MEMORANDUM 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

RESEARCH TRIANGLE PARK, NC 27711 

JAN 1 4 2005 

OFFICE OF 

AIR QUALITY PLANNING 

AND STANDARDS 

SUBJECT: 

FROM: 

Guidance on Limiting Nitrogen Oxides (N·O·· x) Req.uire.,e Related to 8-Hour 

Ozone Implementation .bi 

Stephen D. Page, Director (C404-04) . 

Office of Air Quality Planning and St~ 1 D~ 

TO: Air Directors, Regions 1-X / 

This memorandum provides guidance related to the NOx exemption provisions of section 

182(f) of the Clean Air Act (Act) for the 8-hour ozone standard. EPA invited comment on issues 

related to the exemption provisions in a June 2, 2003, notice of proposed rulemaking. In 

addition, EPA invited comment on a draft version ofthis guidance on September 1, 2004. 

Though not specifically required by the Act, this guidance indicates how the Environmental 

Protection Agency expects to handle the exemption provision under the 8-hour ozone standard. 

If you have any questions on this document, please contact Doug Grano of this office at 

(919) 541-3292, or grano.doug@epa.gov. 

Attachment 

cc: Lydia Wegman, OAQPS 

Tom Helms, OAQPS 

Recycled/Recyclable • Printed wnh Vegetable 011 Based Inks on 100% Recycled Paper (40% Postconsumer) 
United States 

Environmental Protection 

Agency 

Office of Air Quality 

Planning and Standards 

January 2005 

GUIDANCE ON LIMITING NITROGEN OXIDES 

REQUIREMENTS RELATED TO 8-HOUR OZONE 

IMPLEMENTATION 
GUIDANCE ON LIMITING NITROGEN OXIDES 

REQUIREMENTS RELATED TO 8-HOUR OZONE 

IMPLEMENTATION 

Prepared by the 

Air Quality Strategies and Standards Division 

Office of Air Quality Planning and Standards 

U.S. Environmental Protection Agency 

Research Triangle Park, North Carolina 27711 

January 2005 
TABLE OF CONTENTS 

Chapter 1: Introduction 

1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

2. Section 182(f) ....................................................... 4 

3. The NOx Requirements ................................................ 5 

4. Section 185B Study ................................................... 6 

5. Application of Section 182( f) Requirements ................................ 6 

6. Organization of this Document ........................................... 7 

Chapter 2: Administrative Procedures 

1. Processing with the State Implementation Plan (SIP} Revision .................. 8 

2. Petition ............................................................. 8 

3. Interface with the SIP .................................................. 9 

4. Timing ........................................................ ; .... 11 

5. Areas with a 1-Hour NOx Exemption ..................................... 13 

Chapter 3: Net Air Quality Benefit 

1. Demonstration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 

2. Factors ............................................................. 14 

3. Geographic Scope .................................................... 18 

4. Scenarios ........................................................... 19 

5. Sources ............................................................ 19 

Chapter 4: Contribute to Attainment 

1. Demonstration ...................................................... 20 

2. Geographic Scope ................................................... 20 

3. Applicability to Areas Monitoring Attainment ............................. 21 

Chapter 5: Net Ozone Air Quality Benefit 

1. Demonstration ...................................................... 23 

2. Factors ............................................................. 23 

3. Attainment/Unclassified Portions ........................................ 24 
Chapter 6: Excess Emissions Reductions 

1. General ............................................................ 26 

2. Demonstration ...................................................... 26 

Chapter 7: Modeling Techniques 

1. Photochemical Grid Modeling .......................................... 29 

2. Regional Modeling .................................................. 30 

. Chapter 8: Emissions Analysis 

1. General ............................................................ 31 

2. Years to Analyze .................................................... 31 

3. Scenarios to Compare ................................................. 32 

4. Consistency with the SIP .............................................. 33 

5. New Source Review .................................................. 34 
CAA 

co 

NAAQS 

NSR 

NOX 

03 

PM 

RACT 

SIP 

S02 

voc 

NO 

N02 

OH 

LIST OF ABBREVIATIONS 

Clean Air Act 

Carbon Monoxide 

National Ambient Air Quality Standards 

New Source Review 

Nitrogen Oxides 

Ozone 

Particulate Matter 

Reasonably Available Control Technology 

State Implementation Plan 

Sulfur Dioxide 

Volatile Organic Compounds 

Nitric Oxide 

Nitrogen Dioxide 

Hydroxyl 
GUIDANCE ON LIMITING NITROGEN OXIDES (NOJ 

REQUIREMENTS RELATED TO 8-HOUR OZONE IMPLEMENTATION 

CHAPTER 1 

INTRODUCTION 

1.1 General 

In subpart 2 of part D of the Clean Air Act (CAA) , as 

amended in 1990, section 182(f) requires States to apply the same 

requirements to major stationary sources of nitrogen oxides (NOx) 

as are applied to major stationary sources of volatile organic 

compounds (VOC) . These requirements are Reasonably Available 

Control Technology (RACT) and New Source Review (NSR) for major 

stationary sources in certain ozone nonattainment areas and 

throughout States in the Ozone Transport Region. 1 In addition, 

section 182(f) specifies circumstances under which these NOx 

requirements would be limited or would not apply (NOx exemption) . 

Further, as a result of rulemaking, areas granted a NOx exemption 

under section 182(f) may be exempt from certain NOx requirements 

related to motor vehicle inspection and maintenance, operating 

permits, and general and transportation conformity. 

In 1993, EPA issued a guidance document for application of 

the section 182(f) provisions with respect to the 1-hour ozone 

standard. 2 The NOx exemption guidance, as revised, 3 continues to 

apply for the 1-hour ozone standard. 

1See 57 FR 55622 ("Nitrogen Oxides Supplement to the 

General Preamble," published November 25, 1992). 

2Guideline for Determining the Applicability of 

Nitrogen Oxides Requirements under Section 182(f), from John 

S. Seitz, Director, Office of Air Quality Planning and 

Standards, to the Regional Division Directors, December 16, 

1993. 

3Section 182(f) Nitrogen Oxides (NOx) Exemptions 

Revised Process and Criteria, memorandum from John S. Seitz, 

Director, Office of Air Quality Planning and Standards, to 

the Regional Division Directors, May 27, 1994; and Section 

182(f) Nitrogen Oxides (NOx) Exemptions--Revised Process and 

Criteria, memorandum from John S. Seitz, Director, Office of 

Air Quality Planning and Standards, to the Regional Division 

Directors, February 8, 1995. 

1 
In 1997, EPA established the 8-hour ozone standard. On 

June 2, 2003, EPA proposed rules to implement the 8-hour ozone 

standard (68 FR 32802). The EPA proposed to extend to subpart 1 

areas the NOx RACT and NSR requirements which apply to major 

stationary sources in subpart 2 nonattainment areas and 

throughout an Ozone Transport Region. 4 The EPA also proposed to 

establish NOx exemption provisions for the 8-hour ozone standard 

that reflect the same concepts as the existing guidance for the 

1-hour ozone standard. For additional information, see the 

discussion and regulatory text related to the NOx exemption 

provisions in the rulemaking notices on implementation of the 

8-hour ozone standard. 

Decreases in NOx emissions generally reduce ozone levels and 

provide significant ozone-related health benefits. At the local 

level, however, this is not always the case. Due to the complex 

photochemistry of ozone production, emissions of NOx lead to both 

the formation and destruction of ozone. In sunlight, free 

radicals (e.g., hydroxyl radical) oxidize nitric oxide (NO) to 

nitrogen dioxide (N02 ) and the N02 reacts with sunlight to 

recreate NO and to produce ozone. The resulting ozone 

concentration depends, in part, on the relative quantities of NOx 

(NO + N02 ), VOC, and free radicals. Some combination of VOC and 

NOx is optimum at producing ozone. 

In areas with large emissions of NO relative to VOC, the 

reaction between emitted NO and existing ozone removes some ozone 

(forming N02 and 0 2 ) • In addition, a portion of the N02 formed 

reacts with the hydroxyl (OH) radical to produce nitric acid, a 

form of nitrogen that does not create 0 3 . In these cases, 

decreases in NOx emissions result in a local increase in o; 

concentrations (NOx disbenefit) . This effect is usually shortlived (local) and much of the N02 formed from the reaction 

between NOx and ozone leads to formation of ozone later (i.e., 

further downwind) . The ozone increases that can result from NOx 

emissions reductions in these localized areas are generally 

limited to small regions within specific urban cores and are 

surrounded by larger regions in which NOx control is beneficial. 

While localized ozone increases can result from NOx 

reductions, it should be noted that the most recent authoritative 

4

With respect to NSR, the EPA recognized that the terms 

of existing NSR regulations should be adequate to cover NOx 

where it is considered a precursor to the formation of 

ozone, but proposed to codify NOx as an ozone precursor in 

order to be completely clear. 68 FR 32846. 

2 
assessments of regional ozone control approaches 5 · 6 have 

concluded that a NOx control strategy would be most effective for 

reducing regional scale ozone and ozone transport, whereas VOC 

reductions are most effective in more dense urbanized areas. As 

a result, EPA has proposed or promulgated several regulatory 

requirements over the past decade designed, in part, to reduce 

regional NOx emissions: rules from the Acid Rain Program, 

multiple Federal motor vehicle and off-road engine standards, the 

regional NOx SIP Call Rule, and the recently proposed Clean Air 

Interstate Rule. Over time, these rules are expected to reduce 

the magnitude and the geographic extent of the nation's 8-hour 

ozone problem. In addition, EPA has recently concluded7 that 

improvements in ozone air quality over the eastern United States 

since the mid-1990s have coincided with continued decreases in 

NOx emissions, together with local VOC control programs. 

On September 1, 2004, EPA invited comment on a draft version 

of the NOx exemption guidance for the 8-hour ozone standard (69 

FR 53378). This final guidance document describes EPA's 

preliminary views on how EPA would determine that the NOx 

requirements would be limited or would not apply for the 8-hour 

ozone program under subparts 1 and 2. Although this document. 

includes various statements that States or petitioners must take 

certain actions, these statements are guidance made pursuant to 

EPA's preliminary interpretations, and thus do not bind the 

States and the public as a matter of law. The EPA's 

interpretations will provide a basis for subsequent EPA approval 

or disapproval of requests for exemption from the NOx 

requirements. This document does not impose binding, enforceable 

requirements on any party, nor does it assure that EPA may 

approve all instances of its application, and thus the guidance 

may not apply to a particular situation based upon the 

circumstances presented. The EPA retains the discretion to adopt 

approaches on a case-by-case basis that differ from this guidance 

where appropriate. 

Any decisions by EPA regarding a particular demonstration 

pursuant to section 182(f) will only be made following notice and 

5

0zone Transport Assessment Group, OTAG Final Report, 

1997. 

6

NARSTO, An Assessment of Tropospheric Ozone Pollution 

- A North American Perspective, July 2000. 

7

USEPA, The Ozone Report: Measuring Progress through 

2003, April 2004. 

3 
opportunity for public review and comment. Therefore, interested 

parties are free to raise questions and objections about the 

appropriateness of the application of this guidance to a 

particular situation; EPA will consider whether or not the 

guidelines set forth in this document are appropriate in that 

situation. This guidance is a living document and may be revised 

periodically without public notice. The EPA welcomes public 

comments on this document at any time and will consider those 

comments in any future revisions of this guidance document. 

Readers of this document are cautioned not to regard statements 

recommending the use of certain procedures or defaults as either 

precluding other procedures or information or providing 

guarantees that using these procedures or defaults will result in 

actions that are fully approvable. As noted above, EPA cannot 

assure that actions based upon this guidance will be fully 

approvable in all instances, and all final actions may only be 

taken following notice and opportunity for public comment. 

1.2 Section 182(f) 

Section 182(f) of the CAA reads as follows: 

NOx Requirements. (1) The plan provisions required under 

this subpart for major stationary sources of volatile organic 

compounds shall also apply to major stationary sources (as 

defined in section 302 and subsections (c), (d), and (e) of this 

section) of oxides of nitrogen. This subsection shall not apply 

in the case of oxides of nitrogen for those sources for which the 

Administrator determines (when the Administrator approves a plan 

or plan revision) that net air quality benefits are greater in 

the absence of reductions of oxides of nitrogen from the sources 

concerned. This subsection shall also not apply in the case of 

oxides of nitrogen for: 

(A) Nonattainment areas not within an ozone transport region 

under section 184 if the Administrator determines (when the 

~dministrator approves a plan or plan revision) that 

additional reductions of ?Xides of nitrogen would not 

contribute to attainment of the national ambient air quality 

standard for ozone in the area, or 

(B) Nonattainment areas within such an ozone transport 

region if the Administrator determines (when the Administrator approves a plan or plan revision) that additional 

reductions of oxides of nitrogen would not produce net ozone 

air quality benefits in such region. 

4 
The Administrator shall, in the Administrator's 

determinations, consider the study required under section 185B. 

(2) (A) If the Administrator determines that excess reductions in 

emissions of NOx would be achieved under paragraph (1), the 

Administrator may limit the application of paragraph (l)to the 

extent necessary to avoid achieving such excess reductions. 

(B) For purposes of this paragraph, excess reductions in 

emissions of NOx are emission reductions for which the 

Administrator determines that net air quality benefits are 

greater in the absence of such reductions. Alternatively, 

for purposes of this paragraph, excess reductions in 

emissions of NOx are, for: 

(i) nonattainment areas not within an ozone transport 

region under section 184, emission reductions that the 

Administrator determines would not contribute to 

attainment of the national ambient air quality standard 

for ozone in the area, or 

(ii) nonattainment areas within such ozone transport 

region, emission reductions that the Administrator 

determines would not produce net ozone air quality 

benefits in such region. 

(3) At any time after the final report under section 185B is 

submitted to Congress, a person may petition the Administrator 

for a determination under paragraph (1) or (2) with respect to 

any nonattainment area or any ozone transport region under 

section 184. The Administrator shall grant or deny such petition 

within 6 months after its filing with the Administrator. 

1.3 The NOx Requirements 

The NOx requirements for NSR and RACT are described in EPA's 

rulemaking on implementation of the 8-hour ozone standard. Where 

EPA grants a NOx exemption, the NOx RACT and NSR requirements may 

not apply. In addition, areas granted a NOx exemption may be 

exempt from certain Federal requirements related to Title V 

operating permits, motor vehicle inspection and maintenance 

(I/M), and general and transportation conformity. 

As stated in EPA's inspection and maintenance (40 CFR 

51.351 (d)) and conformity rules (40 CFR 93.119 (f) (2) for 

transportation rules and 40 CFR 93.152 for general rules), 

certain NOx requirements do not apply where EPA granted an 

areawide exemption under section 182(f). Pursuant to 40 CFR part 

70.2 (subparagraph (3) (i) under the "major source" definition), 

5 
the major source threshold for Federal operating permit programs 

would be defined as 100 tons per year in areas covered by a NOx 

exemption. These exemptions automatically apply; i.e., a State 

does not need to request the application or granting of the I/M 

or conformity exemptions. However, a State may request that an 

exemption apply for limited purposes. 

1.4 Section 185B Study 

Under section 185B, the Administrator, in conjunction with 

the National Academy of Sciences (NAS), conducted a study on the 

role of ozone precursors in tropospheric ozone formation. The 

NAS report, Rethinking the Ozone Problem in Urban and Regional 

Air Pollution, was completed in December 1991. The final section 

185B study incorporated this NAS report along with an EPA report 

addressing the availability and extent of NOx controls. The 

section 185B study examined the role of NOx and VOC emissions, 

the extent to which NOx reductions may contribute or be counterproductive to achieving attainment in different nonattainment 

areas, the sensitivity of ozone to· the control of NOx, the 

availability and extent of controls for NOx, the role of biogenic 

VOC emissions, and the basic information required for air quality 

models. The final study was submitted to Congress on July 30, 

1993. In making a determination under section 182(f) that the 

NOx requirements do not apply, or may be limited, EPA must 

consider the section 185B study. This document, "Guidance on 

Limiting NOx Requirements Related to 8-Hour Ozone 

Implementation," includes consideration of the section 185B 

study. 

1.5 Application of Section 182(f) Requirements 

Section 182(f) (1) provides that the new NOx requirements 

shall not apply if the Administrator determines that any one of 

the following tests is met: 

(1) in any area, the net air quality benefits are greater 

in the absence of NOx reductions from the sources 

concerned; 

(2) in nonattainment areas not within an ozone transport 

region, additional NOx reductions would not contribute 

to ozone attainment in the area; or 

(3) in nonattainment areas within an ozone transport 

region, additional NOx reductions would not produce net 

ozone air quality benefits in the transport region. 

6 
Further, section 182(f) (2) states that the application of 

the new NOx requirements may be limited to the extent necessary 

to avoid "excess reductions" of NOx as determined by applying 

tests similar to tests (1)-(3) above. 

As described later in this document, the ••net air quality 

benefits 11 test and the nexcess reductions 11 provision may be 

applied in an ozone transport region or outside the transport 

region; the 11 Contribute to attainment 11 test may only be applied 

outside of an ozone transport region; and the 11 net ozone 

benefits 11 test may only be applied within an ozone transport 

region. Where any one of the tests is met (even if another test 

failed), the section 182(f) NOx requirements would not apply or, 

under the excess reductions provision, a portion of these 

requirements would not apply. 

1.6 Organization of this Document 

Chapter 1, above, provides an introduction to the NOx 

exemption provisions. In chapter 2, procedural aspects related 

to a request for a NOx exemption are covered. The 11 net air 

quality benefits, 11 11 contribute to attainment, 11 and 11 net ozone 

benefits 11 tests are described in detail in chapters 3-5. The 

"excess reductions" provision is discussed in chapter 6. 

Chapters 7-8 provide technical information related to modeling 

techniques and emissions analyses that may be carried out to 

support a NOx exemption request. 

7 
CHAPTER 2 

ADMINISTRATIVE PROCEDURES 

2.1 Processing with the State Implementation Plan (SIP) Revision 

A State may, at any time, demonstrate to the Administrator 

that some or all of the NOx requirements listed in section 1.2 of 

this document should not apply. For example, a State may submit 

a demonstration along with, or as a revision to, the SIP at the 

time NOx RACT rules are due. The State•s NOx exemption 

demonstration is not required to be a SIP revision itself. 

The EPA will approve or disapprove the State•s NOx exemption 

demonstration when the Administrator approves a plan or plan 

revision. The EPA will consider the section 185B. report and will 

base its decision on the demonstration and supporting information 

provided by the State. Such demonstration and information should 

be in sufficient detail for EPA to determine that the exemption 

request is consistent with the guidance contained in this 

document. The EPA encourages the States to consult with the 

appropriate EPA Regional Office during the development of the 

exemption request. This is necessary to ensure that the 

documentation provided by the State is likely to be approved and 

that any required rules can be adopted in a timely manner. 

2.2 Petition 

Section 182(f) (3) provides that a person (including a State) 

may petition the Administrator for a NOx exemption at any time 

after the final section 185B report is submitted to Congress. 

The petition may be made with respect to any nonattainment area 

or any ozone transport region. The EPA is required to grant or 

deny a section 182(f) petition within 6 months after its filing. 

Since an individual petition is likely to affect the SIP 

planning process which is primarily a State responsibility, EPA 

believes it is reasona~le to require the petitioner to provide a 

copy of the petition and demonstration to the State or States 

which have jurisdiction over the source or sources covered by the 

petition at the same time it is submitted to the Administrator 

(where a petition is being submitted by a person other than the 

State itself) . Where additional States may be affected by the 

petition, the State receiying the petition should coordinate with 

the other States as necessary. In some cases, there may be 

multiple petitions for a given area. In other cases, a single 

petition may have multi-State implications. The EPA will provide 

the State(s) a 3-month period to make a recommendation to EPA 

8 
regarding the petition. This 3-month period will run 

concurrently with the 6.-month review period required under 

section 182(f) (3). The petitioner should submit the petition and 

demonstration to the Administrator through the appropriate EPA 

Regional Office. 

The EPA encourages any petitioner to consult with the State 

air quality agency and the appropriate EPA Regional Office during 

the development of an exemption request. This is necessary to 

ensure that the documentation provided (1) meets EPA guidance, 

(2) does not conflict with similar analyses by the State, and (3) 

is likely to be accepted by the State and EPA. The EPA's 

decision to grant or deny a petition will include consideration 

of the section 185B report and will be based on the demonstration 

provided by the petitioner, the State's recommendation, and the 

provisions of section 182(f). As noted above, this document sets 

forth EPA's preliminary interpretations of the section 182(f) 

provisions. 

If EPA denies a petition, the petitioner may supplement or 

revise the original petition at a later date. If EPA grants a 

petition, the NOx requirements or portions of those requirements, 

would no longer apply to those sources or areas, as described in 

EPA's approval action. Since EPA approval of an exemption 

request would change SIP requirements, EPA would conduct notice 

and comment rulemaking on that request. 

2.3 Interface with the SIP 

Where a petition for an exemption is granted by EPA prior to 

adoption and submittal of the State's rules, the State may simply 

choose not to submit the NOx rules. If a petition is granted 

after submittal of the NOx rules, but prior to EPA approval, the 

State may choose to withdraw the rules and preclude further EPA 

action. In a case where a petition is granted after EPA approves 

the NOx rules, the SIP would need to be modified through a SIP 

revision to rescind the NOx rules provided such rescission would 

not interfere with attainment or reasonable further progress 

[section 110 (1)] . 

Following application of a photochemical grid model to 

support an attainment demonstration, States adopt a control 

strategy that provides for attainment as expeditiously as 

practicable. The selection of a control strategy may result in 

revision of the previously adopted rules. In some instances, NOx 

RACT and NSR requirements already adopted may need to be 

supplemented with additional or more advanced NOx controls in 

order for the area to attain the National Ambient Air Quality 

Standards (NAAQS) . 

9 
In other cases, an area initially exempted may choose, based 

on the new photochemical grid modeling results, to adopt certain 

NOx reduction rules in order to attain and/or meet reasonable 

further progress requirements through NOx substitution. The area 

would be removed from 11 exempt 11 status since NOx reductions were 

subsequently found to be beneficial in their ozone attainment 

plan. Consequently, the area would have to adopt. the NOx RACT 

and NSR rules except to the extent modeling shows that the 

controls beyond those chosen are 11 excess reductions•• (chapter 6) 

or are counterproductive to the net air quality (chapter 3). 

Credit for NOx substitution would be granted only if in 

accordance with the EPA guidance. In any event, these changes 

must be submitted as a SIP revision and must provide for 

attainment as expeditiously as practicable and meet reasonable 

further progress requirements. 

Alternatively, for an area that adopted the NOx RACT and NSR 

rules (i.e., not exempt), a State may choose to revise some or 

all of those rules to require less NOx stationary source 

controls. This action would be based on the application of a 

photochemical grid model showing that the subject NOx controls 

result in excess emissions reductions, as determined using the 

section 182(f) tests set forth in this document. The revisions 

must be submitted as a SIP revision and the SIP must demonstrate 

attainment as expeditiously as practicable. 

In areas that are granted a NOx exemption, States remain 

free to adopt NOx restrictions for other reasons. For example, a 

State may determine that NOx reductions are needed for purposes 

of ozone maintenance planning, ozone attainment in separate 

downwind nonattainment areas, visibility protection, PM 

attainment or maintenance, acid deposition, or other 

environmental protection. The EPA could approve certain NOx 

restrictions in a SIP revision despite granting an exemption 

request, so long as the NOx restrictions would not interfere with 

meeting any applicable requirement concerning attainment and 

reasonable further progress or any other applicable requirement 

of the CAA [see section 110(1)]. 

Many of the areas that are violating either the 8-hour ozone 

or PM2 . 5 NAAQS, may be violating both of these NAAQS. Thus, in 

many cases, States will have ozone and PM2 . 5 nonattainment areas 

with overlapping boundaries. Requirements for regional haze 

apply to all areas. Each State is responsible for developing SIP 

revisions to meet all the requirements relevant to each 

nonattainment area for each pollutant as well as developing a 

regional haze plan. In some cases, ozone control measures may 

also be useful for a PM2 . 5 control strategy or a regional haze 

plan. Similarly, controls for PM2 . 5 may lead to reductions in 

10 
ozone or regional haze. For example, considered in isolation, a 

metropolitan area's ozone strategy might be based on additional 

VOC emissions reductions; if the area needs NOx reductions for 

PM2 . 5 attainment, however, an optimal approach might include a 

more complex ozone strategy using both NOx and VOC reductions. 

We believe integration of ozone and PM2 . 5 attainment planning will 

reduce the overall costs of meeting multiple air quality goals. 

An integrated assessment of the impact controls have on ozone, 

secondary fine particles, and regional haze provides safeguards 

to ensure ozone controls will not preclude optimal controls for 

secondary fine particles and visibility impairment. Therefore, 

we encourage States.conducting modeling analyses for ozone to 

separately estimate effects of a strategy on PM2.5 mass and its 

components (e.g. sulfate, nitrate, organic carbon, etc.). 

2.4 Timing 

Section 182(f) contains few details regarding the 

administrative procedure for acting on NOx exemption requests. 

The absence of specific guidelines by Congress leaves EPA with 

discretion to establish reasonable procedures, consistent with 

the requirements of the Administrative Procedure Act (APA). 

The EPA believes that section 182(f) sets up two separate 

procedures by which the Agency may act on NOx exemption requests. 

Section 182(f) (1) and (2) direct that action on NOx exemption 

determination requests should take place "when [EPA] approves a 

plan or plan revision." This language appears to contemplate 

that exemption requests submitted under these paragraphs are 

limited to States, since States are the entities authorized under 

the Act to submit plans or plan revisions. By contrast, section 

182 (f) (3) provides that "person [s] " 8 may petition for a NOx 

determination "at any time" after the ozone precursor study 

required under section 185B of the Act is finalized, and gives 

EPA a limit of 6 months after filing to grant or deny such 

petitions. Although section 182 (f) (3) references 182 (f) (1), 

there are certain key differences in the language. First, 

individuals may submit petitions under paragraph (3) "at any 

time" (i.e., even when there is no plan revision from the State 

pending at EPA) . Second, the specific timeframe for EPA action 

established in paragraph (3) is substantially shorter than the 

timeframe usually required for States to develop and for EPA to 

take action on revisions to a SIP. These differences strongly 

suggest that Congress intended the process for acting on personal 

petitions to be distinct--and more expeditious--from the plan8Section 302(e) of the CAA defines the term "person" to 

include States. 

11 
revision process intended under paragraph (1) . Thus, EPA 

believes that paragraph (3) 's reference to paragraph (1) 

encompasses only the substantive tests in paragraph (1) [and, by 

extension, paragraph (2)], not the requirement in paragraph (1) 

for EPA to grant exemptions only when acting on plan revisions. 

The requirements of the APA apply with respect to the type 

of notice which must be provided regarding EPA action on NOx 

exemption determinations. Notice-and-comment rulemaking is 

required by the APA when EPA action involves not just factual, 

but also policy and legal considerations that will apply as a 

general matter and, thus, is legislative in nature. Conversely, 

when EPA action can properly be described as party specific in 

nature, involving consideration of primarily factual evidence, 

notice-and-comment rulemaking is not required by the APA. In 

such a case, the EPA action could consist of the issuance of an 

order [see 5 U.S.C. sections 551(4)-(7) and 553]. Given these 

requirements of the APA, EPA believes that under either of the 

procedures established in section 182(f), where the request is 

for an entire area to be exempted from the NOx requirements, the 

EPA must go through notice-and-comment rulemaking to grant or 

deny the petition. Where a petition is submitted for an 

exemption determination relating to an individual source (or 

group of sources) under subsection 182(f) (3), EPA may grant or 

deny the petition through an order transmitted by letter to the 

affected source (or sources) . The EPA will also provide the 

public with notice in the Federal Register of the receipt and 

availability of the petition, as well as of the EPA's final 

determination. 

Section 182(f) (3) requires that EPA grant or deny a 

petition, whether areawide or source specific, within 6 months 

after its filing. Where the rulemaking process is followed, EPA 

is aware that the 6-month requirement may be infeasible in some 

cases. However, courts have ruled that even in instances, such 

as the one presented here, where a prescribed timeframe for EPA 

action apparently conflicts with the requirement to provide the 

public with adequate opportunity for notice and comment, the 

notice requirement must be met. Therefore, EPA will process 

areawide exemption requests by rulemaking as expeditiously as 

practicable, with the intent of meeting the 6-month deadline. 

As noted earlier, petitions submitted under section 

182(f) (3) are not required to be submitted as SIP revisions. 

Consequently, the State is not required under the Act to hold a 

public hearing in order to petition for an areawide NOx exemption 

determination [see section 110(a) (1) and (2)]. For similar 

reasons, if the State is submitting an areawide petition under 

subsection 182(f) (3), it is unnecessary to have the Governor 

12 
submit the petition. However, because of the need for 

consistency with the requirements of 40 CFR part 58, EPA believes 

that, particularly in cases where the NOx exemption request 

(including a request for exemption from the NOx requirements of 

the conformity rules) is based on monitoring data, if such -data 

are contained in a petition submitted by a person other than the 

State, the petition should be coordinated with the State air 

agency. 

2.5 Areas with a 1-Hour Ozone NOx Exemption 

For areas that were previously granted a NOx exemption under 

the 1-hour ozone standard and request a NOx exemption under the 

8-hour ozone standard, EPA would conduct new rulemaking with 

respect to the 8-hour ozone NOx exemption request. This is 

necessary to allow for public comment, to assure consistency with 

the exemption guidance under the 8-hour standard, and to account 

for any new information that may point to a different conclusion. 

For example, while many areas received a 1-hour NOx exemption in 

the mid-1990s on the basis of having air quality monitoring data 

which met the 1-hour ozone standard, EPA would not grant a NOx 

exemption for the 8-hour standard simply due to that 1-hour ozone 

data. Furthermore, several areas that initially received a NOx 

exemption on the basis of photochemical grid modeling have since 

revoked the exemption based on more recent studies showing the 

necessity of NOx emission decreases in order to reach attainment. 

13 
CHAPTER 3 

NET AIR QUALITY BENEFIT 

3.1 Demonstration 

The "net air quality benefit" demonstration applies to 

specific sources in an ozone nonattainment area or in an ozone 

transport region. It must show that NO reductions from the 

sources seeking the exemption would be counter-productive 

overall, considering the net air quality benefits. Congress 

specified in this 11 test 11 for specific sources a higher hurdle 

than in the other tests for areawide exemptions: the 

demonstration must show a beneficial impact from the avoidance of 

the NOx controls. The procedure for this test is to conduct 

dispersion modeling analyses, consistent with EPA guidance, with 

and without NOx reductions at the sources concerned. 

3.2 Factors . 

Unlike the tests described in chapters 4 and 5, this test is 

not limited to consideration of ozone impacts. Instead, this 

test is based on a broader set of air quality impacts. There are 

many air quality impacts explicitly addressed in the CAA, both 

health and welfare related, that may be directly or indirectly 

related to NOx emissions. These impacts include, for example, 

ozone and PM formation, visibility impairment, acid deposition, 

air toxics formation, and nitrogen deposition in nutrientsensitive areas. 

Due to the number and variety of impacts, it is generally 

impractical or impossible to compare effects quantitatively from 

one of these factors to those from another factor or among 

several factors. For example, there is no readily available 

scale to use to compare ozone impacts with acid deposition 

impacts and/or visibility impacts. Thus, in order to describe a 

method for determining the ••net air quality benefit, 11 a 

distinction must be made regarding which of the many factors can 

and should be analyzed. 

Although 11 air quality impacts 11 could potentially be defined 

in a very broad manner, EPA has concluded that the relevant air 

quality impacts must be related directly to goals, standards, or 

mandates that are explicitly addressed in the CAA. That is, the 

test for net air quality benefits must assure that a decision to 

grant an exemption would not interfere with the achievement of 

the specific programs or goals mandated in the CAA. The key CAA 

programs related to emissions of NOx are attainment and 

maintenance of the NAAQS for nitrogen dioxide, ozone, and PM and 

14 
the acid deposition program. The primary NAAQS are set by the 

Administrator to assure protection of the public health. The 

purpose of the acid deposition program is to reduce the total 

atmospheric loading of sulfur dioxide and NOx. 

The CAA requires the primary NAAQS to be attained as 

expeditiously as practicable, and includes deadlines for 

designation of areas' attainment status, rule adoption, submittal 

of control strategies, and attainment of the primary NAAQS. To 

assure that a NOx exemption would not adversely impact any CAA 

requirements, the impacts on attainment of the primary NAAQS need 

to be a primary concern in the net air quality benefit test. 

Therefore, EPA believes the net air quality benefit test should 

focus on protection of the public health and address the effect 

the exemption would have on attainment of the primary NAAQS for 

the criteria pollutants. 

Secondary tests, as needed, can extend to the (qualitative 

or quantitative) consideration of other air quality impacts that 

are explicitly recognized in the CAA. These could inc-lude, for 

example, the welfare effects which EPA has considered and deemed 

necessary to protect against in setting secondary NAAQS for the 

criteria pollutants. A petitioner could also consider any other 

air quality effects that are explicitly addressed in the CAA 

through goals, standards or manqates - for example, acid 

deposition, air toxics, or visibility. While welfare related 

impacts address important environmental issues (for example, 

atmospheric deposition in nutrient-sensitive areas), the CAA 

generally does not contain the same detailed set of requirements 

and deadlines as it does for the public health related NAAQS. 

Further, EPA believes that granting a NOx exemption would not 

relieve, conflict with, or otherwise affect a source's obligation 

or ability to achieve NOx reductions consistent with the acid 

deposition requirements. In cases where NOx reductions from a 

utility subject to section 407 may be counterproductive with 

respect to local air quality, EPA expects the State and utility 

would be able to use the emission averaging provisions of section 

407 to achieve the required NOx reductions at a location where 

they are not counterproductive. The EPA believes the welfare 

related impacts should be a secondary factor in the net air 

quality benefit test. 

In all cases, the method for consideration of the net 

benefits must be related primarily to nair qualityn since section 

182(f) specifically requires a determination of the nair qualityn 

benefits. Thus, simpler tests, such as a nnet emissionsn test, 

should not be relied upon since changes in emissions may not be 

directly related to changes in air quality. In general, air 

quality impacts can be best determined by use of air quality 

15 
dispersion models. 

In order to use air quality dispersion modeling whenever 

possible and to avoid conflicts with other requirements of the 

CAA, the methods described below should be used to determine the 

net air quality benefit over an appropriate geographic area which 

includes the ozone nonattainment areas encompassing or nearby the 

sources concerned (see section 3.3). These methods include a 

primary consideration of the primary NAAQS air quality benefits 

and secondary consideration of other air quality benefits. 

A. Ozone Nonattainment Areas 

For areas that are nonattainment only for the 8-hour ozone 

NAAQS, the effects of NOx reductions on ozone concentrations 

should be quantified with currently available air quality 

modeling techniques consistent with EPA guidance (see chapter 7) . 

The net air quality benefit should be based on a comparison of 

the geographic area where 8-hour ozone concentrations change with 

and without NOx reductions from the sources concerned. 

Alternatively, the change in population exposure to ozone 

concentrations may be used. If the modeling shows a net 

disbenefit for ozone, EPA could approve the NOx exemption 

request. 

B. Areas Nonattainment for Both Ozone and Nitrogen Dioxide 

For areas that are nonattainment for both ozone and nitrogen 

dioxide, NOx reductions clearly are needed to provide for 

attainment of the nitrogen dioxide standard, while either NOx or 

VOC reductions (or both) might best provide for attainment of the 

ozone standard. In such cases, EPA would not make a finding of a 

net air quality benefit since the CAA requires the NAAQS for 

nitrogen dioxide to be met as expeditiously as practicable. 

C. Areas Nonattainment for Both Ozone and Particulate 

Matter 

Many of the same factors affecting concentrations of ozone 

also affect concentrations of secondary PM. For example, 

similarities exist in sources of precursors for ozone and 

secondary PM. Emissions of NOx may lead to formation of nitrates 

as well as ozone. Presence of ozone itself may be an important 

factor affecting secondary particulate formation. For example, 

as ozone builds up, OH radicals do also as a result of 

equilibrium reactions between ozone, water and OH in the presence 

of sunlight. The OH radicals are instrumental in oxidizing gas 

phase 802 to sulfuric acid, which is eventually absorbed by 

liquid aerosol and converted to particulate sulfate in the 

16 
presence of ammonia. Sulfur dioxide also reacts with ozone and 

hydrogen peroxide (a byproduct of photochemistry) , in the aqueous 

phase, to form particulate sulfate. Hydroxyl radicals and NO are 

also precursors for gas phase nitric acid, which is absorbed by 

liquid aerosol and, in the presence of ammonia, leads to 

particulate nitrate. 

Strategies to reduce ozone can also affect formation of 

secondary PM. Reducing NOx emissions diminishes one of the 

precursors for nitric acid (i.e., N02 which results from NO). 

Therefore, in the presence of sufficient ammonia, reducing NOx 

emissions could reduce particulate nitrate concentrations. There 

are also more subtle interfaces between strategies to reduce 

ozone and to reduce secondary PM. For example, reducing NOx in 

the presence of substantial particulate sulfates and lack of 

sufficient ammonia could in some cases exacerbate the particulate 

sulfate problem, or reducing S02 in the presence of substantial 

NOx and ammonia could in some cases exacerbate the particulate 

nitrate problem. 

For areas that are nonattainment for both ozone and PM (PM10 

and/or PM2 . 5 ), a modeling analysis is needed that addresses each 

pollutant for which the area is nonattainment. The net air 

quality benefit should be based on a comparison of the geographic 

area where concentrations change with and without NOx reductions 

from the sources concerned. Alternatively, the change in 

population exposure to concentrations may be used. If the 

modeling shows net disbenefits for both ozone and PM (PM10 and/or 

PM2 _5 for both the short and long term standards), EPA could 

approve the NOx exemption request. If the modeling shows a 

disbenefit for one pollutant but a benefit for the other, EPA 

would not make a finding of a net air quality benefit because (1) 

there is not a clear net air quality benefit since it is 

difficult to compare ozone benefits to PM benefits; (2) the CAA 

requires the NAAQS to be attained as expeditiously as practicable 

and granting the exemption could result in delayed attainment for 

one pollutant; and (3) there are secondary benefits from NOx 

emissions reductions such as decreased acid rain. 

D. Areas Nonattainment for Ozone and Carbon Monoxide, Lead 

or Sulfur Dioxide 

For CO, lead, and sulfur dioxide, EPA is not aware of any 

significant impacts from NOx emissions. Therefore, the net air 

quality benefits determination should be primarily based on the 

ozone modeling analysis described above for areas nonattainment 

for only ozone. 

Secondary Factors 

17 
As noted above, equal consideration of all NOx impacts is 

generally impractical in this net air quality benefit test 

because of the lack of scales to compare the impacts among the 

various factors. Nevertheless, additional factors explicitly 

addressed in the CAA such as those listed below may be considered 

in addition to any information developed from the NAAQS analyses. 

Consideration of the factors below is especially important in 

cases .where the analyses on the NAAQS pollutants cannot clearly 

determine the net air quality benefit. In any case, EPA believes 

the CAA places a substantial burden on the applicant to provide a 

clear showing that NOx reductions would be counterproductive 

overall, considering the net air quality benefits. Additional 

factors to determine net air quality benefit may include but are 

not limited to: 

1. Effects associated with long-term exposures to plants, 

animals, and materials. 

2. Visibility impairment, long-term and episodic acid 

deposition, air toxics, and deposition of nitrogen in 

nutrient-sensitive watersheds. 

3.3 Geographic Scope 

In contrast to the other section 182(f) tests, the net air 

quality benefit test is not specifically limited to an ozone 

nonattainment area or ozone transport region and may be directed 

at a specific set of sources. Thus, a very broad geographic area 

should be considered. The area may, in some cases, extend beyond 

an ozone nonattainment area or ozone transport region. In 

addition, the area must not be so small that. downwind impacts 

from NOx emissions are not fully considered. Sufficient area is 

needed to allow for completion and consideration of the various 

chemical transformations of NOx and interaction with other 

pollutants. At a minimum, the geographic area should include the 

ozone nonattainment area(s) encompassing or nearby the sources 

concerned. For example, petitioning sources located in 

attainment portions of the ozone transport region should analyze 

their impact on nearby nonattainment areas and should consider 

other factors, such as visibility impacts throughout the 

surrounding area. 

3.4 Scenarios 

Section 182(f) states, for this test, that EPA must 

determine that the net air quality benefits are greater in "the 

absence of reductions of oxides of nitrogen from the sources 

concerned.'' The procedure for this test is to first project 

areawide baseline emissions that may be expected at the ozone 

attainment deadline (see sections 3.3 and 8.3) (As described in 

18 
section 8.2, multi-year analyses may also be conducted.) Second, 

the projected baseline emissions are held constant, except for 

the subject individual sources. Then, the air quality analyses 

are conducted for these two scenarios: 

1. the projected baseline emissions without NOx reductions 

from the sources concerned, and 

2. the projected baseline emissions including NOx 

reductions at all emission sources subject to the NOx 

requirements. 

With respect to new.major sources, the two scenarios should 

take into account appl~cation of the section 182(f) NSR 

requirements as described in section 8.5. 

3.5 Sources 

For this net air quality benefit test, the CAA refers to 11 reductions of oxides of nitrogen from the sources concerned. 11 

For purposes of this analysis, 11 the sources concerned 11 are 

defined as the sources that would be exempted from NOx 

requirements by the petition or State request. The sources 

concerned may be identified in any of the following ways: (1) 

specific individual sources, (2) one or more source categories, 

or (3) a geographic area containing a group of sources. As 

described in section 3.4, the sources concerned must be analyzed 

together with other sources in the area; these other NOx sources 

should take into account application of any NOx requirements (as 

part of the areawide baseline conditions expected at the 

attainment deadline year) which are not the subject of the 

exemption request. 

19 
CHAPTER 4 

CONTRIBUTE TO ATTAINMENT 

4.1 Demonstration 

The "contribute to attainment" demonstration. applies only to 

ozone nonattainment areas that are not within an ozone transport 

region. The demonstration must show that additional NOx 

reductions would not contribute to ozone attainment in the area. 

The effects of substantial NOx reductions on ozone concentrations 

should be quantified with currently available air quality 

modeling techniques consistent with EPA guidance (see chapter 7) . 

The procedure for this test is to use a photochemical grid 

model (see chapter 7) to estimate future ozone design values 

under conditions that may be expected within the attainment 

deadline period considering three emission reduction scenarios 

(see chapter 8): (1) substantial VOC reductions; (2) substantial 

NOx reductions; and (3) both the VOC and NOx reductions. If each 

predicted 8-hour ozone ·design v~lue concentration under scenario 

(1) is less than or equal to that from scenarios (2) and (3), 

then the test is passed ·and the NOx exemption request could be 

approved. 

In certain ozone nonattainment areas, it is possible that 

NOx emissions reductions may help to reduce ozone concentrations 

under some meteorological conditions but not under others. The 

phrase 11 would not contribute to attainment 11 could be interpreted 

to mean that NOx emissions reductions would not help reduce 

(1) any areawide 8-hour ozone concentration, (2) the majority of 

areawide 8-hour ozone concentrations, or (3) the most severe 

areawide 8-hour ozone concentration. The EPA believes that the 11 majority11 option is not appropriate since this is the only one 

of the section 182(f) tests which is not keyed to net benefits. 

Furthermore, (A) an area may need to demonstrate attainment under 

multiple meteorological conditions, (B) generally a small number 

of episodes will be modeled and (C) attainment of the NAAQS 

considers design values at each monitoring site in a 

nonattainment area, rather than a single location's, most severe 

8-hour ozone concentration. For the above reasons, EPA believes 

this determination should show that NOx emission reductions would 

not help reduce any 8-hr ozone predicted design value in the 

nonattainment area. 

4.2 Geographic Scope 

This demonstration focuses on attainment of the ozone NAAQS 11 in the area. 11 The EPA interprets this to mean in the 

nonattainment area. In contrast to the provision for transport 

regions, which is likely to consider severai attainment and 

20 
nonattainment areas in the section 182(f) analysis, this 

demonstration is limited to consideration of the effects in a 

single nonattainment area due to NOx emissions reductions from 

sources in the same nonattainment area. 

Where the demonstration includes photochemical grid 

modeling, EPA encourages States/petitioners to include 

consideration of the entire modeling domain since the effects of 

an attainment strategy may extend beyond the designated 

nonattainment area. States should consider such impacts since 

they are ultimately responsible for achieving attainment in all 

portions of their State and for ensuring that emissions 

originating in their State do not contribute significantly to 

nonattainment in, or interfere with maintenance by, any other 

State. 

However, EPA believes NOx exemptions under section 182(f) of 

the CAA and interstate transport of emissions under section 

110(a) (2) (D) of the CAA must be considered independently. The 

EPA has separate authority under section 110(a) (2) (D) to require 

a State to reduce emissions from stationary and/or mobile sources 

where there is evidence showing that such emissions would 

contribute significantly to nonattainment or interfere with 

maintenance in other States. In some cases, then, EPA may grant 

an exemption from certain NOx requirements and, in a separate 

action, require NOx emission decreases under section 

110 (a) (2) (D) . 

4.3 Applicability to Areas Monitoring Attainment 

In some cases, an ozone nonattainment area might attain the 

oz.one standard, as demonstrated by 3 consecutive years of 

adequate monitoring data, without having implemented the section 

182(f) NOx provisions over that 3-year period. Where the NOx 

requirements were not implemented over that 3-year period, it is 

clear that the section 182(f) language is met since 11 additional 

reductions of oxides of nitrogen would not contribute to 

attainment.'' That is, since attainment has already occurred, 

additional NOx reductions could not improve the area's attainment 

status and, therefore, the NOx exemption request could be 

approved. 

The EPA's approval of the exemption, if warranted, would be 

granted on a contingent basis (i.e., the exemption would last for 

only as long as the area's monitoring data continue to 

demonstrate attainment) . The State must continue to operate an 

appropriate air quality monitoring network, in accordance with 40 

CFR part 58, to verify the attainment status of the area. The 

air quality data relied on for the above determinations must be 

consistent with 40 CFR part 58 requirements and other relevant 

EPA guidance. If it is subsequently determined by EPA .that the 

area has violated the standard, EPA would conduct notice and 

21 
comment rulemaking to remove the NOx exemption. 

CHAPTER 5 

NET OZONE AIR QUALITY BENEFIT 

5.1 Demonstration 

The "net ozone air quality benefit" demonstration applies in 

an Ozone Transport Region. It must show that additional 

reductions of NOx would not produce net ozone benefits in the 

transport region. In this test, the net benefit must be 

demonstrated on a regionwide basis. The EPA believes this test 

should include all portions of an Ozone Transport Region in which 

impacts from NOx emissions from the area seeking the exemption 

can be determined by the photochemical grid model. 

The procedure for this test is to use a photochemical grid 

model (see chapter 7) to estimate future ozone design values 

under conditions that may be expected within the attainment 

deadline period considering three emission reduction scenarios 

(see chapter 8): (1) substantial VOC reductions; (2) substantial 

NOx reductions; and (3) both the VOC and NOx reductions. The net 

ozone benefit may be determined by comparing the ozone 

concentrations modeled in scenario (1) with results modeled from 

scenarios (2) and (3). The net ozone benefit should be based on 

a comparison of the net geographic area where 8-hour ozone 

concentrations change with and without NOx reductions from the 

sources concerned. Alternatively, the net change in population 

exposure to ozone concentrations may be used. If the modeling 

shows a net disbenefit for ozone, EPA could approve the NOx 

exemption request. As described in chapter 8, multi-year 

analyses may also be conducted. 

5.2 Factors 

The ozone NAAQS is set at 0.08 parts per million (ppm). In 

defining "net ozone benefit," however, EPA recognizes that 

various forms of expression could be considered with respect to 

ozone impacts. However, ozone concentrations with different 

averaging periods and values cannot readily be compared to each 

other. For example, it is difficult to compare a set of 1-hour 

ozone peak concentrations above 0.12 ppm against a set of 8-hour 

ozone peak concentrations above 0.08 and determine which results 

are more beneficial. 

The EPA believes it is reasonable to focus the net ozone 

benefits test on the 8-hour 0.08 ppm ozone NAAQS, whe~e possible 

for the following reasons: (1) the 0.08 ppm ozone NAAQS has been 

set by the Administrator as the level necessary to protect the 

most sensitive individuals from adverse health effects with an 

"adequate margin of safety;" (2) ozone concentrations with 

different averaging periods and values cannot readily be compared 

22 
to each other, and (3) the purpose of the NOx requirements is 

primarily to attain the current ozone NAAQS. Therefore, the 

averaging time to be used should be the 8-hour daily maximum 

ozone concentration and the analysis should focus on values above 

the 0.08 ppm NAAQS level. Specifically, the net ozone benefits 

test should focus on the.total geographic area or total 

population exposed to ozone concentrations above the 0.08 ppm 

NAAQS level. 

The model results in some cases might show all scenarios to 

be below the 0.08 ppm ozone NAAQS level. In such cases, some 

might argue that there is no ozone benefit and, thus, the NOx 

requirements should not apply. The EPA does not agree with such 

an interpretation because the CAA specifies "net ozone" rather 

than "ozone attainment" for this test. In such cases, the 

analysis should examine values just below the NAAQS level so that 

a comparison can be made. 

5.3 Attainment/Unclassified Portions 

The section 182(f) (1) (B) demonstration explicitly refers to 

nonattainment areas within an ozone transport region. The CAA 

does not clearly state whether or not portions of ozone transport 

regions that are attainment/unclassified can make the net ozone 

benefit demonstration. The section 182(f) (1) net air quality 

benefit test is available to any area; however, as noted 

previously it is a higher hurdle. Thus, while a severely 

polluted area might be able to demonstrate that NOx reductions do 

not apply because the "net ozone benefits" test is satisfied, the 

CAA could be interpreted to require NOx reductions in the 

surrounding attainment area because that area cannot meet the 

same test. It is unlikely that Congress intended such a result. 

An alternative reading of the CAA can be fo~nd through 

section 184(b) (2). This provision states that the attainment/ 

unclassified portions of the transport region must meet "the 

requirements which would be applicable to major stationary 

sources if the area were classified as a moderate nonattainment 

area." Thus, the CAA could be interpreted to provide the same 

section 182(f) (1) (B) demonstration process for these attainment/ 

unclassified areas, since they should be treated as moderate 

nonattainment areas for the purpose of applying the section 

182(f) requirements and moderate nonattainment areas in the 

transport region are eligible to meet the "net ozone benefits" 

test. 

Even without that language, EPA would be inclined to allow 

an attainment/unclassified area in a transport region to satisfy 

the "net ozone benefits" test. It would be absurd and, 

therefore, it is unlikely that Congress intended to apply more 

stringent requirements in the attainment/unclassified portions of 

the transport region than would apply to· the more polluted 

23 
portions. Congress apparently did not intend any lesser 

requirements to apply in the attainment/unclassified portions of 

the transport region. The EPA believes that it is appropriate to 

extend the section 182(f) provision beyond the boundaries of a 

nonattainment area into adjacent attainment/unclassified areas 

which are part of the same section 182(f) demonstration. Thus, 

where a State/petitioner demonstrates that NOx reductions would 

not produce net ozone benefits in the transport region, then the 

section 182(f) NOx requirements would not apply to those sources 

or areas as described in EPA's approval action. Such a 

demonstration must include all portions of the ozone transport 

region in which impacts from NOx emissions from the area seeking 

the exemption can be determined by the photochemical grid model. 

24 
CHAPTER 6 

EXCESS EMISSIONS REDUCTIONS 

6.1 General 

Section 182 (f) (2) provides the flexibility to limit the 

scope of the NOx requirements. Application of the NOx 

requirements can be limited to the extent that any portion of 

those reductions are demonstrated to result in "excess 

reductions.'' The tests for demonstrating excess reductions are 

generally the same as in section 182(f) (1): net air quality 

benefit, contribute to attainment and net ozone benefit. 

However, in this case, the demonstration must show that a portion 

of the otherwise required NOx reductions are either . 

counterproductive to the net air quality, do not contribute to 

attainment, or do not provide a net ozone benefit [depending on 

the section 182(f) test applied]. 

As described below, for the "contribute to attainment" or 

"net ozone" tests, the excess reductions test must show that 

certain NOx reductions are in excess of the reductions specified 

in either the 8-hour ozone attainment demonstration contained in 

the approved SIP or the 8-hour ozone attainment demonstration 

adopted by the State and submitted to EPA for approval. The 

excess emissions reductions may be described, for example, as (1) 

an areawide across-the-board tonnage reduction; (2) emissions 

attributed to specific sources; or (3) emissions from a 

geographic portion of the nonattainment or transport area. 

6.2 Demonstration 

The "contribute to attainment" and ''net ozone benefit" tests 

described in chapters 4 and 5 require an areawide or regional 

analysis. In such areawide/regional analyses, NOx emissions 

reductions at a large number of sources are considered. These 

analyses are appropriate to determine in a directional manner 

whether or not NOx reductions are expected to be beneficial with 

respect to the air quality in the area/region. The analyses 

described in chapters 4 and 5 may be less precise than an 

attainment demonstration required under section 182(c). 

The EPA believes that the excess reductions provision 

requires a more precise analysis; specifically an analysis which 

is based on the attainment demonstration. That is, the excess 

reductions provision must be more than a directional finding on 

an areawide basis. Under the excess reductions provision, an 

analysis is needed to show that a specific portion of the total 

areawide NOx emissions is not beneficial under one of the three 

tests. Thus, individual or groups of sources may petition to 

25 
show that, while NOx reductions may be beneficial directionally 

in the area, NOx reductions from their specific sources are not 

beneficial and, thus, should be exempt from the NOx requirements. 

Without providing some constraints in this guidance 

document, the excess reductions provisions could undermine the 

section 182(f) requirements, since each individual emission 

source could theoretically petition for an exemption with the 

argument that their small contribution to the overall ozone 

problem is inconsequential. Such a petition might be considered 

consistent with the analyses required in chapters 4 and 5, since 

an exemption may be granted where the modeled NOx reductions show 

no impact on ozone concentrations. Certainly, if EPA allowed 

very small amounts of NOx reductions to be modeled individually, 

this interpretation could create a false impression that 

individually the sources do not affect attainment when, in fact, 

the aggregate of the sources does. Congress would not have 

intended, and therefore EPA does not accept the argument, that 

the owner/operator of one car or one small boiler can be excused 

from the CAA requirements because their emissions, viewed alone, 

are small. Considered together with other small contributions, 

the emissions may be important to attainment. That is, emissions 

from one car or one commercial boiler would not change the 

areawide ozone concentration, yet together with other cars or 

boilers, they may be critical to the area's attainment strategy. 

Furthermore, as described elsewhere in this document, ozone air 

quality models should not be applied solely to determine the 

incremental effect of small sources as such emissions could be 

lost in the noise of the air quality model and emissions 

inventory uncertainties when considered alone. 

For the above reasons, EPA has determined that the excess 

reductions demonstration for the "contribute to attainment" or 

"net ozone benefits" tests must be tied to the area's SIP 

attainment demonstration. Thus, this test must show that the 

excess reductions are reductions in excess of those specified in 

the area's attainment demonstration and either contained in the 

approved SIP or as adopted by the State and submitted to EPA for 

approval. This tie to the attainment demonstration assures that 

an excess reductions petition would not arbitrarily be based on 

small emissions and would not undermine the State's control 

strategy. 

In contrast, the "net air quality benefit" test discussed in 

chapter 3 is intended to address an individual or small number of 

sources and already has an adequate constraint. The net air 

quality benefit test requires a showing that NOx reductions 

specifically from the sources concerned are counterproductive. 

The net air quality benefit test imposes a higher hurdle than the 

other two tests and EPA believes this higher hurdle is adequate 

for purposes of the excess emissions test as well. 

26 
CHAPTER 7 

MODELING TECHNIQUES 

7.1 Photochemical Grid Modeling 

As described in chapters 3-6, photochemical grid modeling is 

generally needed to document cases where NOx reductions are 

counterproductive to net air quality (chapter 3), do not 

contribute to attainment (chapter 4), do not show a net ozone 

benefit (chapter 5) , or include excess reductions (chapter 6) . 

The EPA's current modeling guideline is contained in 40 CFR part 

51, appendix W. In addition, procedures for modeling ozone and 

PM are contained in EPA guidance posted on EPA's web site 

(http://www.epa.gov/ttn/scram/). The EPA has draft modeling 

guidance for use in attainment demonstrations for the ozone and 

PM2 . 5 NAAQS . 

It is important to note that EPA believes that photochemical 

grid models are not sufficient to assess incremental changes to 

areawide ozone concentrations from emissions reductions at a 

single or group of small sources. Emission changes should amount 

to some significant fraction of base emissions before modeling 

results can be interpreted with sufficient confidence that the 

results are not lost in the noise of the model and the input 

data. The EPA has reservations with respect to modeling NOx 

reductions at a single source or group of sources unless the 

modeling includes at least 10 percent of the domain-wide 

emissions. Thus, this exemption analysis is appropriate for 

groups of large emitters .or for consideration of entire source 

categories, rather than emissions reductions at a single or group 

of small sources. However, EPA will consider on a case-by-case 

basis an analysis that considers less than a 10 percent change in 

the domain-wide emissions. In such cases, the analysis of a 

small portion of the emissions would show only a small difference 

in ozone concentration, if any, between those with NOx and 

without NOx scenarios, and, therefore, consideration of secondary 

factors (described previously) is particularly important in order 

to show a net air quality benefit. 

The EPA investigated the feasibility and acceptability of 

applying relatively inexpensive screening techniques to evaluate 

if NOx control measures are likely to be beneficial with respect 

to attainment of the ozone NAAQS (Langstaff and Scheffe, 1991) . 

However, EPA determined that, as a technical matter, 

photochemical grid modeling is the only reliable tool to justify 

an areawide exemption from the NOx requirements. The EPA's 

reliance on photochemical grid models is supported by the 

findings of the NAS on tropospheric ozone (December 1991) . The 

NAS report concluded that three-dimensional or grid-based ozone 

air quality models are the best available models for representing 

27 
the chemical and physical processes of ozone formation. Less 

sophisticated models, such as the Empirical Kinetic Modeling 

Analysis, lack the detailed treatment/consideration of physical 

orientation of NOx sources and dispersion of their plumes. 

Further, since trajectory models only address a limited number of 

trajectories, they cannot assess whether NOx control contributes 

to attainment at all locations in an ozone nonattainment area. 

Therefore, such models are insufficient and not acceptable for a 

NOx exemption demonstration. 

7.2 Regional Modeling 

In an ozone transport region, the net ozone benefits test 

should be met by use of regional modeling. Regional modeling is 

needed since the section 182(f) language explicitly refers to net 

ozone benefits "in such region." For purposes of this document, 

regionwide or regional modeling includes all portions of the 

ozone transport region in which impacts from NOx emissions from 

the area seeking the exemption can be determined by the 

photochemical grid model. 

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CHAPTER 8 

EMISSIONS ANALYSIS 

8.1 General 

As described in chapters 3-6, photochemical grid modeling is 

generally needed to document cases where NOx reductions are 

counterproductive to net air quality (chapter 3), do not 

contribute to attainment (chapter 4), do not show a net ozone 

benefit (chapter 5), or include excess reductions (chapter 6). 

Application of these models requires the use of a representative 

emissions inventory. The EPA's modeling guidance (referenced in 

chapter 7) includes discussion on how to develop appropriate 

emissions estimates for use in the selected air quality model. 

Topics include use of available inventory estimates, quality 

as-surance, application of emissions models and estimating future 

emissions. This chapter describes additional emission inventory 

requirements for the various NOx exemption demonstrations. 

8.2 Years to Analyze 

In general, the purpose of the NOx requirements is related 

to attainment of the ozone standard. This suggests that a NOx 

exemption demonstration should focus within the period ozone 

attainment is required (i.e., the 3-year period used to determine 

attainment). Further, many areas are likely to develop modeling 

analyses which demonstrate attainment within the attainment 

deadline period. In many cases, the emissions inventory, 

meteorological data, episode day selections, and control 

strategies which support the attainment demonstration could also 

be used to support a NOx exemption analysis. As described in 

section 8.4, the NOx exemption demonstration should be consistent 

with assumptions contained in the SIP. Considering these points, 

EPA believes that the NOx exemption demonstrations should, at a 

minimum, reflect conditions expected within the 3-year period 

during which the subject area is required to attain the ozone 

standard. 

Thus, base year emissions would be projected to the period 

reflecting the attainment deadline and would include growth in 

VOC and NOx emissions as well as CAA-mandated emissions 

reductions. Specific emission scenarios with and without NOx 

reductions would be built upon this projected emissions baseline 

as described elsewhere in this document. In addition, as 

described later in this chapter, multi-year analyses may also be 

conducted. 

29 
In an ozone transport region, a NOx exemption demonstration 

would likely cover an area which includes ozone nonattainment 

areas of more than one classification, and thus more than one 

attainment deadline. For example, a metropolitan area may have a 

higher classification than a nearby rural nonattainment area. 

For these areas, it is possible that NOx reductions may be 

beneficial to attainment in the near term with respect to the 

rural nonattainment area (and lesser class1fication deadline) 

but, at the same time or in a longer timeframe, NOx reductions 

might be shown to be not beneficial when considering the area as 

a whole (since NOx reductions are generally expected to be more 

beneficial in rural areas) . In order to determine whether the 

NOx reduction requirements should apply, EPA believes that, at a 

minimum, the NOx exemption demonstration should reflect 

conditions expected at the latest attainment deadline period for 

the area as a whole. 

Alternatively, the State/petitioner may include a multi-year 

analysis in its NOx exemption demonstration. This is appropriate 

for areas demonstrating either a net air quality benefit or a net 

ozone benefit. In these demonstrations, the analysis may include 

periodic assessments of the effects of NOx reductions and 

integrate those effects to arrive at a finding on whether or not 

NOx reductions are beneficial. For example, an area may develop 

geographic area exposure analyses for each year or for every 

third year up to the attainment year and assess the overall 

impact of NOx reductions from that information. 

8.3 Scenarios to Compare 

For the "contribute to attainment" and "net ozone benefit" 

tests, the projected emissions shou1d, at a minimum, consider 

three scenarios wh~ch vary emissions reductions from 

anthropogenic sources: (1) substantial VOC reductions; (2) 

similar NOx reductions; and (3) both the VOC and NOx reductions. 

Total emissions to model include both anthropogenic and biogenic 

emissions. 

In contrast to the net air quality benefit demonstration 

(chapter 3) which focuses on the scenario 11 in the absence of 

reductions of oxides of nitrogen from the sources concerned, 11 the 

contribute to attainment and net ozone benefit demonstrations 

concern an unspecified 11 additional reductions 11 of NOx. Thus, 

while the net air quality benefit test must focus on NOx 

reductions specific to the exemption request, the other 

demonstrations may more broadly consider NOx reductions, 

including reductions that employ advanced control technology 

(i.e., beyond RACT). The application of the VOC and NOx 

reductions should be as source category specific as possible, 

rather than across-the-board, in order for the results to be most 

useful. 

30 
In the first scenario the demonstration should use the VOC 

reductions needed to attain, if available. Alternatively, if the 

attainment demonstration has not been completed, the 

demonstration may use some other substantial VOC reduction. 

Reductions associated with attainment are appropriate for the 

reasons described above. In any case, the VOC reductions should 

be substantial and documented as reasonable to expect for the 

area due to the CAA requirements. For example, a 40 percent 

anthropogenic VOC reduction areawide from the 2002 emission 

inventory may be reasonable to expect for serious areas, 

considering motor vehicle emission controls, I/M, reasonable 

further progress and other CAA requirements. 

In the second scenario, NOx reductions should be modeled 

without any VOC reductions above the attainment year baseline. 

The level of NOx reductions should reflect the same percent 

reduction of anthropogenic VOC emissions in scenario (1) above. 

It is important to model this case since NOx reductions, instead 

of additional VOC reductions, may show a clearer benefit. 

In the third scenario, a similar level of NOx reductions 

would be modeled along with the level of VOC reductions chosen. 

That is, if a 40 percent VOC reduction is chosen in scenario (1), 

then the model for scenario (3) would simulate a 40 percent VOC 

reduction and approximately a 40 percent. NOx reduction. It would 

be inappropriate to select a high level of VOC reductions and a 

low level of NOx reductions since this could artificially favor a 

finding that NOx reductions are not beneficiali the two levels 

should be similar. 

8.4 Consistency with the SIP 

Any NOx exemption demonstration must include a showing that 

the exemption request uses assumptions that are consistent with 

requirements of the SIP and the CAA. It is possible that a 

petition could demonstrate that, under some circumstances, NOx 

reductions are not needed to attain the ozone standard. However, 

unless the State actually adopts those particular circumstances 

into its SIP, there is no assurance that the petition's analysis 

is valid. That is, if the assumptions contained in the 

petitioner's demonstration are not valid, the conclusions are 

similarly not valid and EPA would not approve the petition. The 

NOx exemption petition process should not undermine the State's 

implementation plan. The petition should reflect measures 

consistent with mandatory CAA requirements, federally-approved 

SIP requirements, and recent SIP revisions adopted by the State 

and submitted to EPA for approval. The EPA encourages 

petitioners to coordinate these analyses with the appropriate 

State(s) as they are being developed. 

31 
8.5 New Source Review 

The section 182(f) exemption provisions center on the effect 

on ozone concentrations due to NOx emissions reductions. With 

respect to RACT, which involves emissions reductions from 

existing sources, this is a perfect fit. In the case of new or 

modified sources, however, other factors should be considered. 

Even after the application of on-site controls appropriate for a 

major new or modified source, the source will, considered alone, 

result in major increases in NOx emissions. However, the NSR 

offset provisions would require the new source to obtain 

emissions reductions from other sources so as to offset any 

emissions increase associated with the new source. 

To take into account the full impact of the NSR program, the 

term 11 NOx reductions 11 must be carefully interpreted. When 

considering the air quality impacts in chapters 3-6 of this 

document 11 with NOx reductions 11 or with 11 substantial NOx 

reductions, 11 the analysis should reflect a zero emissions 

increase from stationary sources due to the NSR offset 

requirement; when considering the 11 without 11 ·Nox reductions 

scenarios, the analysis should include NOx emission increases due 

to new or modified stationary sources of NOx, many of which would 

be subject to the best available control technology requirement 

through the prevention of significant deterioration program, but 

not to offsets. 

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