PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 6560 50 P H ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 51 and 52 [ OAR 2003 0079, FRL ]

RIN 2060 AJ99 Final Rule to Implement the 8 Hour Ozone National Ambient Air Quality Standard   Phase 2; Final Rule to Implement Certain Aspects of the 1990 Amendments Relating to New Source Review AGENCY: Environmental Protection Agency ( EPA).

ACTION: Final rule.

SUMMARY: In this document, we are taking final action on remaining elements of the program to implement the 8 hour ozone national ambient air quality standard ( NAAQS or standard). This final rule addresses, among other things,

the following control and planning obligations as they apply to areas designated nonattainment for the 8 hour ozone NAAQS: reasonably available control technology and measures ( RACT and RACM), reasonable further progress ( RFP), modeling and attainment demonstrations, and new source review ( NSR).

We are issuing this rule so that States and Tribes will know PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 2 how these statutory control and planning obligations apply and when State implementation plan ( SIPs) revisions are due for these obligations so that the States may develop timely submissions consistent with the statutory obligations and attain the NAAQS as expeditiously as practicable but no later than their maximum attainment dates. The intended effect of the rule is to provide certainty to States and Tribes regarding development of those plans. The first phase of the final rule was published on April 30, 2004.

In this rule, we are also finalizing several revisions to the regulations governing the nonattainment new source review ( NSR) programs mandated by section 110( a)( 2)( C) and part D of title I of the Clean Air Act ( CAA). First, we are codifying requirements added to part D of title I of the CAA in the 1990 amendments related to permitting of major stationary sources in areas that are nonattainment for the ozone, particulate matter ( PM10), and carbon monoxide NAAQS.

Second, we are revising the criteria for crediting emission reductions credits from shutdowns and curtailments as offsets. Third, we are revising the regulations for permitting of major stationary sources in nonattainment areas in interim periods between designation of new nonattainment areas and EPA's approval of a revised State PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 3 Implementation Plan ( SIP). Fourth, we are changing the regulations that impose a moratorium ( ban) prohibiting construction of new or modified major stationary sources in nonattainment areas where the State fails to have an implementation plan meeting all of the requirements of part D. In addition to the changes to the nonattainment NSR regulations, we also are making one change to the Prevention of Significant Deterioration ( PSD) regulations under part C of title I of the Act. We are codifying nitrogen oxides ( NOx) as an ozone precursor in attainment and unclassifiable areas.

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

including major stationary sources of ozone precursors in ozone nonattainment areas.

EFFECTIVE DATE: This rule is effective on xxxx 2005.

ADDRESSES: The EPA has established a docket for this action PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 4 under Docket ID No. OAR 2003 0079. All documents in the docket are listed in the EDOCKET index at http:// www. epa. gov/ edocket. Although listed in the index,

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

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

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

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

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

FOR FURTHER INFORMATION CONTACT: For general information:

Mr. John Silvasi, Office of Air Quality Planning and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 5 Standards, U. S. Environmental Protection Agency, Mail Code C539 02, Research Triangle Park, NC 27711, phone number ( 919) 54l 5666, fax number ( 919) 54l 0824 or by e mail at silvasi. john@ epa. gov or Ms. Denise Gerth, Office of Air Quality Planning and Standards, U. S. Environmental Protection Agency, Mail Code C539 02, Research Triangle Park, NC 27711, phone number ( 919) 54l 5550, fax number ( 919) 54l 0824 or by e mail at gerth. denise@ epa. gov. For information concerning new source review: Ms. Janet McDonald, Office of Air Quality Planning and Standards,

U. S. Environmental Protection Agency, Mail Code C539 02,

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

5550, fax number ( 919) 54l 1450 or by e mail at mcdonald. janet@ epa. gov .

SUPPLEMENTARY INFORMATION:

Outline I. What is the background for this rule?

II. What is Included in this Rule?

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

IV. Final Rule for Phase 2 Elements other than New Source Review A. Should prescribed requirements of subpart 2 apply in all 8 hour nonattainment areas classified under subpart 2, or is PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 6 there flexibility in application in certain narrowly defined circumstances?

1. Background 2. Final Rule 3. Comment and Responses B. How will we address long range transport of ground level ozone and its precursors when implementing the 8 hour ozone standard?

1. Background 2. Current Approach 3. Comments and Responses C. How will we address transport of ground level ozone and its precursors for rural nonattainment areas, areas affected by intrastate transport, and areas affected by international transport?

1. Rural transport nonattainment areas a. Background b. Summary of final rule c. Comments and Responses 2. Intrastate Transport a. Background b. Summary of Final Rule c. Comments and Responses PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 7 3. How will EPA address transport of ground level ozone and its precursors for [...] areas affected by international transport?

a. Background b. Final Rule c. Comments and Responses D. How will EPA address requirements for modeling and attainment demonstration SIPs for areas implementing the 8

hour ozone standard?

1. Areas with early attainment dates a. Background b. Summary of Final Rule c. Comments and Responses 2. Areas with later attainment dates a. Background b. Summary of Final Rule c. Comments and Responses 3. Multi State nonattainment areas a. Background b. Summary of final rule c. Comments and Responses 4. Role of modeling guidance in attainment demonstrations a. Background PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 8 b. Summary of Final Rule c. Comments and Responses 5. Mid course review ( MCR)

a. Background b. Summary of Final Rule c. Comments and Responses 6. Multi pollutant assessments ( one atmosphere modeling)

a. Background b. Summary of final rule c. Comments and Responses E. What requirements for RFP should apply under the 8 hour ozone standard?

1. General Discussion a. Background b. Summary of Final RFP and rate of progress ( ROP)

Features c. Comments and responses 2. For subpart 2 areas, should the initial 15 percent RFP requirement be limited to volatile organic compounds ( VOC)

emissions?

a. Background b. Summary of Final Rule c. Comments and responses PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 9 3. What baseline year should be required for the emissions inventory for the RFP requirement?

a. Background b. Summary of Final Rule c. Comments and responses 4. Should moderate and higher classified areas be subject to prescribed additional RFP requirements prior to their attainment date?

a. Background b. Summary of Final Rule c. Comments and responses 5. What is the timing of the submission of the RFP plan?

a. Background b. Summary of Final Rule c. Comments and responses 6. How should CAA restrictions on creditable measures be interpreted? Which national measures should count as generating emissions reductions credit toward RFP requirements?

a. Background b. Summary of Final Rule c. Comments and responses 7. For areas covered only by subpart 1, how should the RFP PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 10 requirement be structured?

a. Background b. Summary of Final Rule c. Comments and responses 8. How should the RFP requirements be implemented for areas designated for the 8 hour ozone standard that entirely or in part encompass areas that were designated nonattainment for the 1 hour ozone standard?

a. Background b. Summary of Final Rule c. Comments and responses 9. Will EPA's " Clean Data Policy" apply for purposes of 8

hour RFP?

a. Background b. Summary of Final Rule c. Comments and responses 10. How will RFP be addressed in Tribal areas?

a. Background b. Summary of Final Rule c. Comments and responses 11. How will RFP targets be calculated?

a. Background b. Summary of Final Rule PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 11 c. Comments and responses 12. Should EPA continue the policy of allowing substitution of controls from outside the nonattainment area within 100 kilometers for VOC and 200 kilometers for NOx?

a. Background b. Summary of Final Rule c. Comments and responses 13. When must RFP emission reductions be achieved?

a. Background b. Summary of Final Rule.

c. Comments and Responses.

14. Banked Emission Reduction Credits ( Including Shutdown Credits)

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

1. Background 2. Summary of final rule 3. Comments and Responses G. What requirements should apply for RACM and RACT for 8

hour ozone nonattainment areas?

1. Reasonably Available Control Technology ( RACT) PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 12 a. Background b. Summary of Final Rule c. Comments and responses 2. Reasonably Available Control Measures ( RACM)

a. Background b. Summary of final rule c. Comments and Responses H. How will the section 182( f) NOx provisions be handled under the 8 hour ozone standard?

1. Background 2. Summary of Final Rule 3. Comments and responses I. Should EPA promulgate an NSR provision to encourage development patterns that reduce overall emissions?

1. Background 2. Summary of Final Rule 3. Comments and Responses J. How will EPA ensure that the 8 hour ozone standard will be implemented in a way which allows an optimal mix of controls for ozone, PM2.5, and regional haze?

1. Background 2. Summary of Final Rule 3. Comments and responses PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 13 K. What emissions inventory requirements should apply under the 8 hour ozone NAAQS?

1. Background 2. Summary of final rule 3. Comments and Responses L. What guidance should be provided that is specific to Tribes?

1. Background 2. Summary of final rule 3. Comments and Responses M. What are the requirements for Ozone Transport Regions ( OTRs) under the 8 hour ozone standard?

1. Background 2. Summary of Final Rule 3. Comments and Responses N. Are there any additional requirements related to enforcement and compliance?

1. Background 2. Summary of final rule 3. Comments and Responses O. What requirements should apply to emergency episodes?

1. Background 2. Summary of final rule PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 14 3. Comments and Responses P. What ambient monitoring requirements will apply under the 8 hour ozone NAAQS?

1. Background 2. Summary of final rule 3. Comments and Responses Q. When will EPA require 8 hour attainment demonstration SIP submissions?

1. Background 2. Summary of final rule 3. Comments and Responses R. How will the statutory time periods in the Act be addressed when we redesignate areas to nonattainment following initial designations for the 8 hour NAAQS?

1. Background 2. Final Rule 3. Comments and Responses V. EPA's Final Rule for New Source Review A. Background 1. The Major NSR Program 2. What We Proposed a. Proposed Changes to Incorporate the 1990 Clean Air Act Amendments PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 15 b. Proposed Changes to Criteria for Emission Reduction Credits from Shutdowns and Curtailments c. Proposed Changes to Revise the Construction Ban Provisions d. Proposed Changes On Applicability of Appendix S and the Transitional NSR Program e. Proposed Changes to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable areas.

B. Summary of Final Rule and Legal Basis 1. Final Action and Legal Basis for Changes to Incorporate the 1990 Clean Air Act Amendments a. Final Changes to Incorporate the 1990 Clean Air Act Amendments b. Legal Basis for Changes to Incorporate the 1990 Clean Air Act Amendments 2. Final Action and Legal Basis for Changes to Criteria for Emission Reduction Credits from Shutdowns and Curtailments a. Final Changes to Criteria for Emission Reduction Credits from Shutdowns and Curtailments b. Legal Basis for Changes to Criteria for Emission Reduction Credits from Shutdowns and Curtailments 3. Final Action and Legal Basis for Changes to the Construction Ban Provisions PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 16 a. Final Action for Changes to the Construction Ban Provisions b. Legal Basis for Changes to the Construction Ban Provisions 4. Final Action and Legal Basis for Changes on Applicability of Appendix S and the Transitional NSR Program a. Final Changes on Applicability of Appendix S and the Transitional NSR Program b. Legal Basis for Changes to Applicability of Appendix S and the Transitional NSR Program 5. Final Action and Legal Basis for Changes to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable Areas a. Final Changes to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable Areas.

b. Legal Basis to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable areas 6. Final Changes and Legal Basis for Changes to Emission Offset Provisions of Appendix S.

a. Final Changes to Emission Offset Provisions of Appendix S.

b. Legal Basis for Changes to Emission Offset Provisions of Appendix S.

C. Comments and Responses PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 17 1. Comments on Proposed Changes to Incorporate the 1990 Clean Air Act Amendments 2. Comments on Proposed Revisions to Criteria for Emission Reduction Credits from Shutdown and Curtailments 3. Comments on Construction Ban Provisions 4. Comments on Applicability of Appendix S and the Transitional Program 5. Comments on Changes to Identify NOx as an Ozone Precursor in Attainment and Unclassifiable Areas 6. Comments on Removing the 50 ton Exemption D. NSR Implementation Under the 8 hour ozone NAAQS 1. Areas That Have Never Been Nonattainment for Ozone 2. Areas That Are Nonattainment for the 1 hour NAAQS and the 8 hour NAAQS 3. Part D NSR SIP Submittals 4. Effective Date for Today's Requirements 5. Requirements for Offsets VI. OTHER CONSIDERATIONS A. How will EPA's action affect funding under the Congestion Mitigation and Air Quality Improvement ( CMAQ)

Program?

1. Background 2. Current Position PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 18 3. Comments and Responses B. What is the relationship between implementation of the 8 hour standard and the CAA's Title V permit program?

1. Background 2. Current Position 3. Comments and Responses VII. STATUTORY AND EXECUTIVE ORDER REVIEWS A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer Advancement Act J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low Income Populations K. Congressional Review Act PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 19 I. What is the background for this rule?

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

June 2, 2003) for a detailed discussion and background information on the 8 hour ozone NAAQS; the associated litigation; our proposed strategy for areas to achieve the NAAQS; and the stakeholder process for gathering input into this effort, among other topics.

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

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

when the 1 hour NAAQS will no longer apply); how antibacksliding principles will ensure continued progress toward attainment of the 8 hour ozone NAAQS; attainment dates; and PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 1Three petitions for reconsideration of the Phase 1 Rule were filed by: 1) Earthjustice on behalf of the American Lung Association, Environmental Defense, Natural Resources Defense Council, Sierra Club, Clean Air Task Force, Conservation Law Foundation, and Southern Alliance for Clean Energy; 2) the National Petrochemical and Refiners Association and the National Association of Manufacturers; and 3) the American Petroleum Institute, American Chemistry Council, American Iron and Steel Institute, National Association of Manufacturers and the U. S. Chamber of Commerce.

20 the timing of emissions reductions needed for attainment.

Following publication of the April 30, 2004 final rule,

the Administrator received three petitions, pursuant to section 307( b)( 7)( B) of the CAA requesting reconsideration of a number of aspects of the final rule. 1 On September 23,

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

the timing for determination of what is an " applicable requirement." On xxx___________________________, we published a proposed rule to take comment on the issue of the NSR anti backsliding provisions. We plan to take final action on these three issues by May 20, 2005.

[ XXX THIS MAY NEED TO BE REVISED ] We are continuing to PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 21 review the remaining issues raised in the Earthjustice Petition, as well as the issues raised in the National Petrochemical and Refiners Association and American Petroleum Institute Petitions. Copies of the Petitions for Reconsideration and actions EPA has taken regarding the Petitions may be found at:

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

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

II. What is Included in this Rule?

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

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

RFP; modeling and attainment demonstrations; and new source review ( NSR).

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

This summary is intended to give only a convenient PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 22 overview of our final rule. It should not be relied on for the details of the actual rule. The final rule ( regulatory text) and the discussion of it in the next sections below should be consulted directly.

Summary of Section IV: Final Rule for Phase 2 Elements Other than New Source Review A. Should prescribed requirements of subpart 2 apply in all 8 hour nonattainment areas classified under subpart 2, or is there flexibility in application in certain narrowly defined circumstances?

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

B. How will we address long range transport of ground level ozone and its precursors when implementing the 8 hour ozone standard? PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 23 We are addressing the long range transport of ozone and its precursors through a separate rulemaking. Based on a reassessment of interstate transport for the 8 hour standard, we proposed the " Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone," now known as the proposed Clean Air Interstate Rule ( CAIR) on January 30, 2004 ( 69 FR 4566). This action proposed statewide NOx budgets for 25 States and the District of Columbia. These budgets are based on a proposed determination that emissions from these 26 jurisdictions are significantly contributing to 8 hour ozone ( and fine particulate matter) problems in downwind States. On June 10, 2004 ( 69 FR 32684), we issued a supplemental proposal for the CAIR, which included a proposed model cap and trade program that States could use to meet the NOx budgets.

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

1. Rural transport nonattainment areas The final rule does not contain any revisions to current policy on rural transport areas under section 182( h). We do not believe there are any 8 hour PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 24 nonattainment areas covered under subpart 2 that are " rural"

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

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

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

We are not setting forth any regulatory provisions related to international transport in this rule as section 179B of the CAA applies for these purposes. We continue to recommend that States confer with the appropriate EPA Regional Office to establish on a case by case basis the technical requirements for these analyses. These analyses will be subject to public comment during the State and federal SIP processes.

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

hour ozone standard?

The final rule retains the following four elements that each attainment demonstration SIP must include: ( 1) PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 25 technical analyses to locate and identify sources of emissions that are causing violations of the 8 hour NAAQS within nonattainment areas ( i. e., analyses related to the emissions inventory required for the nonattainment area),

( 2) adopted measures with schedules for implementation and other means and techniques necessary and appropriate for attainment, ( 3) commitments, in some cases, to perform a mid course review ( MCR), and ( 4) contingency measures required under section 172( c)( 9) of the CAA that can be implemented without further action by the State or the Administrator to cover failures to meet RFP milestones and/ or attainment.

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

2. Areas with later attainment dates Areas with later attainment dates such as other subpart 1 areas and areas classified as moderate or higher under section 51.903 are required to submit an attainment PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 26 demonstration no later than 3 years after the effective date of designation for the 8 hour ozone NAAQS.

3. Multi State nonattainment areas State partners involved in a multi State ozone nonattainment area must work together to perform the appropriate modeling analyses to identify control measures that will enable the area to achieve attainment as expeditious as practicable. Each State will be responsible for its portion of the control program and will be held accountable for controls identified for implementation within its State boundaries.

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

5. Mid course review ( MCR)

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

6. Multi pollutant assessments ( one atmosphere modeling) PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 27 There is no regulatory text on this issue, but the preamble makes several recommendations concerning multipollutant assessments.

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

1. General Discussion We are adopting nearly all the approaches set forth in our proposed rule for the various 1

hour ROP and 8 hour RFP issues.

2. For subpart 2 areas, should the initial 15 percent RFP requirement be limited to VOC emissions?

Areas that are classified as moderate under the 8 hour standard that have already implemented their 15 percent plans under their 1 hour ozone SIPs would be considered to have met the statutory 15 percent requirement. RFP for the first 6 years from the baseline year would be covered under the more generic RFP requirements of subpart 1. Serious and above areas would have to meet 3 percent reductions per year starting in the baseline year averaged over each three year period out to the attainment year.

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

We are using the 2002 inventory as the baseline inventory for the ROP requirement for areas designated PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 28 nonattainment in 2004 primarily because of timing concerns related to attainment dates and when data is collected and compiled.

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

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

For moderate and higher classified areas, the first RFP SIP must be submitted within 3 years after the area's nonattainment designation. For areas with a June 15, 2004 effective date, for the 8 hour designations, the SIP would be due by June 15, 2007. This would provide up to 3 years for States to develop and submit RFP plans, and one additional year ( until the end of 2008) for control measures to be implemented. The RFP SIP for any remaining 3 year periods out to the attainment date beyond the first 6 years PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 29 would be required to be submitted with the attainment demonstration, i. e., within 3 years after designation.

However, we recommend that States complete their RFP plans as soon as possible after designation to provide more time for sources to implement the emission reductions.

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

b. Summary of Final Rule.

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

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

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

Scenario A: Areas with attainment dates 5 years or less PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 30 after designation ( i. e., on or before June 15, 2009). RFP for these areas would be met by ensuring emission reductions needed for attainment are implemented, as noted above, by the beginning of the ozone season prior to the attainment date. This would be similar to subpart 2 RFP for areas classified as marginal.

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

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

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

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

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

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

° For each subsequent 3 year period ( after 2008) out to the attainment date, the RFP SIP would have to provide PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 31 for an additional increment of progress no less than the amount of emission reductions that would be proportional to the time between the end of the first increment ( in 2008) and the attainment date. This second RFP SIP would also have to be submitted within 3 years after the effective date of designation ( i. e., in 2007).

8. How should the RFP requirements be implemented for areas designated for the 8 hour ozone standard that entirely or in part encompass areas that were designated nonattainment for the 1 hour ozone standard? An 8 hour nonattainment area that is identical, geographically, to its predecessor 1 hour nonattainment area ( which has already done the 15 percent reduction) will not be required to do another 15 percent VOC only reduction plan. For an 8 hour moderate or higher nonattainment area that contains a 1 hour nonattainment area that has an approved 15 percent VOC ROP plan but also contains areas that do not have an approved 15 percent VOC ROP plan, the final rule allows States the choice between two options:

Option 1. Develop a new baseline and new 15 percent VOC ROP emission reduction target for the entire newly expanded area. Determine that emission reductions that occur after PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 32 the 2002 baseline emissions inventory year are creditable in the combined new area. The reductions must be of VOC only.

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

EPA notes that where a moderate area with a previously approved 15% plan for a portion of the 8 hour nonattainment area chooses the second option of developing a new 15% plan for only the new portion of the 8 hour nonattainment area,

the emissions projections included in such plans will not constitute motor vehicle emissions budgets for purposes of the transportation conformity rules because they will be not establish total allowable emissions for 2008 for the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 33 nonattainment area as a whole. Since the portions of moderate areas that have previously met their 15%

requirements will only be subject to subpart 1 RFP requirements, which will be satisfied with the measures that demonstrate attainment as expeditiously as practicable,

these areas will not be developing RFP plans separate from their attainment plans. Thus, for these areas, the only motor vehicle emissions budgets that will be developed will be for the attainment year. In contrast, for 2008 serious and above areas will be developing both a 15% VOC plan for the new portion of the 8 hour nonattainment area and an 18%

VOC/ NOx plan for the portion of the area that previously met its 15% requirement. Thus, the RFP plan as a whole will establish total allowable emissions for 2008 for the entire 8 hour nonattainment area. Therefore, the plans for these areas, as well as moderate areas that choose option one,

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

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

hour RFP? We intend to apply the Clean Data Policy for the 8 hour standard in the same manner as we applied it for the 1 hour standard.

10. How will RFP be addressed in Tribal areas? PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 34 We intend to follow the Tribal Authority Rule ( TAR), which provides Tribes with the ability to develop Tribal implementation plans ( TIPs) to address and implement the NAAQS in Indian country. It further provides the Tribes with flexibility to develop these plans in a modular way, as long as the elements of their TIPs are reasonably " severable."

11. How will RFP targets be calculated?

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

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

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

We intend to continue to rely on this policy at the current time, but also intend to reassess whether the policy should be revised in light of comments related to issues of equity and the potential for double counting of emission reductions.

13. When must RFP emission reductions be achieved?

The target level of emissions must be met by the attainment date of the attainment year. Section PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 35 182( c)( 2)( B) requires that RFP be continued out to the attainment date. Therefore, if the area's last increment of progress ( out to the area's attainment date) would result in emissions reductions greater than needed for attainment,

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

14. Banked Emission Reduction Credits ( Including Shutdown Credits): Can pre baseline emission reduction credits be used to satisfy the RFP requirement?

° The baseline emissions should not include pre enactment banked emission credits since they were not actual emissions during the calendar year of enactment.

° 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 as authorized.

° 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. Prior guidance on this issue is still relevant for banked emission PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 36 reduction credits in relation to the RFP requirement for the 8 hour ozone standard. However, because the rule for implementing the 8 hour ozone standard uses a 2002 baseline year, the prior guidance should be interpreted with that baseline in mind instead of enactment of the 1990 Amendments.

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

Contingency measures are required to be implemented in the event of failure to meet a milestone or attain the 8

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

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

hour ozone nonattainment areas?

1. Reasonably Available Control Technology ( RACT)

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

For subpart 1 areas that request an attainment date PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 37 extension ( beyond 5 years after designation), subpart 2 moderate and above areas, and areas within an Ozone Transport Region, RACT is required. The RACT submittal date is two years after designation, except subpart 1 areas shall submit the RACT SIP with its attainment date extension request. States must require sources to implement RACT no later than the first ozone season or portion thereof which occurs 30 months after the required submittal date.

Where RACT is required, State SIPs implementing the 8

hour standard generally must assure that RACT is met, either through a certification that previously required RACT controls represent RACT for 8 hour implementation purposes or through a new RACT determination. States may use existing EPA guidance in making RACT determinations.

Sources subject to the NOx SIP Call trading program meet NOx RACT requirements under existing RACT guidance. States are free to conduct case by case RACT determinations, or RACT determinations or certifications for groups of sources, at their discretion.

2. Reasonably Available Control Measures ( RACM)

For each nonattainment area required to submit an attainment demonstration, the State must submit with the attainment demonstration a SIP revision demonstrating that PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 2Memorandum dated January 14, 2005, " Guidance on Limiting Nitrogen Oxides ( NO x) Requirements Related to 8 Hour Ozone Implementation" from Stephen D. Page, Director,

38 it has adopted all control measures necessary to demonstrate attainment as expeditiously as practicable and to meet any RFP requirements.

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

The final rule allows a person to petition the Administrator for an exemption from nonattainment major NSR and/ or RACT requirements for major stationary sources of NOs in 8 hour ozone nonattainment areas and for any area in a section 184 ozone transport region. The final rule includes an extension of the NOx waiver provisions to 8 hour ozone nonattainment areas covered under subpart 1 ( as proposed) as well as subpart 2 nonattainment areas. In addition, the final rule states that a section 182( f) NOx exemption granted under the 1 hour ozone standard does not relieve the area from any requirements under the 8 hour ozone standard.

A petition must contain adequate documentation that the exemption provisions in section 182( f) are met. We recently issued updated guidance on appropriate documentation regarding section 182( f) for application to the 8 hour ozone program. 2 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 Office of Air Quality Planning and Standards, to Air Directors, Regions I X.

39 I. Should EPA promulgate an NSR provision to encourage development patterns that reduce overall emissions? Section V of this preamble below addresses rules for NSR for the 8

hour ozone standard. We are not at this time issuing any rule related to Clean Air Development Communities ( CADCs).

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

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

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

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

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

CAA section 301( d) recognizes that American Indian PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 40 Tribal governments are generally the appropriate authority to implement the CAA in Indian country. As discussed in the Tribal Authority Rule ( TAR), it is appropriate to treat Tribes in the same manner as States for purposes of implementing all of the provisions of the CAA, except those provisions for which EPA has specifically determined that it is not appropriate to treat Tribes in the same manner as States. ( The CAA provisions for which EPA has determined it is not appropriate to treat Tribes in the same manner as States are listed in Section IV. L. of this preamble.)

Examples of CAA provisions for which EPA has determined it is not appropriate to treat Tribes in the same manner as States include specific plan submittal and implementation deadlines.

In implementing this rule, it is important for both States and Tribes to work together to coordinate planning efforts. Other than in very limited circumstances, State regulations do not apply to Indian Country, but SIP control measures could impact downwind areas, including Indian communities. In addition, nonattainment area boundaries may include a portion of Indian Country. Coordinated planning will help ensure that the planning decisions made by the States and Tribes complement each other and achieve progress PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 41 toward meeting the NAAQS.

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

Section 184 continues to apply for purposes of the 8

hour standard; therefore, the current OTR remains in place and the section 184 control requirements continue to apply for purposes of the 8 hour standard. If a new OTR is established for purposes of the 8 hour standard pursuant to section 176A, that area would also be subject to the provisions and additional control requirements of section 184.

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

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

O. What requirements should apply to emergency episodes?

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

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

No monitoring requirements are being promulgated as part of this rulemaking. The preamble discusses current PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 42 relevant requirements and anticipated activities.

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

Modeled attainment demonstrations   where required   must be submitted within 3 years after the effective date of the area's nonattainment designation. A subpart 1 area that desires an attainment date within 3 years after designation would have to provide a demonstration within 18 months after designation.

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

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

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

Summary of Section V EPA's Final Rule for New Source Review In today's action, we are finalizing previously proposed changes to three regulations that govern major NSR permitting of major stationary sources in nonattainment PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 43 areas 40 CFR 51.165, Appendix S of 40 CFR part 51, and 40 CFR 52.24.

The regulations at 40 CFR 51.165 contain the minimum elements that a State's preconstruction permitting program for major stationary sources in nonattainment areas must contain in order for EPA to approve the State's program into the SIP. In section 51.165, we are making revisions to incorporate the major stationary source thresholds,

significant emission rates, and offset ratios pursuant to part D of title I of the 1990 Amendments to the CAA for the 8 hour ozone NAAQS, the carbon monoxide NAAQS, and the PM10 NAAQS. We are also promulgating final changes to the requirements for emission reductions achieved from shutdowns or curtailments at 51.165( a)( 3)( ii)( C). We are not currently acting on any other proposed changes to 40 CFR 51.165.

Appendix S of 40 CFR part 51 contains the preconstruction permitting program that applies to major stationary sources in nonattainment areas lacking an approved part D NSR program. It applies during the interim period after EPA designates an area as nonattainment, but before EPA approves a SIP to implement the nonattainment NSR requirements for that pollutant ( SIP development period). PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 44 We are making the same changes to Appendix S that we are making to section 51.165 to implement the 1990 Amendments.

In addition, we are finalizing revisions to Section VI of Appendix S to qualify applicability of this section. This revision is an outgrowth of the proposed revisions to Section VI in the 8 hour NAAQS implementation proposal ( 68 FR 32802). We also are removing an outdated exemption for sources increasing emissions less than 50 tons per year ( tpy).

The regulations at 40 CFR 52.24 contain restrictions on the construction or modification of major stationary sources, including a construction ban applicable in circumstances enumerated by the 1977 Clean Air Act. These regulations also apply if the Administrator determines pursuant to CAA section 173( a)( 4) that the State is not adequately implementing the SIP for meeting the part D requirements. Today's final rules codify requirements of the 1990 amendments related to the applicability of construction bans. The final rules at section 52.24 also codify that section 51.165 applies in interpreting the terms in section 52.24. The regulations at 40 CFR 52.24( k) retain the requirement that Appendix S governs permits to construct and operate applied for during the period between the date PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 45 of designation as nonattainment and the date the part D plan for NSR is approved, but is updated to remove the reference to the construction ban.

In addition to the changes to the nonattainment NSR regulations, we also are making one change to the PSD regulations under part C of title I of the Act. We are codifying NOx as an ozone precursor in attainment and unclassifiable areas.

Summary of Section VI. Other Considerations A. How will EPA's action affect funding under the Congestion Mitigation and Air Quality Improvement ( CMAQ)

Program?

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

hour ozone standard are eligible for CMAQ funding. However,

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

Hence, under the transportation statute CMAQ funds cannot be apportioned to the States on the basis of the designations for the 8 hour ozone standard that are not also classified PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 46 under subpart 2.

B. What is the relationship between implementation of the 8 hour standard and the CAA's Title V permit program?

The interrelationship between implementation of the 8

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

C. What action is EPA taking on the Overwhelming Transport Classification for subpart 1 areas? This section discusses the petition for reconsideration of the overwhelming transport classification that we received from Earth Justice, guidance on overwhelming transport, and the applicable requirements for subpart 1 areas that are classified as overwhelming transport.

IV. Final Rule for Phase 2 Elements other than New Source Review [ NOTE: The discussion of many of the regulatory elements below address timing of required actions, such as submission PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 47 dates for SIP revisions. The discussion is primarily directed toward 8 hour ozone nonattainment areas for which the effective date of the designation was June 15, 2004.

However, a number of areas may have later effective dates for their designations, such as early action compact areas and areas subsequently redesignated from attainment to nonattainment for the 8 hour ozone standard. For these situations, the timing will run from the effective date of those designations. In cases in this preamble where we have used June 15, 2005 as a substitute for the " effective date,"

we are using it only for purposes of those areas with an effective date of June 15, 2004.]

A. Should prescribed requirements of subpart 2 apply in all 8 hour nonattainment areas classified under subpart 2, or is there flexibility in application in certain narrowly defined circumstances? [ Section VI. D. of June 2, 2003 proposed rule ( 68 FR 32825); no draft or final regulatory text.]

1. Background The 1990 Clean Air Act Amendments ( CAAA) overhauled the Clean Air Act's ( CAA) requirements for ozone nonattainment areas and, in doing so, specified new mandatory measures for many areas. The approach embodied in subpart 2 was to classify areas according to the severity of their pollution. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 48 Areas with more serious ozone pollution were given a higher classification that did two things. First, the successively higher classifications provided a successively longer maximum time frame for attaining the ozone NAAQS. Second,

each higher classification mandated specific additional and/ or more stringent obligations than the classification immediately below. Congressional proponents of this approach argued that specifying mandatory measures in the statute was necessary because States and EPA, prior to 1990,

had failed to ensure that SIPs achieved steady reasonable progress in reducing emissions or to require readily available measures that were cost effective and necessary to meet the standard.

For this rule, we examined the issue of mandatory measures from both a legal and policy standpoint. Our legal view is guided by the statutory language in Part D of title I of the CAA. In addition, we were guided by the Supreme Court's view of this language.

We have consistently interpreted the CAA to mean that once an area is classified under subpart 2, the subpart 2 requirements apply. While certain requirements allow for some flexibility in how they apply, the requirements do not allow for broad waivers. For example, all areas classified PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 49 as serious or above must meet the requirement for an enhanced inspection and maintenance ( I/ M) program, however,

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

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

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

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

hour NAAQS. As we noted in the preamble to the proposed PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 50 rule, there may be a basis for waiving a prescribed requirement on a case by case basis where imposition of the requirement would create an absurd result. As we stated in the proposed rule, we believe that absurd results that might occur from application of mandatory control measures would happen only in rare instances, if at all. If a State submits a demonstration that application of a specific requirement in a specific nonattainment area would create an absurd result, we will consider application of the absurd results doctrine at that time.

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

Several commenters suggested that we take the cost of controls into consideration when determining if there were an absurd result while others suggested that we look at relative control strategy effectiveness, e. g., allowing a demonstration that NOx reductions are more effective and therefore may be substituted for mandatory VOC emissions reductions. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 51 Several other commenters stated that we should more broadly allow substitution of subpart 2 mandatory measures.

One commenter felt that substitution of subpart 2 measures should be allowed as long as the substituted measures are at least equivalent to the mandatory measures. Another commenter stated that we should allow areas to adopt substitute measures in lieu of subpart 2 measures where the subpart 2 measures would not be as effective as the substitute measures in reaching attainment. The commenter stated that we have been overly limited in our characterization of when subpart 2 measures might be waived to avoid an absurd result. The commenter believed that we should create a categorical exemption as an exercise of agency power to allow areas to substitute NOx for VOC measures or more effective control measures for less effective control measures when doing so would expedite attainment. Another commenter urged us to limit the strict application of subpart 2 measures because the imposition of such measures creates economic disincentives for companies to locate and expand in nonattainment areas. A number of commenters stated that they do not support the vehicle inspection and maintenance ( I/ M) or stage II vapor recovery programs and recommended that we provide States with PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 52 flexibility in meeting these requirements.

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

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

Whitman, __ US ___ [ xxx NEED CITATION] (" Whereas subpart 1 gives EPA considerable discretion to shape nonattainment programs, subpart 2 prescribes large parts of them by law"

and " EPA may not construe the statute in a way that completely nullifies textually applicable provisions meant to limit discretion"). xxx ADD CITE] We do not believe that we or the States can take action to override this Congressional intent.

However, as stated in our proposed rule, we believe that case law may provide EPA with limited flexibility to waive federally mandated requirements on a case by case basis where application of those requirements would produce an absurd result. We do not need to conclude here what PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 53 precise circumstances would create an absurd result.

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

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

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

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

Response: As stated above, we agree that we do not have broad authority to waive subpart 2 requirements and that the CAA itself does not expressly create authority to waive such requirements. However, the " absurd results" line of cases PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 54 provides that where application of a statute as written would create a result counter to what Congress intended, an Agency has limited authority to construe that provision in a manner than would effectuate Congress' intent. [ XXX ADD ABSURD RESULTS CITES]

B. How will we address long range transport of ground level ozone and its precursors when implementing the 8 hour ozone standard? [ Section VI. F. of June 2, 2003 proposed rule ( 68 FR 32827); no draft or final regulatory text.]

1. Background Interstate transport can make it difficult or impossible for some States to meet their attainment deadlines solely by regulating sources within their own boundaries. Section 110( a)( 2)( D) of the Act provides an important tool for addressing the problem of transport. It provides that a State must include adequate provisions in its SIP to prohibit sources within the State from emitting air pollutants in amounts that contribute significantly to nonattainment, or interfere with maintenance, in one or more downwind States. Section 110( k)( 5) of the Act authorizes EPA to find that a SIP is substantially inadequate to meet any CAA requirement, including the requirements of section 110( a)( 2)( D) of the Act. If we make such a finding, we must PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 55 require the State to submit, within a specified period, a SIP revision to correct the inadequacy. The CAA further addresses interstate transport of pollution in section 126,

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

In 1998, we issued the NOx SIP Call, which found the SIPs for certain States in the eastern U. S. to be substantially inadequate to address emissions transported to downwind States and required those States to select and adopt control measures to meet statewide NOx emissions budgets ( 63 FR 57356, October 27, 1998.) State programs to implement the rule have focused on reducing emissions from electric power generators and large industrial emitters. In the NOx SIP Call, we made determinations of whether emissions from sources in upwind States are significantly contributing to downwind nonattainment problems under both the 1 hour and/ or 8 hour ozone standards. In the final SIP Call rule, we determined that the same level of reductions was needed to address transport for both the 1 hour and 8

hour standards.

The compliance date for achieving the required NOx PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 56 reductions under the NOx SIP Call was May 31, 2004. All of the affected States submitted approvable SIPs in response to the NOx SIP Call and are implementing their NOx control programs. The NOx SIP Call is ensuring substantial emissions reductions from sources in upwind States, and these reductions will significantly improve the boundary conditions that downwind States must consider as they work to identify how areas within the State will attain and maintain the NAAQS. By reducing the level of transported emissions at the boundaries of the States, there will be less burden to achieve additional emission reductions from areas within the State. In the proposed rule, we said that unlike in the past, States affected by transport can develop their local ozone implementation plans with the knowledge that the issue of interstate transport has already been addressed " up front." However, in the 8 hour implementation proposal, we also indicated that we intended to investigate the extent, severity, and sources of interstate ozone transport that will exist after implementation of the NOx SIP Call.

2. Current Approach.

Since the 8 hour implementation proposal, we have conducted a reassessment of interstate transport for the 8 PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 57 hour standard. Based on these analyses, on January 30, 2004 ( 69 FR 4566), we proposed the " Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone," now known as the proposed Clean Air Interstate Rule ( CAIR). This action proposed statewide NOx budgets for 25 States and the District of Columbia. These budgets are based on a proposed determination that emissions from these 26 jurisdictions are significantly contributing to 8 hour ozone ( and fine particulate matter) problems in downwind States. On June 10, 2004 ( 69 FR 32684), we issued a supplemental proposal for the CAIR, which included a proposed model cap and trade program that States could use to meet the NOx budgets.

3. Comments and Responses Comment: Several commenters thought the June 2, 2003,

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

Some added that this puts northeastern States located in the Ozone Transport Region ( OTR) in a situation where their citizens and businesses are bearing a disproportionate burden of health and economic impacts compared to upwind States that have fewer control requirements than OTR States.

Some OTR State commenters said that the rule should address PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 58 this inequity. One said we cannot assume that transport has been addressed until after the NOx SIP Call is implemented and has been evaluated.

Response: The 8 hour implementation rule is not intended as a rule to address interstate transport of pollution and to achieve emission reductions from upwind sources. Rather, its purpose is to explain how the provisions of subparts 1 and 2 of part D of title I of the CAA apply for purposes of the 8 hour NAAQS. We continue to believe that the NOx SIP call provides substantial benefit for areas that are affected by the significant transport of pollution from other States and will ease the planning burden for those areas. Under the CAIR, we have proposed to find that there is a need for NOx reductions beyond those required by the NOx SIP Call to further reduce the interstate transport of ozone and the precursor NOx for purposes of addressing significant contribution for the 8

hour ozone standard.

Comment: Two commenters recommended a regional approach among States to address transport. One commenter thought that Clear Skies is the best way to address transport, but absent that, would support a regional approach. Some commenters thought the 8 hour implementation PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 59 proposal ignored the issue that ozone is a regional problem that can only be solved through regional planning. These commenters added that instead of incentives for regional planning there were disincentives. Another commenter thought that EPA unrealistically expects States to be able to resolve all potential conflicts between the States by working together in a collaborative process to identify and adopt appropriate controls that provide for attainment. The commenter suggested that EPA oversight may be necessary in these situations. One commenter thought the development of multiple ozone transport regions for regional planning and coordination may be highly desirable to bring States with a common problem together to coordinate efforts with the strength of several States rather than to go it alone.

Another suggested some criteria for EPA to use if we were to choose to establish OTRs.

Response: We believe that addressing interstate transport requires regional cooperation. The NOx SIP Call is providing significant benefit to areas affected by transported pollution. In addition, we have proposed to require additional NOx emissions reductions from a number of States covered by the NOx SIP call and to required several other States to reduce NOx emissions. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 60 We note that groups of States have worked effectively together in the past to address regional ozone problems.

For example the Lake Michigan Air Directors Consortium ( LADCO) was established in 1990 by the States of Illinois,

Indiana, Michigan, and Wisconsin. The main purpose of LADCO is to provide technical assessments for and assistance to its member States on problems of ozone air quality and to provide a forum for its member States to discuss air quality issues. We will continue to encourage these multi State efforts to assess and address ozone nonattainment and will work with these States as needed to provide support and ensure progress. We believe these federal rules in conjunction with voluntary cooperation between States will be effective in addressing the 8 hour ozone problem.

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

Comment: Many commenters supported our intention to investigate the extent, severity, and sources of interstate transport that will exist after the NOx SIP Call is implemented in 2004. Two commenters said this investigation PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 61 should be preceded by rigorous, peer reviewed modeling and observation analyses in an open public process. One commenter thought we should conduct modeling similar to the NOx SIP Call modeling and assign the transport responsibility to States. Another recommended that the States be involved from the beginning. Several urged us to issue a transport rule as soon as possible.

Several State commenters claimed that the air coming into their States is often at or above the level of the 8

hour standard and thus it would not be possible to solve nonattainment within their boundaries without reducing the amount of ozone and its precursors being transported into the State. Others said our preliminary modeling indicates that ozone concentrations in air being transported to the Northeast will be at levels near or above the 8 hour standard, even after the implementation of the NOx SIP Call.

One commenter said upwind States are not reducing emissions sufficiently to ensure a downwind State can meet its legal obligations.

Several commenters thought upwind areas should be held accountable for their impacts by implementing controls similar to those required in the downwind areas they impact.

One commenter believes that the same type of control PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 62 measures already in place throughout the OTR should be applied in upwind areas affecting the air quality in the OTR. One suggested that as a starting point upwind areas should be required to implement requirements such as RACT,

I/ M, and NSR. Several commenters stated that all types of industrial facilities should be controlled to prevent transport. Another urged us to do our part to adopt national controls on fuels and mobile sources. One commenter said that we have not demonstrated that the existing and anticipated control programs in upwind States will solve the transport problem for northeastern States despite our assertion that interstate transport has already been addressed.

Response: In certain cases, for the States to be successful in developing local plans demonstrating attainment of the 8 hour standard, we agree that upwind sources of emissions must be effectively and efficiently controlled. These emission reductions may be achieved through federal rules ( such as those regulating engines and vehicles) or through rules requiring upwind States to address the interstate transport of pollutants through SIP revisions. However, in any rule issued by EPA under sections 110( a)( 2)( D) and ( k)( 3), EPA cannot mandate the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 63 specific controls the State must adopt   such as RACT, I/ M and NSR   as suggested by the commenters. We may identify the level of contribution that needs to be addressed, but the State has the responsibility to identify the controls to achieve those reductions.

For the proposed CAIR, we conducted new analyses of the degree of transport that will remain after implementation of the NOx SIP Call. In assessing whether emissions from upwind States significantly contribute to 8 hour ozone nonattainment in downwind States, we followed the general approach used in the NOx SIP Call. However, we used an updated model and updated inputs that reflect current requirements ( including the NOx SIP Call itself). We proposed to conclude that certain States and the District of Columbia are significantly contributing to 8 hour ozone problems in downwind States and proposed statewide NOx budgets for these jurisdictions. In the rulemaking process,

we have made all of the transport analyses available for public comment and review.

Comment: Two commenters thought that we should not evaluate what actions are needed to address transport beyond the existing NOx SIP Call until after States have had a chance to address the new standard with SIPs. The PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 64 commenters pointed out that the SIP Call reductions will just be implemented in 2004. One pointed out that the NOx SIP Call was designed to address both 1 hour and 8 hour transport. Several commenters thought that because the existing NOx SIP Call eliminates significant contribution from other States, under that rule there is no basis for any further requirements to reduce NOx for the purpose of addressing long range transport issues. Another stated that any changes to the NOx SIP Call should be limited to expanding the geographic coverage of the requirements. The commenter said we should not, and have not, justified modifying the NOx SIP call for States that have fully controlled under the NOx SIP Call.

Response: As discussed above, we are addressing the issue of transport in CAIR, and the sufficiency of the analysis in that rule or the legal authority of such action is not an issue for this rulemaking. We agree that States should work together in the SIP development process to ensure localized transport is addressed. States that share an interstate nonattainment area are expected to work together in developing the nonattainment SIP for that area and in reducing emissions that contribute to local scale interstate transport problems. We would also encourage PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 65 collaborative efforts even in cases where there is not a multi State nonattainment area but where significant emissions sources in one State might affect air quality in a nonattainment area in an adjacent State.

Comment: One commenter said that in order for areas to attain the 8 hour standard by the applicable attainment date, a regional strategy with deeper and quicker ( i. e., by the end of this decade) reductions than has been offered to date is needed. The commenter urged us to reconsider the options submitted in April 2002, through the Ozone Transport Commission, regarding transport and ozone implementation.

Another commenter agreed that significant regional or national reductions that coincide with attainment dates are essential. The commenter pointed out that Clear Skies and Tier IV nonroad engine standards are not yet in place and in any event would not bring timely relief from transport. One State commenter urged us to quickly promulgate a transport rule to address 8 hour ozone problems in a time frame to help areas attain the standards. Several commenters thought that any results from EPA's investigation of interstate transport that will exist after the NOx SIP Call will likely come too late to help downwind 8 hour areas meet their attainment dates. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 66 Response: As noted above, the issues raised by these commenters are being considered separately in the CAIR and are not part of this rulemaking. In both the January 2004 proposal and the June 2004 supplemental proposal for the CAIR, we solicited comment on the proposed compliance deadlines for Phase I ( 2010) and Phase II ( 2015) reductions.

In that rulemaking, we are evaluating the balance between the need for near term reductions to attain the 8 hour ozone and PM2.5 standards, the ability of States to develop firm plans for achieving the required reductions, and the ability of affected emissions sources to install pollution controls in a fashion that is least disruptive to the economy. We are currently reviewing the comments we have received and will make final decisions on the timing for compliance with the CAIR after we have carefully considered all relevant policy issues. xxx may need to be revised and updated based on what we say in the CAIR]

Comment: Two commenters expressed concern that if upwind emissions are not controlled, downwind local areas will be driven to adopt more costly ( and less cost effective) measures. One added that this would exacerbate the existing inequity between upwind sources and the OTR States. Another thought that areas affected by transport PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 67 should not be required to achieve all reductions from local controls even if local control would achieve attainment,

since local measures may be extremely expensive when compared either to control measures that could be implemented in upwind areas or compared to regional measures. Two commenters stated that the cost and benefit of controls to address transported emissions should be carefully evaluated and compared to the cost and benefits of downwind local control measures.

Response: We agree that upwind States have the responsibility to control emissions that are significantly contributing to downwind nonattainment problems. Although numerous areas will attain the 8 hour ozone standard in the near term with existing controls, we believe that other areas will need further emissions reductions ( in some cases,

large reductions) to attain the 8 hour standard. Many of these areas have already adopted significant local control measures to reduce 1 hour ozone levels. As discussed in the proposed CAIR, we conducted an analysis to evaluate the effect of local measures on 8 hour ozone attainment. In this analysis, hypothetical total NOx and VOC emissions reductions of 25 percent were applied in all projected nonattainment areas east of the continental divide in 2010. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 68 Despite these substantial reductions, approximately eight areas were projected to have ozone levels exceeding the 8

hour standard in 2010. We believe that this hypothetical local control scenario is an indication that attaining the 8 hour standard will entail substantial cost in a number of areas, and that further regional reductions are warranted.

The NOx reductions proposed under the CAIR would greatly assist the downwind 8 hour ozone nonattainment areas in achieving the 8 hour NAAQS. Moreover, as we stated in the proposed CAIR, addressing upwind emissions would help ensure that attainment would be achieved in a more equitable,

costeffective manner than if each nonattainment area attempted to achieve attainment by implementing local emissions reductions without the benefit of these upwind emission reductions. [ xxx NEED TO CONTINUE TO CONSIDER THIS RESPONSE IN LIGHT OF HOW WE ULTIMATELY ADDRESS THE NPRA & API PETITIONS FOR RECONSIDERATION. MAYBE MOVE THIS COMMENT/ RESPONSE TO RTC DOC?]

Comment: Three commenters thought the NOx SIP Call was not designed to address the 8 hour standard. One said that the NOx SIP Call was based largely on the work of the Ozone Transport Assessment Group ( OTAG), which was established to address transport under the 1 hour standard. Two stated PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 69 that even with the NOx SIP Call's significant emission reductions, our preliminary modeling indicates that air being transported to the Northeast will be at levels above the 8 hour health standard.

Response: Although the NOx SIP Call relies in part on the OTAG analyses, we conducted additional analyses of interstate transport with respect to both the 1 hour and 8

hour standards and promulgated the NOx SIP Call to address transport for both standards ( see 62 FR 60318; November 7,

1997 and 63 FR 57356; October 27, 1998). Several years have passed since promulgation of the NOx SIP Call and updated data are available. Therefore, we are reassessing the degree to which ozone transport will remain a problem under the 8 hour NAAQS after full implementation of the NOx SIP Call. Based on new analyses, we proposed in CAIR to conclude that additional reductions are needed to address the significant transport of emissions and to ensure progress toward attainment in downwind areas affected by those transported emissions. Therefore, we proposed the CAIR, which would require additional NOx emissions reductions requirements for 25 States and the District of Columbia to address the interstate transport problem. We are continuing to evaluate the issue of transport and plan PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 70 to take final action on the CAIR no later than xxx [ date??].

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

Response: While we still hope that Congress will adopt the Administration's Clear Skies multi pollutant legislation, we acknowledge that the outcome of that process is uncertain. Therefore, relying on existing regulatory authorities, we proposed the CAIR, which would require upwind States to address any transported NOx emissions reductions as expeditiously as possible.

Comment: One commenter proposed that rather than addressing transport through national measures, we could include transport as one of the criteria for determining the adequacy of a SIP. This commenter supported the multi State collaborative effort mentioned in the proposed rule, so that areas work together to address transport as their SIPs are PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 71 being developed. The commenter asserted that our proposed early, top down approach could significantly hinder SIP planning for local areas considering the complex chemistry of ozone and PM2.5 formation.

Response: We believe that the Act does allow the States to work together in a collaborative fashion to assess regional or sub national transport. The EPA worked with a State led effort in the mid to late 1990' s ( the OTAG process) to perform such an assessment, which documented the magnitude and extent of long range transport of ozone and its precursors. At that time, EPA concluded that without some certainty of what levels of emission controls would be required in the larger region, it was impossible for States to assume realistic amounts of ozone and precursor concentrations being transported into the modeling domain of the nonattainment area for which they were required to develop their attainment demonstrations. Therefore, EPA issued the NOx SIP call that required affected States to cap NOx emissions. In this way, eastern US States could then have a fair degree of certainty regarding the amount of transport to be assumed in their 1 hour ozone attainment demonstrations for individual nonattainment areas. Based on this experience, we believe it would likely take States PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 3This section of the proposal also addressed multi State nonattainment areas. The discussion of multi State nonattainment areas is now covered under the discussion below on attainment demonstrations and modeling.

72 working together in a collaborative fashion to agree on a regional control strategy much more time than the Act provides for States to develop attainment demonstrations.

Therefore, we believe the commenter is incorrect that the " top down" approach would significantly hinder SIP planning for the individual, and on the contrary, if done expeditiously, would provide the certainty needed to complete the attainment demonstrations in a timely manner.

C. How will we address transport of ground level ozone and its precursors for rural nonattainment areas, areas affected by intrastate transport, and areas affected by international transport? [ Section VI. G. of June 2, 2003 proposed rule ( 68 FR 32828); no draft or final regulatory text.] 3 1. Rural transport nonattainment areas a. Background In the June 2, 2003 proposal, we noted that section 182( h) of the CAA ( under subpart 2) recognizes that the ozone problem in a rural transport area is almost entirely attributable to emissions from upwind areas. This section provides that the only requirements applicable to an area PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 4Based on current information, we do not believe there are currently any 8 hour nonattainment areas covered under subpart 2 that are " rural" and therefore eligible for consideration for coverage under section 182( h).

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

b. Summary of final rule The final rule does not contain any revisions to current policy on rural transport areas under section 182( h). 4 c. Comments and Responses Comment: Several commenters favored the proposed approach of not revising our current policies with regard to subpart 2 areas that meet the criteria for being a rural transport area under section 182( h).

Response: We agree with these comments.

Comment: Several commenters urged us to provide more PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 74 flexibility such as extending the provision to other areas whose problems are caused by transport but that do not qualify as rural under section 182( h).

Response: These commenters did not suggest any legal mechanism for granting flexibility for areas that do not qualify as rural under section 182( h). We have not found any such legal mechanism and therefore the final rule does not provide additional flexibility beyond that allowed under section 182( h).

2. INTRASTATE TRANSPORT a. Background In the proposed rule, we noted that a number of State air agency representatives had voiced concern about intrastate transport of ozone and precursor emissions and asked EPA to address this concern. We indicated that the CAA requires individual States, as an initial matter, to deal with intrastate transport. We also pointed out that a State could recommend designation of nonattainment areas that are large enough to encompass upwind and downwind areas of the State and require that the individual jurisdictions work together on an attainment plan that accounts for transport and results in attainment by the attainment date for the entire nonattainment area. We also solicited PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 75 comments on other ways of addressing intrastate transport within the context of the CAA provisions.

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

c. Comments and Responses Comment: Two commenters recommended that States have regulatory authority to require controls as necessary regarding the problem of intrastate transport. They asserted that nonattainment areas within a State should work together to address regional transport within the State.

Response: As provided in the proposed rule ( 68 FR 32829) we agree with the commenters that States have the obligation PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 76 and authority to address the transport of pollution from one area of the State to a different area.

Comment: Several comments recommended an intrastate transport classification.

Response: Our response to those comments is in the response to comment document for the Phase 1 notice of April 30,

2004. Docket document OAR 2003 0079 0717; p. 68.)

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

a. Background As discussed in the proposal, international transboundary transport of ozone and ozone precursors can contribute to exceedances of the NAAQS. It is possible that the international transport of air pollutants may affect the ability of some areas to attain and maintain the 8 hour ozone NAAQS. Section 179B of the CAA ( International Border Areas), applies to nonattainment areas that are affected by emissions emanating from outside the United States ( U. S.).

This provision requires EPA to approve a SIP for an ozone nonattainment area if it meets all of the requirements applicable under the CAA, other than a requirement that the area demonstrate attainment and maintenance of the ozone NAAQS by the applicable attainment date, and the affected PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 77 State establishes to EPA's satisfaction that the SIP would be adequate to attain and maintain the ozone NAAQS by the applicable attainment date but for emissions emanating from outside the U. S. The preamble to the proposed rule recommended that States should confer with the appropriate EPA Regional Office to establish on a case by case basis the technical requirements for these analyses.

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

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

bycase basis the technical requirements for analyses to support showings under section 179B. These analyses will be subject to public comment during the State and federal SIP processes.

c. Comments and Responses Comment. Several commenters addressed the discussion of international transport in the proposed rule. Two commenters suggested that EPA is placing too high a burden on States to make a demonstration that a nonattainment area would attain but for international transport ( e. g., PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 78 assessing emissions from foreign countries). These commenters stated that EPA has the appropriate resources and technical expertise to evaluate international transport and highlighted certain data EPA has gathered and modeling EPA has performed. The commenters suggested that EPA should reevaluate relevant policies regarding Section 179B of the CAA to ensure they are streamlined and not unnecessarily burdensome on States in making an international transport demonstration. Another commenter thought that the proposed rule does not adequately address ozone from international sources, especially in a situation where a State does not have jurisdiction over most of the significant sources of ozone or access to available data for modeling in that region. Another commenter encouraged EPA to expand its view of the applicability of Section 179B and allow consideration of the impact on attainment of smoke from crop burning activities in Southern Mexico and Central America.

Response. The CAA, not EPA's proposed rule, places the burden on States to demonstrate that an area would be able to attain but for emissions from sources located outside the U. S. However, EPA agrees with the commenters that EPA has been performing numerous activities that will provide data that States may be able to rely on as they develop these PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 79 demonstrations. We recognize that adequate data for foreign sources may not be available to States. Therefore,

modeling, according to the modeling guidance for attainment demonstrations, may not be possible in all cases. Because the availability of information and the causes of international pollution vary significantly from one area to another, EPA continues to believe that the best approach for addressing international transport is for States to work with EPA on an area by area basis to determine what is the best available information and the best method for analysis that fits the unique situation for each area.

Regarding consideration under section 179B of the impact on attainment of smoke from crop burning activities in Southern Mexico and Central America, in many cases it may not be possible to confidently quantify the impacts to the total ozone or PM loadings from individual foreign sources that are hundreds or even thousands of miles from the U. S.

border. Particularly since 1998, when spring fires in Mexico and Central America were very severe, EPA has received much information about the potential impacts from such occurrences on ozone and PM levels in the U. S. A prime lesson learned from those experiences is that a welldesigned detailed analysis is required before one can PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 80 estimate the degree of influence from such fires. In many cases, sufficient data will not exist to draw such a conclusion. Case by case consultation between EPA and the State will help determine how best to consider this information in attainment planning.

With respect to the applicability of section 179B to areas affected by emissions from very distant, foreign sources, EPA currently has not taken a position. If and when there are any SIP submittals that request a section 179B dispensation on such a basis, EPA will examine those submittals on a case by case basis, including focusing on the sufficiency of the technical demonstration, in order to make a determination of section 179B applicability.

The EPA considers international transport of pollution an important issue. The EPA is engaged in several international efforts that will allow us to better understand the linkages between air pollution sources in other countries and their impacts on public health and air quality in the U. S. The EPA has cooperative agreements with both Canada and Mexico to investigate international border transport. The information generated by these partnerships will assist States in evaluating international transport affecting 8 hour nonattainment areas. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 81 D. How will EPA address requirements for modeling and attainment demonstration SIPs for areas implementing the 8

hour ozone standard? [ Section VI. H. of June 2, 2003 proposed rule ( 68 FR 32830); section 51.908 in draft and final regulatory text.]

As noted in the proposal, an attainment demonstration SIP consists of ( 1) technical analyses to locate and identify sources of emissions that are causing violations of the 8 hour NAAQS within nonattainment areas ( i. e., analyses related to the emissions inventory required for the nonattainment area), ( 2) adopted measures with schedules for implementation and other means and techniques necessary and appropriate for attainment, ( 3) commitments, in some cases,

to perform a mid course review ( MCR), and ( 4) contingency measures required under section 172( c)( 9) of the CAA that can be implemented without further action by the State or the Administrator to cover failures to meet RFP milestones and/ or attainment. The final rule retains these four elements.

In the Phase 1 final rule, section 51.908 contained only the requirement related to the timing of implementation of the emission reductions needed for attainment. In today's final rule, that provision is retained as paragraph PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 82 ( d) of section 51.908, and other requirements related to modeling and attainment demonstrations appear in the remaining paragraphs of section 51.908. The draft regulatory text made available in August 2003 included 51.904( b)( 2), regarding subpart 1 areas that request an attainment date of three years or less. That issue was not addressed in Phase 1, but will be addressed here. For completeness and organizational purposes, we now include that provision in section 51.908, as it makes sense to include it in the same location in the rule as the other regulatory provisions regarding attainment demonstration requirements and submittal dates.

In the proposal, we also solicited public comment on the guidance related to multi pollutant assessments ( as discussed below), areas with earlier and later attainment dates, MCR, modeling guidance, and multi State nonattainment areas. These topics are discussed below. Associated with the attainment demonstration also are the RFP/ ROP plans and the SIP submission concerning RACM, which we discussed elsewhere in the preamble to the proposed rule and which are discussed in later sections of this preamble.

1. Areas with early attainment dates a. Background PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 5Even though the June 2, 2003 proposal contained the reference to the 0.005 ppm criterion, the draft regulatory text issued for public comment did not contain a reference to this criterion.

83 The proposal noted that under section 182( a), marginal areas, which have a maximum attainment date of 3 years or less after designation, are not required to perform a complex modeling analysis using photochemical grid modeling.

We noted that areas covered under either subpart 1 or 2 with ozone concentrations close to the level of the NAAQS ( e. g.,

within 0.005 parts per million ( ppm)) 5, will most likely come into attainment within 3 years after designation as nonattainment without any additional local planning as a result of national and/ or regional emission control measures that are scheduled to occur. We noted that regional scale modeling for national rules, such as the NOx SIP Call and Tier II motor vehicle tailpipe standards, projects major ozone benefits for the 3 year period of 2004 2006.

Attainment for many areas classified as marginal is further indicated by subsequent modeling used to support proposal of the CAIR. This 3 year period coincides with the period that would be used to determine whether an area attains the 8

hour standard within 3 years after designation for areas classified as marginal. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 84 If existing modeling for a marginal area does not indicate the area will attain with the current planned control measure, EPA encouraged the areas to request reclassification to moderate and encouraged the State or Tribe to develop an attainment demonstration using photochemical grid modeling. See 68 FR 32831.) Even though modeling is not required, it may be prudent.

In the proposal, we postulated that for subpart 1 areas, 3 years is not enough time to perform the detailed photochemical grid modeling needed to develop the demonstration and to then complete the regulatory process needed to adopt and implement control measures sufficiently before the attainment date. Three years is generally adequate time to perform the modeling analysis and other parts of the process save implementation. Additional time is generally needed to implement the control measures.

Since many subpart 1 areas are projected through regional modeling to come into attainment within three years after designation with current control programs, it would not be reasonable to require these areas to expend the amount of resources needed to perform a complex modeling analysis.

Therefore, we proposed that no additional modeled attainment demonstration would be required for areas with air quality PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 85 observations close to the level of the standard as described above and where regional or national modeling exists and that is appropriate for use in the area demonstrates the area will attain the 8 hour standard within 3 years after designation ( i. e., based on data from 2004 2006).

We proposed that areas subject only to subpart 1 may request an attainment date no later than 3 years following designation for the 8 hour NAAQS by submitting within 1 year of the designation a SIP that demonstrates the area will attain within 3 years following designation. The demonstration must include modeling results and analyses that the State is relying on to support its claim. Such modeling must be consistent with EPA guidance and must be appropriate for the area.

b. Summary of Final Rule The final rule generally follows the approach of the proposal. A subpart 1 area may rely on acceptable available modeling to obtain an attainment date of 3 years or less after the effective date of the designation. Thus, the rule does not require the area to submit a separate local modeled attainment demonstration. We anticipate that most of the areas that meet these criteria and thus are potentially eligible for an early attainment date will be included in PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 6One approach, for instance, could be to perform a linear interpolation, using available regional or local modeling, between base and future years to estimate ozone concentrations at intermediate years. This approach could be improved by using the fractional portion of control measures as an adjustment factor to the linear interpolated concentrations so as to take the timing of the control programs into consideration. Though this approach may not consider the emissions mix achieved or the nonlinearity in the ozone chemistry, and therefore may not be appropriate for attainment demonstrations, it should provide a reasonable estimate of whether the area is expected to attain within 3 years after designation.

86 the modeling analyses conducted by areas with later attainment dates. States are encouraged to use these available analyses, as well as any future EPA national or regional modeling, as opportunities to review the impact control programs will have on areas with early attainment dates. 6 Although the proposal set forth a criterion that only areas whose base year design value is within 0.005 ppm of the standard level could rely on acceptable available modeling to obtain an attainment date of 3 years or less after designation, we do not believe that criterion is necessary and is therefore not included in the final rule.

For subpart 1 areas that wish to take advantage of this provision, the State must submit within 18 months after the effective date of the designation a SIP that demonstrates the area will attain within 3 years following designation. PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 7If an assessment indicates that a regional modeling analysis is not applicable to a particular nonattainment area, additional local modeling would be required.

87 Even though the proposal called for submission within 1 year after designation, the fact that this phase 2 final rule has been issued later than anticipated has led us to allow an additional 6 months for the submission. However, we recommend that the demonstration be submitted as soon as possible. The demonstration must include modeling results and analyses that the State or Tribe is relying on to support its claim. Such modeling should be consistent with EPA guidance and should be applicable and appropriate for the area. 7 If acceptable available modeling does not demonstrate attainment within three years after the area's designation, the area would need to submit a local modeled attainment demonstration.

The draft regulatory text ( section 51.908( a)) was structured such that no attainment demonstration was needed for subpart 1 areas that received an attainment date within 3 years after the effective date of the nonattainment designation. However, this was misleading, since the draft 51.904( b)( 2) provision that affected these areas required a demonstration of attainment within 3 years after PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 88 designation. The final regulatory text in 51.908( f)

clarifies this point.

c. Comments and Responses Comment: Several commenters recommended that the requirement for attainment demonstrations from all subpart 1 areas be eliminated.

Response: Section 172( c)( 1) clearly requires that nonattainment areas ". . . shall provide for attainment of the national primary ambient air quality standards." To meet this requirement a State must demonstrate that the area will attain by a specified date and identify and adopt the control measures that will bring the area into attainment.

We see no authority for waiving this requirement for areas.

However, we do believe, that in light of the CAA's provisions for areas classified as marginal under subpart 2,

that it is appropriate to rely on existing national and regional modeling for this demonstration for subpart 1 areas that are similar to marginal areas in terms of the severity of the air pollution problem and the time needed for attainment.

Comment: What are the requirements for subpart 1 areas requesting attainment dates within 3 years of designation?

Response: Subpart 1 areas that request an attainment PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 89 date within 3 years of designation must submit within 18 months after the effective designation date an attainment demonstration as specified in the rule. These areas should begin to work immediately with the appropriate regional office to establish modeling protocols and agreements on the technical analyses need to support its claim.

2. Areas with later attainment dates a. Background For areas with attainment dates of more than 3 years after designation, regardless of whether they are covered under subpart 1 or subpart 2 ( except marginal areas), we proposed to require them to submit an attainment demonstration SIP. This proposal was reflected in section 51.908( b) and ( c) of the draft regulatory text. We stated that local, regional and national modeling developed to support Federal or local controls could be used provided the modeling is consistent with EPA's modeling guidance.

Several States have invested considerable time and resources in regional 8 hour ozone modeling projects following this guidance. Where exceedances of the 8 hour ozone standard are more pervasive and widespread than they were for the 1

hour ozone standard, we recommended that States work together in multi State modeling efforts and leverage off PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 8U. S. EPA, ( XXXMONTH NEEDED 2005), Guidance on the Use of Models and Other Related Analyses in Attainment Demonstrations for the 8 Hour Ozone NAAQS, EPA 454/ R 04 005, http:// www. epa. gov/ ttn/ scram, ( Modeling Guidance, File name: FINAL8HR)

90 work under development and resources spent on these projects. This will be most beneficial in developing attainment demonstrations to achieve attainment.

b. Summary of Final Rule Areas with attainment dates later than 3 years after designation, such as areas classified as moderate or higher under section 51.903, are required to submit an attainment demonstration no later than 3 years after the effective date of designation for the 8 hour ozone NAAQS. For example,

areas with attainment dates later than 3 years after designation ( whose effective date of designation is June 15,

2004) are required to submit an attainment demonstration no later than June 15, 2007. These demonstrations shall be consistent with Appendix W. For the review of technical adequacy, we will generally rely on our most recent modeling guidance at the time the modeled attainment demonstration is performed. We will be making available a final version of the modeling guidance related to the 8 hour ozone standard. 8 Local, regional and national modeling developed to support PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 91 Federal or local controls may be used provided the modeling is consistent with EPA's modeling guidance.

c. Comments and Responses We received no comments on this topic per se; comments on the timing of submission of attainment demonstrations is discussed elsewhere. We noted in the proposal that comments on the guidance were welcome at any time and that we would consider those comments in any future revision of the document. We noted that comments submitted on the modeling guidance document would not be docketed as part of this rulemaking, nor would a comment/ response summary of these comments be a part of the final 8 hour ozone implementation rule since they will not affect the rule itself.

3. Multi State nonattainment areas a. Background As discussed in the June 2003 proposal, section 182( j)

of the Act defines a multi State ozone nonattainment area as an ozone nonattainment area, portions of which lie in two or more States. Section 182( j)( 1)( A) and ( B) set forth certain requirements for such areas. First, each State in which a multi State ozone nonattainment area lies must take all reasonable steps to coordinate the implementation of the required revisions to SIPs for the given nonattainment area PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 92 [ section 182( j)( 1)( A)]. Next, section 182( j)( 1)( B) requires the States to use photochemical grid modeling or any other equally effective analytical method approved by us for demonstrating attainment. We are prevented by section 182( j) from approving any SIP revision submitted under that section if a State has failed to meet the above requirements.

To address the provisions of section 182( j)( 1)( A),

States that include portions of a multi State ozone nonattainment area should develop a joint work plan as evidence of early cooperation and integration. The work plan should include a schedule for developing the emissions inventories, and the attainment demonstration for the entire multi State area. Each State within a multi State ozone nonattainment area is responsible for meeting all the requirements relevant to the given area. Care should be taken to coordinate strategies and assumptions in a modeled area with those in other, nearby modeled areas in order to ensure that consistent, plausible strategies are developed.

Section 182( j)( 2) for multi State nonattainment areas recognizes that one State may not be able to demonstrate attainment for the nonattainment area if other States in which portions of the nonattainment area are located do not PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 93 adopt and submit the necessary attainment plan for the area.

In such cases, even though the area as a whole would not be able to demonstrate attainment, the sanction provisions of section 179 shall not apply in the portion of the nonattainment area located in a State that submitted an attainment plan.

b. Summary of final rule As discussed in the proposal, State partners involved in a multi State ozone nonattainment area must work together to perform the appropriate modeling analyses to identify control measures that will enable the area to achieve attainment as expeditiously as practicable. Each State will be responsible for its portion of the control program and therefore will be held accountable for controls identified for implementation within its State boundaries. The modeling analyses should encompass the entire multi state nonattainment area as well as adjacent counties which may contribute to the nonattainment problem. State plans should address local transport within the region and its contribution to nonattainment in the multi state area.

Consideration of long range transport and its contributions to nonattainment is discussed in section IV. B. of this preamble. The same modeling and attainment demonstration PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 94 requirements of the final rule apply to multi State nonattainment areas, including areas covered under subpart 1. Marginal multi State nonattainment areas do not have to submit a modeled attainment demonstration because section 182( a) exempts marginal areas from the requirement to submit an attainment demonstration.

c. Comments and Responses Comment: Several commenters encouraged us to clearly define in the rule how multi State nonattainment areas will be treated if all or a portion of an area is governed by subpart 1. One of these commenters requested a clarification that photochemical grid modeling will not be required for multi State areas classified under Subpart 1 or areas that are classified as marginal. The commenter's reasoning was that such modeling is unnecessary since they are close to achieving the 8 hour NAAQS and will be in attainment before the modeling can be completed.

Response: We agree with these commenters that since section 182( a) exempts marginal areas from the requirement to submit an attainment demonstration, such areas need not develop an attainment demonstration. We recognize that Section 182( j)

of the CAA requires that multi State areas use photochemical grid modeling as part of their attainment demonstrations but PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 95 that Section 172 ( Subpart 1 areas) of the CAA does not require photochemical grid modeling. For subpart 1 areas that do not seek an attainment date of three years or less after designation, we make no distinction between multi

State and single State subpart 1 nonattainment areas.

However, subpart 1 nonattainment areas are required to submit an attainment demonstration that relies on photochemical grid modeling, either one that has already been performed that is appropriate for use in the area, or a new one. We do not believe that techniques other than those based on photochemical grid modeling will provide credible assurance that an area will achieve the 8 hour ozone standard by the area's attainment date.

Comment: One commenter requested that we perform the modeling for the multi state areas. Two commenters stated that if any additional photochemical modeling is required for such areas pursuant to CAA 182( j)( 1)( B), then EPA should refine previous modeling; perform new modeling; or approve a less resource intensive, alternate method that fulfills the requirement. The commenters asserted that we should assist the States in coordinating the development of the attainment/ maintenance plans and ensure that areas involving multiple EPA Regions are not hampered by PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 96 jurisdictional conflicts and inconsistencies.

Response: We have already conducted regional scale modeling for many of the potential nonattainment areas that involve multiple States. The modeling results will be made available for States to assess whether the regional modeling results are applicable for local attainment demonstrations ( ICF Consulting/ SAI, S. Douglas, et. al. " Use of Regional Scale Modeling to support 8 Hour Ozone Assessments", 2004, AWMA, Indianapolis, ID, Technical Report). If an assessment indicates that a regional modeling analysis is not applicable to a particular nonattainment area, additional local modeling would be required. If additional photochemical modeling is required for such areas, then the States involved should refine previous modeling or perform new modeling to support a local attainment demonstration. We will assist and work with States to coordinate the development of the attainment/ maintenance plans.

4. Role of modeling guidance in attainment demonstrations a. Background The proposal noted that section 182( b)( 1)( A) requires ozone nonattainment areas to develop an attainment demonstration which provides for reductions in VOC and NOx PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 9As noted above in the discussion of subpart 1 areas with early attainment dates, although the draft regulatory text ( section 51.908( a) was structured such that no attainment demonstration was needed for subpart 1 areas that received an attainment date within 3 years after the effective date of the nonattainment designation, this was misleading, since the draft 51.904( b)( 2) provision that affected these areas required a demonstration of attainment within 3 years after designation. The final regulatory text in 51.908( f) clarifies this point.

97 emissions " as necessary to attain the national primary ambient air quality standard for ozone." Section 172( c),

requires areas covered under subpart 1 to demonstrate attainment. For a subpart 1 area that does not qualify for an attainment date within 3 years after designation, we proposed to require the State to develop and submit a modeled attainment demonstration. 9 We noted that section 182( c)( 2)( A) provides that for serious and higher classified areas the " attainment demonstration must be based on photochemical grid modeling or any other analytical method determined by the Administrator, in the Administrator's discretion, to be at least as effective." A photochemical grid model should meet several general criteria for it to be a candidate for consideration in an attainment demonstration. We noted PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 10U. S. EPA, ( 1991), Guideline for Regulatory Application of the Urban Airshed Model, EPA 450/ 4 91 013. Available at: http:// www. epa. gov/ scram001/ tt25. htm ; see document DRAFT8HR.

11U. S. EPA, ( May 1999), Draft Guidance on the Use of Models and Other Analyses in Attainment Demonstrations for the 8 Hour Ozone NAAQS, EPA 454/ R 99 004, http:// www. epa. gov/ ttn/ scram, ( Modeling Guidance, File name: DRAFT8HR).

98 that, unlike in previous guidance, 10 we did not propose recommending a specific photochemical grid model for use in the attainment demonstration for the 8 hour NAAQS for ozone.

At present, there is no single model which has been extensively tested and shown to be clearly superior or easier to use than other available models. Criteria for attainment demonstrations are contained in 40 CFR 51.112,

including appendix W ( i. e., " EPA's Guideline on Air Quality Models", 68 FR 18440, April 15, 2003). Appendix W refers to EPA's " Use of Models and Other Analyses in Attainment Demonstrations for the 8 Hour Ozone NAAQS" and lists a set of general requirements that an air quality model should meet to qualify for use in an attainment demonstration for the 8 hour ozone NAAQS. 11 The proposal described alternatives available to the States and the scope and coverage of the draft guideline. The draft regulatory text of 2003 addressed this requirement in section 51.908( d). PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 99 We noted that we were planning to make substantial changes to the draft version of this document before finalizing the attainment demonstration aspects of the implementation rule. We said we welcomed public comments on the guidance at any time and would consider those comments in any future revision of the document. However, we said we would not consider comments on the technical merits of the modeling guidance in this present rulemaking.

b. Summary of Final Rule The final rule requires each attainment demonstration to be consistent with Appendix W of this part. We will generally review the demonstrations for technical merit using EPA's most recent modeling guidance at the time the modeled attainment demonstration is performed. This guidance will generally have the State provide ( 1) technical analyses to locate and identify sources of emissions that are causing violations of the 8 hour NAAQS within nonattainment areas, ( 2) adopted measures with schedules for implementation and other means and techniques necessary and appropriate for attainment that are needed for attainment,

with implementation no later than the beginning of the PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 12See 40 CFR 51.900( g) for definition.

100 attainment year ozone season12 ( e. g., prior to 2009 ozone season for areas with June 15, 2010 attainment dates), and ( 3) contingency measures required under section 172( c)( 9) of the CAA that can be implemented without further action by the State or the Administrator to cover emissions shortfalls in RFP plans and failures to attain.

c. Comments and Responses Comment: One commenter recommended that EPA must ensure that attainment demonstrations are based on scientifically valid regional air shed modeling rather than scientifically invalid linear proportional rollback and weight of evidence methods.

Response: Criteria for attainment demonstrations are contained in 40 CFR 51.112, including appendix W ( i. e.,

" EPA's Guideline on Air Quality Models", 68 FR 18440, April 15, 2003). Appendix W cites EPA's " Use of Models and Other Analyses in Attainment Demonstrations for the 8 Hour Ozone NAAQS" and describes a set of general criteria that an air quality model and its application should meet to qualify for use in an attainment demonstration for the 8 hour ozone PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 13U. S. EPA, ( May 1999), Draft Guidance on the Use of Models and Other Analyses in Attainment Demonstrations for the 8 Hour Ozone NAAQS, EPA 454/ R 99 004, http:// www. epa. gov/ ttn/ scram, ( Modeling Guidance, File name: DRAFT8HR).

101 NAAQS. 13 The draft guidance was developed through a collaborative process which included review from the scientific community, and it has been revised to reflect recent review comments. The procedures described are considered a scientifically valid use of regional and urban airshed modeling. The modeled attainment test makes use of the model derived relationship between ozone and its precursors. It does not, as is the case with proportional rollback, assume equal proportions of the precursors will provide an equally proportional reduction in ozone. For example, it does not assume that 20 percent reduction in precursors will provide 20 percent improvement in ozone.

The guidance also identifies additional data which, if available, should enhance the credibility of model results and results of other analyses used in a weight of evidence determination. EPA believes use of weight of evidence is appropriate as do many in the scientific community. Weight of evidence is a credible approach for considering inherent uncertainties in a modeling application. As noted above, we PREDECISIONAL DRAFT   DO NOT QUOTE, CITE OR DISTRIBUTE draft 2/ 6/ 05 14U. S. EPA, ( XXX MONTH NEEDED 2005), Guidance on the Use of Models and Other Related Analyses in Attainment Demonstrations for the 8 Hour Ozone NAAQS, EPA 454/ R 04 005, http:// www. epa. gov/ ttn/ scram, ( Modeling Guidance, File name: FINAL8HR)

102 will be making available a final version of the modeling and attainment demonstration guidance for the 8 hour ozone standard. 14 Comment: All attainment demonstrations should be subject to the same rigorous standards.