***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 1 of 36 **6560 -**  **50 -**  **P ENVIRONMENTAL PROTECTION AGENCY** 

**40 CFR Part 51 [**  **EPA -**  **HQ -**  **OAR -**  **2009 -**  **0897 ; FRL**  **- ]** 

**RIN 2060**  **- AQ07**  **Withdrawal of the Prior**  **Determination or Presumption**  **that Compliance with the**  **CAIR or**  **the NO**  **x SIP Call Constitute**  **s RACT**  **or RACM for the 1997 8 -**  **Hour Ozone and**  **1997 Fine Particle NAAQS**  **AGENCY:** Environmental Protection Agency (EPA). **ACTION:** Proposed rule . **SUMMARY:** The EPA is proposing to withdraw any prior determination or presumption , for the 1997 8 - hour ozone national ambient air quality standard (NAAQS) and the 1997 fine particle (PM 2.5 ) NAAQS, that compliance with the Clean Air Interstate Rule (CAIR) or the NO x SIP Call automatically constitutes reasonabl y available control technology (RACT) or reasona bly available co ntrol measures (RACM) for oxides of nitrogen (NO x ) or sulfur dioxide ( SO 2 ) emissions from electric generating unit (EGU) sources participating in these regional cap - and - trade programs . **DATES:** Comments . C omments 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 r efer to SUPPLEMENTARY INFORMATION for additional information on the comment period and the public hearing .***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 2 of 36 **ADDRESSES:** Submit your comments, identified by Docket ID No. EPA - HQ - OAR 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 - HQ - OAR - 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, Washingt on, D . C . 20460 . Please include a total of two copies .  Hand Delivery: U.S. Environmental Protection Agency , William Jefferson Clinton West Building (Air Docket), 1301 Constitution Avenue, Northwest, Room 3334, Washington, D . C . 20004, Attention Docket ID No . EPA - HQ - OAR 2009 - 0897 . Such deliveries are onl y 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 b y statute . Do not submit information that you consider to be CBI or otherwise***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 3 of 36 protected through www.regulations.gov or email . The www.regulations.gov w ebsite is an “anon ym ous access” s ys tem, which means the 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 directl y t o the EPA without going through www.regulations.gov , your email addres s 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 avoid th e use of special characters, avoid any form of encry

ption, and be free of any defects or viruses . For additional information about the EPA's public docket, visit the EPA Docket Center homepage at www.e pa.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 b y statute . Certain other material, such as copy righted 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 William Jefferson Clinton West Building, Room 3334, 1301 Constitution Ave., NW, Washington, D . C . The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday , excluding legal holiday s . The telephone number for the Public Reading Room is (202) 566 - 1744, and the telephone number for the Air Docket is (202) 566 - 1742.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 4 of 36 **FOR FURTHER INFORMATION CONTACT :**  Ms. Kristin Riha , Office of Air Quality Planning and Standards, Air Quality Policy Division , Mailcode C 539 - 01 , Research Triangle Park, NC 27711, telephone (919) 541 - 2031 ; fax number: ( 919 ) 541 - 5315 ; email address: riha.kristin @epa.gov . **SUPPLEMENTARY INFORMATION: I.**  **General Information** A. Does this a ction a pply to m e? Entities potentially

affected by

this action include s tates (ty pically s tate air pollution control agencies) and in some cases, local governments that are responsible for air quality

management and planning . In particular, s tates with areas designated nonattainment for the 1997 8 - hour ozone NAAQS and/ or the 1997 PM 2.5 NAAQS and that are located within the geographic areas covered by the NO x SIP Call 1 and/ or the CAIR2 may

be affected by

this action . EGUs located in such geographic regions may also be affected b y an y new RACT or RACM reviews that may result from final rulemaking on this action . T hese sources are in the following groups: Industry group SI C a NAI CS b Electric Services 492 221111, 221112, 221113, 221119, 221121, 221122

a Standard Industrial Classification. b North American Industry Classification S ys tem. 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 NO x SIP Call; Final Rule, 70 FR 25162 (May 12, 2005).***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 5 of 36 B. What should I consider as I prepare my comments for the EPA? 1. Submitting CBI

. Do not submit this information to the EPA through www.regulations.gov or email . Clearly mark the part or all of the information that you claim to be CBI . For CBI information in a disk or CD - ROM that you mail to the 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 P art 2. 2. Tips for Preparing Your Comments . When submitting comments, remember to:

 Id entify

the rulemaking by

dock et 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 o r 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 yo u used.

 If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 6 of 36  Provide specific examples to illustrate your concerns, and suggest alternatives.

 Explain your views as clearl y as possible, avoiding the use of profanity or personal threats.

 Make sure to submit your comments by the comment period deadline identified. C. Wh ere can I get a copy of this document and other related information? In addition to being available in the docket, an electronic cop y of this notice will be posted at http://www.epa.gov/airquality/ozonepollution/actions.html . 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, f urther details concerning a public hearing for this proposed rule will be published in a separate Federal Register notice . For updat es and additional information on a public hearing, please check the EPA’s w ebsite for this rulemaking at http://www.epa.gov/airquality/ozonepollution/actions.html . E. How is this notice organized? The information presented in this notice is organized as follows: I . General Information A. Does this action appl y to me? B. What should Ico nsider as Iprepare m y comments for the EPA? C. Where can I get a cop y of this document and other related information? D. What information should Iknow about a possible public hearing? E. How is this notice organized? II . Background A. CAA Requirements and the Definition s of RACT and RACM B. The NO x SIP Call C. The CAIR D. The Phase 2 Ozone Implementation Rule E. The PM 2.5 Implementation Rule***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 7 of 36 F. Impact of the NRDC v. EPA Court Decision on Determinations and Presumptions III. Proposed Action IV. Statutory

and Executive Ord er Revie w A. Executive Order 12866: Regulatory Plann ing an d 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. Executiv e Order 13175: Consultation and Coo rdination with Indian Tribal Governments G. Executive Order 13045: Protection of Children fro m Environmental Health and Safety

Risks H. Executive Order 13211: Actions Concerning Regulations That Significantl y Affect Energ y Supply , Distributio n, or Use I. National Technology Transfer and Advancement Ac t J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority

Populations and L ow - In come Populations Statutory Authority List of Subjects **II. Background**  A . CAA Requirements and the Definition s 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 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 . Sub part 2 and Subpart 4 of Part D contains additional requirements applicable to certain ozone and particulate matter (PM, including PM 2.5 ) nonattainment areas , respectivel y.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 8 of 36 Among the general statutory requirements for all nonattainment areas is the requirement i n section 172( c)(1) that SIPs: “provide for the implementation of all reasonabl y 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, o f reasonably available control technology).” Ozone nonattainment areas that are subject to the requirements of S ubpart 2 must meet more specific RACT requirements in accordance with section 182(b)(2)(C) . States located wi thin the Ozone Transport Region (OT R) have additional requirements to impose RACT on sources statewide, rather than only in nonattainment areas, in accordance with section 184. The 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 appl y broadl y to a range of source categories located in designated nonattainment areas , including large stationary sources such as EGUs . The EPA has historicall y interpreted RACT to mean the lowest emissions limitation that a particular source is capable of meeting b y the application of control technology

that is reasonabl y available considering technological and economic feasibility . 3 RACT requirem ents are specificall y intended to impose emission controls for purposes of attainment and maintenance of the NAAQS within a specific nonattainm ent

3 See Memorandum from Roger Strelow titled “Guidance for Determining Acceptability of SIP Regulations in Non - Attainment Areas.” (December 9, 1976). See also “State Implementation Plans ; General Preamble for the Implementation of Title Iof the Clean Air Act Amen dments of 1990,” 57 FR 13 498 (April 16, 1992) .***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 9 of 36 area . The EPA has interpreted the terms RACT and RACM for purposes of Subpart 1 requirements as being the lev el 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. 4 In contrast to nonattainment plan requirements, s ection 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 1 10(a)(2)(D)(i) (I ) requires that a state’s SIP must contain provisions to prevent e missions in amounts that would “contribute significantly to nonattainment in, or interfere with maintenance b y, any other state” with respect to a NAAQS . The EPA has initiated several regulatory programs pursuant to section 110(a)(2)(D)(i) (I) to address interstate transport of emissions that have such prohibited impacts on attainment of the ozone and PM 2.5 NAAQS on a regional basis . B . The NO

x SIP Call In Octo ber 1998, the EPA published a rule under section 110(a)( 2)(D) ( i ) of the CAA , commonly

referred to as the “NO x SIP Call . ” This rule was intended to reduce NO x emissions (a precursor for ozone formation) from sources that significantl y contribute to nonattainment or interfere with maintenance of the ozone NAAQS in one or more downwind states . To implement these reductions, the NO x SIP Call required 22 states and the District of Columbia to submit SIP revisions prohibiting those NO x emissions that the EPA determined to be adversel y impacting downwind air quality problems . T he NO x SIP Call provided a regional emissions cap - and - trade program as one mechanism for states to 4 See NRDC v. EPA , 571 F.3d 1245, at 1252 - 53 (D.C. Cir. 2009).***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 10 of 36 meet their interstate transport requirements under s ection 110(a)(2)(D)(i) . Through this mechanism, affected sources could meet emissions reductions requirements either by installing NO x emissions controls or by purchasing allowances from other sources located within the geographic region covered b y the NO x SIP Call . C. The CAIR In May 2005, the EPA published another rule under section 110(a)(2)(D) ( i ) of the CAA , referred to a s the “ Clean Air Interstate Rule ” ( or the CAIR) . The CAIR required reductions of NO x and

/or SO 2 emissions across 2 8 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 PM 2.5 NAAQS in one or more downwind states . 5 Similar to the NO x SIP Call, the EPA provided a regional emissions 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 b y installing controls for NO x and/ or SO 2 emissions, or by purchasing allowances from other sources located in the geographic region covered by the CAIR . On April 28, 2006 (71 FR 25328) , the E PA 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 allev iate interstate transport.

5 NO x is a precursor for ozone formation, while both NO x and SO 2 are precursors for PM 2.5 formation.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 11 of 36 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 the EPA, but later decided not to vacate the rule. 6 In the process of remanding the CAIR, however, the Court identified serious concerns with the EPA’s reading of the statute and anal yt ical approach, including such core issues as the a gency ’s metho d of evaluating significant contribution to nonattainment and interference with maintenance of the NAAQS . In response to the remand of the CAIR, the EPA finalized another rule, the “Cross - State Air Pollution Rule” (CSAPR) on July 6, 2011 (published in the Federal Register on August 8, 2011) . 7 This rule was then vacated b y the U.S. Court of Appeals for the District of Columbia (D.C. Circuit) on August 21, 2012. 8 In its opinion vacating the CSAPR, the D.C. Circuit instructed the EPA to continue administering the CAIR pending promulgation of a valid replacement. The United States Supreme Court subsequently agreed to review the decision of the D.C. Circuit. Oral argument before the Supreme Court was held on December 10, 2013. Both the NO x 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

/or PM 2.5 NAAQS in downwind areas . Thus, they provide significant emissions reductions that assist downwind area s with attainment or maint e n ance of the NAAQS , and allow downwind states to develop SIPs in reliance on regional emissions reductions . 6 See North Carolina v. EPA , 531 F.3d 896; mo dified by 550 F.3d 1176 (D.C. Cir. 2008). 7 See “Federal Implementation Plans: Interstate Transport of Fine Particulate Matter and Ozone and Correction of SIP Approvals, Final Rule,” 76 FR 48208 (August 8, 2011). 8 See EME Homer City Generation L.P. v. EPA , 696 F.3d 7 (D.C. Cir. 2012) , cert. granted 133 S. Ct. 2857 (2013) .***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 12 of 36 However, the EPA did not intend that either the NO x SIP Call or the CAIR would completely

obviate the potential need for additional local pollution controls in downwind nonattainment areas, nor did the EPA intend either action to override the statutory 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 PM 2.5 NAAQS, the EPA promulgated both regulations and guidance applicable to each NAAQS in separate implementation rules . Within those actions, the 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, the EPA focused on the issue of whether, or to what extent, compliance b y EGUs with the requirements of the NO x 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 PM 2.5 NAAQS . The EPA’s approach to this issue for each NAAQS is described in more detail later . D . T he Phase 2 Ozone Implementation Rule On November 29, 2005 (70 FR 71612) , the 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 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 Ru le, 72 FR 20587 (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).***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 13 of 36 Implementation Rule addressed various statutory requirements, including the requirement for RACT - level controls for sources located within nonattainment areas generall y, and controls for NO x emissions from EGUs in particular . After explaining its analy sis of the issue , the EPA indicated its determination that the regional NO x emission s reductions that result from either the NO x SIP Call or the CAIR would meet the NO x RACT requirement for EGUs located in states included within the respective NO x SIP Call or CAIR geographic region s . Thus, the EPA concluded that: “[t]he S tate need not perform a NO x RACT analy sis for sources subject to the S tate’s emission cap - and - trade program where the cap - and - trade program has been adopted b y the S tate and approved b y the EPA as meeting the NO x SIP Call requirements or, in S tates achievi ng the CAIR reductions solely from electric generating units (EGUs), the CAIR NO x requirements.” 10 In January

2006, Earth

j ustice , on behalf of the Natural Resources Defense Council (NRDC) , filed a petition for reconsideration of the Phase 2 Ozone Implementation Rule, objecti ng to the EPA’s determination that, in certain circumstances, compliance with the requirements of the CAIR would constitute RACT for NO x emissions for EGUs located in states with in the CAIR region. 11 The petition raised objection s to an alleged failure to seek publ ic comment on the determination and to the a genc y’ s interpretation of the CAA to allow a regional emissions reduction program to constitute RACT for sources located within nonattainment areas , as well as other related is sues . The EPA granted the petition for reconsideration of the Phase 2 Ozone Implementation Rule and subsequently conducted a Supplemental Technical Analy sis to 10 See Phase 2 Ozone Implementation Rule, 70 FR 71617. 11 See “Petition for Reconsideration,” filed b y David Baron, Earthjustice, on behalf of NRDC (January

30, 2006). A copy

of the petition is located in the docket for this action.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 14 of 36 assess whether compliance with the CAIR could satisfy the NO x RACT requirement for EGUs in certain geographic areas . 12 A proposed rule , which presented this analy si s and solicited comments regarding the reconsideration of whether the CAIR would constitute RACT for NO x emissions for EGUs located in states within the CAIR region , was published i n December 2006 . The EPA did not reconsider or request comments on its prior determination that the NO x SIP Call constitutes RACT for those sources covered by the NO x SIP Call. The EPA then published a final notice of reconsideration on June 8, 2007 (72 FR 31727) , reflecting the a gency ’s additional evaluation of whether compliance with the CAIR could constitute RACT for NO x emissions for certain EGUs . In that action , the EPA modified its conclusion regarding when compliance with the CAIR may satisfy NO x RACT requirements for EGUs in areas within the CAIR region . The EPA reaffirmed its determination that, in many ozone nonattainment areas, compliance with the CAIR would satisf y NO x RACT requirements for EGUs in such areas . 13 However, the EPA stated that th is determination w ould only appl y to specific areas for which the EPA’s Supplemental Technical Anal ys is show ed that the CAIR was projected to achieve equal or greater NO x emissions reductions than application of source - by- source application of RACT to the

12 See “Technical Support Document for Phase 2 of the Final Rule to Implement the 8 - Ho ur Ozone National Ambient Air Quality Standard -Notice of Reconsideration; NO x RACT for EGUs in CAIR States

– Supplemental Technical Anal ys is,” December 2006.(Docket ID no. EPA - HQ - OAR - 2003 - 0079, item number EPA - HQ - OAR - 2003 - 0079 - 1044.2) (Supplemental Technic al Anal ys is). 13 Specificall y, the EPA determined that compliance with the CAIR would meet the NO x RACT requirements for ozone nonattainment areas in sections 172(c)(1) and 182(f), and the statewide NO x 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.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 15 of 36 EGUs within the nonattainment area . Even in those nonattainment areas where the EPA did not make a formal determination, however, the EPA also establish e d a separate presumption that compliance with the CAIR, in certain circumstances, c ould satisf y NO x RACT requirements for EGUs in any area within the C AIR region . 14 The 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 , the EPA reiterated in the final notice of reconsideration that EGU sources complying with the requirements of the NO x SIP C all would also be considere d to have met their ozone NO x RACT obligations , assuming certain conditions . 15 In addition to the Supplemental Technical Anal ys is , the 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, the EPA argued that its interpretation of section 17 2(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 , the EPA also argued that emissions reductions that result from regional scale programs like the CAIR often “will achieve a more effective and economicall y efficient air quality improvement in nonattainment areas than application of source - by- source RACT.” 17

14 See Phase 2 Ozone Implementation Rule -Notice of Reconsideration, 72 FR 31730. 15 Id . 72 FR 31731. 16 Id . 72 FR 31730. 17 Id .***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 16 of 36 In November 2008, the U.S. Court of Appeals for the D.C. Circuit heard oral argument concerning multiple petitions for judicial review of the EPA’s Phase 2 Ozone Implementation Rule and the Notice of Reconsideration . Among other issues, the petitioners (i ncluding NRDC) challenged the EPA’s determination that compliance with the NO x SIP Call and

/or the CAIR could satisfy NO x RACT requirements for EGUs in ozone nonattainment areas , and the EPA’s specific determinations for some areas and general presumption for other areas, that compliance with the CAIR could satisfy NO x RACT for EGUs in ozone nonattainment areas . Inview of its decision in North Carolina v. EPA , in which the C ourt had previousl y remanded the CAIR and in response to the parties’ joint suggestion to the Court that any further litigation of CAIR - related issues be held in abeyance given the North Carolina decision , the Court deferred consideration of the litigants ’ challenge s to the Phase 2 Ozone Implementation Rule and Reconsideration Notice ins ofar as they

relate d to the CAIR program. As a result of this litigation, the Court decided that the provisions in the Phase 2 O zone Implementation R ule indicating that a s tate need not perform (or submit) a NO x RACT analy sis for EGU sources subject to a cap - and - trade program that meets the requirements of the NO x SIP Call are inconsistent with the statutory requirements of section 172(c) (1) . 18 The Court specificall y held that the Phase 2 Ozone Implementation Rule allowing use of the NO x SIP call to constitute RACT without any locally applicable anal ys is regarding the equivalence of NO x SIP Call and RACT reductions: “is inconsistent with the Clean Air Act . . . in allowing participation in a regional cap - and trade program to satisfy

an are a - specific statutory mandate.” The C ourt emphasized that : 18 See NRDC v. EPA , 571 F.3d 1245 (D.C. Cir. 2009).***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 17 of 36 “ 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 . . . Accordingl y, participation in the NO x 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 the EPA’s arguments that a regional emissions reductions program like the NO x SIP Call would result in greater emissions reductions in nonattainment areas as unsupported by any adequate technical anal ys is. 19 The Court likewise rejected the EP A’s argument that regionwide emissions reductions would collectively

achieve better emission s reductions because this argument did not comport with the explicit “in the area” language of section 172(c)(1). 20 With respect to the 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, the EPA had failed to evaluate the impact of the NO x SIP Call on the air quality within specific nonattainment areas, and thus the EPA “ ha s failed to establish that NO x SIP Call compliance can be equated to RACT compliance.” 21 The Court disagreed with the 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 Finall y, the Court rejected the argument that the EPA’s interpretation should be u pheld because a state could still elect

19 Id . 571 F.3d at 1257. 20 Id . 21 Id . 22 Id . 571 F.3d at 1258.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 18 of 36 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 the EPA’ s approach

– failing to implement the requirement of at least RACT - level reductions in emissions from sources in the nonattainment area.” 23 Based on the foregoing reasoning , the C ourt remanded th e provision of the Phase 2 Ozone Implementation Rule determining that the NO x SIP Call satisfies NO x RACT for EGUs because the EPA had failed to show that compliance with the NO x SIP Call would achieve at least RACT - level reductions in each nonattainment area . In deciding not to vac ate the provision, however , the Court noted that a determination that RACT was satisfied by

compliance with the NO x SIP Call might be permissible for an area if accompanied b y a technical anal ys is demonstrating that the program in fact “results in greater emissions reductions in a nonattainment area than would be achieved if RACT level controls were installed in that area.” 24 Inother 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) coul d automatically constitute RACT level 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 . Significantl y, the Court did not address at all the EPA’s comparable determinations and presumption that compliance with the CAIR would constitute NO x RACT for EGUs in ozone nonattainment are as under certain circumstances . As

23 Id . 24 Id .***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 19 of 36 mentioned earlier, the Court (in response to the joint suggestion of the parties) deferred consideration of the CAIR - related challenges to the EPA’s determinations and presumption because at the time of this decision, the Court had already remanded the CAIR . 25 However, on August 30, 2013, the U.S. Court of Appeals for the D.C. Circuit granted the EPA’s request for voluntary remand of the CAIR determination and vacatur of the CAIR presumption. In granting the a gency ’s request , the Court said that “[v]acatur of the presumption is appropriate in light of the NRDC v. EPA ...” 26 E. T he PM 2.5 I mplementation R ule On April 25, 2007 (72 FR 20586) , the EPA published the “ Clean Air Fine Particle Implementation R

ule ” to address nonattainment SIP requirements for the 1997 PM 2.5 NAAQ S (the PM 2 .5 Implementation Rule). 27 Th at action provide d regulations and additional guidance in the preamble for s tate plans required to implement the 1997 PM 2.5 NAAQS . Th e PM 2.5 Implementation Rule provide d a framework for developing SIP submissions for nonattainment areas based on the S ubpart 1 requirements for nonattainment areas found in section 172 of the CAA . 28

25 Id . at 1250. 26 NRDC v. EPA , No. 09 - 1198 (D.C. Cir.) ( order of August 30, 2013 ). 27 The PM 2.5 Implementation Rule is now codified at 40 CFR Section 51.1000

– 1012. Section 51.1010 addresses the RACT and RACM requirement s . 28 The EPA notes that on January 4, 2013, the PM 2.5 Implementation Rule was remanded by the U.S. Court of Appeals for the D.C. Circuit. The Court ruled that the EPA should have issued the implementation rule under the Clean Air Act requirements of Subpart 4. (See NRDC v. EPA , 706 F.3d 428 (D.C. Cir. 2013). This proposal addresses only one aspect of the remanded PM 2.5 Implementatio n Rule, i.e. , the presumption that CAIR is RACT/RACM for purposes of attainment plans for the 1997 PM 2.5 NAAQS. This issue is not directly

related to the court’s decision in NRDC v. EPA . The EPA intends to respond to the court’s remand in that decision in another rulemaking that will address implementation requirements for the PM 2.5 NAAQS more broadl y.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 20 of 36 With respect to the requirements of s ection 172 (c)(1), the PM 2.5 Implementation R ule u sed a combined RACT/RACM approach, where a state’s obligation to implement RACT was considered as part of the 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 . T hrough guidance in the preamble to the final PM 2.5 Implementation R ule , the EPA also establishe d a presumption that compliance with the CAIR would satisfy RACT/RACM requirement s for SO 2 and NO x emission s from EGUs in states participating in the CAIR cap - and - trade program for such emissions. 29 For SO 2 , the EPA’s guidance recommended that states that obtained all SO 2 reductions required b y the CAIR from EGUs could presume that such sources located within a designated nonattainment area were meeting SO 2 RACT/RACM requirements because of overall regional SO 2 reductions from EGUs . The guidance indicated that this presumption could be u sed without conducting a technical anal ys is comparing the CAIR and RACT/RACM reductions for the specific nonattainment area . For NO x , the EPA similarly recommended that so long as the EGU s ources in the state were required to operate NO x emissions controls on a year - round basis to comply with the CAIR , then that state could presume that those EGUs were meeting NO x RACT/RACM requirements because of overall regional NO x reductions from EGUs . The EPA made no decision with respect to what might constitute RACT/RACM level controls for direct PM 2.5 emissions from EGUs i n relation to the CAIR because the CAIR onl y addressed the NO x and SO 2 emissions from such sources . 29 See PM 2.5 Implementation Rule, 72 FR 20623.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 21 of 36 Based on this presumption that compliance with the CAIR would constitute RACT/RACM level controls for SO 2 and NO x emissions from EGUs within the CA IR region, the 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.” 30 In other words, the EPA indicated that states could presume that EGUs located within a given nonattainment area 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 EGU s located within nonattainment areas might elect to comply with the CAIR through the acquisition of allowances, rather than the reduction of emissions . Although the 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.” 31 These policy and technical arguments are very

similar to those made b y the EPA in connection with challenges to the Phase 2 Ozone Implementation Rule , and rejected b y the C ourt decision discussed in further detail previously

in this notice . In June 2007, the EPA received a petition for reconsideration filed b y Earth j ustice on behalf of several petitioners (including NRDC) that raised several objections to th e

30 Id . at 72 FR 20624. 31 Id . at 72 FR 20625.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 22 of 36 PM 2.5 Implementation Rule . 32 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 with in PM 2.5 nonattainment areas . T he petition also asserts that the presumption and its accompanyi ng rationale were added to the rule after the close of the public comment period, and that the EPA therefore failed to seek public comment on the final rule’s determination that the CAIR presumptively satisfies SO 2 and NO x RACT requirements for EGUs located in nonattainment areas . The petition further maintain s that the EPA lacks authority to establish a presumption on what satisfies RACT in this fashion , and that the EPA’s conclusion that the CAIR can b e presumed to satisfy RACT is arbitrary

and capricious because it lacked a factual basis . Lastly , the petition also maintain ed 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 arbitrary and unlawful because it fail ed to explain if or how the presumption can be rebutted . Sign i ficantl y, Earth

j ustice filed the petition for reconsideration of the PM 2.5 Implementation Rule well before the Court in the NRDC v. EPA case addressed the comparable issue with respect to the NO x SIP Call in the context of the Phase 2 O zone

32 See “Petition for Reconsideration,” filed b y 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 cop y of the petition is in the docket for this action.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 23 of 36 Implementation R

ule . Nevertheless, the petitioner made essentiall y 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 requ irements of section 172(c)(1) . Moreover, the EPA notes that multiple parties have indicated that they

intend to challenge the PM 2.5 Implementation Rule on this same issue through petitions for review currently pending i n the Court. In light of the argument s raised in the petition for reconsideration, and in light of the Court’s decision in NRDC v. EPA , the EPA decided to grant the petition for reconsideration on this issue and initiate this rulemaking . 33 F . Impact of the NRDC v. EPA Court Decision on Determinations and Presumptions The EPA has reevaluated whether compliance with the NO x SIP Call could automatically constitute NO x 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, the EPA believes that it is no longer appropriate to presume that this requirement is automatically met through the participation of source s in a regional emissions cap - and - trade program . Implicit in a regional cap - and - trade program is that some sources may elect to u se allowances in lieu of emissions controls to meet the regional emissions reductions requirements, and that those elections could change from ye ar to year . The EPA be lieves that it would be inappropriate to pre -

judge whether participation in a cap - and - trade program satisf ies NO x

33 See letter dated April 25, 2011, from L isa P. Jackson to Paul Cort, Earthjustice. A cop y of this letter is located in the docket for this action.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 24 of 36 RACT for EGU sources in any given nonattainment area . The EPA further believes that states could rel y on a regional emissions cap - and - trade program for purposes of meeting NO x RACT requirements if they conduct the appropriate anal ys is demonstrating that compliance b y EGUs participating in this program results in actual emission reductions in the particular nonattainment area that are equal to, o r greater than, emission reductions that would result if RACT were applied to each individual EGU source or the EGU source category in the nonattainment area . Additionally , b ased on the logic of the NRDC v. EPA Court decision, and the concerns raised in the petition for reconsideration on the PM 2.5 Implementation Rule, the EPA believes that it would be inappropriate absent an anal ys is for the EPA to pre - judge whether regional cap - and - trade programs would constitute RACT or RACM for covered sources in a particular PM 2.5 nonattainment area . **III. Proposed Action**  In this notice, the EPA is proposing to : ( 1) withdraw from the Phase 2 Ozone Implementation Rule the determination that compliance with the NO x SIP Call satisfies NO x RACT for EGUs located in certain ozone nonattainment areas or in states within the OTR ; ( 2) withdraw from the Phase 2 Ozone Implementation Rule the separate determination that compliance with the CAIR satisfies NO x RACT for EGUs located in certain specific ozone nonattainment are as . ; and (3) withdraw from th e PM 2.5 Implementation R

ule any presumption that compliance with the CAIR automatically satisfies RACT/RACM requirements for SO 2 and NO x emissions from EGUs located in PM 2.5 nonattainment areas.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 25 of 36 In general, the EPA supports flexible, common sense approaches that provide the health and environmental protections required under the CAA while maximizing flexibility for states. The EPA also supports maintaining the integrity of regional cap and - trade programs. Therefore, a s a resu lt of this action, s tates would retain the option of relying on source participation in a regional cap - and - trade program for purposes of meeting the RACT or RACM requirements for the 1997 ozone NAAQS or the 1997 PM 2.5 NAAQS if they

submit a supporting technical anal ys is to the EPA. More information about this flexibility is included below. The EPA has re evaluated whether compliance with the NO x SIP Call could constitute NO x RACT for EGUs in light of the Court ’ s opinion in the NRDC v. EPA case . Given the exp licit wording of section 172(c)(1) that sources “in the area” must at a minimum adopt RACT controls for that area, the EPA believes that it is no longer appropriate to determine that this requirement is automatically addressed for certain sources based upon the participation of th ose source s in a regional cap - and - trade program . After reconsideration, the EPA believes that it would be 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 . As noted above , the NRDC v. EPA decision left open the possibility that an area - specific anal ys is might establish that compliance with a regional cap - and - trade program like the NO x SIP Call could simultaneously result in factual compliance with the RACT requirement for sources located w ithin nonattainment areas, and EPA’s elimination of the prior determination will***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 26 of 36 in no way prevent a state from conducting and rel ying on such an anal ys is . S tates have the option of conducting a technical anal ys is for the specific nonattainment area consid ering the emissions controls required b y a regional cap - and - trade program, and demonstrating that compliance by EGUs participating in the program results in actual emission reductions in the particular nonattainment area that are equal to or greater than the emission reductions that would result if RACT were applied to each individual EGU source or the EGU source category within the nonattainment area . We note that s ubsequent to the NRDC v. EPA decision , the Court granted the EPA’s request for a remand of a similar determination, previously made in the Phase 2 Ozone Implementation R ule, that compliance with the CAIR could, in some circumstances , automatically satisfy RACT requirements for certain sources. Following the North Ca rolina v. EPA decision that remanded the CAIR, the Court had deferred consideration of whether compliance with the CAIR could automatically satisfy a source’s obligation to install RACT for the 1997 ozone NAAQS . Following vacatur of the rule that was to replace the CAIR, however, the EPA decided that it would be appropriate to reconsider this determination also in light of the earlier decision in NRDC v. EPA . The EPA believes that the logic of the NRDC v. EPA decision extends to any determination that sources subject to a regional trading program such as the CAIR automatically

comply with RACT requirements for NO x . In other words, the decision establishes that any such determination is permissible if supported b y an adequate technical demonstration show ing that the trading program would result in equal or greater emission reductions than would be achieved b y application of RACT to the relevant sources or source categories.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 27 of 36 The EPA does not believe the anal ys is to support the CAIR determination in the Ph ase 2 Ozone Implementation R ule provides an adequate technical demonstration . For this reason, the EPA is also proposing to withdraw its conclusion, made in the Phase 2 Ozone Implementation Rule final notice of reconsideration , that the EPA’s Supplemental Technical Anal ys is g i ve s an adequate demonstration that participation in the CAIR is projected to achieve equal or greater annual emissions reduc t ions from EGUs th an source - by- source RACT for certain specific areas . The EPA is proposing this action because it no longer believes that the assumptions held within th e Supplemental Technical Anal ys is are adequate to make such a showing . After reconsideration, the EPA now concludes that the anal ys i s’ s across - the board assumptions regarding what constitutes RACT for all sources in all nonattainment areas were inadequate, and did not consider whether more advance d control technologies, such as post - combustion controls ( e.g. , selective cataly tic reduction or selective non catal yt ic reduction) , might at some time be technically and economically

feasible for specific s ources in some areas . The EPA is consequentl y proposing to amend Section 51.912 to state explicitly that for each individual major source , or major source category , in a nonattainment area , states must conduct a RACT analy sis for purposes of 1997 8 - hour ozone NAAQS SIPs . As part of the PM 2.5 Implementation Rule, the EPA included a presumption that EGU participation in the CAIR constituted RACT or RACM for SO 2 for EGU sources in a particular nonattainment area. The EPA did not include a supporting analy sis for this presumption as part of the Rule. The EPA believes that the logic of the NRDC v. EPA decision extends to any presumption that sources subject to a regional emissions cap - and -***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 28 of 36 trade program such as the CAIR automaticall y comply with RACT or RACM requirements for NO x or S O 2 . As a result of this action , states should not rely merely on the fact that sources are complying with a regional cap - and - trade program as a basis fo r RACT or RACM - level emissions controls for the 1997 8 - hour ozone NAAQS or the 1997 PM 2.5 NAAQS. States must comply

with the provisions of the CAA, which require an evaluation of emissions sources, such as EGUs , located within designated nonattainment area s for potential RACT or RACM controls, and imposition of such controls as may be necessary

for expeditious attainment of the NAAQS within the area. However, s tates retain the option of conducting a technical analy sis for the specific nonattainment area co nsidering the emissions controls required b y a regional cap - and - trade p rogram, and demonstrating that compliance by EGUs participating in the cap - and - trade program results in actual emission reductions in the particular nonattainment area that are equal to or greater than the emission reductions that would result if RACT or RACM were applied to an individual EGU source or the EGU source category within the nonattainment area. States could conduct this analy sis for the EGUs in the nonattainment area, either individually or in the aggregate. The EPA anticipates that in many areas, such an evaluation will likely indicate that EGUs within the nonattainment area at issue are already adequatel y controlled for NO x and SO 2 emissions, whether b y virtue of the NO x SIP Call, the controls required by the CAIR, 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 o f the PM 2.5 Implementation Rule, the EPA believes that it would be inappropriate to pre - judge that***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 29 of 36 outcome prior to state development of locall y applicable demonstrations showing equivalent reductions. The EPA is soliciting comments on the withdrawal of the determinations and presumption as explained previously in this notice. Additionally , the EPA does not believe that the withdrawal of the determinations and presumption has a practical impact on state planning and emissions control efforts , either currentl y or prospectively , for the 1997 oz one and PM 2.5 NAAQS . The EPA has worked closel y with those states who previously

relied on the determinations or presumption , and in those instances either the states or EPA (through SIP approval notices ) have conducted, or are currently conducting, the ap propriate anal ys is to demonstrate that EGUs in each nonattainment area have met the RACT or RACM requirements . The EPA is not aware of any states that have raised concerns about the need to conduct a new RACT or RACM analy sis as a result of the policy

chan ges proposed in this rulemaking . The EPA is soliciting comments on our assessment that the withdrawal of the determinations and presumption does not have a practical impact on states . **I V.**  **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 raise s novel policy issues . Accord ingl y, the 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***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 30 of 36 changes made in response to OMB recommendations have been documented in the docket fo r 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 merel y interprets the statutory requirements that apply

to states in preparing their SIPs. C. Regulatory Flexibility Act The Regulatory

Flexibility

Act (RFA) generall y requires an agency to prepare a regulatory

flexibility

analy sis 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, sm all organizations, and small governmental jurisdictions. For purposes of assessing the impacts of this proposed rule on small entitie s, 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 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***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 31 of 36 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 PM 2.5 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 provision s 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 . T herefore, 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

aff ect small governments . This action merel y interprets the statutory requirements that apply to states in preparing their SIPs. E. Executive Order 13132: Federalism This action does not have federalism implications . It will not have substantial direct effect s 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 man dates on state or local governments . Thus, Executive Order 13132 does not apply to this rule.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 32 of 36 In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between the EPA and state and local governments, the EPA is spec ificall y 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 Tribal Implementation Plan 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 modify

that relationship . This rule does not have tribal implications . Thus, Executive Order 13175 does not apply to this action . However, the EPA did conduct outreach to tribes on a regularl y s cheduled conference call with the National Tribal Air Associat ion on March 27, 2014, where we provided the tribes with a brief overview of the proposed rule. The EPA specificall y solicits additional comment on this proposed action from tribal officials. G. Executive Order 13045: Protection of Children from Environmen tal Health and Safety Risks The EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as appl yi ng only to those regulatory

actions that concern health or safety risks, such that the analy sis required under section 5 - 501 of the EO has the potential to influence the regulation. This action is***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 33 of 36 not subject to EO 13045 because it does not establish an environmental standard intended to mitigate health or safety risks. This proposal is designed to help implement the already- established ozone and PM 2.5 NAAQS, whi ch were both promulgated in 1997 to protect the health and welfare of individuals, including children, who are susceptible to the adverse effects of exposure to unhealthy levels of ozone and PM 2.5 . 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 likely to have a significant adverse effect on the supply , di stribution, 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 the mselves will likely establish requirements that directl y 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 ("NT TAA"), Public Law 104 - 113, section 12(d), (15 U.S.C. 272 note) directs the 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 the EPA to provide Congress, through OMB, explan ations when the a gency

decides not to use available and applicable voluntary consensus***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 34 of 36 standards . This rulemaking does not involve technical standards . Therefore, the EPA is not considering the use of any voluntary consensus standards. J . Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low -Income Populations Executive Order 12898 (59 FR 7629, Feb. 16, 1994) establishes federal executive policy on environmental justice . It s main provision directs federal agencies, to the greatest extent practicable and permitted b y 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 program s, policies, and activities on minority

populations and low - income populations in the United States . The EPA has determined that this proposed rule will not have disproportionately high and adverse human health or environmental effects on minority or lo w - 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 nonattainm ent areas. **Statutory Authority** The statutory

authority for this action is provided by 42 U.S.C. 7501, 7502, 7511a, 7513a, 7513b and 7601.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 35 of 36 **Page 3**  **5 of**  **3 6**  **Withdrawal of the Prior Determination or Presumption that Compliance with the CAIR or the NO**  **x SIP Call Constitutes RACT or RACM for**  **the 1997 8 -**  **Hour Ozone and 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:

___________________________________ Gina McCarth y, Administrator.***E.O. 12866 Review

– Revised Version

– Do Not Cite, Quote, or Release During Review *** EO12866_Withdrawal RACTRACM_2060 - AQ07_Proposal_PreambleRule_20140411

Page 36 of 36 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 PREPARATI ON, 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 Wha t**  **requirements apply for reasonably available control technology (RACT) and reasonably available control measures (RACM) under the**  **8 -**  **h our 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. * * * * *