[Federal Register Volume 61, Number 18 (Friday, January 26, 1996)]
[Rules and Regulations]
[Pages 2428-2438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1413]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52

[IL99-2-7003, IN46-2-7004, MI33-2-7005, WI47-2-7006; FRL-5402-8]


Approval of a Section 182(f) Exemption; Illinois, Indiana, 
Michigan, and Wisconsin

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: As requested by the States of Illinois, Indiana, Michigan, and 
Wisconsin in a July 13, 1994 submittal pursuant to section 182(f)(3) of 
the Clean Air Act (CAA or the Act), the EPA is granting exemptions from 
the Reasonably Available Control Technology (RACT) and New Source 
Review (NSR) requirements for major stationary sources of Oxides of 
Nitrogen (NO<INF>X) and from vehicle Inspection/Maintenance (I/M) and 
general conformity requirements for NO<INF>X for ozone nonattainment 
areas within the Lake Michigan Ozone Study (LMOS) modeling domain, 
which includes portions of the States of Illinois, Indiana, Michigan, 
and Wisconsin. The EPA is also granting exemptions from transportation 
conformity requirements for NO<INF>X for ozone nonattainment areas 
classified as marginal or transitional within the LMOS modeling domain. 
The EPA is approving the exemptions based on a demonstration that 
additional NO<INF>X reductions would not contribute to attainment of 
the National Ambient Air Quality Standard (NAAQS) for ozone within the 
LMOS modeling domain. The EPA is not taking final action at this time 
on the granting of exemptions from the transportation conformity 
requirements of the CAA for ozone nonattainment areas classified as 
moderate or above in the LMOS modeling domain. The continued approval 
of these exemptions is contingent on the results of the final ozone 
attainment demonstrations and plans. These plans are expected to be 
submitted by mid-1997 and to incorporate the results of the Ozone 
Transport Assessment Group process. The attainment plans will supersede 
the initial modeling information which is the basis for the waiver EPA 
is granting in this document. To the extent the attainment plans 
include NO<INF>X controls on certain major stationary sources in the 
LMOS ozone nonattainment areas, EPA will remove the NO<INF>X waiver for 
those sources. To the extent the final plans achieve attainment of the 
ozone standard without additional NO<INF>X reductions from certain 
sources, the NO<INF>X emissions control exemption would continue for 
those sources. EPA's rulemaking action to reconsider the initial 
NO<INF>X waiver may occur simultaneously with rulemaking action on the 
attainment plans.

DATES: This final rule will be effective February 26, 1996.

ADDRESSES: Copies of the exemption request, public comments and EPA's 
responses are available for inspection at the following address: United 
States Environmental Protection Agency, Region 5, Air and Radiation 
Division, 77 West Jackson Boulevard, Chicago, Illinois 60604.

FOR FURTHER INFORMATION CONTACT: Edward Doty, Regulation Development 
Section (AR-18J), Regulation Development Branch, Air and Radiation 
Division, United States Environmental Protection Agency, Region 5, 77 
West Jackson Boulevard, Chicago, Illinois 60604, Telephone Number (312) 
886-6057.

SUPPLEMENTARY INFORMATION:

I. Background Information

    On July 13, 1994, the States of Illinois, Indiana, Michigan, and 
Wisconsin submitted a petition to the EPA requesting that the ozone 
nonattainment areas within the LMOS modeling domain be exempted from 
requirements to implement NO<INF>X controls pursuant to section 182(f) 
of the Act. The exemption request is based on modeling demonstrating 
that additional NO<INF>X emission controls within the nonattainment 
areas will not contribute 

[[Page 2429]]
to attainment of the ozone NAAQS within the LMOS modeling domain.
    On March 6, 1995, EPA published a rulemaking proposing approval of 
the NO<INF>X exemption petition and specifically identifying the 
Counties or areas covered by the exemption. During the 30 day public 
comment period, EPA received a number of comments favoring or objecting 
to the proposed approval. In addition to these comments, the EPA also 
received adverse comments objecting to any NO<INF>X control waiver 
within the United States, with the commenters requesting that these 
comments be addressed in all EPA rulemakings dealing with such emission 
control waivers.

II. Public Comments

    The following discussion summarizes the comments received regarding 
the States' petition and/or EPA's proposed rulemaking and presents 
EPA's responses to these comments.
    Comment: A number of comments supporting the proposed rulemaking 
were received from organizations representing various industrial 
groups, local planning organizations, and the States themselves. One 
commenter, who generally supported the proposed rulemaking, noted that 
the EPA proposed to reverse its decision on the petition if subsequent 
modeling results supported such a reversal. The commenter raised a 
concern that the EPA should only reverse its decision to approve the 
petition if well documented modeling results are available clearly 
indicating the need for such a reversal.
    Response: The favorable comments support the logic used in the 
proposed rulemaking.
    With regard to the concern over the quality of the modeling results 
needed to reverse this decision, it should be noted that such modeling 
results will be well documented and are expected to be based on 
validated modeling. The States involved in the LMOS are conducting a 
number of additional modeling analyses (subsequent to the preparation 
of the NO<INF>X waiver request) to assess the impacts of emission 
controls on peak ozone concentrations and on ozone concentrations 
transported out of the modeling domain (long range ozone transport has 
become a significant issue in the development of ozone demonstrations 
of attainment in the eastern United States). Additional modeling 
analyses are required to support the States' demonstrations of 
attainment, which have not been completed. These modeling analyses are 
well documented and are now based on a modeling system which has been 
accepted by the EPA as being validated for the LMOS modeling domain. 
Any conclusion showing the need for NO<INF>X controls will be well 
supported by the modeling.
    It should be noted that the modeling used to support the NO<INF>X 
waiver petition was not based initially on validated modeling. The 
modeling system and its base year inputs were modified to a validated 
form subsequent to the submittal of the petition. Nonetheless, the 
``signals'' of the modeling results regarding Volatile Organic Compound 
(VOC) controls versus NO<INF>X controls have not changed with the 
validation of the modeling system. The modeling results continue to 
show that NO<INF>X emission controls in the ozone nonattainment areas 
will not contribute to reduction of peak ozone levels within the LMOS 
modeling domain, and may actually increase peak ozone levels near the 
major urban areas.
    Comment: A commenter, who supports the proposed NO<INF>X exemption, 
considers the exemption, through section 182(f), to also increase the 
major source threshold relating to federal operating permit programs 
from 25 tons/year (tpy) to 100 tpy (this comment is assumed to apply to 
the ozone nonattainment areas classified as severe).
    Response: The commenter is correct. Based on guidance contained in 
40 CFR Part 70.2 (subparagraph (3)(1) under the ``major source'' 
definition), the major source threshold for federal operating programs 
would be revised to 100 tpy, potential to emit, in the areas covered by 
the NO<INF>X waiver. In addition, for new source considerations, it 
should be noted that the waived areas should be considered to be 
covered by Prevention of Significant Deterioration requirements, with a 
control source size threshold of 250 tpy, potential to emit, for 
NO<INF>X rather than by nonattainment area new source requirements.
    Comment: A commenter notes that, in addition to modeling data 
supporting approval of the petition, monitoring data were collected 
during the 1991 LMOS field study which also support the approval of the 
NO<INF>X waiver. The combination of modeling data and monitoring data 
meet the requirements for a section 182(f) exemption specified in EPA's 
guidance documents titled: ``State Implementation Plan; Nitrogen Oxides 
Implementation of Title I of the Clean Air Act Amendments of 1990'' (57 
FR 55628, November 25, 1992); and the ``Guideline for Determining 
Applicability of Nitrogen Oxide Requirement under Section 182(f)'' 
(December 1993).
    Response: Although the commenter did not specifically reference the 
data from which this conclusion was drawn, EPA acknowledges that data, 
such as concentrations of non-methane hydrocarbons and NO<INF>X and 
derived/monitored ozone production potentials of air parcels, collected 
for the urban source areas during the 1991 field study support the 
approval of the NO<INF>X waiver. It is noted, however, that the primary 
basis for the approval of the N0<INF>x waiver is the modeling results 
submitted in support of the waiver. The 1991 field data by themselves 
may not be an adequate support for the waiver since these data are 
limited in nature and do not present a complete picture of the impacts 
of NO<INF>X controls on LMOS modeling domain peak ozone concentrations.
    Comment: Commenters argue that NO<INF>X exemptions are provided for 
in two separate parts of the Act, in sections 182(b)(1) and 182(f). 
Because the NO<INF>X exemption tests in sections 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 section 182(f)(3), must occur during consideration of an 
approvable attainment or maintenance plan, unless the area has been 
redesignated as attainment. The commenters also argue that even if the 
petition procedures of section 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 section 
182(b)(1), since this is the only provision explicitly referenced by 
section 176(c), the Act's conformity provisions.
    Response: Section 182(f) contains very few details regarding the 
administrative procedures 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 NO<INF>X exemption requests under section 182(f), and 
instead believes that sections 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 section 182(f)(1), which indicates that the 
EPA should act on NO<INF>X exemptions in conjunction with action on a 
plan or a plan revision, does not appear in section 182(f)(3). While 
section 182(f)(3) references section 

[[Page 2430]]
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 State Implementation Plans (SIPs). Additionally, section 
182(f)(3) provides that ``person[s]'' [which section 302(e) of the Act 
defines to include States] may petition for NO<INF>X exemptions ``at 
any time,'' and requires the EPA to make its determination within 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 RACT and NSR 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 have needed to submit this exemption request 
for EPA review and rulemaking action several months before November 15, 
1992. In contrast, the CAA specifies that the attainment demonstrations 
were not due until November 1993 or 1994 (and EPA may take 12 to 18 
months to approve or disapprove the demonstrations). For marginal ozone 
nonattainment areas (subject to NO<INF>X NSR), no attainment 
demonstrations are called for in the CAA. For areas seeking 
redesignation to attainment of the ozone NAAQS, the CAA does not 
specify a deadline for submittal of maintenance demonstrations (in 
reality, EPA would generally consider redesignation requests without 
accompanying maintenance plans to be unacceptable). Clearly, the CAA 
envisions the submittal of and EPA action on NO<INF>X exemption 
requests, in some cases, prior to submittal of attainment or 
maintenance demonstrations.
    With respect to the comment that section 182(b)(1) is the 
appropriate authority for granting interim-period transportation 
conformity NO<INF>X exemptions, EPA agrees with the commenters and has 
published an interim final rule that changes the transportation 
conformity rule's reference to section 182(b)(1) as the correct 
authority under the Act for waiving the NO<INF>X build/no-build and 
less-than-1990 emissions tests for certain areas. See 60 FR 44762 (A 
related proposed rule, 60 FR 44790, published on the same day, invited 
public comment on how the Agency plans to implement section 182(b)(1) 
transportation conformity NO<INF>X exemptions. That proposal has been 
subsequently finalized. See 60 FR 57179). However, EPA also notes that 
section 182(b)(1), by its terms, only applies to moderate and above 
ozone nonattainment areas. Consequently, EPA believes that the interim-
reductions requirements of section 176(c)(3)(A)(iii), and hence the 
authority provided in section 182(b)(1) to grant relief from those 
interim-reduction requirements, apply only with respect to those areas 
that are subject to section 182(b)(1). EPA intends to continue to apply 
the transportation conformity rule's build/no-build and less-than-1990 
emissions tests for purposes of implementing the requirements of 
section 176(c)(1), and EPA intends to continue to provide relief from 
those requirements under section 182(f). In addition, because general 
federal actions are not subject to section 176(c)(3)(A)(iii), which 
explicitly references section 182(b)(1), EPA will also continue to 
offer relief under section 182(f)(3) from the applicable NO<INF>X 
requirements of the general conformity rule.
    In order to demonstrate conformity, transportation-related federal 
actions that are taken in ozone nonattainment areas not subject to 
section 182(b)(1) and, hence, not subject to section 176(c)(3)(A)(iii) 
must still be consistent with the criteria specified under section 
176(c)(1). Specifically, these actions must not, with respect to any 
standard, cause or contribute to new violations, increase the frequency 
or severity of existing violations, or delay attainment. In addition, 
such actions must comply with the relevant requirements and milestones 
contained in the applicable state implementation plan, such as 
reasonable further progress schedules, assumptions specified in the 
attainment or maintenance demonstrations, numerical emission limits, or 
prohibitions. EPA believes that the build/no-build and less-than-1990 
emissions tests provide an appropriate basis for such areas to 
demonstrate compliance with the above criteria.
    As noted earlier, EPA intends to continue to offer relief under 
section 182(f) from the interim NO<INF>X requirements of the conformity 
rules that would apply under section 176(c)(1) for the areas not 
subject to section 182(b)(1) in the manner described above. EPA 
believes this approach is consistent both with the way NO<INF>X 
requirements in ozone nonattainment areas are treated under the Act 
generally, and under section 182(f) in particular. The basic approach 
of the Act is that NO<INF>X reductions should apply when beneficial to 
an area's attainment goals, and should not apply when unhelpful or 
counterproductive. Section 182(f) reflects this approach but also 
includes specific substantive tests which provide a basis for EPA to 
determine when NO<INF>X requirements should not apply. There is no 
substantive difference between the technical analysis required to make 
an assessment of NO<INF>X impacts on attainment in a particular area 
whether undertaken with respect to mobile source or stationary source 
NO<INF>X emissions. Moreover, where EPA has determined that NO<INF>X 
reductions will not benefit attainment or would be counterproductive in 
an area, the EPA believes it would be unreasonable to insist on 
NO<INF>X reductions for purposes of meeting reasonable further progress 
or other milestone requirements. Thus, even as to the conformity 
requirements of section 176(c)(1), EPA believes it is reasonable and 
appropriate, first, to offer relief from the applicable NO<INF>X 
requirements of the general and transportation conformity rules in 
areas where such reductions would not be beneficial and, second, to 
rely in doing so based on the exemption tests provided in section 
182(f).
    For moderate and above ozone nonattainment areas which are relying 
on modeling data in petitioning for a transportation conformity 
NO<INF>X exemption, the proposed change affects the process for 
applying for such waivers. Unlike section 182(f)(3), section 182(b)(1) 
requires that EPA approve a NO<INF>X waiver (i.e., determine that 
additional reductions of NO<INF>X would not contribute to attainment) 
as part of a SIP revision. Thus, under section 182(b)(1), petitions for 
transportation conformity NO<INF>X waivers for areas subject to that 
section must be submitted as formal SIP revisions by the Governor (or 
designee) following a public hearing. As explained previously, EPA will 
continue to process and approve, under section 182(f)(3), conformity 
NO<INF>X waivers for areas not subject to section 182(b)(1) without 
public hearings or submission by the Governor. Finally, as noted 
earlier, the NO<INF>X provisions of the general conformity rule would 
not be affected by this proposal. A NO<INF>X waiver under section 
182(f) removes the NO<INF>X general conformity requirements entirely 
and would continue to do so. The Clean Air Act's provision for 
transportation conformity NO<INF>X waivers stems from section 
176(c)(3)(A)(iii), which addresses only transportation conformity, and 
not general conformity. Therefore, the statutory authority for general 
conformity NO<INF>X waivers is not 

[[Page 2431]]
required to be section 182(b) for any areas and may continue to be 
section 182(f) for all areas.
    It should be noted that EPA is taking no final action on a NO<INF>X 
exemption for transportation conformity for ozone nonattainment areas 
classified as moderate and above in the petition covered by this 
rulemaking. The States of Illinois, Indiana, Michigan, and Wisconsin 
may seek a transportation conformity NO<INF>X exemption for such areas 
through formal SIP revisions pursuant to section 182(b)(1) of the Act 
(Illinois and Wisconsin have submitted such SIP revisions, which are 
currently being reviewed by the EPA).
    Comment: Commenters argue that waiver of NO<INF>X control 
requirements is unlawful if such a waiver would impede attainment and 
maintenance of the ozone standard in downwind areas.
    Response: As a result of these comments, the EPA reevaluated its 
position on this issue and has revised the previously issued guidance. 
See Memorandum, ``Section 182(f) Nitrogen Oxides (NO<INF>X) 
Exemptions--Revised Process and Criteria'' dated February 8, 1995, for 
John Seitz's signature. As described in this memorandum, 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 
the NO<INF>X emissions could contribute significantly to nonattainment 
in, or interfere with maintenance by, any other State or in another 
nonattainment area within the same State. This action would be 
independent of any action taken by EPA on a NO<INF>X exemption request 
under section 182(f). That is, EPA action to grant or deny a NO<INF>X 
exemption request under section 182(f) for any area would not shield 
that area from EPA action to require NO<INF>X emission reductions, if 
necessary, under section 110(a)(2)(D).
    Significant new modeling analyses are being conducted by the Lake 
Michigan Air Directors Consortium (LADCO) (the technical and functional 
directors of the Lake Michigan Ozone Study and the Lake Michigan Ozone 
Control Program, including representatives of the four LMOS States and 
the EPA), EPA and other agencies as part of the Ozone Transport 
Assessment Group (OTAG) process. The OTAG process is a consultative 
process among the eastern States and EPA. The OTAG process, which ends 
at the close of 1996, assesses national and regional emission control 
strategies using improved modeling techniques. The goal of the OTAG 
process is for EPA and the affected States to reach consensus on the 
additional regional and national emission reductions that are needed 
for attainment of the ozone standard. Based on the results of the OTAG 
process, States are expected to submit by mid-1997 attainment plans 
which show attainment of the ozone standard through local, regional, 
and national controls.
    The OTAG plans to complete additional modeling between now and 
September 1996 using emissions data and strategies currently being 
developed among OTAG workgroups. These new analyses will improve the 
information available on NO<INF>X and VOC impacts on ozone 
concentrations both in the LMOS area and over the eastern half of the 
United States. These analyses will for example, provide more accurate 
boundary conditions for the LMOS area analyses; this provides greater 
accuracy in both the attainment plan and in the decision regarding 
NO<INF>X reductions contribution to attainment.
    In light of the modeling completed thus far and considering the 
importance of the OTAG process and attainment plan modeling efforts, 
EPA is granting this waiver on a contingent basis. As the OTAG modeling 
results and control recommendations are completed in 1996, this 
information will be incorporated into the attainment plans being 
developed by the LADCO States. When these attainment plans are 
submitted to EPA in mid-1997, these new modeling analyses will be 
reviewed to determine if the NO<INF>X waiver should be continued, 
altered, or removed.
    The attainment plans will supersede the initial modelling results 
which are the basis for the waiver which EPA is granting in this rule. 
To the extent the attainment plans include NO<INF>X controls on certain 
major stationary sources in the LMOS ozone nonattainment areas, EPA 
will remove the NO<INF>X waiver for those sources. To the extent the 
plans achieve attainment without additional NO<INF>X reductions from 
certain sources, the NO<INF>X reductions would be considered excess 
reductions and, thus, the exemption would continue for those sources. 
EPA's rulemaking action to reconsider the initial NO<INF>X waiver may 
occur simultaneously with rulemaking action on the attainment plans.
    Comment: Comments were received regarding the scope of exemption of 
areas from the NO<INF>X requirements of the conformity rules. The 
commenters argue that such exemptions waive only the requirements of 
section 182(b)(1) to contribute to specific annual reductions; not the 
requirement that conformity SIPs contain information showing the 
maximum amount of motor vehicle NO<INF>X emissions allowed under the 
transportation conformity rules and, similarly, the maximum allowable 
amounts of any such NO<INF>X emissions under the general conformity 
rules. The commenters admit that, in prior guidance, EPA has 
acknowledged the need to amend a drafting error in the existing 
transportation conformity rules to ensure consistency with motor 
vehicle emissions budgets for NO<INF>X, but want EPA, in actions on 
NO<INF>X exemptions, to explicitly affirm this obligation and to also 
avoid granting waivers until a budget controlling future NO<INF>X 
increases is in place.
    Response: As explained previously, EPA's transportation conformity 
rule originally provided for a NO<INF>X waiver if an area received a 
section 182(f) exemption. The EPA published amendments to the 
transportation conformity rule in a final rule on November 14, 1995 (60 
FR 57179) which addresses the issue of conformity to NO<INF>X budgets 
in SIPs when a NO<INF>X waiver for transportation conformity has been 
approved. The final rule is based on an August 29, 1995 (60 FR 44790) 
proposed rule and comments which were received regarding that proposal. 
The final rule requires consistency with NO<INF>X motor vehicle 
emissions budgets in control strategy SIPs regardless of whether a 
NO<INF>X waiver has been granted. The NO<INF>X build/no-build tests and 
less-than-1990 tests, however, no longer apply to ozone nonattainment 
areas receiving a NO<INF>X waiver. Furthermore, some flexibility is 
possible for areas that have been issued a NO<INF>X waiver based on air 
quality modeling data. This flexibility is described in the notice of 
final rulemaking (60 FR 57183). The NO<INF>X emission budget provisions 
of the revised rules will be effective 90 days after the date of the 
final rule (November 14, 1995).
    Comment: Commenters argue that the Act does not authorize any 
waiver of the NO<INF>X reduction requirements until conclusive evidence 
exists that such reductions are counterproductive.
    Response: EPA does not agree with this comment since it ignores the 
Congressional intent as evidenced by the plain language of section 
182(f), the structure of the Title I ozone subpart as a whole, and 
relevant legislative history. By contrast, in developing and 
implementing its NO<INF>X exemption policies, EPA has sought an 
approach that reasonably accords with that intent. Section 182(f), in 
addition to imposing control requirements on major stationary sources 
of NO<INF>X similar to those that apply for sources of VOC, also 
provides for an exemption (or limitation) from application of these 
requirements if, under one of several 

[[Page 2432]]
tests, EPA determines that in certain areas NO<INF>X reductions would 
generally not be beneficial towards attainment of the ozone standard. 
In section 182(f)(1), Congress explicitly conditioned action on 
NO<INF>X exemptions on the results of an ozone precursor study required 
under section 185B of the Act. Because of the possibility that reducing 
NO<INF>X in an 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 Title I of the 
Act, to avoid requiring NO<INF>X reductions where such would not be 
beneficial or would be counterproductive. In describing these various 
ozone provisions, including section 182(f), the House Conference 
Committee Report states in the 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, the command in section 
182(f)(1) that EPA ``shall consider'' the 185B report taken together 
with the timeframe the Act provides 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.
    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 by additional, current information.
    In addition, the EPA believes, as described in EPA's December 1993 
guidance, that section 182(f)(1) of the Act provides that the new 
NO<INF>X requirements shall not apply (or may 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 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 or not applied), 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: Commenters argue that, while NO<INF>X controls may be less 
beneficial than VOC-only controls in reducing ozone concentrations in 
some areas of the Lake Michigan region on some days, the States have 
not demonstrated that VOC-only controls will sufficiently reduce ozone 
concentrations for the majority of episodes, particularly in areas 
farther downwind.
    Response: Several modeling and data analyses were performed by the 
States and LADCO to examine the relative benefits of VOC versus 
NO<INF>X emission controls. The modeling analyses included emissions 
sensitivity tests for several different basecase scenarios, including: 
(1) an original base period emissions inventory; (2) increased VOC 
emissions in the base period inventory (higher VOC/NO<INF>X ratios); 
(3) increased base period VOC/NO<INF>X ratios through either increased 
VOC emissions or decreased NO<INF>X emissions; and (4) differences in 
photochemistry photolysis rates as applied in the Urban Airshed Model--
Version IV (UAM-IV) (the photochemical dispersion model generally 
accepted and supported by the EPA) and in UAM-V (the photochemical 
dispersion model approved by the EPA for use in the LMOS).
    Despite differences in the absolute and relative amounts of VOC and 
NO<INF>X emissions in the sensitivity analyses, the analyses found that 
the modeled domain-wide peak ozone concentration, the areal coverage of 
modeled ozone concentrations exceeding 120 parts per billion (ppb), and 
the number of hours with modeled ozone concentrations exceeding 120 ppb 
decreased in response to VOC emission reductions and increased in 
response to NO<INF>X emission reductions (up to more than 60 percent 
controls for some episode analysis days) for all modeled episodes.
    VOC and NO<INF>X emission reductions were found to produce 
different impacts spatially. In and downwind of major urban areas, 
within the ozone nonattainment areas, VOC reductions were effective in 
lowering peak ozone concentrations, while NO<INF>X emission reductions 
resulted in increased peak ozone concentrations. Farther downwind, 
within attainment areas, VOC emissions reductions became less effective 
for reducing ozone concentrations, while NO<INF>X emission reductions 
were effective in lowering ozone concentrations. It must be noted, 
however, that the magnitude of ozone decreases farther downwind due to 
NO<INF>X emission reductions was less than the magnitude of ozone 
increases in the ozone nonattainment areas as a result of the same 
NO<INF>X emission reductions.
    Analyses of ambient data by LMOS contractors provided results which 
corroborated the modeling results. These analyses identified areas of 
VOC- and NO<INF>X-limited conditions (VOC-limited conditions would 
imply a greater sensitivity of ozone concentrations to changes in VOC 
emissions. The reverse would be true for NO<INF>X-limited conditions.) 
and tracked the ozone and ozone precursor concentrations in the urban 
plumes as they moved downwind. The analyses indicated VOC-limited 
conditions in the Chicago/Northwest Indiana and Milwaukee areas and 
NO<INF>X-limited conditions further downwind. These results imply that 
VOC controls in the Chicago/Northwest Indiana and Milwaukee areas would 
be more effective at reducing peak ozone concentrations within the 
severe ozone nonattainment areas.
    The consistency between the modeling results and the ambient data 
analysis results for all episodes with joint data supports the view 
that the UAM-V modeling system developed in the LMOS may be used to 
investigate the relative merits of VOC versus NO<INF>X emission 
controls. The UAM-V results for all modeled episodes point to the 
benefits of VOC controls versus NO<INF>X controls in reducing the 
modeled domain peak ozone concentrations.
    Comment: Commenters argue that the UAM-V modeling system is 
experimental and untested and has not yet undergone extensive peer 
review by independent experts, unlike the Regional Oxidant Model (ROM) 
supported by the EPA. The EPA should review the ROM results for the 
episodes modeled in the LMOS to show 

[[Page 2433]]
consistency between the ROM results and those for UAM-V.
    Response: Even though the UAM-V modeling system is relatively new, 
it has undergone external review. LADCO supported an external review of 
the computer code used in the modeling system and an external 
evaluation of model performance in the Lake Michigan region. Modeling 
results show that the system, as it is currently being used for control 
strategy analyses, produces ozone concentrations which meet EPA-
established criteria for adequate model performance.
    Direct comparisons of ROM and UAM-V results must be conducted with 
caution and may produce conflicting results even though both modeling 
systems are performing adequately. The UAM-V modeling system is 
theoretically more complete and incorporates improved scientific 
principles and more area-specific input data. ROM, on the other hand, 
is a simpler modeling system with lower spatial resolution, more 
uncertain emission estimates, and no special treatment of 
meteorological phenomena, such as lake-breeze effects (critical factors 
in the Lake Michigan area), and individual source plumes for large 
sources. These differences in model formulation and data input 
resolution as well as differences in output resolution may preclude 
direct comparisons of the two models. It should be noted, that such a 
comparison may be attempted in the near future because UAM-V may be 
applied to a larger domain to assess the impacts of long range 
transport of ozone and ozone precursors.
    Comment: Commenters state that the EPA must rely on the recent 
National Academy of Sciences (NAS) report in its review of NO<INF>X 
waivers. The commenters pointed out that the NAS report found that to 
reduce transported ozone, NO<INF>X reductions are needed.
    Response: The NAS report and EPA's companion report both support 
the conclusion that, as a general matter for ozone nonattainment areas 
across the country, NO<INF>X reductions in addition to VOC reductions 
will be needed to achieve attainment. This general conclusion, however, 
must be assessed in the context of the more detailed analysis provided 
in those same reports. For example, the NAS report notes that NO<INF>X 
reductions can have either a beneficial or detrimental effect on ozone 
concentrations, depending on the locations and emission rates of VOC 
and NO<INF>X sources in a region. The effect of NO<INF>X reductions 
depends on the local VOC/NO<INF>X ratio and a variety of other factors. 
In its report issued pursuant to section 185B of the Act, EPA stated 
that ``[a]pplication of gridded photochemical models on a case by case 
basis is required to determine the efficacy of NO<INF>X controls, 
because the ozone response to precursor reductions is area specific.''
    The analyses performed in the Lake Michigan region demonstrate a 
local disbenefit from NO<INF>X control in the urban nonattainment 
areas. Those same analyses suggest there would be ozone benefits 
experienced farther downwind from NO<INF>X control in the urban 
nonattainment areas. LADCO acknowledges that NO<INF>X controls in the 
LMOS modeling domain may be needed ultimately to reduce ozone transport 
in the eastern United States. Nonetheless, the modeling results show 
that, due to the ozone reduction disbenefits associated with NO<INF>X 
reductions for the ozone nonattainment areas in the LMOS domain, these 
areas meet the test under section 182(f)(1)(A) of the Act required to 
support a waiver from the NO<INF>X requirements of section 182(f).
    Comment: Commenters believe that NO<INF>X emission reductions will 
not only reduce transported ozone, but will also improve visibility, 
especially in downwind Class I areas.
    Response: The NO<INF>X control waiver request was submitted in 
conjunction with the preparation of a four-State ozone control plan. To 
this end, the focus is on the local ozone problem in the Lake Michigan 
region. Other air pollution problems will be dealt with as part of 
separate regulatory activities.
    Comment: Commenters argue that the burden of proof is on the States 
and LADCO to demonstrate that NO<INF>X reductions will not be 
beneficial over the entire Lake Michigan region. It was the explicit 
intent of Congress that NO<INF>X reductions are to be presumed to be 
beneficial unless demonstrated otherwise.
    Response: Modeling and data analyses addressed in the States' 
NO<INF>X waiver request demonstrate the positive benefits of VOC 
control in the major urban areas and downwind in the areas of highest 
ozone concentrations. These analyses also show the negative effects of 
NO<INF>X control in these same ozone nonattainment areas, and suggest 
positive benefits from NO<INF>X control farther downwind in attainment 
areas. In other words, the benefits resulting from NO<INF>X control are 
modelled to occur in areas that experience, based on modeling and 
monitoring data, ozone concentrations well below the ozone standard 
even prior to the implementation of emission controls. Consequently, as 
required under section 182(f), the States have demonstrated the 
disbenefits of implementing NO<INF>X emission controls in terms of 
greater domain-wide peak ozone concentrations throughout the LMOS 
modeling domain. Since these States are relying on the section 
182(f)(1)(4) ``contribute to attainment'' test, they do not also need 
to demonstrate NO<INF>X reduction benefits over the entire Lake 
Michigan region as the commenters claim.
    As noted above, the EPA believes, as described in EPA's December 
1993 guidance, that section 182(f)(1) of the Act provides that the new 
NO<INF>X requirements shall not apply 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) and the modeling results supplied with the LMOS States' 
NO<INF>X waiver request, the EPA believes these States have met the 
requirements of test (2) above since the States have demonstrated that 
across-the-board NO<INF>X controls in the LMOS ozone nonattainment 
areas will interfere with the attainment of the ozone standard in these 
nonattainment areas. Based on the scheme provided by Congress under the 
Act, it is not necessary for the States to also demonstrate the lack of 
ozone benefits from NO<INF>X controls everywhere within the entire Lake 
Michigan region.
    As a separate matter and as noted above, the States, LADCO, and the 
EPA are conducting additional studies on the impact of ozone precursor 
(including NO<INF>X) emission reductions in areas outside of the LMOS 
ozone nonattainment areas on downwind ozone concentrations. These 
studies, in part, will consider the LMOS nonattainment areas as 
downwind areas to assess the impact of upwind emissions controls on 
ozone and ozone precursor transport into these areas.
    Comment: Commenters argue that LADCO's statistical comparisons 
provide an incomplete evaluation of model performance and do not assess 
the model's ability to accurately predict the impact of VOC versus 
NO<INF>X control.
    Response: LADCO, through a September 1994 model evaluation report, 
has documented a thorough evaluation of the modeling system 
performance. The model evaluation, which is based on an ideal model 

[[Page 2434]]
evaluation process proposed by a number of technical experts <SUP>1, 
includes the following elements:

    \1\ ``A Conceptual Framework for Evaluating the Performance of 
Grid-Based Photochemical Air Quality Simulation Models'', Roth, 
Reynolds, Tesche, and Dennis (1991).
---------------------------------------------------------------------------

    (1) Evaluations of the scientific formulation of the model;
    (2) Assessment of the fidelity of the computer codes to scientific 
formulation, governing equations, and numerical solution procedures;
    (3) evaluation of the predictive performance of the individual 
process modules and preprocessor modules;
    (4) evaluation of the full model's predictive performance;
    (5) application of sensitivity tests to assure conformance of the 
model with known or expected behavior;
    (6) application of comparative modeling; and
    (7) implementation of quality control/quality assurance activities.
    The September 1994 model evaluation report addressed all of these 
elements for the modeling system used in the LMOS. In addition, the 
report also discussed several analyses which were performed 
specifically to assess the reliability of the model's response to VOC 
and NO<INF>X emission reductions (see response to comment above 
concerning the response of the model to VOC-only controls).
    The model evaluation conducted for the LMOS modeling system 
examined performance over as wide a range of emission densities as 
possible (both spatial and temporal ranges were considered), considered 
topographic and land use uncertainties, and evaluated the impacts of 
variations in meteorology. Demonstration of acceptable model 
performance over this range of conditions reflects correct 
representation of the governing chemical and physical processes. It is, 
therefore, reasonable to assume that the model will respond 
realistically irrespective of emission strengths of VOC versus 
NO<INF>X.
    Comment: Commenters argue that LADCO has failed to conduct 
additional analyses of model performance which provide a better test of 
VOC-NO<INF>X sensitivity [e.g., analyses of afternoon concentrations of 
total reactive nitrogen (NO<INF>y)]. An examination of ambient NO<INF>X 
concentrations over Lake Michigan clearly show NO<INF>X-limited 
conditions (i.e., NO<INF>X control should be beneficial for reducing 
ozone concentrations) and, further, that the modeled NO<INF>X 
concentrations are overestimated, which would cause the model to 
incorrectly identify VOC control as being preferential to NO<INF>X 
control. NO<INF>X concentrations, as predicted by the model to occur 
over Lake Michigan (i.e., 90 parts per billion), are unlikely to occur 
anywhere other than in urban centers.
    Response: The September 1994 model evaluation report submitted by 
LADCO does include the type of analysis suggested by the commenters. 
This analysis of predicted and measured NO<INF>2 concentrations 
(NO<INF>y concentrations were not measured making evaluation of modeled 
results for NO<INF>y impossible. NO<INF>X is assumed to be primarily 
NO<INF>2 at the peak ozone times and locations.) at the time and 
location of maximum ozone concentration for each day shows no 
discernible bias in the model predictions.
    The September 1994 model evaluation report also includes a general 
assessment of model performance for NO<INF>2. Rather than focusing on 
just one or two days, as was done by the commenters, the evaluation 
considered all of the modeled high ozone days. The results for all high 
ozone days demonstrate that model performance overall for NO<INF>2 is 
good.
    The magnitude of the predicted NO<INF>X concentrations over Lake 
Michigan, as cited by the commenters, is not correct. The model 
predicted NO<INF>2 concentrations over Lake Michigan on the order of 50 
parts per billion or less. NO<INF>X measurements by the LMOS aircraft 
over Lake Michigan were on the order of 30--50 parts per billion, in 
good agreement with the model's predicted concentrations (NO<INF>X over 
Lake Michigan is primarily NO<INF>2).
    Comment: Commenters argue that VOC emissions are likely 
underestimated in the emission inventory used for the LMOS modeling, 
which would cause a bias in the model towards favoring VOC control. 
Also, LADCO's finding that its VOC inventory may be low by only 30 
percent conflicts with studies elsewhere which suggest a high degree of 
underestimation.
    Response: Several methods were used by LADCO to evaluate the LMOS 
emissions inventory, including comparisons of ambient to emissions-
based nonmethane organic compound to NO<INF>X (NMOC:NO<INF>X) ratios; 
comparisons of ambient to emissions-based carbon monoxide to NO<INF>X 
ratios; receptor modeling; and comparisons of ambient to model-based 
NMOC:NO<INF>X ratios. These analyses for an initial emissions inventory 
suggested a significant underestimation of VOC emissions, 
overestimation of NO<INF>X emissions, or some combination of these two. 
Consequently, LADCO conducted an extensive re-evaluation of the 
emissions inventory and made several modifications. The resulting, 
final emissions inventory was found to compare more closely to the 
ambient NMOC:NO<INF>X ratios (the ambient NMOC:NO<INF>X ratios are only 
about 1.0--1.5 times greater than the emissions inventory-based 
NMOC:NO<INF>X ratios).
    To assess the effect of the emissions uncertainty on the model's 
response to VOC and NO<INF>X reductions, sensitivity tests were 
performed with a higher VOC:NO<INF>X ratio. The results of this 
modeling were qualitatively the same (NO<INF>X disbenefits were 
demonstrated for attainment of the ozone standard) as those found for 
the unadjusted emissions inventory. Consequently, any possible 
underestimation of VOC emissions does not affect the conclusions drawn 
concerning VOC versus NO<INF>X controls.
    With regard to the results of other emissions studies, it should 
first be noted that a certain degree of variability of emissions ratios 
(NMOC:NO<INF>X) exists depending of the locations of the studies and 
the sources sampled. Application of the results of these studies to the 
LMOS source areas is not straight forward and must be viewed to have a 
high degree of uncertainty. The LMOS results leading to the adjustment 
of emissions and the favorable comparison of modeled and monitored 
results lends some credibility to the emissions used in the LMOS.
    Secondly, the LMOS States and LADCO, based on the studies of mobile 
source emissions conducted previously in other areas, recognized the 
potential for the underestimation of mobile source VOC emissions. This 
recognition was part of the basis for the comparison of monitored and 
modeled emissions and the modeling sensitivity studies considering 
alternate NMOC:NO<INF>X ratios. As indicated above, increased 
NMOC:NO<INF>X ratios lead to the same conclusions regarding the impacts 
of VOC versus NO<INF>X emissions controls.
    Comment: A commenter notes that the problems with the LMOS modeling 
are not ``routine'' model errors. The LMOS model results, as presented 
in a February 1994 report by Alpine Geophysics, showed large errors in 
comparison with measurements for certain pollutant species and these 
errors suggest a bias in favor of VOC control and against NO<INF>X 
control. The finding that the model systematically overestimates 
NO<INF>y also suggests that the model is biased in favor of VOC 
control.
    Response: The commenter has chosen to rely on outdated results from 
a preliminary February 1994 model evaluation report. Since then, as 
documented, for example, in the 

[[Page 2435]]
September 1994 model evaluation report submitted to the EPA by LADCO, 
significant improvements have been made in the modeling system and in 
its inputs. (See also the discussions in response to other comments 
regarding the model's performance.) The improved modeling system and 
its results make moot the concerns of the commenter.
    Comment: A commenter is concerned about the quality of the multi-
species evaluation contained in the September 1994 model evaluation 
report. The commenter notes that an interim report indicated that the 
model performed poorly in modeling the concentrations of paraffins, 
frequently erring by a factor of two or more. Such an error implies 
that the model may be biased in favor of VOC controls. The commenter 
further notes that the September 1994 model evaluation report fails to 
include a significant discussion of multi-species evaluations, 
particularly a discussion of modeled versus measured paraffin 
concentrations.
    Response: The September 1994 report does discuss the fact that 
multi-species analyses were performed for the updated modeling system 
and updated input data. As noted above, the updated model performed 
acceptably for the prediction of species such as ozone, NO<INF>2, 
NO<INF>X, and VOC:NO<INF>X. The report did fail to discuss most other 
species addressed in the model. LADCO has acknowledged this failure, 
and has offered to supply any data requested by the EPA. LADCO, 
however, has indicated, in its own responses to the comments on the 
proposed approval of the NO<INF>X waiver, that the multi-species 
performance of the model has significantly improved from past versions 
of the modeling system and input data. It is not clear how the 
performance of the model regarding prediction of paraffin 
concentrations has changed.
    Comment: A commenter notes that the emissions inventory used in the 
modeling underestimates emissions of both anthropogenic and biogenic 
VOC emissions. A particular deficiency is the lack of any biogenic 
isoprene emissions in the Chicago area. In addition, the failure to 
evaluate model performance for isoprene is especially important. Models 
that recommend VOC-based control strategies should be required to 
demonstrate that they have not underestimated ambient concentrations of 
isoprene.
    Response: As noted in a response to a comment above, the current 
version of the emissions inventory used in the modeling reasonably 
agrees with the ambient data. Although the current LMOS emissions 
inventory does not contain biogenic isoprene emissions, calculations 
made by LADCO, as discussed in LADCO's response to this comment, 
indicate that this does not result in a significant change in the VOC 
inventory (addition of biogenic isoprene emissions would only increase 
the regional VOC inventory by 1 percent or less). Ambient VOC 
measurements also reflect negligible isoprene concentrations in the 
Chicago, Gary, and Milwaukee urban areas. The lack of an evaluation of 
isoprene concentrations should not detract from the overall assessment 
of model performance.
    LADCO has noted that the EPA-recommended emission factors for 
biogenic isoprene are under review nationally. LADCO has committed to 
revise the emissions inventory if these emission factors are changed 
significantly, particularly if they are significantly increased.
    LADCO has noted that the UAM-V modeling system has been thoroughly 
evaluated. In fact this evaluation significantly exceeds the 
requirements of the EPA and exceeds the evaluations employed for UAM in 
most other ozone nonattainment areas in the United States.
    Comment: A commenter notes that the September 1994 model evaluation 
report fails to include modeled versus measured NO<INF>2 concentrations 
from locations that represent maximum measured ozone concentrations. It 
is also noted that two-thirds of the modeled-measured data pairs that 
were documented in the model evaluation report lie outside of the 
factor-of-two range implying poor agreement between modeled and 
measured concentrations.
    Response: LADCO notes that the modeled versus measured NO<INF>2 
data were included in the final model evaluation report (October 1994). 
These data show that there is no discernible bias in the model 
predictions. Furthermore, only a few data pairs reflect an 
overprediction by more than a factor of two. Most of the data pairs lie 
either within the factor-of-two range, or reflect underprediction by 
more than a factor-of-two (underprediction of NO<INF>2 would favor 
NO<INF>X control over VOC control in reducing ozone concentrations). 
Despite the possible underprediction of some NO<INF>2 concentrations, 
the model continues to show that NO<INF>X control provides disbenefits 
for attainment of the ozone standard in the LMOS domain.
    Comment: It is noted that Table 7 in the September 1994 model 
evaluation report contains NO<INF>X data which differ from those in a 
February 1994 model evaluation report. It is also noted that the 
September 1994 model evaluation report also fails to include data for a 
critical site (the Mid-Lake Boat) on July 18, 1991.
    Response: The NO<INF>X values contained in the February 1994 report 
did not reflect the final quality-assured data for the boat-based 
monitors used in the 1991 LMOS field study. The final data were 
addressed in the September 1994 model evaluation report. Nevertheless, 
no firm conclusions should be based on the NO<INF>X data from the boats 
because these data were found to be suspect.
    Table 7 in the September 1994 report did not include the Mid-Lake 
Boat data for July 18, 1991 because the Boat stopped collecting data on 
this day after 1600 Central Daylight Time (CDT). The modeling domain-
wide peak observed and modeled concentrations, as noted in Table 7, 
occurred after 1600 CDT. In any case, the peak ozone concentration at 
the Mid-Lake Boat on this day was 158 parts per billion (1400 CDT). The 
magnitude of the NO<INF>X concentration for this hour was still fairly 
high (13 parts per billion), indicating that the air mass may still 
have been VOC-limited, which favors VOC control of upwind sources over 
NO<INF>X control for the reduction of ozone levels.
    Comment: The February 1994 model evaluation report contains 
evidence that the mixing algorithm in UAM-V has serious problems. In 
particular, the model is overestimating ambient NO<INF>X concentrations 
by a factor of three or more during the mid-July 1991 episode.
    Response: The September 1994 model evaluation report shows that the 
model performance statistics for NO<INF>2 (as noted above, NO<INF>X 
over Lake Michigan is primarily NO<INF>2 with little NO) during the 
mid-July episode are reasonable. The spatial concentration plots for 
NO<INF>2 show that the predicted values are highest in the Chicago 
downtown area and decrease downwind over Lake Michigan. The latest 
baseline model input data set (Basecase C) produces significantly lower 
peak NO<INF>2 concentrations than did the earlier baseline model input 
data set considered by the commenter. The new input data lead to 
results similar to concentrations measured in aircraft over Lake 
Michigan during the 1991 field study.
    Comment: A commenter claims that the September 1994 model 
evaluation report erroneously claims that 1991 field study NO<INF>y 
measurements were not available and that most local afternoon NO<INF>y 
is expected to be NO<INF>2.
    Response: Contrary to the commenter's claims, NO<INF>y data were 
not collected during the 1991 field program. The only nitrogen species 
for which 

[[Page 2436]]
ambient data were collected were NO, NO<INF>2, NO<INF>X, and 
peroxyacetlnitrate (PAN) (collected at only a few sites). LADCO 
responds and EPA agrees that, while NO<INF>y reflects many nitrogen 
compounds, NO<INF>2 is a reasonable surrogate for these analyses.
    Comment: Commenters note that LADCO has requested and received EPA 
approval to assume a future modeling domain boundary peak ozone 
concentration of 60 parts per billion. An analysis of this assumption 
leads the commenters to conclude that NO<INF>X transported into the 
modeling domain would have to be reduced by approximately 66 percent 
from current emission levels. Given the policy established in the 
approval of the NO<INF>X exemption petition, the commenters question 
the feasibility of this boundary condition assumption.
    Response: It is true that the EPA has approved the assumption of a 
future modeling domain boundary ozone concentration not exceeding 60 
parts per billion. It should be noted, however, that this is a 
temporary assumption to be used only in the initial phase of ozone 
modeling needed to develop the areas' final ozone demonstrations of 
attainment. Regional modeling over a larger domain will be conducted to 
better assess the level of ozone transport in the Eastern United 
States. This regional modeling will also assess the impacts of possible 
national emission control efforts to generally lower ozone precursor 
emissions throughout this area. The final phase of local ozone modeling 
will use ozone boundary conditions based on the regional modeling.
    It should also be noted that the EPA, under section 110(a)(2)(D) of 
the Act, may require additional NO<INF>X emission controls in the areas 
exempted from specific NO<INF>X control requirements under section 
182(f) of the Act. The NO<INF>X emission reduction requirements under 
section 110(a)(2)(D) may exceed those under section 182(f) if the 
regional modeling supports the need for such emission reductions. The 
boundary ozone concentration that will ultimately be used in the final 
demonstrations of attainment will be backed by adequate ozone precursor 
emission reductions.
    Comment: Commenters argue that the NO<INF>X exemption petition 
ignores the LMOS States' contribution to their own boundary conditions. 
Insufficient analyses have been presented that consider the benefits in 
lowered boundary ozone levels that could be achieved during episodes 
when locally generated ozone and ozone precursors are transported out 
of and back into the modeling domain. Exceedances observed on June 18, 
1994 are of note in this regard. On this day, it appears that the 
Chicago/Gary ``plume'' actually moved north-northeast only to later 
reimpose itself on the metropolitan area. The benefits for NO<INF>X 
control are not presented for this meteorological phenomenon.
    Response: Modeling for LMOS considered all high ozone episodes in 
1991. Modeling for these episodes will form the basis for the ultimate 
ozone demonstrations of attainment to be completed in 1997 under 
current EPA policy. The NO<INF>X exemption petition is based on 
modeling for all of these high ozone episodes, and, as such, meets the 
modeling requirements in the December 1993 EPA guidance. It should be 
noted that the episodes considered cover a significant range of 
meteorological phenomena, including ozone transport and recirculation 
within the LMOS domain. A more complete picture of ozone transport out 
of and back into the modeling domain will not be available until after 
the completion of the regional modeling discussed in the response to 
the previous comment.
    Comment: A commenter argues that incorporating the Michigan 
Counties of Saginaw, Bay, Genessee, Shiawasse, Midland, Ingham, 
Jackson, Lenawee, and Calhoun is an attempt to factitiously expand the 
domain of LADCO's NO<INF>X disbenefit analysis. It is also noted that 
the EPA has included the fictional Michigan County of Hillside. The 
commenter argues that, if EPA had intended to exempt Hillsdale County 
rather than ``Hillside County,'' the EPA should publish a correction 
notice amending the proposed rulemaking notice.
    Response: When LADCO conducted the modeling analysis of NO<INF>X 
control impacts, NO<INF>X controls were modeled using the LMOS 
intermediate modeling domain (Grid B). The Counties noted by the 
commenter are located outside of Grid B. Therefore, LADCO did not 
determine as part of this modeling effort the potential ozone impacts 
of NO<INF>X emission reductions for these Counties. It can be noted, 
however, that the EPA has received and reviewed base period modeling 
for the larger domain (Grid A) which did include the Counties in 
question. Base period (1991) modeling of high ozone episodes in the 
LMOS domain has been determined by the EPA to be validated based on 
comparison of monitored and modeled ozone concentrations. Modeling 
results in Grid A in the Counties in question and in their downwind 
environs shows that the ozone standard is not violated in these areas. 
This is confirmed by monitoring data collected in 1991 during the LMOS 
field study. Based on this observation, it can be concluded that 
additional NO<INF>X emission controls in these Counties would not 
contribute to attainment of the ozone standard. Therefore, under the 
``contribute to attainment'' test of section 182(f), the NO<INF>X 
waiver should be approved for these Counties. It should also be noted 
that emission reductions in the ``additional'' Counties are not likely 
to significantly impact peak ozone concentrations in the LMOS modeling 
domain. (Emission reductions in these Counties, however, may be shown 
in future regional modeling to lower ozone transport into other ozone 
nonattainment areas. If such is the case, the State of Michigan may 
wish to or be requested to consider additional emission controls for 
these Counties.) A definitive conclusion can not be made here since the 
ozone and precursors generated by the these Counties are transported 
out of the modeling domain for most modeled episodes.
    The EPA did err in the proposed rulemaking in listing ``Hillside 
County'' instead of Hillsdale County. This error is corrected here. 
This error is not sufficient, in the view of the EPA, to warrant a 
revised proposed rulemaking. The listing of the covered Counties and 
the location of Hillsdale County should have led a reviewer (as indeed 
it did the commenter) of the proposed rulemaking to conclude that the 
listing of ``Hillside County'' was a typographical error and that the 
EPA had intended to list Hillsdale County.

III. Final Action

    The comments received were generally found to warrant no changes 
from the proposed action on this NO<INF>X exemption request with the 
following exceptions: (1) EPA is not taking final action to approve the 
NO<INF>X exemption for transportation conformity requirements of the 
Act for the ozone nonattainment areas in the LMOS domain classified as 
moderate and above; (2) EPA is correcting the listing of ``Hillside 
County'', Michigan to Hillsdale County, Michigan; and (3) in light of 
the modeling completed thus far and considering the importance of the 
OTAG process and attainment plan modeling efforts, EPA grants this 
NO<INF>X waiver on a contingent basis. As the OTAG modeling results and 
control recommendations are completed in 1996, this information will be 
incorporated into attainment plans being developed by the LADCO States. 
When these attainment plans are submitted to EPA in mid-1997, these new 
modeling analyses will be reviewed 

[[Page 2437]]
to determine if the NO<INF>X waiver should be continued, altered, or 
removed.
    The final attainment plans will supersede the initial modeling 
results which are the basis of the NO<INF>X waiver that EPA is granting 
in this notice. To the extent the attainment plans include NO<INF>X 
controls on certain major stationary sources in the LMOS ozone 
nonattainment areas, EPA will remove the NO<INF>X waiver for those 
sources. To the extent the plans achieve attainment without additional 
NO<INF>X reductions from certain sources, the NO<INF>X exemption would 
continue for those sources. EPA's rulemaking action to reconsider the 
initial NO<INF>X waiver may occur simultaneously with rulemaking action 
on the attainment plans. EPA reserves the right to require NO<INF>X 
emission controls in general or on a source-specific basis under 
section 110(a)(2)(D) of the Act if future ozone modeling demonstrates 
that such controls are needed to achieve the ozone standard in downwind 
areas.
    This action will become effective on February 26, 1996.

IV. Miscellaneous

A. Applicability to Future SIP Decisions

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

B. Executive Order 12866

    This action has been classified as a Table 3 action by the Regional 
Administrator under the procedures published in the Federal Register on 
January 19, 1989 (54 FR 2214-2225), as revised by an October 4, 1993 
memorandum from Michael Shapiro, Acting Assistant Administrator for Air 
and Radiation. The Office of Management and Budget has exempted this 
regulatory action from Executive Order 12866 review.

C. Regulatory Flexibility

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

D. Unfunded Mandates

    Under Sections 202, 203, and 205 of the Unfunded Mandates Reform 
Act of 1995 (Unfunded Mandates Act), signed into law on March 22, 1995, 
EPA must assess whether various actions undertaken in association with 
proposed or final regulations include a Federal mandate that may result 
in estimated costs of $100 million or more to the private sector, or to 
State, local, or tribal governments in the aggregate.
    EPA's final action will relieve requirements otherwise imposed 
under the Clean Air Act and, hence does not impose any federal 
intergovernmental mandate, as defined in section 101 of the Unfunded 
Mandates Act. This action also will not impose a mandate that may 
result in estimated costs of $100 million or more to either State, 
local, or tribal governments in the aggregate, or to the private 
sector.

E. Petitions for Judicial Review

    Under section 307(b)(1) of the Act, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the appropriate circuit by March 26, 1996. Filing a petition for 
reconsideration by the Administrator of this final rule does not affect 
the finality of this rule for the purpose of judicial rule, 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) of the Act.

List of Subjects in 40 CFR Part 52

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

    Dated: January 18, 1996.
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. 7401-7671(q).

Subpart O--Illinois

    2. Section 52.726 is amended by adding paragraph (k) to read as 
follows:


Sec. 52.726  Control Strategy: Ozone

* * * * *
    (k) Approval--EPA is approving the section 182(f) oxides of 
nitrogen (NO<INF>X) reasonably available control technology (RACT), new 
source review (NSR), vehicle inspection/maintenance (I/M), and general 
conformity exemptions for the Illinois portion of the Chicago-Gary-Lake 
County severe ozone nonattainment area as requested by the States of 
Illinois, Indiana, Michigan, and Wisconsin in a July 13, 1994 
submittal. This approval does not cover the exemption of NO<INF>X 
transportation conformity requirements of section 176(c) for this area. 
Approval of these exemptions is contingent on the results of the final 
ozone attainment demonstration expected to be submitted in mid-1997. 
The approval will be modified if the final attainment demonstration 
demonstrates that NO<INF>X emission controls are needed in the 
nonattainment area to attain the ozone standard in the Lake Michigan 
Ozone Study modeling domain.

Subpart P--Indiana

    2. Section 52.777 is amended by adding paragraph (i) to read as 
follows:


Sec. 52.777  Control Strategy: Photochemical oxidants (hydrocarbons).

* * * * *
    (i) Approval--EPA is approving the section 182(f) oxides of 
nitrogen (NO<INF>X) reasonably available control technology (RACT), new 
source review (NSR), vehicle inspection/maintenance (I/M), and general 
conformity exemptions for the Indiana portion of the Chicago-Gary-Lake 
County severe ozone nonattainment area as requested by the States of 
Illinois, Indiana, Michigan, and Wisconsin in a July 13, 1994 
submittal. This approval does not cover the exemption of NO<INF>X 
transportation conformity requirements of section 176(c) for this area. 
Approval of these exemptions is contingent on the results 

[[Page 2438]]
of the final ozone attainment demonstration expected to be submitted in 
mid-1997. The approval will be modified if the final attainment 
demonstration demonstrates that NO<INF>X emission controls are needed 
in the nonattainment area to attain the ozone standard in the Lake 
Michigan Ozone Study modeling domain.
* * * * *

Subpart X--Michigan

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


Sec. 52.1174  Control Strategy: Ozone

* * * * *
    (l) Approval--EPA is approving the section 182(f) oxides of 
nitrogen (NO<INF>X) reasonably available control technology (RACT), new 
source review (NSR), vehicle inspection/maintenance (I/M), and general 
conformity exemptions for the Grand Rapids (Kent and Ottawa Counties) 
and Muskegon (Muskegon County) moderate nonattainment areas as 
requested by the States of Illinois, Indiana, Michigan, and Wisconsin 
in a July 13, 1994 submittal. This approval also covers the exemption 
of NO<INF>X transportation and general conformity requirements of 
section 176(c) for the Counties of Allegan, Barry, Bay, Berrien, 
Branch, Calhoun, Cass, Clinton, Eaton, Gratiot, Genesee, Hillsdale, 
Ingham, Ionia, Jackson, Kalamazoo, Lenawee, Midland, Montcalm, St. 
Joseph, Saginaw, Shiawasse, and Van Buren.

Subpart YY--Wisconsin

    2. Section 52.2585 is amended by adding paragraph (i) to read as 
follows:


Sec. 52.2585  Control Strategy: Ozone.

* * * * *
    (i) Approval--EPA is approving the section 182(f) oxides of 
nitrogen (NO<INF>X) reasonably available control technology (RACT), new 
source review (NSR), vehicle inspection/maintenance (I/M), and general 
conformity exemptions for the moderate and above ozone nonattainment 
areas within Wisconsin as requested by the States of Illinois, Indiana, 
Michigan, and Wisconsin in a July 13, 1994 submittal. This approval 
also covers the exemption of transportation and general conformity 
requirements of section 176(c) for the Door and Walworth marginal ozone 
nonattainment areas. Approval of these exemptions is contingent on the 
results of the final ozone attainment demonstration expected to be 
submitted in mid-1997. The approval will be modified if the final 
attainment demonstration demonstrates that NO<INF>X emission controls 
are needed in any of the nonattainment areas to attain the ozone 
standard in the Lake Michigan Ozone Study modeling domain.

[FR Doc. 96-1413 Filed 1-25-96; 8:45 am]
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