MEMORANDUM UNITEDSTATESENVIRONMENTALPROTECTIONAGENCY RESEARCHTRIANGLEPARK,NC 27711 

### JAN 1 4 2005

OFFICEOF AIRQUALITYPLANNING ANDSTANDARDS
SUBJECT:

FROM: GuidanceonLimitingNitrogenOxides(N·O··x)Req.uire.,eRelatedto8-Hour OzoneImplementation 

# .bi

StephenD.Page,Director(C404-04)

. 

### OfficeofAirQualityPlanningand

## St~

# 1**D~** TO: AirDirectors,Regions1-X /

ThismemorandumprovidesguidancerelatedtotheNOxexemptionprovisionsofsection 182(f)oftheCleanAirAct(Act)forthe8-hourozonestandard.EPAinvitedcommentonissues relatedtotheexemptionprovisionsinaJune2,2003,noticeofproposedrulemaking. In addition,EPAinvitedcommentonadraftversionofthisguidanceonSeptember1,2004. ThoughnotspecificallyrequiredbytheAct,thisguidanceindicateshowtheEnvironmental ProtectionAgencyexpectstohandletheexemptionprovisionunderthe8-hourozonestandard.
Ifyouhaveanyquestionsonthisdocument,pleasecontactDougGranoofthisofficeat (919)541-3292,orgrano.doug@epa.gov.
Attachment

cc: LydiaWegman,OAQPS TomHelms,OAQPS

Recycled/Recyclable•PrintedwnhVegetable011BasedInkson100%RecycledPaper(40%Postconsumer)UnitedStates EnvironmentalProtection Agency OfficeofAirQuality PlanningandStandards January2005



## GUIDANCEONLIMITINGNITROGENOXIDES REQUIREMENTSRELATEDTO8-HOUROZONE IMPLEMENTATION

## GUIDANCEONLIMITINGNITROGENOXIDES REQUIREMENTSRELATEDTO8-HOUROZONE IMPLEMENTATION

Preparedbythe
AirQualityStrategiesandStandardsDivision

OfficeofAirQualityPlanningandStandards U.S.EnvironmentalProtectionAgency ResearchTrianglePark,NorthCarolina 27711

January2005

## TABLEOFCONTENTS
Chapter1:Introduction
1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Section182(f)

.......................................................4 3. TheNOxRequirements

................................................5 4. Section185BStudy

...................................................6 5. ApplicationofSection182(f)Requirements

................................6 6. OrganizationofthisDocument

...........................................7 

### Chapter2:AdministrativeProcedures
1. ProcessingwiththeStateImplementationPlan(SIP}Revision

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

.............................................................8 3. InterfacewiththeSIP

..................................................9 4. Timing

........................................................;
....11 5. Areaswitha1-HourNOxExemption

.....................................13 

### Chapter3:NetAirQualityBenefit
1. Demonstration

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

.............................................................14 3. GeographicScope

....................................................18 4. Scenarios

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

............................................................19 

### Chapter4: ContributetoAttainment
1.Demonstration

......................................................20 2.GeographicScope

...................................................20 3.ApplicabilitytoAreasMonitoringAttainment

.............................21 

### Chapter5:NetOzoneAirQualityBenefit
1.Demonstration

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

.............................................................23 3.Attainment/UnclassifiedPortions

........................................24

### Chapter6:ExcessEmissionsReductions
1.General

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

......................................................26 

### Chapter7:ModelingTechniques
1.PhotochemicalGridModeling

..........................................29 2.RegionalModeling

..................................................30



### . Chapter8:EmissionsAnalysis
1.General

............................................................31 2.YearstoAnalyze

....................................................31 3.ScenariostoCompare

.................................................32 4.ConsistencywiththeSIP

..............................................33 5.NewSourceReview

..................................................34

### CAA 

## co NAAQS 

### NSR NOX 

### 03 

### PM RACT SIP S02 

## voc NO N02 

### OH LISTOFABBREVIATIONS
CleanAirAct CarbonMonoxide NationalAmbientAirQualityStandards NewSourceReview NitrogenOxides Ozone ParticulateMatter ReasonablyAvailableControlTechnology StateImplementationPlan SulfurDioxide VolatileOrganicCompounds NitricOxide NitrogenDioxide Hydroxyl

### GUIDANCEONLIMITINGNITROGENOXIDES(NOJ REQUIREMENTSRELATEDTO8-HOUROZONEIMPLEMENTATION
CHAPTER 1
INTRODUCTION
1.1 General
In subpart 2 of part Dof the CleanAirAct (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 ReasonablyAvailable 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) maybe exempt from certainNOx requirements related to motor vehicle inspection andmaintenance, 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-hourozone standard. 2 The NOx exemption guidance, as revised, 3 continues to apply for the 1-hourozone standard.

1See 57 FR 55622 ("Nitrogen Oxides Supplement to the General Preamble," publishedNovember 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 DivisionDirectors, 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 DivisionDirectors, 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.
1In 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 andNSR requirements which apply to major stationary sources in subpart 2 nonattainment areas and throughout an Ozone Transport Region. 4 The EPA also proposed to establishNOx exemptionprovisions 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 inNOx emissions generally reduce ozone levels and provide significant ozone-related healthbenefits. 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, inpart, 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 reactionbetween emittedNO and existing ozone removes some ozone (formingN02 and 02) • 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 03. In these cases, decreases inNOx 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 betweenNOx and ozone leads to formation of ozone later (i.e., further downwind)

. The ozone increases that can result fromNOx emissions reductions in these localized areas are generally limited to small regions within specific urban cores and are surroundedby larger regions inwhichNOx control is beneficial.
While localized ozone increases can result fromNOx reductions, it shouldbe noted that the most recent authoritative

4With respect to NSR, the EPA recognized that the terms of existingNSR regulations shouldbe adequate to coverNOx where it is considered a precursor to the formation of ozone, but proposed to codifyNOx as an ozone precursor in order to be completely clear. 68 FR 32846.
2assessments of regional ozone control approaches5
· 6 have concluded that a NOx control strategywould be most effective for reducing regional scale ozone and ozone transport, whereas VOC reductions are most effective inmore dense urbanized areas. As a result, EPA has proposed orpromulgated several regulatory requirements over the past decade designed, inpart, 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 recentlyproposed CleanAir 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 easternUnited States since the mid-1990s have coincided with continued decreases in NOx emissions, togetherwith 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 preliminaryviews on how EPA would determine that the NOx requirements would be limited or would not apply for the 8-hour ozone programunder subparts 1 and 2. Although this document. includes various statements that States orpetitioners 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 anyparty, nor does it assure that EPA may approve all instances of its application, and thus the guidance may not apply to a particular situationbasedupon 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 byEPA regarding a particular demonstration pursuant to section 182(f) will onlybe made following notice and

50zone Transport Assessment Group, OTAG Final Report, 1997.

6NARSTO, AnAssessment of Tropospheric Ozone Pollution - ANorthAmerican Perspective, July 2000.

7USEPA, The Ozone Report: Measuring Progress through 2003, April 2004. 

### 3opportunity 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 considerwhether or not the guidelines set forth in this document are appropriate in that situation. This guidance is a living document andmaybe revised periodicallywithout 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 cautionednot to regard statements recommending the use of certainprocedures or defaults as either precluding otherprocedures or information orproviding guarantees that using these procedures or defaults will result in actions that are fully approvable. As noted above, EPA cannot assure that actions basedupon this guidance will be fully approvable in all instances, and all final actions may onlybe 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 planprovisions requiredunder 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 orplan revision) that net air qualitybenefits 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 orplan revision) that additional reductions of ?Xides of nitrogenwould 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 orplan revision) that additional reductions of oxides of nitrogen would not produce net ozone air qualitybenefits in such region.



### 4The 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) Forpurposes of this paragraph, excess reductions in emissions of NOx are emission reductions for which the Administrator determines that net air qualitybenefits 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 regionunder 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 personmaypetition the Administrator for a determination under paragraph (1) or (2) with respect to any nonattainment area or any ozone transport regionunder section 184. The Administrator shall grant or deny suchpetition 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 andNSR requirements may not apply. In addition, areas granted a NOx exemptionmaybe exempt from certain Federal requirements related to Title V operatingpermits, motor vehicle inspection andmaintenance (I/M), and general and transportation conformity.
As stated in EPA's inspection andmaintenance (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), certainNOx requirements do not applywhere EPA granted an areawide exemptionunder section 182(f). Pursuant to 40 CFR part 70.2 (subparagraph (3)(i) under the "major source" definition),
5the major source threshold for Federal operatingpermit programs wouldbe defined as 100 tons per year in areas coveredby a NOx exemption. These exemptions automatically apply; i.e., a State does not need to request the application orgranting of the I/M or conformity exemptions. However, a State may request that an exemption apply for limitedpurposes. 1.4 Section 185B Study
Under section 185B, the Administrator, in conjunctionwith 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 inUrban and Regional Air Pollution, was completed inDecember 1991. The final section 185B study incorporated this NAS report along with an EPA report addressing the availability and extent ofNOx controls. The section 185B study examined the role of NOx andVOC emissions, the extent to whichNOx reductions may contribute orbe 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 studywas submitted to Congress on July 30, 1993. In making a determination under section 182(f) that the NOx requirements do not apply, ormaybe limited, EPA must consider the section 185B study. This document, "Guidance on LimitingNOx 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 newNOx requirements shall not apply if the Administrator determines that any one of the following tests is met: (1) in any area, the net air qualitybenefits 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 qualitybenefits in the transport region.



### 6Further, section 182(f)(2) states that the application of the newNOx requirements maybe limited to the extent necessary to avoid "excess reductions" of NOx as determinedby applying tests similar to tests (1)-(3) above.
As described later in this document, the ••net air quality benefits 11 test and the nexcess reductions11 provisionmaybe applied in an ozone transport region or outside the transport region; the 11Contribute to attainment11 test may onlybe applied outside of an ozone transport region; and the 11net ozone benefits 11 test may onlybe 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 exemptionprovisions. In chapter 2, procedural aspects related to a request for a NOx exemption are covered. The 11net air qualitybenefits, 11 11contribute to attainment, 11 and 11net 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 maybe carried out to support a NOx exemption request.

7CHAPTER 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 tobe a SIP revisionitself.
The EPA will approve or disapprove the State•s NOx exemption demonstrationwhen the Administrator approves a plan orplan revision. The EPA will consider the section 185B.report and will base its decision on the demonstration and supporting information providedby 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 documentationprovidedby the State is likely to be approved and that any required rules canbe adopted in a timelymanner. 2.2 Petition
Section 182(f)(3) provides that a person (including a State) maypetition the Administrator for a NOx exemption at any time after the final section 185B report is submitted to Congress. The petitionmaybe made with respect to any nonattainment area or any ozone transport region. The EPA is required to grant or deny a section 182(f) petitionwithin 6 months after its filing.
Since an individual petition is likelyto affect the SIP planningprocess 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 jurisdictionover the source or sources coveredby the petition at the same time it is submitted to the Administrator (where a petition is being submittedby a person other than the State itself)

. Where additional States maybe affectedby the petition, the State receiying the petition should coordinate with the other States as necessary. In some cases, there maybe multiple petitions for a given area. In other cases, a single petitionmayhave multi-State implications. The EPA will provide the State(s) a 3-monthperiod to make a recommendation to EPA



### 8regarding the petition. This 3-monthperiodwill run concurrentlywith the 6.-month reviewperiod 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 anypetitioner 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 documentationprovided (1) meets EPA guidance, (2) does not conflict with similar analyses by the State, and (3) is likely to be acceptedby the State and EPA. The EPA's decision to grant or deny a petitionwill include consideration of the section 185B report and will be based on the demonstration providedby 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 petitionermay supplement or revise the original petition at a laterdate. If EPA grants a petition, the NOx requirements orportions of those requirements, wouldno 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 grantedbyEPA 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 andpreclude further EPA action. In a case where a petition is granted afterEPA approves the NOx rules, the SIP would need to be modified through a SIP revision to rescind the NOx rules provided such rescissionwould not interfere with attainment or reasonable further progress

[section 110(1)]

. Following application of a photochemical gridmodel to support an attainment demonstration, States adopt a control strategy that provides for attainment as expeditiously as practicable. The selectionof a control strategymay result in revision of the previously adopted rules. In some instances, NOx RACT andNSR requirements already adoptedmay need to be supplementedwith additional ormore advancedNOx controls in order for the area to attain the National Ambient Air Quality Standards (NAAQS)

.



### 9In other cases, an area initiallyexemptedmay choose, based on the newphotochemical gridmodeling results, to adopt certain NOx reduction rules in order to attain and/or meet reasonable further progress requirements throughNOx substitution. The area wouldbe removed from 11exempt11 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 11excess reductions•• (chapter 6) or are counterproductive to the net air quality (chapter 3). Credit for NOx substitutionwould 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 andmeet reasonable further progress requirements. Alternatively, for an area that adopted the NOx RACT andNSR 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 gridmodel 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, visibilityprotection, PM attainment ormaintenance, acid deposition, or other environmental protection. The EPA could approve certainNOx 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, maybe violatingboth 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 eachpollutant as well as developing a regional haze plan. In some cases, ozone control measures may also be useful for a PM2.5 control strategyor a regional haze plan. Similarly, controls for PM2.5 may lead to reductions in



### 10ozone or regional haze. For example, considered in isolation, a metropolitan area's ozone strategymight 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 strategyusing bothNOx andVOC reductions. We believe integration of ozone and PM2.5 attainment planningwill 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.conductingmodeling analyses for ozone to separately estimate effects of a strategyon 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 onNOx 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 bywhich the Agencymay act onNOx exemption requests. Section 182(f)(1) and (2) direct that action onNOx exemption determination requests should take place "when [EPA] approves a plan orplan revision." This language appears to contemplate that exemption requests submittedunder these paragraphs are limited to States, since States are the entities authorizedunder the Act to submit plans orplan revisions. By contrast, section 182(f)(3) provides that "person[s]"8 maypetition 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 certainkey differences in the language. First, individuals may submit petitions under paragraph (3) "at any time" (i.e., evenwhen there is no plan revision from the State pending at EPA)

. Second, the specific timeframe for EPA action established inparagraph (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 onpersonal petitions to be distinct--andmore expeditious--fromthe plan8Section 302(e) of the CAA defines the term "person" to include States.
11revision process intended underparagraph (1)

. Thus, EPA believes that paragraph (3)'s reference to paragraph (1) encompasses only the substantive tests inparagraph (1) [and, by extension, paragraph (2)], not the requirement inparagraph (1) for EPA to grant exemptions onlywhen acting onplan revisions.
The requirements of the APA apply with respect to the type of notice whichmust be provided regarding EPA action onNOx exemption determinations. Notice-and-comment rulemaking is requiredby 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 canproperlybe 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 transmittedby 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 maybe 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 submittedunder 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 petitionunder subsection 182(f)(3), it is unnecessary to have the Governor



### 12submit the petition. However, because of the need for consistencywith 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 onmonitoring data, if such-data are contained in a petition submittedby a person other than the State, the petition shouldbe coordinated with the State air agency. 2.5 Areas with a 1-Hour Ozone NOx Exemption
For areas that were previouslygranted a NOx exemptionunder the 1-hour ozone standard and request a NOx exemptionunder the 8-hour ozone standard, EPA would conduct new rulemaking with respect to the 8-hour ozone NOx exemptionrequest. This is necessary to allow for public comment, to assure consistencywith the exemption guidance under the 8-hour standard, and to account for any new information that maypoint to a different conclusion. For example, while many areas received a 1-hourNOx exemption in the mid-1990s on the basis of having air qualitymonitoring data whichmet the 1-hourozone standard, EPA would not grant a NOx exemption for the 8-hour standard simply due to that 1-hourozone data. Furthermore, several areas that initiallyreceived a NOx exemption on the basis of photochemical gridmodeling have since revoked the exemptionbased onmore recent studies showing the necessity of NOx emission decreases in order to reach attainment.



### 13CHAPTER 3
NET AIR QUALITY BENEFIT
3.1 Demonstration
The "net air qualitybenefit" 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 qualitybenefits. Congress specified in this 11test 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 dispersionmodeling 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 maybe 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 qualitybenefit, 11 a distinction must be made regarding which of the many factors can and shouldbe analyzed. Although 11air quality impacts 11 couldpotentiallybe defined in a verybroad 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 qualitybenefits 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



### 14the acid depositionprogram. The primaryNAAQS 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 andNOx.
The CAA requires the primaryNAAQS 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 primaryNAAQS. To assure that a NOx exemptionwould not adversely impact any CAA requirements, the impacts on attainment of the primaryNAAQS need to be a primary concern in the net air qualitybenefit test. Therefore, EPA believes the net air qualitybenefit test should focus onprotection of the public health and address the effect the exemptionwould have on attainment of the primaryNAAQS for the criteriapollutants. Secondary tests, as needed, can extend to the (qualitative or quantitative) consideration of other air quality impacts that are explicitlyrecognized in the CAA. These could inc-lude, for example, the welfare effects which EPA has considered and deemed necessary to protect against in setting secondaryNAAQS for the criteriapollutants. Apetitioner could also consider any other air quality effects that are explicitly addressed in the CAA through goals, standards ormanqates

- for example, acid deposition, air toxics, orvisibility. 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 relatedNAAQS. Further, EPA believes that granting a NOx exemptionwould 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 maybe counterproductive with respect to local air quality, EPA expects the State andutility wouldbe able to use the emission averaging provisions of section 407 to achieve the requiredNOx reductions at a locationwhere they are not counterproductive. The EPA believes the welfare related impacts shouldbe a secondary factor in the net air qualitybenefit test.
In all cases, the method for consideration of the net benefits must be relatedprimarily to nair qualityn since section 182(f) specificallyrequires 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 canbe best determined byuse of air quality

15dispersionmodels.
In order to use air quality dispersionmodelingwhenever possible and to avoid conflicts with other requirements of the CAA, the methods describedbelow shouldbe used to determine the net air qualitybenefit 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 primaryNAAQS air qualitybenefits and secondary consideration of other air qualitybenefits.
A. Ozone Nonattainment Areas
For areas that are nonattainment only for the 8-hour ozone NAAQS, the effects of NOx reductions on ozone concentrations shouldbe quantified with currently available air quality modeling techniques consistent with EPA guidance (see chapter 7)

. The net air qualitybenefit shouldbe 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 inpopulation exposure to ozone concentrations maybe used. If the modeling shows a net disbenefit for ozone, EPA could approve the NOx exemption request.
B. Areas Nonattainment for Both Ozone and NitrogenDioxide
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 eitherNOx 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 qualitybenefit 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 maybe an important factor affecting secondaryparticulate formation. For example, as ozone builds up, OH radicals do also as a result of equilibriumreactions 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

16presence of ammonia. Sulfur dioxide also reacts with ozone and hydrogen peroxide (a byproduct of photochemistry), in the aqueous phase, to formparticulate sulfate. Hydroxyl radicals andNO are also precursors for gas phase nitric acid, which is absorbedby 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, reducingNOx 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 qualitybenefit shouldbe 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 maybe 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 qualitybenefit because (1) there is not a clear net air qualitybenefit 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 secondarybenefits fromNOx emissions reductions such as decreased acid rain.
D. Areas Nonattainment for Ozone and CarbonMonoxide, Lead or SulfurDioxide
For CO, lead, and sulfur dioxide, EPA is not aware of any significant impacts from NOx emissions. Therefore, the net air qualitybenefits determination shouldbe primarilybased on the ozone modeling analysis described above for areas nonattainment for only ozone. Secondary Factors

17As noted above, equal consideration of all NOx impacts is generally impractical in this net air qualitybenefit 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 listedbelowmaybe 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 qualitybenefit. In any case, EPA believes the CAA places a substantial burden on the applicant to provide a clear showing that NOx reductions wouldbe counterproductive overall, considering the net air qualitybenefits. Additional factors to determine net air qualitybenefit may include but are not limited to:
1. Effects associatedwith long-termexposures 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 qualitybenefit test is not specifically limited to an ozone nonattainment area or ozone transport region andmaybe directed at a specific set of sources. Thus, a verybroad geographic area should be considered. The area may, in some cases, extendbeyond an ozone nonattainment area or ozone transport region. In addition, the area must not be so small that.downwind impacts fromNOx emissions are not fully considered. Sufficient area is needed to allow for completion and consideration of the various chemical transformations of NOx and interactionwith 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 qualitybenefits 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



### 18section 8.2, multi-year analyses may also be conducted.) Second, the projectedbaseline emissions are held constant, except for the subject individual sources. Then, the air quality analyses are conducted for these two scenarios:
1. the projectedbaseline emissions without NOx reductions from the sources concerned, and
2. the projectedbaseline emissions includingNOx 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 qualitybenefit test, the CAA refers to
11reductions of oxides of nitrogen from the sources concerned. 11 Forpurposes of this analysis, 11the sources concerned11 are defined as the sources that wouldbe exempted fromNOx requirements by the petition or State request. The sources concernedmay be identified in any of the following ways: (1) specific individual sources, (2) one ormore source categories, or (3) a geographic area containing a group of sources. As described in section 3.4, the sources concernedmust be analyzed together with other sources in the area; these otherNOx sources should take into account application of anyNOx requirements (as part of the areawide baseline conditions expected at the attainment deadline year) which are not the subject of the exemption request.



### 19CHAPTER 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 designvalues under conditions that maybe expectedwithin 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 andNOx reductions. If each predicted 8-hour ozone·design**v~lue** concentrationunder scenario (1) is less than or equal to that from scenarios (2) and (3), then the test is passed·and the NOx exemption request couldbe approved.
In certain ozone nonattainment areas, it is possible that NOx emissions reductions mayhelp to reduce ozone concentrations under some meteorological conditions but not under others. The phrase 11would not contribute to attainment11 couldbe 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
11majority11 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 designvalues at eachmonitoring 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 predicteddesignvalue in the nonattainment area. 4.2 Geographic Scope
This demonstration focuses on attainment of the ozone NAAQS
11in 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


### 20nonattainment 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 strategymay 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 withmaintenance 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 authorityunder 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 MonitoringAttainment
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-yearperiod. Where the 

### NOx requirements were not implemented over that 3-yearperiod, it is clear that the section 182(f) language is met since 11additional reductions of oxides of nitrogenwould not contribute to attainment.'' That is, since attainment has alreadyoccurred, additional 

### NOx reductions could not improve the area's attainment status and, therefore, the 

### NOx exemption request couldbe approved.
The EPA's approval of the exemption, if warranted, wouldbe granted on a contingent basis (i.e., the exemptionwould last for only as long as the area's monitoring data continue to demonstrate attainment)

. The State must continue to operate an appropriate air qualitymonitoring 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 byEPA.that the area has violated the standard, EPA would conduct notice and

21comment rulemaking to remove the NOx exemption. CHAPTER 5
NET OZONE AIR QUALITY BENEFIT
5.1 Demonstration
The "net ozone air qualitybenefit" 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 inwhich impacts fromNOx emissions from the area seeking the exemption canbe determined by the photochemical gridmodel.
The procedure for this test is to use a photochemical grid model (see chapter 7) to estimate future ozone designvalues under conditions that may be expectedwithin 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 andNOx reductions. The net ozone benefit maybe determined by comparing the ozone concentrations modeled in scenario (1) with results modeled from scenarios (2) and (3). The net ozone benefit shouldbe 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 inpopulation exposure to ozone concentrations maybe 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 couldbe considered with respect to ozone impacts. However, ozone concentrations with different averaging periods and values cannot readilybe 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 readilybe compared


### 22to 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 shouldbe the 8-hour dailymaximum ozone concentration and the analysis should focus onvalues above the 0.08 ppmNAAQS 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 interpretationbecause 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 canbe made.
5.3 Attainment/Unclassified Portions
The section 182(f)(1)(B) demonstration explicitlyrefers 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 applybecause the "net ozone benefits" test is satisfied, the CAA couldbe 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 canbe**fo~nd** through section 184(b)(2). This provision states that the attainment/ unclassifiedportions of the transport regionmust meet "the requirements which would be applicable to major stationary sources if the area were classified as a moderate nonattainment area." Thus, the CAA couldbe interpreted to provide the same section 182(f)(1)(B) demonstrationprocess for these attainment/ unclassified areas, since they shouldbe 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 wouldbe inclined to allow an attainment/unclassified area in a transport region to satisfy the "net ozone benefits" test. It wouldbe absurd and, therefore, it is unlikely that Congress intended to applymore stringent requirements in the attainment/unclassifiedportions of the transport region than would apply to·the more polluted

23portions. Congress apparently did not intend any lesser requirements to apply in the attainment/unclassifiedportions of the transport region. The EPA believes that it is appropriate to extend the section 182(f) provisionbeyond 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/petitionerdemonstrates 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 inwhich impacts from

### NOx emissions from the area seeking the exemption canbe determinedby the photochemical gridmodel.



### 24CHAPTER 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 canbe limited to the extent that anyportion 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 describedbelow, for the "contribute to attainment" or "net ozone" tests, the excess reductions test must show that certainNOx 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 adoptedby the State and submitted to EPA for approval. The excess emissions reductions maybe 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 maybe less precise than an attainment demonstration requiredunder section 182(c).
The EPA believes that the excess reductions provision requires a more precise analysis; specificallyan analysis which is based on the attainment demonstration. That is, the excess reductions provisionmust 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 maypetition to

25show that, while 

### NOx reductions may be beneficial directionally in the area, 

### NOx reductions from their specific sources are not beneficial and, thus, shouldbe exempt from the 

### NOx requirements.
Without providing some constraints in this guidance document, the excess reductions provisions couldundermine the section 182(f) requirements, since each individual emission source could theoreticallypetition for an exemptionwith the argument that their small contribution to the overall ozone problem is inconsequential. Such a petitionmight 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 tobe 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 canbe excused from the CAA requirements because their emissions, viewed alone, are small. Considered togetherwith other small contributions, the emissions maybe important to attainment. That is, emissions from one car or one commercial boilerwould not change the areawide ozone concentration, yet together with other cars or boilers, theymaybe critical to the area's attainment strategy. Furthermore, as described elsewhere in this document, ozone air qualitymodels should not be applied solely to determine the incremental effect of small sources as such emissions couldbe lost in the noise of the air qualitymodel and emissions inventoryuncertainties 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 petitionwould not arbitrarilybe based on small emissions and would not undermine the State's control strategy.
In contrast, the "net air qualitybenefit" 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 qualitybenefit test requires a showing that 

### NOx reductions specifically from the sources concerned are counterproductive. The net air qualitybenefit 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.


### 26CHAPTER 7
MODELING TECHNIQUES
7.1 Photochemical Grid Modeling
As described in chapters 3-6, photochemical gridmodeling is generallyneeded 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, appendixW. 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 canbe 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 modelingNOx 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 withNOx and without NOx scenarios, and, therefore, consideration of secondary factors (described previously) is particularly important in order to show a net air qualitybenefit.
The EPA investigated the feasibility and acceptability of applying relatively inexpensive screening techniques to evaluate if NOx control measures are likely to be beneficial withrespect 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 onphotochemical gridmodels is supportedby the findings of the NAS on tropospheric ozone (December 1991)

. The NAS report concluded that three-dimensional or grid-based ozone air qualitymodels are the best available models for representing

27the chemical and physical processes of ozone formation. Less sophisticatedmodels, such as the Empirical Kinetic Modeling Analysis, lack the detailed treatment/consideration of physical orientation of 

### NOx sources and dispersion of theirplumes. Further, since trajectorymodels only address a limitednumber of trajectories, they cannot assess whether

### NOx control contributes to attainment at all locations in an ozone nonattainment area. Therefore, suchmodels are insufficient and not acceptable for a 

### NOx exemption demonstration.
7.2 Regional Modeling
In an ozone transport region, the net ozone benefits test shouldbe met byuse of regional modeling. Regional modeling is needed since the section 182(f) language explicitlyrefers to net ozone benefits "in such region." Forpurposes 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 canbe determined by the photochemical gridmodel.



### 28CHAPTER 8
EMISSIONS ANALYSIS
8.1 General
As described in chapters 3-6, photochemical gridmodeling 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 qualitymodel. 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 toAnalyze
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-yearperiodused to determine attainment). Further, many areas are likely to develop modeling analyses which demonstrate attainment within the attainment deadline period. Inmany 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 shouldbe consistent with assumptions contained in the SIP. Considering these points, EPA believes that the NOx exemption demonstrations should, at a minimum, reflect conditions expectedwithin the 3-yearperiod 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 andNOx 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.



### 29In 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 mayhave a higher classification than a nearby rural nonattainment area. For these areas, it is possible that NOx reductions maybe beneficial to attainment in the near termwith 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 tobe 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/petitionermay include a multi-year analysis in its NOx exemption demonstration. This is appropriate for areas demonstrating either a net air qualitybenefit 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 onwhether or not NOx reductions are beneficial. For example, an area may develop geographic area exposure analyses for eachyear or for every thirdyear 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) similarNOx reductions; and (3) both the VOC andNOx reductions. Total emissions to model include both anthropogenic andbiogenic emissions.
In contrast to the net air qualitybenefit demonstration (chapter 3) which focuses on the scenario 11in 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 11additional reductions 11 of NOx. Thus, while the net air qualitybenefit test must focus onNOx reductions specific to the exemption request, the other demonstrations may more broadly considerNOx reductions, including reductions that employ advanced control technology (i.e., beyond RACT). The application of the VOC andNOx reductions shouldbe as source category specific as possible, rather than across-the-board, in order for the results to be most useful.

30In the first scenario the demonstration shoulduse the VOC reductions needed to attain, if available. Alternatively, if the attainment demonstration has not been completed, the demonstration mayuse 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 inventorymay 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 shouldbe modeled without anyVOC reductions above the attainment yearbaseline. 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 clearerbenefit.
In the third scenario, a similar level of NOx reductions wouldbe 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 shouldbe similar.
8.4 Consistencywith 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 similarlynot valid and EPA would not approve the petition. The NOx exemptionpetitionprocess should not undermine the State's implementationplan. The petition should reflect measures consistent withmandatory 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.

318.5 New Source Review
The section 182(f) exemptionprovisions 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 shouldbe considered. Even after the application of on-site controls appropriate for a major new or modified source, the source will, considered alone, result inmajor increases inNOx 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 11NOx reductions 11 must be carefully interpreted. When considering the air quality impacts in chapters 3-6 of this document 11withNOx reductions 11 or with 11substantial NOx reductions, 11 the analysis should reflect a zero emissions increase from stationary sources due to the NSR offset requirement; when considering the 11without11·Nox reductions scenarios, the analysis should include NOx emission increases due to new or modified stationary sources of NOx, many of whichwould be subject to the best available control technology requirement through the prevention of significant deteriorationprogram, but not to offsets.

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