Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard-Phase 2; Final Rule To Implement Certain Aspects of the 1990 Amendments Relating to New Source Review and Prevention of Significant Deterioration as They Apply in Carbon Monoxide, Particulate Matter and Ozone NAAQS; Final Rule for Reformulated Gasoline, 71612-71705 [05-22698]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 70, Number 228 (Tuesday, November 29, 2005)]
[Rules and Regulations]
[Pages 71612-71705]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-22698]



[[Page 71611]]

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Part II





Environmental Protection Agency





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40 CFR Parts 51, 52, and 80



Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality 
Standard; Final Rule

Federal Register / Vol. 70, No. 228 / Tuesday, November 29, 2005 / 
Rules and Regulations

[[Page 71612]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, and 80

[OAR 2003-0079; FRL-7996-8]
RIN 2060-AJ99


Final Rule To Implement the 8-Hour Ozone National Ambient Air 
Quality Standard--Phase 2; Final Rule To Implement Certain Aspects of 
the 1990 Amendments Relating to New Source Review and Prevention of 
Significant Deterioration as They Apply in Carbon Monoxide, Particulate 
Matter and Ozone NAAQS; Final Rule for Reformulated Gasoline

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: In this document, we are taking final action on most remaining 
elements of the program to implement the 8-hour ozone national ambient 
air quality standard (NAAQS or standard). This final rule addresses, 
among other things, the following control and planning obligations as 
they apply to areas designated nonattainment for the 8-hour ozone 
NAAQS: reasonably available control technology and measures (RACT and 
RACM), reasonable further progress (RFP), modeling and attainment 
demonstrations, and new source review (NSR). We are issuing this rule 
so that States and Tribes will know how these statutory control and 
planning obligations apply and when State implementation plan (SIP) 
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.
    In this rule, we are also finalizing several revisions to the 
regulations governing the nonattainment NSR programs mandated by 
section 110(a)(2)(C) and part D of title I of the Clean Air Act (CAA).
    Finally, this rule addresses what effect the transition to the 8-
hour standard will have on certain aspects of the Reformulated Gasoline 
(RFG) program. The nine original mandatory RFG areas, as well as most 
other areas that have become mandatory RFG areas by being reclassified 
as severe areas under section 181(b) of the CAA, will continue to be 
required to use RFG at least until they are redesignated to attainment 
for the 8-hour NAAQS. The EPA reserves for future consideration what 
effect the transition to the 8-hour standard will have on areas 
reclassified as severe areas for the 1-hour NAAQS under section 181(b) 
of the CAA that were redesignated to attainment for the 1-hour standard 
before revocation of that standard.

EFFECTIVE DATE: This rule is effective on January 30, 2006.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. OAR-2003-0079. All documents in the docket are listed in 
the EDOCKET index at https://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: 
https://www.epa.gov/ttn/naaqs/ozone/o3imp8hr.

FOR FURTHER INFORMATION CONTACT: For general information: Mr. John 
Silvasi, Office of Air Quality Planning and Standards, U.S. 
Environmental Protection Agency, Mail Code C539-02, Research Triangle 
Park, NC 27711, phone number (919) 541-5666, fax number (919) 541-0824 
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) 
541-5550, fax number (919) 541-0824 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 C539-03, Research Triangle 
Park, NC 27711, phone number (919) 541-1450, fax number (919) 541-5509 
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 NSR and RFG
    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?
    B. How will we address long-range transport of ground-level 
ozone and its precursors when implementing the 8-hour ozone 
standard?
    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?
    D. How will EPA address requirements for modeling and attainment 
demonstration SIPs for areas implementing the 8-hour ozone standard?
    E. What requirements for RFP should apply under the 8-hour ozone 
standard?
    F. Are contingency measures required in the event of failure to 
meet a milestone or attain the 8-hour ozone NAAQS?
    G. What requirements should apply for RACM and RACT for 8-hour 
ozone nonattainment areas?
    H. How will the section 182(f) NOX provisions be 
handled under the 8-hour ozone standard?
    I. Should EPA promulgate a NSR provision to encourage 
development patterns that reduce overall emissions?
    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?
    K. What emissions inventory requirements should apply under the 
8-hour ozone NAAQS?
    L. What guidance should be provided that is specific to Tribes?
    M. What are the requirements for Ozone Transport Regions (OTRs) 
under the 8-hour ozone standard?
    N. Are there any additional requirements related to enforcement 
and compliance?
    O. What requirements should apply to emergency episodes?
    P. What ambient monitoring requirements will apply under the 8-
hour ozone NAAQS?
    Q. When will EPA require 8-hour attainment demonstration SIP 
submissions?
    R. How will the statutory time periods in the CAA be addressed 
when we redesignate areas to nonattainment following initial 
designations for the 8-hour NAAQS?
V. EPA's Final Rule for New Source Review
    A. Background
    B. Summary of Final Rule and Legal Basis

[[Page 71613]]

    C. Comments and Responses
    D. NSR Implementation Under the 8-hour ozone NAAQS
VI. Final Rule for RFG
    A. Introduction
    B. Background
    C. What Action is EPA Taking?
    D. Why is EPA Taking This Action?
    E. Future Proceedings
    F. Miscellaneous Administrative Changes to RFG Regulations
    G. Comments and Responses
VII. Other Considerations
    A. How will EPA's implementation of the 8-hour ozone NAAQS 
affect funding under the Congestion Mitigation and Air Quality 
Improvement (CMAQ) Program?
    B. What is the relationship between implementation of the 8-hour 
standard and the CAA's title V permits program?
    C. What action is EPA taking on the Overwhelming Transport 
Classification for Subpart 1 Areas?
VIII. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer Advancement Act
    J. Executive Order 12898: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
    L. Petitions for Judicial Review
    M. Determination Under Section 307(d)
    Appendix A to Preamble--Methods to Account for Non-Creditable 
Reductions when Calculating ROP Targets for the 2008 and Later ROP 
Milestone Years
    Appendix B to Preamble--Glossary Of Terms and Acronyms

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) 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 anti-backsliding principles will ensure continued progress toward 
attainment of the 8-hour ozone NAAQS; attainment dates; and the timing 
of emissions reductions needed for attainment.
    Following publication of the April 30, 2004 final rule, the 
Administrator received three petitions, pursuant to section 
307(b)(7)(B) of the CAA requesting reconsideration of a number of 
aspects of the final rule.\1\ On September 23, 2004, we granted 
reconsideration of three issues raised in the Earthjustice Petition. On 
February 3, 2005 (70 FR 5593), we published a proposed rule to take 
comment on two of these issues: (1) The provision that section 185 fees 
would no longer be applicable once the 1-hour NAAQS is revoked and (2) 
the timing for determination of what is an ``applicable requirement.'' 
On May 20, 2005, the final rule on these two issues was signed by the 
Administrator of EPA. On April 4, 2005 (70 FR 17018), we published a 
proposed rule to take comment on the issue of whether we should 
interpret the Act to require areas to retain major NSR requirements 
that apply to certain 1-hour ozone nonattainment areas in implementing 
the 8-hour standard. We took final action on the NSR issues on June 30, 
2005 (70 FR 39413; July 8, 2005).
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    \1\ Three 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.
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    On January 10, 2005, we granted reconsideration of the overwhelming 
transport classification issue raised by Earthjustice in their 
Petition. At the same time, we denied reconsideration of the issues 
they raised in their Petition dealing with the applicability of RFG 
when the 1-hour NAAQS is revoked and future 8-hour ozone redesignations 
to nonattainment. We intend to publish a proposed rule on the 
overwhelming transport classification shortly. We are continuing to 
review 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 intend to publish that list shortly.
    Concerning the major NSR provisions, today's final regulations were 
proposed as part of two different regulatory packages. On July 23, 1996 
(61 FR 38250), we proposed changes to the major NSR program, including 
codification of the requirements of part D of title I of the 1990 CAA 
Amendments for major stationary sources of volatile organic compounds 
(VOC), NOX, particulate matter having a nominal aerodynamic 
diameter less than or equal to 10 microns (PM10), and CO. On 
June 2, 2003 (68 FR 32802), we proposed a rule to implement the 8-hour 
ozone NAAQS. In the 2003 action, we proposed a rule to identify the 
statutory requirements that apply for purposes of developing SIPs under 
the CAA to implement the 8-hour ozone NAAQS (68 FR 32802). We did not 
propose specific regulatory language for implementation of NSR under 
the 8-hour NAAQS. However, we indicated that we intended to revise the 
nonattainment NSR regulations to be consistent with the rule for 
implementing the 8-hour ozone NAAQS (68 FR 32844). On April 30, 2004 
(69 FR 23951), we published a final rule that addressed classifications 
for the 8-hour NAAQS. The April 2004 rule also included the NSR 
permitting requirements for the 8-hour ozone standard, which 
necessarily follow from the classification scheme chosen under the 
terms of subpart 1 and subpart 2.
    Also, in our 1996 action, and then again in our June 2, 2003 
action, we proposed to amend our nonattainment NSR provisions to 
expressly include NOX as an ozone precursor in nonattainment 
major NSR programs (61 FR 38297 and 68 FR 32847). We also proposed 
that, as provided under CAA section 182(f), a waiver from nonattainment 
NSR for NOX as an ozone precursor would be available for 
both subpart 1 and subpart 2 areas (68 FR 32846). Moreover, we proposed 
to require States to modify their existing programs to include 
NOX as an ozone

[[Page 71614]]

precursor in attainment areas (68 FR 32846).
    In 1996, we proposed to revise the regulations limiting offsets 
from emissions reductions due to shutting down an existing source or 
curtailing production or operating hours below baseline levels 
(``shutdowns/curtailments''). We proposed substantive revisions in two 
alternatives that would ease, under certain circumstances, the existing 
restrictions on the use of emission reduction credits from source 
shutdowns and curtailments as offsets.
    On July 23, 1996, we proposed to revise Sec.  52.24 to incorporate 
changes made by the 1990 CAA Amendments related to the applicability of 
construction bans (61 FR 38305). To clarify our intent, our proposed 8-
hour ozone NAAQS implementation rule in June 2003 explained that Sec.  
52.24(k) remained in effect and would be retained. In that action, we 
also proposed that we would revise Sec.  52.24(k) to reflect the 
changes in the 1990 CAA Amendments (68 FR 32846). On June 2, 2003 (68 
FR 32802), we explained implementation of the major NSR program under 
the 8-hour ozone NAAQS during the SIP development period, and proposed 
flexible NSR requirements for areas that expected to attain the 8-hour 
NAAQS within 3 years after designation.
    In this rule, we are also finalizing several revisions to the 
regulations governing the nonattainment 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 (PM), and carbon monoxide (CO) NAAQS. Second, we are revising 
the criteria for crediting emissions reductions credits from shutdowns 
and curtailments as offsets. Third, we are revising the regulations for 
permitting of major stationary sources in nonattainment areas in 
interim periods between designation of new nonattainment areas and 
EPA's approval of a revised 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 CAA. We are codifying nitrogen oxides (NOX) as an ozone 
precursor in attainment and unclassifiable areas.
    Today's changes regarding NSR are based on the proposed rule 
published on June 2, 2003 to Implement the 8-hour Ozone National 
Ambient Air Quality Standard (NAAQS), as well as the proposed rule 
published on July 23, 1996 for ``Prevention of Significant 
Deterioration (PSD) and Non-attainment New Source Review (NSR).'' These 
changes provide a consistent national program for permitting major 
stationary sources under section 110(a)(2)(C) and parts C and D of 
title I, including major stationary sources of ozone precursors in 
ozone nonattainment areas.
    For the reader's convenience, a glossary and list of acronyms 
appears in Appendix B of this preamble.

II. What Is Included in This Rule?

    Today's action, Phase 2 of the implementation rule, addresses 
numerous topics, but primarily focuses on the following key 
implementation obligations for areas designated nonattainment for the 
8-hour NAAQS: RACT and RACM; RFP; modeling and attainment 
demonstrations; and NSR. It also addresses what effect the transition 
to the 8-hour standard will have on certain aspects of the RFG program.

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

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

Summary of Section IV (Below): Final Rule for Phase 2 Elements Other 
Than NSR and RFG

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?

    The EPA has issued two major rules to address interstate transport 
of ozone pollution. The 1998 NOX SIP Call Rule already is 
achieving significant reductions in NOX emissions that 
contribute to interstate ozone pollution in the eastern United States. 
Nineteen States were required to achieve reductions by May 2004, and 
additional reductions are required by May 2007.
    On May 12, 2005, EPA published the Clean Air Interstate Rule (CAIR) 
in the Federal Register (70 FR 25162). It establishes statewide sulfur 
dioxide (SO2) and NOX emissions budgets for 
upwind States that significantly contribute to nonattainment or 
interfere with maintenance of the fine particle or 8-hour ozone air 
quality standards in downwind States. For ozone, this action 
established summertime NOX budgets for the District of 
Columbia and 25 States in the eastern half of the country, with 
reductions to be achieved by 2009 and 2015. The CAIR goes beyond the 
SIP call by requiring reductions from additional States and by 
requiring further emissions reductions in SIP call States.

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

1. Rural Transport Nonattainment Areas
    The final rule does not contain any revisions to current policy on 
rural transport areas under section 182(h). We do not believe there are 
any 8-hour nonattainment areas covered under subpart 2 that are 
``rural'' and therefore eligible for consideration for coverage under 
section 182(h).
2. Intrastate 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. Section 179B of the CAA applies 
for these purposes. We continue to recommend that States confer with 
the appropriate EPA

[[Page 71615]]

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 three elements that each 
attainment demonstration SIP must include: (1) Technical analyses to 
locate and identify sources of emissions that are causing violations of 
the 8-hour NAAQS within nonattainment areas (i.e., analyses related to 
the emissions inventory required for the nonattainment area), (2) 
adopted measures with schedules for implementation and other means and 
techniques necessary and appropriate for attainment, 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 failures to meet RFP milestones and/or 
attainment.
1. Attainment Demonstration Due Date
    Areas required to submit an attainment demonstration must do so no 
later than 3 years after the effective date of designation for the 8-
hour ozone NAAQS.
2. 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 expeditiously 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.
3. 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.
4. Multi-pollutant Assessments (One-Atmosphere Modeling)
    There is no regulatory text on this issue, but the preamble makes 
several recommendations concerning multi-pollutant 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 rate-of-progress (ROP) and 8-hour RFP 
issues.
2. What is the content and timing of the plan for addressing the RFP 
requirements under section 182(b)(1) for areas covered under subpart 2?
    Areas that are classified as moderate under the 8-hour standard 
that have already implemented their 15 percent plans under their 1-hour 
ozone SIPs would be considered to have met the statutory 15 percent 
requirement. Reasonable further progress for the first 6 years from the 
baseline year would be covered under the more generic RFP requirements 
of subpart 1. Serious and above areas would have to meet 3 percent 
reductions per year starting in the baseline year averaged over each 3-
year period out to the attainment year.
    An 8-hour nonattainment area that is identical, geographically, to 
its predecessor 1-hour nonattainment area (which has already done the 
15 percent reduction) will not be required to do another 15 percent 
VOC-only reduction plan. For an 8-hour moderate or higher nonattainment 
area that contains a 1-hour nonattainment area that has an approved 15 
percent VOC ROP plan but also contains areas that do not have an 
approved 15 percent VOC ROP plan, the final rule allows States the 
choice between two options:
    Option 1. Develop a new baseline and new 15 percent VOC ROP 
emission reduction target for the entire newly expanded area. Determine 
that emissions reductions that occur after the 2002 baseline emissions 
inventory year are creditable in 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.
    The subpart 1 RFP provisions addressed by the rule below that are 
applicable in the former 1-hour portion of the area depend on the 
subpart 2 area's attainment date as follows:
     In moderate areas that have an attainment date within 5 
years after their 8-hour designation, for which portions of the area 
have previously met their 15 percent requirements under the 1-hour 
standard, the former 1-hour portion will only be subject to subpart 1 
RFP requirements, which will be satisfied with the measures that 
demonstrate attainment as expeditiously as practicable. These areas 
will not be developing RFP plans separate from their attainment plans. 
Thus, for these areas, the only motor vehicle emissions budgets that 
will be developed will be for the attainment year.
     In moderate areas that have an attainment date beyond 5 
years after their 8-hour designation, for which portions of the area 
have previously met their 15 percent requirements under the 1-hour 
standard, the former 1-hour portion will only be subject to subpart 1 
RFP requirements, which will be satisfied with a plan to demonstrate 15 
percent emissions reductions (which may be either VOC or NOX 
or a combination of both) from 2002 to 2008, and any additional 
emissions reductions needed for attainment beyond 2008. Thus, these 
areas (the entire 8-hour nonattainment area) would establish a motor 
vehicle emission budget for 2008 and for their attainment year.
    Serious and above areas will be developing both a 15 percent VOC 
plan for the new portion of the 8-hour nonattainment area and an 18 
percent VOC/NOX plan for the portion of the area that 
previously met its 15 percent requirement. Thus, the RFP plan as a 
whole will establish total allowable emissions for 2008 for the entire 
8-hour nonattainment area. Therefore, the plans for these areas, as 
well as moderate areas that choose option one, will establish motor 
vehicle emissions budgets for both 2008 and the attainment year.
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 
RFP requirement for areas designated nonattainment in 2004 primarily 
because of timing concerns related to attainment dates and when data is 
collected and compiled. However, in response to several comments, we 
are allowing States the option of justifying the use of an alternative 
baseline year inventory year for RFP.

[[Page 71616]]

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 1 
additional year (until the end of 2008) for control measures to be 
implemented. The RFP SIP for any remaining 3-year periods out to the 
attainment date beyond the first 6 years would be required to be 
submitted with the attainment demonstration, i.e., within 3 years after 
designation. We recommend that States complete their RFP plans as soon 
as possible after designation to provide more time for sources to 
implement the emissions reductions.
6. How should CAA restrictions on creditable measures be interpreted? 
Which national measures should count as generating emissions reductions 
credit toward RFP requirements?
    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 CAA which exclude four 
categories of emissions reductions requirements required to be adopted 
prior to 1990.
7. For areas covered only by subpart 1, how should the RFP requirement 
be structured?
    We are finalizing rules for two rather than three categories of 
areas based on the CAA's division of attainment dates for subpart 1 
areas under section 172(a)(2). The following are the two scenarios and 
the RFP requirements for each:
    Scenario A: Areas with attainment dates 5 years or less after 
designation (i.e., for most areas on or before June 15, 2009). 
Reasonable further progress for these areas would be met by ensuring 
emissions reductions needed for attainment are implemented, as noted 
above, by the beginning of the ozone season prior to the attainment 
date. This would be similar to subpart 2 RFP for areas classified as 
marginal.
    Scenario B: Areas with attainment dates beyond 5 years after 
designation (i.e., beyond 2009).
     The RFP plan must show increments of progress from the 
baseline emissions inventory year out to the attainment date.
     The RFP SIP would first have to provide for a 15 percent 
emission reduction from the baseline year within 6 years after the 
baseline year (i.e., out to 2008).
     The 15 percent RFP SIP would have to be submitted within 3 
years after designation (i.e., in 2007).
     Either NOX or VOC emissions reductions (or 
both) could be used to achieve the 15 percent emission reduction 
requirement.
     For each subsequent 3-year period (after 2008) out to the 
attainment date, the RFP SIP would have to provide for an additional 
increment of progress no less than the amount of emissions reductions 
that would be roughly proportional to the time between the end of the 
first increment (in 2008) and the attainment date. This second RFP SIP 
would also have to be submitted within 3 years after the effective date 
of designation (i.e., in 2007).
8. Where part of an 8-hour nonattainment area was a 1-hour 
nonattainment area with a ROP obligation extending past 2002, can 
emissions reductions from the area's 1-hour ROP plan be used as credit 
toward meeting the area's 8-hour RFP plan?
    Where an area has both 1-hour and 8-hour RFP obligations for the 
post-2002 period, the State may rely on emissions reductions from the 
1-hour plan in achieving RFP for the 8-hour standard. The State could 
develop a new baseline and new RFP emission reduction targets for the 
entire 8-hour standard nonattainment area (i.e., the old 1-hour 
standard nonattainment area and any newly added portion of the 8-hour 
standard nonattainment area). Emissions reductions from measures in the 
1-hour ozone SIP that are achieved after the 8-hour ozone NAAQS 
baseline year could count (subject to creditability restrictions as 
discussed above) toward meeting the RFP requirement for the entire 8-
hour area.
    This approach would set an RFP target for the entire 8-hour ozone 
nonattainment area. Under this approach, the new RFP target for the 8-
hour standard would replace the previous 1-hour ROP target (while 
ensuring that, at a minimum, the emissions reductions required to meet 
the old target are met; see 40 CFR 51.905(a)(1)(iii)).
9. Will EPA's ``Clean Data Policy'' apply for purposes of 8-hour RFP, 
attainment demonstrations and other related requirements?
    We intend to apply the Clean Data Policy, which we had applied 
under the 1-hour standard, for purposes of the 8-hour standard. In this 
action EPA is finalizing the statutory interpretation that is embodied 
in the policy. The text of the final rule encapsulates the statutory 
interpretation set forth in the policy.
10. How will RFP be addressed in Tribal areas?
    We intend to follow the Tribal Authority Rule (TAR), which provides 
Tribes with the ability to develop Tribal implementation plans (TIPs) 
to address and implement the NAAQS in Indian country. It further 
provides the Tribes with flexibility to develop these plans in a 
modular way, as long as the elements of their TIPs are reasonably 
``severable.''
11. How will RFP targets be calculated?
    Appendix A to the preamble to this final rule provides calculation 
procedures for determining the RFP targets. These have been revised 
from those in the proposal to account for NOX and for 
emissions models in addition to the MOBILE model.
12. Should EPA continue the policy of allowing substitution of controls 
from outside the nonattainment area within 100 kilometers for VOC and 
200 kilometers for NOX?
    We intend to continue to rely on this policy at the current time. 
The use of emissions reductions outside the nonattainment area must be 
shown to be beneficial toward reducing ozone in the nonattainment area 
and must ensure that the reductions meet the standard tests of 
creditability (permanent, enforceable, surplus, and quantifiable).
13. When must RFP emissions reductions be achieved?
    The target level of emissions must be met by the attainment date of 
the attainment year. Section 182(c)(2)(B) requires that RFP be 
continued out to the attainment date.

[[Page 71617]]

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 of the CAA Amendments of 1990.
     Banked emissions reductions credits created prior to 
enactment of the CAA Amendments of 1990 are not creditable toward the 
15 percent progress requirement. However, for purposes of equity, EPA 
encourages States to allow sources to use such banked emissions credits 
for offsets and netting as authorized.
     When States use such banked credits for offsets and 
netting to the extent otherwise creditable under the 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 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 CAA Amendments of 1990.

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 submit a demonstration of attainment for 5 
or less years after designation (i.e., do not request an attainment 
date extension beyond 5 years after designation), the CAA's RACT 
requirement is met with the control requirements associated with a 
demonstration that the NAAQS is attained as expeditiously as 
practicable.
    For subpart 1 areas that submit an attainment demonstration that 
requests an attainment date extension (i.e., beyond 5 years after 
designation), subpart 2 moderate and above areas, and areas within an 
Ozone Transport Region (OTR), a RACT SIP is required covering CTG 
sources and major non-CTG sources. The RACT submittal date is 27 months 
after designation, except a subpart 1 area shall submit the RACT SIP 
with its attainment date extension request.\2\ 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.
---------------------------------------------------------------------------

    \2\ This is generally expected with the submission of the 
attainment demonstration.
---------------------------------------------------------------------------

    Where a RACT SIP 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. The 
State need not perform a NOX RACT analysis for sources 
subject to the State's emission cap-and-trade program where the cap-
and-trade program has been adopted by the State and approved by EPA as 
meeting the NOX SIP Call requirements or, in States 
achieving CAIR reductions solely from electric generating units (EGUs), 
the CAIR NOX requirements.\3\ States are free to conduct 
case-by-case RACT determinations, or RACT determinations or 
certifications for groups of sources, at their discretion.
---------------------------------------------------------------------------

    \3\ Alternatively, a State need not perform a NOX 
RACT analysis for sources subject to Federal implementation plan 
that implements the emission reductions required by the 
NOX SIP call or the CAIR.
---------------------------------------------------------------------------

2. Reasonably Available Control Measures (RACM)
    For each nonattainment area required to submit an attainment 
demonstration, the State must submit with the attainment demonstration 
a SIP revision demonstrating that it has adopted all control measures 
necessary to demonstrate attainment as expeditiously as practicable and 
to meet any RFP requirements.

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

    The final rule allows a person to petition the Administrator for an 
exemption from nonattainment major NSR and/or RACT requirements for 
major stationary sources of NOX 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.\4\
---------------------------------------------------------------------------

    \4\ Memorandum dated January 14, 2005, ``Guidance on Limiting 
Nitrogen Oxides (NOX) Requirements Related to 8-Hour 
Ozone Implementation'' from Stephen D. Page, Director, Office of Air 
Quality Planning and Standards, to Air Directors, Regions I-X.
---------------------------------------------------------------------------

I. Should EPA promulgate a 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, 
fine particulate matter 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 ozone-relevant emissions data element requirements under 
40 CFR 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?

    Section 301(d) of the CAA recognizes that American Indian Tribal 
governments are generally the appropriate authority to implement the 
CAA in Indian country. As discussed in the 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

[[Page 71618]]

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 toward 
meeting the NAAQS.

M. What are the requirements for Ozone Transport Regions (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 (at 40 CFR part 51, subpart H), and the final rule below does 
not contain any such rule revision.

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

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

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

    Modeled attainment demonstrations--where required--must be 
submitted within 3 years after the effective date of the area's 
nonattainment designation.

R. How will the statutory time periods in the CAA 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 for the 8-hour NAAQS.

Summary of Section V (Below): EPA's Final Rule for New Source Review

    In today's action, we are finalizing previously proposed changes to 
three regulations that govern major NSR permitting of major stationary 
sources in nonattainment areas--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 Sec.  51.165, we are making 
revisions to incorporate the major stationary source thresholds, 
significant emission rates, and offset ratios pursuant to part D of 
title I of the CAA, as amended in 1990, for the 8-hour ozone NAAQS, the 
CO NAAQS, and the PM10 NAAQS. We are also promulgating final 
changes to the requirements for emissions reductions achieved from 
shutdowns or curtailments at Sec.  51.165(a)(3)(ii)(C). We are not 
currently acting on any other proposed changes to 40 CFR 51.165.
    Appendix S of 40 CFR part 51 contains the preconstruction 
permitting program that applies to major stationary sources in 
nonattainment areas lacking an approved part D NSR program. It applies 
during the interim period after EPA designates an area as 
nonattainment, but before EPA approves a SIP to implement the 
nonattainment NSR requirements for that pollutant (SIP development 
period). We are making the same changes to appendix S that we are 
making to Sec.  51.165 to implement the CAA as revised by 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 
CAA. 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 CAA Amendments related to the 
applicability of construction bans. The final rules at Sec.  52.24 also 
codify that Sec.  51.165 applies in interpreting the terms in Sec.  
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 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 CAA. We are codifying NOX as an ozone precursor in 
attainment and unclassifiable areas.

Summary of Section VI (Below): Final Rule for RFG

    Today's rule specifies that the nine original RFG mandatory areas 
must continue to use RFG at least until they are redesignated to 
attainment for the 8-hour standard. Similarly, areas that have been 
reclassified as severe areas under section 181(b) of the CAA for the 1-
hour NAAQS, and which were not redesignated to attainment for the 1-
hour NAAQS prior to its revocation, must continue to use RFG at least 
until they are redesignated to attainment for the 8-hour standard. The 
EPA is reserving for future consideration what RFG requirements apply 
to areas that were reclassified as severe under the 1-hour standard, 
but were redesignated to attainment for that standard before its 
revocation. The only such area that was redesignated to attainment 
prior to revocation of the 1-hour standard is Atlanta, Georgia. The EPA 
is also reserving for future consideration whether areas must continue 
using RFG

[[Page 71619]]

after they are redesignated to attainment for the 8-hour standard, for 
the original nine mandatory areas as well as the areas reclassified to 
severe. Finally, EPA clarifies that the current opt-in rules will 
remain in place after the 1-hour standard is revoked. Areas classified 
under subpart 2 as marginal or above are eligible to opt-in to the RFG 
program.

Summary of Section VII (Below): Other Considerations

A. How will EPA's implementation of the 8-hour ozone NAAQS affect 
funding under the Congestion Mitigation and Air Quality Improvement 
(CMAQ) Program?

    This section describes the relationship between the CMAQ program 
and the 8-hour ozone NAAQS implementation program.

B. What is the relationship between implementation of the 8-hour 
standard and the CAA's title V permits program?

    The interrelationship between implementation of the 8-hour ozone 
standard and the title V permits program was not discussed in the 
proposed rule. However, 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-
hour ozone standard.

C. What action is EPA taking on the Overwhelming Transport 
Classification for subpart 1 areas?

    We are not completing rulemaking on the overwhelming transport 
classification in this rulemaking. This section discusses the status of 
the rulemaking.

IV. Final Rule for Phase 2 Elements Other Than New Source Review and 
Reformulated Gasoline

    The discussion of many of the regulatory elements below address 
timing of required actions, such as submission dates for SIP revisions. 
The discussion is primarily directed toward 8-hour ozone nonattainment 
areas for which the effective date of the designation was June 15, 
2004. However, a number of areas may have later effective dates for 
their designations, such as early action compact areas 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, 2004 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 CAA Amendments overhauled the CAA's requirements for ozone 
nonattainment areas and, in doing so, specified new mandatory measures 
for many areas. The approach embodied in subpart 2 was to classify 
areas according to the severity of their pollution. Areas with more 
serious ozone pollution were given a higher classification that did two 
things. First, the successively higher classifications provided a 
successively longer maximum timeframe for attaining the ozone NAAQS. 
Second, each higher classification mandated specific additional and/or 
more stringent obligations than the classification immediately below. 
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. See generally H.R. Rep. No. 101-490 at 144-48 (1990).
    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. Our policy 
view is guided by past precedents and also the principles we set forth 
in our proposed rule (June 3, 2003; 68 FR 32802).
    We have consistently interpreted the CAA to mean that once an area 
is classified under subpart 2, the subpart 2 requirements apply. While 
certain requirements allow for some flexibility in how they apply, the 
requirements do not allow for broad waivers. For example, all areas 
classified as serious or above must meet the requirement for an 
enhanced inspection and maintenance (I/M) program, however, there is 
some flexibility in determining what type of I/M program meets the 
requirement for an enhanced I/M program. The Supreme Court, in 
addressing whether the classification provisions in subpart 2 applied 
for purposes of the 8-hour ozone NAAQS found that they did and stated 
that EPA's implementation scheme, which would have avoided 
classifications under subpart 2, was unreasonable because it would 
effectively nullify the subpart 2 provisions that Congress created with 
the intent to limit State and EPA discretion. Whitman v. American 
Trucking Assoc., 531 U.S. 484-85.
    In the proposed rule, we recognized that there is case law doctrine 
that might allow a case-by-case waiver from mandatory requirements when 
sufficient evidence is presented that application of a specific 
requirement in a particular area would cause absurd results.
2. Final Rule
    We continue to interpret the CAA to mean that the prescribed 
requirements for each classification under subpart 2 apply to areas 
with such classification for the 8-hour NAAQS. As we noted in the 
preamble to the proposed rule, there may be a basis for waiving a 
prescribed requirement on a case-by-case basis where imposition of the 
requirement would create an absurd result. However, as 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 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.
    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

[[Page 71620]]

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 I/M or Stage II vapor recovery programs and 
recommended that we provide States with flexibility in meeting these 
requirements.
    Response: Many of the commenters' suggestions go beyond the 
application of an absurd results doctrine and instead suggest broad 
waiver of subpart 2 requirements based on a determination that an 
alternative or substitute is more effective. We do not believe that we 
have the authority to broadly waive measures mandated by Congress. As 
noted by the Supreme Court, Congress intended to cabin States' 
discretion when it mandated the specific controls under subpart 2. See 
e.g., Whitman, 531 U.S. 484-85. (``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'').
    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 precise circumstances would create an absurd result. Rather, 
that decision would need to be made on a case-by-case 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. For example, 
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.
    With regard to the comment relating to Stage II vapor recovery, 
section 202(a)(6) of the CAA does provide for revision or waiver of the 
Stage II vapor recovery requirement under certain conditions: ``The 
requirements of section 182(b)(3) (relating to stage II gasoline vapor 
recovery) for areas classified under section 181 as moderate for ozone 
shall not apply after promulgation of such standards and the 
Administrator may, by rule, revise or waive the application of the 
requirements of such section 182(b)(3) for areas classified under 
section 181 as Serious, Severe, or Extreme for ozone, as appropriate, 
after such time as the Administrator determines that onboard emissions 
control systems required under this paragraph are in widespread use 
throughout the motor vehicle fleet.'' Currently, EPA is formulating 
policy concerning how widespread use will be determined and has been 
seeking participation from affected parties. Further information is 
available at: https://www.epa.gov/ttn/naaqs/ozone/ozonetech/stage2/.
    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 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.\5\
---------------------------------------------------------------------------

    \5\ See Holy Trinity Church v. United States, 143 U.S. 457 
(1892) (``If literal construction of the words of a statute be 
absurd, the act must be so construed to avoid the absurdity.''); 
Griffin v. Oceanic Contractors, Inc. 458 U.S. 564 (1982) 
(recognizing the absurdity exemption, but concluding that a harsh 
penalty provision did not produce results counter to Congress' 
intent); Mova Pharm. Corp. v. Shalala, 140 F. 3d 1060 (D.C. Cir. 
1998) (recognizing the absurdity exemption, but finding that a 
``successful defense'' regulation went beyond the statute was not 
necessary to meet Congressional intent.)
---------------------------------------------------------------------------

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 attainment deadlines for areas within their boundaries 
solely by regulating sources