing the degree to which ozone transport will remain a problem under the 8 hour NAAQS after full implementation of the NOx SIP Call. Based on new analyses, we proposed in CAIR to conclude that additional reductions are needed to address the significant transport of emissions and to ensure progress toward attainment in downwind areas affected by those transported emissions.

Therefore, we proposed the CAIR, which would require additional NOx emissions reductions requirements for 25 States and the District of Columbia to address the interstate transport problem. We are continuing to evaluate the issue of transport and plan to take final action on the CAIR no later than xxx [ date??].

Comment: Some commenters stated that we should not rely on the proposed Clear Skies legislation to reduce emissions transport because there is no guarantee that the legislation will be enacted. Several State commenters added that Clear Skies would not provide adequate or timely emissions reductions. Another commenter suggested that we work with Congress to enact legislation to allow for the development and use of a transport argument in attainment demonstrations. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 79 Response: While we still hope that Congress will adopt the Administration's Clear Skies multi pollutant legislation,

we acknowledge that the outcome of that process is uncertain.

Therefore, relying on existing regulatory authorities, we proposed the CAIR, which would require upwind States to address any transported NOx emissions reductions as expeditiously as possible. Comment: One commenter proposed that rather than addressing transport through national measures, we could include transport as one of the criteria for determining the adequacy of a SIP. This commenter supported the multi State collaborative effort mentioned in the proposed rule, so that areas work together to address transport as their SIPs are being developed. The commenter asserted that our proposed early, top down approach could significantly hinder SIP planning for local areas considering the complex chemistry of ozone and PM2.5 formation.

Response: We believe that the Act does allow the States to work together in a collaborative fashion to assess regional or sub national transport. The EPA worked with a State led effort in the mid to late 1990' s ( the OTAG process) to perform such an assessment, which documented the magnitude and extent of long range transport of ozone and its precursors. At that time, EPA concluded that without some PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 80 certainty of what levels of emission controls would be required in the larger region, it was impossible for States to assume realistic amounts of ozone and precursor concentrations being transported into the modeling domain of the nonattainment area for which they were required to develop their attainment demonstrations. Therefore, EPA issued the NOx SIP call that required affected States to cap NOx emissions. In this way, eastern US States could then have a fair degree of certainty regarding the amount of transport to be assumed in their 1 hour ozone attainment demonstrations for individual nonattainment areas. Based on this experience, we believe it would likely take States working together in a collaborative fashion to agree on a regional control strategy much more time than the Act provides for States to develop attainment demonstrations.

Therefore, we believe the commenter is incorrect that the " top down" approach would significantly hinder SIP planning for the individual, and on the contrary, if done expeditiously, would provide the certainty needed to complete the attainment demonstrations in a timely manner. C. How will we address transport of ground level ozone and its precursors for rural nonattainment areas, areas affected by intrastate transport, and areas affected by international PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 81 transport? [ Section VI. G. of June 2, 2003 proposed rule ( 68 FR 32828); no draft or final regulatory text.] 1 Text Was Moved From Here: 2 b. Summary of final rule The final rule does not contain any revisions to current policy on rural transport areas under section 182( h). 2 c.

3. Comments and Responses Comment: responses This section addresses more significant comments received; the response to comment document addresses other comments also.

Text Moved Here: 1 Comment: Several commenters thought the June 2, 2003,

8 hour implementation proposal failed to adequately address transport and disagreed with our statement that 8 hour transport has been addressed up front by the NOx SIP Call.

Some added that this puts northeastern States located in the Ozone Transport Region ( OTR) in a situation where their citizens and businesses are bearing a disproportionate burden of health and economic impacts compared to upwind States that have fewer control requirements than OTR States. Some OTR State commenters said that the rule should address this inequity. One said we cannot assume that transport has been PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 82 addressed until after the NOx SIP Call is implemented and has been evaluated.

End Of Moved Text Response: Several commenters favored the proposed approach of not revising our current policies with regard to subpart 2 areas that meet the criteria for being a ruralThe 8 hour ozone implementation rule is not intended as a rule to address interstate transport areaof pollution and to achieve emissions reductions from upwind sources as provided under CAA section 182110( a)( 2)( hD).

Response: Rather, its purpose is to interpret nonattainment requirements ( in subparts 1 and 2 of part D of title I) for State plans to implement the 8 hour NAAQS. We agree withhave addressed the section 110( a)( 2)( D) obligation through these comments.

Comment: Several commenters urged us to NOx SIP Call and CAIR, which provide more flexibility such as extending the provision to othersubstantial air quality benefit for downwind areas whose problems are causedsignificantly affected by transport but that do not qualify as rural under section 182( h).

Text Was Moved From Here: 3 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 83 2of pollution from other States.

Comment: Two commenters recommended a regional approach among States to address transport. INTRASTATE TRANSPORT aOne commenter thought that Clear Skies is the best way to address transport, but absent that, would support a regional approach. Some commenters thought the 8 hour ozone implementation proposal ignored the issue that ozone is a regional problem that can only be solved through regional planning. These commenters added that instead of incentives for regional planning there were disincentives. Another commenter thought that EPA unrealistically expects States to be able to resolve all potential conflicts between the States by working together in a collaborative process to identify and adopt appropriate controls that provide for attainment.

The commenter suggested that EPA oversight may be necessary in these situations. One commenter thought the development of multiple OTRs for regional planning and coordination may be highly desirable to bring States with a common problem together to coordinate efforts with the strength of several States rather than to go it alone. Another suggested some criteria for EPA to use if we were to choose to establish OTRs. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 84 Background Response: We believe that addressing interstate transport requires regional approaches and regional cooperation. EPA has ensured regional action to reduce interstate ozone transport through the NOx SIP Call Rule and CAIR. In addition, we note that groups of States have worked effectively together in the past to address regional ozone problems. For example, the Lake Michigan Air Directors Consortium ( LADCO) was established in 1990 by the States of Illinois, Indiana, Michigan, and Wisconsin. The main purpose of LADCO is to provide technical assessments for and assistance to its member States on problems of ozone air quality and to provide a forum for its member States to discuss air quality issues. We will continue to encourage these multi State efforts to assess and address ozone nonattainment and will work with these States as needed to provide support and ensure progress.

We agree with other commenters that States should work together in the SIP development process to ensure localized transport is addressed. States that share an interstate nonattainment area are expected to work together in developing the nonattainment SIP for that area and in reducing emissions that contribute to local scale interstate transport problems. We would also encourage collaborative PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 85 efforts even in cases where there is not a multi State nonattainment area but where significant emissions sources in one State might affect air quality in a nonattainment area in an adjacent State.

In response to comments suggesting that EPA establish additional transport regions, at this time we do not anticipate formalizing any additional transport regions. We believe that the NOx SIP Call and CAIR rules go far to effectively address the kind of transport that establishment of a transport region would be intended to address, without the costs of setting up a commission to oversee the transport region.

Comment: Some commenters stated that we should not rely on the proposed Clear Skies legislation to reduce emissions transport because there is no guarantee that the legislation will be enacted. Several State commenters added that Clear Skies would not provide adequate or timely emissions reductions. Another commenter suggested that we work with Congress to enact legislation to allow for the development and use of a transport argument in attainment demonstrations.

Response: While we still hope that Congress will adopt the Administration's Clear Skies multi pollutant legislation,

we acknowledge that the outcome of that process is uncertain. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 86 To ensure that regional transport is addressed in a timely manner, EPA finalized the CAIR in May 2005 based on our existing regulatory authority.

Comment: One commenter proposed that rather than addressing transport through national measures, we could include transport as one of the criteria for determining the adequacy of a SIP. This commenter supported the multi State collaborative effort mentioned in the proposed rule, so that areas work together to address transport as their SIPs are being developed. The commenter asserted that our proposed early, top down approach could significantly hinder SIP planning for local areas considering the complex chemistry of ozone and PM2.5 formation.

Response: We believe that the NOx SIP call and CAIR help, rather than hinder, SIP planning for nonattainment areas. We agree that the CAA does allow the States to work together in a collaborative fashion to assess regional or sub national transport. The EPA worked with a State led effort in the mid to late 1990' s ( the OTAG process) to perform such an assessment, which documented the magnitude and extent of long range transport of ozone and its precursors. At that time, EPA concluded that without some certainty of what levels of emission controls would be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 87 required in the larger region, States faced great uncertainty regarding the amounts of ozone and precursor concentrations being transported into the modeling domain of the nonattainment area for which they were required to develop their attainment demonstrations. Therefore, EPA issued the NOx SIP Call   and more recently, CAIR  to establish the emission reduction responsibilities of upwind States under section 110( a)( 2)( D). In this way, eastern States could then have a fair degree of certainty regarding required upwind reductions and the amount of transported emissions to be assumed in their 1 hour ozone attainment demonstrations for individual nonattainment areas. Based on the OTAG experience, we believed that there was high risk that States working together in a collaborative fashion would not agree on a regional control strategy within the time the CAA provides for States to develop 8 hour attainment demonstrations. Therefore, we believe the commenter is incorrect that the " top down" approach will significantly hinder SIP planning for the individual areas, and on the contrary, will provide the certainty needed to complete the attainment demonstrations in a timely manner.

The commenter also proposed that rather than addressing transport through national measures, we could include PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 88 transport as one of the criteria for determining the adequacy of a SIP. It is true that section 110( a)( 2)( D)( i)( I)

requires a SIP to " contain adequate provisions . .

. prohibiting, consistent with the provisions of this title,

any source or other type of emissions activity within the State from emitting any air pollutant in amounts which will )

( I) contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any such national primary or secondary ambient air quality standard . . ." Furthermore, sections 110( a)( 1) and ( 2) of the Act require States to submit SIPs that implement,

maintain, and enforce a new or revised national ambient air quality standard ( NAAQS) within 3 years of promulgation of the standard. Among other things, these SIP revisions must address a state's significant contribution of pollution to nonattainment and maintenance problems in other States under section 110( a)( 2)( D). On March 10, 2005, EPA officially notified States that they have failed to submit SIPs to satisfy this requirement of the Act with respect to the 8

hour ozone and PM2.5 NAAQS ( 70 FR 21147; April 25, 2005).

The finding starts a 2 year clock for EPA to issue a final Federal Implementation Plan ( FIP) that will address the requirements of section 110( a)( 2)( D) unless a SIP revision PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 7This section of the proposal also addressed multi State nonattainment areas. The discussion of multi State nonattainment areas is now covered under the discussion below on attainment demonstrations and modeling.

89 correcting the deficiency is approved by EPA before the FIP is promulgated. On [ xxx date], EPA issued guidance regarding how States could satisfy the section 110( a)( 2)( D)

requirement. For States affected by CAIR, an approved SIP responding to the CAIR would satisfy the requirement and turn off the FIP clock.

C. How will we address transport of ground level ozone and its precursors for rural nonattainment areas, areas affected by intrastate transport, and areas affected by international transport?

[ Section VI. G. of June 2, 2003 proposed rule ( 68 FR 32828); no draft or final regulatory text.] 7 Text Moved Here: 2 7 1. Rural transport nonattainment areas a. Background In the June 2, 2003 proposal, we noted that section 182( h) of the CAA ( under subpart 2) recognizes that the ozone problem in a rural transport area is almost entirely attributable to emissions from upwind areas. This section PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 8Based on current information, we do not believe there are currently any 8 hour nonattainment areas covered under subpart 2 that are " rural" and therefore eligible for consideration for coverage under section 182( h). Existing policy on rural transport areas includes the " General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990; Proposed Rule" April 16, 1992 ( 57 FR at 13505).

90 provides that the only requirements applicable to an area classified under subpart 2 that we determine is a rural transport area are the minimal requirements specified for marginal areas, i. e., those areas expected to attain within 3 years ofafter designation. The timing for attainment for these areas will depend on the schedule for adoption and implementation of control measures in the upwind areas. We did not propose any revision to current policy and practices related to the rural transport area provisions under section 182( h).

b. Summary of final rule The final rule does not contain any revisions to current policy on rural transport areas under section 182( h). 8 c. Comments and responses Comment: Several commenters favored the proposed approach of not revising our current policies with regard to subpart 2 areas that meet the criteria for being a rural transport area under section 182( h). PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 91 Response: We agree with these comments.

Comment: Several commenters urged us to provide more flexibility such as extending the provision to other areas whose problems are caused by transport but that do not qualify as rural under section 182( h).

Response: These commenters did not suggest any legal mechanism for granting the flexibility provided under section 182( h) to areas that do not qualify as rural under section 182( h). We have not found any such legal mechanism and,

therefore, the final rule does not extend the flexibility provided under section 182( h) to additional areas.

2 Text Was Moved From Here: 4 . Intrastate Transport a. Background In the proposed rule, we noted that a number of State air agency representatives had voiced concern about intrastate transport of ozone and precursor emissions and asked EPA to address this concern. We indicated that the CAA requires individual States, as an initial matter, to deal with intrastate transport. We also pointed out that a State could recommend designation of nonattainment areas that are large enough to encompass upwind and downwind areas of the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 92 State and require that the individual jurisdictions work together on an attainment plan that accounts for transport and results in attainment by the attainment date for the entire nonattainment area. We also solicited comments on other ways of addressing intrastate transport within the context of the CAA provisions.

b. Summary of final rule The final rule does not contain any additional provisions for addressing intrastate transport for the reasons stated in the proposal. However, as indicated in the Phase 1 Rule published on April 30, 2004, for subpart 1 areas, States and EPA could consider intrastate transport in determining the attainment date for an area. ( Intrastate transport also could be considered in determining the attainment date that is as expeditious as practicable for subpart 2 areas, but if that date were later than allowed for the area's classification, the State would need to request bump up of the area to a higher classification for that date to be approvable).

c. Comments and responses Comment: Two commenters recommended that States have regulatory authority to require controls as necessary regarding the problem of intrastate transport. They asserted PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 93 that nonattainment areas should work with upwind contributing areas within the State to address regional transport within the State.

Response: As provided in the proposed rule ( 68 FR 32829) we agree with the commenters that States have the obligation and authority to address the transport of pollution from one area of the State to a different area of the State.

Comment: Several comments recommended an intrastate transport classification.

Response: Our response to those comments is in the response to comment document for the Phase 1 Rule of April 30, 2004. Docket document OAR 2003 0079 0717; p. 68.)

3. How will EPA address transport of ground level ozone and its precursors for areas affected by international transport?

a. Background As discussed in the proposal, international transboundary transport of ozone and ozone precursors can contribute to exceedances of the NAAQS. It is possible that the international transport of air pollutants may affect the ability of some areas to attain and maintain the 8 hour ozone NAAQS. Section 179B of the CAA ( International Border Areas),

applies to nonattainment areas that are affected by emissions PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 94 emanating from outside the United States. This provision requires EPA to approve a SIP for an ozone nonattainment area if it meets all of the requirements applicable under the CAA,

other than a requirement that the area demonstrate attainment and maintenance of the ozone NAAQS by the applicable attainment date, and the State establishes to EPA's satisfaction that the SIP would be adequate to attain and maintain the ozone NAAQS by the applicable attainment date but for emissions emanating from outside the United States.

The preamble to the proposed rule recommended that States should confer with the appropriate EPA Regional Office to establish on a case by case basis the technical requirements for these analyses.

b. Final rule As in the proposal, we are not setting forth any regulatory provisions related to international transport.

Section 179B of the CAA applies for these purposes. We continue to recommend that States confer with the appropriate EPA Regional Office to establish on a case by case basis the technical requirements for analyses to support showings under section 179B. These analyses will be subject to public comment during the State and Federal SIP processes.

c. Comments and responses PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 95 Comment: Several commenters addressed the discussion of international transport in the proposed rule. Two commenters suggested that EPA is placing too high a burden on States to make a demonstration that a nonattainment area would attain but for international transport ( e. g., assessing emissions from foreign countries). These commenters stated that EPA has the appropriate resources and technical expertise to evaluate international transport and highlighted certain data EPA has gathered and modeling EPA has performed. The commenters suggested that EPA should re evaluate relevant policies regarding section 179B of the CAA to ensure they are streamlined and not unnecessarily burdensome on States in making an international transport demonstration. Another commenter thought that the proposed rule does not adequately address ozone from international sources, especially in a situation where a State does not have jurisdiction over most of the significant sources of ozone or access to available data for modeling in that region. Another commenter encouraged EPA to expand its view of the applicability of section 179B and allow consideration of the impact on attainment of smoke from crop burning activities in Southern Mexico and Central America. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 7/ 8/ 05 96 Response: The CAA, not EPA's proposed rule, places the burden on States to demonstrate that an area would be able to attain but for emissions from sources located outside the United States. However, EPA agrees with the commenters that EPA has been performing numerous activities that will provide data that States may be able to rely on as they develop these demonstrations. We recognize that adequate data for foreign sources may not be available to States. Therefore, modeling,