[Federal Register Volume 60, Number 75 (Wednesday, April 19, 1995)]
[Rules and Regulations]
[Pages 19510-19515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9568]



=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[AZ-34-1-6823; FRL-5193-4]


Clean Air Act Section 182(f) NO<INF>X Exemption Petition; Phoenix 
Ozone Nonattainment Area

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The EPA is finalizing the approval of a petition submitted by 
the Arizona Department of Environmental Quality (ADEQ) requesting that 
EPA grant an exemption for the Phoenix ozone nonattainment area 
(Phoenix area) from the requirement to implement oxides of nitrogen 
(NO<INF>X) reasonably available control technology (RACT). EPA 
published a proposed action to approve the Phoenix area NO<INF>X 
exemption in the Federal Register on November 1, 1994. In accordance 
with the requirements of the Clean Air Act, as amended in 1990 (the Act 
or CAA), the EPA has determined that additional NO<INF>X reductions 
from major stationary sources in the Phoenix area would not contribute 
to attainment of the national ambient air quality standard (NAAQS) for 
ozone. The approval of this action exempts the Phoenix area from 
implementing the NO<INF>X requirements for RACT, new source review 
(NSR), and the applicable general and transportation conformity and 
inspection and maintenance (I/M) requirements of the CAA. The EPA is 
finalizing approval of this action under provisions of the CAA 
regarding plan requirements for nonattainment areas.

EFFECTIVE DATE: This action is effective on April 11, 1995.

ADDRESSES: Copies of the petition and EPA's evaluation report is 
available for public inspection at EPA's Region IX office during normal 
business hours. Copies of the submitted petition is available for 
inspection at the following locations:

Rulemaking Section (A-5-3), Air and Toxics Division, U.S. Environmental 
Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA 
94105
Environmental Protection Agency, Air Docket (6102), 401 ``M'' Street, 
SW., Washington, DC 20460
Arizona Department of Environmental Quality, 3033 North Central Avenue, 
Phoenix, Arizona 85012
Maricopa County Air Pollution Control District, 2406 South 24th Street, 
Suite E214, Phoenix, Arizona 85034

FOR FURTHER INFORMATION CONTACT: Wendy Colombo, Rulemaking Section, Air 
and Toxics Division, U.S. Environmental Protection Agency, Region IX, 
75 Hawthorne Street, San Francisco, CA 94105, Telephone: (415) 744-
1202.

SUPPLEMENTARY INFORMATION:

Background

    On November 1, 1994, EPA proposed to approve the Phoenix area 
NO<INF>X exemption petition, submitted by the ADEQ on April 13, 1994. 
59 FR 54540. The exemption petition is based on urban airshed modeling 
(UAM) and makes a demonstration that additional NO<INF>X reductions in 
the Phoenix area would not contribute to attainment of the NAAQS for 
ozone. A detailed discussion of the background concerning the NO<INF>X 
requirements and the submitted petition is provided in the notice of 
proposed rulemaking (NPRM) cited above.
    EPA has evaluated the exemption petition for consistency with the 
requirements of the CAA, EPA regulations, and EPA interpretation of 
these requirements as expressed in the various EPA policy guidance 
documents referenced in the NPRM cited above. EPA has found that the 
petition satisfies the applicable EPA requirements and is exempting the 
Phoenix area from implementing the NO<INF>X requirements for RACT, 
NSR<SUP>1, and the applicable general and transportation conformity and 
I/M requirements<SUP>2 of the CAA. A detailed discussion of the 
petition and EPA's evaluation have been provided in the NPRM and in the 
technical support document (TSD), dated October 1994. A detailed 
discussion of the scope of the [[Page 19511]] NO<INF>X exemption as 
applicable to the Phoenix area is discussed in the TSD dated January 
1995 which accompanies this final action. These documents are available 
at EPA's Region IX office.

    \1\The section 182(f) exemption provisions center on the effect 
on ozone concentrations due to NO<INF>X emission reductions. In the 
case of new or modified sources, even after the application of on-
site controls from NSR programs, the source will result in increases 
of NO<INF>X emissions. Therefore, the ``substantial NO<INF>X 
reductions'' analysis used to demonstrate that NO<INF>X reductions 
do not contribute to attainment should reflect a zero emissions 
increase from new or modified stationary sources.
    \2\``Scope of Nitrogen Oxides (NO<INF>X) Exemptions,'' from G.T. 
Helms, Group Leader, Ozone/Carbon Monoxide Programs Branch (MD-15), 
to the Air Branch Chiefs, January 12, 1995. ``I/M Requirements in 
NO<INF>X RACT Exempt Areas'', from Mary T. Smith, Acting Director, 
Office of Mobile Sources, to the Air Division Directors, October 14, 
1994.
---------------------------------------------------------------------------

Response to Public Comments

    A 30-day public comment period was provided in 59 FR 54540. EPA 
received comment letters of support from two utility companies, the 
Arizona transportation authority, and two local governments in the 
Phoenix area. Two adverse comment letters were received from 
environmental groups and a local public interest law office
    In August 1994, three environmental groups submitted joint comments 
on the proposed approvals of NO<INF>X exemptions for the Ohio and 
Michigan ozone nonattainment areas. The comments address EPA's policy 
regarding NO<INF>X exemptions in general and apply to all actions EPA 
takes regarding section 182(f) NO<INF>X exemptions. These comments as 
well as those received from the local public interest law office are 
addressed below.
    Comment: Certain commenters argued 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: 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 Procedures 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 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 EPA by November 15, 1992. 
Thus, in order to avoid the CAA sanctions, areas seeking a NO<INF>X 
exemption would have needed 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 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 and EPA 
action on exemption requests, in some cases, prior to submittal of 
attainment or maintenance demonstrations.
    The CAA requires conformity to the applicable SIP 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.
    Comment: One commenter contends that because the Arizona SIP is 
inadequate to produce attainment, EPA cannot approve the waiver under 
section 182(f).
    Response: The basis for granting the NO<INF>X exemption is that 
additional NO<INF>X reductions would not contribute to attainment. How 
an area demonstrates that NO<INF>X reductions do not contribute to 
attainment is outlined in EPA's December 1993 exemption guidance.<SUP>3 
The contribute to attainment test is met by demonstrating through UAM 
that substantial reductions of VOC emissions result in lower ozone 
levels than would result from both substantial reductions of NO<INF>X 
emissions and combined reductions of VOC and NO<INF>X emissions. The 
Phoenix petition adequately demonstrates this through UAM modeling 
consistent with EPA's guidance. For reasons stated above, EPA does not 
agree that the decision to grant or deny the Phoenix petition under 
section 182(f) should depend on the approvability of the attainment 
demonstration under section 182 (b) or (c).

    \3\``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.
---------------------------------------------------------------------------

    Comment: Some commenters stated that the modeling required by EPA 
guidance 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. The 
comments also contend that the NO<INF>X reductions modeled specifically 
for the Phoenix [[Page 19512]] petition are not sufficient to meet the 
requirements of section 182(f), and that if any level of additional 
NO<INF>X reductions would contribute to attainment (as opposed to one 
test showing substantial reductions do not contribute to attainment), 
then the waiver must be denied. In addition, the commenters claim that 
Arizona did not model scenarios actually presented in the SIP.
    Response: As described in EPA's December 1993 NO<INF>X exemption 
guidance, 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.
    EPA's guidance also states that application of UAM should be 
consistent with techniques specified in the EPA document, entitled, 
Guideline on Air Quality Models, Revised. Further, application of UAM 
should also be consistent with procedures contained in the EPA 
document, Guideline for Regulatory Application of the Urban Airshed 
Model, issued 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 unspecified ``additional reductions'' of 
NO<INF>X. EPA's December 1993 exemption guidance specifies that the 
analysis should reflect 3 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% VOC reduction is chosen in scenario (1), then 
the model for scenario (3) would simulate a 40% VOC reduction and 
approximately a 40% 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 EPA's December 1993 guidance may be less 
precise than an attainment demonstration required under section 182(c). 
By contrast, with respect to the excess reductions provision in section 
182(f)(2), 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.
    The EPA does not agree that the waiver analysis must consider ``any 
level'' of NO<INF>X reductions. The EPA guidance requires analysis of 
``substantial'' reductions because reductions which are extremely small 
or extremely large would bias the model so that the results could be 
predetermined. Analyzing very small changes in NO<INF>X and/or VOC 
emissions would yield a result of no change in the ozone concentrations 
since the model cannot assess very small changes. Analysis of very 
large NO<INF>X emission reductions might be unrealistic (especially 
compared to the adopted attainment demonstration) and would result in 
concluding that NO<INF>X reductions reduce ozone concentrations in all 
cases. Also, in developing an attainment demonstration, an area 
typically tries to attain the ozone standard in the least costly way by 
starting from current conditions and reducing emissions from there. 
While 100% VOC reduction alternatives exist, they are not the least 
expensive ways to meet the NAAQS, and may not be feasible. Instead, 
alternative combinations of VOC and NO<INF>X reductions are examined. 
If two different strategies show the same ambient ozone concentration, 
but one requires greater reductions and cost, the latter is not 
considered a preferable strategy.
    EPA believes that the main reason for the NO<INF>X RACT waiver 
provisions in the CAA is the recognition by Congress that under certain 
conditions NO<INF>X emission reductions can be counterproductive to 
ozone attainment, because they could increase ozone levels and 
necessitate additional VOC reductions to compensate. Although required 
as beneficial to ozone attainment unless demonstrated otherwise, 
NO<INF>X reductions which achieve the same ozone levels at a greater 
cost based on a strategy using extra counterbalancing VOC reductions 
does not make sense from an ozone regulatory standpoint. Therefore, 
EPA's exemption guidance reflects this rationale in allowing 
petitioners the opportunity to demonstrate scenarios where substantial 
reductions of NO<INF>X are counterproductive to ozone attainment. In 
the Arizona petition, both across-the-board NO<INF>X reductions and 
NO<INF>X RACT specific reductions were simulated which consistently 
demonstrate that NO<INF>X reductions do not contribute to attainment of 
the ozone standard.
    The EPA believes that the scenarios utilized in the Phoenix 
analysis are adequate to determine that NO<INF>X reductions that might 
reasonably be considered in an attainment strategy would not contribute 
to attainment in the Phoenix area.
    Comment: Some commenters provided a comment 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 Phoenix area action because the area's section 182(f) petition 
is based on modeling rather than ``clean'' monitoring data.
    Comment: Some commenters provided a comment on all section 182(f) 
actions that a waiver of NO<INF>X controls is unlawful if such a waiver 
will impede attainment and maintenance of the ozone standard in 
separate downwind areas.
    Response: The EPA believes that while this comment may be 
applicable to proposed NO<INF>X exemption actions in other areas, it is 
not applicable to the Phoenix exemption action because the EPA is 
unaware of, and the comment itself does not specify, any downwind area 
for which NO<INF>X transport is of concern.
    Comment: 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, and do not waive 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 [[Page 19513]] 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.
    Response: With respect to conformity, EPA's conformity 
rules<SUP>4,<SUP>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 
exemption for the Phoenix area was submitted pursuant to section 
182(f)(3), and EPA does not believe it is appropriate to delay the 
statutory deadline for acting on this petition 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.

    \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 Rule,'' November 30, 1993 (58 
FR 63214).
---------------------------------------------------------------------------

    Comment: Some commenters argue 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: 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 Congress' 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 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), 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: One commenter objected to the adequacy of the modeling 
demonstration in meeting the fundamental requirements of EPA's guidance 
for applying the UAM, because the record reflects that the Phoenix area 
is not an area with a single meteorological regime and no intensive 
data from a field study was obtained for modeling purposes. In addition 
to these reasons, the commenter claims that because there was not a 
field study conducted with respect to the emissions inventory and that 
modeling performance was not very good at several sites, the petition 
should be denied.
    Response: EPA's Guideline on Regulatory Application of the Urban 
[[Page 19514]] Airshed Model (UAM guidance), EPA-450/91-013, July 1991, 
describes procedures for the appropriate use of UAM, such as for 
attainment demonstrations required of all ozone nonattainment areas. 
This guidance generally requires that for attainment demonstrations, an 
area with a single meteorological regime, must model three episodes of 
that type of regime. However, EPA believes that the results of 
simulating two episodes with intensive data from a field study would be 
more reliable than simulating three episodes with merely routine data.
    In terms of the meteorological regime issue, every day has 
different meteorology and will yield different ozone predictions. This 
does not necessarily mean that each varying meteorological day belongs 
to a different meteorological regime. Regime refers to a general 
pattern responsible for ozone formation. In the case of Phoenix, as 
documented in the Systems Applications International (SA) memorandum 
dated September 17, 1992,<SUP>6 a single meteorological regime exists 
in the Phoenix area which consists of a low pressure system over 
southwestern Arizona, with light southwesterly flow during the 
afternoon, and high temperatures. There is nothing in the record that 
is inconsistent with this description or conclusion.

    \6\``Review of Ozone Episodes (1987-1991) in the Phoenix Area'', 
from the Arizona Department of Environmental Quality to Systems 
Applications International, September 17, 1992. This memorandum is a 
summary of the characteristics of the ozone episodes in the Phoenix 
area, including annual, seasonal, and spatial distributions of the 
exceedances.
---------------------------------------------------------------------------

    EPA guidance for UAM states that three episodes should be modeled 
for each observed meteorological regime. However, in this case two 
episodes were considered sufficient because it was determined that data 
beyond that routinely available would be gathered and used to simulate 
ozone episodes. A field study, documented in ``Summer 1992 Phoenix 
Ozone Field Study'' (ADEQ, 1/93), involved the collection of data 
beyond that recorded on a routine basis, such as meteorological and air 
quality data aloft, VOC data, and extra background air quality data. In 
addition, because of the desire to use a fuller database, episodes were 
selected from among those that occurred during the study.
    There was not a ``field study'' conducted in regards to the 
emissions inventory as field studies usually do not refer to emissions 
inventories. The emissions inventory in the Phoenix area was developed 
using standard EPA-approved methods.
    Because modeling performance is never exact, EPA must evaluate 
whether its performance is adequate for regulatory decision-making. 
Although modeling performance was not good at several sites, and some 
under-prediction occurred, the modeling exercise meets EPA's 
performance goals, and appears overall to perform reasonably. Spatial 
plots of the whole modeling domain and time-series plots of individual 
stations show reasonable performance. This is illustrated by the 
model's correct responses to diagnostic and sensitivity tests, in which 
various inputs are changed in determining if the model responds 
consistently with our scientific understanding of ozone formation. 
Therefore, EPA believes that the overall modeling performance is 
reasonable and acceptable.
    Comment: One commenter contends that the Phoenix modeling tests 
failed the alternative ``net air quality benefits'' test because there 
were no ozone decreases in some model grid cells on the initial 
modeling day.
    Response: While there was some discussion, the ``net air quality 
benefits'' test was not relied on by Arizona in support of the 
petition. Instead, two sets of modeling runs were performed for each 
modeling episode to meet the ``contribute to attainment'' test. The two 
sets were substantial levels of pollutant reductions and source-
specific NO<INF>X reductions. Together, these runs showed that the 
specific reductions that would occur under NO<INF>X RACT, and also 
levels of NO<INF>X reductions likely to be examined in an attainment 
demonstration, would overall be counterproductive to ozone attainment.
    The effect of decreases in NO<INF>X will always depend on location 
because a decrease can increase ozone nearby in time or space, and 
decrease it later and farther away. The fact that various modeling 
cells go up and down is far less significant for regulatory purposes 
than the effect on the overall peak.
    The initial day of a modeling simulation is typically not used, per 
EPA guidance, because it is deemed too dependent on uncertain initial 
conditions for air quality, which must be extrapolated in time and 
space from relatively few measurements. Thus, the decreases in ozone 
for the initial days of the episodes modeled are not considered 
meaningful. Results for the second and later days of a simulation are 
used, since these more closely reflect the area's actual emissions.

EPA Action

    EPA is finalizing this action to exempt the Phoenix ozone 
nonattainment area from implementing the NO<INF>X requirements for 
RACT, NSR, and the applicable general and transportation conformity and 
I/M requirements.
    The EPA believes that all section 182(f) exemptions that are 
approved should be approved only on a contingent basis. As described in 
the EPA's NO<INF>X Supplement to the General Preamble (57 FR 55628, 
November 25, 1992), the EPA would rescind a NO<INF>X exemption in cases 
where NO<INF>X reductions were later found to be beneficial in the 
area's attainment plan. That is, a modeling based exemption would last 
for only as long as the area's modeling continued to demonstrate 
attainment without the additional NO<INF>X reductions required by 
section 182(f). Arizona submitted its ozone attainment demonstration on 
November 15, 1994, and EPA is currently in the process of evaluating it 
in regards to meeting the CAA requirements.
    If the EPA later determines that NO<INF>X reductions are beneficial 
based on new photochemical grid modeling in an area initially exempted, 
the area would be removed from exempt status and would be required to 
adopt and implement the NO<INF>X requirements, except to the extent 
that modeling shows NO<INF>X reductions to be ``excess reductions''. A 
determination that the NO<INF>X exemption no longer applies would mean 
that the NO<INF>X general and transportation conformity provisions 
would again be applicable (see 58 FR 63214, 58 FR 62188; 59 FR 31238) 
to the affected area. In the rulemaking action which removes the exempt 
status, the EPA would specify a schedule for Arizona to adopt the 
NO<INF>X requirements and for sources to comply with the applicable 
requirements.
    The subsequent modeling analyses mentioned above need not be 
limited to those whose main purpose is to demonstrate attainment in the 
1994 SIP revisions without the need for NO<INF>X controls required 
under section 182(f). State or local officials might want to consider a 
strategy that phases in NO<INF>X reductions only after certain VOC 
reductions are implemented. As improved emission inventories and 
ambient data become available, planning officials may choose to 
remodel. In addition, alternative control strategy scenarios might be 
considered in subsequent modeling analyses in order to improve the 
cost-effectiveness of the attainment plan.
    Nothing in this action should be construed as permitting or 
allowing or establishing a precedent for any future 
[[Page 19515]] request for revision to any state implementation plan. 
Each request for revision to the state implementation plan shall be 
considered separately in light of specific technical, economic, and 
environmental factors and in relation to relevant statutory and 
regulatory requirements.

Regulatory Process

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the EPA 
must determine whether the regulatory action is ``significant'', and 
therefore subject to Office of Management and Budget (OMB) review and 
the requirements of the Executive Order. It has been determined that 
this action is not a ``significant regulatory action'' under the terms 
of Executive Order 12866, and is therefore not subject to OMB review.
    Under section 307(b)(1) of the CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the appropriate circuit by May 19, 1995. Filing a petition for 
reconsideration by the Administrator of this 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 a rule. This 
action may not be challenged later in proceedings to enforce its 
requirements. Section 307(b)(2).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Hydrocarbons, 
Incorporation by reference, Intergovernmental relations, Nitrogen 
dioxide, Ozone, Reporting and recordkeeping requirements, Volatile 
organic compounds.
    Note: Incorporation by reference of the State Implementation Plan 
for the State of Arizona was approved by the Director of the Federal 
Register on July 1, 1982.

    Dated: April 11, 1995.
Carol M. Browner,
Administrator.
    Part 52, chapter I, title 40 of the Code of Federal Regulations 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 D--Arizona

    2. Subpart D is amended by adding Sec. 52.136 to read as follows:


Sec. 52.136  Control strategy for ozone: Oxides of nitrogen.

    EPA is approving an exemption request submitted by the State of 
Arizona on April 13, 1994 for the Maricopa County ozone nonattainment 
area from the NO<INF>X RACT requirements contained in section 182(f) of 
the Clean Air Act. This approval exempts the Phoenix area from 
implementing the NO<INF>X requirements for RACT, new source review 
(NSR), and the applicable general and transportation conformity and 
inspection and maintenance (I/M) requirements of the CAA. The exemption 
is based on Urban Airshed Modeling as lasts for only as long as the 
area's modeling continues to demonstrate attainment without NO<INF>X 
reductions from major stationary sources.

[FR Doc. 95-9568 Filed 4-18-95; 8:45 am]
BILLING CODE 6560-50-W