[Federal Register Volume 63, Number 83 (Thursday, April 30, 1998)]
[Proposed Rules]
[Pages 24058-24077]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11475]



[[Page 24057]]

_______________________________________________________________________

Part VII





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 52



Findings of Significant Contribution and Rulemaking on Section 126 
Petitions for Purposes of Reducing Interstate Ozone Transport; Proposed 
Rule

Federal Register / Vol. 63, No. 83 / Thursday, April 30, 1998 / 
Proposed Rules

[[Page 24058]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[FRL-6006-1]
RIN 2060-AH88


Findings of Significant Contribution and Rulemaking on Section 
126 Petitions for Purposes of Reducing Interstate Ozone Transport

AGENCY: Environmental Protection Agency (EPA).

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: In accordance with sections 126 and 110(a)(2)(D) of the Clean 
Air Act (CAA), EPA plans to take rulemaking action on petitions filed 
by eight Northeastern States seeking to mitigate what they describe as 
significant transport of one of the main precursors of ozone smog, 
nitrogen oxides (NO<INF>X</INF>), across State boundaries. Each 
petition specifically requests that EPA make a finding that 
NO<INF>X</INF> emissions from certain major stationary sources 
significantly contribute to ozone nonattainment problems in the 
petitioning State. If EPA makes such a finding, EPA would be authorized 
to establish Federal emissions limits for the sources. The petitions 
recommend control levels for EPA to consider. The eight Northeastern 
States that filed petitions are Connecticut, Maine, Massachusetts, New 
Hampshire, New York, Pennsylvania, Rhode Island, and Vermont.
    This notice announces the Agency's schedule for rulemaking on the 
section 126 petitions, provides EPA's preliminary identification of 
sources named in the petitions that significantly contribute to 
nonattainment problems in the petitioning States, provides EPA's 
preliminary assessment of the types of recommended emission limitations 
and compliance schedules set forth in the petitions, and discusses 
legal and policy issues raised under section 126.
    The transport of ozone is important because ozone has long been 
recognized, in both clinical and epidemiological research, to affect 
public health. There is a wide range of ozone-induced health effects, 
including decreased lung function (primarily in children active 
outdoors), increased respiratory symptoms (particularly in highly 
sensitive individuals), increased hospital admissions and emergency 
room visits for respiratory causes (among children and adults with pre-
existing respiratory disease such as asthma), increased inflammation of 
the lung, and possible long-term damage to the lungs.

DATES: The EPA is establishing an informal 30-day comment period for 
today's advance notice of proposed rulemaking (ANPR), ending on June 1, 
1998. Please direct correspondence to the address specified below. See 
SUPPLEMENTARY INFORMATION for further information on the ANPR comment 
period.
    A public hearing for the future proposed rulemaking on the section 
126 petitions will be held on October 28 and 29, 1998.

ADDRESSES: Documents relevant to this action are available for 
inspection at the Air and Radiation Docket and Information Center 
(6101), Attention: Docket A-97-43, U.S. Environmental Protection 
Agency, 401 M Street SW, room M-1500, Washington, DC 20460, telephone 
(202) 260-7548, between 8:00 a.m. and 4:00 p.m., Monday through Friday, 
excluding legal holidays. A reasonable copying fee may be charged for 
copying.
    Written comments should be submitted to this address. Comments and 
data may also be submitted electronically by following the instructions 
under SUPPLEMENTARY INFORMATION of this document. No confidential 
business information should be submitted through e-mail.
    The public hearing on the future proposed rulemaking on the section 
126 petitions will be held on October 28 and 29, 1998 at the EPA 
Auditorium at 401 M Street SW, Washington, DC 20460.

FOR FURTHER INFORMATION CONTACT: Carla Oldham, Office of Air Quality 
Planning and Standards, Air Quality Strategies and Standards Division, 
MD-15, Research Triangle Park, NC, 27711, telephone (919) 541-3347.

SUPPLEMENTARY INFORMATION:

Comment Period

    This ANPR gives EPA's preliminary assessment of the petitions and 
raises a number of legal and policy issues related to the section 126 
provisions. If comments are submitted within 30 days of publication of 
this notice, EPA will have adequate time to take the comments into 
account in the deliberative process for the rulemaking proposal. As 
discussed in Section V of this notice, under a proposed consent decree, 
EPA must publish the section 126 rulemaking proposal in the Federal 
Register by September 30 of this year. A formal comment period and 
public hearing will be provided for the proposal. The EPA will respond 
to comments on this ANPR, if any comment is appropriate, when it 
responds to comments on the proposal.

Availability of Related Information

    The official record for this rulemaking, as well as the public 
version, has been established under docket number A-97-43 (including 
comments and data submitted electronically as described below). The 
eight petitions are contained in this docket. A public version of this 
record, including printed, paper versions of electronic comments, which 
does not include any information claimed as confidential business 
information, is available for inspection from 8 a.m. to 4 p.m., Monday 
through Friday, excluding legal holidays. The official rulemaking 
record is located at the address in ADDRESSES at the beginning of this 
document. Electronic comments can be sent directly to EPA at: A-and-R-
D<a href="/cdn-cgi/l/email-protection#0d626e6668794d687d6c606c646123687d6c236a627b"><span class="__cf_email__" data-cfemail="3d525e5658497d584d5c505c545113584d5c135a524b">[email protected]</span></a>. Electronic comments must be submitted as an 
ASCII file avoiding the use of special characters and any form of 
encryption. Comments and data will also be accepted on disks in 
WordPerfect in 5.1 file format or ASCII file format. All comments and 
data in electronic form must be identified by the docket number A-97-
43. Electronic comments on this ANPR rule may be filed online at many 
Federal Depository Libraries.
    The EPA is conducting a separate rulemaking action that contain 
actions and information related to this ANPR, ``Finding of Significant 
Contribution and Rulemaking for Certain States in the Ozone Transport 
Assessment Group Region for Purposes of Reducing Regional Transport of 
Ozone,'' (see 62 FR 60318; November 7, 1997 and a supplemental proposal 
being published in late April or early May 1998.) Documents related to 
these proposals are available for inspection in Docket No. A-96-56 at 
the address and times given above. This rulemaking action is hereafter 
referred to as the proposed NO<INF>X</INF> State implementation plan 
(SIP) call (proposed NO<INF>X</INF> SIP call). The proposed 
NO<INF>X</INF> SIP call and associated documents are located at <a href="http://
www.epa.gov/ttn/oarpg.otagsip.html">http://
www.epa.gov/ttn/oarpg.otagsip.html</a>.
    Additional information relevant to this ANPR concerning the Ozone 
Transport Assessment Group (OTAG) is available on the Agency's Office 
of Air Quality Planning and Standards' (OAQPS) Technology Transfer 
Network (TTN) via the web at http://www.epa.gov/ttn/. If assistance is 
needed in accessing the system, call the help desk at (919) 541-5384 in 
Research Triangle Park, NC. Documents related to OTAG can be downloaded 
directly from OTAG's webpage at <a href="http://

">http://

</a>[[Page 24059]]

www.epa.gov/ttn/otag. The OTAG's technical data are located at <a href="http://
www.iceis.mcnc.org/OTAGDC">http://
www.iceis.mcnc.org/OTAGDC</a>.

Outline

I. Background
    A. Ozone Transport, Ozone Transport Commission NO<INF>X</INF> 
Memorandum of Understanding (OTC NO<INF>X</INF> MOU), OTAG, the 
Proposed NO<INF>X</INF> SIP Call, and the Revised Ozone National 
Ambient Air Quality Standard (NAAQS)
    B. Section 126
    C. Summary of Section 126 Petitions
    D. Relationship to NO<INF>X</INF> SIP Call
    E. Proposed Rulemaking Schedule
II. Preliminary Analysis of Significant Contribution
    A. Background
    B. Regional Ozone and Interstate Transport
    C. Collective Contribution to Nonattainment
    D. Weight of Evidence Approach and Findings of Significant 
Contribution
    E. Technical Approach to Preliminary Analysis of Petitions
    F. Results of Preliminary Assessment of Section 126 Petitions
III. Preliminary Assessment of Emissions Limitations and Compliance 
Schedules
    A. Remedies Recommended in Petitions
    B. EPA's Analytic Approach
    C. Intent to Implement Controls Through Cap-and-Trade Program
IV. Legal and Policy Issues
    A. Issues Involving Significant Contribution
    B. Issues Involving Trading
    C. Cost-Effectiveness Issues
    D. Legal Issues
V. Schedule for Rulemaking Action of Section 126 Petitions
VI. Impact on Small Entities

I. Background

A. Ozone Transport, Ozone Transport Commission NO<INF>X</INF> 
Memorandum of Understanding (OTC NO<INF>X</INF> MOU), OTAG, the 
Proposed NO<INF>X</INF> SIP Call, and the Revised Ozone National 
Ambient Air Quality Standard (NAAQS)

    Today's action occurs against a background of a major national 
effort, spanning at least the last 10 years, to analyze and take steps 
to mitigate the problem of the transport of ozone and its precursors 
across State boundaries. This effort has grown more intensive in the 
past several years with the approval of the OTC NO<INF>X</INF> MOU by 
11 of the Northeastern States and the District of Columbia included in 
the OTC, the completion of the OTAG process, and the publication of 
EPA's proposed NO<INF>X</INF> SIP call. In addition, in July 1997, EPA 
issued a revised NAAQS for ozone, which is determined over an 8-hour 
period (the 8-hr standard). This new 8-hr standard must now be taken 
into account, along with the pre-existing 1-hr standard, in resolving 
transport issues. These issues and events are detailed in the proposed 
NO<INF>X</INF> SIP call (62 FR 60318) and familiarity with that notice 
is assumed for purposes of today's notice.

B. Section 126

    Today's action focuses on section 126 of the CAA. Subsection (a) of 
section 126 requires, among other things, that SIPs require major 
proposed new (or modified) sources to notify nearby States for which 
the air pollution levels may be affected by the fact that such sources 
have been permitted to commence construction. Subsection (b) provides:

    Any State or political subdivision may petition the 
Administrator for a finding that any major source or group of 
stationary sources emits or would emit any air pollutant in 
violation of the prohibition of section 110(a)(2)(D)(ii) * * * or 
this section.

    Subsection (c) of section 126 states that--

    [I]t shall be a violation of this section and the applicable 
implementation plan in such State [in which the source is located or 
intends to locate]--
    (1) for any major proposed new (or modified) source with respect 
to which a finding has been made under subsection (b) of this 
section to be constructed or to operate in violation of the 
prohibition of section 110(a)(2)(D)(ii) * * * or this section, or
    (2) for any major existing source to operate more than three 
months after such finding has been made with respect to it.

    However, subsection (c) further provides that EPA may permit the 
continued operation of such major existing sources beyond the 3-month 
period, if such sources comply with EPA-promulgated emissions limits 
within 3 years of the date of the finding.
    Section 110(a)(2)(D) provides the requirement that a SIP contain 
adequate provisions--

    (i) prohibiting, consistent with the provisions of this title, 
any source or other type of emissions activity within the State from 
emitting any air pollutant in amounts which will--
    (I) contribute significantly to nonattainment in, or interfere 
with maintenance by, any other State with respect to [any] national 
* * * ambient air quality standard, or
    (II) interfere with measures required to be included in the 
applicable implementation plan for any other State under part C to 
prevent significant deterioration of air quality or to protect 
visibility.
    (ii) insuring compliance with the applicable requirements of 
sections 126 and 115 (relating to interstate and international 
pollution abatement) * * *

    For purposes of today's ANPR, it is EPA's preliminary view that, 
with respect to existing stationary sources, sections 126(b)-(c) and 
110(a)(2)(D), read together, authorize a downwind State to petition EPA 
for a finding that emissions from major stationary sources upwind of 
the State contribute significantly to nonattainment, or interfere with 
maintenance, of a NAAQS in the State. If EPA grants the requested 
finding, EPA must directly regulate the sources. Sources would have to 
comply with the emissions limits within 3 years from the finding. The 
EPA acknowledges that others have urged different readings of sections 
126(b)-(c) and 110(a)(2)(D), and EPA solicits comments thereon, as 
described in Section IV below.
    In a letter dated August 8, 1997, to Michael J. Walls, Chief, 
Environmental Protection Bureau, Office of Attorney General, State of 
New Hampshire, from Mary D. Nichols, Assistant Administrator for Air 
and Radiation, EPA provided preliminary and general guidance concerning 
section 126 and the process of submitting petitions (Nichols letter). 
This letter has been placed in the docket for today's action.
    In Section IV of this notice, below, EPA discusses legal and policy 
issues raised under section 126 and requests comments on the various 
issues.

C. Summary of Section 126 Petitions

    On August 14-15, 1997, EPA received eight section 126 petitions 
submitted individually by eight Northeastern States. The petitioning 
States are Connecticut, Maine, Massachusetts, New Hampshire, New York, 
Pennsylvania, Rhode Island, and Vermont. Each petition requests EPA to 
make a finding that certain major stationary sources in upwind States 
contribute significantly to nonattainment, or interfere with 
maintenance, in the petitioning State. All of the petitions seek a 
finding and relief under the 1-hr standard; Massachusetts, 
Pennsylvania, and Vermont also seek a finding and relief with respect 
to the 8-hr standard.
    The petitions vary as to the type and geographic location of the 
sources identified as significant contributors. Some petitions identify 
specific sources, others list source categories. The sources and source 
categories include electric generating plants, fossil fuel-fired 
boilers and other indirect heat exchangers, and certain other related 
stationary sources that emit NO<INF>X</INF>. All the petitions target 
sources in the Midwest; some also target sources in the South and 
Northeast.
    The petitions also vary as to the level of controls they recommend 
be applied to the sources to mitigate the transport problem. Several 
recommend EPA establish a 0.15 lb/mmBtu NO<INF>X</INF>

[[Page 24060]]

emission limitation implemented through a cap-and-trade program. The 
petitions are described in greater detail in Sections II and III of 
this notice.
    All of the petitions rely, in part, on OTAG analyses for technical 
support. In addition, the States submitted a variety of other technical 
analyses which include computerized urban airshed modeling, wind 
trajectory analyses, results of a transport study by the Northeast 
States for Coordinated Air Use Management, and culpability analyses.

D. Relationship to NO<INF>X</INF> SIP Call

    The sources, or groups of sources, identified in the petitions may 
also be subject to State-adopted emission limitations and control 
schedules in response to a separate rulemaking action on regional ozone 
transport--the NO<INF>X</INF> SIP call.
    In the proposed NO<INF>X</INF> SIP call, EPA made a proposed 
determination that NO<INF>X</INF> emissions from 22 eastern States and 
the District of Columbia significantly contribute to nonattainment 
problems in downwind States with respect to both the long-standing 1-hr 
NAAQS and the new 8-hr NAAQS. The EPA proposed that these jurisdictions 
be required to revise their SIPs to reduce Statewide NO<INF>X</INF> 
emissions to a specified level. The proposal is designed to assure that 
SIPs meet the requirements of section 110(a)(2)(D), which mandates that 
SIPs contain adequate provisions prohibiting emissions that 
significantly contribute to downwind nonattainment.
    The proposed NO<INF>X</INF> SIP call is the result of technical 
analyses and recommendations by the OTAG, a group comprised of EPA and 
the 37 eastern-most States in the Nation, as well as industry and 
environmental groups. Because the NO<INF>X</INF> SIP call process 
overlaps considerably with the section 126 petition process, EPA 
believes it is important to coordinate the two actions as much as 
possible.

E. Proposed Rulemaking Schedule

    Section 126(b) requires EPA to make the requested finding, or deny 
the petition, within 60 days of receipt. It also requires EPA to 
provide a public hearing for the petition. In addition, EPA's action 
under section 126 is subject to the procedural requirements of section 
307(d) of the Act. One of these requirements is notice-and-comment 
rulemaking. Section 307(d) provides for a time extension, under certain 
circumstances, for rulemakings subject to that provision. Specifically, 
it allows statutory deadlines that require promulgation in less than 6 
months from proposal to be extended to not more than 6 months from 
proposal to afford the public and the Agency adequate opportunity to 
carry out the purposes of section 307(d). In three notices dated 
October 22, 1997 (62 FR 55769), November 20, 1997 (62 FR 6194), and 
January 2, 1998 (63 FR 26), EPA ultimately extended the deadline for 
action to December 18, 1997.
    On February 25, 1998, the eight petitioning States filed a 
complaint in the U.S. District Court for the Southern District of New 
York to compel EPA to take action on the States' section 126 petitions. 
The EPA and the eight States filed a proposed consent decree that would 
establish a schedule for acting on the petitions. Pursuant to CAA 
section 113(g), the EPA has solicited comments on the proposed consent 
decree, by notice dated March 5, 1998 (63 FR 10874). The comment period 
closed April 6, 1998.
    The schedule recommended in the proposed consent decree would 
require EPA to take final action on at least the technical merits of 
the petitions by April 30, 1999. The recommendation would further 
provide for an alternative schedule under which EPA could delay final 
action on the petitions until May 1, 2000. The section 126 rulemaking 
schedule is described in more detail in Section V of this notice.

II. Preliminary Analysis of Significant Contribution

A. Background

    This section describes EPA's preliminary analysis of whether the 
sources identified in the section 126 petitions significantly 
contribute to nonattainment problems in the eight petitioning States. 
The EPA is relying on information included in the proposed 
NO<INF>X</INF> SIP call on significant contribution for this analysis. 
The proposed NO<INF>X</INF> SIP call significance determination was 
based upon a ``weight of evidence'' approach in which a range of 
technical information was evaluated against a set of factors, as 
described below. This section presents: (1) General information on the 
importance of transport to ozone formation, (2) the collective nature 
of the contribution of man-made emissions to ozone formation, (3) 
factors considered in the weight of evidence approach and findings of 
significant contribution in the proposed NO<INF>X</INF> SIP call, and 
(4) analysis of these findings relative to each of the petitions.

B. Regional Ozone and Interstate Transport

    The importance of interstate transport to the regional ozone 
problem and contributions from upwind States to downwind States is 
supported by numerous studies of air quality measurements and modeling 
analyses. In general, ozone episodes occur on many spatial and temporal 
scales ranging from localized subregional events lasting a day or two, 
up to regionwide episodes lasting as long as 10-14 days. The frequency 
of localized versus regional episodes depends on the characteristics of 
the large-scale meteorological patterns which control the weather in a 
particular summer season. In some cases, local controls alone are not 
sufficient to reduce ozone during regionwide episodes since a 
substantial amount of ozone may be transported into the area from 
upwind sources.
    The National Research Council report, ``Rethinking the Ozone 
Problem in Urban and Regional Air Pollution,'' <SUP>1</SUP> cites 
numerous studies of widespread ozone episodes during summertime 
meteorological conditions in the East. These episodes typically occur 
when a large, slow-moving, high pressure system envelopes all, or a 
large portion of, the Eastern United States. The relatively clear skies 
normally associated with such weather systems favor high temperatures 
and strong sunlight, which enhances the formation of high ozone 
concentrations. In addition, the wind flow patterns can lead to a build 
up of ozone concentrations and the potential for long-range ozone 
transport. Specifically, winds are generally light in the center of 
high pressure systems so that areas under the center may have near-
stagnation conditions resulting in the formation of high ozone levels. 
As the high pressure system moves eastward, winds become stronger on 
the ``backside'' which increases the potential for these high ozone 
levels to be transported to more distant downwind locations. Over 
several days, the emissions from numerous small, medium, and large 
cities, major stationary sources in rural areas, as well as natural 
sources, combine to form a ``background'' of moderate hourly ozone 
levels ranging from 80 to 100 ppb <SUP>2</SUP> of

[[Page 24061]]

which only 30 to 40 ppb may be due to natural sources. Hourly ozone 
concentration levels in the range of 80 to 100 ppb and higher have also 
been measured by aircraft aloft, across portions of the Northeast 
<SUP>3</SUP>. Because this level of background ozone is so close to the 
ozone NAAQS, even a small amount of locally-generated ozone will result 
in an exceedance.
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    \1\ National Research Council, Committee on Tropospheric Ozone 
Formation and Measurement, ``Rethinking the Ozone Problem in Urban 
and Regional Air Pollution,'' pp. 93-107, National Academy Press, 
Washington, DC, 1991.
    \2\ Northeast States for Coordinated Air Use Management, ``The 
Long-Range Transport of Ozone and Its Precursors in the Eastern 
United States,'' March 1997, Boston, MA. (Document is available in 
Docket A-96-56 for the NO<INF>X</INF> SIP call.)
    \3\ Ibid.
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C. Collective Contribution to Nonattainment

    Ozone is generally the result of cumulative emissions of 
NO<INF>X</INF> and volatile organic compounds (VOC) from hundreds of 
stationary sources and millions of vehicles, each of which is likely to 
be responsible for much less than 1 percent of the overall inventory of 
precursor emissions. A source (or group of sources) should not be 
exempted from treatment as a significant contributor merely because it 
may be a small part, in terms of total emissions, of the overall 
problem when all or most other contributors, individually, are also 
relatively small parts of the overall problem. This situation, in which 
a number of individual (and sometimes small) sources collectively cause 
a significant impact on air quality, is a major aspect of the 
contribution issue. As noted above, the moderate-to-high ozone levels 
which cover broad regions are the result of emissions from millions of 
individual sources interacting over multiple days. The contribution to 
downwind nonattainment results from the cumulative contribution from 
all sources involved in this process.
    In light of these considerations, in the proposed NO<INF>X</INF> 
SIP call, EPA believed it not appropriate to define a bright line test 
for significant contribution. Instead, EPA relied on a weight of 
evidence approach, based on a range of information, for determining 
whether a State makes a significant contribution to downwind 
nonattainment.

D. Weight of Evidence Approach and Findings of Significant Contribution

    The factors considered by the EPA in the proposed NO<INF>X</INF> 
SIP call for determining whether a contribution is significant include:
    <bullet> the transport distance between the upwind source area and 
the downwind problem area;
    <bullet> the amount of the contribution (ppb above the level of the 
ozone standard) made to the downwind nonattainment area;
    <bullet> the geographic extent of the contribution downwind; and
    <bullet> the level of emissions in the area upwind of a 
nonattainment area.
Details of the methodology and approaches followed by EPA in its 
analysis of these factors are documented in the proposed NO<INF>X</INF> 
SIP call.<SUP>4</SUP>
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    \4\ For a technical description of this modeling, see proposed 
NO<INF>X</INF> SIP call, 62 FR 60,335-60,337.
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    In brief, the results of the OTAG air quality, trajectory, and wind 
vector analyses indicate that the 1- to 2-day transport distance scale 
for the northern portion of the OTAG domain is generally in the range 
of 150 to 500 miles. This information was used to identify a set of 
States which could potentially contribute to downwind nonattainment. 
The amount of contribution and geographic extent of contribution from 
upwind areas to downwind nonattainment were quantified by EPA based on 
analysis of the OTAG subregional modeling. In these model runs, all 
manmade emissions were removed in each of 12 subregions (see Figure 1), 
individually. The resulting ``ppb'' contributions were tabulated by 
State for areas within the State which (a) currently violate the NAAQS, 
based on 1993-1995 ambient monitoring data and (b) which are also 
expected to continue to violate the NAAQS, based on future-year 2007 
modeling of CAA controls.<SUP>5</SUP> Contributions to 1-hr and 8-hr 
nonattainment were considered separately. The modeling results indicate 
that emissions from States wholly or partially contained in Subregions 
1 through 9 produce large and frequent contributions to downwind 
nonattainment for both NAAQS. The EPA then examined NO<INF>X</INF> 
emissions data along with the OTAG trajectory and modeling results to 
identify 23 jurisdictions which it proposed to determine make a 
significant contribution to nonattainment of both the 1-hr and 8-hr 
NAAQS in downwind States. These jurisdictions are: Alabama, 
Connecticut, Delaware, District of Columbia, Georgia, Illinois, 
Indiana, Kentucky, Maryland, Massachusetts, Michigan, Missouri, New 
Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, 
South Carolina, Tennessee, Virginia, West Virginia, and Wisconsin.
BILLING CODE 6560-50-P
---------------------------------------------------------------------------

    \5\ These areas are considered as having a ``monitored'' plus 
``modeled'' ozone problem and are referred to as ``nonattainment'' 
for the purposes of this discussion.

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[[Page 24062]]

Figure 1. Location of Subregions
[GRAPHIC] [TIFF OMITTED] TP30AP98.000

BILLING CODE 6560-50-C

E. Technical Approach to Preliminary Analysis of Petitions

    The EPA is in the process of gathering and reviewing technical 
information to determine whether EPA should find that certain large 
upwind stationary sources and/or source categories of NO<INF>X</INF> 
named in each petition contribute significantly to nonattainment in the 
petitioning States. The EPA expects to propose its findings in a 
subsequent notice of proposed rulemaking. The following preliminary 
analysis should not be interpreted as a proposed finding of significant 
contribution for these petitions.
    The EPA has examined the petitions based on the significant 
contribution analysis in the proposed NO<INF>X</INF> SIP call. First, 
EPA determined if those source areas identified by the petitioners are 
located in States which EPA, in the proposed NO<INF>X</INF> SIP call, 
proposed to determine make a significant contribution to downwind 
nonattainment. Second, EPA examined subregional modeling results to 
ascertain the predicted contributions to nonattainment relative to the 
source areas named in each petition.
    The source areas named in petitions submitted by Connecticut, 
Massachusetts, New Hampshire, New York, Rhode Island and Vermont are 
generally limited to States which were found in the proposed 
NO<INF>X</INF> SIP call to make a significant contribution to downwind 
nonattainment. The geographic area covered by each petition is shown in 
Figure 2. Specifically, the New York and Connecticut petitions cover 
sources in areas extending west and south of each of these States up to 
the western boundaries of Subregions 2 and 6 and the southern 
boundaries of Subregions 6 and 7. For the New York petition, this 
includes all or portions of the following States: Delaware, Indiana, 
Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, 
Pennsylvania, Tennessee, Virginia, and West Virginia. In addition to 
these States, the Connecticut petition also covers sources in portions 
of New York. The Massachusetts and Rhode Island petitions name specific 
sources in individual counties within the Subregion 6 States of 
Indiana, Kentucky, Ohio, and West Virginia. The New Hampshire petition 
includes sources in upwind portions of the Ozone Transport Region and 
in Subregions 1 through 7, which includes all or portions of 
Connecticut, Delaware, District of Columbia, Illinois, Indiana, 
Kentucky, Maryland, Massachusetts, Michigan, Missouri, New Jersey, New 
York, Ohio, Pennsylvania, Rhode Island, Virginia, West Virginia, and 
Wisconsin. Also, the New Hampshire petition includes a portion of 
eastern Iowa (which is part of Subregion 1) which EPA, in the proposed 
NO<INF>X</INF> SIP call, proposed to determine did not make a 
significant contribution to downwind nonattainment problems. The 
Vermont petition named sources in upwind portions of the Ozone 
Transport Region and in all or portions of Illinois, Indiana, Kentucky, 
Michigan, North Carolina, Ohio, Tennessee, Virginia, and West Virginia. 
Further, the petition notes that it intends to cover additional 
unidentified sources within an area extending 1,000 miles Southwest of 
Vermont if EPA determines the sources to be significantly contributing 
to Vermont. This broader geographic area includes South Carolina and 
portions of Alabama, Georgia, Missouri, and Wisconsin. The Vermont 
petition also

[[Page 24063]]

includes a portion of eastern Iowa which EPA, in the proposed 
NO<INF>X</INF> SIP call, proposed to determine did not make a 
significant contribution to downwind nonattainment problems. The 
Pennsylvania petition named Alabama, Georgia, Illinois, Indiana, 
Kentucky, Michigan, Missouri, North Carolina, Ohio, South Carolina, 
Tennessee, Virginia, West Virginia, and Wisconsin. However, the 
Pennsylvania petition also named several States which EPA, in the 
proposed NO<INF>X</INF> SIP call, proposed to determine did not make a 
significant downwind contribution including: Arkansas, Iowa, Louisiana, 
Minnesota, and Mississippi. The petition from Maine named source 
categories for sources in upwind portions of the Ozone Transport Region 
and generally within all or portions of Subregions 2, 3, 4, 6, and 7. 
The Maine petition includes all or parts of the following 
jurisdictions: Connecticut, Delaware, District of Columbia, Maryland, 
Massachusetts, New Jersey, New York, North Carolina, Ohio, 
Pennsylvania, Rhode Island, Virginia, and West Virginia. The Maine 
petition also identified New Hampshire and Vermont as containing 
sources which contribute significantly to nonattainment in Maine, but 
in the proposed NO<INF>X</INF> SIP call these States were not found to 
make a significant contribution downwind.

BILLING CODE 6560-50-P

[[Page 24064]]

Figure 2a. Areas Covered by the Section 126 Petitions: New York 
(Top) and Connecticut (Bottom)
[GRAPHIC] [TIFF OMITTED] TP30AP98.001


[[Page 24065]]



Figure 2b. Areas Covered by the Section 126 Petitions: Pennsylvania 
(Top), Massachusetts and Rhode Island (Bottom)
[GRAPHIC] [TIFF OMITTED] TP30AP98.002


[[Page 24066]]



Figure 2c. Areas Covered by the Section 126 Petitions: Maine (Top) 
and New Hampshire (Bottom)
[GRAPHIC] [TIFF OMITTED] TP30AP98.003


[[Page 24067]]



Figure 2d. Areas Covered by the Section 126 Petitions: Vermont
[GRAPHIC] [TIFF OMITTED] TP30AP98.004


BILLING CODE 6560-50-C
    Although there are differences between the petitions in terms of 
the sources named as significant contributors, the petitions have 
generally targeted NO<INF>X</INF> emissions from utility and large non-
utility (>250 mmBtu/Hr) fossil fuel-fired boilers. In this regard, 
analyzing the contributions from these emissions categories (i.e. 
utility and large non-utilities) is somewhat complicated because the 
subregional modeling in the proposed NO<INF>X</INF> SIP call quantifies 
the contributions from all man-made emissions in each subregion, not 
just these categories. It is likely that the emissions from these 
categories produce downwind contributions which are at least roughly 
proportional to their relative amount of emissions, compared to the 
total man-made emissions in the subregion. As shown in Table 1, 
NO<INF>X</INF> emissions from these categories combined, range from 33 
percent to 60 percent of the total 2007 projected NO<INF>X</INF> 
emissions within Subregions 1-9 <SUP>6</SUP>. Thus, the utility and 
large non-utility emissions combined represent a relatively large 
portion of total NO<INF>X</INF> emissions within these nine subregions. 
The collective contribution approach discussed above suggests that if 
total emissions in an upwind area are found to make a significant 
contribution to downwind nonattainment, then the individual components 
of the areas' emissions are considered to be part of the significant 
contribution. Thus, the subregional modeling results are relevant to 
the source categories identified in the petitions because these 
categories are a large component of the total man-made NO<INF>X</INF> 
emissions and are therefore expected to produce contributions in 
proportion to their emissions.
---------------------------------------------------------------------------

    \6\ Note that these subregions are important because all man-
made emissions in these subregions were found to make large and 
frequent contributions to downwind nonattainment.

  Table 1.--Percent of total subregion NO<INF>X emitted by Utility and Large 
                Non-Utility Sources (OTAG 2007 Base Case)               
------------------------------------------------------------------------
                          Subregion                             Percent 
------------------------------------------------------------------------
1............................................................         39
2............................................................         37
3............................................................         46
4............................................................         33
5............................................................         60
6............................................................         53
7............................................................         39
8............................................................         36
9............................................................         39
10...........................................................         38
11...........................................................         29
12...........................................................         32
------------------------------------------------------------------------

    Table 2 provides the contributions to 1-hr and 8-hr nonattainment 
in each of the petitioning States from those upwind subregions which 
(a) correspond to upwind areas named in the petitions and (b) contain 
States which were found to make a significant contribution to downwind 
nonattainment in the proposed NO<INF>X</INF> SIP call. These 
contributions are based on zero-out modeling of all man-made emissions 
in the subregion. Data are provided for the areas which have both 
``monitored'' violations and ``modeled'' concentrations exceeding the 
NAAQS. This information was extracted from Tables II-10 and II-12 in 
the proposed NO<INF>X</INF> SIP call. Note that 2 ppb is the lower 
range of the tabulated contributions, following the convention adopted 
by OTAG.
    These results are discussed for each petition:
    New York--This petition named sources in Subregions 2, 6, and 7. 
The subregional modeling results indicate a number of contributions in 
the range of 5-10 ppb or more from each of these subregions to both 1-
hr and 8-hr nonattainment in New York. Contributions of 15-20 ppb are 
predicted from Subregion 7 to 1-hr nonattainment and from Subregions 2 
and 7 to 8-hr nonattainment.
    Connecticut--Subregions 2, 6, and 7 were named as source areas by 
Connecticut. For the both 1-hr and 8-hr nonattainment, frequent 
contributions are predicted from each of these subregions. The 
magnitude of the contributions ranges up to 15-20 ppb for 1-hr 
nonattainment and up to 10-15 ppb for 8-hr nonattainment.

[[Page 24068]]



   Table 2.--Contributions to 1-Hour and 8-Hour Nonattainment in Each   
            Petitioning State From Selected Subregions (Sub)            
------------------------------------------------------------------------
          Impacts (ppb)               Sub 2        Sub 6        Sub 7   
------------------------------------------------------------------------
                                NEW YORK                                
                  Contributions to 1-Hour Nonattainment                 
------------------------------------------------------------------------
2-5..............................           47           41           30
5-10.............................            6           16           52
10-15............................            0            4           15
15-20............................            0            0            4
20-25............................            0            0            0
>25..............................            0            0            0
------------------------------------------------------------------------
                  Contributions to 8-Hour Nonattainment                 
------------------------------------------------------------------------
2--5.............................           25           15           39
5--10............................            4            3           16
10-15............................            4            0            4
15-20............................            0            0            0
20-25............................            0            0            0
>25..............................            0            0            0
------------------------------------------------------------------------
                               CONNECTICUT                              
                  Contributions to 1-Hour Nonattainment                 
------------------------------------------------------------------------
2-5..............................           65            4           50
5-10.............................            3            9           31
10-15............................            0            0            8
15-20............................            0            0            2
20-25............................            0            0            0
>25..............................            0            0            0
------------------------------------------------------------------------
                  Contributions to 8-Hour Nonattainment                 
------------------------------------------------------------------------
2-5..............................           19           44           36
5-10.............................            0            2           16
10-15............................            0            0            1
15-20............................            0            0            0
20-25............................            0            0            0
>25..............................            0            0            0
------------------------------------------------------------------------


--------------------------------------------------------------------------------------------------------------------------------------------------------
                        Impacts (ppb)                             Sub 1        Sub 2        Sub 5        Sub 6        Sub 7        Sub 8        Sub 9   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      PENNSYLVANIA                                                                      
                                                          Contributions to 1-Hour Nonattainment                                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
2-5..........................................................            0            1            2            4            3            4            0
5-10.........................................................            0            0            0            4            2            0            0
10-15........................................................            0            0            0            2           13            0            0
15-20........................................................            0            0            0            0           11            0            0
20-25........................................................            0            0            0            0            2            0            0
>25..........................................................            0            0            0            0            7            0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Contributions to 8-Hour Nonattainment                                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
2-5..........................................................           14           42           71           72           57           13            0
5-10.........................................................            0           26           10           53           66            0            0
10-15........................................................            0            6            0           40           30            0            0
15-20........................................................            0            2            0           10            4            0            0
20-25........................................................            0            5            0            7            0            0            0
>25..........................................................            0            1            0            0            0            0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
                                                 Sub 6  1-    Sub 6  8- 
                 Impacts (ppb)                      hour         hour   
------------------------------------------------------------------------
                              MASSACHUSETTS                             
            Contributions to 1-hour and 8-hour Nonattainment            
------------------------------------------------------------------------
2-5...........................................            0           22
5-10..........................................            0            0
10-15.........................................            0            0
15-20.........................................            0            0
20-25.........................................            0            0

[[Page 24069]]

                                                                        
>25...........................................            0            0
------------------------------------------------------------------------
                              RHODE ISLAND                              
            Contributions to 1-hour and 8-hour Nonattainment            
------------------------------------------------------------------------
2-5...........................................            0            1
5-10..........................................            2            0
10-15.........................................            0            0
15-20.........................................            0            0
20-25.........................................            0            0
>25...........................................            0            0
------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                 Impacts (ppb)                      Sub 2        Sub 3        Sub 4        Sub 6        Sub 7   
----------------------------------------------------------------------------------------------------------------
                                                      MAINE                                                     
                                      Contributions to 1-Hour Nonattainment                                     
----------------------------------------------------------------------------------------------------------------
2-5............................................            0            7            0            0            0
5-10...........................................            0            0            2            0            0
10-15..........................................            0            0           15            0            0
15-20..........................................            0            0            0            0            0
20-25..........................................            0            0            0            0            0
>25............................................            0            0            0            0            0
----------------------------------------------------------------------------------------------------------------
                                      Contributions to 8-Hour Nonattainment                                     
----------------------------------------------------------------------------------------------------------------
2-5............................................            8           28            0            0            3
5-10...........................................            0            0           20            0            0
10-15..........................................            0            0            6            0            0
15-20..........................................            0            0            4            0            0
20-25..........................................            0            0            0            0            0
>25............................................            0            0            0            0            0
----------------------------------------------------------------------------------------------------------------


--------------------------------------------------------------------------------------------------------------------------------------------------------
                        Impacts (ppb)                             Sub 1        Sub 2        Sub 3        Sub 4        Sub 5        Sub 6        Sub 7   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      NEW HAMPSHIRE                                                                     
                                                          Contributions to 1-Hour Nonattainment                                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
2-5..........................................................            0            0            4            8            0            0            0
5-10.........................................................            0            0            0            1            0            0            0
10-15........................................................            0            0            0           11            0            0            0
15-20........................................................            0            0            0            3            0            0            0
20-25........................................................            0            0            0            1            0            0            0
  25.........................................................            0            0            0            1            0            0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Contributions to 8-Hour Nonattainment                                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
2-5..........................................................            0            8           12            2            0            0            0
5-10.........................................................            0            0            1            6            0            0            0
10-15........................................................            0            0            0            0            0            0            0
15-20........................................................            0            0            0            0            0            0            0
20-25........................................................            0            0            0            0            0            0            0
>25..........................................................            0            0            0            0            0            0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------


--------------------------------------------------------------------------------------------------------------------------------------------------------
           Impacts (ppb)                Sub 1        Sub 2        Sub 3        Sub 4        Sub 5        Sub 6        Sub 7        Sub 8        Sub 9   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         VERMONT                                                                        
                                                          Contributions to 1-Hour Nonattainment                                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
2-5................................            0            0            0            0            0            0            0            0            0
5-10...............................            0            0            0            0            0            0            0            0            0
10-15..............................            0            0            0            6            0            0            0            0            0
15-20..............................            0            0            0            0            0            0            0            0            0
20-25..............................            0            0            0            0            0            0            0            0            0
<25................................            0            0            0            0            0            0            0            0            0
                                                          Contributions to 8-Hour Nonattainment                                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
2-5................................            0            0            0            0            0            0            0            0            0
5-10...............................            0            0            0            0            0            0            0            0            0
10-15..............................            0            0            0            0            0            0            0            0            0
15-20..............................            0            0            0            0            0            0            0            0            0
20-25..............................            0            0            0            0            0            0            0            0            0
<25................................            0            0            0            0            0            0            0            0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 24070]]

    Pennsylvania--This petition named States which generally correspond 
to Subregions 1, 2, 5, 6, 7, 8, and 9. Of these, Subregions 2, 5, 6, 7, 
and 8 contribute to 1-hr nonattainment in Pennsylvania. The largest and 
most frequent contributions are predicted to come from Subregions 7 and 
6, respectively. No contributions >2 ppb are predicted from Subregions 
1 or 9. For 8-hr nonattainment, the largest contributions are from 
Subregions 2, 6, and 7. The magnitude of the contributions from these 
three subregions is in the range of 15-20 ppb or more. No contributions 
to 8-hr nonattainment >2 ppb were predicted from Subregion 9.
    Massachusetts--This petition named sources within a portion of 
Subregion 6. However, no contributions >2 ppb were predicted to 1-hr 
nonattainment from this subregion to nonattainment in Massachusetts. 
Contributions to 8-hr nonattainment from this subregion were in the 
range of 2-5 ppb.
    Rhode Island--This petition also named sources within a portion of 
Subregion 6. Contributions from this subregion to 1-hr nonattainment 
were 5-10 ppb. The predicted contribution to 8-hr nonattainment from 
this subregion was in the range of 2-5 ppb.
    Maine--Of the five subregions (i.e. Subregions 2, 3, 4, 6, and 7) 
which are associated with sources named in Maine's petition, 
contributions to 1-hr nonattainment were predicted from Subregions 3 
and 4, with contributions to 8-hr nonattainment from Subregions 2, 3, 
4, and 7. The largest contributions were from Subregion 4 at 10-15 ppb 
for 1-hr contributions and 15-20 ppb for 8-hr contributions. No 
contributions were predicted from Subregion 6 to either 1-hr or 8-hr 
nonattainment.
    New Hampshire--Subregions 1 through 7 are associated with sources 
named in the New Hampshire petition. Of these subregions, however, only 
Subregions 3 and 4 are predicted to contribute >2 ppb to 1-hr 
nonattainment with the largest contributions, >25 ppb, from Subregion 
4. Subregions 2, 3, and 4 are predicted to contribute >2 ppb to 8-hr 
nonattainment with contributions of 10-15 ppb from Subregion 4.
    Vermont--There is no current or predicted ``nonattainment'' in 
Vermont, based on 1993-1995 ambient monitoring data and/or model 
predictions from the OTAG 2007 Base Case.

F. Results of Preliminary Assessment of Section 126 Petitions

    As indicated above, the purpose of this preliminary analysis is not 
to make a proposed finding of ``significance'' relative to the sources 
and/or source categories named in each petition. Rather, the intent is 
to identify the contributions to 1-hr and 8-hr nonattainment in each 
State based on information developed in the proposed NO<INF>X</INF> SIP 
call as part of the significant contribution determination. As a whole, 
the eight petitions cover sources in States within OTAG Subregions 1, 
2, 3, 4, 5, 6, 7, 8, 9, 11, and 12, as well as in Massachusetts, New 
Hampshire, Rhode Island, and Vermont. Of these, emissions in States 
covered by Subregions 1, 2, 3, 4, 5, 6, 7, 8, and 9 along with 
Massachusetts and Rhode Island were proposed, by EPA, to make a 
significant contribution to downwind nonattainment in the 
NO<INF>X</INF> SIP call.
    This preliminary assessment indicates that sources in Subregions 2, 
3, 4, 5, 6, and 7 contribute to 1-hr nonattainment in at least one of 
the petitioning States. The 16 States and the District of Columbia that 
are wholly or partially within these subregions include: Connecticut, 
Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, Missouri, 
New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee 
<SUP>7</SUP>, Virginia, and West Virginia. Based on these results, 
EPA's preliminary assessment indicates that the source categories 
identified by the petitions that are located within these 16 States and 
the District of Columbia make a significant contribution to 
nonattainment of the 1-hr standard. In addition, in the proposed 
NO<INF>X</INF> SIP call, EPA proposed that Massachusetts and Rhode 
Island be considered significant contributors to nonattainment in 
downwind States, including Maine and New Hampshire. Accordingly, 
sources in these two States are preliminarily included in this 
assessment as significant contributors.
---------------------------------------------------------------------------

    \7\ Tennessee is included because it is part of Subregions 5 and 
6. Tennessee is also part of Subregion 9 which, based on the 
subregional modeling, does not contribute to 1-hr nonattainment in 
any of the petitioning States.
---------------------------------------------------------------------------

    Sources in Subregions 1, 2, 3, 4, 5, 6, 7, and 8 contribute to 8-hr 
nonattainment in at least one of the petitioning States. However, it 
should be noted that sources in only Subregions 1, 2, 5, 6, 7, and 8 
contribute to 8-hr nonattainment in one of the three petitioning States 
(Massachusetts, Pennsylvania, and Vermont) that requested EPA to make a 
finding under the 8-hr NAAQS. The 15 States and the District of 
Columbia which are wholly or partially within the subregions 
contributing to 8-hr nonattainment in Pennsylvania (i.e. subregions 1, 
2, 5, 6, 7, and 8) and Massachusetts (i.e., subregion 6) and which were 
proposed to make a significant contribution to downwind nonattainment 
in the proposed NO<INF>X</INF> SIP call are Delaware, Georgia 
<SUP>8</SUP>, Illinois, Indiana, Kentucky, Maryland, Michigan, 
Missouri, North Carolina, Ohio, South Carolina, Tennessee <SUP>9</SUP>, 
Virginia, West Virginia, and Wisconsin. The EPA's preliminary 
assessment indicates that the source categories identified by the 
petitions that are located within these States make a significant 
contribution to nonattainment of the 8-hr standard (or interfere with 
maintenance of that standard) in the petitioning States. Because there 
are no current or predicted nonattainment problems in Vermont, there 
are no upwind source areas that are included in the preliminary 
assessment of significant contribution due to the Vermont petition.
---------------------------------------------------------------------------

    \8\ Georgia is included because it is part of Subregion 8. 
Georgia is also part of Subregion 9 which, based on subregional 
modeling, does not contribute to 8-hr nonattainment in any of the 
petitioning States.
    \9\ Tennessee is included because it is part of Subregions 5 and 
6. Tennessee is also part of Subregion 9 which, based on the 
subregional modeling, does not contribute to 1-hr nonattainment in 
any of the petitioning States.
---------------------------------------------------------------------------

    As noted above, the petitioning States submitted technical data in 
addition to the zero-out modeling data just described. The EPA is 
continuing to review the States' technical data, as well as other data 
relevant to the petitions, to develop a proposed finding for each 
petition.
    By comparison to the above section 126 analysis, in the proposed 
NO<INF>X</INF> SIP call, EPA determined that sources in 22 States and 
the District of Columbia are significantly contributing to 1-hr and 8-
hr nonattainment problems. In the proposed NO<INF>X</INF> SIP call, EPA 
considered nonattainment problems throughout the Eastern half of the 
United States. In the section 126 rulemaking action, EPA is limited to 
considering nonattainment problems in the 8 petitioning States, which 
are all located in the Northeast.

III. Preliminary Assessment of Emission Limitations and Compliance 
Schedules

    The EPA is currently analyzing each of the section 126 petitions to 
determine whether to propose to grant the States' requests for findings 
of significant contribution or to deny the petitions; as a result, EPA 
is not prepared to propose a response at this time. If EPA does propose 
to find that certain source categories described in one or more of the 
petitions significantly contribute to nonattainment or interfere with 
maintenance of an ozone standard in a downwind State, then EPA would be

[[Page 24071]]

authorized to propose new control requirements for those sources.
    The EPA anticipates that any requirements it may eventually propose 
would resemble the controls described in the proposed NO<INF>X</INF> 
SIP call. As noted above, it is EPA's preliminary view that the 
NO<INF>X</INF> SIP call rulemaking overlaps considerably with EPA 
action on the section 126 petitions because both are governed by the 
requirements of section 110(a)(2)(D) with respect to ozone for a 
similar geographic region. The EPA intends to employ the extensive 
analysis in the proposed NO<INF>X</INF> SIP call action, including the 
NO<INF>X</INF> Budget Trading Program (described in a supplemental 
rulemaking), in developing any proposed remedy for the petitions. Thus, 
if EPA were to propose to grant any or all of the section 126 
petitions, EPA's response would include the proposal of a cap-and-trade 
program. The EPA expects to base any remedy granted under section 126 
on the assumption of a uniform control level for the covered universe 
of sources, based on the criteria delineated in Section III.C. The 
following sections outline the remedies sought by petitioners and 
discuss how EPA would address the petitions if it were to propose 
granting any or all of them.

A. Remedies Recommended in Petitions

    The eight petitions submitted to EPA collectively cover the 23 
jurisdictions named by EPA in the proposed NO<INF>X</INF> SIP call, as 
well as seven additional States that were not named (Iowa, New 
Hampshire, Vermont, Arkansas, Louisiana, Mississippi, and Minnesota). 
This section focuses on the source categories named in the petitions as 
significant contributors and the requested relief sought by 
petitioners.
    Several of these petitions reference the OTC NO<INF>X</INF> MOU, 
agreed to by eleven Northeastern States and the District of Columbia to 
implement NO<INF>X</INF> emissions reductions across the Ozone 
Transport Region (OTR). The OTC NO<INF>X</INF> MOU signatories were 
Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode 
Island, New York, New Jersey, Pennsylvania, Maryland, Delaware, and the 
District of Columbia. The OTC NO<INF>X</INF> MOU commits these States 
to reductions in ozone season NO<INF>X</INF> emissions from large 
utility and industrial combustion sources through implementation of a 
phased-in regionwide cap-and-trade program. Specifically, affected 
sources in the OTR are fossil fuel-fired boilers and other indirect 
heat exchangers with a maximum rated heat input capacity of 250 mmBtu/
hr or greater, and electric generating facilities with a rated output 
of 15 megawatts (MW) or greater.
    The OTC NO<INF>X</INF> MOU established emissions reduction 
requirements for these sources in the OTR, creating emissions budgets 
for 1999 (Phase II) and 2003 (Phase III). (Phase I required the 
installation of reasonably available control technology (RACT) by May 
1995.) The requirements vary across three control zones in the region: 
an inner zone ranging from the District of Columbia metropolitan area 
northeast to southeastern New Hampshire (covering all contiguous 
moderate and above nonattainment areas), an outer zone ranging out from 
the inner zone to western Pennsylvania, and a northern zone which 
includes much of northern New York and northern New England (including 
most of New Hampshire).
    For Phase II of the OTC NO<INF>X</INF> MOU, which begins in 1999, 
sources in the inner zone are subject to emissions reduction 
requirements based on the less stringent of an emission rate of 0.20 
pounds NO<INF>X</INF> per million British thermal units of heat input 
(lb/mmBtu), or a 65 percent reduction from 1990 NO<INF>X</INF> levels; 
sources in the outer zone are subject to emissions reduction 
requirements based on the less stringent of a 0.20 lb/mmBtu rate, or a 
55 percent reduction from 1990 NO<INF>X</INF> levels; and sources in 
the northern zone must adopt RACT. The Phase III requirements, which 
may be altered by a ``mid-course correction'' based on new information 
such as refined air quality modeling, establish emissions reduction 
requirements based on the lesser of a 0.15 lb/mmBtu rate, or a 75 
percent reduction from 1990 levels for sources in both the inner and 
outer zones. Northern zone sources would face emissions reduction 
requirements based on the lesser of a 0.20 lb/mmBtu rate, or a 55 
percent reduction from 1990 levels. In both Phase II and III in all 
three zones, electric generating facilities less than 250 mmBtu/hr but 
above 15 MW are subject only to a capping of emissions at 1990 levels 
for purposes of budget calculation. However, individual States 
determine specific allocations for each source from their overall 
budget based on independent allocation formulas, and thus the 
allocation for these sources will not necessarily reflect this level.
    All of the section 126 petitions, except Pennsylvania's, 
Massachusetts' and Rhode Island's, named States in the OTR as 
significant contributors. However, only New Hampshire and Maine 
requested relief beyond OTC NO<INF>X</INF> MOU requirements from 
sources in the OTR. It may be noted that the OTC NO<INF>X</INF> MOU 
requirements are not federally enforceable at this time since these 
requirements have not been adopted into SIPs.
    Table 3 shows, by petitioner, the named source categories, the 
named geographic areas, and the requested remedy sought by the 
petitioning States. Please note that the named source categories are 
worded as they appear in the petitions.

            Table--3. EPA's Summary of Section 126 Petitions            
------------------------------------------------------------------------
                      Named source                                      
       State           categories       Named states         Request    
------------------------------------------------------------------------
NY................  Fossil fuel-      All or parts of   Establish, at a 
                     fired boilers     IN, KY, MI, NC,   minimum,       
                     or indirect       OH, TN, VA, WV.   emission       
                     heat exchangers   Also lists OTR    limitations and
                     with a maximum    States DE, MD,    a schedule of  
                     heat input rate   NJ, PA, but       compliance     
                     of 250 mmBtu/hr   does not          consistent with
                     or greater and    request relief.   the OTC NO<INF>X    
                     electric                            MOU, and a cap-
                     utility                             and-trade      
                     generating                          program.       
                     facilities with                                    
                     a rated output                                     
                     of 15 MW or                                        
                     greater.                                           
CT................  Fossil fuel-      All or parts of   Establish, at a 
                     fired boilers     IN, KY, MI, NC,   minimum,       
                     or other          OH, TN, VA, WV.   emission       
                     indirect heat     Also lists OTR    limitations and
                     exchangers with   States DE, MD,    a schedule of  
                     a maximum gross   NJ, NY, PA, but   compliance     
                     heat input rate   does not          consistent with
                     of 250 mmBtu/hr   request relief.   the OTC NO<INF>X    
                     or greater and                      MOU, and a cap-
                     electric                            and-trade      
                     utility                             program.       
                     generating                                         
                     facilities with                                    
                     a rated output                                     
                     of 15 MW or                                        
                     greater.                                           

[[Page 24072]]

                                                                        
PA................  Fossil fuel-      AL, AR, GA, IL,   Establish       
                     fired indirect    IN, IA, KY, LA,   emission       
                     heat exchange     MI, MN, MS, MO,   limitations and
                     combustion        NC, OH, SC, TN,   a compliance   
                     units with a      VA, WV, WI.       schedule for a 
                     maximum rated                       cap-and-trade  
                     heat input                          program        
                     capacity of 250                     requiring: (a) 
                     mmBtu/hr or                         Seasonal       
                     greater, and                        reductions of  
                     fossil fuel-                        the less       
                     fired electric                      stringent of   
                     generating                          55% from 1990  
                     facilities                          baseline       
                     rated at 15 MW                      levels, or 0.20
                     or greater.                         lbs/mmBtu,     
                                                         beginning by   
                                                         May 1999; (b)  
                                                         if necessary,  
                                                         seasonal       
                                                         reductions of  
                                                         the less       
                                                         stringent of   
                                                         75% from 1990  
                                                         baseline       
                                                         levels, or 0.15
                                                         lbs/mmBtu,     
                                                         beginning by   
                                                         May 2003; (c)  
                                                         such additional
                                                         reductions as  
                                                         necessary      
                                                         beginning in   
                                                         2005.          
MA................  Electricity       Parts of IN, KY,  Establish       
                     generating        OH, WV. Also      emissions      
                     plants.           names sources     limitation of  
                                       in OTR States,    0.15 lbs/mmBtu 
                                       but does not      or 1.5 lbs/MWh 
                                       request relief.   and a          
                                                         compliance     
                                                         schedule.      
RI................  Electricity       Parts of IN, KY,  Establish       
                     generating        OH, WV. Also      emissions      
                     plants.           names sources     limitation of  
                                       in OTR States,    0.15 lbs/mmBtu 
                                       but does not      or 1.5 lbs/MWh 
                                       request relief.   and a          
                                                         compliance     
                                                         schedule.      
ME................  Electric          Sources within    Establish       
                     utilities and     600 miles of      compliance     
                     steam-            Maine's ozone     schedule and   
                     generating        nonattainment     emissions      
                     units with a      areas (all or     limitation of  
                     heat input        parts of NC,      0.15 lbs/mmBtu 
                     capacity of 250   OH, VA, WV, and   for electric   
                     mmBtu/hr or       OTR States CT,    utilities and  
                     greater.          DE, DC, MD, MA,   the OTC NO<INF>X MOU
                                       NJ, NY, NH, PA,   level of       
                                       RI, VT).          control for    
                                                         steam          
                                                         generating     
                                                         units, in a    
                                                         multi-state cap-
                                                         and-trade NO<INF>X  
                                                         market system. 
NH................  Fossil fuel-      All or parts of   Establish       
                     fired indirect    IL, IN, IA, KY,   compliance     
                     heat exchange     MI, MO, OH, VA,   schedule and   
                     combustion        WV, WI. Also      emission       
                     units and         names sources     limitations no 
                     fossil fuel-      in OTR States     less stringent 
                     fired electric    CT, DE, DC, MD,   than: (a) Phase
                     generating        MA, NJ, NY, PA,   III OTC NO<INF>X MOU
                     facilities        RI.               reductions; and/
                     which emit ten                      or (b) 85%     
                     tons of NO<INF>X or                      reductions from
                     more per day.                       projected 2007 
                                                         baseline; and/ 
                                                         or (c) An      
                                                         emission rate  
                                                         of 0.15 lbs/   
                                                         mmBtu.         
VT................  Fossil fuel-      All or parts of   Establish       
                     fired electric    IL, IN, KY, MI,   emissions      
                     utility           NC, OH, TN, VA,   limitation of  
                     generating        WV. Also AL GA,   0.15 lbs/mmBtu 
                     facilities with   IA, MO, SC, WI.   or 1.5 lbs/MWh 
                     a maximum gross   Also names OTR    and a          
                     heat input rate   sources, but      compliance     
                     of 250 mmBtu/hr   does not          schedule.      
                     or greater and    request relief.                  
                     potentially                                        
                     other                                              
                     unidentified                                       
                     major sources.                                     
------------------------------------------------------------------------

    The petitions vary somewhat with regard to the universe of sources 
they name as significant contributors to their ozone problem. Three of 
the petitioning States--New York, Connecticut, and Pennsylvania--name 
the same universe of sources covered by the OTC NO<INF>X</INF> MOU. New 
Hampshire names fossil fuel-fired indirect heat exchangers and electric 
generating facilities as well, but uses a tonnage applicability cut-off 
to include only sources that emit ten tons or more of NO<INF>X</INF> 
per day. Massachusetts and Rhode Island name ``electricity generating 
plants'' as the universe requiring controls, without naming a specific 
size cutoff. Finally, Vermont names fossil fuel-fired electric 
generating facilities of 250 mmBtu or greater.
    The petitions also vary regarding the remedy requested. Though all 
of the petitions request that EPA impose controls in terms of various 
emissions limitations, four of the eight petitions--New York, 
Connecticut, Pennsylvania, and Maine--also request that a trading 
program with a cap, or emissions budget, be established to implement 
these controls. Massachusetts, Rhode Island, and Vermont request that 
limitations be established for all named sources at 0.15 lbs/mmBtu, 
which is the level of control for electric generating facilities used 
to calculate the budget in the proposed NO<INF>X</INF> SIP call. Maine 
requests an emission limitation of 0.15 lbs/mmBtu for named electric 
utilities, but the OTC NO<INF>X</INF> MOU level of control for named 
steam generating units. New Hampshire requests emission limitations no 
less stringent than the Phase III OTC NO<INF>X</INF> MOU reductions, 
and/or 85 percent reductions from projected 2007 baseline, and/or an 
emission rate of 0.15 lbs/mmBtu. New York, Connecticut and Pennsylvania 
all request that emissions limitations consistent with the OTC 
NO<INF>X</INF> MOU be imposed on named sources, but only Pennsylvania 
specifies the outer zone requirements; neither Connecticut nor New York 
specifies a zone. The level of reduction requested for 2003 in these 
three petitions specifying basic OTC NO<INF>X</INF> MOU requirements 
appears to be less stringent than that in the petitions requesting 0.15 
lbs/mmBtu, since the remedy requested would allow sources the option to 
implement the less stringent of a percentage reduction or an emission 
rate. In terms of smaller sources named by these three States, 
Pennsylvania's petition appears to seek somewhat more reductions than 
the OTC NO<INF>X</INF> MOU by requiring the same emission level for 
electric generating facilities less than 250 mmBtu/hr and greater than 
15MW as for larger units. Both Connecticut and New York appear to be 
aligned with the OTC NO<INF>X</INF> MOU in seeking only a capping of 
emissions at 1990 levels for these smaller sources.
    New York, Connecticut and Pennsylvania recommend a date for the 
implementation by sources of control requirements: the OTC 
NO<INF>X</INF> MOU schedule of compliance, including its phased-in 
controls and implementation dates of 1999 and 2003. The remaining 
States request that EPA establish a schedule of compliance requiring 
sources to comply with emission limitations as expeditiously as 
practicable.

B. EPA's Analytic Approach

    If EPA proposes to grant a section 126 petition, and thereby 
proposes to find that identified sources either contribute

[[Page 24073]]

significantly to nonattainment or interfere with maintenance in the 
petitioning State, EPA intends to propose emissions reduction 
requirements for those sources. The EPA would not, however, propose 
controls on sources other than those named in the petitions under 
section 126.
    To determine the level of requirements to propose, EPA intends to 
consider the remedies described in the petitions (see III.A. of this 
section), relevant comments received in a timely manner on today's 
notice, the availability and cost effectiveness of potential control 
measures, the ambient impact of the control measures, OTAG's 
recommendations, and the similar efforts EPA is already undertaking to 
address the transport problem in the proposed NO<INF>X</INF> SIP call.
    In developing proposed budgets for States as part of the proposed 
NO<INF>X</INF> SIP call, EPA assumed the application of a uniform 
NO<INF>X</INF> emission rate of 0.15 lb/mmBtu to projected electricity 
generating activity levels at large electric generating devices, and 70 
percent control for other large stationary sources. The EPA's rationale 
for assuming these control levels is explained in the proposed 
NO<INF>X</INF> SIP call, and is based upon cost effectiveness, OTAG 
recommendations, the collective contribution approach described in the 
NO<INF>X</INF> SIP call notice, equity concerns, EPA's air quality 
modeling approach, and concerns over emissions shifting (62 FR 60342).
    The EPA believes that it needs to coordinate and integrate the 
proposed NO<INF>X</INF> SIP call and the section 126 rulemaking to the 
greatest extent possible in order to reduce the possibility that 
affected sources would be faced with inconsistent or conflicting 
control requirements and deadlines. Such inconsistency could hamper the 
sources' abilities to plan and achieve the needed reductions as cost-
effectively as possible. Further discussion of the proposed integration 
of these two efforts is included in Section IV.B.
    The EPA believes that promoting consistent requirements among the 
States affected by the NO<INF>X</INF> SIP call and the section 126 
rulemaking would greatly facilitate participation in a common trading 
program to address the transport problem on a regional scale. 
Therefore, EPA anticipates that any section 126 proposed rulemaking 
will attempt to coordinate the schedules for the SIP revisions, and the 
implementation of reductions required under the proposed NO<INF>X</INF> 
SIP call, with the schedule for completing the rulemaking on the 
section 126 petitions in accordance with the consent decree proposed by 
the petitioning States and EPA.
    In determining the appropriate control requirements to propose in 
response to the granted section 126 findings, EPA would use the same 
cost effectiveness approach that it used in the proposed NO<INF>X</INF> 
SIP call with respect to stationary sources. In the upcoming proposed 
rulemaking for the section 126 petitions, EPA intends to present 
analyses conducted for the proposed NO<INF>X</INF> SIP call regarding 
the feasibility, performance, and cost of NO<INF>X</INF> controls, and 
factor this into the control level recommendation. The application of 
this control level would determine the allocation of NO<INF>X</INF> 
allowances each source would receive under a trading program.
    The EPA's preliminary assessment is that it would propose the 
control levels assumed in formulating the budgets for the proposed 
NO<INF>X</INF> SIP call in response to the section 126 petitions. In 
addition, EPA's preliminary assessment is that it would propose the 
full 3-year period for sources to implement those controls. Comments 
are sought on these approaches, as indicated in Section IV of today's 
notice.
    Also in the proposal, EPA intends to use the Integrated Planning 
Model (IPM) to explore the cost of achieving emission levels among 
sources affected by the section 126 rulemaking. The EPA uses the IPM to 
evaluate the emissions and cost impacts expected to result from the 
requirements of the proposed NO<INF>X</INF> SIP call on the electric 
power generation sector. The IPM has been used for over 10 years to 
address a wide range of electric power market issues, including 
environmental policy and compliance planning, and undergoing frequent 
and extensive review and validation. The EPA has used IPM for many 
analytic efforts, most recently as a tool to analyze alternative 
trading and banking programs during the OTAG process in 1996 and 1997, 
and to analyze the economic impacts of the proposed NO<INF>X</INF> SIP 
call.

C. Intent To Implement Controls Through Cap-and-Trade Program

    A cap-and-trade program is expected to be the most cost-effective 
approach to achieving any emissions reductions required under section 
126. Under such a program, the sources for which EPA proposes a 
positive finding would be limited to specified amounts of emissions as 
a group, but would be authorized to trade emissions. Four of the eight 
petitioning States (New York, Connecticut, Pennsylvania, and Maine) 
requested that EPA establish such a trading program to implement the 
required reductions. The EPA is proposing a framework for a cap-and-
trade program in a supplemental notice to the proposed NO<INF>X</INF> 
SIP call to facilitate cost effective achievement of the proposed 
reductions, (``Purpose of the NO<INF>X</INF> Budget Trading Program'' 
and ``Benefits of Participating in the NO<INF>X</INF> Budget Trading 
Program''). If one or more of the section 126 petitions are granted, a 
remedy can be integrated with this program, consolidating the two 
actions and lowering the cost of compliance.
    The EPA anticipates defining all the program elements for a cap-
and-trade program in the proposed rulemaking for the section 126 
petitions, including a list of covered sources, monitoring requirements 
for these sources, an allowance allocation methodology, source-specific 
NO<INF>X</INF> allowance allocations for the initial control period, 
timing of the program, and permitting requirements.

IV. Legal and Policy Issues

A. Issues Involving Significant Contribution

    As discussed earlier in Sections I.A and I.C. of this notice, both 
the section 126 petitions and proposed NO<INF>X</INF> SIP call are 
premised on a violation of section 110(a)(2)(D) of the CAA. This 
section requires that SIPs prohibit emissions that contribute 
significantly to nonattainment or that interfere with maintenance 
downwind.<SUP>10</SUP> Because of the link between section 126 and 
section 110, EPA should use similar criteria in its analysis for each 
case.
---------------------------------------------------------------------------

    \10\ As indicated earlier, it is EPA's preliminary 
interpretation that the cross reference in section 126(b) to section 
110(a)(2)(D) should be treated as a cross reference to sentence (i) 
of the provision, which includes the significant contribution test.
---------------------------------------------------------------------------

    As described in the proposed NO<INF>X</INF> SIP call and earlier in 
this notice, EPA used a ``weight of evidence'' approach in determining 
whether sources in one State significantly contributed to ozone 
nonattainment in another State. This approach applies multiple factors 
which focus on emission quantities and air quality impacts, as well as, 
under certain formulations, control costs. It is EPA's intent to use 
this same ``weight of evidence'' approach in determining whether or not 
to grant any of the section 126 petitions.
    The EPA is soliciting comment on whether there is any reason why it 
should rely on a different approach and, if so, what that approach 
should be. It should be noted that EPA is not soliciting comment on the 
issues of significant contribution discussed in the proposed 
NO<INF>X</INF> SIP call. It is only asking

[[Page 24074]]

for comment on whether or not the same approach should be used in 
evaluating the section 126 petitions.
    Additionally, EPA is asking for comment on whether it should focus 
on the contributions to the downwind areas of named sources in a each 
petition, considered by themselves, or whether EPA should consider the 
named sources in one petition in conjunction with the named sources in 
all the other petitions under a type of ``collective contribution'' 
approach. In the latter case, even if the emissions from the named 
sources in a single petition have a relatively minor impact on downwind 
areas, the emissions may be considered significant if they are 
considered as part of a broader set of emissions from all the sources 
named in all the petitions, which together have a larger impact on the 
same downwind areas.

B. Issues Involving Trading

    The EPA is proposing the framework for a cap-and-trade program in 
its supplemental notice to the proposed NO<INF>X</INF> SIP call. As 
noted previously, EPA believes a trading program should be part of any 
remedy it proposes in response to the section 126 petitions. At this 
time, EPA is not prepared to define the scope of the trading program it 
would propose in response to the section 126 petitions, but would like 
to solicit comment on some important issues regarding trading program 
development.
    First, EPA believes that when a petition identifies as significant 
contributors both named sources and generally identified source 
categories, EPA may make findings of significant contribution, apply 
controls, and implement a trading program, with respect to all sources 
within those source categories in geographic areas named in the 
petitions. Second, EPA foresees that the proposed response to the 
section 126 petitions would resemble the proposed NO<INF>X</INF> Budget 
Trading Program in EPA's supplemental proposed NO<INF>X</INF> SIP call 
and that the two efforts could be integrated into one common trading 
program. Under this common trading program, sources subject to controls 
under the section 126 rulemaking, or sources in States choosing to 
participate in the NO<INF>X</INF> Budget Trading Program in response to 
the NO<INF>X</INF> SIP call, or sources in States subject to a Federal 
implementation plan (FIP) under the NO<INF>X</INF> SIP call, could 
trade with one another under a regionwide NO<INF>X</INF> cap. The EPA 
solicits comments as to whether the trading program that EPA would 
propose in response to the section 126 petitions should be essentially 
the same trading program proposed by EPA in its proposed NO<INF>X</INF> 
SIP call, and whether there are any reasons why the programs should not 
be integrated.
    In order to address the ozone transport problem in the most cost-
effective manner, EPA believes one trading program can and should be 
established in response to both the final NO<INF>X</INF> SIP call and 
the section 126 petitions. The EPA believes that there are two 
principal criteria that sources must meet to be eligible to participate 
in a cap-and-trade program, as stated in the supplemental notice for 
the proposed NO<INF>X</INF> SIP call. The first criterion requires that 
sources be able to account accurately and consistently for all of their 
emissions to ensure the trading program goal of maintaining emissions 
within a cap. The second criterion for participation in a trading 
program is the ability to identify a responsible party for each 
regulated source who would be accountable for demonstrating and 
ensuring compliance with the program's provisions. The EPA solicits 
comment on these, or additional, criteria that should be considered. 
Assuming that these criteria are met, and consistent control levels are 
used in setting emission requirements for the affected sources, EPA 
supports the establishment of a common trading program for all sources 
in States subject to the final NO<INF>X</INF> SIP call who hold EPA-
approved SIPs and choose to participate, and all sources subject to any 
section 126 remedy established by EPA. The EPA would administer this 
common trading program in collaboration with affected States. The EPA 
anticipates proposing to establish the geographic boundaries of the 
common trading program as those States submitting SIPs in response to 
the final NO<INF>X</INF> SIP call or subject to FIPs and/or the sources 
in geographic areas for which EPA makes a finding for the section 126 
petitions.
    A common trading program integrating the NO<INF>X</INF> Budget 
Trading Program and the section 126 actions would necessarily include 
those source categories in States for which EPA makes a finding in the 
section 126 process, sources located in States that are both named in 
the final NO<INF>X</INF> SIP Call and which choose to participate in 
the NO<INF>X</INF> Budget Trading Program, as well as sources subject 
to a FIP. States choosing to participate through the NO<INF>X</INF> SIP 
call would be required to include a core group of sources in the 
trading program, but would be provided the option to include additional 
stationary source categories, and certain qualifying individual 
stationary sources would be provided the opportunity to opt in. Sources 
subject to section 126 findings would be required to participate in the 
common trading program under EPA's section 126 authority. However, EPA 
does not believe that section 126 provides EPA authority to make 
findings or require controls beyond the named sources or source 
categories in the petitions. The EPA seeks comment on this issue of 
whether it may include additional sources beyond the named sources or 
source categories in the petitions through the section 126 remedy. 
Specifically, EPA requests comment on whether the sources EPA includes 
in the common trading program under the section 126 petitions should be 
confined to source categories in geographic areas for which petitioning 
States request, and EPA grants, a finding of significant contribution. 
In the alternative, EPA requests comment as to whether additional 
sources not named in a petition, but located in a State where a finding 
is made under section 126, should be able to voluntarily participate in 
a trading program remedy. Further, EPA requests comment on whether such 
a trading program may include sources in other States subject to the 
NO<INF>X</INF> SIP call.
    Because sources may be included in the common trading program 
through one of three possible mechanisms (section 126 petitions, 
NO<INF>X</INF> SIP Call, and FIP), the sources included in the trading 
program for purposes of the NO<INF>X</INF> SIP call may vary from 
sources included for purposes of the section 126 remedy. The EPA 
solicits comment as to whether this is problematic for integration 
concerns.
    The EPA does not anticipate that a trading program designed for 
sources subject to the final NO<INF>X</INF> SIP call and the section 
126 petitions for which EPA makes a finding could be expanded 
geographically to include sources in geographic areas not subject to 
requirements under either program. The EPA solicits comment on this 
preliminary view.
    The effect of NO<INF>X</INF> emissions on air quality in downwind 
nonattainment areas depends, in part, on the distance between sources 
and receptor areas. Sources that are closer to the nonattainment areas 
tend to have much larger effects on air quality than sources that are 
far away. In light of this and as discussed in Section IV.C, the EPA 
plans to evaluate alternative approaches, other than one based on the 
application of uniform controls, in developing the rulemaking proposal.
    The Agency solicits comments on whether a trading program should 
factor in differential effects of NO<INF>X</INF> emissions in an 
attempt to strike a balance

[[Page 24075]]

between achieving the cost savings from a broader geographic scope of 
trading and avoiding the adverse effects on air quality that could 
result if the geographic domain for trading is inappropriately large or 
trades across areas are not appropriately adjusted to reflect 
differential environmental effects. The EPA could consider establishing 
``exchange ratios'' for tons traded between areas. The large number of 
areas in the petitioning States that are violating the standards and 
the several different weather patterns associated with summertime ozone 
pollution episodes complicate the development of a stable set of 
trading ratios. Alternatively, the Agency could consider establishing 
subregions for trading within the geographic area that may ultimately 
be subject to any section 126 findings and apply a discount to or 
prohibit trades between regions. The Agency solicits comments on this 
issue.

C. Cost-Effectiveness Issues

    Where EPA proposes to grant a section 126 petition and, therefore, 
also to propose control measures, it plans to use the cost-
effectiveness approach used in the proposed NO<INF>X</INF> SIP call 
action with respect to stationary sources. This approach focuses on the 
selection of reasonable, cost-effective control measures and the 
application of uniform controls. Further, as in the proposed 
NO<INF>X</INF> SIP call, EPA plans to propose to require sources in 
upwind areas to decrease emissions through cost-effective controls that 
compare favorably, at least qualitatively, with the costs of controls 
downwind and that reduce ozone levels downwind.
    However, the effect of NO<INF>X</INF> emissions on air quality in 
areas violating the ozone air quality standard depends, in part, on the 
distance between sources and receptor areas. Sources that are closer to 
areas violating the air quality standards tend to have larger effects 
on air quality than sources that are far away. If there is a 
significant variation in the contribution of emissions in different 
subregions within the geographic area that may be subject to any 
section 126 findings, alternative approaches to developing a remedy, 
other than one based on the application of uniform control measures, 
will be evaluated. On the other hand, the large number of nonattainment 
areas in the States that filed petitions and the several different 
weather patterns associated with summertime ozone pollution episodes 
should also be considered when evaluating a subregional approach. The 
EPA plans to evaluate alternative approaches at levels below and above 
the levels used in the calculation of the budgets in the proposed 
NO<INF>X</INF> SIP call as well as regional approaches that apply 
different control levels to different geographic regions.
    The EPA is soliciting comment on approaches for the section 126 
control remedy that factor in the differential effects on air quality 
in areas violating the standard. Comments advocating alternative 
approaches would be most helpful if they set forth concrete proposals 
on what analysis should form the basis of the remedy. For example, some 
have suggested an approach that would attempt to quantify more 
explicitly the cost-effectiveness of emissions reductions in terms of 
improvements in ambient ozone concentrations in areas violating a 
standard (measures, for example, as cost per population-weighted 
changes in parts per billion peak ozone concentration) taking into 
account the location of control measures through subregional modeling.
    The EPA invites comment on whether the criteria for cost 
effectiveness applied in any section 126 petition decision should be 
the same as the criteria used in the proposed NO<INF>X</INF> SIP call 
action; or whether the criteria should be different because, for 
example, there are fewer sources involved in the section 126 petitions 
than in the proposed NO<INF>X</INF> SIP call. (The EPA is not asking 
for comment, in this notice, on the issue of cost effectiveness as it 
applies to the proposed NO<INF>X</INF> SIP call, but only on whether 
the approach taken in the proposed NO<INF>X</INF> SIP call is 
appropriate for the section 126 action.) Similarly, EPA invites comment 
on whether to consider the cost effectiveness of controls for sources 
named in a single petition or whether EPA should look at the collective 
cost effectiveness of controls for all the sources named in all the 
petitions which EPA may propose to grant. In both cases, even if some 
sources' emissions reduction requirements taken by themselves are not 
cost effective, EPA believes that these controls may be considered cost 
effective if they are part of a set of controls which, when taken as a 
whole, are considered cost effective.
    The EPA also invites comments on whether and to what extent cost 
effectiveness should differentiate between large and small sources 
within a specific source category. Specifically, EPA notes that its 
proposed NO<INF>X</INF> SIP call included a cutoff of 25 MWe for 
utility boilers and 250 mmBtu for non-utility boilers; units below 
these cutoffs were not included in emissions decrease calculations for 
the statewide budgets. Because certain petitions suggest controlling 
15-25 MWe generators, and one suggests controlling all electric 
generators, EPA specifically invites comment on the cost effectiveness 
of these requests.
    As a preliminary matter, EPA anticipates making determinations as 
to cost effectiveness through the same approach as discussed in the 
proposed NO<INF>X</INF> SIP call. Specifically, EPA would employ the 
following steps in proposing the control levels: First, EPA would 
compile a list of available NO<INF>X</INF> control measures for the 
various emissions sectors named in the petitions. For the control 
measures on this list, EPA would estimate the average cost 
effectiveness of those controls. The average cost effectiveness is 
defined as the cost of a ton of reductions from the source category 
based on full implementation of the proposed controls, as compared to 
the pre-existing level of controls.
    Second, EPA would determine the average cost effectiveness of a 
representative sample of recently proposed and adopted State and 
Federal controls. The EPA believes that the average cost effectiveness 
for measures that would form the basis of the remedy to the petitions 
should be comparable to the average cost effectiveness of those 
controls recently proposed and adopted. Third, EPA would use this 
information to determine which controls may be appropriate to propose 
as the remedy for any petitions that are proposed to be granted. 
Fourth, EPA would determine that the proposed controls--or generally 
comparable levels--result in an adequate level of ambient reductions 
downwind. The EPA used this approach to propose the level of control 
assumed in the proposed NO<INF>X</INF> SIP call. The EPA solicits 
comments on whether this approach should be changed in the section 126 
rulemaking.

D. Legal Issues

    The EPA also solicits comment on a series of issues concerning the 
legal interpretation of section 126(b) and associated provisions. 
Section 126(b) provides that a State may petition EPA for a finding 
that specified sources in other States emit air pollutants ``in 
violation of the prohibition of section 110(a)(2)(D)(ii) of this title 
or this section.'' Section 110(a)(2)(D) provides the requirement that a 
SIP contain adequate provision:

    (i) prohibiting, consistent with the provisions of this title, 
any source or other type of emissions activity within the State from 
emitting any air pollutant in amounts which will--
    (I) contribute significantly to nonattainment in, or interfere 
with

[[Page 24076]]

maintenance by, any other State with respect to [any] national * * * 
ambient air quality standard, or
    (II) interfere with measures required to be included in the 
applicable implementation plan for any other State under part C to 
prevent significant deterioration of air quality or to protect 
visibility.
    (ii) insuring compliance with the applicable requirements of 
sections 126 and 115 (relating to interstate and international 
pollution abatement)* * *

    One issue is whether the cross-reference in section 126(b) to 
``section 110(a)(2)(D)(ii)'' is valid, or instead should be considered 
to be a typographical error that should be read to refer to section 
110(a)(2)(D)(i). The EPA has offered this view in general and 
preliminary guidance. (Nichols Letter cited earlier in Section I.B.)
    Some have argued that section 126(b) should be read literally, and 
that this reading would require EPA to deny the petitions submitted to 
date on grounds that section 126 allows a State to file a petition with 
EPA only to force other States to meet the requirements of section 126 
itself, (i.e., the requirement in section 126(a) that SIPs include 
provisions to require new and modified major stationary sources to give 
preconstruction notification to nearby States under certain 
circumstances). (Letter from Henry V. Nickel, et.al, Counsel for the 
Utility Air Regulatory Group, to Carol M. Browner, Administrator, U.S. 
EPA, November 21, 1997 (UARG Letter); Letter from Betty D. Montgomery, 
Attorney General of Ohio, et. al., to Richard Wilson, Acting Assistant 
Administrator for Air & Radiation, U.S. EPA, November 5, 1997 (letters 
included in the docket to this rulemaking).)
    If the proper interpretation of section 126(b) is that the cross-
reference represents a typographical error, an issue arises as to what 
the appropriate cross-reference should be. The EPA has offered the 
view, in general and preliminary guidance, that the proper cross-
reference should be to section 110(a)(2)(D)(i) (Nichols Letter). Some 
have argued that the appropriate cross-reference should be to section 
110(a)(2)(D)(i)(II), and not section 110(a)(2)(D)(i)(I) (UARG letter). 
The effect of this reading would be to limit section 126 petitions to 
cases in which the upwind sources are adversely affecting: (i) Clean 
areas under the prevention of significant deterioration requirements of 
part C of Title I of the CAA; or (ii) visibility.
    A further issue arises as to the interpretation of the requirement 
of section 110(a)(2)(D)(i) that the ``SIP contain adequate provisions 
prohibiting, consistent with the provisions of this title,'' sources 
from emitting air pollutants in amounts that contribute significantly 
to nonattainment problems downwind. Some have argued that the phrase 
``consistent with the provisions of this title'' should be interpreted 
to limit the requirements imposed with respect to sources in a 
contributing State to the control requirements that the petitioning 
State demonstrates would be necessary to allow the petitioning State to 
reach attainment of the NAAQS after the petitioning State implements 
the applicable requirements under section 182 (requirements for 
nonattainment areas), and under sections 176A and 184 (transport region 
provisions). The EPA solicits comments on each of the issues of 
interpretation noted earlier.
    Additional legal issues, which assume that section 126(b) should be 
read to authorize EPA to grant the petitions if they have an adequate 
technical basis, concern:
    <bullet> Whether, if EPA grants a section 126 petition, EPA may 
allow sources a period longer than 3 years from the date of granting 
the petition to implement required controls under section 126(c).
    <bullet> Whether administrative complexity is an appropriate factor 
to consider in determining whether to grant a petition with respect to 
certain sources, so that EPA would have the discretion to determine not 
to grant a finding with respect to, for example, smaller sources that 
would be administratively complex for EPA to regulate.
    <bullet> Whether EPA should evaluate each of the section 126 
petitions under both the 1-hr ozone NAAQS and the 8-hr ozone NAAQS or 
whether EPA should limit its evaluation of the 8-hr standard only to 
those petitions which cite the 8-hr standard as a basis for their 
petition.
    <bullet> Whether EPA has the authority to evaluate petitions under 
the 8-hr standard in light of the fact that EPA has not yet designated 
areas under the 8-hr standard or required SIP revisions under that 
standard.
    <bullet> Whether EPA, in determining whether sources are 
significant contributors to nonattainment problems downwind, may 
consider the impact of upwind sources named in a petition on only the 
petitioning State, or whether EPA may consider the impact of upwind 
sources named in one petition on other petitioning States (or non-
petitioning States).

V. Schedule for Rulemaking Action on Section 126 Petitions

    As discussed in the Section I Background, the eight petitioning 
States have sued EPA to establish a schedule for rulemaking on the 
section 126 petitions, and EPA and those States have filed with the 
court a proposed consent decree. The EPA took comment on the proposed 
consent decree under section 113(g) of the CAA and is considering those 
comments. The EPA has not asked the court to lodge the consent decree.
    Section 2(b) of the proposed consent decree requires that EPA 
publish in today's ANPR ``the schedule set forth in [the] consent 
decree for finalizing action on the section 126 petitions, including 
the date and location of the public hearing.''
    The proposed consent decree sets forth the relevant schedule as 
follows:

    3. EPA will publish in the Federal Register a notice of proposed 
rulemaking regarding the section 126 petitions no later than 
September 30, 1998.* * *
    5. a. EPA will take a final action on the section 126 petitions 
no later than April 30, 1999.
    b. Unless EPA takes the final action described in paragraph 6, 
as to each individual petition, EPA's final action will be to--
    (i) Grant the requested finding, in whole or part; and/or
    (ii) Deny the petition, in whole or part.
    c. Unless EPA denies a petition in whole, its final action will 
include promulgation of the Proposed Remedy for sources to the 
extent that a requested finding is granted with respect to those 
sources.
    6. EPA shall be deemed to have complied with the requirements of 
Paragraph 5(a) if it instead takes a final action by April 30, 1999, 
that--
    a. Makes an affirmative determination concerning the technical 
components of the ``contribute significantly to nonattainment'' or 
``interfere with maintenance'' tests under CAA section 
110(a)(2)(D)(i), 42 U.S.C. sec. 7410(a)(2)(D)(i);
    b. Further provides that--
    (i) If EPA does not issue a proposed approval of the relevant 
upwind State's SIP revision (submitted in response to the 
NO<INF>X</INF> SIP call) by November 30, 1999, then the finding will 
be deemed to be granted as of November 30, 1999, without any further 
action by EPA;
    (ii) If EPA issues a proposed approval of said SIP revision by 
November 30, 1999, but does not issue a final approval of said SIP 
revision by May 1, 2000, then the finding will be deemed to be 
granted as of May 1, 2000, without any further action by EPA;
    (iii) If EPA issues a final approval of said SIP revision by May 
1, 2000, EPA must take any and all further actions, if necessary to 
complete its action under section 126, no later than May 1, 2000; 
and
    c. Promulgates the Proposed Remedy for sources to the extent 
that an affirmative determination is made with respect to those 
sources.

    A public hearing on the future proposed rulemaking on the section 
126 petitions will be held on October 28 and 29, 1998 at the EPA 
Auditorium at 401 M Street SW,

[[Page 24077]]

Washington, DC, 20460. The oral testimonies, as well as all written 
comments received during the comment period for the proposed 
rulemaking, will be considered in the development of the final 
rulemaking.

VI. Impact on Small Entities

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., 
provides that whenever an agency is required to publish a general 
notice of proposed rulemaking, it must prepare and make available a 
regulatory flexibility analysis, unless it certifies that the proposed 
rule, if promulgated, will not have ``a significant economic impact on 
a substantial number of small entities.'' Id., section 605(b).
    No such requirements or certification apply in the case of an 
advance notice of proposed rulemaking. However, in accordance with 
section 609(a)(1) of the RFA, EPA is today notifying the public that if 
EPA grants the findings requested by the petitioning States, the 
controls that EPA would promulgate may have a significant economic 
impact on a substantial number of small entities. Accordingly, EPA has 
begun an informal outreach process to work with the Small Business 
Administration (SBA), the Office of Management and Budget (OMB), and a 
number of small-entity representatives. On April 14, 1998, EPA held a 
meeting in Washington, D.C. to provide an opportunity for small-entity 
representatives to provide advice and recommendations and to join in a 
discussion of the issues related to small-entities. Representatives 
from SBA and OMB also participated in the meeting. If this outreach and 
further analysis show that EPA's action appears likely to have a 
significant adverse impact on a substantial number of small entities, 
EPA would then convene a Federal Small Business Advocacy Panel for this 
rulemaking under the Small Business Regulatory Enforcement Fairness Act 
(SBREFA). The EPA would examine such issues as the number of small 
entities likely to be affected by the rule; the associated compliance, 
reporting and recordkeeping burdens; Federal rules which might 
duplicate, overlap, or conflict with the rule; and alternative 
compliance strategies and approaches that would help to minimize any 
significant economic impact on small entities.

    Dated: April 24, 1998.
Carol M. Browner,
Administrator.
[FR Doc. 98-11475 Filed 4-29-98; 8:45 am]
BILLING CODE 6560-50-P


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