“Withdrawal of the Prior Determination or Presumption that 

Compliance with the CAIR or the NOx SIP Call Constitutes 

RACT or RACM for the 1997 8-Hour Ozone and 1997 Fine 

Particle NAAQS; and Revision to RACT Guidance and RFP 

Requirements for the 1997 Fine Particle NAAQS”

Briefing for Office of Management and Budget 

and Interagency Review Panel

January 9, 2012
Overview

• This proposed action was developed in response to both a 

court decision and petitions for reconsideration of several 

issues pertaining to the implementation rules for the 1997 8-

hour ozone NAAQS and the 1997 fine particle (PM2.5) 

NAAQS.

• Litigation on issues covered in this proposal has been stayed 

for now, provided that the rule moves forward.

• To date, there are no court-ordered deadlines.

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Overview (Cont)

This proposal contains three main components:

1. Proposes to withdraw from the implementation rules for the 1997 8-hour 

ozone and 1997 PM2.5 NAAQS, the prior presumptions and/or 

determinations that compliance with the NOx SIP Call and/or the Clean Air 

Interstate Rule (“the CAIR”) constitutes reasonably available control 

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

oxides of nitrogen (NOx) or sulfur dioxide (SO2 oxides of nitrogen (NO ) emissions from electric x) or sulfur dioxide (SO2) emissions from electric 

generating unit (EGU) sources participating in these regional cap-and-trade 

programs. 

2. Proposes to revise guidance in the preamble for the final PM2.5

Implementation Rule regarding criteria for determining economic feasibility of 

RACT controls. 

3. Proposes to revise guidance in the preamble for the final PM2.5

Implementation Rule regarding the geographic area from which states can 

take credit for emissions reductions necessary to fulfill an area’s Reasonable 

Further Progress (RFP) requirements for the 1997 PM2.5 NAAQS.

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Withdrawal of CAIR and NOx SIP Call 

RACT and RACM Presumptions 

Ozone Implementation Rule

• In the Phase 2 Ozone Implementation Rule (as amended by a final action 

on reconsideration) EPA:

– Determined that the regional NOx emissions reductions that result from 

compliance (in certain circumstances) with the NOx SIP Call would meet 

the NOx RACT requirement for EGUs located in states included within 

the respective NOx SIP Call geographic region.

– Determined that for some states, compliance with the CAIR would meet 

the NOx RACT requirement for EGUs located in the state. (The states 

covered by this determination are those in which a technical analysis 

demonstrated that reductions associated with CAIR would be greater 

than those associated with source-by-source RACT – assuming RACT 

was low-NOx burners). 

– Established a presumption that compliance with the CAIR would meet 

the NOx RACT requirement for EGUs located in states not covered by 

the CAIR=RACT determination. 4
Withdrawal of CAIR and NOx SIP Call 

RACT and RACM Presumptions (Cont)

• Several parties filed petitions for review of the Phase 2 Ozone 

Implementation Rule and the amendments to that rule made in 

the Final Action on Reconsideration. 

– Among other things, petitioners challenged EPA’s determination that compliance 

with the NOx SIP Call could satisfy NOx RACT requirements for EGUs in 

nonattainment areas, and EPA’s specific determinations for some areas and general 

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

for EGUs in ozone nonattainment areas. 

• In July 2009, the United States Court of Appeals for the District 

of Columbia Circuit issued its decision on this case and 

remanded the provision of the Phase 2 Ozone Implementation 

Rule determining that the NOx SIP Call satisfies NOx RACT for 

EGUs. The Court emphasized that, under the Clean Air Act, “the 

RACT requirement calls for reductions in emissions from 

sources in the area.” 5
Withdrawal of CAIR and NOx SIP Call 

RACT and RACM Presumptions (Cont)

• Because the CAIR had been remanded, the Court deferred 

consideration of the litigant’s challenge insofar as it related to 

the CAIR program. A new “case” was created (number 09-

1198) by the Court in 2009, which covered this issue. 

• The new “case” covering the CAIR presumption and/or 

determination was held in abeyance until July 2011, when CAIR 

was replaced by the Cross-State Air Pollution Rule (“the 

CSAPR”)

• In October 2011, the Court granted EPA's subsequent motion to 

continue holding the case the abeyance.

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Withdrawal of CAIR and NOx SIP Call 

RACT and RACM Presumptions (Cont)

PM2.5 Implementation Rule

• Through guidance in the preamble to the final PM2.5 Implementation Rule, 

EPA established a presumption that compliance with the CAIR would satisfy 

RACT/RACM requirements for SO2 and NOx emissions from EGUs in states 

participating in the CAIR.

• In June 2007, EPA received a petition for reconsideration of this issue in the 

PM2.5 Implementation Rule.

– The petitioner argued that under the CAA, compliance with a regional trading 

program, such as the CAIR, should not be presumed to satisfy RACT/RACM 

requirements for individual EGU sources located in nonattainment areas. The petition 

also asserts that EPA failed to seek public comment on this presumption.

• In 2009, the Court issued its decision concerning the comparable issue from 

the Phase 2 Ozone Implementation Rule.

• In April 2011, EPA granted the petition for reconsideration of this issue in 

the PM2.5 Implementation Rule.

• This rulemaking is necessary to follow through and complete the process 

necessary for this reconsideration.

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Withdrawal of CAIR and NOx SIP Call 

RACT and RACM Presumptions (Cont)

Action in this Proposed Rule

• Given the ozone Court decision and explicit wording of Clean Air Act section 172(c)(1) 

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

believes that it is no longer appropriate to address this requirement merely based upon 

the participation of the source in a regional cap-and-trade program.

• EPA believes that the assumptions used in the Supplemental Technical Analysis for the 

Phase 2 Ozone Implementation Rule-Notice of Reconsideration do not provide an 

adequate demonstration that participation in the CAIR is projected to achieve equal or 

greater annual emissions reductions from EGUs than source-by-source RACT for 

certain specific ozone nonattainment areas. 

• As a result of this proposal, states may not merely presume that for EGUs located in a 

nonattainment area that compliance with a cap-and-trade program, including the NOx

SIP Call, the CAIR, or similar programs (such as the CSAPR), could satisfy their 

obligation to implement RACT or RACM for NOx or SO2. 

• States will need to conduct a technical analysis for EGUs, as for all other source 

categories subject to RACT or RACM.

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PM2.5 Economic Feasibility of RACT

• In June 2007, EPA received a petition for reconsideration of this issue in the 

PM2.5 Implementation Rule.

• The petition raised objections to the guidance in the preamble regarding 

economic feasibility criteria for determining RACT for sources located within 

nonattainment areas for the 1997 PM2.5 NAAQS.

• EPA granted reconsideration granted reconsideration of this issue in of this issue in April 201 April 2011. 

• Upon reconsideration, EPA now believes that the guidance reflects an 

inappropriate departure from prior EPA guidance on how to evaluate RACT. 

• Therefore, EPA is proposing to remove the guidance in question from the 

preamble to the final PM2.5 Implementation Rule, and to replace it with guidance 

that is consistent with historical criteria and very similar to what was included in 

the preamble to the proposed PM2.5 Implementation Rule.

• Consequently, EPA guidance will maintain that, absent other indications, it is 

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

by similar sources in the same source category.

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Limiting RFP Credit to 

Within the Nonattainment Area for PM2.5

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

from sources located outside a nonattainment area could be credited toward 

meeting the 1997 8-hour ozone NAAQS RFP requirement.

– In the preamble to that Rule, EPA stated that credit could be taken for volatile organic compounds 

(VOC) and NOx emission reductions within 100 kilometers (km) and 200 km, respectively, from 

outside the nonattainment area under certain circumstances. 

• The preamble to the PM Implementation Rule included a similar policy, 2.5 Implementation Rule included a similar policy, 

allowing states to take credit for reductions of NOx and SO2 emissions up to 200 

km from outside the nonattainment area (and potentially for reductions of VOC 

or ammonia as well) when certain conditions were met.

• In November 2007, the Court vacated and remanded the portion of the Phase 2 

Ozone Implementation Rule that allowed RFP credit for emission reductions of 

VOC and NOxfrom outside nonattainment areas. In July 2009, the Court issued 

their decision on “in the area” for RACT. (see slide 5)

• On December 22, 2010, EPA issued a proposed action revising the RFP policy 

in the Phase 2 Ozone Implementation Rule.

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Limiting RFP Credit to 

Within the Nonattainment Area for PM2.5 (Cont)

• In June 2007, EPA received a petition for reconsideration of the RFP policy in the 

PM2.5 Implementation Rule. We granted reconsideration in May 2010.

• Upon reconsideration, EPA is proposing to set aside the Agency’s earlier 

interpretation of its RFP policy and to interpret the CAA as not allowing states to 

rely on credit for emission reductions from outside the nonattainment area to 

meet such an area’s RFP requirements for the 1997 PM2.5 NAAQS. Regulatory 

provisions require reductions from the nonattainment area emissions inventory.

• Therefore, to be creditable toward fulfilling the CAA’s RFP requirements for the 

1997 PM2.5 NAAQS, such emissions reductions must occur from sources located 

within the nonattainment area boundary. 

• EPA is also taking comment on whether there may be alternative legal rationale 

consistent with the CAA and recent court decisions that would permit EPA to 

allow RFP credit for reductions from outside the nonattainment area.

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