[Federal Register Volume 60, Number 75 (Wednesday, April 19, 1995)]
[Rules and Regulations]
[Pages 19515-19522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9567]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52

[TX-49-1-6831; FRL-5193-8]


Approval and Promulgation of Temporary Section 182(f) Exemption 
to the Nitrogen Oxides (NO<INF>X) Control Requirements for the Houston 
and Beaumont Ozone Nonattainment Areas; Texas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: In this action, the EPA is approving a petition from the State 
of Texas requesting that the Houston and Beaumont ozone nonattainment 
areas be temporarily exempted from NO<INF>X control requirements of 
section 182(f) of the Clean Air Act (CAA) as amended in 1990. The State 
of Texas bases its request upon preliminary photochemical grid modeling 
which shows that reductions in NO<INF>X would be detrimental to 
attaining the National Ambient Air Quality Standards (NAAQS) for ozone 
in these areas. This temporary exemption is being requested under 
section 182(f) of the CAA.

EFFECTIVE DATE: This action is effective as of April 12, 1995.

ADDRESSES: Copies of the documents relevant to these actions are 
available for public inspection during normal business hours at the 
following locations. The interested persons wanting to examine these 
documents should make an appointment with the appropriate office at 
least 24 hours before the visiting day.

U.S. Environmental Protection Agency, Region 6, Air Programs Branch 
(6T-A), 1445 Ross Avenue, Dallas, Texas 75202-2733
The Air and Radiation Docket and Information Center, U.S. Environmental 
Protection Agency, 401 M Street, SW., Washington, DC 20460
Texas Natural Resource Conservation Commission, P.O. Box 13087, Austin, 
Texas 78711-3087

FOR FURTHER INFORMATION CONTACT: Ms. Leila Yim Surratt or Mr. Quang 
Nguyen, Planning Section (6T-AP), Air Programs Branch, EPA Region 6, 
1445 Ross Avenue, Dallas, Texas 75202-2733, telephone (214) 665-7214.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 17, 1994, the Texas Natural Resource Conservation 
Commission (TNRCC) submitted to the EPA a petition pursuant to section 
182(f) of the CAA which requests that the Houston and Beaumont ozone 
nonattainment areas be temporarily exempted by the EPA from the 
NO<INF>X control requirements of section 182(f). The Houston 
nonattainment area includes the cities of Houston and Galveston, and 
consists of the following eight counties: Brazoria, Chambers, Fort 
Bend, Galveston, Harris, Liberty, Montgomery, and Waller. The Beaumont 
nonattainment area includes the cities of Beaumont and Port Arthur, and 
consists of the following three counties: Hardin, Jefferson, and 
Orange. The State bases its petition on an Urban Airshed Modeling (UAM) 
demonstration showing that NO<INF>X reductions would not contribute to 
attainment in either area because the decrease in ozone concentrations 
resulting from volatile organic compound (VOC) reductions alone is 
equal to or greater than the decrease obtained from NO<INF>X reductions 
or a combination of VOC and NO<INF>X reductions.
    As described in the State's petition, the TNRCC plans to complete 
additional UAM modeling between November 1995 and May 1996 using the 
results of an intensive 1993 field study, the Coastal Oxidant 
Assessment for Southeast Texas (COAST). The data collected through the 
COAST study consist of hourly point source emissions, gridded typical 
summer day on-road mobile source emissions, hourly air quality data, 
and detailed meteorological data for specific ozone exceedance episodes 
in the Houston-Beaumont domain. Because it is the most comprehensive 
data set available, it should result in greater accuracy in the 
modeling and therefore in the [[Page 19516]] attainment control 
strategy. Since the modeling is expected to be completed by May 1996, 
the TNRCC is requesting only a temporary NO<INF>X exemption until May 
31, 1997.
    The TNRCC had previously adopted and submitted to the EPA complete 
NO<INF>X Reasonably Available Control Technology (RACT) rules for the 
Houston and Beaumont areas. The TNRCC has also adopted and submitted to 
the EPA New Source Review (NSR), conformity, and vehicle inspection and 
maintenance (I/M) rules, each of which contain NO<INF>X provisions. The 
EPA's approval of the temporary NO<INF>X exemption petition affects the 
federal applicability and enforcement of the State's NO<INF>X RACT rule 
and the NO<INF>X provisions contained in the State's NSR, conformity, 
and I/M rules.
    On December 15, 1994, the EPA proposed to approve the section 
182(f) petition for a temporary NO<INF>X exemption for the Houston and 
Beaumont areas (see 59 FR 64640). The proposed rulemaking notice, the 
EPA's Technical Support Document (November 1994) on the proposed 
action, and supplemental information are contained in the docket and 
provide a detailed discussion of the TNRCC's submittal, applicable 
guidance and the EPA's rationale for proposing approval of the State's 
petition. Rather than repeating that entire discussion in this 
document, that discussion is incorporated by reference herein. Thus, 
the public should review the notice of proposed rulemaking for relevant 
background on this final rulemaking action.

II. Response to Comments

    The EPA requested public comments on all aspects of the proposed 
action to approve the section 182(f) petition for a temporary NO<INF>X 
exemption for the Houston and Beaumont ozone nonattainment areas. The 
EPA received 51 letters of support from individuals, industry, local 
judges, the State transportation authority, State and Federal 
legislators, and local governments.
    Six adverse comment letters were received from individuals, 
environmental groups, and an association of companies which supply 
stationary source air pollution control systems, equipment, and 
services. One of the letters was submitted by three environmental 
groups and contained generic comments objecting to the EPA's general 
policy on section 182(f) exemptions. The three environmental groups who 
submitted the generic letter requested that it be included in each EPA 
rulemaking action for each section 182(f) petition.
    Comment: Two letters of support asked for clarification concerning 
when the NO<INF>X requirements would take effect if the COAST modeling 
results indicate that some or all of the applicable NO<INF>X control 
requirements would contribute to attainment of the ozone NAAQS.
    Response: In the FR notice proposing to approve the temporary 
NO<INF>X exemption for Houston and Beaumont (see 59 FR 64640, December 
15, 1994), the EPA also proposed that upon the expiration of the 
temporary exemption on December 31, 1996, if the State had not received 
a permanent NO<INF>X exemption from the EPA prior to that time, the 
NO<INF>X RACT, NSR, conformity and I/M requirements would again become 
applicable except that the NO<INF>X RACT compliance date shall be as 
expeditious as practicable but no later than May 31, 1997. The EPA 
continues to believe that the above stated requirement is appropriate. 
Therefore, through this rulemaking on the temporary NO<INF>X exemption 
for the Houston and Beaumont areas, the following requirements would 
become applicable on January 1, 1997, if the Houston and Beaumont areas 
had not received a permanent NO<INF>X exemption prior to that time: (1) 
The State must have adopted and submitted to the EPA RACT, NSR, 
conformity, and I/M regulations to control NO<INF>X emissions (note 
that these provisions have already been met by the TNRCC), (2) the 
State's NO<INF>X RACT regulation must require subject sources to comply 
with the NO<INF>X control requirements as expeditiously as practicable 
but no later than May 31, 1997, (3) any NSR permits that had not been 
deemed complete prior to January 1, 1997, must comply with the NO<INF>X 
NSR requirements, consistent with the policy set forth in the EPA's NSR 
Supplemental Guidance memo dated September 3, 1992, from John S. Seitz, 
Director, EPA's Office of Air Quality Planning and Standards, (4) any 
conformity determination (for either a new or revised transportation 
plan and transportation improvement program (TIP)) made on or after 
January 1, 1997, must comply with the NO<INF>X conformity requirements, 
and (5) any I/M vehicle inspection made on or after January 1, 1997, 
must comply with the I/M NO<INF>X requirements.
    Comment: One commenter stated that the temporary NO<INF>X waiver 
would expire on May 15, 1997, and asked for clarification on whether 
TIPs being developed this year would be exempted from the NO<INF>X 
conformity requirements.
    Response: The EPA would like to clarify that the NO<INF>X waiver 
does not expire on May 15, 1997, as stated by the commenter, but rather 
will expire on December 31, 1996, as discussed in the EPA's proposed 
approval of the State's petition (see 59 FR 64643). Because the State's 
petition clearly indicates that the attainment modeling should be 
completed between November 1995 and May 1996 (which will determine 
whether a VOC, NO<INF>X, or combination thereof, strategy is most 
beneficial for attainment), the EPA believes that the petition supports 
granting the State's request for a temporary exemption only until the 
end of 1996. Any conformity determination (for either a new or revised 
transportation plan and TIP) made after the effective date of the EPA's 
approval of this 182(f) petition for Houston and Beaumont, and before 
the expiration of the waiver on December 31, 1996, would be exempted 
from the NO<INF>X conformity requirements. Any conformity determination 
(for either a new or revised transportation plan and TIP) made on or 
after January 1, 1997, must comply with the NO<INF>X conformity 
requirements, unless the State had received a permanent section 182(f) 
NO<INF>X exemption prior to that time.
    Comment: Several adverse comments stated that an area must submit a 
complete, approvable attainment State Implementation Plan (SIP) before 
a NO<INF>X waiver could be granted. Certain comments continued by 
stating that NO<INF>X exemptions are provided for in two separate parts 
of the CAA, 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 CAA's conformity provisions.
    Response: The TNRCC petitioned the EPA for an exemption under 
section 182(f), as evidenced by the letter from John Hall, Chairman of 
the TNRCC, transmitting the petition to the EPA (dated August 17, 1994) 
which states, ``The TNRCC is submitting for your review, pursuant to 
Section 182(f) of the [[Page 19517]] CAA, a petition requesting a 
temporary exemption from NO<INF>X RACT * * *'' In addition, on page 3 
of the petition, the State also referenced subsection 182(f)(3) 
concerning the procedure for petitioning the Administrator.
    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 the 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 section 302(e) of the 
CAA defines to include States) may petition for NO<INF>X exemptions 
``at any time,'' and requires the EPA to make its determination within 
six months of the petition's submission. These key differences lead the 
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).
    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 the EPA by November 15, 
1992. Thus, in order to avoid the CAA sanctions, areas seeking a 
NO<INF>X exemption would need to submit their exemption request for EPA 
review and rulemaking action several months before November 15, 1992. 
In contrast, the CAA specifies that the attainment demonstrations are 
not due until November 1993 or 1994 (and the 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 CAA. For maintenance plans, the CAA 
does not specify a deadline for submittal of maintenance 
demonstrations. Clearly, the CAA envisions the submittal of an EPA 
action on exemption requests, in some cases, prior to submittal of 
attainment or maintenance demonstrations.
    The CAA requires conformity with regard to federally-supported 
NO<INF>X generating activities in relevant nonattainment and 
maintenance areas. However, the EPA's conformity rules explicitly 
provide that these NO<INF>X requirements would not apply if the 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, 
the EPA notes that this issue has previously been raised in a formal 
petition for reconsideration of the 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 the 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 Procedure 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 the EPA's final conformity 
regulations, and the EPA remains bound by their existing terms.
    Comment: Several commenters felt that the UAM computer model is not 
sufficiently accurate to allow good predictions of air quality. Some 
stated that the modeling performed by the TNRCC was inconclusive. One 
commenter argued that focusing on severe rather than more typical ozone 
episodes may significantly distort the findings. Another commenter 
stated that TNRCC only modeled three episodes, each with varying 
performance. Finally, several commenters felt that the emissions 
inventories were significantly inaccurate so as to discredit the 
modeling results.
    Response: The EPA disagrees with the comment that the UAM 
demonstration conducted by the TNRCC was insufficient to allow good 
predictions of air quality. Due to the large number of factors that 
influence ozone formation, the EPA agrees that the UAM model cannot 
precisely predict the exact relationship between VOC, NO<INF>X, and 
ozone. However, Congress clearly intended that photochemical grid 
modeling be used for air quality planning purposes. As noted in the 
EPA's December 1993 guidance, UAM results are acceptable for the 
purpose of the section 182(f) demonstrations and application of UAM 
should be consistent with techniques specified in the EPA's ``Guideline 
on Air Quality Models (Revised).''
    The EPA disagrees with the comment that the episodes analyzed by 
the TNRCC may have distorted the findings. The TNRCC followed the EPA's 
``Guideline for Regulatory Application of the Urban Airshed Model'' in 
selecting the episodes that were used in the 182(f) demonstration. In 
accordance with the EPA guidance, the State selected episodes that were 
likely to cover different sets of meteorological conditions 
corresponding with high ozone concentrations, not necessarily the most 
severe ozone exceedance. The EPA recommends that high ozone days be 
analyzed to ensure that the control strategy plan developed from the 
UAM analysis will result in ozone attainment under most meteorological 
conditions, not just the average meteorological condition. The selected 
multi-day episodes used in the Houston and Beaumont UAM analyses are 
representative of the primary meteorological conditions typically found 
on high ozone days.
    The EPA's UAM guidance recommends that a minimum of three days from 
among all meteorological regimes should be modeled (e.g., three 
meteorological regimes each containing one primary episode day, or two 
meteorological regimes with at least two primary days from one of those 
regimes). The TNRCC's analyses are consistent with the EPA's guidance 
in that the two episodes that exhibited satisfactory performance cover 
more than three days of ozone exceedances and represent several of the 
predominant meteorological regimes for ozone exceedances in the Gulf 
Coast. (For further information, see the EPA's proposed approval notice 
for the temporary NO<INF>X exemption for Houston and Beaumont (59 FR 
64640), and the EPA's Technical Support Document for the proposed 
action.)
    The EPA disagrees with the comment that the emissions inventories 
were too inaccurate to produce acceptable modeling results. In 
accordance with the EPA's UAM guidance the State used the 1990 
emissions inventory for Houston and Beaumont to developing its modeling 
demonstration. The EPA evaluated the State's 1990 base year 
[[Page 19518]] emissions inventories and a final approval was published 
in the FR on November 8, 1994 (see 59 FR 55588).
    Comment: Several commenters stated that the modeling required by 
the 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 
argued that larger NO<INF>X reductions are realistically available, and 
that if Texas had considered large enough reductions in NO<INF>X 
emissions, the modeling would have shown decreases in ozone. They 
further explained that an area must submit an approvable attainment 
plan before the EPA can know whether NO<INF>X reductions will aid or 
undermine attainment.
    Response: As described in the EPA's December 1993 NO<INF>X 
exemption guidance,<SUP>1 photochemical grid modeling is generally 
needed to document cases where NO<INF>X reductions are 
counterproductive to net air quality, do not contribute to attainment, 
do not show a net ozone benefit, or include excess reductions. The UAM 
or, in an ozone transport region, the Regional Oxidant Model (ROM) are 
acceptable models for these purposes.

    \1\``Guideline for Determining the Applicability of Nitrogen 
Oxide Requirements under Section 182(f),'' from John S. Seitz, 
Director, Office of Air Quality Planning and Standards, to the 
Regional Division Directors, December 16, 1993.
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    The EPA guidance also states that application of UAM should be 
consistent with techniques specified in the EPA ``Guideline on Air 
Quality Models (Revised).'' Further, application of UAM should also be 
consistent with procedures contained in the EPA ``Guideline for 
Regulatory Application of the Urban Airshed Model'' (July 1991). Thus, 
episode selection for the section 182(f) demonstration should be 
consistent with the UAM guidance for SIP attainment demonstrations.
    The section 182(f) contribute to attainment and net ozone benefit 
demonstrations concern an unspecified ``additional reductions'' of 
NO<INF>X. The EPA's December 1993 guidance specifies that the analysis 
should reflect three scenarios of ``substantial'' NO<INF>X and VOC 
emission reductions. The guidance states that, in the first scenario, 
the demonstration should use the VOC reductions needed to attain 
(demonstrated by EKMA or UAM analyses). Alternatively, if the 
attainment demonstration has not been completed, the demonstration may 
use some other substantial VOC reduction. In any case, the VOC 
reductions should be substantial and documented as reasonable to expect 
for the area due to the CAA requirements. In the second scenario, 
NO<INF>X reductions should be modeled without any VOC reductions above 
the attainment year baseline. The level of NO<INF>X reductions should 
reflect the same percent reduction of anthropogenic VOC emissions in 
scenario (1) above. In the third scenario, a similar level of NO<INF>X 
reductions would be modeled along with the level of VOC reductions 
chosen. That is, if a 40 percent VOC reduction is chosen in scenario 
(1), then the model for scenario (3) would simulate a 40 percent VOC 
reduction and approximately a 40 percent NO<INF>X reduction. It would 
be inappropriate to select a high level of VOC reductions and a low 
level of NO<INF>X reductions since this could artificially favor a 
finding that NO<INF>X reductions are not beneficial; thus, the 
scenarios are constrained to avoid an inappropriate analysis.
    The EPA believes that these analyses are appropriate to determine 
in a directional manner whether or not NO<INF>X reductions are expected 
to be beneficial with respect to the air quality in the area/region. 
These analyses described in the EPA's December 1993 guidance may be 
less precise than an attainment demonstration required under section 
182(c). With respect to the excess reductions provision in section 
182(f)(2), however, the EPA believes that more than a directional 
analysis is needed (for reasons described in the December 1993 
guidance) and, therefore, requires an analysis based on the attainment 
demonstration.
    Contrary to the statements of some of the commenters, the State 
modeled substantial NO<INF>X emission reductions that are significantly 
greater than the 10-15 percent reductions cited by the commenters as 
projected to result from NO<INF>X RACT. In the 1999 projected domain-
wide (i.e., Houston and Beaumont) NO<INF>X emissions inventory used in 
the State's section 182(f) demonstration, point source emissions 
comprise 66 percent of the total NO<INF>X inventory. The State modeled 
a 50 percent total reduction of NO<INF>X (which would represent a 76 
percent reduction in the point source NO<INF>X inventory) along with a 
50 percent reduction of VOC and 50 percent reduction of both VOC and 
NO<INF>X. Clearly, the TNRCC's section 182(f) modeling demonstration 
reflects substantial NO<INF>X reductions in addition to substantial VOC 
reductions.
    Comment: Three groups provided a generic comment on all section 
182(f) actions that three years of ``clean'' data fail to demonstrate 
that NO<INF>X reductions would not contribute to attainment.
    Response: The EPA does not believe that this comment is applicable 
to the Houston and Beaumont actions because neither area has based its 
section 182(f) petition on ``clean'' air monitoring data.
    Comment: Several commenters stated that the EPA's December 1993 
guidance prohibits granting a section 182(f) waiver based on three 
years of clean data if evidence exists showing that the waiver would 
interfere with attainment or maintenance in downwind areas. They argued 
that the condition should also apply to waiver requests based on 
modeling. The commenters felt that a NO<INF>X exemption in Houston and 
Beaumont would likely exacerbate ozone formation downwind in other 
nonattainment areas (e.g., Dallas) or near nonattainment areas (e.g., 
Austin, San Antonio, Corpus Christi, and Longview-Tyler-Marshall).
    Response: As a result of the comments, the EPA reevaluated its 
position on this issue and has revised the previously issued guidance. 
As described below, the 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 the 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 
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, the 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 [[Page 19519]] under 
section 182(f). Some areas requesting an exemption may be upwind of and 
impact upon downwind nonattainment areas. The 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 CAA, an exemption from the NO<INF>X 
requirements may be granted for nonattainment areas outside an ozone 
transport region if the 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>2 As described in 
section 4.3 of the December 1993 guidance document, the EPA believes 
that the term ``area'' means the ``nonattainment area'' and that the 
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.

    \2\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, the EPA believes that 
the section 110(a)(2)(D) and 182(f) provisions must be considered 
independently and hence is withdrawing the guidance presently contained 
in section 4.4. 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 the EPA in a section 110(a)(2)(D) action. 
In addition, a section 182(f) exemption request should be independently 
considered by the EPA. In some cases, then, the 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.
    Comment: Several 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, the 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 the 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.
    Response: The EPA's conformity rules<SUP>3,4 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), the 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, the EPA states in the June 17 
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, the 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 the 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 regulations, and the Agency 
remains bound by their existing terms.

    \3\``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).
    <SUP>4``Determining Conformity of General Federal Actions to 
State or Federal Implementation Plans; Final Rule,'' November 30, 
1993 (58 FR 63214).
---------------------------------------------------------------------------

    Comment: One group commented that the CAA does not authorize any 
waiver of the NO<INF>X reduction requirements until conclusive evidence 
exists that such reductions are counter-productive.
    Response: The 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, the 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, the EPA determines that in 
certain [[Page 19520]] 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 the EPA 
``shall consider'' the 185B report taken together with the time frame 
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 the 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 the EPA from revisiting an approved NO<INF>X exemption if 
warranted due to better ambient information.
    In addition, the EPA believes (as described in the EPA's December 
1993 guidance) that section 182(f)(1) of the CAA provides that the new 
NO<INF>X requirements shall not apply (or may be 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), the 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.
    Comment: Two commenters stated that the health and environmental 
benefits of decreasing NO<INF>X as well as the likelihood of 
concomitant reduction in other criteria pollutants (e.g., CO, SO<INF>2 
and particulates), provide other reasons to control NO<INF>X, 
independent of their impact on ozone formation. One commenter listed 
various negative health and environmental impacts of NO<INF>X and 
stated that although Houston does not exceed the NAAQS for nitrogen 
dioxide (NO<INF>2), current ambient levels are believed to be unsafe. 
In addition, the federal standard, 53 parts per billion (ppb) annual 
average, is meaningless without a short-term standard.
    Response: The EPA agrees that high NO<INF>X emissions can 
contribute to air pollution problems independent of their role in ozone 
formation; however, the EPA disagrees that the NO<INF>X controls 
required under section 182(f) of the CAA should be implemented in the 
Houston or Beaumont area regardless of their impact on ozone. Ambient 
concentrations of NO<INF>2 in Houston and Beaumont are significantly 
below the federal NAAQS for NO<INF>2 (in 1993, the annual average 
NO<INF>2 concentration was 24 ppb in Houston and 10 ppb in Beaumont, as 
compared with the federal standard of 53 ppb). Therefore, based on 
current federal standards, the EPA does not believe the NO<INF>2 levels 
in Houston or Beaumont are unsafe.
    The EPA is mandated to periodically re-evaluate the NAAQS for each 
criteria pollutant based on the best information available. The EPA is 
currently reviewing the NO<INF>2 standard and will evaluate concerns 
over the standard through a separate rulemaking process. As part of 
that effort, in October 1994, the EPA issued a draft paper for public 
review and comment entitled, ``Review of National Ambient Air Quality 
Standards for Nitrogen Dioxide, Assessment of Scientific and Technical 
Information, OAQPS Staff Paper,'' concerning the NO<INF>2 standard, and 
expects to propose rulemaking action in late 1995. If the EPA finds, 
based on its review, that the NO<INF>2 standard should be revised, then 
at that time the Agency will implement NO<INF>X control requirements in 
areas that become nonattainment for NO<INF>2 under the revised 
standard.
    In addition, as discussed in an earlier response, section 
182(f)(1)(A) specifically provides for an exemption in cases where 
NO<INF>X emission reductions would not contribute to attainment of the 
NAAQS for ozone in the area. The TNRCC has demonstrated for the 
relevant time period in its petition and in the EPA's proposed action 
that the NO<INF>X reductions required by section 182(f) would not 
contribute to attaining the ozone NAAQS in either area.
    Finally, for the purposes of reducing acid rain deposition, certain 
NO<INF>X sources will still be required to reduce NO<INF>X emissions 
under Title IV of the CAA. For these reasons, the EPA does not believe 
that the NO<INF>X controls required under section 182(f) of the CAA 
should be implemented in the Houston or Beaumont areas regardless of 
their impact on ozone.
    Comment: One commenter stated that Houston is not at risk of over 
controlling emissions, and that it is important to front end load 
emission reductions now so that control strategies would have time to 
work.
    Response: The TNRCC petition for a temporary NO<INF>X exemption 
relies not on an excess emission reduction test, but on modeling which 
indicates that NO<INF>X reductions would be detrimental to attaining 
the ozone standard. The EPA agrees that where NO<INF>X reductions would 
be beneficial to attaining the ozone standard, they should be pursued 
expeditiously; however, for Houston and Beaumont, the State's modeling 
demonstration shows that NO<INF>X reductions will not contribute to 
attainment of the ozone NAAQS. As discussed in a previous response, 
Congress clearly understood that in certain areas, NO<INF>X reductions 
may not be beneficial, and for this reason, included a provision to 
exempt such areas from NO<INF>X control requirements.
    Comment: One commenter argued that regardless of the impact 
NO<INF>X controls might have in the Houston area, NO<INF>X controls 
should be required in the Beaumont nonattainment area, since point 
source emissions are a significant [[Page 19521]] source of NO<INF>X in 
that area and large NO<INF>X reductions would guarantee ozone 
reductions.
    Response: The EPA disagrees with this comment. As discussed in the 
EPA's proposed approval notice for the temporary NO<INF>X exemption for 
Houston and Beaumont (see 59 FR 64640), and the EPA's Technical Support 
Document for the proposed action, the TNRCC modeled substantial 
reductions of VOC, NO<INF>X and both VOC and NO<INF>X in Beaumont and 
showed that ozone levels were lowest under the VOC-only reduction 
scenario. The State's petition therefore demonstrates that NO<INF>X 
reductions would not be beneficial to attainment of the ozone standard 
in the Beaumont area.
    Comment: One commenter stated that there is no congestion 
management plan as required by federal transportation law and that the 
EPA has allowed the State to illegally wait two additional years before 
submitting a plan.
    Response: The EPA disagrees with this comment for two reasons. 
First, it does not accurately reflect the current status of the 
transportation congestion management plan (which is a program 
implemented under the Intermodal Surface Transporation Efficiency Act 
(ISTEA) by the U.S. Department of Transportation (DOT)) in the Houston 
and Beaumont areas. Contrary to the commenter's statement, it is the 
EPA's understanding that a congestion management plan for Houston and 
Beaumont was submitted in accordance with the DOT regulatory 
requirements specified in title 23 of the Code of Federal Regulations 
in Sec. 500.509 (see 58 FR 63442, December 1, 1993).
    Second, the EPA's approval of the NO<INF>X exemption petition does 
not adversely impact the requirements and implementation of the 
transportation congestion management plan required by the DOT. The EPA 
supports this program and believes that it will, at a minimum, identify 
the congestion problems in the area and will lead to development of a 
traffic management plan which would have positive air quality benefits 
for the area. This program is being implemented by the DOT (which is a 
separate Federal agency from the EPA) under authority of the ISTEA. 
Contrary to the commenter's statement, the EPA's action on the NO<INF>X 
exemption petition will not result in a two year delay in the 
submission of the transportation congestion management plan.
    Comment: Two commenters requested that the EPA consider extending 
the section 182(f) NO<INF>X exemption and the NO<INF>X RACT compliance 
deadlines past the EPA's proposed deadlines of December 31, 1996 and 
May 31, 1997, respectively. One commenter stated that the EPA's revised 
ozone attainment planning policy points to the possible extension of 
modeling completion deadlines into 1997.
    Response: The EPA believes that it is appropriate to maintain the 
NO<INF>X exemption period and the RACT compliance deadline as 
originally proposed by the EPA. The State of Texas has not requested 
that the exemption period or compliance dates be extended, nor did it 
make such a request during the public comment period for the EPA's 
proposed approval of the State's section 182(f) petition. In addition, 
the EPA has not received from the State any request that the COAST 
modeling schedule described in the State's petition has been delayed or 
would need to be modified. The EPA therefore believes that the 
rationale (as explained in the notice of proposed rulemaking (see 59 FR 
64643)), for the December 31, 1996, and May 31, 1997, dates concerning 
the exemption period and the RACT compliance deadline, respectively, is 
still valid, and is independent of the EPA's revised ozone attainment 
planning policy. Should the EPA subsequently receive a revised section 
182(f) petition for the Houston and Beaumont areas, we will evaluate it 
at that time for consistency with the CAA and the EPA's guidance on 
section 182(f) exemptions.

III. Effective Date

    This rulemaking is effective as of April 12, 1995. The 
Administrative Procedure Act (APA) 5 U.S.C. 553(d)(1), permits the 
effective date of a substantive rule to be less than thirty days after 
publication of the rule if the rule ``relieves a restriction.'' Since 
the approval of the section 182(f) exemptions for the Houston and 
Beaumont areas is a substantive rule that relieves the restrictions 
associated with the CAA title I requirements to control NO<INF>X 
emissions, the NO<INF>X exemption approval may be made effective upon 
signature by the EPA Administrator.

IV. Final Action

    The EPA is taking final action to approve the section 182(f) 
petition submitted by the State of Texas requesting a temporary 
NO<INF>X exemption for the Houston and Beaumont ozone nonattainment 
areas. The temporary exemption automatically expires on December 31, 
1996, without further notice from the EPA. Approval of the temporary 
exemption waives the federal requirements for NO<INF>X RACT, NSR, 
conformity, and I/M for the period of the temporary exemption.
    The State had previously adopted and submitted to the EPA complete 
NO<INF>X RACT, NSR, conformity, and I/M rules. During the temporary 
exemption, the EPA will not act upon the State's NO<INF>X RACT rules. 
The EPA plans to act upon the State's NO<INF>X NSR and conformity 
provisions in separate rulemaking actions because those provisions are 
contained in broader rules that also control VOC emissions; however, 
during the period of the temporary exemption, the State's NO<INF>X NSR 
and conformity requirements are not federally applicable. The EPA 
previously approved the State's I/M rules (see 59 FR 43046, August 22, 
1994).
    Upon the expiration of the temporary exemption, (1) the 
requirements pertaining to NO<INF>X RACT, NSR, conformity, and I/M will 
again become applicable, except that the NO<INF>X RACT implementation 
date applicable to the Houston and Beaumont nonattainment areas under 
section 182(f) shall be as expeditious as practicable but no later than 
May 31, 1997, unless (2) the State has received a permanent NO<INF>X 
exemption from the EPA prior to that time. The EPA will begin 
rulemaking action on the State's NO<INF>X RACT SIP upon the expiration 
of the temporary exemption if the State has not received a permanent 
NO<INF>X exemption by that time.

Regulatory Process

    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., the 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, the EPA may certify that the rule will not have a 
significant economic 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.
    Approvals of NO<INF>X exemption petitions under section 182(f) of 
the CAA do not create any new requirements. Therefore, because the 
Federal approval of the petition does not impose any new requirements, 
the EPA certifies that it does not have a significant impact on 
affected small entities. Moreover, due to the nature of the Federal-
State relationship under the CAA, preparation of a regulatory 
flexibility analysis would constitute Federal inquiry into the economic 
reasonableness of State action. The CAA forbids the EPA to base its 
actions concerning SIPs on such grounds (Union Electric Co. v. U.S. 
E.P.A., 427 [[Page 19522]] U.S. 246, 256-66 (S. Ct. 1976); 42 U.S.C. 
7410(a)(2)).
    Under section 307(b)(1) of the CAA, petitions for judicial review 
of this action must be filed in the U.S. Court of Appeals for the 
appropriate circuit by June 19, 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).)

Executive Order 12866

    The Office of Management and Budget has exempted this action from 
review under Executive Order 12866.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Hydrocarbons, 
Intergovernmental relations, Nitrogen dioxide, Ozone, Volatile organic 
compounds.

    Dated: April 12, 1995.

Carol M. Browner,

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. 7401-7671q.

Subpart SS--Texas

    2. Section 52.2308 is amended by adding paragraph (d) to read as 
follows:


Sec. 52.2308  Area-wide nitrogen oxides (NO<INF>X) exemptions.

* * * * *
    (d) The TNRCC submitted to the EPA on August 17, 1994, with 
supplemental information submitted on August 31, 1994, and September 9, 
1994, a petition requesting that the Houston and Beaumont ozone 
nonattainment areas be temporarily exempted from the NO<INF>X control 
requirements of section 182(f) of the CAA. The Houston nonattainment 
area consists of Brazoria, Chambers, Fort Bend, Galveston, Harris, 
Liberty, Montgomery, and Waller counties. The Beaumont nonattainment 
area consists of Hardin, Jefferson, and Orange counties. The exemption 
request was based on photochemical grid modeling which shows that 
reductions in NO<INF>X would not contribute to attaining the ozone 
NAAQS. On April 12, 1995, the EPA approved the State's request for a 
temporary exemption. Approval of the temporary exemption waives the 
federal requirements for NO<INF>X Reasonably Available Control 
Technology (RACT), New Source Review (NSR), conformity, and vehicle 
inspection and maintenance (I/M) for the period of the temporary 
exemption. The temporary exemption automatically expires on December 
31, 1996, without further notice from the EPA. Based on the rationale 
provided in the notice of proposed rulemaking on this action, upon the 
expiration of the temporary exemption, the requirements pertaining to 
NO<INF>X RACT, NSR, conformity, and I/M will again become applicable, 
except that the NO<INF>X RACT implementation date applicable to the 
Houston and Beaumont nonattainment areas under section 182(f) shall be 
as expeditious as practicable but no later than May 31, 1997, unless 
the State has received a permanent NO<INF>X exemption from the EPA 
prior to that time.

[FR Doc. 95-9567 Filed 4-18-95; 8:45 am]
BILLING CODE 6560-50-P