Comment: Another commenter said that although subpart 2 contains some narrowly crafted exceptions ( e. g., CAA 182( b)( 1)( A)( ii)), there are no exceptions based on clean data. In the past, EPA has cited a Tenth Circuit decision,

Sierra Club v. EPA, 99 F. 3d 1551 ( 10th Cir. 1996), as supporting the Clean Data Policy. The commenter contended that case has been superseded by the Supreme Court decision in Whitman v. American Trucking Assoc., Inc., 531 U. S. 457 ( 2001). There, the Court held that Subpart 2 eliminates regulatory discretion previously allowed to EPA under Subpart 1, and noted that Subpart 2 prescribes large parts of nonattainment programs, for example, section 182. The requirements for RFP and attainment demonstrations are among those Subpart 2 nonattainment programs that Congress prescribed by law, thereby eliminating EPA discretion to accept something less. See also Sierra Club v. EPA, 293 F. 3d 155 ( D. C. Cir. 2002) ( holding that EPA is without authority to infer exceptions to attainment deadlines and to explicit Subpart 2 requirements for RFP plans).

Response: EPA believes that the comments misconstrue Sierra Club v. EPA, 293 ( Sierra Club 2002) F. 3d 155 ( D. C. Cir.

2002). At issue in the Sierra Club 2002 case was whether: PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 198 ( 1) EPA could extend an area's attainment date through a means other than reclassification ( which is not associated with the waiver of the obligation to submit the attainment demonstration or any other planning requirement through some method other than a bump up or 1 year extension pursuant to section 181; ( 2) whether EPA could approve the RFP plan for an area with an attainment date of 2005 with only a demonstration that the plan contained RFP of 3 percent per year through 1999; and ( 3) other issues which are also not germane to this issue. The issue of whether an area was required to submit an attainment demonstration and/ or an RFP plan was not raised or decided Sierra Club 2002. Rather the issues under consideration were the content of the RFP demonstration and the legality of extending the statutorilyprescribed maximum attainment date.

The issue addressed by the Clean Data Policy is whether an area that has attained the standard ( as evinced by air quality monitoring data) still needs to submit a demonstration of how the area will achieve enough reductions to demonstrate that air quality goals will be met ( i. e.,

" attain the NAAQS") and a plan to obtain reasonable periodic reductions towards attaining that air quality goal.

EPA continues to believe that the need for an PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 199 attainment demonstration   a SIP revision which identifies the level of future reductions needed to achieve the NAAQS and any additional adopted measures needed to achieve these future reductions   is unnecessary once the NAAQS is attained. Likewise, EPA concludes RFP   a plan for annual incremental reductions leading to attainment   is also unnecessary once attainment is reached. If the goal of attainment has been met, there is no longer a need to plan for measures to meet that goal.

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

hour NAAQS. In the Phase 1 rule, EPA addressed the Court's decision and concluded that subpart 2 does apply. The issue here is not whether it applies, but how those requirements apply under a specific situation where an area has attained the NAAQS. That issue was not addressed by the Court in Whitman.

10. How will RFP be addressed in Tribal areas? [ Section VI. I. 11. of June 2, 2003 proposed rule ( 68 FR 32835); no draft or final regulatory text.]

a. Background. The TAR provides flexibility for Tribes in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 200 the preparation of a TIP to address the NAAQS. As mentioned in the proposed rulemaking, the TAR provides the Tribes with the ability to develop 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." For example, each TIP submission must include a demonstration that the Tribe has authority to develop and run its program, the ability to enforce its rules, and the capacity and resources to implement the program it adopts. Therefore it may include one or two source specific requirements but may not include provisions for RFP and other SIP requirements. The proposal noted that these TIPs can be an important step in addressing an overall air quality plan to achieve health and environmental goals on tribal lands. Where a Tribe chooses not to address a specific planning element, EPA may be obligated to step in. Such action would not preclude a Tribe from addressing those elements at a later time.

b. Summary of Policy.

We intend to take the approach noted in the proposal. There is no regulatory text for this intention.

c. Comments and responses PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 201 No comments received on this portion of the proposal.

11. How will RFP targets be calculated? [ Section VI. I. 12.

of June 2, 2003 proposed rule ( 68 FR 32836); section 51.910( c) of the draft and final regulatory text.]

a. Background. We proposed a methodology for the calculation of RFP target levels of emissions that is based on the method we developed for the 1 hour standard, while taking into account our interpretation of CAA restrictions on creditable emissions and our proposal to use the 2002 inventory as the baseline inventory for the RFP requirement.

The CAA specifies four types of measures that were not creditable toward the 15 percent RFP requirement. These are:

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

( 2) Regulations concerning Reid Vapor Pressure promulgated after 1990 or required under section 211( h).

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

( 4) State regulations submitted to correct deficiencies in I/ M existing or required programs. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 202 These four types of measures were all expected to result in a decrease in emissions between 1990 and 1996. Of these four types of measures, RACT and I/ M program corrections and the 1992 RVP requirements were completely in place by 1996 and therefore are already accounted for in the 2002 baseline. As a result, they would produce no additional reductions between 2002 and 2008 or later milestone years.

However, the pre 1990 Federal Motor Vehicle Control Program ( FMVCP) will continue to provide additional benefits during the first two decades of the 21st century as remaining vehicles meeting pre 1990 standards are removed from the vehicle fleet. Because these benefits are not creditable for RFP purposes, in order to calculate the target level of emissions for future RFP milestone years ( i. e., 2008, 2011, etc.), States must first calculate the reductions that would occur over these future years as a result of the pre 1990 FMVCP. We proposed three methods to properly account for the non creditable reductions when calculating RFP targets for the 2008 and later RFP milestone years.

b. Summary of Final Rule.

The calculation methods have been revised to account for NOx and for other emissions models. They appear as PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 203 Appendix A of this preamble. These methods are consistent with the requirements of sections 182( b)( 1)( C) and ( D) and 182( c)( 2)( B) of the Act.

c. Comments and responses Comment: One commenter agreed that the base emission level should be decreased by the pre 1990 FMVCP reductions ( 1990 I/ M program and fuel Reid Vapor Pressure ( RVP) of 9.0 or 7.8 psi). However, the commenter further recommended that the pre 1990 FMVCP reductions be calculated using the I/ M program and fuel properties in effect during the new baseline year of 2002.

The commenter claimed an advantage of the recommended change is that it removes from the non creditable pre 1990 FMVCP reductions, creditable reductions from controls implemented prior to 2003 ( such as improvements to the I/ M program or cleaner gasoline).

The commenter claimed that the EPA proposal specifies using the MOBILE6 command NO CAA in the calculation of the non creditable emission reductions. The commenter concurred that this command could be used, but recognized that some of the controls in effect during 2002 cannot be modeled with this command. ( Refer to technical specifics of this comment in the response to comment document.) PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 204 Response: The EPA does not agree with the commenter that the non creditable pre 1990 FMVCP reductions should be calculated using the I/ M program and fuel properties in effect during the new baseline year of 2002. Including the I/ M program and fuel properties in effect in 2002 in the calculation of non creditable reductions would not accurately account for reductions that are the result of pre 1990 federal motor vehicle control measures. EPA believes that the methods provided in the final rule accurately identify the non creditable reductions from pre

1990 motor vehicle standards and provide appropriate credit for all post 1990 control measures.

12. Should EPA continue the policy of allowing substitution of controls from outside the nonattainment area within 100 kilometers for VOC and 200 kilometers for NOx? [ Section VI. I. 2. of June 2, 2003 proposed rule ( 68 FR 32833); no draft or final regulatory text.]

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

Existing PM10 NAAQS, December 29, 1997, 68 FR 32833].

Specifically, the guidance generally allows credit for VOC PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 33The final interim implementation guidance of 1997 referenced the proposed interim implementation policy of December 13, 1996, which said, " The EPA believes that this additional flexibility for States in their ROP SIP's is consistent with the Act, since reductions from outside a nonattainment area within these limits contribute to progress toward attainment within the area. The 3 percent per year ROP requirement is a general rate of progress requirement, not a requirement for specific programs or measures such as vehicle inspection and maintenance. Allowing this flexibility would continue to provide the same rate of progress in terms of reducing emissions." ( 61 Fr 65758)

205 reductions occurring upt to 100 km outside the area and for NOx reductions occurring up to 200 km outside the area for ( Statewide where a regional NOx control strategy is being implemented. The policy indicates that credit may be taken only for the emission reductions from measures not otherwise mandated by the Act. As explained in the policy, EPA believes that this additional flexibility for crediting reductions outside nonattainment areas is consistent with the Act. 33 Under this approach, the geographic area for substitution of VOC emission reductions is 100 km from the nonattainment area and the geographic area for substitution of NOx reductions is 200 km from the nonattainment area with the possibility for additional expansion of the NOx substitution area as follows. NOx emission reductions from PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 206 anywhere within the State may be credited for those States that participate in a regional NOx control strategy such as the NOx SIP Call. All other States implementing a NOx substitution strategy for RFP would be restricted to a distance of 200 km from the nonattainment area, unless a substitution for a greater distance is accompanied by adequate technical justification. There are some cases in the western portions of the United States where 100 km for VOC substitution or 200 km for NOx substitution from the nonattainment areas are not appropriate for RFP credit. In those cases, States should obtain approval from the appropriate Regional Office to verify credit and applicability prior to implementing such a substitution.

EPA notes that in all cases the distances in the policy provide only a general policy presumption that, if used,

would need data resources in the record showing that reductions from sources in the specific locations in attainment areas benefit the nonattainment area. See LEAN v. EPA, 382 F. 3d 575 5th Cir. 2004.

b. Summary of Final Rule.

We believe that States should continue to be able to rely on emissions reductions from outside the nonattainment area for credit toward their RFP obligations. However, we PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 34U. S. EPA Office of the Inspector General. Evaluation Report: EPA and States Not Making Sufficient Progress in Reducing Ozone Precursor Emissions In Some Major Metropolitan Areas. Report No. 2004 P 00033. September 29, 2004.

207 are reassessing the current policy in light of concerns raised outside the rulemaking process that indicated a potential for double counting of emission reductions and problematic equity issues. 34 c. Comments and responses Comment: Several commenters supported this feature of EPA's proposal regarding RFP because it allows the States flexibility to tailor control strategies to address the issues specific to a particular nonattainment area.

The commenters supported codification ( 68 FR 32833,

col. 1) in the final rule of the December 29, 1997, guidance memo (" Guidance for Implementing the 1 Hour Ozone and Pre

Existing PM10 NAAQS") that allows emissions reductions from outside the nonattainment area to be creditable toward RFP.

One commenter agreed that States ought to be able to account for regional emissions in their attainment demonstrations.

On the other hand, the commenter was concerned that the Agency might allow jurisdictions to " credit" emission reductions from sources up to 100 km for VOC and 200 km for PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 208 NOx toward 15 percent RFP plans, and this in turn could encourage jurisdictions in need of these tonnage reductions to regulate without a sound basis. The commenter contended that while ozone is known to be a " regional pollutant", EPA has failed to establish in this rulemaking any technical basis for allowing States to impose regulations on sources outside the nonattainment area boundaries without independent justification of the impact of such sources on an area's failure to attain the standard.

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

April 21, 2004). These modeling analyses demonstrate that significant contribution to nonattainment resulted not only from source emissions within a nonattainment area but also from source emissions over a much broader area. Not only do these emissions from outside the nonattainment area affect air quality within the nonattainment area, in some cases it might be necessary to include and control emission sources located in the nearby areas in order to attain the standard.

We believe it is appropriate to allow States to take credit for reductions from sources outside their nonattainment areas where data indicate that those emissions affect air PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 35EPA notes that paragraph ( 1) of subsection 182( b) is entitled " Plan Provisions for Reasonable Further Progress" and that subparagraph ( B) of paragraph 182( c)( 2) is entitled " Reasonable Further Progress Demonstration," thereby making it clear that both the 15 percent plan requirement of section 182( b)( 1) and the 3 percent per year requirement of section 182( c)( 2) are specific varieties of RFP requirements.

209 quality in the nonattainment areas.

We note that section 182( c)( 2)( C), which provides for the substitution of NOx controls for VOC, speaks in terms of reductions of ozone concentrations rather than strictly reductions in emissions. This provision led us to conclude that Congress's intent for the ROP requirement is to lower ozone concentrations within the nonattainment area. It is consistent with that intent that emission reductions from outside the nonattainment area that will reduce ozone concentrations in the nonattainment area should be creditable in RFP demonstrations. We also believe that the Act is clear that both the 15 percent plan requirement of section 182( b)( 1) and the 3 percent per year requirement of section 182( c)( 2) are specific varieties of RFP requirements. 35 Section 171( 1) of the Act states that, for purposes of part D of title I, RFP " means such annual incremental reductions in emissions of the relevant air pollutant as are required by this part or may reasonably be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 210 required by the Administrator for the purpose of ensuring attainment of the applicable NAAQS by the applicable date."

Thus, whether dealing with the general RFP requirement of section 172( c)( 2), or the more specific RFP requirements of subpart 2 for classified ozone nonattainment areas ( the 15 percent plan requirement of section 182( b)( 1) and the 3 percent per year requirement of section 182( c)( 2)), the purpose of RFP is to ensure attainment by the applicable attainment date. Emissions reduction strategies applied to sources outside the nonattainment area may have a beneficial effect on the nonattainment problem within the designated area. Since RFP/ ROP is progress towards attainment,

specific, annual emission reductions from geographic areas outside the nonattainment area boundaries that contribute to attainment in the nonattainment area would fall within the scope of " such annual incremental reductions in emissions of the relevant air pollutant as are required . . . for the purpose of ensuring attainment of the applicable NAAQS by the applicable date."

However, as noted above in the Background portion, we intend to reassess whether the policy should be revised in light of concerns brought to our attention outside the rulemaking process pertaining to its technical PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 36U. S. EPA Office of the Inspector General. Evaluation Report: EPA and States Not Making Sufficient Progress in Reducing Ozone Precursor Emissions In Some Major Metropolitan Areas. Report No. 2004 P 00033. September 29, 2004.

211 feasibility. 36 Comment: One commenter requested clarification that if the 100 km/ 200 km area extends into adjacent States that reductions in those States should also be creditable,

especially with regard to the implementation of federal measures.

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

Comment: Another commenter expressed confusion by the provision to allow creditable reductions be made outside nonattainment areas. They asked if reductions made outside a nonattainment area actually bring that nonattainment area into compliance with the standard, then shouldn't those outside areas be designated nonattainment by definition?

The commenter contended that this contradiction is unacceptable, and a fatal flaw of current designation efforts and this implementation proposal.

Response: EPA disagrees with the comment that the area in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 212 which creditable ROP/ RFP reductions are obtained must be part of the nonattainment area. Emissions are only one of many factors to determine if an area should be part of the nonattainment area built around a violating monitor. Once we determine that a monitor is recording a violation, the next step is to determine if there are any nearby areas that are contributing to the violation and include them in the designated nonattainment area. For guidance on determining the nonattainment boundary for the 8 hour ozone standard, we look to CAA section 107( d)( 4) that established the Consolidated Metropolitan Statistical Area ( CMSA) or Metropolitan Statistical Area ( MSA) presumptive boundary for more polluted areas when we promulgated our designation actions in 1991 for the 1 hour ozone standard. We generally started with counties in the CMSA or MSA because that area,

defined by OMB, generally shares economic, transportation,

population and other linkages that are similar to air quality related factors that produce ozone pollution. The actual size of the nonattainment area may be larger or smaller than the CMSA or the MSA boundaries, or, than the single county with a violating monitor ( in the case of a single county not in any MSA/ CMSA area) and depends on a number of air quality related technical factors contained in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 37Memorandum from John Seitz, " Boundary Guidance on Air Quality Designations for the 8 Hour Ozone National Ambient Air Quality Standards ( NAAQS or Standard)." March 28, 2000. Found at: http:// www. epa. gov/ ozonedesignations/ guidance. htm .

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

213 our designation guidance. 37 After identifying such areas   MSAs/ CMSAs/ single counties   with violating monitors, we then determined which nearby jurisdictional units 38 were contributing to the nearby violation even those not monitoring violations. We considered each of 11 applicable factors indentified in our designation guidance in making our assessment of whether a jurisdictional unit was a nearby area contributing to the violation that should be included in the designated nonattainment area. These factors include emissions, traffic patterns, population density, and area growth. Only after consideration of all 11 factors did we add a jurisdictional unit to a nonattainment area. In sum, for purposes of designating an area, we are required to designate the area violating the standard and any " nearby"

area that is contributing to the violation. We complied PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 214 with that statutory obligation in the designation process.

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

Comments on draft regulatory text Comment: One commenter recommended that EPA state, either in the preamble to this rule or in the rule itself, that any VOC emission reductions within 100 km and any NOx emission reductions within 200 km of the nonattainment boundary,

including reductions in adjacent States, are creditable for RFP plan purposes. They also suggested that EPA address voluntary reductions for RFP purposes to state that reductions from voluntary measures should be incorporated into the baseline emissions inventory calculation.

Another commenter stated that EPA does not specify in section 51.910( a)( 4) that in areas where the 3 percent annual reduction is required, those reductions must be achieved within the statutorily defined baseline " area."

CAA section 182( b)( 1)( B). The commenter stated that we issued initial NOx substitution guidance in 1993 that required RFP reductions to be achieved from sources within PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 215 the designated nonattainment area. The commenter noted that subsequently, we attempted to unlawfully allow RFP reductions to be obtained from sources within the modeling domain. The commenter advocated that we clarify that the Act requires creditable reductions to be obtained only from sources within the designated nonattainment areas.

Response: We believe that the policy does not need to be incorporated into a rule. Since areas must include record support for application of the policy in an area demonstrating that such reductions will have a positive impact on the specific nonattainment area, individual rulemaking in the context of an area's SIP must be conducted in any event to implement the policy. EPA believes that any reductions that in fact result in improved air quality within the nonattainment area can be credited to RFP demonstrations. Voluntary emission reductions that are used to satisfy RFP requirements   or any requirements under the Act   must meet EPA's criteria for creditability of such reductions, including inclusion of the emissions reductions in the baseline. As explained elsewhere in response to another comment on the policy of allowing substitution of controls from outside the nonattainment area within 100 km for VOC and 200 km for NOx, EPA disagrees with the comment PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 216 that the Act limits the scope of creditable emission reductions to only those reductions in emissions emanating from within the nonattainment area boundaries. Our full rationale is set forth in a previous response. We also address elsewhere the comment relating to allowance of RFP credit from emission reductions outside the State in which the nonattainment area is located.

13. When must RFP emission reductions be achieved?

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

a. Background. Section 51.910( a)( 1) of the draft regulatory text that was made available for public comment provided that for areas initially designated nonattainment for the 8 hour NAAQS the initial 6 year period for RFP shall run from January 1, 2003 to December 31, 2008. Section 182( c)( 2)( B), applicable to serious and above areas,

requires that RFP be continued out to the attainment date.

Therefore, section 51.910( a)( 2) of the draft regulatory text provided, " For each area classified as serious or higher under section 51.903, the State must submit no later than 3 years after the effective date of the area's nonattainment PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 39With this rulemaking, this provision is codified as 40 CFR 51.908( d).

217 designation a SIP revision consistent with section 182( c)( 2)( B) of the Act for each 3 year period following the initial 6 year period addressed under paragraph ( a)( 1)( ii)( B) of this section until the area's attainment date. For areas initially designated nonattainment for the 8 hour NAAQS the 3 year periods referenced in section 182( c)( 2)( B) of the Act shall begin January 1, 2009."

In applying the requirement of section 182( c)( 2)( B), it is necessary to know the attainment date for the area. The attainment date is not necessarily the maximum allowed under part D of the Act, but must be " as expeditious as practicable" but no later than the outermost date provided in the Act ( e. g., 9 years after designation for a serious area). Thus, the State must theoretically have completed an attainment demonstration and RACM analysis ( discussed elsewhere in this preamble) to demonstrate that the attainment date selected is as expeditious as practicable.

The Phase 1 rule, section 51.900( g) sets forth the following definition: " Attainment year ozone season shall mean the ozone season immediately preceding a nonattainment area's attainment date." Also, section section 51.90839 ( What is PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 40With the exception of areas with year round ozone seasons, in which case the latest attainment date may be earlier in the year of the outside attainment date identified in the statute.

218 the required time frame for obtaining emission reductions to ensure attainment by the attainment date?) provides: " For each nonattainment area, the State must provide for implementation of all control measures needed for attainment no later than the beginning of the attainment year ozone season." Thus, if the latest attainment date allowed by the Act for a serious area designated in 2004 is June 15, 2013,

the ( complete) ozone season preceding that date would occur in 2012. However, if all of the reductions necessary to achieve attainment are in place prior to that ozone season,

then the most expeditious attainment date would in fact be just after the end of that ozone season in 2012 ( assuming the RACM analysis did not compel a more expeditious attainment year). Thus, in light of the Phase I Rule the latest possible attainment date for all areas will be just after the end of the ozone season in the year prior to the outside attainment date identified in the statute for the area's classification. 40 Consistent with the manner in which ROP plans under the 1 hour ozone standard were developed, the RFP baseline for PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 41Note that 40 CFR 51.900( g) defines " Attainment year ozone season" as the ozone season immediately preceding a nonattainment area's attainment date.

219 2002 will have a typical summer day tons/ day basis. As such, the attainment year target will also be a typical summer day target. Thus, the target level of emissions must be met by the attainment date of the attainment year. 41 As noted above, section 182( c)( 2)( B) requires that RFP be continued out to the attainment date.

Therefore, if the area's last increment of progress ( out to the area's attainment date) would result in emissions reductions greater than needed for attainment,

then that final increment of progress still needs to be implemented by the area's attainment date.

b. Summary of Final Rule.

For each area classified as moderate or higher, the State's 15 percent VOC emission reduction plan must provide for the emission reductions to be achieved by the end of the 6 year period after the baseline year. The 6 year period referenced in section 182( b)( 1) of the Act shall begin January 1 of the year following the year used for the baseline emissions inventory. For areas initially designated nonattainment for the 8 hour NAAQS the six year PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 220 period runs from January 1, 2003 to December 31, 2008.

For each area classified as serious or higher, the State's RFP plan must provide a 3 percent annual emission reduction requirement averaged over every 3 year period after the initial 6 year period. For areas initially designated nonattainment for the 8 hour NAAQS, the first 3

year period shall run from January 1, 2009 and end December 31, 2011. The final increment of progress must be achieved no later than the attainment date for the area. An example of the recommended approach is shown in Table 1 for serious and above areas; assume the area has already completed its 15 percent VOC reduction under the 1 hour ozone standard. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 221 Table 1 Reduction Requirements for Periods for Areas Classified as Serious and above with an approved 1 hour 15 percent Plan in the SIP RFP Requirement  As a Percentage of Baseline VOC and/ or NOx Emissions NOTE 2 Classification Row Time Period / Terminal Period NOTE 1 Serious Severe 15 Severe 17 Extreme 1 First 6 years after the Baseline Year ( Typical summer day, 2002 to December 31, 2008) 18 percent 18 percent 18 percent 18 percent 2 Next Full 3 year Period ( January 1, 2009 to December 31, 2011) 9 percent 9 percent 9 percent 9 percent 3 Next Full 3 year Period ( January 1, 2012 to December 31, 2014) 3 percent in the 2012 attainment year 9 percent 9 percent 9 percent 4 Next Full 3 year Period ( January 1, 2015 to December 31, 2017) 9 percent 9 percent 9 percent PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 Table 1 Reduction Requirements for Periods for Areas Classified as Serious and above with an approved 1 hour 15 percent Plan in the SIP RFP Requirement  As a Percentage of Baseline VOC and/ or NOx Emissions NOTE 2 Classification Row Time Period / Terminal Period NOTE 1 Serious Severe 15 Severe 17 Extreme 222 5 Next Full 3 year Period ( January 1, 2017 to December 31, 2019) 9 percent through 2019 attainment year 9 percent 9 percent 6 Next Full 3 year Period ( January 1, 2020 to December 31, 2023) 6 percent through 2021 attainment year 9 percent 7 The period terminating in extreme area attainment date ( January 1, 2023 to attainment date at end of 2024) 6 percent PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 223 NOTES:

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

2. RFP credit allowed for NOx reductions using substitution under section 182( c)( 2)( C). PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 224 c. Comments and Responses. No comments were received on the proposal concerning the timing of emission reductions needed for RFP.

14. Banked Emission Reduction Credits ( Including Shutdown Credits). Can pre baseline emission reduction credits be used to satisfy the RFP requirement? [ No discussion in June 2, 2003 proposal; no draft or final regulatory text.]

a. Background This topic was not discussed in the proposed rulemaking, but we believe that questions that have arisen on this topic bear some discussion here.

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

Baseline emissions. For purposes of subparagraph ( A),

the term " baseline emissions" means the total amount of actual VOC or NOx emissions from all anthropogenic sources in the area during the calendar year of the enactment of the Clean Air Act Amendments of 1990,

excluding . . . [ emphasis added.]

The April 1992 General Preamble provides:

The adjusted base year inventory ( i. e., baseline emissions) must contain only actual emissions occurring in the base year, 1990, within the designated PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 225 nonattainment area boundaries. The baseline emissions should not include pre enactment banked emission credits since they were not actual emissions during the calendar year of enactment. [ Fed. Reg of April 16,

1992; 57 FR 13507; emphasis added]

and Pre enactment banked emissions reductions credits are not creditable toward the 15 percent progress requirement. However, for purposes of equity, EPA encourages States to allow sources to use such banked emissions credits for offsets and netting. When States use such banked credits for offsets and netting to the extent otherwise creditable under the Part D NSR regulations, these pre enactment emissions credits must be treated as growth. Consequently, this " growth" must be accounted for, as is the case with all other anticipated growth, in order to ensure that it does not interfere with the 15 percent rate of progress requirement ( which is " net" of growth). In addition,

when such growth emissions are used as offsets, they must be applied in accordance with the offset ratio prescribed for the area of concern ( e. g., 1.3 to 1 for severe areas, etc.). All pre enactment banked credits PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 42Guidance on the Adjusted Base Year Emissions Inventory and the 1996 Target for the 15 Percent Rate of Progress Plans. Ozone/ Carbon Monoxide Programs Branch, U. S. Environmental Protection Agency, Office of Air Quality Planning and Standards Research Triangle Park, NC 27711. EPA 452/ R 92 005. October 1992.

4351 FR 233 " Emissions Trading Policy Statement; General Principles for Creation, Banking and Use of Emission Reduction Credits; Final Policy Statement and Technical Issues Document." December 4, 1986. This document has been replaced by Improving Air Quality with Economic Incentive Programs, January 2001, available at http:// www. epa. gov/ region07/ programs/ artd/ air/ policy/ search. htm 226 must be included in the nonattainment area's attainment demonstration for ozone to the extent that the State expects that such credits will be used for offsets or netting prior to attainment of the ambient standards.

Credits used after that date will need to be consistent with the area's plan for maintenance of the ambient standard. [ 57 FR 13508]

EPA's 1992 guidance on calculating the 15 percent emission target42 contained the following:

4.3 Pre enactment Banked Emissions Reduction Credits.

If the State has an emissions credit bank that meets the EPA's requirements under an earlier policy statement[ 43], the State is allowed to use its preenactment banked emissions reduction credits to PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 227 facilitate the location of new sources in nonattainment areas during the 1990 1996 period. However, because these reduction credits represent emissions that are not included in the 1990 base year inventory, any additional emissions that result from the use of banked credits must be treated as growth in order to ensure that the 15 percent VOC emissions reduction requirement is achieved. Also, it is important to note that the use of pre enactment banked emissions credits must be in accordance with the offset ratios prescribed in the CAAA ( e. g., 1.3 to 1 in severe areas.)

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

b. Interpretation for 8 hour Ozone NAAQS The guidance provided above is still relevant for banked emission reduction credits in relation to the RFP requirement for the 8 hour ozone standard. However, because the rule for implementing the 8 hour ozone standard uses a 2002 baseline year, the above guidance should be read   for purposes of implementing the 8 hour ozone RFP requirement   by substituting " pre enactment banked emission credits" with " pre 2002 banked emission credits." A pre 2002 banked emission credit is one that was generated before January 1, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 228 2002 and that is certified in a bank that EPA has approved for such purposes. For a discussion of the use of shutdown/ curtailment credits for offsets and netting, see Section V. B. 1. a of this preamble. For a discussion of the use of emission reduction credits for offsets and netting,

see Section V. D. 5 of this preamble.

F. Are contingency measures required in the event of failure to meet a milestone or attain the 8 hour ozone NAAQS? [ Section VI. J. of June 2, 2003 proposed rule ( 68 FR 32837); no draft or final regulatory text.]

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

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

For additional background information, see the Proposal ( 68 FR 105, June 2, 2003). Other related information can be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 229 found in the following applicable guidance documents:

° " Contingency Measures for Ozone and Carbon Monoxide ( CO) Redesignations," Memorandum from G. T. Helms,

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

1992 ° " Procedures for Processing Requests to Redesignate Areas to Attainment," Memorandum from John Calcagni,

Director, Air Quality Management Division, September 4,

1992 ° " Guidance for Growth Factor, Projections, and Control Strategies for the 15 percent Rate of Progress Plans,"

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

Memorandum from G. T. Helms, Chief, Ozone/ Carbon Monoxide Programs Branch, August 13, 1993 ° " Guidance on Issues Related to the 15 Percent Rate of

Progress Plans," Memorandum from Michael H. Shapiro,

Acting Assistant Administrator for Air and Radiation to the Regional Division Directors, August 23, 1993 ° " Clarification of Issues Regarding the Contingency Measures that are due on November 15, 1993 for Moderate and Above Ozone Nonattainment Areas," Memorandum from PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 230 D. Kent Berry, Acting Director, Air Quality Management Division, November 8, 1993 ° " Guidance on the Post 1996 Rate of Progress Plan ( ROP)

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

January 1994 2. Summary of final rule Contingency measures are required to be implemented in the event of failure to meet a milestone or attain the 8

hour ozone NAAQS. We are adopting the approach taken in our proposal. All subpart 1 and subpart 2 areas other than marginal areas need contingency measures. The contingency measures SIP should accompany the attainment demonstration SIP required for submission by June 15, 2007.

It should be noted that the Act requires States to identify contingency measures that will go into effect without further action on the part of the federal government. We have recognized, however, that some additional State or local action may be necessary ( such as notification of sources) before implementation.

Under Subpart 2, areas that are nonattainment for the 8 hour ozone NAAQS that have unused adopted contingency measures for the 1 hour ozone NAAQS may use those measures as appropriate as contingency measures for the 8 hour NAAQS. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 231 For Subpart 1, States should follow the same guidance used for Subpart 2 areas. We intend to provide any additional guidance if needed.

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

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

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

The purpose of contingency measures is to have a quickly implementable backup plan of action should primary measures fail to bring a nonattaining area to the requisite level ( be it attainment of the NAAQS or meeting a RFP milestone). It PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 232 is up to each State to determine what measures the State will commit to implement should failure occur. We note that States may rely on regional and national control measures as well as local control measures to meet the contingency measure obligation.

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

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

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

Comment: One commenter alleged EPA's proposal to allow Federal measures that result in additional emission PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 233 reductions beyond RFP or attainment to qualify as contingency measures is legally invalid. The commenter further stated that contingency measures must consist of control requirements that will be taken off the shelf and undertaken if and when an RFP or attainment failure occurs;

in other words, new measures not federal or local measures that already exist.

Response: The CAA states that contingency measures are to be " specific measures to be undertaken if the area fails to make reasonable further progress, or to attain . . . by the attainment date." In guidance, EPA interprets this provision to mean that contingency measures must be fully adopted rules or measures which are ready for implementation quickly upon failure to meet milestones or attainment. This could include federal measures and local measures already scheduled for implementation.

EPA has approved numerous SIPs under this interpretation   i. e., that use as contingency measures one or more federal or local measures that are in place and provide reductions that are in excess to the attainment demonstration or RFP plan. ( 62 FR 15844, April 3, 1997; 62 FR 66279, December 18, 1997; 66 FR 30811, June 8, 2001; 66 FR 586 and 66 FR 634, January 3, 2001.) The key is that the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 234 statute requires extra reductions that are not relied on for RFP or attainment and that are in the demonstration to provide a cushion while the plan is revised to meet the missed milestone. In other words, contingency measures are intended to achieve reductions over and beyond those relied on in the attainment and RFP demonstrations. Nothing in the statute precludes a State from implementing such measures before they are triggered. In fact, a recent court ruling upheld contingency measures that were previously required and implemented where they were in excess of the attainment demonstration and RFP SIP. See LEAN v. EPA, 382 F. 3d 575 5th Cir. 2004.

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

Response: EPA acknowledges the commenter's support of our proposal regarding contingency measures. As to the commenter's anticipation of how additional guidance will be patterned, as stated in both our proposed and final rule PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 235 regarding subpart 1, we intend to develop guidance as needed.

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

hour ozone nonattainment areas? [ Section VI. K. of June 2,

2003 proposed rule ( 68 FR 32837); section 51.912 in draft and final regulatory text.]

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

1. Reasonably Available Control Technology ( RACT)

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

subpart 1 of part D includes a requirement that an attainment plan provide for the implementation of all RACM as expeditiously as practicable, including such reductions that may be obtained through RACT. Under subpart 2,

marginal areas are required to correct pre 1990 RACT requirements and new RACT requirements are specified for moderate and above ozone nonattainment areas. Additionally,

States must adopt RACT for all areas in an ozone transport region ( OTR). The RACT requirement applies to both ozone precursors   NOx and VOC. Since 1990, we have issued guidance documents on the RACT requirements in subpart 2.

Prior to enactment of the CAA Amendments of 1990, EPA also PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 236 issued detailed guidance documents on RACT for ozone nonattainment area SIPs.

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

Over a five year period, 1991 94, EPA issued nine ACT guideline documents for large stationary sources of NOx. In 2000, updates to the NOx ACT documents were completed for stationary internal combustion engines and cement kilns.

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

Section 183( c) of the CAA also requires EPA to " revise and update such documents [ i. e., CTGs and ACTs] as the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 237 Administrator determines necessary." The EPA intends in the future to develop updated technology guidance, especially with respect to source categories emitting multiple pollutants in large amounts. In addition, EPA will be considering related recommendations from the Clean Air Act Advisory Committee that are expected in January 2005 in response to the recent National Research Council report on Air Quality Management in the United States ( January 2004).

In the June 2, 2003 proposal, we proposed several requirements with respect to RACT. For subpart 1 areas, we proposed several options. We proposed in one option to interpret the CAA in a manner similar to that under subpart 2 by requiring areas covered under subpart 1 to face different RACT requirements based on the magnitude of the ozone problem in the area ( i. e., the area's design value).

In another option we proposed that RACT would be met if the area were able to demonstrate attainment of the standard as expeditiously as practicable with emission control measures in the SIP. We also proposed as an early attainment incentive that RACT would be met in an area which demonstrates attainment within 3 years and submits the demonstration within 1 year.

For subpart 2 areas, we proposed to apply RACT as PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 238 specified in subpart 2. We proposed the RACT submittal dates for subpart 1 areas would be either the same as the submittal date for the attainment plan ( within 3 years) or the same as the deadline for subpart 2 areas ( within 2 years). In addition, we proposed the date for affected sources to implement RACT in subpart 2 areas would be thirty months after the required submittal date. We also proposed that States may use current EPA guidance in making RACT determinations; consequently, in some cases, sources previously evaluated under the 1 hour ozone RACT requirement and sources subject to the NOx SIP Call cap and trade program could be determined to meet the 8 hour ozone RACT requirement.

b. Summary of Final Rule.

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

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

For subpart 1 areas that request an attainment date extension ( beyond 5 years after designation), subpart 2 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 239 moderate and above areas, and areas within an Ozone Transport Region, RACT is required under subpart 2 and the RACT submittal date is two years after designation. States must require sources to implement RACT no later than the first ozone season or portion thereof which occurs 30 months after the required submittal date.

Where RACT applies ( except certain subpart 1 areas, as described above, and except certain sources subject to the NOx SIP Call, as described below), State SIPs implementing the 8 hour standard must assure that RACT is met, either through a certification that previously required RACT controls represent RACT for 8 hour implementation purposes or through a new RACT determination. States may use existing EPA guidance in making RACT determinations. Where a State has adopted and EPA has approved a control measure as RACT for a specific major stationary source or source category for the 1 hour ozone NAAQS, and absent data indicating that the previous RACT determination is no longer appropriate in lieu of a RACT rule, the State may submit a certification that the source is subject to RACT. Such certification shall be accompanied by appropriate supporting information, such as consideration of updated EPA guidance and other relevant information such as information received PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 240 from public commenters.

For purposes of meeting the NOx RACT requirement in areas located in a State subject to the NOx SIP Call, the State may conduct case by case RACT determinations or consider the RACT SIP requirements met for sources subject to the State's emission cap and trade program where the cap and trade program has been approved by EPA as part of a SIP meeting the NOx SIP Call requirements. Additionally,

RACT is considered met for cement kilns and stationary internal combustion engines that are subject to a SIP approved obligation to install and operate controls that are expected to achieve at least a 30 percent and 82 percent reduction, respectively, from uncontrolled levels. As new or updated EPA RACT guidance becomes available, States should consider the new information in their RACT determinations.

States are free to conduct case by case RACT determinations or RACT determinations or certifications for groups of sources, at their discretion. A State may meet the NOx RACT requirement by showing that the weighted average emission rate from sources in the nonattainment area subject to RACT   including sources subject to the NOx SIP Call requirements   meet RACT requirements. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 241 It should be noted that for purposes of meeting the RACT obligations under section 182( b)( 2)( C) of the Act for major stationary sources of VOCs and under section 182( f) of the Act for major stationary sources of NOx, the definition of major stationary source in section 302 of the Act, as modified by the major source definition in either section 182( b), ( c), ( d) or ( e) of the Act as applicable to the area's classification, applies.

c. Comments and responses Comments: For subpart 2 ozone nonattainment areas,

several States expressed agreement with the proposed approach for implementing RACT consistent with section 182 of the CAA.

Response: The EPA agrees with these comments.

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

Several State and industry commenters supported EPA's proposed approach that RACT would be met if the area is able to demonstrate attainment of the standard as expeditiously as practicable with emission control measures in the SIP.

The reasons provided by these commenters were generally as follows: States should be able to use their discretion in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 242 determining which control strategies are the most effective in addressing a particular area's air quality problem;

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

The EPA also received comments, primarily from several States and environmental groups, opposing the approach that RACT would be met by control measures that are part of a SIP demonstrating attainment of the standard as expeditiously as practicable. These commenters made the following points:

since section 172( c)( 1) of the Act explicitly mandates RACT " at a minimum" in all nonattainment areas, Congress plainly intended to require RACT as a floor level of control technology in addition to any measures needed to demonstrate timely attainment; even where RACT does not advance attainment, it is needed in order to reduce the severity and number of violations; under this approach, the statutory RACT provisions add nothing to the statutory attainment mandate   which violates basic canons of statutory interpretation; RACT in nonattainment areas will substantially reduce transport of ozone and ozone PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 243 precursors; for equity reasons, sources in similar areas should be subject to the same control; and RACT is a useful tool that should not be abandoned through flexibility mechanisms.

Response: The general RACT provision under subpart 1 in the statute, is found in section 172( c)( 1). It is a portion of the RACM provision found in that same section. Our longstanding interpretation of the RACM provision is that areas need only submit such RACM as will contribute to timely attainment and meet RFP, and that measures which might be available but would not advance attainment or contribute to RFP need not be considered RACM. This interpretation has been upheld in several recent court cases. See Sierra Club v. EPA, 294 F. 39 155, 162 ( DC Cir. 2002) ( concerning the Metropolitan Washington, D. C., attainment demonstration) and Sierra Club v. EPA, No. 01 60537 ( 5th Cir. 2002) ( concerning the Beaumont attainment demonstration). Since subpart 1 RACT is a portion of RACM, these cases also support a conclusion that, where we are dealing only with section 172 RACT, it is reasonable to require only such RACT as will meet RFP and advance attainment. In view of these court cases, EPA disagrees with the comments listed above opposing the approach that, in subpart 1 areas, RACT would be met by PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 244 control measures in a SIP demonstrating attainment of the standard as expeditiously as practicable and meeting RFP.

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

In addition, EPA believes that section 172( c) is not the appropriate section of the CAA to address the transport of ozone and ozone precursors; EPA has conducted and is conducting rulemaking pursuant to sections 110 and 126 for that purpose.

Finally, EPA agrees with commenters who suggest, for equity reasons, that sources in similar areas should be subject to the same control. In the proposal, EPA suggested subpart 1 and 2 areas with the 8 hour ozone design values above 91 ppb should all be required to meet RACT. The EPA also proposed that RACT would be met in an area which demonstrates attainment within 3 years and submits the demonstration within 1 year. In the final rule, EPA has addressed equity concerns by taking portions of these two proposals, such that subpart 1 and 2 areas with attainment PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 245 deadlines longer than 5 years after designation must meet the same RACT requirements. We believe ( longer than) 5 years is more appropriate than the 3 years proposed for this requirement since this approximates the maximum attainment date for subpart 2 ( moderate) areas subject to RACT and since this approach is consistent with the manner ROP/ RFP requirements are treated in the final rule.

Therefore, in subpart 1 areas that do not request an extension beyond the initial 5 years after designation, the final rule indicates that RACT would be met by the emission control measures in a SIP that demonstrates attainment of the standard as expeditiously as practicable and meets RFP.

In addition, the final rule requires subpart 1 areas with maximum attainment deadlines longer than 5 years after designation to meet the same RACT requirements as subpart 2 areas. This approach minimizes the RACT inequity with subpart 2 areas and provides flexibility for subpart 1 areas demonstrating attainment within 5 years.

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

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

Response: Section 182( a) provides that marginal and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 246 higher classified areas for the 1 hour standard with pre

1990 RACT obligations had to submit corrections to their RACT rules within 6 months after classification under the 1990 CAAA. To the extent that any 8 hour ozone nonattainment areas did have this obligation, they already met it. See footnote 60 in the June 2, 2003 proposal. The CAA does not require RACT for marginal areas other than the obligation to " correct" pre 1990 RACT requirements.

Comments: The EPA received several comments for and against the proposal that States may use a prior RACT determination with respect to the 1 hour ozone standard for purposes of meeting the RACT requirements for the 8 hour ozone standard. Further, EPA received comments on the proposal that a new RACT determination is required in cases where the initial RACT analysis under the 1 hour standard for a specific source or source category concluded that no additional controls were necessary.

Several State and industry commenters supported EPA's proposed approach that a prior RACT analysis under the 1

hour ozone standard should meet RACT requirements under the 8 hour standard where major sources or source categories were previously reviewed and controls applied to meet RACT.

These commenters stated that RACT is not specific to any PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 247 particular ozone standard, such that once a source has met RACT, it has met RACT, whether or not the ozone standard is revised to become more ( or less) stringent; just as with the 15 percent VOC requirement, the statute provides no basis for duplicative imposition of RACT; and there is no basis in the statute to read in a new requirement for RACT. In addition, some industry commenters stated that electric generating units which meet Title IV NOx control requirements would also meet the NOx RACT requirement.

The EPA also received comments from several States opposing EPA's proposed approach. These commenters believe the NOx and VOC guidance is too old, needs updating and, in the case of NOx controls, the improvement over the last three years has been dramatic with controls previously considered to be Best Available Control Technology ( BACT)

( and therefore generally considered at the time to be more stringent than RACT) are now considered to be merely RACT.

In addition, one State suggested the presumptive RACT level should be revised to at least 85 percent control or that NOx RACT should be defined as up to $ 10,000/ ton of pollutant removed.

Two States disagreed with EPA's proposal that a new RACT determination should be required in cases where the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 248 initial RACT analysis under the l hour NAAQS found that no additional controls were necessary for a specific source or source category. They indicated such re analysis would be an unwise use of resources because it would not yield significant benefits. Further, they do not agree that a RACT determination is warranted for major VOC or NOx sources not in existence during the previous RACT determination,

because new sources in 1 hour nonattainment areas have been permitted pursuant to the requirements for NSR and, where applicable, have already been subject to more stringent control requirements.

Response: In 1992, EPA set presumptive NOx RACT for boilers as combustion modification, consistent with Title IV acid rain requirements. For all other NOx stationary source categories, EPA guidance in 1994 indicated States should consider in their RACT determinations technologies that achieve 30 50 percent reduction within a cost range of $ 160

1300 per ton of NOx removed. In the NOx SIP Call Rule, we reviewed all major NOx source categories and stated in the final rule that the NOx SIP Call controls, at less than $ 2,000/ ton, represent reductions beyond those required by RACT. We cannot agree with the suggestion of one State that EPA's RACT guidance should be revised to reflect 85 percent PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 249 control and $ 10,000/ ton of pollutant removed because the comment lacked supporting documentation that these values represent feasible control levels for the many source categories affected by the RACT program.

Many areas subject to the major source RACT requirement under the 8 hour ozone standard have previously addressed the RACT requirement with respect to the 1 hour ozone standard. For example, major sources located in States of the Ozone Transport Commission ( OTC) were subject to the NOx RACT requirement in the mid 1990s. We believe that, in many cases, a new RACT determination under the 8 hour standard would result in the same or similar control technology as the initial RACT determination under the 1 hour standard because the fundamental control techniques, as described in the CTGs and ACTs, are still applicable. In cases where controls were applied due to the 1 hour ozone RACT requirement, we expect the incremental emission reductions from application of a second round of controls would be small and would not be cost effective. In such cases, EPA believes the cost per ton of NOx removed associated with installing a second round of RACT controls ( and perhaps the removal of initial RACT controls) is likely to be beyond the RACT levels in our current guidance ($ 160 1300/ ton). In PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 250 contrast, a RACT analysis for uncontrolled sources would be much more likely to find that RACT level controls are economically and technically feasible.

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

The CTGs are still used to presumptively define VOC RACT.

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

We agree that progress has been made in improving the cost effectiveness of some NOx and VOC controls. States and other interested parties should consider available PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 251 information that may supplement the CTG and ACT documents.

In cases where additional information is presented, for example, as part of notice and comment rulemaking on a RACT SIP submittal, States ( and EPA) would necessarily consider the additional data in reviewing what control obligation is consistent with RACT. For example, as part of the 1998 NOx SIP Call and 2004 CAIR rulemakings, EPA developed and used control and cost data for large boilers and turbines based on newer information than contained in the ACTs. Similarly,

we encourage States to use the latest information available in making RACT determinations, whether it is in CTGs, ACTs,

or elsewhere.

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

Therefore, we believe States must consider new information PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 252 that has become available and certify that a 1 hour ozone RACT determination, even where controls were required, still represents an appropriate RACT level of control for the 8

hour ozone program. In the alternative, the State should revise the SIP to reflect a modified RACT requirement for specific sources or source categories. We intend to develop updated technology guidance, especially with respect to source categories emitting multiple pollutants in large amounts. States should consider the updated guidance in any RACT determinations or certifications that have not been issued as of the time such an update becomes available.

In summary, we believe the current NOx and VOC RACT guidance, including CTGs and ACTs, may continue to be used by States in making RACT determinations with respect to the 8 hour ozone standard. As the guidance is updated, States should consider the new information in their RACT determinations or certifications. Regardless, States should ensure that their SIPs accurately reflect RACT based on the current availability of technically and economically feasible controls.

Therefore, in portions of 8 hour ozone nonattainment areas where major sources or source categories were previously reviewed and controls subsequently applied to PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 253 meet the RACT requirement under the 1 hour standard, the final rule allows States to review and, if appropriate,

accept the initial RACT analysis as meeting the RACT requirements for the 8 hour standard. Absent data indicating that the previous RACT determination is no longer appropriate, the State need not submit a new RACT SIP for these sources. In such cases, the State should submit a certification as part of its SIP revision, with appropriate supporting information, such as consideration of updated EPA guidance, that it previously met the RACT requirement for these sources and that the previous determination still represents an appropriate RACT level of control. Where the initial RACT analysis under the 1 hour standard for a specific source or source category concluded that no additional controls were necessary, the final rule requires a new RACT determination. The new RACT determination is needed to consider whether more cost effective control measures have become available for sources that were not previously regulated. A re analysis may determine that controls are now economically and technically feasible and should be required to meet RACT. Furthermore, in this situation, we expect the incremental emissions reductions to be significant, compared to the uncontrolled emissions PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 254 levels, thereby reducing the cost per ton of emissions controlled and therefore more reasonably available. In all cases where additional information is presented as part of notice and comment rulemaking, including a RACT SIP submittal for sources previously controlled, States ( and EPA) must consider the additional information as part of that rulemaking.

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

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

however, use information gathered from prior BACT or LAER analyses to help complete a RACT analysis. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 255 Comments: Several State and industry commenters supported EPA's proposed approach. These commenters stated that the level of emissions reductions required by the NOx SIP call is far greater than the level of reductions achieved by controls that have been determined to be NOx RACT. Other commenters pointed out that many companies have employed averaging programs for NOx SIP Call compliance and want this option preserved under the 8 hour ozone standard since requiring sources to individually meet NOx RACT requirements would greatly increase the costs of compliance at sources already subject to the NOx cap and trade program without achieving greater emission reductions. One State encourages EPA to provide this exemption to other areas subject to approved cap and trade programs in addition to those areas affected by the NOx SIP call.

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

These commenters stated that there are no exceptions to the RACT mandates in either subpart 1 or subpart 2 for sources subject to SIP call cap and trade programs, and EPA is without authority to invent such an exception. Because the NOx SIP Call's cap and trade program does not require emission control technologies to be installed at a PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 256 particular source, some commenters conclude that RACT requirements are necessary and appropriate to ensure that all sources implement at least a minimum level of control.

One State indicated there have been numerous cases where sources subject to the NOx SIP Call have not had to install controls comparable to RACT. Commenters also suggested that RACT is intended to be a benchmark for control technology at individual stationary sources, not a level of regional reductions. In addition, some commenters noted that the NOx SIP Call requirements are specific to the ozone season,

where RACT requirements are year round. Consequently, these commenters recommended that EPA should also consider nonozone related nitrogen issues, including fine particles,

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

Response: The EPA believes the RACT mandate in subpart 1 and subpart 2 applies in specific geographic areas but does not necessarily require every major source to install controls. For example, as discussed in a separate comment/ response, where we are dealing only with subpart 1 RACT, we only require such RACT as will advance attainment or meet RFP. Thus, EPA does not agree with commenters who PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 257 conclude that RACT requirements are necessary and appropriate to ensure that all sources implement at least a minimum level of control or that RACT is intended to be a benchmark for control technology at all individual stationary sources.

Some commenters pointed out that the NOx SIP Call requirements are specific to the ozone season, yet RACT requirements are year round. While there are some exceptions, EPA agrees that RACT usually is an application of controls year round. With respect to the NOx SIP Call,

EPA believes that the vast majority of sources in the capand trade program will install combustion controls to decrease NOx emissions because it is almost always the most cost effective strategy. Since combustion controls meet EPA's NOx RACT guidance for level of control and since these controls would be operated year round, EPA believes the RACT requirement would be met year round in the vast majority of cases. Further, because many affected sources also installed post combustion controls to meet the NOx SIP Call requirements, these additional emission reductions provide further assurance that RACT equivalent emission reductions will occur, on average, at sources affected by the cap and trade program. We agree that there would be non ozone PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 44In the 1998 NOx SIP Call rule, average costs of compliance were estimated at about $ 1500/ ton and average RACT level costs are less than $ 1300/ ton. Recent estimates of the projected cost of allowances are about $ 2000 4000/ ton ( NOx Budget Trading Program, 2003 Progress and Compliance Report, August 2004, EPA 430 R 04 010). With respect to RACT, we would note that in some cases, the State may determine that additional controls are not technically and economically feasible. Thus, even if the State analyzed RACT for each source subject to the cap and trade program,

258 related nitrogen benefits, including fine particles,

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

Some commenters argue that RACT should apply to each source because some sources subject to the NOx SIP Call cap and trade program might not install controls and could meet the SIP Call requirements solely by purchasing allowances.

Because the NOx SIP Call is a market based program, there could be units that choose to meet those requirements simply by emissions trading. We expect that very few sources subject to RACT and rules implemented by the State under the NOx SIP Call would choose to not install control equipment and, instead, choose to meet the NOx SIP Call requirements solely by purchasing allowances. Most likely the cost for purchasing allowances will be higher than the cost for a achieving a RACT level of control. 44 In addition, many PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 that would not guarantee additional emission reductions at each source because the RACT determination for some could conclude no additional controls are required.

259 units subject to the SIP call cap will install beyond RACT controls, as discussed below. Therefore, we believe that the NOx SIP call will achieve at least a RACT level of control, on average, among sources subject to RACT in each nonattainment area. Meeting RACT in this way is consistent with EPA guidance allowing RACT to be met in the aggregate within a nonattainment area, rather than by each individual source.

In other cases, a facility might choose to meet NOx RACT through emissions averaging; e. g., over controlling one large unit and not controlling other smaller units because the smaller units may be retired in the near future or labor or capital is not immediately available. We agree with comments that emission averaging programs such as the NOx SIP Call Rule achieve emission reductions at lower costs.

EPA's NOx RACT guidance, published in 1992 ( 57 FR 55625),

was, in part, for the purpose of " enhancing the ability of States to adopt market based trading systems for NOx" and to encourage States to " structure their RACT requirements to inherently incorporate an emissions averaging concept ( i. e., PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 260 installing more stringent controls on some units in exchange for lesser control on others)." Since the NOx SIP Call requires greater reductions, on average, than RACT, ( see proposal notice at 68 FR 32839 and discussion below) we believe the average emissions at the facility in this example would be less than its emissions under application of a RACT program alone. We would also expect this scenario to be a short term case since the facility may choose later to install controls on the smaller units and sell any excess allowances, depending on the projected cost of allowances.

We agree with comments indicating the overall emission reduction due to the NOx SIP Call would be greater overall than with a RACT program alone, and we believe they would be greater within each nonattainment area. All States submitting SIP revisions to meet the NOx SIP Call ( October 27, 1998, 63 FR 57356) elected to require large boilers and turbines to comply with an emissions cap and trade program consistent with EPA's model cap and trade rule. As a result, all these sources are already subject to stringent control requirements. As described in the June 2, 2003 proposal, these sources collectively achieve more emissions reductions than would be required by application of RACT requirements to each source. In the NOx SIP Call control PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 45EPA's 1992 NOx RACT guidance sets Title IV equal to RACT and specifies emission rates three times larger than the rates later used for coal fired units in the NOx SIP Call ( 0.45 0.50 lb/ mmBtu versus 0.15).

46 Memorandum of March 16, 1994, from D. Kent Berry re: " Cost Effective Nitrogen Oxides ( NOx) Reasonably Available Control Technology ( RACT)." U. S. Environmental Protection Agency, Research Triangle Park, North Carolina.

261 case, electricity generating units ( EGUs) achieve a 64 percent reduction beyond the base case requirements. 45 The non EGUs subject to the States' cap and trade program achieve a 60 percent reduction from uncontrolled levels.

These EGU and non EGU reductions are clearly beyond the 30

50 percent expected from a RACT program. 46 We stated in the final rule that the NOx SIP Call controls " represent reductions beyond those required by Title IV or Title I RACT." In addition, because the cap and trade program covers units serving a 25 megawatt generator, it requires emission reductions at many units emitting at less than the general RACT threshold of 100 tons per year. As explained above, we believe that the vast majority of sources subject to the SIP call cap would install combustion controls at a minimum, rather than rely solely on purchase of allowances for compliance. Thus, based on our existing NOx RACT guidance, we expect the NOx SIP Call to achieve more emission PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 262 reductions within each nonattainment area than would be achieved through a RACT program.

For the above reasons, EPA believes the sources that comply with the NOx SIP Call cap and trade program meet NOx RACT requirements. Accordingly, the State need not perform a NOx RACT analysis for sources subject to the State's emission cap and trade program where the cap and trade program has been approved by EPA as meeting the NOx SIP Call requirements and the State need not submit a new NOx RACT SIP for those sources. As new or updated EPA RACT guidance becomes available, however, States should consider the new information in their RACT determinations.

As proposed, in cases where States have adopted controls for cement kilns consistent with the NOx SIP Call ( i. e., 30 percent reduction), the State may choose to accept the NOx SIP Call requirements as meeting the NOx RACT requirements for the 8 hour standard and need not submit a new NOx RACT SIP for those sources. In its RACT SIP submission, the State should identify the cement plants that are subject to NOx SIP Call controls and that, therefore,

already meet RACT. The EPA received comments from States supporting the proposal. For the same reasons, EPA believes a State may choose to accept the Phase II NOx SIP Call PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 47As described in the April 21, 2004 Federal Register.

263 control level for stationary internal combustion engines47 as meeting the NOx RACT requirements. As new or updated EPA RACT guidance becomes available for cement kilns and/ or engines, States should consider the new information in their RACT determinations.

In addition, through the NOx SIP Call or other programs, ( including a SIP approved cap and trade program outside the NOx SIP Call area), States may have adopted control measures for specific NOx sources that equal or exceed RACT requirements. For these sources, States may choose to submit, as part of its NOx RACT SIP revision,

documentation that the previously adopted control measure meets the RACT requirement. The EPA's NOx RACT guidance ( NOx General Preamble at 57 FR 55625) encourages States to develop RACT programs that are based on " areawide average emission rates." Thus, States can submit a demonstration as part of their RACT submittal showing that the weighted average emission rate from sources in the nonattainment area subject to RACT   including sources reducing emissions to meet the NOx SIP Call requirements   meet RACT requirements.

It should also be noted that this rule in no way limits PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 264 States' discretion to require beyond RACT NOx reductions from any source ( including NOx SIP Call sources) in a plan to demonstrate attainment of the health based ozone standards. In certain areas, States may choose to require NOx controls based on more advanced control technologies to provide for attainment of the ozone standards.

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

Response: As described in an earlier comment/ response,

in subpart 1 areas that do not request an extension of their attainment date, RACT is met with the control requirements associated with a demonstration that the NAAQS is attained as expeditiously as practicable. The EPA agrees with commenters that it would be more efficient, in these areas,

if the date for submittal of the RACT rules were to coincide PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 48This assumes the ozone season in this example begins May 1. June 15, 2009 is the maximum statutory timeframe for subpart 1 areas that do not seek an extension. Since the CAA requires attainment as expeditiously as practicable, some subpart 1 nonattainment areas may have an attainment date earlier than June 15, 2009.

265 with submittal of the attainment demonstration since RACT is closely tied to the attainment demonstration. Therefore, in the final rule, the RACT submittal date for these areas is the same as the submittal date for the attainment plan,

which is three years after designation ( June 2007).

Although EPA is not setting a specific RACT rule implementation deadline for these areas, as provided in the Phase 1 rule controls must be implemented by the beginning of the attainment year ozone season. Thus, for example,

States would need to require implementation no later than May 1, 2008 in order to help areas attain the ozone standard by a June 15, 2009 attainment date. 48 In some cases, the time from State rule adoption to installation of controls by sources may be relatively short; in other cases, sources may need more time. Therefore, EPA encourages States to adopt any necessary rules expeditiously ( prior to the June 2007 deadline, where possible) so that sources have more than sufficient time to install the controls prior to the start of the attainment year ozone season. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 49In the 1990 amendments to the CAA, Congress specifically added RACT requirements for major sources in section 182. Section 182 required the RACT rules to be implemented " as expeditiously as practicable" but no later than 30 months after the submittal deadline.

266 For subpart 2 moderate and above areas, areas within an Ozone Transport Region, and subpart 1 areas that request an attainment date extension beyond 5 years after designation for the 8 hour standard, the final rule is consistent with the provisions in section 182 of the CAA which require States to submit RACT rules for these areas within 24 months ( June 15, 2006) of the designation. Several commenters supported this approach.

For areas subject to the 24 month RACT submittal date ( June 15, 2006), EPA believes the proposed 30 month ( December 15, 2008) period for installation of controls is reasonable, given that this is the statutorily prescribed period49 ( for the areas covered under subpart 2) and based on our prior experience with States adopting and implementing RACT requirements. Subsequent to the NOx RACT SIP revisions for the 1 hour standard subject to the 30 month CAA period, EPA approved NOx RACT SIP submittals in some areas which had been exempt from the requirements,

including the Dallas and Houston areas, which required PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 267 implementation within 2 years from the State adoption date.

The EPA recently determined that a 24 month period is adequate for stationary internal combustion engines to install low emission combustion controls ( 69 FR 21633).

Furthermore, EPA believes 30 months is adequate since available data support that one of the most challenging retrofit installations   application of selective catalytic reduction ( SCR) as described in the January 2004 CAIR proposal   can be completed, on average, in 21 months ( 69 FR 4617).

The 60 month period ( June 15, 2011) for installation of controls suggested by some commenters was not adequately supported, i. e., there was a lack of detailed justification that more time is necessary. In addition, as described in an earlier comment/ response, EPA anticipates that many sources which applied controls due to RACT requirements with the 1 hour ozone standard will not need to install new controls for the 8 hour standard. Thus, because fewer sources will be subject to a new RACT requirement there will be less demand for control equipment and States and many sources face a reduced burden compared to the same CAA requirement in the 1990s.

Since the ozone season ( 40 CFR part 58, Appendix D) PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 50Note, since the CAA requires attainment as expeditiously as practicable, some moderate nonattainment areas may have an attainment date earlier than June 15, 2010.

268 does not begin for many areas until May 1, however, the final rule allows sources until the beginning of the area's 2009 ozone season ( generally May 1, 2009) rather than December 15, 2008 to install controls. Installation of controls before the 2009 ozone season is sufficient to provide the benefits for timely attainment of the ozone standard in areas with a 2010 or later attainment date. 50 And the short delay ( generally between December 2008 and May 2009) will cause no harm since it is prior to the ozone season, which is when ozone levels are most like to be at harmful levels.

For subpart 1 areas that request an attainment date extension ( beyond 5 years after designation), the final rule sets the RACT submittal and implementation dates the same as required for subpart 2 moderate and above areas, except subpart 1 areas shall submit the RACT SIP with its attainment date extension request. The EPA believes this approach is reasonable and provides equity for subpart 1 and 2 areas with attainment dates beyond five years after designation. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 51" State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990; Proposed Rule." 57 FR 13498 at 13560 ( April 16, 1992). " Guidance on the Reasonably Available Control Measures ( RACM) Requirement and Attainment Demonstration Submissions for Ozone Nonattainment Areas." John S. Seitz, Director, Office of Air Quality Planning and Standards. November 30, 1999. Web site: www. epa. gov/ ttn/ oarpg/ t1pgm. html. Memorandum of December 14, 2000, from John S. Seitz, Director, Office of Air Quality Planning and Standards, re: " Additional Submission on RACM from States with Severe One Hour Ozone Nonattainment Area SIPs."

269 2. Reasonably Available Control Measures ( RACM)

a. Background As noted in the June 2, 2003 proposed rule, Subpart 1 of part D includes general requirements for all designated nonattainment areas, including a requirement that a nonattainment plan provide for the implementation of all RACM as expeditiously as practicable, including such reductions that may be obtained through RACT. We have also issued guidance for implementing the RACM provisions of the CAA that interprets those provisions to require a demonstration that the State has adopted all reasonable measures to meet RFP and attainment as expeditiously as practicable and thus that no additional measures that are reasonably available will advance the attainment date or contribute to RFP for the area. 51 The RACM requirement, PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 270 which is set forth in section 172( c)( 1) of the CAA, applies to all nonattainment areas that are required to submit an attainment demonstration, whether covered under only subpart 1 or also subpart 2. The June 2, 2003, proposal implied that the current policies and procedures related to RACM would continue to apply for the 8 hour ozone standard. The draft regulatory text provided that for each nonattainment area required to submit an attainment demonstration under section 51.908, the State would have to submit with the attainment demonstration a SIP revision demonstrating that it has adopted all control measures necessary to demonstrate attainment as expeditiously as practicable and to meet any RFP requirements.

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

c. Comments and Responses PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 52" State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990; Proposed Rule." 57 FR 13498 at 13560 ( April 16, 1992).

271 Comment: One commenter asked that we clarify whether old SIP measures become RACM.

Response: Under EPA's policy concerning RACM, there are no measures that are automatically deemed RACM. The determination of whether a SIP contains all RACM requires an area specific analysis that there are no additional economically and technologically feasible control measures ( alone or in conjunction with others) that will advance the attainment date. 52 Comment: One commenter recommended that EPA revise its policy permitting SIPs to exclude otherwise feasible and potentially reasonably available control measures that achieve emissions reductions in increments less than the amount necessary to advance the attainment date by a full year. The commenter believed this was an onerous standard that has stymied development of new control measures,

particularly transportation control measures. The commenter believed EPA's RACM standard is especially harmful to the ability to provide SIP credit for Smart Growth land use, due to the long time frame over which land is developed and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 272 redeveloped. The commenter believes that ever increasing suburbanization of our nation inflates the growth rate in vehicle miles traveled ( VMT), thereby neutralizing improvements in vehicle emissions. The commenter claimed that a significant air quality improvement strategy for the 21st Century is compact mixed use pedestrian friendly development near frequent transit and believed that changing land use plans in this direction will benefit air quality by reducing the rate of growth in VMT and emissions. The commenter recommended that EPA be aware of this and revise its RACM standard to encourage local governments to alter their land use plans by providing a mechanism to give credit for air quality beneficial land use changes.

Response: We do not believe our RACM policy has " stymied" development of new control technologies. New emission reduction technologies have surfaced and continue to surface to meet market demands resulting in part from Clean Air Act requirements, which include the requirements to demonstrate attainment as expeditiously as practicable and to make RFP toward attainment. In addition, viable control measures that produce emissions reductions can be approved into SIPs whether or not such measures meet the definition of RACM. Our RACM policy merely interprets the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 53Improving Air Quality Through Land Use Activities; Transportation and Regional Programs Division, Office of Transportation and Air Quality, U. S. Environmental Protection Agency. EPA420 R 01 001. January 2001.

273 Act as not mandating measures that do not contribute to expeditious attainment and timely RFP. The policy does not limit the potential for States to develop any control measures they wish, including land use measures. In fact,

we have prepared a separate guidance document on how areas can develop and receive SIP credit for land use control measures. 53 We conclude, however, that to require areas to adopt and implement as RACM every control technology or measure that obtains a small amount of emissions reductions even if such measure would not advance the attainment date or contribute to RFP is not justified. Such a policy would be extremely burdensome to planning agencies, would detract from the effort to develop more reasonable and effective controls to meet the NAAQS, and would not be necessary to meet the statutory goal of expediting attainment. For these reasons and because such requirement is not mandated by the statute, we are not adopting such a policy.

Comment: One commenter believed that the RACM requirements for subpart 1 areas should be designed so as to not require extensive and unneeded control due to the fact PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 274 that in most or all cases these controls will not be needed for the area to attain.

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

Comment: One commenter believed our RACM guidance provides only minimum requirements to ensure attainment as expeditiously as practicable and believes that every nonattainment area must be required to consider adoption of measures that have been implemented in other areas,

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

Response: To meet the RACM provision of the Act, the State must determine as part of its attainment demonstration whether there are additional measures that are feasible that PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 54In " State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990; Proposed Rule," we noted in the discussion of the RACM requirement that " In addition, any measure that a commenter indicates during the public commenter period is reasonably available for a given area should be closely reviewed by the planning agency to determine if it is in fact reasonably available for implementation in the area in light of local circumstances." The discussion of RACM in that document contains other relevant history concerning the RACM requirement.

275 would expedite attainment. In addition, EPA's RACM policy indicates that areas should consider all candidate measures that are potentially available, including any that have been suggested for the particular nonattainment area. 54 Although areas should consider all available measures, including those being implemented in other areas such as California,

areas need adopt measures only if they are both economically and technologically feasible and will advance the attainment date. This interpretation of the section 172 requirements has recently been upheld by several courts. See, e. g.,

Sierra Club v. EPA, et al., 294 F. 3d 155 ( D. C. Cir. 2002).

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

Response: We acknowledge the support of the comments PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 55See 57 FR 55622 (" Nitrogen Oxides Supplement to the General Preamble," published November 25, 1992).

276 on the submission timing of the RACM requirements.

H. How will the section 182( f) NOx provisions be handled under the 8 hour ozone standard? [ Section VI. L. of June 2,

2003 proposed rule ( 68 FR 32840); section 51.913 in draft and final regulatory text.]

1. Background While NOx emissions are necessary for the formation of ozone in the lower atmosphere, a local decrease in NOx emissions can, in some cases, increase local ozone concentrations. This potential " NOx disbenefit" resulted in Congress including the NOx exemption provisions in section 182( f) of the CAA for areas classified under subpart 2.

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

The applicable requirements are RACT and nonattainment major NSR for major stationary sources of NOx in certain ozone nonattainment areas and throughout States in the OTR. 55 In addition, section 182( f) specifies circumstances under which these NOx requirements would be limited or would not apply (" NOx exemption"). Further, areas granted a NOx exemption PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 56As stated in EPA's I/ M ( 57 FR 52950) and conformity rules ( 60 FR 57179 for transportation rules and 58 FR 63214 for general rules), certain NOx requirements in those rules do not apply where EPA granted an areawide exemption under section 182( f).

57See 57 FR 55620, " Nitrogen Oxides Supplement to the General Preamble," published November 25, 1992.

58September 1, 2004 at 69 FR 53378.

59The EPA's primary guidance regarding section 182( f) is contained in the " Guideline for Determining the Applicability of Nitrogen Oxide Requirements under Section 182( f)," issued by John S. Seitz, Director, Office of Air 277 under section 182( f) may be exempt from motor vehicle I/ M and certain Federal requirements of general and transportation conformity. 56 In the June 2, 2003 notice, we proposed to apply the NOx requirements and exemption provisions in section 182( f)

for subpart 2 nonattainment areas and in OTRs. 57 In addition, we proposed to allow subpart 1 nonattainment areas to seek a NOx exemption, where appropriate. Further, we proposed that areas previously granted a NOx exemption under the 1 hour ozone standard would need to request an exemption for purposes of the 8 hour standard in order to account for any new information that may point to a different conclusion with respect to the 8 hour standard. Recently, we invited comment58 on draft guidance intended to update the existing 1 hour ozone guidance59 regarding section 182( f) for PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 Quality Planning and Standards, to the Regional Division Directors, December 16, 1993.

60Memorandum dated January 14, 2005, " Guidance on Limiting Nitrogen Oxides ( NO x) 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 278 application to the 8 hour ozone program. We issued the updated guidance regarding section 182( f) on January 14,

2005.60 2. Summary of Final Rule.

As proposed, the final rule allows a person to petition the Administrator for a NOx exemption under either section 182( f) or our regulations for any area designated nonattainment for the 8 hour ozone NAAQS and for any area in a section 184 ozone transport region. As with the 1 hour ozone standard, the NOx exemption provision applies to subpart 2 ozone nonattainment areas and in a section 184 ozone transport region. In addition, the final rule extends to subpart 1 ozone nonattainment areas the opportunity to petition the Administrator for an exemption from nonattainment major NSR and/ or RACT requirements in a manner consistent with section 182( f) provisions. The petition must contain adequate documentation that the provisions of section 182( f) and/ or our regulations are met. We recently PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 61Memorandum dated January 14, 2005, " Guidance on Limiting Nitrogen Oxides ( NO x) 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 279 issued61 updated guidance on appropriate documentation regarding section 182( f) for application to the 8 hour ozone program. In addition, the final rule states that a section 182( f) NOx exemption granted under the 1 hour ozone standard does not relieve the area from any requirements under the 8

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

3. Comments and responses Comments: Several commenters supported EPA's proposal to make NOx waivers available to 8 hour nonattainment areas and States in an ozone transport region under either subpart 1 or subpart 2, pursuant to the provisions of section 182( f)

of the Act. Some commenters stated that requiring a reapproval of existing NOx waivers amounts to rescinding the existing waivers. Another commenter asked what is needed to maintain an exemption. One commenter stated that EPA should make it clear that there is no presumption that a NOx waiver PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 280 granted under Section 182( f) of the Act for the 1 hour ozone standard is continued for the 8 hour standard. Other commenters recommended that the NOx waiver should automatically apply for the 8 hr ozone standard in areas where EPA previously granted a NOx waiver under the 1 hr ozone standard. One commenter stated that the technical basis for granting waivers under the l hour NAAQS remains valid.

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

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

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

The EPA does not believe NOx waivers granted under the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 62E. g: Recision of NOx waiver for the Dallas Fort Worth area on April 20, 1999 ( 64 FR 19283). Also, the temporary waiver for Houston and Beaumont ( originally granted April 19, 1995 60 FR 19515) expired December 31, 1997.

281 1 hour ozone standard should always be permanent. As sources are regulated and the mix of pollutants is altered,

circumstances could show that NOx reductions will begin to provide a benefit. In several cases the 1 hour NOx waiver has been removed in subsequent rulemaking actions. 62 Indeed, when EPA issued waivers under the 1 hour ozone standard, we stated that the NOx waivers would be removed where new information became available and the rationale for the initial NOx waiver no longer was supported. For example, the waiver may be removed through rulemaking if subsequent modeling data demonstrated an ozone attainment benefit from NOx emission controls.

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

1990s, EPA believes that newer data and analyses should be used to determine if a NOx waiver under the 8 hour ozone standard is warranted. Many NOx waivers were simply based on whether an area had ambient air quality showing attainment of the 1 hr ozone standard; this is not an appropriate basis for a waiver under the 8 hour ozone PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 282 standard since areas may be attaining the 1 hour standard but exceeding the 8 hour standard. Some NOx waivers were based on dispersion modeling. In some cases the modeling later proved inadequate as attainment was not met in the forecast year. In other cases those modeling analyses have been replaced with more recent analyses. The EPA believes that NOx waivers under the 8 hour ozone standard should be supported by analyses specific to the 8 hour ozone standard and should consider relevant information developed after the 1 hour waivers were granted.

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

Comment: Some commenters urged EPA to expand the section 182( f) waiver to VOC RACT as well as NOx RACT. One commenter states that EPA has substantially more discretion under Subpart 1 than it does under Subpart 2, and to fail to exercise that discretion to avoid ineffective and inefficient requirements ( through NOx and VOC waivers) would PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 63December 1991 NAS report, Rethinking the Ozone Problem in Urban and Regional Air Pollution, page 377.

283 be irresponsible, and an abuse of its discretion.

Response: The EPA disagrees with these comments. We do not see any provision in the Act that would give us the authority to create such an exemption. While Congress could have created a VOC waiver at the same time the section 182( f) NOx waiver provisions were enacted, Congress choose not to do so. The Congress further provided for additional review and study under section 185B " to serve as the basis for the various findings contemplated in the NOx provisions"

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

conducted a study on the role of ozone precursors in tropospheric ozone formation. The final section 185B report incorporates this NAS report along with an EPA report addressing the availability and extent of NOx controls.

With respect to VOC, the NAS report states that " control of VOCs never leads to a significant increase in ozone" 63 Thus, the section 185B report does not support a waiver provision for VOC. Thus, while dispersion modeling analyses show that NOx emission reductions can be counterproductive under certain circumstances ( the reason for the NOx waiver PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 284 provision), we do not see a similar case for VOC.

Therefore, we are not expanding the section 182( f) exemption concept to VOC.

Comment: One commenter stated that the draft guidance does not contain a discussion of the linkages between 182( f)

NOx exemptions and certain other regional NOx reduction requirements such as the NOx SIP Call and the proposed " Clean Air Interstate Rule." The commenter believed EPA has an obligation to assess the impact of any section 182( f)

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

Response: As discussed in section 4.2 of the draft 8

hour exemption guidance, EPA encourages States/ petitioners to include consideration of air quality effects that may extend beyond the designated nonattainment area. States should consider such impacts since they are ultimately responsible for achieving attainment in all portions of their State and for ensuring that emissions originating in their State do not contribute significantly to nonattainment in, or interfere with maintenance by, any other State. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 285 However, EPA believes NOx exemptions under section 182( f) of the CAA and interstate transport of emissions under section 110( a)( 2)( D) of the Act can be considered independently.

The EPA has separate authority under section 110( a)( 2)( D) to require a State to reduce emissions from stationary and/ or mobile sources where there is evidence showing that such emissions would contribute significantly to nonattainment or interfere with maintenance in other States. In some cases,

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

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

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

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

1. Background In the June 2, 2003 proposal, we considered two options PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 286 designed to recognize the air quality benefits which can accrue when areas site new sources and plan development in a manner that results in overall reduced emissions. We proposed to define a community that changes its development patterns in such a way that air emissions within the nonattainment area are demonstrably reduced as a " Clean Air Development Community" ( CADC). As a result of becoming a CADC, an area would obtain a certain amount of flexibility in its NSR program.

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

We also requested comments on the options and encouraged comments suggesting other ways of encouraging PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 287 development patterns that would result in lower emissions.

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

3. Comments and Responses Comments: The EPA received numerous comments on the proposal, some supporting and others opposing the CADC provision. A number of the commenters noted that the proposal did not appear to have enough detail. A summary of the comments appears in the response to comment document.

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

However, EPA does not plan to ignore the issue. The EPA will be looking to bring a group of stakeholders together to see if the group can come up with and support one or more ways that we can use existing programs and authorities to create positive incentives and tools for communities to reduce sprawl. The process will not be PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 288 designed to work only through the specific issues in establishing a program to encourage Clean Air Development Communities as outlined in the proposal but will be open to all ideas.

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

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

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

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

controls for PM2.5 may lead to reductions in ozone or regional haze. Because the precursors for ozone and PM2.5 may be transported hundreds of kilometers, regional scale impacts may also be relevant to consider. The EPA expects that strategies to decrease ozone concentrations will not adversely affect strategies to attain the PM2.5 NAAQS. We PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 289 believe integration of ozone, PM2.5, and regional haze planning will reduce overall costs of meeting multiple air quality goals.

2. Summary of Final Rule.

We are 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.

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

nitrates, organic carbon, elemental carbon, and all other species. However, the final rule does not contain any requirements/ regulatory text on this subject.

3. Comments and responses Comments: Several commenters supported EPA's recommendation for States to integrate planning for 8 hour ozone, PM2.5, and regional haze. These commenters agreed that the integration of ozone, PM2.5 and regional haze controls will reduce the overall costs of meeting multiple air quality goals and that EPA should continue to synchronize the SIP planning requirements for these PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 290 pollutants to aid in this integration. One commenter asked EPA to clarify that this analysis is not an approvability issue associated with an 8 hour attainment demonstration.

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

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

Comments: Other commenters encouraged EPA to identify flexibility so that areas may be provided more time if they are developing a multi pollutant strategy. Commenters stated that it is imperative that SIP obligations and attainment dates with respect to these regulated air PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 291 pollutants be harmonized and that regulatory requirements and deadlines be closely coordinated. One commenter stated this may require certain deadlines be extended and that they believe Congress would not be opposed to extending deadlines in the name of efficiency.

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

we cannot fully harmonize the deadlines. However, the substantial overlap in planning periods will allow states to coordinate planning efforts among programs, without postponing implementation.

K. What emissions inventory requirements should apply under the 8 hour ozone NAAQS? [ Section VI. Q. of June 2, 2003 proposed rule ( 68 FR 32853); section 51.915 in draft and final regulatory text.]

1. Background As noted in the June 2, 2003 proposed rule, we are relying on existing emissions reporting requirements in 40 CFR Part 51 subpart A to satisfy the emissions inventory data requirements under the 8 hour ozone NAAQS. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 292 2. Summary of final rule Section 51.915 of the final rule reflects our proposal and draft regulatory text. Existing emissions reporting requirements in 40 CFR Part 51 subpart A are sufficient to satisfy the emissions inventory data requirements under the 8 hour ozone NAAQS.

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

the proposal does mention one EPA guidance document,

Emissions Inventory Guidance for Implementation of Ozone and Particulate Matter National Ambient Air Quality Standards ( NAAQS) and Regional Haze Regulations. This document states that " The EPA developed this guidance document to complement the CERR and to provide specific guidance to State and local agencies and Tribes on how to develop emissions inventories for 8 hour ozone, PM2.5, and regional haze SIPs." Since the 8 hour emissions inventory requirements are the same for the CERR, there should be no additional, special requirements needed in emissions inventory development for the proposed 8 hour rule.

Response: We agree that the CERR requirements should PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 293 satisfy 8 hour ozone SIP emissions inventory requirements.

Depending on when an area is designated nonattainment and therefore when the SIP is due, in some cases it may be necessary to update the 2002 emissions inventory that was submitted under CERR. If a State's 2005 emission inventory ( or a later one) becomes available in time to use for an area subsequently redesignated nonattainment, then that inventory should be used. We also encourage the cooperation of the Tribes and the State and local agencies in preparing their emissions inventories.