[Federal Register Volume 64, Number 100 (Tuesday, May 25, 1999)]
[Rules and Regulations]
[Pages 28250-28328]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 99-11559]



[[Page 28249]]

_______________________________________________________________________

Part II

Environmental Protection Agency
_______________________________________________________________________



40 CFR Part 52



Findings of Significant Contribution and Rulemaking on Section 126 
Petitions for Purposes of Reducing Interstate Ozone Transport; Final 
Rule

Federal Register / Vol. 64, No. 100 / Tuesday, May 25, 1999 / Rules 
and Regulations

[[Page 28250]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[FRL-6336-9]
RIN 2060-AH88


Findings of Significant Contribution and Rulemaking on Section 
126 Petitions for Purposes of Reducing Interstate Ozone Transport

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In accordance with section 126 of the Clean Air Act (CAA), EPA 
is taking final action on petitions filed by eight Northeastern States 
seeking to mitigate what they describe as significant transport of one 
of the main precursors of ground-level ozone, nitrogen oxides 
(NOX), across State boundaries. Each petition specifically 
requests that EPA make a finding that NOX emissions from 
certain stationary sources emit in violation of the CAA's prohibition 
on emissions that significantly contribute to ozone nonattainment 
problems in the petitioning State. If EPA makes such a finding, EPA is 
authorized to establish Federal emissions limits for the sources. The 
eight Northeastern States that filed petitions are Connecticut, Maine, 
Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island, and 
Vermont.
    Today, EPA is making final determinations that portions of six of 
the petitions are technically meritorious. The technically approvable 
portions of the petitions will be automatically deemed granted or 
denied at certain later dates pending certain actions by the States and 
EPA regarding State submittals in response to the final NOX 
State implementation plan call (NOX SIP call). This rule 
describes the schedule and conditions under which applicable final 
findings on the petitions would be automatically triggered.
    The EPA intends to implement the section 126 control remedy through 
a Federal NOX Budget Trading Program. The trading program 
would apply to sources in the source categories for which a final 
finding is ultimately granted. In today's rule, EPA is finalizing the 
general parameters of the trading program. The EPA is committing to 
promulgate the details of the trading program by July 15, 1999. The EPA 
is including interim final emissions limitations for affected sources 
which would apply only if EPA fails to promulgate the trading program 
prior to a section 126 finding.
    Mitigation of the transport of ozone and its precursors is 
important because ozone, which is a primary harmful component of urban 
smog, has long been recognized, in both clinical and epidemiological 
research, to adversely affect public health.

DATES: The final rule is effective July 26, 1999.

ADDRESSES: Documents relevant to this action are available for 
inspection at the Air and Radiation Docket and Information Center 
(6102), Attention: Docket No. A-97-43, U.S. Environmental Protection 
Agency, 401 M Street SW., room M-1500, Washington, DC 20460, telephone 
(202) 260-7548 between 8:00 a.m. and 5:30 p.m., Monday though Friday, 
excluding legal holidays. A reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: General questions concerning today's 
action should be addressed to Carla Oldham, Office of Air Quality 
Planning and Standards, Air Quality Strategies and Standards Division, 
MD-15, Research Triangle Park, NC, 27711, telephone (919) 541-3347, e-
mail at oldham.carla@epa.gov. Please refer to SUPPLEMENTARY INFORMATION 
below for a list of contacts for specific subjects discussed in today's 
action.

SUPPLEMENTARY INFORMATION:

Availability of Related Information

    The official record for this rulemaking, as well as the public 
version, has been established under docket number A-97-43 (including 
comments and data submitted electronically as described below). A 
public version of this record, including printed, paper versions of 
electronic comments, which does not include any information claimed as 
confidential business information, is available for inspection from 
8:00 a.m. to 5:30 p.m., Monday through Friday, excluding legal 
holidays. The official rulemaking record is located at the address in 
ADDRESSES at the beginning of this document. In addition, the Federal 
Register rulemakings and associated documents are located at http://
www.epa.gov/ttn/rto/126.
    The EPA has issued a separate rule on NOX transport 
entitled, ``Finding of Significant Contribution and Rulemaking for 
Certain States in the Ozone Transport Assessment Group Region for 
Purposes of Reducing Regional Transport of Ozone'' (see related 
rulemakings included in the docket for this rulemaking). The rulemaking 
docket for that rule (Docket No. A-96-56), hereafter referred to as the 
NOX SIP call, contains information and analyses that are 
relied upon in the section 126 rulemaking. Documents related to the 
NOX SIP call rulemaking are available for inspection in 
docket number A-96-56 at the address and times given above. In 
addition, the NOX SIP call and associated documents are 
located at http://www.epa.gov/ttn/otag/sip/index.html. Modeling and air 
quality assessment information can be obtained in electronic form at 
http://www.epa.gov.scram001/regmodcenter/t28.htm. Information related 
to the budget development can be found at http://www.epa.gov/capi.
    Additional information relevant to this section 126 rulemaking 
concerning the Ozone Transport Assessment Group (OTAG) is available on 
the web at http://www.epa.gov/ttn/otag/otag/index.html. If assistance 
is needed in accessing the system, call the help desk at (919) 541-5384 
in Research Triangle Park, NC. The OTAG's technical data are located at 
http://www.iceis.mcnc.org/OTAGDC.

For Additional Information

    For additional information related to air quality analysis, please 
contact Carey Jang, Office of Air Quality Planning and Standards; 
Emissions, Monitoring, and Analysis Division, MD-14, Research Triangle 
Park, NC 27711, telephone (919) 541-5638. For legal questions, please 
contact Howard Hoffman, Office of General Counsel, 401 M Street SW., 
MC-2344, Washington, DC, 20460, telephone (202) 260-5892. For questions 
regarding the NOX cap-and-trade program, please contact 
Sarah Dunham, Office of Atmospheric Programs, Acid Rain Division, MC-
6204J, 401 M Street SW, Washington, DC 20460, telephone (202) 564-9087. 
For questions regarding regulatory cost analyses for electricity 
generating sources, please contact MaryJo Krolewski, Office of 
Atmospheric Programs, Acid Rain Division, MC-6204J, 401 M Street SW, 
Washington, DC 20460, telephone (202) 564-9847. For questions regarding 
regulatory cost analyses for other stationary sources, please contact 
Larry Sorrels, Office of Air Quality Planning and Standards, Air 
Quality Strategies and Standards Division, MD-15, Research Triangle 
Park, NC 27711, telephone (919) 541-5041.

Outline

I. Background and Summary of Rulemaking
    A. Summary of Rulemaking and Affected Sources
    B. Ozone Transport, Ozone Transport Commission NOX 
Memorandum of Understanding (OTC NOX MOU), OTAG, the 
NOX SIP Call, the Revised Ozone

[[Page 28251]]

National Ambient Air Quality Standard (NAAQS), and Ozone Effects
    C. Section 126
    D. Summary of Section 126 Petitions
    E. Litigation on Rulemaking Schedule
    F. Advance Notice of Proposed Rulemaking on Petitions
    G. Comment Periods and Availability of Key Information
    1. Emissions Inventory Corrections
    2. Impacts of 1-Hour Standard Revocation
    3. Timing of Petition for Review
    H. Summary of Major Changes Between Proposals and Final Rule
II. EPA's Analytical Approach
    A. EPA's Interpretation of Section 126: Authorization of the 
Petitions
    1. Relationship Among Sections 110(a)(2)(D), 126, and 176A/184
    2. Scrivener's Error
    3. Interpretation of Emits in Violation of the Prohibition of 
Section 110 and Integration of Section 126 Controls With SIPs/FIPs 
Under the NOX SIP Call
    a. Interpretation of Emits in Violation of the Prohibition of 
Section 110
    b. Integration of Section 126 Controls With SIPs/FIPs Under the 
NOX SIP Call
    c. Petitions Deemed Granted Upon Certain Events
    B. EPA's Interpretation of Section 126: Significant Contribution
    1. Significant Contribution Standard
    a. NPR
    b. Final Action
    i. General Meaning of the ``Contribute Significantly'' Provision
    ii. Varied Circumstances of Air Pollutant Transport
    iii. Definition of the Significant Contribution Test and 
Legislative History
    iv. Application of Significant Contribution Test to Ozone 
Problems
    c. Comments and EPA Responses
    i. Vagueness
    ii. Collective Contribution
    iii. Bright Line
    iv. Other Factors
    2. Cost Factor
    C. EPA's Interpretation of Section 126: 8-Hour NAAQS
    D. EPA's Interpretation of Section 126: Remedy
    1. Three-Year Period
    2. Uniform Level of Controls
    a. Comments
    b. Response
    E. Obligations of Downwind States
    1. Comments
    2. Response
    F. Effect of 1-Hour Attainment
    G-H. Weight of Evidence Determination of Named Upwind States
    I. Identifying Sources
    1. Proposed EGU Source Classification
    2. Proposed Non-EGU Boiler and Turbine Source Classification
    3. Issues Raised by Commenters on EGU/Non-EGU Classification
    4. Final Rule EGU/Non-EGU Classification
    J. Cost Effectiveness of Emissions Reductions
    1. Identifying Highly Cost Effective NOX Control 
Levels
    2. Determining the Cost Effectiveness of NOX Controls
    a. Large EGUs
    b. Large Non-EGUs
    c. Large Process Heaters
    d. Small Sources
    e. Summary of Control Measures
    K. Feasibility of NOX Control Implementation Date
    1. Cost Assumptions for SCR
    2. Technology Deployment
    3. Catalyst Supply
    4. Outage Periods
    L. Air Quality Assessment
III. EPA's Final Action on Granting or Denying the Petitions
    A. Technical Determinations
    B. Action on Whether to Grant or Deny Each Petition
    1. Portions of Petitions for Which EPA Is Making an Affirmative 
Technical Determination
    2. Portions of Petitions for Which EPA Is Not Making an 
Affirmative Technical Determination
    C. Requirements for Sources for Which EPA Makes a Section 126(b) 
Finding
IV. Section 126 Control Remedy
    A. Appropriateness of Trading as a Section 126 Remedy
    B. Relationship of the Section 126 Remedy to the NOX 
SIP Call and the Proposed FIP
    C. Federal NOX Budget Trading Program
    1. Elements of the Section 126 Remedy Finalized With Today's 
Rulemaking
    a. Compliance Schedule and Emission Limitation
    b. Trading Program Budget
    c. Compliance Supplement Pool
    2. Elements of the Section 126 Remedy not Finalized With Today's 
Rulemaking
    D. Default Emission Limitations in the Absence of a Promulgated 
Federal NOX Budget Trading Program
    1. Default Emission Limitations a. Default Emission Limitations 
for Existing Units b. Default Emission Limitations for New Units
    2. July 15, 1999 Allocation Decisions
V. Non-ozone Benefits to NOX Reductions
VI. Administrative Requirements
    A. Executive Order 12866: Regulatory Impact Analysis
    B. Impact on Small Entities
    1. Regulatory Flexibility
    2. Potentially Affected Small Entities
    C. Unfunded Mandates Reform Act
    D. Paperwork Reduction Act
    E. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    1. Applicability of Executive Order 13045
    2. Children's Health Protection
    F. Executive Order 12898: Environmental Justice
    G. Executive Order 12875: Enhancing the Intergovernmental 
Partnership
    H. Executive Order 13084: Consultation and Coordination With 
Indian Tribal Governments
    I. National Technology Transfer and Advancement Act
    J. Judicial Review
    K. Congressional Review Act

I. Background and Summary of Rulemaking

A. Summary of Rulemaking and Affected Sources

    In August 1997, eight northeastern States (Connecticut, Maine, 
Massachusetts, New Hampshire, New York, Rhode Island, Pennsylvania, and 
Vermont) submitted petitions to EPA under section 126 of the Clean Air 
Act (CAA) seeking to mitigate what they describe as significant 
transport of NOX, one of the main precursors of ozone. Each 
petition requests that EPA make a finding that certain major stationary 
sources or groups of sources in upwind States emit NOX 
emissions in violation of the CAA's prohibition on amounts of emissions 
that contribute significantly to ozone nonattainment or maintenance 
problems in the petitioning State. All the petitioning States directed 
their petitions to the 1-hour ozone standard. Originally, only three of 
the States (Massachusetts, Pennsylvania, and Vermont) also directed 
their petitions at the 8-hour ozone standard.
    In rulemakings dated September 30, 1998 and October 21, 1998, EPA 
proposed action on the petitions. The October notice of proposed 
rulemaking (NPR) is the longer, more detailed version of the proposal. 
In aggregate across all the petitions and for both ozone standards (to 
the extent a petition applied to both standards), EPA proposed to find 
that sources in 19 States and the District of Columbia are 
significantly contributing to nonattainment problems in one or more of 
the petitioning States. The October NPR also proposed a Federal 
NOX budget trading program as the control remedy for sources 
that would be subject to any section 126 findings.
    In the NPR, EPA proposed action under the 1-hour and 8-hour 
standards as specifically requested in each State's petition. At that 
time, the Maine and New Hampshire petitions were only directed at the 
1-hour standard. On November 30, 1998, both Maine and New Hampshire 
requested that EPA also evaluate their August 1997 petitions under the 
8-hour standard. These requests, in effect, constitute new petitions. 
In a supplemental notice of proposed rulemaking (SNPR) dated March 3, 
1999 (64 FR 10342), EPA proposed action on the new Maine and New 
Hampshire 8-hour petitions. The SNPR did not affect any sources beyond 
those already affected by the NPR with respect to the Maine and New 
Hampshire 1-hour petitions and/or other petitions. The SNPR did not 
propose any additional control requirements beyond what were

[[Page 28252]]

proposed in the NPR. The EPA is taking final action on both the NPR and 
the SNPR in this rule.
    In today's action, EPA is making final affirmative technical 
determinations that certain major stationary sources and source 
categories identified in the section 126 petitions are significantly 
contributing to nonattainment in, or interfering with maintenance by, 
one or more petitioning States with respect to one or both of the 
national ambient air quality standards for ozone (hereafter referred to 
as affirmative technical determinations). On the basis of these 
affirmative technical determinations, the petitions naming these 
sources and source categories will be finally granted (i.e, the section 
126 findings will be deemed made) or denied at certain later dates 
pending certain actions by the States and EPA regarding State 
submittals in response to the final NOX SIP call. The 
schedule and conditions under which the applicable final findings on 
the petitions would be triggered are discussed below in Section I.E. 
The EPA's analysis of significant contribution is discussed in Section 
II below.
    Under the 1-hour ozone standard, EPA is making final affirmative 
technical determinations as to a subset of sources or source categories 
named in the petitions from Connecticut, Massachusetts, New York, and 
Pennsylvania. The source categories for which EPA is making this 
affirmative technical determination of significant contribution are 
discussed in Section II. The States where these sources are located are 
listed in Table II-1.
    The EPA is also partially denying the 1-hour petitions from 
Connecticut, Massachusetts, New York, and Pennsylvania, and fully 
denying the 1-hour petitions from Maine, New Hampshire, and Rhode 
Island for on one of three reasons described below. First, for some 
sources or source categories in some States named in these petitions, 
EPA has information demonstrating these sources and States are not 
significantly contributing to nonattainment in the relevant petitioning 
State with respect to the 1-hour ozone standard. Second, for sources in 
some States EPA does not have adequate information to show that the 
sources do or do not significantly contribute (see Section III.A). 
Third, based on air quality monitoring data from 1996 through 1998, EPA 
believes preliminarily that certain areas in Maine, Massachusetts, New 
Hampshire, Pennsylvania, and Rhode Island have now achieved the 1-hour 
standard. Therefore, EPA is not making affirmative technical 
determinations of significant contribution for any upwind sources with 
respect to these areas (see Section II.F). The EPA is fully denying the 
1-hour petition from Vermont because the 1-hour standard no longer 
applies in that State (See 63 FR 31014).
    Five of the petitioning States, Maine, Massachusetts, New 
Hampshire, Pennsylvania, and Vermont, also directed their petitions at 
the new 8-hour ozone standard. Under the 8-hour ozone standard, EPA is 
making final affirmative technical determinations as to a subset of 
sources named in the petitions from Maine, Massachusetts, New 
Hampshire, and Pennsylvania. The source categories for which EPA is 
making the affirmative technical determinations of significant 
contribution are the same as for the 1-hour standard and are discussed 
in Section II. The EPA is also denying portions of the petitions either 
because EPA has information demonstrating that some of the sources or 
source categories named in these petitions are not significantly 
contributing to nonattainment in the relevant petitioning State with 
respect to the 8-hour ozone standard or because EPA does not have 
adequate information to show that the sources are significantly 
contributing (see Section III.A). The EPA is denying the Vermont 
petition in full with respect to the 8-hour ozone standard because 
Vermont has no current 8-hour ozone nonattainment problems and no 
future projected nonattainment (i.e., maintenance) problems based on 
available analyses.
    In aggregate for all petitions and both ozone standards, the 
sources and source categories for which EPA is making final affirmative 
determinations of significant contribution to nonattainment or 
interference with maintenance (hereafter simply significant 
contribution) with respect to one or more of the petitioning States are 
located in the following States: Alabama, Connecticut, Delaware, 
District of Columbia, Illinois, Indiana, Kentucky, Maryland, 
Massachusetts, Michigan, Missouri, New Jersey, New York, North 
Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Virginia, and 
West Virginia.
    Some of the sources that EPA is determining do not significantly 
contribute to the petitioning States are located in States that are 
affected by a separate rule on NOX transport, the 
NOX SIP call. Specifically, EPA is determining that sources 
in Georgia, South Carolina, and Wisconsin are not significantly 
contributing to any of the petitioning States that name those States. 
However, EPA has determined in the NOX SIP call that sources 
in these three States do significantly contribute to nonattainment 
problems in other downwind States. In acting on these section 126 
petitions, EPA can only consider the impacts on downwind nonattainment 
problems in the petitioning States, which are all located in the 
Northeast. In the NOX SIP call, EPA considered impacts on 
nonattainment problems throughout the eastern half of the United 
States. Therefore, a determination that sources in certain States are 
not significantly contributing to any petitioning State for purposes of 
this action on the section 126 petitions does not alter EPA's 
conclusions on significant contribution with regard to other States 
under the NOX SIP call.
    The section 126 petitions varied with regard to the control 
requirements they recommend for mitigating the interstate transport. 
While EPA considered the recommendations, section 126 does not limit 
EPA to the recommended controls in determining an appropriate remedy. 
In Section II.J., EPA discusses the emissions limitations that would be 
necessary to ensure that the affected sources do not or would not emit 
in violation of the applicable statutory prohibition on significant 
contribution by upwind States to downwind air quality problems. The 
control remedy is based on the uniform application of highly cost-
effective controls (as determined based on cost per ton of 
NOX reduced for each type of source). In selecting the 
control measures, EPA considered the recommendations made by OTAG on 
July 8, 1997 and the analyses for the NOX SIP call.
    In today's action, EPA is establishing a section 126 control remedy 
for sources that would be subject to a future section 126 finding. The 
EPA intends to implement the control requirements through a Federal 
NOX cap-and-trade program. The EPA believes a trading 
program is the most cost-effective approach for achieving emissions 
reductions from large stationary sources. The EPA envisions that there 
would be an interstate trading program among section 126 sources, 
NOX SIP call sources in States that choose to participate in 
the interstate trading program administered by EPA, and sources subject 
to a Federal implementation plan under the NOX SIP call.
    As discussed in Section IV below, EPA is today promulgating the 
general parameters of the remedy, including, among others, the decision 
to implement a NOX cap-and-trade program as the control 
remedy, the control levels the trading program would be based on, the 
definition of the

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types of sources that would be subject to the trading program, and the 
compliance date. By July 15, 1999, EPA will finalize the details of the 
Federal NOX Budget Trading Program for the section 126 
sources (as new 40 CFR part 97). The combined list of existing sources 
affected by an affirmative technical determination with respect to at 
least one petition, along with the more specific emissions limitations 
in the form of tradable allowance allocations, will be provided in the 
July notice of final rulemaking (NFR). The EPA intends to include new 
sources in the source categories that are significantly contributing 
with respect to the petitions from Connecticut, Maine, New Hampshire, 
New York, and Pennsylvania. The petition from Massachusetts does not 
cover new sources.
    In accordance with section 126, sources must comply with the 
control requirements no later than 3 years from a final positive 
finding on the petitions. The EPA believes the full 3 years is 
necessary for compliance. As discussed below, the portions of the 
petitions for which EPA is making an affirmative technical 
determination could be deemed granted (the finding deemed made) on 
November 30, 1999 or May 1, 2000, depending on certain actions by 
States and EPA regarding implementation plans required in response to 
the NOX SIP call. As discussed in Section III.C., both of 
these trigger dates would result in an emission reduction deadline of 
May 1, 2003.

B. Ozone Transport, Ozone Transport Commission NOX 
Memorandum of Understanding (OTC NOX MOU), OTAG, the 
NOX SIP Call, the Revised Ozone National Ambient Air Quality 
Standard (NAAQS), and Ozone Effects

    Today's action occurs against a background of a major national 
effort, spanning more than 10 years, to analyze and take steps to 
mitigate the problem of the transport of ozone and its precursors 
across State boundaries. This effort has grown more intensive in the 
past several years with the approval of the OTC NOX MOU by 
11 of the Northeastern States and the District of Columbia included in 
the Northeast Ozone Transport Region (OTR), the completion of the OTAG 
process (described below), and the promulgation of EPA's NOX 
SIP call. In addition, on July 18, 1997, EPA issued a revised NAAQS for 
ozone, which is determined over an 8-hour period (the 8-hour standard) 
(62 FR 38856). In establishing the 8-hour standard, EPA set the 
standard at 0.08 parts per million and defined the new standard as a 
``concentration-based'' form, specifically the 3-year average of the 
annual 4th-highest daily maximum 8-hour ozone concentrations. This has 
resulted in more areas and larger areas with monitoring data indicating 
nonattainment. Thus, it is even more important to implement regional 
control strategies to mitigate interstate pollution in order to assist 
downwind areas in achieving attainment. This new 8-hour standard must 
now be taken into account, along with the pre-existing 1-hour standard, 
in resolving transport issues. These issues and events are detailed in 
the proposed NOX SIP call (62 FR 60318). The 8-hour standard 
is intended to ultimately replace the 1-hour standard. However, the 1-
hour standard will continue to apply to areas not yet in attainment to 
ensure an effective transition to the new 8-hour standard. In many 
areas of the country, the 1-hour standard has been revoked because the 
areas are attaining that standard (63 FR 31013; June 5, 1998 and 63 FR 
39432; July 22, 1998). A State may petition under section 126 for both 
the 1-hour standard, to the extent that it still applies in the 
petitioning State, and the 8-hour standard.
    The 1990 CAA set forth many requirements to address nonattainment 
of the 1-hour ozone NAAQS. Many States have found it difficult to 
demonstrate attainment of the NAAQS due to the widespread transport of 
ozone and its precursors. The Environmental Council of the States 
(ECOS) recommended formation of a national work group to allow for a 
thoughtful assessment and development of consensus solutions to the 
problem. This work group, OTAG, was established 4 years ago to 
undertake an assessment of the regional transport problem in the 
eastern half of the United States. The OTAG was a collaborative process 
conducted by representatives from the affected States, EPA, and 
interested members of the public, including environmental groups and 
industry, to evaluate the ozone transport problem and develop 
solutions. The OTAG region included the 37 eastern-most States and the 
District of Columbia. Through the OTAG process, the States concluded 
that widespread NOX reductions are needed in order to enable 
areas to attain and maintain the ozone NAAQS. Based on information 
generated by OTAG and other available data, EPA determined that twenty-
two States and the District of Columbia in the OTAG region are 
significantly contributing to nonattainment problems in downwind 
States. Therefore, EPA issued the NOX SIP call (63 FR 57356, 
October 27, 1998) requiring these jurisdictions to revise their SIPs to 
include NOX control measures to mitigate the ozone 
transport.
    The EPA's response to the section 126 petitions differs from EPA's 
action in the NOX SIP call rulemaking in several ways. In 
the NOX SIP call, where EPA concluded that NOX 
emissions from a State are significantly contributing to nonattainment 
problems in downwind States, EPA is requiring the State to submit SIP 
provisions to prohibit an amount of NOX emissions which 
represents the significant contribution. The State has the discretion 
to select the mix of control measures for their sources to meet the 
required statewide NOX emissions reductions. If the State 
does not make the required SIP submission, or submits an inadequate 
SIP, EPA is required to promulgate a Federal implementation plan (FIP) 
within 2 years of EPA's finding of the State failure. In the November 
7, 1997 NOX SIP call proposal, EPA announced that it 
intended to expedite the FIP promulgation in order to assure that the 
downwind States receive the air quality benefits of regional 
NOX reductions as soon as practicable. Therefore, the EPA 
proposed FIPs for all the States affected by the NOX SIP 
call in conjunction with EPA's issuance of the final NOX SIP 
call (63 FR 56394).
    By comparison, section 126 petitions are limited to addressing 
emissions from upwind stationary sources named in the petitions and not 
other sectors of the inventory. If EPA grants the petitions, it is EPA, 
not the States, that promulgates control requirements for the sources. 
The control remedy for sources named in the petitions that would be 
subject to future findings under section 126 is consistent with the 
control assumptions EPA used for these sources in determining the final 
statewide NOX budgets for States subject to the 
NOX SIP call. In addition, the Federal NOX Budget 
Trading Program that EPA intends to promulgate in July for the section 
126 sources is the same trading program that EPA proposed to use to 
achieve reductions from large electric generating units (EGUs) and 
large non-EGUs if it promulgates a FIP in any State. It is also the 
same trading program in which States can choose to participate to 
achieve the majority of the required emissions reductions under the 
NOX SIP call.
    Because the NOX SIP call process and the section 126 
petition process both address NOX transport in the eastern 
United States, EPA believes it is important to coordinate the two 
actions

[[Page 28254]]

as much as possible. As discussed below in Section I.E., EPA and the 
petitioning States agreed to a proposed consent decree on the 
rulemaking schedule for the petitions that takes into consideration the 
NOX SIP call rulemaking. The court entered a slightly 
modified consent decree on October 26, 1998.
    All of the States that submitted section 126 petitions are included 
in the OTR and participated in the OTAG process. In addition, all of 
the upwind sources identified in the petitions are located in the OTAG 
region. All eight petitions rely, in part, on the OTAG analyses for 
technical justification. The OTAG process concluded in June 1997 prior 
to the promulgation of the new 8-hour ozone standard and, therefore, 
the OTAG analyses focused on the 1-hour standard. All the petitions 
request relief under the 1-hour standard. Five of the petitions also 
request relief under the new 8-hour standard. In acting on the section 
126 petitions, EPA believes that it can only consider 8-hour 
nonattainment problems for the petitioning States that expressly 
requested relief under that standard. Under the NOX SIP 
call, EPA considered both 1-hour and 8-hour nonattainment problems 
throughout the OTAG region.
    Ground-level ozone, the main harmful ingredient in smog, is 
produced in complex chemical reactions when its precursors, volatile 
organic compounds (VOCs) and NOX, react in the presence of 
sunlight. The chemical reactions that create ozone take place while the 
pollutants are being blown through the air by the wind, which means 
that ozone can be more severe many miles away from the source of 
emissions than it is at the source.
    At ground level, ozone can cause a variety of ill effects to human 
health, crops and trees. Specifically, ground-level ozone induces the 
following health effects:
     Decreased lung function, primarily in children active 
outdoors,
     Increased respiratory symptoms, particularly in highly 
sensitive individuals,
     Hospital admissions and emergency room visits for 
respiratory causes, among children and adults with pre-existing 
respiratory disease such as asthma,
     Inflammation of the lung, and
     Possible long-term damage to the lungs.

The new 8-hour primary ambient air quality standard will provide 
increased protection to the public from these health effects.
    Each year, ground-level ozone above background is also responsible 
for several hundred million dollars worth of agricultural crop yield 
loss. It is estimated that full compliance of the 8-hour ozone NAAQS 
will result in about $500 million of prevented crop yield loss. Ozone 
also causes noticeable foliar damage in many crops, trees, and 
ornamental plants (i.e., grass, flowers, shrubs, and trees) and causes 
reduced growth in plants. Studies indicate that current ambient levels 
of ozone are responsible for damage to forests and ecosystems 
(including habitat for native animal species).

C. Section 126

    As discussed below in Section II.A., section 126 of the CAA 
authorizes a downwind State to petition EPA for a finding that major 
stationary sources or groups of sources upwind of the State emit in 
violation of the prohibition of section 110(a)(2)(D)(i) because, among 
other reasons, their emissions contribute significantly to 
nonattainment, or interfere with maintenance, of a NAAQS in the State. 
If EPA grants the requested finding, the existing sources must shut 
down in 3 months unless EPA directly regulates the sources by 
establishing emissions limitations and a compliance period extending 
beyond 3 months but no later than 3 years from the finding.

D. Summary of Section 126 Petitions

    As discussed in detail in the NPR, the petitions vary as to the 
type and geographic location of the source categories identified as 
significant contributors. All the petitions identified source 
categories; some petitions also provided lists of sources within the 
specified categories. The source categories include electric generating 
plants, fossil fuel-fired boilers and other indirect heat exchangers, 
and certain other related stationary sources that emit NOX. 
All the petitions target sources in the Midwest; some also target 
sources in the South and Northeast. The geographic area covered by each 
petition is shown in Figures F2-F9 of appendix F of part 52.
    The petitions also vary as to the level of controls they recommend 
be applied to the sources to mitigate the transport problem. Several 
recommend EPA establish a 0.15 lb/mmBtu NOx emission limitation and 
several recommend that controls be implemented through a cap-and-trade 
program.
    All of the petitions rely, in part, on OTAG analyses for technical 
support. In addition, the States submitted a variety of other technical 
analyses which include computerized urban airshed modeling, wind 
trajectory analyses, results of a transport study by the Northeast 
States for Coordinated Air Use Management, and culpability analyses.
    Table I-1 shows, by petitioner, the named source categories, the 
named geographic areas, and the requested remedy sought by the 
petitioning States. The named source categories are worded as they 
appear in the petitions. A map of the OTAG Subregions is provided in 
part 52, Appendix F, Figure 1, promulgated as part of this rule.

            TABLE I-1. EPA's Summary of Section 126 Petitions
------------------------------------------------------------------------
                      Named source
       State           categories       Named States    Requested remedy
------------------------------------------------------------------------
CT................  Fossil fuel-      Sources in OTAG   Establish, at a
                     fired boilers     Subregions 2,     minimum,
                     or other          6, and 7 and      emission
                     indirect heat     portion of OTR    limitations and
                     exchangers with   extending west    a schedule of
                     a maximum gross   and south of      compliance
                     heat input rate   CT. Includes      consistent with
                     of 250 mmBtu/hr   all or parts of   the OTC NOX MOU
                     or greater and    IN, KY, MI, NC,   a, and a cap-
                     electric          OH, TN, VA, WV.   and-trade
                     utility           And OTR States    program. Does
                     generating        DC, DE, MD, NJ,   not request
                     facilities with   NY, PA.           remedy for OTR
                     a rated output                      States because
                     of 15 MW or                         of OTC NOX MOU.
                     greater.
ME................  Electric          Sources within    Establish
                     utilities and     600 miles of      compliance
                     steam-            Maine's ozone     schedule and
                     generating        nonattainment     emissions
                     units with a      areas. Includes   limitation of
                     heat input        all or parts of   0.15 lb/mmBtu
                     capacity of 250   NC, OH, VA, WV,   for electric
                     mmBtu/hr or       and OTR States    utilities and
                     greater.          CT, DE, DC, MD,   the OTC NOX MOU
                                       MA, NJ, NY, NH,   level of
                                       PA, RI, VT.       control for
                                                         steam
                                                         generating
                                                         units, in a
                                                         multi-state cap-
                                                         and-trade NOX
                                                         market system.
MA................  Electricity       Sources in        Establish
                     generating        region within 3   emissions
                     plants.           counties on       limitation of
                                       either side of    0.15 lb/mmBtu
                                       the Ohio River    or 1.5 lb/MWh
                                       in IN, KY, OH,    and a
                                       WV.               compliance
                                                         schedule.

[[Page 28255]]

 
NH................  Fossil fuel-      Sources in OTR    Establish
                     fired indirect    States and OTAG   compliance
                     heat exchange     Subregions 1      schedule and
                     combustion        through 7.        emission
                     units and         Includes all or   limitations no
                     fossil fuel-      parts of IL,      less stringent
                     fired electric    IN, IA, KY, MI,   than:
                     generating        MO, NC, OH, TN,  (a) Phase III
                     facilities        VA, WV, WI.       OTC NOX MOU
                     which emit ten    Also OTR States   reductions; and/
                     tons of NOX or    CT, DE, DC, MD,   or
                     more per day.     MA, ME, NJ, NY,  (b) 85%
                                       PA, RI, VT.       reductions from
                                                         projected 2007
                                                         baseline; and/
                                                         or
                                                        (c) An emission
                                                         rate of 0.15 lb/
                                                         mmBtu.
NY................  Fossil fuel-      Sources in OTAG   Establish, at a
                     fired boilers     Subregions 2,     minimum,
                     or indirect       6, and 7 and      emission
                     heat exchangers   portion of OTR    limitations and
                     with a maximum    extending west    a schedule of
                     heat input rate   and south of      compliance
                     of 250 mmBtu/hr   NY. Includes      consistent with
                     or greater and    all or parts of   the OTC NOX
                     electric          IN, KY, MI, NC,   MOU, and a cap-
                     utility           OH, TN, VA, WV.   and-trade
                     generating        And OTR States    program. Does
                     facilities with   DC, DE, MD, NJ,   not request
                     a rated output    PA.               remedy for OTR
                     of 15 MW or                         States because
                     greater.                            of OTC NOX MOU.
PA................  Fossil fuel-      AL, AR, GA, IL,   Establish
                     fired indirect    IN, IA, KY, LA,   emission
                     heat exchange     MI, MN, MS, MO,   limitations and
                     combustion        NC, OH, SC, TN,   a compliance
                     units with a      VA, WV, WI.       schedule for a
                     maximum rated                       cap-and-trade
                     heat input                          program
                     capacity of 250                     requiring:
                     mmBtu/hr or                        (a) Seasonal
                     greater, and                        reductions of
                     fossil fuel-                        the less
                     fired electric                      stringent of
                     generating                          55% from 1990
                     facilities                          baseline
                     rated at 15 MW                      levels, or 0.20
                     or greater.                         lb/mmBtu,
                                                         beginning by
                                                         May 1999;
                                                        (b) If
                                                         necessary,
                                                         seasonal
                                                         reductions of
                                                         the less
                                                         stringent of
                                                         75% from 1990
                                                         baseline
                                                         levels, or 0.15
                                                         lb/mmBtu,
                                                         beginning by
                                                         May 2003;
                                                        (c) Such
                                                         additional
                                                         reductions as
                                                         necessary
                                                         beginning in
                                                         2005.
RI................  Electricity       Sources in        Establish
                     generating        region within 3   emissions
                     plants.           counties on       limitation of
                                       either side of    0.15 lb/mmBtu
                                       Ohio River in     or 1.5 lb/MWh
                                       IN, KY, OH, WV.   and a
                                                         compliance
                                                         schedule.
VT................  Fossil fuel-      Sources located   Establish
                     fired electric    within a          emissions
                     utility           geographic area   limitation of
                     generating        extending 1000    0.15 lb/mmBtu
                     facilities with   miles southwest   or 1.5 lb/MWh
                     a maximum gross   from              and a
                     heat input rate   Bennington, VT.   compliance
                     of 250 mmBtu/hr  Includes all or    schedule. Does
                     or greater and    parts of IL,      not request
                     potentially       IN, KY, MI, NC,   remedy for OTR
                     other             OH, TN, VA, WV.   States because
                     unidentified      Also AL, GA,      of OTC NOX MOU.
                     major sources.    IA, MO, SC, WI.
                                       Also OTR States
                                       CT, DE, DC, MD,
                                       MA, NJ, NY, PA.
------------------------------------------------------------------------
a The OTC NOX MOU is an agreement among the States in the Ozone
  Transport Region to reduce ozone season NOX emissions from large
  utility and industrial combustion sources through implementation of a
  phased-in regionwide cap-and-trade program. It is described in detail
  in the NPR.

    Section 126 allows States to petition EPA for a finding against 
sources and groups of sources that ``emit'' or ``would emit'' pollution 
in violation of the section 110(a)(2)(D) prohibition on emissions that 
significantly contribute to nonattainment problems in the petitioning 
State. Thus, a finding could potentially apply not only to existing 
sources within a particular source category, but also to sources that 
would be built in the future. In the NPR, EPA stated it believed the 
section 126 petitions are ambiguous as to whether the requested 
findings are intended to include new sources. For the reasons discussed 
in the NPR, EPA proposed to interpret all eight section 126 petitions 
to encompass both existing and new sources. Therefore, if any final 
findings were triggered for source categories in a particular 
geographic area, new sources in those source categories locating in 
that area would also be subject to the section 126 control remedy. The 
EPA requested that if any of the petitioning States disagreed with this 
interpretation of its petition, the State submit clarifying comments on 
this issue. New York and New Hampshire submitted comments that EPA had 
correctly interpreted their petitions to cover both existing and new 
sources. The State of Massachusetts commented that it was not seeking a 
finding with respect to new sources. Therefore, in today's rule, the 
EPA is concluding that all of the petitions, except the petition from 
Massachusetts, cover both existing and new sources.

E. Litigation on Rulemaking Schedule

    As discussed in the NPR, on February 25, 1998, the eight 
petitioning States filed a complaint in the U.S. District Court for the 
Southern District of New York to compel EPA to take action on the 
States' section 126 petitions. State of Connecticut v. Browner, No. 98-
1376. The EPA and the eight States filed a proposed consent decree that 
would establish a schedule for EPA to act on the petitions. Pursuant to 
CAA section 113(g), the EPA solicited comments on the proposed consent 
decree, by notice dated March 5, 1998 (63 FR 10874). The comment period 
closed April 6, 1998. On August 21, 1998, after considering the 
comments received in the section 113(g) process, EPA requested the 
Court to enter a slightly modified version of the consent decree. The 
Court entered the slightly modified consent decree on October 26, 1998.
    The schedule in the consent decree requires EPA to take final 
action on at least the technical merits of the petitions by April 30, 
1999. The schedule requires the full disposition of the petitions by 
that date or an alternative final action by that date that would defer 
the granting or denial of the petitions to certain later dates 
extending to as late as May 1, 2000.
    In formulating the consent decree, EPA developed the alternative 
approach to harmonize the section 126 and NOX SIP call 
actions. Specifically, paragraphs 5.b. and c. state that:

    b. Unless EPA takes the final action described in paragraph 6, 
as to each

[[Page 28256]]

individual petition, EPA's final action will be to--
    (i) Grant the requested finding, in whole or part; and/or
    (ii) Deny the petition, in whole or part.
    c. Unless EPA denies a petition in whole, its final action will 
include promulgation of a remedy under CAA section 126(c) for 
sources to the extent that a requested finding is granted with 
respect to those sources.
    Then paragraph 6 states:
    6. EPA shall be deemed to have complied with the requirements of 
paragraph 5(a) if it instead takes a final action by April 30, 1999, 
that--
    a. makes an affirmative determination concerning the technical 
components of the ``contribute significantly to nonattainment'' or 
``interfere with maintenance'' tests under CAA section 
110(a)(2)(D)(i), 42 U.S.C. section 7410(a)(2)(D)(i);
    b. further provides that:
    (i) If EPA does not issue a proposed approval of the relevant 
Upwind State's SIP revision (submitted in response to the 
NOX SIP call) by November 30, 1999, then the finding will 
be deemed to be granted as of November 30, 1999, without any further 
action by EPA;
    (ii) If EPA issues a proposed approval of said SIP revision by 
November 30, 1999, but does not issue a final approval of said SIP 
revision by May 1, 2000, then the finding will be deemed to be 
granted as of May 1, 2000, without any further action by EPA;
    (iii) If EPA issues a final approval of said SIP revision by May 
1, 2000, EPA must take any and all further actions, if necessary to 
complete its action under section 126, no later than May 1, 2000; 
and
    c. Promulgates a remedy under CAA section 126(c) for sources to 
the extent that an affirmative determination is made with respect to 
those sources.

    As discussed in the NPR, EPA believes that sources in an upwind 
State should not be considered to be emitting an air pollutant in 
violation of the section 110 prohibition, and hence EPA should not 
grant a petition naming such sources, if the State is adhering to the 
NOX SIP call rule's schedule for submission of an approvable 
SIP revision, and EPA is acting speedily to approve the SIP--or, 
failing that, if EPA has promulgated a SIP for the State. After all, if 
EPA's rule provides a particular path for the development of a plan 
calling on sources to reduce interstate pollution by May 1, 2003, and 
under that rule either the upwind State or EPA is moving forward to 
develop, take action on or promulgate a satisfactory plan meeting that 
rule and achieving attainment as expeditiously as practicable, it would 
be difficult to conclude that an affected source in the upwind State 
``emits or would emit in violation'' of the prohibition that the plan 
is not yet required to contain.1
---------------------------------------------------------------------------

    \1\ Moreover there does appear to be tension between section 
110(a)(2)(D), which does not establish the timing as to when the SIP 
prohibition needs to be effective against sources (i.e., when 
sources need to implement controls to reduce emissions) and the 
timing in section 126, which requires implementation no later than 3 
years following a section 126(b) determination. The EPA does not 
believe that Congress intended section 126 to be used to shorten 
timeframes for action that EPA has previously determined are 
approvable for purposes of eliminating significant contribution to 
nonattainment areas in other States.
---------------------------------------------------------------------------

    For these reasons, EPA is following the alternative described in 
paragraph 6 of the consent decree. Thus, EPA is structuring its final 
action to contain: (1) A series of ``technical determinations'' as to 
which sources in which States named in the petitions would emit in 
violation of the section 110 prohibition if the State or EPA were to 
fall off track in putting a timely and satisfactory plan in place; (2) 
determinations that the petitions will automatically be deemed granted 
or denied on the basis of the events set forth in paragraph 6; and (3) 
the remedial requirements that will apply to the sources receiving 
affirmative technical determinations if a petition naming those sources 
is ultimately deemed granted.
    The EPA received comments on the NPR that the section 126 petitions 
were inappropriately driving the timetable for submission of the SIPs 
required under the NOX SIP call; that is, that upwind States 
were not given adequate time to develop and submit their SIP revision, 
but that if they failed to do so on the mandated schedule, a section 
126 finding would be deemed to be made. For the reasons discussed 
below, EPA does not believe that the link between the section 126 
petitions and the NOX SIP call SIPs is inappropriate. 
Further, as stated in the final NOX SIP call, while EPA 
believes it is advantageous to coordinate the section 126 and 
NOX SIP call actions, EPA disagrees that this constrained 
EPA from being responsive to public comments and considering 
alternative compliance dates.

F. Advance Notice of Proposed Rulemaking on Petitions

    In accordance with the schedule in the then proposed consent 
decree, on April 30, 1998, EPA published in the Federal Register (63 FR 
24058) an advance notice of proposed rulemaking (ANPR) on the section 
126 petitions. The ANPR provided EPA's preliminary identification of 
source categories named in the petitions that emit NOX in 
amounts that significantly contribute to nonattainment problems in the 
petitioning States, provided EPA's preliminary assessment of the types 
of recommended emissions limitations and compliance schedules, provided 
EPA's preliminary assessment of the remedy the Agency would propose for 
approvable petitions, discussed legal and policy issues raised under 
section 126, and outlined the rulemaking schedule for the petitions. 
The ANPR solicited comment on all of the issues and preliminary 
assessments. The EPA received a number of comments on the ANPR from 
industry, States, and environmental groups. These comments covered the 
full spectrum of issues discussed in the ANPR and were carefully 
considered in the development of the section 126 NPR. The EPA indicated 
in the ANPR that it would respond to the ANPR comments, if any response 
were appropriate, when EPA responded to comments on the section 126 
NPR.
    The EPA established the informal comment period for the ANPR to 
solicit information that would be helpful in the deliberative process 
for the rulemaking proposal. The EPA appreciates the early, thoughtful 
input from the commenters. In the NPR, EPA noted that its proposed 
positions superseded the preliminary positions taken in the ANPR. The 
majority of commenters on the ANPR submitted new comments on the NPR to 
specifically address EPA's detailed proposal. The EPA has responded to 
all significant comments on the proposal either in this preamble or in 
the Response to Comments document that accompanies this rulemaking.

G. Comment Periods and Availability of Key Information

    The EPA provided a 60-day comment period on the NPR and a 40-day 
comment period on the SNPR. As discussed below, in response to 
commenter's requests, EPA reopened the NPR comment period on two 
occasions, to take further comment on source-specific emissions 
inventory data and on the impacts of the proposed revocations of the 1-
hour standard on the section 126 rulemaking. Some commenters requested 
that the NPR comment period be extended on all issues. The very limited 
amount of time allowed in the consent decree between the deadline for 
the proposed rule and the deadline for the final rule constrained EPA 
from providing longer comment periods for every issue. However, EPA 
received a number of comments after the close of the comment periods 
which EPA considered in developing the final rule.
    Commenters representing the interests of upwind sources and States 
stated that they had not been given a meaningful opportunity to comment 
on various aspects of today's rulemaking, either because important 
documents had not been made available to them, or

[[Page 28257]]

because, in the commenters' view, EPA has not been open-minded to the 
perspective of the upwind sources and States. For the reasons described 
in the Response to Comments document, EPA believes that the appropriate 
information was timely made available to the public, and that EPA has 
been open-minded to the views of, and has carefully reviewed the 
comments of, all commenters concerning today's rulemaking.
    The major issues raised in the comments are responded to throughout 
the preamble of this final rule. A comprehensive summary of all other 
significant comments, along with EPA's response, is provided in the 
Response to Comments document, that has been placed in the docket for 
this rulemaking (Docket No. A-97-43).
1. Emissions Inventory Corrections
    By action dated January 13, 1999 (64 FR 2416), EPA reopened the 
comment period on source-specific emission inventory data. This comment 
period was established in conjunction with the extended period for the 
public to submit emissions inventory revisions for the purpose of the 
NOX SIP call. The EPA received numerous requests to allow 
more time to submit revisions to the source-specific data used to 
establish each State's base inventory and budget in the NOX 
SIP call. By action dated December 24, 1998, (63 FR 71220), EPA 
extended the opportunity for submitting emission inventory corrections 
for the NOX SIP call until February 22, 1999. Because the 
section 126 action and the NOX SIP call rely on the same 
emissions inventory information, EPA extended the comment period for 
the section 126 action as well. The EPA committed to revise the 
emissions inventory to reflect the new data, as appropriate, by the end 
of April 1999. The EPA will use the revised inventory in identifying 
the individual sources subject to today's affirmative technical 
determinations and in assigning their NOX allowance 
allocations for purposes of the Federal NOX Budget Trading 
Program. This information will be provided in the July notice of final 
rulemaking.
2. Impacts of 1-Hour Standard Revocation
    By action dated March 2, 1999 (64 FR 10118), EPA reopened the NPR 
comment period to allow comment on how the proposed section 126 action 
may be affected by a separate proposed action by EPA (63 FR 69598, 
December 17, 1998) to revoke the 1-hour ozone standard for certain 
areas in States that had submitted section 126 petitions. The affected 
areas are Boston-Lawrence-Worcester, Massachusetts-New Hampshire; 
Portland, Maine; Portsmouth-Dover-Rochester, New Hampshire; and 
Providence, Rhode Island. The comment period was reopened in response 
to two requests. In that notice, EPA indicated its position that if EPA 
promulgates a final determination that the 1-hour standard no longer 
applies for those designated nonattainment areas, the contributions 
from sources in upwind States to those areas would no longer constitute 
a basis for EPA to approve the petitioning States' requested findings 
as to the 1-hour standard for those areas. The EPA is finalizing action 
on the revocation notice in the same timeframe as today's final action. 
In addition, EPA is in the process of proposing to revoke the 1-hour 
standard in another area in one of the petitioning States, Pittsburgh, 
Pennsylvania, because the area has achieved clean air based on 1996-
1998 monitoring data. In today's rulemaking, EPA confirms its position 
that the areas in the petitioning States for which EPA is revoking the 
1-hour standard no longer provide a basis for EPA to make positive 
findings under section 126 for the 1-hour standard.
3. Timing of Petition for Review
    Commenters stated that if EPA takes action to approve the technical 
merits of a section 126 petition by April 30, 1999, but findings on the 
petitions are not deemed made until some later date, then the April 30 
action should be deemed ``final action'' reviewable by a court of law 
regardless of the fact that EPA would not be making findings on the 
petitions until some later date.
    Section 307(b) of the CAA identifies which court has venue to hear 
a petition for review of final agency action and the timing by which 
any such petition must be filed. For the reasons described in section 
VI of this preamble, EPA is determining that final action regarding the 
section 126 petitions is nationally applicable and of nationwide scope 
or effect for purposes of section 307(b)(1). Therefore, venue lies with 
the U.S. Court of Appeals for the D.C. Circuit. With respect to timing, 
section 307(b)(1) generally provides that any petition for review must 
be filed within sixty days of publication of agency final action in the 
Federal Register. Whether a petition to review the decisions in this 
rule would be properly reviewable at this time by the Court of Appeals 
is a question to be addressed and decided by the court, not EPA.

H. Summary of Major Changes Between Proposals and Final Rule

    This summary describes the major changes that have occurred since 
publication of the NPR and SNPR.
Section 126 Control Remedy
    In the NPR, EPA proposed to implement as the section 126 remedy a 
new Federal NOX Budget Trading Program. That program would 
consist of a capped, market-based trading system applicable to all 
sources for which a final affirmative finding is ultimately granted. 
The Agency intended to finalize all aspects of the section 126 remedy 
by April 30, 1999. In today's notice, EPA finalizes the general 
parameters of the remedy--including the decision to implement a capped, 
market-based trading program, identification of the sources subject to 
the program, specification of the basis for the total tonnage cap, and 
specification of the compliance date. The details of the trading 
program, including unit-by-unit allocations, will be finalized in a 
separate action no later than July 15, 1999. As part of today's action, 
the EPA is also establishing interim final emissions limitations that 
will be imposed in the event a finding under section 126 is made and 
the Administrator does not promulgate the Federal NOX Budget 
Trading Program regulations before such finding.
1-Hour Standard Attainment
    In the section 126 NPR, EPA proposed which upwind States contain 
sources of emissions named in the petitions that contribute 
significantly to nonattainment problems in the petitioning States under 
the 1-hour ozone standard, and where petitions were based on it, the 8-
hour ozone standard.
    After publication of the section 126 NPR on October 21, 1998, EPA 
preliminarily determined that proposed to determine that the 1-hour 
ozone standard no longer applied to certain nonattainment areas, 
including several areas in the petitioning States based on 1996-1998 
air quality monitoring data. These areas, however, continue to monitor 
violations of the 8-hour standard.
    Because EPA believes, preliminarily, that these areas no longer 
have 1-hour nonattainment problems based on the 1996-1998 data, they 
can no longer provide a basis for EPA to make affirmative findings 
under section 126 that upwind sources are significantly contributing to 
nonattainment with respect to the 1-hour standard. Therefore, EPA is 
denying portions of

[[Page 28258]]

the 1-hour petitions related to these areas. The determination to 
delete these areas as 1-hour receptor areas has no impact on the 
determinations of which sources are significantly contributing to 
downwind nonattainment.
Maine's 8-Hour Petition and North Carolina Sources
    In the section 126 NPR, the upwind States that were named by the 
petitioners and which were proposed to contain sources that make a 
significant contribution to 8-hour nonattainment problems in the 
petitioning States were based on the upwind-downwind linkages found to 
be significant in the NOX SIP call. The exception to this in 
today's rule is Maine's petition for relief from emissions sources in 
North Carolina. In its petition, Maine requested relief from large 
stationary sources within a 600-mile radius of the southwestern-most 
nonattainment area in Maine. This radius includes several counties in 
the extreme northeastern portion of North Carolina that do not contain 
sources of the type and size identified in Maine's petition. Thus, even 
though EPA found in the NOX SIP call that emissions in North 
Carolina contribute significantly to 8-hour nonattainment in Maine, EPA 
is denying Maine's petition relative to North Carolina because there 
are no section 126 sources located in the portion of North Carolina 
covered by Maine's petition.

II. EPA's Analytical Approach

    The EPA described its analytical approach in the NPR, (63 FR 
56299). The EPA received numerous comments on various aspects of its 
approach. After considering these comments, EPA has determined to 
maintain the principal elements of its approach. The major comments are 
summarized below.

A. EPA's Interpretation of Section 126: Authorization of the Petitions

    This section lays out EPA's legal interpretation of sections 126 
and 110(a)(2)(D), the key statutory provisions that authorize today's 
action. First, EPA describes how these provisions authorize EPA to 
address interstate transport problems and how they relate to sections 
176A and 184, which are the other two main interstate transport 
provisions under the Act. Second, EPA explains its interpretation that 
the reference in section 126 to section 110(a)(2)(D)(ii) is a 
scrivener's error and the correct reference is to section 
110(a)(2)(D)(i). Third, EPA discusses its interpretation of the phrase 
``emits in violation of the prohibition'' of section 110 and explains 
how this interpretation provides direction for coordinating EPA's 
actions on the section 126 petitions and the NOX SIP call.
1. Relationship Among Sections 110(a)(2)(D), 126, and 176A/184
    Subsection (a) of section 126 requires, among other things, that 
SIPs require major proposed new (or modified) stationary sources to 
notify nearby States for which the air pollution levels may be affected 
by the fact that such sources have been permitted to commence 
construction. Subsection (b) provides:

    Any State or political subdivision may petition the 
Administrator for a finding that any major source or group of 
stationary sources emits or would emit any air pollutant in 
violation of the prohibition of section 110(a)(2)(D)(ii) * * * or 
this section.
    Subsection (c) of section 126 states that--
    [I]t shall be a violation of this section and the applicable 
implementation plan in such State [in which the source is located or 
intends to locate]--
    (1) For any major proposed new (or modified) source with respect 
to which a finding has been made under subsection (b) of this 
section to be constructed or to operate in violation of the 
prohibition of section 110(a)(2)(D)(ii) * * * or this section, or
    (2) for any major existing source to operate more than three 
months after such finding has been made with respect to it.

However, subsection (c) further provides that EPA may permit the 
continued operation of such major existing sources beyond the 3-month 
period, if such sources comply with EPA-promulgated emissions limits 
within 3 years of the date of the finding.
    Section 110(a)(2)(D) provides the requirement that a SIP contain 
adequate provisions--

    (i) Prohibiting, consistent with the provisions of this title, 
any source or other type of emissions activity within the State from 
emitting any air pollutant in amounts which will--
    (I) Contribute significantly to nonattainment in, or interfere 
with maintenance by, any other State with respect to [any] national 
* * * ambient air quality standard, or
    (II) Interfere with measures required to be included in the 
applicable implementation plan for any other State under part C to 
prevent significant deterioration of air quality or to protect 
visibility.
    (ii) Insuring compliance with the applicable requirements of 
sections 126 and 115 (relating to interstate and international 
pollution abatement) * * *

    In the 1990 Clean Air Act Amendments, Congress added section 184, 
which delineates a multistate ozone transport region (OTR) in the 
Northeast, requires specific additional controls for all areas (not 
only nonattainment areas) in that region, and establishes the Ozone 
Transport Commission (OTC) for the purpose of recommending to EPA 
regionwide controls affecting all areas in that region. At the same 
time, Congress added section 176A, which authorizes the formation of 
transport regions for other pollutants and in other parts of the 
country.
    In the NPR, EPA proposed the view that, with respect to existing 
stationary sources, sections 126(b)-(c) and 110(a)(2)(D), read 
together, authorize a downwind State to petition EPA for a finding that 
major stationary sources or groups of sources upwind of the State emit 
in violation of the prohibition of section 110(a)(2)(D)(i) because, 
among other reasons, their emissions contribute significantly to 
nonattainment, or interfere with maintenance, of a NAAQS in the State. 
If EPA grants the requested finding, the existing sources must shut 
down in 3 months unless EPA directly regulates the sources by 
establishing emissions limitations and a compliance period extending 
beyond 3 months but no later than 3 years from the finding. In 
accordance with section 302(j) of the CAA, the term major stationary 
source means ``any stationary facility or source which directly emits, 
or has the potential to emit, one hundred tons per year or more of any 
air pollutant. . . .'' For the purpose of this rulemaking the relevant 
pollutant is NOX emissions.
    The EPA received numerous comments arguing that section 126(b) 
should not be read to authorize the petitions, which ask EPA to 
implement controls on upwind sources on grounds that, under section 
110(a)(2)(D), they contribute significantly to nonattainment problems 
downwind. According to these commenters, Congress, in the 1990 Clean 
Air Act Amendments, dealt with interstate ozone transport by 
establishing sections 176A and 184 as the key provisions, and revising 
section 110(a)(2)(D) to assure that it did not apply outside the 
context of section 184.
    For the reasons discussed below, EPA believes that following the 
1990 Clean Air Act Amendments, section 126(b) and 110(a)(2)(D) retain 
independent effect and authorize the petitions. Please note that the 
discussion below assumes that the references in section 126 to section 
110(a)(2)(D)(ii) are a scrivener's error and instead should be read to 
refer to section 110(a)(2)(D)(i). See section II.A.2. below for further 
explanation of the error.
    Background: The CAA, as amended in 1990, has four key provisions 
that relate to the issue of interstate transport of air pollution and 
air pollution precursors:

[[Page 28259]]

sections 110(a)(2)(D), 126, 176A, and 184. In attempting to resolve 
disputes over specific interpretations of these provisions, it makes 
sense to consider these provisions together as the set of statutory 
requirements that carry out Congress' desired approach to the problem 
of interstate transport. The provisions should be read in a manner that 
will best bring meaning to each provision and allow it to fit 
rationally into the overall statutory context.
    A stated purpose of the CAA is ``to protect and enhance the quality 
of the Nation's air resources so as to promote the public health and 
welfare and the productive capacity of its population.'' CAA, section 
101(b)(1). To understand how the interstate transport provisions 
interact with one another and fit into the CAA's overall scheme to 
achieve its clean air purposes, it is useful to step back and consider 
how these provisions came into being in their current forms. Relevant 
information includes earlier draft and adopted versions of the 
provisions themselves, statements by Congress regarding the provisions, 
and judicial rulings on EPA interpretations of the provisions. It is 
also useful to recognize the larger factual context in which Congress 
was operating while developing these provisions, both in terms of the 
current understandings of the environmental problems that Congress was 
attempting to remedy and of the political context for Congressional 
action. The relevant legislative history is largely that of the 1970, 
1977 and 1990 CAA Amendments, although the pre-1970 provisions are 
useful to indicate the approach that Congress rejected in adopting the 
first version of the current section 110(a)(2)(D).
    As with most environmental policy issues, our understanding of the 
problem of interstate transport of pollutants and pollution precursors, 
our ability to measure it, and the legal means employed to address it 
have become increasingly sophisticated over time. Prior to the adoption 
of the 1970 CAA, conflicts between states over air pollution most 
frequently concerned the relatively local air quality effects inflicted 
on inhabitants of one state by a facility located on the other side of 
the state border. The 1970 CAA contained an interstate pollution 
provision that could potentially have been applied to long distance 
transport disputes, but those did not appear to be Congress' main 
concern. See S. Comm. on Public Works, National Air Quality Standards 
Act of 1970, S. Rep. No. 91-1196, 91st Cong., 2d Sess., 13 (1970) 
reprinted in 1 Committee on Public Works, 93d Cong., 2d Sess., A 
Legislative History of the Clean Air Act Amendments of 1970, 413 (1974) 
(hereinafter 1970 Legislative History). By the time Congress passed the 
1977 Amendments, however, both the federal and state governments and 
the general public had become increasingly aware that a significant 
portion of certain air pollution problems in some states likely derived 
from activities in other states, including more distant states. In 
fact, the provisions of the 1970 CAA, as implemented, had exacerbated 
long-range interstate transport problems by implicitly encouraging 
dispersion through tall smoke stacks as a remedy for local air quality 
problems. By 1990, our increasing awareness of the long-range transport 
problem was bolstered by more sophisticated measurement and modeling 
techniques.
    As understanding of the problem became more sophisticated over 
time, so did Congress' approach to ameliorating the problem. From 1970 
to 1990, Congress steadily increased the number and power of the tools 
available to both EPA and the states to address interstate pollution 
transport. This expansion of authority under the CAA was driven by an 
ongoing situation in which increased recognition of the problem was 
accompanied by no actual reduction in transport over a 20-year period. 
In fact, the set of actions comprised by the NOx SIP call 
and the proposed FIP is EPA's first significant attempt to require 
reduction of interstate transport of pollutants. While certain downwind 
states affected by the problem have made serious attempts to impel 
reductions by upwind states, none of these attempts has been effective 
to date. This factual context, both in terms of the extent of the 
effects of interstate pollutant transport on downwind states' citizens' 
health, environments, and economies, and in terms of the continued 
failure of the federal or state governments to have any direct effect 
on the problem, is critical to understanding Congress' intent in 
adopting the 1990 CAA provisions on interstate transport.
    In addressing interstate pollution transport, there are several 
central issues with which Congress has had to grapple. In its simplest 
form, interstate transport raises questions of how to provide recourse 
for a state experiencing health or welfare impacts from sources beyond 
the state's control. To the extent that we have decided that there are 
certain minimum national standards for air pollutants that must be met 
to protect health and welfare, this first issue is a matter of creating 
a mechanism for the downwind state to impel emission reductions in the 
upwind state. The issue becomes more complicated in the more common 
situation where both the upwind and downwind states contribute 
pollutants causing the exceedance of the national standards. This 
situation adds the need to allocate responsibility (and therefore cost) 
for making the reductions necessary to meet the standards, which 
involves both economic and equity aspects. Where the air in the 
downwind area is cleaner than the standards require, it also raises the 
issue of the extent to which the downwind state can ``reserve'' its 
cleaner air either for environmental purposes or to provide a margin 
for future economic growth. All of these questions are further 
complicated where there are multiple upwind and downwind states 
contributing to and experiencing an air pollution problem. With each of 
these situations, there is also the continuing question of the extent 
to which these issues should be resolved by the states involved and the 
extent to which solutions may or must be imposed by the federal 
government.
    Pre-1970 Provisions: The Clean Air Act of 1963 and the Air Quality 
Act of 1967 both included provisions to address interstate air 
pollution, but neither had much effect on the problem. See generally, 
Clean Air Act, Public Law 88-206, 77 Stat. 392, (1963); Air Quality Act 
of 1967, Public Law 90-148, 81 Stat. 485 (1967). These early statutes 
generally provided for far less of a federal role in pollution control 
than the 1970 CAA. On interstate pollution, they took the approach that 
it was an issue between states, and hence that states needed to 
cooperate to develop a solution. See Vickie L. Patton, The New Air 
Quality Standards, Regional Haze, and Interstate Air Pollution 
Transport, 28 Envtl. L. Rep. 10155, 10157-10160 (1998); Geoffrey L. 
Wilcox, New England and the Challenge of Interstate Ozone Pollution 
Under the Clean Air Act of 1990, 24 Boston College Envtl. Affairs L. 
Rev. 1, 13-14 (1996). The federal government would facilitate such 
cooperation, but would not force it and would rarely step in to impose 
a solution in the absence of state resolution. Over time, as the 
approach of state cooperation has consistently failed to produce 
reductions from upwind states, Congress has given more authority to the 
federal government to break the deadlock between upwind and downwind 
states, although a strong political and policy interest in letting 
states solve state problems has produced continued attempts at driving 
consensus solutions.
    The CAA of 1963 provided that either a downwind state or Department 
of Health, Education, and Welfare (HEW) could convene an 
intergovernmental

[[Page 28260]]

conference on a particular interstate pollution issue. Section 
5(c)(1)(A), (c)(1)(C), 77 Stat. at 396. The conference would make 
findings, and HEW could recommend on that basis that the upwind state 
take certain actions to reduce emissions. Section 5(d), 77 Stat. at 
397. If the upwind state failed to act, HEW could hold a public hearing 
to decide whether to recommend abatement measures again. Section5(e), 
77 Stat. at 397. Finally, if the upwind state failed again to implement 
the recommended measures, HEW could refer the issue to the U.S. 
Attorney General who could bring an enforcement action. Section 5(f), 
77 Stat. at 397-398. While they produced progress on a few interstate 
pollution problems, the provisions were generally criticized as 
ineffectual, particularly due to the long burdensome process required 
before the upwind state could be forced to act. Patton, supra at 10157. 
The Air Quality Act of 1967 added a regional air quality planning 
approach, which was appropriate for addressing interstate pollution 
issues, but still lacked a mechanism to force action. See Air Quality 
Act of 1967, Public Law 90-148, 81 Stat. 485 (1967).
    1970 Clean Air Act: In the face of a widespread lack of progress 
addressing the nation's air pollution problems, Congress significantly 
changed its approach in adopting the 1970 CAA. Congress moved from a 
decentralized approach dependent on state action to a cooperative 
federalism approach, with uniform minimum standards and federal 
authority to step in where the states failed to act. In the 1970 CAA, 
in then section 110(a)(2)(E), Congress first adopted language embodying 
the concept that sources located in one state should not be allowed to 
interfere with attainment or maintenance of a NAAQS in another state. 
See Clean Air Act Amendments of 1970, Public Law 91-604, 84 Stat. 1676. 
EPA was to approve a state implementation plan if, among other 
requirements, ``it contains adequate provisions for intergovernmental 
cooperation, including measures necessary to insure that emissions of 
air pollutants from sources located in any air quality control region 
will not interfere with the attainment or maintenance of such primary 
or secondary standard in any portion of such region outside of such 
State or in any other air quality control region.'' Public Law 91-604 
section 110(a)(2)(E). While the final statutory language and the Senate 
Committee Report (discussing almost identical language) emphasized 
intergovernmental cooperation as the mechanism, the intent was that 
states develop air quality programs that ``at the minimum must prevent 
facilities in one State from contributing to the violation of ambient 
air quality standards in an adjacent State * * *.'' S. Rept. No. 91-
1196 at 13, reprinted in 1970 Legislative History at 413. Although the 
statutory language was sufficiently broad to encompass the long-range 
transport issues that have emerged as the more difficult problem, it 
appears that Congress initially conceptualized the problem as more of a 
short-range transport issue, with pollution from a facility on one side 
of a state border affecting a community on the other side.2
---------------------------------------------------------------------------

    \2\ See, e.g., H.R. 17255, which would have amended section 
108(c) of the CAA to provide that state plans should contain 
``adequate provisions for intergovernmental cooperation, including, 
in the case of any area covering part or all of more than one State 
and designated as an air quality control region . . . appropriate 
provisions for dealing with interstate air pollution problems, . . 
.'' (limiting the interstate pollution provisions to states that are 
part of a single air quality control region). H.R. 17255, 91st 
Cong., 2d Sess. Sec. 4(a)(1) (1970), reprinted in 2 1970 Legislative 
History at 914. Note also that most of the abatement conferences 
held at that time, which addressed the more contentious interstate 
air pollution issues, concerned conflicts between adjacent states. 
See Air Pollution--1970: Hearings Before the Subcomm. on Air and 
Water Pollution of the Senate Comm. on Public Works, 91st Cong., 2d 
Sess. (March 17, 1990), reprinted in 2 1970 Legislative History at 
1098-1103.
---------------------------------------------------------------------------

    The EPA implemented sections 110(a)(2)(E) of the 1970 CAA through 
regulations focusing on information exchange rather than requirements 
to control emissions. Patton, supra, at 10162; Wilcox, supra, at 15-16. 
The regulations required only that the SIP assure that the state will 
transmit information to other states regarding factors, such as 
construction of new plants, that may significantly affect air quality 
in the same or adjoining air quality regions. 40 CFR 51.21(c) (1977) 
(superseded). In a challenge by NRDC, the Eighth Circuit upheld the 
regulations as a ``legitimate means to attain ``intergovernmental 
cooperation'' as contemplated by Congress in the statute.'' Wilcox, 
supra, at 15, quoting NRDC v. EPA, 483 F.2d 690, 692 (8th Cir. 1973). 
The result of EPA's approach was that the states made virtually no 
progress on control of interstate pollution under the 1970 Act. See 
Patton, supra, at 10161, 19; Wilcox, supra, at 18; S. Comm. on Envt. 
and Public Works, Clean Air Act Amendments of 1977, S. Rept. 95-127, 
95th Cong., 1st, Sess. 41 (1977), reprinted in S. Comm. on Envt. and 
Public Works, 95th Cong. 2d. Sess., 3 A Legislative History of the 
Clean Air Act Amendments of 1977, 1415 (1978) (hereinafter 1977 
Legislative History) (noting that the 1970 Act failed to specify any 
abatement procedure if a source in one state emitted air pollutants 
that adversely affected another state, and ``[a]s a result, no 
interstate enforcement actions have taken place, resulting in serious 
inequities among several States, where one State may have more 
stringent implementation plan requirements than another State.'').
    1977 Clean Air Act: In developing the 1977 Amendments to the CAA, 
both Houses of Congress focused on interstate pollution as a major area 
of concern, and the 1977 Amendments made significant changes to the 
statute intended to address the problem. See S. Rept. 95-127 at 41, 
reprinted in 3 1977 Legislative History at 1415. The Report of the 
House Committee on Interstate and Foreign Commerce provided an 
extensive discussion of the interstate pollution problem, a portion of 
which ran as follows:
    In the committee's view, however, the existing law (as 
interpreted by the Administrator) is an inadequate answer to the 
problem of interstate air pollution. This is so for five basic 
reasons. First, an information exchange without adequate procedures 
to act on that information is simply insufficient. Second, an 
effective interstate air pollution control program must include not 
only prevention of interstate air pollution from new sources but 
also abatement of pollution from existing sources. Third, an 
effective program must also be designed to prevent significant 
deterioration * * * of air quality and to protect visibility under 
section 116 of the bill from interstate air pollution. Fourth, an 
effective program must not rely on prevention or abatement action by 
the State in which the source of the pollution is located, but 
rather by the State * * * which receives the pollution and the harm, 
and thus which has the incentive and need to act. Fifth, an 
effective program must include a Federal mechanism for resolving 
disputes which cannot be decided through cooperation and 
consultation between the States or persons involved * * *. The 
problem of interstate air pollution remains a serious one that 
requires a better solution * * *.

    H. Comm. on Interstate and Foreign Commerce, 95th Cong., 1st Sess., 
Clean Air Act Amendments of 1977, H. Rept. 95-294, 330 (1977) reprinted 
in 4 1977 Legislative History at 2797.
    The Senate Committee on the Environment and Public Works also 
viewed the 1970 provisions as inadequate, particularly in their failure 
to ``specify any abatement procedure'' if a source in one state emitted 
air pollutants that ``adversely affected the air quality control 
efforts of another State.'' S. Rept. 95-127 at 41 reprinted in 3 1977 
Legislative History at 1415. The Committee noted that ``[a]s a result,

[[Page 28261]]

no interstate enforcement actions have taken place, resulting in 
serious inequities among several States, where one State may have more 
stringent implementation plan requirements than another State.'' Id. 
This put plants in the states with more stringent control measures ``at 
a distinct economic and competitive disadvantage.'' Id. at 42, 1416. 
The revisions were ``intended to equalize the positions of the States 
with respect to interstate pollution by making a source at least as 
responsible for polluting another State as it would be for polluting 
its own ``State.'' Id.
    To address the interstate pollution problem, the 1977 Amendments 
modified section 110(a)(2)(E) and added a new section 126. See Clean 
Air Act Amendments of 1977, Public Law 95-95, 91 Stat. 685. The House 
Committee Report discussed how these provisions together incorporated 
``the five elements for an effective program for control of interstate 
pollution.'' H. Rept. 95-294 at 330, reprinted in 4 1977 Legislative 
History at 2797. The most critical strengthening elements were a direct 
requirement that SIPs prohibit emissions in amounts that would prevent 
attainment or maintenance by any other state of a NAAQS, and a 
mechanism for downwind states to petition EPA to bar emissions from any 
major source in violation of that prohibition. The revised section 
110(a)(2)(E) required SIPs to contain:
    Adequate provisions (i) prohibiting any stationary source within 
the State from emitting any air pollutant in amounts which will (I) 
prevent attainment or maintenance by any other State of any such 
national primary or secondary ambient air quality standard, or (II) 
interfere with measures required to be included in the applicable 
implementation plan for any other State under part C to prevent 
significant deterioration of air quality or to protect visibility, 
and (ii) insuring compliance with the requirements of section 126, 
relating to interstate pollution abatement.
    Public Law 95-95. While overall this made the SIP requirements for 
interstate pollution more stringent, the provision was limited to 
emissions from stationary sources, and Congress later removed this 
limitation in the 1990 Amendments.
    The new section 126 included both notification requirements and a 
petition process. First, each SIP had to require notice to all nearby 
States in which the air pollution levels might be affected of each 
major existing or proposed new source that ``may significantly 
contribute to levels of air pollution in excess of the national ambient 
air quality standards in any air quality control region outside the 
State.'' Public Law 95-95. Second, section 126 provided that a state 
could petition EPA for a finding that any new or existing ``major 
source emits or would emit any air pollutant in violation of the 
prohibition of section 110(a)(2)(E).'' Public Law 95-95. EPA had to act 
on the petition within 60 days, and if EPA made the finding, it would 
be a violation of the SIP for the source either to be constructed or 
operate in violation of section 110(a)(2)(E) or for the source to 
operate for more than three months after the finding. The EPA could 
allow the source to continue to operate beyond that period if it 
complied with ``such emission limitations and compliance schedules'' 
set by EPA ``to bring about compliance with * * * section 110(a)(2)(E) 
as expeditiously as practicable,'' but the source would have to comply 
by three years from the date of the finding, at the latest. Public Law 
95-95.
    Congress made clear that it intended section 126 to provide an 
additional means of attacking interstate pollution that would 
supplement, not replace, the SIP requirement under section 
110(a)(2)(e).
    This petition process is intended to expedite, not delay, 
resolution of interstate pollution conflicts. Thus, it should not be 
viewed as an administrative remedy which must be exhausted prior to 
bringing suit under section 304 of the act. Rather, the committee 
intends to create a second and entirely alternative method and basis 
for preventing and abating interstate pollution. The existing 
provision prohibiting any stationary source from causing or 
contributing to air pollution which interferes with timely 
attainment or maintenance or [sic] a national ambient air standard 
(or a prevention of significant deteriorating [sic] or visibility 
protection plan) in another State is retained. A new provision 
prohibiting any source from emitting any pollutant after the 
Administrator has made the requisite finding and granted the 
petition is an independent basis for controlling interstate air 
pollution.
    H. Rep. 95-294 at 331, reprinted in 4 1977 Legislative History at 
2798.
    A commentator summarizes the significance of and inter-relationship 
between these two provisions in the following manner:

    New section 126 had several remarkable features. Importantly, it 
enabled downwind states to initiate action against interstate 
pollution. While section 126 required upwind states to identify 
sources potentially contributing to interstate pollution thereby 
informing potential petitions, the petitions themselves were not 
dependent on the cooperation of the upwind state. States suffering 
from interstate pollution could independently obtain information and 
petition EPA for abatement action.
    Section 126 also provided a powerful federal remedial tool. It 
authorized direct, expeditious federal abatement of pollution. 
Additionally, it allowed objection to and corresponding remediation 
of transported pollution at any time, not just when EPA was 
reviewing an upwind state plan for compliance with the transport 
prohibition.
    The petition process together with the SIP prohibition on transport 
provided reinforcing checks on interstate transport. The section 110 
provisions restricted the source state from adopting, and prohibited 
EPA from approving, state plans allowing interstate air pollution. 
Section 126 provided a backstop in the event prohibited pollution 
nevertheless occurred. It created a formal process for downwind states 
to enforce the section 110 prohibition by bringing interstate pollution 
concerns to EPA's attention and thereby enabling injured states to 
safeguard their interests.

Patton, supra, at 10165-10166.
    Despite Congress' provision of significantly improved tools to 
address interstate pollution, in implementing these 1977 CAA provisions 
EPA did not require reduction of interstate pollution. While EPA has 
received a number of petitions under section 126, it has granted none 
of them prior to this action. Nor had the Agency found a SIP inadequate 
on the basis of interstate transport, until the OTC LEV SIP call. See 
60 FR 4712 (January 24, 1995). See Patton, supra, 10166-10172; Wilcox, 
supra, at 21-27 for detailed discussion of EPA's rejection of downwind 
states' efforts to obtain relief under these provisions.
    Clean Air Act Amendments of 1990: Congress adopted the CAA 
Amendments of 1990 in the context of our continued failure to make 
significant progress on several air pollution fronts, including 
tropospheric ozone and acid rain, both of which are caused at least in 
part by interstate transport of pollutants. See Lieberman, S. Debate on 
H. Conf. Rep. 101-952, 101st Cong., 2d Sess., 10/27/90, reprinted in S. 
Comm. on Envt. and Public Works, I A Legislative History of the Clean 
Air Act Amendments of 1990, 103d Cong., 1st Sess., 1055 (1993) 
(hereinafter 1990 Legislative History) (``In the years since the Clean 
Air Act was amended--back in 1977--the air has become dirtier and more 
dangerous. Our uphill climb against the ravages of pollution has turned 
into a downhill fall, and only now are we realizing the real impact of 
our failure to act.''). By 1990, there was also a greater awareness 
that problems such as ozone pollution of the eastern U.S. were unlikely 
ever to be successfully addressed without controlling interstate 
pollution transport. As stated in the Senate Committee Report, 
``[a]reas in some States may be unable to attain the ozone

[[Page 28262]]

standard despite implementation of stringent emissions control because 
of pollution transported into such areas from other States * * *. The 
transport problem in the northeast, and perhaps other regions as well, 
is serious enough that additional efforts must be made on an interstate 
basis to control emissions, including emissions from attainment 
areas.'' S. Comm. on Env't and Public Works, Clean Air Act Amendments 
of 1989, S. Rep. 101-228, 101st Cong., 1st Sess., 48 (1989) reprinted 
in V 1990 Legislative History at 8388. See also Lautenberg, S. Debate 
on H. Conf. Rep. 101-952, 101st Cong., 2d Sess., 10/26/90, reprinted in 
I 1990 Legislative History at 1106 (``In New Jersey, the Department of 
Environmental Protection says that on some days even if we shut down 
the entire State, we would be in violation of some health standards 
because of pollution coming over from other states.''); S. Rep. 101-
228, 101st Cong., 1st Sess. at 49 (1989), reprinted in V 1990 
Legislative History at 8389 (``The model suggests that even if all 
emissions sources were eliminated within the tri-state area [New York, 
New Jersey and Connecticut], violations of the ozone standard would 
still occur. This means substantial reductions in emissions from areas 
upwind from the New York metropolitan area must be achieved if this 
area is to attain the air quality standards.'').
    The CAA Amendments of 1990 are widely viewed as one of the most 
detailed, complex, and prescriptive pieces of environmental legislation 
yet adopted. See Wilcox, supra, at 27. In light of EPA's lack of 
progress on several major air pollution problems under the 1977 
provisions, including interstate pollution, Congress responded by 
strengthening existing federal tools and adding new ones that could be 
used to achieve emissions reductions, and by establishing numerous new 
mandates and deadlines to force action by states and EPA. See, e.g., 
sections 169B, 172, 174, 175A, 176, 176A, 179, 181, 182, 183, 184, 185, 
186, 187, 188, 191, 192, and 401-416. See also, Lieberman, Senate 
Debate on S. 1630, 1/31/90, reprinted in IV 1990 Legislative History at 
5077 (``Indeed, it is in part the lack of support of EPA which in the 
past has prevented the effort to institute regional controls from being 
successful.''). The provisions that were either new or strengthened 
included several targeting interstate pollution--the acid rain 
provisions, the regional haze provisions, the eastern ozone transport 
commission provisions, and general provisions for interstate transport. 
Congress strengthened the existing interstate pollution transport 
provisions in sections 110(a)(2)(D) (the successor to section 
110(a)(2)(E)) and 126, and added two new interstate pollution 
provisions in sections 176A and 184. See H. Debate, 5/21/90, Clean Air 
Facts, reprinted in II 1990 Legislative History at 2558 (``Stronger 
interstate transport provisions.--The Swift/Eckart amendment includes 
stronger provisions for emission controls in interstate ozone transport 
regions, as sought by many Northeast and Mid-Atlantic states.''). All 
of the descriptions of the amendments in the legislative history refer 
to the changes made to strengthen and supplement the provisions. See 
discussion below.
    Congress made several changes to sections 110(a)(2)(E) and 126 to 
overcome EPA's limiting interpretations under the 1977 language, making 
them easier to apply and more effective in controlling interstate 
pollution. The Chafee-Baucus Statement of Senate Managers states that 
the bill ``amends section 126 and section 302(h) of the Clean Air Act 
to strengthen to [sic] prohibitions on emissions that result in 
interstate pollution.'' Chafee-Baucus Statement of Senate Managers 
reprinted in I 1990 Legislative History at 886. In describing the 
changes to section 110, the Senate Committee Report states that 
``[p]rovisions in existing law requiring SIPs to take into account the 
effect of emissions on other States are strengthened.'' S. Comm. on 
Envt. and Public Works, Clean Air Act Amendments of 1989, S. Rept. 101-
228, 101st Cong., 1st Sess. 19 (1989), reprinted in V 1990 Legislative 
History at 8359. The Senate Committee Report further states ``[s]ection 
110(a)(2)(E) is replaced by new section 110(c)(4), which, together with 
changes made to section 126 * * * , improve the effectiveness of the 
Act as a means of dealing with interstate air pollution.'' 3 
Id. at 21, 8361.
---------------------------------------------------------------------------

    \3\ Section 110(c)(4) was largely identical to the final version 
of section 110(a)(2)(D), except that it contained one additional 
provision and did not contain the clause ``consistent with the 
provisions of this title.'' See S. 1630, 101st Cong., 2d Sess. 
Sec. 101(c) (1990), reprinted in III 1990 Legislative History at 
4140-4141.
---------------------------------------------------------------------------

    One significant change to section 110(a)(2)(E), which became 
section 110(a)(2)(D), was that Congress extended the prohibition beyond 
stationary sources to cover other emissions activities, thereby 
allowing downwind states to obtain relief from an upwind state's 
pollution emanating from any source. The 1977 version of section 110 
required the SIP to contain adequate provisions ``prohibiting any 
stationary source within the State * * *,'' (emphasis added) which was 
replaced with ``prohibiting, consistent with the provisions of this 
title, any source or other type of emissions activity within the State 
* * *'' (emphasis added). Congress also changed the language of the 
criteria for showing that the downwind state is harmed by pollution 
transport. Rather than barring emissions of air pollutants ``in amounts 
which will (I) prevent attainment or maintenance by any other State'' 
(emphasis added), Congress modified section 110(a)(2)(D) to bar 
emissions of air pollutants ``in amounts which will-- (I) contribute 
significantly to nonattainment in, or interfere with maintenance by, 
any other State'' (emphasis added). Finally, Congress expanded the 
prohibition to require SIPs to insure compliance with international 
pollution abatement requirements under section 115, as well as 
interstate pollution abatement requirements under section 126. In 
describing the amendments to section 110(a)(2)(E), the Senate Committee 
Report stated:
    Where prohibitions in existing section 110(a)(2)(E) apply only 
to emissions from a single source, the amendment includes ``any 
other type of emissions activity,'' which makes the provision 
effective in prohibiting emissions from, for example, multiple 
sources, mobile sources, and area sources. For interstate pollution 
to violate current law, it must ``prevent attainment.'' Since it may 
be impossible to say that any single source or group of sources is 
the one which actually prevents attainment, the bill changes 
``prevent attainment or maintenance'' to ``contribute significantly 
to nonattainment or interfere with maintenance by,'' thus clarifying 
when a violation occurs.

Id. at 21, 8361. The only other change discussed in the Report was an 
additional strengthening provision that was not included in the adopted 
amendments.
    Congress also made it easier for downwind states to use section 126 
by allowing downwind states to petition based on pollution derived from 
``any major source or a group of stationary sources'' (emphasis added), 
not just from a major source, as under the previous version. As there 
are usually multiple sources in the upwind state contributing to 
transported pollution, it is far more difficult to prove that any one 
particular source, rather than the entire set of contributing upwind 
sources, prevents attainment or maintenance (or contributes 
significantly to nonattainment or interferes with maintenance) in the 
downwind state. In describing the amendment to section 126 contained in 
H.R. 3030, which was identical to the adopted language, the House 
Committee

[[Page 28263]]

Report mentions only the strengthening effect of the changes. ``Section 
126 of the Clean Air Act, concerning interstate air pollution, is 
amended to provide that when evaluating the impact of one State's 
emissions on another State under this section, it is not necessary to 
focus only on the impacts of a single major source. The evaluation of 
whether pollution from one State is having a greater than permissible 
impact on another State is to extend as well to a group of stationary 
sources.'' H. Comm. on Energy and Commerce, Clean Air Act Amendments of 
1990, H. Rept. 101-490, 101st Cong., 2d Sess. 274 (1990), reprinted in 
II 1990 Legislative History at 3298.4
---------------------------------------------------------------------------

    \4\ Note that this is the sum total description of the section 
126 amendment in the House Committee Report. This version of the 
House bill also contained in the 176A and 184 provisions, which the 
House Committee Report did not describe at all. See H. Rep. 101-490, 
101st Cong., 2d Sess. at 274, reprinted in II 1990 Legislative 
History at 3298.
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    Congress also strengthened section 126 by adding ``this section'' 
in several places in section 126(b) and (c). This addition explicitly 
allowed a finding that a source would emit or is emitting in violation 
of section 126, in addition to a finding that the source would emit or 
is emitting in violation of the prohibition of section 110(a)(2)(D). 
The amendments also made continued operation after a section 126 
finding a violation of section 126 itself, in addition to being a 
violation of the applicable SIP.
    In addition, Congress adopted changes to the definitions of ``air 
pollutant'' and ``welfare'' that made the interstate transport 
provisions clearly applicable to emissions of precursors to air 
pollution, not just emissions of the NAAQS pollutants. This overrode 
EPA's previous limiting interpretation that when reviewing a SIP 
revision, EPA could only consider the impacts on interstate pollution 
of the particular pollutant controlled under the SIP, not any other 
pollution impacts that result from transformation of the pollutant. 
See, e.g., Connecticut v. U.S. EPA, 696 F.2d 147, 162 (2d Cir. 1982); 
Connecticut Fund for the Env't v. U.S. EPA, 696 F.2d 169, 177 (2d Cir. 
1982); Patton, supra, at 10166.
    Congress also adopted provisions to establish interstate transport 
commissions, giving states and EPA a new tool to use to tackle the 
intractable interstate pollution problem. Section 176A provides general 
provisions for the creation and functioning of interstate transport 
regions and interstate transport commissions, while in section 184 
Congress directly established the Northeast Ozone Transport Region. The 
transport commission approach is based on a recognition that regional 
problems require regional, rather than state-by-state, solutions, and a 
good way to achieve regional solutions may be for the affected states 
to develop them and the federal government to require their 
implementation. This maximizes information for decision-making, 
generates political support for the outcome, and increases the 
likelihood that states will implement identified solutions.
    Under section 176A(a), EPA may establish by rule a transport region 
for a pollutant whenever the interstate transport of air pollutants 
from one or more states contributes significantly to a violation of a 
NAAQS in one or more other states. The transport region would include 
both the contributing and affected states. EPA may establish the 
transport region on its own, or may act upon a petition from a Governor 
of any state. Section 176A(b) requires establishment of a transport 
commission for each transport region. The commission is to be comprised 
of a representative of the Governor and an air pollution control 
official from each state in the transport region, an EPA Headquarters 
representative, and a representative of each affected EPA Region. The 
transport commission is to assess interstate pollution transport 
throughout the region, assess strategies for mitigating the transport, 
and recommend to EPA measures necessary for SIPs to meet the 
requirements of section 110(a)(2)(D). Under section 176A(c), the 
transport commission may request EPA to find under section 110(k)(5) 
that the SIPs for one or more of the states in the region are 
inadequate to meet the requirements of section 110(a)(2)(D). The EPA 
must act to approve, disapprove or partially approve and partially 
disapprove the recommendations within eighteen months of receipt.
    Section 184 contains additional provisions applicable specifically 
to ozone transport regions and establishes the northeastern ozone 
transport region by operation of law. Section 184(b) requires each 
state in an ozone transport region to adopt SIP revisions containing 
specified control measures related to motor vehicle inspection and 
maintenance programs, reasonably available control technology for 
control of VOCs, and vehicle refueling controls. Section 184(c) lays 
out a process for an ozone transport commission to develop and EPA to 
act on recommendations for additional control measures necessary to 
bring any area in the region into attainment. EPA must approve, 
disapprove, or partially approve and partially disapprove the 
recommendations within nine months of their receipt. Upon full or 
partial approval of the recommendations, EPA must issue a SIP call 
under section 110(k)(5) requiring the relevant states to revise their 
SIPs to include the recommended measures to meet the requirements of 
section 110(a)(2)(D). If EPA disapproves the recommendations, EPA must 
explain why the disapproved measures are not necessary to bring any 
area in the region into attainment and must recommend equal or more 
effective actions that the commission could take to conform the 
recommendations to the section 184 requirements. Section 184(d) 
requires EPA to promulgate criteria requiring that the best available 
air quality monitoring and modeling techniques be used to determine the 
contribution of sources in one area to concentrations of ozone in a 
nonattainment area.
    Comments: A number of commenters argue that Congress modified 
section 126 and section 110(a)(2)(D) in the 1990 Amendments to 
eliminate EPA's authority to take action against upwind sources, except 
upon a recommendation from a transport commission established under 
section 176A or section 184. They argue that the adoption of sections 
176A and 184, combined with the addition of the language ``consistent 
with the provisions of this title'' in section 110(a)(2)(D) and the 
amended cite to section 110(a)(2)(D)(ii) in section 126, eliminates 
EPA's authority to act under section 126(b) and (c), except with 
respect to failures to notify under section 126(a). One commenter also 
cites section 110(k)(5) to support the argument that EPA may not act to 
address interstate transport problems except upon the recommendation of 
an interstate transport commission established under section 176A or 
section 184.
    Response: Congress viewed the creation of interstate transport 
commissions as a valuable new approach to resolving interstate 
pollution problems that would encourage the affected states to help 
design a solution. As stated by Senator Lieberman, ``[t]he creation of 
a regional air quality commission is an important and creative part of 
the bill. It recognizes that it is impossible to put a cleanup bubble 
over an individual State. It puts some responsibility on the States to 
be good neighbors.'' S. Debate on H. Conf. Rep. 101-952, 10/27/90, 
reprinted in I 1990 Legislative History at 1053. Commenters argue that 
these new interstate transport commission provisions are the exclusive 
means for

[[Page 28264]]

EPA to address interstate pollution transport. However, nothing in the 
structure or language of the interstate pollution provisions 
themselves, their discussion in the legislative history, or the 
historical development of the statutory authorities to address 
interstate pollution through successive versions of the CAA, supports 
the assertion that the new provisions were intended to replace, rather 
than supplement, EPA's existing authority to address interstate 
pollution problems under section 110(a)(2)(D) and section 126.
    First, a straightforward interpretation of the CAA language and 
structure leads to the conclusion that there are four fully effective 
provisions providing multiple tools for EPA and states to use to 
address interstate pollution problems. It is a canon of statutory 
construction that statutes should be interpreted, if possible, to give 
full effect to all of the statutory language. See Alabama Power Co. v. 
EPA, 40 F.3d 450, 455 (D.C. Cir. 1994) (a statute ``is to be 
interpreted to give consistent and harmonious effect to each of its 
provisions.'') (Emphasis added, citation omitted). The simplest 
interpretation of the inter-relationship of these four provisions 
addressing interstate transport is that each one plays a role in a 
rational system for upwind states, downwind states and EPA to work 
together to develop and implement solutions for interstate pollution 
transport.
    Section 110(a)(2)(D) establishes one of the basic requirements that 
each state must address in its air pollution planning efforts--the SIP 
must contain adequate provisions prohibiting emissions that contribute 
significantly to nonattainment in, or interfere with maintenance by, 
any other state. This provision places the primary responsibility to 
prohibit such emissions on the upwind state, but requires EPA to 
evaluate the adequacy of a state's SIP submission in this respect and 
potentially to disapprove the SIP on these grounds. A SIP disapproval 
will eventually trigger sanctions against the state if it does not 
revise the submission to contain adequate provisions for control of 
interstate transport. While the downwind states are the parties with 
the greatest incentive to obtain emissions reductions upwind, section 
110(a)(2)(D) only provides a limited role for downwind states. They may 
object to EPA's proposed approval of a SIP submission on the grounds 
that it fails to control interstate transport as required by section 
110(a)(2)(D), but cannot initiate action on interstate pollution 
transport under this provision. 5 See, e.g., State of New 
York v. U.S. EPA, 710 F.2d 1200 (6th Cir. 1983) (upholding EPA's 
approval of a SIP revision for Tennessee and rejecting New York's claim 
that the revision violated the requirements of section 110(a)(2)(E)).
---------------------------------------------------------------------------

    \5\ Under section 553(e) of the Administrative Procedure Act, a 
downwind state could petition EPA to issue a SIP call under section 
110(k)(5) on the grounds that an upwind state's SIP failed to meet 
section 110(a)(2)(D). See 5 U.S.C. 553(e). However, EPA would have 
discretion to decide when to act on the petition, subject only to a 
lawsuit for unreasonable delay under section 304(a) of the CAA. In 
contrast, section 126 establishes a nondiscretionary duty and 
deadlines for EPA to act on a petition under that section, which a 
state may enforce through a citizen suit under section 304.
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    Congress adopted section 126 to give downwind states a stronger 
tool to impel action by EPA and upwind states. First, section 126(a) 
gives downwind states access to emissions information that may be 
necessary for them to identify the upwind sources of their 
nonattainment or maintenance problems. Second, section 126(b) and (c) 
allows downwind states to petition EPA directly to make a finding that 
upwind sources are emitting air pollutants in violation of the section 
110(a)(2)(D)(i) prohibition on emissions that contribute significantly 
to nonattainment in, or interfere with maintenance by, any other state. 
If EPA makes a finding under section 126, EPA must directly regulate 
the sources of the upwind emissions. Relief does not depend upon any 
action by the upwind states, as is necessary for a SIP revision. Thus, 
where currently approved SIPs do not contain adequate provisions 
protecting downwind states from pollution transport, section 126 
provides powerful recourse to the entities most motivated to reduce 
transport. It allows the downwind states to initiate action and gives 
EPA authority to implement a solution directly, without requiring 
additional state response.
    The sections 176A and 184 provisions on interstate transport 
commissions supplement this scheme in two key respects. These sections 
provide a stronger action-forcing tool for a situation where a majority 
of upwind and downwind states have developed a compromise solution to 
pollution transport in a region, but EPA has not acted to support 
implementation of that solution. See S. Rep. 101-228, 101st Cong., 1st 
Sess. at 51 (1989), Leg. Hist V. at 8391 (``A regional ozone transport 
commission is one important way to address these problems identified by 
modeling and monitoring. State air quality directors in the northeast 
have been cooperating for several years to develop a regional solution 
to the ozone problem. Lack of support by EPA and lack of authority to 
institute needed regional controls (both in attainment and 
nonattainment areas) have prevented this effort from being more 
successful.'') The transport commission approach contemplates that all 
affected states in an interstate transport region will come together 
with EPA and identify emission control measures supported by at least a 
majority of the states. Under the more specific provisions of section 
184, the transport commission will forward the recommended emission 
control measures to EPA, which then must take action to approve or 
disapprove the recommended measures pursuant to criteria contained in 
section 184.
    Establishment of an interstate transport commission also may help 
improve the political viability of potential solutions to interstate 
transport problems, and hence increase the likelihood that such 
solutions will be implemented through state and EPA actions. Bringing 
the states together as a body to develop solutions emphasizes the 
shared responsibility for the problem and the need to address it 
through compromise and mutual agreement. Access to a shared body of 
information increases the likelihood of reaching similar conclusions, 
although, of course, the same information will always be analyzed 
somewhat differently in light of different state interests. 
Participation in a formal analysis and decision-making process 
increases the parties' investment in the outcomes, thereby enhancing 
political support for the recommended actions. Finally, enhanced 
political support for the recommendations makes it easier for EPA to 
require implementation of those recommendations. See Section I.B. for 
discussion of how the OTAG process has fulfilled some of these 
functions in this proceeding.
    While Congress clearly saw the opportunities provided by a state 
process for developing regional solutions, the process is designed to 
promote consensus solutions where those are possible, but has no 
mechanism for forcing action where states remain strongly divided. 
Recommendations may only be made by vote of the majority of the states 
represented. Where the transport commission approach works and produces 
recommendations to EPA, the solutions developed may well be optimal in 
terms of effectiveness and acceptability. However, there is simply no 
forcing function to ensure that the transport commission process will 
ever identify any, let alone an adequate, solution to any particular 
interstate

[[Page 28265]]

transport problem. In fact, the northeast ozone transport commission 
established by operation of law under section 184 has produced only one 
recommendation to EPA, which was approved by EPA but overturned in 
litigation. Moreover, apart from the establishment of the northeast 
ozone transport commission by operation of law, EPA has discretion as 
to whether even to establish a transport region, and hence transport 
commission, to address a given interstate transport problem. See CAA, 
section 176A (``Whenever, on the Administrator's own motion or by 
petition from the Governor of any State, the Administrator has reason 
to believe that the interstate transport of air pollutants from one or 
more States contributes significantly to a violation of a national 
ambient air quality standard in one or more other States, the 
Administrator may establish, by rule, a transport region * * *.'') 
(emphasis added). Thus, the regional transport commissions provide a 
potentially useful tool, but by no means a panacea, for the interstate 
pollution problem.
    Despite the inherent limitation in the transport commission 
approach--a structure that builds in a significant possibility that it 
may never actually act to reduce any interstate pollution--commenters 
argue that Congress intended to rely solely upon this one potential 
approach and strip from EPA and downwind states the existing 
alternative tools to address the problem that Congress had so carefully 
developed in the 1970 and 1977 Amendments. It is hardly logical to 
presume from the adoption of these transport commission provisions (in 
the absence of any statutory language to that effect) that Congress 
intended them also to divest EPA of authority to act at all in the 
absence of a formal recommendation from a majority of affected states. 
Such a presumption is inconsistent with both Congress' expressions of 
concern about the effect of interstate transport on downwind states and 
Congress' support for unilateral federal action if states continued to 
fail to address the problem. See, e.g., Lieberman, S. Debate on H. 
Conf. Rep. 101-952, 101st Cong., 2d Sess., 10/27/90, reprinted in I 
1990 Legislative History at 1053 (``Another provision of the bill which 
is an important part of our effort to control air pollution transported 
from other areas is the requirement that the Federal Government 
intervene and promulgate a plan of emission controls in an area where 
the State fails to act. This provision guarantees that if States 
sending pollution to Connecticut are not doing their jobs in 
controlling pollution, Connecticut will be assured that the Federal 
Government will step in and do the job.'')
    Commenters claim that allowing EPA to act on interstate transport 
problems without a recommendation from a transport commission reads 
section 176A and 184 out of the CAA. This is nonsense. The transport 
commission provisions provide a structure, authority and incentive for 
state-driven solutions to regional pollution problems. The EPA has 
strong legal and policy-based reasons to encourage such consensus-based 
solutions and implement them where they emerge. Providing EPA 
independent authority to act in the absence of a transport commission 
or where the commission has failed to produce any recommendations does 
not undermine the transport commission's authority, much less render 
those provisions meaningless. Rather, by increasing the likelihood of 
some action even in the absence of a recommendation, EPA's authority 
may well encourage states to develop their own consensus-based 
solutions in preference over imposition of requirements developed by 
EPA. The logical interpretation of the structure of the Act is that the 
transport commission provisions complement, but do not replace, the 
other interstate pollution provisions contained in section 
110(a)(2)(D)(i) and section 126 specifying requirements for SIPs and 
providing for direct reductions from sources, even in the absence of 
any regional agreement.
    Second, the language of the provisions simply does not support the 
commenters' arguments. Section 126 states that ``[a]ny state * * * may 
petition the Administrator for a finding that any major source or group 
of stationary sources emits or would emit any air pollutant in 
violation of the prohibition of section 110(a)(2)(D)(ii) or this 
section.'' Sections 176A and 184 provide authority to establish, and 
for the northeastern ozone transport region directly establish, 
transport regions and transport commissions. There is no language in 
either section 126, or the sections that supposedly largely negate 
section 126(b) and (c), suggesting that section 126 is superseded by 
sections 176A and 184 or that all three provisions do not remain in 
effect.
    Moreover, in the 1990 legislation, Congress amended section 126 to 
strengthen its effectiveness by broadening its scope without any 
indication that it intended to simultaneously dramatically curtail 
EPA's authority under that provision. See Chafee-Baucus Statement of 
Senate Managers, reprinted in I 1990 Legislative History at 886 
(stating that the bill ``amends section 126 and section 302(h) of the 
Clean Air Act to strengthen to [sic] prohibitions on emissions that 
result in interstate pollution.''). The amendments made it a 
prohibition of section 126 itself, as well as of the applicable SIP (as 
the previous version provided), for a source to continue to operate for 
more than three months after EPA makes a finding under section 126. 
They also explicitly allowed a finding that a source would emit or is 
emitting in violation of section 126, in addition to the pre-existing 
language allowing a finding that the source would emit or is emitting 
in violation of the prohibition of section 110(a)(2)(D).
    Under the commenters' interpretation of the amended version of 
section 126, Congress strengthened the petition process while limiting 
its applicability to violations of notification requirements. This 
interpretation necessarily presumes that Congress intended to enhance 
EPA's power to enforce through source shut-downs a requirement with no 
direct environmental impacts, while removing EPA's pre-existing 
independent authority to reduce the actual emissions. The commenters 
claim that the petition process under section 126(b) and (c) is now 
limited to petitions claiming that an upwind state has violated section 
126(a) by failing to provide information to a downwind state regarding 
certain sources of emissions in the upwind state. Section 126(a) 
requires a SIP to include a requirement to provide information to 
downwind states for each major new or existing source regarding 
emissions ``which may significantly contribute to levels of air 
pollution in excess of the national ambient air quality standards' in 
those downwind states. Commenters are arguing that EPA could shut down 
a source under section 126 because it had failed to comply with the 
notification requirements, but could not shut down such a source 
because it was emitting prohibited quantities of air pollution. 
Moreover, the notification requirement applies to each major proposed 
new or modified source that (a) is subject to part C of title I 
(relating to prevention of significant deterioration of air quality) or 
(b) may significantly contribute to levels of air pollution in excess 
of the NAAQS downwind. Thus, under the commenters' interpretation, the 
notification requirement, and hence the shut down remedy for its 
violation, potentially applies to sources that do not actually 
significantly contribute to downwind air pollution, while no

[[Page 28266]]

longer applying to sources because they do so contribute. The language 
of the statute does not indicate that Congress intended this result, 
and its inherent irrationality strongly suggests the contrary.
    Commenters also rely on the revised language of section 
110(a)(2)(D) and the new section 110(k)(5) to argue that sections 176A 
and 184 are now the sole authorities for addressing interstate 
pollution transport. The commenters point to the new language in 
section 110(a)(2)(D)(i), which requires SIPs to prohibit, ``consistent 
with the provisions of this title'' (emphasis added), emissions that 
contribute significantly to nonattainment or interfere with 
maintenance. They also note that section 110(k)(5), which Congress 
added in the 1990 Amendments, gives EPA authority to call for a SIP 
revision when a plan fails ``to mitigate adequately the interstate 
pollutant transport described in section 176A or section 184.'' The 
commenters argue that together, these provisions bar EPA from acting 
under section 110(k)(5) and section 110(a)(2)(D)(i) (whether or not in 
conjunction with section 126) in the absence of recommendations from an 
interstate transport commission established under section 176A or 
section 184.
    The revision to section 110(a)(2)(D)(i) adds a general clause 
requiring adopted SIP provisions to be consistent with title I 
requirements. Nowhere in the statute is there language indicating that 
sections 176A and 184 provide the sole mechanisms to address interstate 
pollution transport. In the absence of such language, it is unclear how 
the requirement for consistency with other provisions can be 
bootstrapped into establishing the supremacy of certain provisions over 
others. Since nothing in sections 176A or 184 states that those 
provisions override other statutory provisions which establish other 
means of addressing interstate pollution transport, it is perfectly 
consistent with the language sections 176A and 184 for EPA to exercise 
the authority directly established under sections 126 and 
110(a)(2)(D)(i).
    Under EPA's interpretation, the language ``consistent with the 
provisions of this title'' serves the purpose of ensuring that in 
requiring a SIP to contain adequate provisions for interstate 
transport, EPA may not require states to take, and states may not take 
on their own initiative, actions that are barred by or in conflict with 
other requirements under title I. Title I establishes a multitude of 
detailed requirements for states to adopt and submit SIP revisions 
adequate to achieve and maintain each of the NAAQS in different areas 
on various timetables. The 1990 Amendments greatly increased the detail 
and complexity of the state planning requirements in title I. Thus, it 
is perfectly reasonable that, in strengthening the section 
110(a)(2)(D)(i) interstate transport requirements, Congress wanted to 
make certain that these new more stringent requirements would not 
override or interfere with other title I provisions. This is what the 
language on its face requires. Had Congress intended to allow EPA to 
act under section 110(a)(2)(D)(i) only upon the recommendation of an 
interstate transport commission, it presumably would have said that 
instead.
    The legislative history supports EPA's interpretation that the 
language ``consistent with the provisions of this title'' was intended 
to be a catch-all safety clause, rather than a significant substantive 
change. The language was introduced in H.R. 3030 as approved by the 
House Committee on Energy and Commerce, and was included in the version 
approved by the House. The version approved by the full Senate did not 
contain the language, but it was retained in the Conference Committee 
version approved by both Houses. In all of the discussions of the 
changes made to sections 110(a)(2)(D)(i) and 126 and the addition of 
sections 176A and 184 by both Houses, there is no mention of this 
language. It is implausible that Congress intended the language to 
dramatically reduce the scope of section 110(a)(2)(D)(i) without 
mention, while discussing all of the strengthenings of these 
provisions.
    The language of section 110(k)(5) also does not limit EPA's 
authority to act under section 110(a)(2)(D)(i) only upon the 
recommendations of a transport commission. Section 110(k)(5) allows EPA 
to call for a SIP revision ``to otherwise comply with any requirement 
of this Act.'' The fact that section 110(k)(5) also identifies two 
specific instances where a SIP would be inadequate does not narrow the 
scope of the last catch-all clause. In adopting the interstate 
transport commission provisions in the 1990 Amendments, Congress 
established an entirely new additional mechanism for addressing 
interstate pollution, which did not depend solely on EPA action. 
Concurrent with establishing a new mechanism under the statute, it 
makes sense that Congress would specifically identify a SIP call under 
section 110(k)(5) as a key element in implementing that mechanism. It 
does not follow, however, that Congress intended to remove EPA's 
authority to call for a SIP revision in other circumstances related to 
interstate transport. See also 63 FR at 57368, NOX SIP Call 
Response to Comments Document, 39-43.
    Third, the legislative history supports EPA's interpretation that 
all four provisions remain fully effective. The legislative history 
contains numerous descriptions of the amendments as strengthening the 
authority to address the problem of interstate pollution. See, e.g., 
Chafee-Baucus Statement of Senate Managers, reprinted in I 1990 
Legislative History at 886 (stating that the bill ``amends section 126 
and section 302(h) of the Clean Air Act to strengthen to [sic] 
prohibitions on emissions that result in interstate pollution.''); S. 
Rep. 101-228, 101st Cong., 1st Sess. at 19 (1989), reprinted in V 1990 
Legislative History at 8359 (in describing the changes to section 110, 
states that ``[p]rovisions in existing law requiring SIPs to take into 
account the effect of emissions on other States are strengthened.''); 
House Committee on Energy and Commerce, H. Rep. 101-490, 101st Cong., 
2d Sess. at 274 (1990), reprinted in II 1990 Legislative History at 
3298 (full text of the description of the amendments to section 126 
follows: ``Section 126 of the Clean Air Act, concerning interstate air 
pollution, is amended to provide that when evaluating the impact of one 
State's emissions on another State under this section, it is not 
necessary to focus only on the impacts of a single major source. The 
evaluation of whether pollution from one State is having a greater than 
permissible impact on another State is to extend as well to a group of 
stationary sources.'').
    In addition to the specific discussions in the legislative history 
identified above, the legislative history is informative through what 
it does not mention. The substantive changes to section 110(a)(2)(D) 
are discussed in the Senate Committee Report, and the House Committee 
Report. The substantive changes to section 126 are discussed in both 
Committee Reports and the Chafee-Baucus Statement of Senate Managers. 
The addition of sections 176A and 184 are discussed in all of these 
sources plus statements on the House and Senate floors. None of these 
discussions states or implies that in addition to the strengthening 
changes identified, Congress also intends to sharply restrict EPA's 
pre-existing authority under sections 110(a)(2)(D)(i) and 126 and to 
establish sections 176A and 184 as the sole sources of authority to 
address interstate pollution transport. Rather, the references in the 
legislative history to sections 176A and 184 suggest

[[Page 28267]]

that interstate transport commissions provide one, rather than the only 
means by which to address the problem. See, S. Rep. 101-228, 101st 
Cong., 1st Sess. at 51 (1989), reprinted in V 1990 Legislative History 
at 8391 (``A regional ozone transport commission is one important way 
to address these problems identified by modeling and monitoring.'' 
(emphasis added); Baucus, S. Debate on H. Conf. Rep. 101-952, 101st 
Cong., 2d Sess., 10/27/90, reprinted in I 1990 Legislative History at 
1003 (``We believe that the transport commissions can play a vital role 
in abating interstate air pollution control problems.'')
    Fourth, as discussed extensively above, Congress adopted the 1990 
Amendments in the context of continued lack of progress on the 
interstate pollution problem and the failure of many areas affected by 
interstate pollution transport to meet the NAAQS, and with the goal of 
strengthening the CAA to produce results in the form of cleaner air. 
The commenters argue that Congress intended to remove a primary 
mechanism for reducing interstate transport and leave downwind states 
with no recourse should upwind states fail to agree to recommend a 
solution. They claim that Congress recognized ``that the adversarial 
approaches of the past--pitting one state against another and pitting 
EPA against one of those states--had not worked and would not work.'' 
Therefore, they argue that Congress ``restricted EPA's authority to 
create the kind of confrontation and controversy that had existed in 
the past.'' This is revisionist history, uninformed by the historical 
development of the CAA and the factual and political context in which 
Congress acted. The legislative history contains numerous references to 
the problem of interstate pollution, the failure to make progress in 
reducing pollution transport, and the effects on downwind 
states.6 The legislative history expresses concern about the 
lack of EPA and state action, but nowhere evinces a concern about 
conflict between the states or adversarial relationships. (Note that 
commenters do not cite any support for their characterization of 
Congress' motivations).
---------------------------------------------------------------------------

    \6\ See, e.g., Lieberman, S. Debate on H. Conf. Rep. 101-952, 
101st Cong., 2d Sess., 10/27/90, reprinted in I 1990 Legislative 
History at 1055 (``In the years since the Clean Air Act was 
amended--back in 1977-the air has become dirtier and more dangerous. 
Our uphill climb against the ravages of pollution has turned into a 
downhill fall, and only now are we realizing the real impact of our 
failure to act.''); S. Rep. 101-228, 101st Cong., 1st Sess. at 48 
(1989), reprinted in V 1990 Legislative History at 8388 (``[a]reas 
in some States may be unable to attain the ozone standard despite 
implementation of stringent emissions control because of pollution 
transported into such areas from other States. . . . The transport 
problem in the northeast, and perhaps other regions as well, is 
serious enough that additional efforts must be made on an interstate 
basis to control emissions, including emissions from attainment 
areas.''); Lautenberg, S. Debate on H. Conf. Rep. 101-952, 101st 
Cong., 2d Sess., 10/26/90, reprinted in I 1990 Legislative History 
at 1106 (``In New Jersey, the Department of Envirionmental 
Protection says that on some days even if we shut down the entire 
State, we would be in violation of some health standards because of 
pollution coming over from other states.''); Lieberman, S. Debate on 
S. 1630, 1/31/90, reprinted in IV 1990 Legislative History at 5077 
(``Indeed, it is in part the lack of support of EPA which in the 
past has prevented the effort to institute regional controls from 
being successful.''); H. Debate, 101st Cong., 2d Sess., 5/21/90, 
Clean Air Facts, reprinted in II 1990 Legislative History at 2558 
(``Stronger interstate transport provisions.--The Swift/Eckart 
amendment includes stronger provisions for emission controls in 
interstate ozone transport regions, as sought by many Northeast and 
Mid-Atlantic states.''); Lieberman, S. Debate on H. Conf. Rep. 101-
952, 101st Cong., 2d Sess., 10/27/90, reprinted in I 1990 Legisltive 
History at 1053; Baucus, S. Debate on H. Conf. Rep. 101-952, 101st 
Cong., 2d Sess., 10/27/90, reprinted in I 1990 Legislative History 
at 1004 (``[] EPA bears a heavy burden on demonstrating that the 
additional control measure(s) is not necessary to bring any area of 
the region into attainment by the dates provided and to recommend 
equal or more effective actions that could be taken designed [sic] 
to replace the recommendation. Any recommendations by EPA under this 
section, designed to replace the recommendations of the Commission, 
shall not place an unfair burden on any state which is the victim of 
the transported air pollution.''); Lieberman, S. Debate, 101st 
Cong., 2d Sess., 1/31/90, reprinted in IV 1990 Legislative History 
at 5076 (``So there is a basic point here that Connecticut cannot 
clean its air itself because so much of its problems comes from 
outside of the State of Connecticut, and therefore if we are going 
to have clean air in Connecticut [sic] in so many other States in 
the country, but particularly in the Northeast, we need help from 
the Federal Government.'').
---------------------------------------------------------------------------

    The commenters' interpretation is that Congress made section 126(b) 
and (c) no longer effective for petitions against sources of pollution. 
For this interpretation to be correct, Congress must have revised the 
CAA to drastically limit section 126(b) and (c): (1) Without repealing 
the provisions; (2) without explicitly overriding them elsewhere in the 
CAA; (3) while adding language to strengthen those provisions; (4) 
without mentioning the change in the legislative history discussions of 
any of these provisions; and (5) while pursuing a forcefully stated 
intent to compel EPA and the states to make more progress on reducing 
interstate pollution. The EPA finds this argument profoundly 
unconvincing.
    For further discussion of EPA's position on these issues please see 
the section 126 proposed rule, the NOX SIP Call final rule 
and the NOX SIP Call Response to Comments Document. 63 FR 
56292; 63 FR 57356.
2. Scrivener's Error
    Section 126(b) provides that a State may petition EPA for a finding 
that specified sources or groups of sources in other States emit or 
would emit air pollutants ``in violation of the prohibition of section 
110(a)(2)(D)(ii) of this title or this section.'' In turn, section 110 
(a)(2)(D) requires that a SIP:

    Contain adequate provisions:
    (i) prohibiting, consistent with the provisions of this title, 
any source or other type of emissions activity within the State from 
emitting any air pollutant in amounts which will--
    (I) contribute significantly to nonattainment in, or interfere 
with maintenance by, any other State with respect to [any] national 
ambient air quality standard, or
    (II) interfere with measures required to be included in the 
applicable implementation plan for any other State under part C to 
prevent significant deterioration of air quality or to protect 
visibility,
    (ii) ensuring compliance with the applicable requirements of 
sections 126 and 115 (relating to interstate and international 
pollution abatement).

    The EPA has concluded that the cross-reference in section 126(b) to 
section 110(a)(2)(D)(ii) is a scrivener's error and that Congress 
intended to refer to section 110(a)(2)(D)(i). Simply stated, the Agency 
believes that Congress in the 1990 CAA Amendments meant to make a 
conforming change in section 126(b) by replacing the pre-existing 
cross-reference to section 110(a)(2)(E)(i) with the renumbered section 
110(a)(2)(D)(i), but inadvertently referenced section 110(a)(2)(D)(ii). 
As explained in greater detail below, this interpretation is based on 
the statute's logic and structure, as well as the legislative history. 
First, the reference to ``the prohibition of section 110(a)(2)(D)(ii)'' 
is ambiguous at best, and arguably nonsensical, since section 
110(a)(2)(D)(ii) contains no prohibition, yet section 110(a)(2)(D)(i) 
does. Second, the statutory cross-reference contained in section 
126(b), if taken on its face, would render section 126(b) largely 
meaningless. Finally, the legislative history of the CAA Amendments 
supports this interpretation. The EPA's interpretation is consistent 
with the reading of the CAA prior to the 1990 Amendments and Congress 
expressed no indication that it meant to substantively revise this 
provision of the statute at the time it administratively renumbered the 
provision.7
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    \7\ The 1990 CAA Amendments revised section 110(a)(2)(D) by 
dropping certain provisions not relevant here, and incorporating 
other provisions previously contained in section 110(a)(2)(E). See 
CAA Amendments of 1990, Pub. L. 101-549, 101(b), 104 Stat. 2404 
(1990); S. Rep. No. 101-228, 101st Cong., 2d Sess. 20 (1989), 
reprinted in 1990 U.S.C.A.A.N. 3385, 3406.

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[[Page 28268]]

    Many commenters agreed with EPA's interpretation (presented in the 
proposal at 63 FR at 56299) that the cross-reference is a scrivener's 
error and should be read as section 110(a)(2)(D)(i). However, the 
Agency also received numerous comments taking exception to this view. 
Such commenters argued that section 126(b) should be read literally, 
such that the provision does not authorize EPA to issue a finding that 
new or existing sources contribute significantly to nonattainment 
downwind or interfere with measures to prevent significant 
deterioration of air quality or to protect visibility. For the reasons 
described below, EPA continues to believe that the cross-reference in 
section 126(b) should be interpreted as referring to section 
110(a)(2)(D)(i).
    The doctrine of scrivener's error recognizes that typographical and 
other drafting errors occasionally occur in the legislative process. 
The U.S. Supreme Court therefore has determined that such errors may be 
corrected where the statute ``can't mean what it says,'' Green v. Bock 
Laundry Machine Co., 490 U.S. 504, 511 (1989) (internal quotation marks 
omitted), and that courts should ``repunctuate, if need be, to render 
the true meaning'' of a statute. U.S. Nat'l Bank v. Independent Ins. 
Agents, 508 U.S. 439, 462 (1993) (quoting from Hammock v. Loan & Trust 
Co., 105 U.S. 77, 84-85 (1882)). Courts have applied this doctrine when 
the literal text ``would lead to unintended and absurd results.'' In re 
Chateaugay Corp., 89 F.3d 942, 954 (2nd Cir. 1996) (holding that courts 
are empowered to correct an erroneous statutory cross-reference that 
inadvertently results from legislative changes). The EPA's specific 
authority to apply this doctrine was recently upheld in a case 
involving other aspects of the Clean Air Act's SIP provisions. 
Environmental Defense Fund v. EPA, 82 F.3d 451 (D.C. Cir. 1996) 
(affirming EPA's authority to depart from the literal reading of 
section 176(c) of the Clean Air Act where it would frustrate 
congressional purposes).
    Some commenters argued that the cross-reference in section 126(b) 
is not ``one of those rare cases where the statute as written will 
produce a result demonstrably at odds with the intentions of the 
drafters.'' Demarest v. Manspeaker, 498 U.S. 184, 190 (1991) (internal 
quotations and citations omitted). At best, however, the cross-
reference in section 126(b) is ambiguous. First, section 126(b) 
authorizes EPA to find that any major source or group of stationary 
sources emits or would emit any air pollutant ``in violation of the 
prohibition of section (a)(2)(D)(ii) of this title or this section'' 
(emphasis added). However, section 110(a)(2)(D)(ii) contains no 
prohibition. Rather, it provides that SIPs must ``contain adequate 
provisions insuring compliance with'' statutory sections relating to 
interstate and international pollution abatement.
    By contrast, section 110(a)(2)(D)(i)--the provision that EPA 
believes Congress intended to cross-reference in section 126(b)--does 
contain a prohibition. It requires that SIPs contain adequate 
provisions ``prohibiting'' any source or other type of emissions 
activity within the State from emitting any air pollutant in amounts 
that, among other things, will contribute significantly to 
nonattainment in, or interfere with maintenance by, another State with 
respect to the NAAQS. Thus, the textual interplay between sections 
126(b) and 110(a)(2)(D) provides strong evidence that the CAA contains 
a scrivener's error.8
---------------------------------------------------------------------------

    \8\ One commenter argued that Congress, in referring to sections 
126(b) and 110, used the words ``prohibition'' and ``requirements'' 
interchangeably. Based on the provisions' text, structure and 
legislative history, EPA disagrees. Nevertheless, the fact that 
reasonable people can disagree on this issue confirms that section 
126(b) is, at the very least, ambiguous.
---------------------------------------------------------------------------

    As further support, reading section 126(b) as cross-referencing 
section 110(a)(2)(D)(ii) essentially renders that provision redundant 
and meaningless. Section 126(b) allows a party to petition EPA with 
respect to a ``violation of the prohibition in section 110(a)(2)(D)(ii) 
or this section.'' Section 110(a)(2)(D)(ii) states that SIPs must 
contain adequate provisions to insure compliance with sections 126 and 
115. To the extent section 110(a)(2)(D)(ii) cross-references back to 
section 126, the statute is redundant. Reading the two provisions 
together, section 126(b) would provide an opportunity for parties to 
file a petition claiming that a major source violates the prohibition 
of section 110(a)(2)(D)(ii) (i.e., section 126) or this section (i.e., 
section 126).
    Moreover, to the extent that section 110(a)(2)(D)(ii) references 
section 115, the provision is meaningless. There is no relief that can 
be provided under section 126(b) for violations of section 115. Rather, 
sections 126 and 115 create separate processes for different parties to 
petition the Agency for a finding that a SIP is inadequate. Under 
section 115, the Administrator may issue a SIP call to a State based on 
a request by an international agency or the Secretary of State that an 
air pollutant or pollutants emitted in the United States ``cause or 
contribute to air pollution which may reasonably be anticipated to 
endanger public health or welfare in a foreign country.'' In contrast, 
only ``States'' or ``political subdivisions''--entities under the 
jurisdiction of the United States--may request relief under section 
126(b). If Congress intended to provide States or political 
subdivisions in the United States with the opportunity to seek relief 
for pollution transported to foreign countries, Congress could have 
provided so in a much clearer fashion in section 115. It is highly 
doubtful that Congress would have used such a cryptic reference to 
grant political entities within the United States the power to address 
pollution being transported out of the country from other States.
    Further textual evidence that section 126(b) contains a scrivener's 
error is found by examining section 126(c). Amended at the same time as 
section 126(b), Congress modified section 126(c) by replacing the two 
references to the original State petition process, section 
110(a)(2)(E)(i), with the renumbered section ``110(a)(2)(D)(ii) or this 
section.'' 9 As amended, the new cross-references are 
ambiguous because they conflict with the structure and text of section 
126(c). Read literally, section 126(c) would provide for enforcement of 
violations of section 110(a)(2)(D)(ii), which requires SIPs to insure 
compliance with section 126 (the interstate pollution provisions) and 
section 115 (the international pollution abatement provisions). As 
discussed above, these cross-references are redundant with respect to 
section 126 and meaningless with respect to section 115. In addition, 
section 126(c) again refers to the non-existent ``prohibitions'' of 
110(a)(2)(D)(ii). There is also no legislative history indicating that 
Congress intended to make such substantive legal changes. In contrast, 
the interpretation that Congress meant to renumber section 
110(a)(2)(E)(i) as 110(a)(2)(D)(i) avoids these ambiguities and 
restores the section 126 State petition process to the structure and 
manner in which it was intended to function prior to the 1990 CAA 
Amendments. As such, EPA believes that the text, structure and 
legislative history of section 126(c) bolsters the

[[Page 28269]]

Agency's conclusion that section 126(b) contains a scrivener's 
error.10
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    \9\ As amended, section 126(c) states that it shall be a 
violation for any major proposed new or modified source ``to be 
constructed or to operate in violation of the prohibition of section 
110(a)(2)(D)(ii) of this section.'' 42 U.S.C. 7426(c) (1995). The 
provision also provides discretion to the Administrator to allow 
sources to operate beyond three months after a finding of violation 
where needed ``to bring about compliance with the requirements 
contained in section 110(a)(2)(D)(ii) or this section.'' Id.
    \10\ EPA's interpretation that the cross-reference in section 
126(b) is a scrivener's error is further supported by the existence 
of two clear, non-controversial typographical errors in the same 
provision. First, section 126(c) refers to ``enforcement orders 
under section 113(d),'' which was amended by section 701 of the 1990 
Clean Air Act Amendments (Pub. L. 101-549, 104 Stat. 2672) without 
conforming this reference. Similarly, the Clean Air Act Amendments 
(Pub. L. 101-549, section 109(a)(2)(A), 104 Stat. 2470) amended 
section 126(c) in the first sentence by inserting ``this section 
and'' after ``violation of'' without further specification. However, 
the words ``violation of'' appear in two places in the sentence. 
Thus, read literally, section 126(c)(1) prohibits construction or 
operation ``in violation of this section and the prohibition of 
110(a)(2)(D)(ii) or this section.'' These errors were noted by the 
House Energy and Commerce Committee, 103d Congress, 1st Sess., 
Committee Print 103-B, Compilation of Selected Acts Within the 
Jurisdiction of the Committee on Energy and Commerce (Feb. 1993), at 
124.
---------------------------------------------------------------------------

    The EPA received comments suggesting that there is no ambiguity in 
section 126(b) because, on its face, it refers to section 
110(a)(2)(D)(ii), not 110(a)(2)(D)(i). However, ``[t]he rule that 
statutes are to be read to avoid absurd results allows an agency to 
establish that seemingly clear statutory language does not reflect the 
unambiguously expressed intent of Congress and thus overcome the first 
step of the Chervon analysis.'' Mova Pharmaceutical Corp. v. Shalala, 
140 F.3d 1060, 1068 (D.C. Cir. 1998) (internal citations omitted). See 
also Chemical Manufacturers Association v. Natural Resources Defense 
Council, 470 U.S. 116, 126-27 (1985) (finding that the word ``modify'' 
has no plain meaning as used in section 301 of the Clean Water Act and 
is properly subject to construction by EPA).
    The EPA's interpretation that there is a scrivener's error, and 
that the reference should be to section 110(a)(2)(D)(i), fits with the 
legislative history on this provision. See Public Citizen v. Department 
of Justice, 491 U.S. 440, 454 (1989) (if apparently plain language 
compels an ``odd result,'' evidence of legislative intent other than 
the text itself, such as the legislative history, should be 
considered). The Agency received comments contesting this conclusion 
and arguing that the legislative history is, at best, inconclusive. The 
EPA disagrees with this characterization. The Agency's review of the 
legislative history indicates that Congress' broad aim was to 
strengthen the section 126(b) State petition process and there is 
nothing to suggest that Congress meant to substantively revise this 
process when it administratively renumbered section 110.
    Several aspects of the legislative history are worth highlighting. 
First, prior to the 1990 Amendments, section 126(b) could be used by 
States to petition EPA for a finding about ``violation[s] of the 
prohibition of section 110(a)(2)(E)(i),'' which required SIPs to 
address interstate pollution. 42 U.S.C. 7410(a)(2)(E)(i) (1990). The 
1990 Clean Air Act Amendments simply revised the text of former section 
110(a)(2)(E)(i) and then renumbered it as section 110(a)(2)(D)(i). 
Compare 42 U.S.C. 7410(a)(2)(E)(i) (1990) with 42 U.S.C. 
7410(a)(2)(D)(i) (1995). In other words, EPA's interpretation that 
section 126(b) contains a scrivener's error and that Congress intended 
to cross-reference section 110(a)(2)(D)(i) is consistent with both the 
structure of sections 126(b) and 110 and the way in which the section 
126(b) State petition process was intended to function prior to the 
1990 CAA Amendments.
    Second, the U.S. Supreme Court has noted that, ``[u]nder 
established canons of statutory construction, it will not be inferred 
that Congress, in revising and consolidating the laws, intended to 
change their effect unless such intention is clearly expressed.'' 
Finley v. U.S., 490 U.S. 545, 554 (1989) (internal quotation marks 
omitted). Yet there is nothing in the legislative history to even 
suggest that Congress intended to dramatically limit the State petition 
process when it renumbered section 110(a)(2)(E)(i).
    Indeed, the evidence indicates the opposite. For starters, the 
sponsors of the Senate legislation never considered restricting the 
scope of the section 126(b) petition process. As introduced, the Senate 
bill, S. 1630, maintained the original provision, section 
110(a)(2)(E)(i), and section 126(b) without any modifications. S. 1630, 
as introduced, reprinted in Comm. On Environment and Public Works, U.S. 
Senate, 103d Congress, 1st Sess., Legislative History of the Clean Air 
Act Amendments of 1990 (1993) [hereinafter ``Legislative History of 
1990 CAAA''], at 9060-61, 9148. The version of S. 1630 that was adopted 
by the full Senate merely modified and renumbered section 
110(a)(2)(E)(i) and changed the section 126(b) cross-reference 
accordingly. S. 1630, as passed by Senate (April 3, 1990), reprinted in 
Legislative History of 1990 CAAA,'' at 4139-41, 4270. Likewise, H.R. 
3030, as introduced, was intended by its sponsors to simply modify and 
renumber section 110(a)(2)(E)(i) and make a conforming change in the 
section 126(b) cross-reference. H.R. 3030, as introduced, reprinted in 
Legislative History of 1990 CAAA, at 3751-53, 3867.11
---------------------------------------------------------------------------

    \11\ The manner in which H.R. 3030, as introduced, changed 
sections 110 and 126(b) helps clarify the intent of the bill's 
sponsors. As introduced, H.R. 3030 renumbered section 
110(a)(2)(E)(i) as 110(a)(2)(D)(4). H.R. 3030, as introduced, 
reprinted in Legislative History of 1990 CAAA, at 3752-53. The 
cross-reference in section 126(b) was modified to refer to section 
111(a)(2)(D)(4), a provision (in the section addressing new source 
performance standards) that was not in existing law nor proposed by 
the bill. Id. at 3867. EPA believes that the most logical 
interpretation of the bill's ambiguous cross-reference to section 
111(a)(2)(D)(4) is that Congress meant to refer to 110(a)(2)(D)(4). 
Based on this interpretation, EPA believes that the sponsors of H.R. 
3030 did not intend to limit the section 126(b) State petition 
process.
---------------------------------------------------------------------------

    The cross-reference to section 110(a)(2)(D)(ii) arose relatively 
late in the congressional debate, as part of the version of H.R. 3030 
passed by the House Energy and Commerce Committee. The House Committee 
bill renumbered section 110(a)(2)(E)(i) as 110(a)(2)D)(i). H. Rep. No. 
101-490, Pt. 1, 101st Cong. 2d Sess. 48 (1990), reprinted in 
Legislative History of 1990 CAAA, at 3030. However, the cross-reference 
in section 126(b) was amended to read section 110(a)(2)(D)(ii). Id. at 
3072. Significantly, the Committee Report's discussion of sections 110 
and 126 does not mention the cross-reference or provide any indication 
that the Committee intended to fundamentally restrict the pre-existing 
section 126(b) State petition process. Id. at 218, 274, reprinted in 
Legislative History of 1990 CAAA'' at 3242, 3298.
    In contrast, Congress clearly indicated that the Amendments were 
designed to increase EPA's ability to address interstate air pollution. 
For example, S. 1630, as passed by the Senate, included various 
amendments to section 110 that ``strengthened'' provisions in existing 
law requiring SIPs to take into account the effect of emissions on 
other States.12 S. Rep. No. 101-228, 101st Cong. 2d Sess. 19 
(1989), reprinted in 1990 U.S.C.C.A.N. 3385, 3405. The House Conference 
Report notes that the amendments sought to ``enhance the

[[Page 28270]]

enforcement authority of the Federal government under the Clean Air 
Act,'' including ``EPA enforcement authority regarding violations of 
State Implementation Plans.'' H. Rep. No. 101-952, 101st Cong. 2d Sess. 
347 (1990), reprinted in 1990 U.S.C.C.A.N. 3385, 3879. Similarly, the 
conference report from the Senate managers states that the bill amends 
section 126 ``to strengthen to [sic] prohibitions on emissions that 
result in interstate pollution.'' Chaffee-Baucus Statement of Senate 
Managers, S. 1630, reprinted in Legislative History of 1990 CAAA, at 
880, 886.
---------------------------------------------------------------------------

    \12\ S. 1630, as enacted by the Senate, expanded section 126(b) 
by allowing States to petition about ``groups of sources'' in 
addition to ``any major source.'' Similarly, the bill expanded the 
scope of section 110 beyond stationary sources to include ``any 
source or other type of emissions activity.'' The bill also modified 
the standard for showing that the downwind state is harmed by 
pollution transport by changing the language from amounts which will 
``prevent attainment or maintenance by any other State'' to amounts 
which will ``contribute significantly to nonattainment in, or 
interfere with maintenance by, any other State.'' Finally, Congress 
expanded the prohibition to require SIPs to insure compliance with 
international pollution abatement requirements under section 115, as 
well as interstate pollution abatement requirements under section 
126. See S. Rept. 101-228 (to accompany S. 1630), 22, reprinted in 
Legislative History of 1990 CAAA, at 4140, 4270.
---------------------------------------------------------------------------

    Where Congress considered changes to the section 126(b) State 
petition process, it did so explicitly. For example, Congress 
specifically amended section 126(b) to add the phrase ``or group of 
stationary sources'' after the phrase ``major source,'' thereby 
expanding the scope of the State petition process. Public Law 101-549, 
section 109, 104 Stat. 2469 (1990) reprinted in Legislative History of 
CAAA, at 483. In contrast, EPA cannot find--and the commenters do not 
point to--any discussion of the effect of the cross-reference to 
section 110(a)(2)(D)(ii). In light of Congress' silence, EPA believes 
that it is more reasonable to interpret the cross-reference as a 
scrivener's error than to believe that Congress intended to make such a 
significant change in the section 126(b) State petition process by 
surreptitiously altering the cross-reference. See In re Chateaugay 
Corp., 89 F.3d at 953 (``where it appears plain that an error in 
drafting has occurred, so that a literal construction would make a 
dramatic change in long-standing law, it is both sensible and 
permissible for judges to consider, in conjunction with other factors, 
Congress' complete silence on the literal effect of the change'').
    The EPA received several comments suggesting that other 
interpretations of section 126(b)'s cross-reference to section 
110(a)(2)(D)(ii) were plausible. As discussed below, EPA finds these 
theories unpersuasive. Nevertheless, even if a possible explanation for 
the cross-reference could be advanced, EPA retains the discretion to 
determine what, in fact, Congress intended. See U.S. Nat'l Bank of 
Oregon v. Independent Insurance Agents of America, 508 U.S. 439, 461 
n.10 (1993) (holding that, although plausible reasons to explain 
Congress' drafting choices can be developed, ``the best reading of the 
[Federal Reserve] Act, despite the punctuation marks, is that Congress 
did something else'').
    Some commenters suggested that Congress intended to replace the 
section 126(b) State petition process with the new interstate transport 
provisions of sections 176A and 184, or, alternatively, that Congress 
required EPA to have a recommendation from a transport commission 
established under sections 176A or 184 before acting on a section 
126(b) petition. Proponents of this theory speculate that the cross-
reference to section 110(a)(2)(D)(ii) may have been a deliberate step 
to achieve this result. The EPA believes that the better reasoned view 
is that Congress intended sections 176A and 184 to supplement the 
existing authorities provided to address interstate transport in 
sections 126(b) and 110. As discussed in greater detail above in 
Section II.A.1, this interpretation gives full effect to all four 
statutory provisions. See Alabama Power Co. v. EPA, 40 F.3d 450, 455 
(D.C. Cir. 1994) (a statute ``is to be interpreted to give consistent 
and harmonious effect to each of its provisions''). In addition, there 
is no statutory language indicating that sections 126(b) and 
110(a)(2)(D)(i) are superseded by sections 176A or 184 or that all four 
provisions do not remain in effect. Rather, the legislative history 
demonstrates that Congress intended to strengthen EPA's authority to 
address the problem of interstate pollution and there is nothing to 
indicate that Congress envisioned sections 176A or 184 as the exclusive 
mechanism by which to address these issues. See S. Rpt. 101-228 (on S. 
1630), Legislative History of 1990 CAAA, at 8391 (``A regional ozone 
transport commission is one important way to address these problems 
identified by modeling and monitoring''). As a result, EPA reads 
section 176A and 184 as supplementing, rather than limiting, the 
section 126(b) State petition process.
    The EPA also received a comment that, if there was a drafting 
error, it is at least as plausible that Congress intended to refer to 
section 110(a)(2)(D)(i)(II), which requires SIP provisions to prevent 
significant deterioration of air quality or to protect visibility. 
Another commenter argued that the cross-reference was a deliberate 
statutory change to limit the section 126(b) petition process to 
implementation of the notification requirements of section 126(a). The 
legislative history, however, fails to provide any evidence to support 
either theory. Rather, it is more plausible that Congress was silent on 
the issue because the change in cross-reference was an unintended 
scrivener's error. Further, EPA's interpretation that Congress did not 
intend to limit the pre-existing section 126(b) State petition process 
is a more narrow statutory interpretation than the theory that Congress 
intended to limit section 126(b) to either the prevention of 
significant deterioration and visibility provisions of section 
110(a)(2)(D)(i)(II) or the notification requirements of section 126(a). 
See Mova Pharmaceutical Corp., 140 F.3d at 1068-69 (remanding an FDA 
rule for a ``more narrow solution'' because, ``when [an] agency 
concludes that a literal reading of a statute would thwart the purposes 
of Congress, it may deviate no further from the statute than is needed 
to protect congressional intent''). Finally, as noted previously, even 
if either theory were as plausible as EPA's interpretation, the Agency 
remains responsible for determining what Congress actually meant. See 
U.S. Nat'l Bank of Oregon v. Independent Insurance, 508 U.S. at 461 
n.10.
    Other commenters observed that Congress has chosen to leave the 
statute as enacted in 1990, rather than amend the cross-reference in 
section 126(b). However, the post-enactment legislative history sheds 
no light on whether the 101st Congress intended to restrict the section 
126(b) State petition process. There could be a host of potential 
explanations for congressional inaction, ranging from ignorance of the 
mistaken cross-reference to concern about reopening the CAA and 
unraveling the broad compromise reached in the 1990 Clean Air Act 
Amendments. As a result, EPA finds this argument unpersuasive.
    The EPA received comments claiming that the Agency must obtain a 
judicial ruling before interpreting section 126(b) as a scrivener's 
error. Other commenters suggested that the only lawful route would be 
for EPA to request that Congress revise the Act. The EPA does not 
believe that either approach is required. Rather, based on the doctrine 
of scrivener's error, courts have repeatedly affirmed interpretations 
by federal agencies that deviate from a statute's literal text when 
necessary to effectuate Congress' purpose. See Chemical Manufacturers 
Ass'n v. Natural Resources Defense Council, 470 U.S. 116, 125-26 (1985) 
(upholding EPA's interpretation that statutory language forbidding EPA 
to ``modify'' national standards for the discharge of toxic water 
pollutants did not preclude the Agency from issuing individualized 
variances because a literalistic reading of the statute would ``make 
little sense''); Environmental Defense Fund v. EPA, 82 F.3d at 468 
(affirming EPA's interpretation of section 176(c) of the Clean Air Act 
to avoid ``absurd or futile results'').
    The EPA also received comments arguing that the Agency unlawfully 
prejudged this issue by adopting the

[[Page 28271]]

scrivener's error theory as the basis for the consent decree in State 
of Connecticut v. Browner , No. 98-1376 (S.D.N.Y. 1998), which requires 
EPA to take final action on at least the technical merits of the 
section 126(b) petitions by April 30, 1999. However, paragraph 10 of 
the consent decree expressly leaves open all ``issue[s] regarding the 
substance and timing of any remedy that EPA may or should require in 
response to the Section 126 petition,'' including EPA's final 
interpretation of section 126(b). State of Connecticut v. Browner, No. 
98-1376 (S.D.N.Y. Oct. 27, 1998) (stipulation and order approving 
consent decree). Thus, under the consent decree, EPA retained the 
discretion to deny the section 126(b) petitions on the ground that the 
Agency lacked statutory authority to entertain them in the first place. 
Accord Croning v. Browner, 898 F. Supp. 1052, 1062 (S.D.N.Y. 1995) 
(language in consent decree requiring EPA to take final action on 
regulations did not preclude EPA from determining that ``regulations 
are not called for''). The Agency has undertaken a full notice and 
comment rulemaking process and has appropriately considered the 
comments submitted in reaching its final decisions. As a result, EPA is 
entitled to the traditional ``presumption of regularity [that] supports 
the official acts of public officers.'' United States v. Chemical 
Foundation, Inc., 272 U.S. 1, 14 (1926).
    Some commenters suggested that EPA's proposed interpretation is 
contrary to an Agency policy on typographical errors in the 1990 Clean 
Air Act Amendments. The commenters cite to statements made during a 
1993 rulemaking on acid rain allowance allocations.13 These 
statements addressed only a narrow issue involving the statutory 
interpretation of section 404(e) and did not purport to establish an 
Agency-wide policy. Furthermore, unlike the issue at hand, EPA 
determined that section 404(e) was ``clear'' for purposes of the 
rulemaking. Acid Rain Allowance Allocations and Reserves Final Rule, 58 
FR 15,634 15,642 (March 23, 1993). In contrast, EPA believes that the 
literal text of section 126(b) and 110 is ambiguous and would create 
absurd results. As a result, EPA's determination that section 126(b) 
contains a scrivener's error is consistent with all relevant Agency 
policy.
---------------------------------------------------------------------------

    \13\ EPA stated that the Agency ``acknowledged the redundancy in 
section 404(e) [of the Clean Air Act] as enacted, but believes that 
the section is clear as to the eligibility requirements. Therefore 
the Agency must follow the statute as enacted.'' 58 FR 15,634 15,642 
(March 23, 1993). In a background document, EPA further stated that 
``EPA accepts the statutory text as written and believes that it 
does not have the authority to make the change suggested by the 
commenter.'' EPA Response to Public Comment on Proposed Acid Rain 
Allowance Allocation Rule, EPA Docket No. A-92-06, Doc. No. V-C-1, 
at 124 (March 1993).
---------------------------------------------------------------------------

    In sum, the cross-reference to section 110(a)(2)(D)(ii) is 
ambiguous at best. A literal reading of the cross-reference is 
impossible since section 110(a)(2)(D)(ii) does not contain a 
prohibition and such an interpretation would contradict the statute's 
logic and structure. Further, there is no indication that Congress, in 
renumbering sections 126(b) and 110, intended to change the section 
126(b) State petition process. The evidence indicates, in contrast, 
that Congress wanted to enhance EPA's ability to address interstate air 
pollution. As a result, EPA believes that its interpretation is 
permissible because it resolves the ambiguity in the interplay between 
sections 126(b) and 110(a)(2)(D) in a manner that harmonizes and gives 
meaning to all of their provisions and reasonably accommodates the 
purposes of the provisions. See Chevron, U.S.A., Inc. v. Natural 
Resources Defense Council, 467 U.S. 837, 844 (1984).
3. Interpretation of Emits in Violation of the Prohibition of Section 
110 and Integration of Section 126 Controls With SIPs/FIPs Under the 
NOX SIP Call
a. Interpretation of Emits in Violation of the Prohibition of Section 
110
    In the section 126 proposed rule, EPA explained its position on how 
section 126 should be interpreted in coordination with section 
110(a)(2)(D), and specifically, how the Agency should act on the 
section 126 petitions in light of the NOX SIP call. See 63 
FR 56301-56303. As proposed, EPA is structuring its final action to 
contain: (1) A series of ``technical determinations'' as to which 
sources in which States named in the petitions would emit in violation 
of the section 110 prohibition if the State or EPA were to fall off 
track in putting a timely and satisfactory plan in place pursuant to 
the NOX SIP call; (2) determinations that the petitions will 
automatically be deemed granted or denied on the basis of certain 
specified events and timing related to state submissions and EPA 
approvals of SIP revisions submitted in response to the 
NOX SIP call, as well as EPA promulgations of federal 
implementation plan provisions; and (3) the remedial requirements that 
will apply to the sources receiving affirmative technical 
determinations if a petition naming those sources is ultimately deemed 
granted.
    Numerous parties have commented on the relationship of the section 
126 petitions to the NOX SIP call. One set of commenters 
generally argues that action under the NOX SIP call does not 
necessarily satisfy the requirements of section 126 and asserts that 
EPA should not dismiss the section 126 petitions until sources have 
actually reduced emissions. Several commenters assert that 
implementation of the NOX SIP call rule either by the states 
in their SIPs or by EPA in FIPs precludes a positive finding under 
Sec. 126. Another commenter argues that it would be inconsistent with 
the NOX SIP call for EPA to make any determinations 
regarding the prohibition of section 110(a)(2)(D)(i) other than a 
determination that the prohibition is not being violated by any source 
in any state that is subject to the SIP call. The EPA continues to 
believe that its approach, and the underlying interpretation of 
sections 110(a)(2)(D)(i) and 126, is the most appropriate way to 
interpret and reconcile the two provisions, for the reasons explained 
in the proposal and further detailed below.
    Section 126 calls for relief where EPA finds that sources are 
emitting ``in violation of the prohibition'' of section 
110(a)(2)(D)(i). The language of section 126 on its face, however, is 
ambiguous as to what it means for a source to emit in violation of the 
prohibition of section 110(a)(2)(D)(i).
    Some commenters argue that there can be no violation of the 
prohibition of section 110(a)(2)(D)(i) unless the upwind state SIP 
contains an emission limit that implements the requirement of section 
110(a)(2)(D)(i) and the source is violating that limit. In support of 
this interpretation, the commenters point to section 126(c), which 
states that ``it shall be a violation of this section and the 
applicable implementation plan in such State'' for a source to operate 
in violation of the prohibition of section 110(a)(2)(D) or section 126. 
The commenters also argue that this interpretation makes sense in light 
of the short time frame for EPA action under section 126, consistency 
with section 110 and other provisions, and consistency with the remedy 
under section 126(c).
    Other commenters appear to believe that the existence of an 
emissions limit in a SIP implementing section 110 is irrelevant. They 
(either explicitly or implicitly) take the position that EPA may find 
that a source is emitting in violation of the prohibition of section 
110(a)(2)(D)(i) for any source that is contributing significantly to 
nonattainment or interfering with maintenance downwind if either: (a) 
the

[[Page 28272]]

SIP fails to limit those emissions, or; (b) the SIP limits the 
emissions, but the source is violating those limits.
    The EPA does not agree with either of these interpretations. 
Rather, EPA interprets section 126 to provide that a source is emitting 
in violation of the prohibition of section 110(a)(2)(D)(i) where the 
applicable SIP fails to prohibit (and EPA has not remedied this failure 
through a FIP) a quantity of emissions from that source that EPA has 
determined contributes significantly to nonattainment or interferes 
with maintenance in a downwind state. Several commenters support EPA's 
approach.
    The ambiguity of the language of section 126 raises at least three 
related questions. The meaning of ``emit in violation of the 
prohibition'' is ambiguous. As a consequence, it is not clear how 
Congress intended sections 110(a)(2)(D)(i) and 126 to work together 
under the CAA, and specifically, it is unclear how an approved SIP 
provision implementing section 110(a)(2)(D)(i) or compliance with a SIP 
call to implement section 110(a)(2)(D)(i) affects section 126 petitions 
alleging that sources are emitting in violation of the prohibition of 
section 110(a)(2)(D)(i).
    The EPA believes that there are several key factors to consider in 
attempting to resolve these questions. First, of course, is the 
language of the provisions, to the extent that it can be read to 
support one interpretation over another. A second key consideration is 
the purpose of section 126 in light of the problem it was designed to 
solve as indicated by the legislative history. Third, it is appropriate 
to take into account the existence of other provisions in the CAA and 
to interpret sections 126 and 110(a)(2)(D)(i) in a manner that gives 
those sections full force and effect, without creating redundancy with 
any other provision. Finally, in analyzing the role of direct controls 
on sources through section 126 findings vis-a-vis controls on sources 
through SIPs, it is useful to consider how these two different 
mechanisms fit into the federal-state system for air pollution control 
established under Title I. Taking all of these considerations into 
account, EPA believes that the best interpretation of section 126 is 
that it authorizes a downwind state to petition EPA to control 
emissions from upwind sources where the upwind SIP is inadequate to 
comply with the requirements of section 110(a)(2)(D)(i), but that where 
the SIP establishes adequate controls on interstate transport and a 
source is violating those requirements, the appropriate remedies are 
provided in sections 113 and 304 of the Act, not section 126.
    Focusing first on the language of the provisions, EPA believes that 
it is reasonable and appropriate to interpret the prohibition of 
section 110(a)(2)(D)(i) as a prohibition on emission of a quantity of 
pollutants that would contribute significantly to nonattainment in or 
interfere with maintenance by another state. In essence, it is a 
prohibition on excessive interstate transport of air pollutants. The 
state is responsible for implementing the prohibition by barring such 
excessive emissions in the SIP. Thus, EPA believes a reasonable 
interpretation is that where the state has failed to implement the 
prohibition, the SIP allows excessive transport of pollutants, the 
prohibition is violated, and a source emitting such quantities of 
pollutants is emitting in violation of the prohibition.
    Where the state has adopted SIP provisions barring such emissions, 
but the source is violating those limits, it is less clear whether the 
prohibition on excessive interstate transport has been violated and 
hence whether the source is in violation of the prohibition. The EPA 
believes it is most reasonable to read section 126 not to encompass 
this situation, for the reasons explained below.
    The EPA also rejects the more restrictive interpretation that 
section 126 only applies where a state has adopted SIP provisions to 
control interstate transport of pollutants, EPA has approved those SIP 
provisions, and sources are violating those provisions. Section 
110(a)(2)(D)(i) itself does not directly establish any emissions 
limitations applicable to a particular source. The emissions 
limitations on which the commenters are focusing are the requirements 
of the SIP, not of section 110(a)(2)(D)(i). Looking just at the 
specific language of the two provisions, EPA believes that the better 
interpretation of the language of section 126 is that it refers to the 
actual functional prohibition of section 110(a)(2)(D)(i), which bars 
impermissible interstate transport, rather than the specific provisions 
through which states implement that prohibition, the emissions 
limitations for individual sources contained in an approved SIP. As 
explained above, a source would be in violation of the prohibition of 
section 110 where the applicable SIP failed to bar excessive interstate 
transport of air pollutants. EPA believes that its interpretation is a 
reasonable reading of the reference in section 126 to emitting in 
violation of the prohibition of section 110, and in light of the 
ambiguity of the statutory language, EPA's interpretation is subject to 
deference under Chevron.
    The clear purpose of section 126 is to provide a tool for downwind 
states to achieve reductions in interstate pollution transport. See 
discussion above in section II.A.1. The history and current 
manifestation of interstate pollution problems emphasize that such a 
tool is needed to address the situation where upwind states have not 
designed their SIPs to account for the effects of emissions from 
sources in those states on downwind areas. See discussion in Sections 
II.A.1. and I.B. In short, as Congress recognized in adopting all of 
the interstate transport provisions in the CAA, the interstate 
pollution problem stems from inadequate SIPs, not inadequate compliance 
with adequate SIP requirements. This characterization of the problem is 
supported by the numerous descriptions of the interstate pollution 
problem in the 1977 and 1990 legislative histories, all of which 
explicitly or implicitly refer to the lack of upwind limitations and 
none of which mentions sources' violation of upwind SIP 
limits.14 Furthermore, it is reasonable to assume that 
Congress intended to create a tool that would attack the problem 
Congress recognized. This supports the conclusion that Congress 
intended section 126 to apply where upwind states' SIPs are inadequate, 
not (and certainly not only) where sources are violating adequate SIP 
provisions.
---------------------------------------------------------------------------

    \14\ See, e.g., S. Comm. on Envt. and Public Works, Clean Air 
Act Amendments of 1977, S. Rep. 95-127, 95th Cong., 1st Sess. 41 
(1977), reprinted in 3 1977 Legislative History, 1415 (noting that 
the 1970 Act failed to specify any abatement procedure if a source 
in one state emitted air pollutants that adversely affected another 
state, and ``[a]s a result, no interstate enforcement actions have 
taken place, resulting in serious inequities among several States, 
where one State may have more stringent implementation plan 
requirements than another state;'' H. Rep. 95-294, 95th Cong., 1st 
Sess. at 331 (1977), reprinted in 4 1977 Legislative History at 2798 
(``This petition process is intended to expedite, not delay, 
resolution of interstate pollution conflicts.''); S. Rep. 101-228 at 
48, reprinted in V 1990 Legislative History at 8388 (``The transport 
problem in the northeast, and perhaps other regions as well, is 
serious enough that additional efforts must be made on an interstate 
basis to control emissions, including emissions from attainment 
areas.''); id. at 49, 8389 (``The model suggests that even if all 
emissions sources were eliminated within the tri-state area [New 
York, New Jersey and Connecticut], violations of the ozone standard 
would still occur. This means substantial reductions in emissions 
from areas upwind from the New York metropolitan area must be 
achieved if this area is to attain the air quality standards.'').
---------------------------------------------------------------------------

    The EPA's interpretation is also consistent with Congress' 
explanation of section 126 in the legislative history. In the course of 
adopting the 1990 Amendments, the Senate Committee described section 
126 as allowing a

[[Page 28273]]

downwind state to complain about ``a defect in the offending State's 
SIP.'' Senate Committee Report, 75-76, Leg. Hist. V. 8415-8416. A 
source's violation of adequate SIP requirements is certainly not 
synonymous with a defect in the SIP itself.
    In addition, there is little or no purpose to establishing a 
process for downwind states to petition EPA to find that upwind sources 
are violating their SIP requirements because other sections of the 
Clean Air Act provide ample authority for states, citizens and EPA to 
directly enforce approved SIP provisions against sources violating 
those provisions. This objection applies even more forcefully against 
the most limited interpretation advocated by some commenters, in which 
the sole purpose of the petition process under section 126(b) and (c) 
is to allow states to petition EPA to find that a source is violating 
its emissions limitations under an approved SIP. Upon making such a 
finding, EPA could then allow the source up to three years to come into 
compliance with its emissions limitations. Yet there is no need to have 
a petition, public hearing, and EPA determination simply to enforce 
existing SIP limits, as the CAA elsewhere provides a quite sufficient 
and much simpler set of remedies for violation of an approved SIP 
provision. Under section 113, upon finding that any person is in 
violation of any requirement of an approved SIP, EPA has the authority 
to enforce the requirement by issuing an order to comply, issuing an 
administrative penalty order, or bringing a civil action. In addition, 
any person (which includes states) may bring a citizen suit against any 
person in violation of any requirement of an approved SIP. Section 
304(a), (f); see also section 302. These provisions provide more direct 
and likely quicker recourse against a source that is violating its SIP-
imposed emission limits. In bringing suit under the citizen suit 
provisions, a state could act independent of EPA action. Moreover, 
these tools for enforcement of SIP requirements were available under 
the 1977 Clean Air Act, which contained both sections 113 and 304 in 
substantively similar form to the present versions. In adopting section 
126 in 1977 and strengthening it in 1990, Congress clearly intended the 
petition process to play a significant role in addressing the 
interstate pollution problem. See discussion above in section II.A.1. 
To the extent that section 126 is used to enforce SIP violations, the 
petition process would not be serving such a role. Furthermore, under 
the commenters' most limited interpretation, the petition process would 
instead provide no authority at all to address interstate pollution 
beyond what is already provided elsewhere in the Act through arguably 
more effective mechanisms. In contrast, using the section 126 petition 
process where a state has failed to adopt adequate SIP provisions 
serves the unique role of allowing a downwind state to force EPA 
consideration of the problem and potentially achieve emissions 
reductions directly from sources, without the need to depend on action 
by the upwind state.
    In determining how Congress intended section 126 to operate both in 
the absence of an adequate SIP and when a state is complying with the 
section 110 SIP requirements, it is also important to consider the role 
under Title I of state planning and control efforts in the form of 
SIPs, versus imposition of direct federal controls. In Title I of the 
Act, Congress has established a cooperative federalism approach in 
which air pollution planning and control occurs largely at the state 
level. Under Title I, states are primarily responsible for determining 
the mix of control measures necessary to achieve the NAAQS, while the 
federal government sets the uniform national goals and ensures that 
states act to meet them. Train v. NRDC, 421 U.S. 60 (1975). Section 126 
is somewhat unusual in Title I in that it authorizes EPA to control 
sources directly, rather than providing a means for EPA to encourage 
states to control those sources. In that sense, it is similar to the 
provisions for federal implementation plans in section 110(c). With 
both of these provisions, Congress provided tools for direct federal 
action to address serious failures of state action. Nevertheless, 
Congress' clear preference throughout Title I is that states are to 
decide and plan how they will control their sources of air pollution, 
and the mechanism for imposing those controls at the state level is 
SIPs. As noted above, states, EPA and citizens have the authority to 
directly enforce violations of an approved SIP. Thus, where a SIP is 
adequate but a source is violating its provisions, it would be counter 
to the cooperative federalism structure of the Act and would serve no 
purpose to essentially replace those adequate SIP limits with redundant 
direct federal controls on a source. In contrast, where a state has 
failed to adopt adequate SIP provisions in the first place, it makes 
sense to provide an alternative mechanism to directly achieve the 
necessary emissions reductions from the sources. A state would always 
be free to regulate the sources itself in that instance by revising its 
SIP to include the necessary emission limits. EPA believes that this 
understanding of Congress' overall design for air pollution control 
supports EPA's interpretation that section 126 is intended to be used 
only to address the situation where the SIP fails to prohibit sources 
from emitting impermissible amounts of transported air pollutants. 
Thus, under this view, a source is emitting in ``violation of the 
prohibition of'' section 110(a)(2)(D)(i) under section 126 when the 
applicable SIP fails to limit the emissions prohibited under section 
110(a)(2)(D)(i).
    In support of the most limited interpretation that there is no 
violation of the prohibition absent an approved SIP provision limiting 
the source's emissions, commenters point to the language of section 
126(c), which states that ``it shall be a violation of this section and 
the applicable implementation plan in such State'' for a source to 
operate in violation of the prohibition of section 110(a)(2)(D) or 
section 126. They claim that the reference to a violation of a SIP 
supports the interpretation that section 126 only applies where there 
is an approved SIP provision in place. However, if a source is emitting 
in violation of an emission limitation in a SIP, there is no question 
that the source is in violation of the SIP. The language in section 126 
stating that ``it shall be a violation of * * * the applicable 
implementation plan'' for a source to emit in violation of the 
prohibition of section 110(a)(2)(D) serves no legal purpose where the 
source is already directly violating a SIP requirement. In contrast, 
under EPA's interpretation, section 126 deems a source's emissions to 
be a violation of the applicable SIP (as well as of section 126) where 
the SIP itself does not bar the source's emissions but the emissions 
significantly contribute to nonattainment downwind. This interpretation 
gives legal effect to the language in section 126 and is consistent 
with Congress' purpose of providing a tool for downwind states and EPA 
to use to impel upwind sources to reduce transported emissions.
    Nor does EPA agree with the commenter's argument that EPA's 
interpretation is inconsistent with the remedy under section 126(c). 
The commenter asserts that because a source must comply within three 
months of a finding or cease operating, the remedy makes no sense in 
the absence of an approved SIP provision. However, section 126(c) also 
provides that the three month deadline only applies if

[[Page 28274]]

EPA does not establish an alternative schedule for the source to come 
into compliance. EPA may give a source up to three years to comply with 
the prohibition in section 110(a)(2)(D), as long as the source meets 
emissions limitations and compliance schedules containing increments of 
progress set by EPA. The commenter fails to explain why this scheme 
``makes no sense.'' In EPA's view, up to three years for compliance is 
generally a reasonable amount of time that should not unduly burden 
sources and is consistent with the timeframes for implementation of 
many federal and state air pollution requirements. This is a perfectly 
rational, if potentially stringent, means of assuring continued 
progress on something that Congress viewed as a serious pollution 
problem.
    Commenters also assert that their interpretation is the only 
interpretation that is consistent with section 110(a)(2)(D)(i) and 
other provisions of the Act. They argue that states have the primary 
responsibility for regulating their sources under section 110, and if 
the states fail to do so, EPA's recourse is provided in sections 110(k) 
(allowing EPA to call for revision of an inadequate SIP), 110(m) 
(allowing EPA to impose sanctions) and 110(c) (allowing EPA to 
promulgate a Federal implementation plan). EPA emphatically agrees that 
a SIP call under sections 110(a)(2)(D)(i) and 110(k)(5) is an 
alternative means for EPA to address interstate pollution transport. 
However, commenters overlook the unique role of section 126, which is 
designed to provide recourse to downwind states where both upwind 
states and EPA have failed to act. As discussed above, no progress had 
been made on interstate transport problems at the time of enactment of 
both the 1977 and 1990 Amendments. Section 126 provides a tool for 
downwind states, the entities with most at stake, to force EPA to 
confront the issue directly. It also sets up an abbreviated, and hence 
potentially faster, process to achieve emission reductions. Under the 
SIP process, EPA must direct a state to revise its SIP to comply with 
110(a)(2)(D), and then perhaps find that the state has failed to 
comply, impose sanctions, and finally promulgate a Federal 
implementation plan, all of which could potentially stretch out for 
many years. In contrast Congress required very expeditious EPA action 
on a petition and from three months up to three years for sources to 
comply. It is perfectly reasonable for Congress to have established 
section 126 as an alternative mechanism under the Clean Air Act to 
address the interstate pollution problem, just as it did again in 
adopting sections 176A and 184. To provide alternatives, the various 
interstate transport provisions are necessarily different from each 
other and from other provisions of the Act, but that does not make them 
inconsistent with other provisions of the Act.
    Finally, commenters argue that their interpretation makes sense 
because Congress only gave the Agency 60 days after receipt of the 
petition to hold a public hearing on the petition and act to grant or 
deny the petition. They assert that this short time frame indicates 
that Congress anticipated the decision would be a fairly simple 
administrative task of determining whether a source is violating a SIP 
requirement. EPA views the significance of these requirements 
differently. First, the requirement to hold a hearing bolsters EPA's 
interpretation of section 126 because a hearing would serve no purpose 
here under the commenter's interpretation. Whether a source is 
violating an emission limitation is a straightforward compliance 
determination. EPA makes such determinations on a daily basis without 
going through a public hearing process, and such a process would 
provide no benefit. Second, the short time frame for a determination is 
an indication of Congress' intent to produce action on the interstate 
pollution issue. In section 307(d)(10) of the Act, Congress expressly 
provided a generic time extension for EPA action on certain rules 
listed under section 307 to address the possibility that some of the 
deadlines under the Act might be too short to allow EPA to complete the 
rulemaking process. This indicates that Congress did not necessarily 
link short deadlines for action under section 307(d) with less complex 
or substantive proceedings, and where a short deadline may threaten the 
integrity of the rulemaking process, Congress was willing to extend the 
deadline. A short deadline for EPA action corresponds better with 
Congress' assessment of the urgency of the problem than the time needed 
by EPA to carry out the mandate, and thus such a deadline should not be 
assumed to signal a simple task for the Agency.
    A commenter also stated that ``[i]n the NPR, EPA acknowledges that 
the section 126 language requires a violation of a SIP provision 
implementing section 110(a)(2)(D)(i) before a section 126 finding can 
be made. 63 Fed. Reg. at 56302.'' EPA is not certain to which 
particular statement the commenter is referring. The commenter may be 
referencing out of context the last clause of a sentence describing 
EPA's rationale for not granting a petition if either the State is 
adhering to the NOX SIP call schedule for submission of an 
approvable SIP revision and EPA is acting speedily to approve the SIP, 
or if EPA has promulgated a FIP for the State. EPA's statement 
regarding whether a source ``emits or would emit in violation of the 
prohibition'' alluded to how EPA should interpret section 126 in light 
of the interplay with the NOX SIP call under section 
110(a)(2)(D). EPA rejects the notion that any statement in the NPR 
constitutes the ``acknowledgment'' claimed by the commenter.
    Overall, commenters advocating the most limited interpretation 
would reduce what is perhaps the most powerful tool in the Clean Air 
Act to address interstate pollution to a redundant mechanism to enforce 
limitations that states have already included in their SIPs. Under 
their interpretation section 126 is a tool to fix a nonexistent 
problem. No commenter on the NOX SIP call or this section 
126 rulemaking has claimed that the northeastern ozone problem is due 
in any part to sources' noncompliance with emission limitations 
contained in upwind states' SIPs. The commenters' interpretation of 
section 126 does not comport with Congress' aim of establishing and 
strengthening a means for downwind states to enlist EPA's assistance to 
require the upwind reductions needed for the downwind states to meet 
air quality standards.
b. Integration of Section 126 Controls With SIPs/FIPs Under the 
NOX SIP Call
    EPA's interpretation of ``emitting in violation of the 
prohibition'' provides direction for how EPA should act on the section 
126 petitions in light of the NOX SIP call, as for both 
actions EPA is operating on basically the same set of facts regarding 
the same pollutants and largely the same amounts of upwind reductions 
affecting the same downwind states. First, it follows that if a state 
had already adopted a SIP revision in response to the 
NOX SIP call providing for sources to reduce their emissions 
at a future date and EPA had approved the revision as adequate to meet 
the requirements of section 110(a)(2)(D)(i), EPA would not find that a 
source in that state was emitting in violation of the prohibition of 
section 110(a)(2)(D)(i).15 Similarly, if a state had

[[Page 28275]]

failed to adopt a SIP revision in response to the NOX SIP 
call and EPA had responded with a FIP, the FIP would bar the excessive 
emissions of transported pollutants and hence sources in the state 
would not be emitting in violation of the section 110 prohibition. EPA 
believes it also follows that if states are currently subject to a 
schedule for compliance with a SIP call to correct an inadequacy under 
section 110(a)(2)(D)(i), and states have not yet slipped off track in 
terms of compliance with the schedule, it is appropriate for EPA to 
defer making a finding as to whether sources in the state are emitting 
in violation of the prohibition of section 110(a)(2)(D)(i).
---------------------------------------------------------------------------

    \15\ Of course, compliance with a SIP call based on section 
110(a)(2)(D)(i) only means that a state has adequately prohibited 
excessive emissions of transported pollutants for the particular set 
of facts analyzed under the SIP call. For example, if a downwind 
state that had not been considered a recipient of an upwind state's 
emissions subsequently brought a petition under section 126, or a 
downwind state that had been considered a recipient under the SIP 
call produced new data showing a different level of contribution or 
other new facts, compliance with the earlier SIP call would not be 
determinative regarding whether the upwind sources were emitting in 
violation of the prohibition of section 110(a)(2)(D)(i).
---------------------------------------------------------------------------

    The premise of the NOX SIP call is that a number of 
state SIPs fail to limit emissions to prevent the excessive interstate 
pollution transport prohibited by section 110(a)(2)(D)(i). The purpose 
of the NOX SIP call is to require the states to revise their 
SIPs to comply with section 110(a)(2)(D). Pursuant to the 
NOX SIP call, there is an explicit and expeditious schedule 
for states to meet their section 110(a)(2)(D)(i) obligations. EPA has 
also proposed a FIP to bar the excessive emissions of transported 
pollutants for each state that fails to meet the schedule established 
in the NOX SIP call, and EPA could finalize the FIP by 
November 30, 1999. As long as both states and EPA are on track in terms 
of complying with the substance and timing of the NOX SIP 
call, EPA believes it is appropriate to interpret section 126 to allow 
EPA to defer making a finding with respect to sources in those states.
    It further follows that once a state has missed a deadline under 
the schedule and EPA has not corrected the SIP inadequacy with a FIP, 
it is reasonable to find at that point that sources in the state are 
emitting in violation of the prohibition because the applicable SIP 
fails to limit interstate transport and the state has failed to correct 
the inadequacy in the timeframe established under the SIP call. It also 
follows that EPA could not find that sources in the state are not 
emitting in violation of the prohibition of section 110(a)(2)(D)(i) and 
deny the petitions now simply because EPA has issued a SIP call, as one 
commenter suggests. The key criterion under EPA's interpretation of 
sections 126 and 110(a)(2)(D)(i) is the existence of provisions in an 
applicable implementation plan to control interstate transport. 
Issuance of the SIP call with a schedule for correcting the deficiency 
is sufficient to allow EPA to defer a final decision on granting or 
denying the petitions as long as the states have not missed a deadline 
under that schedule. It is not a sufficient basis, however, on which to 
assume that the required provisions controlling interstate transport 
will necessarily be adopted by the state or EPA within the required 
timeframe, and hence to assume that sources are not emitting in 
violation of the prohibition of section 110.
    EPA believes that it is reasonable to make technical determinations 
at this time that absent timely action under the NOX SIP 
call, sources covered by the petitions, which are in states subject to 
the SIP call, will emit in violation of the prohibition of section 
110(a)(2)(D)(i). Hence, if states or EPA fail to act on the schedule 
established, the petitions will automatically be deemed granted, and if 
states and EPA meet the schedule established, the petitions will 
automatically be deemed denied. Specifically, today's action provides 
that for each source for which EPA has made an affirmative technical 
determination, EPA will be deemed to have found that the source emits 
or would emit NOX in violation of the prohibition of section 
110(a)(2)(D)(i) under the following circumstances.16 First, 
the finding is deemed to be made for such sources in a state if by 
November 30, 1999, EPA has not either (a) proposed to approve a state's 
SIP revision to comply with the NOX SIP call or (b) 
promulgated a FIP for the state. Second, the finding is deemed to be 
made for such sources in a state if by May 1, 2000, EPA has not either 
(a) approved a state's SIP revision to comply with the 
NOX SIP call or (b) promulgated implementation plan 
provisions meeting the section 110(a)(2)(D)(i) requirements. Upon EPA's 
approval of a state's SIP revision to comply with the 
NOX SIP call or promulgation of a FIP, the corresponding 
portions of the petitions will automatically be deemed denied. Also, if 
a finding is deemed to be made, it will be deemed to be withdrawn, and 
the corresponding portions of the petitions will also be deemed to be 
denied, upon EPA's approval of a state's SIP revision to comply with 
the NOX SIP call or promulgation of a FIP. See Section II.B 
for further discussion of the basis for EPA's technical determinations.
---------------------------------------------------------------------------

    \16\ While these findings would be made automatically without 
further EPA action, EPA would promptly publish a notice in the 
Federal Register notifying affected sources and other interested 
parties that the findings had been made.
---------------------------------------------------------------------------

    This coordinated approach to addressing the overlapping section 126 
petitions and the NOX SIP call is also a practical way to 
implement both of these provisions in the same time period, as the 
timing of the SIP call and the consent decree have required EPA to do 
here. Several commenters have suggested that EPA address coordination 
with the NOX SIP call through either retaining the section 
126 petitions as a backstop until the SIP provisions are implemented 
(possibly by ``staying'' action on the petitions), or treating timely 
implementation of the FIP or SIP as alternative ``increments of 
progress'' under section 126. However, each of these approaches would 
raise practical problems by subjecting sources to differing emission 
control requirements--e.g., one set from an approved SIP and the other 
from the section 126 remedy. This would be particularly problematic for 
sources in states that choose different control options from those 
selected by EPA under the section 126 petitions and could potentially 
significantly increase the overall burden of reducing interstate 
transport of pollutants under the NOX SIP call and the 
section 126 petitions.
    The practical problems with the commenters' suggested approaches 
stem from the fact that the controls adopted by upwind states in their 
SIPs may well not be identical to the controls identified by EPA under 
section 126. The SIP may control different sources, and may impose 
looser, or no, controls on at least some of the sources also covered by 
section 126. Accordingly, it may not be feasible to treat the SIP 
controls as increments of progress under section 126. In addition, if 
the SIP controlled different sources or imposed looser controls on the 
sources covered by section 126, the section 126 sources would still be 
obliged to implement the section 126 controls in time for the May 1, 
2003 deadline. The section 126 sources would need to take this action 
because otherwise, if the sources covered under the SIP did not 
implement their SIP controls, the section 126 sources would be 
responsible for having their controls in place as soon as the SIP 
sources were determined not to be in compliance. Under this scenario, 
the overall burden of achieving the downwind reductions could be 
significantly higher than necessary because to the extent that the 
controls required under section 126 and the controls required under a 
SIP were nonidentical, sources would need to

[[Page 28276]]

implement all of the nonidentical controls required by either section 
126 or the SIP, even though implementation of either the set of section 
126 controls or the set of SIP controls alone would be sufficient to 
eliminate emissions that contribute significantly to nonattainment or 
interfere with maintenance in downwind states. Furthermore, this 
potential inefficiency might be viewed as effectively impermissibly 
pressuring states to adopt in their SIPs controls identical to the 
section 126 controls, as states might conclude that identical controls 
are necessary to minimize the overall compliance burden. As described 
elsewhere in today's notice, the courts have found that while EPA may 
specify a quantity of emissions reductions that states must achieve 
through SIP revisions, EPA may not specify the particular controls that 
a state must adopt.
    A number of commenters have stated that EPA should not dismiss the 
section 126 petitions unless and until the quantity of transported air 
pollutants has been reduced, either through implementation of the SIP 
revisions adopted in response to the NOX SIP call or through 
implementation of a FIP. The commenters express the concern that under 
EPA's approach, if the upwind states, EPA, or sources go off track in 
terms of compliance with the NOX SIP call schedule, the 
downwind states will be unable to enforce the three year deadline for 
emissions reductions established by section 126. 
    For the reasons discussed above, EPA believes that the better 
interpretation of sections 110(a)(2)(D)(i) and 126 is that sources emit 
in violation of the prohibition of section 110(a)(2)(D)(i) only where 
the applicable SIP, SIP submission, or federal plan fails to bar the 
excessive emission of transported pollutants prohibited by section 
110(a)(2)(D)(i). Nor does EPA agree that its approach raises the 
problems cited by the commenters. First, EPA believes that it has 
carefully structured its actions on the petitions to avoid any problems 
associated with either the upwind states or EPA going off track with 
respect to the NOX SIP call schedule for adoption and 
approval of SIP revisions. By making technical determinations now and 
specifying the exact dates and circumstances under which the petitions 
would be deemed granted, EPA has structured today's action to ensure 
that if either the upwind states or EPA do not submit or promulgate the 
necessary plan provisions expeditiously under the NOX SIP 
call, the section 126 remedy will automatically be activated without 
any further action by EPA. Moreover, May 1, 2000 is the deadline for 
the upwind states and EPA to complete their necessary actions to avoid 
an automatic granting of the section 126 petitions. This provides ample 
time for sources subject to the section 126 controls to come into 
compliance by the May 1, 2003 deadline. Once the SIP revisions are 
adopted and approved, no further action is needed from the upwind 
states and EPA--from that point on, the only way that emissions 
reductions would go off track is if the upwind sources failed to comply 
with their SIP limitations.
    Moreover, the problem of potential bad actors exists regardless of 
whether EPA grants, retains (and somehow stays action on), or denies 
the section 126 petitions. Under any approach, it is possible that some 
sources may not meet the May 1, 2003 deadline for compliance with the 
SIP limitations, and thus, whether or not EPA has denied the section 
126 petitions, there is a possibility that some portion of the upwind 
emissions will not be reduced within the three year period specified in 
section 126. If EPA has either retained or denied the petitions, the 
remedy is the same--enforcement action against the source for failure 
to comply with a regulatory requirement embodied in an approved SIP. As 
discussed above, either downwind states or EPA could directly enforce 
the SIP limits against the source under section 304 or 113, 
respectively. If EPA grants the petitions, downwind states would 
additionally be able to enforce against sources for violation of 
section 126, as well as the SIP limits, but it is not clear that this 
would make any practical difference. It is not necessary for EPA to use 
the section 126 petitions as a backstop in case of potential bad 
actors, and attempting to do so would raise the practical problems 
discussed above. In addition to this analysis of the practical issues 
associated with granting or retention versus denial of the petitions 
upon approval of the SIP revisions, such an approach would be 
inconsistent with what EPA believes to be the best reading of the 
statute, as discussed above. Moreover, with respect to the argument 
that EPA should retain the section 126 petitions as a backstop after 
approval of a SIP revision or promulgation of a FIP, EPA is uncertain 
as to what would constitute the statutory authority for such an 
approach.
c. Petitions Deemed Granted Upon Certain Events
    A number of commenters objected to EPA's proposal that the section 
126 petitions for which it has made affirmative determinations would be 
deemed granted under the circumstances specified above. Commenters 
asserted that EPA should withhold decisions regarding the section 126 
petitions until it has had sufficient time to determine the adequacy of 
the SIPs submitted pursuant to the NOX SIP call, rather than 
providing that the section 126 remedy would be automatically triggered 
by certain dates. Commenters also argued that EPA must conduct a 
rulemaking to evaluate the technical merits of the section 126 
petitions rather than setting up a mechanism whereby failure to take a 
final action by a deadline, and in particular, EPA's failure to act, 
constitutes a default to some pre-arranged decision. Commenters opined 
that EPA might delay its approval of SIP submissions in order to 
trigger granting of the section 126 petitions without providing for 
public comment on the section 126 finding in light of a state's SIP 
submission. As discussed above, EPA is finalizing the proposed 
approach, which EPA believes is based on the most reasonable 
interpretation of the relationship between sections 110(a)(2)(D)(i) and 
126, and best coordinates actions under the overlapping 
NOX SIP call and section 126 petitions.
    The EPA has provided ample public notice and opportunity to comment 
on the Agency's technical and legal determinations underlying today's 
affirmative determinations on the section 126 petitions. The EPA is 
determining through rulemaking that the sources subject to the 
affirmative determinations will emit in violation of the prohibition of 
section 110, absent timely state compliance with the NOX SIP 
call or promulgation of a FIP. Today's rule provides that the petitions 
will be granted if the Agency does not act to propose approval of and 
finally approve a SIP revision or promulgate federal implementation 
plan provisions satisfying the NOX SIP call. There is no 
legal requirement for EPA to conduct rulemaking to determine that the 
Agency has not proposed, approved, or promulgated implementation plan 
provisions by a given date, and such a rulemaking would serve no 
purpose. There is no benefit to providing for public comment on whether 
EPA has published a specified notice by a specified date. EPA has 
established easily verified, purely objective criteria for triggering 
the granting of the petitions. Because EPA has provided for notice and 
comment on every aspect of the finding on the section 126 petitions, 
including on establishment of an

[[Page 28277]]

objective criteria for when petitions are deemed to be granted, EPA has 
fully complied with the Clean Air Act and the Administrative Procedure 
Act requirements for notice-and-comment rulemaking.
    EPA also rejects commenters' allegations that the Agency may 
deliberately or inadvertently miss the deadlines for proposed or final 
approval of SIP revisions submitted under the NOX SIP call. 
In the proposal and in the Response to Comments Document for this rule, 
EPA explains why it believes the schedule for action on the SIP 
revisions is reasonable and achievable. See 63 FR 56302-56303. Given 
achievable deadlines, there is no reason why EPA would deliberately 
miss them to impose the section 126 remedy in preference over states' 
plans. As discussed above, EPA believes that Congress generally 
intended states, not EPA, to be primarily responsible for imposing the 
controls required under Title I of the Act to meet the NAAQS. Moreover, 
EPA has attempted to coordinate its proceedings on the section 126 
petitions and the NOX SIP call to provide the maximum 
opportunity, consistent with EPA's interpretation of the statutory 
provisions, for states to address the interstate transport problem 
through their SIPs, rather than having EPA impose controls directly 
through a FIP or under section 126. Commenters argue that the section 
126 petitions should not be granted if states have submitted a SIP 
revision purporting to comply with the NOX SIP call and EPA 
has either not acted on the revision, or has proposed approval but not 
acted to finally approve the revision. Yet such an approach would 
provide no assurance that there would be timely emission reductions 
either through an approved SIP, a FIP, or direct controls on sources. 
EPA's interpretation provides states and EPA a reasonable opportunity 
to address the interstate transport problem through approved SIP 
revisions, but ensures that the opportunity is not open-ended. Instead, 
EPA interprets the interplay of the two provisions to ensure that under 
one approach or the other, reductions will be achieved as expeditiously 
as practicable. EPA believes that this interpretation is reasonable and 
best achieves Congressional intent regarding the purpose and function 
of sections 126 and 110(a)(2)(D)(i).

B. EPA's Interpretation of Section 126: Significant Contribution

1. Significant Contribution Standard
a. NPR
    In the NPR, EPA relied on the same multi-factor, weight-of-evidence 
test used in the NOX SIP call final rulemaking for 
determining whether emissions from upwind sources contribute 
significantly to nonattainment problems downwind.
    As described in the NOX SIP call final rule, section 
110(a)(2)(D)(i)(I)--provides that the SIP must ``prohibit[]'' sources 
from ``emitting any air pollutant in amounts which will contribute 
significantly to nonattainment in, or interfere with maintenance by, 
any other State * * * [This provision requires] the elimination of * * 
* those amounts of [upwind] emissions that, based on a multi-factor 
test, significantly contribute to downwind air quality problems.
63 FR 57376.17
---------------------------------------------------------------------------

    \17\ As indicated in the NOX SIP Call final 
rulemaking, EPA views the interfere-with-maintenance test to 
incorporate the same standards as the contribute-significantly-to-
nonattainment test.
---------------------------------------------------------------------------

    The EPA further stated, in the NOX SIP call final rule, 
that the multi-factor test, in turn, weighs together seven factors. The 
first four were the ``primary components in EPA's consideration,'' and 
EPA specifically considered them with respect to each upwind State:
     The overall nature of the ozone problem (i.e., 
``collective contribution'')
     The extent of the downwind nonattainment problems to which 
the upwind State's emissions are linked, including the ambient impact 
of controls required under the CAA or otherwise implemented in the 
downwind areas
     The ambient impact of the emissions from the upwind 
State's sources on the downwind nonattainment problems
     The availability of highly cost effective control measures 
for upwind emissions.

63 FR 57376.
    In the NOX SIP call final rule, in the context of 
applying the weight-of-evidence test to the New York City nonattainment 
area as an example, EPA further indicated the manner in which these 
primary factors were combined and considered:
    The extent of New York City's nonattainment problem and the nature 
of the contributions from upwind States were considered in determining 
whether the values of the metrics indicate large and/or frequent 
contributions for individual upwind States. Specifically, additional 
controls beyond the local and upwind NOX reductions which 
are part of the regional NOX strategy may be needed to solve 
New York City's 1-hour nonattainment problem. Also, the total 
contribution from all upwind States is large and there is no single 
State or small number of States which comprise this total upwind 
portion. In this regard, the contributions to New York City from some 
States may not appear to be individually ``high'' amounts. However * * 
* these contributions, when considered together with the contributions 
from other States (i.e., the collective contribution) produce a large 
total contribution to nonattainment in New York City.
63 FR 57392.
    In addition, EPA stated, in the NOX SIP call final rule, 
that the multi-factor test included three other factors, as follows:
    In addition, EPA generally reviewed several other considerations 
before concluding that upwind emissions contribute significantly to 
downwind nonattainment. The EPA did not consider it necessary, or did 
not have adequate information, to apply each these factors with 
specificity with respect to each upwind State's emissions. In addition, 
in some instances, EPA did not have quantitative information to assess 
certain of these factors, and instead relied on qualitative 
information. These considerations were secondary aspects of EPA's 
analysis. They include:
     The consistency of the regional reductions with the 
attainment needs of the downwind areas with nonattainment problems.
     The overall fairness of the control regimes required of 
the downwind and upwind areas, including the extent of the controls 
required or implemented by the downwind and upwind areas.
     General cost considerations, including the relative cost-
effectiveness of additional downwind controls compared to upwind 
controls.
63 FR 57376.
b. Final Action
i. General Meaning of the ``Contribute Significantly'' Provision
    The significant contribution test of section 126(b)/110(a)(2)(D) 
represents Congress's effort to determine how the various users of the 
downwind air basin should share that valuable resource when the air 
basin has, or may have, a nonattainment problem. The sharing occurs 
through a determination by EPA that the appropriate upwind entities are

[[Page 28278]]

emitting pollutants in amounts that ``contribute significantly'' to a 
downwind nonattainment problem, or interfere with maintenance.
    Under EPA's favored interpretation of section 110(a)(2)(D)(i) 
(although, as described below, not the only reasonable interpretation), 
the amounts of emissions that contribute significantly must be 
prohibited. The remaining amounts of emissions--those that do not 
contribute significantly--need not be controlled under section 
110(a)(2)(D)(i). Under section 126(c), if EPA grants a petition on 
grounds that the indicated sources violate the prohibition of section 
110(a)(2)(D), EPA may promulgate a remedy that has the effect of 
requiring the elimination of the amount of emissions that contribute 
significantly to nonattainment, or that interfere with maintenance, 
downwind.
    The CAA does not define the term ``contribute significantly,'' nor 
specify any of the factors that should be considered in applying the 
term. That is, Congress did not provide that a specified amount of 
contribution from upwind sources to a downwind nonattainment problem 
should be considered to be ``significant,'' nor did Congress 
specifically direct EPA to determine that a particular amount of 
contribution should be considered ``significant.'' Certainly, Congress 
knew well how to draft the provision to include a specific standard or 
a set of criteria, had Congress chosen to do so. Compare section 183(e) 
(requiring EPA to establish controls on the set of consumer and 
commercial products that EPA determines account for at least 80% of VOC 
emissions in areas that violate the NAAQS) and section 107(d)(4)(A)(v) 
(establishing criteria for EPA to consider in determining whether to 
grant a State's request to exclude certain portions from ozone or 
carbon monoxide nonattainment areas classified as serious or higher).
    Nor does the statute require the downwind petitioner or EPA to 
demonstrate that the upwind reductions, with or without other 
reductions from local, national, or other regional measures, will 
result in attainment and maintenance of the downwind problem. By 
comparison, in other provisions, Congress did require the downwind 
nonattainment area or EPA to specify an attainment plan and 
demonstration. See sections 182(c)(2)(A), 182(d)(flush language at 
beginning), and section 182(e) (flush language at beginning) (downwind 
states designated nonattainment for ozone and classified as serious, 
severe, or extreme, must submit attainment demonstrations on specified 
schedules); and section 110(c)(1) (EPA must promulgate a Federal 
Implementation Plan under certain circumstances).18 
Similarly, in other sections, Congress required compliance with SIP 
requirements before a State with a nonattainment area would be eligible 
for certain benefits. See section 107(d)(3)(E)(ii) and (v) 
(nonattainment area may be redesignated to attainment only if, among 
other things, SIP has been approved and State has met applicable 
requirements); section 181(a)(5)(A) (nonattainment area may receive an 
extension of attainment date if, among other things, State has complied 
with all SIP requirements). Congress did not establish such strictures 
with respect to the downwind State under section 110(a)(2)(D)(i)(I).
---------------------------------------------------------------------------

    \18\ It is true that section 110(a)(2)(I) requires SIPs for 
nonattainment areas to meet the nonattainment requirements found in 
part D, which include requirements to submit an attainment 
demonstration. However, failure by a downwind State to submit an 
attainment demonstration would not have any direct effect on EPA's 
decision whether to grant the downwind State's section 126 petition.
---------------------------------------------------------------------------

    Rather, Congress provided simply that upwind contributions must be 
eliminated if they are ``significant''. According to the dictionary, 
the term ``significant'' means, among other things, ``(1) ``Having or 
expressing a meaning; meaningful * * * (3) Having or likely to have a 
major effect; important; (4) Fairly large in amount or quantity * * 
*.'' American Heritage Dictionary of the English Language (3d ed. 1992) 
1679. Thus, the term appears to permit of various meanings, ranging 
from the more general ``meaningful'' or ``important,'' which would 
permit consideration of more factors or circumstances; to a 
sufficiently large air quality contribution. Under these circumstances, 
EPA has discretion under Chevron U.S.A., Inc. v. Natural Resources 
Defense Council, 468 U.S. 1227 (1984) (Chevron), to an interpretation 
of the statutory test of ``contribute significantly'' that reflects a 
reasonable accommodation with the purposes of the statute.19
---------------------------------------------------------------------------

    \19\ The term ``contribute significantly'' or variations of that 
term is found in various other Clean Air Act provisions concerning 
various pollutants, including, among others section 169B(c)(1) 
(visibility impairment), section 187(c) (carbon monoxide), and 
section 189(e) (particulate matter). The term has been defined 
differently under those various sections. Indeed, in section 188(f), 
relating to particular matter, the term ``contribute significantly'' 
is used twice, and EPA has concluded that it should be given a 
different meaning for each of the two uses. ``Addendum to General 
Preamble for Future Proposed Rulemakings: State Implementation Plans 
for Serious PM-10 Nonattainment Areas, and Attainment Date Waivers 
for PM-10 Nonattainment Areas Generally,'' 59 FR 419998, 42004 
(August 16, 1994).
---------------------------------------------------------------------------

ii. Varied Circumstances of Air Pollutant Transport
    It was wise for Congress to authorize discretion to EPA because 
defining the significant contribution test amounts to determining how 
the downwind air basin should be shared among upwind and downwind 
claimants, a task that necessarily involves making judgments as to the 
extent and manner in which that basin may be shared under the specific 
circumstances presented. Because there are many different contexts in 
which air pollution transport may occur, the basin may be shared 
differently, and the significant contribution test may be applied 
differently, in those contexts. For example, the types of pollutants 
may vary, ranging from direct pollutants such as SO2, to secondary 
pollutants, such as NOX. The numbers of areas (both upwind 
and downwind) may vary. The numbers of sources and amounts of 
pollutants may vary. The status of both upwind and downwind control 
implementation efforts, and of air quality planning efforts, may also 
vary.
    To illustrate the practical importance of these variations:
    At one extreme, a relatively simpler transport problem may arise 
involving a direct pollutant, such as SO2, and one upwind State with 
one or a few sources, and one downwind State with one or a few 
sources. Under these circumstances, the sharing of the air basin 
presents important and complex decisions, but it need occur only as 
among several sources. Moreover, a clear path to attainment may be 
determined (although choosing among several alternative control 
schemes to reach attainment may be necessary). This scenario is 
similar to some of the past EPA rulemakings. See Air Pollution 
Control District of Jefferson County, Kentucky v. EPA, 739 F.2d 1071 
(6th Cir. 1984).
    The opposite extreme is similar to the circumstances of the 
NOX SIP call and today's rulemaking. These actions involve 
the greater technical complexity of a pollution problem caused by a 
secondary pollutant, ozone. There are numerous downwind areas with 
nonattainment problems, and numerous upwind sources in numerous upwind 
States. Upwind sources have varying impacts on the different downwind 
receptors. Downwind States are at varying stages in ozone planning 
efforts; some do not yet have approved attainment demonstrations. In 
addition, varying control levels may have already been implemented by 
similar sources.
    These variables may profoundly affect the type of control efforts 
on upwind sources that may be considered to be reasonable. For example: 
Assume that Downwind State exceeds its NAAQS by 10 percent. The amount 
of pollution is

[[Page 28279]]

determined to be created in 90 percent part by sources in Downwind 
State, and in 10 percent part by sources in Upwind State. In this 
example, were the Upwind Sources to eliminate their contribution, the 
Downwind State would experience attainment of the NAAQS.
    If the air basin in Downwind State is viewed as the resource of 
solely the citizens of Downwind State, then the Upwind Sources may be 
obliged to eliminate 100 percent of their contribution. However, if the 
air basin is viewed as a resource to be shared in some manner among the 
citizens of Upwind and Downwind States, then a different pattern of 
control obligations may emerge.
    Further, different results may seem reasonable depending on 
existing control levels. For example, in Scenario-1, assume that Upwind 
State has always enjoyed attainment air quality, and Upwind Sources 
have never implemented any controls, but that Downwind State has long 
experienced nonattainment air quality, and Downwind Sources have 
already implemented extensive controls. Under these circumstances, at 
least some level of controls on Upwind Sources may seem reasonable.
    On the other hand, under Scenario-2, assume, that Upwind State is 
itself a nonattainment area, and that Upwind Sources have already 
implemented extensive controls to improve air quality in Upwind State. 
Assume further that Downwind State has long experienced attainment air 
quality, Downwind Sources have never implemented any controls, and only 
recently, growth in Downwind State has led to sufficiently more 
emissions from Downwind Sources to tip air quality into nonattainment. 
Under these circumstances, a control level on Upwind Sources that is 
lesser than under Scenario-1, or even a zero control level on Upwind 
Sources, may seem reasonable.
iii. Definition of the Significant Contribution Test and Legislative 
History
    The EPA believes that Congress provided in section 126/110(a)(2)(D) 
the flexibility to determine the upwind control obligations under these 
varying circumstances. As indicated above, the term ``significant[]'' 
may be construed broadly, to mean ``important'' or ``meaningful''. The 
Senate Report accompanying the CAA Amendments of 1977, which added 
section 126, offered the following description of the purpose of the 
addition of section 126:
    The [1970 version of the Clean Air Act] did not specify any 
abatement procedure in the event that a stationary source on [sic: 
in] one State did emit air pollutants which adversely affected the 
air quality control efforts of another State. As a result, no 
interstate enforcement actions have taken place, resulting in 
serious inequities among several States, where one State may have 
more stringent implementation plan requirements than another State. 
For example, an implementation plan for the State of Ohio was not 
even proposed until 1976. It has now been challenged and has not yet 
been effectively implemented. As a result, there are no enforceable 
control requirements applicable to most of the significant major 
stationary sources of sulfur oxides in Ohio. The emissions from 
plants in Ohio are transported across the Ohio River to West 
Virginia, which must then cope with pollution not generated by a 
source under its own control; and must require more stringent 
control of West Virginia sources to attain the ambient air quality 
standards.
    In the absence of interstate abatement procedures, those plants in 
States with more stringent control requirements are at a distinct 
economic and competitive disadvantage. This new provision is intended 
to equalize the positions of the States with respect to interstate 
pollution by making a source at least as responsible for polluting 
another State as it would be for polluting its own State. S. Rep. 95-
127 (95th Cong. 1st Sess.) at 41-42.
    Clearly, the legislative history of section 126 indicates that this 
provision, which of course relies on the significant contribution test, 
is intended to take into account relative control requirements upwind 
and downwind. Congress's focus on this specific factor--which concerns 
costs and equity, and not air quality--coupled with the fact that the 
term ``significant'' may be read broadly, has led EPA to conclude that 
the term should be defined broadly to take account of all the important 
aspects of the interstate pollution problem. In the context of ozone, 
EPA applies this approach through a multi-factor formula discussed 
below.
    It should also be noted that the statutory provisions contain no 
constraint that would indicate that the downwind States must have 
developed attainment demonstrations before upwind controls may be 
imposed. On the contrary, section 126(c) establishes a 3-year period 
for implementation of controls that applies by its terms, without any 
reference to the timing of attainment needs downwind. This provision 
indicates that Congress intended section 126 controls to apply even in 
the absence of downwind attainment demonstrations.
iv. Application of Significant Contribution Test to Ozone Problems
(1) Nature of the Ozone Problem
    The ozone transport problem in the part of the United States 
covered by the section 126 petitions that EPA is considering in today's 
action may be characterized as follows: There are several downwind 
areas that have nonattainment air quality under the 1-hour ozone NAAQS, 
and numerous more that have nonattainment air quality under the 8-hour 
ozone NAAQS. These ozone problems are caused by the collective 
emissions from numerous downwind and upwind sources. As EPA stated in 
the NOX SIP Rule final rulemaking:
    Unhealthful levels of ozone result from emissions of NOX 
and VOCs from thousands of stationary sources and millions of mobile 
sources and consumer products and other sources across a broad 
geographic area. Each source's contribution is a small percentage of 
the overall problem; indeed, it is rare for emissions from even the 
largest single sources to exceed one percent of the inventory of ozone 
precursors even for a single metropolitan area. Under these 
circumstances, even complete elimination of any given source's 
emissions may well have no measurable impact in ameliorating the 
nonattainment problem. Rather, attainment requires controls on numerous 
sources across a broad area. Ozone is a regional scale problem that 
requires regional scale reductions. 63 FR 57375-57376 (quoting 
NOX SIP call NPR).
    Further, UAM-V air quality models show that the major areas in the 
northeast, with respect to which section 126 petitions have been 
submitted, have 1- and 8-hour nonattainment air quality problems that 
will continue even after all areas implement all controls specifically 
required under the CAA. These model runs assume that the amount of 
emissions will continue to grow at certain rates, and that meteorology 
will recur that replicates the types of weather episodes that since 
1988 have been conducive to ozone transport and to a high level of 
exceedances of the ozone NAAQS.
    Further, many States do not yet have SIPs approved as demonstrating 
attainment for each of the downwind areas at issue that have 
nonattainment problems.
    In addition, the areas with one-hour ozone NAAQS problems have, by 
and large, implemented more controls over a longer period than have 
their upwind contributors. While some downwind

[[Page 28280]]

nonattainment areas have not yet fully implemented all of their 
required measures, the UAM-V modeling shows that even when these 
measures are fully implemented, certain areas with nonattainment 
problems would continue to show nonattainment.
(2) Reasonable Step in Ameliorating Ozone Nonattainment
    Under the circumstances presented concerning the ozone problem, EPA 
believes it reasonable to interpret section 126(b)/110(a)(2)(D)(i) to 
authorize a step in the direction of ameliorating the downwind 
nonattainment problem by achieving cost-effective reductions to 
eliminate an important component of the upwind contribution. Additional 
reductions may be necessary from, for example, sources in the downwind 
area itself or from national measures that EPA may promulgate. However, 
again, these sections do not require an overall plan for attainment 
prior to action to eliminate significant upwind contributions.
    This interpretation treats section 126(b)/110(a)(2)(D)(i) as a 
control mechanism that is similar to numerous other provisions in the 
CAA in which Congress mandated cost-effective or technologically 
achievable reductions in ozone precursors from a particular group of 
sources for the purpose of ameliorating ozone nonattainment problems, 
but without any requirement for some overall attainment plan.
    For example, in promulgating various mobile source rules to control 
ozone precursors, EPA generally examines the need for further 
reductions of those precursors based on the expected attainment or 
nonattainment status of areas nationwide. The EPA then examines whether 
further regulation of the mobile sources is appropriate, based on the 
amount of emissions from those sources as well as the feasibility and 
cost-effectiveness of such regulation.\20\ The resulting rules are not 
designed, by themselves, to lead to attainment in all areas; and in 
promulgating these rules, EPA does not specify any particular strategy 
for reductions from additional sources designed to reach attainment in 
all areas. As additional examples, EPA recently promulgated standards 
for nonroad diesel engines. EPA first noted the level of contribution 
from such engines to total nationwide NOX and PM emissions 
and stated that without further controls, the contribution from these 
engines would increase. EPA then developed standards based on the 
feasibility of controls, the amount of emission reductions (in tons of 
NOX, VOC and PM reduced), and the cost of the controls or 
control levels. Although EPA did compare the cost-effectiveness of 
these standards against that of other standards, EPA did not attempt to 
integrate these standards into any specific strategy for achieving 
attainment based on reductions from all sources. 63 FR 56968 (Oct. 23, 
1998). See 62 FR 54694 (Oct. 21, 1997) (promulgation of standards 
requiring emission reductions from heavy duty motor vehicles based on 
feasibility, taking into consideration cost-effectiveness, without 
specifying any particular overall strategy for overall attainment).
---------------------------------------------------------------------------

    \20\ Different types of mobile sources are regulated based on 
different specific sections of the CAA, with some sections placing 
more emphasis on one or more of the criteria mentioned above. E.g., 
section 202(i)(3)(c) (Tier 2 light-duty standards based on need for 
further reductions, availability of technology, and cost-
effectiveness); section 202(a)(3)(A) (Heavy-duty on-highway 
standards reflect greatest reduction achievable through available 
technology, considering cost, energy, and safety factors).
---------------------------------------------------------------------------

    Similarly, under section 183(e), Congress directed EPA to determine 
the categories of consumer and commercial products that account for at 
least 80 percent of the VOC emissions from such products in areas that 
violate the ozone NAAQS. After doing so, EPA must proceed to regulate 
those categories of sources by requiring ``best available controls.'' 
Again, the statute does not specify the need for any particular link to 
demonstrations of attainment downwind.
    For these reasons, EPA disagrees with the commenters who argued 
that EPA should deny the section 126 petitions because a number of 
nonattainment areas may be brought into attainment without transport 
controls. Although this may be true, EPA's modeling shows areas with 
nonattainment problems that are not expected to be brought into 
attainment even with transport controls.
    The EPA also disagrees with the commenters who stated that the 
section 126 petitions should be denied because implementation of the 
NOX SIP call (and, presumably, the section 126 control 
program) will not by itself achieve attainment. These commenters 
suggested that this failure to achieve attainment indicates that upwind 
controls have no use for attainment purposes, and that only local 
controls should be implemented.
    The EPA agrees that regional controls may not by themselves result 
in attainment in all downwind areas, but modeling shows that these 
controls ameliorate nonattainment problems. In addition, EPA does not 
believe that Congress mandated an overall demonstration of attainment 
as a prerequisite to requiring even initial reductions from upwind 
States whose emissions clearly are part of the nonattainment problem. 
All that is necessary is an indication that these reductions ameliorate 
the nonattainment problem.
(3) Factors in Weight of Evidence Test
    Further, EPA believes that the weight-of-evidence test that 
considers a series of factors is an appropriate means to define the 
significant contribution standard.
(a) Collective Contribution
    One of the principal factors that EPA examined was the collective 
contribution aspect of ozone formation, described above. That ozone is 
caused by the collective contribution of numerous sources across a 
broad geographic area is universally true, and thus is true for each of 
the downwind receptors. This factor pushes in the direction of 
recognizing that even relatively small (in an absolute sense) 
contributions must be recognized as a meaningful part of the problem 
and thus potentially as part of the solution.
(b) Extent of Downwind Problem
    A second principal factor that EPA recognized was the extent of the 
downwind problems. As noted above, for each downwind area with 
nonattainment air quality under either or both the 1- and 8-hour NAAQS, 
EPA used computer modeling to determine that certain of these 
nonattainment areas would continue to have nonattainment problems in 
the future, even assuming the implementation by all areas of 
specifically required CAA obligations. These circumstances indicate 
that additional controls will be necessary for the downwind areas to 
attain. This factor also pushes in the direction of recognizing that 
even relatively small (in an absolute sense) upwind contributions must 
be recognized as a meaningful part of the problem and thus potentially 
as part of the solution.
(c) General Factors
    EPA also examined some factors more generally, without applying 
them to each downwind (or upwind) contributor. First, EPA recognized 
that in general, as part of the Ozone Transport Commission (OTC), the 
section 126 petitioners have agreed to implement NOX 
controls pursuant to a Memorandum of Understanding,--the OTC 
NOX MOU--which requires controls similar to those that EPA 
would mandate were the section 126 petitions approved. Moreover, 
virtually all of the downwind areas are themselves upwind

[[Page 28281]]

contributors, and thus would be subject to the controls placed on 
upwinds. As a result, sources in the section 126 petitioning States may 
be expected to be subjected to at least the same level of control as 
upwind sources targeted by those petitions. Indeed, in general, the 
SIPs in downwind areas with one-hour NAAQS ozone nonattainment problems 
have already required ozone precursor controls over a longer period of 
time than have the upwind areas. This factor, which is related to 
equity, also generally argues in favor of controls on upwind sources. 
As noted above, the legislative history of the 1977 CAA Amendments 
notes that one of the purposes of section 126 was to ensure this type 
of equity.
    Moreover, because downwind areas under the one-hour NAAQS are 
already fairly vigorously controlled, the cost-per-ton removed for 
additional downwind controls is generally higher than the cost-per-ton 
removed for upwind controls. As EPA stated in the NOX SIP 
call final rule--
    [I]n general, areas that currently have, or that in the past have 
had, nonattainment problems under the 1-hour NAAQS, or that are in the 
Northeast Ozone Transport Region (OTR), have already incurred ozone 
control costs. The controls already implemented in these areas tend to 
be among the less expensive of available controls * * *. EPA has 
determined that, in general, the next set of controls identified as 
available in the downwind nonattainment areas under the 1-hour NAAQS 
would cost approximately $4,300 per ton removed. By comparison, EPA has 
determined that the cost of the regional reductions required [in the 
NOX SIP Call final rule] would approximate $1,500 per ton 
removed. Thus, it appears that the upwind reductions required by [the 
NOX SIP Call final rule] are more cost-effective per ton 
removed than reductions in the downwind nonattainment areas.

63 FR 57379. This factor of relative cost-effectiveness points towards 
controls on even relatively small (in absolute terms) upwind 
contributions.
(d) Air Quality Metrics
    The factors described above informed EPA's judgment about the size 
of upwind contributions that should be considered to be a meaningful 
part of downwind attainment problems. EPA employed two air quality 
models--UAM-V and CAMx--which each generated a set of modeling runs to 
measure the amount of contribution generated by the upwind State's 
entire inventory of ozone precursors to the downwind area's 
nonattainment problem. Commenters have questioned EPA's evaluation of 
the impact of the full amount of the statewide inventory, as opposed to 
evaluating the impact of only the amount of emissions required to be 
reduced by the rulemaking. EPA believes it appropriate to evaluate the 
impact of the entire inventory because this amount causes the upwind 
State's contribution to ambient ozone levels downwind.
    The EPA evaluated this impact on the basis of a set of metrics for 
the UAM-V modeling runs, and a separate set of metrics for the CAMx 
modeling runs. The EPA determined that, in light of the collective 
contribution nature of the ozone problem and the extent of the downwind 
ozone nonattainment problems, even relatively small (in absolute terms) 
upwind contributions to those nonattainment problems should be 
considered to be meaningful components of the problems and thus as 
potentially subject to controls. Only if the statewide contribution was 
extremely small did EPA conclude that none of the emissions from the 
State's sources could be considered to contribute significantly to the 
downwind nonattainment problems. The EPA's specific evaluation of these 
metrics, including its response to comments received, is discussed 
below.
(e) Cost-Effectiveness Factor
    After determining which upwind State emissions should be considered 
part of the downwind nonattainment problem, EPA considered whether the 
portion of those emissions from section 126 sources could be reduced in 
a highly cost-effective manner. EPA determined the amounts that could 
be so reduced to be the amounts that significantly contribute to 
downwind nonattainment, and that therefore must be prohibited.\21\ In 
theory, if all of the upwind State's emissions came from section 126 
sources and could be eliminated through highly cost-effective controls, 
EPA would conclude that all of those emissions should be considered to 
contribute significantly to nonattainment downwind, and EPA would 
require their elimination. On the other hand, in theory, if EPA 
determined that no highly cost-effective controls were available, EPA 
would determine that none of the emissions contribute significantly, 
and therefore than none need be eliminated.
---------------------------------------------------------------------------

    \21\ Strictly speaking, only the amount of emissions that may be 
eliminated through highly cost-effective controls should be 
considered the amount that contributes significantly to downwind 
nonattainment. For convenience, throughout the notices and 
supporting documents for today's action, as well as the notices and 
supporting documents for the NOX SIP call final 
rulemaking, EPA occasionally refers to the entire amount of 
emissions from the upwind State as contributing significantly to 
nonattainment downwind.
---------------------------------------------------------------------------

    The EPA received comments that it does not have authority to use 
cost as a factor, or that if EPA could consider cost, EPA did not 
formulate its consideration of cost in a rational manner. These 
comments are discussed below. The EPA also received comment that it 
should not apply a uniform level of control to all affected upwind 
sources. These comments are also discussed below.
(f) Air Quality Modeling of Amount of Reductions
    Finally, as a general consideration, EPA modeled the upwind 
reductions and determined that they generally were consistent with the 
attainment needs of the downwind areas with nonattainment problems. 
That is, the reductions from affected sources in each upwind State, 
combined with reductions from affected sources in the other upwind 
States, resulted in meaningful ambient improvement downwind, and did 
not result in any situation in which upwind sources were required to 
reduce more than necessary to achieve attainment in each of the 
downwind areas that they impact. This consideration further supports 
EPA's determination as to significant contribution.
c. Comments and EPA Responses
i. Vagueness
    Some commenters considered the significant-contribution test as EPA 
defined it in the NPR to be vague or unclear.
    Other commenters did not appear to consider the test to be vague, 
and EPA believes that its discussion of the test in the NOX 
SIP Call rulemaking (referenced in the section 126 NPR) adequately 
explained the Agency's interpretation and methodology. In any event, 
EPA believes that the description above of the multifactor test further 
elaborates on the connection of each of the primary and secondary 
factors to the conclusions drawn.
ii. Collective Contribution
    In the NPR, EPA incorporated the determination in the 
NOX SIP call that whether the upwind sources' contribution 
to nonattainment downwind rises to the level of significance is 
determined, in part, by reference to the ambient impact of all of the 
ozone precursor emissions in the upwind sources' state, as indicated by 
the state-by-state UAM-V and CAMx modeling runs. In addition, EPA 
evaluated the impact of the reductions in emissions by modeling the 
impact of

[[Page 28282]]

all upwind reductions on downwind receptors.
(1) Comments
    Commenters argued that EPA erred in considering collective 
contribution as a factor in the determination of significant 
contribution. According to the commenters, EPA employs the collective 
contribution approach to evaluate the downwind air quality impact of 
emissions from sources in each upwind State by considering those 
emissions to be part of the entire set of multi-upwind-state emissions. 
According to the commenters, EPA then determines that because the 
entire set of multi-upwind-state emissions collectively contributes 
significantly to nonattainment downwind, each upwind State's emissions, 
and emissions from all the targeted sources in each upwind State, 
should be considered to contribute significantly to nonattainment 
downwind. According to the commenters, sections 126(b) and 
110(a)(2)(D)(i) should be read to require evaluation of the downwind 
air quality impact of emissions from only the particular sources 
targeted by the section 126 petitions, or at most from each upwind 
State on a State-by-state basis, and not on any geographically larger 
basis. Some commenters stated that the terms of section 126(b), which 
limit EPA's possible finding to ``any major source or group of 
sources,'' requires EPA to make the determination of significant 
contribution on the basis of each source or group of sources targeted 
by the section 126 petitions, and not on a state-wide basis.
    Commenters further stated that reliance on broader modeling results 
based on collective contribution failed to evidence the precise 
contribution from the targeted upwind sources or their individual 
states, and allowed EPA to claim that the small contributions from the 
targeted sources were in fact larger because they were linked to 
contributions from other sources. The commenters further expressed 
concern that the collective contribution approach proves too much 
because it could be used to combine any particular set of emissions 
with a much larger set of emissions that have a large impact downwind, 
and thereby support the claim that the initial set of emissions is 
partly responsible for that large impact downwind. Similarly, EPA 
received comments that it should evaluate the petitions on a petition-
by-petition basis.
(2) Responses
(a) Petition-by-Petition
    The EPA agrees that with respect to each section 126 petition, EPA 
must make a determination as to whether the sources identified in that 
petition contribute significantly to nonattainment in the petitioning 
state. EPA believes that it may rely on the collective contribution 
factor to inform its judgment as to the level of contribution that it 
may consider to be significant. That is, as explained above, even 
relatively small amounts of contribution (in an absolute sense) may be 
considered to be significant in light of the collective contribution of 
many sources of the ozone problem.
(b) Statewide Groups of Sources
    Further, section 126 authorizes EPA to grant a petition with 
respect to either ``any major source'' or ``group of stationary 
sources.'' The EPA believes it is reasonable to treat all section 126 
sources in a single upwind State as a ``group[] of sources,'' \22\ 
rather than to treat sources individually or to treat smaller sets of 
sources as a ``group''. As noted elsewhere, ozone results from 
emissions of numerous sources over a broad geographic area; in many 
cases, even the largest source comprises less than 1% of the inventory. 
Accordingly, attempting to quantify the impact of individual sources, 
or even small groups, may prove futile.
---------------------------------------------------------------------------

    \22\ The term ``group of sources'' is not defined, and does not 
exclude other reasonable methods of combining sources, such as 
combining all targeted sources in a particular geographic region.
---------------------------------------------------------------------------

    EPA believes it is reasonable to confine its analysis of the 
section 126 sources to a state-by-state basis, so that the impact of 
emissions from sources in one upwind State is analyzed separately from 
the impact of emissions from sources in another upwind State (except, 
as described below, for analyzing the impact of the reductions from the 
section 126 controls). That is, EPA did not combine emissions from more 
than one upwind State in its UAM-V zero-out or CAMx apportionment 
modeling. EPA agrees that it is sensible to demarcate sets of upwind 
emissions along some lines, and evaluate those sets separately.
    The EPA believes that in the context of section 126 action, 
demarcating sources by state lines is reasonable. Although emissions 
and the ozone they generate of course do not respect state boundaries, 
those boundaries are important for regulatory purposes.23 As 
discussed elsewhere in today's rulemaking, under EPA's interpretation 
of section 126, sources subject to that provision may not emit in 
excess of the amounts that would be authorized under SIP provisions 
that meet the requirements of section 110(a)(2)(D)(i)(I). In the case 
of ozone precursors, the section 110(a)(2)(D)(i)(I) requirements are 
applied on the basis of state-wide emissions. If State-wide emissions 
contribute significantly to nonattainment downwind, then the State's 
section 126 sources may be subject to SIP controls; if state-wide 
emissions do not contribute significantly, then the State's section 126 
sources would not be subject to SIP controls. For these reasons, it is 
appropriate to evaluate the impact of State-wide emissions from all 
source categories in order to determine whether the emissions from the 
section 126 sources should be considered to contribute significantly.
---------------------------------------------------------------------------

    \23\ In general, under the CAA, States are given the primary 
responsibility for air pollution prevention and control. Section 
101(a)(3).
---------------------------------------------------------------------------

    By the same token, if EPA finds that emissions from a State's 
section 126 sources contribute significantly to nonattainment downwind 
because State-wide emissions contribute significantly, the State may 
promulgate SIP controls that would achieve sufficient emissions 
reductions so that EPA may conclude that the section 126 sources in 
that State should no longer be considered to contribute significantly 
to nonattainment. The State may place these SIP controls on any sources 
it chooses, and is not limited to imposing controls on the section 126 
sources. Under these circumstances, as discussed elsewhere in today's 
rulemaking, EPA may rescind the section 126 finding. This 
determination--that in light of the SIP controls, the section 126 
sources no longer contribute significantly--is possible if the initial 
finding that the section 126 sources do contribute significantly was 
made in the context of examining the emissions from the upwind State 
itself.
    This analysis leads EPA to conclude that in determining whether the 
sources targeted in each petition make a significant contribution to 
the petitioning state, EPA may rely on the results of the State-by-
State UAM-V zero-out modeling and the state-by-state CAM-X modeling as 
the primary basis for that determination. These models allow a 
determination that state-wide emissions do or do not contribute 
significantly to nonattainment downwind, and therefore--under EPA's 
interpretation of section 126, as described immediately above--whether 
the emissions from the section 126 sources contribute significantly to 
nonattainment.

[[Page 28283]]

    The EPA also believes that the collective contribution aspect of 
ozone formation provides a separate basis for relying on the 
determination of whether State-wide emissions contribute significantly 
as the basis for the determination that emissions from section 126 
sources contribute significantly. That is, because an ozone 
nonattainment results from the emissions of numerous sources across a 
broad geographic area, and because the State-wide emissions from a 
particular upwind State contribute significantly to that problem, then 
the various emitters within the upwind State should be considered to 
contribute significantly to that problem.
    Both of the above bases for relying on State-wide emissions impacts 
to determine whether section 126 source emissions contribute 
significantly--EPA's interpretation of the relationship of section 
126(b) to section 110(a)(2)(D)(i), and the collective contribution 
aspect of ozone formation--are consistent with certain facts concerning 
the NOX emissions inventories for the upwind States 
associated with ozone transport problems. Specifically, as discussed 
below, for each upwind State subject to today's rulemaking, the section 
126 sources are a substantial portion of the State-wide NOX 
inventory. Thus, it is more readily apparently, that because the entire 
upwind State emissions contribute significantly, the portion of those 
emissions from the section 126 sources contribute significantly.
    The EPA is well aware that the metrics for determining the air 
quality component of the significant contribution test are based on the 
entire set of emissions from the upwind State, not only the emissions 
from the section 126 sources. It is conceivable that modeling only the 
emissions from the section 126 sources would result in smaller ambient 
impacts downwind, and that those smaller impacts, if analyzed on the 
basis of the metrics and thresholds developed for State-wide emissions, 
may not exceed those thresholds.
    The EPA believes it sensible to link its determinations to the 
state-by-state modeling of emissions of all ozone precursors in each 
state. For certain upwind States, this modeling indicates that all 
ozone precursors in the State contribute significantly to nonattainment 
downwind. A group of sources that represents a substantial portion of 
those emissions should be considered to contribute significantly to 
nonattainment downwind as well. Otherwise, the determination that all 
of a State's emissions contribute significantly could in effect be 
defeated by the simple expedient of dividing those emissions among 
various source categories, and determining that the emissions from each 
source category are too few to constitute a significant 
contribution.24
---------------------------------------------------------------------------

    \24\ EPA acknowledges that it is theoretically possible for 
there to be two adjoining upwind States, one of which has a 
NOX inventory that contributes significantly downwind, 
but that has only a few emissions from section 126 sources; and the 
second of which has a NOX inventory that does not 
contribute significantly downwind, but that has a large percentage 
of emission from section 126 sources. These theoretical 
circumstances could lead to the anomaly that the relatively few 
emissions from section 126 sources in State-1 may be subject to 
section 126 controls, but the greater emissions from section 126 
sources in State-2 may not be subject to section 126 controls. These 
factual circumstances are not present in this or related 
rulemakings. All the States for which actions are being taken 
contain both substantial amounts of emissions from utilities and 
from other sources. No upwind States contain an exceptionally high 
percentage of emissions from section 126 sources, but do not 
contribute significantly.
---------------------------------------------------------------------------

    Additional data sets support EPA's technical determination that 
emissions from the section 126 sources contribute significantly 
downwind. For the NOX SIP call rulemaking, EPA conducted air 
quality modeling runs indicating the impact of emissions reductions, 
comparable to those required today, in certain of the upwind States. 
These model runs indicate that ambient ozone reductions occur in 
northeastern nonattainment areas as a result of these reductions. It 
should be noted that some of the section 126 petitioning States do not 
target sources in all of the upwind States that EPA determined during 
the NOX SIP call rulemaking to contribute significantly to 
those States. Even so, EPA believes that the sources targeted by the 
section 126 petitions overlap sufficiently with this NOX SIP 
call modeling so that the conclusions of this modeling--that upwind 
NOX reductions improve ambient ozone concentrations 
downwind--apply as well in today's action. This modeling is described 
in Air Quality Modeling Technical Support Document for the 
NOX SIP Call, Docket A-96-56, No. VI-B-11, p. 70.
    In addition, the U-runs performed by EPA, described below, confirm 
that the amount of emissions reductions from each upwind State's 
section 126 sources has a meaningful downwind impact. Although EPA did 
not complete these U-runs on a state-by-state basis, the results 
indicate an impact from each upwind State's sources. In some cases, 
these impacts are small in an absolute sense, a result that is to be 
expected when the amount of emissions reductions from sources in a 
particular upwind State required through the highly cost effective 
controls is relatively small, and when those sources are distant from 
the downwind receptors.
    However, the reduction in downwind ozone levels is meaningful, and 
thus supports the affirmative technical determination made today 
concerning the section 126 sources in that upwind State, because ozone 
nonattainment problems are caused by emissions from numerous sources 
over a broad geographic area, and those problems must be solved by 
achieving emissions reductions from numerous sources over a broad 
geographic area. Both the U-runs and the modeling described immediately 
above that EPA conducted for the NOX SIP call indicate that 
the ambient impact of the emissions reductions from sources in a 
particular upwind State are more discernible when they are combined 
with comparable reductions from sources in other upwind States.
iii. Bright Line
    Commenters argued that EPA should have established a bright line 
test based on air quality impact alone. Under this view, EPA would 
determine that a specified frequency and/or magnitude of ambient ozone 
impact would constitute a significant contribution, so that amounts of 
NOX emissions that cause an impact higher than the specified 
amount would have to be reduced to the point where the remaining 
emissions caused an impact less than the specified amount. Proponents 
of this approach have pointed out that EPA's approach results in a 
situation in which Upwind State-1 that is near to a downwind 
nonattainment area may continue to contribute a substantially higher 
amount of ozone to the downwind area even after it implements the 
highly cost effective controls than Upwind State-2 that is further away 
from the nonattainment area contributes even before Upwind State-2 
implements any controls.
    The EPA rejected the bright-line approach because EPA considers it 
reasonable, in the context of the ozone nonattainment problems under 
both the 1- and 8-hour NAAQS, to interpret the significant contribution 
standard as mandating the elimination of the portion of NOX 
emissions from sources in states upwind of the nonattainment problems 
that may be eliminated through highly cost-effective controls, when 
those emissions cause even a relatively small (in an absolute sense) 
ozone impact. Interpreted and applied in this manner, section 126(b)/
110(a)(2)(D) authorize a useful step towards ameliorating ozone 
nonattainment problems. As discussed

[[Page 28284]]

above, in many other instances, Congress has directly mandated, or has 
authorized EPA to require, a cost-or technology-based control scheme 
designed to reduce ozone precursors for the purpose of ameliorating 
nonattainment problems.
    The EPA recognizes that this interpretation and application of the 
significant contribution test diminishes the importance of the fact 
that ozone precursors have a greater impact the closer they are emitted 
to the nonattainment problem. However, all of the sources subject to 
the affirmative technical findings contribute to the nonattainment 
burdens in an amount that, considering the collective contribution 
nature of the ozone problem, must be viewed as meaningful. Moreover, 
nothing in sections 126/110(a)(2)(D) indicate that Congress intended 
that sources in upwind States closer to a nonattainment problem bear a 
proportionately larger burden of emissions reduction. Compare by 
section 211(c)(4)(C) (EPA may approve state fuel controls, and thereby 
waive Federal preemption of such rules, only after finding that ``no 
other measures that would bring about timely attainment exist, or if 
other measures exist and are technically possible to implement, but are 
unreasonable or impracticable;'' this provision indicates Congress knew 
how to require that control schemes be prioritized).
iv. Other Factors
    In addition, some commenters stated that it was unlawful to include 
certain factors in the significant contribution test, including the 
secondary factors concerning (1) the overall fairness of the control 
regimes required of the downwind and upwind areas (including the extent 
of the controls required or implemented by the downwind and upwind 
areas), and (2) general cost considerations, including the relative 
cost-effectiveness of additional downwind controls compared to upwind 
controls.
    The commenters argued that these factors are invalid because 
section 110 does not by its terms authorize consideration of cost and 
economic fairness. They further argued that EPA has overlooked the fact 
that some States in the South and Midwest have already incurred 
significant control costs and have attained compliance with the 1-hour 
NAAQS.
    As discussed below, EPA believes that the significant contribution 
test does permit consideration of cost factors. Indeed, the Senate 
Report explaining passage of section 126 in the CAA Amendments of 1977 
made clear that one purpose of the provision was to enable downwind 
sources that were subject to controls because located in nonattainment 
areas to assure that their upwind competitors that contributed to the 
nonattainment problem would not reap the competitive advantages of 
lighter control burdens. S. Rep. 95-127 (95th Cong. 1st Sess.) at 41-
42.
    Further, evidence available to EPA indicates that in general, 
sources in the one-hour nonattainment areas have incurred greater 
control obligations than sources in the upwind areas.
2. Cost Factor
    Summary: In the NPR, EPA proposed to follow the interpretation of 
the significant contribution test set forth in the SIP Call Final Rule. 
In particular, EPA proposed to use the cost of available controls in 
upwind areas as a factor in the significant contribution test.
    In today's action, EPA has concluded that the proposed 
determination of significant contribution is appropriate. Thus, after 
determining the degree to which NOX emissions from named 
source categories contribute to downwind nonattainment or maintenance 
problems in the petitioning States, the Agency determined whether any 
amounts of the NOX emissions from those source categories 
may be eliminated through controls that are highly cost effective on a 
cost-per-ton basis. EPA has concluded that the amount of NOX 
emissions from named source categories that can be eliminated through 
application of highly cost-effective control measures contributes 
significantly to nonattainment or maintenance problems downwind for 
purposes of sections 110(a)(2)(D) and 126.
    The EPA received many comments critical of the use of the 
availability of cost-effective control measures in any way in the test 
for determining significant contribution. These comments generally fell 
into two categories. Commenters in the first category typically 
asserted that the existence of a ``significant contribution'' to 
nonattainment should be based merely on the quantitative amount of 
ozone transported from sources in one State to another and that cost 
should be irrelevant to the inquiry. These commenters argued that a 
significant contribution should not be any less significant simply 
because it is uneconomic to control, and that an insignificant 
contribution should not become significant simply because it is 
economical to control. Rather than an element of the significant 
contribution analysis, the commenters suggested that the cost of 
controls should only be relevant for purposes of selecting controls 
once the Agency found that the amount of contribution in fact met some 
bright line quantitative measurement for significance.
    By comparison, commenters in the second category argued that EPA 
should not utilize the cost of controls as an element of the 
significant contribution determination because it would unduly limit 
relief from ozone transport from upwind sources. These commenters 
suggested that by linking the determination of significant contribution 
to the availability of highly cost-effective controls, upwind sources 
could continue to emit NOX that has an adverse transport 
impact simply because of the cost of emissions control, whereas the 
finding of significant contribution should be based simply on the 
actual amount of ozone transport in the downwind State without regard 
to the cost of controls upwind.
    Response: EPA disagrees with the commenters' assertions that the 
relative cost of controls has no place in the determination of 
significant contribution. EPA believes that cost of controls in 
general, and the consideration of the availability of highly cost-
effective controls in particular, is an appropriate factor for 
consideration in making the determination of significant contribution. 
The EPA notes that the term ``significant contribution'' is not defined 
in the statute and that neither the statute nor the legislative history 
provides meaningful guidance for interpreting the term. As explained 
elsewhere in this document, EPA contends that Congress modified the Act 
in the 1990 Amendments to incorporate the concept of significant 
contribution as applied by the Agency and the courts to provide a de 
minimis exception for pollutant transport across State boundaries. EPA 
had formerly interpreted section 110(a)(2)(E) of the 1977 Act to 
include this concept because otherwise the Agency arguably had to 
reject SIPs that allowed for any amount of cross-boundary transport, no 
matter how minute. See, e.g., Connecticut v. EPA, 696 F.2d at 164.
    In prior determinations of significant contribution, whether in the 
context of section 126 petitions or in partial SIP revisions, EPA has 
generally utilized a multi-factor test to assess the presence or 
absence of a significant contribution to nonattainment. See, e.g., 
Proposed Determination Under Section 126 of the Clean Air Act 
(Interstate Pollution Abatement), 49 FR 34851, 34859 (September 4, 
1984). The determinations included consideration

[[Page 28285]]

of a variety of factors addressing issues similar to the issues 
addressed by the factors in the significant contribution test utilized 
by EPA for today's Section 126 determinations. EPA has previously 
included the relative cost of controls as one consideration in the 
determination of the existence of a significant contribution. Id., 
(including as a factor ``the relative costs of pollution abatement 
between source that contribute to a violation''). EPA has made these 
determinations on a case by case basis and has stated that the 
enumerated factors are not exclusive. See Final Determination Under 
Section 126 of the Clean Air Act (Interstate Pollution Abatement), 49 
FR 48152 , ________ (December 10, 1984) (``EPA enumerated a 
nonexhaustive list of factors which the Administrator may take into 
account in determining whether a contribution is significant'') . Given 
the lack of a statutory definition of what emissions ``contribute 
significantly to nonattainment,'' EPA believes that it has discretion 
to decide what factors would best accomplish the statutory goal of 
eliminating upwind emissions that comprise a significant contribution 
to downwind nonattainment.
    Through modeling, EPA has determined that the sources covered by 
this section 126 action significantly contribute to downwind ambient 
concentrations of ozone in one or more petitioning States. Because of 
the pervasive problem of ozone transport across a large geographic 
area, many upwind sources covered by today's action may be the source 
of ozone for several downwind States. It does not necessarily follow, 
however, that EPA should force the sources to halt all emissions 
activities to eliminate the contribution to downwind States. EPA 
believes that a definition of significant contribution that required 
the elimination of all emissions that contribute to downwind 
nonattainment is not a practical or appropriate method to address the 
complex overlapping transport problems posed by ozone. Therefore, EPA 
must utilize a workable method to determine when a contribution is 
significant for purposes of section 110(a)(2)(D).
    EPA has concluded that it is appropriate to utilize a multi-factor 
approach to assess whether there is a significant contribution and to 
take into account the availability of highly cost effective control 
measures to the named sources as one factor in that analysis. EPA 
believes that whether some amount of emissions is significant depends, 
in part, upon the availability of highly cost-effective controls.
    In 1990 Congress amended section 110(a)(2)(D) to make clear that 
contribution must be ``significant'', i.e., not de minimis, while 
remaining silent on the criteria EPA should use to make a determination 
of significant contribution. Especially in light of EPA's past practice 
of using a multi-factor approach--including cost--to assess 
contribution, Congress' action affirms that EPA retains discretion 
under the CAA to consider factors other than air quality when making a 
determination of significant contribution.
    The EPA's approach is consistent with case law concerning the CAA, 
as well as other statutes. See Warren Corp. v. EPA, 159 F.3d 616, ____ 
(D.C. Cir. 1998), amended on other grounds, 164 F.3d 676 (1999) 
(deferring to EPA's interpretation that CAA section 211(k)(8) allows 
EPA to consider economic factors as well as air quality in promulgating 
gasoline anti-dumping provisions), citing NRDC v. EPA, 824 F.2d 1146, 
1157 (D.C. Cir. 1987) (en banc) (interpreting CAA section 112 and 
rejecting the view that ``as a matter of statutory interpretation, cost 
and technological feasibility may never be considered under the Clean 
Air Act unless Congress expressly so provides''); International 
Brotherhood of Teamsters v. United States, 735 F.2d 1525, 1529 
(D.C.Cir. 1984) (``In the absence of clear congressional direction to 
the contrary, we will not deprive the agency of the power to fine-tune 
its regulations to accommodate worthy nonsafety interests'' under a 
statute focused on safety); Grand Canyon Air Tour Coalition v. FAA, 154 
F.3d 455, 475 (D.C.Cir. 1998) (FAA properly considered effects of rule 
on air tourism industry where statute did not forbid such consideration 
and required not total but only ``substantial restoration of the 
natural quiet.''). When Congress intends to exclude consideration of 
all issues other than air quality concerns, it has used decidedly 
different statutory language than appears in sections 126 and 
110(a)(2)(D). See Lead Indus. Ass'n v. EPA, 647 F.2d 1130, 1148-50 
(D.C.Cir. 1980) (Congress' directive to promulgate primary national 
ambient air quality standards which ``allow [] an adequate margin of 
safety * * * to protect the public health'' precluded consideration of 
cost and technology factors). Where, as here, the statute is silent 
regarding the factors EPA may or may not consider, it is generally 
permissible for the Agency to consider other relevant factors or policy 
objectives in carrying out the statutory goal, absent some indication 
to the contrary in the statutory text, structure or history. NRDC v. 
EPA, 824 F.2d at 1157, 1158; see also International Brotherhood, 735 
F.2d at 1528-29.
    Some commenters point to a Supreme Court case, Union Electric v. 
EPA, 427 U.S. 246 (1976) for the proposition that EPA may not include 
costs considerations in the interpretation of ``significant 
contribution.'' In Union Electric, the Supreme Court found that the 
1970 version of section 110(a)(2) did not allow EPA to disapprove an 
attainment sulfur dioxide (SO2) SIP on the ground that the SIP's 
control measures for complying with the SO2 NAAQS would be so stringent 
as to be technologically or economically infeasible. Id. at 265. The 
Supreme Court made it clear that Congress left States free to choose 
technology forcing measures to achieve attainment within what was then 
a three-year deadline. Id. at 268-69. This holding is simply inapposite 
to EPA's interpretation of ``significant contribution.'' With respect 
to the separate question, whether EPA can take cost into account in 
interpreting the minimum that State SIPs are required to include, the 
Supreme Court expressly states that ``the Administrator may consider 
whether it is economically or technologically possible for the state 
plan to require more rapid progress than it does.'' Id. at 264, fn. 13. 
This language from the case supports EPA's interpretation of 
``significant contribution'' rather than the views of commenters.
    Finally, EPA notes that the 1977 legislative history of the CAA 
demonstrates that Congress was clearly concerned about the relative 
cost of pollution control in upwind and downwind states when it added 
section 126 to the CAA. The Senate Report accompanying the Clean Air 
Act Amendments of 1977, which added section 126, offered the following 
description of the purpose of the new section's addition:
    In the absence of interstate abatement procedures those plants 
in States with more stringent control requirements are at a distinct 
economic and competitive disadvantage. This new provision is 
intended to equalize the positions of the States with respect to 
interstate pollution by making a source at least as responsible for 
polluting another State as it would be for polluting its own State.

S. Rep. 95-127 (95th Cong. 1st Sess.) at 41-42. This legislative 
history evinces Congressional concern about economic equity and 
supports EPA's consideration of cost-effectiveness as a factor in 
determining significant contribution.

[[Page 28286]]

C. EPA's Interpretation of Section 126: 8-Hour NAAQS Summary

    In the NPR, EPA proposed to make a finding that certain sources and 
categories of sources identified in the Sec. 126 petitions 
significantly contribute to attainment in, or interfere with 
maintenance by, one or more of the petitioning States. EPA proposed to 
make this finding based upon evidence that upwind sources contribute 
significantly to violations of the ozone NAAQS under both the pre-
existing 1-hour standard and the new 8-hour standard which EPA recently 
promulgated. EPA's proposed approach was consistent with that of the 
NOX SIP Call in which the Agency concluded that 22 States 
and the District of Columbia must submit State Implementation Plan 
(``SIP'') revisions to prohibit specified amounts of NOX 
emissions in order to reduce NOX and ozone transport across 
State boundaries in the eastern half of the United States. See, 
``Finding of Significant Contribution and Rulemaking for Certain States 
in the Ozone Transport Assessment Group Region for Purposes of Reducing 
Regional Transport of Ozone; Rule,'' 63 FR 57356 (Oct. 27, 1998). In 
the latter action, EPA extensively discussed the Agency's authority and 
rationale for finding that violations of the 8-hour ozone standard are 
appropriate for consideration in the assessment of interstate transport 
of ozone in violation of CAA section 110(a)(2)(D). Id., 63 FR at 57370-
57374. In the NPR for today's action, EPA also proposed to make the 
finding of significant contribution for purposes of Sec. 126 based, in 
part, upon violation of the 8-hour standard in full recognition that 
the Agency has not yet formally designated any areas as nonattainment 
under the 8-hour standard.
    EPA received numerous comments on this issue, either directly or 
through cross references to earlier comments on the NOX SIP 
Call. Those commenters critical of EPA's use of the 8-hour standard 
raised four specific arguments: (i) that EPA cannot base the finding of 
significant contribution on violations under the 8-hour standard before 
the Agency has designated any areas as nonattainment under such 
standard; (ii) that EPA cannot use modeling to establish nonattainment 
of the 8-hour standard as a basis for the finding of significant 
contribution; (iii) that EPA cannot base the finding of significant 
contribution on the 8-hour standard now and must wait until after 
completion of SIPs to implement that standard under CAA section 172; 
and (iv) that EPA's reliance upon violations of the 8-hour standard for 
purposes of the NOX Sip Call or this finding under section 
126 is inconsistent with President Clinton's stated implementation plan 
for that standard.
    Response: Although EPA has previously replied to these comments in 
connection with the NOX SIP Call as noted above, it wishes 
to reiterate and expand upon those responses here.
    (a) Use of the 8-hour standard before designation of nonattainment 
areas for that standard. The commenters noted that EPA will not 
formally designate nonattainment areas for the 8-hour ozone standard 
until the year 2000. The commenters argued that until such formal 
designation, EPA cannot make any determination concerning significant 
contribution of a pollutant from a State to any such future 
nonattainment area in another State. According to the commenters, until 
EPA designates areas for nonattainment under the 8-hour standard, the 
Agency has no authority either to require SIP submissions under section 
110(a)(1) or to make findings of significant contribution under 
Sec. 126 with respect to the 8-hour standard. The heart of the 
commenters' argument is that Sec. 110 may empower EPA to rectify 
interstate pollutant transport, but that EPA must read the term 
``area'' into section 110(a)(2)(D)(i)(I) so that EPA has no authority 
to do so absent formally designated nonattainment areas. As further 
evidence of their position, the commenters alleged that the new source 
review requirements and other ozone nonattainment provisions of the 
1990 CAA apply only to areas designated as nonattainment.
    EPA disagrees that it must have designated 8-hour standard 
nonattainment areas prior to taking today's action under section 
126(b). First, section 110(a)(2)(D)(i)(I) provides, inter alia, that a 
SIP must prohibit emissions that ``contribute significantly to 
nonattainment in * * * any other State.'' The provision does not, by 
its terms, indicate that this downwind ``nonattainment'' must already 
be formally designated under section 107 as a nonattainment ``area.'' 
Because the provision does not include the term ``area'' in conjunction 
with the term ``nonattainment,'' EPA believes that the express terms of 
the statute do not support the claim of the commenters. Similarly, 
section 126 as a whole also makes no reference to nonattainment 
``areas'' and instead pointedly refers only to air pollution which can 
contribute to violation of the relevant NAAQS. In section 126(a)(1)(B), 
the provision states, inter alia, that States must provide notice of 
new or modified sources ``which may significantly contribute to levels 
of air pollution in excess of the [NAAQS] in any air quality control 
region outside of the State'' (emphasis added). Likewise, section 
126(c) contains no restrictions upon violations or remedies based upon 
the existence of nonattainment areas. Most importantly for today's 
action, section 126(b) provides that any State may petition EPA for a 
finding that sources in another State are making a significant 
contribution, but does not tie that finding to the existence of a 
formally designated ``nonattainment area'' in the petitioning State.
    EPA contends that it would be unreasonable to read into section 126 
a requirement that States must wait until formal designation of 
nonattainment areas before they may petition the Agency for relief or 
before the EPA may take action to alleviate transport. Such an approach 
would permit upwind States to inundate downwind States with emissions 
for extended periods of time before downwind States could seek relief. 
Given that section 126(a) clearly contemplates advance notice of 
construction or modification of sources before they begin to contribute 
to downwind levels of air pollution, regardless of whether the downwind 
area is designated nonattainment or not, EPA believes that Congress did 
not intend to preclude States from seeking recourse through section 
126(b) prior to official designation of nonattainment status. As 
explained elsewhere, EPA contends that the statutory reference in 
section 126(b) should read ``Sec. 110(a)(2)(D)(i),'' thereby 
establishing that Congress intended that States have the right to 
petition for a finding that sources in a State contribute significantly 
to nonattainment in, or interfere with maintenance by, another State.
    By contrast, EPA notes that other provisions of the CAA do 
explicitly employ the term ``area'' in conjunction with the term 
``nonattainment,'' and that these provisions clearly refer to areas 
designated as nonattainment. See, e.g., sections 107(d)(1)(A)(i), 
181(b)(2)(A), 211(k)(10)(D). Similarly, the provisions to which the 
commenters appeared to refer, section 172(b) and section 172(c)(5)(new 
source review) and section 181(a)(1) and section 182 (classified ozone 
nonattainment area requirements), by their terms apply to a designated 
nonattainment ``area.'' EPA finds it unremarkable that provisions which 
explicitly impose requirements on nonattainment areas apply to 
nonattainment ``areas.'' Rather than supporting the commenters' claim, 
EPA believes that the difference between the

[[Page 28287]]

explicit wording of the provisions illustrates the distinction Congress 
intended in the statute. The sections at issue, section 110(a)(2)(D) 
and section 126, do not make reference to nonattainment ``areas,'' but 
rather to ``nonattainment'' or to levels of air pollution in excess of 
the NAAQS.
    As further evidence of the distinction in the provisions, EPA notes 
that section 176A(a) authorizes EPA to establish a transport region 
whenever ``the Administrator has reason to believe that the interstate 
transport of air pollutants from one or more States contributes 
significantly to a violation of a [NAAQS] in one or more other 
States.'' This reference to ``a violation of a [NAAQS]'' makes clear 
that EPA is authorized to form a transport region when an upwind State 
contributes significantly to downwind area with nonattainment air 
quality, regardless of whether the downwind area is designated 
nonattainment. EPA also notes that the remedy under section 176A is a 
SIP call under section 110(a)(2)(D), thereby shedding light on the 
meaning of section 110(a)(2)(D) and confirming that the Agency may use 
that provision as a tool to alleviate interstate transport. The EPA 
believes that section 110(a)(2)(D) and section 126 should be read the 
same way because of the parallels between those provisions and section 
176A(a). All of the provisions address transport and all are triggered 
when emissions from an upwind area ``contribute significantly'' to air 
pollutants downwind. EPA believes that it is appropriate in light of 
these related provisions to apply a consistent approach to interpreting 
and implementing the provisions. Thus, EPA contends that the term 
``nonattainment'' in section 110(a)(2)(D) is synonymous with ``a 
violation of the [NAAQS]'' in section 176A. Section 126(b), in EPA's 
opinion, refers to section 110(a)(2)(D)(i), thereby incorporating that 
standard by reference. None of the three provisions at issue here make 
reference to nonattainment ``areas,'' and EPA believes that this common 
fact is significant.
    EPA also notes that the CAA contains other provisions that refer to 
the actual air quality status of a particular area rather than to the 
area's formally designated status. These provisions include: (i) 
sections 172(c) and 171(1), the reasonable further progress 
requirements which require nonattainment SIPs to provide for ``such 
annual incremental reductions in emissions * * * as * * * may * * * be 
required * * * for the purpose of ensuring attainment of the [NAAQS]; 
and (ii) section 182(c)(2), the attainment demonstration requirement, 
which mandates a ``demonstration that the [SIP] * * * will provide for 
attainment of the [NAAQS].'' These provisions refer to air quality 
status rather than to the designated status of the area in question. In 
a series of notices in the Federal Register, EPA has relied on these 
references to air quality status, rather than designated status, in 
determining that areas seeking to redesignate from nonattainment to 
attainment did not need to complete Rate Of Progress SIPs or attainment 
demonstrations, even though those requirements generally apply to areas 
designated as nonattainment. EPA took these actions because the air 
quality for those areas seeking redesignation was, in fact, in 
attainment notwithstanding their formal designation as nonattainment 
areas. See ``State Implementation Plans: General Preamble for the 
Implementation of Title I of the Clean Air Act Amendments of 1990; 
Proposed Rule,'' 57 FR 13498, 13564 (April 16, 1992); ``Determination 
of Attainment of Ozone Standard for Salt Lake and Davis Counties, Utah, 
and Determination Regarding Applicability of Certain Reasonable Further 
Progress and Attainment Demonstration Requirements; Direct Final Rule,: 
60 FR 30189, 30190 (June 8, 1995); and ``Determination of Attainment of 
Ozone Standard for Salt Lake and Davis Counties, Utah, and 
Determination Regarding Applicability of Certain Reasonable Further 
Progress and Attainment Demonstration Requirements; Final Rule,'' 60 FR 
36723, 36724 (July 18, 1995). The EPA's interpretation was upheld by 
the Court of Appeals for the 10th Circuit in Sierra Club v. EPA, 99 
F.3d 1551, 1557 (10th Cir. 1996).
    EPA has concluded that it may take today's action before formal 
designation of nonattainment areas under the 8-hour standard. EPA 
believes that it is clear that the reference in section 
110(a)(2)(D)(i)(I) to ``nonattainment'' refers to actual air quality, 
not the formal designation status of an area. EPA believes that it is 
also clear that section 126(b) is tied to actual air quality rather 
than to designation status. The explicit terms of section 110(a)(2) and 
section 126 do not refer to nonattainment ``areas.'' Such a reading 
would not be reasonable in light of the purpose of the provisions to 
halt emissions of pollutants which significantly contribute to 
nonattainment or maintenance of attainment in other States. 
Accordingly, EPA believes that this issue is controlled by the clear 
terms of the statute and is resolvable under the first step of Chevron. 
If, however, the provisions were ambiguous on this point, then EPA 
believes that, under the second step in the Chevron analysis, a court 
should give EPA deference for its reasonable interpretation. EPA 
contends that interpreting ``nonattainment'' to refer to air quality is 
reasonable for the reasons described above. Additional arguments based 
upon the structure of the Act are detailed in EPA's action on the 
NOX SIP Call. See, 63 FR 57356, 57372.
    (b) Use of modeling to support a finding of significant 
contribution to nonattainment of the 8-hour standard. The commenters 
also argued that EPA cannot use ``modeled nonattainment areas'' for 
purposes of section 126 to determine whether the emissions of sources 
in one State contribute significantly to nonattainment of the 8-hour 
ozone standard in another State. By the commenters' reasoning, EPA must 
first define such nonattainment areas in accordance with the applicable 
regulations for determining violations of the ozone standard. Thus, the 
commenters argued that EPA can only make the determination of 
significant contribution to nonattainment of the 8-hour standard in 
accordance with monitoring requirements of 40 CFR 50.10. In particular, 
the commenters objected to EPA using modeled nonattainment areas in 
advance of developing a procedure for States to perform attainment 
demonstration modeling for the new 8-hour standard.
    EPA disagrees with the commenters on the appropriateness of using 
modeling to establish nonattainment. First, EPA disagrees that it may 
not generally use modeling to assess the likelihood of a future 
significant contribution to nonattainment or interference with 
maintenance as contemplated by section 126. The provision does not 
direct the Agency as to the particular method it must use to make the 
finding. Historically, however, EPA has used modeling to determine the 
presence or absence of such an impact. See, e.g., Air Pollution Control 
District of Jefferson County, 739 F.2d at 1077-79 (Agency reliance on 
modeling); New York v. EPA, 852 F.2d at 580 (Agency criticism of 
insufficient modeling). Moreover, EPA notes that section 126 implicitly 
contemplates that EPA may use modeling to assess significant 
contribution. In particular, section 126(b) provides that any State may 
petition for a finding that any source or group of sources ``emits or 
would emit'' in violation of section 110. This construction indicates 
that EPA may determine whether sources would

[[Page 28288]]

violate the provision now or in the future, thereby requiring that the 
Agency would have to model to determine whether there would be a future 
significant contribution to nonattainment or interference with 
maintenance in the petitioning State. This anticipation of prospective 
significant contribution is likewise implicit in section 126(a) which 
provides for notice in advance of construction of major new sources or 
the modification of existing sources that would have the same effect. 
Thus, section 126 not only does not preclude EPA from modeling to make 
a finding, it logically requires it in the case of petitions alleging 
future significant contributions to nonattainment or interference with 
maintenance. To interpret section 126 to forbid the use of modeling to 
predict future air quality conditions would be inconsistent with the 
statute and absurd.
    Second, EPA notes that the commenters appear to misunderstand how 
the Agency did use both monitoring data and modeling to project whether 
areas will be in nonattainment of the 8-hour standard in the future for 
purposes of this action. EPA did obtain monitoring data which 
demonstrated that many areas in the petitioning States are currently 
violating the 8-hour standard At the outset of the process, EPA thus 
relied on actual monitored data of the type desired by the commenters. 
As described in more detail in the NPR, EPA then utilized modeling to 
determine which areas currently violating the 8-hour standard would be 
likely to continue to violate the 8-hour standard in 2007, factoring in 
expected ozone reductions and concomitant air quality improvements from 
Federal and State control measures. Significantly, EPA used modeling 
not to add areas to the list of nonattainment areas, but rather to 
subtract from the list of areas already shown through monitoring data 
to be in violation of the 8-hour standard at this time. EPA believes 
that this conservative approach is a reasonable means to anticipate 
which areas will continue to be in nonattainment of the 8-hour standard 
unless sources in upwind States undertake additional control measures. 
By contrast, the commenters imply that EPA cannot possibly determine 
which areas will be in nonattainment in a future year unless EPA waits 
until that year for actual monitored data showing that nonattainment. 
Such an approach would be inconsistent with the provisions of section 
126 as discussed above, and would be illogical because it would 
preclude EPA from encouraging upwind States to obtain emission 
reductions that the Agency can now reasonably identify through modeling 
as necessary for downwind States to achieve attainment of the 8-hour 
standard as expeditiously as practicable.
    (c) Finding of significant contribution to nonattainment under the 
8-hour standard before submissions of SIPs in accordance with section 
172. The commenters also argued that EPA cannot make a finding under 
section 126(b) using the 8-hour ozone standard because of timing 
issues. In the NOX SIP Call, EPA concluded that States must 
submit SIPs for the new 8-hour standard in accordance with the schedule 
in section 110(a)(1), i.e., within three years after promulgation of a 
new or revised NAAQS. The commenters claimed that such a timetable is 
unauthorized under the CAA and that EPA must follow the schedule set 
forth in section 172(b), which provides that SIPs required to satisfy 
nonattainment areas are due three years after the designation of an 
area as nonattainment pursuant to section 107(d). Because EPA has 
stated that it intends to complete the designation process for 
nonattainment areas under the 8-hour standard in 2000, the commenters 
reason that SIPs to address that nonattainment would not be due until 
2003. Following that reasoning, the commenters argued that because of 
the schedule set forth in section 172(b), EPA cannot now use violations 
of the 8-hour standard in connection with petitions under section 126.
    For the reasons detailed in the NOX SIP Call, EPA 
disagrees with the contentions of the commenters concerning the timing 
of the NOX SIP Call and SIPs to implement the 8-hour 
standard. See, 63 FR 57356, 57372-57374. With respect to today's action 
under section 126(b), EPA reiterates that sections 110(a)(1) and (2) 
authorize the Agency to require SIP revisions to address SIP 
requirements in section 110(a)(2)(D) on the schedule set forth in the 
NOX SIP Call.
    EPA also notes that section 126 itself contains no reference to 
section 172 as a timeline for requiring SIP revisions or implementation 
of necessary emission reduction requirements as a result of a finding 
under section 126(b). In fact, section 126(c) specifically stipulates 
that existing sources may not continue to operate longer than three 
months after a section 126(b) finding unless the source ``complies with 
such emission limitations and compliance schedules * * * as may be 
provided by the Administrator.'' If EPA extends the compliance period, 
section 126(c) provides that the source must comply ``as expeditiously 
as practicable, but in no event longer than three years after such 
compliance.'' EPA believes that the explicit provisions of section 126 
refute the commenters' implication that the Agency cannot take action 
under section 126(b) until after the designation of nonattainment areas 
and submission of SIPs for the 8-hour standard and the ultimate 
potential compliance date, i.e., potentially as much as ten years after 
designation. Having established that sources in upwind jurisdictions 
will significantly contribute to ozone nonattainment or interfere with 
maintenance in the petitioning States, EPA has authority to take action 
and to require compliance in the time frame that the Agency believes 
will allow attainment as expeditiously as practicable.
    Although the commenters claimed that it is absurd to grant the 
section 126 petitions now because this action will require upwind 
emission reductions prior to forcing downwind areas to implement all 
statutorily required or necessary controls, EPA disagrees. As explained 
in connection with the NOX SIP Call, downwind nonattainment 
areas have historically borne the brunt of controls designed to reduce 
ozone and ozone precursors for many years. In spite of these efforts, 
many areas have had difficulty meeting the 1-hour ozone standard 
because of the influx of ozone and ozone precursors from upwind 
jurisdictions. Under the new 8-hour standard, monitoring data indicate 
that more and larger areas will potentially be in nonattainment. EPA 
therefore believes that it is even more important to implement regional 
control strategies to mitigate interstate pollution in order to assist 
downwind areas in achieving attainment. As such, the granting of the 
section 126 petitions is not an effort ``to enforce the 8-hour 
standard'' prematurely as alleged by the commenters, but rather the 
exercise of appropriate authority to begin to alleviate emissions that 
are already contributing to ambient air conditions which exceed that 
standard. This action will help meet the statutory objective of 
achieving attainment as expeditiously as practicable.
    (d) Finding of significant contribution under the 8-hour standard 
in light of President Clinton's implementation plan for the standard. 
Commenters also claimed that EPA's use of the 8-hour ozone standard for 
purposes of the proposed section 126 finding was inconsistent with 
President Clinton's Memorandum of July 16, 1997, entitled 
``Implementation of Revised Air Quality Standards for Ozone and 
Particulate

[[Page 28289]]

Matter'' (the ``Implementation Memo''). See, 62 FR 38421 (July 18, 
1997). That document accompanied EPA's promulgation of the new 8-hour 
NAAQS for ozone. The commenters noted that the Implementation Memo made 
explicit reference to the statutory timeline for implementation of the 
new 8-hour standard and indicated that there would be up to three years 
to designate nonattainment areas under the new 8-hour standard, up to 
three more years to develop SIPs for the new 8-hour standard, and up to 
a total of ten years from designation to comply with the new 8-hour 
standard. The commenters implied that the presence of the ``general 
timeline'' in the Implementation Memo precludes EPA from making a 
finding of significant contribution under section 126 using the 8-hour 
standard at this time.
    EPA disagrees that today's finding is inconsistent with the 
Implementation Memo. EPA believes that the commenters have overlooked 
key passages of the Implementation Memo which make clear that the 
Agency is to take action to alleviate regional transport of ozone and 
ozone precursors immediately, rather than to wait until formal 
designation of nonattainment areas under the 8-hour standard.
    Contrary to the commenters' implications, the Implementation Memo 
does not state that EPA is to do nothing to implement the 8-hour ozone 
standard until after designation of nonattainment areas and submission 
of SIPs. The document explicitly discussed the need for a regional 
strategy to address ozone nonattainment and the investigation of 
strategy options by the Ozone Transport Assessment Group (OTAG) to 
alleviate interstate transport of ozone. See, 62 FR at 38425. In 
particular, the Implementation Memo stated ``that EPA will propose a 
rule requiring States in the OTAG region that are significantly 
contributing to nonattainment or interfering with maintenance of 
attainment in downwind States to submit SIPs to reduce their interstate 
pollution.'' Id. This was a clear reference to the NOX SIP 
Call. The Implementation Memo promised issuance of the NOX 
SIP Call final rule in September of 1998, well in advance of 
designation of nonattainment areas for the 8-hour standard. 
Significantly, the Implementation Memo did not indicate that EPA would 
restrict the NOX SIP Call to nonattainment areas under the 
old 1-hour standard. To the contrary, the document stated, inter alia, 
that : ``Most important, based on the EPA's review of the latest 
modeling, a regional approach, coupled with implementation of already 
existing State and Federal Clean Air Act requirements, will allow the 
vast majority of areas that currently meet the 1-hour standard but 
would not otherwise meet the new 8-hour standard to achieve healthful 
air without additional local controls.'' Id. In other words, the 
Implementation Memo contemplated that control measures under the 
NOX SIP Call would help alleviate nonattainment of the 8-
hour standard. Rather than suggesting that EPA is to defer any action 
to ensure reductions in emissions that contribute to regional ozone 
transport to achieve the 8-hour standard, the Implementation Memo 
clearly contemplated that EPA should and would take appropriate action 
in advance of designations.
    Similarly, with regard to the ``transitional classification,'' the 
Implementation Memo provided that: ``Because many areas will need 
little or no additional new local emission reductions to reach 
attainment, beyond those reductions that will be achieved through the 
regional control strategy, and will come into attainment earlier than 
otherwise required, the EPA will exercise its discretion under the law 
to eliminate unnecessary local planning requirements for such areas.'' 
Id. The referenced ``regional control strategy'' is the NOX 
SIP Call. Again, the Implementation Memo not only does not direct 
inaction on the 8-hour standard, it specifically presumes that EPA will 
take action on a regional basis to mitigate ozone transport without 
regard to whether or not it has formally designated areas as 
nonattainment for the 8-hour standard.
    In short, EPA believes that the Implementation Memo reflected the 
intention that EPA is to take appropriate advance action to ensure 
future compliance with the 8-hour standard, and that such action should 
specifically include a regional strategy to reduce ozone and ozone 
precursors such as NOX. It is not reasonable to assume that 
EPA must wait up to three years for formal designation of nonattainment 
areas, much less the additional three years for development of 
nonattainment SIPs or up to twelve years for full compliance, before it 
may take appropriate action to address interstate transport under 
section 110(a)(2)(D)(i), whether in the form of the NOX SIP 
Call, as specifically contemplated in the Implementation Memo, or 
otherwise under section 126. At the time of the Implementation Memo, 
EPA had not yet proposed to take action on the section 126 petitions 
and thus the absence of references to those petitions is not 
significant. Like the NOX SIP Call, EPA's action under 
section 126 is based upon a finding of significant contribution by 
sources in upwind States. Like the NOX SIP Call, EPA's 
action on the section 126 petitions is premised on the need to achieve 
regional reductions in ozone and ozone precursors in order to enable 
all States to achieve the 8-hour standard expeditiously. EPA's finding 
under section 126 is consistent with the Implementation Memo.

D. EPA's Interpretation of Section 126: Remedy

    In the NPR, EPA proposed a set of controls that would apply if any 
of the petitions were granted. The EPA further proposed the maximum of 
the 3 years allowed by the statute from the date of the final approval 
of a section 126 petition to the date that the affected upwind sources 
must implement controls that EPA may promulgate. The EPA further 
proposed that if the petitions were granted during the fall of 1999, 
EPA would grant a maximum of 3 years from the beginning of the next 
ozone season. The EPA received numerous comments on this aspect of the 
rulemaking.
1. Three-Year Period
    Some commenters sought a longer-than-3-year period, but EPA 
continues to believe that the section 126(c) provisions that establish 
this period should be interpreted as establishing a ceiling of no more 
than 3 years for implementation.
2. Uniform Level of Controls
a. Comments
    Commenters argued that EPA has not justified uniform control levels 
on upwind sources in light of the varying impacts among the different 
upwind sources and the downwind receptors. These commenters stressed 
that in general, the greatest part of a downwind area's nonattainment 
problem results from emissions local to the downwind area; that the 
next greatest part of the problem results from emissions in adjoining 
States; and that emissions from further upwind States are a relatively 
small part of the problem. According to these commenters, it would be 
more cost-effective in terms of ambient impact to focus more controls 
on sources in the local and adjoining areas.
    The commenters further stated that the fact that the section 126 
petitions present fewer downwind receptors (compared to the 
NOX SIP call) that are concentrated in the northeast renders 
the uniform remedy particularly suspect. Commenters added that EPA 
concerns about the difficulty of establishing a remedy with state-by-
state

[[Page 28290]]

variations was not a valid reason if state-by-state variations were 
otherwise justifiable.
b. Response
    The EPA's response to these comments is similar to EPA's response 
to comments that EPA should establish a bright-line approach for 
determining significant contribution. That is, EPA believes its uniform 
approach to the remedy is reasonable, regardless of whether other 
approaches would also be considered reasonable.
    Moreover, EPA's approach to the remedy stems directly from its 
interpretation of the significant contribution test. EPA's 
interpretation incorporates the application of cost-effective controls 
to determine the amount of emissions considered to contribute 
significantly. This application is, by its terms, uniform among all 
upwind sources.
    EPA believes that this approach to the significant contribution 
determination, and thus to the remedy, is reasonable. As noted above, 
sections 126(b)/110(a)(2)(D)(i)(I) do not include criteria for defining 
and applying the significant contribution test. In addition, section 
126(c) does not include criteria for determining the level of controls 
that EPA is authorized to promulgate (except for the general 
requirement that the controls must be designed to ``bring about 
compliance with the requirements contained in'' section 
110(a)(2)(D)[(i)] as expeditiously as practical, but in no case later 
than three years after the date of such finding).
    In particular, Congress did not provide any requirement that local 
sources or adjoining sources are obligated to implement reductions 
sooner, or to a greater degree, than sources further away. Congress has 
included comparable provisions under other requirements. For example, 
the Clean Air Act Amendments of 1990 included section 182, which 
established a five-step set of graduated controls on ozone 
nonattainment areas. The level of control requirements for 
nonattainment areas increase with the severity of their nonattainment 
problem. At the lower and upper boundaries of this scheme, areas with 
``marginal'' problems are required to implement a lighter level of 
controls, section 182(a); and areas with ``extreme'' problems are 
required to implement a much higher level of controls, section 182(e). 
By comparison, in sections 126/110(a)(2)(D), Congress did not indicate 
more stringent sets of controls on upwind areas that immediately adjoin 
downwind states with nonattainment problems, and a lower level of 
controls on the further upwind areas.
    As an additional example, section 211(c)(4)(C) provides the test 
for granting a waiver of Federal preemption for State fuel controls. 
Under this test, EPA may approve the state fuel controls only after 
finding that ``no other measures that would bring about timely 
attainment exist, or if other measures exist and are technically 
possible to implement, but are unreasonable or impracticable.'' This 
provision illustrates that Congress knew how to require that control 
schemes be prioritized, and Congress chose not to include such a 
requirement in sections 126/110(a)(2)(D)(i)(I).
    As noted above, under these circumstances, EPA believes that it has 
discretion under Chevron to develop a reasonable interpretation that 
gives effect to the statutory purposes of ameliorating air pollution 
transport.
    For the reasons described above, EPA believes it has a valid basis 
for establishing controls that are highly cost-effective on section 126 
sources in States whose overall NOX emissions contribute 
significantly to nonattainment downwind. As noted above, this approach 
is fully consistent with the approach Congress and EPA have taken in 
many other instances in which controls have been imposed on other 
sources. The EPA's approach results in controls on sources whose 
emissions have a meaningful impact on nonattainment downwind, in light 
of the collective contribution nature of ozone nonattainment problems.
    In addition, as noted above, imposing a lower--or even a zero--
level of controls on sources that are further away, yet still emit into 
the same air basin as the more highly controlled sources, would give 
the lesser controlled sources a competitive advantage. This competitive 
advantage runs contrary to one of the purposes of section 126, as 
expressed by the legislative history, described above, of eliminating 
the competitive advantages enjoyed by upwind sources at the expense of 
downwind sources.
    Further, for the NOX SIP call rulemaking, EPA conducted 
air quality modeling that assumed lower levels of controls on sources 
in certain upwind States. The results of this modeling generally 
indicated that lower levels of controls in the further-away upwind 
States resulted in fewer ozone reductions in the northeast 
nonattainment areas, compared to a uniform, higher level of control. 
See Air Quality Modeling Technical Support Document for the 
NOX SIP call, Docket A-96-56, No. VI-B-11, p. 69.
    The EPA believes that the above-described reasons fully justify its 
decision to adopt, as the remedy, a uniform set of highly cost-
effective controls. As additional reasons, EPA notes that a non-uniform 
remedy would create substantial administrative complexities, as 
described in the NOX SIP call rulemaking. In addition, in 
the NOX SIP call NFR, EPA determined that emissions in each 
upwind state--including the section 126 sources in those states--
generally contribute to several downwind nonattainment problems under 
the 1-hour NAAQS, and numerous downwind nonattainment problems under 
the 8-hour NAAQS. For some of these downwind nonattainment problems, 
the downwind states have submitted a section 126 petition for which EPA 
is today granting an affirmative technical determination; for others, 
the downwind State has recently submitted a section 126 petition; and 
for others, the downwind States have not submitted a section 126 
petition. Regardless, EPA believes that in determining whether a 
contribution is significant, including assessing the cost-effectiveness 
of the upwind controls, it is reasonable to recognize that in general, 
those controls will result in benefits throughout several downwind 
areas under the one-hour NAAQS, and numerous downwind areas under the 
eight-hour NAAQS. This issue is further discussed in the NOX 
SIP Call final rule, 63 FR 57404-57405. As a result, EPA believes that 
the controls for each upwind State should be considered as providing 
benefits for at least several, and in some cases many, downwind areas. 
As a qualitative matter, the fact that the controls provide benefits in 
numerous downwind areas significantly improves the efficacy of the 
controls.

E. Obligations of Downwind States

1. Comments
    Numerous commenters representing the interests of upwind sources 
and States stressed that in many cases, the petitioning States have not 
completed all of the SIP requirements to which they are subject under 
the CAA Amendments of 1990. These commenters argued that the section 
126 petitions should be denied on this basis.
2. Response
    The EPA disagrees that incomplete SIPs would preclude EPA from 
issuing findings requested by the section 126 petitioners concerning 
upwind sources.
    The EPA responded at length to comparable comments in the 
NOX SIP call final rule, 63 FR 57380, and EPA incorporates 
those responses into

[[Page 28291]]

today's action. In addition, EPA has included in the rulemaking docket 
for today's action a set of tables identifying the SIP submittal 
requirements applicable to various downwind nonattainment areas under 
the 1990 CAA Amendments, and summarizing the progress made by the 
downwind states in completing their requirements. Although the downwind 
States have not yet complied with some SIP submittal requirements, they 
have complied with the vast majority of those requirements.
    In addition, neither section 126(b)-(c) nor section 110(a)(2)(D) 
contains any requirements that the section 126 petitioners or other 
downwind states complete their SIP requirements before they become 
entitled to the section 126/110(a)(2)(D) protections. By comparison, in 
other CAA provisions, Congress required compliance with SIP 
requirements before a State with a nonattainment area would be eligible 
for certain benefits. See section 107(d)(3)(E)(ii) and (v) 
(nonattainment area may be redesignated to attainment only if, among 
other things, SIP has been approved and State has met applicable 
requirements); section 181(a)(5)(A) (nonattainment area may receive an 
extension of attainment date if, among other things, State has complied 
with all SIP requirements). Congress did not establish such strictures 
with respect to the downwind State under sections 126(b)-(c) or 
110(a)(2)(D)(i)(I).
    In addition, as EPA pointed out in the NOX SIP call 
final rule, 63 FR 57380, air quality modeling shows that even if the 
downwind states were to comply fully with all of the specifically 
required CAA controls, they would continue to experience nonattainment 
problems to which emissions from sources in the upwind States are 
contributing.

F. Effect of 1-Hour Attainment

    In the section 126 NPR, EPA proposed which upwind States contain 
sources of emissions named in the petitions that contribute 
significantly to nonattainment problems in the petitioning States under 
the 1-hour ozone standard, and where petitions were based on it, the 8-
hour ozone standard that EPA promulgated to replace the 1-hour ozone 
standard. These linked upwind States, which are identified in Tables 
II-1 and II-2 in the section 126 NPR (63 FR 56303), were based on 
determinations made in the NOX SIP call. After the 
publication of the section 126 NPR, two additional states, Maine and 
New Hampshire, submitted petitions under the 8-hour ozone standard. EPA 
published a supplemental proposal regarding those petitions on March 3, 
1999 (64 FR 10342).
    After publication of the section 126 NPR on October 21, 1998, EPA 
preliminarily determined that the air quality data for 1996-1998 for 
certain areas in the petitioning states indicated that those areas--
which were still violating the 8-hour ozone standard--were no longer in 
violation of the 1-hour ozone standard. These areas were: Boston-
Lawrence-Worcester, Massachusetts-New Hampshire; Portland, Maine; 
Portsmouth-Dover-Rochester, New Hampshire; and Providence, Rhode Island 
(63 FR 69598, December 17, 1998).25 In addition, EPA 
believes that the 1996-98 air quality data for Pittsburgh, 
Pennsylvania, indicates that Pittsburgh has attained the 1-hour ozone 
standard. If EPA reaches a final determination that these areas have 
attained the 1-hour standard, EPA will conclude that the 1-hour 
standard will no longer apply anywhere in Maine, New Hampshire, and 
Rhode Island. The 1-hour standard will still apply to certain areas in 
Massachusetts and Pennsylvania. Moreover, all of these areas currently 
violate the new 8-hour standard that EPA promulgated to replace the 1-
hour standard.
---------------------------------------------------------------------------

    \25\ Based on these data, EPA published a notice of proposed 
rulemaking on December 17, 1998 (63 FR 69598), in which the Agency 
proposed to determine that the 1-hour standard had been achieved in 
these areas and would no longer apply to those areas.
---------------------------------------------------------------------------

    Because EPA has preliminarily determined that these areas no longer 
have air quality in violation of the 1-hour standard, EPA believes it 
would not be appropriate for EPA to consider them as downwind receptor 
areas for purposes of determining whether upwind areas are 
significantly contributing to 1-hour nonattainment in these areas. 
While EPA has not yet made a final determination that these areas are 
attaining the 1-hour standard, EPA believes that, in light of the air 
quality monitoring data for 1996-98 for these areas, it is prudent to 
delete them as receptor areas for purposes of this action under section 
126.
    It is important to note that the more protective 8-hour ozone 
standard applies in all of these areas. Pennsylvania, Maine, 
Massachusetts, and New Hampshire all petitioned EPA under both the 1-
hour and 8-hour ozone standards. A determination that any of the areas 
in these States has air quality meeting the 1-hour standard does not 
affect EPA's significant contribution determinations under the 8-hour 
standard with regard to 8-hour nonattainment and maintenance problems 
in these States. Indeed, the deletion of these areas as receptor areas 
for the 1-hour standard has no impact whatsoever on which States EPA 
has identified as contributing to ozone problems in the petitioning 
States. In fact, more upwind States were identified as contributors 
based on the 8-hour standard than on the 1-hour standard. As no upwind 
States were identified as contributors based solely on Rhode Island's 
1-hour petition, the deletion of Rhode Island as a 1-hour receptor does 
not affect the conclusions as to the identification of which sources 
are significant contributors.
    The original comment period on the section 126 NPR closed on 
November 30, 1998, prior to EPA's preliminary determination that these 
areas had monitored attainment of the 1-hour standard based on 1996-98 
monitoring data. As discussed in Section I.G.2, at the request of two 
commenters, EPA reopened the section 126 NPR comment period to take 
comment on the impacts of the 1996-98 air quality data on the section 
126 rulemaking.
    The majority of the commenters agreed that EPA should deny 
petitions based on the 1-hour standard that seek findings against 
upwind sources with regard to downwind areas where the 1-hour standard 
is met.
    Several of the petitioning States commented that a determination 
that an area had attained the 1-hour standard should not alter EPA's 
proposed findings of significant contribution related to those specific 
areas. The States argued that such a determination does not guarantee 
that the 1-hour standard will be maintained in the future. Two of the 
States suggested that favorable meteorology may have been a large 
factor in the current attainment conditions and that the upwind sources 
are still significantly impacting the areas.
    As discussed in Section I.B., the 8-hour ozone standard is intended 
to fully replace the 1-hour standard. However, when EPA promulgated the 
8-hour standard, it decided that the 1-hour standard would continue to 
apply in an area for an interim period until the area achieved 
attainment of that standard. Once EPA makes a final determination that 
the 1-hour standard is attained, the standard will be revoked and 
States are expected to focus their planning efforts on developing 
strategies for attaining the 8-hour standard. As mentioned previously, 
attainment of the 1-hour standard does not impact EPA's action on a 
petition under the more stringent 8-hour standard. To the extent that a 
State has 8-hour ozone problems, a State may seek a finding under that 
standard. In this rulemaking, a finding under the 8-hour standard 
yields the same

[[Page 28292]]

requirements for upwind emissions reductions as a finding under the 1-
hour standard.
    Several commenters said that the 1996-98 air quality data 
indicating attainment of the 1-hour standard in some areas in the 
Northeast indicates that there is a trend in air quality improvement, 
even without the section 126 control measures and, therefore, the 
petitions should all be denied. The EPA agrees that there are general 
downward trends in ozone concentrations in the Northeast. The EPA has 
reported the air quality changes over the 10-year period 1988 to 1997 
in the document, ``National Air Quality and Emissions Trends Report, 
1997'' (Trends Report) (EPA 454/R-98-016). However, EPA cautions that 
the air quality trends are historical records of what has occurred and 
alone do not indicate future trends. Ambient ozone trends are 
influenced by year-to-year changes in meteorological conditions, 
population growth, VOC to NOX ratios, and changes in 
emissions from ongoing control measures. The EPA does not agree that 
current trends indicate that new NOX control programs are 
not necessary. Rather, the data help show that NOX and VOC 
controls can be very effective in reducing ozone. Since passage of the 
CAA Amendments in 1990, States have implemented many new VOC and 
NOX emissions control programs which have helped to reduce 
ozone levels. However, for many areas, these reductions have not been 
sufficient to provide for attainment of the 1-hour and/or 8-hour 
standard. In addition, the majority of the areas in the Northeast do 
not show significant downward trends in emissions (See Trends Report 
maps, pages 58-59). For example, New York City and Philadelphia show no 
significant downward (or upward) trends for the 1-hour and 8-hour 
standards over the past few years (See Trends Report, pages 160 and 
162). In order to see future air quality improvements, EPA believes 
additional control measures are necessary to reduce emissions and 
offset growth. The section 126 petitions are one way in which States 
are seeking to ensure that their transported emissions are reduced.
    Furthermore, there is no basis for denying all of the petitions on 
the basis of any such trend. All of the petitioning States contain 
areas that violate the 8-hour standard and there are many areas in the 
Northeast that still violate the 1-hour standard.
    The EPA received comments that the modeling is flawed because it 
projects 1-hour nonattainment for 2007 in areas for which the 1-hour 
NAAQS is proposed to be revoked based on current monitoring data. The 
most recent three years had meteorological conditions in the Northeast 
such that the emissions during this time period did not result in 
nonattainment in the identified areas. The extent to which 
meteorological conditions are conducive to ozone exceedences in a 
particular area varies from year to year. As noted above, several 
commenters suggested that the meteorology during 1996-1998 in the 
Northeast was not particularly conducive to high ozone. Thus, if 
meteorological conditions similar to those modeled by OTAG and used for 
the SIP Call occur in the future, it is expected that ozone 
concentrations >=125 ppb would recur in these areas, which is 
consistent with what the modeling predicts. The fact that 
meteorological conditions vary is one of the reasons EPA relied on both 
current monitoring and projected future modeled predictions to 
determine which areas should be considered to be downwind nonattainment 
receptors to provide a more robust test for that determination.

G-H. Weight of Evidence Determination of Named Upwind States

1. General Approach
    The EPA proposed to rely on the conclusions it drew in the final 
NOX SIP call rulemaking to determine whether the emissions 
in named upwind States contribute significantly to the 1-hour and 8-
hour nonattainment and maintenance problems in the petitioning States. 
26 In the final NOX SIP call rulemaking, EPA used 
a weight-of-evidence approach involving various factors, including air 
quality impacts. To determine this latter factor, EPA relied on three 
sets of modeling information: the OTAG subregional modeling together 
with other information such as emission density and transport distance, 
confirmed by the State-by-State UAM-V zero-out modeling and the State-
by-State CAMx source apportionment modeling. The upwind State-to-
downwind nonattainment linkages in the final NOX SIP call 
rulemaking were used as the basis for the proposed section 126 
findings.
---------------------------------------------------------------------------

    \26\ The maintenence standard does not apply in the case of the 
1-hour NAAQS because, under the regulation EPA promulgated in 
connection with the 8-hour NAAQS, once an area attains the 1-hour 
NAAQS, EPA determines that the area is no longer subject ot it. For 
convenience, references to nonattainment problems under the 8-hour 
NAAQS also include the maintenance standard.
---------------------------------------------------------------------------

    The EPA is using this same information and reaffirming these 
linkages as the basis for the related affirmative technical 
determinations in today's rulemaking, as well as the denials of parts 
or all of certain petitions. Specifically, EPA evaluated the petitions 
in terms of which upwind States named in each petition were found in 
the NOX SIP call to contribute significantly to 
nonattainment in the petitioning State. Separate determinations were 
made for the 1-hour and 8-hour NAAQS. The technical details of the 
modeling information are described in the final NOX SIP call 
rulemaking. Except as noted below, EPA is today making affirmative 
technical determinations concerning emissions from identified sources 
found in upwind States whose overall emissions were determined in the 
NOX SIP call final rule to contribute significantly to the 
petitioning State's nonattainment problems. In making these affirmative 
technical determinations, and in denying part or all of certain 
petitions, EPA is reaffirming the findings it made in the 
NOX SIP call final rulemaking concerning the upwind-State 
downwind-nonattainment area linkages related to those determinations, 
on the basis of the same technical data relied on in that rulemaking. 
For this, EPA is primarily relying on the UAM-V State-by-state zero-out 
modeling runs and the CAMX modeling runs.
    The EPA received a number of comments on the modeling and other 
technical information relied on in the proposal. Those comments which 
are most relevant to the technical aspects of this rulemaking are 
addressed below or in the RTC document.
2. Collective Contribution
    The EPA received comments that it is inappropriate to use modeling 
that evaluates the downwind contribution from all manmade emissions in 
an entire State for the purposes of evaluating the section 126 
petitions since these petitions request relief from large stationary 
sources which are only a portion of the States' total emissions and/or 
from sources located in only a portion of the upwind State. This 
comment, and EPA's response, is discussed above.
    As noted above, part of EPA's response to this comment refers to 
the collective contribution approach. Under this approach, if the total 
NOX emissions from an upwind State contribute significantly 
to a downwind petitioning State, then each large stationary source's 
emissions in the upwind State or portion of the upwind State covered by 
the petition, is considered to be a significant contributor to 
nonattainment. The EPA noted above that even though large point 
sources, like those covered by the

[[Page 28293]]

126 petitions, are only a portion of the total NOX emissions 
in each State, they comprise a sizable portion of the NOX 
inventory. For 17 of the 20 jurisdictions (Connecticut, Rhode Island 
and the District of Columbia are the exceptions) NOX 
emissions from electricity generating units and non-electricity 
generating point sources comprise at least one third of Statewide 
NOX emissions. Thus, EPA continues to believe that the full 
State modeling is appropriate to establish whether the named sources in 
specific upwind States contribute significantly to nonattainment in the 
petitioning State.
3. U-Runs
    The EPA received comments that it is necessary to specifically 
evaluate the downwind contributions of large stationary sources. 
Although, as noted above, EPA does not think this evaluation is 
critical for today's rulemaking, EPA has performed a set of modeling 
runs in which emissions from all utility point sources and large non-
utility point sources with boilers greater than 250 mmBTU were zeroed 
out for select groups of States. All four OTAG episodes were modeled. 
These model runs are referred to as the ``U runs.'' Further details 
concerning these model runs are contained in the RTC document and in 
the docket for this rulemaking (see Docket item number VI-D-23).
    The EPA has reviewed the results of these runs which indicate that 
sources covered by section 126 petitions provide meaningful ozone 
reductions in downwind petitioning States. For example, in model run 
``U-10,'' large stationary sources in Michigan, Indiana, Ohio, 
Kentucky, West Virginia, and Virginia were zeroed-out. These States 
closely approximate the non-OTR States petitioned by New York. The 
results for run U-10 show contributions to nonattainment in New York of 
>= 2 parts per billion (ppb) to 39 percent of the 1-hour exceedances, 
>= 5 ppb to 14 percent of the 1-hour exceedances, and >= 10 ppb to 1 
percent of the 1-hour exceedances.
4. UAM-V and CAMx Modeling and Metrics
    A number of commenters said that zero-out modeling was flawed. 
Several of these commenters submitted modeling based on CAMx. Other 
commenters said that the CAMx source apportionment technique was flawed 
and submitted modeling based on zero-out runs. The comments concerning 
the technical adequacy of these modeling techniques are addressed in 
the RTC document. The EPA relied on both UAM-V zero-out modeling and 
CAMx source apportionment modeling in order to identify the significant 
upwind-downwind linkages. In the evaluation by EPA of contributions for 
individual linkages, both modeling techniques had to indicate a 
significant contribution in order for the linkage to be found 
significant. After reviewing the comments submitted by proponents and 
opponents of each of these two modeling techniques, EPA has concluded 
that the most technically credible approach is to continue to rely on 
both techniques and not base its decisions of the significance of 
individual linkages on one technique or the other. This is discussed in 
further detail in the RTC document.
    Several commenters submitted a technical report intended to 
quantify the uncertainty in the UAM-V model predictions. These 
commenters argued that the contributions which EPA found significant 
are within the ``noise'' of the modeling. The EPA has reviewed that 
study and determined that (1) the results do not indicate any bias in 
the model predictions as being either too high or too low and (2) there 
is no indication of any bias in the model's response to emissions 
reductions or the ability of the model to predict the contribution of 
emissions in upwind States to downwind nonattainment. This is discussed 
in further detail in the RTC document.
    Several commenters made general assertions that EPA was not clear 
in its definition of significant contribution, and was inconsistent, 
subjective, or arbitrary in its determination that certain States do 
not make a significant contribution, but that other States do. EPA 
believes that its definition of significant contribution is reasonably 
clear and consistently applied. EPA's examination of the linkages 
raised by the commenters does not reveal inconsistencies. This issue is 
discussed further in the RTC.
    In the proposal EPA requested comment on the individual upwind-
downwind linkages and, in particular, the linkages between some of the 
more distant States, such as Alabama to Pennsylvania and Missouri to 
Pennsylvania.
    Several commenters were critical of EPA's finding that emissions 
from Missouri contribute significantly to 8-hour nonattainment in 
Pennsylvania. One of these commenters submitted an analysis of 
contribution using many of the metrics EPA calculated from the State-
by-State zero-out and source apportionment modeling. In this analysis, 
the commenter applied numerical criteria, used as a bright-line test, 
to judge the significance of the contributions indicated by each 
metric. The commenter then applied a numerical scoring system to 
evaluate the overall significance of each individual linkage. The 
commenter used the results of this analysis to argue that Missouri does 
not contribute significantly to Pennsylvania. The EPA agrees that the 
scoring system concept provides a way to quantify and numerically 
compare the significance of individual linkages. However, the commenter 
provided no technical justification for the criteria used in this 
analysis or for selecting the cut-off value used to determine whether 
or not the final score for each linkage indicates a significant 
contribution. The EPA disagrees that using a single final cutoff value 
is the appropriate way to distinguish between significant and 
insignificant contributions. In this regard, EPA believes that 
technical judgement, based on an evaluation of all of the metrics for 
each linkage, as described elsewhere in today's rulemaking, is 
necessary for decisions on which linkages are significant.
    Regarding the linkage between Alabama and Pennsylvania under the 8-
hour NAAQS, several commenters submitted an independent study of EPA's 
modeling of Alabama's contribution to 8-hour nonattainment in 
Pennsylvania. These commenters concluded from this study that the 
largest contributions from Alabama occur in Pennsylvania on a single 
day in one episode. The study also includes a limited comparison of the 
observed winds at 7 a.m. each day against the corresponding wind data 
used in the modeling. For some wind observation stations between 
Alabama and Pennsylvania, the data presented in the study indicate that 
the observed winds are more westerly and/or northwesterly than those 
used in the modeling. The commenter also notes uncertainties in the 
modeled wet deposition calculations and modeled ozone overpredictions. 
The commenter concludes from these data that in light of ``improper 
model assumptions'', a determination of a significant impact on 8-hour 
nonattainment in Pennsylvania is arbitrary.
    The EPA has reviewed the data submitted by the commenters along 
with the transport pattern of ozone from Alabama predicted by both the 
UAM-V zero-out and the CAMx source apportionment modeling together with 
the full set of data concerning observed and modeled winds aloft. Based 
upon a comprehensive review of observed and modeled data, EPA concludes 
that (1) the winds used in the model adequately represent the transport 
pattern between

[[Page 28294]]

Alabama and Pennsylvania during this time period, (2) model performance 
was acceptable for the full domain and the Southeast and Midwest OTAG 
regions (3) EPA is not aware of errors in the modeling due to wet 
deposition calculations and (4) the ozone ``plume'' from Alabama is 
geographically extensive, covering a large portion of Pennsylvania, as 
indicated by both the zero-out and source apportionment modeling. Thus, 
there is no basis for EPA to change its conclusion relative to the 
significance of Alabama's contribution to 8-hour nonattainment in 
Pennsylvania. This is discussed further in the RTC document.
    Several commenters stated that EPA's modeling indicates that much 
of the downwinds' ozone problem is due to local emissions. The EPA 
agrees that local emissions are a large part of the overall ozone 
problem in most major cities in the OTAG region. However, the 
collective contribution from upwind sources to ozone in these areas is 
also quite large. For example, the average contribution from upwind 
manmade emissions to 1-hour nonattainment in New York City is 45 
percent (28 percent from States outside the Northeast), 83 percent in 
Greater Connecticut (21 percent from States outside the Northeast), and 
32 percent in the Philadelphia nonattainment area (all from States 
outside the Northeast).
    Some commenters questioned why the available modeling information 
was not sufficient for EPA to make a final decision on whether certain 
States in the OTAG domain (e.g., New Hampshire, Maine, and Vermont) 
contribute significantly to nonattainment in downwind States. As stated 
above, EPA primarily relied on two types of modeling for making a 
determination of significant contribution. This included State-by-State 
UAM-V zero-out and CAMx source-apportionment modeling. For an upwind-
downwind linkage to be significant, contributions from both of the 
State-by-State techniques had to show significant contributions. For 15 
States in the OTAG domain, including those identified by these 
commenters, EPA does not have a complete set of modeling comparable to 
that relied on for those States found to be significant. Thus, as part 
of the NOX SIP call, EPA deferred taking final action on 
these States. This is discussed further in the RTC document.
    The upwind States that were named by the petitioners and which are 
found to contain sources that make a significant contribution to 
nonattainment in the petitioning States are based on the upwind-
downwind linkages found to be significant in the NOX SIP 
call. The exception to this is Maine's petition for relief from 
emissions in North Carolina. In its petition, Maine requested relief 
from large stationary sources within a 600 mile radius of the 
southwestern most nonattainment area in Maine. This radius includes 
several counties in the extreme northeastern portion of North Carolina 
that do not contain sources of the type and size identified in Maine's 
petition. Thus, even though EPA found that emissions in North Carolina 
contribute significantly to 8-hour nonattainment in Maine, EPA is 
denying Maine's petition relative to North Carolina because there are 
no section 126 sources located in the portion of North Carolina covered 
by Maine's petition.
    The significant upwind-downwind linkages applicable to the section 
126 petitions are listed in Tables II-1 for the 1-hour NAAQS and Table 
II-2 for the 8-hour NAAQS. The linkages in Table II-1 take into account 
the recent revocations of the 1-hour NAAQS for certain 1-hour 
nonattainment areas. All of the information contained in the docket of 
the NOX SIP call rulemaking that is relevant to the 
determination of significant contribution is incorporated by reference 
into today's rulemaking.

 
 Table II-1.--Named Upwind States Which Contain Sources That Contribute Significantly to 1-Hour Nonattainment in
                                               Petitioning States
----------------------------------------------------------------------------------------------------------------
 Petitioning state (nonattainment area)                            Named upwind states
----------------------------------------------------------------------------------------------------------------
New York (New York City)...............  DC, DE, IN, KY, MD, MI, NC, NJ, OH, PA, VA, WV.
Connecticut (Greater Connecticut)......  DC, DE, IN*, KY*, MD, MI*, NC*, NJ, NY, OH, PA, VA, WV.
Pennsylvania (Philadelphia)............  NC, OH, VA, WV.
Massachusetts (Western Massachusetts)..  WV.
Rhode Island...........................  None.*
Maine..................................  None.**
New Hampshire..........................  None.**
Vermont................................  None.**
                                        ------------------------------------------------------------------------
    Total..............................  DC, DE, IN, KY, MD, MI, NC, NJ, NY, OH, PA, VA, WV.
----------------------------------------------------------------------------------------------------------------
* Upwind States marked with an asterisk are considered to significantly contribute because they contribute to an
  interstate nonattainment area that includes part of the petitioning State. Part of Connecticut is included in
  the New York City nonattainment area.
** Based on 1996-1998 air quality monitoring data, EPA cannot now determine that areas in these States continue
  to be in nonattainment for the 1-hour NAAQS.


 
 Table II-2.--Named Upwind States Which Contain Sources That Contribute Significantly to 8-hour Nonattainment in
                                               Petitioning States
----------------------------------------------------------------------------------------------------------------
           Petitioning state                                       Named upwind states
----------------------------------------------------------------------------------------------------------------
Pennsylvania...........................  AL, IL, IN, KY, MI, MO, NC, OH, TN, VA, WV.
Maine..................................  CT, DC, DE, MA, MD, NJ, NY, PA, RI, VA.
Massachusetts..........................  OH, WV.
New Hampshire..........................  CT, DC, DE, MD, MA, NJ, NY, PA, RI.

[[Page 28295]]

 
Vermont................................  None.
                                        ------------------------------------------------------------------------
    Total..............................  AL, CT, DC, DE, IL, IN, KY, MA, MD, MI, MO, NJ, NY, NC, OH, PA, RI, TN,
                                          VA, WV.
----------------------------------------------------------------------------------------------------------------

    The EPA concluded from all of the information considered that the 
20 jurisdictions listed below contain sources that make a significant 
contribution to nonattainment in, or interfere with maintenance by, one 
or more petitioning States under the 1-hour and/or the 8-hour NAAQS:
    Alabama,
    Connecticut,
    Delaware,
    District of Columbia,
    Illinois,
    Indiana,
    Kentucky,
    Maryland,
    Massachusetts,
    Michigan,
    Missouri,
    New Jersey,
    New York,
    North Carolina,
    Ohio,
    Pennsylvania,
    Rhode Island,
    Tennessee,
    Virginia, and West Virginia.

I. Identifying Sources

    As discussed previously in Section I.D., all of the petitions named 
specific upwind source categories as significantly contributing to 
nonattainment in, or interfering with maintenance by, the petitioning 
State. Four petitioning States (Massachusetts, New Hampshire, New York, 
and Rhode Island) also attempted to identify the existing sources in 
the targeted source categories. However, the petitioners cautioned EPA 
that the lists might not be complete and that any omissions were 
unintentional. In addition, the EPA has received several comments from 
sources on the State lists saying that they do not meet the source 
category definitions provided in the petitions.
    In the final NOX SIP call (63 FR at 57427), EPA provided 
the opportunity for comment on source-specific inventory data revisions 
for the data used to establish each State's base inventory and budget. 
Furthermore, EPA extended that comment period to February 22, 1999 (63 
FR 71221). At the same time, EPA reopened the comment period for the 
proposed section 126 and the proposed FIP for the same source-specific 
inventory data revisions. Based on these comments, EPA will be 
finalizing a list of existing sources in the source categories for 
which EPA is making an affirmative technical determination. These 
sources will be included in the Federal NOX Budget Trading 
Rule which EPA intends to promulgate in July. The source categories 
named in the petitions that EPA is making affirmative technical 
determinations are large EGU boilers and turbines and large non-EGU 
boilers and turbines. The EPA's methodology for determining if a boiler 
or turbine fits in the EGU or the non-EGU category and whether it is 
large or small are explained below. The EPA's rationale for determining 
that large EGU boilers and turbines and large non-EGU boilers and 
turbines contribute significantly is explained in Section II.J below.
1. Proposed EGU Source Classification
    The section 126 NPR proposed the same two-step approach as used in 
the final NOX SIP call for determining which of the 
following categories a boiler or turbine fits into: large EGU, small 
EGU, large non-EGU, or small non-EGU. In the final NOX SIP 
call, EPA first determined if a boiler or turbine should be classified 
into the category of EGU or non-EGU. The EPA then determined if the 
boiler or turbine should be classified as large or small.
    The EPA used three sources of data for determining if an existing 
generator's purpose included generation of electricity for sale and 
thus qualified the unit connected to the generator as an EGU. First, 
EPA treated as EGUs all units that are currently reporting under title 
IV of the CAA. Second, EPA included as EGUs any additional units that 
were serving generators reporting to the Energy Information 
Administration using Form 860 in 1995. Form 860 is submitted for 
utility generators. Third, EPA included units serving generators that 
reported to Energy Information Administration using Form 867 in 1995. 
Since Form 867 is submitted by non-utility generators, including 
generators ``which consume all of their generation at the facility,'' 
EPA excluded any units for which EPA had information indicating that 
the unit was not connected to any generators that sold any electricity. 
This was determined by excluding units that were not listed as sources 
that sell power under contract to the electric grid using the electric 
generation forecasts of the North American Electric Reliability 
Council.
    Once EPA determined that a boiler or turbine should be classified 
as an EGU, EPA considered that unit to be a large EGU if it served a 
generator greater than 25 MWe and considered it a small EGU if it 
served a generator less than or equal to 25 MWe.
    The EPA explained that there are two important reasons that the 
methodology outlined above is not appropriate to use on an ongoing 
basis for new boilers or turbines. First, EPA was concerned about the 
completeness of data using this methodology. The EPA had this concern 
because there are limited consequences to not reporting to Energy 
Information Administration and because EPA has no assurance that 
sources will continue to be required to report to Energy Information 
Administration using the same forms. Second, because of changes in the 
electric generation industry and because of regulatory developments 
such as the NOX SIP call, owners and operators of units may 
have an incentive to install, operate and sell electricity from small 
(25 MWe or less) generators connected to larger boilers or turbines 
that are primarily used for industrial processes and not electricity 
generation. Such sources could have significant NOX 
emissions.
    To ensure that owners and operators of such units did not install a 
small generator and sell small amounts of electricity merely to 
circumvent the requirements of this rule, EPA established a slightly 
different process for categorizing units that commenced operation on or 
after January 1, 1996. First, EPA explained it would classify as an EGU 
any boiler or turbine that is connected to a generator greater than 25 
MWe from which any electricity is sold. This would be based on 
information reported directly to the State under the SIP (or EPA in the 
case of a FIP or

[[Page 28296]]

section 126 action). The EPA stated that this addresses the first 
concern about completeness of data, as discussed in the previous 
paragraph. Second, if a boiler or turbine is connected to a generator 
equal to or less than 25 MWe from which any electricity is sold, it 
would be considered a small EGU if it has the potential to use more 
than 50.0 percent of the usable energy from the boiler or turbine to 
generate electricity. For example, this means that a 260 mmBtu boiler 
connected to a 20 MWe generator that is used to generate some 
electricity for sale would be considered a small EGU. On the other 
hand, a 600 mmBtu boiler connected to a 20 MWe generator that is used 
to generate some electricity for sale would be considered a large non-
EGU. This addressed EPA's second concern (discussed in the previous 
paragraph) about owners or operators of large boilers and turbines that 
have small generators.
    All other boilers and turbines (including boilers and turbines 
connected to generators equal to or less than 25 MWe from which any 
electricity is sold and which have the potential to use 50.0 percent or 
less of the usable energy from the boiler or turbine to generate 
electricity) were considered non-EGUs. The EPA stated that it will use 
the process described below to classify those units as large or small. 
The EPA stated that, once a unit had been classified in the base 
inventory, EPA did not intend to reclassify that unit, but explained 
that it might reconsider unit classification in 2007 along with the 
2007 transport reassessment.
2. Proposed Non-EGU Boiler and Turbine Source Classification
    In the section 126 NPR, the non-EGU point source categories that 
EPA determined to be subject to the section 126 reduction requirements 
are large boilers and turbines. The EPA proposed in the section 126 NPR 
to use the same method to identify ``large'' and ``small'' non-EGU 
boilers and turbines that was used in the final NOX SIP call 
(for more detailed information refer to ``Development of Modeling 
Inventory and Budgets for Regional SIP Call,'' September 24, 1998). The 
methodology is as follows:
    1. Where boiler heat input capacity data were available for a 
unit, EPA used that data. Units with such data that are less than or 
equal to 250 mmBtu are ``small'' and units greater than 250 mmBtu/hr 
are ``large.''
    2. Where boiler heat input capacity data were not available for 
a unit, EPA estimated that data, as described in the NOX 
SIP call NPR and SNPR. Units estimated to be greater than 250 mmBtu/
hr are ``large.''
    3. Where boiler heat input capacity data were not available for 
a unit and where the boiler capacity was estimated to be less than 
250 mmBtu/hr, EPA checked 1995 point-level emissions for each unit. 
If the 1995 average daily ozone season emissions were greater than 
one ton, the unit was categorized as a ``large'' source; otherwise, 
the unit was categorized as a ``small'' source.
3. Issues Raised by Commenters on EGU/Non-EGU Classification
    One commenter, representing the pulp and paper industry, argued 
that small cogeneration units should not be treated as EGUs and EPA 
should continue to apply the exemption from treatment as utility units 
established under new source performance standards (NSPS) and the Acid 
Rain Program for cogeneration units that produce an annual amount of 
electricity for sale less than one-third of their potential electrical 
output capacity or equal to or less than 25 MWe. (Note that the 
regulations implementing title IV converted the annual 25 MWe threshold 
to 129,000 MWe hrs of electricity which is equivalent to 25 MWe per 
hour times 8760 hours per year.) The commenter also noted that section 
112 of the CAA defines ``electricity steam generating unit'' excluding 
cogeneration units using the same thresholds. The commenter made 
several assertions to support its argument. First, the commenter said 
the classification of small cogeneration units would be contrary to 20 
years of Agency precedent under the NSPS and Acid Rain programs. The 
CAA encourages cogeneration by exempting small cogenerators below the 
one-third/25 MWe trigger from the Acid Rain program and from section 
112. Deviating from this historical precedent was not a logical 
outgrowth of the proposed NOX SIP call since the proposed 
NOX SIP call did not discuss that EPA would treat small 
cogeneration units as EGUs or differently than under the NSPS and Acid 
Rain programs. Second, the commenter argued the uniqueness of boiler 
design, fuel type, and operations of individual industrial boilers 
makes these units less amenable to achieving the utility standards.
    Another commenter expressed concerns that defining ``electrical 
generating units solely on the basis of electrical generating capacity 
without regards to boiler size is patently unfair to a number of 
industrial boilers.'' They explained that ``from a practical 
standpoint, emissions from a 250 mmBTU/hr coal-fired industrial boiler 
are the same whether it is used to generate electrical power or not.'' 
The commenter continued that EPA should treat all industrial boilers 
alike whether or not they generate electrical power.
    Several other commenters expressed concerns that the definition in 
the trading rule was more inclusive than the definition used for 
setting forth the control requirements. One commenter suggested 
specific language to remedy this concern.
    As EPA explained in a clarification notice published on December 
24, 1998 (See 63 FR at 71223), EPA used two classification methods to 
determine whether a unit should be classified as an EGU or a non-EGU. 
One method (based on whether a unit served a generator from which 
electricity was sold under a firm contract) applied to units that were 
in existence in 1995 and were part of the base year emission inventory, 
and the other method (based on whether a unit serves a generator from 
which any electricity is sold) applies to units that came into 
existence on or after January 1, 1996. Both of these methodologies are 
explained above (in sections II.I.C1 and C.2 ). In addition, the 
methodology used to classify units in the base-year inventory was 
explained in the document, ``Development of Modeling Inventory and 
Budgets for Regional NOX SIP call.'' A draft of this 
document was issued on March 23, 1998 and a final document was issued 
on September 24, 1998, and is available in the NOX SIP call 
docket.
    The methodology used to classify existing units as EGUs or non-EGUs 
was based upon whether or not a unit was connected to a generator that 
produced electricity for sale under firm contract to the grid. Since 
most industrial units are not currently involved in sales under firm 
contract to the grid, this leads to most industrial cogeneration units 
being classified as non-EGUs. The EPA has several concerns about 
changing from this methodology to a methodology based upon a one-third 
potential capacity/25 MWe threshold, as suggested by the commenter. The 
first is that EPA has not used that threshold in the rulemaking to 
date, and does not have information on all existing units necessary to 
apply that threshold to all the units. For example, EPA does not have 
information to identify all the units that actually cogenerate and the 
information on how much electricity is sold from these units. The 
commenter did not even identify the units owned by its members, much 
less provide that information for identified units.
    Second, if EPA did have the information for each unit to determine 
if the unit's classification should be changed, EPA is concerned that 
the classification for a number of units would change, apparently none 
of

[[Page 28297]]

which are owned or operated by the commenter's members. The commenter 
noted that changing the definition to be based upon a one-third 
potential capacity/25 MWe threshold ``would not alter the Agency's 
baseline emissions inventory.'' Since the commenter never identified 
any existing units where classification is different in the inventory 
under the Agency's classification method than under the commenter's 
classification method, EPA concludes that changing the methodology 
would not change the inventory classification of any units owned or 
operated by the commenter's members. The EPA believes that this is 
because using the criteria of selling under firm contract to the grid 
classifies most industrial units that generate small amounts of 
electricity as non-EGUs rather than EGUs.
    However, EPA maintains that there is the potential that a number of 
other units could be reclassified if EPA applied the one-third 
potential capacity/25 MWe threshold. This could change the 
classification of a large EGU to a large non-EGU, the classification of 
a large non-EGU to a large EGU or the classification of a small EGU to 
a large non-EGU. For example, a unit that is currently classified as a 
large EGU could become a large non-EGU if, even though the unit was 
selling electricity under a firm contract, it sold less than one third 
of its potential electrical output capacity. An independent power 
producer unit that is connected to a generator greater than 25 MWe and 
that cogenerates and provides both steam and electricity could fit into 
this category. A unit that is currently classified as a large non-EGU 
could become a large EGU if it did not sell power under a firm 
contract, but did sell more than one third of its potential electrical 
output capacity. An industrial boiler that cogenerates and is connected 
to a generator greater than 25 MWe could fit into this category. A unit 
that is currently classified as a small EGU and sells under firm 
contract, but less than one-third of its potential electrical output 
capacity, could become a large non-EGU if the unit was greater than 250 
mmBtu and the generator to which it was connected was less than 25 MWe. 
An independent power producer unit that cogenerates could fit into this 
category. In short, the adoption of the commenter's classification 
methodology could result in reclassification leading to more stringent, 
rather than less stringent, regulation of some cogeneration facilities
    The EPA also does not agree with the commenter's arguments: (1) 
That deviating from the classification that EPA has used for 
cogeneration units for 20 years was not a logical outgrowth of the 
proposed NOX SIP call and that no discussion was included in 
the proposal that small cogeneration units would be treated as EGUs or 
differently than under the NSPS and Acid Rain programs; or (2) that the 
uniqueness of boiler design, fuel type, and operations of individual 
industrial boilers makes these units less amenable to achieving the 
reduction requirements for large EGUs.
    In prior regulatory programs, EPA has used the criteria of 
producing an annual amount of electricity for sale less than one-third 
of a unit's potential electrical output capacity or less than 25 MWe. 
However, these criteria were not applied in the same way in each of 
these prior programs and recent, ongoing changes in the electric power 
industry undermine the basis for the criteria, and justify using 
different criteria for the new units, in today's action. The Agency 
began using the one-third potential capacity/25MWe cutpoint in 1978, in 
40 CFR part 60, subpart Da, setting forth new source performance 
standards for ``electric utility steam generating units.'' In that 
case, the cutpoint was not used to exempt units entirely from NSPS. 
Rather, it was used to classify them as either ``electric utility steam 
generating units'' that would be subject to the new standards under 
subpart Da or to classify them as non-utility steam generating units 
that would continue to be subject to the requirements under subpart D 
and would subsequently become subject to more stringent standards for 
``Industrial-Commercial-Institutional Steam generating units'' under 
subpart Db. As the commenter noted, this distinction between utility 
and non-utility units continued under the Clean Air Act Amendments of 
1990, in both title IV and section 112. This cutpoint applied to all 
steam generating units, not just cogeneration facilities. The cutpoint 
was used as a proxy for utility vs. non-utility ownership of the units, 
the assumption being that a unit involved in electricity sales at or 
below the cutpoint was owned by a company that was in a business other 
than electric generation and so was a utility.
    Since 1990 there have been dramatic changes in the electric power 
industry associated with the emergence of competitive markets for 
electricity generation where non-utility generators compete to an 
increasingly significant extent with traditional utilities. As these 
changes occur, it becomes less and less appropriate to differentiate 
between utilities and non-utilities that produce electricity. The 
Energy Policy Act of 1992 reflected these types of changes in the 
electric power industry by recognizing a whole new category of non-
utility generators, wholesale generators that directly compete with 
utility generators. The Federal Energy Regulatory Commission's 1996 
order adopting open transmission access and the actions of many States 
(currently at least 18 States) that are in the process of deregulating 
electric power generation have further blurred the distinction between 
utilities and non-utilities. Other federal agencies that deal with the 
power industry have realized that historical categorizations of the 
industry are no longer appropriate. For instance, the Energy 
Information Agency is in the process of streamlining its reporting 
requirements so that there will no longer be a distinction between 
reporting by utility generators and by non-utility generators.
    In the NOX SIP call rulemaking, that EPA expressed 
concern that, under a deregulated electricity market, it is important 
to consider all NOX emissions sources that generate 
electricity. For instance, in the supplemental notice of proposed 
rulemaking under the NOX SIP call, EPA explained that:
    Additionally, with deregulation of electric utilities, it is not 
clear how ownership of the electricity generating facilities will 
evolve. Therefore, EPA proposes to include all large electricity 
generating sources, regardless of ownership, in the trading program. 
As there is no relevant physical or technological difference between 
utilities and other power generators, the same monitoring provisions 
and the size cut-off of greater than 25 MWe are applicable to all 
units which serve generators. 63 FR at 25923.
    With regard to the feasibility of meeting the ``utility'' 
standards, the above commenter made several technical arguments about 
why non-utility units are fundamentally different from utility sources. 
In particular, the commenter argued that because of the need to vary 
loads significantly, many industrial boilers cannot operate at the 
conditions required to obtain maximum NOX reduction using 
combustion controls. In addition, the commenter argued that pulp and 
paper mill boilers have technical limitations on the installation of 
selective catalytic reduction (SCR) and selective non-catalytic 
reduction (SNCR), due to wide and rapid load and lower operating 
temperatures. Furthermore, the commenter does not believe there will be 
a significant number of allowances available or that the assumption of 
allowance availability should be used to justify higher costs for 
industrial sources. Moreover, the commenter argues that some affected 
States have expressed hesitancy to participate in

[[Page 28298]]

interstate or even intrastate NOX trading programs.
    The EPA continues to believe that industrial cogeneration units can 
achieve similar NOX emission reductions as utility units. 
Post-combustion NOX control technologies, like SNCR and SCR, 
are available to industrial units that cannot achieve NOX 
reductions using combustion controls. Both SCR and SNCR are proven 
technologies demonstrated on industrial and utility units, including 
paper and pulp industry units. See White Paper--Selective Catalytic 
Reduction (SCR) for Controlling NOX Emissions, ICAC, 1997 
and White Paper--Selective Non-Catalytic Reduction (SNCR) for 
Controlling NOX Emissions, ICAC, 1997. At the same time, 
this rulemaking provides for multiple compliance options including 
trading of allowances. The Agency believes that a significant number of 
allowances will be available for trading. The Integrated Planning Model 
(IPM) analysis shows a significant number of allowances will be 
available in 2003 when trading begins (see the Regulatory Impact 
Analysis for further discussion). The compliance supplement pool also 
provides further allowances in the trading market (see compliance 
supplement pool discussion in Section III below). In addition, EPA is 
aware of several States in the process of developing a trading program 
under the NOX SIP call. Furthermore, a trading program will 
be promulgated for this section 126 rulemaking.
    For all of these reasons, EPA believes that it is appropriate to 
consider all units that generate electricity for sale as one source 
category, regardless of whether the owners and operators of the units 
are traditional utilities, independent power producers, or industrial 
companies. (Indeed, it may be appropriate at some time in the future to 
consider all units generating electricity, whether for sale or internal 
use, as a single category). However, for purposes of this rulemaking, 
EPA is continuing to apply to existing units the definition of EGU 
based on firm-contract sales, essentially as clarified in the December 
24, 1998 correction notice. This definition does not classify either 
all existing or new units that generate electricity, or all existing or 
new units that generate electricity for sale, as EGUs. For example, 
industrial units that generate electricity only for internal use will 
be considered non-EGUs. Furthermore, most existing industrial units 
that sell small amounts of electricity will also not be considered 
EGUs, because most of these units do not sell electricity under firm 
contract. Even though EPA is not basing the EGU and non-EGU definitions 
on the one-third potential capacity/25 MWe threshold supported by the 
commenters, EPA believes that the definition for existing units 
classifies the units of the commenter's members in a way that is 
consistent with the way the commenters have suggested those units 
should be classified, i.e., as non-EGUs.
    The EGU and non-EGU definitions based on any sales of electricity 
will apply to units that commence operation on or after January 1, 
1999. These definitions will not apply to any of the units referenced 
by the commenter (e.g., the units referenced, but not identified, in 
the commenter's April 7, 1999 comments for which the commenter provided 
information on actual, annual electricity sales). Thus, in general, any 
new units that serve generators involved in electricity sales will be 
EGUs. The EPA intends to make parallel clarifications to the definition 
of EGU under the NOX SIP call rulemaking. The EPA believes 
that the definition of EGU needs to be consistent across the 
NOX SIP call, section 126, and FIP rulemakings because it is 
possible that at one time a source might be subject to control 
requirements under one of these mechanisms, while at another time a 
source might be subject to control requirements under another one of 
these mechanisms. Changing the category that a source has been placed 
in because of this change in regulatory structure could be confusing 
and burdensome for the source.
    While EPA is not including all sources that generate electricity 
for sale or internal use as EGUs at this time, EPA may for all of the 
reasons explained above, consider whether this would be appropriate in 
future rulemakings.
4. Final Rule EGU/Non-EGU Classification
    In summary under today's final rule, EPA will take a three-step 
approach to determining which of the following categories a boiler or 
turbine fit into: large EGU, small EGU, large non-EGU, or small non-
EGU. First, EPA will determine the date upon which a unit commenced 
operation. Second, EPA will determine if a boiler or turbine should be 
classified into the category of EGU or non-EGU by applying the 
appropriate criteria depending on the date on which the boiler or 
turbine commenced operation. Finally, EPA will determine if the boiler 
or turbine should be classified as large or small.
    For units that commenced operation before January 1, 1999, EPA will 
classify as an EGU any boiler or turbine that sells any electricity to 
the grid under firm contract. For units that commenced operation on or 
after January 1, 1999, EPA intends, in general, to classify as an EGU 
any boiler or turbine that produces any amount of electricity for sale.
    Once EPA determines that a boiler or turbine should be classified 
as an EGU, EPA then will classify the unit as a small or large EGU. For 
a unit that commenced operation before January 1, 1999, EPA will 
consider the unit a small EGU if it serves a generator less than or 
equal to 25 MWe and a large EGU if it serves a generator greater than 
25 MWe. For a unit that commenced operation on or after January 1, 1999 
and sells any electricity, EPA will consider the unit a small EGU if it 
serves a generator that is less than or equal to 25 MWe and that has 
the potential to use more than 50 percent of the potential electrical 
output capacity of the unit. Units that serve generators greater than 
25 MWe and that sell any electricity will be considered large EGUs.
    All other boilers and turbines will be considered non-EGUs. This 
includes boilers and turbines that commence operation on or after 
January 1, 1999 connected to generators equal to or less than 25 MWe 
from which any electricity is sold and that have the potential to use 
50 percent or less of the potential electrical output capacity of the 
boiler or turbine. This also includes any unit that commenced operation 
before January 1, 1999 that did not produce electricity for sale under 
firm contract.
    Non-EGUs will be considered large if their maximum rated heat input 
capacity is greater than 250 mmbtu/hour and will be considered small if 
their maximum rated heat input capacity is equal to or less than 250 
mmbtu/hour.
    The EPA intends to address comments related to inconsistencies 
between this definition and the applicability requirements of part 97, 
when EPA promulgates part 97 in July.

J. Cost Effectiveness of Emissions Reductions

    As described in Section II.A, above, one part of the significant-
contribution interpretation that EPA applied in the NOX SIP 
call rule, and that EPA applies for purposes of today's final rule, is 
the extent to which ``highly cost-effective'' NOX control 
measures are available for the types of stationary sources named in the 
petitions27. As in the NOX SIP call

[[Page 28299]]

rule (63 FR at 57399) and the proposed section 126 rule (63 FR at 
56304), the EPA has selected these highly cost-effective measures by 
examining the technological feasibility, administrative feasibility and 
cost-per-ton-reduced of various multi-state ozone season NOX 
control measures in light of other actions taken by EPA and States to 
control NOX.
---------------------------------------------------------------------------

    \27\ As discussed in this section, the highly cost-effective 
NOX controls happen to apply only to large stationary 
sources. Under section 126, EPA can make a finding for ``any major 
source or group of stationary sources.'' In other words, even if not 
all sources subject to this action were major, they would be part of 
a group of stationary sources that contribute significantly to 
nonattainment and hence could potentially be subject to a finding.
---------------------------------------------------------------------------

1. Identifying Highly Cost Effective NOX Controls Levels
    The first step in the process of determining cost effectiveness was 
to identify the types of sources named in the various petitions. The 
petitioning States have identified the source categories that they 
believe significantly impact their ability to achieve attainment of the 
ozone standard. These categories are listed in Table I-1 earlier in 
this preamble. The EPA has determined that the named source categories 
can be combined into one general category--fossil fuel-fired indirect 
heat exchangers. This term applies to boilers and turbines used for the 
production of steam, electricity, and in some cases mechanical work, 
and to process heaters. To assure equity among the various 
subcategories of such sources and the industries they represent, EPA 
considered the cost effectiveness of controls for each subcategory 
separately throughout the affected 20-jurisdiction region described in 
Section II.B above. The EPA further subdivided the category of boilers 
and turbines into two categories, those used to generate electricity 
for sale and those used for all other purposes. Therefore, the EPA 
split the population of indirect heat exchangers into the following 
four subcategories, consistent with the approach EPA took in the final 
NOX SIP call and the section 126 proposal: (1) Boilers and 
turbines serving generators greater than 25 MWe that produce 
electricity for sale to the grid (``large EGUs''); (2) boilers and 
turbines with a heat input greater than 250 mmBtu/hr that exclusively 
generate steam, produce mechanical work (e.g., provide energy to an 
industrial pump), or produce electricity for internal use (``large non-
EGUs''); (3) process heaters with a heat input greater than 250 mmBtu/
hr (``large process heaters''); and (4) smaller indirect heat 
exchangers, i.e., all such sources not included in the first three 
subcategories (``small sources'').
    As mentioned above, in evaluating the cost effectiveness of 
NOX control levels for indirect heat exchangers, the EPA has 
taken the same approach as that taken in the final NOX SIP 
call (see 63 FR at 57399). In short, for each subcategory, the amounts 
of emissions that cause subcategories in the covered upwind States to 
contribute significantly to a petitioning State's nonattainment were 
determined based on the application of NOX controls that 
achieve the greatest feasible emissions reduction while still falling 
within a cost-per-ton-reduced range that EPA considers to be highly 
cost effective. The NOX control levels for this rulemaking 
were considered highly cost effective for the purposes of reducing 
ozone transport to the extent they achieve the greatest feasible 
emissions reduction but still cost no more than $2,000 per ton of ozone 
season NOX emissions removed (in 1990 dollars), on average, 
for each subcategory. The discussion below further describes the basis 
for this cost amount and the techniques used for each subcategory. The 
EPA believes that certain control levels that cost more than $2,000 per 
ton of NOX reduced are reasonably cost effective in reducing 
ozone transport or in achieving attainment with the ozone NAAQS in 
specific nonattainment areas. However, EPA is basing the significant-
contribution determination only on highly cost-effective reductions. In 
addition, as discussed further below, in determining whether to assume 
reductions from the small source subcategory, EPA considered 
administrative burden.
    More specifically, to determine what level of control can be 
considered highly cost effective, EPA considered other recently 
undertaken or planned NOX control measures. Table II-3 
provides a reference list of measures that EPA and States have 
undertaken to reduce NOX and their average annual costs per 
ton of NOX reduced. Most of these measures fall below $2,000 
per ton. The average cost effectiveness of these measures is 
representative of the average cost effectiveness of the types of 
controls EPA and States have needed to adopt most recently, since their 
previous planning efforts have already taken advantage of opportunities 
for even cheaper controls. The EPA believes that the cost effectiveness 
of measures that it or States have adopted, or have proposed to adopt, 
forms a good reference point for determining which of the available 
additional NOX control measures are among the most cost-
effective measures that can be implemented by the sources considered in 
today's action.

 Table II-3.--Average Cost Effectiveness of NOXControl Measures Recently
                               Undertaken
                                (1990 $)
------------------------------------------------------------------------
                                                               Cost per
                      Control measure                         ton of NOX
                                                               removed
------------------------------------------------------------------------
NOX RACT...................................................    150-1,300
Phase II Reformulated Gasoline.............................      a 4,100
State Implementation of the Ozone Transport Commission         950-1,600
 Memorandum of Understanding...............................
New Source Performance Standards for Fossil Steam Electric         1,290
 Generation Units..........................................
New Source Performance Standards for Industrial Boilers....       1,790
------------------------------------------------------------------------
a Average cost representing the midpoint of $2,180 to $6,000 per ton.
  This cost represents the projected additional cost of complying with
  the Phase II reformulated gasoline NOX standards, beyond the cost of
  complying with other standards for Phase II RFG.

    The EPA notes that there are also a number of less expensive 
measures recently undertaken by the Agency to reduce NOX 
emission levels that do not appear in Table II-3. These actions include 
the title IV NOX reduction program. Though these actions are 
very cost effective, the Agency is focusing on what other measures 
exist, at a potentially higher (though still not the highest 
reasonable) cost effectiveness, that can further reduce NOX 
emissions. Table II-3 is thereby useful as a reference of the next 
higher level of NOX reduction cost effectiveness that the 
Agency considers among the most reasonable to undertake. As a result, 
the Agency concludes that NOX controls that can feasibly be 
achieved and have an average subcategory-specific cost effectiveness 
less than $2,000 per ton of NOX removed are highly cost 
effective. The subcategories that EPA intends to control are those 
major stationary sources in the named categories for which EPA finds 
that these highly cost-effective controls are available.
2. Determining the Cost Effectiveness of NOX Controls
    In an effort to determine what, if any, highly cost-effective mix 
of controls is available for each subcategory (i.e., large EGUs, large 
non-EGUs, large process heaters, and small sources) the Agency 
considered the average cost effectiveness of alternative levels of 
controls for each subcategory as described in the final NOX 
SIP call (see 63 FR at 57400). That analysis is summarized below.

[[Page 28300]]

    For purposes of this final rule, EPA is using cost-effectiveness 
numbers developed for the final NOX SIP call. When EPA 
finalizes its source-specific inventory data (as discussed in section I 
above), EPA will revise the cost estimates for this action in 
conjunction with promulgation of the trading portion of this section 
126 rulemaking. The EPA does not anticipate that the revised cost-
effectiveness numbers will be significantly different from those in 
today's action. This is due to the fact that unit-specific changes on 
the inventory should be minimal. For example, EGU units should not 
change significantly because the information used for NOX 
SIP call inventory was based on CEM data. For non-EGUs, EPA anticipates 
a small decrease in the number of affected sources as units move from 
the large to small category. In addition, EPA concludes that the cost 
of controls and reductions achievable do not vary significantly across 
the region and removing the three States that are in the NOX 
SIP call, but not in today's section 126 action, should not impact the 
regionwide average cost effectiveness. This is due to the fact that 
cost-effectiveness numbers assume trading among sources. Therefore, 
today's rule will use the cost-effectiveness numbers developed for the 
NOX SIP call.
    As part of today's action, the Agency is describing the interim 
final emission limitations that will be imposed in the event that a 
section 126 finding is made and the Agency does not promulgate the 
Federal NOX Budget Trading Program before such finding (see 
Section IV.D below for further discussion). The EPA notes that the 
cost-effectiveness analysis summarized below applies to the Federal 
NOX Budget Trading Program and not the interim final 
emission limitations. EPA is committed to establishing final 
allocations and trading program provisions by July 15, 1999, well 
before the date that sources need to comply with this action (May 
1 ,2003), and thus, the cost-effectiveness analysis presented is 
appropriate for today's rulemaking.
    The average cost effectiveness of the controls was calculated from 
a baseline level that included all currently applicable Federal or 
State NOX control measures for each subcategory. The 
baseline did not include Phase II and Phase III of the OTC 
NOX MOU since those measures are not Federally required and 
they have not yet been adopted by all the involved States;28 
if the OTC NOX MOU were included in the baseline, the 
overall costs would be lower. In determining the cost of NOX 
reductions from large EGUs, EPA assumed a multi-state cap-and-trade 
program. As discussed in the final NOX SIP call (see 63 FR 
at 57400), EPA evaluated and compared the likely air quality impacts 
both with and without a multi-state NOX cap-and-trade 
program for electricity generating sources. This analysis showed that a 
multi-state trading program causes no significant adverse air quality 
impacts. Because such a program would result in significant cost 
savings, EPA's cost-effectiveness determination for large EGUs (i.e., 
the majority of the core group of sources in the trading program) 
assumes sources will participate in a multi-state trading 
program.29 For non-EGU sources, EPA used a least-cost method 
which is equivalent to an assumption of an intrastate trading program. 
Under this method, the least costly controls, in terms of total annual 
cost per ozone season ton removed, across the entire set of possible 
source-control measure combinations are selected in order until the 
required NOX emission budget is achieved. Inclusion of non-
EGU sources in a multi-state trading program would provide further cost 
savings.
---------------------------------------------------------------------------

    \28\ In the Regulatory Impact Analysis of the final 
NOX SIP call, EPA evaluates an additional option of the 
economic impact of including the Phase II and III OTC NOX 
MOU in the baseline for the electric power industry.
    \29\ Large EGUs in States covered by (1) the NOX 
Budget Trading program under the section 110 NOX SIP 
call, (2) the section 110 FIP, or (3) section 126, will be able to 
trade among each other.
---------------------------------------------------------------------------

    Table II-4 summarizes the control options investigated for each 
subcategory covered by the petitions and the resulting average, multi-
state cost effectiveness as presented in EPA's final NOX SIP 
call (see 63 FR at 57401). Additionally, the cost effectiveness 
analysis included a consideration of each subcategory's growth, 
including new sources. Thus, the control levels arrived at are also 
cost-effective for new sources.

      Table II-4.--Average Cost Effectiveness of Options Analyzed a
                         [1990 dollars in 2007]
------------------------------------------------------------------------
                                                          Average cost
                                                       effectiveness  ($/
                   Source category                     ozone season ton)
                                                        for each control
                                                             option
------------------------------------------------------------------------
Large EGUs:
  0.20 lb/mmBtu......................................             $1,263
  0.15 lb/mmBtu......................................              1,468
  0.12 lb/mmBtu......................................              1,760
Large Non-EGUs:
  50% reduction......................................              1,235
  60% reduction......................................              1,467
  70% reduction......................................              2,140
Process Heaters b:
  $3,000/ton maximum per source......................              2,860
  $4,000/ton maximum per source......................              2,896
  $5,000/ton maximum per source......................              2,896
------------------------------------------------------------------------
a The cost-effectiveness values in Table II-4 are regionwide averages.
  The cost-effectiveness values represent reductions beyond those
  required by title IV or title I RACT, where applicable.
b For process heaters, the table indicates that the same control
  technology (at the same cost) would be selected whether the cost
  ceiling for each source is $3,000, $4,000, or $5,000 per ton; thus the
  average cost-effectiveness number for this source category is the same
  in each column.

    The following discussion explains the control levels determined by 
EPA to be highly cost effective for each subcategory.
a. Large EGUs
    As proposed (63 FR at 56306), for large EGUs, the control level was 
determined by applying a uniform NOX emissions rate across 
the 23 jurisdictions of the NOX SIP call which includes the 
jurisdictions potentially subject to section 126 findings. The cost 
effectiveness for each control level was determined using the IPM. 
Details regarding the methodologies used can be found in the Regulatory 
Impact Analysis. Table II-4 summarizes the control levels and resulting 
cost effectiveness of three levels analyzed.
    A regionwide level of 0.20 lb/mmBtu was rejected because, though it 
resulted in an average cost effectiveness of less than $2,000 per ton, 
the air quality benefits were less than those for the 0.15 lb/mmBtu 
level, which was also less than $2,000 per ton.
    Some commenters supported a control level based on 0.12 lb/mmBtu. 
The EPA estimates that a control level based on 0.12 lb/mmBtu has a 
cost effectiveness of $1,760 per ozone season ton removed, which is 
within the upper range of cost effectiveness. This estimate is based on 
the Agency's best estimates of several key assumptions on the 
performance of pollution control technologies and electricity 
generation requirements in the future. While the record strongly 
supports EPA's

[[Page 28301]]

determination that a 0.15 lb/mmBtu trading program beginning in 2003 
will not lead to installation of SCR technology at a level and in a 
manner that will be difficult to implement or that will result in 
reliability problems for electric power generation, the record is not 
as clear with regard to a trading program based on a 0.12 lb/mmBtu 
level (see Section II.K below for discussion of reliability and section 
III.C for discussion of compliance date). Although 0.12 lb/mmBtu is 
technically achievable, the record had data from only one boiler 
achieving that level, Birchwood Unit I in Virginia. (See Performance of 
Selective Catalytic Reduction on Coal-Fired Steam Generating Units, 
EPA, June 25, 1997.)
    With a strong need to implement a program by 2003 that is 
recognized by the States as practical, necessary, and highly cost 
effective, the Agency has decided to base the emissions budgets for 
EGUs on a 0.15 lb/mmBtu trading level of control. This control level 
has an average cost effectiveness of $1,468 per ozone season ton 
removed 30. This amount is consistent with the range for 
cost effectiveness that EPA has derived from recently adopted (or 
proposed to be adopted) control measures.
---------------------------------------------------------------------------

    \30\ It should be noted that in the final NOX SIP 
call, EPA also investigated the regionwide cost effectiveness of 
NOX reductions if each State individually met the budget 
component for large electricity generting boilers and turbines 
(i.e., through intra-State trading). In the case of the 0.15 lb/
mmBtu strategy, intra-State trading resulted in a regionwide cost 
effectiveness of $1,499/ton compared to $1,468/ton for regionwide 
trading.
---------------------------------------------------------------------------

b. Large Non-EGUs
    As proposed (63 FR at 56306), EPA determined a highly cost-
effective control level for large non-EGUs by applying a uniform 
percent reduction in increments of 10 percent. Details regarding the 
methodologies used are in the Regulatory Impact Analysis. Table II-4 
summarizes the control levels and resulting cost effectiveness for non-
EGUs.
    For large non-EGUs, the cost-effectiveness determination includes 
estimates of the additional emissions monitoring costs that sources 
would incur in order to participate in a trading program. Some non-EGUs 
already monitor their emissions. These costs are defined in terms of 
dollars per ton of NOX removed so that they can be combined 
with the cost-effectiveness figures related to control costs. 
Monitoring costs for large non-EGU boilers and turbines are about $160 
per ton of NOX removed.
    Based on this information, the EPA determines that for large non-
EGUs, a control level corresponding to 60 percent reduction from 
baseline levels is highly cost effective (this percent reduction 
corresponds to a regionwide average control level of about 0.17 lb/
mmBtu).
c. Large Process Heaters
    For large process heaters, the control level was determined by 
applying various cost-effectiveness thresholds, because trading was not 
assumed to be readily available for this subcategory. Details regarding 
the methodologies used are in the Regulatory Impact Analysis. Table II-
4 summarizes the control levels and resulting cost effectiveness for 
each option under this subcategory.
    At proposal (see 63 FR at 56306), EPA determined that controlling 
process heaters, though reasonably cost effective, is not highly cost 
effective because all the options analyzed for these source categories 
cost more than $2,000 per ton of NOX removed. Thus, EPA 
concluded that these sources do not emit in amounts that significantly 
contribute to petitioning States' nonattainment or maintenance 
problems.
    One commenter objected to EPA's proposed denial of section 126 
petition with respect to large process heaters. The commenter argued 
that implementation of the regional NOX budget program 
adopted by the OTC indicates that a trading program is readily 
available for such sources within the OTC. If such a program is 
available in the OTC, the commenter questions why such a program is not 
being imposed on sources under section 126.
    Although a trading program is available for process heaters under 
the OTC, EPA has determined that controlling process heaters across the 
entire region covered by section 126 is not highly cost effective. If 
EPA were to include monitoring costs in its cost-effectiveness number 
and assume that a trading program would achieve a 30 percent reduction 
in the cost-effectiveness number, controlling process heaters would 
still cost more than $2,000 per ton of NOX removed. Thus, 
for today's final rule, EPA concludes that process heaters do not emit 
in amounts that significantly contribute to petitioning States' 
nonattainment or maintenance problems.
d. Small Sources
    At proposal (see 63 FR at 56306), for the subcategory of small 
sources, EPA has determined that additional control measures or levels 
of control are not highly cost effective and appropriate to mandate. 
For the purposes of this rulemaking, EPA generally considers the 
following sizes of point sources to be small: (1) electricity 
generating boilers and turbines serving generators 25 MWe or less, and 
(2) other indirect heat exchangers with a heat input of 250 mmBtu/hr or 
less (see section I above for further discussion).
    One commenter objected to EPA's denial of section 126 petitions 
with respect to EGUs between 15 and 25 MWe. The commenter advocated 
capping such sources at 1990 levels consistent with the OTC 
NOX MOU. The commenter argued that this action would not 
require additional controls in a market driven NOX control 
program.
    In the NOX SIP call (see 63 FR at 57402), EPA found that 
the collective emissions from small sources were relatively small (in 
the context of that rulemaking) and the administrative burden, to the 
permitting authority and to regulated entities, of controlling such 
sources was likely to be considerable. Even if EPA were not to apply 
additional controls beyond capping small sources at 1990 levels, there 
would be administrative costs that would be considerable in comparison 
to the emissions reductions gained. Thus, this level of control is not 
highly cost effective and appropriate to mandate. Furthermore, EPA 
notes that the 25 MWe is approximately equivalent to 250 mmBtu/hr used 
for small non-EGUs.
    In today's action, for the same reasons as described in the final 
NOX SIP call, EPA concludes that small sources do not emit 
in amounts that significantly contribute to petitioning States' 
nonattainment or maintenance problems.
e. Summary of Control Measures
    Table II-5 summarizes the controls that are assumed for each 
subcategory.

   Table II-5.--Summary of Feasible, Highly Cost-Effective NOX Control
                                Measures
------------------------------------------------------------------------
                Subcategory                       Control measures
------------------------------------------------------------------------
Large EGUs................................  State-by-State ozone season
                                             emissions level (in tons)
                                             based on applying a NOX
                                             emission rate of 0.15 lb/
                                             mmBtu on all applicable
                                             sources assuming historic
                                             ozone season heat input and
                                             adjusting for growth to
                                             year 2007.

[[Page 28302]]

 
Large Non-EGUs............................  State-by-State ozone season
                                             emissions level (in tons)
                                             based on applying a 60
                                             percent reduction from
                                             uncontrolled emissions on
                                             all applicable sources
                                             assuming uncontrolled ozone
                                             season emissions and
                                             adjusting for growth to
                                             year 2007.
Large Process Heaters.....................  No additional controls
                                             highly cost effective.
Small Sources.............................  No additional controls
                                             highly cost effective.
------------------------------------------------------------------------

K. Feasibility of NOX Control Implementation Date

    Some commenters asserted that a compliance deadline of May 2003 is 
infeasible for completing the installation of the assumed 
NOX controls. Some commenters argued that there are not 
enough materials and suppliers to install NOX controls by 
the May 2003 deadline. Other commenters expressed concern that 
utilities will not have sufficient time to install NOX 
controls without causing electrical power outages; these commenters 
stated that such power outages would have adverse impacts on the 
reliability of the electricity supply. Commenters also expressed 
concern about the technologies EPA assumed could be used to meet the 
2003 deadline and the cost assumptions for NOX control 
technology.
    As part of the NOX SIP call, the Agency conducted a 
detailed examination of the feasibility of installing the 
NOX controls that EPA assumed in developing the emissions 
budgets for the affected States. See Feasibility of Installing 
NOX Control Technologies By May 2003, EPA, Office of 
Atmospheric Programs, September 1998. The Agency's findings are 
summarized in the NOX SIP call final rule (63 FR at 57447). 
Based on these findings, EPA believes that the compliance date of May 
1, 2003 for NOX controls to be installed to comply with this 
section 126 rulemaking is a feasible and reasonable deadline.
    Furthermore, several utility plants have already begun installation 
of SCR retrofits, indicating the ability of electric utilities to meet 
the compliance date for the NOX SIP call without system 
reliability concerns. These projects are summarized in Table II-6 
below. For instance, the Tennessee Valley Authority (TVA) has publicly 
announced its schedule to have all its units comply with the 
NOX SIP call by 2003. This is quite significant, since TVA 
operates more than 7 percent of the coal-fired capacity in the 
NOX SIP call Region.

                                   Table II-6.--Planned SCR Retrofit Projects
----------------------------------------------------------------------------------------------------------------
                                                            Unit size
              Utility                       Plant              (MW)            Fuel              Outage date
----------------------------------------------------------------------------------------------------------------
TVA...............................  Allen 1..............          300  Coal..............  Spring 2001.
                                    Allen 2..............          300  Coal..............  Spring 2002.
                                    Allen 3..............          300  Coal..............  Fall 2001.
                                    Bull Run.............          900  Coal..............  Spring 2003.
                                    Cumberland 1.........         1300  Coal..............  Spring 2003.
                                    Cumberland 2.........         1300  Coal..............  Fall 2002.
                                    Paradise 1...........          700  Coal..............  Fall 2000.
                                    Paradise 2...........          700  Coal..............  Spring/Fall 1999.
                                    Widows Creek 2.......          141  Coal..............  Spring 2003.
                                    Widows Creek 7.......          575  Coal..............  Spring 2002.
AES...............................  Kintigh..............          655  Coal..............  Before 2003.
Associated Electric Cooperative...  New Madrid 1.........          600  Coal..............  Before 2003.
                                    New Madrid 2.........          600  Coal..............  Fall 1999.
Edison Mission Energy.............  Homer City 1.........          660  Coal..............  Before 2003.
                                    Homer City 2.........          660  Coal..............  Before 2003.
                                    Homer City 3.........          692  Coal..............  Before 2003.
----------------------------------------------------------------------------------------------------------------

    In addition, one commenter agrees that the controls are feasible in 
terms of their supply, the time available for the needed installation 
and the availability of vendors to effectively install them. The 
commenter has assessed the feasibility of NOX SIP call 
compliance by the affected sources in the context of electric system 
reliability, as explained in a report Electric System Reliability--A 
Red Herring to Delay Clean Air Progress, Ozone Attainment Coalition, 
September 1998. This report shows that, even with conservative 
assumptions about outage periods for the installation of SCR controls, 
compliance with the SIP call can be achieved in aggregate by the 
affected sources. Furthermore, the commenter has completed additional 
analysis that concludes that SIP call compliance is a manageable 
situation that will be accomplished during the non-peak periods of 
electricity demand. The analysis estimates that SCR can be installed on 
255 electric utility units as compared to EPA's estimate of 142 units 
(see Electric System Reliability and the NOX SIP Call, Ozone 
Attainment Coalition, Draft Report, April 1999).
    The Agency is also providing compliance flexibility to sources for 
the 2003 and 2004 ozone seasons by establishing State compliance 
supplement pools. (See section IV.C.1.c for further discussion of 
compliance supplement pool.)
    The EPA also concludes from the German experience that reliability 
should not be a problem. In the mid-1980s, West Germany required every 
plant to meet a NOX emission rate of about 0.16 lb/mmBtu, 
every half-hour all year long. Within a 3-year period, West Germany 
retrofitted more than 80 percent of its coal-fired power plants with 
SCR. The retrofitted, coal-fired plants represented about 33 percent of 
the overall generation capacity of Germany, compared to 27 percent of 
the U.S. in the final NOX SIP call (under section 126 this 
percentage will be less since the rule covers three less States). 
During this time, no brownouts are known to have occurred as a result 
of the SCR retrofits, even though West German plants tend to have more 
space restrictions than U.S. plants and it was

[[Page 28303]]

much more difficult for West Germany to import power from other 
countries.
1. Cost Assumptions for SCR
    One commenter has argued that the costs for installation of SCR are 
50 percent greater than EPA's estimate and that SCR does not achieve 
NOX removal greater than 83 percent. The commenter did not 
provide the basis for its estimates.
    The EPA maintains that SCR systems are achieving 90 percent or 
greater NOX removal in applications demonstrated worldwide. 
The SCR is a proven technology used to significantly reduce 
NOX emissions from more than 300 sources in the U.S., and 
more than 500 sources worldwide. By proper catalyst selection and 
system design, NOX removal efficiencies exceeding 90 percent 
can be achieved. In practice, commercial SCR systems often meet control 
targets of over 90 percent. For further discussion see White Paper--
Selective Catalytic Reduction (SCR) for Controlling NOX 
Emissions, ICAC, 1997.
    The SCR control assumptions used by EPA are supported by actual SCR 
applications. The Northeast States for Coordinated Air Use Management 
(NESCAUM) and the Mid-Atlantic Regional Air Management Association 
(MARAMA) prepared a comprehensive report on the status of technologies 
to reduce emissions of NOX from electric utility boilers. 
The report relied on real-world cost and operating experience from 
actual installations of advanced NOX control technologies 
(including SCR) at fourteen U.S. facilities involving 52 coal and gas/
oil-fired boilers. The report results demonstrate that available 
technologies can achieve significant NOX emissions 
reductions both cost effectively and reliably. The report states that 
NOX emission rates of 0.15 and as low as 0.08 lb/mmBtu were 
achieved at a cost of $400 to about $1500/ton. (See Status Report on 
NOX Control Technologies and Cost Effectiveness for Utility 
Boilers, Staudt, James E., NESCAUM/MARAMA Report, June 1988.) Note that 
capital costs reported are comparable to EPA capital costs which were 
given at $50-70/kW (in 1997 dollars). (See Analyzing Electric Power 
Generation Under the CAAA, EPA, March 1998.)
    The EPA used the information available from the existing retrofit 
at Merrimack Unit 2 to corroborate its costing methodology. For this 
330 MW cyclone-fired installation, designed for a 65 percent 
NOX removal efficiency, the total capital cost was reported 
to be $55/kW and cost effectiveness was $400/ton of NOX 
removed (see NESCAUM/MARAMA Report, June 1988). This cost included the 
addition of a significant amount of additional ductwork and support 
steel required for this retrofit because of unusual space limitations. 
The baseline NOX emission rate for this unit was also 
unusually high (2.66 lb/mmBtu), thus requiring a relatively large and 
expensive ammonia handling system. The capital cost estimate for the 
Merrimack Unit 2 retrofit using EPA's cost model was $68.53/kW, which 
was over 20 percent higher than the $55/kW actual cost reported. Thus, 
this comparison confirms the conservatism of the EPA's cost methodology 
and contingencies built into it.
2. Technology Deployment
    Commenters maintained that EPA has overestimated the amount of SCNR 
that will be installed as a result of the section 126 action. First, 
commenters argued that SNCR NOX removal is between 15 and 35 
percent, as opposed to EPA's estimate of 40 percent. Second, commenters 
disagreed with EPA's assertion that there are no limits to the unit 
capacity for commercial application of SNCR. Commenters maintained that 
SNCR is limited to units with capacities no higher than 325 MW.
    The EPA maintains that SNCR NOX reduction of 40 percent 
is attainable and represents the mid-range efficiency achieved in 
current utility boiler applications. The SNCR has been commercially 
used on electric utility boilers to achieve in excess of 60 percent 
NOX reduction while maintaining ammonia slip below 10 ppm. 
(See NESCAUM and MARAMA, June 1998, Attachment C, p. 42.) Although this 
performance may not be possible for every boiler, careful assessment of 
factors impacting boiler performance (such as initial NOX 
level, furnace temperature, flue gas flow and NOX 
distribution profiles at various operating load conditions, and access 
for injection of reagent) can result in increased NOX 
reduction efficiency and reduced ammonia slip from SNCR systems. 
Reported literature indicates that SNCR control efficiency on the 
installed utility boilers ranges predominantly from 30 to 60 percent. 
(See White Paper--Selective Non-Catalytic Reduction (SNCR) for 
Controlling NOX Emissions, ICAC, 1997, p. 18.) Based on the 
demonstrated experience in the electric utility and other industry, EPA 
has suggested use of SNCR as a cost-effective option to achieve desired 
emissions reductions. The EPA does not require use of SNCR and 
acknowledges that some of the affected facilities may choose to install 
SCR instead of SNCR and reduce emissions over and above what is 
required by the NOX SIP call, as part of their compliance 
and economic strategies.
    The EPA also maintains that there are no limits to the unit 
capacity for commercial application of SNCR. The size of the boiler 
does not limit the ability to inject SNCR reagent into the combustion 
gas flow to achieve NOX reductions, as demonstrated by 
applications worldwide. The SNCR is a fully commercial NOX 
reduction technology, with application of ammonia and urea-based 
processes at approximately 300 installations worldwide, ranging up to 
822 MW in size and covering a wide array of stationary combustion units 
firing a variety of fuels. (See White Paper--Selective Non-Catalytic 
Reduction (SNCR) for Controlling NOX Emissions, ICAC, 1997, 
pp. 17-26.) Industrial boilers, process units, and municipal combustors 
make up the largest share of commercial SNCR installations in the U.S. 
This distribution appears to be a result of NOX control 
regulations in place rather than SNCR's technical limitations. In the 
U.S., the largest urea-based SNCR has been commercially applied to a 
320 MWe pulverized coal-fueled, wall-fired electric utility boiler. 
However, there are various commercial urea-based SNCR contracts in 
place for larger units (e.g., one unit is as large as 620 MWe). (See 
NESCAUM/MARAMA Report, June 1998, Attachment C, p. 44.) Additionally, 
literature shows that one technology vendor has conducted a computer 
simulation of SNCR application on some large size boilers and is 
extending commercial performance guarantees for the same. (See CFD 
Modeling of Urea-Based SNCR and Hybrid Performance on Large Utility 
Boilers, Comparato, J.; Boyle, J.; and Michaels, W., ICAC Forum 1998, 
pp. 1-8.) Based on this information, it is reasonable to conclude that 
commercially available SNCR technology can be applied to large boilers, 
and therefore, costs for utility NOX reductions have not 
been underestimated.
    To further address concerns on the potential size limitations for 
SNCR raised by the commenters, EPA conducted a sensitivity analysis 
using the IPM as part of the final NOX SIP call. In this 
analysis, SNCR was applied to boilers 200 MWe or smaller only. This is 
a conservative assumption considering application of SNCR on a boiler 
as large as 320 MW has already been demonstrated. Additionally, it was 
assumed that SNCR NOX reduction efficiency would be 35 
percent for sources which emit NOX (prior to the

[[Page 28304]]

application of SNCR) at levels of equal to or more than 0.5 lb/mmBtu. 
The SNCR efficiency was assumed to be limited to 30 percent for sources 
which emit NOX (prior to the application of SNCR) at levels 
less than 0.5 lb/mmBtu (i.e., low-emitting sources).
    Results of the IPM sensitivity simulation, showed less of SNCR and 
more of SCR is needed to achieve the required NOX budget 
contributions. Specifically, there is a decrease of 33.3 gigawatts (GW) 
of SNCR on coal-fired units and an increase of 24.7 GW of SCR 
installation on coal-fired units. Cost of compliance for EGUs under the 
sensitivity scenario are estimated to be about $1746 (1990 dollars) per 
ton of NOX removed in 2007. Thus, even with reduced use and 
effectiveness of SNCR, it is highly cost effective for EGUs to comply 
with the section 126 requirements.
    In addition to the cost of compliance, EPA examined the feasibility 
of implementing the retrofits by September 2002 for the sensitivity 
scenario. The IPM projections revealed that, in general, one to three 
SCR or SNCR installations per plant would be expected. However, at one 
plant a maximum of six SCR systems may be required. Based on these 
projections and EPA's analysis of control technology retrofitting 
schedules, it is reasonable to conclude that all of the necessary 
engineering and air permitting activities can be accomplished by 
September 2002.
    Based on the above discussion, limiting SNCR applicability and 
NOX control efficiency would not affect the feasibility of 
implementing the controls by May 2003. Moreover, compliance with the 
section 126 requirements would still be cost effective.
3. Catalyst Supply
    One commenter has argued that EPA's estimates on the availability 
of SCR catalyst are flawed because the Agency is underestimating the 
number of EGUs that will be employing SCR technology.
    The EPA has determined that ample supply of catalyst exists. One 
major catalyst vendor has recently announced its plans to build a new 
catalyst manufacturing plant by mid-year 2000, thus increasing the 
current supply of available catalyst. In addition, a study of catalyst 
availability during the NOX SIP call had concluded that 
adequate capacity of SCR catalyst supply is believed to be available to 
satisfy the demand that may result from the projected SCR 
installations. (See Feasibility of Installing NOX Control 
Technologies by May 2003, EPA, September 1998.) In addition, as 
discussed above, EPA conducted a sensitivity analysis limiting SNCR 
applicability and assuming a lower SNCR NOX reduction 
efficiency. Even with the increase in projected SCR capacity under the 
sensitivity scenario, the excess capacity in catalyst supply would be 
sufficient to meet the demand over an implementation period of less 
than 3 years. Given the findings of the sensitivity analysis and the 
plans for building an additional catalyst plant, EPA infers there will 
be sufficient catalyst supply for increased SCR installations.
4. Outage Periods
    One commenter has submitted information reflecting that SCR 
retrofits expected to result from the final rule could be placed in 
three categories: cases with modest retrofit difficulty, cases with 
intermediate retrofit difficulty, and cases with challenging retrofit 
difficulty. The commenter suggested that a modestly difficult retrofit 
will require about 4-6 weeks of outage for completing SCR installation; 
a retrofit with intermediate difficulty will need 8-12 weeks; and a 
challenging retrofit will need more than 14 weeks of outage.
    The EPA has examined the information submitted by the commenter and 
determined that this information is unsupported and speculative. The 
commenter asserts that the length of the outage periods to install SCR 
will vary, depending upon the size of the affected units and the degree 
of access. According to the commenter, small units with reasonable 
access will be modestly difficult retrofits. The commenter fails to 
show a logical connection between the size of a unit and the degree of 
retrofit difficulty in the case of an SCR installation, where the 
emission controls are in a separate structure adjacent to the unit 
itself. In EPA's view, a large unit with relatively unconstrained plant 
layout may be easier to retrofit compared to a small unit with a 
relatively constrained layout.
    The commenter provides an example of a hypothetical ``intermediate 
retrofit difficulty case'' in which access to the unit is constrained. 
In this example, the commenter lists the activities to be completed and 
the volume of material needed but does not provide any data relating 
these activities to the time needed to complete them. In the absence of 
this data, the commenter's claimed outage period for the example is 
unsupported. However, EPA notes that in any construction project (such 
as SCR retrofit), multiple activities can be conducted concurrently 
and, if needed, more personnel can be deployed to expedite the project. 
Therefore, even assuming, for the sake of argument, the commenter's 
categorization of retrofit difficulty has some merit, the relationship 
of this categorization to outage requirement is unsupported. The 
commenter's assertion that the vast majority of SCR retrofits will be 
of intermediate retrofit difficulty also is unsupported.
    The EPA also notes that a large utility in Germany, which also 
supplies SCR systems, completed each of its SCR retrofits in about 4 
weeks. This utility also has informed EPA that SCR retrofit-related 
work can be spread over two or three outages. (See Feasibility of 
Installing NOX Control Technologies By May 2003, September 
1998.) By spreading retrofit work over a few outages, if necessary, 
plants would be able to avoid causing any impacts on the reliability of 
electricity supply.
    The EPA used IPM to look into the sensitivity of a number of the 
model's assumptions, as discussed in Feasibility of Installing 
NOX Control Technologies by May 2003. One of the sensitivity 
runs considered the installation of 63 GW in 1 year and an increase of 
the planned outage period to 9 weeks. This run can also be considered a 
representation of the installation of 189 GW of SCR at coal-fired units 
over a 3-year period (more than the commenter assumes will occur) with 
9 weeks of planned outages each year (10 percent less than what the 
commenter assumes will occur on average). In this sensitivity scenario, 
increasing the amount of planned outage did not threaten the stability 
of the power supply (deduced from the fact that no new units were built 
in IPM simulations). What does occur is some shifting of power between 
regions in and around the SIP call region, decisions for later existing 
unit retirement, and increased use of gas-fired units and an overall 
result of some increased cost of electricity production, but no 
conditions that would necessitate a blackout. The total costs over 3 
years amount to a small increase of about 1.3 percent in overall costs. 
The increase in costs were found to be related to the need to 
substitute available, idle power plants for those units taken off line, 
which are more expensive to run.

L. Air Quality Assessment

    In the proposal, EPA relied on air quality modeling in the final 
NOX SIP call to evaluate the ozone benefits in the 
petitioning States of NOX controls proposed in today's 
action. That modeling was performed for the 23 jurisdictions covered in 
the NOX SIP call to confirm that those States

[[Page 28305]]

collectively contribute significantly to downwind nonattainment. The 
collective contribution of all the upwind States is one factor that 
went into EPA's decision that each individual upwind State contributes 
significantly to downwind nonattainment. The results of this modeling 
indicate that the NOX controls applied to the sources in the 
upwind States which make a significant contribution to nonattainment in 
one or more of the petitioning States will provide substantial ozone 
benefits in each of the petitioning States. As discussed below, the EPA 
continues to believe that the results of that modeling analysis are 
valid for the purpose of today's rulemaking, as well.
    The modeling cited at proposal was based on UAM-V model runs for a 
2007 Base Case and a control scenario designed to evaluate the effects 
of NOX controls very similar to those in today's rulemaking 
on nonattainment in downwind States, including each of the petitioning 
States. The details of this modeling are described in the final 
NOX SIP call rulemaking. Several commenters stated that this 
modeling does not isolate the effects on ozone in the petitioning 
States of controls applied outside the Northeast. As part of the 
NOX SIP call rulemaking, EPA performed model runs which 
provide the type of assessment similar to that requested by the 
commenters. This modeling included a comparison of two control 
scenarios. One scenario is identified above as having NOX 
controls applied across all 23 jurisdictions. The other scenario 
included the application of these same NOX controls in the 
Northeast only. The difference in ozone predictions between these two 
scenarios shows the effects in the Northeast of NOX controls 
applied outside this region. A full description of this modeling and 
the metrics used to evaluate the results are described in the final 
NOX SIP call rulemaking.
    The results indicate that controls similar to those in today's 
rulemaking will produce large reductions in ozone concentrations in the 
petitioning States. For example, the number of modeled exceedences of 
the 1-hour NAAQS that are reduced by upwind controls include a 16 
percent reduction in New York City, a 38 percent reduction in 
Philadelphia, and 43 percent reduction in western Massachusetts. Also, 
for the 8-hour NAAQS, the number of exceedences reduced by upwind 
controls is 7 percent in New York, 10 percent in Massachusetts, and 32 
percent in Pennsylvania. Thus, the results of this modeling indicate 
that the proposed NOX controls applied to the sources in the 
upwind States proposed as making a significant contribution to 
nonattainment in one or more of the petitioning States will provide 
substantial ozone benefits downwind in the petitioning States.
    The EPA recognizes that the amount of emissions reduction in the 
modeled strategy is not identical to the amount of emissions reduction 
in today's rulemaking. There are three additional upwind States (i.e., 
Georgia, South Carolina, and Wisconsin) which are controlled in the 
modeled strategy that are not covered by today's rulemaking. The 
difference in the total NOX emission reductions for the 20 
jurisdictions covered by today's rule between what was assumed in the 
23 jurisdiction modeling is 11 percent. These three States were covered 
in the NOX SIP call because of their contributions to States 
other than the petitioning States. Since EPA believes that emissions 
from sources in these States do not contribute significantly to 
nonattainment in any of the petitioning States, it is reasonable to 
assume that emissions reductions in these States will not have any 
appreciable impact on nonattainment in any of the petitioning States.

III. EPA's Final Action on Granting or Denying the Petitions

    The EPA is taking final action on the section 126 petitions based 
on the outcome of the multi-step process described in the preceding 
section. The EPA's action consists of three components: (1) Technical 
determinations of whether upwind sources or source categories named in 
each of the petitions significantly contribute to nonattainment (of the 
1-hour or 8-hour standard) or interfere with maintenance (of the 8-hour 
standard) in the relevant petitioning State; (2) for those sources or 
source categories for which EPA is making an affirmative technical 
determination, action specifying when a finding that those sources emit 
or would emit in violation of the section 110(a)(2)(D)(i)(I) 
prohibition will be deemed made or not made (or made but subsequently 
withdrawn) if certain events occur for purposes of section 126(b); and 
(3) the specific emissions-reduction requirements that will apply when 
such a finding is deemed made. Each of these actions is described 
below. Under this final action, new and existing large EGUs and large 
non-EGUs in 19 upwind States and the District of Columbia are 
potentially subject to a future section 126(b) finding and therefore to 
the requirements set forth in this final rule.

A. Technical Determinations

    First, EPA is making final affirmative technical determinations as 
to which of the new (or modified 31) or existing major 
sources or groups of stationary sources named in each petition emit or 
would emit NOX in amounts that contribute significantly to 
nonattainment of the 1-hour or 8-hour standard in (or interfere with 
maintenance of the 8-hour standard by) each petitioning State. The 
regulatory text of today's rule sets forth each of the affirmative 
technical determinations for sources named in each petition.
---------------------------------------------------------------------------

    \31\ Whenever the word ``new'' is used in relation to sources 
affected by this rule, it includes both new and modified sources.
---------------------------------------------------------------------------

    In short, for each petition, with respect to each ozone standard 
(as specifically requested in the petition), EPA is making affirmative 
technical determinations of significant contribution (or interference) 
for those large EGU and large non-EGU sources for which highly cost-
effective controls are available (as described in Section II.J.), to 
the extent those sources are located in one of the ``Named Upwind 
States'' corresponding to that petition in Tables II-1 and II-2. Thus, 
to illustrate, for the petition from New York, EPA is making an 
affirmative technical determination that large EGUs and large non-EGUs 
that are located or would be located in the named portions of Delaware, 
the District of Columbia, Indiana, Kentucky, Maryland, Michigan, New 
Jersey, North Carolina, Ohio, Pennsylvania, Virginia, and West Virginia 
emit, or would emit, NOX in amounts that contribute 
significantly to nonattainment of the 1-hour standard in the State of 
New York. (By contrast, EPA is determining that such sources located in 
Tennessee, which New York also named in its petition, do not emit 
NOX in amounts that significantly contribute to 
nonattainment problems in the State of New York.) The result is that 
EPA is determining that the large EGUs and large non-EGUs in at least 
some upwind States named in every petition except Vermont's and Rhode 
Island's contribute significantly to nonattainment of at least one of 
the standards (or interfere with maintenance of the 8-hour standard) in 
the petitioning State. The EPA refers the reader to the regulatory text 
for a full description of the final affirmative technical 
determinations for each petition.
    The EPA notes that the Agency is not making final affirmative 
technical determinations as to any sources located in Arkansas, Iowa, 
Louisiana, Maine, Minnesota, Mississippi, New

[[Page 28306]]

Hampshire, and Vermont. For the States of Maine, New Hampshire, and 
Vermont EPA has not completed sufficient modeling and other assessments 
to enable the Agency to conclude that sources in any of those States 
contribute significantly to nonattainment (or interfere with 
maintenance) of an ozone standard in any downwind petitioning 
State.32 In the final NOX SIP call, EPA stated 
that it planned to conduct State-by-State modeling for these and 
certain other States for which EPA does not currently have adequate 
information. The EPA indicated it intended to begin the modeling in the 
fall of 1998. However, in letters dated March 10, 1999, EPA notified 
these States that, given the Agency's current resource contraints, it 
would not be able to conduct the additional air quality modeling at 
this time. Accordingly, for the present, EPA is denying, on the grounds 
of inadequate information, the portions of the petitions from Maine, 
New Hampshire, and Pennsylvania that request a finding of significant 
contribution with regard to sources located in any of these three 
States.
---------------------------------------------------------------------------

    \32\ Maine's petition named sources in Vermont and New 
Hamsphire; New Hampshire's petition named sources in Maine, Vermont, 
and Iowa; and Pennsylvania's petition named sources in Arkansas, 
Iowa, Louisiana, Minnesota, and Mississippi.
---------------------------------------------------------------------------

    The EPA is also not making any affirmative technical determinations 
regarding sources located in Georgia, South Carolina, Wisconsin, 
Minnesota, Mississippi, Louisiana, Arkansas, and Iowa. For these 
States, EPA has sufficient modeling results (and other technical 
assessments) to enable it to conclude that these States do not 
significantly contribute to downwind nonattainment or maintenance 
problems in any of the petitioning States.33 Although, EPA 
does not believe that sources in Georgia, South Carolina, and Wisconsin 
are significantly contributing to nonattainment problems in any of the 
petitioning States, EPA notes that it has determined in the NOx SIP 
call rule that sources in these States are significantly contributing 
to other States in the eastern half of the nation.
---------------------------------------------------------------------------

    \33\ As part of EPA's evaluation of contributions, two screening 
criteria were used to identify those linkages that were definitely 
not significant (i.e., a 4-episode average contribution <1 percent 
or a maximum contribution <2ppb). A linkage is considered 
insignificant if at least one of the two screening criteria is not 
met. The results of the CAMx modeling are described in 
the Air Quality Modeling Technical Support Document for the 
NOx SIP Call. The CAMx modeling indicates that 
the 1-hour and 8-hour contributions from Iowa to both New Hampshire 
and Pennsylvania are below the 1 percent screening criteria for the 
4-episode average contribution metric. Also, the CAMx 
modeling for Louisiana and Mississippi and the multi-state group 
containing Arkansas and Minnesota indicates that contributions from 
these States to 1-hour nonattainment in Pennsylvania are below the 1 
percent screening criteria. Given that EPA's significant 
contribution test requires that an upwind area be determined to 
significantly contribute based on both the CAMx and UAM-V 
models, the fact that these States do not significantly contribute 
based on CAMx modeling means that they could not be found 
to significantly contribute even if they are found to be significant 
under the UAM-V modeling. Thus, even though EPA has not conducted 
State-specific UAM-V zero-out modeling for each of these States, the 
1-hour and 8-hour linkages from Iowa to New Hampshire and 
Pennsylvania and the 1-hour linkages from Arkansas, Louisiana, 
Minnesota, and Mississippi to Pennsylvania are not significant 
because these linkages do not pass the screening criteria for the 
CAMx 4-episode average contribution metric. Note that the 
contributions from Louisiana, Mississippi, and the multi-state 
grouping containing Arkansas and Minnesota to 8-hour nonattainment 
in Pennsylvania exceed the screening criteria. Thus, we are not 
making affirmative technical findings on these States under the 8-
hour standard because, without the State-by-State UAM-V zero-out 
modeling, EPA does not have sufficient information to determine 
whether they contribute significantly to Pennsylvania.
---------------------------------------------------------------------------

B. Action on Whether To Grant or Deny Each Petition

1. Portions of Petitions for Which EPA Is Making an Affirmative 
Technical Determination
    For the reasons described in Section II.E., EPA is issuing the 
alternative type of final action provided for in the consent decree. 
Under that alternative approach, for sources for which EPA is today 
making an affirmative technical determination of significant 
contribution, the section 126(b) finding that certain sources emit or 
would emit in violation of the prohibition in section 
110(a)(2)(D)(i)(I) will be deemed made as of certain specified dates if 
certain events do not occur by those dates. More specifically, a 
finding that new or existing sources, for which EPA has made an 
affirmative technical determination, do emit in violation of section 
110(a)(2)(D)(i)(I) will be deemed made:

     As of November 30, 1999, if by such date EPA does not 
issue either a proposed approval, under section 110(k) of the CAA, 
of a SIP revision submitted by such State to comply with the 
requirements of the NOX SIP call; or a final FIP meeting 
such requirements for such State in which the affected sources are 
or will be located,
     As of May 1, 2000, if by November 30, 1999, EPA 
proposes to approve the SIP revision described above for such State, 
but, by May 1, 2000, EPA does not fully approve the SIP revision or 
promulgate a FIP meeting the requirements of the NOx SIP 
call for such State.

The EPA also is determining that any such finding as to any such major 
source or group of stationary sources would be considered a finding 
under section 126(b) and, therefore, would trigger the remedial 
requirements of this final rule. At such time as a finding is deemed 
made, EPA intends to publish a notice in the Federal Register 
announcing the source categories and locations affected by the finding.
    Furthermore, any portion of a petition for which EPA is making an 
affirmative technical determination (as described above) shall be 
deemed denied as of May 1, 2000, if a section 126(b) finding has not 
been deemed to have been made by that date. In other words, if EPA has 
taken final action putting into place a SIP or FIP meeting the 
requirements of the NOX SIP call, any outstanding portions 
of petitions will be deemed denied as of the date of approval of the 
SIP or promulgation of the FIP. In addition, after a section 126(b) 
finding has been deemed made as to sources or groups of stationary 
sources in an upwind State, that finding will be deemed withdrawn, and 
the corresponding part of the relevant petition(s) denied, if the 
Administrator either approves a SIP or promulgates a FIP which complies 
with the requirements of the NOX SIP call for such upwind 
State. This would minimize any overlap between an effective section 
126(b) finding, on one hand, and the application of satisfactory SIP or 
FIP provisions, on the other.
2. Portions of Petitions for Which EPA Is Not Making an Affirmative 
Technical Determination
    Consistent with this overall approach, for the sources for which 
EPA is not making an affirmative technical determination, EPA is 
concluding that they do not or would not emit in violation of the 
section 110(a)(2)(D)(i)(I) prohibition. As a result, EPA is denying 
each aspect of each petition relating to such sources. Table I-1 shows 
which States and sources were named in each petition. The EPA is not 
making affirmative technical determinations for all sources named in 
the petitions that are located in States not linked to the petitioning 
State as shown in Tables II-I and II-2. In addition, EPA is not making 
affirmative technical determinations for sources for which EPA has 
determined highly cost effective control measures are not available 
(see Section II.J.) For example, EPA is denying New York's petition as 
to sources in any State (or portion of a State) named in New York's 
petition that are outside the large EGU and large non-EGU categories 
described in Section II.J., as well as any named sources of any type in 
Tennessee. Another example is that EPA is today denying the petitions 
from Rhode Island and Vermont in their entirety because

[[Page 28307]]

EPA has determined that none of the sources named in these petitions is 
significantly contributing to nonattainment or maintenance problems 
with respect to the ozone standard(s) for which relief is requested in 
the petitions.

C. Requirements for Sources for Which EPA Makes a Section 126(b) 
Finding

    The control requirements that would apply to any new or existing 
major source or group of stationary sources for which a section 126(b) 
finding is ultimately made are discussed in Section IV below.
    Section 126(c) states, in relevant part, that:

it shall be a violation of this section and the applicable 
implementation plan in such State
    (1) for any major proposed new (or modified) source with respect 
to which a finding has been made under subsection (b) to be 
constructed or to operate in violation of this section and the 
prohibition of section 110(a)(2)(D)([i]) or this section or
    (2) for any major existing source to operate more than three 
months after such finding has been made with respect to it.

The Administrator may permit the continued operation of a source 
referred to in paragraph (2) beyond the expiration of such 3-month 
period if such source complies with such emission limitations and 
compliance schedules (containing increments of progress) as may be 
provided by the Administrator to bring about compliance with the 
requirements contained in section 110(a)(2)(D)([i]) as expeditiously as 
practicable, but in no case later than 3 years after the date of such 
finding.
    The remedial requirements that EPA is finalizing in today's action 
for sources for which a section 126(b) finding is ultimately made would 
satisfy the requirements just quoted. First, EPA is requiring that 
sources for which a section 126(b) finding is ultimately made must 
comply with the requirements described in Section IV to ensure that 
they do not emit in violation of the section 110(a)(2)(D)(i) 
prohibition. Second, the program EPA is finalizing serves as the 
alternative set of requirements that the Administrator may apply for 
the purpose of allowing existing sources subject to a section 126(b) 
finding to operate for more than 3 months after the finding is made. 
Consistent with section 126(c), the compliance period in EPA's program 
extends no further than 3 years from the making of the finding. To the 
extent a finding is deemed made as of November 30, 1999, compliance 
will be required by November 30, 2002. But since the program EPA is 
establishing would require actual emissions reductions only in the 
ozone season (defined for purposes of this rule as May 1-September 30, 
inclusive), actual reductions will not need to occur until May 1, 2003, 
the start of the first ozone season after the November 30, 2002, 
compliance date. Thus, compliance by November 30, 2002 would not 
require actual reductions until May 1, 2003. A finding deemed made as 
of May 1, 2000 would also yield a May 1, 2003 compliance date. As 
described in Section V.A.1 of the final NOX SIP call and its 
Response to Comment document and in Section II.K above, EPA believes 
that compliance by the ozone season beginning May 1, 2003 is feasible.

IV. Section 126 Control Remedy

    In the NPR (63 FR at 56309-56320), EPA proposed to implement a 
market-based cap-and-trade system to bring sources covered by any final 
section 126(b) finding into compliance. The Federal NOX 
Budget Trading Program was proposed as a new part 97 in title 40 of the 
Code of Federal Regulations. The EPA proposed that the Federal 
NOX Budget Trading Program would be triggered automatically 
if EPA makes a final finding of significant contribution as to any 
sources under section 126(b). Participation in the program would be 
mandatory for all sources affected by such a finding. As explained in 
Section IV.C of this preamble, today's rule includes the general 
parameters of the Federal NOX Budget Trading Program remedy 
in paragraph (j) of Sec. 52.34. The EPA will issue the remaining 
elements of the Federal NOX Budget Trading Program by July 
15, 1999. Today's rule also includes paragraph (k) of Sec. 52.34, which 
delineates the interim final emission limitations that will be imposed 
in the event the Administrator fails to promulgate (i.e., sign and 
release to the public) the Federal NOX Budget Trading 
Program regulations before a finding under section 126 is made. Section 
IV.D of this preamble describes these default emission limitations.

A. Appropriateness of Trading as a Section 126 Remedy

    A market-based cap-and-trade program is a proven method for 
achieving the highly cost-effective emissions reductions described in 
section II.J., while providing sources compliance flexibility. As 
explained in the NOX SIP call SNPR (63 FR at 25918-25919), 
the Ozone Transport Assessment Group (OTAG) identified five advantages 
of market-based systems: (1) Reduced cost of compliance, (2) creation 
of incentives for early reductions, (3) creation of incentives for 
emissions reductions beyond those required by regulations, (4) 
promotion of innovation, and (5) increased flexibility without 
resorting to waivers, exemptions, and other forms of administrative 
relief (OTAG 1997 Executive Report, pg. 57).
    The Agency received wide support for using the Federal 
NOX Budget Trading Program as the section 126 remedy. 
Several commenters cited lower compliance costs as a reason for 
supporting a cap-and-trade program and generally stated that the 
section 126 petitions would be satisfied if the sources named in the 
petitions were included in the trading program. One commenter claimed 
that pursuant to section 126, EPA has the clear authority to develop, 
impose, and implement the emissions caps associated with the trading 
program. Others claimed, however, that trading is not an appropriate 
section 126 remedy. One commenter questioned EPA's authority to use 
trading as the section 126 remedy because a section 126 finding 
requires reductions from specific sources for which a finding of 
significant contribution is made. That commenter pointed out that 
trading allows reductions to occur where they are most cost effective 
without regard to air quality benefits or impacts.
    The EPA agrees with the majority of commenters that expressed 
support for the Federal trading program. The EPA agrees with the 
assertion that participation in the Federal NOX Budget 
Trading Program is the most cost-effective method for achieving the 
reductions required if EPA makes a finding with regard to the section 
126 petitions. The EPA rejects the comment that EPA lacks the authority 
under section 126 to implement a trading program. The EPA finds that it 
has authority under section 126 to require sources or groups of sources 
for which a section 126(b) finding is made to comply with a cap-and-
trade program. Section 126(c) provides that such sources or groups of 
sources may continue to operate if they comply ``with such emission 
limitations and compliance schedules (containing increments of 
progress) as may be provided by the Administrator to bring about 
compliance'' with section 110(a)(2)(D). Under section 302, an 
``emission limitation'' is a ``requirement * * * which limits the 
quantity, rate, or concentration of emission of air pollutants on a 
continuous basis.'' This term is broad enough to include the limiting 
of sources' emissions through a cap-and-trade program. In fact, title 
IV of the Clean Air Act expressly refers to the

[[Page 28308]]

allowance requirements of the Acid Rain SO2 cap-and-trade 
program as ``emission limitations.'' See e.g., 42 U.S.C. 7651c(a).
    Under a cap-and-trade program, the Administrator sets an emission 
limitation and compliance schedule for all units subject to the 
program. The emission limitation for each unit is the requirement that 
the quantity of the unit's emissions during a specified period (here, 
the tonnage of NOX emissions during the ozone season) cannot 
exceed the amount authorized by the allowances that the unit holds. 
Allowances are allocated to units subject to the program, and the total 
number of allowances allocated to all such units for each control 
period is fixed or capped at a specified level. The compliance schedule 
is set by establishing a deadline (here, May 1, 2003 as explained in 
Section III.C of this preamble) by which units must begin to comply 
with the requirement to hold allowances sufficient to cover emissions. 
In summary, since EPA has the authority to establish emission limits 
and compliance schedules under section 126, and allowance requirements 
include both emission limits and a compliance schedule, EPA has the 
authority to promulgate allowance requirements and allocate allowances 
for purposes of section 126.
    The Federal NOX Budget Trading Program required in 
response to a section 126 finding will achieve the intended emissions 
reductions while providing flexibility and cost savings to the covered 
sources. The significant reductions incorporated into the cap, or 
budget, under which the Federal trading program would operate help 
ensure that the remedy would sufficiently mitigate the transport of 
ozone as required by any remedy under section 126. This budget 
represents the sum of NOX allowances allocated each year to 
affected sources in States covered by any final section 126 findings, 
calculated as explained in Section IV.C.1.b of this preamble. (For 
purposes of the section 126 remedy, this budget is not aggregated to a 
State level for any purpose other than for the calculation of 
allowances available for allocation to affected sources. Since the 
focus in the remedy is sources rather than States, there are no 
programmatic requirements associated with this budget at the State 
level.) For commenters concerned about the appropriateness of trading, 
EPA emphasizes that the trading program has been designed to mitigate 
the transport of ozone and its precursors to facilitate attainment and 
maintenance of the ozone NAAQS. The program was proposed based on 
recommendations from OTAG, experience from the OTC, and the 
NOX SIP call rulemaking process. Additionally, four of the 
petitioning States requested that a cap-and-trade program serve as the 
section 126 remedy.
    The analyses performed in conjunction with the NOX SIP 
call demonstrate that no significant changes in the location of 
emissions reductions will result from implementation of an unrestricted 
trading program with a uniform control level, as compared to a 
traditional command-and-control scenario (``Supplemental Ozone 
Transport Rulemaking Regulatory Analysis'', April 1998, pp. 2-19). The 
trading program will therefore allow named sources to retain some 
flexibility in meeting the emission limitations, but also will ensure 
that the necessary NOX reductions are achieved to mitigate 
the transport of ozone.

B. Relationship of the Section 126 Remedy to the NOX SIP 
Call and the Proposed FIP

    In the section 126 NPR (63 FR at 56309), the EPA proposed to 
establish a common trading program among sources subject to a trading 
program under the NOX SIP call, a section 126 remedy or a 
FIP. This common trading program could include all sources in States 
found to be significantly contributing to nonattainment or interfering 
with maintenance of the ozone standard in another State. Sources 
subject to the Federal NOX Budget Trading Program under the 
section 126 rulemaking or the FIP, and sources in States choosing to 
participate in the State NOX Budget Trading Program under 
the SIP call, could trade with one another across participating States 
under a NOX cap equivalent to the sum of the NOX 
emissions allocated to sources in participating States.
    The commenters almost uniformly supported integrating the trading 
programs under the NOX SIP call, section 126 rulemaking, and 
the FIP. One commenter stated that aligning the program requirements 
could lessen unnecessary compliance costs, promote greater certainty in 
compliance planning, and reduce the potential administrative burdens on 
both the regulatory and regulated communities. Most commenters cited 
that all three programs address the same transport problem and 
integrating them would achieve the environmental objective at least 
cost and with more flexibility for the affected sources. One commenter 
did not believe a trading program was an appropriate remedy for the 
section 126 petitions (addressed in section IV.A.), and therefore, the 
section 126 remedy should not be integrated with the NOX SIP 
call and the FIP trading programs.
    As stated in the section 126 NPR, all three rulemaking actions (the 
NOX SIP call, the FIP, and the section 126 rulemaking) are 
aimed at reducing transport of ozone by controlling emissions from 
sources in a given State that are found to be contributing 
significantly to nonattainment or interfering with maintenance in 
another State. The EPA agrees with commenters that, because all three 
programs were intended to achieve the same environmental objective, it 
would be possible to integrate the programs and maintain the integrity 
of this environmental objective.
    In order to be eligible to participate in a cap-and-trade program, 
the EPA believes that there are certain criteria that sources must meet 
(e.g., they must accurately and consistently account for all of their 
emissions). See Section 126 NPR, 63 FR at 56310. Because the sources in 
States that choose to participate in the cap-and-trade program outlined 
in the final NOX SIP call (40 CFR part 96) will meet these 
criteria, the sources subject to this section 126 action will meet 
these criteria, and the sources in States that would be subject to the 
proposed FIP (with the exception of cement kilns and IC engines, which 
are not included in the trading program) will meet these criteria, EPA 
supports the establishment of a common trading program. Therefore, EPA 
has determined that sources subject to the Federal NOX 
Budget Trading Program under section 126 or the proposed FIP, and 
sources in States choosing to participate in the State NOX 
Budget Trading Program under the NOX SIP call, could trade 
with one another under a NOX cap across participating States 
equivalent to the sum of the NOX caps of the individual 
States. In addition, in rejecting concerns about the appropriateness of 
one common trading program as a remedy, EPA relies on the analyses 
performed in conjunction with the NOX SIP call, which 
demonstrated that implementation of a single trading program with a 
uniform control level results in no significant changes in the location 
of emissions reductions as compared to a non-trading scenario 
(``Supplemental Ozone Transport Rulemaking Regulatory Analysis,'' April 
1998, pp. 2-19).

C. Federal NOX Budget Trading Program

    Under the terms of the consent decree with petitioning states, EPA 
must take final action on a remedy under section 126 by April 30, 1999. 
In accordance with that requirement, EPA is

[[Page 28309]]

promulgating the general parameters of the remedy in paragraph (j) of 
Sec. 52.34. The general parameters of the remedy promulgated today 
include the decision to employ a cap-and-trade program as the aggregate 
remedy, identification of the categories of sources subject to the 
trading program, specification of the basic emission limitation for the 
covered source categories, specification of the total emissions 
reductions to be achieved by the trading program, and the compliance 
date. Since EPA is not promulgating in today's rule the unit-specific 
allocations or 40 CFR part 97 rule provisions providing the details of 
the trading program for the section 126 remedy (as explained in Section 
IV.C.2), today's final rule specifies that EPA will issue these 
elements of the Federal NOX Budget Trading Program by July 
15, 1999. The EPA is committed to acting quickly in promulgating the 
remaining elements of the Federal NOX Budget Trading 
Program. The EPA has therefore specified the date in Sec. 52.34 by 
which those elements will be promulgated, and has delineated in 
paragraph (k) of Sec. 52.34 the interim final emission limitations that 
will be imposed in the event the remaining elements of the Federal 
NOX Budget Trading Program are not promulgated, as explained 
in Section IV.D of this preamble.
1. Elements of the Section 126 Remedy Promulgated With Today's 
Rulemaking
    The intent of EPA's action today is to prescribe the general 
parameters of the section 126 remedy and postpone the details of the 
Federal NOX Budget Trading Program until July 1999. Today's 
rule includes part 52, which establishes the general parameters of the 
Federal NOX Budget Trading Program as well as the default 
emission limitations should EPA fail to promulgate the details of the 
trading program and allocation provisions. Specifically, the regulatory 
language finalized today specifies the following elements, listed here 
and explained in further detail in Sections IV.C.1.a and IV.D.1, below:
     All large EGUs and large non-EGUs for which EPA makes a 
final finding under section 126(b) will be covered by and subject to 
the Federal NOX Budget Trading Program.
     Beginning May 1, 2003, the owner or operator of each 
source subject to the Federal NOX Budget Trading Program 
must hold total NOX allowances available to that source in 
the ozone season that are not less than the total NOX 
emissions emitted by the source during that ozone season.
     The total tons of NOX allowances allocated 
under the trading program (other than any compliance supplement pool 
credits) will be equivalent to the sum of two tonnage limits:
    (A) The total tons of NOX that large EGUs in the program 
would emit in an ozone season after achieving a 0.15 lb/mmBtu 
NOX emissions rate, assuming historic ozone season heat 
input adjusted for growth to the year 2007; plus
    (B) The total tons of NOX that large non-EGUs in the 
program would emit in an ozone season after achieving a 60 percent 
reduction in ozone season NOX emissions compared to 
uncontrolled levels adjusted for growth to the year 2007.
     If EPA makes a final finding under section 126(b) for any 
large EGUs and large non-EGUs and fails to promulgate the trading 
program regulations, owners or operators shall control emissions from 
such units so that each unit does not emit NOX emissions in 
excess of the unit's allocated NOX allowances. Moreover, 
NOX allowances will be allocated to large EGUs and large 
non-EGUs according to the methodology originally set forth in the 
proposed part 97.
     Compliance supplement pool credits may be available for 
distribution to affected sources, subject to specific State-by-State 
tonnage limits as established in the SIP call.
a. Compliance Schedule and Emission Limitation
    Section 52.34(j)(1) in today's final rule serves to establish a 
compliance schedule, i.e., the May 1, 2003 start date for the control 
program, as well as the general emission limitations for the large EGUs 
and large non-EGUs covered by any final section 126 remedy (see section 
II.I of this preamble for EGU and non-EGU definitions). Although 
section 126 findings are made for sources or source categories (as 
required by section 126), the section 126 remedy described in today's 
final rule applies at the unit level rather than the source level. This 
reflects the fact that many sources have multiple emission units and 
already report emissions at the unit level.
    Section 52.34(j)(1) requires the owners or operators of each such 
unit to hold total ``NOX allowances available'' for the 
ozone season not less than the unit's NOX emissions during 
that ozone season. The NOX allowances--each allowance 
representing a limited authorization to emit one ton of 
NOX--would be the currency used in the Federal 
NOX Budget Trading Program. The term ``available'' is 
intended to be sufficiently broad to include not only NOX 
allowances allocated to the unit, but additional NOX 
allowances which may be available through trading or banking to the 
extent such flexibility is incorporated into the final Federal 
NOX Budget Trading Program, as well as allowances from the 
compliance supplement pool in the 2003 and 2004 ozone seasons to the 
extent they are distributed.
b. Trading Program Budget
    In today's final rule, EPA describes the methodology used to 
determine the NOX emissions budget, i.e., the total amount 
of NOX allowances allocated to all units subject to the 
Federal NOX Budget Trading Program in a State for purposes 
of any section 126 finding. As noted in Section IV.A of this preamble, 
for purposes of the section 126 remedy, this budget is not aggregated 
to a State level for any purpose other than for the calculation of 
allowances available for allocation. Section 52.34(j)(3) indicates that 
the total available allowances will be calculated consistently with the 
method used in developing the NOX SIP call budgets in 40 CFR 
part 51, as described in the preamble to the final NOX SIP 
call. The number of available allowances will be equal to the sum of 
the tonnage limits explained in the following two paragraphs. The EPA 
will calculate these emissions budgets following the issuance of the 
final revised inventory for the SIP call and this section 126 
rulemaking.
    For large EGUs, the total tonnage limit will be determined by 
applying a 0.15 lb/mmBtu emission rate to either the 1995 or 1996 heat 
input level (whichever is higher for a particular State) projected to 
the year 2007 in a manner consistent with the methodology EPA used in 
developing the NOX SIP call budgets. The EPA used forecasts 
of future electricity generation to apply State-specific growth factors 
in calculating the emissions budgets for the electricity generating 
sector. The Agency derived these State specific growth factors from 
application of the Integrated Planning Model (IPM) using the 1998 Base 
Case (the condition of the industry in the absence of the 
NOX SIP call). A complete explanation of how EPA uses IPM to 
determine growth factors is included in EPA's Analyzing Electric Power 
Generation under the CAAA, March 1998.
    Non-EGU point source inventory data for 1995 were grown to 2007 
using Bureau of Economic Analysis (BEA) historical growth estimates of 
industrial earnings at the State 2-digit Standard Industrial 
Classification (SIC) level. Where source specific SIC data were not 
available, associated Source Classification Code (SCC) growth rates 
were used. In those cases where a State or industry may have had more 
accurate

[[Page 28310]]

information than the BEA forecast (e.g., planned expansion or 
population rates), data were verified and validated by the affected 
States and by EPA, and revisions were made to the factors used for that 
category.
    A fixed number of NOX allowances will be allocated to 
units for each ozone season equal to the total amount of the aggregate 
emissions (as calculated above) allowed for the units in each State 
included in the Federal NOX Budget Trading Program for 
purposes of the section 126 remedy. The specific unit allocations as 
well as the specific methodology will be provided with the provisions 
of the Federal NOX Budget Trading Program when part 97 is 
promulgated by July 15, 1999. The regulatory language finalized today 
leaves the Agency free to adopt a method for determining individual 
unit allocations in a manner different from the method used to 
determine unit emissions in the NOX SIP call inventory.
c. Compliance Supplement Pool
    In today's final rule, EPA includes a compliance supplement pool, 
as delineated in Sec. 52.34(j)(4). In the Section 126 NPR, EPA proposed 
that part 97 would include a compliance supplement pool consistent with 
the compliance supplement pool finalized with the NOX SIP 
call (63 FR at 56318). The Agency had received comments in response to 
the proposals for the NOX SIP call expressing concern that 
some sources may encounter unexpected problems installing controls by 
the May 1, 2003 deadline. The commenters suggested that these 
unexpected problems could cause unacceptable risk for a source and its 
associated industry. In particular, commenters expressed concern 
related to the electricity industry, stating that the deadline could 
adversely impact the reliability of electricity supply.
    The EPA addressed these concerns in the SIP call by providing 
additional flexibility for sources to comply with requirements (see 
also section II.K). One element of this flexibility is the compliance 
supplement pool, which ensures that there are a limited number of 
allowances available in addition to State budgets at the start of the 
program. The EPA proposed to use the same compliance supplement pools 
on a State-by-State basis for the section 126 remedy as were included 
in the final NOX SIP call.
    The majority of the commenters supported inclusion of the 
compliance supplement pool in the Federal NOX Budget Trading 
Program. These commenters asserted that the pool is necessary for 
sources that are unable to meet the compliance deadline and to 
alleviate concerns about electric supply reliability. However, three 
petitioning States argued that the CAA does not authorize a compliance 
supplement pool. These States commented that the pool effectively 
extends the compliance period under section 126 from 3 to 5 years. One 
State maintained that the compliance supplement pool compromises the 
relief sought by its section 126 petition and requested that the States 
against which its petition was directed not be permitted to rely on the 
pool. An additional State commenter suggested that delay of the 
compliance deadline was not warranted and supported this conclusion 
with an example of an SCR installation that only took 6 months. That 
State also commented that if EPA does adopt the compliance supplement 
pool, the portion of the compliance supplement pool allotted to States 
in the Ozone Transport Commission (OTC) should be apportioned to the 
combined OTC States rather than individual States because that would 
provide for less forfeiture of OTC banked allowances. Since each State 
could bring banked allowances under the OTC into the Federal 
NOX Budget Trading Program up to the level of their 
compliance supplement pool, pooling allowances among OTC States would 
allow these States to ensure maximum incorporation of banked 
allowances. Another OTC State asserted that the States in the OTC are 
given disproportionately small compliance supplement pools as a result 
of the stricter controls already installed on their sources.
    Consistent with the decision made for the NOX SIP call, 
the Agency is including the compliance supplement pool as part of its 
section 126 remedy, as delineated in Sec. 52.34(j)(4). Although the 
Agency agrees with the commenters who asserted that States affected by 
the NOX SIP call could reasonably achieve the reductions in 
the time-frame specified (see section III.K of this preamble and 
section III.F.6 of the final NOX SIP call preamble), EPA 
created the additional pool of emissions to address concerns about the 
compliance deadline. Those same concerns exist for sources subject to a 
section 126 finding and we affirm and incorporate into this rulemaking 
the rationales for the compliance supplement pool offered in the SIP 
call final rule. Therefore, EPA is including the compliance supplement 
pool in the Federal NOX Budget Trading Program.
    The Agency disagrees with commenters that assert that EPA lacks 
authority to include the compliance supplement pool and also disagrees 
with commenters who stated that the compliance supplement pool 
compromises the relief sought under section 126. The Agency disagrees 
with the commenters' assertions that the compliance supplement pool 
delays the compliance deadline beyond the 3 years required by section 
126. The compliance deadline for the covered sources is 3 years from 
the date the finding is made (which results in a May 1, 2003 deadline, 
as explained in Section III.C) and the compliance supplement pool is an 
inherent part of the remedy and concomitant emissions reductions 
required to be achieved at that time, just as are the trading 
provisions. Thus, this rule will require compliance with the Federal 
NOX Budget Trading program as the remedy within the three 
year timeframe contemplated by the CAA.
    The section 126 remedy incorporates a reasonable degree of 
flexibility with these compliance supplement pool provisions, while 
still ensuring the necessary reductions to mitigate the transport of 
ozone since the level of NOX emissions authorized through 
the remedy is fixed. Capping the compliance supplement pool ensures 
limited impact on emissions. Further, credits issued from the 
compliance supplement pool will not be valid for compliance past the 
2004 ozone season.
    The Agency disagrees with commenters who suggest that the 
compliance supplement pool should be distributed in a manner different 
from the method described in the proposal. The compliance supplement 
pool will be distributed, as proposed, proportionately to the level of 
reductions required in each State by the NOX SIP call for 
those States whose sources are covered by any section 126 remedy. The 
final rule adopts the method in the NOX SIP call for 
distributing the pool to each State because that method directly 
addresses the reason for the creation of the pool: to address concerns 
that the emission reductions required would create undue risk to the 
industry affected by the controls. Therefore, the Agency rejects 
comments asserting that the OTC States' share of the compliance 
supplement pool is disproportionately small and that the compliance 
supplement pool allowances should be aggregated across the OTC. Each 
State's share of these additional allowances is based on the same 
distribution criteria to ensure consistent treatment (in terms of the 
original justification of the compliance supplement pool) of sources in 
each State for which a section 126 finding is made. This approach will 
maintain

[[Page 28311]]

compatibility with the NOX SIP call for the States covered 
by the section 126 remedy.
    The July rule will specify the criteria and procedures for 
distributing allowances from the compliance supplement pool to sources 
affected by the section 126 remedy. Comments relevant to distribution 
of the compliance supplement pool to sources will be addressed at that 
time.
2. Elements of the Section 126 Remedy Not Finalized With Today's 
Rulemaking
    After finalization of the NOX SIP call on October 27, 
1998, EPA provided a 60-day public comment period for review of the 
NOX SIP call inventory and budgets, which on December 24, 
1998 was extended to February 22, 1999 (see Section I.I in this 
preamble). Because the section 126 rulemaking relies on the same 
emissions inventory as the NOX SIP call, EPA also reopened 
the section 126 comment period for emissions inventory comments. The 
EPA is completing its review of the inventory comments received and has 
committed to revising the final SIP call inventory and budgets after 
full evaluation of the comments submitted by States and sources. 
Following the revision of the inventory, the Agency will finalize the 
list of Section 126 affected sources, the Federal NOX Budget 
Trading Program's allocation methodology, the unit-by-unit 
NOX allowance allocations, and the compliance supplement 
pool distribution methodology. The Agency did not have sufficient time 
to properly evaluate comments related to the trading program which were 
dependent on consideration of the inventory revisions, or to 
incorporate those inventory revisions into the final trading program 
prior to today's action.
    The Agency has decided that taking until as late as July 15, 1999 
to promulgate part 97 and the source specific allocations will not 
affect the triggering of the remedy on November 30, 1999 or May 1, 2000 
(these trigger dates are explained in Section III.B.1 and tied to the 
SIP submission process under the NOX SIP call), or affect 
the May 1, 2003 start date for compliance with the remedy. The Agency 
has found that the May 1, 2003 implementation date is feasible to 
achieve given the dates by which a section 126 remedy could be 
triggered (see preamble section III.K.). Because the section 126 remedy 
can not be triggered until November 30, 1999 at the earliest, issuing 
final trading program regulations by July 15, 1999 will not affect the 
trigger dates and therefore will not affect implementation of the 
section 126 remedy.
    Therefore, by July 15, 1999, the Administrator will promulgate 
regulations setting forth the remaining elements of the section 126 
remedy. The July rulemaking will describe in detail the entire Federal 
NOX Budget Trading Program, summarize and respond to 
comments on the proposed program provisions and unit allocations, and 
present the specific unit allocations that would be imposed under a 
section 126(b) finding. The July rulemaking will also specify the 
methodology for distribution of allowances from the compliance 
supplement pool. However, should the Administrator fail to promulgate 
the trading program regulations before a section 126 finding is made, 
the interim final emission limitations described in Section IV.D will 
apply.

D. Default Emission Limitations in the Absence of a Promulgated Federal 
NOX Budget Trading Program

    The Agency has committed to promulgating regulations setting forth 
the Federal NOX Budget Trading Program by July 15, 1999, 
including the allocation of NOX allowances under the 
program. By that date EPA will have considered the comments received on 
the trading program and the individual unit allocations and will be 
able to respond to these comments in making a final determination on 
allocations and other trading program provisions.
    As discussed in Section I.E. of this preamble, EPA entered into a 
consent decree with the petitioning States that committed the Agency to 
developing a final section 126 remedy by April 30, 1999. As part of 
today's action, the Agency is promulgating on an interim basis emission 
limitations that will be imposed in the event a finding under section 
126 is made and the Administrator does not promulgate the Federal 
NOX Budget Trading Program regulations before such finding. 
EPA is finalizing the default emissions limitations remedy set forth in 
Sec. 52.34(k) under the ``good cause'' exemption to the Administrative 
Procedure Act's requirements for rulemaking. See 5 U.S.C. 553(b)(B). As 
noted elsewhere, taking into account the comments received on the 
appropriate remedy is impracticable given the court-ordered deadline 
and the volume of comments received. The EPA does not expect the 
default remedy set forth in Sec. 52.34(k) to ever be applied, for the 
reasons explained in this section. When EPA promulgates the details of 
the Federal NOX Budget Trading Program (40 CFR part 97), 
Sec. 52.34(k) will be superseded as a matter of law and EPA will take 
action to delete Sec. 52.34(k) accordingly.
    The EPA believes that today's action, even without any default 
emission limitations, meets the terms of the consent decree. However, 
this rule limits a unit's emissions to the amount of its allocated 
allowances to provide a remedy (in addition to the statutory remedy 
under section 126) by ensuring that unit-specific emission limitations 
are in place in the event that the Administrator fails to promulgate 
the Federal NOX Budget Trading Program regulations and a 
section 126 finding is made. In that event, the amount of allowances 
allocated to each unit will be that unit's emission limitation in the 
absence of trading provisions.
    As discussed in Section III.B.1. of this preamble, any section 126 
remedy would not be triggered before November 30, 1999 at the earliest. 
Therefore, the interim remedy discussed in this section will not apply 
unless the remedy is triggered and the Administrator has not 
promulgated the Federal NOX Budget Trading Program 
regulations. Further, as would be the case for the Federal 
NOX Budget Trading Program, unit compliance with any section 
126 remedy (whether it is the default emission limitations described in 
this section or the Federal NOX Budget Trading Program 
regulations to be promulgated in July) would not be required until May 
1, 2003.
    The methodology presented in this action for calculating the 
allowance allocations mirrors the methodology for allocating allowances 
described in the proposed part 97 (63 FR 56315), with changes to 
account for incorporation of the rule language into part 52. Each of 
these NOX allowance allocations will serve as a unit-
specific emission limitation only if a finding under Section 126 is 
made and the Administrator fails to promulgate regulations setting 
forth the Federal NOX Budget Trading Program before such 
finding. If the Administrator promulgates such regulations prior to the 
triggering of a section 126 remedy, the unit-specific emission 
limitations described in Sec. 52.34(k) will not apply.
    The EPA emphasizes that these allocations provide a default remedy 
under the consent decree and that EPA is committed to establishing 
final allocations, as well as trading program provisions, by July 15, 
1999. The Agency has included these interim final limitations in order 
to assure the petitioning States that emission limitations will be in 
place should a final section 126 finding be made and the Administrator 
has failed to promulgate the Federal NOX Budget

[[Page 28312]]

Trading Program regulations. As explained in Section IV.D.2, the Agency 
is incorporating as a default remedy the proposed part 97 methodology, 
but this does not represent the Agency's final determination on 
allowance allocations under the NOX Budget Trading Program. 
The Agency is continuing to review comments received on the proposed 
allocation methodologies and will come to a final decision by July 15, 
1999. The proposed part 97 rule language describing the allowance 
allocation methodology is included in today's rule without significant 
change in order not to pre-judge any decision the Agency will make on 
allocations.
    Further, EPA acknowledges that assigning these allowance 
allocations as unit-specific emission limitations in the absence of a 
trading program is not necessarily within the cost-effectiveness bounds 
delineated in Section II.J. However, given that the statutory 
alternative remedy to not promulgating emission limitations at this 
time is requiring the shutdown of units within 3 months of a finding 
under section 126(b) of the Act, today's action to meet the terms of 
the consent decree represents a more cost-effective alternative. 
Nonetheless, the Agency is concerned about meeting the cost-
effectiveness criteria. For this reason, as well as for the reason that 
the allocation methodology included in today's rule does not 
necessarily reflect the Agency's final decision on allocations, EPA 
reiterates its commitment to promulgate the regulations and unit-
specific allocations to implement the Federal NOx Budget 
Trading Program by July 15, 1999.
1. Default Emission Limitations
    Section 52.34(k) sets forth the provisions for how the 
Administrator will allocate NOx allowances to sources for 
which EPA makes a finding under section 126(b), in the event that the 
Administrator fails to promulgate the Federal NOX Budget 
Trading regulations. The methodology for determining the individual 
unit emission limitations included in this action incorporates rule 
language that was proposed in Sec. 97.42 (63 FR 56315) for determining 
allowance allocations. The EPA has incorporated Sec. 97.42 as proposed, 
with changes only where necessary to account for the incorporation of 
the proposed Sec. 97.42 into Sec. 52.34. Specifically, the Agency 
removed any references to terminology or provisions of other sections 
of proposed part 97, in order to refer instead to the relevant 
terminology or provisions of part 52 or delete entirely references 
relevant only to participation in a trading program. For example, in 
order to maintain consistent terminology with Sec. 52.34, EPA replaced 
the term ``NOX Budget unit'' with the term ``large EGUs and 
large non-EGUs.''
a. Default Emission Limitations for Existing Units
    As was described in the proposed Sec. 97.42, Sec. 52.34(k) bases 
the allowance allocations on heat input data. For large EGUs, initial 
unadjusted allocations would be based on actual heat input data (in 
mmBtu) for the units multiplied by an emission rate of 0.15 lb/mmBtu. 
For the ozone seasons in 2003, 2004, and 2005, the heat input used in 
the allocation calculation for large EGUs equals the average of the 
heat input for the two highest ozone seasons for the years 1995, 1996, 
and 1997. The emission limitations for each unit would then be adjusted 
upward or downward so that the total allocations for large EGUs in the 
State match 95 percent (to provide for a 5 percent new source set-
aside) of the total ozone season NOX emissions calculated 
for large EGUs in each State (see section IV.C.1.b. of this preamble).
    For the ozone seasons starting in 2006, the heat input used in the 
allocation calculation for large EGUs equals the heat input measured 
during the ozone season of the year that is four years before the year 
for which the allocations are being calculated. The emission 
limitations would be determined by multiplying the heat input by 0.15 
lb/mmBtu, and then adjusting the result so that the sum of the 
allocations to each EGU in the State equals 98 percent (to provide for 
a 2 percent new source set-aside) of the total ozone season 
NOX emissions calculated for large EGUs in each State.
    For large non-EGUs, initial unadjusted allocations would be based 
on 1995 heat input data (in mmBtu) for the units multiplied by an 
emission rate of 0.17 lb/mmBtu (the average emission rate for existing 
non-EGUs after controls are in place). As discussed in the section 126 
NPR, this differs from the method used to determine the aggregate 
emission level for non-EGUs (a percentage reduction from historical 
emissions) because at the time the aggregate level was determined 
(during the NOX SIP call proposal process), heat input data 
for individual units was not available. Distributing allocations on a 
heat-input basis provides a fuel-neutral method of allocating 
allowances to the units in the trading program similar to the 
allocation approach proposed for the EGUs. This heat-input-based 
allocation also allows for reallocating in the future (to accommodate 
new units) whereas allocations based upon a specific percentage 
reduction do not.
    The emission limitations for each unit would then be adjusted 
upward or downward so that the total allocations for large non-EGUs in 
the State match 95 percent (to provide for a 5 percent new source set-
aside) of the total ozone season NOX emissions calculated 
for large non-EGUs in each State.
    As described for large EGUs, for the ozone seasons starting in 
2006, the heat input used in the allocation calculation for large non-
EGUs equals the heat input measured during the ozone season of the year 
that is four years before the year for which the allocations are being 
calculated. The emission limitations would be determined by multiplying 
the heat input by 0.17 lb/mmBtu, and then adjusting the result so that 
the sum of the allocations to each non-EGUs in the State equals 98 
percent (to provide for a 2 percent new source set-aside) of the total 
ozone season NOX emissions calculated for large non-EGUs 
each State.
b. Default Emission Limitations for New Units
    The proposed Sec. 97.42 contained a new source set-aside of 5 
percent for the ozone seasons of 2003, 2004 and 2005 and 2 percent for 
each subsequent year. For purposes of this interim final remedy, the 
set-aside would enable new units, which did not operate during the full 
baseline periods used in assigning allocations to existing sources, to 
still receive an allowance allocation.
    As described in Sec. 52.34(k), the allowances would be issued to 
new sources on a first-come, first-served basis at a rate of 0.15 lb/
mmBtu for large EGUs and 0.17 lb/mmBtu for large non-EGUs multiplied by 
the unit's maximum design heat input. Following each ozone season, the 
source would be subject to a reduced utilization calculation, in which 
EPA would deduct NOX allowances based on the unit's actual 
utilization. Because the allocation for a new unit from the set-aside 
is based on maximum design heat input, this procedure adjusts the 
allocation by actual heat input for the ozone season of the allocation. 
This adjustment is a surrogate for the use of actual utilization in a 
prior baseline period which is the approach used for allocating 
NOX allowances to existing units.
    At the end of the relevant ozone season, EPA would allocate any 
allowances remaining in the account to the existing sources in the 
State on a pro-rata basis. This would have the effect of increasing 
each existing source's emission limitation for that ozone season.

[[Page 28313]]

2. July 15, 1999 Allocation Decisions
    The methodology described above is included in Sec. 52.34 as a 
default remedy under the consent decree with the section 126 
petitioners. The EPA emphasizes that no decisions have yet been made as 
to the allocation methodology that will be included in the Federal 
NOX Budget Trading Program promulgated in July. Today's 
default remedy reflects only what was initially proposed in Sec. 97.42 
and does not reflect any comments or new information received since the 
proposal. As explained in Sections I.I and IV.C.2 of this preamble, the 
Agency has not yet had sufficient time to incorporate SIP call 
inventory revisions into trading program policy decisions and analysis. 
The Agency intends to use this revised data when it becomes available, 
along with the comments received on the trading program generally and 
allocations specifically, to make a decision on the allocation 
methodology and other aspects of the trading program by July 15.
    Specifically, the Agency has not yet made decisions regarding the 
basis for allocations, the frequency with which the allocations might 
be updated (including whether they will be updated), or who might be 
eligible to receive allowances. In the NPR for the section 126 
rulemaking, EPA proposed three possible allocation methodologies and 
corresponding individual unit allocations for EGUs. The first 
methodology proposed to allocate allowances based on the heat input 
methodology that was included in Sec. 97.42 and is used for the interim 
final emission limitations in Sec. 52.34(k) of this action. The second 
methodology proposed would allocate to fossil fuel-fired electric 
generators based on share of total electricity generation. The third 
methodology would issue allowances to all electricity generators based 
on their share of total electricity generation.
    Selection of the first of these proposed methodologies for the 
interim final emission limitations does not indicate that the Agency 
prefers that option. The heat input option was included as a default 
only because it had already been proposed in rule language in part 97. 
The Agency is continuing to review comments, and the Administrator will 
promulgate regulations by July 15, 1999 which establish the basis for 
allowance allocations, as well as who will receive allowances.
    Likewise, the methodology that describes an annually updating 
system starting in 2006 was included as the interim remedy because that 
was proposed in the Sec. 97.42 rule language. The Agency has not yet 
made a decision regarding whether the allowance allocations in the 
Federal NOX Budget Trading Program will be updated 
periodically or how often they might be updated. The Agency will make a 
final determination by July 15, 1999 after consideration of comments.
    In addition, the Agency has received numerous comments on other 
aspects of the proposed allocation methodologies and will continue to 
review these. The Agency will provide final determinations and 
responses to these comments by July 15, 1999.

V. Non-ozone Benefits to NOX Reductions

    In addition to contributing to attainment of the ozone NAAQS, 
decreases of NOX emissions will also likely help improve the 
environment in several important ways. On a regional scale, decreases 
in NOX emissions will also decrease acid deposition, 
nitrates in drinking water, excessive nitrogen loadings to aquatic and 
terrestrial ecosystems, and ambient concentrations of nitrogen dioxide, 
particulate matter, and toxics. Thus, management of NOX 
emissions is important to both air quality and watershed protection. In 
its July 8, 1997 final recommendations, OTAG stated that it 
``recognizes that NOX controls for ozone reductions purposes 
have collateral public health and environmental benefits, including 
reductions in acid deposition, eutrophication, nitrification, fine 
particle pollution, and regional haze.'' These and other public health 
and environmental benefits associated with decreases in NOX 
emissions are summarized qualitatively below.34
---------------------------------------------------------------------------

    \34\ U.S. Environmental Protection Agency, ``Nitrogen Oxides: 
Impacts on Public Health and the Environment,'' EPA-452/R-97-002, 
August 1997.
---------------------------------------------------------------------------

    Justification for Rulemaking: While EPA believes the information 
discussed in this section is important for the public to understand 
and, thus, needs to be described as part of the rulemaking and RIA, 
there should be no misunderstanding as to the legal basis for the 
rulemaking, which is described in Section II of this notice and does 
not depend on the non-ozone benefits. The non-ozone benefits did not 
affect the method in which EPA determined significant contribution nor 
the control requirements.
    Acid Deposition: Sulfur dioxide and NOX are the two key 
air pollutants that cause acid deposition (wet and dry particles and 
gases) and result in the adverse effects on aquatic and terrestrial 
ecosystems, materials, visibility, and public health. Nitric acid 
deposition plays a dominant role in the acid pulses associated with the 
fish kills observed during the springtime melt of the snowpack in 
sensitive watersheds and recently has also been identified as a major 
contributor to chronic acidification of certain sensitive surface 
waters.
    Drinking Water Nitrate: High levels of nitrate in drinking water is 
a health hazard, especially for infants. Atmospheric nitrogen 
deposition in sensitive watersheds can increase stream water nitrate 
concentrations; the added nitrate can remain in the water and be 
transported long distances downstream.
    Eutrophication: NOX emissions contribute directly to the 
widespread accelerated eutrophication of United States coastal waters 
and estuaries. Atmospheric nitrogen deposition onto surface waters and 
deposition to watershed and subsequent transport into the tidal waters 
has been documented to contribute from 12 to 44 percent of the total 
nitrogen loadings to United States coastal water bodies. Nitrogen is a 
nutrient which enhances growth of algae in most coastal waters and 
estuaries. Thus, addition of nitrogen results in accelerated algae and 
aquatic plant growth causing adverse ecological effects and economic 
impacts that range from nuisance algal blooms to oxygen depletion and 
fish kills.
    Nitrogen Dioxide (NO2): Exposure to NO2 is 
associated with a variety of acute and chronic health effects. The 
health effects of most concern at ambient or near-ambient 
concentrations of NO2 include mild changes in airway 
responsiveness and pulmonary function in individuals with pre-existing 
respiratory illnesses and increases in respiratory illnesses in 
children. Currently, all areas of the United States monitoring 
NO2 are below EPA's threshold for health effects.
    Nitrogen Saturation of Terrestrial Ecosystems: Nitrogen accumulates 
in watersheds with high atmospheric nitrogen deposition. Because most 
North American terrestrial ecosystems are nitrogen limited, nitrogen 
deposition often has a fertilizing effect, accelerating plant growth. 
Although this effect is often considered beneficial, nitrogen 
deposition is causing important adverse changes in some terrestrial 
ecosystems, including shifts in plant species composition and decreases 
in species diversity or undesirable nitrate leaching to surface and 
ground water and decreased plant growth.
    Particulate Matter (PM): NOX compounds react with other 
compounds in the atmosphere to form nitrate particles and acid 
aerosols. Because of

[[Page 28314]]

their small size nitrate particles have a relatively long atmospheric 
lifetime; these small particles can also penetrate deeply into the 
lungs. The PM has a wide range of adverse health effects.
    Toxic Products: Airborne particles derived from NOX 
emissions react in the atmosphere to form various nitrogen containing 
compounds, some of which may be mutagenic. Examples of transformation 
products thought to contribute to increased mutagenicity include the 
nitrate radical, peroxyacetyl nitrates, nitroarenes, and nitrosamines.
    Visibility and Regional Haze: The NOX emissions lead to 
the formation of compounds that can interfere with the transmission of 
light, limiting visual range and color discrimination. Most visibility 
and regional haze problems can be traced to airborne particles in the 
atmosphere that include carbon compounds, nitrate and sulfate aerosols, 
and soil dust. While the major cause of visibility impairment in the 
eastern United States is sulfates, NOX emissions also 
contribute to visibility impairment.

VI. Administrative Requirements

A. Executive Order 12866: Regulatory Impact Analysis

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether a regulatory action is ``significant'' 
and therefore subject to Office of Management and Budget (OMB) review 
and the requirements of the Executive Order. The Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more 
or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The EPA believes that this action is a ``significant regulatory 
action'' because it raises novel legal and policy issues arising from 
the Agency's obligation to respond to the section 126 petitions, and 
because the action could have an annual effect on the economy of more 
than $100 million. As a result, the final rulemaking was submitted to 
OMB for review. EPA is referencing the impacts in the final 
NOX SIP call and proposed section 126 petitions RIA for the 
final section 126 rule and has not prepared a new RIA for the final 
rule at this time. Any written comments from OMB to EPA and any written 
EPA response to those comments are included in the docket. The docket 
is available for public inspection at the EPA's Air Docket Section, 
which is listed in the ADDRESSES section of this preamble. The RIA is 
available in hard copy by contacting the EPA Library at the address 
under ``Availability of Related Information'' and in electronic form as 
discussed above in that same section.
    The RIA for the section 126 petitions addresses the costs and 
benefits associated with reducing emissions at sources affected under 
the petitions in the broader context of those sources potentially 
affected by the final NOX SIP call and the proposed FIP. 
Sources named in the section 126 petitions may also be controlled under 
SIPs that will be revised to meet final NOX budgets. The EPA 
has proposed that in the event that States fail to submit approvable 
SIPs, FIPs will be enacted. Therefore, the sources named in section 126 
petitions may be complying with either State or Federal regulations of 
generally equivalent stringency.
    The RIA for the final NOX SIP call and section 126 
petitions concludes that the national annual cost of possible State 
actions to comply with the NOX SIP call is approximately 
$1.7 billion (1990 dollars). The sources named in the section 126 
petitions will bear the majority of that total cost. The EPA will 
revise this total cost estimate when it promulgates the NOX 
trading program for this section 126 rulemaking. The EPA anticipates 
the total cost for this section 126 rulemaking will not exceed the 
NOX SIP call estimate. The associated benefits from the 
NOX SIP call, in terms of improvements in health, 
visibility, and ecosystem protection, that EPA has quantified and 
monetized range from $1.1 billion to $4.2 billion. Due to practical 
analytical limitations, the EPA is not able to quantify and/or monetize 
all potential benefits of the NOX SIP call action. It is 
anticipated that the majority of these quantified and monetized 
benefits are associated with the section 126 action because the 
majority of emission reductions, and the associated exposed populations 
and ecosystems, are from sources potentially covered by SIP revisions, 
and these sources may also be covered by this section 126 action.
    Due to practical analytical and data limitations, such as a lack of 
air quality modeling based on the final section 126 inventory data, the 
EPA is not able to provide a quantified and monetized benefits analysis 
for the promulgated trading program as part of this section 126 
rulemaking in July. The EPA will provide a qualitative benefits 
assessment for the final section 126 rule in July, and will provide a 
quantitative benefits analysis for the final rule in October. The 
qualitative benefits assessment will be included in an RIA. This RIA 
will also contain estimates of the compliance costs and economic 
impacts associated with selected regulatory options that will be 
analyzed as part of the promulgation of the NOX trading 
program in July.

B. Impact on Small Entities

1. Regulatory Flexibility
    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act (SBREFA), provides that 
whenever an agency is required to publish a general notice of final 
rulemaking, it must prepare and make available a final Regulatory 
Flexibility Analysis, unless it certifies that the proposed rule, if 
promulgated, will not have ``a significant economic impact on a 
substantial number of small entities.''
    In accordance with section 603 of the RFA, EPA prepared an initial 
regulatory flexibility analysis (IRFA) for this rule (see 63 FR at 
56322), and convened a Small Business Advocacy Panel (henceforth called 
a ``Panel'') to obtain advice and recommendations of representatives of 
the affected small entities in accordance with requirements in the RFA. 
As per section 604 of the RFA, we also prepared a final regulatory 
flexibility analysis (FRFA) for today's final rule. The FRFA addresses 
the issues raised by public comments on the IRFA which was part of the 
proposal of this rule. The FRFA is available for review in the docket 
and is summarized below.
    In the process of developing this rulemaking, EPA worked with the 
Small Business Administration (SBA) and OMB and obtained input from 
small businesses, small governmental jurisdictions, and small 
organizations. On June 23, 1998, EPA's Small Business Advocacy 
Chairperson convened a Small Panel under section 609(b) of the RFA as 
amended by SBREFA. In addition to its chairperson, the Panel consists 
of EPA's Director of the Office of Air Quality Planning and Standards 
within the Office of Air and Radiation, the Administrator of the Office 
of Information and Regulatory Affairs within the OMB, and the Chief 
Counsel for Advocacy of the SBA.
    As described in the proposed rule (see 63 FR at 56322), this Panel 
conducted

[[Page 28315]]

an outreach effort and completed a report on the section 126 proposal. 
The report provides background information on the proposed rule being 
developed and the types of small entities that would be subject to the 
proposed rule, describes efforts to obtain the advice and 
recommendations of representatives of those small entities, summarizes 
the comments that have been received to date from those 
representatives, and presents the findings and recommendations of the 
Panel; the completed report, comments of the small entity 
representatives, and other information are contained in the docket for 
this rulemaking. The contents of today's action, including the RTC 
document and the Final Regulatory Flexibility Analysis, address the six 
recommendations in the Panel's report.
    In addition, EPA will also prepare a small entity compliance guide 
to assist small entities in complying with this rule as required by 
Section 212 of the SBREFA.
2. Potentially Affected Small Entities
    To define small entities, EPA used the SBA industry-specific 
criteria published in 13 CFR section 121. The SBA size standards have 
been established for each type of economic activity under the Standard 
Industrial Classification (SIC) System. Due to their NOX-
emitting properties, the following industries have the potential to be 
affected by the final section 126 rulemaking:

SIC Codes in Division D: Manufacturing
    2611--Pulp mills
    2819--Industrial Inorganic Materials
    2821--Plastics Materials, Synthetic Resins, and Nonvulcanizable 
Elastomers
    2869--Industrial Organic Chemicals
    3312--Steel Works, Blast Furnaces, and Rolling Mills
    3511--Steam, Gas, and Hydraulic Turbines
    3519--Stationary Internal Combustion Engines
    3585--Air-Conditioning and Warm-Air Heating Equipment and 
Commercial and Industrial Refrigeration Equipment
SIC Codes in Division E: Transportation, Communications, Electric, Gas, 
and Sanitary Services
SIC Major Group 49: Electric, Gas, and Sanitary Services, including:
    4911--Electric Utilities
    4922--Natural Gas Transmission
    4931--Electric and other Gas Services
    4961--Steam and Air Conditioning Supply

    The section 126 rulemaking is potentially applicable to all 
NOX-emitting entities named in one or more of the section 
126 petitions. The EPA estimates that the total number of such entities 
named in the section 126 petitions is approximately 5200, of which 
about 1200 are small entities. The EPA's analysis, ``Final Regulatory 
Flexibility Analysis For the Final Section 126 Petitions Under the 
Clean Air Act Amendments Title I'' is contained in the docket for this 
action, and results from this analysis are given below.
    For purposes of today's final action, the section 126 rulemaking 
will apply only to the following types of sources: large EGUs, and 
large non-EGUs. At these size cutoffs, the estimated number of small 
entities that would be affected is as follows:

Electric Generating Units--114 small entities
Industrial Boilers and/or Combustion Turbines--31 small entities.

    The EPA has further estimated that, of these affected small 
entities, the following would experience compliance costs equal or 
greater to 1 percent of their estimated revenues:

Electric Generating Units--32 small entities
Industrial Boilers and Combustion Turbines--4 small entities

    Of these, EPA estimates that about 18 small entities with electric 
generating units and 4 small entities with industrial boilers or 
turbines would experience costs greater than 3 percent of their 
estimated revenues.
    By limiting the small entities covered by the final rule to large 
EGUs and large non-EGUs, EPA is reducing by over 85 percent the number 
of small entities otherwise potentially affected by the cap-and-trade 
program: out of 1200 potentially-affected small entities, over 1000 
would be exempted, with only 145 small entities remaining. Commenters 
have strongly endorsed these exemptions.
    Furthermore, as described in the proposed rule (see 63 FR at 
56323), the Panel explored additional options for reducing the impact 
of the rule on small entities in the context of the NOX cap-
and-trade program. The EPA will consider these options and also produce 
a small entity analysis based on the latest emissions inventory data 
when it promulgates the NOX trading program for this section 
126 rulemaking.

C. 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, 2 
U.S.C. 1532, EPA generally must prepare a written statement, including 
a cost-benefit analysis, for any proposed or final rule that ``includes 
any Federal mandate that may result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more . . . in any one year.'' A ``Federal mandate'' is 
defined to include a ``Federal intergovernmental mandate'' and a 
``Federal private sector mandate'' (2 U.S.C. 658(6)). A ``Federal 
intergovernmental mandate,'' in turn, is defined to include a 
regulation that ``would impose an enforceable duty upon State, local, 
or tribal governments (2 U.S.C. 658(5)(A)(i)), except for, among other 
things, a duty that is ``a condition of Federal assistance (2 U.S.C. 
658(5)(A)(i)(I)). A ``Federal private sector mandate'' includes a 
regulation that ``would impose an enforceable duty upon the private 
sector,'' with certain exceptions (2 U.S.C. 658(7)(A)).
    The EPA is taking the position that the requirements of UMRA apply 
because this action could result in the establishment of enforceable 
mandates directly applicable to sources (including sources owned by 
State and local governments) that would result in costs greater than 
$100 million in any one year. The UMRA generally requires EPA to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least-costly, most cost-effective or least-burdensome 
alternative that achieves the objectives of the rule. The EPA's UMRA 
analysis, ``Unfunded Mandates Reform Act Analysis For the Proposed 
Section 126 Petitions Under the Clean Air Act Amendments Title I (Phase 
I),'' is contained in the docket for this action and is summarized 
below. The results of this analysis are referenced here since there 
have been no changes in the input data or to the analysis methodology 
offered by commenters.
    This UMRA analysis examines the impacts of the final section 126 
rulemaking on both EGUs and non-EGUs that are owned by State, local, 
and tribal governments, as well as sources owned by private entities. 
This final rule potentially affects 65 EGUs that are owned by one State 
and 24 municipalities (Massachusetts owns 6 units, and the 
municipalities own the remaining 59 units). In addition, seven non-EGUs 
owned by two States and five municipalities are potentially affected. 
The EPA has not identified any units on Tribal lands that would be 
subject to the rule requirements. The overall costs are dominated by 
the 65 EGUs and are about $30 million per year.

[[Page 28316]]

    Under section 203 of UMRA, 2 U.S.C. 1533, before EPA establishes 
any regulatory requirements ``that might significantly or uniquely 
affect small governments,'' EPA must have developed 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. Today's final rule does not distinguish 
EGUs based on ownership, either for those units that are included 
within the scope of the proposed rule or for those units that are 
exempted by the generating capacity cut-off. Consequently, the final 
rule has no requirements that uniquely affect small governments that 
own or operate EGUs within the affected region. With respect to the 
significance of the rule's provisions, EPA's UMRA analysis (cited 
above) demonstrates that the economic impact of the rule will not 
significantly affect (as defined in Section 203 of UMRA) State or 
municipal EGUs or non-EGUs, either in terms of total cost incurred and 
the impact of the costs on revenue, or increased cost of electricity to 
consumers. Therefore, development of a small government plan under 
section 203 of UMRA is not required.
    Under section 204 of UMRA, 2 U.S.C. 1534, if an agency proposes a 
rule that contains a ``significant Federal intergovernmental mandate,'' 
the agency must develop a process to permit elected officials of State, 
local, and tribal governments to provide input into the development of 
the proposal.'' In order to fulfill UMRA requirements that publicly-
elected officials be given meaningful and timely input in the process 
of regulatory development, EPA has sent letters to five national 
associations whose members include elected officials. The letters 
provided background information, requested the associations to notify 
their membership of the proposed rulemaking, and encourage interested 
parties to comment on the proposed actions by sending comments during 
the public comment period and presenting testimony at the public 
hearing on the proposal. The EPA considered these comments as part of 
today's final action and EPA will also consider them when finalizing 
the trading program.
    In addition, during the NOX SIP call, EPA provided 
direct notification to potentially affected State and municipally-owned 
utilities as part of the public comment and hearing process attendant 
to proposal of the NOX SIP call and supplemental notice of 
proposed rulemaking. These procedures helped ensure that small 
governments had an opportunity to give timely input and obtain 
information on compliance. The EPA provided the 26 State- and 
municipally-owned utilities and appropriate elected officials with a 
brief summary of the proposal and the estimated impacts. The public 
rulemaking also elicited numerous comments from State and municipal 
utilities and groups representing utility interests. Commenters 
generally endorsed the Agency's determinations on application of 
controls to State- and municipally-owned utilities.
    Furthermore, for the section 126 rulemaking, EPA published an ANPR 
that served to provide notice of the Agency's intention to propose 
emissions limits and to solicit early input on the proposal. This 
process helped to ensure that small governments had an opportunity to 
give timely input and obtain information on compliance.
    The Agency will revise the UMRA analysis, based on the data in the 
final section 126 inventory, when it promulgates the NOX 
trading program for this section 126 rulemaking.

D. Paperwork Reduction Act

    The information collection requirements in this final rule will be 
submitted for approval to OMB under the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq., when the NOX trading portion of this 
section 126 rulemaking is promulgated. An Information Collection 
Request (ICR) document was prepared by EPA for the proposed section 126 
rulemaking (see 63 FR at 56325, ICR No. 1889.01) and a copy may be 
obtained from Sandy Farmer, OPPE Regulatory Information Division, US 
Environmental Protection Agency (2137), 401 M St., SW, Washington, DC 
20460 or by calling (202) 260-2740.

E. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

1. Applicability of Executive Order 13045
    The Executive Order 13045 applies to any rule that EPA determines 
is (1) ``economically significant'' as defined under Executive Order 
12866, and (2) addressed an environmental health or safety risk that 
has a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency. This final 
rule is not subject to Executive Order 13045, entitled ``Protection of 
Children from Environmental Health Risks and Safety Risks''(62 FR 
19885, April 23, 1997), because it does not involve decisions on 
environmental health risks or safety risks that may disproportionately 
affect children.
2. Children's Health Protection
    In accordance with section 5(501), the Agency has evaluated the 
environmental health or safety effects of the rule on children, and 
found that the rule does not separately address any age groups. 
However, in conjunction with the final NOX SIP call 
rulemaking, the Agency has conducted a general analysis of the 
potential changes in ozone and PM levels experienced by children as a 
result of the NOX SIP call; these findings are presented in 
volume 2 of the RIA. The findings include population-weighted exposure 
characterizations for projected 2007 ozone and PM concentrations. The 
population data includes a census-derived subdivision for the under 18 
group. These findings from the final NOX SIP call RIA are 
also applicable to today's final action since the exposure 
characterizations are based on emissions from sources potentially 
covered by SIP revisions, and these sources may also be covered by this 
section 126 action.

F. Executive Order 12898: Environmental Justice

    Executive Order 12898 requires that each Federal agency make 
achieving environmental justice part of its mission by identifying and 
addressing, as appropriate, disproportionately high and adverse human 
health or environmental effects of its programs, policies, and 
activities on minorities and low-income populations. In conjunction 
with the final NOX SIP call rulemaking, the Agency has 
conducted a general analysis of the potential changes in ozone and PM 
levels that may be experienced by minority and low-income populations 
as a result of the NOX SIP call; these findings are 
presented in volume 2 of the RIA. The findings include population-
weighted exposure characterizations for projected ozone concentrations 
and PM concentrations. The population data includes census-derived 
subdivisions for whites and non-whites, and for low-income groups.

[[Page 28317]]

G. Executive Order 12875: Enhancing the Intergovernmental Partnership

    Under Executive Order 12875, EPA may not issue a regulation that is 
not required by statute and that creates a mandate upon a State, local 
or tribal government, unless the Federal government provides the funds 
necessary to pay the direct compliance costs incurred by those 
governments or EPA consults with those governments. If the mandate is 
unfunded, EPA must provide to the OMB a description of the extent of 
EPA's prior consultation with representatives of affected State, local 
and tribal governments, the nature of their concerns, copies of any 
written communications from the governments, and a statement supporting 
the need to issue the regulation. In addition, Executive Order 12875 
requires EPA to develop an effective process permitting elected 
officials and other representatives of State, local and tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory proposals containing significant unfunded mandates.''
    The EPA has concluded that this rule may create a mandate on State 
and local governments and that the Federal government will not provide 
the funds necessary to pay the direct costs incurred by the State and 
local governments in complying with the mandate. In order to provide 
meaningful and timely input in the development of this regulatory 
action, EPA sent letters to five national associations whose members 
include elected officials. The letters provided background information, 
requested the associations to notify their membership of the proposed 
rulemaking, and encouraged interested parties to comment on the 
proposed actions by sending comments during the public comment period 
and presenting testimony at the public hearing on the proposal. The EPA 
has addressed the concerns of these officials in the UMRA Analysis 
mentioned in Section V.C. and in the Response to Comments document. A 
statement supporting the need to issue the regulation is also contained 
in the UMRA Analysis.
    Furthermore, for the section 126 rulemaking, EPA published an ANPR 
that served to provide notice of the Agency's intention to propose 
emissions limits and to solicit early input on the proposal. This 
process helped to ensure that small governments had an opportunity to 
give timely input and obtain information on compliance.

H. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the government 
provides the funds necessary to pay the direct compliance costs 
incurred by the tribal governments. If the mandate is unfunded, EPA 
must provide to the OMB, in a separately identified section of the 
preamble to the rule, a description of the extent of EPA's prior 
consultation with representatives of affected tribal governments, a 
summary of the nature of their concerns, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 13084 
requires EPA to develop an effective process permitting elected and 
other representatives of Indian tribal governments ``to provide 
meaningful and timely input in the development of regulatory policies 
on matters that significantly or uniquely affect their communities.''
    Today's rule does not significantly or uniquely affect the 
communities of Indian tribal governments and, in any event, will not 
impose substantial direct compliance costs on such communities. The EPA 
is not aware of sources located on tribal lands that could be subject 
to the requirements EPA is finalizing in this action. Accordingly, the 
requirements of section 3(b) of Executive Order 13084 do not apply.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Pub. L. 104-113, Sec. 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.
    This final rulemaking would require all sources that participate in 
the trading program under proposed part 97 to meet the applicable 
monitoring requirements of part 75. Part 75 already incorporates a 
number of voluntary consensus standards. In addition, the Agency 
recently revised part 75 to incorporate procedures to monitor and 
report NOX mass emissions (see 63 FR at 57464). During that 
rulemaking, process EPA sought comments on additional voluntary 
consensus standards.
    This final rulemaking involves environmental monitoring or 
measurements. Sources that participate in the trading program would be 
required to meet the monitoring requirements under part 75. Consistent 
with the Agency's Performance Based Measurement System (PBMS), part 75 
sets forth performance criteria that allow the use of alternative 
methods to the ones set forth in part 75. The PBMS approach is intended 
to be more flexible and cost effective for the regulated community; it 
is also intended to encourage innovation in analytical technology and 
improved data quality. The EPA is not precluding the use of any method, 
whether it constitutes a voluntary consensus standard or not, as long 
as it meets the performance criteria specified, however, any 
alternative methods must be approved in advance before they may be used 
under part 75.

J. Judicial Review

    Section 307(b)(1) of the CAA indicates which Federal Courts of 
Appeal have venue for petitions of review of final actions by EPA. This 
Section provides, in part, that petitions for review must be filed in 
the Court of Appeals for the District of Columbia Circuit (i) when the 
agency action consists of ``nationally applicable regulations 
promulgated, or final actions taken, by the Administrator,'' or (ii) 
when such action is locally or regionally applicable, if ``such action 
is based on a determination of nationwide scope or effect and if in 
taking such action the Administrator finds and publishes that such 
action is based on such a determination.''
    This rulemaking on several section 126 petitions is ``naturally 
applicable'' within the meaning of section 307(b)(1). At the core of 
this rulemaking is EPA's interpretation of sections 126 and 
110(a)(2)(D)(i)(I). These interpretations were applied uniformly to 
each section 126 petition.\35\ Further, the modeling which EPA employed 
to assist in

[[Page 28318]]

making today's decisions involved uniform modeling techniques and a 
uniform set of air quality metrics to assess upwind impacts on downwind 
states. In addition, the cost effectiveness information was analyzed 
and applied uniformly to each petition. Further, the remedy selected by 
EPA is uniformly applicable to upwind sources in many different states 
and involves interstate trading of NOX emission allowances. 
In sum, the numerous legal and technical issues that EPA addressed in 
this rulemaking apply uniformly to all the sources in 19 states and the 
District of Columbia about which EPA is making an affirmative or 
negative determination. Cf. West Virginia Chamber of Commerce v. 
Browner, 1998 WL 827315, *7 (4th Cir., Dec. 1, 1998) (the proposed 
NOX SIP Call Rule is nationally applicable because it 
``seeks to tackle a problem affecting two-thirds of the country by 
regulating somewhat less than one half of the states'').
---------------------------------------------------------------------------

    \35\ EPA interpreted some of the same provisions in the SIP Call 
final rule, and the U.S. Court of Appeals for the D.C. Circuit 
agreed with the Administrator that the rule was nationally 
significant and thus, that venue lies in that circuit. See State of 
Michigan v. EPA, No. 98-1497 (D.C. Cir., Order, Mar. 19, 1999) 
(citing Texas Municipal Power Agency v. EPA, 89 F. 3d 858, 867 (D.C. 
Cir. 1996) (per curiam)).
---------------------------------------------------------------------------

    For these reasons, the Administrator also is determining that the 
final action regarding the section 126 petitions is of nationwide scope 
and effect for purposes of section 307(b)(1). This is particularly 
appropriate because in the report on the 1977 Amendments that revised 
section 307(b)(1) of the CAA, Congress noted that the Administrator's 
determination that an action is of ``nationwide scope or effect'' would 
be appropriate for any action that has ``scope or effect beyond a 
single judicial circuit.'' H.R. Rep. No. 95-294 at 323, 324, reprinted 
in 1977 U.S.C.C.A.N. 1402-03. Here, the scope and effect of this 
rulemaking extend to numerous judicial circuits since the downwind 
petitioning states lie in the First, Second and Third Circuits of the 
U.S. Courts of Appeals and the upwind regulated states lie in several 
other circuits. In these circumstances, section 307(b)(1) and its 
legislative history calls for the Administrator to find the rule to be 
of ``nationwide scope or effect'' and for venue to be in the D.C. 
Circuit.
    Thus, any petitions for review of final actions regarding the 
section 126 rulemaking must be filed in the Court of Appeals for the 
District of Columbia Circuit within 60 days from the date final action 
is published in the Federal Register.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The EPA will submit a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A ``major rule'' 
cannot take effect until 60 days after it is published in the Federal 
Register. This action is a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective July 26, 1999.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Emissions trading, 
Intergovernmental relations, Nitrogen oxides, Ozone transport, 
Reporting and recordkeeping requirements.

    Dated: April 30, 1999.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble, part 52 of chapter I of 
title 40 of the Code of Federal Regulations is amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

    1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart A--General Provisions

    2. Subpart A is amended to add Sec. 52.34 to read as follows:


Sec. 52.34  Action on petitions submitted under section 126 relating to 
emissions of nitrogen oxides.

    (a) Definitions. For purposes of this section, the following 
definitions apply:
    (1) Administrator means the Administrator of the United States 
Environmental Protection Agency or the Administrator's duly authorized 
representative.
    (2) Large Electric Generating Units (large EGUs) means:
    (i) For units that commenced operation before January 1, 1997, a 
unit serving during 1995 or 1996 a generator that had a nameplate 
capacity greater than 25 MWe and produced electricity for sale under a 
firm contract to the electric grid.
    (ii) For units that commenced operation on or after January 1, 1997 
and before January 1, 1999, a unit serving at any time during 1997 or 
1998 a generator that had a nameplate capacity greater than 25 MWe and 
produced electricity for sale under a firm contract to the electric 
grid.
    (iii) For units that commence operation on or after January 1, 
1999, a unit serving at any time a generator that has a nameplate 
capacity greater than 25 MWe and produces electricity for sale.
    (3) Large Non-Electric Generating Units (large non-EGUs) means:
    (i) For units that commenced operation before January 1, 1997, a 
unit that has a maximum design heat input greater than 250 mmBtu/hr and 
that did not serve during 1995 or 1996 a generator producing 
electricity for sale under a firm contract to the electric grid.
    (ii) For units that commenced operation on or after January 1, 1997 
and before January 1, 1999, a unit that has a maximum design heat input 
greater than 250 mmBtu/hr and that did not serve at any time during 
1997 or 1998 a generator producing electricity for sale under a firm 
contract to the electric grid.
    (iii) For units that commence operation on or after January 1, 
1999, a unit with a maximum design heat input greater than 250 mmBtu/hr 
that:
    (A) At no time serves a generator producing electricity for sale; 
or
    (B) At any time serves a generator producing electricity for sale, 
if any such generator has a nameplate capacity of 25 MWe or less and 
has the potential to use 50 percent or less of the potential electrical 
output capacity of the unit.
    (4) New sources means new and modified sources.
    (5) NOX means oxides of nitrogen.
    (6) NOX allowance means an authorization by the 
permitting authority or the Administrator to emit up to one ton of 
nitrogen oxides during the control period of the specified year or of 
any year thereafter.
    (7) OTAG means the Ozone Transport Assessment Group (active 1995-
1997), a national work group that addressed the problem of ground-level 
ozone and the long-range transport of air pollution across the Eastern 
United States. The OTAG was a partnership between EPA, the 
Environmental Council of the States, and various industry and 
environmental groups.
    (8) Ozone season means the period of time beginning May 1 of a year 
and ending on September 30 of the same year, inclusive.
    (9) Potential electrical output capacity means, with regard to a 
unit, 33 percent of the maximum design heat input of the unit.
    (10) Unit means a fossil-fuel fired stationary boiler, combustion 
turbine, or combined cycle system.
    (b) Purpose and applicability. Paragraphs (c) through (h) of this 
section set forth EPA's affirmative technical determinations, with 
respect to the

[[Page 28319]]

national ambient air quality standards (NAAQS) for ozone, that certain 
new and existing sources of emissions of nitrogen oxides 
(``NOX'') in certain States emit or would emit 
NOX in amounts that contribute significantly to 
nonattainment in, or interfere with maintenance by, one or more States 
that submitted petitions in 1997-1998 addressing such NOX 
emissions under section 126 of the Clean Air Act. (As used in this 
section, the term new source includes modified sources, as well.) 
Paragraph (i) of this section sets forth EPA's decisions about whether 
to grant or deny each of those petitions, and the remainder of this 
section sets forth the emissions-reduction requirements that will apply 
to the affected sources of NOX emissions to the extent any 
of the petitions are granted.
    (1) The States that submitted such petitions are Connecticut, 
Maine, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode 
Island, and Vermont (each of which, hereinafter in this section, may be 
referred to also as a ``petitioning State'').
    (2) The new and existing sources of NOX emissions 
covered by the petitions that emit or would emit NOX 
emissions in amounts that make such significant contributions are large 
electric generating units (EGUs) and large non-EGUs.
    (c) Affirmative technical determinations relating to impacts on 
ozone levels in Connecticut. (1) Affirmative technical determinations 
with respect to the 1-hour ozone standard in Connecticut. The 
Administrator of EPA finds that any existing or new major source or 
group of stationary sources emits or would emit NOX in 
amounts that contribute significantly to nonattainment in the State of 
Connecticut with respect to the 1-hour NAAQS for ozone if it is or will 
be:
    (i) In a category of large EGUs or large non-EGUs;
    (ii) Located in one of the States (or portions thereof) listed in 
paragraph (c)(2) of this section; and
    (iii) Within one of the ``Named Source Categories'' listed in the 
portion of Table F-1 in appendix F of this part describing the sources 
of NOX emissions covered by the petition of the State of 
Connecticut.
    (2) States or portions of States that contain sources for which EPA 
is making an affirmative technical determination with respect to the 1-
hour ozone standard in Connecticut. The States, or portions of States, 
that contain sources of NOX emissions for which EPA is 
making an affirmative technical determination are:
    (i) Delaware.
    (ii) District of Columbia.
    (iii) Portion of Indiana located in OTAG Subregions 2 and 6, as 
shown in appendix F, Figure F-2, of this part.
    (iv) Portion of Kentucky located in OTAG Subregion 6, as shown in 
appendix F, Figure F-2, of this part.
    (v) Maryland.
    (vi) Portion of Michigan located in OTAG Subregion 2, as shown in 
appendix F, Figure F-2, of this part.
    (vii) Portion of North Carolina located in OTAG Subregion 7, as 
shown in appendix F, Figure F-2, of this part.
    (viii) New Jersey.
    (ix) Portion of New York extending west and south of Connecticut, 
as shown in appendix F, Figure F-2, of this part.
    (x) Ohio.
    (xi) Pennsylvania.
    (xii) Virginia.
    (xiii) West Virginia.
    (d) Affirmative technical determinations relating to impacts on 
ozone levels in Maine. (1) Affirmative technical determinations with 
respect to the 8-hour ozone standard in Maine. The Administrator of EPA 
finds that any existing or new major source or group of stationary 
sources emits or would emit NOX in amounts that contribute 
significantly to nonattainment in the State of Maine, with respect to 
the 8-hour NAAQS for ozone if it is or will be:
    (i) In a category of large EGUs or large non-EGUs;
    (ii) Located in one of the States (or portions thereof) listed in 
paragraph (d)(2) of this section; and
    (iii) Within one of the ``Named Source Categories'' listed in the 
portion of Table F-1 of appendix F of this part describing the sources 
of NOX emissions covered by the petition of the State of 
Maine.
    (2) States or portions of States that contain sources for which EPA 
is making an affirmative technical determination with respect to the 8-
hour ozone standard in Maine. The States that contain sources for which 
EPA is making an affirmative technical determination are:
    (i) Connecticut.
    (ii) Delaware.
    (iii) District of Columbia.
    (iv) Maryland.
    (v) Massachusetts.
    (vi) New Jersey.
    (vii) New York.
    (viii) Pennsylvania.
    (ix) Rhode Island.
    (x) Virginia.

    (e) Affirmative technical determinations relating to impacts on 
ozone levels in Massachusetts. (1) Affirmative technical determinations 
with respect to the 1-hour ozone standard in Massachusetts. The 
Administrator of EPA finds that any existing major source or group of 
stationary sources emits NOX in amounts that contribute 
significantly to nonattainment in the State of Massachusetts, with 
respect to the 1-hour NAAQS for ozone if it is:
    (i) In a category of large EGUs or large non-EGUs;
    (ii) Located in one of the States (or portions thereof) listed in 
paragraph (e)(2) of this section; and
    (iii) Within one of the ``Named Source Categories'' listed in the 
portion of Table F-1 in appendix F of this part describing the sources 
of NOX emissions covered by the petition of the State of 
Massachusetts.
    (2) States or portions of States that contain sources for which EPA 
is making an affirmative technical determination with respect to the 1-
hour ozone standard in Massachusetts. The portion of a State that 
contains sources for which EPA is making an affirmative technical 
determination are:
    (i) All counties in West Virginia located within a 3-county-wide 
band of the Ohio River, as shown in appendix F, Figure F-4, of this 
part.
    (3) Affirmative technical determinations with respect to the 8-hour 
ozone standard in Massachusetts. The Administrator of EPA finds that 
any existing major source or group of stationary sources emits 
NOX in amounts that contribute significantly to 
nonattainment in, or interfere with maintenance by, the State of 
Massachusetts, with respect to the 8-hour NAAQS for ozone if it is:
    (i) In a category of large EGUs or large non-EGUs;
    (ii) Located in one of the States (or portions thereof) listed in 
paragraph (e)(4) of this section; and
    (iii) Within one of the ``Named Source Categories'' listed in the 
portion of Table F-1 in appendix F of this part describing the sources 
of NOX emissions covered by the petition of the State of 
Massachusetts.
    (4) States or portions of States that contain sources for which EPA 
is making an affirmative technical determination with respect to the 8-
hour ozone standard in Massachusetts. The portions of States that 
contain sources for which EPA is making an affirmative technical 
determination are:
    (i) All counties in Ohio located within a 3-county-wide band of the 
Ohio River, as shown in appendix F, Figure F-4, of this part.

[[Page 28320]]

    (ii) All counties in West Virginia located within a 3-county-wide 
band of the Ohio River, as shown in appendix F, Figure F-4, of this 
part.
    (f) Affirmative technical determinations relating to impacts on 
ozone levels in New Hampshire. (1) Affirmative technical determinations 
with respect to the 8-hour ozone standard in New Hampshire. The 
Administrator of EPA finds that any existing or new major source or 
group of stationary sources emits or would emit NOX in 
amounts that contribute significantly to nonattainment in, or interfere 
with maintenance by, the State of New Hampshire, with respect to the 8-
hour NAAQS for ozone if it is or will be:
    (i) In a category of large EGUs or large non-EGUs;
    (ii) Located in one of the States (or portions thereof) listed in 
paragraph (f)(2) of this section; and
    (iii) Within one of the ``Named Source Categories'' listed in the 
portion of Table F-1 of appendix F of this part describing the sources 
of NOX emissions covered by the petition of the State of New 
Hampshire.
    (2) States or portions of States that contain sources for which EPA 
is making an affirmative technical determination with respect to the 8-
hour ozone standard in New Hampshire. The States that contain sources 
for which EPA is making an affirmative technical determination are:
    (i) Connecticut.
    (ii) Delaware.
    (iii) District of Columbia.
    (iv) Maryland.
    (v) Massachusetts.
    (vi) New Jersey.
    (vii) New York.
    (viii) Pennsylvania.
    (ix) Rhode Island.
    (g) Affirmative technical determinations relating to impacts on 
ozone levels in the State of New York. (1) Affirmative technical 
determinations with respect to the 1-hour ozone standard in the State 
of New York. The Administrator of EPA finds that any existing or new 
major source or group of stationary sources emits or would emit 
NOX in amounts that contribute significantly to 
nonattainment in the State of New York, with respect to the 1-hour 
NAAQS for ozone:
    (i) In a category of large EGUs or large non-EGUs;
    (ii) Located in one of the States (or portions thereof) listed in 
paragraph (g)(2) of this section; and
    (iii) Within one of the ``Named Source Categories'' listed in the 
portion of Table F-1 in appendix F of this part describing the sources 
of NOX emissions covered by the petition of the State of New 
York.
    (2) States or portions of States that contain sources for which EPA 
is making an affirmative technical determination with respect to the 1-
hour ozone standard in the State of New York. The States, or portions 
of States, that contain sources for which EPA is making an affirmative 
technical determination are:
    (i) Delaware.
    (ii) District of Columbia.
    (iii) Portion of Indiana located in OTAG Subregions 2 and 6, as 
shown in appendix F, Figure F-6, of this part.
    (iv) Portion of Kentucky located in OTAG Subregion 6, as shown in 
appendix F, Figure F-6, of this part.
    (v) Maryland.
    (vi) Portion of Michigan located in OTAG Subregion 2, as shown in 
appendix F, Figure F-6, of this part.
    (vii) Portion of North Carolina located in OTAG Subregions 6 and 7, 
as shown in appendix F, Figure F-6, of this part.
    (viii) New Jersey.
    (ix) Ohio.
    (x) Pennsylvania.
    (xi) Virginia.
    (xii) West Virginia.
    (h) Affirmative technical determinations relating to impacts on 
ozone levels in Pennsylvania. (1) Affirmative technical determinations 
with respect to the 1-hour ozone standard in Pennsylvania. The 
Administrator of EPA finds that any existing or new major source or 
group of stationary sources emits or would emit NOX in 
amounts that contribute significantly to nonattainment in the State of 
Pennsylvania, with respect to the 1-hour NAAQS for ozone if it is or 
will be:
    (i) In a category of large EGUs or large non-EGUs;
    (ii) Located in one of the States (or portions thereof) listed in 
paragraph (h)(2) of this section; and (iii) Within one of the ``Named 
Source Categories'' listed in the portion of Table F-1 in appendix F of 
this part describing the sources of NOX emissions covered by 
the petition of the State of Pennsylvania.
    (2) States or portions of States that contain sources for which EPA 
is making an affirmative technical determination with respect to the 1-
hour ozone standard in Pennsylvania. The States that contain sources 
for which EPA is making an affirmative technical determination are:
    (i) North Carolina.
    (ii) Ohio.
    (iii) Virginia.
    (iv) West Virginia.
    (3) Affirmative technical determinations with respect to the 8-hour 
ozone standard in Pennsylvania. The Administrator of EPA finds that any 
existing or new major source or group of stationary sources emits or 
would emit NOX in amounts that contribute significantly to 
nonattainment in, or interfere with maintenance by, the State of 
Pennsylvania, with respect to the 8-hour NAAQS for ozone:
    (i) In a category of large EGUs or large non-EGUs;
    (ii) Located in one of the States (or portions thereof) listed in 
paragraph (h)(4) of this section; and
    (iii) Within one of the ``Named Source Categories'' listed in the 
portion of Table F-1 in appendix F of this part describing the sources 
of NOX emissions covered by the petition of the State of 
Pennsylvania.
    (4) States or portions of States that contain sources for which EPA 
is making an affirmative technical determination with respect to the 8-
hour ozone standard in Pennsylvania. The States that contain sources 
for which EPA is making an affirmative technical determination are:
    (i) Alabama.
    (ii) Illinois.
    (iii) Indiana.
    (iv) Kentucky.
    (v) Michigan.
    (vi) Missouri.
    (vii) North Carolina.
    (viii) Ohio.
    (ix) Tennessee.
    (x) Virginia.
    (xi) West Virginia.
    (i) Action on petitions for section 126(b) findings. (1) For each 
existing or new major source or group of stationary sources for which 
the Administrator has made an affirmative technical determination as 
described in paragraphs (c) through (h) of this section as to impacts 
on nonattainment or maintenance of a particular NAAQS for ozone in a 
particular petitioning State, a finding of the Administrator that each 
such major source or group of stationary sources emits or would emit 
NOX in violation of the prohibition of Clean Air Act section 
110(a)(2)(D)(i)(I) with respect to nonattainment or maintenance of such 
standard in such petitioning State will be deemed to be made:
    (i) As of November 30, 1999, if by such date EPA does not issue 
either:
    (A) A proposed approval, under section 110(k) of the Clean Air Act, 
of a State implementation plan revision submitted by such State to 
comply with the requirements of 40 CFR 51.121 and 51.122; or
    (B) A final Federal implementation plan meeting the requirements of 
those sections for such State.

[[Page 28321]]

    (ii) As of May 1, 2000, if by November 30, 1999, EPA issues the 
proposed approval described in paragraph (i)(1)(i) of this section for 
such State, but, by May 1, 2000, EPA does not fully approve or 
promulgate implementation plan provisions meeting such requirements for 
such State.
    (2) The making of any such finding as to any such major source or 
group of stationary sources shall be considered to be the making of a 
finding under subsection (b) of section 126 of the Clean Air Act as to 
such major source or group of stationary sources. Each aspect of a 
petition covering sources in a State as to which the Administrator has 
made an affirmative technical determination (as described in paragraphs 
(c) through (h) of this section) shall be deemed denied as the date of 
final approval, under section 110(k) of the Clean Air Act, of a State 
implementation plan revision submitted by such State to comply with the 
requirements of 40 CFR 51.121 and 51.122, or promulgation of a final 
Federal implementation plan meeting the requirements of 40 CFR 51.121 
and 51.122 for such State. Notwithstanding any other provision of this 
paragraph (i), after such a finding has been deemed to be made under 
this paragraph (i) as to a particular major source or group of 
stationary sources in a particular State, such finding will be deemed 
to be withdrawn, and the corresponding part of the relevant petition(s) 
denied, if the Administrator issues a final action putting in place 
implementation plan provisions that comply with the requirements of 40 
CFR 51.121 and 51.122 for such State.
    (j) Section 126 control remedy. The Federal NOX Budget 
Trading Program applies to the owner or operator of any new or existing 
large EGU or large non-EGU as to which the Administrator makes a 
finding under section 126(b) of the Clean Air Act pursuant to the 
provisions of paragraph (h) of this section.
    (1) Starting May 1, 2003, the owner or operator of any large EGU or 
large non-EGU in the program must hold total NOX allowances 
available under the Federal NOX Budget Trading Program to 
such unit for the ozone season that are not less than the total 
NOX emissions emitted by the unit during that ozone season.
    (2) No later than July 15, 1999, the Administrator will promulgate 
regulations setting forth the Federal NOX Budget Trading 
Program, including the allocation and distribution of NOX 
allowances under the program in accordance with paragraphs (j)(3) and 
(j)(4) of this section.
    (3)(i) The total amount of NOX allowances allocated 
under the Federal NOX Budget Trading Program will be 
equivalent to the sum of the following two tonnage limits:
    (A) The total ozone season NOX emissions from all large 
EGUs in the program after achievement of a 0.15 lb/mmBtu NOX 
emissions rate in the ozone season by every large EGU, assuming 
adjusted historic ozone season heat input as defined in paragraph 
(j)(3)(ii) of this section; and
    (B) The total ozone season NOX emissions from all large 
non-EGUs in the program after achievement of a 60 percent reduction in 
ozone season NOX emissions from every large non-EGU, 
assuming adjusted ozone season uncontrolled emissions as defined in 
paragraph (j)(3)(iii) of this section.
    (ii) The adjusted historic ozone season heat input for large EGUs 
referenced in paragraph (j)(3)(i)(A) of this section will be calculated 
by:
    (A) Determining for each State for each year 1995 and 1996 the 
total actual ozone season heat input for all EGUs that operated in the 
State in 1995 or 1996;
    (B) Determining for each State whether the total actual ozone 
season heat input for all EGUs that operated in the State in 1995 or 
1996 is greater for 1995 or 1996; and
    (C) For all of the large EGUs that operated in a State in 1995 or 
1996, taking the actual ozone season heat input for each large EGU for 
the year determined in paragraph (j)(3)(ii)(B) of this section to have 
the greater total actual ozone season heat input for the State and 
adjusting for growth to the year 2007.
    (iii) The adjusted ozone season uncontrolled emissions for large 
non-EGUs referenced in paragraph (j)(3)(i)(B) of this section will be 
calculated by taking each large non-EGU's 1995 actual ozone season 
NOX emissions, increasing the NOX emissions by 
removing the effect of any NOX controls at the large non-EGU 
in 1995, and adjusting for growth to the year 2007.
    (4)(i) Notwithstanding paragraph (j)(3) of this section, the 
additional NOX allowances specified in 40 CFR 
51.121(e)(3)(iii) will be available for distribution under the Federal 
NOX Budget Trading Program to large EGUs and large non-EGUs 
in the program that are located within applicable States.
    (ii) After the 2004 ozone season, the owner or operator of any 
large EGU or large non-EGU in the program may not use the additional 
NOX allowances distributed under paragraph (j)(4)(i) of this 
section to demonstrate compliance with the provisions of paragraph 
(j)(1) of this section.
    (k) Default section 126 remedy. (1) The provisions of this 
paragraph (k) will apply only if:
    (i) The Administrator makes a finding under section 126(b) of the 
Clean Air Act pursuant to the provisions of paragraph (h) of this 
section with regard to any new or existing large EGU or large non-EGU; 
and
    (ii) The Administrator fails to promulgate regulations setting 
forth the Federal NOX Budget Trading Program (including the 
allocation and distribution of NOX allowances under the 
program in accordance with paragraphs (j)(3) and (j)(4) of this 
section) before the Administrator makes the finding described in 
paragraph (k)(1)(i) of this section.
    (2) Starting May 1, 2003, the owner or operator of each large EGU 
or each large non-EGU as to which the Administrator makes a finding 
under section 126(b) of the Clean Air Act pursuant to the provisions of 
paragraph (h) of this section shall control emissions from such unit so 
that the unit does not emit total NOX emissions during the 
ozone season in excess of the total NOX allowances allocated 
to the unit for that ozone season under paragraph (k)(3) of this 
section.
    (3)(i) The Administrator will allocate to each large EGU and large 
non-EGU in the program an amount of NOX allowances and, for 
certain units, deduct an amount of NOX allowances, 
calculated in accordance with paragraphs (k)(3)(ii) through (vii) of 
this section.
    (ii)(A) The heat input (in mmBtu) used for calculating 
NOX allowance allocations for each large EGU and large non-
EGU in the program will be:
    (1) For NOX allowance allocations for the 2003, 2004 and 
2005 ozone seasons to any large EGU, the average of the two highest 
amounts of the unit's actual heat input for the ozone seasons in 1995, 
1996, and 1997 and to any large non-EGU, the ozone season in 1995; and
    (2) For a NOX allowance allocation for ozone seasons in 
2006 and thereafter to any large EGU or large non-EGU, the unit's 
actual heat input for the ozone season in the year that is four years 
before the year for which the NOX allocation is being 
calculated.
    (B) The unit's actual heat input for the ozone season in each year 
specified under paragraph (k)(3)(ii)(A) of this section will be 
determined in accordance with 40 CFR part 75 if the large EGU or large 
non-EGU was otherwise subject to the requirements of 40 CFR part 75 for 
the ozone season, or will be based on the best available data

[[Page 28322]]

reported to the Administrator for the unit if the unit was not 
otherwise subject to the requirements of 40 CFR part 75 for the ozone 
season.
    (iii) For each ozone season, the Administrator will allocate to all 
large EGUs in a State that commenced operation before May 1 of the 
ozone season used to calculate heat input under paragraph (k)(3)(ii) of 
this section, a total number of NOX allowances equal to 95 
percent in 2003, 2004, and 2005, or 98 percent thereafter, of the total 
ozone season NOX emissions from all large EGUs in the State 
(as calculated under paragraph (j)(3)(i)(A) of this section) in 
accordance with the following procedures:
    (A) The Administrator will allocate NOX allowances to 
each large EGU in an amount equaling 0.15 lb/mmBtu multiplied by the 
heat input determined under paragraph (k)(3)(ii) of this section, 
rounded to the nearest whole NOX allowance as appropriate.
    (B) If the initial total number of NOX allowances 
allocated to all large EGUs in the State for an ozone season under 
paragraph (k)(3)(iii)(A) of this section does not equal 95 percent in 
2003, 2004, and 2005, or 98 percent thereafter, of the total ozone 
season NOX emissions from all large EGUs in the State (as 
calculated under paragraph (j)(3)(i)(A) of this section), the 
Administrator will adjust the total number of NOX allowances 
allocated to all such large EGUs for the ozone season under paragraph 
(k)(3)(iii)(A) of this section so that the total number of 
NOX allowances allocated equals 95 percent in 2003, 2004, 
and 2005, or 98 percent thereafter, of such total ozone season 
NOX emissions. This adjustment will be made by: multiplying 
each unit's allocation by 95 percent in 2003, 2004, and 2005, or 98 
percent thereafter, of the total ozone season NOX emissions 
from all large EGUs in the State (as calculated under paragraph 
(j)(3)(i)(A) of this section) divided by the total number of 
NOX allowances allocated under paragraph (k)(3)(iii)(A) of 
this section, and rounding to the nearest whole NOX 
allowance as appropriate.
    (iv) For each ozone season, the Administrator will allocate to all 
large non-EGUs in a State that commenced operation before May 1 of the 
ozone season used to calculate heat input under paragraph (k)(3)(ii) of 
this section, a total number of NOX allowances equal to 95 
percent in 2003, 2004, and 2005, or 98 percent thereafter, of the total 
ozone season NOX emissions from all large non-EGUs in the 
State (as calculated under paragraph (j)(3)(i)(B) of this section) in 
accordance with the following procedures:
    (A) The Administrator will allocate NOX allowances to 
each large non-EGU in an amount equaling 0.17 lb/mmBtu multiplied by 
the heat input determined under paragraph (k)(3)(ii) of this section, 
rounded to the nearest whole NOX allowance as appropriate.
    (B) If the initial total number of NOx allowances allocated to all 
large non-EGUs in the State for an ozone season under paragraph 
(k)(3)(iv)(A) of this section does not equal 95 percent in 2003, 2004, 
and 2005, or 98 percent thereafter, of the total ozone season 
NOX emissions from all large non-EGUs in the State (as 
calculated under paragraph (j)(3)(i)(B) of this section), the 
Administrator will adjust the total number of NOX allowances 
allocated to all such non-EGUs for the ozone season under paragraph 
(k)(3)(iv)(A) of this section so that the total number of 
NOX allowances allocated equals 95 percent in 2003, 2004, 
and 2005, or 98 percent thereafter, of such total ozone season 
NOX emissions. This adjustment will be made by: multiplying 
each unit's allocation by 95 percent in 2003, 2004, and 2005, or 98 
percent thereafter, of the total ozone season NOX emissions 
from all large non-EGUs (as calculated under paragraph (j)(3)(i)(B) of 
this section) divided by the total number of NOx allowances allocated 
under paragraph (k)(3)(iv)(A) of this section, and rounding to the 
nearest whole NOx allowance as appropriate.
    (v) For each ozone season, the Administrator will allocate 
NOX allowances to large EGUs and large non-EGUs that 
commenced operation, or are projected to commence operation, in a State 
on or after May 1 of the ozone season used to calculate heat input 
under paragraph (k)(3)(ii) of this section, in accordance with the 
following procedures:
    (A) The Administrator will establish one allocation set-aside for 
each ozone season for the State. Each allocation set-aside will be 
allocated NOX allowances equal to 5 percent in 2003, 2004, 
and 2005, or 2 percent thereafter, of the total ozone season 
NOX emissions from all large EGUs and large non-EGUs in the 
State (as calculated under paragraph (j)(3)(i) of this section).
    (B) The owner or operator of any large EGU or large non-EGU under 
paragraph (k)(3)(v) of this section may submit to the Administrator a 
request, in writing or in a format specified by the Administrator, to 
be allocated NOX allowances for no more than five 
consecutive ozone seasons, starting with the ozone season during which 
the unit commenced, or is projected to commence, operation and ending 
with the ozone season preceding the ozone season for which it will 
receive an allocation under paragraph (k)(3)(iii) or (iv) of this 
section. The NOX allowance allocation request must be 
submitted prior to May 1 of the first ozone season for which the 
NOX allowance allocation is requested and after the date on 
which the State permitting authority issues a permit to construct the 
large EGU or large non-EGU.
    (C) In a NOX allowance allocation request under 
paragraph (k)(3)(v)(B) of this section, the owner or operator of a 
large EGU may request for an ozone season NOX allowances in 
an amount that does not exceed 0.15 lb/mmBtu multiplied by the unit's 
maximum design heat input (in mmBtu/hr) multiplied by the number of 
hours remaining in the ozone season starting with the first day in the 
ozone season on which the unit operated or is projected to operate.
    (D) In a NOX allowance allocation request under 
paragraph (k)(3)(v)(B) of this section, the owner or operator of a 
large non-EGU may request for an ozone season NOX allowances 
in an amount that does not exceed 0.17 lb/mmBtu multiplied by the 
unit's maximum design heat input (in mmBtu/hr) multiplied by the number 
of hours remaining in the ozone season starting with the first day in 
the ozone season on which the unit operated or is projected to operate.
    (E) The Administrator will review, and allocate NOX 
allowances pursuant to, each NOX allowance allocation 
request under paragraph (k)(3)(v)(B) of this section in the order that 
the request is received by the Administrator.
    (1) Upon receipt of the NOX allowance allocation 
request, the Administrator will determine whether, and will make any 
necessary adjustments to the request to ensure that, for large EGUs, 
the ozone season and the number of allowances specified are consistent 
with the requirements of paragraphs (k)(3)(v)(B) and (C) of this 
section and, for large non-EGUs, the ozone season and the number of 
allowances specified are consistent with the requirements of paragraphs 
(k)(3)(v)(B) and (D) of this section.
    (2) If the allocation set-aside for the ozone season for which 
NOX allowances are requested has an amount of NOX 
allowances not less than the number requested (as adjusted under 
paragraph (k)(3)(v)(E)(1) of this section), the Administrator will 
allocate the amount of the NOX allowances requested (as 
adjusted under paragraph (k)(3)(v)(E)(1) of this section) to the large 
EGU or large non-EGU.
    (3) If the allocation set-aside for the ozone season for which 
NOX allowances

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are requested has a smaller amount of NOX allowances than 
the number requested (as adjusted under paragraph (k)(3)(v)(E)(1) of 
this section), the Administrator will deny in part the request and 
allocate only the remaining number of NOX allowances in the 
allocation set-aside to the large EGU or large non-EGU.
    (4) Once an allocation set-aside for an ozone season has been 
depleted of all NOX allowances, the Administrator will deny, 
and will not allocate any NOX allowances pursuant to, any 
NOX allowance allocation request under which NOX 
allowances have not already been allocated for the ozone season.
    (F) Within 60 days of receipt of a NOX allowance 
allocation request, the Administrator will take appropriate action 
under paragraph (k)(3)(v)(E) of this section and notify the owner or 
operator of the large EGU or large non-EGU that submitted the request 
of the number of NOX allowances (if any) allocated for the 
ozone season to the large EGU or large non-EGU.
    (vi) For a large EGU or large non-EGU that is allocated 
NOX allowances under paragraph (k)(3)(v) of this section for 
a control period, the Administrator will deduct NOX 
allowances to account for the actual utilization of the unit during the 
ozone season. The Administrator will calculate the number of 
NOX allowances to be deducted to account for the unit's 
actual utilization using the following formulas and rounding to the 
nearest whole NOX allowance as appropriate, provided that 
the number of NOX allowances to be deducted shall be zero if 
the number calculated is less than zero:

NOX allowances deducted for actual utilization for a 
large EGU = (Unit's NOX allowances allocated for ozone 
season)-(Unit's actual ozone season utilization  x  0.15 lb/mmBtu); 
and
NOX allowances deducted for actual utilization for a 
large non-EGU = (Unit's NOX allowances allocated for 
ozone season)-(Unit's actual ozone season utilization  x  0.17 lb/
mmBtu),

Where:

Unit's NOX allowances allocated for ozone season = The 
number of NOX allowances allocated to the unit for the 
ozone season under paragraph (k)(3)(v) of this section; and
Unit's actual ozone season utilization = The utilization (in mmBtu) 
of the unit during the ozone season.

    (vii) After each ozone season, the Administrator will determine 
whether any NOX allowances remain in the allocation set-
aside for a State for the ozone season. The Administrator will allocate 
any such NOX allowances to the large EGUs and large non-EGUs 
in the State using the following formula and rounding to the nearest 
whole NOX allowance as appropriate:

Unit's share of NOX allowances remaining in allocation 
set-aside = Total NOX allowances remaining in allocation 
set-aside  x  (Unit's NOX allowance allocation  
Total amount of NOX allowances allocated excluding 
allocation set-aside)

Where:

Total NOX allowances remaining in allocation set-aside = 
The total number of NOX allowances remaining in the 
allocation set-aside for the State for the ozone season;
Unit's NOX allowance allocation = The number of 
NOX allowances allocated under paragraph (k)(3)(iii) or 
(iv) of this section to the unit for the ozone season to which the 
allocation set-aside applies; and
Total amount of NOX allowances allocated excluding 
allocation set-aside = The total ozone season NOX 
emissions from all large EGUs and large non-EGUs in the State (as 
calculated under paragraph (j)(3)(i) of this section) multiplied by 
95 percent if the ozone season is in 2003, 2004, or 2005 or 98 
percent if the ozone season is in any year thereafter, rounded to 
the nearest whole allowance as appropriate.

    3. Appendix F is added to part 52 to read as follows:

Appendix F to Part 52--Clean Air Act Section 126 Petitions From 
Eight Northeastern States: Named Source Categories and Geographic 
Coverage

    The table and figures in this appendix are cross-referenced in 
Sec. 52.34.

      Table F-1.--Named Source Categories in Section 126 Petitions
------------------------------------------------------------------------
      Petitioning state                 Named source categories
------------------------------------------------------------------------
Connecticut..................  Fossil fuel-fired boilers or other
                                indirect heat exchangers with a maximum
                                gross heat input rate of 250 mmBtu/hr or
                                greater and electric utility generating
                                facilities with a rated output of 15 MW
                                or greater.
Maine........................  Electric utilities and steam-generating
                                units with a heat input capacity of 250
                                mmBtu/hr or greater.
Massachusetts................  Electricity generating plants.
New Hampshire................  Fossil fuel-fired indirect heat exchange
                                combustion units and fossil fuel-fired
                                electric generating facilities which
                                emit ten tons of NOX or more per day.
New York.....................  Fossil fuel-fired boilers or indirect
                                heat exchangers with a maximum heat
                                input rate of 250 mmBtu/hr or greater
                                and electric utility generating
                                facilities with a rated output of 15 MW
                                or greater.
Pennsylvania.................  Fossil fuel-fired indirect heat exchange
                                combustion units with a maximum rated
                                heat input capacity of 250 mmBtu/hr or
                                greater, and fossil fuel-fired electric
                                generating facilities rated at 15 MW or
                                greater.
Rhode Island.................  Electricity generating plants.
Vermont......................  Fossil fuel-fired electric utility
                                generating facilities with a maximum
                                gross heat input rate of 250 mmBtu/hr or
                                greater and potentially other
                                unidentified major sources.
------------------------------------------------------------------------


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[FR Doc. 99-11559 Filed 5-24-99; 8:45 am]
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