The CASAC AMMS also recommended that total NHx (NH3 and p-NH4) be considered as a proxy for reduced nitrogen species, reasoning that the subsequent partitioning to NH3 and p-NH4 may be estimated using equilibrium chemistry calculations. Reduced nitrogen measurements are used to evaluate air quality modeling which is used in generating factor F2. Additional studies are needed to determine the applicability of NHx measurements and calculated values of NH3 and NH4 to the AAI.
      The additional supplemental measurements of speciated NOy, continuous SO2 and NHx will be used in future air quality modeling evaluation efforts.  Because there often is significant lag in the availability of contemporary emissions data to drive air quality modeling, the complete use of these data sets will extend beyond the 5-year collection period of the pilot program.  Consequently, the immediate application of those data will address instrument performance comparisons that explore the feasibility of using continuous SO2 instruments in rural environments, and using the speciated NOy data to assess NOy instrument performance.   Although contemporary air quality modeling will lag behind measurement data availability, the observations can be used in deposition models to compare observed transference ratios with the previously calculated transference ratios to test temporal stability of the ratios.
      An extended water quality sampling effort should parallel the air quality measurement program to address some of the uncertainties related to factor F1 and the representativeness of the n[th] percentile critical load as discussed in section III.B.5.b.i.  The objective of the water quality sampling would be to develop a larger data base of critical loads in each of the pilot ecoregions such that the n[th] percentile can adequately be characterized in terms of representing all water bodies.  Opportunities to leverage and perhaps enhance existing ecosystem modeling efforts enabling more advanced critical load modeling and improved methods to estimate base cation production would be pursued.  For example, areas with ongoing research studies producing data for dynamic critical load modeling would be considered when selecting the pilot ecoregions.
4.	Complementary areas of research
      The EPA recognizes that a source of uncertainty in an AAI-based secondary standard that would not be directly addressed in the pilot program stems from the uncertainty in the model used to link atmospheric concentrations to dry deposition fluxes.  Currently, there are no ongoing direct dry deposition measurement studies at CASTNET sites that can be used to evaluate modeled results.  It was strongly recommended by CASAC AMMS that a comprehensive sampling-intensive study be conducted in at least one, preferably two sites in different ecoregions to assess characterization of dry deposition of sulfur and nitrogen.  These sites would be the same as those for the complementary measurements described above, but they would afford an opportunity to also complement dry deposition process research that benefits from the ambient air measurements collected in the pilot program.  The concerns regarding uncertainties underlying an AAI-based secondary standard suggest that research that includes dry deposition measurements and evaluation of dry deposition models should be a high priority.
      Similar leveraging should be pursued with respect to ecosystem research activities.  For example, studies that capture a suite of soil, vegetation, hydrological, and water quality properties that can help evaluate more advanced critical load models would complement the atmospheric-based pilot program.  In concept, such studies could provide the infrastructure for true multi-pollutant, multi-media "super" sites assuming the planning, coordination, and resource facets can be aligned.  While this discussion emphasizes the opportunity of leveraging ongoing research efforts, consideration could be given to explicitly including related research components directly in the pilot program.
5.	Implementation challenges
	The CAA requires that once a NAAQS is established, designation and implementation must move forward.  With a standard as innovative as the AAI-based standard considered in this review, the Administrator believes that its success will be greatly improved if, while additional data are being collected to reduce the uncertainties discussed above, the implementing agencies and other stakeholders have an opportunity to discuss and thoroughly understand how such a standard would work.  And since, as noted above, emissions reductions that are directionally correct to reduce aquatic acidification will be occurring as a result of other CAA programs, the Administrator believes that this period of further discussion will not delay progress but will ensure that once implementation is triggered, agencies will be prepared to implement it successfully.
      Consideration of an AAI-based secondary standard for oxides of nitrogen and sulfur would present significant implementation challenges because it involves multiple, regionally-dispersed pollutants and relatively complex compliance determinations based on regionally variable levels of NOy and SOx concentrations that would be necessary to achieve a national ANC target..  The anticipated implementation challenges fall into three main categories:  monitoring and compliance determinations for area designations, pre-construction permit application analyses of individual source impacts, and State Implementation Plan (SIP) development.  Several overarching implementation questions that we anticipate will be addressed in parallel with the field pilot program's five-year data collection period include:
      (1)  What are the appropriate monitoring network density and siting requirements to support a compliance system based on ecoregions?
      (2)  Given the unique spatial nature of the secondary standard (e.g., ecoregions), what are the appropriate parameters for establishing nonattainment areas?
      (3)  How can new or modified major sources of oxides of nitrogen and oxides of 	sulfur emissions assess their ambient impacts on the standard and demonstrate that they are not causing or contributing to a violation of the NAAQS for preconstruction permitting?  To what extent does the fact that a single source may be impacting multiple areas, with different acid sensitivities and variable levels of NOy and SOx concentrations that would be necessary to achieve a national ANC target, complicate this assessment and how can these additional complexities best be addressed?
      (4)  What additional tools, information, and planning structures are needed to assist states with SIP development, including the assessment of interstate pollutant transport and deposition?
      (5)  Would transportation conformity apply in nonattainment and maintenance areas for this secondary standard, and, if it does, would satisfying requirements that apply for related primary standards (e.g., ozone, PM2.5, and NO2) be demonstrated to satisfy requirements for this secondary standard?
6.	Final monitoring plan development and stakeholder participation
      The existing CASTNET sampling site infrastructure provides an effective means of quickly and efficiently deploying a monitoring program to support potential implementation of an AAI-based secondary standard, and also provides an additional opportunity for federally managed networks to collaborate and support the states, local agencies and tribes (SLT) in determining compliance with a secondary standard.  A collaborative effort would help to optimize limited federal and SLT monitoring funds and would be beneficial to all involved.  The CASTNET is already a stakeholder-based program with over 20 participants and contributors, including federal, state and tribal partners.
      The CASAC AMMS generally endorsed the technical approaches used in CASTNET, but concerns were raised by individual representatives of state agencies concerning the perception of EPA-controlled management aspects of CASTNET and data ownership.  Potential approaches to resolve these issues will be developed and evaluated in existing National Association of Clean Air Agencies (NACAA)/EPA ambient air monitoring workgroups.  The EPA Office of Air and Radiation (which includes the Office of Air Quality Planning Standards, OAQPS; and the Office of Atmospheric Program's Clean Air Markets Division, OAP-CAMD), and their partners on the NACAA monitor steering committee will develop a prioritized specific plan that identifies the three to five ecoregions and the instrumentation to be deployed.  The EPA anticipates that a cost estimate of the plan with priorities and options will be developed by January, 2012.   Although this pilot program is focused on data collection, the plan will include details of the data analysis approaches as well as a vehicle that incorporates engagement from those within EPA and SLTs to foster progress on the implementation questions noted above in section IV.A.5.
      If an AAI-based secondary standard were to be set in the future, deployment of a full national network would follow the pilot monitoring program.  The number of sites deployed in the network will lead to increased confidence in capturing spatial patterns of air quality.  Recognizing that this section presents the general elements of the field pilot programs, EPA intends to develop a more detailed field pilot program plan through a process that will engage the air quality management and research (atmospheric and ecosystem) communities, as well as other federal agencies, state and local agencies, and non-government based centers of expertise.  The EPA is seeking comment and input on all aspects of this field pilot program.
.B.	Evaluation of Monitoring Methods
      The EPA generally relies on monitoring methods that have been designated as FRMs or FEMs for the purpose of determining the attainment status of areas with regard to existing NAAQS.  Such FRMs or FEMs are generally required to measure the air quality indicators that are compared to the level of a standard to assess compliance with a NAAQS.  Prior to their designation by EPA as FRM/FEMs through a rulemaking process, these methods must be determined to be applicable for routine field use and need to have been experimentally validated by meeting or exceeding specific accuracy, reproducibility, and reliability criteria established by EPA for this purpose.  As discussed above in section III.A, the ambient air indicators being considered for use in an AAI-based standard include SO2, particulate sulfate (p-SO4), and total reactive oxides of nitrogen (NOy).
      The CASTNET provides a well established infrastructure that would meet the basic location and measurement requirements of an AAI-based secondary standard given the rural placement of sites in acid sensitive areas.  In addition, CFPs currently provide very economical weekly, integrated average concentration measurements of SO2, p-SO4, ammonium ion (NH4) and t-NO3, the sum of HNO3 and p-NO - 3.
      While routinely operated instruments that measure SO2, p-SO4, NOy and/or t-NO3 exist, instruments that measure p-SO4, NOy, t-NO3, or the CFP for SO2 have not been designated by EPA as FRMs or FEMs.  The EPA's Office of Research and Development has initiated work that will support future FRM designations by EPA for SO2 and p-SO4 measurements based on the CFP.  Such a designation by EPA could be done for the purpose of facilitating consistent research related to an AAI-based standard and/or in conjunction with setting and supporting an AAI-based secondary standard.
      Based on extensive review of literature and available data, the EPA has identified potential methods that appear suitable for measuring each of the three components of the indicators.  These three methods are being considered as new FRMs to be used for measuring the ambient concentrations of the three components that would be needed to determine compliance with an AAI-based secondary standard.
      For the SO2 and p-SO4 measurements, EPA is considering the CFP method, which provides weekly average concentration measurements for SO2 and p-SO4.  This method has been used in the EPA's CASTNET monitoring network for 15 years, and strongly indicates that it will meet the requirements for use as an FRM for the SO2 and p-SO4 concentrations for an AAI-based secondary standard.
      Although the CFP method would provide measurements of both the SO2 and p-SO4 components in a unified sampling and analysis procedure, individual FRMs will be considered for each.  The EPA recognizes that an existing FRM to measure SO2 concentrations using ultra-violet fluorescence (UVF) exists (40 CFR Part 50, Appendix A-1) for the purpose of monitoring compliance for the primary SO2 NAAQS.  However, several factors suggest that the CFP method would be superior to that UVF FRM for monitoring compliance with an AAI-based secondary standard and will be discussed in more detail below.
	For monitoring the NOy component, a continuous analyzer for measuring NOy is commercially available and is considered to be suitable for use as an FRM.  This method is similar in design to the existing NO2 FRM (described in 40 CFR Part 50, Appendix F), which is based on the ozone chemiluminescence measurement technique.  The method is adapted to and further optimized to measure all NOy.  However, this NOy method requires further evaluation before it can be fully confirmed as a suitable FRM.  The EPA is currently completing a full scientific assessment of the NOy method to determine whether it would be appropriate to consider for designation by EPA as an FRM.  Specific details on these three methods are given below.
             On February 16, 2011, EPA presented this set of potential FRMs to the CASAC AMMS for their consideration and comment.  In response, the CASAC AMMS stated that, overall, it believes that EPA's planned evaluation of methods for measuring NOy, SO2 and p-SO4 as ambient air indicators is a suitable approach in concept.   On supporting the CFP method as a potential FRM for SO2, CASAC stated that they felt that the CFP is adequate for measuring long-term average SO2 gas concentrations in rural areas with low levels (less than 5 parts per billion by volume (ppbv)) and is therefore suitable for consideration as an FRM.  For p-SO4, CASAC generally supports the use of the CFP as a potential FRM for measuring p-SO4 for an AAI-based secondary standard.  The method has been relatively well-characterized and evaluated, and it has a documented, long-term track record of successful use in a field network designed to assess spatial patterns and long-term trends.
      On supporting the photometric NOy method as a potential FRM, CASAC concluded that the existing NOy method is generally an appropriate approach for the indicator.  However, CASAC agrees that additional characterization and research is needed to fully understand the method in order to designate it as a FRM.  The EPA is now soliciting public comment on these methods as to their adequacy, suitability, and relative merits as FRMs for purposes of monitoring to determine compliance with an AAI-based secondary standard.
1.	Potential FRMs for SO2 and p-SO4
      The CFP is a combined, integrated sampling and analysis method based on the well-established measurement technology that has been used extensively in EPA's CASTNET monitoring network (see http://www.epa.gov/castnet).  This method is in current use at over 80 monitoring sites and has been in use at not less than 40 sites for over 15 years.  This method employs a relatively simple and inexpensive sampler and uses four 47-mm filters placed in an open-faced filter pack to simultaneously collect integrated filter samples for the SO2 and p-SO4 components.  In addition, the CFP is also capable of the collection of t-NO3, the sum of HNO3 and p-NO3.
      The first stage of the filter pack assembly contains a Teflon(R) filter that collects p-SO4[2-] and p-NO3, the second stage contains a nylon filter that collects SO2 (as SO4[2-]) and HNO3, and the third stage contains two cellulose fiber filters impregnated with potassium carbonate (K2CO3) that collect any remaining SO2 (as SO4[2-]).  The sampler collects 1-week integrated samples at a very low, controlled flow rate (1.5 or 3 L/min) in an attempt simulate actual deposition.  Weekly averaged SO2 and p-SO4 concentrations could then be averaged over a 1-year period to calculate annual average values.
      Upon sample completion, the species-specific filters are extracted, with subsequent analysis by the well-established and documented ion chromatographic (IC) analytical technique. During the IC analysis, an aliquot of a filter extract is injected into a stream of eluent (ion chromatography mobile phase, generally a millimolar-strength solution of carbonate-bicarbonate) and passed through a series of ion exchangers.  The anions of interest are separated on the basis of their relative affinities for a low capacity and the strongly basic anion exchanger (guard and separator column).  The separated anions are directed onto a cation exchanger (suppressor column) where they are converted to their highly conductive acid form, and the eluent is converted to a weakly conductive form.  The now-separated anions, each in their acid form, are measured by conductivity.  They are identified on the basis of retention time compared to that of standards and quantified by measurement of peak area compared to the peak areas of calibration standards.
      Calibration and quality assurance for the method are applied to the sample filters, the analytical processes, and the flow rate measurement and control aspects of the sampler.  Overall method performance is typically assessed with collocated samplers.  These quality assurance techniques are routinely used and have proved adequate for other types of FRMs and equivalent methods in air monitoring network service.
      The measurement and analytical procedures and past performance data associated with the CFP method are well documented and available through Quality Assurance Performance Plans (QAPPs), Standard Operating Procedures (SOPs) and annual reports (US EPA, 2010a and 2010b).  The accumulated database on the CFP method is substantial and indicates that the method is sound, stable and has good reliability in routine, field operation.  Data quality assessment results show the method to have good reproducibility, with collocated and analytical precision values in the range of 2 percent to 10 percent (excluding very low concentration measurements near the method detection limits; US EPA 2010b).
      Data quality objectives (DQOs) for a new FRM would be based upon current DQOs being used for this method by EPA's OAP/CAMD and the NPS, the federal managers of CASTNET (US EPA, 2010a).  In its current state, the CFP method is expected to meet or exceed (as past CASTNET data have indicated; US EPA, 2010b) the expected FRM DQOs, even when deployed in new monitoring networks outside of CASTNET.  In addition, CASTNET samples have agreed favorably with other measures of SO2 and p-SO4 in comparison studies.  For example, in direct comparison with an annular denuder sampler (ADS) method, CASTNET/ADS ratios for SO2 and p-SO4 were generally on the order of 0.9-1.1 (Lavery et al, 2009; Sickles et al, 1999; Sickles et al, 2008), thus illustrating the accuracy of the CFP method in the determination of long-term average SO2 and p-SO4 concentrations.  The EPA believes that the CFP method would be fully adequate as an FRM in determining yearly average SO2 and p-SO4 concentrations for compliance determination purposes.
      The EPA recognizes that an existing FRM for SO2 has proven adequate for the purposes of monitoring compliance for the primary SO2 NAAQS, specifically the newly-promulgated 1-hour standard.  However, this FRM is better suited to the shorter-term, higher concentration primary and secondary SO2 NAAQS, and there is substantial uncertainty as to the adequacy of this SO2 FRM for monitoring the lower concentrations relevant to determining compliance with an AAI-based secondary standard.  The performance specifications for SO2 FRM analyzers (40 CFR Part 53, Table B-1) require a lower detectable limit (LDL) of 0.002 ppm for the standard measurement range and 0.001 ppm for the lower measurement range.  These requirements correspond to mass per unit volume concentrations of 5.24 and 2.62 ug/m[3], respectively.   Analysis of 2009 CASTNET data shows that of the 84 CASTNET sampling sites, 63 measured annual average SO2 concentrations below even the lower of these LDL requirements of 2.62 ug/m[3] for the lower range SO2 FRM (US EPA, 2010a).  In addition, 11 of the 84 sites measured annual (2009) average SO2 concentrations very near or below the manufacturers' reported detection limits for trace level UVF SO2 monitors.  Further, it is likely that the number of sites with annual average SO2 concentration below both the SO2 FRM LDL and the manufacturers reported detection limits will increase due to expected declines in mean SO2 concentrations (US EPA, 2010b).  For these reasons, EPA is considering the CFP method for use as the FRM for monitoring the SO2 component of an ambient air indicator for oxides of sulfur, with a recommendation for additional study and data collection to evaluate further the possible applicability of the continuous UVF SO2 FRM for this purpose.
2.	Potential FRM for NOy
       Atmospheric concentrations of NOy are measured continuously by an analyzer that photometrically measures the light intensity, at wavelengths greater than 600 nanometers (nm), resulting from the chemiluminescent reaction of ozone (O3) with NO in sampled air.  This method is very similar to the chemiluminescence NO/NO2 analyzers widely used to collect NO2 monitoring data for determining compliance with the NO2 NAAQS.  The various oxides of nitrogen species, excluding NO, are first quantitatively reduced to NO by means of a catalytic converter.  These species include NO2, HNO2, PANs, HNO3 and p-NO3.  The NO, which commonly exists in ambient air, passes through the converter unchanged, and, when combined with the NO resulting from the catalytic conversion of the other oxides of nitrogen, a measurement of the total NOy concentration results.  To maximize the conversion of the more chemically active oxides of nitrogen species, the converter is located externally, at or near the air sample inlet probe.  This location minimizes losses of these active species that could otherwise occur from chemical reactions and wall losses in the sample inlet line.
      The NOy analyzer is a suitable, commercially produced continuous chemiluminescence analyzer that includes an ozone generator, a reaction cell, a photometric detector, wavelength filters as necessary to reduce sensitivity to wavelengths below 600 nanometer (nm), a pump and flow control system to draw atmospheric air through the converter and into the reaction cell, a suitable converter, a system to control the operation of the analyzer, and appropriate electronics to process and quantitatively scale the photometric signals.  The converter contains a catalyst such as molybdenum and is heated to an optimum temperature designed to optimize the conversion of the various oxides of nitrogen to NO.  It is connected to the analyzer via suitable lengths of Teflon(R) tubing.  Hourly NOy measurements obtained by the analyzer would be averaged over the same 7-day period used by the CFP method to measure the SO2 and p-SO4 components, with further averaging over a 1-year period.
      Commercial NOy analyzers are currently available, and the analyzers have been used for a variety of monitoring applications.  During the 2006 TexAQS Radical and Aerosol Measurement Project (TRAMP), Luke et al., 2010, compared measured NOy concentrations obtained with an NOy instrument based upon the above mentioned methodology with the sum of measured individual NOy species (i.e., NOyi = NO+NO2+HNO3+PANs+HNO2+p-NO3).  This comparison yielded excellent overall agreement during both day ([NOy](ppb) = [NOyi](ppb) x 1.03  -  0.42; r[2] = 0.9933) and night time ([NOy](ppb) = [NOyi](ppb) x 1.01  -  0.18; r[2] = 0.9975) periods (Luke et al, 2010).  The results of this study show that this NOy method is capable of the accurate determination of all the atmospherically relevant NOy components, resulting in an accurate determination of total NOy concentrations.  The NOy instruments have been routinely operated in networks such as SouthEastern Aerosol Research and Characterization (SEARCH), dating back several years.  In addition, state monitoring agencies across the U.S. have begun, starting in 2009, the routine operation of commercially available NOy instrumentation in anticipation of EPA's NCore network transitioning to full operation in 2011.
      These initial assessments described above are promising and indicate that the photometric NOy method appears to be accurate, reliable, and capable of routine network operation.  As a result, the method is most likely capable for use as an FRM for determining atmospheric NOy concentrations as a component in determining compliance with an AAI-based secondary standard.  However, as described below, this continuous method for NOy requires additional time for further evaluation before it can be fully confirmed for adoption as a FRM.  The EPA has identified measurement uncertainties and some remaining science questions associated with this method.  Among these are:   (a) the ability of the method to capture all components of NOy relevant to nitrogen deposition, (b) the efficiency of the molybdenum converter in converting all oxides of nitrogen to NO for detection (excluding NO2, as this conversion is already well documented), (c) appropriate inlet height specifications to minimize any bias associated with vertical concentration gradients of key NOy components, (d) identification and quantification of potential measurement interferences in the NOy determination, and (e) development and demonstration of effective calibration/challenge procedures to best represent the various mixtures of NOy components that are expected to be present in the different air sheds across the U.S.
      To address these NOy method uncertainties and to fully assess this method for use as the NOy FRM, EPA has developed a detailed research plan (Russell and Samet, 2011b) which was presented to the CASAC AMMS on February 16, 2011.  In response, CASAC recognized the need for, and supported the general outline of EPA's research plan to evaluate the NOy method for potential designation as an FRM (US EPA, 2011).  In addition, the CASAC AMMS suggested additional areas of research associated with the photometric NOy method that warrant further assessment prior to final designation of the method as the NOy FRM.  These include operation of the method during extremely low temperature conditions to investigate possible condensation in sample lines, method detection limits relative to low levels expected in remote areas, and ambient-based method evaluations in various air sheds across the U.S.  In response to these CASAC AMMS suggestions, EPA is carrying out studies, in addition to the tasks outlined in the research plan, for the NOy method.  The results of these studies will likely take a year or more to become available.  As noted previously, EPA anticipates that these results will be favorable and will confirm the adequacy of the NOy method as a suitable FRM for determining compliance with an AAI-based secondary standard.
V.	Statutory and Executive Order Reviews
A.	Executive Order 12866: Regulatory Planning and Review and Review and Executive Order 13563:  Improving Regulation and Regulatory Review
	 Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a "significant regulatory action."   Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011), and any changes made in response to OMB recommendations have been documented in the docket for this action.
B.	Paperwork Reduction Act
	This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.  Burden is defined at 5 CFR 1320.3(b). There are no information collection requirements directly associated with the establishment of a NAAQS under section 109 of the CAA.
C.	Regulatory Flexibility Act
	For purposes of assessing the impacts of today's rule on small entities, small entity is defined as:  (1) a small business that is a small industrial entity as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201;  (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.
	After considering the economic impacts of today's proposed rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities.  This proposed rule will not impose any requirements on small entities.  Rather, this rule establishes national standards for allowable concentrations of oxides of nitrogen and sulfur in ambient air as required by section 109 of the CAA.  See also American Trucking Associations v. EPA. 175 F. 3d at 1044-45 (NAAQS do not have significant impacts upon small entities because NAAQS themselves impose no regulations upon small entities).  We continue to be interested in the potential impacts of the proposed rule on small entities and welcome comments on issues related to such impacts.
D.	Unfunded Mandates Reform Act
 	Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with "Federal mandates" that may result in expenditures to state, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any 1 year.  Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and to adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law.  Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.
	This action contains no Federal mandates under the provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 for state, local, or tribal governments or the private sector.  Therefore, this action is not subject to the requirements of sections 202 or 205.  Furthermore, as indicated previously, in setting a NAAQS EPA cannot consider the economic or technological feasibility of attaining ambient air quality standards; although such factors may be considered to a degree in the development of state plans to implement the standards.  See also American Trucking Associations v. EPA, 175 F. 3d at 1043 (noting that because EPA is precluded from considering costs of implementation in establishing NAAQS, preparation of a Regulatory Impact Analysis pursuant to the Unfunded Mandates Reform Act would not furnish any information which the court could consider in reviewing the NAAQS).  Accordingly, EPA has determined that the provisions of sections 202, 203, and 205 of the UMRA do not apply to this proposed decision.  The EPA acknowledges, however, that any corresponding revisions to associated state implementation plan (SIP) requirements and air quality surveillance requirements, 40 CFR part 51 and 40 CFR part 58, respectively, might result in such effects.  Accordingly, EPA will address, as appropriate, unfunded mandates if and when it proposes any revisions to 40 CFR parts 51 or 58.
E.	Executive Order 13132: Federalism
	This proposed rule does not have federalism implications.  It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 because it does not contain legally binding requirements. Thus, the requirements of Executive Order 13132 do not apply to this rule.
	EPA believes, however, that this proposed rule may be of significant interest to state governments.  As also noted in section E (above) on UMRA, EPA recognizes that states will have a substantial interest in this rule and any corresponding revisions to associated SIP requirements and air quality surveillance requirements, 40 CFR part 51 and 40 CFR part 58, respectively.  Therefore, in the spirit of Executive Order 13132 and consistent with EPA policy to promote communications between EPA and state and local governments, EPA specifically solicits comment on this proposed rule from state and local officials.
F.	Executive Order 13175: Consultation and Coordination with Indian Tribal Governments
	Executive Order 13175, entitled "Consultation and Coordination with Indian Tribal Governments" (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure "meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications."  This rule concerns the establishment of national standards to address the public welfare effects of oxides of nitrogen and sulfur.
	This action does not have Tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000).  It does not have a substantial direct effect on one or more Indian tribes, since tribes are not obligated to adopt or implement any NAAQS.  Thus, Executive Order 13175 does not apply to this rule.
G.	Executive Order 13045: Protection of Children from Environmental Health & Safety Risks

      This action is not subject to EO 13045 because it is not an economically significant rule as defined in EO 12866.
H.	Executive Order 13211: Actions that Significantly Affect Energy Supply, Distribution or Use
	This action is not a "significant energy action" as defined in Executive Order 13211 (66 FR 28355, May 22, 2001), because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.  This action concerns the establishment of national standards to address the public welfare effects of oxides of nitrogen and sulfur.   This action does not prescribe specific pollution control strategies by which these ambient standards will be met.  Such strategies will be developed by states on a case-by-case basis, and EPA cannot predict whether the control options selected by states will include regulations on energy suppliers, distributors, or users.
I.	National Technology Transfer and Advancement Act
	Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical.  Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies.  The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.
	The EPA is not aware of any voluntary consensus standards that are relevant to the provisions of this proposed rule.  The EPA welcomes any feedback on such standards that may be applicable.
J.	Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations
	Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice.  Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.
	EPA has determined that this proposed rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it retains the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population.

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Lavery, T.F. C.M. Rogers, R. Baumgardner, and K.P. Mishoe. 2009. Intercomparison of Clean Air Status and Trends Network Nitrate and Nitric Acid Measurements with Data from Other Monitoring Programs. J. Air & Waste Manage. Assoc., 59, 214-226.
Lien L; Raddum GG; Fjellheim A. 1992. Critical loads for surface waters: invertebrates and fish. (Acid rain research report no 21). Oslo, Norway: Norwegian Institute for Water Research.
Luke, W.T., P.K. Barry, L. Lefer, J. Flynn, B. Rappenglück, M. Leuchner, J.E. Dibb, L.D. Ziemba, C.H. Anderson, and M. Buhr. 2010. Measurements of primary trace gases and NOY composition in Houston, Texas.  Atmospheric Environment, 44, 4068-4080.
MacAvoy SW; Bulger AJ. 1995. Survival of brook trout (Salvelinus fontinalis) embryos and fry in streams of different acid sensitivity in Shenandoah National Park, USA. Water Air Soil Pollut, 85, 445-450.
McNulty SG; Cohen EC; Myers JAM; Sullivan TJ; Li H. 2007. Estimates of critical acid loads and exceedances for forest soils across the conterminous United States. Environ Pollut, 149, 281-292.
NAPAP. 1990. Acid Deposition: State of Science and Technology. National Acid Precipitation Assessment Program. Office of the Director, Washington, DC.
NAPAP. (2005). National acid precipitation assessment program report to Congress: An integrated assessment.  http://www.esrl.noaa.gov/csd/aqrs/reports/napapreport05.pdf. Silver Spring, MD: National Acid Precipitation Assessment Program (NAPAP); Committee on Environment and Natural Resources (CENR) of the National Science and Technology Council (NSTC).
NRC (National Research Council). 2004. Air quality management in the United States. Washington, DC: National Research Council (NRC); The National Academies Press.
Russell, A and J. M. Samet, 2010a. Review of the Policy Assessment for the Review of the Secondary National Ambient Air Quality Standard for NOx and SOx: First Draft. EPA-CASAC-10-014.
Russell, A and J. M. Samet, 2010b. Review of the Policy Assessment for the Review of the Secondary National Ambient Air Quality Standard for NOx and SOx: Second Draft. EPA-CASAC-11-003.
Russell, A and J. M. Samet, 2011. Review of the Policy Assessment for the Review of the Secondary National Ambient Air Quality Standard for NOx and SOx: FINAL. EPA-CASAC-11-005.
Russell and Samet, 2011b Review of EPA Draft Documents on Monitoring and Methods for Oxides of Nitrogen (NOx) and Sulfur (SOx) http://yosemite.epa.gov/sab/sabpeople.nsf/WebCommittees/CASAC
Sickles II, J.E., L. L. Hodson, and L. M. Vorburger. 1999. Evaluation of the filter pack for long-duration sampling of ambient air. Atmospheric Environment, 33, 2187-2202.
Sickles II, J.E. and D.S. Shadwick. 2008. Comparison of particulate sulfate and nitrate at collocated CASTNET and IMPROVE sites in the eastern US.  Atmospheric Environment, 42, 2062-2073.
Smyth SC, W. Jiang, and H. Roth. 2008. A comparative performance evaluation of the AURAMS and CMAQ air quality modeling systems. Atmos Envir 43:1059-1070.
Stoddard J; Kahl JS; Deviney FA; DeWalle DR; Driscoll CT; Herlihy AT; Kellogg JH; Murdoch PS; Webb JR; Webster KE. (2003). Response of surface water chemistry to the Clean Air Act Amendments of 1990 (No. EPA 620/R-03/001). Research Triangle Park, NC; National Health and Environmental Effects Research Laboratory; Office of Research and Development; U.S. Environmental Protection Agency.
Sullivan TJ; Driscoll CT; Cosby BJ; Fernandez IJ; Herlihy AT; Zhai J; Stemberger R; Snyder KU; Sutherland JW; Nierzwicki-Bauer SA; Boylen CW; McDonnell TC; Nowicki NA. 2006. Assessment of the extent to which intensively studied lakes are representative of the Adirondack Mountain region. (Final Report no 06-17).Corvallis, OR; prepared by Environmental Chemistry, Inc. for: Albany, NY; Environmental Monitoring Evaluation and Protection Program of the New York State Energy Research and Development Authority (NYSERDA).
US EPA, 1973. "Effects of Sulfur Oxide in the Atmosphere on Vegetation". Revised Chapter 5 of Air Quality Criteria For Sulfur Oxides. U.S. Environmental Protection Agency. Research Triangle Park, N.C. EPA-R3-73-030.
US EPA. 1982. Review of the National Ambient Air Quality Standards for Sulfur Oxides: Assessment of Scientific and Technical Information. OAQPS Staff Paper. EPA-450/5-82-007. U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, Research Triangle Park, NC.
US EPA, 1984a. The Acidic Deposition Phenomenon and Its Effects: Critical Assessment Review Papers. Volume I Atmospheric Sciences. EPA-600/8-83-016AF. Office of Research and Development, Washington, DC.
US EPA, 1984b. The Acidic Deposition Phenomenon and Its Effects: Critical Assessment Review Papers. Volume II Effects Sciences. EPA-600/8-83-016BF. Office of Research and Development, Washington, DC.
US EPA, 1985. The Acidic Deposition Phenomenon and Its Effects: Critical Assessment Document. EPA-600/8-85/001. Office of Research and Development, Washington, DC.
US EPA. 1995a. Review of the National Ambient Air Quality Standards for Nitrogen Dioxide: Assessment of Scientific and Technical Information. OAQPS Staff Paper. EPA-452/R-95-005. U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, Research Triangle Park, NC. September.
US EPA. 1995b. Acid Deposition Standard Feasibility Study Report to Congress. U.S. Environmental Protection Agency, Washington, DC. EPA-430/R-95-001a.
US EPA 2007. Integrated Review Plan for the Secondary National Ambient Air Quality Standards for Nitrogen Dioxide and Sulfur Dioxide. U.S. Environmental Protection Agency, Research Triangle Park, NC, EPA-452/R-08-006.
US EPA 2008. Integrated Science Assessment (ISA) for Oxides of Nitrogen and Sulfur Ecological Criteria (Final Report). U.S. Environmental Protection Agency, Washington, D.C., EPA/600/R-08/082F, 2008.
US EPA 2009. Risk and Exposure Assessment for Review of the Secondary National Ambient Air Quality Standards for Oxides of Nitrogen and Oxides of Sulfur-Main Content - Final Report. U.S. Environmental Protection Agency, Washington, D.C., EPA-452/R-09-008a.
US EPA, 2010a. CASTNET Quality Assurance Project Plan, Revision 7.0, October 2010, http://java.epa.gov/castnet/
US EPA, 2010b.  CASTNET Annual Reports, 2004 - 2009, http://java.epa.gov/castnet/
US EPA 2011. Policy Assessment for the Review of the Secondary National Ambient Air Quality Standards for Oxides of Nitrogen and Oxides of Sulfur. U.S. Environmental Protection Agency, Washington, D.C., EPA-452/R-11-005a.
                  Page 220 of 238  -  NOx/SOx Secondary NAAQS

US EPA, 2011b.  Federal Reference Methods for NOy and p-SO4 for the New Combined NOx and SOx Secondary NAAQS Research Plan, EPA/600/1-11/002 January 20, 2011.
Wolff, G. T. 1993. CASAC closure letter for the 1993 Criteria Document for Oxides of Nitrogen addressed to U.S. EPA Administrator Carol M. Browner dated September 30, 1993.
Wolff, G. T. 1995. CASAC closure letter for the 1995 OAQPS Staff Paper addressed to U.S. EPA Administrator Carol M. Browner dated August 22, 1995.

List of Subjects in 40 CFR Part 50
	Environmental protection, Air pollution control, Carbon monoxide, Lead, Nitrogen dioxide, Ozone, Particulater matter, Sulfur oxides.

________________________________
Dated:  July 12, 2011
--------------------------------------------------------------------------------

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Lisa P. Jackson,
Administrator

For the reasons set forth in the preamble, part 50 of chapter 1 of title 40 of the code of Federal regulations is proposed to be amended as follows:

PART 50-NATIONAL PRIMARY AND SECONDARY AMBIENT AIR QUALITY STANDARDS
1.  The authority citation for part 50 continues to read as follows:
Authority: 42 U.S.C. 7401, et seq.

2.  Section 50.5 is amended by revising paragraphs (b) and (c) and by adding paragraphs (d) and (e) to read as follows:
§50.5   National secondary ambient air quality standards for sulfur oxides (sulfur dioxide).
*     *     *     *     *
(b)  The level of the national secondary 1-hour ambient air quality standard for oxides of sulfur is 75 parts per billion (ppb, which is 1 part in 1,000,000,000), measured in the ambient air as sulfur dioxide (SO2).
(c)  The levels of the standards shall be measured by a reference method based on Appendix A-1 or A-2 of this part, or by a Federal Equivalent Method (FEM) designated in accordance with part 53 of this chapter.
(d)  To demonstrate attainment with the 3-hour secondary standard, the second-highest 3-hour average must be based upon hourly data that are at least 75 percent complete in each calendar quarter.  A 3-hour block average shall be considered valid only if all three hourly averages for the 3-hour period are available.  If only one or two hourly averages are available, but the 3-hour average would exceed the level of the standard when zeros are substituted for the missing values, subject to the rounding rule of paragraph (a) of this section, then this shall be considered a valid 3-hour average.  In all cases, the 3-hour block average shall be computed as the sum of the hourly averages divided by 3.
(e)  The 1-hour secondary standard is met at an ambient air quality monitoring site when the three-year average of the annual 99th percentile of the daily maximum 1-hour average concentrations is less than or equal to 75 ppb, as determined in accordance with Appendix T of this part.

3.  Section 50.11 is amended by deleting paragraphs (f) and (g) and revising paragraphs (a) through (e) to read as follows:
§50.11   National primary and secondary ambient air quality standards for oxides of nitrogen (with nitrogen dioxide as the indicator).
  (a) The level of the national primary and secondary annual ambient air quality standards for oxides of nitrogen is 53 parts per billion (ppb, which is 1 part in 1,000,000,000), annual average concentration, measured in the ambient air as nitrogen dioxide.
(b) The level of the national primary and secondary 1-hour ambient air quality standards for oxides of nitrogen is 100 ppb, 1-hour average concentration, measured in the ambient air as nitrogen dioxide.
(c) The levels of the standards shall be measured by:
(1) a reference method based on appendix F to this part; or
(2) a Federal equivalent method (FEM) designated in accordance with part 53 of this chapter.
(d) The annual primary and secondary standards are met when the annual average concentration in a calendar year is less than or equal to 53 ppb, as determined in accordance with Appendix S of this part for the annual standard.
(e) The 1-hour primary and secondary standards are met when the three-year average of the annual 98th percentile of the daily maximum 1-hour average concentration is less than or equal to 100 ppb, as determined in accordance with Appendix S of this part for the 1-hour standard.

4. Appendix S is amended as follows:
a. by revising paragraph 1.(a),
b. by revising the definition of "Design values" under paragraph 1.(c),
c. by  revising paragraph 2.(b),
d. by revising paragraphs 3.1(a) through (d),
e. by revising paragraphs 3.2(a) through (e),
f. by revising paragraph 4.1(b),
g. by revising paragraph 4.2 (c),
h. by revising paragraph 5.1(b), and
i. by revising paragraph 5.2(b) to read as follows:
Appendix S to Part 50 -- Interpretation of the Primary and Secondary National Ambient Air Quality Standards for Oxides of Nitrogen (Nitrogen Dioxide)
 1. General.
(a) This appendix explains the data handling conventions and computations necessary for determining when the primary and secondary national ambient air quality standards for oxides of nitrogen as measured by nitrogen dioxide ("NO2 NAAQS") specified in §50.11 are met.  Nitrogen dioxide (NO2) is measured in the ambient air by a Federal reference method (FRM) based on appendix F to this part or by a Federal equivalent method (FEM) designated in accordance with part 53 of this chapter. Data handling and computation procedures to be used in making comparisons between reported NO2 concentrations and the levels of the NO2 NAAQS are specified in the following sections.
 *     *     *     *     *
(c) The terms used in this appendix are defined as follows:
*     *     *     *     *
Design values are the metrics (i.e., statistics) that are compared to the NAAQS levels to determine compliance, calculated as specified in section 5 of this appendix.  The design values for the primary and secondary NAAQS are:
 (1) The annual mean value for a monitoring site for one year (referred to as the "annual primary or secondary standard design value").
(2) The 3-year average of annual 98[th] percentile daily maximum 1-hour values for a monitoring site (referred to as the "1-hour primary or secondary standard design value").
*     *     *     *     *
2. Requirements for Data Used for Comparisons with the NO2 NAAQS and Data
Reporting Considerations.
 *     *     *     *     *
(b) When two or more NO2 monitors are operated at a site, the state may in advance designate one of them as the primary monitor.  If the state has not made this designation, the Administrator will make the designation, either in advance or retrospectively.  Design values will be developed using only the data from the primary monitor, if this results in a valid design value.  If data from the primary monitor do not allow the development of a valid design value, data solely from the other monitor(s) will be used in turn to develop a valid design value, if this results in a valid design value.  If there are three or more monitors, the order for such comparison of the other monitors will be determined by the Administrator.  The Administrator may combine data from different monitors in different years for the purpose of developing a valid 1-hour primary or secondary standard design value, if a valid design value cannot be developed solely with the data from a single monitor.  However, data from two or more monitors in the same year at the same site will not be combined in an attempt to meet data completeness requirements, except if one monitor has physically replaced another instrument permanently, in which case the two instruments will be considered to be the same monitor, or if the state has switched the designation of the primary monitor from one instrument to another during the year.
*     *     *     *     *
3. Comparisons with the NO2 NAAQS.
3.1 The Annual Primary and Secondary NO2 NAAQS.
(a) The annual primary and secondary NO2 NAAQS are met at a site when the valid annual primary standard design value is less than or equal to 53 parts per billion (ppb).
(b) An annual primary or secondary standard design value is valid when at least 75 percent of the hours in the year are reported.
(c) An annual primary or secondary standard design value based on data that do not meet the completeness criteria stated in section 3.1(b) may also be considered valid with the approval of, or at the initiative of, the Administrator, who may consider factors such as monitoring site closures/moves, monitoring diligence, the consistency and levels of the valid concentration measurements that are available, and nearby concentrations in determining whether to use such data.
(d) The procedures for calculating the annual primary and secondary standard design values are given in section 5.1 of this appendix.
3.2 The 1-hour Primary and Secondary NO2 NAAQS.
(a) The 1-hour primary or secondary NO2 NAAQS is met at a site when the valid 1-hour primary or secondary standard design value is less than or equal to 100 parts per billion (ppb).
(b) An NO2 1-hour primary or secondary standard design value is valid if it encompasses three consecutive calendar years of complete data.  A year meets data completeness requirements when all 4 quarters are complete.  A quarter is complete when at least 75 percent of the sampling days for each quarter have complete data. A sampling day has complete data if 75 percent of the hourly concentration values, including state-flagged data affected by exceptional events which have been approved for exclusion by the Administrator, are reported.
 (c) In the case of one, two, or three years that do not meet the completeness requirements of section 3.2(b) of this appendix and thus would normally not be useable for the calculation of a valid 3-year 1-hour primary or secondary standard design value, the 3-year 1-hour primary or secondary standard design value shall nevertheless be considered valid if one of the following conditions is true.
(i) At least 75 percent of the days in each quarter of each of three consecutive years have at least one reported hourly value, and the design value calculated according to the procedures specified in section 5.2 is above the level of the primary or secondary 1-hour standard.
(ii) (A) A 1-hour primary or secondary standard design value that is below the level of the NAAQS can be validated if the substitution test in section 3.2(c)(ii)(B) results in a "test design value" that is below the level of the NAAQS.  The test substitutes actual ``high'' reported daily maximum 1-hour values from the same site at about the same time of the year (specifically, in the same calendar quarter) for unknown values that were not successfully measured.  Note that the test is merely diagnostic in nature, intended to confirm that there is a very high likelihood that the original design value (the one with less than 75 percent data capture of hours by day and of days by quarter) reflects the true under-NAAQS-level status for that 3-year period; the result of this data substitution test (the ``test design value", as defined in section 3.2(c)(ii)(B)) is not considered the actual design value. For this test, substitution is permitted only if there are at least 200 days across the three matching quarters of the three years under consideration (which is about 75 percent of all possible daily values in those three quarters) for which 75 percent of the hours in the day, including state-flagged data affected by exceptional events which have been approved for exclusion by the Administrator, have reported concentrations. However, maximum 1-hour values from days with less than 75 percent of the hours reported shall also be considered in identifying the high value to be used for substitution.
(B) The substitution test is as follows: Data substitution will be performed in all quarter periods that have less than 75 percent data capture but at least 50 percent data capture, including state-flagged data affected by exceptional events which have been approved for exclusion by the Administrator; if any quarter has less than 50 percent data capture then this substitution test cannot be used.  Identify for each quarter (e.g., January-March) the highest reported daily maximum 1-hour value for that quarter, excluding state-flagged data affected by exceptional events which have been approved for exclusion by the Administrator, looking across those three months of all three years under consideration.  All daily maximum 1-hour values from all days in the quarter period shall be considered when identifying this highest value, including days with less than 75 percent data capture.  If after substituting the highest non-excluded reported daily maximum 1-hour value for a quarter for as much of the missing daily data in the matching deficient quarter(s) as is needed to make them 100 percent complete, the procedure in section 5.2 yields a recalculated 3-year 1-hour standard "test design value" below the level of the standard, then the 1-hour primary or secondary standard design value is deemed to have passed the diagnostic test and is valid, and the level of the standard is deemed to have been met in that 3-year period. As noted in section 3.2(c)(i), in such a case, the 3-year design value based on the data actually reported, not the ``test design value'', shall be used as the valid design value.
(iii) (A) A 1-hour primary or secondary standard design value that is above the level of the NAAQS can be validated if the substitution test in section 3.2(c)(iii)(B) results in a "test design value" that is above the level of the NAAQS.  The test substitutes actual ``low" reported daily maximum 1-hour values from the same site at about the same time of the year (specifically, in the same three months of the calendar) for unknown values that were not successfully measured.  Note that the test is merely diagnostic in nature, intended to confirm that there is a very high likelihood that the original design value (the one with less than 75 percent data capture of hours by day and of days by quarter) reflects the true above-NAAQS-level status for that 3-year period; the result of this data substitution test (the ``test design value", as defined in section 3.2(c)(iii)(B)) is not considered the actual design value. For this test, substitution is permitted only if there are a minimum number of available daily data points from which to identify the low quarter-specific daily maximum 1-hour values, specifically if there are at least 200 days across the three matching quarters of the three years under consideration (which is about 75 percent of all possible daily values in those three quarters) for which 75 percent of the hours in the day have reported concentrations. Only days with at least 75 percent of the hours reported shall be considered in identifying the low value to be used for substitution.
(B) The substitution test is as follows: Data substitution will be performed in all quarter periods that have less than 75 percent data capture.  Identify for each quarter (e.g., January-March) the lowest reported daily maximum 1-hour value for that quarter, looking across those three months of all three years under consideration.  All daily maximum 1-hour values from all days with at least 75 percent capture in the quarter period shall be considered when identifying this lowest value. If after substituting the lowest reported daily maximum 1-hour value for a quarter for as much of the missing daily data in the matching deficient quarter(s) as is needed to make them 75 percent complete, the procedure in section 5.2 yields a recalculated 3-year 1-hour standard "test design value" above the level of the standard, then the 1-hour primary or secondary standard design value is deemed to have passed the diagnostic test and is valid, and the level of the standard is deemed to have been exceeded in that 3-year period. As noted in section 3.2(c)(i), in such a case, the 3-year design value based on the data actually reported, not the ``test design value'', shall be used as the valid design value.
 (d) A 1-hour primary or secondary  standard design value based on data that do not meet the completeness criteria stated in 3.2(b) and also do not satisfy section 3.2(c), may also be considered valid with the approval of, or at the initiative of, the Administrator, who may consider factors such as monitoring site closures/moves, monitoring diligence, the consistency and levels of the valid concentration measurements that are available, and nearby concentrations in determining whether to use such data.
(e) The procedures for calculating the 1-hour primary and secondary standard design values are given in section 5.2 of this appendix.
4. Rounding Conventions.
4.1 Rounding Conventions for the Annual Primary and Secondary NO2 NAAQS.
*     *     *     *     *
 (b) The annual primary or secondary standard design value is calculated pursuant to section 5.1 and then rounded to the nearest whole number or 1 ppb (decimals 0.5 and greater are rounded up to the nearest whole number, and any decimal lower than 0.5 is rounded down to the nearest whole number).
4.2 Rounding Conventions for the 1-hour Primary and Secondary NO2 NAAQS.
*     *     *     *     *
(c) The 1-hour primary or secondary standard design value is calculated pursuant to section 5.2 and then  rounded to the nearest whole number or 1 ppb (decimals 0.5 and greater are rounded up to the nearest whole number, and any decimal lower than 0.5 is rounded down to the nearest whole number).
5. Calculation Procedures for the Primary and Secondary NO2 NAAQS.
5.1 Procedures for the Annual Primary and Secondary NO2 NAAQS
*     *     *     *     *
 (b) The annual primary or secondary standard design value for a site is the valid annual mean rounded according to the conventions in section 4.1.
5.2 Calculation Procedures for the 1-hour Primary and Secondary NO2 NAAQS.
*     *     *     *     *
(b) The 1-hour primary or secondary standard design value for a site is the mean of the three annual 98[th] percentile values, rounded according to the conventions in section 4.
*     *     *     *     *

5.  Appendix T is amended as follows:
a. by revising paragraph 1.(a),
b. by revising the definition of "Design values" under paragraph 1.(c),
c. by  revising paragraph 2.(b),
d. by revising paragraphs 3.(a) through (e),
e. by revising paragraph 4.(c), and
f. by revising paragraph 5.(b) to read as follows:
Appendix T to Part 50 -- Interpretation of the Primary and Secondary National Ambient Air Quality Standards for Oxides of Sulfur (Sulfur Dioxide)
1. General.
(a) This appendix explains the data handling conventions and computations necessary for determining when the primary and secondary national ambient air quality standards for Oxides of Sulfur as measured by Sulfur Dioxide ("SO2 NAAQS") specified in § 50.17 and §50.5 (b), respectively, are met at an ambient air quality monitoring site.  Sulfur Dioxide (SO2) is measured in the ambient air by a Federal reference method (FRM) based on appendix A-1 or A-2 to this part or by a Federal equivalent method (FEM) designated in accordance with part 53 of this chapter. Data handling and computation procedures to be used in making comparisons between reported SO2 concentrations and the levels of the SO2 NAAQS are specified in the following sections.
*     *     *     *     *
(c) The terms used in this appendix are defined as follows:
*     *     *     *     *
Design values are the metrics (i.e., statistics) that are compared to the NAAQS levels to determine compliance, calculated as specified in section 5 of this appendix.  The design value for the primary and secondary 1-hour NAAQS is the 3-year average of annual 99[th] percentile daily maximum 1-hour values for a monitoring site (referred to as the "1-hour primary standard design value").
*     *     *     *     *
2. Requirements for Data Used for Comparisons with the SO2 NAAQS and Data
Reporting Considerations.
*     *     *     *     *
(b) Data from two or more monitors from the same year at the same site reported to EPA under distinct Pollutant Occurrence Codes shall not be combined in an attempt to meet data completeness requirements.  The Administrator will combine annual 99[th] percentile daily maximum concentration values from different monitors in different years, selected as described here, for the purpose of developing a valid 1-hour primary or secondary standard design value.  If more than one of the monitors meets the completeness requirement for all four quarters of a year, the steps specified in section 5(a) of this appendix shall be applied to the data from the monitor with the highest average of the four quarterly completeness values to derive a valid annual 99[th] percentile daily maximum concentration.  If no monitor is complete for all four quarters in a year, the steps specified in section 3(c) and 5(a) of this appendix shall be applied to the data from the monitor with the highest average of the four quarterly completeness values in an attempt to derive a valid annual 99[th] percentile daily maximum concentration.  This paragraph does not prohibit a monitoring agency from making a local designation of one physical monitor as the primary monitor for a Pollutant Occurrence Code and substituting the 1-hour data from a second physical monitor whenever a valid concentration value is not obtained from the primary monitor; if a monitoring agency substitutes data in this manner, each substituted value must be accompanied by an AQS qualifier code indicating that substitution with a value from a second physical monitor has taken place.
*     *     *     *     *
3. Comparisons with the 1-hour Primary and Secondary SO2 NAAQS.
 (a) The 1-hour primary or secondary SO2 NAAQS is met at an ambient air quality monitoring site when the valid 1-hour primary or secondary standard design value is less than or equal to 75 parts per billion (ppb).
(b) An SO2 1-hour primary or secondary standard design value is valid if it encompasses three consecutive calendar years of complete data.  A year meets data completeness requirements when all 4 quarters are complete.  A quarter is complete when at least 75 percent of the sampling days for each quarter have complete data. A sampling day has complete data if 75 percent of the hourly concentration values, including State-flagged data affected by exceptional events which have been approved for exclusion by the Administrator, are reported.
 (c) In the case of one, two, or three years that do not meet the completeness requirements of section 3(b) of this appendix and thus would normally not be useable for the calculation of a valid 3-year 1-hour primary or secondary standard design value, the 3-year 1-hour primary or secondary standard design value shall nevertheless be considered valid if one of the following conditions is true.
(i) At least 75 percent of the days in each quarter of each of three consecutive years have at least one reported hourly value, and the design value calculated according to the procedures specified in section 5 is above the level of the primary or secondary 1-hour standard.
(ii) (A) A 1-hour primary or secondary standard design value that is equal to or below the level of the NAAQS can be validated if the substitution test in section 3(c)(ii)(B) results in a "test design value" that is below the level of the NAAQS.  The test substitutes actual ``high'' reported daily maximum 1-hour values from the same site at about the same time of the year (specifically, in the same calendar quarter) for unknown values that were not successfully measured.  Note that the test is merely diagnostic in nature, intended to confirm that there is a very high likelihood that the original design value (the one with less than 75 percent data capture of hours by day and of days by quarter) reflects the true under-NAAQS-level status for that 3-year period; the result of this data substitution test (the ``test design value", as defined in section 3(c)(ii)(B)) is not considered the actual design value. For this test, substitution is permitted only if there are at least 200 days across the three matching quarters of the three years under consideration (which is about 75 percent of all possible daily values in those three quarters) for which 75 percent of the hours in the day, including State-flagged data affected by exceptional events which have been approved for exclusion by the Administrator, have reported concentrations. However, maximum 1-hour values from days with less than 75 percent of the hours reported shall also be considered in identifying the high value to be used for substitution.
(B) The substitution test is as follows: Data substitution will be performed in all quarter periods that have less than 75 percent data capture but at least 50 percent data capture, including State-flagged data affected by exceptional events which have been approved for exclusion by the Administrator; if any quarter has less than 50 percent data capture then this substitution test cannot be used.  Identify for each quarter (e.g., January-March) the highest reported daily maximum 1-hour value for that quarter, excluding State-flagged data affected by exceptional events which have been approved for exclusion by the Administrator, looking across those three months of all three years under consideration.  All daily maximum 1-hour values from all days in the quarter period shall be considered when identifying this highest value, including days with less than 75 percent data capture. If after substituting the highest reported daily maximum 1-hour value for a quarter for as much of the missing daily data in the matching deficient quarter(s) as is needed to make them 100 percent complete, the procedure in section 5 yields a recalculated 3-year 1-hour standard "test design value" less than or equal to the level of the standard, then the 1-hour primary or secondary standard design value is deemed to have passed the diagnostic test and is valid, and the level of the standard is deemed to have been met in that 3-year period. As noted in section 3(c)(i), in such a case, the 3-year design value based on the data actually reported, not the ``test design value'', shall be used as the valid design value.
(iii) (A) A 1-hour primary or secondary standard design value that is above the level of the NAAQS can be validated if the substitution test in section 3(c)(iii)(B) results in a "test design value" that is above the level of the NAAQS.  The test substitutes actual ``low" reported daily maximum 1-hour values from the same site at about the same time of the year (specifically, in the same three months of the calendar) for unknown hourly values that were not successfully measured.  Note that the test is merely diagnostic in nature, intended to confirm that there is a very high likelihood that the original design value (the one with less than 75 percent data capture of hours by day and of days by quarter) reflects the true above-NAAQS-level status for that 3-year period; the result of this data substitution test (the ``test design value", as defined in section 3(c)(iii)(B)) is not considered the actual design value. For this test, substitution is permitted only if there are a minimum number of available daily data points from which to identify the low quarter-specific daily maximum 1-hour values, specifically if there are at least 200 days across the three matching quarters of the three years under consideration (which is about 75 percent of all possible daily values in those three quarters) for which 75 percent of the hours in the day have reported concentrations. Only days with at least 75 percent of the hours reported shall be considered in identifying the low value to be used for substitution.
(B) The substitution test is as follows: Data substitution will be performed in all quarter periods that have less than 75 percent data capture.  Identify for each quarter (e.g., January-March) the lowest reported daily maximum 1-hour value for that quarter, looking across those three months of all three years under consideration.  All daily maximum 1-hour values from all days with at least 75 percent capture in the quarter period shall be considered when identifying this lowest value. If after substituting the lowest reported daily maximum 1-hour value for a quarter for as much of the missing daily data in the matching deficient quarter(s) as is needed to make them 75 percent complete, the procedure in section 5 yields a recalculated 3-year 1-hour standard "test design value" above the level of the standard, then the 1-hour primary or secondary standard design value is deemed to have passed the diagnostic test and is valid, and the level of the standard is deemed to have been exceeded in that 3-year period. As noted in section 3(c)(i), in such a case, the 3-year design value based on the data actually reported, not the ``test design value'', shall be used as the valid design value.
 (d) A 1-hour primary or secondary standard design value based on data that do not meet the completeness criteria stated in 3(b) and also do not satisfy section 3(c), may also be considered valid with the approval of, or at the initiative of, the Administrator, who may consider factors such as monitoring site closures/moves, monitoring diligence, the consistency and levels of the valid concentration measurements that are available, and nearby concentrations in determining whether to use such data.
(e) The procedures for calculating the 1-hour primary or secondary standard design values are given in section 5 of this appendix.
4. Rounding Conventions for the 1-hour Primary and Secondary SO2 NAAQS.
*     *     *     *     *
(c) The 1-hour primary or secondary standard design value is calculated pursuant to section 5 and then  rounded to the nearest whole number or 1 ppb (decimals 0.5 and greater are rounded up to the nearest whole number, and any decimal lower than 0.5 is rounded down to the nearest whole number).
5. Calculation Procedures for the 1-hour Primary and Secondary SO2 NAAQS.
*     *     *     *     *
(b) The 1-hour primary or secondary standard design value for an ambient air quality monitoring site is the mean of the three annual 99[th] percentile values, rounded according to the conventions in section 4.


[Federal Register: December 2, 2005 (Volume 70, Number 231)]
[Notices]
[Page 72321-72322]
[DOCID:fr02de05-69]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52842; File No. SR-NYSE-2005-50]

Self-Regulatory Organizations; New York Stock Exchange Inc.;
Order Approving Proposed Rule Change Relating to Proposed Amendments to
Rules 282 (Mandatory Buy-In), 284 (Procedure for Closing Defaulted
Contract), 289 (Must Receive Delivery), and 290 (Defaulting Party May
Deliver After Notice of Intention to Close)

November 28, 2005.

I. Introduction

    On July 15, 2005, the New York Stock Exchange Inc. (``NYSE'') filed
with the Securities and Exchange Commission (``Commission'') proposed
rule change SR-NYSE-2005-50 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposed
rule change was published in the Federal Register on September 28,
2005.\2\ No comment letters were received. For the reasons discussed
below, the Commission is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 52475 (September 20,
2005), 70 FR 56757.
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II. Description

    The NYSE is amending NYSE Rules 282, 284, 289, and 290 to permit
members and member organizations (collectively referred to as
``member'') to initiate buy-ins, reduce the waiting period to initiate
a buy-in from thirty days to three days, and to otherwise provide more
standardized and consistent industry buy-in rules and procedures.

Current Requirements

    NYSE Rule 282 sets forth the ``mandatory buy-in'' process by which
a member acting as a buyer (``initiating member'') is required to
close-out a contract that has not been completed by the member acting
as the seller (``defaulting member'') for a period of thirty calendar
days. A mandatory buy-in requires that a buy-in notice be delivered in
triplicate by the initiating member (buyer) to the defaulting member
(seller). The defaulting member receiving the buy-in notice must
indicate on the buy-in notice its position with respect to the
resolution of the failed trade (e.g., doesn't know the trade, knows the
trade but cannot deliver, will deliver) and return the buy-in notice to
the initiating member. If the buy-in notice is not returned when due

or is returned with the indication that the contract is known but that
delivery cannot be made, a ``buy-in order'' in duplicate is sent to the
defaulting member for execution.
    NYSE Rule 284 sets forth a procedure by which an initiating member
may close-out a contract that has not been completed by the defaulting
member but that is not required to be closed-out. The initiating member
must deliver a buy-in notice to the defaulting member prior to forty-
five minutes after delivery time. Then the initiating member (buyer)
must deliver a buy-in order to the defaulting member between 2:15 p.m.
and 2:30 p.m. for execution after 2:35 p.m.
    NYSE Rule 289 requires an initiating member to accept physical
delivery of some or all of the securities that are the subject of a
buy-in, thereby halting the mandatory buy-in execution for those
securities if the defaulting member tenders the securities prior to the
mandatory buy-in deadlines. NYSE Rule 290 permits a defaulting member
to deliver securities subject to a notice of buy-in until 2:30 p.m. on
the day of the execution of the buy-in.
    The NYSE buy-in rules apply to transactions that are not subject to
the rules of a qualified clearing agency such as The Depository Trust
Company (``DTC'') and the National Securities Clearing Corporation
(``NSCC''). In the event that a buy-in is sent to the NYSE floor for
execution, then NYSE buy-in rules apply.
    However, under the current NYSE rules, there are inherent conflicts
of interest by permitting the defaulting member to execute the buy-in.
For example, the defaulting member could manipulate the extent to which
it has market exposure by timing its purchase of the necessary
securities to benefit itself. The initiating member may receive
negative customer reaction if the customer learns that its trade has
not settled and their securities are unavailable because a buy-in has
not been executed by the defaulting member or has not been executed in
a timely manner.
    Other self-regulatory organizations (``SROs'') have recognized this
potential conflict and have adopted buy-in rules that assign
responsibility to the initiating member to execute the buy-in. By
allowing initiating members to execute their own buy-ins, any potential
conflict of interest involving the defaulting member is avoided and the
process is expedited.
    In the course of reviewing the operation of its buy-in rules, the
NYSE and other regulators met with the Securities Industry
Association's Securities Operations Division Buy-In Committee
(``Committee''), which is comprised of regulators, broker-dealers, and
industry groups, to identify and standardize various buy-in rules and
procedures regarding the close-out process related to street-side
contracts. The Committee requested that the NYSE amend the buy-in rules
to eliminate the ``Notice'' procedures described above and to allow the
initiating member (buyer) to execute buy-ins to close out a contract.

Amendments \3\
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    \3\ The specific changes to NYSE rules are attached as an
exhibit to its rule filing which can be found on the Commission's
Web site and on NYSE's Web site.
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    The NYSE is effecting five amendments to its buy-in rules. First,
the NYSE is amending Rule 282 to allow the initiating member to execute
a mandatory buy-in and to reduce the waiting period to initiate a
mandatory buy-in from thirty days to three days after delivery on the
contract was due. The NYSE believes once the responsibility is shifted
to the initiating member, the buy-in process will work more
efficiently.
    Second, the NYSE is eliminating the requirement for duplicate and
triplicate paper notices and is permitting electronic notices,
including notices from a computerized network facility or from the
electronic functionality of a qualified clearing agency, such as DTC
and NSCC. The NYSE is also amending existing time deadlines for
delivering notices, securities, and executions and is using those used
by other self-regulatory organizations (i.e., DTC and NSCC).
    Third, the NYSE is adding a section to Rule 282's Supplementary
Material to ensure that members comply with the closeout requirements
of Regulation SHO.\4\ Members are obligated to comply with the marking,
locate, and delivery requirements of Regulation SHO for short sales of
equity securities. As a result, members should have policies and
procedures in place to comply with these rules, including closeout
procedures.
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    \4\ Securities Exchange Act Release No. 50103 (July 28, 2004),
69 FR 48008 (August 6, 2004), [File No. S7-23-03] (adoption of
Regulation SHO).
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    Fourth, the NYSE is rescinding Rule 284 and incorporating those
``buy-in'' procedures into Rule 282. The NYSE is also amending Rules
289 and 290 to clarify the requirements and timeframes upon which a
defaulting member may deliver against a ``buy-in'' notice. Fifth, the
NYSE is making certain technical amendments to Rules 282, 289, and 290
to better coordinate the rules with industry practice.

III. Discussion

    Section 6(b)(5) of the Act requires that rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect, and facilitating
transactions in securities, to remove impediments to and to perfect the
mechanism of a free and open market and a national market system and,
in general, to protect investors and the public interest.\5\ The
Commission finds that the NYSE's proposed amendments to its buy-in
rules should aid members in the clearance and settlement of their
transactions by improving and making consistent with other self-
regulatory organizations' rules its buy-in procedures.
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    \5\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-NYSE-2005-50) be, and it
hereby is, approved.

    For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-6753 Filed 12-1-05; 8:45 am]

BILLING CODE 8010-01-P