11346 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

VIRGINIA—OZONE

Designated Area

Designation Classification

Date 1 Type Date 1 Type

Norfolk-Virginia Beach-Newport News (Hampton

Roads) Area

[insert date 45 days after

publication date].

Unclassifiable/ Attainment .................... ....................

Chesapeake

Hampton

James City County

Newport News

Norfolk

Poquoson

Portsmouth

Suffolk

Virginia Beach

Williamsburg

York County

1This date is November 15, 1990, unless otherwise noted.

* * * * *

[FR Doc. 97–6078 Filed 3–11–97; 8:45 am]

BILLING CODE 6560–50–P

40 CFR Part 80

[FRL–57–02–2]

RIN 2060–AD27

Regulation of Fuels and Fuel

Additives; Standards for Reformulated

Gasoline

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Notice of denial of petition for

reconsideration.

SUMMARY: Pursuant to section 553(e) of

the Administrative Procedure Act, the

American Petroleum Institute requested

that EPA reconsider and repeal the

Phase II reformulated gasoline emission

reduction standard for oxides of

nitrogen. For the reasons provided

below, EPA is denying this petition.

EPA’s review of new data concerning

the air quality benefits and costeffectiveness of the reformulated

gasoline emission reduction standard

for oxides of nitrogen demonstrates the

continued appropriateness of the

standard.

EFFECTIVE DATE: March 12, 1997.

ADDRESSES: Information relevant to this

action is contained in Docket No. A–96–

27 at the EPA Air and Radiation Docket,

room M–1500 (mail code 6102), 401 M

St., SW., Washington, DC 20460. The

docket may be inspected at this location

from 8:30 a.m. until 5:30 p.m.

weekdays. The docket may also be

reached by telephone at (202) 260–7548.

As provided in 40 CFR part 2, a

reasonable fee may be charged by EPA

for photocopying.

FOR FURTHER INFORMATION CONTACT:

Debbie Wood, Office of Mobile Sources,

Fuels and Energy Division, (202) 233–

9000.

SUPPLEMENTARY INFORMATION

I. Introduction and Background

On February 16, 1994, EPA published

a final rule establishing various content

and emission reduction standards for

reformulated gasoline (RFG), including

provisions for the certification of RFG

and enforcement of RFG standards, and

establishing certain requirements

regarding unreformulated or

conventional gasoline (59 FR 7716). The

purpose of the RFG program is to

improve air quality by requiring that

gasoline sold in certain areas of the U.S.

be reformulated to reduce emissions

from motor vehicles of toxics and

tropospheric ozone-forming

compounds, as specified by section

211(k) of the Clean Air Act (CAA or the

Act). Section 211(k) mandates that RFG

be sold in nine specific metropolitan

areas with the most severe summertime

ozone levels; RFG must also be sold in

any ozone nonattainment area

reclassified as a severe area, and in

other ozone nonattainment areas that

choose to participate or ‘‘opt in’’ to the

program. The Act further requires that

conventional gasoline sold in the rest of

the country not become any more

polluting than it was in 1990 by

requiring that each refiner’s and

importer’s gasoline be as clean, on

average, as it was in 1990. This has

resulted in regulatory requirements

referred to as the ‘‘anti-dumping’’

program.

The Act mandates certain

requirements for the RFG program.

Section 211(k)(1) directs EPA to issue

regulations that:

Require the greatest reduction in emissions

of ozone forming volatile organic compounds

(during the high ozone season) and emissions

of toxic air pollutants (during the entire year)

achievable through the reformulation of

conventional gasoline, taking into

consideration the cost of achieving such

emission reductions, any nonair-quality and

other air-quality related health and

environmental impacts and energy

requirements.

Section 211(k) specifies the minimum

requirement for reduction of volatile

organic compounds (VOCs) and toxics

for 1995 through 1999, or Phase I of the

RFG program; the section specifies that

EPA must require the more stringent of

a formula fuel or an emission reduction

performance standard, measured on a

mass basis, equal to 15 percent of

baseline emissions. Baseline emissions

are the emissions of 1990 model year

technology vehicles operated on a

specified baseline gasoline. Section

211(k)(2) compositional specifications

for RFG include a 2.0 weight percent

oxygen standard and a 1.0 volume

percent benzene standard. Section

211(k)(2) also specifies that emissions of

oxides of nitrogen (NOX) may not

increase in RFG over baseline

emissions.

For the year 2000 and beyond, or

Phase II of the RFG program, the Act

specifies that the VOC and toxic

performance standards must be no less

than either a formula fuel or a 25

percent reduction from baseline

emissions, whichever is more stringent.

EPA can adjust these standards upward

or downward taking into account such

factors as technological feasibility and

cost, but in no case can the standards be

less than 20 percent.

Shortly after passage of the CAA

Amendments in 1990, EPA entered into

a regulatory negotiation with interested

parties to develop specific proposals for

implementing both the RFG and antidumping programs. In August 1991, the

negotiating committee reached
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11347

1 61 FR 35960 (July 9, 1996).

2API Petition for Reconsideration and

Rulemaking on NOX Reduction Portion of the

Reformulated Gasoline Rule (hereinafter ‘‘Pet.’’) at

p. 1.

3Pet. at p. 2.

4Pet. at p. 3.

5 Pet. at p. 5.

6 Ibid.

7U.S. EPA, National Air Quality and Emissions

Trends Report 1993, EPA 454/R–94–026, October

1994, p. 6.

8 Pet. at p. 6.

9 Ibid.

10Pet. at p. 7.

11Pet. at p. 8.

12 Ibid.

13National Research Council, Rethinking the

Ozone Problem in Urban and Regional Air

Pollution, National Academy Press, Washington,

DC., 1991.

14Pet. at p. 9.

15Pet. at p. 10.

16Pet. at p. 11.

17Pet. at p. 12.

18Pet. at p. 13. API also points out that Dallas,

which chose to implement the RFG program, has

been granted a section 182(f) waiver. The Dallas

waiver is based on a showing that Dallas would

attain the ozone NAAQS without implementation of

the additional NOX controls required under section

182. 59 FR 44386 (August 29, 1994).

19 Ibid.

20Pet. at p. 14.

21 Ibid.

consensus on a program outline that

would form the basis for a notice of

proposed rulemaking, addressing

emission content standards for Phase I

(1995–1999), emission models,

certification, use of averaging and

credits, and other important program

elements.

The regulatory negotiation conducted

by EPA did not address the Phase II

VOC and toxic standards for RFG, nor

did it address a reduction in NOX

emissions beyond the statutory cap

imposed under section 211(k)(2)(A). The

final rule promulgated by EPA closely

followed the consensus outline agreed

to by various parties in the negotiated

rulemaking process. The final rule also

adopted a NOX emission reduction

performance standard for Phase II RFG,

relying on authority under section

211(c)(1)(A).

In December 1995, the American

Petroleum Institute (API) submitted a

petition to EPA requesting

reconsideration and repeal of the Phase

II RFG NOX standard. API also

requested suspension of the effective

date of the standard, pending

deliberations on the cost-effectiveness of

NOX control. EPA’s initial review of the

API petition indicated that it presented

no compelling new evidence or

argument that would warrant revisiting

the decision made in promulgating the

Phase II RFG NOX reduction standard.

EPA also conducted a review of relevant

and available new information on costs

and benefits developed since

promulgation of the final rule to ensure

that EPA’s conclusions on the

appropriateness of the Phase II RFG

NOX reduction standard remain wellfounded. EPA published a Federal

Register notice requesting comment on

the issues raised in the API petition.1 In

December 1996, EPA reopened the

comment period, to allow public

comment on a draft Department of

Energy report on RFG costs, and held a

meeting with interested parties to

discuss the draft report.

The arguments presented in the API

petition are summarized below,

followed by a summary of the public

comments received, and EPA’s response

to the petition and comments. A

complete copy of the API petition,

public comments, and new information

generated by EPA may be found in the

docket for this action.

II. Summary of API Petition

A. Consistency With CAA and

Negotiated Rulemaking

In its petition, API argues that the

Phase II RFG NOX emission reduction

standard is inconsistent with the 1990

Clean Air Act Amendments and the

1991 regulatory negotiation.2 API cites

provisions of the statute that specifically

require reductions in various pollutants,

and contrasts those explicit NOX

reduction mandates with the ‘‘no NOX

increase’’ approach toward RFG in

section 211(k).3 API also argues that the

1991 agreement reached in the

regulatory negotiation does not address

a Phase II NOX reduction, and that the

focus of debate during the regulatory

negotiation was whether de minimis

increases in NOX would satisfy the no

NOX increase standard.4

B. Air Quality Benefits

In its petition, API argues that ozone

benefits for the Phase II NOX standard

are overstated. 5 API states that the

primary basis for the NOX standard is

ozone attainment, because of the role

NOX emissions play with VOC

emissions in the formation of ozone. 6

API cites EPA’s 1994 Trends Report 7 to

support its statement that substantial

progress toward ozone attainment has

been made. 8 API argues that progress

toward attainment of the National

Ambient Air Quality Standard (NAAQS)

for ozone can be expected to continue

because of new federal programs and

state obligations established under the

Clean Air Act Amendments of 1990. 9

API further argues that EPA’s section

182(f) waiver decisions show that NOX

reductions are not always warranted for

ozone attainment.10 API states that, in

establishing section 182(f) waivers,

Congress recognized that NOX

reductions do not always contribute to

ozone attainment, because of

atmospheric meteorology and the

complex relationship of NOX and VOC

emissions. 11 API characterizes section

182(f) as stating that major stationary

source requirements for NOX do not

apply where NOX reductions do not

contribute to ozone NAAQS attainment

or do not yield net air quality benefits

in the affected nonattainment area. 12

API argues that the Phase II RFG NOX

standard emphasizes those portions of a

1991 National Research Council study 13

and other studies that show NOX control

to be an effective ozone control strategy,

while discounting those parts of the

same studies showing that NOX control

may be counterproductive in a

particular area. 14 API cites studies to

contradict EPA’s discounting of the

adverse effects of NOX reductions on

ozone. 15 API points to parts of EPA’s

1993 report to Congress (pursuant to

section 185B of the CAA) to support its

contention that NOX control may not

always be appropriate to reduce

ozone.16

API argues that in granting section

182(f) waivers, EPA has concluded in

most cases that additional NOX

reductions are not needed for ozone

attainment; however, in a few cases,

EPA has found that NOX reductions

would be detrimental to ozone

attainment.17 Moreover, three waivers

would suspend major stationary source

NOX control in cities required to use

RFG: Chicago, Milwaukee, and

Houston.18 API states that the waivers

have no set period of duration and stay

in place so long as the conditions in

section 182(f) are met.19 API concludes

that the Phase II NOX standard is

incongruous with the granting of section

182(f) waivers in RFG areas.20 API also

argues that the Phase II RFG NOX

standard is incongruous with the twophased approach EPA adopted for

submittal of ozone SIP attainment

demonstrations.21 API concludes that

given the substantial progress toward

ozone NAAQS attainment, and the CAA

requirement of continued steady

progress, EPA’s Phase II RFG NOX

standard applicable in all RFG areas is

incongruous with the granting of state
11348 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

22 Id.

23Pet. at p. 15.

24 Ibid.

25Pet. at p. 16.

26 Ibid.

27 Id.

28Pet. at pp. 17–18.

29Pet. at pp. 18–19.

30Pet. at p. 19.

31U.S. DOE, Estimating the Costs and Effects of

Reformulated Gasolines, DOE/PO–0030, December

1994 (hereinafter ‘‘1994 DOE study’’).

32Pet. at p. 20.

33Pet. at pp. 20–21.

34Pet. at p. 21.

35Pet. at p. 22.

36Pet. at p. 22.

37Pet. at p. 22.

38Pet. at p. 23.

39Pet. at p. 23.

40Pet. at pp. 23–24.

41Pet. at p. 25.

42Pet. at p. 26.

43Pet. at p. 27.

44Pet. at p. 27.

45Pet. at p. 29.

46Pet. at p. 31.

47Pet. at p. 30.

48Pet. at pp. 30–31.

petitions for waiver from section 182

NOX reduction requirements.22

API also argues that non-ozone

benefits claimed for the Phase II RFG

NOX standard are wholly speculative;

no evidence is offered by EPA to show

that the assumed effects are measurable,

let alone significant.23 Non-ozone

benefits claimed include less acid rain,

reduced toxic nitrated compounds,

reduced nitrate deposition, improved

visibility, lower levels of nitrogen

dioxide, lower levels of PM–10, and

protection against increases in fuel

olefin content which could increase the

reactivity of vehicle emissions. 24

C. Cost-Effectiveness

API argues that the impact of the NOX

reduction standard on gasoline refining

costs and on refinery flexibility is

understated.25 API cites statements by

EPA acknowledging that a NOX

performance standard restricts the

flexibility of refiners in producing

qualifying RFG.26 API discounts EPA’s

assertion that the performance standard

is not a fuel recipe and refiners may

produce gasoline in any way that

achieves the desired result.27 According

to API, any NOX reduction ‘‘interferes

with refining flexibility and leaves

refiners with unduly costly and narrow

choices for producing RFG.’’ 28

API argues that the cost-effectiveness

of NOX reduction is overstated because

sulfur removal costs are understated and

ozone benefits are overstated. 29 API

references detailed information

submitted during the RFG rulemaking

that criticizes inadequacies in the

Bonner & Moore refinery model used by

EPA.30 API also cites a 1994 DOE

study 31 that API characterizes as

suggesting that EPA’s desulfurization

costs are too low.32 API cites cost

estimates recently prepared by EPA for

the Ozone Transport Assessment Group

(OTAG) to illustrate its point that EPA

and API are far apart on cost estimates.33

API states that if EPA used more

accurate desulfurization costs, the cost

of Phase II NOX reductions would

increase above the $10,000 per ton

benchmark EPA rejected as too high

during the RFG rulemaking.34

API also argues that EPA’s analysis of

cost-effectiveness does not take into

account that NOX reductions do not

contribute to ozone attainment in

certain areas.35 API states that the

Chicago, Milwaukee, Houston and

Dallas areas each have section 182(f)

waivers and comprise 33 percent of the

non-California RFG market. 36 API

argues that the benefit of NOX

reductions in these areas is at least zero,

if not less than zero, thereby driving

EPA’s cost-effectiveness up to about

$7,500 per ton, based on this factor

alone.37

API further argues that EPA

understated the relative costeffectiveness of major stationary source

NOX control strategies, by dwelling on

motor vehicle and engine controls.38

API argues that stationary source

controls can discriminate between areas

where NOX reductions contribute to

ozone attainment and areas where they

do not, unlike motor vehicle, engine,

and fuel controls.39 API cites several

studies conducted by or for EPA

between July 1991 and July 1994 that

contain more comprehensive

information about stationary source

controls, including cost-effectiveness.40

API provides a table citing data from

those studies, and includes its estimate

of incremental cost-effectiveness for

several technologies.41 API concludes

that its incremental cost-effectiveness

values compare favorably even to EPA’s

incremental cost-effectiveness estimate

of $5,000 per ton of NOX removed for

a 6.8 percent NOX emission reduction.42

API argues that control of major

stationary sources for NOX offers a far

larger potential for overall reduction in

air pollution.43 API cites EPA’s 1994

Trends Report that combustion

stationary sources account for about 50

percent of national NOX emissions with

a NOX reduction potential of 75 to 95

percent.44 API further argues that major

stationary source controls can be

targeted to avoid the economic waste of

NOX controls where they are not needed

and the adverse effect on ozone because

of atmospheric chemistry.45

API concludes that EPA should repeal

the Phase II RFG NOX emission

reduction standard or, at least, suspend

the effective date until a comprehensive

consideration of NOX control costeffectiveness is performed.46 API claims

EPA should sequence NOX controls

where NOX reductions are appropriate,

targeting major stationary source NOX

controls first as they are claimed to be

more cost-effective and can be targeted

where needed geographically. Other

controls should not be considered until

major stationary source controls are

employed and evaluated, according to

API.47 Finally, API concludes that Phase

II RFG NOX emission reductions are not

compelled by the statute, are not

necessary, and are not the most costeffective controls for NOX reduction

and, thus, satisfy none of the criteria for

regulatory action set out in Executive

Order 12866.48

III. Summary of Public Comment

EPA received public comment on the

API petition from 26 commenters,

including the oil, automotive, and

utility industries, and from states and

state organizations. This section

summarizes those comments.

A. Consistency With CAA and

Regulatory Negotiation Agreement in

Principle

Whether the Phase II RFG NOX

reduction standard is consistent with

the CAA and the regulatory negotiation

is addressed in comments by several oil

companies, and by oil, automotive,

utility, and state associations. Most

comments from the oil industry restate

the points made by API in its petition

to EPA, described in the previous

section. One oil company also argued

that EPA did not give proper

consideration to the statutory factors

required under section 211(c)(1)(A) of

the Act, given that EPA is still trying to

define the complex relationships

involving NOX, atmospheric chemistry,

and ozone formation.

The automotive, utility, and state

association comments argue that

although the Phase II RFG NOX

reduction standard is not mandated by

section 211(k) of the CAA, it is not

inconsistent with the CAA, and that the

Phase II program was not addressed by

the regulatory negotiation’s Agreement

in Principle, so the NOX reduction

standard does not contradict or

supersede any specific term of the

agreement.
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11349

B. Air Quality Benefits

Most comments address the issue of

whether EPA overstated the air quality

benefits of the Phase II RFG NOX

emission reduction standard. Several oil

industry comments cite air quality

modeling data generated by OTAG to

support the API argument that NOX

reductions may cause urban ozone

increases, also referred to as NOX

disbenefits. One oil company argues

that the OTAG modeling results present

compelling new evidence against the

Phase II RFG NOX emission reduction

standard, citing one day each of two

modeling runs as evidence that

aggressive NOX controls significantly

increase ozone concentrations in the

urban areas where ozone levels are

highest. Those runs include a 60 percent

reduction in elevated NOX emissions,

and a 60 percent reduction in elevated

NOX emissions plus a 30 percent

reduction in low-level NOX emissions.

Another oil company argues that the

OTAG modeling results are significant

new evidence to support the API

petition, and show that the NOX

disbenefit phenomenon is consistently

present and most pronounced in the

Chicago metropolitan area. That

company further argues that OTAG

modeling results show that urban VOC

reductions do not eliminate the

disbenefit from NOX reductions,

although the company notes that VOC

reductions do mitigate the disbenefit.

That company argues that the scale of

significant ozone transport tends to be

substantially localized rather than

OTAG domain-wide, undercutting the

transport rationale for widespread

imposition of NOX controls. The

commenter bases its arguments on

modeling results for three days for each

of three ozone episodes; one with 60

percent elevated point source NOX

reductions, the second with 60 percent

elevated point source NOX reductions

plus 30 percent low-level NOX

reductions, and the third with 30

percent VOC reductions plus 60 percent

elevated NOX reductions and 30 percent

low-level NOX reductions. Also

included was one day of a run of 30

percent low-level NOX reductions only.

In its comments on the petition, API

argues that OTAG air quality modeling

sensitivity runs as of August 1996 show

that downwind air quality benefits of

NOX control are far less than expected,

undercutting the core transport rationale

for widespread imposition of RFG NOX

controls. API argues that OTAG

modeling confirms its central thesis that

NOX emissions reductions increase

ozone levels immediately downwind of

several urban nonattainment areas,

notably Chicago and New York. Finally,

API argues that the OTAG modeling

shows that the ozone increases were not

fully ameliorated by larger NOX

reductions or VOC reductions; even if

VOC controls were effective, this would

put affected states in the position of

imposing extra VOC controls to offset

the adverse air quality impact of RFG

NOX controls.

Several states, and state and utility

associations also addressed the air

quality benefits issue. States and state

associations stress the importance of the

Phase II RFG NOX standard in state

ozone attainment and maintenance

planning. State associations argue that

OTAG has projected that, in 2007,

mobile sources will still contribute 43

percent of all NOX after implementation

of CAA controls; given the challenges

facing so many areas in identifying and

implementing programs that will lead to

attainment of the ozone standard, the air

quality benefits associated with the NOX

reduction potential of Phase II RFG

cannot be overstated. One state points

out that with the anticipated lowering of

the federal ozone standard, the Phase II

RFG NOX emission reduction standard

will become even more critical for

states. A state association argues that

although there has been progress toward

attainment, loss of a tool as significant

as Phase II RFG in reducing VOC and

NOX would only exacerbate state

emission reduction shortfalls.

While state and state association

comments acknowledge that in certain

urban areas, NOX reductions can

increase ozone, state associations argue

that API’s advocacy of repeal of the NOX

standard is both premature and

shortsighted; premature because OTAG

is still seeking to define the extent and

impact of NOX disbenefits and how

disbenefits should be accommodated,

and shortsighted because for many areas

of the country it has been conclusively

ascertained that NOX reductions will be

imperative if the ozone standard is to be

attained and maintained.

Several states and state associations

argue that modeling demonstrates that

NOX reductions are beneficial, and for

many areas imperative, notwithstanding

potential disbenefits in some limited

geographic areas. One state and a state

association argue that all major regional

modeling efforts performed or underway

through such organizations as OTAG

and the Ozone Transport Commission

have demonstrated that NOX reductions

are beneficial in reducing ozone levels

and will be needed to achieve

attainment of the ozone standard in

many areas, and particularly in the

eastern U.S. They argue that the

importance of NOX reductions in

reducing ozone levels is becoming even

more pronounced as modeling efforts

utilize the newer and more accurate

methodology for estimating biogenic

VOC emissions.

A state association argues that the

regional photochemical modeling

results prepared for OTAG are

confirmatory of previous modeling that

both elevated and low-level control of

NOX are beneficial at reducing the

regional extent of ozone, and that the

combination of NOX and VOC control,

especially in urban areas, can be very

effective in reducing regional ozone

levels. Another state association also

argues that modeling studies have

shown that urban VOC reductions, such

as those provided by RFG, are effective

at addressing any limited NOX

disbenefits, while leaving in place the

very extensive regional benefits of NOX

emission reductions. One state argues

that there is no definitive data that

Phase II RFG could be a significant

disbenefit to ground level ozone

attainment and, in the absence of

evidence to the contrary, the state will

operate under the assumption that all

reductions of ground level ozone

precursors are both important and

beneficial.

A state association argues that

granting contingent waivers on a local

nonattainment area basis does not

negate EPA recognition and support for

regional efforts to use NOX reductions to

address ozone transport and attainment

issues. It argues that NOX waivers do

not take into account that when controls

are removed or absent in one area,

particularly a control of regional

significance, this would generally cause

or exacerbate problems for any area

downwind of that area. It argues that

while the understanding and

development of mechanisms for

regional ozone reductions over large

areas is still evolving, mechanisms that

have the greatest potential continue to

rely on a balance of both VOC and NOX

control.

A utility industry group argues that

the API petition fails to buttress its

argument that EPA overstated the air

quality benefits of the Phase II RFG NOX

standard with new evidence; instead,

API relies upon arguments already

rejected by EPA. API’s section 182(f)

waiver argument fails because the grant

of a waiver says nothing about the value

of the Phase II RFG NOX standard; the

utility group argues that the section

182(f) waiver provisions do not apply to

the RFG program and that, although

temporary waivers have been granted in

some places based on highly specific

localized facts, the Agency has made it

clear waivers would be reevaluated in
11350 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

49 59 FR 7744 (February 16, 1994).

50 Ibid.

51U.S. EPA, Final Regulatory Impact Analysis for

Reformulated Gasoline, December 13, 1993, pp.

313–326.

light of additional data. The utility

group also argues that progress by the

states toward attainment as indicated in

the 1994 Trends Report does not

establish that the Phase II RFG NOX

standard is unnecessary or unwise;

although progress has been made

toward attainment, more still needs to

be done.

C. Cost-Effectiveness

Most commenters addressed whether

EPA understated the cost-effectiveness

of the Phase II RFG NOX standard.

Several oil companies cite data from

OTAG both on the comparative cost of

stationary source reduction measures

and the cost of implementing Phase II

RFG throughout the OTAG region.

Several companies submitted or cite a

ranking developed by the New

Hampshire Department of

Environmental Services for OTAG of

cost per ton ranges for NOX reduction

measures. The ranking places Phase II

RFG as the second most expensive NOX

control measure at $25,000 to $45,000

per ton. The cost ranges are comprised

of the lowest and highest marginal cost

estimates provided by EPA, the states,

industry, and other OTAG participants,

and represents the extent of

disagreement over the ‘‘true’’ costs of

each measure, according to one oil

company comment. One company

argues that these data may be

interpreted to show that a NOX

reduction strategy that includes the

Phase II RFG NOX reduction standard is

purchasing a much smaller reduction at

a much higher price than is available

from alternative measures. That

commenter also claims that DOE’s

analysis indicates a significantly higher

cost per ton of NOX removed than

estimated by EPA in its Regulatory

Impact Analysis (RIA) for the final RFG

rule.

In its comments, API also cites the

OTAG region-wide cost-effectiveness

estimate for the Phase II RFG NOX

standard. API argues that even if that

figure is adjusted for comparison with

only those areas that will use Phase II

RFG, the adjusted figure would still

‘‘dwarf’’ EPA’s $5,000 per ton estimate;

however, API did not include such an

adjusted figure in its comments. API

also cites the New Hampshire list as

evidence that the NOX standard is not

cost-effective.

Two state associations argue that it

would be more accurate to characterize

the cost of Phase II RFG from combined

VOC and NOX reductions; the combined

OTAG range for the OTAG region is

$3,500 to $6,200. One state argues that

the cost of the NOX standard is within

a reasonable range of cost-effectiveness.

That state also argues that the cost of the

NOX standard is highly favorable

compared to the cost of typical

transportation control measures.

An automobile industry association

argues that the API focus on sulfur

reduction overlooks the fact that sulfur

reductions also decrease hydrocarbon

(HC) and carbon monoxide (CO)

emissions. That association argues that

recent industry data show that when

advanced technology vehicles are

operated on high sulfur fuels, their

emissions will be no better than Tier 0

level vehicles; comparing those new

data with expected costs of compliance

compiled by Turner, Mason & Company

in April 1992 yields a cost-effectiveness

estimate of about $200 per ton of

pollutant removed when the benefits of

sulfur removal on HC, CO, and NOX are

considered.

A clean fuel industry association

evaluated capital investment options for

reducing the sulfur level in gasoline to

meet the Phase II RFG NOX emission

reduction standard. That association

argues that average costs from the

investment options evaluated were

generally equal to or less than EPA’s

original cost estimates for reducing

sulfur levels in RFG; therefore, that

association argues, the cost of the Phase

II RFG NOX emission reduction

standard has not fundamentally

changed and it is still a cost-effective

standard.

The utility industry argues that API

presented no compelling new evidence

that desulfurization costs are

understated. One utility industry group

argues that API’s claim that EPA

underestimated desulfurization costs

does not address the fact that

desulfurization is not required; nor did

API address the ability of industry to

meet the standard without

desulfurization. That group also argues

that the fact that it might be cheaper to

reduce emissions from stationary

sources than to reduce NOX in fuels

does not mean the same ozone

reduction benefits would be produced.

Another utility industry association

argues that, even if API’s claim that

regulating stationary sources is more

cost-effective is true, that does not

justify forcing stationary sources to

subsidize the petroleum industry by

paying for that industry’s share of clean

air compliance costs.

IV. EPA Response

A. Consistency With CAA and

Negotiated Rulemaking

As EPA pointed out in the RFG final

rule, the regulatory negotiation

conducted by EPA did not address

Phase II RFG VOC and toxic standards;

neither did it address a reduction in

NOX emissions beyond the statutory cap

imposed under section 211(k)(2)(A).49

Because the regulatory negotiation did

not address Phase II RFG standards,

including the NOX reduction standard,

Phase II RFG standards are consistent

with the Agreement in Principle that

resulted from the regulatory negotiation.

A reduction in NOX emissions does not

interfere with or reduce the benefits

gained by the parties from the elements

of the Agreement in Principle that were

finally adopted in the RFG rule. While

it adds costs and gains benefits, these

are in addition to, and not at the

expense of, the elements addressed in

the regulatory negotiation. The costs

and air quality benefits of the Phase II

RFG NOX emission reduction standard

are discussed in more detail in later

sections of this notice.

The Phase II RFG NOX standard is

also fully consistent with the Act. EPA

proposed and finalized the NOX

emission reduction performance

standard for Phase II RFG relying on

EPA’s authority under section

211(c)(1)(A) of the Act, based on EPA’s

view that NOX reductions from

summertime RFG are important to

achieve attainment of the ozone NAAQS

in many nonattainment areas.50 Section

211(c)(1)(A) of the Act allows the

Administrator to regulate fuels or fuel

additives if ‘‘any emission product of

such fuel or fuel additive causes, or

contributes to, air pollution which may

reasonably be anticipated to endanger

the public health or welfare.’’ Section

211(c)(2)(A) further provides that EPA

may control those fuels and fuel

additives ‘‘after consideration of all

relevant medical and scientific evidence

available * * * including consideration

of other technologically or economically

feasible means of achieving emissions

standards under [section 202 of the

Act].’’

EPA used this authority to require

reformulated fuels to also achieve NOX

reductions in order to reduce ozone

formation, based on scientific evidence

regarding the benefits of NOX control

and on the cost-effectiveness of NOX

reductions. A detailed discussion of the

determination of the need for and

scientific justification for NOX control is

presented in the RIA for the final rule.51

The fact that scientific understanding of

atmospheric chemistry and ozone

formation continues to evolve does not
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11351

52U.S. EPA, Office of Air Quality Planning and

Standards, ‘‘Review of National Ambient Air

Quality Standards for Ozone, Assessment of

Scientific and Technical Information,’’ OAQPS Staff

Paper, EPA–452/R–96–007, June 1996.

53 Ibid.

54Seinfeld, John H., ‘‘Urban Air Pollution: State

of the Science,’’ February 10, 1989 vol., Science.

55 Jeffries, H.E., communication to Clinton

Burklin, ERG, October 27, 1996.

56 National Research Council, Rethinking the

Ozone Problem in Urban and Regional Air

Pollution, National Academy Press, Washington,

D.C., 1991.

57Seinfeld, John H., ‘‘Urban Air Pollution: State

of the Science,’’ February 10, 1989 vol., Science.

58Finlayson-Pitts, B.J. and J.N. Pitts, Jr.,

‘‘Atmospheric Chemistry of Tropospheric Ozone

Formation: Scientific and Regulatory Implications,’’

Air and Waste Management Association, Vol. 43,

August 1993.

59 Seinfeld, John H., ‘‘Urban Air Pollution: State

of the Science,’’ February 10, 1989 vol., Science.

negate that determination. In addition,

as discussed below, EPA’s review of the

air quality benefits and costeffectiveness of the NOX reduction

standard does not show that the

rulemaking determinations supporting

this standard were inappropriate.

B. Air Quality Benefits

1. The Need for Regional NOX

Reduction

At present, there are 74 areas in the

United States, with a population

exceeding one hundred million, that do

not meet the ozone NAAQS of 120 parts

per billion (ppb) for a one-hour daily

maximum. The following section

describes ozone formation, the regional

scale of the ozone problem, and the

reductions needed to meet the ozone

standard.

Ozone Formation. Ozone is a

naturally occurring trace constituent of

the atmosphere. Background ozone

concentrations vary by geographic

location, altitude, and season. Part of

this background ozone concentration is

due to natural sources and part is due

to long-range transport of anthropogenic

or man-made precursor emissions. The

natural component of background ozone

originates from three sources: (1)

Stratospheric ozone (which occurs at

about ten to 50 kilometers altitude) that

is transported down to the troposphere

(i.e., from the ground level through

about ten kilometers), (2) ozone formed

from the photochemically-initiated

oxidation of biogenic (i.e., produced by

living organisms) and geogenic (i.e.,

produced by the earth) methane and

carbon monoxide with nitric oxide, and

(3) ozone formed from the

photochemically-initiated oxidation of

biogenic VOCs with NOX. NOX plays an

important role in the oxidation of

methane, carbon monoxide, and

biogenic VOC, though the magnitude of

this natural component cannot be

precisely determined.52 The background

ozone concentration near sea level in

the U.S. for a one-hour daily maximum

during the summer is usually in the

range of 30–50 ppb.53

While ozone formation in the

atmosphere involves complex nonlinear processes, a simplified

description is offered here. For more

information on ozone chemistry, see, for

example, the 1991 National Research

Council study. In short, nitric oxide

(NO) is formed during combustion or

any high temperature process involving

air (air being largely N2 and O2). NO is

formed, for example, when fuel is

burned to generate power for stationary

or mobile sources. The NO is converted

to NO2 by reacting with certain

compounds formed from oxidized

VOCs, called radicals. It is also

converted to NO2 by reacting with ozone

(O3). Sunlight then causes the NO2 to

decompose, leading to the formation of

ozone and NO. The NO that results is

then able to start this cycle anew. A

reaction path that converts NO to NO2

without consuming a molecule of ozone

allows ozone to accumulate; this can

occur by the presence of oxidized

VOCs.54 That is:

1. NO is formed from combustion

involving air:

N2+O2==>NO molecules.

2. NO2 (nitrogen dioxide) is formed

when NO reacts with radicals from

oxidized VOCs.

3. NO2 is also formed when NO reacts

with ozone; this removes ozone:

NO+O3==>NO2+O2.

4. Sunlight causes NO2 to decompose,

or photolyze, into NO and O. Ozone is

formed when an oxygen molecule (O2)

reacts with the oxygen element (O),

formed from the decomposition of NO2:

NO2==>NO+O; and

O+O2==>Ozone.

A general explanation for the

formation of ozone in or near urban

areas follows.55 NOX is produced when

combustion temperatures are above

2500°K, and air is used as an oxidizer

in the combustion process. Incomplete

combustion of the fuel also results in

the emission of raw fuel components

and oxygenated organic components or

VOCs from the fuels. In sunlight, these

components form free radicals (e.g., OH,

HO2, RO, RO2) that oxidize NO to NO2

(reaction 2 above). The free radical is

recreated in the process. Each free

radical is cycled up to five times. The

NO2 then reacts with sunlight to

recreate NO and to produce ozone

(reaction 4 above). After the first

oxidation of NO to NO2, every

subsequent operation of the cycle

produces ozone with an efficiency

greater than 90 percent. In current

chemical reaction mechanisms, a typical

nitrogen is cycled three to five times.

Some of the ozone produced reacts with

organics and with sunlight to produce

more free radicals to maintain the cyclic

oxidation process.

Ozone itself is a major source of the

free radicals that oxidize NO into NO2.

This represents a powerful positive

feedback process on the formation of

more ozone, given available NOX. The

oxidation of the VOCs also leads to the

production of more free radicals. As the

cycle operates, NO2 reacts with free

radicals and is converted into nitrates.

This form of nitrogen cannot cycle. This

also removes free radicals. A system that

converts all NOX to nitrogen products

cannot create any more ozone.

NO2 reacts rapidly with free radicals.

In situations that have a limited supply

of radicals, NO2 effectively competes

with VOCs for the limited free radicals,

and is converted into nitrates. This

results in virtually no production of

ozone. Where there are large amounts of

NO relative to the sources of radicals

(such as VOCs), then the reaction

between NO and existing ozone removes

ozone (a radical source), and the large

amount of NO2 formed competes

effectively with VOCs for the other

available radicals, thus leading to an

overall suppression of ozone.

In general, areas with high VOC to

NOX concentration ratios (greater than

eight to ten) can effectively reduce local

ozone concentrations with local NOX

emission reductions.56 In areas where

VOCs are abundant relative to NOX,

ozone formation is controlled primarily

by the amount of NOX available to react

with the oxidized VOCs (reaction 2

above).57 These ‘‘NOX limited’’ areas

generally include rural, suburban, and

downwind areas.58 In contrast, in areas

with low VOC to NOX ratios, ozone

formation is controlled primarily by the

amount of VOC available. Ozone

scavenging by the NO–O3 reaction

(reaction 3 above) is more effective than

the reaction of oxidized VOC with NO

producing NO2 (reaction 2 above).59

Such areas are ‘‘VOC limited’’ and

generally include the central core areas

of large urban areas with significant

vehicle emissions.

The rate of ozone formation varies

with the VOC to NOX ratio. By reducing

local emissions of VOC, the formation

rate generally slows down, leading to

lower ozone levels locally, but with

eventual production of approximately

the same total amount of ozone.

Reduction of NOx emissions can lead to
11352 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

60 Ibid.

61National Research Council, Rethinking the

Ozone Problem in Urban and Regional Air

Pollution, National Academy Press, Washington,

D.C., 1991.

62 Ibid.

63 Id.

64 Id.

a more rapid formation of ozone, though

with less total amount of ozone

formed.60

Different mixtures of VOC and NOX,

therefore, can result in different ozone

levels such that the total system is nonlinear. That is, large amounts of VOC

and small amounts of NOX make ozone

rapidly but are quickly limited by

removal of the NOX. VOC reductions

under these circumstances show little

effect on ozone. Large amounts of NO

and small amounts of VOC (which

usually implies smaller radical source

strengths) result in the formation of

inorganic nitrates, but little ozone. In

these cases, reduction of NOX results in

an increase in ozone.

The preceding is a static description.

In the atmosphere, physical processes

compete with chemical processes and

change the outcomes in complex ways.

The existence of feedback and nonlinearity in the transformation system

confound the description. Competing

processes determine the ambient

concentration and there are an infinite

set of process magnitudes that can give

rise to the same ambient concentrations

and changes in concentrations. Lack of

any direct measurement of process

magnitudes results in the need to use

inferential methods to confirm any

explanation of a particular ozone

concentration.

The formation of ozone is further

complicated by biogenic emissions,

meteorology, and transport of ozone and

ozone precursors. The contribution of

ozone precursor emissions from

biogenic sources to local ambient ozone

concentrations can be significant,

especially emissions of biogenic VOCs.

Important meteorological factors

include temperature, and wind

direction and speed. Long-range

transport results in interactions between

distant sources in urban or rural areas

and local ambient ozone. Peroxyacetyl

nitrate (PAN), formed from the reaction

of radicals with NO2, can transport NOX

over relatively large distances through

the atmosphere. Its rate of

decomposition significantly increases

with temperature, so that it can be

formed in colder regions, transported,

and then decomposed to deliver NO2 to

downwind areas.61

Regional Scale of the Ozone Problem.

Peak ozone concentrations typically

occur during hot, dry, stagnant

summertime conditions. Year-to-year

meteorological fluctuations and longterm trends in the frequency and

magnitude of peak ozone concentrations

can have a significant influence on an

area’s compliance status.

Typically, ozone episodes last from

three to four days on average, occur as

many as seven to ten times per year, and

are of large spatial scale. In the eastern

United States, high concentrations of

ozone in urban, suburban, and rural

areas tend to occur concurrently on

scales of over 1,000 kilometers.62

Maximum values of non-urban ozone

commonly exceed 90 ppb during these

episodes, compared with average daily

maximum values of 60 ppb in summer.

Thus, an urban area need contribute an

increment of only 30 ppb over the

regional background during a high

ozone episode to cause a violation of the

ozone NAAQS of 120 ppb.63

The precursors to ozone and ozone

itself are transported long distances

under some commonly occurring

meteorological conditions. The

transport of ozone and precursor

pollutants over hundreds of kilometers

is a significant factor in the

accumulation of ozone in any given

area. Few urban areas in the U.S. can be

treated as isolated cities unaffected by

regional sources of ozone.64

NOX Reductions Needed to Meet the

Ozone Standard. Over the past two

decades, great progress has been made

at the local, state and national levels in

controlling emissions from many

sources of air pollution. Substantial

emission reductions are currently being

achieved through implementation of the

1990 CAAA measures for mobile and

stationary sources. These measures

include the retrofit of reasonably

available control technology on existing

major stationary sources of NOX and

implementation of enhanced vehicle

inspection and maintenance programs

under Title I; new emission standards

for new motor vehicles and nonroad

engines, and the RFG program under

Title II; and controls on certain coalfired electric power plants under Title

IV. The effects of these programs on

total NOX emissions over time indicate

a decline in emissions from 1990 levels

of about 12 percent until the year 2007.

However, continued industrial growth

and expansion of motor vehicle usage

threaten to reverse these past

achievements; NOX emissions will

gradually increase for the foreseeable

future, unless new initiatives are

implemented to reduce NOX emissions.

For many years, control of VOCs was

the main strategy employed in efforts to

reduce ground-level ozone. More

recently, it has become clearer that

additional NOX controls will be needed

in many areas, especially areas where

ozone concentrations are high over a

large region (as in the Midwest and

Northeast, where RFG is mandated in

several nonattainment areas). The extent

of local controls that will be needed to

attain and maintain the ozone NAAQS

in and near seriously polluted cities is

sensitive both to the amount of ozone

and precursors transported into the

local area and to the specific

photochemistry of the area.

In some cases, preliminary local

modeling performed by the states

indicates that it may not be feasible to

find sufficient local control measures for

individual nonattainment areas unless

transport into the areas is significantly

reduced; this may include transport

from attainment areas and from other

nonattainment areas. These modeling

studies suggest that reducing NOX

emissions on a regional basis is the most

effective approach for reducing ozone

over large geographic areas, even though

local NOX controls may not be effective

by themselves in the urban centers of

selected nonattainment areas. Thus,

large reductions in NOX emissions may

be needed over much of the nation if all

areas are to attain the ozone standard.

The following discussion examines

the need for NOX reductions in those

regions of the country where RFG is

required.

California. The State of California

adopted its ozone SIP on November 15,

1994. The SIP covers most of the

populated portion of the state and relies

on both NOX and VOC reductions for

most California nonattainment areas to

demonstrate compliance with the ozone

NAAQS. Specifically, the revised SIP

projects that the following NOX

reductions are needed (from a 1990

baseline): South Coast, 59 percent;

Sacramento, 40 percent; Ventura, 51

percent; San Diego, 26 percent; and San

Joaquin Valley, 49 percent.

The South Coast’s control strategy for

attainment of the ozone standard

specifies a 59 percent reduction in NOX

emissions. The design of this strategy

took into account the need to reduce

NOX as a precursor of particulate matter,

as described in the SIP submittal. This

represents a reduction of over 800 tons

of NOX per day. The reductions are to

be achieved from a combination of

national, state, and local control

measures.

The Sacramento metropolitan area’s

control strategy for attainment of the

ozone standard specifies a 40 percent

reduction in NOX emissions. Modeling

results indicate that NOX reductions are
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11353

65Roberts, P.T., T.S. Dye, M.E. Korc, H.H. Main,

‘‘Air Quality Data Analysis for the 1991 Lake

Michigan Ozone Study,’’ final report, STI–92022–

1410–FR, Sonoma Technology, 1994.

66Lake Michigan Air Directors Consortium, ‘‘Lake

Michigan Ozone Study—Evaluation of the UAM–V

Photochemical Grid Model in the Lake Michigan

Region,’’ 1994.

67Chu, Shao-Hung and W.M. Cox, ‘‘Effects of

Emissions Reductions on Ozone Predictions by the

Regional Oxidant Model during the July 1988

Episode,’’ Journal of Applied Meteorology, Vol. 34,

No. 3, March 1995.

68 John, K., S.T. Rao, G. Sistla, W. Hao, and N.

Zhou, ‘‘Modeling Analyses of the Ozone Problem in

the Northeast,’’ EPA–230–R–94–018, 1994. John, K.,

S.T. Rao, G. Sistla, N. Zhou, W. Hao, K. Schere, S.

Roselle, N. Possiel, R. Scheffe, ‘‘Examination of the

Efficacy of VOC and NOX Emissions Reductions on

Ozone Improvement in the New York Metropolitan

Area,’’ printed in Air Pollution Modeling and Its

Application, Plenum Press, NY, 1994.

69 60 FR 48673 (January 24, 1995).

70 Kuruville, John et al., ‘‘Modeling Analyses of

Ozone Problem in the Northeast,’’ prepared for

EPA, EPA Document No. EPA–230–R–94–108,

1994. Cox, William M. and Chu, Shao-Hung,

‘‘Meteorologically Adjusted Ozone Trends in Urban

Areas: A Probabilistic Approach,’’ Atmospheric

Environment, Vol. 27B, No. 4, pp 425–434, 1993.

71Rao, S.T., G. Sistla, W. Hao, K. John and J.

Biswas, ‘‘On the Assessment of Ozone Control

Policies for the Northeastern United States,’’

presented at the 21st NATO/CCMS International

Technical Meeting on Air Pollution Modeling and

Its Application, Nov. 6–10, 1995.

72 60 FR 19515 (April 19, 1995).

more effective than VOC reductions on

a tonnage basis in reducing ambient

ozone concentrations. The reductions

are to be achieved from a combination

of national, state, and local control

measures, especially mobile source

measures such as standards for heavy

duty vehicles and nonroad engines.

Lake Michigan Region. Modeling and

monitoring studies performed to date for

the states surrounding Lake Michigan

(Illinois, Indiana, Michigan, and

Wisconsin) indicate that reducing ozone

and ozone precursors transported into

the region’s nonattainment areas would

have a significant effect on the number

and stringency of local control measures

necessary to meet the ozone NAAQS. In

many cases, boundary conditions

appear to contribute significantly to

peak ozone concentrations; ozone and

ozone precursors flowing into a

metropolitan area can greatly influence

the peak ozone concentration

experienced in the metropolitan area.

For example, the 1991 Lake Michigan

Ozone Study found that transported

ozone concentrations entering the

region were 40 to 60 percent of the peak

ozone concentrations in some of the

region’s metropolitan areas. That is, the

air mass entering the study area was

measured by aircraft at 70 to 110 ppb

(compared to the ozone NAAQS of 120

ppb) on episode days.65

Separate modeling analyses in the

Lake Michigan region indicate that

reduction in ozone and ozone precursor

emissions would be effective at

reducing peak ozone concentrations. In

the Lake Michigan case, a modeled 30

percent reduction in boundary

conditions was found to reduce peak

ozone concentrations as much as a 60

percent decrease in local VOC

emissions.66

These studies suggest that without

reductions in transport and boundary

conditions, the necessary degree of local

control will be difficult to achieve, even

with very stringent local controls. The

EPA Matrix Study 67 looked at regionwide NOX control, and the results

indicate it would be effective in

reducing ozone across the Midwest. The

objective of the EPA Matrix Study was

to obtain a preliminary estimate of the

sensitivity of ozone in the eastern U.S.,

from Texas to Maine, to changes in VOC

and NOX emissions applied regionwide. The modeled control strategy of

region-wide 75 percent NOX reduction

with 50 percent VOC reduction

produced substantial ozone reductions

throughout the eastern U.S., with ozone

standard exceedances limited to several

grid cells in the southeast corner of Lake

Michigan, over Toronto, and

immediately downwind of New York

City.

Taken together, the information

available to date suggests that additional

reductions in regional NOX emissions

will be necessary to attain the ozone

NAAQS in the Chicago/Gary/Milwaukee

area and downwind (including western

Michigan). NOX control in

nonattainment areas, such as RFG

provides, contributes to regional NOX

emission reductions. The information

available to date has not shown that

upwind controls are all that is needed.

Emerging data indicates that NOX

controls in Lake Michigan

nonattainment areas can contribute to

the ozone reduction benefits derived

from regional NOX reductions. See

discussion infra.

New York Study. New York State’s

recent urban airshed modeling (UAM)

studies show that substantial reductions

in the ozone transported from other

regions would be necessary for several

areas within the UAM domain to

achieve ozone attainment.68 The UAM

domain includes areas in New York and

Connecticut within and surrounding the

New York Consolidated Metropolitan

Statistical Area (CMSA). This UAM

study demonstrates the potential

effectiveness of a regional NOX

reduction strategy in combination with

a local VOC reduction strategy. The

New York study showed that the

combination of a regional strategy

reflecting a 25 percent reduction in

VOCs and a 75 percent reduction in

NOX outside the New York urban

airshed, with a local strategy reflecting

a 75 percent reduction in VOCs and a

25 percent reduction in NOX inside the

New York urban airshed, would be

necessary for all areas throughout the

New York UAM domain to reduce

predicted ozone levels to 120 ppb or

less during adverse meteorological

conditions.

Northeast Ozone Transport Region.

The Northeast Ozone Transport Region

(OTR) includes the states of Maine, New

Hampshire, Vermont, Massachusetts,

Rhode Island, Connecticut, New York,

New Jersey, Pennsylvania, Delaware,

Maryland, and the CMSA that includes

the District of Columbia and northern

Virginia. In its analysis supporting the

approval of a Low Emission Vehicle

program in the mid-Atlantic and

Northeast states comprising the OTR,

EPA reviewed existing work and

performed analyses to evaluate in detail

the degree to which NOX controls are

needed.69 These studies showed that

NOX emissions throughout the OTR

must be reduced by 50 to 75 percent

from 1990 levels to obtain predicted

ozone levels of 120 ppb or less

throughout the OTR.

Other recent studies have confirmed

these conclusions.70 Additional

modeling simulations suggest that

region-wide NOX controls coupled with

urban-specific VOC controls would be

needed for ozone attainment in the

northeastern United States.71 Taken

together, these studies point to the need

to reduce NOX emissions in the range of

50 to 75 percent throughout the OTR,

and VOC emissions by the same amount

in and near the Northeast urban

corridor, to reach and maintain

predicted hourly maximum ozone levels

of 120 ppb or less.

Eastern Texas. There has been limited

modeling work to date that focuses on

the air quality characteristics of the

eastern Texas region. The State of Texas

has been granted section 182(f) waivers

for the Houston/Galveston and

Beaumont/Port Arthur nonattainment

areas based on preliminary UAM

modeling which predicted that local

NOX reductions would not contribute to

ozone attainment because predicted area

ozone concentrations are lowest when

only VOC reductions are modeled.72

Additional modeling is underway by the

State, including UAM modeling using

data from the Coastal Oxidant

Assessment for Southeast Texas
11354 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

73 61 FR 65505 (December 13, 1996).

74 Ozone Transport Assessment Group, joint

meetings of RUSM and ISI workgroups, ‘‘First

Round Strategy Modeling,’’ October 25, 1996, and

‘‘Round 2 Strategy Modeling,’’ December 17, 1996.

75 42 U.S.C. § 7511a(f)(1)(A).

76 Seitz, John S., Director, OAQPS, EPA, ‘‘Section

182(f) Nitrogen Oxides (NOX) Exemptions—Revised

Process and Criteria,’’ EPA memoranda to Regional

Air Directors, dated May 27, 1994, and revised

February 8, 1995.

77 62 FR 1420 (January 10, 1997).

78Nichols, Mary D., Assistant Administrator for

Air and Radiation, ‘‘Ozone Attainment

Demonstrations,’’ memorandum to EPA Regional

Administrators, March 2, 1995.

(COAST) study, but there is not yet

enough data to draw conclusions about

the potential effect of transport of ozone

and its precursors on these areas. This

uncertainty has led the State to request

that the waivers from local NOX controls

in these areas be granted on a temporary

basis while more sophisticated

modeling is conducted. Texas has

requested a one-year extension of its

temporary waivers for Houston/

Galveston and Beaumont/Port Arthur,

citing the need for additional time to

complete its UAM modeling.73

Ozone Transport Assessment Group.

EPA is supporting a consultative

process involving 37 eastern states that

includes examination of the extent to

which NOX emissions from as far as

hundreds of kilometers away are

contributing to smog problems in

downwind cities in the eastern U.S.

Known as the Ozone Transport

Assessment Group (OTAG) and chaired

by the State of Illinois, this group is

looking into ways of achieving

additional cost-effective reductions in

ground-level ozone throughout a region

consisting of the eastern half of the U.S.

Preliminary findings from the first and

second of three rounds of control

strategy modeling indicate that regional

reductions in NOX emissions would be

effective in lowering ozone on a regional

scale. The relative effectiveness varies

by subregion and episode modeled.74

Preliminary OTAG modeling results are

described in more detail later in this

section.

Summary. The preceding discussion

demonstrates that substantial regionwide NOX reductions will be needed in

regions of the country where RFG is

required for those regions to reach

attainment of the ozone standard.

Reduction in NOX emissions is needed

locally in some areas in order to attain

the ozone NAAQS while, in some of

these or other areas, NOX emission

reductions may be needed to help attain

the ozone NAAQS in downwind areas

or to help maintain ozone levels below

the standard in attainment areas. As a

local control (except along the Northeast

corridor where its use is so widespread

as to constitute a regional control), the

RFG program will reduce NOX

emissions in nonattainment areas and

contribute to needed regional NOX

reductions.

Control strategies must consider

efforts to reduce regional scale NOX

emissions as well as local emissions. In

general, NOX emissions reductions in

upwind, rural areas coupled with VOC

reductions in urban nonattainment areas

appears to be an effective strategy in

some cases. In some cases however, the

urban nonattainment area is also

upwind of another urban nonattainment

area or contains so much biogenic VOC

emissions that reducing only

anthropogenic VOC emissions has too

little ozone benefit. For example, the

Atlanta nonattainment area has very

high biogenic VOC, while in the

Northeast, many urban nonattainment

areas are upwind of other urban

nonattainment areas. In cases like these,

local NOX reductions may be needed in

urban nonattainment areas in addition

to, or instead of, VOC reductions for

purposes of ozone attainment. Thus,

effective ozone control will require an

integrated strategy that combines costeffective reductions in emissions at the

local, state, regional, and national

levels.

2. Section 182(f) Waivers and State

Implementation Plans for Ozone

Attainment

Because Title I focuses on measures

needed to bring nonattainment areas

into attainment, the CAA requires EPA

to view section 182(f) NOX waivers in a

narrow manner. In part, section 182(f)

provides that waivers must be granted if

states outside an ozone transport region

(OTR) show that reducing NOX within

a nonattainment area would not

contribute to attainment of the ozone

NAAQS in that nonattainment area.75

Only the role of local NOX emissions on

local attainment of the ozone standard

is considered in nonattainment areas

outside an OTR. Any exemption may be

withdrawn if the basis for granting it no

longer applies. For modeling-based

exemptions, this will occur if updated

modeling analyses reach a different

conclusion than the modeling on which

the exemption was based.76 Thus all

local NOX waivers should be considered

temporary and do not shield an area

from NOX requirements demonstrated to

be needed for ozone attainment in that

area or in downwind areas.

EPA has independent statutory

authority under CAA section

110(a)(2)(D) to require a state to reduce

emissions from sources where there is

evidence that transport of such

emissions contributes significantly to

nonattainment or interferes with

maintenance of attainment in other

states. That is, the CAA requires a SIP

to conform provisions addressing

emissions from one state that

significantly pollute another downwind

state. EPA has stated, in all Federal

Register notices approving section

182(f) NOX petitions, that it will use its

section 110(a)(2)(D) authority where

evidence of significant contribution is

found to require needed NOX (and/or

VOC) reductions. EPA recently

published a notice of intent that it plans

to call for SIP revisions in the eastern

half of the U.S. to reduce regional ozone

transport across state boundaries, in

accordance with section 110(a)(2)(D)

and (k)(5).77

EPA’s granting of exemptions from

local NOX controls should be seen in the

broader context of SIP attainment plans.

For ozone nonattainment areas

designated as serious, severe, or

extreme, state attainment

demonstrations involve the use of

dispersion modeling for each

nonattainment area. Although these

attainment demonstrations were due

November 15, 1994, the magnitude of

this modeling task, especially for areas

that are significantly affected by

transport of ozone and ozone precursors

generated outside of the nonattainment

area, has delayed many states in

submitting complete modeling results.

Recognizing these challenges, EPA

issued guidance on ozone

demonstrations 78 that includes an

intensive modeling effort to address the

problem of long distance transport of

ozone, NOX, and VOCs, and submittal of

attainment plans in 1997. Considering

its modeling results, a state must select

and adopt a control strategy that

provides for attainment as expeditiously

as practicable.

When the attainment plans are

adopted by the states, these new control

strategies will, in effect, replace any

NOX waivers previously granted. To the

extent the attainment plans include

NOX controls on certain major

stationary sources in the nonattainment

areas, EPA will remove the NOX waiver

for those sources. To the extent the

plans achieve attainment without

additional NOX reductions from certain

sources, the waived NOX reductions

would be considered excess reductions

and, thus, the exemption would

continue. EPA’s rulemaking action to

reconsider the initial NOX waiver may

occur simultaneously with rulemaking

action on the attainment plans. Thus,
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11355

79 July 1–11, 1988; July 13–21, 1991; July 20–30,

1993; and July 7–18, 1995.

80 Ozone Transport Assessment Group, joint

meeting of the RUSM and ISI workgroups,

‘‘Sensitivity Modeling’’ and 5g scatter plots, August

22, 1996, ‘‘First Round Strategy Modeling,’’ October

25, 1996, and ‘‘Round 2 Strategy Modeling,’’

December 17, 1996.

81 The upper end of the scale of changes in ozone

concentrations modeled by OTAG was 36 ppb.

many or all areas, including NOX waiver

areas, are potentially subject to NOX

controls as needed to attain the ozone

standard throughout the nation and/or

meet other NAAQSs.

API selectively cites to those portions

of EPA’s 1993 section 185B report to

Congress that support its contention that

NOX control may not always be

appropriate to reduce ozone, but ignores

the report’s overall conclusions

regarding the need for many areas across

the nation to reduce NOX emissions if

ozone attainment is to be achieved. API

in particular overlooks the report’s

finding that, in some cases, even if

ozone initially increases in response to

small NOX reductions, ozone levels in

many areas will decline if NOX levels

are more significantly reduced. See

section 2.2.2. Thus, in some cases, state

and local agencies may need to reduce

NOX emissions even though doing so

may cause a potential increase in ozone

concentrations in central urban areas, as

part of a larger plan to enable many

nonattainment areas to meet the ozone

NAAQS. For example, NOX reductions

in the New York metropolitan area are

needed for downwind areas within the

state and in other states to attain the

ozone standard; yet additional VOC

controls may be needed in the

metropolitan area to offset the local

impact of NOX reductions. Similarly,

NOX reductions in areas upwind of the

Northeast Ozone Transport Region may

be needed to help downwind areas

attain and maintain the ozone standard,

even though those NOX reductions may

not in some cases help the upwind areas

reduce local peak ozone concentrations.

In such cases, a previously granted NOX

waiver will not allow an area to avoid

implementing NOX control

requirements deemed necessary for

itself or another area’s attainment.

The progress toward ozone attainment

that has been achieved by states to date

and the continued progress by states

toward ozone attainment, required by

the CAA, are not convincing rationales

to EPA for dropping the Phase II RFG

NOX standard, as suggested in the API

petition. The previous discussion

demonstrates that substantial regionwide reductions in NOX will be needed

in areas of the country where RFG is

required for those areas to reach

attainment of the ozone standard.

Progress toward attainment achieved by

states to date and the continued

progress toward attainment required

under the CAA will not be sufficient

without additional combined NOX and

VOC emission reductions for some RFG

areas, including the Northeast corridor

and the Lake Michigan region, as

discussed above, to achieve attainment.

Moreover, a NOX waiver does not

excuse an area from reasonable further

progress (RFP) requirements. Thus,

progress toward attainment is not a

convincing rationale for dropping the

Phase II RFG NOX standard, because

progress toward attainment is not the

same as attainment and, thus, doesn’t

demonstrate that the Phase II RFG NOX

standard is unnecessary or

inappropriate. Because the need for

extensive NOX control is clear, it is not

necessary or appropriate for EPA to

delay establishing federal NOX control

programs until individual state ozone

attainment demonstrations have been

developed and presented. EPA agrees

with comments that loss of the Phase II

RFG NOX standard would only

exacerbate state emission reduction

shortfalls.

Moreover, for the reasons discussed

above, EPA does not agree that the

Phase II RFG NOX standard is

incongruous or at odds with the

granting of section 182(f) waivers in

RFG areas, as suggested in the API

petition. EPA does agree with API’s

comments that point out that the section

182(f) waiver process alone does not

take into account the downwind impact

of NOX controls, but notes that API, in

doing so, has ignored EPA’s stated

intent to require NOX reductions from

states with areas that received NOX

exemptions, pursuant to its section

110(a)(2)(D) authority if such areas are

shown to contribute significantly to

downwind states’ ozone problems.

3. Comparison of Benefits and

Disbenefits From NOX Reductions

The following discussion focuses on

another aspect of API’s section 182(f)

argument: the potential for disbenefits,

or increases in urban ozone, that occur

as a result of reductions in NOX. The

best data currently available to examine

this air quality and ozone attainment

issue are the photochemical grid

modeling results being generated by

OTAG. The OTAG model (UAM–V)

includes the best emission inventory

information available, provided by the

states and reviewed by stakeholders and

experts, an improved biogenic inventory

(BEIS2), and updated chemistry (CB–

IV). Data are available from four ozone

episodes. 79 All stakeholders, including

states and the oil, automotive, and

utility industries, have been involved in

OTAG modeling inputs and modeling

runs. Further information describing

OTAG is available electronically on the

OTAG Home Page at http://

www.epa.gov/oar/OTAG/otag.html. All

OTAG data discussed here are available

electronically on the TTN2000 Web Site

at http://ttnwww.rtpnc.epa.gov.

OTAG modeling conducted to date

consistently demonstrates that NOX

reductions applied equally by source

type throughout the 37 state OTAG

region result in widespread ozone

reductions across most of that region,

and in geographically and temporally

limited increases in urban ozone. 80 The

OTAG sensitivity modeling cited in oil

industry comments included large NOX

reductions (i.e., a 60 percent reduction

in elevated utility system point source

NOX emissions plus a 30 percent

reduction in low-level, or non-utility

point and area source and mobile

source, including nonroad and onhighway, NOX emissions), or large NOX

reductions combined with VOC

reductions (i.e., a 60 percent reduction

in elevated NOX emissions with a 30

percent reduction in low-level NOX

emissions plus a 30 percent reduction in

VOC emissions) over the 37 state OTAG

region. That modeling indicates that

such emission reductions would result

in widespread ozone decreases in high

ozone areas. That modeling also

indicates ozone increases, or

disbenefits, particularly within the

Northeast corridor and southwestern

Lake Michigan area but only in some

grid cells on some days of some

episodes.

For example, for July 8, 1988, the

OTAG modeling run of a 60 percent

reduction in elevated NOX emissions

plus a 30 percent reduction in low-level

NOX emissions, throughout the 37 state

region (OTAG run 5e), shows decreases

in ozone throughout most of the 37 state

region ranging from four to at least 36

ppb. 81 That modeling run also shows

increases in ozone of four to 12 ppb in

Boston, Savannah, Wheeling, and

Houston, and increases of four to 28 ppb

in the Norfolk/Virginia Beach area and

along the coasts of Connecticut, New

York, and New Jersey.

For July 18, 1991, the same modeling

run shows decreases in ozone ranging

from four to at least 36 ppb throughout

most of the 37-state region. Ozone

increases of four to 12 ppb appear in

Nashville, Paducah, Detroit, Bay City,

and Philadelphia, and increases of four

to at least 36 ppb in the Lake Michigan

area and in Memphis, Louisville,

Indianapolis, and Cincinnati. For July
11356 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

82 Lopez, Bob, ‘‘Localized Ozone Increases Due

to NOX Control—Transmittal of Technical

Evaluation Summary and Draft Policy Options

Paper,’’ memorandum and attachments from OTAG

Task Group on Criteria for Modeling and Strategy

Refinement Regarding NOX Disbenefits to OTAG

Implementation and Strategies Workgroup and

Criteria Evaluation Miniworkgroup, second draft,

December 12, 1996, and Koerber, Mike, OTAG

Policy Group Meeting, December 18, 1996.

83 Ibid.

84 OTAG run 4b represents the deepest level of

controls that has been modeled by OTAG for

nonutility point source NOX emissions, and for

NOX and VOC emissions from area and mobile

sources. If the deepest level of NOX controls being

modeled by OTAG for utility NOX and for utility

and nonutility point source VOC is then added

(OTAG run 2), ozone increases are not as large on

July 19, 1991 and some become ozone reductions.

85 Koerber, Mike, OTAG Policy Group Meeting,

December 18, 1996.

86Subsequent to the subregional modeling

described here, OTAG has further divided its

modeling domain into 13 smaller subregions for

purposes of assessing transport between these

subregions. This modeling was not complete

enough to have been considered in the decision

announced today.

15, 1995, modeling shows ozone

decreases ranging from four to at least

36 ppb throughout most of the OTAG

region, and ozone increases of four to 12

ppb in Milwaukee, Chicago,

Youngstown, and Philadelphia, and

increases of four to 28 ppb on Long

Island and in Memphis.

OTAG modeling indicates that urban

ozone increases from region-wide NOX

control are smaller in magnitude and

area when NOX reductions are

combined with VOC reductions. In a

modeling run with a 60 percent elevated

source NOX reduction, a 30 percent lowlevel NOX reduction and a 30 percent

VOC reduction (OTAG run 5c), for July

8, 1988, ozone increases of four to 12

ppb were confined to Memphis and

Norfolk/Virginia Beach, with increases

of four to 28 ppb along the coast of

Connecticut, New York, and New Jersey.

For July 18, 1991, ozone increases of

four to 12 ppb appear in Paducah and

Philadelphia, with increases of four to

20 ppb in Chicago, Milwaukee,

Cincinnati, and Louisville. For July 15,

1995, increases of four to 12 ppb appear

in Memphis, Youngstown, Philadelphia,

and Long Island.

The above OTAG results for ozone

changes were cited without regard to the

actual ozone levels. A closer look at

OTAG modeling indicates that urban

NOX reductions, as part of region-wide

reductions, produce widespread

decreases in ozone concentrations on

high ozone days. Urban NOX reductions

also produce limited increases in ozone

concentrations, but the magnitude, time,

and location of these increases generally

do not cause or contribute to high ozone

concentrations; most urban ozone

increases occur in areas already below

the ozone standard and, thus, in most

cases, urban ozone increases resulting

from NOX reductions do not cause

exceedance of the ozone standard. There

are a few days in a few urban areas

where NOX reductions produce ozone

increases in portions of an urban area

that are detrimental. OTAG defined

detrimental as an increase exceeding

four ppb in a grid cell on a day with

ozone exceeding 100 ppb. However,

those portions of an urban area with

disbenefits on one day of an ozone

episode get benefits on later days of the

same episode, and later days generally

are higher ozone days. 82

In other words, OTAG has found that,

in general, NOX reduction disbenefits

are inversely related to ozone

concentration. On the low ozone days

leading up to an ozone episode (and

sometimes the last day or so) the

increases are greatest, and on the high

ozone days, the increases are least (or

nonexistent); the ozone increases

generally occur on days when ozone is

low and the ozone decreases generally

occur on days when ozone is high. This

indicates that, in most cases, urban

ozone increases may not produce

detrimental effects when viewed alone,

and the overall effects over the episode

are positive. However, OTAG modeling

(run 5e) indicates that at least one area

for one day of one episode experienced

an increase in ozone on a high ozone

day. Concentration difference plots

show ozone increases over Lake

Michigan and the adjacent shoreline at

least as high as 36 ppb on July 18, 1991,

when the highest modeled ozone

concentration was about 110 ppb.

However, concentration difference plots

also show ozone decreases in

downwind states. Decreases in ozone of

five ppb extend into Michigan, and

decreases of one ppb extend as far as

New York, New Hampshire, Vermont,

and Maine. The magnitude of the ozone

decrease is as high as ten ppb. 83

For July 19, 1991, with peak ozone

levels of 130 ppb and, therefore higher

than for July 18, OTAG modeling (run

4b) 84 showed ozone increases for only

two of the 20 highest grid cells in the

Lake Michigan region. On July 20, ozone

increases are only apparent for ozone

levels less than 100 ppb. OTAG

modeling thus demonstrates that the

ozone reduction benefits of urban NOX

control far outweigh the disbenefits of

urban ozone increases in both

magnitude of ozone reduction and

geographic scope.

Ozone benefits and disbenefits occur

from both elevated and low-level NOX

reductions; the relative effectiveness of

elevated and low-level NOX reductions

varies by region and ozone episode,

according to OTAG modeling.85

Elevated and low-level NOX reductions

appear to act independently, with little

synergistic effect. The pattern of ozone

benefits and disbenefits is similar

whether the one-hour or the proposed

eight-hour ozone standard is modeled.

The NOX reduction scenarios

modeled by OTAG are for large NOX

reductions, greater than the Phase II

RFG NOX emission reduction standard

of 6.8 percent of gasoline-fueled vehicle

emissions on average. Although EPA

believes the direction of the effect is

reliable, disbenefits from the Phase II

RFG NOX emission reduction standard

would be smaller than the urban

disbenefits modeled by OTAG for larger

NOX reductions. EPA recognizes that

the OTAG model’s coarse grid size (even

in fine part of the domain) may cause

the modeling to show fewer disbenefit

areas than actually exist and would be

revealed by finer grid modeling, such as

urban-scale modeling. As API points

out, urban-scale modeling

demonstrations of NOX disbenefits

supported the section 182(f) waivers

approved by EPA for three mandated

RFG areas (Chicago, Milwaukee, and

Houston). The OTAG model’s grid size

and wide field treatments are not

precise enough to be used to balance

population exposures to ozone benefits

and disbenefits from NOX control.

However, these facts do not change

EPA’s conclusion that OTAG modeling

demonstrates that the ozone reduction

benefits of NOX control far outweigh the

disbenefits of urban ozone increases in

both magnitude of ozone reduction and

geographic scope.

It should be noted that no scenario

modeled by OTAG to date completely

mitigates the ozone problem throughout

the 37 state domain, so some areas,

including the Northeast and the Lake

Michigan region, will have to go beyond

OTAG scenarios to reach attainment.

Since OTAG modeling shows that more

NOX emission reductions produce more

ozone reductions, the ultimate ozone

mitigation level of emissions may not

produce urban disbenefits.

OTAG modeling of the transport of

ozone and ozone precursors among

subregions is less complete than its

modeling of various region-wide

emission reduction scenarios.

Preliminary OTAG sensitivity tests did

include a set of four regional impact

runs to examine the effect of controls

applied differently within the OTAG

domain. For this purpose, OTAG was

divided into four subregions: Northeast,

Midwest, Southeast, and Southwest.86

The regional impact runs provide
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11357

87Ozone Transport Assessment Group, joint

meeting of the RUSM and ISI workgroups,

‘‘Sensitivity Modeling,’’ August 22, 1996.

88One commenter suggested that an ‘‘opt out’’

provision from the NOX reduction standard be

provided for areas that can document a disbenefit

from NOX reductions. For the reasons discussed

above, the evidence does not support such a waiver

for RFG standards at this time.

89Lopez, Bob, ‘‘Localized Ozone Increases Due to

NOX Control—Transmittal of Technical Evaluation

Summary and Draft Policy Options Paper,’’

memorandum and attachments from OTAG Task

Group on Criteria for Modeling and Strategy

Refinement Regarding NOX Disbenefits to OTAG

Implementation and Strategies Workgroup and

Criteria Evaluation Miniworkgroup, second draft,

December 12, 1996, and Koerber, Mike, OTAG

Policy Group Meeting, December 18, 1996.

90 See discussion in the RFG final rule at 59 FR

7751.

91 EPA was puzzled by effects that appear in

Georgia and Alabama, which are not RFG areas, and

contacted API for an explanation. API’s contractor,

SAI, explained in a February 14, 1997 telephone

call that some anomalies of the modeled results can

be explained by the differences in the results when

directly comparing modeling runs made on two

different computers. However, the differences in

results from directly comparing modeling runs

made on two different computers may also

confound the modeled effects of RFG in terms of

ozone concentration differences, casting doubt on

the credibility of the results, since the modeled

effects of RFG are in the same range as the

anomalies claimed by SAI.

92 See the RIA at pp. 321–322. See also 59 FR

7751.

preliminary information on the spatial

and temporal scales of ozone transport.

NOX reductions of 60 percent from

elevated sources and 30 percent from

low level sources plus a VOC reduction

of 30 percent (OTAG run 5c) were

applied to one region at a time for each

of the four OTAG ozone episodes. In

general, surface plots show that

emission reductions in a given region

have the most ozone reduction benefit

in that same region, although downwind

benefits outside the region were also

apparent. Northeast reductions

benefited the Southeast in one episode.

Midwest reductions benefited the

Northeast in four episodes and the

Southeast in one episode. Southeast

reductions benefited the Midwest

during two episodes and the Southwest

during two episodes. Southwest

reductions benefited the Midwest

during two episodes.87

Although OTAG modeling of ozone

transport is incomplete, it indicates that

NOX reductions have downwind ozone

reduction benefits, although those

benefits attenuate with distance. NOX

reductions in Chicago and Milwaukee

may help nearby states such as

Michigan and perhaps, to some extent,

the Northeast as well. NOX reductions

in the southern end of the Northeast

corridor will help the northern end.

The API petition requests that EPA

eliminate or delay the Phase II RFG NOX

emission reduction standard.88 EPA

disagrees, as the evidence does not

support eliminating or delaying the

Phase II RFG NOX standard. The NOX

reductions obtained from RFG in the

metropolitan nonattainment areas are an

important component of a regional NOX

reduction strategy, and modeling and

analysis to date strongly supports the

need for such regional NOX reductions.

Such reductions, especially when

combined with urban VOC reductions,

lead to ozone reductions on high ozone

days across large areas of the country,

including all of the major ozone

nonattainment areas covered by the RFG

program. While the potential for

disbenefits is clear, with few exceptions,

disbenefits appear on low ozone days

and do not cause exceedance of the

ozone standard, while benefits appear

on high ozone days when they are most

needed. As described above, OTAG

found only one day of one episode in

one area where an urban ozone increase

could be classified as detrimental, with

detrimental being defined as an increase

in ozone of four ppb in a grid cell on

a day with ozone exceeding 100 ppb.89

NOX control resulted in ozone decreases

for the following days of that episode .

EPA does not believe the evidence when

viewed overall supports forgoing the

ozone reduction benefits of NOX

reduction from RFG.

In conclusion, API’s arguments that

the Phase II RFG NOX standard may

cause limited urban disbenefits, and

that additional VOC reductions may be

necessary to ameliorate such

disbenefits, are not compelling new

evidence or arguments that support

elimination or delay of the Phase II RFG

NOX emission reduction standard. 90

EPA has concluded that reducing NOX

emissions in required RFG areas as part

of a region-wide strategy will contribute

to attainment of the ozone standard,

even if those NOX emission reductions

do not improve air quality in some

portions of some RFG areas on some low

ozone days. Additional VOC reductions

are an option states may choose to avoid

or reduce urban ozone increases from

NOX control.

API recently submitted the results of

air quality modeling undertaken by

Systems Applications International on

API’s behalf. API’s modeling used the

same photochemical grid model,

inventory, and episode data as OTAG.

API examined the effect in 2007 of a 6.8

percent reduction in mobile source NOX

emissions in RFG areas during the 1991

episode. API’s modeling shows benefits

and disbenefits in RFG areas, and no

change in most non-RFG areas

throughout the OTAG domain. 91 On the

basis of this modeling, API argues that

the Phase II RFG NOX standard will be

ineffective in reducing ozone,

underscoring the cost-ineffectiveness of

the Phase II RFG NOX standard,

according to API.

However, API’s modeling does not

indicate whether disbenefits occurred in

grid cells with high or low ozone, so

EPA cannot determine if the projected

disbenefit would actually be

detrimental. As discussed previously,

OTAG modeling demonstrates that most

urban ozone increases from NOX control

occur on low ozone days and do not

cause exceedance of the ozone standard,

while ozone reductions occur on high

ozone days when reductions are most

needed. Moreover, API’s modeling sets

the threshold level of ozone reduction at

two ppb, which effectively eliminates

benefits below two ppb. The Phase II

RFG NOX standard is estimated to

achieve a one to two percent reduction

in the national NOX inventory, and that

reduction would translate into a

relatively small reduction in the ozone

level at levels above 100 ppb. By setting

the threshold at two percent, API’s

modeling may not capture the benefits

of the standard. Thus, EPA is not

persuaded by API’s modeling that the

Phase II RFG NOX standard will be

ineffective in reducing ozone; nor does

EPA agree that API’s modeling

underscores the Phase II RFG NOX

standard’s cost-ineffectiveness.

4. Non-ozone Benefits

In the RFG final rule, EPA cited nonozone benefits of NOX control, such as

reductions in emissions leading to acid

rain formation, reductions in toxic

nitrated polycyclic aromatic

compounds, lower secondary airborne

particulate (i.e., ammonium nitrate)

formation, reduced nitrate deposition

from rain, improved visibility, and

lower levels of nitrogen dioxide. A

complete discussion of these benefits

can be found in the RIA accompanying

the RFG final rule. 92 EPA did not

attempt to quantify the non-ozone

benefits of NOX control in the

rulemaking, and did not include nonozone benefits in its cost-effectiveness

determination.

API claims that because EPA did not

quantify non-ozone benefits, such

benefits are speculative; API presented

no evidence to support this claim. EPA

does not agree. The fact that EPA did

not quantify non-ozone benefits of NOX

control does not render those benefits

speculative. In a directional sense, at

least, the non-ozone benefits of NOX

reductions, including the Phase II RFG

NOX standard, are clear.
11358 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

93See A–96–27, Memorandum dated February

1997 from Lester Wyborny, Chemical Engineer,

Fuels and Energy Division, ‘‘Cost of Phase II RFG

NOX Control,’’ to Charles Freed, Director, Fuels and

Energy Division.

94 Ibid and U.S. DOE, Re-estimation of the

Refining Cost of Reformulated Gasoline NOX

Control, February 1997.

Since publication of the RFG final

rule, EPA has identified additional nonozone benefits from NOX reductions.

The following describes how NOX

emissions contribute to adverse impacts

on the environment:

Acid Rain. NOX and sulfur dioxide

are the two key air pollutants that cause

acid rain and result in adverse effects on

aquatic and terrestrial ecosystems,

materials, visibility, and public health.

Nitric acidic deposition plays a

dominant role in the acid pulses

associated with the fish kills observed

during the springtime melt of the

snowpack in sensitive watersheds and

recently has also been identified as a

major contributor to chronic

acidification of certain sensitive surface

waters.

Drinking Water Nitrate. High levels of

nitrate in drinking water are a health

hazard, especially for infants.

Atmospheric nitrogen deposition in

sensitive forested watersheds can

increase stream water nitrate

concentrations; the added nitrate can

remain in the water and be transported

long distances downstream because

plants in most freshwater systems do

not take up the added nitrate.

Eutrophication. NOX emissions

contribute directly to the widespread

accelerated eutrophication of U.S.

coastal waters and estuaries.

Atmospheric deposition direct to

surface waters and deposition to

watershed and subsequent transport

into the tidal waters has been

documented to contribute from 12 to 44

percent of the total nitrogen loadings to

U.S. coastal water bodies. Nitrogen is

the nutrient limiting growth of algae in

most coastal waters and estuaries. Thus

addition of nitrogen results in

accelerated algal and aquatic plant

growth in the water body causing

adverse ecological effects and economic

impacts that range from nuisance algal

blooms to oxygen depletion and fish

kills.

Global Warming. Nitrous oxide (N2O)

is a greenhouse gas. Anthropogenic

nitrous oxide emissions in the U.S.

contribute about two percent of the

greenhouse effect, relative to total U.S.

anthropogenic emissions of greenhouse

gases. In addition, emissions of NOX

lead to the formation of tropospheric

ozone, which is another greenhouse gas.

Nitrogen Dioxide (NO2). Exposure to

NO2 is associated with a variety of acute

and chronic health effects. The health

effects of most concern at ambient or

near-ambient concentrations of NO2

include mild changes in airway

responsiveness and pulmonary function

in individuals with preexisting

respiratory illnesses, and increases in

respiratory illnesses in children.

Nitrogen Saturation of Forest

Ecosystems. Forests accumulate

nitrogen inputs. While nitrogen inputs

in forest ecosystems have traditionally

been considered beneficial, recent

findings in North America and Europe

suggest that, because of chronic nitrogen

deposition from air pollution, some

forests are showing signs of nitrogen

saturation, including undesirable nitrate

leaching to surface and ground water

and decreased plant growth.

Particulate Matter. NOX compounds

react with other compounds to form fine

nitrate particles and acid aerosols.

Nitrates are especially damaging

because of their small size, which

results in penetration deep into the

lungs. Particulate matter has a wide

range of adverse health effects,

including premature death.

Stratospheric Ozone Depletion. A

layer of ozone located in the upper

atmosphere (stratosphere) protects the

surface of the earth (troposphere) from

excessive ultraviolet radiation.

Tropospheric emissions of nitrous oxide

(N2O) are very stable and slowly

migrate to the stratosphere, where solar

radiation breaks it into nitric oxide (NO)

and nitrogen (N). The nitric oxide reacts

with ozone to form nitrogen dioxide and

oxygen. Thus, additional N2O emissions

would result in a slight decrease in

stratospheric ozone.

Toxics. In the atmosphere, NOX

emissions react to form nitrogen

compounds, some of which are toxic.

Compounds of concern include

transformation products, nitrate radical,

peroxyacetyl nitrates, nitroarenes, and

nitrosamines.

Visibility and Regional Haze. NOX

emissions can interfere with the

transmission of light, limiting visual

range and color discrimination. Most

visibility and regional haze problems

can be traced to carbon, nitrates,

nitrogen dioxide, organics, soil dust,

and sulfates.

Cost-Effectiveness

1. Cost-Effectiveness of Phase II RFG

NOX Standard

To update its evaluation of the costeffectiveness of the Phase II RFG NOX

standard, EPA asked DOE to update the

1994 DOE study. EPA used the Bonner

& Moore refinery model to estimate

costs in the RFG rulemaking, and

included the 1994 DOE study and

additional industry cost studies in its

consideration. EPA determined to

update the DOE study for purposes of

considering API’s petition, rather than

the Bonner & Moore analysis, because

since the 1994 study, EPA, DOE, and

API have worked closely to improve the

refinery modeling used by DOE to

develop cost estimates. Over 200

improvements and changes to the model

have been made in response to

suggestions from API.

EPA notified each party that

commented on the API petition when

DOE’s draft report became available and

sent copies to interested parties for their

review. EPA also reopened the comment

period and held a meeting with

interested parties to discuss the draft

DOE report.

DOE’s improved model provides a

range of cost-effectiveness, rather than a

single number. DOE’s regionallyweighted cost range per summer ton of

NOX removed is $5,400 to $11,300.

Based on that range, EPA calculated the

annual incremental cost range at $2,180

to $6,000 per ton of NOX removed.

Although the high end of EPA’s costeffectiveness range exceeds $5,000, EPA

does not consider that to be significant,

since the midpoint of the range is

$4,090. EPA views DOE’s updated

estimate as new information that

confirms the information relied upon in

the RFG rulemaking to evaluate the costeffectiveness of the Phase II RFG NOx

standard. The improvements to the DOE

model and EPA’s updated costeffectiveness calculations are described

in detail in an EPA technical

memorandum available in the docket for

this action. 93

EPA received comments from the oil

and automotive industries on DOE’s

draft report. Both the oil and automotive

industries’ comments are critical of

certain technical aspects of DOE’s

refinery modeling. These comments and

EPA’s responses are discussed in an

EPA technical memorandum, and in

DOE’s final report; both documents are

available in the docket for this action. 94

Overall, oil industry comments

argued that the lower end of the DOE

cost range should be dropped because

the model form that produced it is not

representative. DOE produced a cost

range by using both a ‘‘ratio free’’ and

‘‘ratio constrained’’ form of its refinery

model. The ratio free form is similar to

the model version used for the 1994

DOE study, with improvements in

process descriptions. The ratio free

model includes a modeling concept in

which refinery streams with identical
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11359

95The annual per ton cost estimates of DOE and

EPA differ because EPA uses a different method of

annualizing costs than DOE. EPA’s calculations are

described in a technical memorandum to docket A–

96–27; see the memorandum dated February 1997

from Lester Wyborny, Chemical Engineer, Fuels and

Energy Division, ‘‘Cost of Phase II RFG NOX

Control,’’ to Charles Freed, Director, Fuels and

Energy Division. Although Phase II RFG NOX

emission reductions are required only during the

summer ozone season, EPA annualizes the cost so

that it may be compared with other emission

reduction programs.

96Pet. at p. 20, citing the 1994 DOE study at xii.

97 1994 DOE study, pp. 56–58.

98Pet. at p. 26.

99 Ibid.

100RIA at p. 385.

101 60 FR 18751 (April 13, 1995).

102 54 FR 52293 (December 20, 1989); 60 FR 65387

(December 19, 1995).

103Phase II NOX Controls for the MARAMA and

NESCAUM Regions, EPA–453/R–96–002,

November 1995, Table 1–7.

distillation cut points are kept separate

through different processes, and this

modeling concept may produce overoptimized results. The ratio constrained

form has the same improvements in

process descriptions as the ratio free

form, with added constraints on the

proportions of streams entering a

process, to avoid unrealistic stream

separation; however, the ratio

constrained form may under-optimize

refinery operations. DOE has concluded

that both model forms can provide

credible estimates of the refining cost

range, given the variations within and

among refineries, uncertainties in the

range of refinery costs, and the overoptimization and under-optimization

possibilities of the model forms. EPA

agrees with DOE that both model forms

are useful in exploring the plausible

range of refining costs.

Oil industry comments argue that the

upper end of DOE’s range exceeds a

benchmark of $5,000 per ton of NOX

removed. DOE’s regionally-weighted

cost-effectiveness estimate for the ratio

constrained model form is $11,300 per

summer ton of NOX removed, which

DOE calculates as $5,200 per annual

ton, and which EPA calculates as $6,000

per annual ton. 95 Both EPA and DOE

believe that the high end of the range

reflected by the ratio constrained model

estimate is not significantly different

from the benchmark of $5,000 per

annual ton.

EPA believes that the updated DOE

cost study is the best available evidence

concerning the costs of the Phase II RFG

NOX standard, including the

desulfurization processes that drive

those costs. This evidence indicates that

the cost-effectiveness analysis used by

EPA when setting the standard

continues to be valid. The detailed

information on desulfurization costs

submitted by API to support its petition

was previously submitted during the

RFG rulemaking and was considered at

that time; it is not new information and

does not change EPA’s view, based on

the updated DOE cost modeling, that the

Phase II RFG NOX standard remains

cost-effective.

API argues that the 1994 DOE study

supports its argument that EPA’s

desulfurization costs are too low, citing

the study’s observation that: ‘‘The actual

NOX reduction standard for Phase II

RFG should reflect margins for

enforcement tolerance, temporal

production variations* * *, variations

among refiners of differing capability,

and potential inaccuracies and overoptimization in the refinery yield

model* * *,96 However, the 1994 DOE

study supports EPA’s view that the 6.8

percent average NOX emission reduction

standard will cost approximately $5,000

per annual ton of NOX removed. The

1994 DOE study’s reference to $10,000

per summer ton is equivalent to EPA’s

$5,000 per annual ton.97 Furthermore,

the 1994 DOE study used inflated year

2000 dollars, while EPA’s estimates

were in 1990 dollars.

Oil industry comments also point out

that DOE’s updated report states that its

cost estimates do not include the impact

of the requirement that RFG achieve a

three percent minimum NOX reduction

per batch under the averaging

provisions, or the impact of any

potential enforcement tolerance

associated with that three percent

minimum NOX standard. EPA believes

that any costs associated with the

minimum NOX reduction requirement

and any associated enforcement

tolerance compliance costs are separate

costs associated with these provisions

and do not change the cost-effectiveness

analysis of the 6.8 percent average NOX

emission reduction standard. While

EPA is denying API’s petition to

reconsider the 6.8 percent average

standard, it will continue to evaluate

and plans to reach a decision on the

separate issues associated with the three

percent minimum requirement under

the averaging provisions.

As discussed above, NOX reductions

from Phase II RFG in several cities with

NOX waivers are expected to contribute

to ozone attainment in those areas,

downwind areas, or both. As discussed

previously, EPA believes that the

benefits of NOX reduction in these and

other RFG areas far outweigh the

disbenefits. Thus, EPA does not believe

that the benefit of the NOX reductions

in Chicago, Milwaukee, and Houston

should be calculated as zero when

analyzing the cost-effectiveness of the

Phase II RFG NOX reduction standard.

API also argues that the Phase II RFG

NOX emission reduction standard

interferes with refining flexibility and

leaves refiners with unduly costly and

narrow choices for producing RFG.

However, as the updated DOE study

indicates, as discussed above, the Phase

II RFG NOX standard is not unduly

costly even considering the high end of

the range reflected by the ratio

constrained model estimate. In the final

rule, EPA clarified that the Phase II RFG

standards are performance standards

and may be met by the refiner’s choice

of fuel parameter controls. In addition,

EPA elected to allow both a per gallon

and an averaging standard for NOX to

provide greater flexibility to refiners.

API has provided no compelling new

evidence or argument to the contrary.

2. Stationary Source Cost-Effectiveness

API argues that EPA understated the

relative cost-effectiveness of major

stationary source NOX controls. API

cites incremental cost-effectiveness

estimates for coal-fired utility boilers of

$1,300 to $2,200 per ton for selective

non-catalytic reduction and $1,250 to

$6,600 per ton for selective catalytic

reduction.98 For gas and oil-fired utility

boilers, API cites $2,100 to $5,650 per

ton for selective catalytic reduction, and

for gas-fired industrial boilers, $3,300 to

$5,500 per ton for selective catalytic

reduction.99 In its RIA, EPA cited costeffectiveness estimates for stationary

source NOX emission controls based on

utility boilers. Low NOX burner

technology was cited at $1,000 per ton

and selective catalytic reduction at

$3,000 to $10,000 per ton.100

In stationary source regulations

promulgated since the RFG rule, costeffectiveness estimates have ranged

from $200 per ton for certain coal fired

power plants 101 to about $3,000 per ton

for municipal waste combustors.102

Recent NOX control estimates developed

by the Mid-Atlantic Regional Air

Management Association (MARAMA)

and Northeast States for Coordinated

Air Use Management (NESCAUM) for

those regions for retrofits range from a

low of $320 to $1,800 for natural gas

reburn for oil and gas boilers to $3,400

to $6,900 for natural gas conversion for

coal-fired boilers.103

API and other oil industry sources

cited cost-effectiveness estimates and

rankings that were developed in the

OTAG process for Phase II RFG and

other NOX reduction programs, as

evidence that the Phase II RFG NOX

standard is not cost-effective compared

to other NOX reduction programs,

particularly stationary source programs.
11360 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

104 58 FR 51735 (October 4, 1993), section 1(a) at

51735. 105RIA at pp. 313–326.

API argues these other programs offer a

larger potential for overall reduction in

NOX emissions. The figure of $25,000 to

$45,000 per ton of NOX reduced

developed in the OTAG process ascribes

all the costs of RFG to NOX control,

including costs incurred to reduce

toxics and VOCs, and to meet the

various content requirements. If VOC

and NOX reductions are valued equally,

as OTAG has done, the incremental cost

per ton of NOX removed falls by more

than a factor of four to under $7,000 per

ton, and the average cost falls to $3,000

to $4,000 per ton. That incremental cost

is higher than projected by EPA for the

Phase II RFG NOX standard because it

assumes that all the gasoline in the 37

state OTAG region, over 90 percent of

the gasoline sold in the U.S. outside of

California, would be included in the

RFG program. Costs rise rather than fall

as volume of RFG produced increases

because less efficient refineries would

be drawn into producing RFG.

Moreover, EPA’s $5,000 per ton cost

estimate for the Phase II RFG NOX

standard applies to the final increment

of emission reduction pursued under

the program, while API compares this

incremental cost to average costs of

other control programs. Average costs

are always less than incremental costs;

if Phase II RFG costs are evaluated on

an average-cost basis, the cost per ton

for RFG areas falls to between $2,000

and $3,000.

Based on the evidence presented, EPA

concludes that some stationary source

NOX controls are more cost-effective

than the Phase II RFG NOX standard,

and some are not. The fact that some

stationary source NOX controls are more

cost-effective does not vitiate the costeffectiveness of the Phase II RFG NOX

standard. EPA cited stationary source

costs both above and below the cost of

Phase II RFG NOX standard in the RFG

rulemaking. EPA does not find that it

understated the relative costeffectiveness of stationary source NOX

controls.

API argues that stationary sources

offer more potential for reducing air

pollution. API argues that EPA should

sequence NOX controls and target major

stationary sources first, since stationary

source NOX control is more costeffective and can be targeted

geographically to avoid controls where

controls are not needed. Other NOX

controls should not be considered until

major stationary source controls are

employed and evaluated, according to

API.

As discussed previously, some

stationary source NOX controls are more

cost-effective than the Phase II RFG NOX

standard, and some are not. However,

OTAG has projected that, in 2007,

mobile sources will still contribute 42

percent of all NOX after implementation

of 1990 CAAA controls for mobile and

stationary sources. These measures

include the retrofit of reasonably

available control technology on existing

major stationary sources of NOX and

implementation of enhanced inspection

and maintenance programs under Title

I; new emission standards for new

motor vehicles and nonroad engines,

and the RFG program under Title II; and

controls on certain coal-fired electric

power plants under Title IV. Given the

challenges facing so many areas in

identifying and implementing programs

that will lead to attainment of the ozone

standard, and the need for additional

NOX controls, EPA believes that NOX

reductions in urban areas where mobile

sources are concentrated, as part of a

region-wide NOX reductions, are still

essential to achieve ozone attainment. In

addition, OTAG modeling demonstrates

that even with unrealistically large NOX

reductions, such as an 80 percent

reduction in elevated NOX plus a 60

percent reduction in low level NOX,

without VOC reductions, attainment

still would not be reached throughout

the OTAG region. EPA believes that

both stationary source and mobile

source controls will be necessary for

many areas to reach attainment.

3. Executive Order 12866

API argues that the Phase II RFG NOX

emission reduction standard does not

satisfy the provisions of Executive Order

12866. API argues that the Phase II RFG

NOX standard is not compelled by

statute or necessary to interpret the

statute, or made necessary by public

need, or the most cost-effective NOX

control to achieve the regulatory

objective.

EPA believes the Phase II RFG NOX

reduction standard meets the

substantive requirements of the

Executive Order 12866. Although the

Phase II RFG NOX standard is not

required by statute, it is ‘‘made

necessary by compelling public

need’’ 104 and is a cost-effective

standard. As discussed earlier, the

authority EPA used to establish the

standard, section 211(c)(1)(A), allows

EPA to regulate fuels or fuel additives

if their emission products cause or

contribute to air pollution that may

reasonably be anticipated to endanger

public health or welfare. EPA used this

authority based on scientific evidence

regarding the benefits of NOX control

and the cost-effectiveness of NOX

reductions. The preceding discussion

indicates that EPA’s RFG rulemaking

properly complied with Executive Order

12866.

V. Conclusion

A detailed discussion of the

determination of the need for, scientific

justification for, and cost-effectiveness

of NOX control is presented in the RIA

for the final rule.105 EPA’s review here

of the air quality benefits and costeffectiveness of the Phase II RFG NOX

reduction standard does not show that

the prior rulemaking determinations

supporting this standard were

inappropriate. After considering API’s

petition, public comment, and other

relevant information available to EPA,

API’s petition for reconsideration of the

Phase II RFG NOX emission reduction

standard is denied.

Dated: February 28, 1997.

Mary D. Nichols,

Assistant Administrator, Office of Air and

Radiation.

[FR Doc. 97–6217 Filed 3–11–97; 8:45 am]

BILLING CODE 6560–50–P

40 CFR Part 180

[OPP–300458; FRL–5593–1]

RIN 2070–AB78

Clopyralid; Pesticide Tolerance for

Emergency Exemption

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Final rule.

SUMMARY: This regulation establishes a

time-limited tolerance for residues of

the herbicide clopyralid in or on the raw

agricultural commodity cranberries in

connection with EPA’s granting of

emergency exemptions under section 18

of the Federal Insecticide, Fungicide,

and Rodenticide Act authorizing use of

clopyralid on cranberries in the states of

Massachusetts, Oregon, and

Washington. This regulation establishes

maximum permissible levels for

residues of clopyralid in this food. The

tolerance will expire July 31, 1998.

DATES: This regulation becomes

effective March 12, 1997. This

regulation expire on July 31, 1998.

Objections and requests for hearings

must be received by EPA on or before

May 12, 1997.

ADDRESSES: Written objections and

hearing requests, identified by the

docket control number, [OPP–300458],

must be submitted to: Hearing Clerk

(1900), Environmental Protection