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6560-50-P Deleted: 1021

ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Part 51 

[EPA-HQ-OAR-2009-0897; FRL- ] 

2060-AQ07 

Withdrawal of the Prior Determination or Presumption that Compliance with the 

CAIR or the NOx SIP Call Constitutes RACT or RACM for the 1997 8-Hour Ozone 

and 1997 Fine Particle NAAQS 

AGENCY: Environmental Protection Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: The EPA is proposing to withdraw any prior determination or 

presumption, for the 1997 8-hour ozone national ambient air quality standard (NAAQS) 

and the 1997 fine particle (PM2.5) NAAQS, that compliance with the Clean Air Interstate 

Rule (CAIR) or the NOx SIP Call automatically constitutes reasonably available control 

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

nitrogen (NOx) or sulfur dioxide (SO2) emissions from electric generating unit (EGU) 

sources participating in these regional cap-and-trade programs. 

DATES: Comments. Comments must be received on or before [INSERT DATE 30 

DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER]. Public Hearings.

If anyone contacts us requesting a public hearing on or before [INSERT DATE 15 

DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER], we will 

hold a public hearing. Please refer to SUPPLEMENTARY INFORMATION for 

additional information on the comment period and the public hearing. 

Deleted: ; and Revision to RACT Guidance and RFP 

Requirements for the 1997 Fine Particle NAAQS

Deleted: 

Deleted: 

Deleted: 

Deleted: The EPA is proposing revisions to preamble guidance in 

the final Implementation Rule for the 1997 PM2.5 national ambient 

air quality standard (NAAQS) concerning the economic feasibility 

criteria for determining RACT for sources located within 

nonattainment areas. The EPA is also proposing not to allow 

emission reductions from outside of a nonattainment area to be 

credited toward meeting the Reasonable Further Progress (RFP) 

requirements for the 1997 PM2.5 NAAQS.

Deleted: ¶
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ADDRESSES: Deleted: 1021 Submit your comments, identified by Docket ID No. EPA-HQ-OAR2009-0897, by one of the following methods: 

 www.regulations.gov. Follow the online instructions for submitting comments. 

Attention Docket ID No. EPA-HQ-OAR-2009-0897. 

 Email: a-and-r-docket@epa.gov. Attention Docket ID No. EPA-HQ-OAR-2009-

0897. 

 Fax: (202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-2009-0897. 

 Mail: EPA Docket Center, EPA West (Air Docket), Attention Docket ID No. 

EPA-HQ-OAR-2009-0897, U.S. Environmental Protection Agency, Mailcode: 

2822T, 1200 Pennsylvania Avenue, NW, Washington, D.C. 20460. Please include 

a total of two copies. 

 Hand Delivery: U.S. Environmental Protection Agency, William Jefferson 

Clinton West Building (Air Docket), 1301 Constitution Avenue, Northwest, 

Room 3334, Washington, D.C. 20004, Attention Docket ID No. EPA-HQ-OAR2009-0897. Such deliveries are only accepted during the Docket's normal hours of 

operation, and special arrangements should be made for deliveries of boxed 

information. 

 Instructions. Direct your comments to Docket ID No. EPA-HQ-OAR-2009-0897.

The EPA's policy is that all comments received will be included in the public docket 

without change and may be made available online at www.regulations.gov, including any 

personal information provided, unless the comment includes information claimed to be 

Confidential Business Information (CBI) or other information whose disclosure is 

restricted by statute. Do not submit information that you consider to be CBI or otherwise 

Deleted: 

Deleted: 

Deleted: EPA West 
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protected through www.regulations.gov Deleted: 1021 or email. The www.regulations.gov website is an 

“anonymous access” system, which means the EPA will not know your identity or 

contact information unless you provide it in the body of your comment. If you send an 

email comment directly to the EPA without going through www.regulations.gov, your 

email address will be automatically captured and included as part of the comment that is 

placed in the public docket and made available on the Internet. If you submit an 

electronic comment, the EPA recommends that you include your name and other contact 

information in the body of your comment and with any disk or CD-ROM you submit. If 

the EPA cannot read your comment due to technical difficulties and cannot contact you 

for clarification, the EPA may not be able to consider your comment. Electronic files 

should avoid the use of special characters, avoid any form of encryption, and be free of 

any defects or viruses. For additional information about the EPA's public docket, visit the 

EPA Docket Center homepage at www.epa.gov/epahome/dockets.htm.

 Docket. All documents in the docket are listed in the www.regulations.gov index. 

Although listed in the index, some information is not publicly available, e.g., CBI or 

other information whose disclosure is restricted by statute. Certain other material, such as 

copyrighted material, will be publicly available only in hard copy. Publicly available 

docket materials are available either electronically in www.regulations.gov or in hard 

copy at the Air and Radiation Docket and Information Center, EPA/DC, EPA William 

Jefferson Clinton West Building, Room 3334, 1301 Constitution Ave., NW, Washington, 

D.C. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 

Friday, excluding legal holidays. The telephone number for the Public Reading Room is 

(202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742. 
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FOR FURTHER INFORMATION CONTACT: Ms. Kristin Riha, Office of Air Deleted: 1021

Quality Planning and Standards, Air Quality Policy Division, Mailcode C539-01, 

Research Triangle Park, NC 27711, telephone (919) 541-2031; fax number: (919) 541-

5315; email address: riha.kristin@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information

A. Does this action apply to me? 

Entities potentially affected by this action include states (typically state air 

pollution control agencies) and in some cases, local governments that are responsible for 

air quality management and planning. In particular, states with areas designated 

nonattainment for the 1997 8-hour ozone NAAQS and/or the 1997 PM2.5 NAAQS and 

that are located within the geographic areas covered by the NOx SIP Call1

 and/or the 

CAIR2

 may be affected by this action. EGUs located in such geographic regions may also 

be affected by any new RACT or RACM reviews that may result from final rulemaking 

on this action. These sources are in the following groups: 

Industry group SICa

 NAICSb

Electric Services 492 221111, 221112, 221113, 221119, 221121, 

221122 

a

 Standard Industrial Classification. 

b

 North American Industry Classification System. 

 

1 See Finding of Significant Contribution and Rulemaking for Certain States in the Ozone 

Transport Assessment Group Region for Purposes of Reducing Regional Transport of 

Ozone; Final Rule, 63 FR 57356 (October 27, 1998). 

2 See Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone (Clean 

Air Interstate Rule); Revisions to Acid Rain Program; Revisions to the NOx SIP Call; 

Final Rule, 70 FR 25162 (May 12, 2005). 

Deleted: 

Deleted: 

Deleted: -

Deleted: 0824

Deleted: , tribes, 

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B. What should I consider as I prepare my comments for the EPA? 

1. Submitting CBI. Do not submit this information to the EPA through 

www.regulations.gov or email. Clearly mark the part or all of the information that you 

claim to be CBI. For CBI information in a disk or CD-ROM that you mail to the EPA, 

mark the outside of the disk or CD-ROM as CBI and then identify electronically within 

the disk or CD-ROM the specific information that is claimed as CBI. In addition to one 

complete version of the comment that includes information claimed as CBI, a copy of the 

comment that does not contain the information claimed to be CBI must be submitted for 

inclusion in the public docket. Information so marked will not be disclosed except in 

accordance with procedures set forth in 40 CFR Part 2. 

2. Tips for Preparing Your Comments. When submitting comments, 

remember to:

 Identify the rulemaking by docket number and other identifying information 

(subject heading, Federal Register date and page number). 

 Follow directions - The agency may ask you to respond to specific questions or 

organize comments by referencing a Code of Federal Regulations (CFR) part or 

section number. 

 Explain why you agree or disagree; suggest alternatives and substitute language 

for your requested changes. 

 Describe any assumptions and provide any technical information and/or data that 

you used. 

 If you estimate potential costs or burdens, explain how you arrived at your 

estimate in sufficient detail to allow for it to be reproduced. 

Deleted: 

Deleted: 

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 Provide specific examples to illustrate your concerns, and suggest alternatives. Deleted: 1021

 Explain your views as clearly as possible, avoiding the use of profanity or 

personal threats. 

 Make sure to submit your comments by the comment period deadline identified. 

C. Where can I get a copy of this document and other related information?

In addition to being available in the docket, an electronic copy of this notice will 

be posted at http://www.epa.gov/airquality/ozonepollution/actions.html.

D. What information should I know about a possible public hearing? 

To request a public hearing or information pertaining to a public hearing on this 

document, contact Ms. Pamela Long at (919) 541-0641 before 5 p.m. on [INSERT 

DATE 15 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL 

REGISTER]. If requested, further details concerning a public hearing for this proposed 

rule will be published in a separate Federal Register notice. For updates and additional 

information on a public hearing, please check the EPA’s website for this rulemaking at

http://www.epa.gov/airquality/ozonepollution/actions.html.

E. How is this notice organized? 

The information presented in this notice is organized as follows:

I. General Information 

 A. Does this action apply to me? 

 B. What should I consider as I prepare my comments for the EPA? 

 C. Where can I get a copy of this document and other related information? 

 D. What information should I know about a possible public hearing? 

 E. How is this notice organized? 

II. Background 

 A. CAA Requirements and the Definitions of RACT and RACM 

 B. The NOx SIP Call 

 C. The CAIR 

 D. The Phase 2 Ozone Implementation Rule 

 E. The PM2.5 Implementation Rule 

Deleted: 

Deleted: http://www.epa.gov/ttn/oarpg/new.html under “Recent 

Actions

Deleted: ”

Deleted: http://www.epa.gov/ttn/oarpg/new.html 

Deleted: under “recent actions

Deleted: ”

Deleted: 1. Submitting CBI¶

2. Tips for Preparing Your Comments¶

 

Deleted: ¶

Deleted: A. RACT or RACM Requirements for EGUs 

Participating in the NOx SIP ¶

Call and the CAIR¶

Deleted: 1. 

Deleted: ¶

Deleted: 2. 

Deleted: ¶

Deleted: 3. 

Deleted: ¶

Deleted: 4. 

Deleted: ¶

Deleted: 5. 

Deleted: ¶
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Deleted: 1021 F. Impact of the NRDC v. EPA Court Decision on Determinations and 

 Presumptions 

III. Proposed Action 

IV. Statutory and Executive OrderReview 

 A. Executive Order 12866: Regulatory Planning and Review and Executive 

 Order 13563: Improving Regulation and Regulatory Review 

 B. Paperwork Reduction Act

 C. Regulatory Flexibility Act

 D. Unfunded Mandates Reform Act

 E. Executive Order 13132: Federalism

 F. Executive Order 13175: Consultation and Coordination with Indian Tribal 

 Governments 

 G. Executive Order 13045: Protection of Children from Environmental 

 Health and Safety Risks 

 H. Executive Order 13211: Actions Concerning Regulations That 

 Significantly Affect Energy Supply, Distribution, or Use 

 I. National Technology Transfer and Advancement Act 

 J. Executive Order 12898: Federal Actions to Address Environmental Justice 

 in Minority Populations and Low-Income Populations 

Statutory Authority 

List of Subjects

II. Background 

A. CAA Requirements and the Definitions of RACT and RACM 

The Clean Air Act (CAA) requires the EPA to designate areas as either 

attainment, nonattainment, or unclassifiable for each NAAQS. States have primary 

responsibility for implementing the NAAQS within their borders, and each state must 

develop a SIP that contains adequate provisions for attainment and maintenance of the 

NAAQS. The SIPs developed by states must meet the applicable statutory requirements. 

For areas designated nonattainment, Part D of the CAA requires that SIPs must include 

certain control measures. Subpart 1 of Part D contains generally applicable requirements 

for all nonattainment areas. Subpart 2 and Subpart 4 of Part D contains additional 

requirements applicable to certain ozone and particulate matter (PM, including PM2.5)

nonattainment areas, respectively. 

Deleted: 6. 

Deleted: 

Deleted: 

Deleted: 7. Impact of the North Carolina v. EPA Court Decision 

on ¶

Determinations and Presumptions

Deleted: ¶

Deleted: B. Analysis of the Economic Feasibility of 

Reasonably Available Controls in ¶

the PM2.5 Implementation Rule¶

C. RFP Requirements for the 1997 PM2.5 NAAQS¶

 1. Linkage between the RFP Policy in the Phase 2 Ozone 

¶

Implementation Rule and the PM2.5 Implementation Rule¶

2. Rulemaking and Litigation Chronology of RFP 

Requirements for ¶

the 1997 Ozone NAAQS and the 1997 PM2.5 NAAQS¶

Deleted: A. RACT or RACM Requirements for EGUs 

Participating in the NOx SIP ¶

Call and the CAIR¶

B. Analysis of the Economic Feasibility of Reasonably Available 

Controls in ¶

the PM2.5 Implementation Rule¶

C. RFP Requirements for the 1997 PM2.5 NAAQS¶

Deleted: A. RACT or RACM Requirements for EGUs Participating 

in the NOx SIP Call and the CAIR¶

Deleted: 1

Deleted: State Implementation Plan (

Deleted: )
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Among the general statutory requirements for all nonattainment areas is the Deleted: 1021

requirement in section 172(c)(1) that SIPs: “provide for the implementation of all 

reasonably available control measures as expeditiously as practicable (including such 

reductions in emissions from existing sources in the area as may be obtained through the 

adoption, at a minimum, of reasonably available control technology).” Ozone 

nonattainment areas that are subject to the requirements of Subpart 2 must meet more 

specific RACT requirements in accordance with section 182(b)(2)(C). States located 

within the Ozone Transport Region (OTR) have additional requirements to impose 

RACT on sources statewide, rather than only in nonattainment areas, in accordance with 

section 184. 

The EPA refers to the requirement for “reasonably available control measures” as 

RACM, and refers to the subset of RACM in the parenthetical for “reasonably available 

control technology” as RACT. RACM and RACT measures apply broadly to a range of 

source categories located in designated nonattainment areas, including large stationary 

sources such as EGUs. The EPA has historically interpreted RACT to mean the lowest 

emissions limitation that a particular source is capable of meeting by the application of 

control technology that is reasonably available considering technological and economic 

feasibility.3

 

RACT requirements are specifically intended to impose emission controls for 

purposes of attainment and maintenance of the NAAQS within a specific nonattainment 

 

3 See Memorandum from Roger Strelow titled “Guidance for Determining Acceptability 

of SIP Regulations in Non-Attainment Areas.” (December 9, 1976). See also “State 

Implementation Plans; General Preamble for the Implementation of Title I of the Clean 

Air Act Amendments of 1990,” 57 FR 13498 (April 16, 1992).

Deleted: as well as other considerations

Deleted: Economic feasibility encompasses 

Deleted: considerations such as whether the cost of a potential 

measure is reasonable considering attainment needs of the area and 

the costs of other measures, and whether the cost of a measure is 

reasonable for the regulated entity to bear, in light of the benefits.

Deleted: 4

Deleted: 

Deleted: local 

Deleted: Clean Air Fine Particle Implementation Rule; Final Rule, 

72 FR 20586 (April 25, 2007). The interpretation of RACT occurs at 

20610.
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area. The EPA has interpreted the terms RACT and RACM for purposes of Subpart 1 Deleted: 1021

requirements as being the level of emissions control that is necessary to provide for 

expeditious attainment of the NAAQS within a nonattainment area. Courts have upheld 

this interpretation of the statute with respect to nonattainment SIPs.5

In contrast to nonattainment plan requirements, section 110(a)(2)(D)(i) requires 

each state’s SIP to contain provisions that will prevent emissions from sources in the state 

from having certain prohibited impacts on the air quality of other states, via interstate 

transport. In particular, section 110(a)(2)(D)(i)(I) requires that a state’s SIP must contain 

provisions to prevent emissions in amounts that would “contribute significantly to 

nonattainment in, or interfere with maintenance by, any other state” with respect to a 

NAAQS. The EPA has initiated several regulatory programs pursuant to section 

110(a)(2)(D)(i)(I) to address interstate transport of emissions that have such prohibited 

impacts on attainment of the ozone and PM2.5 NAAQS on a regional basis. 

B. The NOx SIP Call 

In October 1998, the EPA published a rule under section 110(a)(2)(D)(i) of the 

CAA, commonly referred to as the “NOx SIP Call.” This rule was intended to reduce NOx

emissions (a precursor for ozone formation) from sources that significantly contribute to 

nonattainment or interfere with maintenance of the ozone NAAQS in one or more 

downwind states. To implement these reductions, the NOx SIP Call required 22 states and 

the District of Columbia to submit SIP revisions prohibiting those NOx emissions that the 

EPA determined to be adversely impacting downwind air quality problems. The NOx SIP 

Call provided a regional emissions cap-and-trade program as one mechanism for states to 

 

5 See NRDC v. EPA, 571 F.3d 1245, at 1252-53 (D.C. Cir. 2009). 

Deleted: in order 

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meet their interstate transport requirements under section 110(a)(2)(D)(i). Through this Deleted: 1021

mechanism, affected sources could meet emissions reductions requirements either by 

installing NOx emissions controls or by purchasing allowances from other sources located 

within the geographic region covered by the NOx SIP Call. 

C. The CAIR 

 In May 2005, the EPA published another rule under section 110(a)(2)(D)(i) of the 

CAA, referred to as the “Clean Air Interstate Rule” (or the CAIR). The CAIR required 

reductions of NOx and/or SO2 emissions across 28 states and the District of Columbia 

needed to eliminate significant contribution to nonattainment, or interference with 

maintenance of, the 1997 8-hour ozone NAAQS and/or the 1997 PM2.5 NAAQS in one or 

more downwind states.6

 Similar to the NOx SIP Call, the EPA provided a regional 

emissions cap-and-trade mechanism as one means for upwind states to meet the interstate 

transport requirements of section 110(a)(2)(D)(i). By this mechanism, affected sources 

could meet their emission reduction requirements either by installing controls for NOx

and/or SO2 emissions, or by purchasing allowances from other sources located in the 

geographic region covered by the CAIR. On April 28, 2006 (71 FR 25328), the EPA also 

promulgated Federal Implementation Plans (FIPs) for all jurisdictions covered by the 

CAIR to address the section 110(a)(2)(D)(i) requirements in the event that states were 

unable to make a SIP submission containing state measures necessary to alleviate 

interstate transport.

 

6

 NOx is a precursor for ozone formation, while both NOx and SO2 are precursors for 

PM2.5 formation. 

Deleted: 

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A number of parties filed petitions for review in 2008 to challenge the CAIR on Deleted: 1021

various grounds. As a result of this litigation, the United States Court of Appeals for the 

District of Columbia Circuit (the Court) remanded the CAIR to the EPA, but later 

decided not to vacate the rule.7

 In the process of remanding the CAIR, however, the 

Court identified serious concerns with the EPA’s reading of the statute and analytical 

approach, including such core issues as the agency’s method of evaluating significant 

contribution to nonattainment and interference with maintenance of the NAAQS. In 

response to the remand of the CAIR, the EPA finalized another rule, the “Cross-State Air 

Pollution Rule” (CSAPR) on July 6, 2011 (published in the Federal Register on August 

8, 2011).

8

 This rule was then vacated by the U.S. Court of Appeals for the District of 

Columbia (D.C. Circuit) on August 21, 2012.9 In its opinion vacating the CSAPR, the 

D.C. Circuit instructed the EPA to continue administering the CAIR pending 

promulgation of a valid replacement. The United States Supreme Court subsequently 

agreed to review the decision of the D.C. Circuit. Oral argument before the Supreme 

Court was held on December 10, 2013.

 Both the NOx SIP Call and the CAIR were intended and designed to eliminate 

interstate transport of pollutants that have impacts on attainment and maintenance of the

ozone and/or PM2.5 NAAQS in downwind areas. Thus, they provide significant emissions 

reductions that assist downwind areas with attainment or maintenance of the NAAQS, 

and allow downwind states to develop SIPs in reliance on regional emissions reductions. 

 

7 See North Carolina v. EPA, 531 F.3d 896; modified by 550 F.3d 1176 (D.C. Cir. 2008). 8 See “Federal Implementation Plans: Interstate Transport of Fine Particulate Matter and 

Ozone and Correction of SIP Approvals, Final Rule,” 76 FR 48208 (August 8, 2011). 9 See EME Homer City Generation L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012), cert. 

granted 133 S. Ct. 2857 (2013).

Deleted: A

Deleted: 

Deleted: 

Deleted: http://www.epa.gov/airtransport/pdfs/TR_070611_WEB.

pdf for the prepublication version of this rule. Once published in the 

Federal Register, the rule will appear at www.regulations.gov under 

Docket Number HQ-OAR-2009-0491. 
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However, the EPA did not intend that either the NOx Deleted: 1021 SIP Call or the CAIR would 

completely obviate the potential need for additional local pollution controls in downwind 

nonattainment areas, nor did the EPA intend either action to override the statutory 

requirements for SIPs for nonattainment areas.10 

In order to help states address the specific statutory requirement for SIPs for 

nonattainment areas for the 1997 8-hour ozone NAAQS and 1997 PM2.5 NAAQS, the 

EPA promulgated both regulations and guidance applicable to each NAAQS in separate 

implementation rules. Within those actions, the EPA addressed questions concerning the 

intersection of the requirements for regional control strategies and the requirements for 

local control strategies to reduce interstate transport in individual nonattainment areas 

needed for local attainment purposes. In particular, the EPA focused on the issue of 

whether, or to what extent, compliance by EGUs with the requirements of the NOx SIP 

Call and/or the CAIR could also be construed as compliance with the RACT 

requirements for local nonattainment SIPs for the 1997 8-hour ozone and 1997 PM2.5

NAAQS. The EPA’s approach to this issue for each NAAQS is described in more detail 

later. 

D. The Phase 2 Ozone Implementation Rule 

On November 29, 2005 (70 FR 71612), the EPA published an ozone 

implementation rule to address nonattainment SIP requirements for the 1997 8-hour 

ozone NAAQS (the Phase 2 Ozone Implementation Rule). The Phase 2 Ozone 

 

10 See the CAIR, 70 FR 25184 (discussing the need for both regional and local emission 

reductions to bring all areas into attainment); See also Clean Air Fine Particle 

Implementation Rule, 72 FR 20587 (discussing the need for regional and national 

emission reduction programs in conjunction with local controls in SIPs for nonattainment 

areas to bring all areas into attainment). 

Deleted: ¶

Deleted: 4

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Deleted: 1021 Implementation Rule addressed various statutory requirements, including the requirement 

for RACT-level controls for sources located within nonattainment areas generally, and 

controls for NOx emissions from EGUs in particular. After explaining its analysis of the 

issue, the EPA indicated its determination that the regional NOx emissions reductions that 

result from either the NOx SIP Call or the CAIR would meet the NOx RACT requirement 

for EGUs located in states included within the respective NOx SIP Call or CAIR 

geographic regions. Thus, the EPA concluded that: “[t]he State need not perform a NOx

RACT analysis for sources subject to the State’s emission cap-and-trade program where 

the cap-and-trade program has been adopted by the State and approved by the EPA as 

meeting the NOx SIP Call requirements or, in States achieving the CAIR reductions 

solely from electric generating units (EGUs), the CAIR NOx requirements.”11

In January 2006, Earthjustice, on behalf of the Natural Resources Defense 

Council (NRDC), filed a petition for reconsideration of the Phase 2 Ozone 

Implementation Rule, objecting to the EPA’s determination that, in certain 

circumstances, compliance with the requirements of the CAIR would constitute RACT 

for NOx emissions for EGUs located in states within the CAIR region.12 The petition 

raised objections to an alleged failure to seek public comment on the determination and to 

the agency’s interpretation of the CAA to allow a regional emissions reduction program 

to constitute RACT for sources located within nonattainment areas, as well as other 

related issues. The EPA granted the petition for reconsideration of the Phase 2 Ozone 

Implementation Rule and subsequently conducted a Supplemental Technical Analysis to 

 

11 See Phase 2 Ozone Implementation Rule, 70 FR 71617. 12 See “Petition for Reconsideration,” filed by David Baron, Earthjustice, on behalf of 

NRDC (January 30, 2006). A copy of the petition is located in the docket for this action. 

Deleted: 

Deleted: the 

Deleted: A
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assess whether compliance with the CAIR could satisfy the NOx Deleted: 1021 RACT requirement for 

EGUs in certain geographic areas.13 A proposed rule, which presented this analysis and 

solicited comments regarding the reconsideration of whether the CAIR would constitute 

RACT for NOx emissions for EGUs located in states within the CAIR region, was 

published in December 2006. The EPA did not reconsider or request comments on its 

prior determination that the NOx SIP Call constitutes RACT for those sources covered by 

the NOx SIP Call. 

The EPA then published a final notice of reconsideration on June 8, 2007 (72 FR 

31727), reflecting the agency’s additional evaluation of whether compliance with the 

CAIR could constitute RACT for NOx emissions for certain EGUs. In that action, the 

EPA modified its conclusion regarding when compliance with the CAIR may satisfy NOx

RACT requirements for EGUs in areas within the CAIR region. The EPA reaffirmed its 

determination that, in many ozone nonattainment areas, compliance with the CAIR would 

satisfy NOx RACT requirements for EGUs in such areas.14 However, the EPA stated that 

this determination would only apply to specific areas for which the EPA’s Supplemental 

Technical Analysis showed that the CAIR was projected to achieve equal or greater NOx

emissions reductions than application of source-by-source application of RACT to the 

 

13 See “Technical Support Document for Phase 2 of the Final Rule to Implement the 8-

Hour Ozone National Ambient Air Quality Standard-Notice of Reconsideration; NOx

RACT for EGUs in CAIR States – Supplemental Technical Analysis,” December 

2006.(Docket ID no. EPA-HQ-OAR-2003-0079, item number EPA-HQ-OAR-2003-

0079-1044.2) (Supplemental Technical Analysis). 

14 Specifically, the EPA determined that compliance with the CAIR would meet the NOx

RACT requirements for ozone nonattainment areas in sections 172(c)(1) and 182(f), and 

the statewide NOx RACT requirements for SIPs for states located within the Ozone 

Transport Region pursuant to sections 184(b) and 182(f). See Phase 2 Ozone 

Implementation Rule-Notice of Reconsideration, 72 FR 31730. 

Deleted: 

Deleted: A

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EGUs within the nonattainment area. Even in those nonattainment areas where the EPA Deleted: 1021

did not make a formal determination, however, the EPA also established a separate 

presumption that compliance with the CAIR, in certain circumstances, could satisfy NOx

RACT requirements for EGUs in any area within the CAIR region.15 The EPA thus 

announced that states could rely initially on this presumption, even in areas where the 

agency had made no formal determination, assuming certain conditions. Finally, the EPA 

reiterated in the final notice of reconsideration that EGU sources complying with the 

requirements of the NOx SIP Call would also be considered to have met their ozone NOx

RACT obligations, assuming certain conditions.16 

In addition to the Supplemental Technical Analysis, the EPA provided various 

legal and policy bases for its determinations and presumptions in the final notice of 

reconsideration of the Phase 2 Ozone Implementation Rule. For example, the EPA argued 

that its interpretation of section 172(c) to allow RACT to include consideration of 

regionwide emissions reductions, rather than nonattainment area specific reductions only, 

was permissible because of the use of the term “reasonable” as part of the definition of 

RACT.17 As a policy matter, the EPA also argued that emissions reductions that result 

from regional scale programs like the CAIR often “will achieve a more effective and 

economically efficient air quality improvement in nonattainment areas than application of 

source-by-source RACT.”18

 

15 See Phase 2 Ozone Implementation Rule-Notice of Reconsideration, 72 FR 31730. 16 Id. 72 FR 31731. 

17 Id. 72 FR 31730. 

18 Id. 

Deleted: 

Deleted: A

Deleted: 

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Deleted: 1021 In November 2008, the U.S. Court of Appeals for the D.C. Circuit heard oral 

argument concerning multiple petitions for judicial review of the EPA’s Phase 2 Ozone 

Implementation Rule and the Notice of Reconsideration. Among other issues, the 

petitioners (including NRDC) challenged the EPA’s determination that compliance with 

the NOx SIP Call and/or the CAIR could satisfy NOx RACT requirements for EGUs in 

ozone nonattainment areas, and the EPA’s specific determinations for some areas and 

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

RACT for EGUs in ozone nonattainment areas. In view of its decision in North Carolina 

v. EPA, in which the Court had previously remanded the CAIR and in response to the 

parties’ joint suggestion to the Court that any further litigation of CAIR-related issues be 

held in abeyance given the North Carolina decision, the Court deferred consideration of 

the litigants’ challenges to the Phase 2 Ozone Implementation Rule and Reconsideration 

Notice insofar as they related to the CAIR program. 

As a result of this litigation, the Court decided that the provisions in the Phase 2 

Ozone Implementation Rule indicating that a state need not perform (or submit) a NOx

RACT analysis for EGU sources subject to a cap-and-trade program that meets the 

requirements of the NOx SIP Call are inconsistent with the statutory requirements of 

section 172(c)(1).19 The Court specifically held that the Phase 2 Ozone Implementation 

Rule allowing use of the NOx SIP call to constitute RACT without any locally applicable 

analysis regarding the equivalence of NOx SIP Call and RACT reductions: “is 

inconsistent with the Clean Air Act . . . in allowing participation in a regional cap-andtrade program to satisfy an area-specific statutory mandate.” The Court emphasized that: 

 

19 See NRDC v. EPA, 571 F.3d 1245 (D.C. Cir. 2009). 

Deleted: several parties (including NRDC) further challenged 

Deleted: In particular, they 

Deleted: ’

Deleted: 
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“the RACT requirement calls for reductions in emissions from sources in the area; Deleted: 1021

reductions from sources outside the nonattainment area do not satisfy the requirement . . . 

Accordingly, participation in the NOx SIP call would constitute RACT only if 

participation entailed at least RACT-level reductions in emissions from sources within 

the nonattainment area.” 

The Court rejected the EPA’s arguments that a regional emissions reductions 

program like the NOx SIP Call would result in greater emissions reductions in 

nonattainment areas as unsupported by any adequate technical analysis.20 The Court 

likewise rejected the EPA’s argument that regionwide emissions reductions would 

collectively achieve better emissions reductions because this argument did not comport 

with the explicit “in the area” language of section 172(c)(1).21 With respect to the EPA’s 

argument that the statute is ambiguous as to whether each individual source within a 

nonattainment area must install RACT, the Court concluded that even if that were 

correct, the EPA had failed to evaluate the impact of the NOx SIP Call on the air quality 

within specific nonattainment areas, and thus the EPA “has failed to establish that NOx

SIP Call compliance can be equated to RACT compliance.”22 The Court disagreed with 

the EPA’s theory that section 172(c)(6), which authorizes auctions as a permissible form 

of control measure, could allow reliance on a regional cap-and-trade type program in lieu 

of the RACT requirement for sources “in the area.”23 Finally, the Court rejected the 

argument that the EPA’s interpretation should be upheld because a state could still elect 

 

20 Id. 571 F.3d at 1257. 

21 Id. 

22 Id. 

23 Id. 571 F.3d at 1258. 
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Deleted: 1021 to define RACT to require greater emissions reductions from EGUs in a given area for 

local attainment needs, concluding that: “[a] state’s decision to require stricter controls 

cannot eliminate the defect in the EPA’s approach – failing to implement the requirement 

of at least RACT-level reductions in emissions from sources in the nonattainment area.”24 

Based on the foregoing reasoning, the Court remanded the provision of the Phase 

2 Ozone Implementation Rule determining that the NOx SIP Call satisfies NOx RACT for 

EGUs because the EPA had failed to show that compliance with the NOx SIP Call would 

achieve at least RACT-level reductions in each nonattainment area. In deciding not to 

vacate the provision, however, the Court noted that a determination that RACT was 

satisfied by compliance with the NOx SIP Call might be permissible for an area if 

accompanied by a technical analysis demonstrating that the program in fact “results in 

greater emissions reductions in a nonattainment area than would be achieved if RACTlevel controls were installed in that area.”25 In other words, the Court rejected the notion 

that a regional cap-and-trade program intended to eliminate interstate transport of 

emissions consistent with section 110(a)(2)(D)(i) could automatically constitute RACTlevel control as required by section 172(c)(1), but held open the possibility that such a 

program might in fact result in the same, or higher, level of emissions reductions in 

individual nonattainment areas. 

Significantly, the Court did not address at all the EPA’s comparable 

determinations and presumption that compliance with the CAIR would constitute NOx

RACT for EGUs in ozone nonattainment areas under certain circumstances. As 

 

24 Id. 

25 Id. 

Deleted: The Court did not, however, explain how the key feature 

of such cap-and-trade programs, i.e., the ability of sources to 

purchase allowances in lieu of installation of emissions controls, 

could meet the parameters envisioned by the Court. Nor did the 

Court speak to the issue of sources that might wish to switch their 

method of compliance in the future, taking advantage of the 

flexibility to control emissions or purchase allowances as market 

conditions evolve. 
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mentioned earlier, the Court Deleted: 1021 (in response to the joint suggestion of the parties) deferred 

consideration of the CAIR-related challenges to the EPA’s determinations and 

presumption because at the time of this decision, the Court had already remanded the 

CAIR.26 However, on August 30, 2013, the U.S. Court of Appeals for the D.C. Circuit 

granted the EPA’s request for voluntary remand of the CAIR determination and vacatur 

of the CAIR presumption. In granting the agency’s request, the Court said that “[v]acatur 

of the presumption is appropriate in light of the NRDC v. EPA...”27

E. The PM2.5 Implementation Rule 

On April 25, 2007 (72 FR 20586), the EPA published the “Clean Air Fine Particle 

Implementation Rule” to address nonattainment SIP requirements for the 1997 PM2.5 

NAAQS (the PM2.5 Implementation Rule).28 That action provided regulations and 

additional guidance in the preamble for state plans required to implement the 1997 PM2.5

NAAQS. The PM2.5 Implementation Rule provided a framework for developing SIP 

submissions for nonattainment areas based on the Subpart 1 requirements for 

nonattainment areas found in section 172 of the CAA.29 

 

26 Id. at 1250. 

27 NRDC v. EPA, No. 09-1198 (D.C. Cir.) (order of August 30, 2013). 28 The PM2.5 Implementation Rule is now codified at 40 CFR Section 51.1000 – 1012. 

Section 51.1010 addresses the RACT and RACM requirements. 29 The EPA notes that on January 4, 2013, the PM2.5 Implementation Rule was remanded 

by the U.S. Court of Appeals for the D.C. Circuit. The Court ruled that the EPA should 

have issued the implementation rule under the Clean Air Act requirements of Subpart 4. 

(See NRDC v. EPA, 706 F.3d 428 (D.C. Cir. 2013). This proposal addresses only one 

aspect of the remanded PM2.5 Implementation Rule, i.e., the presumption that CAIR is 

RACT/RACM for purposes of attainment plans for the 1997 PM2.5 NAAQS. This issue is 

not directly related to the court’s decision in NRDC v. EPA. The EPA intends to respond 

to the court’s remand in that decision in another rulemaking that will address 

implementation requirements for the PM2.5 NAAQS more broadly.

Deleted: A

Deleted: Nevertheless, the EPA believes that the concerns 

expressed by the Court about the Agency’s approach to the NOx

RACT requirement for EGUs and the emissions reductions required 

by the NOx SIP Call raise significant questions about the EPA’s 

approach to the comparable issues related to compliance with the 

CAIR, for both the Phase 2 Ozone Implementation Rule and the 

1997 PM2.5 NAAQS Implementation Rule

Deleted: described later

Deleted: .

Deleted: The EPA has therefore decided to consider the decision 

and the reasoning of the Court with respect to both the NOx SIP Call 

and the CAIR as it responds to the remand of the Phase 2 Ozone 

Implementation Rule, and to evaluate the implications of the 

decision for other related rulemakings, including the responses to 

related petitions for reconsideration

Deleted: .

Deleted: 5

Deleted: ¶

¶
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With respect to the requirements of section 172 (c)(1), the PM2.5 Deleted: 1021 Implementation 

Rule used a combined RACT/RACM approach, where a state’s obligation to implement 

RACT was considered as part of the overall RACM obligation for EGU sources. 

RACT/RACM was defined in the Rule as the set of emission reduction measures needed 

to attain the standards as expeditiously as practicable in the nonattainment area at issue. 

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

established a presumption that compliance with the CAIR would satisfy RACT/RACM 

requirements for SO2 and NOx emissions from EGUs in states participating in the CAIR 

cap-and-trade program for such emissions.30 

For SO2, the EPA’s guidance recommended that states that obtained all SO2

reductions required by the CAIR from EGUs could presume that such sources located 

within a designated nonattainment area were meeting SO2 RACT/RACM requirements 

because of overall regional SO2 reductions from EGUs. The guidance indicated that this 

presumption could be used without conducting a technical analysis comparing the CAIR 

and RACT/RACM reductions for the specific nonattainment area. For NOx, the EPA 

similarly recommended that so long as the EGU sources in the state were required to 

operate NOx emissions controls on a year-round basis to comply with the CAIR, then that 

state could presume that those EGUs were meeting NOx RACT/RACM requirements 

because of overall regional NOx reductions from EGUs. The EPA made no decision with 

respect to what might constitute RACT/RACM level controls for direct PM2.5 emissions 

from EGUs in relation to the CAIR because the CAIR only addressed the NOx and SO2

emissions from such sources. 

 

30 See PM2.5 Implementation Rule, 72 FR 20623. 

Deleted: tilized

Deleted: an area’s 

Deleted: an area’s

Deleted: tilized

Deleted: –5
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Based on this presumption that compliance with the CAIR would constitute Deleted: 1021

RACT/RACM level controls for SO2 and NOx emissions from EGUs within the CAIR 

region, the EPA concluded that: “states may define RACT/RACM as the CAIR level of 

control on the collective group of sources in the region rather than impose a specific level 

of control on individual sources.”31 In other words, the EPA indicated that states could 

presume that EGUs located within a given nonattainment area were meeting the 

RACT/RACM requirement, based solely upon a regional program that imposed controls 

on sources both within and outside designated nonattainment areas. The EPA 

acknowledged that reliance on the presumption could result in situations where specific 

EGUs located within nonattainment areas might elect to comply with the CAIR through 

the acquisition of allowances, rather than the reduction of emissions. Although the EPA 

articulated a series of policy and technical reasons for the appropriateness of considering 

a regional control program like the CAIR to be a preferable approach, the agency also 

acknowledged that a state might “conclude that establishing additional ‘beyond CAIR’ 

emissions control requirements on specific sources in nonattainment areas is warranted to 

provide for attainment as expeditiously as practicable.”32 These policy and technical 

arguments are very similar to those made by the EPA in connection with challenges to 

the Phase 2 Ozone Implementation Rule, and rejected by the Court decision discussed in 

further detail previously in this notice. 

In June 2007, the EPA received a petition for reconsideration filed by Earthjustice 

on behalf of several petitioners (including NRDC) that raised several objections to the 

 

31 Id. at 72 FR 20624. 

32 Id. at 72 FR 20625. 

Deleted: A
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PM2.5 Deleted: 1021 Implementation Rule.33 One of the principle objections raised by the petition is that 

under the CAA, compliance with a regional trading program, such as the CAIR, should 

not be presumed to satisfy RACT/RACM requirements for individual EGU sources 

located in nonattainment areas. The petitioner argued that the effect of the “CAIR-RACT 

presumption” was to waive the CAA RACT requirements for individual EGU sources 

located within PM2.5 nonattainment areas. The petition also asserts that the presumption 

and its accompanying rationale were added to the rule after the close of the public 

comment period, and that the EPA therefore failed to seek public comment on the final 

rule’s determination that the CAIR presumptively satisfies SO2 and NOx RACT 

requirements for EGUs located in nonattainment areas. The petition further maintains that 

the EPA lacks authority to establish a presumption on what satisfies RACT in this 

fashion, and that the EPA’s conclusion that the CAIR can be presumed to satisfy RACT 

is arbitrary and capricious because it lacked a factual basis. Lastly, the petition also 

maintained that even if an initial presumption that compliance with the CAIR constituted 

compliance with the RACT requirements of section 172(c)(1) were otherwise 

permissible, the final rule would be arbitrary and unlawful because it failed to explain if 

or how the presumption can be rebutted. 

Significantly, Earthjustice filed the petition for reconsideration of the PM2.5 

Implementation Rule well before the Court in the NRDC v. EPA case addressed the 

comparable issue with respect to the NOx SIP Call in the context of the Phase 2 Ozone 

 

33 See “Petition for Reconsideration,” filed by Paul Cort, Earthjustice, on behalf of the 

American Lung Association, Medical Advocates for Healthy Air, Natural Resources 

Defense Council, and the Sierra Club (June 25, 2007). A copy of the petition is in the 

docket for this action. 

Deleted: 
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Deleted: 1021 Implementation Rule. Nevertheless, the petitioner made essentially the same points as the 

Court in the NRDC v. EPA case that to allow compliance with a regional cap-and-trade 

program to constitute RACT for sources located within a nonattainment area 

automatically, or pursuant to an unsupported presumption, would be contrary to the 

explicit requirements of section 172(c)(1). Moreover, the EPA notes that multiple parties 

have indicated that they intend to challenge the PM2.5 Implementation Rule on this same 

issue through petitions for review currently pending in the Court. 

In light of the arguments raised in the petition for reconsideration, and in light of 

the Court’s decision in NRDC v. EPA, the EPA decided to grant the petition for 

reconsideration on this issue and initiate this rulemaking.34 

F. Impact of the NRDC v. EPA Court Decision on Determinations and Presumptions 

The EPA has reevaluated whether compliance with the NOx SIP Call could 

automatically constitute NOx RACT for EGUs in light of the Court’s opinion in the 

NRDC v. EPA case. Given the explicit wording of section 172(c)(1) that sources “in the 

area” must at a minimum adopt RACT controls for that area, the EPA believes that it is 

no longer appropriate to presume that this requirement is automatically met through the 

participation of sources in a regional emissions cap-and-trade program. Implicit in a 

regional cap-and-trade program is that some sources may elect to use allowances in lieu 

of emissions controls to meet the regional emissions reductions requirements, and that 

those elections could change from year to year. The EPA believes that it would be 

inappropriate to pre-judge whether participation in a cap-and-trade program satisfies NOx

 

34 See letter dated April 25, 2011, from Lisa P. Jackson to Paul Cort, Earthjustice. A copy 

of this letter is located in the docket for this action. 

Deleted: 

Deleted: Accordingly, after reconsideration and for the reasons 

further described later in this notice, the EPA is proposing in this 

action to withdraw our prior presumption in the PM2.5

Implementation Rule that compliance with the CAIR would 

automatically constitute RACT/RACM level controls for EGUs 

located in areas designated nonattainment for the 1997 PM2.5

NAAQS. 

Deleted: 6

Deleted: .

Deleted: ¶

Deleted: address 

Deleted: merely 

Deleted: based upon 

Deleted: the 

Deleted: source

Deleted: tilize

Deleted: in order 

Deleted: 
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RACT for EGU sources in any given nonattainment area Deleted: 1021 . The EPA further believes that 

states could rely on a regional emissions cap-and-trade program for purposes of meeting 

NOx RACT requirements if they conduct the appropriate analysis demonstrating that 

compliance by EGUs participating in this program results in actual emission reductions in 

the particular nonattainment area that are equal to, or greater than, emission reductions

that would result if RACT were applied to each individual EGU source or the EGU 

source category in the nonattainment area.

Additionally, based on the logic of the NRDC v. EPA Court decision, and the 

concerns raised in the petition for reconsideration on the PM2.5 Implementation Rule, the 

EPA believes that it would be inappropriate absent an analysis for the EPA to pre-judge 

whether regional cap-and-trade programs would constitute RACT or RACM for covered 

sources in a particular PM2.5 nonattainment area. 

III. Proposed Action 

In this notice, the EPA is proposing to: (1) withdraw from the Phase 2 Ozone 

Implementation Rule the determination that compliance with the NOx SIP Call satisfies 

NOx RACT for EGUs located in certain ozone nonattainment areas or in states within the 

OTR; (2) withdraw from the Phase 2 Ozone Implementation Rule the separate 

determination that compliance with the CAIR satisfies NOx RACT for EGUs located in 

certain specific ozone nonattainment areas.; and (3) withdraw from the PM2.5 

Implementation Rule any presumption that compliance with the CAIR automatically 

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

PM2.5 nonattainment areas. 

Deleted: In response to the remand of the CAIR, EPA finalized 

the CSAPR on July 6, 2011, which requires 27 states in the eastern 

half of the United States to significantly improve air quality by 

reducing EGU emissions that cross state lines and contribute to 

ground-level ozone and fine particle pollution in other states. At the 

same time, the Agency also issued a supplemental proposal that 

would require six states — Iowa, Kansas, Michigan, Missouri, 

Oklahoma, and Wisconsin — to make summertime NOX reductions 

under the CSAPR ozone-season control program. Finalizing this 

supplemental proposal would bring the total number of covered 

states under the CSAPR to 28.

Deleted: B

Deleted: that other

Deleted: , such as the CSAPR,

Deleted: Therefore, states should not rely merely on the fact that 

sources are complying with a regional cap-and-trade program as a 

basis for RACT or RACM level emissions controls for the 1997 8-

hour ozone NAAQS or, the 1997 PM2.5 NAAQS, or any other 

NAAQS. States must comply with the provisions of the CAA, which 

require an evaluation of EGUs located within designated 

nonattainment areas for potential RACT controls, and imposition of 

such controls as may be necessary for expeditious attainment of the 

NAAQS within the area. States may, however, elect to conduct a 

technical analysis for the specific nonattainment area considering the 

emissions controls required by the regional cap-and-trade program at 

issue, and demonstrate that compliance by EGUs participating in this 

program results in equal to or greater than actual emission reductions 

from the EGUs within the particular nonattainment area that are 

equal to or greater than the emission reductions that would result if 

application of RACT were applied to an individual on all subject 

EGU source or the EGU source categorys within the nonattainment 

area. States could conduct this analysis for the EGUs in the 

nonattainment area, either individually or in the aggregate. The EPA 

anticipates that in many areas, such an evaluation will likely indicate 

that EGUs within the nonattainment area at issue are already 

adequately controlled for NOx and SO2 emissions, whether by virtue 

of the NOx SIP Call, the controls required by the CAIRSAPR, or by 

other means. However, based on the logic of the NRDC v. EPA

Court decision, and the concerns raised in the petition for 

reconsideration on of the PM2.5 Implementation Rule, the EPA 

believes that it would be inappropriate for the EPA to pre-judge that 

outcome prior to state development of locally applicable 

demonstrations showing equivalent reductions.

Deleted: 7. Impact of the North Carolina v. EPA Decision on 

Determinations and Presumptions¶

 As mentioned earlier, the Court remanded the CAIR to the EPA 

and later decided not to vacate the rule. In the process of remanding ... [1]

Deleted: A. RACT or RACM Requirements for EGUs Participating 

in the NOx SIP Call and the CAIR¶

Deleted: revise the Phase 2 Ozone Implementation Rule in order 

to

Deleted: a

Deleted: and the presumption that compliance with the CAIR can 

satisfy NOx RACT for EGUs located in other ozone nonattainment 

areas or in states within the OTR

Deleted: The EPA is also proposing to

Deleted: 
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Deleted: 1021 In general, the EPA supports flexible, common sense approaches that provide the 

health and environmental protections required under the CAA while maximizing 

flexibility for states. The EPA also supports maintaining the integrity of regional capand-trade programs. Therefore, as a result of this action, states would retain the option of 

relying on source participation in a regional cap-and-trade program for purposes of 

meeting the RACT or RACM requirements for the 1997 ozone NAAQS or the 1997 

PM2.5 NAAQS if they submit a supporting technical analysis to the EPA. More 

information about this flexibility is included below.The EPA has reevaluated whether 

compliance with the NOx SIP Call could constitute NOx RACT for EGUs in light of the 

Court’s opinion in the NRDC v. EPA case. Given the explicit wording of section 

172(c)(1) that sources “in the area” must at a minimum adopt RACT controls for that 

area, the EPA believes that it is no longer appropriate to determine that this requirement 

is automatically addressed for certain sources based upon the participation of those

sources in a regional cap-and-trade program. After reconsideration, the EPA believes that 

it would be consistent with the statutory provision, with the overall structure of the CAA 

with respect to nonattainment plans, and with the overarching objective to provide for 

expeditious attainment of the NAAQS in each nonattainment area, that states should 

evaluate the EGUs located within designated nonattainment areas for any necessary 

controls. As noted above, the NRDC v. EPA decision left open the possibility that an 

area-specific analysis might establish that compliance with a regional cap-and-trade 

program like the NOx SIP Call could simultaneously result in factual compliance with the 

RACT requirement for sources located within nonattainment areas, and EPA’s 

elimination of the prior determination will in no way prevent a state from conducting and 

Deleted: ¶

Deleted: ’

Deleted: establish a presumption

Deleted: address this requirement merely

Deleted: the source

Deleted: e

Deleted: Implicit in a regional cap-and-trade program is that some 

sources may elect to usetilize allowances in lieu of emissions 

controls in order to meet the regional emissions reductions 

requirements, and that those elections could change. 

Deleted: more 

Deleted: In addition

Deleted: to the extent that the Court in 

Deleted: the EPA believes that eliminating the 

Deleted: s

Deleted: and presumptions 

Deleted: result 
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Deleted: 1021 relying on such an analysis. States have the option of conducting a technical analysis for 

the specific nonattainment area considering the emissions controls required by a regional 

cap-and-trade program, and demonstrating that compliance by EGUs participating in the

program results in actual emission reductions in the particular nonattainment area that are 

equal to or greater than the emission reductions that would result if RACT were applied 

to each individual EGU source or the EGU source category within the nonattainment 

area. 

We note that subsequent to the NRDC v. EPA decision, the Court granted the 

EPA’s request for a remand of a similar determination, previously made in the Phase 2 

Ozone Implementation Rule, that compliance with the CAIR could, in some 

circumstances, automatically satisfy RACT requirements for certain sources. Following 

the North Carolina v. EPA decision that remanded the CAIR, the Court had deferred 

consideration of whether compliance with the CAIR could automatically satisfy a 

source’s obligation to install RACT for the 1997 ozone NAAQS. Following vacatur of 

the rule that was to replace the CAIR, however, the EPA decided that it would be 

appropriate to reconsider this determination also in light of the earlier decision in NRDC 

v. EPA. The EPA believes that the logic of the NRDC v. EPA decision extends to any 

determination that sources subject to a regional trading program such as the CAIR 

automatically comply with RACT requirements for NOx. In other words, the decision 

establishes that any such determination is permissible if supported by an adequate 

technical demonstration showing that the trading program would result in equal or greater 

emission reductions than would be achieved by application of RACT to the relevant 

sources or source categories. 

Deleted: should states elect to consider it

Deleted: Only where 

Deleted: s

Deleted: the 

Deleted: at issue

Deleted: 

Deleted: such a 

Deleted: equal to or greater than 

Deleted: s

Deleted: from the EGUs with

Deleted: application of 

Deleted: on all subject 

Deleted: 

Deleted: , could the EPA approve a SIP adopting such an approach

Deleted: The EPA believes that although

Deleted: 

Deleted: explicitly 

Deleted: for NOx or SO2

Deleted: , it is both consistent with the decision and appropriate 

for the Agency to reconsider this issue in the same manner that the 

Court addressed whether compliance with the NOx SIP Call could 

satisfy a EGU’s obligation to meet RACT within a nonattainment 

area. We believe that the Court deferred action with respect to the 

CAIR, not because the issue could be decided differently, but rather 

because the Court had already remanded the CAIR to the EPA for 

other reasons. 

Deleted: presumption 

Deleted: or SO2

Deleted: gets

Deleted: Moreover, the EPA believes that the remanded status of 

the CAIR, and the fact that it will be replaced with a different 

regional program, renders the prior determinations and presumptions 

unreliable.
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The EPA does not believe the analysis Deleted: 1021 to support the CAIR determination in the 

Phase 2 Ozone Implementation Rule provides an adequate technical demonstration. For 

this reason, the EPA is also proposing to withdraw its conclusion, made in the Phase 2 

Ozone Implementation Rule final notice of reconsideration, that the EPA’s Supplemental 

Technical Analysis gives an adequate demonstration that participation in the CAIR is 

projected to achieve equal or greater annual emissions reductions from EGUs than 

source-by-source RACT for certain specific areas. 

The EPA is proposing this action because it no longer believes that the 

assumptions held within the Supplemental Technical Analysis are adequate to make such 

a showing. After reconsideration, the EPA now concludes that the analysis’s across-theboard assumptions regarding what constitutes RACT for all sources in all nonattainment 

areas were inadequate, and did not consider whether more advanced control technologies, 

such as post-combustion controls (e.g., selective catalytic reduction or selective noncatalytic reduction), might at some time be technically and economically feasible for 

specific sources in some areas. 

The EPA is consequently proposing to amend Section 51.912 to state explicitly 

that for each individual major source, or major source category, in a nonattainment area, 

states must conduct a RACT analysis for purposes of 1997 8-hour ozone NAAQS SIPs. 

As part of the PM2.5 Implementation Rule, the EPA included a presumption that 

EGU participation in the CAIR constituted RACT or RACM for SO2 for EGU sources in 

a particular nonattainment area. The EPA did not include a supporting analysis for this 

presumption as part of the Rule. The EPA believes that the logic of the NRDC v. EPA

decision extends to any presumption that sources subject to a regional emissions cap-andDeleted: the determination

Deleted: ,

Deleted: 

Deleted: First, the analysis was premised upon the continued 

existence of the CAIR, and implicitly upon the predicted action of 

sources subject to the CAIR. Second, after

Deleted: 

Deleted: Therefore, states with nonattainment areas for which the 

EPA previously made this determination must now individually 

comply with the provisions of the CAA, which require an evaluation 

of EGUs located within designated nonattainment areas for RACT 

controls, and imposition of such controls as may be necessary for 

expeditious attainment of the NAAQS within the area. In addition, 

should they elect to do so, they must conduct a technical analysis for 

the specific nonattainment area considering the emissions controls 

required by the regional cap-and-trade program at issue, and 

demonstrating that this program results in equal to or greater than 

actual emissions reductions from the EGUs within the nonattainment 

area than would application of RACT on all subject sources within 

the nonattainment area before they include such a determination in a 

SIP.

Deleted: undergo 
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Deleted: 1021 trade program such as the CAIR automatically comply with RACT or RACM 

requirements for NOx or SO2. 

As a result of this action, states should not rely merely on the fact that sources are 

complying with a regional cap-and-trade program as a basis for RACT or RACM-level 

emissions controls for the 1997 8-hour ozone NAAQS or the 1997 PM2.5 NAAQS. States 

must comply with the provisions of the CAA, which require an evaluation of emissions 

sources, such as EGUs, located within designated nonattainment areas for potential 

RACT or RACM controls, and imposition of such controls as may be necessary for 

expeditious attainment of the NAAQS within the area. 

However, states retain the option of conducting a technical analysis for the 

specific nonattainment area considering the emissions controls required by a regional 

cap-and-trade program, and demonstrating that compliance by EGUs participating in the 

cap-and-trade program results in actual emission reductions in the particular 

nonattainment area that are equal to or greater than the emission reductions that would 

result if RACT or RACM were applied to an individual EGU source or the EGU source 

category within the nonattainment area. States could conduct this analysis for the EGUs 

in the nonattainment area, either individually or in the aggregate. 

The EPA anticipates that in many areas, such an evaluation will likely indicate 

that EGUs within the nonattainment area at issue are already adequately controlled for 

NOx and SO2 emissions, whether by virtue of the NOx SIP Call, the controls required by 

the CAIR, or by other means. However, based on the logic of the NRDC v. EPA Court 

decision, and the concerns raised in the petition for reconsideration of the PM2.5 

Implementation Rule, the EPA believes that it would be inappropriate to pre-judge that 
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outcome prior to state development of locally applicable demonstrations showing Deleted: 1021

equivalent reductions. 

 The EPA is soliciting comments on the withdrawal of the determinations and 

presumption as explained previously in this notice. Additionally, the EPA does not 

believe that the withdrawal of the determinations and presumption has a practical impact 

on state planning and emissions control efforts, either currently or prospectively, for the 

1997 ozone and PM2.5 NAAQS. The EPA has worked closely with those states who 

previously relied on the determinations or presumption, and in those instances either the 

states or EPA (through SIP approval notices) have conducted, or are currently 

conducting, the appropriate analysis to demonstrate that EGUs in each nonattainment 

area have met the RACT or RACM requirements. The EPA is not aware of any states that 

have raised concerns about the need to conduct a new RACT or RACM analysis as a 

result of the policy changes proposed in this rulemaking. The EPA is soliciting comments 

on our assessment that the withdrawal of the determinations and presumption does not 

have a practical impact on states.

IV. Statutory and Executive Order Reviews 

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 

13563: Improving Regulation and Regulatory Review 

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a 

"significant regulatory action” because it raises novel policy issues. Accordingly, the 

EPA submitted this action to the Office of Management and Budget (OMB) for review 

under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any 

changes made in response to OMB recommendations have been documented in the 

Deleted: states should not merely presume that for EGUs located 

in a nonattainment area that compliance with a cap-and-trade 

program, including the NOx SIP Call, the CAIR, or other programs, 

such as the CSAPR, could satisfy their obligation to implement NOx

or SO2 RACT. As required by the CAA, states are required to 

analyze what constitutes RACT for EGUs in each nonattainment 

area. However, a state may be able to show through appropriate 

technical analysis that EGU participation in a regional cap-and-trade 

program, such as the CSAPR, in a particular nonattainment area 

would meet NOx and/or SO2 RACT requirements for the area. Such 

an analysis must show that compliance by EGUs participating in the 

program results in actual emissions reductions in the particular 

nonattainment area that are equal to or greater than the emissions 

reductions that would result if RACT were applied to each 

individual EGU source or the EGU source category in the area. 

Deleted: s

Deleted: s

Deleted: ,

Deleted: 

Deleted: B. Analysis of the Economic Feasibility of Reasonably 

Available Controls in the PM2.5 Implementation Rule¶

 The EPA has granted the petitioner’s request for reconsideration 

of the guidance in the preamble for the final PM2.5 Implementation 

Rule regarding criteria for determining economic feasibility of 

RACT controls. Upon reconsideration, the EPA agrees that the 

specific objections raised by the petition do reflect departures from 

prior EPA guidance on how to evaluate RACT. Given the specific 

statutory language of section 172(c)(1), and the EPA’s long-standing 

interpretation of what factors are appropriate for consideration of 

economic feasibility in a RACT analysis, the EPA concludes that the 

final guidance that the Agency provided for the PM2.5

Implementation Rule was inappropriate in certain respects. The EPA 

also concludes that there was inadequate notice and opportunity for 

public comment for all of the departures from past guidance, and the 

departures from the guidance as presented in the preamble for the 

proposed PM2.5 Implementation Rule. ¶

 Accordingly, the EPA proposes to remove the guidance in 

question from the preamble to the final PM2.5 Implementation Rule, 

and to replace it with guidance very similar to what was included in 

the preamble to the proposed PM2.5 Implementation Rule concerning 

the economic feasibility analysis component for determining what 

constitutes RACT. The EPA believes that reverting to the guidance 

as proposed will be the most effective and efficient means to address 

the concerns related to inappropriate considerations that were set 

forth in the preamble to the final PM2.5 Implementation Rule. ¶

 In particular, this approach will remove what the EPA now 

concludes was incorrect guidance language in the final rule that 

suggested that the “economic feasibility” element of a RACT 

determination should include consideration of “whether the cost of a 

[control] measure is reasonable for the regulated entity to bear, in 

light of the benefits,” as the costs of control relative to the health 

benefits of a particular control technology should not be relevant to 

the technical determination of RACT. This language suggested that 

the economic feasibility analysis should be a “cost/benefit” analysis, ... [2]

Deleted: is likely to 

Deleted: legal or 

Deleted: arising out of legal mandates, the President’s priorities, 

or the principles set forth in the Executive Order
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docket for this action. Deleted: 1021

B. Paperwork Reduction Act 

 This action does not impose an information collection burden under the 

provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Burden is defined at 5 

CFR 1320.3(b). This action merely interprets the statutory requirements that apply to 

states in preparing their SIPs. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a 

regulatory flexibility analysis of any rule subject to notice and comment rulemaking 

requirements under the Administrative Procedure Act or any other statute unless the 

agency certifies that the rule will not have a significant economic impact on a substantial 

number of small entities. Small entities include small businesses, small organizations, and 

small governmental jurisdictions. 

For purposes of assessing the impacts of this proposed rule on small entities, 

small entity is defined as: (1) A small business that is a small industrial entity as defined 

in the U.S. Small Business Administration (SBA) size standards. (See 13 CFR 121.); (2) 

A governmental jurisdiction that is a government of a city, county, town, school district, 

or special district with a population of less than 50,000; and (3) A small organization that 

is any not-for-profit enterprise which is independently owned and operated and is not 

dominant in its field. 

 After considering the economic impacts of this proposed rule on small entities, I 

certify that this action will not have a significant economic impact on a substantial 

number of small entities. This rule will not directly impose any requirements on small 
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entities. Rather, this rule interprets the obligations of the CAA for states to submit Deleted: 1021

implementation plans in order to attain the 1997 8-hour ozone and 1997 PM2.5 NAAQS. 

We continue to be interested in the potential impacts of the proposed rule on small 

entities and welcome comments on issues related to such impacts. 

D. Unfunded Mandates Reform Act 

 This action contains no federal mandates under the provisions of Title II of the 

Unfunded Mandates Reform Act of 1995 (UMRA, 2 U.S.C. 1531 – 1538) for state, local, 

or tribal governments or the private sector. The action imposes no enforceable duty on 

any state, local, or tribal governments or the private sector. Therefore, this action is not 

subject to the requirements of sections 202 or 205 of the UMRA. 

 This action is also not subject to the requirements of section 203 of UMRA 

because it contains no regulatory requirements that might significantly or uniquely affect 

small governments. This action merely interprets the statutory requirements that apply to 

states in preparing their SIPs. 

E. Executive Order 13132: Federalism 

This action does not have federalism implications. It will not have substantial 

direct effects on the states, on the relationship between the national government and the 

states, or on the distribution of power and responsibilities among the various levels of 

government, as specified in Executive Order 13132. This action does not impose any new 

mandates on state or local governments. Thus, Executive Order 13132 does not apply to 

this rule. 
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Deleted: 1021 In the spirit of Executive Order 13132, and consistent with EPA policy to promote 

communications between the EPA and state and local governments, the EPA is 

specifically soliciting comments on this proposed rule from state and local officials. 

F. Executive Order 13175: Consultation and Coordination with Indian Tribal 

Governments 

This rule does not have tribal implications, as specified in Executive Order 13175 

(65 FR 67249, November 9, 2000). The rule does not have a substantial direct effect on 

one or more Indian tribes, since no tribe has to develop a Tribal Implementation Plan

under this regulation. Furthermore, this rule does not affect the relationship or 

distribution of power and responsibilities between the federal government and Indian 

tribes. The CAA and the Tribal Air Rule establish the relationship of the federal 

government and tribes in developing plans to attain the NAAQS, and this rule does 

nothing to modify that relationship. This rule does not have tribal implications. Thus, 

Executive Order 13175 does not apply to this action. However, the EPA did conduct 

outreach to tribes on a regularly scheduled conference call with the National Tribal Air 

Association on March 27, 2014, where we provided the tribes with a brief overview of 

the proposed rule. The EPA specifically solicits additional comment on this proposed 

action from tribal officials. 

G. Executive Order 13045: Protection of Children from Environmental Health and 

Safety Risks 

The EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying only to 

those regulatory actions that concern health or safety risks, such that the analysis required 

under section 5-501 of the EO has the potential to influence the regulation. This action is 

Deleted: SIP

Deleted: Tribal
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not subject to EO 13045 because it does not es Deleted: 1021 tablish an environmental standard intended 

to mitigate health or safety risks. This proposal is designed to help implement the 

already-established ozone and PM2.5 NAAQS, which were both promulgated in 1997 to 

protect the health and welfare of individuals, including children, who are susceptible to 

the adverse effects of exposure to unhealthy levels of ozone and PM2.5.

H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect 

Energy Supply, Distribution, or Use

This action is not a “significant energy action” as defined in Executive Order 

13211 (66 FR 28355 (May 22, 2001)), because it is not likely to have a significant 

adverse effect on the supply, distribution, or use of energy because it does not establish 

requirements that directly affect the general public and the public and private sectors, but, 

rather interprets the statutory requirements that apply to states in preparing their SIPs. 

The SIPs themselves will likely establish requirements that directly affect the general 

public, and the public and private sectors. 

Deleted: 

Deleted: This action is not subject to EO 13045 (62 FR 19885, 

April 23, 1997) because it is not economically significant as defined 

in Executive Order 12866. However, EPA has reason to believe that 

ozone has a disproportionate effect on children who play outdoors 

(62 FR 38856; 38859, July 18, 1997). Likewise, EPA believes that 

PM2.5 has a disproportionate effect on children. (See 62 FR 38652-

38760, National Ambient Air Quality Standards for Particulate 

Matter, Final Rule; also 40 CFR Part 50.) The EPA invites the 

public to submit or identify peer-reviewed studies and data, of which 

EPA may not be aware, that assess how changes in RACT may 

affect ozone or PM2.5 formation. This rule may lead to lower levels 

of ozone and PM2.5 in particular geographical areas, which will be 

beneficial to the health of children who live in those particular areas.
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Deleted: 1021 I. National Technology Transfer and Advancement Act 

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 

("NTTAA"), Public Law 104-113, section 12(d), (15 U.S.C. 272 note) directs the EPA to 

use voluntary consensus standards in its regulatory activities unless to do so would be 

inconsistent with applicable law or otherwise impractical. Voluntary consensus standards 

are technical standards (e.g., materials specifications, test methods, sampling procedures, 

and business practices) that are developed or adopted by voluntary consensus standards 

bodies. The NTTAA directs the EPA to provide Congress, through OMB, explanations 

when the agency decides not to use available and applicable voluntary consensus 

standards. This rulemaking does not involve technical standards. Therefore, the EPA is 

not considering the use of any voluntary consensus standards.

J. Executive Order 12898: Federal Actions to Address Environmental Justice in 

Minority Populations and Low-Income Populations 

Executive Order 12898 (59 FR 7629, Feb. 16, 1994) establishes federal executive 

policy on environmental justice. Its main provision directs federal agencies, to the 

greatest extent practicable and permitted by law, to make environmental justice part of 

their mission by identifying and addressing, as appropriate, disproportionately high and 

adverse human health or environmental effects of their programs, policies, and activities 

on minority populations and low-income populations in the United States. 

 The EPA has determined that this proposed rule will not have disproportionately 

high and adverse human health or environmental effects on minority or low-income 

populations because if it has any effect on the level of protection provided to human 

Deleted: A

Deleted: 
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Deleted: 1

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health or the environment, the effect will be to increase the level of protection by Deleted: 1021

resulting in more stringent emission controls on EGUs in affected nonattainment areas. 

Statutory Authority 

The statutory authority for this action is provided by 42 U.S.C. 7501, 7502, 

7511a, 7513a, 7513b and 7601. Deleted: ,
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Page 35 of 36 Withdrawal of the Prior Determination or Presumption that Deleted: 1021

Compliance with the CAIR or the NOx SIP Call Constitutes RACT or RACM for 

the 1997 8-Hour Ozone and 1997 Fine Particle NAAQS 

List of Subjects in 40 CFR Part 51 

Environmental protection, Administrative practice and procedure, Air pollution 

control, Ozone, Reporting and recordkeeping requirements, Particulate matter, Volatile 

organic compounds. 

___________________________________ 

Dated: 

 

___________________________________ 

Gina McCarthy, 

Administrator. 

Deleted: 6

Deleted: 3

Deleted: 

Deleted: 64 

Deleted: ; and Revision to RFP Requirements and RACT 

Guidance for the 1997 Fine Particle NAAQS

Deleted: 

Deleted: Lisa P. Jackson
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For reasons set forth in the preamble, part 51 of chapter I of title 40 of the Code of Deleted: 1021

Federal Regulations is proposed to be amended as follows: 

Part 51-REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL 

OF IMPLEMENTATION PLANS. 

 1. The authority citation for part 51 continues to read as follows: 

 Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q 

 2. Section 51.912 is amended by adding paragraph (a)(4) to read as follows: 

 §51.912 What requirements apply for reasonably available control 

technology (RACT) and reasonably available control measures (RACM) under the 

8-hour NAAQS? 

 (a) * * * 

 (4) An individual RACT determination must be made for each major source or major 

source category meeting the applicable major source size within a nonattainment area. 

 * * * * * 
Page 24: [1] Deleted Riha, Kristin 3/17/2014 10:43:00 AM 

7. Impact of the North Carolina v. EPA Decision on Determinations and Presumptions

 As mentioned earlier, the Court remanded the CAIR to the EPA and later decided not to 

vacate the rule. In the process of remanding the CAIR, the Court identified serious concerns with 

the EPA’s reading of the statute and analytical approach, including such core issues as the 

Agency’s method of evaluating significant contribution to nonattainment and interference with 

maintenance of the NAAQS. The EPA notes that the Court also reiterated some of its concerns in 

the NRDC v. EPA decision with the CAIR and the EPA’s use of a regional cap-and-trade 

program to address interstate transport of emissions between states.1

 Given that the Court has remanded the CAIR, the Agency believes that any prior 

determination that compliance with the CAIR would constitute RACT for NOx for EGUs for 

purposes of the Phase 2 Ozone Implementation Rule can no longer be considered reliable. Those 

determinations were implicitly based upon the continued existence of the CAIR and its specific 

requirements. In making the determinations, the EPA evaluated the controls that EGUs in those 

areas would be likely to install given the specific requirements of the CAIR, and the choices that 

such sources would make given the specific cap-and-trade features of the CAIR. Further, in 

NRDC v. EPA, the Court explicitly rejected the Agency’s conclusion that compliance with the 

NOx SIP Call would constitute RACT for EGUs in nonattainment areas because there was 

inadequate technical basis or justification for such a conclusion.2

 The EPA believes that after the 

 

1 See NRDC v. EPA, 571 F.3d 1245 at 1256-57. 

2

 The EPA notes that the Court also considered the issue of potentially outdated RACT 

determinations in the context of “RACT certifications” in the Phase 2 Ozone Implementation 

Rule. The Court approved of EPA’s case-by-case approach to evaluate the continued viability of 

past RACT determinations, in part because “[i]f a state is presented with information indicating 

that a previous RACT determination is inappropriate, the state must consider that information 

and modify its RACT determinations accordingly.” NRDC v. EPA, 571 F.3d 1245 at 1254-55. 
remand of the CAIR, the prior EPA determinations that compliance with the CAIR would 

automatically constitute RACT for EGUs in nonattainment areas suffers from a comparable lack 

of an adequate technical basis or justification. Moreover, because other rules such as the CSAPR 

will by necessity differ from the CAIR as a result of the Court’s remand of the CAIR, the EPA 

concludes that any reliance on the prior determinations at this time would be inappropriate. 

Therefore, in this action the EPA is proposing to withdraw the prior area-specific determinations 

that the EPA made in connection with the Phase 2 Ozone Implementation Rule. 

 The EPA’s prior conclusion that a state could presume that the CAIR would constitute NOx

RACT for EGUs for purposes of the ozone NAAQS, even in areas where the EPA did not make 

a formal determination, is also no longer reliable for the same reasons. That presumption also 

assumed continued existence of the CAIR and its specific requirements. Similarly, EPA’s prior 

conclusion that a state could presume that compliance with the CAIR would constitute both NOx

RACT/RACM and SO2 RACT/RACM for EGUs for purposes of the PM2.5 NAAQS is also no 

longer reliable. Therefore, in this action the EPA is proposing to withdraw our prior presumption 

that EPA announced for purposes of the ozone NAAQS in the Phase 2 Ozone Implementation 

Rule and our prior presumption that the EPA announced for purposes of the PM2.5 NAAQS in 

the PM2.5 Implementation Rule. 

B. Analysis of the Economic Feasibility of Reasonably Available Controls in the PM2.5

Implementation Rule 

 Section 172(c)(1) requires that sources located in nonattainment areas meet RACM and 

RACT level control requirements. In the PM2.5 Implementation Rule, the EPA promulgated 

 

The EPA concludes that the same logic would extend to prior determinations that the CAIR 

constituted RACT, in light of subsequent events. 
regulations to implement this requirement, among others, for the 1997 PM2.5 NAAQS.3

 In 

addition, in the preamble to the final PM2.5 Implementation Rule, the EPA provided extensive 

guidance for states about how to evaluate sources for RACM and RACT level controls.4

 

Although section 172(c)(1) does not itself specify how to determine what constitutes RACM or 

RACT level controls, the EPA has a long history of interpreting those terms both in prior 

guidance and as applied in many SIP actions. 

 The petition for reconsideration of the final PM2.5 Implementation Rule filed by Earthjustice 

asserts that the EPA unlawfully and arbitrarily revised well-established criteria used to determine 

the economic feasibility of controls being considered for RACT, without any explanation of the 

legal or policy arguments in support of the new interpretation of the statute.5

 The petition further 

claims that the new approach directly contradicts the approach included in the proposed PM2.5 

Implementation Rule and that these new interpretations were added to the final rule after the 

close of the public comment period. For this reason, the petition argues that the EPA unlawfully 

failed to present the new criteria for economic feasibility of RACT to the public for comment. 

 The petition maintains that the final PM2.5 Implementation Rule includes the following new 

policies which were not subject to an opportunity for public comment: (1) consideration of 

economic feasibility encompasses whether the cost of a measure is reasonable to bear in light of 

the benefits; (2) there is no presumption that a given source must bear a similar cost to other 

similar sources; and (3) states may evaluate equity considerations in weighing economic 

 

3 See 40 CFR 51.1010. 

4 See PM2.5 Implementation Rule, 72 FR 20609– 33. 

5 See “Petition for Reconsideration,” filed by Paul Cort, Earthjustice, on behalf of the American 

Lung Association, Medical Advocates for Healthy Air, Natural Resources Defense Council, and 

the Sierra Club (June 25, 2007). A copy of the petition is in the docket for this action. 
feasibility.6

 The petition states that these are significant changes in longstanding EPA policy and 

interpretation of the RACT requirement for nonattainment areas. In particular, the petitioner 

argues that “[e]conomic feasibility is not a cost-benefit analysis.” The petitioner also argues that 

the EPA’s longstanding policy, which was reiterated in the preamble to the proposal for the 

PM2.5 Implementation Rule, maintained that absent other indications, it is reasonable for a source 

to bear similar costs of emission reduction as are borne by similar sources in the same source 

category. 

 In light of the arguments raised in the petition, the EPA decided to grant the petition for 

reconsideration on this issue.7 Accordingly, after reconsideration and for the reasons explained 

further, the EPA is proposing in this action to remove the section of guidance in the preamble to 

the final PM2.5 Implementation Rule that included the new interpretations of RACT objected to 

by the petitioner. The EPA is also proposing to replace this section of the guidance with the 

EPA’s long-standing policy on economic feasibility for RACT as described in the proposed 

PM2.5 Implementation Rule.8

 A basic element of this policy is the presumption that a source in a 

given category should be able to bear a cost of control similar to the cost of control of other 

sources in that category.9

 The original policy did not include factors such as “equity” and “profit 

margins” in determining whether a given level of control is appropriate. 

C. RFP Requirements for the 1997 PM2.5 NAAQS 

 

6

 The new guidance objected to by the petitioner appears in section II.F.5.b of the preamble to 

the final PM2.5 Implementation Rule. See 72 FR 20619-20. 

7 See letter dated April 25, 2011 from Lisa Jackson to Paul Cort, Earthjustice. A copy of this 

letter is located in the docket for this action. 

8

 See Proposed Rule To Implement the Fine Particle National Ambient Air Quality Standards, 

70 FR 65984 (November 1, 2005). The section of the preamble appears at 70 FR 66021-22.

9 See Title I General Preamble, 57 FR 13498 (April 16, 1992) for the basis of this policy. 
1. Linkage between the RFP Policy in the Phase 2 Ozone Implementation Rule and the PM2.5

Implementation Rule 

 The Phase 2 Ozone Implementation Rule and the PM2.5 Implementation Rule each included a 

policy allowing emission reductions from certain sources located outside of a nonattainment area 

to be credited toward meeting the RFP requirement for the 1997 8-hour ozone NAAQS and the 

1997 PM2.5 NAAQS within such a nonattainment area. In these actions, the EPA used somewhat 

different approaches with respect to how states could take credit for emission reductions from 

outside the nonattainment area. In response to a petition for reconsideration of the Phase 2 Ozone 

Implementation Rule concerning this policy and other issues, the EPA proposed to revise the 

policy for the 1997 8-hour ozone NAAQS on December 22, 2010 (75 FR 80420). 

 This action is being proposed in response to a petition for reconsideration concerning the RFP 

policy in the PM2.5 Implementation Rule. However, to understand this proposed change in RFP 

policy with respect to the PM2.5 Implementation Rule, it is important to also understand related 

actions and court decisions with respect to this issue in the Phase 2 Ozone Implementation Rule. 

A chronology of rulemaking and litigation with respect to the RFP policy is described in detail in 

the next subsection. 

2. Rulemaking and Litigation Chronology of RFP Requirements for the 1997 Ozone NAAQS and 

the 1997 PM2.5 NAAQS 

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

sources located outside a nonattainment area could be credited toward meeting the 1997 8-hour 

ozone NAAQS RFP requirement. In the preamble to that Rule, the EPA stated that credit could 

be taken for volatile organic compounds (VOC) and NOx emission reductions within 100 

kilometers (km) and 200 km, respectively, from outside the nonattainment area under certain 
circumstances. In addition, if a regional NOx control strategy was in place in a state, NOx

reductions within that state beyond 200 km could be credited toward meeting the RFP target. In 

all cases, however, states had to include a demonstration that the emissions from outside the 

nonattainment area had an impact on ambient ozone air quality levels within the nonattainment 

area and emissions from the sources outside the area providing the reductions would have to be 

added to the baseline inventory for the nonattainment area. The EPA explained that where data 

indicated that emission reductions from sources outside a nonattainment area improved ozone air 

quality within the nonattainment area, it was appropriate to allow states to take RFP credit for 

such reductions from outside the nonattainment area. This interpretation was consistent with the 

policy the EPA had established under the l-hour ozone standard 

"Guidance for Implementing the l-Hour Ozone and Pre-Existing PM10 NAAQS.”10

 Earthjustice filed a petition for reconsideration in January 2006 on behalf of NRDC 

challenging the EPA’s interpretation that formed the basis of its policy for allowing credit for 

emission reductions outside the nonattainment area, namely the interpretation that the intent of 

section 182(c)(2)(C) is to reduce ambient ozone concentrations within an area rather than to 

reduce emissions within the nonattainment area.11 The petitioner claimed that the EPA’s 

interpretation and implementation of these provisions were both unlawful and arbitrary. The 

petitioner also argued that the rule was arbitrary because it allowed the state to claim credit for 

emission reductions from selected outside-the-nonattainment-area sources without also adding 

 

10 The memorandum is available on the EPA Technology and Transfer Network (TTN) Policy 

and Guidance page for Title I at this website: http://www.epa.gov/ttn/oarpg/t1pgm.html. For a 

more complete discussion of EPA’s rationale for applying this interpretation in the Phase 2 

Ozone Implementation Rule, see 70 FR 71647-49. 

11 This same petition also challenged EPA’s determination within the Phase 2 Ozone 

Implementation Rule that, under certain circumstances, compliance with the requirements of the 

CAIR would constitute RACT for NOx emissions from EGUs located in states within the CAIR 

region. 
emissions from other outside sources to the RFP baseline, even where those other sources impact 

air quality in the nonattainment area. 

 The EPA subsequently published the PM2.5 Implementation Rule, where the Agency adopted 

a somewhat different approach for crediting emission reductions from outside nonattainment 

areas.12 Section G.5.b of the preamble to the PM2.5 Implementation Rule allowed states to take 

credit for reductions of NOx and SO2 emissions up to 200 km from outside the nonattainment 

area (and potentially for reductions of VOC or ammonia as well) only when certain conditions 

are met, including that when taking RFP credit for emissions reductions achieved outside of a 

nonattainment area, the baseline emissions inventory for the nonattainment area contain all, 

rather than a select few, sources in the outside area.13 The primary objective of this policy was to 

reflect the net emission reductions in the area outside of a nonattainment area that could affect 

the nonattainment area rather than crediting only reductions from selected sources. 

 In June 2007, the EPA received a petition for reconsideration filed by Earthjustice on behalf 

of several petitioners (including NRDC) that raised objections to the PM2.5 Implementation Rule 

on several issues, including the RFP policy allowing credit for emission reductions from outside 

the nonattainment area.14 

 

12 See PM2.5 Implementation Rule, 72 FR 20586. 

13 In addition, where state RFP plans rely on emission reductions outside of a nonattainment area 

to meet the RFP obligations, such plans must include a technical demonstration showing that 

such outside emissions significantly affected the PM2.5 concentrations within the nonattainment 

area. In addition, the area outside the nonattainment area from which creditable reductions are 

taken must be within the state; areas outside the state but within 200 km would not be eligible for 

credit for RFP purposes. 

14 This same petition raised concerns regarding the criteria used to determine the economic 

feasibility of controls being considered for RACT for the 1997 PM2.5 NAAQS. See “Petition for 

Reconsideration,” filed by Paul Cort, Earthjustice, on behalf of the American Lung Association, 

Medical Advocates for Healthy Air, Natural Resources Defense Council, and the Sierra Club 

(June 25, 2007). A copy of the petition is in the docket for this action. 
 Shortly thereafter, the EPA requested from the Court in July 2007, a partial voluntary remand 

of the Phase 2 Ozone Implementation Rule to reevaluate and reconsider whether to revise the 

RFP interpretation for ozone to assure consistency with the provisions in the PM2.5

Implementation Rule. In response to the EPA's motion for a partial voluntary remand of the 

ozone RFP policy, NRDC asked the Court to also to vacate this provision. In November 2007, 

the Court issued an order that vacated and remanded the portion of the Phase 2 Ozone 

Implementation Rule that allowed RFP credit for emission reductions of VOC and NOx from 

outside nonattainment areas. On August 11, 2009 (74 FR 40074), the EPA issued a final rule to 

revise the RFP policy in the Phase 2 Ozone Implementation Rule to be consistent with the 

interpretation in the PM2.5 Implementation rule. 

 In July 2009, the Court issued its decision on the other issues in the Phase 2 Ozone 

Implementation Rule case.15 The Court examined the phrase “in the area” included in separate 

provisions relating to reductions from the application of RACT. As described previously in this 

notice, in the Phase 2 Ozone Implementation Rule, the EPA had explained that because an 

interstate emissions trading program would achieve beyond RACT-level NOx reductions 

regionally, areas did not have to meet the RACT-level reductions required under CAA section 

172(c)(1) solely from within the nonattainment area. The Court, however, concluded that the 

phrase “in the area” means that reductions must occur from sources within the area and 

“reductions from outside the nonattainment area do not satisfy the requirement.”16 

 In October 2009, Earthjustice filed a petition on behalf of NRDC for reconsideration of the 

August 2009 final rule revising the EPA’s interpretation in the Phase 2 Ozone Implementation 

Rule allowing credit toward meeting the RFP requirement using emissions reductions from 

 

15 See NRDC v. EPA, 571 F.3d 1245 (D.C. Cir. 2009). 

16 Id. 571 F.3d at 1256. 
outside of ozone nonattainment areas. In its petition, the petitioner based its objections to the rule 

on the following grounds: 1) the Court’s decision on the RACT provisions in the Phase 2 Ozone 

Implementation Rule and its interpretation of the phrase “sources in the area” requires that RFP 

emission reductions also be achieved only from sources within the nonattainment area; 2) the 

EPA had presented a new rationale in the August 2009 final rule, i.e., there is some ambiguity in 

the statutory provisions because they do not prohibit credits for reductions from outside the 

nonattainment area, for which it did not provide an opportunity for comment; 3) the EPA offered 

a new and arbitrary rationale for its choice of the 100 and 200 km distances for reductions 

outside the nonattainment area; 4) the EPA stated a new and arbitrary rationale, i.e., creditable 

reductions outside a nonattainment area must be reasonably expected to provide ozone air quality 

benefits comparable to those from reductions in the area, for evaluating emissions reductions 

outside a nonattainment area; and 5) the EPA relied on a new rationale when it explained that 

sources that are outside the nonattainment area are not necessarily “nearby” for designations 

purposes and certain factors would need to be considered for judging whether an area is “nearby” 

for those purposes. 

 In May 2010, based on Earthjustice’s October 2009 petition for reconsideration, the EPA 

granted reconsideration of the August 2009 final rule to revise the RFP policy in the Phase 2 

Ozone Implementation Rule, and stated it would initiate a rulemaking to address the issue.17 The 

EPA issued this proposed rulemaking on December 22, 2010 (75 FR 80420). In this proposed 

rulemaking, the EPA is addressing the petitioner’s first objection and the EPA believes that the 

proposed action makes the other objections moot. Therefore, the EPA did not address any of 

those subsequent points in the proposed reconsideration rulemaking. 

 

17 See letter dated May 13, 2010, from Gina McCarthy to David S. Baron and Paul Cort, 

Earthjustice. A copy of the letter is located in the docket for this action. 
 These developments with respect to the RFP issue in the context of the 1997 8-hour ozone 

NAAQS necessitate a reexamination of the comparable issue for purposes of the 1997 PM2.5 

NAAQS. The petition for reconsideration of the PM2.5 Implementation Rule filed in June 2007 

by Earthjustice raised two main objections to the policy allowing certain emissions reductions 

from outside the nonattainment area to be credited toward meeting the RFP requirements for the 

1997 PM2.5 NAAQS. First, Earthjustice argued that the EPA committed a procedural violation by 

failing to solicit public comments on the policy. Second, the petitioner argued that the policy 

lacks any standard for defining the geographic boundary of the area outside the nonattainment 

area from which emission reductions could be credited. The petitioner noted that the policy 

“limits the surrounding area that can be included to a doughnut around the nonattainment area of 

up to 200 kilometers.”18 However, the petitioner objected to the approach in the PM2.5 

Implementation Rule because it could allow a state to choose any portion of that surrounding 

area for purposes of the RFP calculation; i.e., a state need only show that emissions in the area 

selected substantially impact ambient concentrations in the nonattainment area. The petitioner 

argued that there is no stated requirement that all areas substantially impacting the nonattainment 

area be included. For these reasons, the petitioner claimed that the RFP policy was unlawful and 

arbitrary. 

 In light of the arguments raised by Earthjustice’s June 2007 petition, the EPA decided to grant 

the petition for reconsideration on this issue.19 Due to EPA’s proposed action to revise the RFP 

policy for the 1997 8-hour ozone NAAQS, and upon reconsideration of the policy for the 1997 

PM2.5 NAAQS, the EPA is proposing in this action to set aside its earlier interpretation of the 

 

18 See PM2.5 Implementation Rule, 70 FR 20636. 

19 See letter dated May 13, 2010 from Gina McCarthy to David S. Baron and Paul Cort, 

Earthjustice. A copy of the letter is located in the docket for this action. 
RFP provisions described in Section II.G.5.b of the preamble to the final PM2.5 Implementation 

Rule and to no longer permit states to rely on credit for emission reductions from outside the 

PM2.5 nonattainment area to meet such an area’s RFP obligations. 

Page 29: [2] Deleted Riha, Kristin 3/13/2014 2:40:00 PM 

B. Analysis of the Economic Feasibility of Reasonably Available Controls in the PM2.5 

Implementation Rule 

 The EPA has granted the petitioner’s request for reconsideration of the guidance in the 

preamble for the final PM2.5 Implementation Rule regarding criteria for determining economic 

feasibility of RACT controls. Upon reconsideration, the EPA agrees that the specific objections 

raised by the petition do reflect departures from prior EPA guidance on how to evaluate RACT. 

Given the specific statutory language of section 172(c)(1), and the EPA’s long-standing 

interpretation of what factors are appropriate for consideration of economic feasibility in a 

RACT analysis, the EPA concludes that the final guidance that the Agency provided for the 

PM2.5 Implementation Rule was inappropriate in certain respects. The EPA also concludes that 

there was inadequate notice and opportunity for public comment for all of the departures from 

past guidance, and the departures from the guidance as presented in the preamble for the 

proposed PM2.5 Implementation Rule. 

 Accordingly, the EPA proposes to remove the guidance in question from the preamble to the 

final PM2.5 Implementation Rule, and to replace it with guidance very similar to what was 

included in the preamble to the proposed PM2.5 Implementation Rule concerning the economic 

feasibility analysis component for determining what constitutes RACT. The EPA believes that 

reverting to the guidance as proposed will be the most effective and efficient means to address 

the concerns related to inappropriate considerations that were set forth in the preamble to the 

final PM2.5 Implementation Rule. 
 In particular, this approach will remove what the EPA now concludes was incorrect guidance 

language in the final rule that suggested that the “economic feasibility” element of a RACT 

determination should include consideration of “whether the cost of a [control] measure is 

reasonable for the regulated entity to bear, in light of the benefits,” as the costs of control relative 

to the health benefits of a particular control technology should not be relevant to the technical 

determination of RACT. This language suggested that the economic feasibility analysis should 

be a “cost/benefit” analysis, instead of the “cost effectiveness” type of analysis that it has 

historically been. 

 Similarly, this change will remove the prior statement in the final rule that there is “no 

presumption that a given source must bear costs similar to any other source,” because of source 

specific considerations such as “marginal costs, profit margin, and abilities to pass costs through 

to the consumer.” Upon reconsideration, the EPA does not believe that such considerations 

should override the longstanding presumption that similar sources should be able to bear similar 

costs, unless adequately and appropriately demonstrated otherwise. A source’s ability to “afford” 

a control can be a consideration. However, the intent of the policy is not to reward less efficient 

sources by allowing them to bear lower emission control costs than more efficient sources. 

 Finally, re-establishment of the prior guidance referenced in the preamble to the proposed rule 

will remove the ambiguous references to “equity considerations” as part of the RACT analysis, 

which in addition to deviating from prior guidance merely introduced uncertainty as to what this 

factor might mean, e.g., equity between regulated entities or equity between sources and the 

health concerns of the public in the nonattainment area, or how such competing equities might be 

balanced. 
 In order to accomplish this revision to the guidance, we propose in this action to remove the 

language in section II.F.5.b of the preamble to the final PM2.5 Implementation Rule (the section 

heading is: “What factors should states consider in determining whether an available control 

technology or measure is economically feasible?”),20 and to replace it with the following 

language: 

 What factors should states consider in determining whether an available control technology is 

economically feasible? 

 Economic feasibility considers the cost of reducing emissions and the difference between the 

cost of the emissions reductions approach at the particular source and the costs of emissions 

reductions approaches that have been implemented at other similar sources. Absent other 

indications, the EPA presumes that it is reasonable for similar sources to bear similar costs of 

emission reduction. Economic feasibility for RACT purposes is largely determined by evidence 

that other sources in a source category have in fact applied the control technology or process 

change in question. 

 The capital costs, annualized costs, and cost effectiveness of an emission reduction 

technology should be considered in determining its economic feasibility. 

 The EPA Air Pollution Control Cost Manual21 describes procedures for determining these 

costs for stationary sources. A number of other sources of information are available which 

provide updated information on control technologies and associated costs of installation and 

operation.22 The above costs should be determined for all technologically feasible emission 

reduction options. 

 States may give substantial weight to cost effectiveness in evaluating the reduction feasibility 

of an emission reduction technology. The cost effectiveness of a technology is its annualized cost 

($/year) divided by the emissions reduced (i.e., tons/year) which yields a cost per amount of 

emission reduction ($/ton). Cost effectiveness provides a value for each emission reduction 

option that is comparable with other options and other facilities. 

 In considering what level of control is reasonable, the EPA is not proposing a fixed dollar per 

ton cost threshold for RACT. We believe that what is considered to be a reasonable control level 

should vary based on the severity of the nonattainment problem in the area. In addition, we 

believe that in determining what appropriate emission control levels are, the state should also 

consider the collective health benefits that can be realized in the area due to projected 

 

20 This section of the preamble to the final PM2.5 Implementation Rule appears at 72 FR 20619-

20. 

21 See “EPA Air Pollution Control Cost Manual-Sixth Edition,” EPA Office of Air Quality 

Planning and Standards, Research Triangle Park, NC, January 2002. (EPA/452/B-02-001). 

22 See STAPPA/ALAPCO, “Controlling Fine Particulate Matter Under the Clean Air Act: A 

Menu of Options,” March 2006; EPA’s RACT/BACT/LAER Clearinghouse; regional air quality 

planning organizations; state air agencies; add others. 
improvements in air quality. The health benefits associated with reducing PM2.5 levels are 

significant. Using estimation techniques reviewed and deemed reasonable by the National 

Academy of Sciences, national monetized health benefits resulting from reductions in PM 

concentrations are estimated to exceed emission control costs by a factor of three to thirty times, 

depending on the particular controls on sources of PM precursor emissions.23 This approach is 

consistent with the EPA’s view that RACT may be related to what is needed for attainment. That 

is, for areas with more severe air quality problems that typically will need to adopt more 

stringent controls, RACT level controls in such areas may require controls at higher cost 

effectiveness levels ($/ton) than areas with less severe air quality problems. 

 Areas with more serious air quality problems typically will need to obtain greater levels of 

emissions reductions from local sources than areas with less serious problems, and it would be 

expected that their residents could realize greater health benefits. For this reason, we believe that 

it will be reasonable and appropriate for areas with more serious air quality problems and higher 

design values to impose emission reduction requirements with generally higher costs per ton of 

reduced emissions that the cost of emissions reductions in areas with lower design values. 

 If a source contends that it cannot afford to implement the control technology that is 

considered to be RACT for certain other sources in its source category, the source should support 

its claim with information describing the impact of imposing RACT on its: 

Fixed and variable production costs ($/unit), 

Product supply and demand elasticity, 

Product prices (cost absorption vs. cost pass–through), 

Expected costs incurred by competitors, 

Company profits, and 

Employment costs. 

 The EPA is soliciting comments on replacing the previous section of the guidance for RACT 

determinations with this language. To our knowledge, states did not utilize the specific guidance 

in the preamble to the PM2.5 Implementation Rule that we are proposing to remove to alter any 

RACT determinations in nonattainment SIPs developed for the 1997 PM2.5 NAAQS, so we 

anticipate that this change in the guidance will have no practical impact on SIPs already 

submitted to the EPA for approval. 

C. RFP Requirements for the 1997 PM2.5 NAAQS 

 

23 See “The Clear Skies Act: Technical Support Package,” U.S. EPA, July 2003. See also: “Draft 

Regulatory Impact Analysis: Control of Emissions from Non-road Diesel Engines,” United 

States Environmental Protection Agency Office of Air and Radiation EPA420-R-03-008, April 

2003. 
 After reconsideration of the RFP policy raised by the petitioner in the petition for 

reconsideration, and in light of the Court’s decision in the NRDC v. EPA case, the EPA is 

proposing in this action to set aside the Agency’s earlier interpretation of its RFP policy 

described in Section II.G.5.b of the preamble to the final PM2.5 Implementation Rule and to 

interpret the CAA as not allowing states to rely on credit for emission reductions from outside 

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

Specifically, the EPA is proposing that states may not take credit for emission reductions from 

outside the nonattainment area to meet the area’s section 172(c)(3) RFP requirements for 

reductions within the nonattainment area. This revised policy would apply to implementation 

plans for the 1997 PM2.5 NAAQS, and would apply to all areas with an approved attainment date 

beyond 5 years from the effective date of designations that are required to submit an RFP plan 

per section 51.1009(c) of the PM2.5 Implementation Rule. 

There may, however, remain valid policy reasons for giving states incentive to focus on 

obtaining emission reductions that are the most beneficial and cost effective for attaining the 

PM2.5 NAAQS. Also, there may be cases where the most beneficial and cost-effective reductions 

are from sources located outside the designated nonattainment area boundaries. In these cases, 

there may be good policy reason to credit the emission reductions toward meeting RFP 

requirements. To this end, the EPA is also taking comment on whether it would be appropriate 

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

obligations, and under what legal rationale consistent with the CAA would allow the EPA to 

adopt such an approach.