[Federal Register Volume 60, Number 44 (Tuesday, March 7, 1995)]
[Rules and Regulations]
[Pages 12446-12451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5444]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52

[MI26-04-6805; FRL-5157-1]


Approval and Promulgation of Implementation Plan; Michigan 
Detroit-Ann Arbor NO<INF>X Exemption

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency is granting an exemption 
to the Detroit-Ann Arbor ozone nonattainment area from applicable 
oxides of nitrogen (NO<INF>X) requirements found in the Clean Air Act 
(Act). Approval of the exemption would apply for various NO<INF>X 
requirements including adoption and implementation of regulations 
addressing general conformity, transportation conformity, inspection 
and maintenance, reasonably available control technology, and new 
source review. The State of Michigan submitted a NO<INF>X exemption 
request on November 12, 1993. A subsequent letter dated May 31, 1994 
clarified this earlier submittal. This request is based on the fact 
that ozone monitoring in the Detroit-Ann Arbor area indicates that the 
average number of exceedances of the National Ambient Air Quality 
Standard for ozone during the most recent 3-year period, 1991 to 1993, 
is fewer than one per year. Given this monitoring data, Michigan 
petitioned for an exemption from the NO<INF>X requirements based on a 
demonstration that additional reductions of NO<INF>X would not 
contribute to attainment of the ozone standard.

EFFECTIVE DATE: This final rule will be effective April 6, 1995.

ADDRESSES: Written comments should be sent to: Carlton T. Nash, Chief, 
Regulation Development Section, Air Toxics and Radiation Branch (AT-
18J), EPA, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 
60604-3590.
    Copies of the request and the EPA's analysis are available for 
inspection at the following address: USEPA, Region 5, Air and Radiation 
Division, 77 West Jackson Boulevard, Chicago, Illinois 60604-3590. 
(Please telephone Douglas Aburano at (312) 353-6960 before visiting the 
Region 5 office.)

FOR FURTHER INFORMATION CONTACT: Douglas Aburano, Air Toxics and 
Radiation Branch (AT-18J), EPA, Region 5, Chicago, Illinois 60604, 
(312) 353-6960.

SUPPLEMENTARY INFORMATION:

I. Background

    On November 12, 1993 the State of Michigan submitted a petition to 
the EPA requesting that the Detroit-Ann Arbor ozone nonattainment area 
be exempted from the requirement to implement NO<INF>X controls 
pursuant to section 182(f) of the Act. The exemption request is based 
upon monitoring data which demonstrate that the average number of 
exceedances of the ozone standard in the Detroit-Ann Arbor area during 
the most recent 3-year period, 1991 through 1993, is fewer than one per 
year.
    On August 10, 1994, EPA published a direct final rulemaking 
approving the NO<INF>X exemption petition for the Detroit-Ann Arbor 
nonattainment area. During the 15 day public comment period, EPA 
received joint adverse comments from the Natural Resources Defense 
Council, Sierra Club Legal Defense Fund, and the Environmental Defense 
Fund and 2 requests for additional time to comment on this rulemaking 
from the State of New York and the Citizens Commission for Clean Air in 
the Lake Michigan Basin. The EPA published a document announcing the 
opening of a second comment period on October 6, 1994. The second 
comment period lasted until November 7, 1994. During the second comment 
period, the State of New York submitted adverse comments.

II. Public Comment/EPA Response

    The following evaluation summarizes each comment received and EPA's 
response to the comment. A more detailed discussion of the State 
submittal and the rationale for the EPA's action based on the Act and 
cited references appear in EPA's technical support documents dated 
February 8, 1994 and December 1, 1994.

NRDC Comments

    Following is a summary of comments received from the NRDC in a 
letter dated August 24, 1994 signed by Sharon Buccino. After each 
comment is EPA's response.
    NRDC Comment 1: Certain commenters argued that NO<INF>X exemptions 
are provided for in two separate parts of the Act, section 182(b)(1) 
and section 182(f). Because the NO<INF>X exemption tests in subsections 
182(b)(1) and 182(f)(1) include language indicating that action on such 
requests should take place ``when [EPA] approves a plan or plan 
revision,'' these commenters conclude that all NO<INF>X exemption 
determinations by the EPA, including exemption actions taken under the 
petition process established by subsection 182(f)(3), must occur during 
consideration of an approvable attainment or maintenance plan, unless 
the area has been redesignated as attainment. These commenters also 
argue that even if the petition procedures of subsection 182(f)(3) may 
be used to relieve areas of certain NO<INF>X requirements, exemptions 
from the NO<INF>X conformity requirements must follow the process 
provided in subsection 182(b)(1), since this is the only provision 
explicitly referenced by section 176(c), the Act's conformity 
provisions.
    EPA Response: Section 182(f) contains very few details regarding 
the administrative procedure for acting on NO<INF>X exemption requests. 
The absence of specific guidelines by Congress leaves EPA with 
discretion to establish reasonable procedures, consistent with the 
requirements of the Administrative Procedure Act (APA).
    The EPA disagrees with the commenters regarding the process for 
considering exemption requests under section 182(f), and instead 
believes that subsections 182(f)(1) and 182(f)(3) provide independent 
procedures by which the EPA may act on NO<INF>X exemption requests. The 
language in subsection 182(f)(1), which indicates that the EPA should 
act on NO<INF>X exemptions in conjunction with action on a plan or plan 
revision, does not appear in subsection 182(f)(3). And, while 
subsection 182(f)(3) references subsection 182(f)(1), the EPA believes 
that this reference encompasses only the substantive tests in paragraph 
(1) (and, by extension, paragraph (2)), not the procedural requirement 
that the EPA act on exemptions only when acting on SIPs. Additionally, 
paragraph (3) provides that ``person[s]'' (which [[Page 12447]] section 
302(e) of the Act defines to include States) may petition for NO<INF>X 
exemptions ``at any time,'' and requires the EPA to make its 
determination within 6 months of the petition's submission. These key 
differences lead EPA to believe that Congress intended the exemption 
petition process of paragraph (3) to be distinct and more expeditious 
than the longer plan revision process intended under paragraph (1).
    Section 182(f)(1) appears to contemplate that exemption requests 
submitted under these paragraphs are limited to States, since States 
are the entities authorized under the Act to submit plans or plan 
revisions. By contrast, section 182(f)(3) provides that 
``person[s]''<SUP>1 may petition for a NO<INF>X determination ``at any 
time'' after the ozone precursor study required under section 185B of 
the Act is finalized,<SUP>2 and gives EPA a limit of 6 months after 
filing to grant or deny such petitions. Since individuals may submit 
petitions under paragraph (3) ``at any time'' this must include times 
when there is no plan revision from the State pending at EPA. The 
specific timeframe for EPA action established in paragraph (3) is 
substantially shorter than the timeframe usually required for States to 
develop and for EPA to take action on revisions to a SIP. These 
differences strongly suggest that Congress intended the process for 
acting on personal petitions to be distinct--and more expeditious--from 
the plan-revision process intended under paragraph (1). Thus, EPA 
believes that paragraph (3)'s reference to paragraph (1) encompasses 
only the substantive tests in paragraph (1) (and, by extension, 
paragraph (2)), not the requirement in paragraph (1) for EPA to grant 
exemptions only when acting on plan revisions.

    \1\Section 302(e) of the Act defines the term ``person'' to 
include States.
    \2\The final section 185B report was issued July 30, 1993.
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    With respect to major stationary sources, section 182(f) requires 
States to adopt NO<INF>X NSR and RACT rules, unless exempted. These 
rules were generally due to be submitted to EPA by November 15, 1992. 
Thus, in order to avoid the Act sanctions, areas seeking a NO<INF>X 
exemption would have had to submit their exemption requests for EPA 
review and rulemaking action several months before November 15, 1992. 
In contrast, the Act specifies that the attainment demonstrations are 
not due until November 1993 or 1994 (and EPA may take 12-18 months to 
approve or disapprove the demonstration). For marginal ozone 
nonattainment areas (subject to NO<INF>X NSR), no attainment 
demonstration is called for in the Act. For maintenance plans, the Act 
does not specify a deadline for submittal of maintenance 
demonstrations. Clearly, the Act envisions the submittal of and EPA 
action on exemption requests, in some cases, prior to submittal of 
attainment or maintenance demonstrations.
    The Act requires conformity with regard to federally-supported 
NO<INF>X generating activities in relevant nonattainment and 
maintenance areas. However, EPA's conformity rules explicitly provide 
that these NO<INF>X requirements would not apply if EPA grants an 
exemption under section 182(f). In response to the comment that section 
182(b)(1) should be the appropriate vehicle for dealing with exemptions 
from the NO<INF>X requirements of the conformity rule, EPA notes that 
this issue has previously been raised in a formal petition for 
reconsideration of EPA's final transportation conformity rule and in 
litigation pending before the U.S. Court of Appeals for the District of 
Columbia Circuit on the substance of both the transportation and 
general conformity rules. The issue, thus, is under consideration 
within EPA, but at this time remains unresolved. Additionally, 
subsection 182(f)(3) requires that NO<INF>X exemption petition 
determinations be made by the EPA within six months. The EPA has stated 
in previous guidance that it intends to meet this statutory deadline as 
long as doing so is consistent with the Administrative Procedures Act. 
The EPA, therefore, believes that until a resolution of this issue is 
achieved, the applicable rules governing this issue are those that 
appear in EPA's final conformity regulations, and EPA remains bound by 
their existing terms.
    NRDC Comment 2: Some commenters stated that the modeling required 
by EPA is insufficient to establish that NO<INF>X reductions would not 
contribute to attainment since only one level of NO<INF>X control, 
i.e., ``substantial'' reductions, is required to be analyzed. They 
further explained that an area must submit an approvable attainment 
plan before EPA can know whether NO<INF>X reductions will aid or 
undermine attainment.
    EPA Response: This comment is directed towards exemption approvals 
based on photochemical grid modeling. This comment does not apply in 
the case of Detroit-Ann Arbor because this exemption request is based 
on monitoring.
    NRDC Comment 3: Three years of ``clean'' data fail to demonstrate 
that NO<INF>X reductions would not contribute to attainment. EPA's 
policy erroneously equates the absence of a violation for one three-
year period with ``attainment.''
    EPA Response: The EPA has separate criteria for determining if an 
area should be redesignated to attainment under section 107 of the Act. 
The section 107 criteria are more comprehensive than the Act requires 
with respect to NO<INF>X exemptions under section 182(f).
    Under section 182(f)(1)(A), an exemption from the NO<INF>X 
requirements may be granted for nonattainment areas outside an ozone 
transport region if EPA determines that ``additional reductions of 
[NO<INF>X] would not contribute to attainment'' of the ozone NAAQS in 
those areas. In some cases, an ozone nonattainment area might attain 
the ozone standard, as demonstrated by 3 years of adequate monitoring 
data, without having implemented the section 182(f) NO<INF>X provisions 
over that 3-year period. The EPA believes that, in cases where a 
nonattainment area is demonstrating attainment with 3 consecutive years 
of air quality monitoring data without having implemented the section 
182(f) NO<INF>X provisions, it is clear that the section 182(f) test is 
met since ``additional reductions of [NO<INF>X] would not contribute to 
attainment'' of the NAAQS in that area. The EPA's approval of the 
exemption, if warranted, would be granted on a contingent basis (i.e., 
the exemption would last for only as long as the area's monitoring data 
continue to demonstrate attainment).
    NRDC Comment 4: A waiver of NO<INF>X controls is unlawful if such 
waiver will impede attainment and maintenance of the ozone standard in 
separated downwind areas.
    EPA Response: As a result of the comments, EPA reevaluated its 
position on this issue and is revising the previously issued guidance. 
As described below, EPA intends to use its authority under section 
110(a)(2)(D) to require a State to reduce NO<INF>X emissions from 
stationary and/or mobile sources where there is evidence, such as 
photochemical grid modeling, showing that NO<INF>X emissions would 
contribute significantly to nonattainment in, or interfere with 
maintenance by, any other State. This action would be independent of 
any action taken by EPA on a NO<INF>X exemption request for stationary 
sources under section 182(f). That is, EPA action to grant or deny a 
NO<INF>X exemption request under section 182(f) would not shield that 
area from EPA action to require NO<INF>X emission reductions, if 
necessary, under section 110(a)(2)(D).
    Modeling analyses are underway in many areas for the purpose of 
[[Page 12448]] demonstrating attainment in the 1994 SIP revisions. 
Recent modeling data suggest that certain ozone nonattainment areas may 
benefit from reductions in NO<INF>X emissions far upwind of the 
nonattainment area. For example, the northeast corridor and the Lake 
Michigan areas are considering attainment strategies which rely in part 
on NO<INF>X emission reductions hundreds of kilometers upwind. The EPA 
is working with the States and other organizations to design and 
complete studies which consider upwind sources and quantify their 
impacts. As the studies progress, EPA will continue to work with the 
States and other organizations to develop mutually acceptable 
attainment strategies.
    At the same time as these large scale modeling analyses are being 
conducted, certain nonattainment areas in the modeling domain have 
requested exemptions from NO<INF>X requirements under section 182(f). 
Some areas requesting an exemption may be upwind of and impact upon 
downwind nonattainment areas. EPA intends to address the transport 
issue through section 110(a)(2)(D) based on a domain-wide modeling 
analysis.
    Under section 182(f) of the Act, an exemption from the NO<INF>X 
requirements may be granted for nonattainment areas outside an ozone 
transport region if EPA determines that ``additional reductions of 
(NO<INF>X) would not contribute to attainment of the national ambient 
air quality standard for ozone in the area.''<SUP>3 As described in 
section 4.3 of the Guidelines for Determining the Applicability of 
Nitrogen Oxides Requirements under section 182(f), December 16, 1993 
(``guidance'') document, EPA believes that the term ``area'' means the 
``nonattainment area'' and that EPA's determination is limited to 
consideration of the effects in a single nonattainment area due to 
NO<INF>X emissions reductions from sources in the same nonattainment 
area.

    \3\There are 3 NO<INF>X exemption tests specified in section 
182(f). Of these, 2 are applicable for areas outside an ozone 
transport region; the ``contribute to attainment'' test described 
above, and the ``net air quality benefits'' test. EPA must 
determine, under the latter test, that the net benefits to air 
quality in an area ``are greater in the absence of NO<INF>X 
reductions'' from relevant sources. Based on the plain language of 
section 182(f), EPA believes that each test provides an independent 
basis for receiving a full or limited NO<INF>X exemption. 
Consequently, as stated in section 1.4 of the December 16, 1993 EPA 
guidance, ``[w]here any one of the tests is met (even if another 
test is failed), the section 182(f) NO<INF>X requirements would not 
apply or, under the excess reductions provision, a portion of these 
requirements would not apply.''
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    Section 4.3 of the guidance goes on to encourage, but not require, 
States/petitioners to include consideration of the entire modeling 
domain, since the effects of an attainment strategy may extend beyond 
the designated nonattainment area. Specifically, the guidance 
encourages States to ``consider imposition of the NO<INF>X requirements 
if needed to avoid adverse impacts in downwind areas, either intra- or 
inter-State. States need to consider such impacts since they are 
ultimately responsible for achieving attainment in all portions of 
their State (see generally section 110) and for ensuring that emissions 
originating in their State do not contribute significantly to 
nonattainment in, or interfere with maintenance by, any other State 
(see section 110(a)(2)(D)(i)(I)).''
    In contrast, section 4.4 of the guidance states that the section 
182(f) demonstration would not be approved if there is evidence, such 
as photochemical grid modeling, showing that the NO<INF>X exemption 
would interfere with attainment or maintenance in downwind areas. The 
guidance goes on to explain that section 110(a)(2)(D) (not section 
182(f)) prohibits such impacts.
    Consistent with the guidance in section 4.3, EPA believes that the 
section 110(a)(2)(D) and 182(f) provisions must be considered 
independently. Thus, if there is evidence that NO<INF>X emissions in an 
upwind area would interfere with attainment or maintenance in a 
downwind area, that action should be separately addressed by the 
State(s) or, if necessary, by EPA in a section 110(a)(2)(D) action. In 
addition, a section 182(f) exemption request should be independently 
considered by EPA. In some cases, then, EPA may grant an exemption from 
across-the-board NO<INF>X RACT controls under section 182(f) and, in a 
separate action, require NO<INF>X controls from stationary and/or 
mobile sources under section 110(a)(2)(D). It should be noted that the 
controls required under section 110(a)(2)(D) may be more or less 
stringent than RACT, depending upon the circumstances.
    NRDC Comment 5: Comments were received regarding exemption of areas 
from the NO<INF>X requirements of the conformity rules. They argue that 
such exemptions waive only the requirements of section 182(b)(1) to 
contribute to specific annual reductions, not the requirement that 
conformity SIPs contain information showing the maximum amount of motor 
vehicle NO<INF>X emissions allowed under the transportation conformity 
rules and, similarly, the maximum allowable amounts of any such 
NO<INF>X emissions under the general conformity rules. The commenters 
admit that, in prior guidance, EPA has acknowledged the need to amend a 
drafting error in the existing transportation conformity rules to 
ensure consistency with motor vehicle emissions budgets for NO<INF>X, 
but want EPA in actions on NO<INF>X exemptions to explicitly affirm 
this obligation and to also avoid granting waivers until a budget 
controlling future NO<INF>X increases is in place.
    EPA Response: With respect to conformity, EPA's conformity 
rules<SUP>4,5 provide a NO<INF>X waiver if an area receives a section 
182(f) exemption. In its ``Conformity; General Preamble for Exemption 
From Nitrogen Oxides Provisions,'' 59 FR 31238, 31241 (June 17, 1994), 
EPA reiterated its view that in order to conform, nonattainment and 
maintenance areas must demonstrate that the transportation plan and TIP 
are consistent with the motor vehicle emissions budget for NO<INF>X 
even where a conformity NO<INF>X waiver has been granted. Due to a 
drafting error, that view is not reflected in the current 
transportation conformity rules. As the commenters correctly note, EPA 
states in the June 17th notice that it intends to remedy the problem by 
amending the conformity rule. Although that notice specifically 
mentions only requiring consistency with the approved maintenance 
plan's NO<INF>X motor vehicle emissions budget, EPA also intends to 
require consistency with the attainment demonstration's NO<INF>X motor 
vehicle emissions budget. However, the exemptions were submitted 
pursuant to section 182(f)(3), and EPA does not believe it is 
appropriate to delay the statutory deadline for acting on these 
petitions until the conformity rule is amended. As noted earlier in 
response to a previous issue raised by these commenters, this issue has 
also been raised in a formal petition for reconsideration of the 
Agency's final transportation conformity rule and in litigation pending 
before the U.S. Court of Appeals for the District of Columbia Circuit 
on the substance of both the transportation and general conformity 
rules. This issue, thus, is under consideration within the Agency, but 
at this time remains unresolved. The EPA, therefore, believes that 
until a resolution of this issue is achieved, the applicable rules 
governing this issue are those that appear in the Agency's final 
conformity [[Page 12449]] regulations, and the Agency remains bound by 
their existing terms.

    \4\``Criteria and Procedures for Determining Conformity to State 
or Federal Implementation Plans of Transportation Plans, Programs, 
and Projects Funded or Approved under Title 23 U.S.C. of the Federal 
Transit Act,'' November 24, 1993 (58 FR 62188).
    \5\``Determining Conformity of General Federal Actions to State 
or Federal Implementation Plans; Final Rules,'' November 30, 1993 
(58 FR 63214).
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    NRDC Comment 6: The Act does not authorize any waiver of the 
NO<INF>X reduction requirements until conclusive evidence exists that 
such reductions are counter-productive.
    EPA Response: EPA does not agree with this comment since it ignores 
Congressional intent as evidenced by the plain language of section 
182(f), the structure of the Title I ozone subpart as a whole, and 
relevant legislative history. By contrast, in developing and 
implementing its NO<INF>X exemption policies, EPA has sought an 
approach that reasonably accords with that intent. Section 182(f), in 
addition to imposing control requirements on major stationary sources 
of NO<INF>X similar to those that apply for such sources of VOC, also 
provides for an exemption (or limitation) from application of these 
requirements if, under one of several tests, EPA determines that in 
certain areas NO<INF>X reductions would generally not be beneficial. In 
subsection 182(f)(1), Congress explicitly conditioned action on 
NO<INF>X exemptions on the results of an ozone precursor study required 
under section 185B. Because of the possibility that reducing NO<INF>X 
in a particular area may either not contribute to ozone attainment or 
may cause the ozone problem to worsen, Congress included attenuating 
language, not just in section 182(f), but throughout the Title I ozone 
subpart, to avoid requiring NO<INF>X reductions where it would be 
nonbeneficial or counterproductive. In describing these various ozone 
provisions (including section 182(f), the House Conference Committee 
Report states in pertinent part: ``[T]he Committee included a separate 
NO<INF>X/VOC study provision in section [185B] to serve as the basis 
for the various findings contemplated in the NO<INF>X provisions. The 
Committee does not intend NO<INF>X reduction for reduction's sake, but 
rather as a measure scaled to the value of NO<INF>X reductions for 
achieving attainment in the particular ozone nonattainment area.'' H.R. 
Rep. No. 490, 101st Cong., 2d Sess. 257-258 (1990). As noted in 
response to an earlier comment by these same commenters, the command in 
subsection 182(f)(1) that EPA ``shall consider'' the 185B report taken 
together with the timeframe the Act provides both for completion of the 
report and for acting on NO<INF>X exemption petitions clearly 
demonstrate that Congress believed the information in the completed 
section 185B report would provide a sufficient basis for EPA to act on 
NO<INF>X exemption requests, even absent the additional information 
that would be included in affected areas' attainment or maintenance 
demonstrations. However, while there is no specific requirement in the 
Act that EPA actions granting NO<INF>X exemption requests must await 
``conclusive evidence'', as the commenters argue, there is also nothing 
in the Act to prevent EPA from revisiting an approved NO<INF>X 
exemption if warranted due to better ambient information.
    In addition, the EPA believes (as described in EPA's December 1993 
guidance) that section 182(f)(1) of the Act provides that the new 
NO<INF>X requirements shall not apply (or may by limited to the extent 
necessary to avoid excess reductions) if the Administrator determines 
that any one of the following tests is met:
    (1) In any area, the net air quality benefits are greater in the 
absence of NO<INF>X reductions from the sources concerned;
    (2) In nonattainment areas not within an ozone transport region, 
additional NO<INF>X reductions would not contribute to ozone attainment 
in the area; or
    (3) In nonattainment areas within an ozone transport region, 
additional NO<INF>X reductions would not produce net ozone air quality 
benefits in the transport region.

Based on the plain language of section 182(f), EPA believes that each 
test provides an independent basis for receiving a full or limited 
NO<INF>X exemption.
    Only the first test listed above is based on a showing that 
NO<INF>X reductions are ``counter-productive.'' If one of the tests is 
met (even if another test is failed), the section 182(f) NO<INF>X 
requirements would not apply or, under the excess reductions provision, 
a portion of these requirements would not apply.
    State of New York Comment 1: The State of New York reaffirms its 
objection to this proposed rulemaking originally stated in an August 
24, 1994 letter. According to the May 27, 1994 memorandum from Mr. John 
Seitz and the December 1993 section 182(f) NO<INF>X exemption guidance, 
the exemption cannot be approved if there is evidence that NO<INF>X 
exemption would interfere with the attainment of a downwind area.
    Section 3.3 of the December 1993 guidance states;

    The net air quality benefit test is not specifically limited to 
an ozone nonattainment area or ozone transport region and may be 
directed at a specific set of sources. Thus, a broad geographic area 
should be considered. The area may, in some cases, extend beyond an 
ozone nonattainment area or ozone transport region * * * Sufficient 
area is needed to allow for completion of the various chemical 
transformations of NO<INF>X and interaction with other pollutants.

    The latest results of the EPA regional oxidant modeling (ROM) 
indicate that emissions of NO<INF>X from stationary sources west of the 
Ozone Transport Region contribute to increased ozone levels in the 
northeast, including New York State. These results show that control of 
NO<INF>X emissions throughout the eastern United States will contribute 
to significant reductions in peak ozone levels within the ozone 
transport region (OTR).
    EPA Response: With respect to the comments regarding the latest ROM 
results and downwind impacts in general, EPA refers the commenter to 
its previous responses to NRDC Comments 3 and 4.
    The State of New York incorrectly cites section 3.3 of EPA's 
December 1993 guidance. Section 3.3 applies only to those areas 
applying for a NO<INF>X exemption under the ``net air quality benefit'' 
test. The Detroit-Ann Arbor petition is based on the ``contribute to 
attainment'' test. The ``contribute to attainment'' test requires that 
only the emissions from the immediate nonattainment area be considered 
in evaluating the petition (see December 1993 guidance document, 
``Guidelines for Determining the Applicability of Nitrogen Oxides 
Requirements Under Section 182(f)'', section 4.3). In its petition the 
State of Michigan has demonstrated that the average number of 
exceedances of the ozone standard in the area during the past 3 years 
(1991-1993, the most current monitored years at the time the exemption 
request was made) is fewer than one per year which is sufficient to 
receive an exemption under this test. In addition, the 1994 ozone 
season has passed and no violation of the ozone standard has been 
recorded in the area.
    State of New York Comment 2: The air quality monitoring data alone 
does not support this exemption proposal. This is supported by a July 
28, 1994 letter from the Michigan Department of Natural Resources which 
states that ``(we) are nearly in violation of the ozone standard at 
several monitoring sites, primarily due to the many excursions we had 
in June.'' This proposal does not appear to consider this data. In 
addition, the data submitted for the period 1991 to 1993 (November 12, 
1993 section 182(f) NO<INF>X exemption request letter to EPA Region V) 
contain the maximum number of exceedances allowed to still be 
considered attainment. This does not provide a clear test that 
additional [[Page 12450]] reductions would not contribute to 
maintenance of attainment.
    EPA Response: EPA is required to base its SIP decisions on the 
information duly submitted by a State in fulfillment of requirements 
imposed by the Act. The basis for granting this exemption is the fact 
that the information submitted by the State of Michigan demonstrates 
that this area has not experienced a violation of the ozone standard 
for the most recent 3 years of monitored data. Consistent with the 
established EPA policy, the fact that the area has recorded the maximum 
number of exceedances without violating the standard is irrelevant to a 
determination regarding whether an area is showing attainment for the 
period in question. What is relevant is whether or not the standard was 
violated, and the submitted data confirms that it was not. (See 40 CFR 
50.9, 40 CFR part 50, appendix H, and Guideline for Interpretation of 
Ozone Air Quality Standards, January 1979, EPA-450/4-79-003.) In 
addition to the fact that the ozone standard was not violated for the 
years 1991-1993, the years upon which this exemption request is based, 
monitoring data throughout the 1994 ozone season for the Detroit-Ann 
Arbor area continues to show attainment of the ozone standard.
    State of New York Comment 3: The State of New York strongly objects 
to the guidance developed to allow these exemptions to be processed. 
The May 27, 1994 memorandum ``Section 182(f) Nitrogen Oxides (NO<INF>X 
Exemptions--Revised Process and Criteria'' allows a nonattainment area 
to consider only its own air quality monitoring data and does not 
require a demonstration that the area does not negatively impact the 
attainment status of downwind areas. The guidance memorandum also 
allows the nonattainment area to submit the NO<INF>X exemption request 
without a redesignation or maintenance request. This does not provide 
the federal government with the appropriate information to make an 
informed judgment on the contribution of NO<INF>X to nonattainment. 
Finally, this guidance did not undergo State review before issuance. 
While not necessarily required, it is EPA's usual practice to allow the 
States to have input in the development of guidance.
    EPA Response: EPA's guidance regarding both the adequacy of the 
demonstration needed to qualify for a NO<INF>X exemption and the extent 
to which downwind impacts need to be considered was developed in 
accordance with what EPA considers to be the best interpretation of the 
language in section 182(f) of the Act. For a more detailed discussion 
of that interpretation see EPA's responses to NRDC Comments 1 and 4 
above. In addition, while it may be true that this guidance did not 
undergo State review before issuance, an opportunity for State 
participation is provided when such guidance is followed in proposed 
rulemaking actions. If a State objects to a proposed action and the 
guidance that action is based on, it is free to comment on the proposed 
action during the public comment period provided, as indeed, the State 
of New York has done here.
    State of New York Comment 4: The Detroit-Ann Arbor area has been 
designated as moderate ozone nonattainment and as such requires a 15 
percent rate-of-progress plan and a modeled attainment demonstration. 
It is unclear from the record whether these requirements have been 
fulfilled. An exemption request would need this information at a 
minimum to determine its validity. Please provide the status of these 
State implementation plan revisions.
    EPA Response: As described previously in EPA's response to NRDC 
Comment 1, EPA action on NO<INF>X exemption petitions submitted 
pursuant to section 182(f)(3) of the Act can be taken independently of 
action on attainment or maintenance demonstration plans or 
redesignation requests. Consequently, the issue of whether the State of 
Michigan's independent requirements under the Act to submit a 15 
percent rate-of-progress plan and an attainment demonstration plan have 
been met do not affect EPA's ability to act on the State's exemption 
request. (See also EPA's response to NRDC Comment 3, describing the 
Agency's policy regarding the use of monitoring data to meet the 
``contribute to attainment'' test).

III. Final Action

    The comments received were found to warrant no changes from 
proposed to final action on this NO<INF>X exemption request. Therefore, 
EPA is granting the Detroit-Ann Arbor section 182(f) exemption petition 
based upon the evidence provided by the State and the State's 
compliance with the requirements outlined in the Act and in EPA 
guidance. However, it should be noted that this exemption is being 
granted on a contingent basis; i.e., the exemption will last for only 
as long as the area's ambient monitoring data continue to demonstrate 
attainment of the ozone NAAQS.
    The EPA's transportation conformity rule<SUP>6 and EPA's general 
conformity rule<SUP>7 also reference the section 182(f) exemption 
process as a means for exempting affected areas from NO<INF>X 
conformity requirements, and the conformity requirements apply on an 
areawide basis. Since this petition for exemption is areawide, as 
opposed to source-specific, an approval would also exempt this area 
from the NO<INF>X conformity requirements of the Act (see John Seitz 
May 27, 1994 ``Section 182(f) Nitrogen Oxides (NO<INF>X) Exemptions--
Revised Process and Criteria'' memorandum). Additionally, the 
Inspection/Maintenance (I/M) Program Final Rule (57 FR 52950) allows 
for the omission of the basic I/M NO<INF>X requirements if a 182(f) 
exemption is granted to an area. Michigan does not currently have--or 
need--an enhanced I/M program. If the State did adopt such a program 
(because further emissions reductions necessary to address other 
portions of the Act could be obtained through an enhanced program), it 
would have to be designed to offset NO<INF>X increases resulting from 
the vehicle repairs due to hydrocarbon (HC) and carbon monoxide (CO) 
failures.

    \6\``Criteria and Procedures for Determining Conformity to State 
or Federal Implementation Plans of Transportation Plans, Programs, 
and Projects Funded or Approved under Title 23 U.S.C. of the Federal 
Transit Act'' November 24, 1993 (58 FR 62188).
    \7\``Determining Conformity of General Federal Actions to State 
or Federal Implementation Plans; Final Rule'' November 30, 1993 (58 
FR 63214).
---------------------------------------------------------------------------

    If, subsequent to the NO<INF>X waiver being granted, EPA determines 
that the area has violated the standard, the section 182(f) exemption, 
as of the date of the determination, would no longer apply. EPA would 
notify the State that the exemption no longer applies, and would also 
provide notice to the public in the Federal Register. If an exemption 
is revoked, the State must comply with any applicable NO<INF>X 
requirements set forth in the Act, such as those for NO<INF>X RACT, 
NSR, I/M, and conformity. The air quality data relied on for the above 
determinations must be consistent with 40 CFR part 58 requirements and 
other relevant EPA guidance and recorded in EPA's Aerometric 
Information Retrieval System. Additionally, the State must continue to 
operate an appropriate air quality monitoring network, in accordance 
with 40 CFR part 58, to verify the attainment status of the area.
    The Federal Register document revoking the NO<INF>X exemption would 
also establish the schedule for adoption and implementation of those 
NO<INF>X requirements the area was previously exempt. [[Page 12451]] 
    On November 12, 1993 the State submitted a redesignation request. 
Section 175(A) requires submittal of a maintenance plan for areas that 
are redesignating to attainment. This maintenance plan must contain 
contingency measures which shall be implemented if a violation of the 
ozone standard occurs. Consequently, if the State's redesignation 
request is approved, the NO<INF>X requirements found in the maintenance 
plan for that area would, thereafter, apply as long as the area is 
designated attainment for the ozone standard.
    This action will become effective on April 6, 1995.

IV. Miscellaneous

A. Applicability to Future SIP Decisions

    Nothing in this action should be construed as permitting, allowing 
or establishing a precedent for any future request for revision to any 
SIP. The EPA shall consider each request for revision to the SIP in 
light of specific technical, economic, and environmental factors and in 
relation to relevant statutory and regulatory requirements.

B. Executive Order 12866

    This action has been classified as a Table 2 action by the Regional 
Administrator under the procedures published in the Federal Register on 
January 19, 1989 (54 FR 2214-2225), as revised by an October 4, 1993 
memorandum from Michael Shapiro, Acting Assistant Administrator for Air 
and Radiation. The OMB has exempted this regulatory action from E.O. 
12866 review.

C. Regulatory Flexibility

    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA 
must prepare a regulatory flexibility analysis assessing the impact of 
any proposed or final rule on small entities (5 U.S.C. 603 and 604). 
Alternatively, EPA may certify that the rule will not have a 
significant impact on a substantial number of small entities. Small 
entities include small businesses, small not-for-profit enterprises, 
and government entities with jurisdiction over populations of less than 
50,000.
    This approval does not create any new requirements. Therefore, I 
certify that this action does not have a significant impact on any 
small entities affected. Moreover, due to the nature of the Federal-
State relationship under the Act, preparation of the regulatory 
flexibility analysis would constitute Federal inquiry into the economic 
reasonableness of the State action. The Act forbids EPA to base its 
actions concerning SIPs on such grounds. Union Electric Co. v. U.S. 
E.P.A., 427 U.S. 246, 256-66 (1976).

D. Petitions for Judicial Review

    Under section 307(b)(1) of the Act, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the appropriate circuit by May 8, 1995. Filing a petition for 
reconsideration by the Administrator of this final rule does not affect 
the finality of this rule for the purposes of judicial review, nor does 
it extend the time within which a petition for judicial review may be 
filed and shall not postpone the effectiveness of such rule or action. 
This action may not be challenged later in proceedings to enforce its 
requirements (see section 307(b)(2)).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Oxides of 
nitrogen, Incorporation by reference, Intergovernmental relations, 
Ozone.

    Dated: February 8, 1995.
Norman R. Niedergang,
Acting Regional Administrator.

    40 CFR part 52 is amended as follows.

PART 52--[AMENDED]

    1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401-7671(q).

Subpart X--Michigan

    2. Section 52.1174 is amended by adding paragraph (j) to read as 
follows:


Sec. 52.1174  Control strategy: Ozone.

* * * * *
    (j) Approval--On November 12, 1993, the Michigan Department of 
Natural Resources submitted a petition for exemption from the oxides of 
nitrogen requirements of the Clean Air Act for the Detroit-Ann Arbor 
ozone nonattainment area. The submittal pertained to the exemption from 
the oxides of nitrogen requirements for conformity, inspection and 
maintenance, reasonably available control technology, and new source 
review. These are required by sections 176(c), 182(b)(4), and 182(f) of 
the 1990 amended Clean Air Act, respectively. If a violation of the 
ozone standard occurs in the Detroit-Ann Arbor ozone nonattainment 
area, the exemption shall no longer apply.

[FR Doc. 95-5444 Filed 3-6-95; 8:45 am]
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