[Federal Register Volume 70, Number 130 (Friday, July 8, 2005)]
[Rules and Regulations]
[Pages 39413-39426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-13483]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 51
[E-Docket ID No. OAR-2003-0079, FRL-7934-9]
RIN 2060-AJ99
Nonattainment Major New Source Review Implementation Under 8-Hour
Ozone National Ambient Air Quality Standard: Reconsideration
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule; notice of final action on reconsideration.
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SUMMARY: On April 30, 2004, the EPA (we)(in this preamble, the terms
``we'' and ``us'' refers to the EPA, and ``our'' refers to EPA's. All
other entities are referred to by their respective names (e.g.,
commenter)) took final action on key elements of the program to
implement the 8-hour ozone national ambient air quality standard (NAAQS
or 8-hour standard). In that final action, we addressed certain
implementation issues related to the 8-hour standard, including the
nonattainment major New Source Review (NSR) program mandated by part D
of title I of the Clean Air Act (``the Act'' or ``CAA''). Following
this action, EarthJustice filed a petition on behalf of several
organizations requesting reconsideration of several aspects of the
final rule including implementation of the nonattainment major NSR
program, among other issues. By a letter, dated September 23, 2004, we
granted
[[Page 39414]]
reconsideration of three issues raised by the petition for
reconsideration filed by EarthJustice. One of these issues relates to
implementation of the major NSR program.
On April 4, 2005, in response to the request for reconsideration
relating to aspects of the nonattainment major NSR program for the 8-
hour standard, we proposed to retain the final rule as promulgated on
April 30, 2004. (70 FR 17018). We requested comment on and provided
additional information related to whether we should interpret the Act
to require areas to retain major NSR requirements that apply to certain
1-hour ozone nonattainment areas in implementing the 8-hour standard.
We also requested comment on whether we properly concluded that a
State's request to remove 1-hour major NSR provisions from its State
Implementation Plan (SIP) will not interfere with any applicable
requirement within the meaning of section 110(l) of the Act.
Today, we are re-affirming our April 30, 2004 final rule. We
conclude that the requirements for nonattainment major NSR under the 8-
hour standard will be based on a nonattainment area's classification
for the 8-hour standard, and that States may remove their 1-hour major
NSR programs from their SIPs now that we have revoked the 1-hour
standard. We believe that our conclusions are consistent with the Act,
including section 110(l), our anti-backsliding policy we established
for the 8-hour standard, and the ability of areas to achieve reasonable
further progress (RFP) and attainment.
DATES: This final action is effective on August 8, 2005.
ADDRESSES: The EPA docket for this action is Docket ID No. OAR-2003-
0079. All documents in the docket are listed in the EDOCKET index at
http://www.epa.gov/edocket. Although listed in the index, some
information is not publicly available, i.e., Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute. Certain other material, such as copyrighted material, is
not placed on the Internet and will be publicly available only in hard
copy form. Publicly available docket materials are available either
electronically in EDOCKET or in hard copy at the Air Docket,
Environmental Protection Agency, EPA West, 1301 Constitution Avenue,
NW., Room B-102, Washington, DC. The Public Reading Room is open from
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Public Reading Room is (202)
566-1744, and the telephone number for the Air Docket is (202) 566-
1742.
FOR FURTHER INFORMATION CONTACT: Ms. Lynn Hutchinson, Office of Air
Quality Planning and Standards, (C339-03), U.S. EPA, Research Triangle
Park, North Carolina 27711, telephone number (919) 541-5795, fax number
(919) 541-5509, e-mail address: [email protected].
SUPPLEMENTARY INFORMATION:
I. General Information
A. Does This Action Apply to Me?
Entities potentially affected by the subject rule for today's
action include sources in all industry groups. The majority of sources
potentially affected are expected to be in the following groups.
------------------------------------------------------------------------
SIC
Industry group \a\ NAICS \b\
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Electric Services.............. 491 221111, 221112, 221113, 221119,
221121, 221122.
Petroleum Refining............. 291 324110.
Industrial Inorganic Chemicals. 281 325181, 325120, 325131, 325182,
211112, 325998, 331311,
325188.
Industrial Organic Chemicals... 286 325110, 325132, 325192, 325188,
325193, 325120, 325199.
Miscellaneous Chemical Products 289 325520, 325920, 325910, 325182,
325510.
Natural Gas Liquids............ 132 211112.
Natural Gas Transport.......... 492 486210, 221210.
Pulp and Paper Mills........... 261 322110, 322121, 322122, 322130.
Paper Mills.................... 262 322121, 322122.
Automobile Manufacturing....... 371 336111, 336112, 336211, 336992,
336322, 336312, 336330,
336340, 336350, 336399,
336212, 336213.
Pharmaceuticals................ 283 325411, 325412, 325413, 325414.
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\a\ Standard Industrial Classification.
\b\ North American Industry Classification System. Entities potentially
affected by the subject rule for today's action also include State,
local, and Tribal governments that are delegated authority to
implement these regulations.
B. Where Can I Get a Copy of This Document and Other Related
Information?
In addition to being available in the docket, an electronic copy of
this final action will also be available on the World Wide Web.
Following signature by the EPA Administrator, a copy of this notice
will be posted in the regulations and standards section of the our NSR
home page located at http://www.epa.gov/nsr.
C. How Is This Notice Organized?
The information presented in this notice is organized as follows:
I. General Information
A. Does This Action Apply to Me?
B. Where Can I Get a Copy of This Document and Other Related
Information?
C. How Is This Notice Organized?
II. Background
III. Today's Final Action on Reconsideration
A. Final Decision
B. Effective Date
C. Significant Comments: Summary and Response
IV. Statutory and Executive Order Reviews
A. Executive Order 12866--Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act (RFA), as Amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5
U.S.C. 601 et seq.
D. Unfunded Mandates Reform Act
E. Executive Order 13132--Federalism
F. Executive Order 13175--Consultation and Coordination With
Indian Tribal Governments
G. Executive Order 13045--Protection of Children From
Environmental Health Risks and Safety Risks
H. Executive Order 13211--Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act
J. Executive Order 12898--Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
K. Congressional Review Act
V. Statutory Authority
VI. Judicial Review
[[Page 39415]]
II. Background
On July 18, 1997, we revised and strengthened the ozone NAAQS to
change from a standard measured over a 1-hour period (1-hour standard)
to a standard measured over an 8-hour period (8-hour standard).
Previously, the 1-hour standard was 0.12 parts per million (ppm). We
established the new 8-hour standard at 0.08 ppm. (62 FR 38856).
Following revision of the standard, we initially promulgated a rule
that provided for implementation of the 8-hour standard under the
general nonattainment area provisions of subpart 1 of Part D of the
Act. (62 FR 38421). Subsequently, the Supreme Court ruled that our
implementation approach was unreasonable because we did not provide a
role for the generally more stringent ozone-specific provisions of
subpart 2 of Part D of the Act in implementing the 8-hour standard. See
Whitman v. Amer. Trucking Assoc., 531 U.S. 457, 471-476, 121 S. Ct.
903, 911-914 (2001). The Court remanded the rule to us to develop a
reasonable approach for implementation. Id.
On June 2, 2003, we proposed various options for transitioning from
the 1-hour to the 8-hour standard, and for how the 8-hour standard
would be implemented under both subpart 1 and subpart 2. (68 FR 32802).
On August 6, 2003, we published a notice of availability of draft
regulatory text to implement the 8-hour standard. (68 FR 46536). Among
other things, this proposed rule included certain provisions for
implementing major NSR. Specifically, we proposed that major NSR would
generally be implemented in accordance with an area's 8-hour ozone
nonattainment classification, but we would provide an exception for
areas that were designated nonattainment for the 1-hour standard at the
time of designation for the 8-hour standard. If the classification for
a 1-hour nonattainment area was higher than its classification under
the 8-hour standard, then under the proposed rule, the major NSR
requirements in effect for the 1-hour standard would have continued to
apply under the 8-hour standard even after we revoked the 1-hour
standard. (68 FR 32821).
On April 30, 2004, we promulgated Phase I of the new implementation
rule. (69 FR 23951). In response to comments received on the proposal,
we revised the implementation approach for major NSR under the 8-hour
standard. Specifically, we determined that major NSR would be
implemented in accordance with an area's 8-hour ozone nonattainment
classification. For those areas that we classify marginal and above,
major NSR is implemented under subpart 2. We also indicated that, when
we revoke the 1-hour standard, a State is no longer required to retain
a nonattainment major NSR program in its SIP based on the requirements
that applied by virtue of the area's previous classification under the
1-hour standard. We further indicated that we would approve a request
to remove these requirements from a State's SIP because we determined,
based on section 110(l) of the Act, that such changes will not
interfere with any applicable requirements of the Act, including a
State's ability to reach attainment of the 8-hour standard or RFP
towards that standard. (69 FR 23985). We noted that States will be
required to implement a major NSR program based on the 8-hour
classifications. We also emphasized that emission limitations and other
requirements in major NSR permits issued under 1-hour major NSR
programs will remain in effect even after we revoke the 1-hour
standard. (69 FR 23986).
Following publication of the April 30, 2004 final rule, the
Administrator received three petitions, pursuant to section
307(d)(7)(B) of the Act, requesting reconsideration of certain aspects
of the final rule.\1\ On June 29, 2004, Earthjustice submitted one of
the three petitions that we received. This petition seeks
reconsideration of certain elements of the Phase I Ozone Implementation
Rule, including elements of the major NSR provisions. With respect to
major NSR, Petitioners contend that the final rules are unlawful
because the rules violate section 110(l) and section 172(e) of the Act
by not requiring 8-hour ozone nonattainment areas to continue to apply
major NSR requirements based on the area's prior 1-hour ozone
nonattainment classification. Petitioners also allege that we acted
unlawfully by stating that we will approve a State's request to remove
1-hour requirements from the SIP based on our finding that such a
revision would not violate section 110(l) for any State. Petitioners
assert that these major NSR provisions and our rationale for them were
added to the final action after the close of the public comment period.
Thus, Petitioners claim, we failed to provide notice and opportunity
for public comment concerning these provisions as required under
section 307(d)(5) of the Act.
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\1\ Petitioners are: (1) Earthjustice on behalf of the American
Lung Association, Environmental Defense, Natural Resources Defense
Council, Sierra Club, Clean Air Task Force, Conservation Law
Foundation, and Southern Alliance for Clean Energy; (2) the National
Petrochemical and Refiners Association and the National Association
of Manufacturers; and (3) the American Petroleum Institute, American
Chemistry Council, American Iron and Steel Institute, National
Association of Manufacturers and the U.S. Chamber of Commerce.
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On September 23, 2004, we granted reconsideration of three issues
raised in the Earthjustice Petition, including the NSR issues. In an
action dated February 3, 2005, we issued a Federal Register notice
addressing two of those issues: (1) The provision that section 185 fees
would no longer apply for a failure to attain the 1-hour standard once
we revoke the 1-hour standard; and (2) the timing for determining what
is an ``applicable requirement.'' (70 FR 5593). On May 26, 2005, we
took final action on these issues. (70 FR 30592).
On April 4, 2005, as part of our reconsideration process, we
requested comment on: (1) Whether we must interpret the Act to require
States to continue major NSR requirements under the 8-hour standard
based on an area's higher classification under the 1-hour standard; and
(2) whether revising a State SIP to remove 1-hour major NSR
requirements is consistent with section 110(l) of the Act. However, we
proposed to retain the nonattainment major NSR requirements as outlined
in our April 30, 2004 final rules. (70 FR 17018).
III. Today's Final Action on Reconsideration
A. Final Decision
Today, we re-affirm our April 30, 2004 final rules. Accordingly,
States must issue permits to regulate construction and major
modifications of major stationary sources consistent with the major NSR
requirements that apply based on that area's classification under the
8-hour standard.\2\ If a State currently lacks an approved NSR program
that applies for the 8-hour standard, the State must submit an NSR
program to EPA for our approval. The deadline for submission will be
established in Phase II of the ozone implementation rule. Moreover, we
find that section 110(l) does not preclude us from approving a State's
request to revise its SIP to remove 1-hour nonattainment major NSR
requirements.
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\2\ In implementing a program consistent with the major NSR
requirements that apply based on that area's classification under
the 8-hour standard, section 116 of the Act allows States to adopt
regulations which are not less stringent than the federal minimum
requirements.
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After reviewing comments we received on the proposal, we continue
to interpret the Act as not requiring States to retain major NSR
requirements related to the 1-hour standard in implementing
nonattainment major NSR
[[Page 39416]]
for the 8-hour standard.\3\ Consistent with the mandates of the Supreme
Court in Whitman v. American Trucking, we crafted a reasonable approach
for implementing major NSR requirements under the 8-hour standard. 531
U.S. 457 (2001). Moreover, we interpret the requirements of section
172(e) as not applying in these circumstances, and believe that we have
reasonably interpreted this provision in crafting our anti-backsliding
policies for the 8-hour standard to exclude major NSR programs as a
``control measure.'' We further believe that basing an area's major NSR
requirements on that area's classification under the 8-hour standard
will assure that any new emissions from the construction or
modification of major stationary sources will be sufficiently mitigated
to ensure that such emissions will not interfere with RFP or
attainment.
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\3\ On April 18, 2005, we held a hearing to afford the public an
opportunity to provide oral testimony on our reconsideration of the
nonattainment major NSR provisions in the Phase I Ozone
Implementation rule. One person attended the hearing and provided
testimony supporting the concerns raised in the Earthjustice
petition. Following the public hearing, we received public comment
letters from approximately 20 individuals or groups. Section III. B.
of this preamble contains a summary of significant comments we
received and our responses to those comments.
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B. Effective Date
In granting reconsideration of the EarthJustice petition, the
Administrator elected not to stay or vacate the existing regulations.
Accordingly, these requirements remained in effect following the April
30, 2004 promulgation. Several environmental, industry, and
governmental petitioners subsequently challenged the April 30, 2004
rule implementing the 8-hour ozone standard. South Coast Air Quality
Management District v. U.S. EPA, No. 04-1200 (and consolidated cases)
(DC Cir.). After we granted portions of the EarthJustice petition for
reconsideration, the Court, at our request, severed the challenges to
the three issues for which EPA granted reconsideration from the main
consolidated cases challenging the implementation rule. However,
because we committed to an expeditious determination of the three
issues under reconsideration, the parties subsequently agreed that it
would serve judicial economy and the parties' resources to consolidate
the severed case relating to the three issues under reconsideration
back into the main case challenging our April 30, 2004 implementation
rule. We filed a motion seeking such consolidation. The EPA represented
in that motion that it would not take final action on any SIP
submittals relating to those provisions earlier than 30 days after it
has signed a final action on the aspect of the reconsideration to which
the SIP pertains. Accordingly, we will not take final action on a
State's request to revise its SIP relative to the 1-hour and 8-hour
nonattainment major NSR programs until that time.
C. Significant Comments: Summary and Response
In our April 4, 2005 proposal, we requested comment on five issues
related to our reconsideration:
(1) Our determination that the Act does not require States to apply
major NSR requirements under the 8-hour standard based on an area's
higher classification under the 1-hour standard after we revoke the 1-
hour standard;
(2) Our interpretation that the term ``control'' as used in section
172(e) of the Act does not include major NSR requirements;
(3) Our conclusion that a State's removal of 1-hour major NSR
programs from its SIP will not interfere with any applicable
requirements of the Act including attainment and RFP;
(4) Our discussion regarding State and local agency emissions
projections used for RFP and attainment, including whether the
statements we have made regarding those emissions projections are
accurate; and
(5) Information on any instance in which a State or local agency
relied on major NSR as a control measure to reduce overall base year
emissions in a rate of progress (ROP) plan or attainment demonstration.
Below we consolidated the comments that we received to these
questions into four main topic areas, and provide our response to those
comments.
1. Does the Act Require States To Apply Major NSR Requirements Under
the 8-Hour Standard Based on an Area's Higher Classification Under the
1-Hour Standard?
a. Comments
Several commenters supported our position that the Act does not
require States to apply major NSR requirements under the 8-hour
standard based on an area's higher classification under the 1-hour
standard. Nonetheless, several commenters disagreed with our position,
that section 172(e) is an expression of Congressional intent that
States may not remove control measures in areas which are not attaining
a NAAQS when we revised that standard to make it more stringent,
because the plain language of section 172(e) applies only when we make
a NAAQS less stringent. One commenter stressed that section 172(e)
could not logically be applied to a new 8-hour standard. Moreover, many
of these commenters agreed with us, that even if section 172(e) applies
to the 8-hour implementation rule, we properly concluded that the major
NSR program does not impose emissions reduction ``controls.''
One commenter indicated that we would violate equal protection laws
if we established different requirements for different areas based on
their attainment status under the revoked 1-hour standard when both are
classified the same under the 8-hour standard. Another commenter stated
that we appropriately looked into the Congressional history of the Act
to determine the underlying purpose of the major NSR program and found
that its purpose is to manage growth in a manner consistent with the
goals and objectives of the Act. (70 FR 17022), H.R. Rpt. 95-294 at 210
(May 12, 1977).
Conversely, several commenters contend that our decision that
States need not retain nonattainment major NSR requirements based on
the area's classification under the 1-hour standard is contrary to the
two anti-blacksliding provisions in the Act, sections 172(e) and 193.
42 U.S.C. sections 7502(e) and 7515. Several commenters also alleged
that in a Senate floor debate on the 1990 amendments, Senator John
Chafee described the purpose of section 193 of the Act as ``intended to
ensure that there is no backsliding on the implementation of adopted
and currently feasible measures that EPA has approved as part of a
[SIP] in the past, or that EPA has added to State plans on its own
initiative or pursuant to a court order or settlement.'' 136 Cong. Rec.
S17, 232, S17, 237 (Oct 26, 1990). The commenters claim that our narrow
interpretation of control measure cannot be reconciled with this broad
definition. At least one commenter believes that the final rule is
contrary to the provisions of the Act, because it allows major sources
in 1-hour nonattainment areas that are designated with a lower 8-hour
nonattainment classification to be subject to less stringent NSR
requirements by raising the tonnage threshold for defining a major
source and lowering the required offset ratio.
b. Response
As stated in our April 4, 2005 notice on NSR reconsideration, after
reviewing a variety of information including the statutory
requirements, Congressional intent as expressed in legislative history,
the history of the NSR regulatory program, and our actions on 1-hour
ozone ROP plans and attainment demonstrations in general as they relate
[[Page 39417]]
to nonattainment major NSR programs, we concluded that the Act does not
require States to retain a nonattainment program in their SIPs based on
the requirements that applied by virtue of the area's previous
classification under the 1-hour standard. After considering the
comments received on this issue that both support and oppose our
position, we continue to believe that our conclusion on this issue is
correct.
We agree with commenters that section 172(e) does not apply to the
requirements for the 8-hour ozone standard. Nonetheless, because the
Act does not specifically address what requirements apply when we
strengthen a NAAQS, we stated that we viewed the provisions in section
172(e) as an expression of Congressional intent that States may not
remove control measures in areas which are not attaining a NAAQS when
EPA revises that standard to make it more stringent. (70 FR 17021). We
continue to believe that Congress intended States to retain control
measures in SIPs when we strengthen a NAAQS, but we do not believe that
Congress intended to restrict States from amending their SIPs to adjust
for future management of growth based on current day air quality needs.
We agree with the commenters that even if section 172(e) applies
when we strengthen a NAAQS, it would still not preclude a State from
adjusting its nonattainment major NSR requirements because major NSR is
not a control within the meaning of section 172(e) of the Act. We
discuss this interpretation in more detail in section III.C.2. of
today's preamble. Moreover, we disagree with commenters who indicate
that our final rules violate section 193 of the Act. First, as noted,
we do not believe that NSR programs are ``control measures'' within the
meaning of section 193. Secondly, section 193 applies to certain
requirements that were in effect before 1990. Today's final rules
address how the post-1990 requirements contained in subpart 2 of the
Act will apply in 8-hour nonattainment areas.
Before 1990, the nonattainment major NSR requirements were
contained in section 173 of the 1977 CAA and they did not include the
higher offset ratios and lower major stationary source thresholds found
in subpart 2 of the 1990 CAA. In 1990, Congress added additional
requirements to section 173 and added subpart 2. Nothing in today's
final rule allows any jurisdiction to adopt nonattainment NSR
requirements for the 8-hour standard that do not meet the minimum
requirements the State used to satisfy section 173 before 1990.
Accordingly, section 193 of the Act is not implicated by our final
action.
We disagree with the commenter that argues that Congress meant for
section 193 of the Act to have broader application. In fact, by its
terms, section 193 precludes broader application at least as it relates
to subpart 2 requirements. Congress added the subpart 2 requirements at
the same time it added section 193. Congress expressed an intent to
exclude the new requirements it added in 1990 by limiting section 193
to pre-1990 requirements. The clear intent of this action is that
Congress did not mean to use section 193 to limit the ability of States
to revise SIPs relative to subpart 2 requirements. Instead, Congress
added section 110(l) to the Act to guide such SIP changes. Section
110(l) allows States to make changes to a State SIP with respect to
measures not covered by section 193 if the change does not interfere
with any applicable requirement concerning attainment and RFP or any
other applicable requirement of the Act. We discuss how our final rule
satisfies the requirements of section 110(l) of the Act in section
III.C.3. of this preamble.
Viewing these two statutory changes in section 193 and section
110(l) together, Congress expressed an intent to have the pre-1990
requirements establish the foundation for the nonattainment program.
However, Congress did not expressly require that States retain subpart
2 requirements, which were added by the 1990 Amendments, in all
circumstances. Accordingly, we reject the alternative interpretations
expressed by commenters which essentially result in sections 110(l),
172(e), and 193 of the Act as having identical meanings notwithstanding
their different wording.
In Chevron v. NRDC, 467 U.S. 837 (1984), the Supreme Court
considered a challenge to EPA regulations implementing the NSR program
which defined the term ``source.'' The Court concluded that neither the
statutory language nor legislative history revealed Congress' intent
regarding the meaning of the term, and observed that Congress had
intended to accommodate competing objectives but did not do so with
specificity in its statutory language. Under these circumstances, the
Court upheld EPA's regulations as a reasonable accommodation of
competing interests because the agency considered the matter in a
detailed and reasoned fashion, and the decision involved reconciling
conflicting policies. Id. at 865. The Court concluded that EPA's
regulations reasonably sought to accommodate progress in reducing air
pollution with economic growth despite the fact that EPA's regulatory
changes would result in fewer sources going through major NSR. Id. at
866.
Here, for the 8-hour standard, the Supreme Court directed us to
develop a reasonable approach for implementing subpart 2 of Part D of
the Act in implementing the 8-hour standard. Whitman v. Amer. Trucking
Assoc., 531 U.S. 457, 471-76 (2001). For purposes of implementing major
NSR, we considered whether States should be required to implement
subpart 2 in accordance with an area's previous classification under
the 1-hr standard, or with its new classification under the 8-hour
standard. After determining that either approach would be consistent
with the Act and Congressional intent, we selected, and now re-affirm,
the latter approach. We choose to require States to implement major NSR
based on an area's classification under the 8-hour standard because we
believe that such a classification better reflects the current day air
quality needs of the area. Additionally, like the plantwide definition
of ``source'' at issue in Chevron, this approach allows States to
retain flexibility to better balance environmental objectives with
economic growth. ``When a challenge to an agency construction of a
statutory provision centers on the wisdom of the agency's policy,
rather than whether it is a reasonable choice within a gap left open by
Congress, the challenge must fail.'' Chevron v. NRDC, 467 U.S. at 866.
2. Does the Term ``Control'' as Used in Section 172(e) Include Major
NSR Requirements?
a. Comments
Several commenters agree that major NSR programs are not
``controls'' that must be preserved in implementing the 8-hour
standard. Some reasoned that major NSR does not contribute to emissions
reductions below baseline levels. Others contend that ``controls'' and
``growth measures'' have distinct meanings and that ``controls'' are
designed to target existing emissions. Others reasoned that if Congress
was referring to all requirements within a SIP by using ``controls'' in
section 172(e), then Congress simply could have said that no SIP
requirements can be relaxed when a standard is relaxed. For this
reason, the commenters agree with EPA that by limiting section 172(e)
to control measures Congress intended that only some SIP requirements
would continue when a standard is relaxed, and major NSR is not one of
these requirements. Importantly, one commenter reasoned that greater
offset
[[Page 39418]]
ratios may discourage growth altogether and that areas with slightly
eased offset ratios may in fact experience more growth which would
theoretically result in more offset reductions in the area than would
occur if higher offset ratios were imposed.
Other commenters argued that the structure of the Act and its
legislative and regulatory history clearly supports the intent that the
major NSR permitting program is a ``growth measure,'' rather than a
``control measure.'' One commenter pointed out that our conclusion that
NSR is not a ``control measure'' is clear in the context of section
175A of the Act maintenance plans. (68 FR 25418, 25436).
One commenter participated in the regulatory development process
for Illinois' RFP and nonattainment NSR SIP programs. The commenter
indicates Illinois did not intend its nonattainment NSR rules (i.e., 35
Ill. Adm. Code part 203) to be a ``control measure,'' but rather a
procedural methodology to be used under defined circumstances.
Conversely, several commenters disagreed with our assertion that
the nonattainment NSR program is not a ``control'' requirement or
measure. Some commenters reasoned that we drew an artificial
distinction between a ``growth measure'' and a ``control measure.'' The
commenters contend that our interpretation is too limited as they
believe that NSR operates both to reduce emissions and to control
emissions growth.
One commenter asserts that EPA did not provide evidence
substantiating our definition of ``control'' and why it does not
include ``growth measures.'' The commenter further stated that we never
discuss why it limits the reading of section 172(e) solely to measures
that reduce emissions to assure attainment.
Several commenters stated that nonattainment NSR imposes
``controls'' through the offset requirement and that there is
legislative support for this position where the NSR program is
described as a ``graduated control program'' involving increasingly
protective requirements for higher classifications. One commenter
reasoned there is nothing in section 172(e) or elsewhere in the Act
that limits the definition of control to programs whose benefits can be
quantified and accounted for by a State in its attainment
demonstration. Another commenter stated that NSR is a control measure
because offsets are certain and are obtained from the same
nonattainment area.
Two commenters reiterate comments raised by Earthjustice's petition
that we characterized NSR as a pollution control measure in briefs we
submitted to the court. The commenters stated that an emission
limitation is a ``control measure'' or ``requirement.'' The commenters
believe an interpretation that NSR is merely a ``growth measure'' is at
odds with legislative history indicating that Congress sought to foster
the development of control technology when it enacted Prevention of
Significant Determination (PSD) and nonattainment NSR.
One commenter cited several Federal Register notices in which we
analyzed changes to a State's SIP in light of section 193 requirements
and argued that we would have not needed to evaluate whether a SIP
change satisfies section 193 unless NSR is a ``control requirement.''
b. Response
As we previously stated, Section 172(e) does not apply to the
requirements for the 8-hour ozone standard. In this action, we are not
attempting to assign a comprehensive definition to the term
``controls'' as used in section 172(e) of the Act. Rather, we interpret
the term solely as it relates to our anti-backsliding policy, and
whether Congress would have intended States to retain the major NSR
program as imposed on 1-hour ozone nonattainment areas as far back as
1990 in implementing the new, more stringent 8-hr ozone NAAQS.
The term ``controls'' as used in section 172(e) of the Act is
ambiguous. As we stated in our April 4, 2005 proposal, Petitioners and
others present a possible interpretation of this term. Nonetheless,
based on our review of Congressional history and the structure of the
Act, we believe Congress' primary purpose in creating the major NSR
program was to manage growth in a way that balances economic
development with the air quality needs of specific nonattainment areas.
Just as the Supreme Court recognized in Chevron, Congress intended
to accommodate the competing objectives of progress in reducing air
quality with economic growth, but did not always reconcile both of
those interests with specificity in its language. We looked at several
sections of the Act for direction in interpreting the term ``control''
in Section 172(e). (70 FR 17018, 17022). In particular, we looked at
the Section 172(a)(2) requirement that areas attain ``as expeditiously
as practicable.'' Unlike control measures, such as reasonably available
control technology (RACT) and transportation control measures (TCM), we
do not believe that Congress intended to link the major NSR program to
the section 172(a)(2) requirement that areas attain ``as expeditiously
as practicable.'' This is evident by Congress's recognition and
acceptance that economic growth will result in ``some worsening of air
quality or delay in actual attainment * * *'' See H.R. Rpt. 95-294,
214-215 (May 12, 1977). We distinguished Sections 172(c)(1) and (c)(6)
which require implementation of all reasonably available control
measures as expeditiously as practicable to provide for attainment of
the NAAQS from the Section 173(a)(1)(A) requirement that growth due to
proposed sources be considered together with other plan provisions
required under Section 172 to ensure RFP toward attainment. After
carefully reviewing the statute and statement of Congressional intent,
we continue to conclude that Congress did not intend to include major
NSR requirements within the scope of section 172(e) of the Act.
Moreover, as explained in our April 4, 2005 proposal, unlike
control measures for which emissions reductions can be quantified and
relied on in a modeling demonstration to show how the measure helps an
area reach attainment, the generation of offsets are uncertain and
generally cannot be quantified in advance by States. (70 FR 17018,
17023). In 1990, Congress recognized that some States were not
accurately predicting the growth within their attainment
demonstrations. We believe it is reasonable to assume that Congress
included major NSR in its ``graduated control program'' in subpart 2 to
provide an extra buffer for growth in areas with more severe air
quality problems.\4\
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\4\ In 1990, Congress recognized that many of the Nation's air
pollution problems failed to improve or grew more serious. In
assessing the reasons for these failures, Congress identified
several problems that lead to this result, including inadequate
inventories, deficient models, and uncertainties that exist in the
assumptions used in the models. Congress noted that EPA indicated
that emissions growth and inaccurate emissions inventories were
predominant problems. H.R. Rpt. 101-490(I) at 144 (May 17, 1990). In
response, Congress took many steps to improve air quality, including
invalidating some of the existing growth allowances and shifting the
emphasis from managing growth using growth allowances to using the
case-by-case offset approach. In light of the past difficulties
States experienced in attainment planning, Congress established a
strategy that differentiates among areas with regard to attainment
dates based on the severity of the area's ozone problem, including
increased offset ratios to compensate for uncertainties in
predicting growth.
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We do not believe that the structure of the Act and purpose of
major NSR support a conclusion that Congress included major NSR in
subpart 2 for the purpose of generating emissions reductions. The Act
does not support the view that Congress intended the major NSR program
to generate
[[Page 39419]]
emissions reductions in the State's base year inventory to move the
area forward in attainment, nor have States implemented the program in
that manner. The purpose and historical implementation of major NSR
distinguish it from the other requirements that we determined in the
Phase I implementation rule that nonattainment areas must retain in
implementing the 8-hour standard.
To the extent that a nonattainment area is currently designated
with a lower classification under the more stringent 8-hour standard,
it is because that area now has cleaner air than when it was designated
under the 1-hour standard. This improvement demonstrates that the State
has more effectively managed efforts to address its air quality problem
than in the past. We believe Congress expressed an intent to allow
States the flexibility to regulate economic growth in nonattainment
areas consistent with efforts to address the severity of the area's air
quality problem. Accordingly, we are requiring States to implement a
nonattainment major NSR program in accordance with its 8-hour
nonattainment classification.
We do not dispute that major NSR requires certain sources to apply
control technologies to mitigate pollutant increases and that Congress
intended this aspect of the program to advance pollution control
technology over time. Moreover, requiring higher offset ratios could
theoretically lead to emissions reductions in an area. Nonetheless, as
we explained in our proposal, unlike ``control measures,'' States are
not relying on the application of these control technologies or offsets
to advance the area toward attainment. There is also no guarantee that
major NSR will reduce base year emissions, because it is uncertain
whether any new emissions sources will be constructed and if offsets
will be obtained from the same nonattainment area. See State of New
York v. U.S. Environmental Protection Agency, -- F.3d --, 2005 WL
1489698 (DC Cir.) (C.A.D.C., 2005). (Recognizing that the purpose of
emission offsets is to produce no increase in overall regional
emissions.)
We do not believe that the statutory framework, legislative
history, or common sense require us to characterize a program that only
applies when emissions increase in an area as an emissions reduction
program irrespective of whether some control technologies or offset
requirements are components of the program. Moreover, we agree that it
is possible that higher offset ratios may discourage growth and
actually result in fewer offset reductions than areas implementing a
lower offset ratio, as one commenter stated.\5\ \6\
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\5\ Transcript July 19, 1994. (OAR-2001-0004-0650 to -0651). NSR
Reform Subcommittee Meeting. U.S. EPA. Statement by Mr. Barr. (To
require a traditional offset equivalent in attainment areas would
be, in most cases, equivalent to ``establishing a zone where there
is a construction ban in effect.'')
\6\ Southern California Air Quality Alliance. (OAR-2001-0004-
0418). Letter to Docket. August 25, 2003. (Comment states that high
offset levels in California dissuaded a facility from replacing 3
old, high emitting boilers, with new, lower emitting boilers because
the cost of offsets was prohibitive. Stated that ``this is but one
of many actual examples of ``stringency'' interfering with the
emission reductions.'')
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We disagree with the commenter who indicated that offset benefits
are certain and that they must always come from the nonattainment area.
The commenter provides no evidence to support this statement in light
of the provisions of section 173(c) of the Act that allow sources to
obtain offsets from other nonattainment areas. Under our final rule for
implementing major NSR under the 8-hour standard, we retain the
technology forcing aspect of the program by requiring certain sources
to install control technologies, and we mandate an offset ratio
commensurate with the severity of the area's nonattainment problem.
Even assuming arguendo that the term ``controls'' in section 172(e)
of the Act includes the major NSR program, the language in section
172(e) does not resolve which elements of major NSR we must require
States to apply in a given nonattainment area. Section 172(e) only
requires that when EPA relaxes a NAAQS, it must promulgate regulations
requiring the controls that are not less stringent than the controls
applicable to areas designated nonattainment before such designation.
While section 172(e) provides EPA with the authority to impose
requirements for each nonattainment area after it changes a NAAQS
standard that are not less stringent than the controls that existed
prior to the NAAQS change, section 172(e) does not mandate that EPA's
regulations require nonattainment areas to continue to comply with each
and every requirement that applied under the previous standard.
Accordingly, it is reasonable to interpret section 172(e) as
requiring that, at a minimum, we regulate nonattainment areas under the
new standard in a manner consistent with, and not less stringent than,
the way similarly-designated nonattainment areas were regulated under
the old standard. We satisfy this minimum standard by requiring areas
to apply a nonattainment major NSR program consistent with the area's
8-hour classification. That is, all nonattainment areas remain subject
to the technology forcing requirements to impose LAER controls but
areas need only impose the major source thresholds and offset ratios
appropriate for the 8-hour classification.
We concur with the commenter who indicates that it is also clear in
the context of section 175A maintenance plans that we should not
interpret major NSR as a ``control measure.'' In Greenbaum v. EPA, the
Court held that our interpretation of the term ``measure'' in section
175A was reasonable, and that we appropriately considered the statutory
structure in section 110 in determining that the term as used in
section 175A did not include major NSR. Moreover, the Court found
persuasive EPA's argument that the very nature of the NSR permit
program supports its interpretation that it is not intended to be a
contingency pursuant to section 175A(d). The Court noted that
contingency measures (like control measures) require immediate
emissions reductions on emissions sources. In contrast the Court
observed that ``[t]he NSR program would have no immediate effect on
emissions.'' 370 F.3d at 537-38. We believe that the structure and
purpose of the Act similarly supports our view that major NSR
requirements are not ``controls'' as that term is used in section
172(e).
We disagree with commenters who argue that section 193 of the Act
compels us to require nonattainment areas to retain the NSR
requirements that apply based on their 1-hour classifications. We
previously explained in section III.C.1 of this preamble that section
193 is not applicable since it applies to certain requirements that
were in effect before 1990. In evaluating changes to State NSR SIPs, we
have stated that section 193 of the Act does not clearly apply to
revisions in the NSR programs, but we have nonetheless proceeded to
analyze the change under an assumption that it may. (69 FR 31056,
31063). Even proceeding on this assumption, we have relied on a
holistic, qualitative assessment of all elements of the SIP to
determine if a given action related to NSR complies with section 193 of
the Act. We have found that no assessment can be made as to the number
of sources affected by the revisions, and in some instances the number
of sources regulated by major NSR in a State are so few that reducing
the number of sources that might have to comply with the program in the
future would result in an insignificant increase in emissions. (64 FR
29563, 29564). Moreover, we have stated that although section 193 uses
the phrase ``equivalent or greater emissions
[[Page 39420]]
reductions,'' in the context of NSR, which does not produce emissions
reductions, we evaluate SIP changes to see whether the program as a
whole provides equivalent or greater mitigation of new source growth.
(69 FR 54006, 54012).
We note that the language used by Congress in section 193 of the
Act is different from the language used in section 172(e) of the Act.
Rather than use the term ``controls'' as found in section 172(e),
Congress begins section 193 by stating that, `` [e]ach regulation,
standard, rule, notice, order, and guidance promulgated or issued * * *
shall remain in effect * * *'' Congress goes on to require that ``[no]
control requirement in effect * * * may be modified * * * unless the
modification insures equivalent or greater emissions reductions of such
air pollutant.'' Arguably, the language in section 193 is more-
inclusive than section 172(e). On the other hand, the use of the phrase
``in effect'' in section 193 arguably encompasses only those permits
currently issued and does not affect the ability of a State to change
who would be required to obtain a permit in the future.
Given the ambiguity in section 193 of the Act, we have chosen a
conservative approach in our review of NSR SIP changes. Our past option
to review changes for consistency with section 193 is not conclusive of
the scope of section 193. Moreover, it holds no precedential value in
evaluating Congress' purpose in using the different term ``controls''
in section 172(e). The Act, ``is too complex a compromise, and has been
amended too many times, to indulge the assumption that all of its words
must be used consistently in all of its subsections.'' Sierra Club v.
EPA, 375 F.3d 537 (7th Cir. 2004). (Holding that the word
``applicable'' did not have the same meaning when used in different
parts of the Act.)
In sum, we do not believe that by its terms, section 172(e), which
imposes requirements on EPA if it relaxes a NAAQS, applies to our final
action. However, we view this provision as an expression of
Congressional intent that States may not remove control measures in
areas which are not attaining a NAAQS when EPA revises a standard to
make it more stringent, and we rely on the principles of section 172(e)
in crafting our anti-backsliding policy under the 8-hour standard.
Moreover, we believe that Congress created the major NSR program as
a measure to mitigate emissions growth rather than a measure to
generate emissions reductions from existing sources to reduce the base
year emissions inventory in a given nonattainment area. To the extent
that subpart 2 requires higher offset ratios and lower major stationary
source thresholds, Congress included these requirements not to
specifically generate emissions reductions but to provide a buffer to
compensate for under projections of growth in state planning. Even if
Congress broadly intended major NSR to be included within section
172(e), section 172(e) only requires that we impose the subpart 2 major
NSR requirements on similarly-designated nonattainment areas and does
not mandate that we retain each and every element of the NSR program
under the 1-hour standard in each and every previous nonattainment
area, specifically those portions of the NSR program that do not impose
control requirements.
3. Will a State's Removal of 1-Hour Major NSR Programs From Its SIP
Interfere With Any Applicable Requirements of the Act Including
Attainment and RFP?
a. Comments
Several commenters concurred with our finding that applying major
NSR requirements based on an area's 8-hour nonattainment classification
will not interfere with RFP and attainment or any other applicable
requirement of the Act. One commenter noted that section 110(l) of the
Act is not an anti-backsliding provision, but merely a requirement to
assure that a State continues to meet RFP and attainment despite
changes in the SIP. Another commenter indicated that section 110(l)
could not be interpreted to require a State to maintain requirements
for a standard that we revoked. The commenter argues that such an
interpretation of section 110(l) would act to freeze all State rules in
the SIP regardless of whether they make economical sense or are
necessary for air quality. Many commenters agreed that States do not
rely on emissions reductions from major NSR within their attainment
demonstrations. Nonetheless, one commenter noted that the fact that
States do not include reductions from major NSR in its attainment
demonstrations does not mean that major NSR is not an important tool
for achieving attainment. Several commenters noted that States use a
conservative approach to planning by not including reduction credits
from NSR in its attainment demonstration or ROP plan.
Several commenters noted that our own policy indicates that section
110(l) requires a case-by-case, fact-specific review in each
circumstance to determine whether the requirements are being met. One
commenter indicated that EPA cannot evaluate the effect of major NSR
changes on the SIP until it knows the full complement of control
measures that States will use to reach attainment of the 8-hour
standard. Another commenter argued that higher major source thresholds
that will apply in nonattainment areas given a lower nonattainment
designation under the 8-hour standard will result in additional
unmitigated emissions increases. The commenter asserts that by
definition, the change will interfere with the ability of such areas to
achieve attainment, and is inconsistent with section 110(l) of the Act.
One commenter proposed that a State can only remove NSR requirements if
the continued implementation of the program would interfere with
progress or timely attainment, or if the State demonstrates that it is
no longer feasible to implement the program.
b. Response
Many comments received on our proposal support our understanding of
how States account for growth within attainment demonstrations. We
address comments related to specific SIP demonstrations in section
III.C.4. of today's preamble.
As explained in detail in our April 4, 2004 proposal (70 FR 17023-
17025), we conclude that States are not relying on major NSR to
generate emissions reductions in the State's attainment modeling. The
growth projection methods used in preparing attainment demonstrations
and the 8-hour major NSR program requirements will provide overlapping
assurances that removing the 1-hour major NSR program from the SIP,
will not interfere with RFP or attainment in any 8-hour nonattainment
area. Basing an area's major NSR program requirements on its
classification under the 8-hour standard assures that emissions
increases from major stationary sources are mitigated and provide an
ample margin of safety against poor State planning in areas with more
severe air quality problems. Accordingly, we find that removing major
NSR program requirements from the SIP based on an area's previous
classification under the 1-hour standard will not violate section
110(l) of the Act.
We disagree with commenters that our own policy requires a case-by-
case, fact-specific review in each circumstance to determine whether
the requirements of section 110(l) of the Act are met. Although we have
generally conducted case-by-case reviews of SIP changes, we have not
always required a detailed analysis for every element within the
requested change. For
[[Page 39421]]
example, when we approved revisions to the Illinois SIP, commenters
objected to Illinois' removal of lowest achievable emission rate (LAER)
and offset requirements, and NOX (RACT) requirements as a
relaxation of the SIP. Commenters based their objections on the fact
that neither Illinois or the EPA conducted a modeling demonstration
showing that these requirements were not needed for attainment. We
concluded that modeling was not needed to show that these measures were
not needed for attainment because Illinois did not rely on
NOX (reasonably available control technology) RACT to attain
the ozone standard, and all sources already implementing major NSR
requirements were required to retain these controls. (68 FR 25458-9).
Where the record supports generalized determinations on compliance with
section 110(l), we conclude that it is appropriate for us to make them.
Moreover, our actions today are consistent with the guidance we
issued for approving State SIP changes to remove the dual source
definition from State SIPs. In 1981, we revised the major NSR
regulations to allow a State to adopt a plantwide definition of
stationary source in its nonattainment NSR program. (46 FR 50766).
Previously, our regulations required a dual definition of stationary
source (including both the entire plant and individual emissions
units). We predicted that use of a plantwide definition would bring
fewer plant modifications into the nonattainment permitting process,
but emphasized that this change would not interfere with RFP and timely
attainment because States remained under an independent obligation to
demonstrate attainment and maintenance of the NAAQS. (46 FR 50767).
We determined that our action was consistent with Congress' intent
that States are to play the primary role in pollution control and
Congress' desire that States retain the maximum possible flexibility to
balance environmental and economic concerns in designing plans to clean
up nonattainment areas. Although section 110(l) was added to the Act in
1990, prior to that date EPA required States, pursuant to section
110(a)(3)(A), to demonstrate that revisions to an implementation plan
would not interfere with the ability of an area to attain the NAAQS.
See Navistar Int'l Transp. Corp. v. EPA, 941 F.2d 1339, 1342 (6th Cir.
1991). When we revised our regulations to allow States to adopt the
plantwide definition of stationary source, we determined that States
that adopt the less inclusive stationary source definition, would have
to demonstrate that their plans continue to demonstrate RFP and
attainment only if the State relied on emissions reductions that it
projected would result from the dual source definition in its
attainment planning. (46 FR 50767; Memorandum from J. Craig Potter,
Assistant Administrator for Air and Radiation to Director, Air
Management Division Regions I, III, V and IX, et al., ``Plantwide
Definition of Major Stationary Sources of Air Pollution,'' February 27,
1987).
Today, we have determined that with the exception of one
jurisdiction,\7\ discussed below, no State or local entity has
accounted in the past for any emissions reductions relating to the
higher offset ratios and lower major source thresholds under the NSR
program within their attainment demonstrations. Accordingly, consistent
with our policy for demonstrating RFP and attainment established in
1981, no State need submit an individual demonstration to satisfy the
requirements of section 110(l) related to RFP and attainment.
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\7\ We are referring to South Coast Air Quality Management
District. There are several other State and local agencies,
including some in California, in which the classification under the
8-hour standard is lower than that under the 1-hour standard. We are
not aware of any of these agencies relying on the major stationary
source thresholds or the offset ratios under the 1-hour
classification to assure RFP or attain the 1-hour standard.
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We also disagree that EPA cannot know whether removing the 1-hour
major NSR program from SIPs will be a relaxation until we know the full
complement of control measures that each State will use to reach
attainment of the 8-hour standard. We believe that a major NSR program
based on the 8-hour classifications will provide a sufficient margin of
safety to address major source growth in nonattainment areas, because
it will ensure that any growth in major stationary source emissions
will be offset in at least a one to one ratio. Moreover, States have
other mechanisms to control growth of sources not subject to major NSR
through minor NSR programs. Further, under our interpretation of
section 110(l), areas need not wait for development of full attainment
demonstrations to make SIP changes, provided they can demonstrate no
increase in emissions or impediment to achieving NAAQS. Since major NSR
at the levels required by the 8-hour classifications will still provide
at least 1 for 1 offsets, such major NSR programs will not increase
emissions or result in an impediment to achieving NAAQS, and thus will
satisfy section 110(l) until States submit a full attainment
demonstration.
Notwithstanding the ability of the 8-hour nonattainment major NSR
program to ensure that new emissions do not interfere with RFP or
attainment, States have every incentive to include adequate control
measures in a SIP to move an area as expeditiously as practicable to
attainment. If a State predicts that growth will interfere with the
ability of existing control measures to bring the area into attainment,
it would need to impose additional measures to mitigate growth. If the
State fails to plan adequately, ``and as a result slips out of
compliance as its population or industry changes, then it must pay a
steep price for backsliding. It is sensible for the Federal agency to
give localities that must pay the piper some opportunity to call the
tune.'' See Sierra Club, 357 F.3d at 540.
We also disagree that any changes to the major NSR program may
result in unmitigated emissions increases, and that by definition, the
change interferes with the area's ability to achieve attainment, and is
inconsistent with section 110(l). First, no unmitigated growth should
occur in any nonattainment area. Every State must develop an attainment
demonstration that accounts for growth within its attainment plan.
Accordingly, States would need to mitigate all growth projected within
the attainment plan through control measures within the SIP to develop
an approvable attainment plan. The major NSR program provides an extra
measure of benefit on top of the control measures already contained in
the SIP to address any further unanticipated future growth.
Moreover, we disagree with the assumption of some commenters that
any change in a SIP requirement is necessarily subject to review under
section 110(l) of the Act. The Supreme Court upheld our plantwide
stationary source definition as a reasonable balance between reducing
air pollution and economic growth even though this change allowed fewer
sources to go through major NSR permitting. See Chevron, 467 U.S. at
866. The Act allows us to approve SIP revisions if the State shows that
the revision does not interfere with any requirement concerning
attainment and RFP. We conclude that this will be the case in all areas
removing 1-hour NSR programs as 8-hour NSR will still be required and
thus no emissions increases will result.
We also disagree with the commenter who indicates that revisions
under section 110(l) of the Act may not be approved unless a State
shows that maintaining the requirement would
[[Page 39422]]
interfere with progress toward attainment or that the requirement is
not feasible. We do not believe that such an overly restrictive
interpretation of section 110(l) is consistent with Congress' intent
that States retain flexibility in carrying out their responsibilities
for pollution control. We conclude that the words of section 110(l)
simply do not provide for such a strict interpretation.
4. Has Any Individual State or Local Agency Relied on Major NSR as a
``Control Measure'' To Reduce Overall Base Year Emissions in a Rate of
Progress Plan or Attainment Demonstration?
a. Comment and Response--A
Comment. One commenter argued that our assumption that ``(S)tates
do not rely on Major NSR to achieve emissions reductions and reach
attainment,'' is erroneous. According to the commenter, the South Coast
Air Quality Management District's (SCAQMD's) NSR program was an
important element of its attainment demonstration. Their 1989 Air
Quality Management Plan (AQMP) contained Control Measure F-8, which, as
adopted in final form in 1990 was estimated to result in emissions
reductions of 44 tons per day (TPD) of ROG, 33 TPD of NOx, 4
TPD of SOx, 21 TPD of CO, and 29 TPD of PM10. The commenter
argued that while the NSR program no longer appears as a control
strategy in SCAQD's latest AQMP because the rule has been adopted, the
reductions from this measure are contained in the current SIP revision
in the baseline and are still being relied upon to demonstrate
attainment. According to the commenter, they do not understand how any
area could not rely on NSR as part of its attainment demonstration, at
least by including NSR reductions in the baseline.
Response. We agree that emissions from sources already subject to
major NSR permits are part of the States' baseline emissions. For this
reason, our final rule requires all States to maintain requirements
imposed on major sources through permits they issued under the 1-hour
major NSR program before June 15, 2005. However, the comment does not
indicate that any areas rely on further reductions from 1-hour major
NSR programs to make further progress toward attainment.
b. Comment and Response--B
Comment. One commenter stated that we concede that the SCAQMD does
assume a LAER level of control in projecting emissions. (70 FR 17024).
They contend, however, that we fail to explain why the District's SIP-
approved NSR rule would not be relaxed if we must automatically approve
a SIP revision that would result in a relaxation of SCAQMD's
requirements.
Response. The SCAQMD's major NSR program contains many requirements
that are beyond the Federal minimum requirements for either the 1-hour
or 8-hour standard. In light of this, there is no reason to believe
that SCAQMD would make revisions to its major NSR program even given
the opportunity provided under today's final action.
c. Comment and Response--C
Comment. One commenter contended that on March 2, 1995, we issued a
policy establishing an alternative attainment process whereby States
could commit to a two-phase approach for meeting CAA statutory
requirements. The Phase I requirements include adoption of specific
control strategies necessary to meet the post 1996 ROP plan through
1999. The Phase II requirements include participation in a two-year
regional consultative process with other States in the eastern U.S. and
with EPA to identify and commit to additional emissions reductions
necessary to attain health-based ozone standards by the CAA deadlines.
The commenter stated that under this policy Pennsylvania (PA) submitted
the Phase I portion which includes a 1999 24 percent reduction
milestone. In addition, Pennsylvania identified its NSR program as a
``control measure'' put in place to reduce emissions through their
offset requirements and through the installation of LAER control
equipments. On October 26, 2001, the commenter asserted that the EPA
approved these plans as meeting the requirements of section 182(c)(2)
and (d) of the Act, 42 U.S.C. section 7511a(c)(2) and (d). (66 FR
54143).
Response. We reviewed the information related to Pennsylvania's ROP
plans. The reductions the commenter claims are related to
Pennsylvania's major NSR program originated from retrospective, source/
process shutdowns which occurred after January 1, 1991 but before the
ROP milestone date and before the date the ROP plan was prepared.\8\
Importantly, before we approved Pennsylvania's ROP these shutdowns were
not available as offsets.\9\ Moreover, the emissions reductions were
not necessarily generated to meet any need to create an offset because
a new source was being constructed. Pennsylvania requires sources to
register ERCs for future use as offsets or for contemporaneous netting.
Although, Pennsylvania claims that its regulations limit any source in
the Philadelphia area to using only 77% of each ERC that is registered
(banked) in a timely manner, we are unable to identify such a
requirement within Pennsylvania's major NSR regulations. See 25 Pa.
Code Chapter 127, Subchapter E. Nonetheless, it appears that
Pennsylvania's ROP plan may confiscate a portion of the emissions
reduction credits contained in the bank and prevent their future use as
offsets. However, our guidance for ROP plans does not allow credit for
prospective reductions from offsets due to the inherent uncertainty in
projecting new source growth, and in determining the amount of the
emissions reductions from offsets that will be needed to offset minor
source growth. See section 2.2 Emissions Offsets of ``Guidance on the
Relationship Between the 15 Percent Rate-of-Progress Plans and Other
Provisions of the Clean Air Act,'' (EPA-452/R-93-007), May 1993 and
``Guidance on the Post '96 Rate-of-Progress Plan (RPP) and Attainment
Demonstration'' (EPA-452/R-93-015) Corrected version of February 18,
1994.\10\
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\8\ In our review of Pennsylvania's ROP plans we determined that
some of the shutdowns used by Pennsylvania in their plans were not
discounted as the Pennsylvania Department of Environmental
Protection (DEP) stated in its May 4, 2005 comment letter because
the sources did not register the emissions reduction credits (ERCs)
as required by 25 Pa. Code subchapter E. Instead of using 23% of the
shutdowns registered as ERCs in the ROP plan, the PA Department of
Environmental Protection (DEP) used 100% of the past unregistered
shutdown reductions to meet the ROP requirements.
\9\ See 40 CFR part 51.165(a)(ii)(C) as of October 26, 2001. We
reiterated this requirement in our October 26, 2001 final rule (66
FR at 54148) approving Pennsylvania's ROP plan and attainment
demonstration. We also identified this issue in the preambles to
pertinent proposed and final rulemaking notices on the PA NSR SIP.
(62 FR 25060, 62 FR 64722).
\10\ Although these guidance documents indicate that offsets
after 1990 could be used in a milestone compliance demonstration, no
State has actually submitted a milestone compliance demonstration
including these offsets.
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In the proposed rulemaking notice to approve Pennsylvania's ROP
plan, we identified this measure as ``Shutdowns.'' (66 FR 44570). We
did not relate these shutdowns to offsets, LAER requirements, or any
other requirement in Pennsylvania's major NSR program. Likewise, in the
final rulemaking notice approving the attainment demonstration and ROP
plans for the Philadelphia area we again identified this measure as
``Shutdowns.'' (66 FR 54146). We discussed the status of Pennsylvania's
NSR regulation for the Philadelphia area, but only in context of the
issue concerning the relationship between the use of shutdowns as
offsets only after
[[Page 39423]]
we approve the attainment demonstration. (66 FR 54148).
Likewise, the Pennsylvania DEP did not identify NSR as a ``control
measure'' in its Phase II plan. Instead it identified the measures as
``shutdowns.'' Tables 4a and 4b to ``State Implementation Plan (SIP)
Revision for the Philadelphia Interstate Ozone Nonattainment Area,
Meeting the Requirements of the Alternative Ozone Attainment
Demonstration Policy, Phase II,'' dated April 1998. (This was submitted
with an April 30, 1998 letter from James Seif, Secretary, Pennsylvania
Department of Environmental Protection, to Judy Katz, Director, Air,
Radiation, and Toxics Division, EPA Region III.)
Based on this information, we conclude that Pennsylvania did not
rely on major NSR offsets or LAER requirements to generate emissions
reductions for Pennsylvania's ROP plan, but instead confiscated
shutdown ERC credits (some of which were never creditable as offsets,
and others which may have been creditable as offsets) and prevented
such credits from being used as offsets. If Pennsylvania disagrees with
our conclusions and continues to believe the State relies on higher
offsets ratios and lower major stationary source requirements to
achieve attainment, then Pennsylvania should include these requirements
in its nonattainment major NSR program for the 8-hour standard.
Further, Pennsylvania is free to retain 1-hour NSR offset ratios and
major source sizes should it choose to do so as part of its 8-hour SIP.
d. Comment and Response--D
Comment. One commenter raised concerns regarding several areas
(i.e., Houston-Galveston-Brazoria area, Chicago-Gary Lake County area)
where the commenter asserted that relaxation in affected areas would
result in emissions increases, whereby any SIP revision would interfere
with timely progress and timely attainment. The commenter asserted that
the risk of increased emissions in such areas is compounded by the
allowance of totally new facilities being able to locate and emit
increased pollution in these and other nonattainment areas without
obtaining offsets and without installing LAER as would have been
required under their 1-hour classifications. The commenter provided
data on the number of sources in the area who could potentially
increase emissions without undergoing major NSR review.
Another commenter reported that the way in which the EPA has chosen
to implement the 8-hour ozone NAAQS will interfere with Delaware's
ability to solve their air quality problems related to construction and
modification of major stationary sources and will result in
backsliding. The commenter asserted that relaxation of emissions
control and offset requirements will inhibit Delaware's attempts to
control emissions, because more sources will be exempt from compliance
with regulatory requirements.
Response. The commenter provided no specific information indicating
how these areas rely on major NSR for attainment purposes or how
changes to the major NSR requirements will interfere with the areas'
ability to reach attainment. Although the commenter supplied data on
the number of sources which could potentially increase emissions, the
commenter did not correlate this information with an estimate of the
number of these sources that are likely to undertake modifications.
Moreover, States remain under an independent statutory requirement to
assure that emissions from the construction and modification of
stationary sources do not interfere with attaining or maintaining the
NAAQS. The EPA continues to believe that areas will be able to
demonstrate timely attainment through controls on existing sources in
conjunction with appropriate 8-hour NSR on new major sources.
e. Comment and Response--E
Comment. One commenter stated we cited NSR among the ``control
measures'' that provide reductions toward attainment and that New
Hampshire relied on in the modeled 1-hour attainment demonstration for
ozone. (67 FR 64582, 64586).
Response. We reviewed the cited Federal Register notice. References
to NSR appear in two tables within Section A. ``CAA Measures and
Measures Relied on in the Modeled Attainment Demonstration SIP.'' The
tables are entitled ``CAA Requirements for Serious Areas'' and
``Control Measures in the One-Hour Ozone Attainment Plan for the New
Hampshire Portion of the Boston-Lawrence-Worcester, MA-NH Serious Ozone
Nonattainment Area.'' We listed NSR in these tables to illustrate that
New Hampshire had an approved NSR SIP as required by the Act. However,
the attainment modeling that was performed to support the New Hampshire
attainment demonstration did not account for any emissions reductions
from NSR. Accordingly, we conclude that New Hampshire did not rely on
any reductions from NSR to reach attainment.\11\
---------------------------------------------------------------------------
\11\ See EPA docket entry number OAR-2001-0004-0817, Memorandum
from Richard Burkhart, Environmental Scientist, U.S. EPA to David
Conroy, Manager Air Quality Planning Unit, ``Additional Information
regarding the Approval of the New Hampshire One-Hour Ozone
Attainment Demonstration,'' (June 10, 2005).
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IV. Statutory and Executive Order Reviews
A. Executive Order 12866--Regulatory Planning and Review
Under Executive Order 12866 (58 FR 51735), the Agency must
determine whether the 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.
Pursuant to the terms of Executive Order 12866, it has been
determined that this final action is not a ``significant regulatory
action'' within the meaning of the Executive Order. Today's
reconsideration notice merely proposes to retain the position we
adopted in the final Phase I rule.
B. Paperwork Reduction Act
This action does not impose an information collection burden under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
This rule only interprets the requirements to develop State or tribal
implementation plans to satisfy the statutory requirements for major
NSR. This action will not impose any new paperwork requirements.
However, OMB previously approved the information collection
requirements contained in the existing regulations (40 CFR parts 51 and
52) under the provisions of the Paperwork Reduction Act. A copy of the
OMB-approved Information Collection Request (ICR) may be obtained from
Susan Auby, Collection Strategies Division, U.S. Environmental
Protection Agency (2822T), 1200 Pennsylvania Ave., NW., Washington, DC
20460, or by calling (202) 566-1672. Please refer to
[[Page 39424]]
OMB control number 2060-0003, EPA ICR number 1230.17 when making your
request.
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously-applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information. An agency may not
conduct or sponsor, and a person is not required to respond to a
collection of information unless it displays a currently valid OMB
control number. The OMB control numbers for EPA's regulations in 40 CFR
are listed in 40 CFR part 9.
C. Regulatory Flexibility Act (RFA)
The RFA generally requires an agency to prepare an RFA of any rule
subject to notice and comment rulemaking requirements under the
Administrative Procedures Act or any other statute unless the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities.
Small entities include small businesses, small organizations, and
small governmental jurisdictions. For purposes of assessing the impacts
of today's final action on small entities, small entity is defined as:
(1) A small business that is a small industrial entity as defined in
the U.S. Small Business Administration (SBA) size standards (See 13 CFR
121.201); (2) a small governmental jurisdiction that is a government of
a city, county, town, school district, or special district with a
population of less than 50,000; or (3) a small organization that is any
not-for-profit enterprise that is independently owned and operated and
is not dominant in its field.
After considering the economic impacts of today's final action on
reconsideration on small entities, I certify that this action will not
have a significant economic impact on a substantial number of small
entities. This final action on reconsideration will not impose any
requirements on small entities. This reconsideration notice reaffirms
our April 4, 2005 rule and the statutory obligations for States and
Tribes to implement the major NSR program for the 8-hour ozone NAAQS.
D. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
1 year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation as to why
that alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan.
The plan must provide for notifying potentially affected small
governments, enabling officials of affected small governments to have
meaningful and timely input in the development of EPA regulatory
proposals with significant Federal intergovernmental mandates, and
informing, educating, and advising small governments on compliance with
the regulatory requirements.
In promulgating the Phase I Rule, we determined that this final
action on reconsideration does not contain a Federal mandate that may
result in expenditures of $100 million or more for State, local, and
Tribal governments, in the aggregate, or the private sector in any 1
year. Therefore, we concluded that the Phase I Rule is not subject to
the requirements of sections 202 and 205 of the UMRA. For the same
reasons we stated when we promulgated the Phase I Rule, we conclude
that the issues addressed in this final action on reconsideration are
not subject to the UMRA. The EPA also determined that this final action
contains no regulatory requirements that might significantly or
uniquely affect small governments, including tribal governments.
E. Executive Order 13132--Federalism
Executive Order 13132, entitled ``Federalism'' (64 FR 43255),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by State and local officials in the development of
regulatory policies that have federalism implications.'' ``Policies
that have federalism implications'' is defined in the Executive Order
to include regulations that have ``substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government.'' This final action does not have
federalism implications. It will not have substantial direct effects on
the States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government, as specified in Executive Order 13132.
The action specifies the statutory obligations of States and Tribes in
implementing the major NSR program in 8-hour ozone nonattainment areas.
The Act establishes the scheme whereby States take the lead in
developing plans for EPA to approve into the State plan for
implementing the major NSR program. This final action would not modify
the relationship of the States and EPA for purposes of developing
programs to implement major NSR. Thus, Executive Order 13132 does not
apply to this action. Nonetheless, in the spirit of Executive Order
13132, and consistent with EPA policy to promote communications between
EPA and State and local governments, we specifically solicited comment
on aspects of the final rule being reconsidered from State and local
officials. We received 6 comment letters from State and local district
representatives and 1 comment letter from the Baton Rouge Chamber of
Commerce. Section III.C. of this preamble presents a summary of their
significant comments and our response to them.
F. Executive Order 13175--Consultation and Coordination With Indian
Tribal Governments
Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249), requires EPA to develop
an accountable process to ensure ``meaningful and timely input by
tribal officials in the development of
[[Page 39425]]
regulatory policies that have tribal implications.'' This final action
on reconsideration does not have ``tribal implications,'' as specified
in Executive Order 13175.
The purpose of this final action on reconsideration is to present
EPA's conclusions based on the reconsideration process which allowed
for public testimony and comment on the reconsidered aspects of the
Phase I 8-hour ozone rule. The tribal authority rule (TAR) gives Tribes
the opportunity to develop and implement Act programs such as the major
NSR program, but it leaves to the discretion of the Tribe whether to
develop these programs and which programs, or appropriate elements of a
program, they will adopt. For the same reasons that we stated in the
Phase I Rule, we conclude that this final action does not have Tribal
implications as defined by Executive Order 13175. To date, no Tribe has
chosen to implement a major NSR program. Moreover, this final action
does not affect the relationship or distribution of power and
responsibilities between the Federal government and Indian Tribes.
Thus, Executive Order 13175 does not apply to this action.
G. Executive Order 13045--Protection of Children From Environmental
Health Risks and Safety Risks
Executive Order 13045: ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885) applies to any rule that:
(1) Is determined to be ``economically significant'' as defined under
Executive Order 12866, and (2) concerns an environmental health or
safety risk that EPA has reason to believe may have 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 action relates to
reconsideration of one aspect of the Phase I Rule to implement the 8-
hour ozone NAAQS. For the same reasons stated with respect to the Phase
I Rule, we do not believe the Rule, or this final action on
reconsideration, is subject to Executive Order 13045. The Phase I Rule
implements a previously-promulgated health-based Federal standard, the
8-hour ozone NAAQS. Nonetheless, we have evaluated the environmental
health or safety effects of the 8-hour ozone NAAQS on children. The
results of this evaluation are contained in 40 CFR Part 50, National
Ambient Air Quality Standards for Ozone, Final Rule (62 FR 38855-38896;
specifically, 62 FR 38855, 62 FR 38860 and 62 FR 38865).
H. Executive Order 13211--Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
This final action on reconsideration is not a ``significant energy
action'' as defined in Executive Order 13211, ``Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use'' (66 FR 28355) because it is not likely to have a significant
adverse effect on the supply, distribution, or use of energy.
Information on the methodology and data regarding the assessment of
potential energy impacts in implementing programs under the 8-hour
ozone NAAQS is found in Chapter 6 of U.S. EPA 2003, Cost, Emission
Reduction, Energy, and Economic Impact Assessment of the Proposed Rule
Establishing the Implementation Framework for the 8-hour, 0.08 ppm
Ozone National Ambient Air Quality Standard, prepared by the Innovative
Strategies and Economics Group, Office of Air Quality Planning and
Standards, Research Triangle Park, N.C. April 24, 2003.
I. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Public Law 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (for example, 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.
Today's final action does not involve technical standards. Therefore,
EPA is not considering the use of any voluntary consensus standards.
J. Executive Order 12898--Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
Executive Order 12898 requires that each Federal agency make
achieving environmental justice part of its mission by identifying and
addressing, as appropriate, disproportionate high and adverse human
health or environmental effects of its programs, policies, and
activities on minorities and low-income populations. The EPA concluded
that the Phase I Rule should not raise any environmental justice
issues; for the same reasons, the issues raised in this reconsideration
notice should not raise any environmental justice issues. The health
and environmental risks associated with ozone were considered in the
establishment of the 8-hour, 0.08 ppm ozone NAAQS. The level is
designed to be protective with an adequate margin of safety. The final
reconsidered action provides a framework for improving environmental
quality and reducing health risks for areas that may be designated
nonattainment.
K. Congressional Review Act
The Congressional Review Act, section 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 final action on reconsideration and other required information to
the United States Senate, the United States House of Representatives,
and the Comptroller General for the United States prior to publication
of the final action in the Federal Register. A major rule cannot take
effect until 60 days after it is published in the Federal Register.
This action is not a ``major rule'' as defined by 5 U.S. C. 804(2).
Therefore, this action will be effective August 8, 2005.
V. Statutory Authority
The statutory authority for this action is provided by sections
307(d)(7)(B), 101, 111, 114, 116, and 301 of the Act as amended (42
U.S.C. 7401, 7411, 7414, 7416, and 7601). This notice is also subject
to section 307(d) of the Act (42 U.S.C. 7407(d)).
VI. Judicial Review
Under section 307(b)(1) of the Act, the opportunity to file a
petition for judicial review of the April 30, 2004 final rule has
passed. Judicial review of today's final action is available only by
the filing of a petition for review in the U.S. Court of Appeals for
the District of Columbia Circuit by September 6, 2005. Filing a
petition for review by the Administrator of this final action does not
affect the finality of this rule for the
[[Page 39426]]
purposes of judicial review nor does it extend the time within which a
petition for judicial review may be filed, and shall not postpone the
effectiveness of such rule or action. Any such judicial review is
limited to only those objections that are raised with reasonable
specificity in timely comments. This action may not be challenged later
in proceedings to enforce its requirements. See CAA section 307(b)(2).
List of Subjects in 40 CFR Part 51
Administrative practice and procedure, Air pollution control,
Environmental protection, Intergovernmental relations, NAAQS, Nitrogen
oxides, Ozone, SIP, Volatile organic compounds.
Dated: June 30, 2005.
Stephen L. Johnson,
Administrator.
[FR Doc. 05-13483 Filed 7-7-05; 8:45 am]
BILLING CODE 6560-50-P