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ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Part 51

[EPA-HQ-OAR-2009-0897; FRL- ]

2060-AQ07

Withdrawal of the Prior Determination or Presumption that Compliance 

with the CAIR or the NOx SIP Call Constitutes RACT or RACM for the 

1997 8-Hour Ozone and 1997 Fine Particle NAAQS; and Revision to RACT 

Guidance and RFP Requirements for the 1997 Fine Particle NAAQS

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

SUMMARY: The EPA is proposing to withdraw any prior determination or 

presumption that compliance with the Clean Air Interstate Rule (CAIR) 

or the NOx SIP Call constitutes reasonably available control 

technology (RACT) or reasonably available control measures (RACM) for 

oxides of nitrogen (NOx) or sulfur dioxide (SO2) emissions from 

electric generating unit (EGU) sources participating in these 

regional cap-and-trade programs. The EPA is proposing revisions to 

preamble guidance in the final Implementation Rule for the 1997 PM2.5

national ambient air quality standard (NAAQS) concerning the economic 

feasibility criteria for determining RACT for sources located within 

nonattainment areas. The EPA is also proposing not to allow emission

reductions from outside of a nonattainment area to be credited toward 

meeting the Reasonable Further Progress (RFP) requirements for the 

1997 PM2.5 NAAQS.
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DATES: Comments. Comments must be received on or before [INSERT DATE 

30 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER]. 

Public Hearings. If anyone contacts us requesting a public hearing on 

or before [INSERT DATE 15 DAYS AFTER DATE OF PUBLICATION IN THE 

FEDERAL REGISTER], we will hold a public hearing. Please refer to 

SUPPLEMENTARY INFORMATION for additional information on the comment 

period and the public hearing. 

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQOAR-2009-0897, by one of the following methods:

 www.regulations.gov. Follow the online instructions for 

submitting comments. Attention Docket ID No. EPA-HQ-OAR-2009-

0897.

 Email: a-and-r-docket@epa.gov. Attention Docket ID No. EPA-HQOAR-2009-0897.

 Fax: (202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-2009-

0897.

 Mail: EPA Docket Center, EPA West (Air Docket), Attention 

Docket ID No. EPA-HQ-OAR-2009-0897, U.S. Environmental 

Protection Agency, Mailcode: 2822T, 1200 Pennsylvania Avenue, 

NW, Washington, DC 20460. Please include a total of two copies. 

 Hand Delivery: U.S. Environmental Protection Agency, EPA West 

(Air Docket), 1301 Constitution Avenue, Northwest, Room 3334, 

Washington, DC 20004, Attention Docket ID No. EPA-HQ-OAR-2009-
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0897. Such deliveries are only accepted during the Docket's 

normal hours of operation, and special arrangements should be 

made for deliveries of boxed information.

Instructions. Direct your comments to Docket ID No. EPA-HQ-OAR-2009-

0897. The EPA's policy is that all comments received will be included 

in the public docket without change and may be made available online 

at www.regulations.gov, including any personal information provided, 

unless the comment includes information claimed to be Confidential 

Business Information (CBI) or other information whose disclosure is 

restricted by statute. Do not submit information that you consider to 

be CBI or otherwise protected through www.regulations.gov or email. 

The www.regulations.gov website is an “anonymous access” system, 

which means EPA will not know your identity or contact information 

unless you provide it in the body of your comment. If you send an 

email comment directly to EPA without going through 

www.regulations.gov, your email address will be automatically 

captured and included as part of the comment that is placed in the 

public docket and made available on the Internet. If you submit an 

electronic comment, the EPA recommends that you include your name and 

other contact information in the body of your comment and with any 

disk or CD-ROM you submit. If the EPA cannot read your comment due to 

technical difficulties and cannot contact you for clarification, the 

EPA may not be able to consider your comment. Electronic files should 
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avoid the use of special characters, avoid any form of encryption, 

and be free of any defects or viruses. For additional information 

about EPA's public docket, visit the EPA Docket Center homepage at 

www.epa.gov/epahome/dockets.htm. 

Docket. All documents in the docket are listed in the 

www.regulations.gov index. Although listed in the index, some 

information is not publicly available, e.g., CBI or other information 

whose disclosure is restricted by statute. Certain other material, 

such as copyrighted material, will be publicly available only in hard 

copy. Publicly available docket materials are available either 

electronically in www.regulations.gov or in hard copy at the Air and 

Radiation Docket and Information Center, EPA/DC, EPA West Building, 

Room 3334, 1301 Constitution Ave., NW, Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 

Friday, excluding legal holidays. The telephone number for the Public 

Reading Room is (202) 566-1744, and the telephone number for the Air 

Docket is (202) 566-1742. 

FOR FURTHER INFORMATION CONTACT: Ms. Kristin Riha, Office of Air 

Quality Planning and Standards, Air Quality Policy Division, Mail 

code C539-01, Research Triangle Park, NC 27711, telephone (919) 541-

2031; fax number: 919-541-0824; email address: riha.kristin@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information
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A. Does this action apply to me?

Entities potentially affected by this action include states 

(typically state air pollution control agencies), tribes, and, in 

some cases, local governments that are responsible for air quality 

management and planning. In particular, states with areas designated 

nonattainment for the 1997 8-hour ozone NAAQS and/or the 1997 PM2.5 

NAAQS and that are located within the geographic areas covered by the 

NOx SIP Call1 and/or the CAIR2 may be affected by this action. EGUs 

located in such geographic regions may also be affected by any new 

RACT or RACM reviews that may result from final rulemaking on this 

action. These sources are in the following groups: 

Industry group SICa NAICSb

Electric Services 492 221111, 221112, 221113, 221119, 

221121, 221122

a Standard Industrial Classification.

b North American Industry Classification System.

B. What should I consider as I prepare my comments for EPA?

1. Submitting CBI. Do not submit this information to EPA through 

www.regulations.gov or email. Clearly mark the part or all of the 

 

1 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; Final Rule, 63 FR 57356 

(October 27, 1998).

2 See Rule to Reduce Interstate Transport of Fine Particulate Matter 

and Ozone (Clean Air Interstate Rule); Revisions to Acid Rain 

Program; Revisions to the NOx SIP Call; Final Rule, 70 FR 25162 (May 

12, 2005).
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information that you claim to be CBI. For CBI information in a disk 

or CD ROM that you mail to EPA, mark the outside of the disk or CD 

ROM as CBI and then identify electronically within the disk or CD ROM 

the specific information that is claimed as CBI. In addition to one 

complete version of the comment that includes information claimed as 

CBI, a copy of the comment that does not contain the information 

claimed to be CBI must be submitted for inclusion in the public 

docket. Information so marked will not be disclosed except in 

accordance with procedures set forth in 40 CFR Part 2.

2. Tips for Preparing Your Comments. When submitting comments, 

remember to:

 Identify the rulemaking by docket number and other identifying 

information (subject heading, Federal Register date and page 

number).

 Follow directions - The agency may ask you to respond to specific 

questions or organize comments by referencing a Code of Federal 

Regulations (CFR) part or section number.

 Explain why you agree or disagree; suggest alternatives and

substitute language for your requested changes.

 Describe any assumptions and provide any technical information 

and/or data that you used.
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 If you estimate potential costs or burdens, explain how you arrived 

at your estimate in sufficient detail to allow for it to be 

reproduced.

 Provide specific examples to illustrate your concerns, and suggest 

alternatives.

 Explain your views as clearly as possible, avoiding the use of 

profanity or personal threats.

 Make sure to submit your comments by the comment period deadline 

identified.

C. 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 notice will be posted at 

http://www.epa.gov/ttn/oarpg/new.html under “Recent Actions.”

D. What information should I know about a possible public hearing? 

To request a public hearing or information pertaining to a 

public hearing on this document, contact Ms. Pamela Long at (919) 

541-0641 before 5 p.m. on [INSERT DATE 15 DAYS AFTER DATE OF 

PUBLICATION IN THE FEDERAL REGISTER]. If requested, further details 

concerning a public hearing for this proposed rule will be published 

in a separate Federal Register notice. For updates and additional 

information on a public hearing, please check EPA’s website for this 
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rulemaking at http://www.epa.gov/ttn/oarpg/new.html under “recent 

actions.”

E. 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. What should I consider as I prepare my comments for EPA?

1. Submitting CBI

2. Tips for Preparing Your Comments

 C. Where can I get a copy of this document and other related 

 information?

 D. What information should I know about a possible public 

 hearing?

 E. How is this notice organized? 

II. Background

 A. RACT or RACM Requirements for EGUs Participating in the NOx

 SIP Call and the CAIR

 1. CAA Requirements and the Definition of RACT and RACM

2. The NOx SIP Call

3. The CAIR

 4. The Phase 2 Ozone Implementation Rule

 5. The PM2.5 Implementation Rule

 6. Impact of the NRDC v. EPA Court Decision on Determinations 

 and Presumptions

 7. Impact of the North Carolina v. EPA Court Decision on 

 Determinations and Presumptions 

 B. Analysis of the Economic Feasibility of Reasonably Available 

 Controls in the PM2.5 Implementation Rule

 C. RFP Requirements for the 1997 PM2.5 NAAQS

 1. Linkage between the RFP Policy in the Phase 2 Ozone

 Implementation Rule and the PM2.5 Implementation Rule

 2. Rulemaking and Litigation Chronology of RFP Requirements for 

 the 1997 Ozone NAAQS and the 1997 PM2.5 NAAQS

III. Proposed Action

A. RACT or RACM Requirements for EGUs Participating in the NOx

 SIP Call and the CAIR

B. Analysis of the Economic Feasibility of Reasonably Available 

 Controls in the PM2.5 Implementation Rule

C. RFP Requirements for the 1997 PM2.5 NAAQS

IV. Statutory and Executive Order Review
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A. Executive Order 12866: Regulatory Planning and Review and 

 Executive Order 13563: Improving Regulation and Regulatory

 Review

B. Paperwork Reduction Act

C. Regulatory Flexibility Act

D. Unfunded Mandates Reform Act

E. Executive Order 13132: Federalism

F. Executive Order 13175: Consultation and Coordination with 

 Indian Tribal Governments

G. Executive Order 13045: Protection of Children from

 Environmental Health and Safety Risks

H. Executive Order 13211: Actions 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

II. Background

A. RACT or RACM Requirements for EGUs Participating in the NOx SIP 

Call and the CAIR

1. CAA Requirements and the Definition of RACT and RACM

The Clean Air Act (CAA) requires the EPA to designate areas as 

either attainment, nonattainment, or unclassifiable for each NAAQS. 

States have primary responsibility for implementing the NAAQS within 

their borders, and each state must develop a State Implementation 

Plan (SIP) that contains adequate provisions for attainment and 

maintenance of the NAAQS. The SIPs developed by states must meet the 

applicable statutory requirements. For areas designated 

nonattainment, Part D of the CAA requires that SIPs must include 

certain control measures. Subpart 1 of Part D contains generally 

applicable requirements for all nonattainment areas. Subpart 2 of 
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Part D contains additional requirements applicable to certain ozone 

nonattainment areas.

Among the general statutory requirements for all nonattainment 

areas is the requirement in section 172(c)(1) that SIPs: “provide 

for the implementation of all reasonably available control measures 

as expeditiously as practicable (including such reductions in 

emissions from existing sources in the area as may be obtained 

through the adoption, at a minimum, of reasonably available control 

technology).” Ozone nonattainment areas that are subject to the 

requirements of Subpart 2 must meet more specific RACT requirements

in accordance with section 182(b)(2)(C). States located within the 

Ozone Transport Region (OTR) have additional requirements to impose 

RACT on sources statewide, rather than only in nonattainment areas, 

in accordance with section 184. 

EPA refers to the requirement for “reasonably available control 

measures” as RACM, and refers to the subset of RACM in the 

parenthetical for “reasonably available control technology” as RACT. 

RACM and RACT measures apply broadly to a range of source categories 

located in designated nonattainment areas, including large stationary 

sources such as EGUs. The EPA has interpreted RACT to mean the lowest 

emissions limitation that a particular source is capable of meeting 

by the application of control technology that is reasonably available 

considering technological and economic feasibility as well as other 
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considerations.

3 Economic feasibility encompasses considerations such 

as whether the cost of a potential measure is reasonable considering 

attainment needs of the area and the costs of other measures, and 

whether the cost of a measure is reasonable for the regulated entity 

to bear, in light of the benefits.4 

RACT requirements are specifically intended to impose emission 

controls for purposes of attainment and maintenance of the NAAQS 

within a specific local nonattainment area. The EPA has interpreted 

the terms RACT and RACM for purposes of Subpart 1 requirements as 

being the level of emissions control that is necessary to provide for 

expeditious attainment of the NAAQS within a nonattainment area. 

Courts have upheld this interpretation of the statute with respect to 

nonattainment SIPs.5

In contrast to nonattainment plan requirements, section

110(a)(2)(D)(i) requires each state’s SIP to contain provisions that 

will prevent emissions from sources in the state from having certain 

prohibited impacts on the air quality of other states, via interstate 

transport. In particular, section 110(a)(2)(D)(i)(I) requires that a 

state’s SIP must contain provisions to prevent emissions in amounts 

that would “contribute significantly to nonattainment in, or 

interfere with maintenance by, any other state” with respect to a 

 

3 See Clean Air Fine Particle Implementation Rule; Final Rule, 72 FR 

20586 (April 25, 2007). The interpretation of RACT occurs at 20610.

4 See Clean Air Fine Particle Implementation Rule, 72 FR 20619.

5 See NRDC v. EPA, 571 F.3d 1245, at 1252-53 (D.C. Cir. 2009).
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NAAQS. The EPA has initiated several programs pursuant to section 

110(a)(2)(D)(i)(I) in order to address interstate transport of 

emissions that have such prohibited impacts on attainment of the 

ozone and PM2.5 NAAQS on a regional basis.

2. The NOx SIP Call 

In October 1998, EPA published a rule under section 

110(a)(2)(D)(i) of the CAA, commonly referred to as the “NOx SIP 

Call.” This rule was intended to reduce NOx emissions (a precursor 

for ozone formation) from sources that significantly contribute to

nonattainment or interfere with maintenance of the ozone NAAQS in one 

or more downwind states. To implement these reductions, the NOx SIP 

Call required 22 states and the District of Columbia to submit SIP 

revisions prohibiting those NOx emissions that EPA determined to be 

adversely impacting downwind air quality problems. The NOx SIP Call 

provided a regional cap-and-trade program as one mechanism for states 

to meet their interstate transport requirements under section 110

(a)(2)(D)(i). Through this mechanism, affected sources could meet 

emissions reductions requirements either by installing NOx emissions 

controls or by purchasing allowances from other sources located 

within the geographic region covered by the NOx SIP Call. 

3. The CAIR

In May 2005, EPA published another rule under section 

110(a)(2)(D)(i) of the CAA, referred to as the “Clean Air Interstate 
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Rule” (or the CAIR). The CAIR required reductions of NOx and/or SO2

emissions across 28 states and the District of Columbia needed to 

eliminate significant contribution to nonattainment, or interference 

with maintenance of, the 1997 8-hour ozone NAAQS and/or the 1997 PM2.5

NAAQS in one or more downwind states.

6 Similar to the NOx SIP Call,

EPA provided a regional cap-and-trade mechanism as one means for 

upwind states to meet the interstate transport requirements of 

section 110(a)(2)(D)(i). By this mechanism, affected sources could 

meet their emission reduction requirements either by installing 

controls for NOx and/or SO2 emissions, or by purchasing allowances 

from other sources located in the geographic region covered by the

CAIR. On April 28, 2006 (71 FR 25328), EPA also promulgated Federal

Implementation Plans (FIPs) for all jurisdictions covered by the CAIR 

to address the section 110(a)(2)(D)(i) requirements in the event that 

states were unable to make a SIP submission containing state measures 

necessary to alleviate interstate transport.

A number of parties filed petitions for review in 2008 to 

challenge the CAIR on various grounds. As a result of this 

litigation, the United States Court of Appeals for the District of 

Columbia Circuit (the Court) remanded the CAIR to EPA, but later 

 

6 NOx is a precursor for ozone formation, while both NOx and SO2 are 

precursors for PM2.5 formation.
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decided not to vacate the rule.7 In the process of remanding the 

CAIR, however, the Court identified serious concerns with EPA’s 

reading of the statute and analytical approach, including such core 

issues as the Agency’s method of evaluating significant contribution 

to nonattainment and interference with maintenance of the NAAQS. In 

response to the remand of the CAIR, EPA finalized another rule, the 

“Cross-State Air Pollution Rule” (CSAPR) on July 6, 2011.8

Both the NOx SIP Call and the CAIR were intended and designed to 

eliminate interstate transport of pollutants that have impacts on 

attainment and maintenance of the ozone and PM2.5 NAAQS in downwind 

areas. Thus, they provide significant emissions reductions that 

assist downwind areas with attainment or maintenance of the NAAQS, 

and allow downwind states to develop SIPs in reliance on regional 

emissions reductions. However, EPA did not intend that either the NOx

SIP Call or the CAIR would completely obviate the potential need for 

additional local pollution controls in downwind nonattainment areas, 

nor did EPA intend either action to override the statutory 

 

7 See North Carolina v. EPA, 531 F.3d 896; modified by 550 F.3d 1176 

(D.C. Cir. 2008).

8 See http://www.epa.gov/airtransport/pdfs/TR_070611_WEB.pdf for the 

prepublication version of this rule. Once published in the Federal 

Register, the rule will appear at www.regulations.gov under Docket 

Number HQ-OAR-2009-0491. 
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requirements for SIPs for nonattainment areas.9 

In order to help states address the specific statutory 

requirement for SIPs for nonattainment areas for the 1997 8-hour 

ozone NAAQS and 1997 PM2.5 NAAQS, EPA promulgated both regulations and 

guidance applicable to each NAAQS in separate implementation rules. 

Within those actions, EPA addressed questions concerning the 

intersection of the requirements for regional control strategies and 

the requirements for local control strategies to reduce interstate 

transport in individual nonattainment areas needed for local 

attainment purposes. In particular, EPA focused on the issue of 

whether, or to what extent, compliance by EGUs with the requirements 

of the NOx SIP Call and/or the CAIR could also be construed as 

compliance with the RACT requirements for local nonattainment SIPs

for the 1997 8-hour ozone and 1997 PM2.5 NAAQS. The EPA’s approach to 

this issue for each NAAQS is described in more detail later.

4. The Phase 2 Ozone Implementation Rule

On November 29, 2005 (70 FR 71612), EPA published an ozone 

implementation rule to address nonattainment SIP requirements for the 

1997 8-hour ozone NAAQS (the Phase 2 Ozone Implementation Rule). The 

Phase 2 Ozone Implementation Rule addressed various statutory

 

9 See the CAIR, 70 FR 25184 (discussing the need for both regional and 

local emission reductions to bring all areas into attainment); See

also Clean Air Fine Particle Implementation Rule, 72 FR 20587-89 

(discussing the need for regional and national emission reduction 

programs in conjunction with local controls in SIPs for nonattainment 

areas to bring all areas into attainment).
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requirements, including the requirement for RACT level controls for 

sources located within nonattainment areas generally, and controls 

for NOx emissions from EGUs in particular. After explaining its 

analysis of the issue, EPA indicated its determination that the 

regional NOx emissions reductions that result from either the NOx SIP 

Call or the CAIR would meet the NOx RACT requirement for EGUs located 

in states included within the respective NOx SIP Call or the CAIR 

geographic regions. Thus, EPA concluded that: “[t]he State need not 

perform a NOx RACT analysis for sources subject to the State’s 

emission cap-and-trade program where the cap-and-trade program has 

been adopted by the State and approved by EPA as meeting the NOx SIP 

Call requirements or, in States achieving the CAIR reductions solely 

from electric generating units (EGUs), the CAIR NOx requirements.”10

In January 2006, Earthjustice, on behalf of the Natural 

Resources Defense Council (NRDC), filed a petition for

reconsideration of the Phase 2 Ozone Implementation Rule, objecting 

to EPA’s determination that, in certain circumstances, compliance 

with the requirements of the CAIR would constitute RACT for NOx

emissions for EGUs located in states within the CAIR region.11 The 

petition raised objections to an alleged failure to seek public 

comment on the determination and to the Agency’s interpretation of 

 

10 See Phase 2 Ozone Implementation Rule, 70 FR 71617.

11 See “Petition for Reconsideration,” filed by David Baron, 

Earthjustice, on behalf of NRDC (January 30, 2006). A copy of the 

petition is located in the docket for this action.
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the CAA to allow a regional emissions reduction program to constitute 

RACT for sources located within nonattainment areas, as well as other 

related issues. The EPA granted the petition for reconsideration of 

the Phase 2 Ozone Implementation Rule and subsequently conducted a 

Supplemental Technical Analysis to assess whether compliance with the 

CAIR could satisfy the NOx RACT requirement for EGUs in certain 

geographic areas.

12 A proposed rule, which presented this analysis

and solicited comments regarding the reconsideration of whether the 

CAIR would constitute RACT for NOx emissions for EGUs located in 

states within the CAIR region, was published in December 2006. The 

EPA did not reconsider or request comments on its prior determination 

that the NOx SIP Call constitutes RACT for those sources covered by 

the NOx SIP Call.

EPA then published a final notice of reconsideration on June 8, 

2007 (72 FR 31727), reflecting the Agency’s additional evaluation of 

whether compliance with the CAIR could constitute RACT for NOx

emissions for certain EGUs. In that action, EPA modified its 

conclusion regarding when compliance with the CAIR may satisfy NOx

RACT requirements for EGUs in areas within the CAIR region. The EPA 

reaffirmed its determination that, in many ozone nonattainment areas, 

 

12 See “Technical Support Document for Phase 2 of the Final Rule to 

Implement the 8-Hour Ozone National Ambient Air Quality StandardNotice of Reconsideration; NOx RACT for EGUs in CAIR States –

Supplemental Technical Analysis,” December 2006.(Docket ID no. EPAHQ-OAR-2003-0079, item number EPA-HQ-OAR-2003-0079-1044.2) 

(Supplemental Technical Analysis).
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compliance with the CAIR would satisfy NOx RACT requirements for EGUs 

in such areas.

13 However, EPA stated that this determination would

only apply to specific areas for which EPA’s Supplemental Technical 

Analysis showed that the CAIR was projected to achieve equal or 

greater NOx emissions reductions than application of source-by-source 

application of RACT to the EGUs within the nonattainment area. Even 

in those nonattainment areas where EPA did not make a formal 

determination, however, EPA also established a separate presumption 

that compliance with the CAIR, in certain circumstances, could 

satisfy NOx RACT requirements for EGUs in any area within the CAIR

region.

14 EPA thus announced that states could rely initially on this 

presumption, even in areas where the Agency had made no formal 

determination, assuming certain conditions. Finally, EPA reiterated 

in the final notice of reconsideration that EGU sources complying 

with the requirements of the NOx SIP Call would also be considered to 

have met their ozone NOx RACT obligations, assuming certain 

conditions.

15 

 

13 Specifically, EPA determined that compliance with the CAIR would 

meet the NOx RACT requirements for ozone nonattainment areas in 

sections 172(c)(1) and 182(f), and the statewide NOx RACT requirements 

for SIPs for states located within the Ozone Transport Region 

pursuant to sections 184(b) and 182(f). See Phase 2 Ozone 

Implementation Rule-Notice of Reconsideration, 72 FR 31730.

14 See Phase 2 Ozone Implementation Rule-Notice of Reconsideration, 72 

FR 31730-31.

15 Id., 72 FR 31731.
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In addition to the Supplemental Technical Analysis, EPA provided 

various legal and policy bases for its determinations and 

presumptions in the final notice of reconsideration of the Phase 2 

Ozone Implementation Rule. For example, EPA argued that its 

interpretation of section 172(c) to allow RACT to include 

consideration of regionwide emissions reductions, rather than 

nonattainment area specific reductions only, was permissible because 

of the use of the term “reasonable” as part of the definition of 

RACT.16 As a policy matter, EPA also argued that emissions reductions 

that result from regional scale programs like the CAIR often “will 

achieve a more effective and economically efficient air quality 

improvement in nonattainment areas than application of source-bysource RACT.”17

In November 2008, several parties (including NRDC) further 

challenged EPA’s Phase 2 Ozone Implementation Rule and the Notice of 

Reconsideration. In particular, they challenged EPA’s determination 

that compliance with the NOx SIP Call and/or the CAIR could satisfy 

NOx RACT requirements for EGUs in nonattainment areas, and EPA’s 

specific determinations for some areas and general presumption for 

other areas, that compliance with the CAIR could satisfy NOx RACT for 

EGUs in ozone nonattainment areas. In view of its decision in North 

Carolina v. EPA, in which the Court had previously remanded the CAIR, 

 

16 Id., 72 FR 31730.

17 Id.
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the Court deferred consideration of the litigant’s challenge to the 

Phase 2 Ozone Implementation Rule and Reconsideration Notice insofar 

as they related to the CAIR program.

As a result of this litigation, the Court decided that the 

provisions in the Phase 2 Ozone Implementation Rule indicating that a 

state need not perform (or submit) a NOx RACT analysis for EGU sources 

subject to a cap-and-trade program that meets the requirements of the 

NOx SIP Call are inconsistent with the statutory requirements of 

section 172(c)(1).

18 The Court specifically held that the Phase 2 

Ozone Implementation Rule allowing use of the NOx SIP call to 

constitute RACT without any locally applicable analysis regarding the 

equivalence of NOx SIP Call and RACT reductions: “is inconsistent with 

the Clean Air Act . . . in allowing participation in a regional capand-trade program to satisfy an area-specific statutory mandate.” 

The Court emphasized that: “the RACT requirement calls for reductions 

in emissions from sources in the area; reductions from sources 

outside the nonattainment area do not satisfy the requirement . . . 

Accordingly, participation in the NOx SIP call would constitute RACT 

only if participation entailed at least RACT-level reductions in 

emissions from sources within the nonattainment area.”

The Court rejected EPA’s arguments that a regional emissions 

reductions program like the NOx SIP Call would result in greater 

 

18 See NRDC v. EPA, 571 F.3d 1245 (D.C. Cir. 2009).
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emissions reductions in nonattainment areas as unsupported by any 

adequate technical analysis.19 The Court likewise rejected EPA’s 

argument that regionwide emissions reductions would collectively 

achieve better emissions reductions because this argument did not 

comport with the explicit “in the area” language of section 

172(c)(1).20 With respect to EPA’s argument that the statute is 

ambiguous as to whether each individual source within a nonattainment 

area must install RACT, the Court concluded that even if that were 

correct, EPA had failed to evaluate the impact of the NOx SIP Call on

the air quality within specific nonattainment areas, and thus EPA 

“has failed to establish that NOx SIP Call compliance can be equated 

to RACT compliance.”21 The Court disagreed with EPA’s theory that 

section 172(c)(6), which authorizes auctions as a permissible form of 

control measure, could allow reliance on a regional cap-and-trade 

type program in lieu of the RACT requirement for sources “in the 

area.”22 Finally, the Court rejected the argument that EPA’s 

interpretation should be upheld because a state could still elect to 

define RACT to require greater emissions reductions from EGUs in a 

given area for local attainment needs, concluding that: “[a] state’s 

decision to require stricter controls cannot eliminate the defect in 

EPA’s approach – failing to implement the requirement of at least 

 

19 Id. 571 F.3d at 1257.

20 Id. 

21 Id.

22 Id. 571 F.3d at 1258.
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RACT-level reductions in emissions from sources in the nonattainment 

area.”23 

Based on the foregoing reasoning, the Court remanded the 

provision of the Phase 2 Ozone Implementation Rule determining that 

the NOx SIP Call satisfies NOx RACT for EGUs because EPA had failed to 

show that compliance with the NOx SIP Call would achieve at least 

RACT-level reductions in each nonattainment area. In deciding not to 

vacate the provision, however, the Court noted that a determination 

that RACT was satisfied by compliance with the NOx SIP Call might be 

permissible for an area if accompanied by a technical analysis 

demonstrating that the program in fact “results in greater emissions 

reductions in a nonattainment area than would be achieved if RACTlevel controls were installed in that area.”24 In other words, the 

Court rejected the notion that a regional cap-and-trade program 

intended to eliminate interstate transport of emissions consistent 

with section 110(a)(2)(D)(i) could automatically constitute RACTlevel control as required by section 172(c)(1), but held open the 

possibility that such a program might in fact result in the same, or 

higher, level of emissions reductions in individual nonattainment 

areas. The Court did not, however, explain how the key feature of 

such cap-and-trade programs, i.e., the ability of sources to purchase 

allowances in lieu of installation of emissions controls, could meet 

 

23 Id.

24 Id. 
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the parameters envisioned by the Court. Nor did the Court speak to 

the issue of sources that might wish to switch their method of 

compliance in the future, taking advantage of the flexibility to 

control emissions or purchase allowances as market conditions evolve. 

Significantly, the Court did not address at all EPA’s comparable 

determinations and presumption that compliance with the CAIR would 

constitute NOx RACT for EGUs in ozone nonattainment areas under 

certain circumstances. As mentioned earlier, the Court deferred 

consideration of the CAIR-related challenges to EPA’s determinations 

and presumption because at the time of this decision, the Court had 

already remanded the CAIR.

25 Nevertheless, EPA believes that the 

concerns expressed by the Court about the Agency’s approach to the NOx

RACT requirement for EGUs and the emissions reductions required by 

the NOx SIP Call raise significant questions about EPA’s approach to 

the comparable issues related to compliance with the CAIR, for both 

the Phase 2 Ozone Implementation Rule and the 1997 PM2.5 NAAQS 

Implementation Rule described later. The EPA has therefore decided to 

consider the decision and the reasoning of the Court with respect to 

both the NOx SIP Call and the CAIR as it responds to the remand of the 

Phase 2 Ozone Implementation Rule, and to evaluate the implications 

of the decision for other related rulemakings, including the 

responses to related petitions for reconsideration.

 

25 Id. at 1250.
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5. The PM2.5 Implementation Rule

On April 25, 2007 (72 FR 20586), EPA published the “Clean Air 

Fine Particle Implementation Rule” to address nonattainment SIP 

requirements for the 1997 PM2.5 NAAQS (the PM2.5 Implementation Rule).26 

That action provided regulations and additional guidance in the 

preamble for state plans required to implement the 1997 PM2.5 NAAQS. 

The PM2.5 Implementation Rule provided a framework for developing SIP

submissions for nonattainment areas based on the Subpart 1 

requirements for nonattainment areas found in section 172 of the CAA. 

With respect to the requirements of section 172 (c)(1), the PM2.5

Implementation Rule utilized a combined RACT/RACM approach, where an 

area’s obligation to implement RACT was considered as part of an 

area’s overall RACM obligation for EGU sources. RACT/RACM was defined 

in the Rule as the set of emission reduction measures needed to 

attain the standards as expeditiously as practicable in the 

nonattainment area at issue. Through guidance in the preamble to the 

final PM2.5 Implementation Rule, EPA also established a presumption 

that compliance with the CAIR would satisfy RACT/RACM requirements

for SO2 and NOx emissions from EGUs in states participating in the 

CAIR cap-and-trade program for such emissions.27 

 

26 The PM2.5 Implementation Rule is now codified at 40 CFR Section 

51.1000 – 1012. Section 51.1010 addresses the RACT and RACM 

requirement. 

27 See PM2.5 Implementation Rule, 72 FR 20623–5. 
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For SO2, EPA’s guidance recommended that states that obtained all 

SO2 reductions required by the CAIR from EGUs could presume that such 

sources located within a designated nonattainment area were meeting 

SO2 RACT/RACM requirements because of overall regional SO2 reductions 

from EGUs. The guidance indicated that this presumption could be 

utilized without conducting a technical analysis comparing the CAIR 

and RACT/RACM reductions for the specific nonattainment area. For NOx, 

EPA similarly recommended that so long as the EGU sources in the 

state were required to operate NOx emissions controls on a year-round 

basis to comply with the CAIR, then that state could presume that 

those EGUs were meeting NOx RACT/RACM requirements because of overall 

regional NOx reductions from EGUs. The EPA made no decision with 

respect to what might constitute RACT/RACM level controls for direct 

PM2.5 emissions from EGUs in relation to the CAIR because the CAIR 

only addressed the NOx and SO2 emissions from such sources.

Based on this presumption that compliance with the CAIR would 

constitute RACT/RACM level controls for SO2 and NOx emissions from 

EGUs within the CAIR region, EPA concluded that: “states may define 

RACT/RACM as the CAIR level of control on the collective group of 

sources in the region rather than impose a specific level of control 

on individual sources.”28 In other words, EPA indicated that states 

could presume that EGUs located within a given nonattainment area 

 

28 Id. at 72 FR 20624.
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were meeting the RACT/RACM requirement, based solely upon a regional 

program that imposed controls on sources both within and outside 

designated nonattainment areas. The EPA acknowledged that reliance on 

the presumption could result in situations where specific EGUs

located within nonattainment areas might elect to comply with the 

CAIR through the acquisition of allowances, rather than the reduction 

of emissions. Although EPA articulated a series of policy and 

technical reasons for the appropriateness of considering a regional 

control program like the CAIR to be a preferable approach, the Agency 

also acknowledged that a state might “conclude that establishing 

additional ‘beyond CAIR’ emissions control requirements on specific 

sources in nonattainment areas is warranted to provide for attainment 

as expeditiously as practicable.”29 These policy and technical 

arguments are very similar to those made by EPA in connection with 

challenges to the Phase 2 Ozone Implementation Rule, and rejected by 

the Court decision discussed in further detail previously in this 

notice.

In June 2007, EPA received a petition for reconsideration filed 

by Earthjustice on behalf of several petitioners (including NRDC)

 

29 Id. at 72 FR 20625.
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that raised several objections to the PM2.5 Implementation Rule.

30 One 

of the principle objections raised by the petition is that under the 

CAA, compliance with a regional trading program, such as the CAIR,

should not be presumed to satisfy RACT/RACM requirements for 

individual EGU sources located in nonattainment areas. The petitioner 

argued that the effect of the “CAIR-RACT presumption” was to waive 

the CAA RACT requirements for individual EGU sources located within 

PM2.5 nonattainment areas. The petition also asserts that the 

presumption and its accompanying rationale were added to the rule 

after the close of the public comment period, and that EPA therefore 

failed to seek public comment on the final rule’s determination that 

the CAIR presumptively satisfies SO2 and NOx RACT requirements for 

EGUs located in nonattainment areas. The petition further maintains

that EPA lacks authority to establish a presumption on what satisfies 

RACT in this fashion, and that EPA’s conclusion that the CAIR can be

presumed to satisfy RACT is arbitrary and capricious because it 

lacked a factual basis. Lastly, the petition also maintained that 

even if an initial presumption that compliance with the CAIR 

constituted compliance with the RACT requirements of section 

172(c)(1) were otherwise permissible, the final rule would be 

 

30 See “Petition for Reconsideration,” filed by Paul Cort, 

Earthjustice, on behalf of the American Lung Association, Medical 

Advocates for Healthy Air, Natural Resources Defense Council, and the 

Sierra Club (June 25, 2007). A copy of the petition is in the docket 

for this action.
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arbitrary and unlawful because it failed to explain if or how the 

presumption can be rebutted. 

Significantly, Earthjustice filed the petition for 

reconsideration of the PM2.5 Implementation Rule well before the Court 

in the NRDC v. EPA case addressed the comparable issue with respect 

to the NOx SIP Call in the context of the Phase 2 Ozone Implementation

Rule. Nevertheless, the petitioner made essentially the same points 

as the Court in the NRDC v. EPA case that to allow compliance with a 

regional cap-and-trade program to constitute RACT for sources located 

within a nonattainment area automatically, or pursuant to an 

unsupported presumption, would be contrary to the explicit 

requirements of section 172(c)(1). Moreover, EPA notes that multiple 

parties have indicated that they intend to challenge the PM2.5

Implementation Rule on this same issue through petitions for review 

currently pending in the Court.

In light of the arguments raised in the petition for 

reconsideration, and in light of the Court’s decision in NRDC v. EPA, 

EPA decided to grant the petition for reconsideration on this issue

and initiate this rulemaking.

31 Accordingly, after reconsideration 

and for the reasons further described later in this notice, EPA is 

proposing in this action to withdraw our prior presumption in the 

 

31 See letter dated April 25, 2011, from Lisa Jackson to Paul Cort, 

Earthjustice. A copy of this letter is located in the docket for this 

action. 
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PM2.5 Implementation Rule that compliance with the CAIR would 

automatically constitute RACT/RACM level controls for EGUs located in 

areas designated nonattainment for the 1997 PM2.5 NAAQS.

6. Impact of the NRDC v. EPA Court Decision on Determinations and 

Presumptions

EPA has reevaluated whether compliance with the NOx SIP Call 

could constitute NOx RACT for EGUs in light of the Court’s opinion in 

the NRDC v. EPA case. Given the explicit wording of section 172(c)(1) 

that sources “in the area” must at a minimum adopt RACT controls for 

that area, EPA believes that it is no longer appropriate to address 

this requirement merely based upon the participation of the source in 

a regional cap-and-trade program. Implicit in a regional cap-andtrade program is that some sources may elect to utilize allowances in 

lieu of emissions controls in order to meet the regional emissions 

reductions requirements, and that those elections could change. 

In response to the remand of the CAIR, EPA finalized the CSAPR 

on July 6, 2011, which requires 27 states in the eastern half of the 

United States to significantly improve air quality by reducing EGU 

emissions that cross state lines and contribute to ground-level ozone 

and fine particle pollution in other states. At the same time, the 

Agency also issued a supplemental proposal that would require six 

states — Iowa, Kansas, Michigan, Missouri, Oklahoma, and Wisconsin —

to make summertime NOX reductions under the CSAPR ozone-season control 
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program. Finalizing this supplemental proposal would bring the total 

number of covered states under the CSAPR to 28.

Based on the logic of the NRDC v. EPA Court decision, and the 

concerns raised in the petition for reconsideration on the PM2.5

Implementation Rule, EPA believes that it would be inappropriate for 

EPA to pre-judge that other regional cap-and-trade programs, such as 

the CSAPR, would constitute RACT for covered sources. Therefore, 

states should not rely merely on the fact that sources are complying 

with a regional cap-and-trade program as a basis for RACT or RACM 

level emissions controls for the 1997 8-hour ozone NAAQS, the 1997 

PM2.5 NAAQS, or any other NAAQS. States must comply with the 

provisions of the CAA, which require an evaluation of EGUs located 

within designated nonattainment areas for potential RACT controls, 

and imposition of such controls as may be necessary for expeditious 

attainment of the NAAQS within the area. 

States may, however, elect to conduct a technical analysis for 

the specific nonattainment area considering the emissions controls 

required by the regional cap-and-trade program at issue, and 

demonstrate that this program results in equal to or greater than 

actual emission reductions from the EGUs within the nonattainment 

area than would application of RACT on all subject EGUs within the 

nonattainment area. States could conduct this analysis for the EGUs 

in the nonattainment area, either individually or in the aggregate. 
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The EPA anticipates that in many areas, such an evaluation will 

likely indicate that EGUs within the nonattainment area at issue are 

already adequately controlled for NOx and SO2 emissions, whether by 

virtue of the NOx SIP Call, the controls required by the CSAPR, or by 

other means. However, based on the logic of the NRDC v. EPA Court 

decision, and the concerns raised in the petition for reconsideration 

on the PM2.5 Implementation Rule, EPA believes that it would be 

inappropriate for EPA to pre-judge that outcome prior to state 

development of locally applicable demonstrations showing equivalent 

reductions.

7. Impact of the North Carolina v. EPA Decision on Determinations and 

Presumptions

As mentioned earlier, the Court remanded the CAIR to EPA and 

later decided not to vacate the rule. In the process of remanding the 

CAIR, the Court identified serious concerns with EPA’s reading of the 

statute and analytical approach, including such core issues as the 

Agency’s method of evaluating significant contribution to 

nonattainment and interference with maintenance of the NAAQS. The EPA 

notes that the Court also reiterated some of its concerns in the NRDC 

v. EPA decision with the CAIR and EPA’s use of a regional cap-andtrade program to address interstate transport of emissions between 

states.32

 

32 See NRDC v. EPA, 571 F.3d 1245 at 1256-57. 
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Given that the Court has remanded the CAIR, the Agency believes 

that any prior determination that compliance with the CAIR would 

constitute RACT for NOx for EGUs for purposes of the Phase 2 Ozone 

Implementation Rule can no longer be considered reliable. Those 

determinations were implicitly based upon the continued existence of 

the CAIR and its specific requirements. In making the determinations, 

EPA evaluated the controls that EGUs in those areas would be likely 

to install given the specific requirements of the CAIR, and the 

choices that such sources would make given the specific cap-and-trade 

features of the CAIR. Further, in NRDC v. EPA, the Court explicitly 

rejected the Agency’s conclusion that compliance with the NOx SIP Call 

would constitute RACT for EGUs in nonattainment areas because there 

was inadequate technical basis or justification for such a 

conclusion.33 EPA believes that after the remand of the CAIR, the 

prior EPA determinations that compliance with the CAIR would 

automatically constitute RACT for EGUs in nonattainment areas suffers 

from a comparable lack of an adequate technical basis or 

 

33 EPA notes that the Court also considered the issue of potentially 

outdated RACT determinations in the context of “RACT certifications” 

in the Phase 2 Ozone Implementation Rule. The Court approved of EPA’s 

case-by-case approach to evaluate the continued viability of past 

RACT determinations, in part because “[i]f a state is presented with 

information indicating that a previous RACT determination is 

inappropriate, the state must consider that information and modify 

its RACT determinations accordingly.” NRDC v. EPA, 571 F.3d 1245 at 

1254-55. The EPA concludes that the same logic would extend to prior 

determinations that the CAIR constituted RACT, in light of subsequent 

events.
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justification. Moreover, because other rules such as the CSAPR will 

by necessity differ from the CAIR as a result of the Court’s remand 

of the CAIR, EPA concludes that any reliance on the prior 

determinations at this time would be inappropriate. Therefore, in 

this action EPA is proposing to withdraw the prior area-specific 

determinations that EPA made in connection with the Phase 2 Ozone 

Implementation Rule. 

EPA’s prior conclusion that a state could presume that the CAIR 

would constitute NOx RACT for EGUs for purposes of the ozone NAAQS, 

even in areas where EPA did not make a formal determination, is also 

no longer reliable for the same reasons. That presumption also 

assumed continued existence of the CAIR and its specific 

requirements. Similarly, EPA’s prior conclusion that a state could 

presume that compliance with the CAIR would constitute both NOx

RACT/RACM and SO2 RACT/RACM for EGUs for purposes of the PM2.5 NAAQS is 

also no longer reliable. Therefore, in this action EPA is proposing 

to withdraw our prior presumption that EPA announced for purposes of 

the ozone NAAQS in the Phase 2 Ozone Implementation Rule and our 

prior presumption that EPA announced for purposes of the PM2.5 NAAQS 

in the PM2.5 Implementation Rule. 

B. Analysis of the Economic Feasibility of Reasonably Available 

Controls in the PM2.5 Implementation Rule
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Section 172(c)(1) requires that sources located in nonattainment 

areas meet RACM and RACT level control requirements. In the PM2.5

Implementation Rule, EPA promulgated regulations to implement this

requirement, among others, for the 1997 PM2.5 NAAQS.34 In addition, in 

the preamble to the final PM2.5 Implementation Rule, EPA provided 

extensive guidance for states about how to evaluate sources for RACM 

and RACT level controls.35 Although section 172(c)(1) does not itself 

specify how to determine what constitutes RACM or RACT level 

controls, EPA has a long history of interpreting those terms both in 

prior guidance and as applied in many SIP actions. 

The petition for reconsideration of the final PM2.5 Implementation 

Rule filed by Earthjustice asserts that EPA unlawfully and 

arbitrarily revised well-established criteria used to determine the 

economic feasibility of controls being considered for RACT, without 

any explanation of the legal or policy arguments in support of the 

new interpretation of the statute.

36 The petition further claims that 

the new approach directly contradicts the approach included in the 

proposed PM2.5 Implementation Rule and that these new interpretations 

were added to the final rule after the close of the public comment 

 

34 See 40 CFR 51.1010. 

35 See PM2.5 Implementation Rule, 72 FR 20609 – 33.

36 See “Petition for Reconsideration,” filed by Paul Cort, 

Earthjustice, on behalf of the American Lung Association, Medical 

Advocates for Healthy Air, Natural Resources Defense Council, and the 

Sierra Club (June 25, 2007). A copy of the petition is in the docket 

for this action.
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period. For this reason, the petition argues that EPA unlawfully 

failed to present the new criteria for economic feasibility of RACT 

to the public for comment.

The petition maintains that the final PM2.5 Implementation Rule 

includes the following new policies which were not subject to an 

opportunity for public comment: (1) consideration of economic 

feasibility encompasses whether the cost of a measure is reasonable 

to bear in light of the benefits; (2) there is no presumption that a 

given source must bear a similar cost to other similar sources; and 

(3) states may evaluate equity considerations in weighing economic 

feasibility.37 The petition states that these are significant changes 

in longstanding EPA policy and interpretation of the RACT requirement 

for nonattainment areas. In particular, the petitioner argues that 

“[e]conomic feasibility is not a cost-benefit analysis.” The 

petitioner also argues that EPA’s longstanding policy, which was 

reiterated in the preamble to the proposal for the PM2.5 Implementation 

Rule, maintained that absent other indications, it is reasonable for 

a source to bear similar costs of emission reduction as are borne by 

similar sources in the same source category.

 

37 The new guidance objected to by the petitioner appears in section 

II.F.5.b of the preamble to the final PM2.5 Implementation Rule. See

72 FR 20619-20. 
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In light of the arguments raised in the petition, EPA decided to 

grant the petition for reconsideration on this issue.38 Accordingly, 

after reconsideration and for the reasons explained further, EPA is 

proposing in this action to remove the section of guidance in the 

preamble to the final PM2.5 Implementation Rule that included the new 

interpretations of RACT objected to by the petitioner. The EPA is 

also proposing to replace this section of the guidance with EPA’s 

long-standing policy on economic feasibility for RACT as described in 

the proposed PM2.5 Implementation Rule.39 A basic element of this 

policy is the presumption that a source in a given category should be 

able to bear a cost of control similar to the cost of control of 

other sources in that category.40 The original policy did not include 

factors such as “equity” and “profit margins” in determining whether 

a given level of control is appropriate.

C. RFP Requirements for the 1997 PM2.5 NAAQS

1. Linkage between the RFP Policy in the Phase 2 Ozone Implementation 

Rule and the PM2.5 Implementation Rule

The Phase 2 Ozone Implementation Rule and the PM2.5

Implementation Rule each included a policy allowing emission 

 

38 See letter dated April 25, 2011 from Lisa Jackson to Paul Cort, 

Earthjustice. A copy of this letter is located in the docket for this 

action. 

39 See Proposed Rule To Implement the Fine Particle National Ambient 

Air Quality Standards, 70 FR 65984 (November 1, 2005). The section of 

the preamble appears at 70 FR 66021-22.

40 See Title I General Preamble, 57 FR 13498 (April 16, 1992) for the 

basis of this policy.
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reductions from certain sources located outside of a nonattainment 

area to be credited toward meeting the RFP requirement for the 1997 

8-hour ozone NAAQS and the 1997 PM2.5 NAAQS within such a 

nonattainment area. In these actions, EPA used somewhat different 

approaches with respect to how states could take credit for emission 

reductions from outside the nonattainment area. In response to a 

petition for reconsideration of the Phase 2 Ozone Implementation Rule 

concerning this policy and other issues, EPA proposed to revise the 

policy for the 1997 8-hour ozone NAAQS on December 22, 2010 (75 FR 

80420). This action is being proposed in response to a petition for 

reconsideration concerning the RFP policy in the PM2.5 Implementation 

Rule. However, to understand this proposed change in RFP policy with 

respect to the PM2.5 Implementation Rule, it is important to also 

understand related actions and court decisions with respect to this 

issue in the Phase 2 Ozone Implementation Rule. A chronology of 

rulemaking and litigation with respect to the RFP policy is described 

in detail in the next subsection.

2. Rulemaking and Litigation Chronology of RFP Requirements for the

1997 Ozone NAAQS and the 1997 PM2.5 NAAQS

Under EPA’s Phase 2 Ozone Implementation Rule, certain emission 

reductions from sources located outside a nonattainment area could be 

credited toward meeting the 1997 8-hour ozone NAAQS RFP requirement. 

In the preamble to that Rule, EPA stated that credit could be taken 
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for volatile organic compounds (VOC) and NOx emission reductions 

within 100 kilometers (km) and 200 km, respectively, from outside the 

nonattainment area under certain circumstances. In addition, if a 

regional NOx control strategy was in place in a state, NOx reductions 

within that state beyond 200 km could be credited toward meeting the 

RFP target. In all cases, however, states had to include a 

demonstration that the emissions from outside the nonattainment area 

had an impact on ambient ozone air quality levels within the 

nonattainment area and emissions from the sources outside the area 

providing the reductions would have to be added to the baseline 

inventory for the nonattainment area. The EPA explained that where 

data indicated that emission reductions from sources outside a 

nonattainment area improved ozone air quality within the 

nonattainment area, it was appropriate to allow states to take RFP 

credit for such reductions from outside the nonattainment area. This 

interpretation was consistent with the policy EPA had established 

under the l-hour ozone standard "Guidance for Implementing the l-Hour 

Ozone and Pre-Existing PM10 NAAQS.”

41

Earthjustice filed a petition for reconsideration in January 

2006 on behalf of NRDC challenging EPA’s interpretation that formed 

 

41 The memorandum is available on the EPA Technology and Transfer 

Network (TTN) Policy and Guidance page for Title I at this website:

http://www.epa.gov/ttn/oarpg/t1pgm.html. For a more complete 

discussion of EPA’s rationale for applying this interpretation in the 

Phase 2 Ozone Implementation Rule, see 70 FR 71647-49.
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the basis of its policy for allowing credit for emission reductions 

outside the nonattainment area, namely the interpretation that the 

intent of section 182(c)(2)(C) is to reduce ambient ozone 

concentrations within an area rather than to reduce emissions within 

the nonattainment area.42 The petitioner claimed that EPA’s 

interpretation and implementation of these provisions were both 

unlawful and arbitrary. The petitioner also argued that the rule was 

arbitrary because it allowed the state to claim credit for emission 

reductions from selected outside-the-nonattainment-area sources 

without also adding emissions from other outside sources to the RFP 

baseline, even where those other sources impact air quality in the 

nonattainment area. 

EPA subsequently published the PM2.5 Implementation Rule, where 

the Agency adopted a somewhat different approach for crediting 

emission reductions from outside nonattainment areas.43 Section G.5.b 

of the preamble to the PM2.5 Implementation Rule allowed states to 

take credit for reductions of NOx and SO2 emissions up to 200 km from 

outside the nonattainment area (and potentially for reductions of VOC 

or ammonia as well) only when certain conditions are met, including 

that when taking RFP credit for emissions reductions achieved outside 

 

42 This same petition also challenged EPA’s determination within the 

Phase 2 Ozone Implementation Rule that, under certain circumstances, 

compliance with the requirements of the CAIR would constitute RACT 

for NOx emissions from EGUs located in states within the CAIR region.

43 See PM2.5 Implementation Rule, 72 FR 20586.
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of a nonattainment area, the baseline emissions inventory for the 

nonattainment area contain all, rather than a select few, sources in 

the outside area.44 The primary objective of this policy was to 

reflect the net emission reductions in the area outside of a 

nonattainment area that could affect the nonattainment area rather 

than crediting only reductions from selected sources. 

In June 2007, EPA received a petition for reconsideration filed 

by Earthjustice on behalf of several petitioners (including NRDC) 

that raised objections to the PM2.5 Implementation Rule on several 

issues, including the RFP policy allowing credit for emission 

reductions from outside the nonattainment area.45 

Shortly thereafter, EPA requested from the Court in July 2007, a 

partial voluntary remand of the Phase 2 Ozone Implementation Rule to 

reevaluate and reconsider whether to revise the RFP interpretation 

for ozone to assure consistency with the provisions in the PM2.5

 

44 In addition, where state RFP plans rely on emission reductions

outside of a nonattainment area to meet the RFP obligations, such 

plans must include a technical demonstration showing that such 

outside emissions significantly affected the PM2.5 concentrations 

within the nonattainment area. In addition, the area outside the 

nonattainment area from which creditable reductions are taken must be 

within the state; areas outside the state but within 200 km would not 

be eligible for credit for RFP purposes. 

45 This same petition raised concerns regarding the criteria used to 

determine the economic feasibility of controls being considered for 

RACT for the 1997 PM2.5 NAAQS. See “Petition for Reconsideration,” 

filed by Paul Cort, Earthjustice, on behalf of the American Lung 

Association, Medical Advocates for Healthy Air, Natural Resources 

Defense Council, and the Sierra Club (June 25, 2007). A copy of the 

petition is in the docket for this action.
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Implementation Rule. In response to EPA's motion for a partial 

voluntary remand of the ozone RFP policy, NRDC asked the Court to 

also to vacate this provision. In November 2007, the Court issued an 

order that vacated and remanded the portion of the Phase 2 Ozone 

Implementation Rule that allowed RFP credit for emission reductions 

of VOC and NOx from outside nonattainment areas. On August 11, 2009

(74 FR 40074), EPA issued a final rule to revise the RFP policy in 

the Phase 2 Ozone Implementation Rule to be consistent with the 

interpretation in the PM2.5 Implementation rule. 

In July 2009, the Court issued its decision on the other issues 

in the Phase 2 Ozone Implementation Rule case.46 The Court examined 

the phrase “in the area” included in separate provisions relating to 

reductions from the application of RACT. As described previously in 

this notice, in the Phase 2 Ozone Implementation Rule, EPA had 

explained that because an interstate emissions trading program would 

achieve beyond RACT-level NOx reductions regionally, areas did not 

have to meet the RACT-level reductions required under CAA section 

172(c)(1) solely from within the nonattainment area. The Court, 

however, concluded that the phrase “in the area” means that 

reductions must occur from sources within the area and “reductions 

from outside the nonattainment area do not satisfy the requirement.”47 

 

46 See NRDC v. EPA, 571 F.3d 1245 (D.C. Cir. 2009). 

47 Id., 571 F.3d at 1256. 
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In October 2009, Earthjustice filed a petition on behalf of NRDC 

for reconsideration of the August 2009 final rule revising EPA’s 

interpretation in the Phase 2 Ozone Implementation Rule allowing 

credit toward meeting the RFP requirement using emissions reductions 

from outside of ozone nonattainment areas. In its petition, the 

petitioner based its objections to the rule on the following grounds: 

1) the Court’s decision on the RACT provisions in the Phase 2 Ozone 

Implementation Rule and its interpretation of the phrase “sources in 

the area” requires that RFP emission reductions also be achieved only 

from sources within the nonattainment area; 2) EPA had presented a 

new rationale in the August 2009 final rule, i.e., there is some 

ambiguity in the statutory provisions because they do not prohibit 

credits for reductions from outside the nonattainment area, for which 

it did not provide an opportunity for comment; 3) EPA offered a new 

and arbitrary rationale for its choice of the 100 and 200 km 

distances for reductions outside the nonattainment area; 4) EPA 

stated a new and arbitrary rationale, i.e., creditable reductions

outside a nonattainment area must be reasonably expected to provide 

ozone air quality benefits comparable to those from reductions in the 

area, for evaluating emissions reductions outside a nonattainment 

area; and 5) EPA relied on a new rationale when it explained that 

sources that are outside the nonattainment area are not necessarily 

“nearby” for designations purposes and certain factors would need to 
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be considered for judging whether an area is “nearby” for those 

purposes.

In May 2010, based on Earthjustice’s October 2009 petition for 

reconsideration, EPA granted reconsideration of the August 2009 final 

rule to revise the RFP policy in the Phase 2 Ozone Implementation 

Rule, and stated it would initiate a rulemaking to address the 

issue.

48 EPA issued this proposed rulemaking on December 22, 2010 (75 

FR 80420). In this proposed rulemaking, EPA is addressing the 

petitioner’s first objection and EPA believes that the proposed 

action makes the other objections moot. Therefore, EPA did not 

address any of those subsequent points in the proposed 

reconsideration rulemaking.

These developments with respect to the RFP issue in the context 

of the 1997 8-hour ozone NAAQS necessitate a reexamination of the 

comparable issue for purposes of the 1997 PM2.5 NAAQS. The petition for 

reconsideration of the PM2.5 Implementation Rule filed in June 2007 by 

Earthjustice raised two main objections to the policy allowing 

certain emissions reductions from outside the nonattainment area to 

be credited toward meeting the RFP requirements for the 1997 PM2.5

NAAQS. First, Earthjustice argued that EPA committed a procedural 

violation by failing to solicit public comments on the policy. 

 

48 See letter dated May 13, 2010, from Gina McCarthy to David S. Baron 

and Paul Cort, Earthjustice. A copy of the letter is located in the 

docket for this action.
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Second, the petitioner argued that the policy lacks any standard for 

defining the geographic boundary of the area outside the 

nonattainment area from which emission reductions could be credited. 

The petitioner noted that the policy “limits the surrounding area 

that can be included to a doughnut around the nonattainment area of 

up to 200 kilometers.”

49 However, the petitioner objected to the 

approach in the PM2.5 Implementation Rule because it could allow a 

state to choose any portion of that surrounding area for purposes of 

the RFP calculation; i.e., a state need only show that emissions in 

the area selected substantially impact ambient concentrations in the 

nonattainment area. The petitioner argued that there is no stated 

requirement that all areas substantially impacting the nonattainment 

area be included. For these reasons, the petitioner claimed that the 

RFP policy was unlawful and arbitrary. 

In light of the arguments raised by Earthjustice’s June 2007 

petition, EPA decided to grant the petition for reconsideration on 

this issue.50 Due to EPA’s proposed action to revise the RFP policy 

for the 1997 8-hour ozone NAAQS, and upon reconsideration of the 

policy for the 1997 PM2.5 NAAQS, EPA is proposing in this action to 

set aside its earlier interpretation of the RFP provisions described 

in Section II.G.5.b of the preamble to the final PM2.5 Implementation 

 

49 See PM2.5 Implementation Rule, 70 FR 20636.

50 See letter dated May 13, 2010 from Gina McCarthy to David S. Baron 

and Paul Cort, Earthjustice. A copy of the letter is located in the 

docket for this action.
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Rule and to no longer permit states to rely on credit for emission 

reductions from outside the PM2.5 nonattainment area to meet such an 

area’s RFP obligations. 

III. Proposed Action

A. RACT or RACM Requirements for EGUs Participating in the NOx SIP 

Call and the CAIR

In this notice, EPA is proposing to revise the Phase 2 Ozone 

Implementation Rule in order to: (1) withdraw the determination that 

compliance with the NOx SIP Call satisfies NOx RACT for EGUs located 

in certain ozone nonattainment areas or in states within the OTR; and 

(2) withdraw the separate determination that compliance with the CAIR 

satisfies NOx RACT for EGUs located in certain specific ozone 

nonattainment areas and the presumption that compliance with the CAIR 

can satisfy NOx RACT for EGUs located in other ozone nonattainment

areas or in states within the OTR. The EPA is also proposing to 

withdraw from the PM2.5 Implementation Rule any presumption that

compliance with the CAIR automatically satisfies RACT/RACM

requirements for SO2 and NOx emissions from EGUs located in PM2.5 

nonattainment areas. 

EPA has reevaluated whether compliance with the NOx SIP Call 

could constitute NOx RACT for EGUs in light of the Courts’ opinion in 

the NRDC v. EPA case. Given the explicit wording of section 172(c) 

(1) that sources “in the area” must at a minimum adopt RACT controls 
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for that area, EPA believes that it is no longer appropriate to

address this requirement merely based upon the participation of the 

source in a regional cap-and-trade program. Implicit in a regional 

cap-and-trade program is that some sources may elect to utilize 

allowances in lieu of emissions controls in order to meet the 

regional emissions reductions requirements, and that those elections 

could change. After reconsideration, EPA believes that it would be 

more consistent with the statutory provision, with the overall 

structure of the CAA with respect to nonattainment plans, and with 

the overarching objective to provide for expeditious attainment of 

the NAAQS in each nonattainment area, that states should evaluate the 

EGUs located within designated nonattainment areas for any necessary 

controls. 

In addition, to the extent that the Court in the NRDC v. EPA

decision left open the possibility that an area-specific analysis 

might establish that compliance with a regional cap-and-trade program 

like the NOx SIP Call could simultaneously result in factual 

compliance with the RACT requirement for sources located within 

nonattainment areas, EPA believes that eliminating the prior 

determinations and presumptions will result in such an analysis 

should states elect to consider it. Only where states conduct a 

technical analysis for the specific nonattainment area considering 

the emissions controls required by the regional cap-and-trade program 
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at issue, and demonstrating such a program results in equal to or 

greater than actual emissions reductions from the EGUs within the 

nonattainment area than would application of RACT on all subject EGUs 

within the nonattainment area, could EPA approve a SIP adopting such 

an approach. 

EPA believes that although the NRDC v. EPA decision explicitly 

deferred consideration of whether compliance with the CAIR could 

automatically satisfy a source’s obligation to install RACT for NOx or 

SO2, it is both consistent with the decision and appropriate for the 

Agency to reconsider this issue in the same manner that the Court 

addressed whether compliance with the NOx SIP Call could satisfy a 

EGU’s obligation to meet RACT within a nonattainment area. We believe 

that the Court deferred action with respect to the CAIR, not because 

the issue could be decided differently, but rather because the Court 

had already remanded the CAIR to EPA for other reasons. The EPA 

believes that the logic of the NRDC v. EPA decision extends to any 

presumption that sources subject to a regional trading program such 

as the CAIR automatically comply with RACT requirements for NOx or 

SO2. Moreover, EPA believes that the remanded status of the CAIR, and 

the fact that it will be replaced with a different regional program, 

renders the prior determinations and presumptions unreliable.

EPA is also proposing to withdraw the determination made in the 

Phase 2 Ozone Implementation Rule, final notice of reconsideration,
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that EPA’s Supplemental Technical Analysis gives an adequate 

demonstration that participation in the CAIR is projected to achieve 

equal or greater annual emissions reductions from EGUs than sourceby-source RACT for certain specific areas. 

EPA is proposing this action because it no longer believes that 

the assumptions held within the Supplemental Technical Analysis are 

adequate to make such a showing. First, the analysis was premised 

upon the continued existence of the CAIR, and implicitly upon the 

predicted action of sources subject to the CAIR. Second, after 

reconsideration, EPA now concludes that the analysis’s across-theboard assumptions regarding what constitutes RACT for all sources in 

all nonattainment areas were inadequate, and did not consider whether 

more advanced control technologies, such as post-combustion controls

(e.g., selective catalytic reduction or selective non-catalytic 

reduction), might at some time be technically and economically 

feasible for specific sources in some areas. Therefore, states with 

nonattainment areas for which EPA previously made this determination 

must now individually comply with the provisions of the CAA, which 

require an evaluation of EGUs located within designated nonattainment 

areas for RACT controls, and imposition of such controls as may be 

necessary for expeditious attainment of the NAAQS within the area. In 

addition, should they elect to do so, they must conduct a technical 

analysis for the specific nonattainment area considering the 
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emissions controls required by the regional cap-and-trade program at 

issue, and demonstrating that this program results in equal to or 

greater than actual emissions reductions from the EGUs within the 

nonattainment area than would application of RACT on all subject EGUs 

within the nonattainment area before they include such a 

determination in a SIP.

EPA is consequently proposing to amend Section 51.912 to state 

explicitly that each individual major source, or major source 

category, in a nonattainment area must undergo a RACT analysis for 

purposes of 1997 8-hour ozone NAAQS SIPs. 

As a result of this action, states should not merely presume 

that for EGUs located in a nonattainment area that compliance with a 

cap-and-trade program, including the NOx SIP Call, the CAIR, or other 

programs, such as the CSAPR, could satisfy their obligation to 

implement NOx or SO2 RACT. As required by the CAA, states are required 

to analyze what constitutes RACT for EGUs in each nonattainment area. 

However, a state may be able to show through appropriate technical 

analysis that EGU participation in a regional cap-and-trade program, 

such as the CSAPR, in a particular nonattainment area would meet NOx

and/or SO2 RACT requirements for the area. Such an analysis must show 

that compliance by EGUs participating in the program results in 

actual emissions reductions in the particular nonattainment area that 

are equal to or greater than the emissions reductions that would 
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result if RACT were applied to each individual EGU source or the EGU 

source category in the area. In addition, the state would have to 

establish that these emissions levels are required by the SIP by some 

means independent of the regional program so that they would not 

change based upon a source’s subsequent decision to comply via the 

purchase of allowances rather than by the installation and operation 

of emissions controls. The EPA is soliciting comments on the 

withdrawal of the determinations and presumptions as explained 

previously in this notice.

B. Analysis of the Economic Feasibility of Reasonably Available 

Controls in the PM2.5 Implementation Rule

EPA has granted the petitioner’s request for reconsideration of 

the guidance in the preamble for the final PM2.5 Implementation Rule 

regarding criteria for determining economic feasibility of RACT 

controls. Upon reconsideration, EPA agrees that the specific 

objections raised by the petition do reflect departures from prior 

EPA guidance on how to evaluate RACT. Given the specific statutory 

language of section 172(c)(1), and EPA’s long-standing interpretation 

of what factors are appropriate for consideration of economic 

feasibility in a RACT analysis, EPA concludes that the final guidance 

that the Agency provided for the PM2.5 Implementation Rule was 

inappropriate in certain respects. The EPA also concludes that there 

was inadequate notice and opportunity for public comment for all of 
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the departures from past guidance, and the departures from the 

guidance as presented in the preamble for the proposed PM2.5

Implementation Rule. 

Accordingly, EPA proposes to remove the guidance in question 

from the preamble to the final PM2.5 Implementation Rule, and to 

replace it with guidance very similar to what was included in the 

preamble to the proposed PM2.5 Implementation Rule concerning the

economic feasibility analysis component for determining what 

constitutes RACT. The EPA believes that reverting to the guidance as 

proposed will be the most effective and efficient means to address

the concerns related to inappropriate considerations that were set 

forth in the preamble to the final PM2.5 Implementation Rule. 

In particular, this approach will remove what EPA now concludes 

was incorrect guidance language in the final rule that suggested that 

the “economic feasibility” element of a RACT determination should 

include consideration of “whether the cost of a [control] measure is 

reasonable for the regulated entity to bear, in light of the 

benefits,” as the costs of control relative to the health benefits of 

a particular control technology should not be relevant to the 

technical determination of RACT. This language suggested that the 

economic feasibility analysis should be a “cost/benefit” analysis, 

instead of the “cost effectiveness” type of analysis that it has 

historically been. 
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Similarly, this change will remove the prior statement in the 

final rule that there is “no presumption that a given source must 

bear costs similar to any other source,” because of source specific 

considerations such as “marginal costs, profit margin, and abilities 

to pass costs through to the consumer.” Upon reconsideration, EPA 

does not believe that such considerations should override the 

longstanding presumption that similar sources should be able to bear 

similar costs, unless adequately and appropriately demonstrated 

otherwise. A source’s ability to “afford” a control can be a

consideration. However, the intent of the policy is not to reward

less efficient sources by allowing them to bear lower emission 

control costs than more efficient sources. 

Finally, re-establishment of the prior guidance referenced in 

the preamble to the proposed rule will remove the ambiguous 

references to “equity considerations” as part of the RACT analysis, 

which in addition to deviating from prior guidance merely introduced

uncertainty as to what this factor might mean, e.g., equity between 

regulated entities or equity between sources and the health concerns 

of the public in the nonattainment area, or how such competing 

equities might be balanced. 

In order to accomplish this revision to the guidance, we propose 

in this action to remove the language in section II.F.5.b of the 

preamble to the final PM2.5 Implementation Rule (the section heading 
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is: “What factors should states consider in determining whether an 

available control technology or measure is economically feasible?”),

51

and to replace it with the following language:

What factors should states consider in determining whether an 

available control technology is economically feasible?

Economic feasibility considers the cost of reducing emissions 

and the difference between the cost of the emissions reductions 

approach at the particular source and the costs of emissions 

reductions approaches that have been implemented at other similar 

sources. Absent other indications, EPA presumes that it is reasonable 

for similar sources to bear similar costs of emission reduction. 

Economic feasibility for RACT purposes is largely determined by 

evidence that other sources in a source category have in fact applied 

the control technology or process change in question.

The capital costs, annualized costs, and cost effectiveness of 

an emission reduction technology should be considered in determining 

its economic feasibility. 

The EPA Air Pollution Control Cost Manual52 describes procedures 

for determining these costs for stationary sources. A number of other 

sources of information are available which provide updated 

information on control technologies and associated costs of 

installation and operation.53 The above costs should be determined 

for all technologically feasible emission reduction options.

States may give substantial weight to cost effectiveness in 

evaluating the reduction feasibility of an emission reduction 

technology. The cost effectiveness of a technology is its annualized 

cost ($/year) divided by the emissions reduced (i.e., tons/year) 

which yields a cost per amount of emission reduction ($/ton). Cost 

effectiveness provides a value for each emission reduction option 

that is comparable with other options and other facilities.

In considering what level of control is reasonable, EPA is not 

proposing a fixed dollar per ton cost threshold for RACT. We believe 

that what is considered to be a reasonable control level should vary 

 

51 This section of the preamble to the final PM2.5 Implementation Rule 

appears at 72 FR 20619-20.

52 See “EPA Air Pollution Control Cost Manual-Sixth Edition,” EPA 

Office of Air Quality Planning and Standards, Research Triangle Park, 

NC, January 2002. (EPA/452/B-02-001).

53 See STAPPA/ALAPCO, “Controlling Fine Particulate Matter Under the 

Clean Air Act: A Menu of Options,” March 2006; EPA’s RACT/BACT/LAER 

Clearinghouse; regional air quality planning organizations; state air 

agencies; add others.
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based on the severity of the nonattainment problem in the area. In 

addition, we believe that in determining what appropriate emission 

control levels are, the state should also consider the collective 

health benefits that can be realized in the area due to projected 

improvements in air quality. The health benefits associated with 

reducing PM2.5 levels are significant. Using estimation techniques 

reviewed and deemed reasonable by the National Academy of Sciences, 

national monetized health benefits resulting from reductions in PM 

concentrations are estimated to exceed emission control costs by a 

factor of three to thirty times, depending on the particular controls 

on sources of PM precursor emissions.54 This approach is consistent 

with EPA’s view that RACT may be related to what is needed for 

attainment. That is, for areas with more severe air quality problems 

that typically will need to adopt more stringent controls, RACT level 

controls in such areas may require controls at higher cost 

effectiveness levels ($/ton) than areas with less severe air quality 

problems.

Areas with more serious air quality problems typically will need 

to obtain greater levels of emissions reductions from local sources 

than areas with less serious problems, and it would be expected that 

their residents could realize greater health benefits. For this 

reason, we believe that it will be reasonable and appropriate for 

areas with more serious air quality problems and higher design values 

to impose emission reduction requirements with generally higher costs 

per ton of reduced emissions that the cost of emissions reductions in 

areas with lower design values.

If a source contends that it cannot afford to implement the 

control technology that is considered to be RACT for certain other 

sources in its source category, the source should support its claim 

with information describing the impact of imposing RACT on its:

1. Fixed and variable production costs ($/unit),

2. Product supply and demand elasticity,

3. Product prices (cost absorption vs. cost pass–through), 

4. Expected costs incurred by competitors, 

5. Company profits, and

6. Employment costs.

EPA is soliciting comments on replacing the previous section of 

the guidance for RACT determinations with this language. To our 

 

54 See “The Clear Skies Act: Technical Support Package,” U.S. EPA, 

July 2003. See also: “Draft Regulatory Impact Analysis: Control of 

Emissions from Non-road Diesel Engines,” United States Environmental 

Protection Agency Office of Air and Radiation EPA420-R-03-008, April 

2003.
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knowledge, states did not utilize the specific guidance in the 

preamble to the PM2.5 Implementation Rule that we are proposing to 

remove to alter any RACT determinations in nonattainment SIPs 

developed for the 1997 PM2.5 NAAQS, so we anticipate that this change 

in the guidance will have no practical impact on SIPs already 

submitted to EPA for approval. 

C. RFP Requirements for the 1997 PM2.5 NAAQS

After reconsideration of the RFP policy raised by the petitioner 

in the petition for reconsideration, and in light of the Court’s 

decision in the NRDC v. EPA case, EPA is proposing in this action to 

set aside the Agency’s earlier interpretation of its RFP policy 

described in Section II.G.5.b of the preamble to the final PM2.5 

Implementation Rule and to interpret the CAA as not allowing states 

to rely on credit for emission reductions from outside the 

nonattainment area to meet such an area’s RFP requirements for the 

1997 PM2.5 NAAQS. Specifically, EPA is proposing that states may not 

take credit for emission reductions from outside the nonattainment 

area to meet the area’s section 172(c)(3) RFP requirements for 

reductions within the nonattainment area. This revised policy would 

apply to implementation plans for the 1997 PM2.5 NAAQS, and would apply 

to all areas with an approved attainment date beyond 5 years from the 

effective date of designations that are required to submit an RFP 

plan per section 51.1009(c) of the PM2.5 Implementation Rule. 
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There may, however, remain valid policy reasons for giving 

states incentive to focus on obtaining emission reductions that are 

the most beneficial and cost effective for attaining the PM2.5 NAAQS. 

Also, there may be cases where the most beneficial and cost-effective 

reductions are from sources located outside the designated 

nonattainment area boundaries. In these cases, there may be good 

policy reason to credit the emission reductions toward meeting RFP 

requirements. To this end, EPA is also taking comment on whether it 

would be appropriate for states to rely on emission reductions credit 

from outside the nonattainment area for RFP obligations, and under 

what legal rationale consistent with the CAA would allow EPA to adopt 

such an approach. 

IV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and 

Executive Order 13563: Improving Regulation and Regulatory Review

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 

action is a "significant regulatory action” because it is likely to 

raise novel legal or policy issues arising out of legal mandates, the 

President’s priorities, or the principles set forth in the Executive 

Order. Accordingly, EPA submitted this action to the Office of 

Management and Budget (OMB) for review under Executive Orders 12866 

and 13563 (76 FR 3821, January 21, 2011) and any changes made in 

response to OMB recommendations have been documented in the docket 
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for this action.

B. Paperwork Reduction Act

This action does not impose an information collection burden 

under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 

et seq. Burden is defined at 5 CFR 1320.3(b). This action merely 

interprets the statutory requirements that apply to states in 

preparing their SIPs.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an 

agency to prepare a regulatory flexibility analysis of any rule 

subject to notice and comment rulemaking requirements under the 

Administrative Procedure 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 this proposed rule 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.); (2) 

A governmental jurisdiction that is a government of a city, county, 

town, school district, or special district with a population of less 

than 50,000; and (3) A small organization that is any not-for-profit 
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enterprise which is independently owned and operated and is not 

dominant in its field.

After considering the economic impacts of this proposed rule on 

small entities, I certify that this action will not have a 

significant economic impact on a substantial number of small 

entities. This rule will not directly impose any requirements on 

small entities. Rather, this rule interprets the obligations of the 

CAA for states to submit implementation plans in order to attain the 

1997 8-hour ozone and 1997 PM2.5 NAAQS. We continue to be interested in 

the potential impacts of the proposed rule on small entities and 

welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

This action contains no federal mandates under the provisions of 

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, 2 U.S.C. 

1531 – 1538) for state, local, or tribal governments or the private 

sector. The action imposes no enforceable duty on any state, local, or 

tribal governments or the private sector. Therefore, this action is not 

subject to the requirements of sections 202 or 205 of the UMRA.

This action is also not subject to the requirements of section 

203 of UMRA because it contains no regulatory requirements that might 

significantly or uniquely affect small governments. This action 

merely interprets the statutory requirements that apply to states in 

preparing their SIPs.
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E. Executive Order 13132: Federalism

This 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. This action 

does not impose any new mandates on state or local governments. 

Thus, Executive Order 13132 does not apply to this rule. 

In the spirit of Executive Order 13132, and consistent with EPA 

policy to promote communications between EPA and state and local 

governments, EPA is specifically soliciting comments on this proposed 

rule from state and local officials.

F. Executive Order 13175: Consultation and Coordination with Indian 

Tribal Governments

This rule does not have tribal implications, as specified in 

Executive Order 13175 (65 FR 67249, November 9, 2000). The rule does 

not have a substantial direct effect on one or more Indian tribes, 

since no tribe has to develop a SIP under this regulation. 

Furthermore, this rule does not affect the relationship or 

distribution of power and responsibilities between the federal 

government and Indian tribes. The CAA and the Tribal Air Rule 

establish the relationship of the federal government and tribes in 

developing plans to attain the NAAQS, and this rule does nothing to 
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modify that relationship. This rule does not have Tribal 

implications. Thus, Executive Order 13175 does not apply to this 

action. The EPA specifically solicits additional comment on this 

proposed action from tribal officials.

G. Executive Order 13045: Protection of Children from Environmental 

Health and Safety Risks 

This action is not subject to EO 13045 (62 FR 19885, April 23, 

1997) because it is not economically significant as defined in 

Executive Order 12866. However, EPA has reason to believe that ozone 

has a disproportionate effect on children who play outdoors (62 FR 

38856; 38859, July 18, 1997). Likewise, EPA believes that PM2.5 has a 

disproportionate effect on children. (See 62 FR 38652-38760, National 

Ambient Air Quality Standards for Particulate Matter, Final Rule; 

also 40 CFR Part 50.) The EPA invites the public to submit or 

identify peer-reviewed studies and data, of which EPA may not be 

aware, that assess how changes in RACT may affect ozone or PM2.5

formation. This rule may lead to lower levels of ozone and PM2.5 in 

particular geographical areas, which will be beneficial to the health 

of children who live in those particular areas.

H. Executive Order 13211: Actions Concerning Regulations That 

Significantly Affect Energy Supply, Distribution, or Use

This action is not a “significant energy action” as defined in 

Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not 
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likely to have a significant adverse effect on the supply, 

distribution, or use of energy because it does not establish 

requirements that directly affect the general public and the public 

and private sectors, but, rather interprets the statutory 

requirements that apply to states in preparing their SIPs. The SIPs 

themselves will likely establish requirements that directly affect 

the general public, and the public and private sectors. 

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, section 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 rulemaking 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
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Executive Order 12898 (59 FR 7629, Feb. 16, 1994) establishes 

federal executive policy on environmental justice. Its main provision 

directs federal agencies, to the greatest extent practicable and 

permitted by law, to make environmental justice part of their mission 

by identifying and addressing, as appropriate, disproportionately 

high and adverse human health or environmental

effects of their programs, policies, and activities on minority 

populations and low-income populations in the United States. 

EPA has determined that this proposed rule will not have 

disproportionately high and adverse human health or environmental 

effects on minority or low-income populations because if it has any 

effect on the level of protection provided to human health or the 

environment, the effect will be to increase the level of protection 

by resulting in more stringent emission controls on EGUs in affected 

nonattainment areas. 
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Page 63 of 64 - Withdrawal of the Prior Determination or Presumption 

that Compliance with the CAIR or the NOx SIP Call Constitutes RACT or 

RACM for the 1997 8-Hour Ozone and 1997 Fine Particle NAAQS; and 

Revision to RFP Requirements and RACT Guidance for the 1997 Fine 

Particle NAAQS

List of Subjects in 40 CFR Part 51

Environmental protection, Administrative practice and procedure, 

Air pollution control, Ozone, Reporting and recordkeeping 

requirements, Particulate matter, Volatile organic compounds.

___________________________________

Dated:

___________________________________

Lisa P. Jackson, 

Administrator.
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For reasons set forth in the preamble, part 51 of chapter I of title 

40 of the Code of Federal Regulations is proposed to be amended as 

follows:

Part 51-REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF 

IMPLEMENTATION PLANS.

 1. The authority citation for part 51 continues to read as follows:

 Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q

 2. Section 51.912 is amended by adding paragraph (a)(4) to read as 

follows:

 §51.912 What requirements apply for reasonably available 

control technology (RACT) and reasonably available control measures 

(RACM) under the 8-hour NAAQS?

 (a) * * * 

 (4) An individual RACT determination must be made for each major 

source or major source category meeting the applicable major source 

size within a nonattainment area.

* * * * *