1
6560­
50­
P
ENVIRONMENTAL
PROTECTION
AGENCY
40
CFR
Parts
51
AND
52
[
AD­
FRL­
XXXX­
X;
E­
Docket
ID
No.
OAR­
2004­
0013
(
Legacy
Docket
No.
A­
87­
16)]

RIN­
2060­
AM33
Prevention
of
Significant
Deterioration
for
Nitrogen
Oxides
AGENCY:
Environmental
Protection
Agency
(
EPA).

ACTION:
Proposed
rule.

SUMMARY:
To
preserve
the
air
quality
in
national
parks
and
other
areas
that
are
meeting
the
national
ambient
air
quality
standards
(
NAAQS)
for
nitrogen
dioxide
(
NO2),
EPA
is
reevaluating
the
increments
for
NO2
that
were
first
established
in
1988
under
its
program
to
prevent
significant
deterioration
of
air
quality
(
PSD
program).
Increments
represent
the
maximum
allowable
increase
in
ambient
air
pollution
concentrations
over
a
baseline
concentration
in
areas
that
are
in
attainment
with
NAAQS
or
areas
that
are
unable
to
be
classified
as
attainment
or
nonattainment
(
i.
e.,
unclassifiable
areas).
The
EPA
is
initiating
this
rulemaking
action
to
comply
with
a
1990
court
ruling
that
directed
the
Agency
to
consider
and
harmonize
the
statutory
criteria
for
establishing
PSD
regulations
for
nitrogen
oxides
(
NOx)
contained
in
sections
166(
c)
and
(
d)
of
the
Clean
Air
Act
(
CAA
or
Act).
2
After
an
initial
reevaluation
of
the
existing
NO2
increments
under
these
statutory
criteria,
one
option
EPA
proposes
is
to
not
to
change
the
existing
increments.
We
believe
the
existing
pollutant­
specific
regulations
for
NOx,

which
include
the
existing
NO2
increments,
fulfill
the
goals
of
the
PSD
program
and
protect
the
air
quality
in
national
parks
and
other
areas
attaining
the
NAAQS
for
NO2.

We
have
also
evaluated
other
approaches
that
might
be
used
to
fulfill
our
obligation
to
promulgate
pollutantspecific
regulations
under
section
166
to
prevent
significant
deterioration
from
emissions
of
nitrogen
oxides.

Accordingly,
EPA
is
today
proposing
to
permit
States
to
use
two
alternative
approaches
in
lieu
of
the
existing
increments
for
NO2
to
satisfy
the
statutory
criteria
for
preventing
significant
air
quality
deterioration
from
emissions
of
nitrogen
oxides.
These
proposed
options
include
a
cap
and
trade
program
and
a
State
planning
approach.

The
EPA
requests
comment
on
each
of
the
three
proposed
options,
on
EPA's
review
of
the
existing
regulatory
regime,

and
on
the
scientific
and
technical
information
pertaining
to
the
health
and
welfare
effects
of
NO2
and
other
nitrogen
oxides
as
presented
below.

DATES:
Comments.
Comments
must
be
received
on
or
before
3
[
INSERT
DATE
60
DAYS
AFTER
PUBLICATION
IN
THE
FEDERAL
REGISTER].

Public
Hearing.
If
anyone
contacts
EPA
requesting
a
public
hearing
by
[
INSERT
DATE
20
DAYS
AFTER
PUBLICATION
IN
THE
FEDERAL
REGISTER],
we
will
hold
a
public
hearing
on
or
about
[
INSERT
DATE
30
DAYS
AFTER
PUBLICATION
IN
THE
FEDERAL
REGISTER].

ADDRESSES:
Submit
your
comments,
identified
by
Docket
ID
No.
OAR­
2004­
0013,
by
one
of
the
following
methods:

°
Federal
eRulemaking
Portal:
http://
www.
regulations.
gov.

Follow
the
on­
line
instructions
for
submitting
comments.

°
Agency
Website:
http://
www.
epa.
gov/
edocket.
EDOCKET,

EPA's
electronic
public
docket
and
comment
system,
is
EPA's
preferred
method
for
receiving
comments.
Follow
the
on­
line
instructions
for
submitting
comments.

°
E­
mail:
a­
and­
r­
docket@
email.
epa.
gov.

°
Fax:
(
202)
566­
1741.

°
Mail:
Attention
Docket
ID
No.
OAR­
2004­
0013,
U.
S.

Environmental
Protection
Agency,
Mailcode
6102T,
1200
Pennsylvania
Ave.,
NW,
Washington,
DC
20460.
The
EPA
requests
that
a
separate
copy
also
be
sent
to
the
contact
person
listed
below
(
see
FOR
FURTHER
INFORMATION
CONTACT).
4
°
Hand
Delivery:
Attention
Docket
Number
OAR­
2004­
0013,

U.
S.
Environmental
Protection
Agency,
EPA
West
(
Air
Docket),
1301
Constitution
Ave.,
NW,
Washington,
DC
20004.
Such
deliveries
are
only
accepted
during
the
Docket's
normal
hours
of
operation,
and
special
arrangements
should
be
made
for
deliveries
of
boxed
information.
The
EPA
requests
a
separate
copy
also
be
sent
to
the
contact
person
listed
below
(
see
FOR
FURTHER
INFORMATION
CONTACT).

Instructions:
Direct
your
comments
to
Docket
ID
No.
OAR­

2004­
0080
(
Legacy
Docket
No.
A­
87­
16).
The
EPA's
policy
is
that
all
comments
received
will
be
included
in
the
public
docket
without
change
and
may
be
made
available
online
at
http://
www.
epa.
gov/
edocket,
including
any
personal
information
provided,
unless
the
comment
includes
information
claimed
to
be
Confidential
Business
Information
(
CBI)
or
other
information
whose
disclosure
is
restricted
by
statute.
Do
not
submit
information
that
you
consider
to
be
CBI
or
otherwise
protected
through
EDOCKET,
regulations.
gov,

or
e­
mail.
The
EPA
EDOCKET
and
the
Federal
regulations.
gov
websites
are
"
anonymous
access"
systems,
which
means
EPA
will
not
know
your
identity
or
contact
information
unless
you
provide
it
in
the
body
of
your
comment.
If
you
send
an
e­
mail
comment
directly
to
EPA
without
going
through
EDOCKET
5
or
regulations.
gov,
your
e­
mail
address
will
be
automatically
captured
and
included
as
part
of
the
comment
that
is
placed
in
the
public
docket
and
made
available
on
the
Internet.
If
you
submit
an
electronic
comment,
EPA
recommends
that
you
include
your
name
and
other
contact
information
in
the
body
of
your
comment
and
with
any
disk
or
CD­
ROM
you
submit.
If
EPA
cannot
read
your
comment
due
to
technical
difficulties
and
cannot
contact
you
for
clarification,
EPA
may
not
be
able
to
consider
your
comment.

Electronic
files
should
avoid
the
use
of
special
characters,

avoid
any
form
of
encryption,
and
be
free
of
any
defects
or
viruses.
For
additional
information
about
EPA's
public
docket,
visit
EDOCKET
on­
line
or
see
the
Federal
Register
of
May
31,
2002
(
67
FR
38102).
For
additional
instructions
on
submitting
comments,
go
to
section
I.
B
of
the
SUPPLEMENTARY
INFORMATION
section
of
this
document.

Docket:
All
documents
in
the
docket
are
listed
in
the
EDOCKET
index
at
http://
www.
epa.
gov/
edocket.
Although
listed
in
the
index,
some
information
is
not
publicly
available,
i.
e.,
CBI
or
other
information
whose
disclosure
is
restricted
by
statute.
Certain
other
material,
such
as
copyrighted
material,
is
not
placed
on
the
Internet
and
will
be
publicly
available
only
in
hard
copy
form.
Publicly
available
docket
materials
are
available
either
6
electronically
in
EDOCKET
or
in
hard
copy
at
the
U.
S.

Environmental
Protection
Agency,
EPA
West
(
Air
Docket),
Room
B102,
1301
Constitution
Ave.,
NW,
Washington,
DC.
The
Public
Reading
Room
is
open
from
8:
30
a.
m.
to
4:
30
p.
m.,

Monday
through
Friday,
excluding
legal
holidays.
The
telephone
number
for
the
Public
Reading
Room
is
(
202)
566­

1744,
and
the
telephone
for
the
Air
Docket
is
(
202)
566­

1742.

Public
Hearing.
People
interested
in
presenting
oral
testimony
or
inquiring
as
to
whether
a
hearing
is
to
be
held
should
contact
Ms.
Chandra
Kennedy,
OAQPS,
Integrated
Implementation
Group,
Information
Transfer
and
Program
Integration
Division
(
C339­
03),
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC
27711,

telephone
number
(
919)
541­
5319
or
e­
mail
kennedy.
chandra@
epa.
gov,
at
least
2
days
in
advance
of
the
public
hearing.
People
interested
in
attending
the
public
hearing
must
also
call
Ms.
Kennedy
to
verify
the
time,
date,

and
location
of
the
hearing.
The
public
hearing
will
provide
interested
parties
the
opportunity
to
present
data,

views,
or
arguments
concerning
the
proposed
decision
to
retain
the
existing
PSD
increments
for
NOx.
If
a
public
hearing
is
held,
it
will
be
held
at
10:
00
a.
m.
in
EPA's
Auditorium
in
Research
Triangle
Park,
North
Carolina,
or
at
an
alternate
site
nearby.
7
FOR
FURTHER
INFORMATION
CONTACT:
Mr.
Dan
deRoeck,

Information
Transfer
and
Program
Integration
Division
(
C339­

03),
U.
S.
Environmental
Protection
Agency,
Research
Triangle
Park,
NC
27711,
telephone
(
919)
541­
5593,
fax
(
919)
541­

5509,
or
e­
mail
at
deroeck.
dan@
epa.
gov.

SUPPLEMENTARY
INFORMATION:

I.
General
Information
A.
Does
this
action
apply
to
me?

Entities
potentially
affected
by
this
proposed
rule
include
sources
in
all
industry
groups.
The
majority
of
sources
potentially
affected
are
expected
to
be
in
the
following
groups:

Industry
Group
SICa
NAICSb
Electric
Services
491
221111,
221112,
221113,
221119,
221121,
221122
Petroleum
Refining
291
324110
Industrial
Inorganic
Chemicals
281
325181,
325120,
325131,
325182,
211112,
325998,
331311,
325188
Industrial
Organic
Chemicals
286
325110,
325132,
325192,
325188,
325193,
325120,
325199
Miscellaneous
Chemical
Products
289
325520,
325920,
325910,
325182,
325510
Natural
Gas
Liquids
132
211112
Natural
Gas
Transport
492
486210,
221210
Pulp
and
Paper
Mills
261
322110,
322121,
322122,
322130
Paper
Mills
262
322121,
322122
Automobile
Manufacturing
371
336111,
336112,
336211,
336992,
336322,
336312,
336330,
336340,
336350,
336399,
336212,
336213
8
Pharmaceuticals
283
325411,
325412,
325413,
325414
a
Standard
Industrial
Classification
b
North
American
Industry
Classification
System.

Entities
potentially
affected
by
the
proposal
also
include
States,
local
permitting
authorities,
and
Indian
Tribes
containing
new
and
modified
major
stationary
sources.

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

1.
Submitting
CBI
Do
not
submit
proprietary
or
confidential
business
information
(
CBI)
to
EPA
through
EDOCKET,
regulations.
gov,

or
e­
mail.
Clearly
mark
the
part
or
all
of
the
information
that
you
claim
to
be
CBI.
For
CBI
information
in
a
disk
or
CD
ROM
that
you
mail
to
EPA,
mark
the
outside
of
the
disk
or
CD
ROM
as
CBI
and
then
identify
electronically
within
the
disk
or
CD
ROM
the
specific
information
that
is
claimed
as
CBI.
In
addition
to
one
complete
version
of
the
comment
that
includes
information
claimed
as
CBI,
a
copy
of
the
comment
that
does
not
contain
the
information
claimed
as
CBI
must
be
submitted
for
inclusion
in
the
public
docket.

Information
so
marked
will
not
be
disclosed
except
in
accordance
with
procedures
set
forth
in
40
CFR
part
2.
Send
an
additional
copy,
clearly
marked
as
above,
to:
Mr.
Dan
deRoeck,
c/
o
OAQPS
Document
Control
Officer
(
C339­
03),
U.
S.

Environmental
Protection
Agency,
Research
Triangle
Park,
NC
27711.
9
2.
Tips
for
Preparing
Your
Comments
When
submitting
comments,
remember
to:

i.
Identify
the
rulemaking
by
docket
number
and
other
identifying
information
(
e.
g.,
subject
heading,
Federal
Register
proposal
publication
date
and
reference
page
number(
s)).

ii.
Follow
directions
­
The
agency
may
ask
you
to
respond
to
specific
questions
or
organize
comments
by
referencing
a
Code
of
Federal
Regulations
(
CFR)
part
or
section
number.

iii.
Explain
why
you
agree
or
disagree;
suggest
alternatives
and
provide
substitute
language
for
your
requested
changes.

iv.
Describe
any
assumptions
and
provide
any
technical
information
and/
or
data
that
you
used.

v.
If
you
estimate
potential
costs
or
burdens,
explain
how
you
arrived
at
your
estimate
in
sufficient
detail
to
allow
for
it
to
be
reproduced.

vi.
Provide
specific
examples
to
illustrate
your
concerns,
and
suggest
alternatives.

vii.
Explain
your
views
as
clearly
as
possible,

avoiding
the
use
of
profanity
or
personal
threats.

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

Commenters
wishing
to
submit
proprietary
information
10
for
consideration
must
clearly
distinguish
such
information
from
other
comments
and
clearly
label
it
as
CBI.
Send
submissions
containing
such
proprietary
information
directly
to
the
following
address,
and
not
to
the
public
docket,
to
ensure
that
proprietary
information
is
not
inadvertently
placed
in
the
docket:
Attention:
Mr.
Roberto
Morales,
U.
S.

Environmental
Protection
Agency,
OAQPS
Document
Control
Officer,
109
TW
Alexander
Drive,
Room
C404­
02,
Research
Triangle
Park,
NC
27711.
The
EPA
will
disclose
information
identified
as
CBI
only
to
the
extent
allowed
by
the
procedures
set
forth
in
40
CFR
part
2.
If
no
claim
of
confidentiality
accompanies
a
submission
when
it
is
received
by
EPA,
the
information
may
be
made
available
to
the
public
without
further
notice
to
the
commenter.

C.
Where
can
I
obtain
additional
information?

In
addition
to
being
available
in
the
docket,
an
electronic
copy
of
today's
proposed
rule
is
also
available
on
the
World
Wide
Web
through
the
Technology
Transfer
Network
(
TTN).
Following
signature
by
the
EPA
Administrator,
a
copy
of
today's
proposed
rule
will
be
posted
on
the
TTN's
policy
and
guidance
page
for
newly
proposed
or
promulgated
rules
at
http://
www.
epa.
gov/
ttn/
oarpg.
The
TTN
provides
information
and
technology
exchange
in
various
areas
of
air
pollution
control.
If
more
information
regarding
the
TTN
is
needed,
11
call
the
TTN
HELP
line
at
(
919)
541­
5384.

D.
How
is
this
preamble
organized?

The
information
presented
in
this
preamble
is
organized
as
follows:

I.
General
Information
A.
Does
this
action
apply
to
me?
B.
What
should
I
consider
as
I
prepare
my
comments
for
EPA?
C.
Where
can
I
obtain
additional
information?
D.
How
is
this
preamble
organized?
II.
Overview
of
Today's
Proposed
Action
A.
Option
1:
Retain
Existing
Increment
System
for
NOx
B.
Option
2:
Allow
States
to
Use
a
Cap
and
Trade
Program
in
Lieu
of
an
Increment
System
to
Prevent
Significant
Air
Quality
Deterioration
C.
Option
3:
Allow
States
Flexibility
to
Use
a
State
Planning
Approach
That
Can
be
Demonstrated
to
Prevent
Significant
Air
Quality
Deterioration
From
NOx
Emissions
III.
Background
A.
PSD
Program
B.
Existing
Section
166
Regulations
for
NOx
1.
Statutory
Provisions
2.
The
1988
NO2
Increments
C.
Court
Decision
IV.
Legal
Authority
A.
Interpretation
on
Remand:
Harmonizing
Sections
166(
c)
and
(
d)
of
the
Clean
Air
Act
B.
Interpretation
on
Remand:
The
Section
166(
c)
Factors
1.
Numerical
Measures
by
Which
Permit
Application
may
be
Evaluated
2.
Protect
Air
Quality
Values
3.
Protect
Public
Health
and
Welfare
from
Adverse
Effects
Notwithstanding
Attainments
of
NAAQS
4.
Ensure
Economic
Growth
Consistent
with
Preservation
of
Existing
Clean
Air
Resources
C.
EPA's
Authority
to
Fulfill
Section
166
Requirements
by
Granting
States
Flexibility
to
Adopt
Alternative
Measures
in
Their
SIPs
V.
Health
and
Welfare
Effects
of
NOx
A.
Scope
of
Effects
EPA
Proposes
to
Consider
B.
Data
Included
in
Review
12
C.
Analysis
of
Effects
1.
Health
Effects
2.
Welfare
Effects
VI.
Proposed
Actions
A.
Retain
Existing
NO2
Increment
System
1.
How
Existing
Characteristics
of
the
Regulatory
Scheme
Fulfill
Statutory
Criteria
2.
Proposed
Actions
Regarding
Characteristics
of
NO2
Increments
B.
Regional
Cap
and
Trade
Program
1.
Description
of
Cap
and
Trade
Programs
2.
Using
a
Cap
and
Trade
Program
for
Prevention
of
Significant
Deterioration
of
Air
Quality
for
NOx
C.
State
Planning
Approach
1.
Description
of
State
Planning
Approach
2.
Using
State
Planning
Program
for
Prevention
of
Significant
Deterioration
of
Air
Quality
from
NOx
Emissions
VII.
Other
Alternative
Considered
VIII.
Statutory
and
Executive
Order
Reviews
A.
Executive
Order
12866
­
Regulatory
Planning
and
Review
B.
Paperwork
Reduction
Act
C.
Regulatory
Flexibility
Act
(
RFA)
D.
Unfunded
Mandates
Reform
Act
E.
Executive
Order
13132
­
Federalism
F.
Executive
Order
13175
­
Consultation
and
Coordination
with
Indian
Tribal
Governments
G.
Executive
Order
13045
­
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks
H.
Executive
Order
13211
­
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use
I.
National
Technology
Transfer
and
Advancement
Act
of
1995
II.
Overview
of
Today's
Proposed
Action
To
ensure
protection
of
the
air
quality
in
national
parks
and
other
areas
that
meet
the
NAAQS
for
NO2,
EPA
is
reevaluating
the
increments
for
NO2
that
were
first
established
in
1988
under
the
PSD
program.
In
accordance
with
the
directions
of
a
1990
court
ruling,
the
Agency
is
13
conducting
this
review
to
consider
and
harmonize
the
statutory
criteria,
contained
in
subsections
166(
c)
and
(
d)

of
the
Act,
that
govern
the
content
of
EPA's
pollutantspecific
PSD
regulations
for
NOx.
The
EPA
is
proposing
to
apply
these
criteria
using
the
"
contingent
safe
harbor"

approach
that
was
suggested
by
the
court
as
an
appropriate
way
to
ensure
that
EPA's
PSD
regulations
for
nitrogen
oxides
will
prevent
significant
deterioration
of
air
quality,

resulting
from
NOx
emissions
in
parks
and
other
areas
that
are
either
designated
to
be
in
attainment
with
the
NAAQS
or
are
unclassifiable.

Today's
proposal
includes
three
options
to
address
our
responsibility
to
promulgate
pollutant­
specific
regulations
to
significant
deterioration
of
air
quality
from
emissions
of
NOx
and
to
preserve,
protect
and
enhance
the
air
quality
in
our
national
parks
and
other
areas
of
special
interest.

The
first
option
is
to
retain
the
existing
regulatory
format
using
the
increments
that
we
originally
adopted
in
1988.
We
also
propose
two
alternative
approaches
that
we
believe
would
satisfy
the
goals
and
objectives
of
the
statutory
PSD
program
in
lieu
of
the
existing
increments
for
NOx.
These
two
additional
options,
for
which
we
are
seeking
public
comment
today,
would
permit
States
to
adopt
a
specific
market­
based
cap
and
trade
approach
or
to
demonstrate
that
strategies
and
measures
in
their
State
Implementation
Plans
14
(
SIPs),
in
conjunction
with
other
Federal
requirements,
will
prevent
significant
deterioration
from
emissions
of
NOx.

Each
of
these
options
is
summarized
immediately
below
and
described
in
greater
detail
in
section
VI
of
this
preamble.

A.
Option
1:
Retain
Existing
Increment
System
for
NOx
The
EPA
is
reviewing
whether,
considering
the
criteria
in
section
166(
c),
EPA
should
establish
a
different
increment
for
NOx
than
the
one
that
was
adopted
in
1988.

The
existing
increment
was
established
as
a
percentage
of
the
NAAQS,
and
was
based
on
the
ambient
measure
(
NO2)
and
the
same
time
period
(
annual)
as
the
NAAQS.
An
increment
with
these
characteristics
satisfies
the
minimum
requirements
of
section
166(
d)
of
the
Act
for
preserving
the
air
quality
in
parks
and
other
attainment
and
unclassifiable
areas.
In
accordance
with
the
"
contingent
safe
harbor"

approach,
EPA
is
undertaking
this
additional
review
to
determine
whether
the
criteria
in
section
166(
c)
indicate
that
it
is
necessary
for
EPA
to
deviate
from
this
"
safe
harbor"
in
order
to
satisfy
the
criteria
in
section
166(
c).

Based
on
our
initial
review
of
the
existing
NO2
increments
under
these
statutory
criteria,
one
feasible
option
is
to
retain
the
existing
PSD
regulations
for
NOx
without
modification
because
we
believe
the
existing
regulations
protect
the
air
quality
in
national
parks
and
other
attainment
or
unclassifiable
areas,
within
the
context
15
of
the
criteria
of
section
166(
c).
Our
review
has
considered
and
balanced
the
criteria
in
section
166(
c)
and
the
incorporated
goals
and
purposes
of
the
PSD
program
set
forth
in
section
160
of
the
Act.
We
have
also
reviewed
the
existing
regulatory
framework
of
the
Agency's
PSD
regulations
for
NOx
and
the
scientific
and
technical
information
pertaining
to
the
health,
welfare,
and
ecological
effects
of
NOx.
In
light
of
this
review,
EPA
believes
that
the
statutory
requirements
are
met
by
retaining
annual
increments
for
NO2
based
on
the
percentages
of
the
NAAQS
employed
to
set
the
increments
for
sulfur
dioxide
(
SO2).
The
available
research
on
health
and
welfare
effects
indicates
that
the
existing
increments,
in
conjunction
with
the
case­
by­
case
permit
review
for
additional
impacts
and
impairment
of
air
quality
related
values
(
AQRV),
fulfills
the
criteria
in
section
166(
c).
The
EPA
requests
comment
on
this
option
and
its
supporting
review.

B.
Option
2:
Allow
States
to
Use
a
Cap
and
Trade
Program
in
Lieu
of
an
Increment
System
to
Prevent
Significant
Air
Quality
Deterioration
As
an
alternative
approach
to
retaining
the
existing
increment
system
to
prevent
significant
air
quality
deterioration
for
NOx
under
the
PSD
program,
we
are
soliciting
comments
on
a
proposed
option
that
would
allow
1
EPA
proposed
the
CAIR,
originally
titled
the
Interstate
Air
Quality
Rule
(
IAQR),
on
January
30,
2004
(
69
FR
4566),
followed
by
a
supplemental
notice
of
proposed
rulemaking
on
June
10,
2004
(
69
FR
32684),
to
reduce
emissions
of
SO2
and
NOx
in
29
States
and
the
District
of
Columbia
to
contribute
to
the
attainment
of
the
PM2.5
and
8­
hour
ozone
NAAQS
in
a
number
of
eastern
States.

16
States
to
prevent
significant
deterioration
by
implementing
the
model
cap
and
trade
program
for
EGus
contained
in
our
proposed
Clean
Air
Interstate
Rule
(
CAIR).
1
A
State
that
implements
this
program
to
address
NOx
emissions
would
no
longer
be
required
to
conduct
certain
source­
specific
analyses,
including
the
current
increment
analysis
for
NOx.

This
option
would
require
States
to
revise
their
SIPs
to
include
the
necessary
control
measures
to
reduce
NOx
emissions
in
accordance
with
statewide
emissions
budgets
prescribed
by
EPA.
Statewide
budgets
would
be
apportioned
on
the
basis
of
an
emissions
cap
established
for
the
region
as
a
whole.
Neither
the
statewide
budget
nor
the
regional
cap
would
be
a
legally
enforceable
limit
on
total
NOx
emissions
but
would
be
used
as
an
accounting
technique
to
determine
the
amount
of
emissions
reductions
that
would
be
needed
from
specific
sources
to
satisfy
the
budget
or
cap.

As
described
in
greater
detail
in
section
VI.
B
of
this
preamble,
we
believe
that
such
a
cap
and
trade
program,

while
designed
to
address
other
CAA
program
requirements,
is
also
an
effective
alternative
to
increments
for
preventing
17
significant
deterioration
from
emissions
of
NOx.
The
EPA
has
utilized
this
approach
with
considerable
success
in
several
instances.
The
EPA
proposed
a
model
multi­
State
cap
and
trade
program
in
its
June
10,
2004,
supplemental
notice
for
the
CAIR
proposal
that
States
could
choose
to
adopt
to
meet
the
proposed
emissions
reductions
requirements
in
a
flexible
and
cost­
effective
manner.
The
EPA
believes
that
the
implementation
of
this
kind
of
cap
and
trade
program
could
bring
about
significant
improvements
in
air
quality
and
would
offer
many
advantages
over
traditional
commandand
control
and
project­
by­
project
emissions
reduction
credit
trading
programs.

C.
Option
3:
Allow
States
Flexibility
to
Use
a
State
Planning
Approach
That
Can
be
Demonstrated
to
Prevent
Significant
Air
Quality
Deterioration
From
NOx
Emissions
As
a
third
option,
we
propose
to
allow
a
State
to
forego
implementation
of
the
NO2
increment
and
associated
requirements
if
the
State
can
demonstrate
that
measures
in
its
SIP,
in
conjunction
with
Federal
requirements,
would
prevent
significant
deterioration
of
air
quality
from
emissions
of
NOx.
In
lieu
of
implementing
the
increment
system,
a
State
would
have
to
demonstrate
that
the
specific
planning
goals
and
requirements
contained
in
its
SIP
would
satisfy
the
requirements
in
section
166
of
the
Act
and
the
goals
and
purposes
of
the
PSD
program
set
forth
in
section
18
160.

This
option
would
provide
States
with
the
flexibility
to
design
a
program
to
prevent
significant
deterioration
from
emissions
of
NOx
that
may
be
more
effective
than
increments.
States
would
have
to
establish
a
clear
planning
goal
that
satisfies
the
requirements
of
sections
166(
c)
and
166(
d)
of
the
Act.
To
achieve
this
goal,
a
State
could
impose
NOx
emissions
limitations
on
any
type
of
emissions
sources
it
chooses,
including
new
or
existing
sources.

Under
this
option,
EPA
does
not
propose
to
require
a
State
to
demonstrate
that
its
SIP
includes
a
specific
type
of
program
that
we
believe
is
sufficient
to
satisfy
the
requirements
of
section
166.
However,
we
believe
that
a
goal
to
keep
statewide
emissions
of
NOx
from
all
sources
below
1990
levels
would
prevent
significant
deterioration
and
satisfy
the
requirements
of
section
166
of
the
Act.

Adoption
of
this
goal
could
streamline
our
review
of
the
State's
demonstration,
but
a
State
would
not
be
precluded
from
using
another
approach
to
prevent
significant
deterioration
from
NOx
emissions.

III.
Background
A.
PSD
Program
Part
C
of
title
I
of
the
Act
contains
the
requirements
for
a
component
of
the
major
new
source
review
(
NSR)
program
known
as
the
Prevention
of
Significant
Deterioration
(
PSD)
19
program.
This
program
sets
forth
procedures
for
the
preconstruction
review
and
permitting
of
new
and
modified
major
stationary
sources
of
air
pollution
locating
in
areas
meeting
the
NAAQS
("
attainment"
areas)
or
areas
for
which
there
is
insufficient
information
to
classify
an
area
as
either
attainment
or
nonattainment
("
unclassifiable"
areas).

CAA
sec.
161.

The
applicability
of
the
PSD
program
to
a
particular
source
must
be
determined
in
advance
of
construction
and
is
pollutant
specific.
For
new
sources
locating
in
an
attainment
or
unclassifiable
area,
PSD
applies
when
the
source
qualifies
as
a
major
source
because
it
has
the
potential
to
emit
any
regulated
NSR
pollutant
equals
or
exceeds
either
100
or
250
tons
per
year
(
tpy)
depending
on
the
source
category.
In
addition
to
reviewing
the
pollutant
emitted
at
or
in
excess
of
the
"
major
source"
levels,
the
PSD
permit
review
also
covers
each
regulated
NSR
pollutant
that
the
source
would
have
the
potential
to
emit
in
significant
amounts.

For
modified
sources,
PSD
applies
when
an
existing
major
stationary
source
undergoes
a
nonexcluded
physical
change
or
change
in
the
method
of
operation
that
results
in
a
significant
net
emissions
increase
of
any
regulated
NSR
pollutant.
The
PSD
regulations
define
"
significant"
as
a
specific
emissions
rate
(
tons
per
year)
for
each
regulated
2
On
December
31,
2002,
we
revised
the
PSD
regulations
to,
among
other
things,
enable
major
sources
undergoing
modification
of
existing
emissions
units
to
project
future
emissions
increases
on
the
basis
of
projected
utilization
of
the
modified
equipment.
Most
States
have
not
yet
adopted
the
new
provisions
but
they
are
in
effect
in
States
where
EPA
is
the
permitting
authority
(
i.
e.,
where
no
State
PSD
rule
has
been
approved
by
EPA)
or
where
the
State
PSD
rule
incorporates
the
Federal
regulations
by
reference.
67
FR
80186.

20
pollutant.
Each
regulated
NSR
pollutant
emitted
by
the
source
must
be
reviewed
independently
for
applicability
purposes.
Moreover,
to
determine
the
emissions
of
a
particular
pollutant
for
applicability
purposes,
the
source
may
take
into
account
the
use
of
emissions
control
technology
and
restrictions
on
the
hours
of
operation
or
rates
of
production,
where
such
controls
and
restrictions
are
enforceable.
2
Once
a
source
is
determined
to
be
subject
to
PSD,
it
must
undertake
a
series
of
analyses
to
demonstrate
that
it
will
use
the
best
available
control
technology
(
BACT)
and
will
not
cause
or
contribute
to
a
violation
of
any
NAAQS
or
incremental
ambient
pollutant
concentration
increase.
In
cases
where
the
source's
emissions
may
adversely
affect
an
area
classified
as
a
Class
I
area,
additional
review
is
conducted
to
protect
the
increments
and
special
attributes
of
such
an
area
defined
as
"
air
quality
related
values."

When
the
permitting
authority
reaches
a
preliminary
decision
to
authorize
construction
of
each
proposed
major
21
new
source
or
major
modification,
it
must
provide
notice
of
the
preliminary
decision
and
an
opportunity
for
comment
by
the
general
public,
industry,
and
other
persons
that
may
be
affected
by
the
major
source
or
major
modification.
After
considering
and
responding
to
the
comments,
the
permitting
authority
may
issue
a
final
determination
on
the
construction
permit
in
accordance
with
the
PSD
regulations.

B.
Existing
Section
166
Regulations
for
NOx
1.
Statutory
Provisions
In
section
166(
a)
of
the
Act,
Congress
directed
EPA
to
conduct
a
study
and
promulgate
regulations
to
prevent
significant
deterioration
of
air
quality
which
would
result
from
emission
of
hydrocarbons,
carbon
monoxide,

photochemical
oxidants,
and
NOx.
Congress
further
specified
that
such
regulations
meet
the
following
requirements
set
forth
in
section
166(
c)
and
(
d):

(
c)
Such
regulations
shall
provide
specific
numerical
measures
against
which
permit
applications
may
be
evaluated,
a
framework
for
stimulating
improved
control
technology,

protection
of
air
quality
values,
and
fulfill
the
goals
and
purposes
set
forth
in
section
101
and
section
160.

(
d)
The
regulations
.
.
.
shall
provide
specific
measures
at
least
as
effective
as
the
22
increments
established
in
section
163
[
for
SO2
and
PM]
to
fulfill
such
goals
and
purposes,
and
may
contain
air
quality
increments,
emission
density
requirements,
or
other
measures.

The
goals
and
purposes
of
the
PSD
program
set
forth
in
section
160
are
as
follows:

(
1)
to
protect
public
health
and
welfare
from
any
actual
or
potential
adverse
effect
which
in
the
Administrator's
judgment
may
reasonably
be
anticipate[
d]
to
occur
from
air
pollution
or
from
exposures
to
pollutants
in
other
media,
which
pollutants
originate
as
emissions
to
the
ambient
air,
notwithstanding
attainment
and
maintenance
of
all
national
ambient
air
quality
standards;

(
2)
to
preserve,
protect,
and
enhance
the
air
quality
in
national
parks,
national
wilderness
areas,
national
monuments,
national
seashores,
and
other
areas
of
special
national
or
regional
natural,
recreational,
scenic,
or
historic
value;

(
3)
to
insure
that
economic
growth
will
occur
in
a
manner
consistent
with
the
preservation
of
existing
clean
air
resources;

(
4)
to
assure
that
emissions
from
any
source
in
any
State
will
not
interfere
with
any
portion
of
the
applicable
implementation
plan
to
prevent
23
significant
deterioration
of
air
quality
for
any
other
State;
and
(
5)
to
assure
that
any
decision
to
permit
increased
air
pollution
in
any
area
to
which
this
section
applies
is
made
only
after
careful
evaluation
of
all
the
consequences
of
such
a
decision
and
after
adequate
procedural
opportunities
for
informed
public
participation
in
the
decisionmaking
process.

Furthermore,
the
goals
and
purposes
of
the
CAA
set
forth
in
section
101
are
as
follows:

(
b)
.
.
.
(
1)
to
protect
and
enhance
the
quality
of
the
Nation's
air
resources
so
as
to
promote
the
public
health
and
welfare
and
the
productive
capacity
of
its
population;

(
2)
to
initiate
and
accelerate
a
national
research
and
development
program
to
achieve
the
prevention
and
control
of
air
pollution;

(
3)
to
provide
technical
and
financial
assistance
to
State
and
local
governments
in
connection
with
the
development
and
execution
of
their
air
pollution
prevention
and
control
programs;
and
(
4)
to
encourage
and
assist
the
development
and
operation
of
regional
air
pollution
prevention
and
control
programs
[;
and]
24
(
c)
.
.
.
to
encourage
or
otherwise
promote
reasonable
Federal,
State,
and
local
governmental
actions,
consistent
with
the
provisions
of
this
Act,

for
pollution
prevention.

2.
The
1988
NO2
Increments
On
October
17,
1988,
EPA
promulgated
pollutant­
specific
PSD
regulations
for
NOx
under
section
166
of
the
CAA.
53
FR
40656.
The
EPA
decided
to
establish
increments
for
NO2
following
the
pattern
enacted
by
Congress
for
the
PM
and
SO2
increments.
These
increments
establish
maximum
increases
in
ambient
air
concentrations
of
NO2
(
expressed
in
micrograms
per
cubic
meter
(
µ
g/
m3))
allowed
in
a
PSD
area
over
a
baseline
concentration.
Emissions
increases
from
both
stationary
and
mobile
sources
are
considered
in
the
consumption
of
the
NO2
increments
which
are
implemented
through
the
PSD
permitting
provisions
in
40
CFR
parts
51
and
52.

The
NO2
increment
program
includes
the
three­
tiered
area
classification
system
established
by
Congress
in
section
163
for
increments
of
SO2
and
PM.
Class
I
areas
(
including
certain
national
parks
and
wilderness
areas)
were
designated
by
Congress
as
areas
of
special
national
concern,

where
the
need
to
prevent
air
quality
deterioration
is
the
greatest.
Consequently,
the
allowable
level
of
incremental
change
in
air
quality
is
most
stringent
in
Class
I
areas.
25
Class
II
areas
are
all
areas
not
specifically
designated
in
the
Act
as
Class
I
areas.
The
increments
of
Class
II
areas
are
less
stringent
than
the
Class
I
areas
and
allow
for
a
moderate
degree
of
emissions
growth.
Class
III
areas
are
areas
originally
designated
as
Class
II,
that
have
been
redesignated
by
States
where
higher
levels
of
industrial
development
(
and
emissions
growth)
are
desired,
and
are
allowed
to
have
the
greatest
increase
in
ambient
concentration.
There
have
been
no
Class
III
redesignations
to
date.

EPA
based
the
levels
of
the
increments
for
each
area
classification
on
the
percentages
of
the
NAAQS
that
Congress
used
to
set
the
increments
for
SO2
and
PM.
Congress
used
different
percentages
of
the
NAAQS
to
calculate
the
Class
I
increments
for
PM
and
SO2.
For
the
NO2
increments,
we
chose
the
percentage
that
Congress
used
for
SO2.
This
decision
yielded
a
lower
Class
I
increment
for
NO2
than
would
have
resulted
by
using
the
PM
percentage.

The
existing
Class
I
increment
for
NO2
is
2.5
µ
g/
m3
(
annual
average),
a
level
of
2.5
percent
of
the
NO2
NAAQS.

It
is
based
on
the
Class
I
SO2
increment,
which
is
set
at
the
same
percentage
(
2.5
percent)
of
the
SO2
annual
NAAQS.

The
Class
II
increment
for
NO2
is
25
µ
g/
m3
 
25
percent
of
the
NO2
NAAQS.
The
Class
III
increment
for
NO2
is
50
µ
g/
m3
 
50
percent
of
the
NO2
NAAQS.
26
EPA
believed
that
these
increments
satisfied
the
standard
in
section
166(
d),
which
requires
that
PSD
regulations
for
NOx
be
"
at
least
as
effective"
as
the
existing
section
163
increments
in
preventing
significant
deterioration
of
air
quality.
The
EPA
thought
that
reflecting
the
same
percentages
of
the
NAAQS
as
the
SO2
and
PM
increments
would
be
at
least
as
stringent
as
the
statutorily
established
increments
in
terms
of
ambient
air
quality
impacts.
In
the
preamble
to
these
regulations,
EPA
explained
that
the
increments
satisfied
the
section
166(
c)

criteria
by
providing
numerical
measures
against
which
permit
applications
may
be
evaluated
and
stimulating
improved
control
technology.
The
EPA
relied
on
the
establishment
of
a
Class
I
increment
for
NO2
and
the
provisions
for
protecting
AQRVs
in
section
165(
d)(
2)

(
providing
a
role
for
the
Federal
Land
Manager
(
FLM)
in
the
review
of
certain
PSD
permits
prior
to
issuance)
to
protect
air
quality
values
related
to
NOx.
The
EPA
further
reasoned
that
these
ambient
concentration
percentages
could
be
used
as
a
proxy
for
all
the
PSD
purposes
set
forth
in
the
statute,
thus
satisfying
the
"
goals
and
purposes
set
forth
in
section
101
and
section
160"
incorporated
by
reference
in
section
166(
c).

C.
Court
Decision
In
1988,
the
Environmental
Defense
Fund
(
now
27
Environmental
Defense,
or
"
ED")
filed
suit
in
the
U.
S.
Court
of
Appeals
for
the
District
of
Columbia
Circuit
against
the
Administrator
(
Environmental
Defense
Fund,
Inc.
v.
Reilly,

No.
88­
1882).
ED
argued
that
EPA
failed
to
sufficiently
consider
several
of
the
section
166(
c)
criteria.
ED
also
argued
that
EPA's
approach
failed
to
satisfy
the
"
at
least
as
effective"
standard
under
section
166(
d)
because
EPA
did
not
compare
the
NO2
increments
(
set
only
for
the
annual
averaging
period)
to
the
24­
hour
and
3­
hour
increments
for
SO2.

In
its
1990
opinion,
the
court
held
that
EPA
had
satisfied
its
obligation
under
section
166(
d)
but
had
not
sufficiently
considered
whether
a
different
increment
should
be
established
under
the
criteria
in
section
166(
c).
More
specifically,
the
court
held
that
EPA's
percentage­
of­
NAAQS
approach
for
determining
the
increment
satisfied
the
duty
under
section
166(
d)
to
promulgate
regulations
for
NOx
that
were
"
at
least
as
effective"
as
the
increments
in
section
163.
Id.
at
188.
As
to
subsection
(
c),
however,
the
court
held
that
EPA's
approach
of
using
the
percentage
ambient
concentrations
as
a
"
proxy"
for
meeting
the
subsection
(
c)

criteria
overlooked
the
language
of
subsection
(
c),
and
turned
subsection
(
c)
into
an
option,
despite
its
mandatory
wording.
Thus,
the
court
remanded
the
case
to
EPA
"
to
develop
an
interpretation
of
section
166
that
considers
both
28
subsections
(
c)
and
(
d),
and
if
necessary
to
take
new
evidence
and
modify
the
regulations."
Environmental
Defense
Fund
v.
EPA,
898
F.
2d
183,
190
(
D.
C.
Cir.
1990)
("
EDF
v.

EPA").

The
court
identified
three
steps
that
EPA
took
to
develop
PSD
regulations
for
NOx
under
section
166.
The
first
two
steps
reflected
EPA's
decisions
to
adopt
regulations
for
NOx
that
employed
an
increment
and
area
classification
system
to
implement
the
PSD
program.
These
first
two
steps
were
not
controverted
in
EDF
v.
EPA,
898
F.
2d
at
184­
85.
The
dispute
in
the
EDF
case
involved
only
the
third
step,
which
was
EPA's
action
to
establish
several
characteristics
of
the
increment
by
reference
to
the
NAAQS.

The
characteristics
that
EPA
derived
from
the
NAAQS
were
(
1)

the
level
of
the
increment
using
the
percent­
of­

NAAQSapproach
(
2)
the
time
period
(
annual
average)
for
the
increment;
and
(
3)
the
pollutant
(
NO2)
for
which
an
increment
was
established.
Since
these
three
characteristics
of
the
increment
were
the
only
issues
controverted
in
the
EDF
v.
EPA
case,
EPA
is
revisiting
only
these
questions
to
satisfy
the
court's
remand.
However,
we
also
believe
it
would
be
beneficial
to
consider
alternative
approaches
to
an
increment
and
thus
are
voluntarily
reconsidering
the
first
two
steps
in
the
process
of
29
developing
pollutant­
specific
PSD
regulations
for
NOx.

In
EDF
v.
EPA,
the
court
held
that,
in
light
of
the
criteria
in
section
166(
c),
EPA
could
not
use
the
NAAQS
as
the
sole
basis
for
deriving
increments.
However,
the
court
held
that
using
the
NAAQS
as
the
basis
for
deriving
increments
was
permissible
in
determining
whether
the
"
at
least
as
effective"
standard
under
subsection
(
d)
was
met.

But,
with
respect
to
subsection
(
c),
the
court
stated:
"
we
find
nothing
in
the
language
or
legislative
history
suggesting
that
this
duty
[
consideration
of
the
goals
and
purposes
of
the
statute]
could
be
satisfied
simply
by
referencing
the
NAAQS."
Id.
at
190.
The
court
noted
the
differences
between
the
health
and
welfare
criteria
on
which
the
NAAQS
are
based
(
sections
108
and
109)
and
the
"
goals
and
purposes"
of
the
PSD
program
set
forth
in
section
160,

highlighting
the
special
value
the
PSD
program
places
on
protection
of
national
parks.
At
the
same
time,
the
court
recognized
that
"[
n]
evertheless,
the
ambient
standards
are
the
basic
measure
of
air
quality
under
the
[
Clean
Air
Act],

and
the
controlling
standards
by
no
means
exclude
any
value
that
is
the
subject
of
focus
under
the
PSD
provisions."
Id.

at
176
(
internal
citations
and
quotations
omitted).
In
other
words,
the
court
observed
that
NAAQS
remain
relevant
to
the
inquiry
under
section
166
because
they
are
a
basic
30
measure
of
air
quality
and
may
indirectly
reflect
some
consideration,
among
others,
of
the
same
values
that
are
the
focus
of
the
PSD
program.
However,
the
court
indicated
that
we
could
not
rely
solely
upon
the
NAAQS
to
comply
with
section
166
because
this
provision
directs
us
to
focus
on
the
specific
goals
and
purposes
of
PSD
which
are
not
necessarily
the
factors
that
determine
the
NAAQS
under
section
109.

Thus,
the
court
directed
EPA
to
reconsider
the
characteristics
of
the
NOx
increment
described
above
in
light
of
the
criteria
in
both
sections
166(
c)
and
166(
d).

The
court
indicated
that
one
permissible
interpretation
for
harmonizing
subsections
(
c)
and
(
d)
would
be
to
construe
subsection
(
d)
as
a
"
contingent
safe
harbor"
or
presumptive
baseline.
Thus,
an
increment
derived
from
the
NAAQS
could
be
authorized
if
the
agency
were
to
undertake
additional
analysis
and
make
a
reasoned
determination
that
the
criteria
under
subsection
(
c)
do
not
call
for
a
different
increment
than
the
"
safe
harbor"
that
meets
the
criteria
in
subsection
(
d)
of
the
statute.

On
July
31,
2003,
Environmental
Defense
(
ED)
petitioned
the
court
to
order
EPA
to
take
action
in
accordance
with
the
court's
earlier
opinion.
ED
and
EPA
reached
a
settlement
in
which
EPA
agreed
to
propose
and
promulgate
a
rule
to
fully
comply
with
the
court's
remand
order.
The
settlement
31
obligated
the
Agency
to
issue
a
proposal
no
later
than
September
30,
2004,
and
a
final
rule
no
later
than
September
30,
2005.
However,
in
September
2004,
EPA
and
ED
agreed
to
extend
the
proposal
deadline
until
February
14,
2005
in
order
to
allow
EPA
more
time
to
consider
alternatives
to
the
increment
approach.

IV.
Legal
Authority
Section
166(
a)
of
the
Act
directs
EPA
to
develop
pollutant­
specific
regulations
to
prevent
the
significant
deterioration
of
air
quality.
Sections
166(
c)
and
166(
d)
of
the
Act
provide
more
detail
on
the
contents
of
those
regulations.
To
develop
pollutant­
specific
regulations
under
subsection
(
a),
EPA
must
establish
an
overall
regulatory
framework
for
those
regulations
and
fill
in
many
specific
details
around
that
framework.

EPA
interprets
section
166
to
require
that
its
PSD
regulations
for
a
particular
pollutant
must,
as
a
whole,

satisfy
the
criteria
in
section
166.
Thus,
we
believe
our
obligations
under
section
166(
c)
of
the
Act
are
satisfied
when
the
entire
body
of
pollutant­
specific
regulations
for
NOx
(
including
the
overall
regulatory
framework
and
the
specific
details)
satisfy
the
criteria
in
sections
166(
c)

and
166(
d)
of
the
Act.

In
the
case
of
NOx,
EPA
established
that
overall
framework
in
the
1988
rulemaking
and
employed
an
increment
3
Under
section
166(
e)
of
the
Act,
a
State
is
authorized
to
develop
measures
to
prevent
significant
deterioration
other
than
an
area
classification
scheme
for
pollutants
other
than
PM
and
SO2
if
the
implementation
plan
contains
other
provisions
that
the
Administrator
finds
will
"
carry
out
the
purposes
in
section
160
at
least
as
effectively
as
an
area
classification
plan
for
such
pollutant."

32
and
area
classification
system
for
these
regulations.
3
This
system
was
modeled
on
the
system
that
Congress
had
already
established
for
PM
and
SO2.
Within
this
overall
system,
EPA
then
filled
in
specific
details,
including
defining
the
characteristics
of
the
increments
for
NOx.

The
dispute
in
EDF
v.
EPA
involved
only
EPA's
decisions
to
define
the
characteristics
of
the
NOx
increments
in
relation
to
the
NAAQS.
Since
the
basic
increment
and
area
classification
system
in
EPA's
PSD
regulations
for
NOx
were
not
controverted,
EPA
does
not
interpret
the
court's
opinion
to
require
that
the
Agency
reconsider
these
fundamental
aspects
of
its
PSD
regulations
for
NOx.
Thus,
EPA
believes
that
it
is
only
required
at
this
time
to
reconsider
the
level,
time
period,
and
pollutant
used
in
establishing
increments
in
its
PSD
regulations
for
NOx.

However,
EPA
is
also
requesting
comment
in
this
proposed
rule
on
alternatives
to
the
current
NO2
increment
system.
Based
on
the
input
from
various
stakeholders,
EPA
is
voluntarily
reconsidering
whether
the
increment
system
is
the
most
effective
mechanism
for
fulfilling
our
obligations
33
to
protect
parks
and
other
attainment
areas
under
section
166
of
the
Act.
Thus,
as
alternatives
to
our
proposing
to
retain
the
increment
system
for
NOx,
we
are
also
proposing
to
allow
the
States
to
implement
a
cap
and
trade
or
State
planning
approaches
to
fulfill
our
obligation
to
establish
pollutant­
specific
PSD
regulations
for
NOx.

A.
Interpretation
on
Remand:
Harmonizing
Sections
166(
c)

and
(
d)
of
the
Clean
Air
Act
We
propose
to
harmonize
the
criteria
set
forth
in
sections
166(
c)
and
166(
d)
by
using
the
"
contingent
safe
harbor"
approach
discussed
by
the
Court.
We
believe
this
is
an
appropriate
reading
of
the
statute.
Subsection
(
c)

describes
the
kinds
of
measures
to
be
contained
in
the
regulations
to
prevent
significant
deterioration
called
for
in
section
166(
a)
and
specifies
that
these
regulations
are
to
"
fulfill
the
goals
and
purposes"
set
forth
in
sections
160
and
101
of
the
Act.
Then,
under
subsection
(
d),
to
"
fulfill
such
goals
and
purposes,"
EPA
must
promulgate
"
specific
measures
at
least
as
effective
as
the
increments
established
in
section
7473
of
this
title
[
section
163
of
the
Act]."
42
U.
S.
C.
7476.
Subsection
(
d)
indicates
that
these
specific
measures
may
include
increments
but
are
not
necessarily
required
to
contain
increments.
Thus,

subsection
(
d)
can
be
construed
to
require
that
EPA
identify
a
minimum
level
of
effectiveness,
or
safe
harbor,
for
the
34
body
of
pollutant­
specific
PSD
regulations
adopted
under
section
166.
Then,
subsection
(
c)
may
be
read
to
require
that
EPA
conduct
further
review
to
determine
whether,
based
on
the
criteria
in
subsection
(
c),
EPA's
pollutant­
specific
PSD
regulations
under
section
166
should
contain
measures
that
deviate
from
the
minimum
"
safe
harbor"
identified
under
subsection
(
d).
As
in
1988,
we
construe
subsection
(
d)
to
require
that
the
measures
be
"
at
least
as
stringent"
as
the
statutory
increments
set
forth
in
section
163.

In
an
instance
where
EPA
opts
to
employ
an
increment
in
its
section
166
PSD
regulations
for
a
specific
pollutant,
we
interpret
this
language
to
require
that
EPA,
at
minimum,

establish
an
increment
that
is
consistent
with
the
statutory
increments
established
by
Congress
in
that
the
increment
is
established
in
relation
to
the
NAAQS
and
is
set
(
1)
at
an
equivalent
percentage
of
the
NAAQS
as
the
statutory
increments;
(
2)
for
the
same
pollutants
as
the
NAAQS;
and
(
3)
for
the
same
time
period
as
the
NAAQS.
Under
an
increment
approach,
EPA
would
then
conduct
further
review
to
determine
whether
the
"
safe
harbor"
increment,
in
conjunction
with
other
measures
adopted
under
the
PSD
program
and
section
166,
sufficiently
fulfills
the
criteria
in
subsection
(
c).
If,
after
weighing
and
balancing
the
criteria
set
forth
in
subsection
(
c)
(
and
the
incorporated
goals
and
purposes
of
the
CAA
in
section
101
and
the
PSD
35
program
in
section
160),
EPA
determines
that
the
"
safe
harbor"
increment
and
other
measures
do
not
satisfy
these
criteria,
then
EPA
would
need
to
develop
additional
regulations
which
may
include
a
different
increment,

additional
increments,
or
additional
measures
to
satisfy
the
section
166(
c)
criteria.
If
EPA
determines
that
the
"
safe
harbor"
increment
and
associated
measures
satisfy
the
criteria
in
subsection
(
c),
then
it
need
not
adopt
a
different
or
additional
increment
or
other
measures
as
part
of
its
PSD
regulations
under
section
166.

B.
Interpretation
on
Remand:
The
Section
166(
c)
Factors
EPA
interprets
section
166(
c)
of
the
Act
to
establish
eight
factors
to
be
considered
in
the
development
of
PSD
regulations
for
the
pollutants
covered
by
this
provision.

Section
166(
c)
lists
three
specific
criteria
that
EPA
must
consider
in
the
development
of
PSD
regulations
for
the
pollutants
covered
by
this
provision.
These
three
criteria
indicate
that
PSD
regulations
for
specific
pollutants
should
provide
(
1)
specific
numerical
measures
for
evaluating
permit
applications;
(
2)
a
framework
for
stimulating
improved
control
technology;
and
(
3)
protection
of
air
quality
values.
42
U.
S.
C.
7476(
c).
In
addition,
section
166(
c)
directs
that
EPA's
PSD
regulations
for
specific
pollutants
"
fulfill
the
goals
and
purposes"
set
forth
in
sections
101
and
160
of
the
Act.
42
U.
S.
C.
7476(
c).
We
36
interpret
this
phrase
to
incorporate
the
five
goals
and
purposes
of
the
PSD
program
set
forth
in
section
160
as
factors
that
EPA
must
consider
to
comply
with
section
166(
c)

of
the
Act.

The
Agency's
view
is
that
PSD
measures
that
satisfy
the
specific
goals
and
purposes
of
section
160
also
satisfy
the
more
general
purposes
and
goals
identified
in
section
101
of
the
Act.
The
overall
goals
and
purposes
of
the
CAA
listed
in
sections
101(
b)
and
101(
c)
are
general
goals
regarding
protecting
and
enhancing
the
nation's
air
resources
and
controlling
and
preventing
pollution.
Because
these
broad
goals
are
given
more
specific
meaning
in
section
160,
EPA
does
not
believe
it
is
necessary
to
consider
them
in
detail
when
evaluating
whether
PSD
regulations
satisfy
the
criteria
in
subsection
166(
c).
In
addition,
the
court's
inquiry
in
EDF
v.
EPA
focused
exclusively
on
the
specific
goals
and
purposes
of
the
PSD
program
set
forth
in
section
160.

However,
because
the
broad
purpose
of
the
CAA
set
forth
in
section
101(
b)(
1)
provides
some
additional
guidance
as
to
the
meaning
of
the
more
specific
PSD
goal
set
forth
in
section
160(
3),
we
discuss
section
101(
b)(
1)
further
below
in
this
limited
context
of
interpreting
one
of
the
factors
applicable
under
section
166.

Thus,
EPA
construes
the
term
"
fulfill
the
goals
and
purposes,"
as
used
in
section
166(
c),
to
mean
that
EPA
37
should
apply
the
goals
and
purposes
listed
in
section
160
as
factors
applicable
to
pollutant­
specific
PSD
regulations
established
under
section
166.
The
EPA's
PSD
regulations
for
NOx
should
therefore
be
consistent
with
the
three
criteria
listed
in
subsection
166(
c)
and
the
five
goals
and
purposes
listed
in
section
160
of
the
Act.

As
noted
above
and
explained
further
below,
for
the
increment
option
in
this
proposal,
we
believe
many
of
the
eight
factors
applicable
under
section
166(
c)
are
fulfilled
by
elements
of
the
regulatory
framework
that
were
established
in
1988
and
not
controverted
in
EDF
v.
EPA.
We
discuss
further
below
how
the
proposed
cap
and
trade
and
State
planning
options
also
satisfy
these
factors.
The
following
sections
provide
more
detail
on
how
we
propose
to
interpret
and
apply
several
of
these
factors
in
developing
pollutant­
specific
PSD
regulations
under
section
166
of
the
Act.

1.
Numerical
Measures
by
Which
Permit
Application
may
be
Evaluated
The
first
criterion
in
section
166(
c)
states
that
pollutant­
specific
PSD
regulations
must
contain
"
specific
numerical
measures
against
which
permit
applications
may
be
evaluated."
We
believe
an
increment
would
clearly
satisfy
this
criterion
but
do
not
interpret
section
166
to
require
that
we
employ
an
increment
for
every
pollutant
listed
in
38
this
section.
Section
166(
d)
states
that
our
pollutantspecific
PSD
regulations
"
may
contain"
increments
or
other
measures.
We
interpret
this
provision
to
allow
EPA
or
the
States
to
employ
approaches
other
than
an
increment
so
long
as
such
an
approach
fulfills
the
"
specific
numerical
measures"
criterion
in
subsection
166(
c).

While
an
increment
is
the
clearest
example
of
a
specific
numerical
measure
for
evaluating
permit
applications
because
of
the
model
Congress
established
for
PM
and
SO2,
the
Act
gives
EPA
the
discretion
to
employ
other
types
of
numerical
measures
in
PSD
regulations
for
the
other
pollutants
listed
in
section
166,
such
as
NOx.
An
increment
represents
the
allowable
marginal
increase
in
air
pollutant
concentration
(
measured
in
µ
g/
m3).
Under
this
approach,
the
permit
applicant
must
conduct
modeling
to
determine
whether
or
not
its
emissions
on
a
mass
basis
(
e.
g.,
tons)
will
result
in
an
air
quality
concentration
increase
in
excess
of
the
increment.
However,
another
way
to
provide
a
numerical
measure
for
evaluating
permits
would
be
to
establish
a
maximum
allowable
level
of
emissions
on
a
mass
basis
(
e.
g.,

tons).

Under
the
latter
approach,
permit
applicants
would
have
to
show
that
their
emissions
will
not
cause
total
emissions
in
a
given
area
to
exceed
the
maximum
allowable
level
of
emissions
established
for
that
area.
Under
a
State
planning
4
See
S.
Rep.
95­
127,
at
12,
reprinted
at
3
Legislative
History
at
1386,
1410
(
describing
the
goal
of
protecting
"
air
quality
values"
in
"
Federal
lands
­
such
as
national
parks
and
wilderness
areas
and
international
parks",
and
in
the
next
paragraph
and
subsequent
text
using
the
term
"
air
quality
related
values"
to
describe
the
same
goal);
id.
at
35,
36
("
The
bill
charges
the
Federal
land
manager
and
the
supervisor
with
a
positive
role
to
protect
air
quality
values
associated
with
the
land
areas
under
the
jurisdiction
of
the
[
FLM]"
and
then
describing
the
statutory
term
as
"
air
39
approach,
the
State
could
monitor
the
inventory
of
emissions
from
all
sources
(
new
and
existing)
and
only
issue
a
permit
if
the
applicant's
project
would
not
cause
emissions
to
exceed
allowable
levels.
Using
a
cap
and
trade
approach,

EPA
or
the
States
could
adopt
regional
or
statewide
caps
on
emissions
of
specific
sources
that
could
then
be
allocated
to
States
or
individual
sources
covered
by
the
cap
in
the
form
of
a
budget
or
allowance.
Individual
permit
applications
would
be
evaluated
against
the
cap
by
determining
whether
the
applicant
held
a
sufficient
number
of
allowances.

2.
Protect
Air
Quality
Values
The
third
criterion
in
section
166(
c)
broadly
states
that
the
regulations
"
shall
provide
.
.
.
protection
of
air
quality
values"
without
identifying
the
air
quality
values
to
be
protected.
Legislative
history
indicates
that
the
term
"
air
quality
value"
was
used
interchangeably
with
the
term
"
air
quality
related
value"
(
AQRV)
regarding
Class
I
lands.
4
Thus,
we
believe
the
term
"
air
quality
values"
quality
related
values").
H.
R.
Report
95­
564
at
532
(
describing
duty
of
Administrator
to
consider
"
air
quality
values"
of
the
tribal
and
State
lands
in
resolving
an
appeal
of
a
tribal
or
State
redesignation,
which
is
described
in
the
final
bill
as
"
air
quality
related
values").

40
should
be
given
the
same
meaning
as
"
air
quality
related
values."

The
Act
does
not
define
AQRV,
except
to
note
that
it
includes
visibility.
Section
165(
d)(
1)(
B).
However,
the
legislative
history
provides
the
following
explanation
of
AQRV:

The
term
"
air
quality
related
values"
of
Federal
lands
designated
as
class
I
includes
the
fundamental
purposes
for
which
such
lands
have
been
established
and
preserved
by
the
Congress
and
the
responsible
Federal
agency.
For
example,

under
the
1916
Organic
Act
to
establish
the
National
Park
Service
(
16
U.
S.
C.
1),
the
purpose
of
such
national
park
lands
"
is
to
conserve
the
scenery
and
the
natural
and
historic
objects
and
the
wildlife
therein
and
to
provide
for
the
enjoyment
of
the
same
in
such
manner
and
by
such
means
as
will
leave
them
unimpaired
for
the
enjoyment
of
future
generations.

S.
Rep.
95­
127
at
36,
reprinted
at
3
Legislative
History
at
1410.
41
Thus,
in
1996,
the
Agency
proposed
the
following
definition
of
AQRV:

...
visibility
or
a
scenic,
cultural,
physical,

biological,
ecological,
or
recreational
resource
that
may
be
affected
by
a
change
in
air
quality,

as
defined
by
the
Federal
Land
Manager
for
Federal
lands,
or
by
the
applicable
State
or
Indian
Governing
Body
for
nonfederal
lands.

61
FR
38250,
38322
(
July
23,
1996).
The
reference
to
State
or
Indian
Governing
Body
was
to
acknowledge
that
Congress
recognized
in
section
164(
e)
that
such
areas
also
may
have
AQRVs
to
be
taken
into
consideration.

3.
Protect
Public
Health
and
Welfare
from
Adverse
Effects
Notwithstanding
Attainments
of
NAAQS
The
first
goal
and
purpose
in
section
160
of
the
Act
sets
forth
a
broad
mission
"
to
protect
public
health
and
welfare
from
any
actual
or
potential
adverse
effects
which
in
the
Administrator's
judgment
may
reasonably
be
anticipated
to
occur
notwithstanding
attainment
and
maintenance
of
all
national
ambient
air
quality
standards."

The
precise
meaning
of
this
goal
is
somewhat
ambiguous
because
it
appears
to
mirror
the
legal
standards
applicable
to
the
promulgation
of
the
primary
and
secondary
NAAQS.

Under
section
109(
b)
of
the
Act,
the
primary
NAAQS
must
"
protect
the
public
health"
with
an
adequate
margin
of
5
The
NAAQS
process
begins
with
the
development
of
"
air
quality
criteria"
under
section
108
for
air
pollutants
that
"
may
reasonably
be
anticipated
to
endanger
public
health
or
welfare"
and
that
come
from
"
numerous
or
diverse"
sources.
Section
108(
a)(
1).
"
Air
quality
criteria"
must
reflect
the
latest
scientific
knowledge
on
"
all
identifiable
effects
on
public
health
or
welfare"
that
may
result
from
a
pollutant's
presence
in
the
ambient
air.
Id.
§
7408(
a)(
2).
The
scientific
assessments
constituting
air
quality
criteria
generally
take
the
form
of
a
"
criteria
document,"
a
rigorous
review
of
all
pertinent
scientific
studies
and
related
information.
The
EPA
also
develops
a
"
staff
paper"
to
"
bridge
the
gap"
between
the
scientific
review
and
the
judgments
the
Administrator
must
make
to
set
standards.
See
Natural
Resources
Defense
Council
v.
EPA
("
NRDC"),
902
F.
2d
962,
967
(
D.
C.
Cir.
1990).
Both
documents
undergo
extensive
scientific
peer­
review
as
well
as
public
notice
and
comment.
See
e.
g.,
62
FR
38654/
1­
2.

For
each
NAAQS
review,
the
Administrator
must
appoint
"
an
independent
scientific
review
committee
composed
of
seven
members
of
the
National
Academy
of
Sciences,
one
42
safety
(
section
109(
b)(
1))
and
the
secondary
NAAQS
must
"
protect
the
public
welfare
from
any
known
or
anticipated
adverse
effects"
associated
with
ambient
concentrations
of
the
pollutant
(
section
109(
b)(
2)).
The
term
"
welfare"
is
defined
in
the
Act
to
include
"
effects
on
soils,
water,

crops,
vegetation,
man­
made
materials,
animals,
wildlife,

weather,
visibility,
and
climate."
Section
302(
h).

When
applied
as
a
relevant
factor
for
the
content
of
PSD
regulations
for
specific
pollutants
under
section
166(
c)

of
the
Act,
we
do
not
construe
this
language
in
section
160
to
require
EPA
to
conduct
a
full
NAAQS
review
every
time
it
establishes
PSD
regulations
for
a
pollutant.
A
NAAQS
review
is
a
rigorous
scientific
process,
5
and
Congress
gave
EPA
5
physician,
and
one
person
representing
State
air
pollution
control
agencies,"
known
as
the
Clean
Air
Scientific
Advisory
Committee
(
CASAC).
Section
109(
d)(
2)(
A).
CASAC
is
charged
with
recommending
revisions
to
the
criteria
document
and
NAAQS,
and
advising
the
Administrator
on
several
issues,
including
areas
in
which
additional
knowledge
is
required
to
apprise
the
adequacy
and
basis
of
existing,
new
or
revised
NAAQS.
Section
109(
d)(
2)(
B),
(
C).

43
years
to
complete
this
review.
42
U.
S.
C.
7409(
d)(
1).

However,
under
section
166(
a)
of
the
Act,
Congress
gave
EPA
only
2
years
to
establish
PSD
regulations
for
specific
pollutants.
Furthermore,
in
cases
where
NAAQS
were
not
established
as
of
1977,
section
166(
a)
gave
EPA
2
years
after
the
establishment
of
a
NAAQS
to
promulgate
PSD
regulations.
This
indicates
that
Congress
intended
for
PSD
regulations
to
be
developed
shortly
after
establishment
of
a
NAAQS
and
before
completion
of
the
next
NAAQS
review
in
5
years.
As
a
result,
we
do
not
believe
it
is
reasonable
to
interpret
this
factor
to
require
such
a
rigorous
review
to
establish
PSD
regulations.
In
addition,
as
discussed
further
below,
we
believe
these
statutory
provisions
indicate
that
Congress
intended
for
EPA
to
develop
increments
using
the
research
compiled
when
establishing
or
reviewing
a
NAAQS.

In
the
specific
context
of
the
PSD
program,
we
construe
this
charge
to
"
protect
public
health
and
welfare"
to
require
EPA
to
evaluate
whether
adverse
effects
may
occur
as
a
result
of
increases
in
pollution
to
ambient
levels
below
6
Of
course,
if
the
area
is
designated
nonattainment
pursuant
to
section
107
of
the
Act
because
the
air
quality
is
not
attaining
the
NAAQS,
the
PSD
increments
do
not
apply.
Rather,
reductions
in
emissions
must
be
implemented
to
bring
the
area's
air
quality
into
attainment
with
the
NAAQS,
and,
in
the
case
of
new
sources,
sufficient
offsetting
emissions
reductions
must
be
obtained.
Sections
172(
c)
and
173(
a)
of
the
Act.

44
the
NAAQS.
If
such
effects
may
occur
in
some
areas
of
the
country,
then
EPA
must
consider
how
to
establish
PSD
regulations
that
protect
public
health
and
welfare
against
such
effects
where
they
may
occur.
However,
we
do
not
interpret
the
PSD
program
to
require
regulations
that
eliminate
all
adverse
effects
that
may
result
from
increases
in
pollution
in
attainment
areas.
The
PSD
program
is,
as
its
title
suggests,
designed
to
prevent
"
significant
deterioration"
from
a
baseline
concentration.
S.
Rep.
95­

127
at
(
3
LH
at
1385)
("
This
legislation
defines
`
significant
deterioration'
in
all
clean
air
areas
as
a
specified
amount
of
additional
pollution.
This
definition
is
intended
to
prevent
any
major
decline
in
air
quality
currently
existing
in
clean
air
areas
.
.
.
").
That
is,

some
decline
in
air
quality
(
as
tied
to
the
baseline
air
quality
concentration)
is
permissible
for
any
particular
area
of
the
country
that
is
currently
achieving
the
NAAQS,

as
long
as
it
is
not
"
significant."
6
4.
Ensure
Economic
Growth
Consistent
with
Preservation
of
Existing
Clean
Air
Resources
45
The
third
goal
and
purpose
set
forth
in
section
160
is
to
"
insure
that
economic
growth
will
occur
in
a
manner
consistent
with
the
preservation
of
existing
clean
air
resources."
To
some
extent,
this
goal
of
the
PSD
program
more
specifically
articulates
the
broader
purpose
of
the
CAA,
described
in
section
101(
b)(
1)
of
the
Act,
to
"
protect
and
enhance
the
quality
of
the
Nation's
air
resources
so
as
to
promote
the
public
health
and
welfare
and
the
productive
capacity
of
its
population."
42
U.
S.
C.
7401(
b)(
1).

Sections
160(
3)
and
101(
b)(
1)
are
similar
in
that
both
sections
reflect
the
goal
to
simultaneously
protect
air
quality
and
to
foster
economic
growth.
Thus,
in
interpreting
the
meaning
of
section
160(
3)
when
used
as
a
factor
applicable
under
section
166(
c),
we
also
consider
the
broader
purpose
of
the
Act
set
forth
in
section
101(
b)(
1).

The
first
part
of
this
goal
of
the
PSD
program
set
forth
in
section
160(
3)
("
to
insure
that
economic
growth
will
occur")
makes
clear
that
the
PSD
program
is
not
intended
to
stifle
economic
growth.
However,
the
second
part
of
this
goal
indicates
that
economic
growth
should
"
occur
in
a
manner
that
is
consistent
with
the
preservation
of
existing
clean
air
resources."
42
U.
S.
C.
7470(
3).

Section
101(
b)(
1)
indicates
that
these
goals
are
not
necessarily
inconsistent
because
Congress
sought
to
"
protect
and
enhance
the
Nation's
air
resources
so
as
to
promote
the
46
public
health
and
welfare
and
the
productive
capacity
of
[
the
Nation's]
population."
Thus,
when
considered
in
light
of
the
purpose
of
the
Act
set
forth
in
section
101(
b)(
1),
it
is
clear
that
section
160(
3)
establishes
the
goal
of
the
PSD
program
to
balance
the
promotion
of
economic
growth
and
the
protection
of
clean
air
resources.

Therefore,
when
applied
as
a
guiding
factor
for
the
content
of
pollutant­
specific
PSD
regulations
under
section
166(
c),
we
construe
section
160(
3)
to
establish
a
balancing
test
between
fostering
economic
growth
and
protecting:
(
1)

AQRVs;
(
2)
the
public
health
and
welfare
from
adverse
effects,
and
(
3)
the
air
quality
in
parks
and
special
areas.

When
EPA
employs
an
area
classification
system
in
its
section
166
regulations,
all
of
these
factors
must
be
weighed
in
each
type
of
area
(
Class
I,
Class
II,
and
Class
III).
However,
the
weight
given
to
each
factor
may
be
more
or
less
depending
on
the
area
involved.
For
example,

economic
growth
may
be
the
most
important
factor
in
a
Class
III
area,
but
some
level
of
protection
for
existing
clean
air
resources
must
still
be
provided.
In
a
Class
I
area,

some
level
of
economic
growth
must
still
be
allowed
to
occur,
even
though
preservation
of
existing
clear
air
resources
may
be
the
dominant
value
for
these
areas.

C.
EPA's
Authority
to
Fulfill
Section
166
Requirements
by
Granting
States
Flexibility
to
Adopt
Alternative
Measures
in
47
Their
SIPs
Under
section
110(
a)(
1)
of
the
Act,
each
State
is
required
to
submit
a
SIP
which
provides
for
implementation,

maintenance,
and
enforcement
of
the
primary
and
secondary
NAAQS
established
by
EPA.
All
areas
are
required
to
submit
SIPs
within
certain
timeframes,
and
those
SIPs
must
include
specified
provisions
identified
under
section
110(
a)(
2)
of
the
Act.
SIPs
for
nonattainment
areas
are
required
to
include
additional
specified
control
requirements,
as
well
as
controls
providing
for
attainment
of
any
revised
NAAQS
and
periodic
reductions
providing
"
reasonable
further
progress"
in
the
interim
(
see
section
172(
c)).
For
attainment
areas
subject
to
the
PSD
program,
section
161
of
the
Act
requires
that
"
each
applicable
implementation
plan
shall
contain
emissions
limitations
and
such
other
measures
as
may
be
necessary,
as
determined
under
regulations
promulgated
under
this
part,
to
prevent
significant
deterioration
of
air
quality
in
each
region
...
designated
...
as
attainment
or
unclassifiable."
Thus,
we
have
interpreted
sections
166
and
161
to
collectively
require
that
EPA
promulgate
a
specific
PSD
regulatory
program
for
each
pollutant
identified
in
section
166
(
such
as
the
existing
NO2
increments
and
associated
regulations),
and
then
to
require
the
States
to
adopt
that
program
as
part
of
their
SIPs.
7
43
FR
26380,
26381
("
States
can
expand
the
available
PSD
increments
by
requiring
emissions
reductions
from
existing
sources.")

48
We
view
the
PSD
program
to
be
a
growth
management
program
that
is
intended
to
limit
the
growth
in
emissions
above
baseline
levels
that
may
be
caused
by
the
construction
of
major
new
and
modified
sources.
We
do
not
interpret
the
PSD
provisions
to
authorize
us
to
direct
States
in
their
SIPs
to
achieve
reductions
in
emissions
from
existing
sources.
However,
we
recognize
that
the
growth
management
goals
of
PSD
may
also
be
fulfilled
when
the
States
adopt
controls
on
existing
sources
that
would
reduce
emissions
and
allow
growth
from
new
sources
and
major
modifications
to
existing
sources
without
causing
significant
deterioration.

Under
the
increment
approach,
we
have
previously
recognized
that
States
may
choose
to
require
reductions
from
existing
sources
in
order
to
expand
the
increments
and
allow
for
more
growth
under
the
PSD
program.
7
However,
we
have
never
required
States
to
do
so
because,
in
the
absence
of
an
increment
violation,
we
do
not
believe
section
166
and
other
provisions
in
part
C
give
us
the
legal
authority
to
mandate
such
reductions
for
PSD
purposes.

Consistent
with
these
authorities,
in
addition
to
requiring
States
to
adopt
a
specific
PSD
program
for
NOx
promulgated
under
section
166
as
part
of
their
SIPs,
we
49
believe
we
could
also
give
States
the
flexibility
to
develop
their
own
programs
that
EPA
could
review
to
determine
if
the
State
program
meets
the
requirements
of
section
166(
c)
and
166(
d)
of
the
Act.
If
a
State
adopts
a
program
that
meets
the
criteria
of
section
166(
c)
and
166(
d),
we
believe
section
166
would
give
us
the
authority
to
allow
the
State
to
implement
that
program
in
lieu
of
any
specific
program
(
such
as
one
that
may
include
increments)
that
EPA
might
adopt
under
section
166.
Thus,
we
think
one
option
for
fulfilling
our
obligation
to
promulgate
pollutant
specific
regulations
for
NOx
under
section
166
would
be
to
adopt
regulations
that
establish
a
procedure
for
States
to
submit
their
own
programs
to
satisfy
section
166.
These
regulations
would
contain
criteria
that
would
guide
EPA's
evaluation
of
whether
a
State
program
contains
"
other
measures"
that
are
sufficient
to
satisfy
the
requirements
of
section
166(
c)
and
166(
d)
and
to
operate
in
lieu
of
an
EPApromulgated
program.

V.
Health
and
Welfare
Effects
of
NOx
"
Nitrogen
oxides"
(
NOx)
is
the
generic
term
for
a
group
of
highly
reactive
gases
that
contain
nitrogen
and
oxygen
in
varying
amounts.
The
high­
temperature
combustion
of
fossil
fuels,
primarily
from
electric
utilities
and
mobile
sources,

is
a
major
contributor
to
the
formation
of
nitric
oxide
(
NO)

and
NO2.
Most
NOx
from
combustion
sources
are
emitted
as
NO
8
Because
NO
is
readily
converted
to
NO2
in
the
atmosphere,
the
emissions
reported
by
EPA
assumes
nitrogen
oxides
are
in
the
form
of
NO2.
In
predicting
ambient
impacts
that
may
result
from
emissions
of
NOx,
all
NOx
initially
is
assumed
to
be
emitted
from
sources
as
NO2.
(
40
CFR
part
50
app
W
sec.
6.2.4.)

9
Seven
oxides
of
nitrogen
are
known
to
occur
in
the
atmosphere:
nitric
oxide
(
NO),
nitrogen
dioxide
(
NO2),
nitrate
(
NO3
­),
nitrous
oxide
(
N2O),
dinitrogen
trioxide
(
N2O3),
dinitrogen
tetroxide
(
N2O4)
and
dinitrogen
pentoxide
(
N2O5).

10
The
term
"
welfare"
is
defined
in
the
Act
to
include,
inter
alia,
"
effects
on
soils,
water,
crops,
vegetation,
man­
made
materials,
animals,
wildlife,
weather,
visibility,
and
climate."
Section
302(
h).

11
It
should
be
noted
that
nitrification
can
be
a
beneficial
process
in
many
instances.
Nitrification
(
a
bacterially
driven
process
that
converts
ammonium
to
nitrite)
can
occur
productively
in
manure
piles,
during
sewage
processing,
in
soil,
and
in
marine
environments
in
the
oxygenated
water
column
above
anaerobic
sediments
or
50
(
about
95
percent);
the
remainder
are
primarily
NO2.

Emissions
of
NO
are
rapidly
oxidized
in
the
atmosphere
to
produce
even
more
NO2.8
Nitrogen
oxides9
play
a
major
role
in
the
formation
of
ozone
and
PM
(
nitrogen­
bearing
particles
and
acid
aerosols),

each
with
their
own
set
of
adverse
health
and
welfare
effects.
10
For
example,
nitrate
particles
contribute
to
visibility
impairment
and
regional
haze
and
nitrates
are
a
major
component
of
acidic
deposition.
Emissions
of
NOx
also
contribute
to
nitrates
in
drinking
water,
nitrogen
loadings
to
aquatic
(
eutrophication)
and
terrestrial
(
nitrification)
11
ecosystems,
toxics,
stratospheric
ozone
within
the
surface
of
oxidized
layers
of
sediments.
Nitrification
becomes
adverse
when
it
is
accompanied
by
"
nitrogen
saturation,"
a
condition
that
can
arise
in
terrestrial
ecosystems
from
the
long­
term
chronic
effects
of
nitrogen
deposition
or
loading,
where
nitrogen
inputs
into
an
ecosystem
exceed
the
ability
of
plants
and
soil
organisms
to
utilize
it
so
that
it
begins
to
leach
nitrite
out
of
the
soil
into
streams
and
other
water
bodies.

51
depletion,
and
global
climate
change.

Reduced
nitrogen
compounds,
such
as
ammonia
(
NH3)

(
derived
largely
from
emissions
from
livestock
waste
as
well
as
those
associated
with
the
application
of
fertilizer
to
the
ground)
and
ammonium
(
NH4
+),
are
also
important
to
many
of
the
public
health
and
environmental
impacts
associated
with
atmospheric
nitrogen
compounds.
It
is
important
to
recognize
that
some
forms
of
NOx
are
produced
naturally
(
via
lightning,
soils,
wildfires,
stratospheric
intrusion,
and
the
oceans)
and
also
can
play
a
role
in
the
cycling
of
nitrogen
through
the
ecosystem.
Such
varied
origins
of
nitrogen
in
the
atmosphere
add
to
the
difficulty
of
determining
the
specific
source
contributing
to
the
total
nitrogen
concentration
and,
therefore,
make
it
difficult
to
design
an
emissions
control
strategy
for
reducing
the
nitrogen
contribution
in
a
particular
area.

A.
Scope
of
Effects
EPA
Proposes
to
Consider
In
order
to
evaluate
our
pollutant­
specific
PSD
regulations
for
NOx
under
section
166(
c),
we
must
first
define
the
scope
of
effects
that
are
relevant
to
our
52
analysis.
Although
emissions
of
NOx
contribute
to
a
range
of
direct
and
indirect
effects
on
health,
welfare,
and
AQRVs,
we
believe
our
review
should
focus
on
those
effects
that
were
considered
by
EPA
in
the
development
of
the
NAAQS
for
NO2.

EPA
believes
that
this
approach
is
appropriate
because
the
need
to
set
an
increment
is
tied
to
the
existence
of
the
NAAQS.
As
the
court
in
EDF
v.
EPA
acknowledged
"
the
ambient
standards
are
the
basic
measure
of
air
quality
under
the
[
Clean
Air
Act]
and
the
controlling
standards
by
no
means
exclude
any
value
that
is
the
subject
of
focus
under
the
PSD
provisions."
898
F.
2d
at
190
(
emphasis
in
original).
Thus,

the
health
and
welfare
effects
that
were
evaluated
by
EPA
when
it
established
the
NAAQS
necessarily
define
the
outer
bounds
of
the
scope
of
health
and
welfare
effects
that
EPA
should
evaluate
when
it
establishes
regulations
under
section
166
to
protect
against
significant
deterioration
of
air
quality
from
NOx
emissions.

This
view
is
supported
by
the
provisions
of
section
166
which
make
clear
that
EPA
is
to
establish
PSD
regulations
(
including
an
increment,
if
appropriate)
under
this
provision
after
the
establishment
of
a
NAAQS
for
the
applicable
pollutants.
In
1971,
EPA
first
established
a
single
standard
for
NO2
as
both
the
primary
and
secondary
NAAQS
addressing
NOx.
36
FR
8186
(
April
30,
1971).
53
Congress
then
passed
section
166
of
the
Act
in
1977
and
gave
EPA
2
years
to
complete
its
study
and
promulgate
PSD
regulations
for
"
nitrogen
oxides."
42
U.
S.
C.
7476(
a).
In
addition,
for
pollutants
for
which
a
NAAQS
had
not
been
promulgated
by
August
7,
1977,
Congress
gave
EPA
2
years
from
the
promulgation
of
such
standards
to
establish
PSD
regulation
under
section
166
of
the
Act.
Id.
The
establishment
of
PSD
regulations
and
an
increment
must
necessarily
follow
the
NAAQS
because
the
NAAQS
provides
the
benchmark
against
which
we
are
to
judge
"
significant
deterioration"
of
air
quality.

Although
we
propose
to
use
the
range
of
effects
considered
in
setting
the
NAAQS
to
define
the
bounds
of
our
analysis,
we
are
also
mindful
that
the
court
in
EDF
v.
EPA
rejected
use
of
the
NAAQS
as
the
"
sole
basis"
for
deriving
the
increment.
898
F.
2d
at
190.
However,
in
this
action,

we
propose
to
focus
not
simply
on
the
level
of
the
NAAQS
as
a
legal
standard,
as
we
did
in
1988,
but
to
further
consider
the
health
and
welfare
effects
that
EPA
evaluated
to
establish
the
NAAQS.
Rather
than
considering
those
effects
in
relation
to
the
standards
set
forth
in
section
109,
we
now
evaluate
those
effects
in
relation
to
the
factors
in
section
166(
c)
and
160
of
the
Act.
The
court
held
that
we
could
not
rely
solely
on
the
NAAQS
itself
to
establish
increments
because
of
the
emphasis
in
sections
166(
c)
and
12
Ozone
is
the
oxidant
found
in
the
largest
quantities
in
the
atmosphere.
The
EPA
promulgated
NAAQS
for
photochemical
oxidants
in
1971.
The
chemical
designation
of
the
standard
was
changed
in
1979
from
"
photochemical
oxidants"
to
ozone.
See
44
FR
8202
(
February
8,
1979).

13
Particulate
matter
(
PM)
is
composed
of
directly
emitted
particles
and
secondarily
formed
particles.
Secondary
particulates
are
produced
from
gaseous
pollutants,
mainly
NOx,
SO2,
ammonia,
and
some
VOCs.
Emissions
of
NOx
can
result
in
the
formation
of
particulate
nitrates
whose
contribution
to
fine
particles
varies
depending
on
geographic
location
and
other
criteria.

54
160
on
special
considerations
 
such
as
national
wilderness
areas
 
whose
special
values
may
be
reflected
in
the
NAAQS
but
are
not
necessarily
the
only
factor
that
determines
the
level
of
the
NAAQS.
See
898
F.
2d
at
190.
Thus,
within
the
field
of
effects
that
EPA
found
relevant
when
establishing
the
NAAQS,
we
narrow
our
inquiry
here
to
focus
on
the
special
considerations
of
PSD
and
those
effects
that
may
occur
in
some
areas
notwithstanding
attainment
of
the
NAAQS.

As
noted
above,
both
photochemical
oxidants
(
ozone)
12
and
PM13
are
formed
in
part
by
reactions
of
NOx
emissions
with
other
pollutants
in
the
atmosphere.
Thus,
the
question
arises
whether
the
PSD
regulations
with
respect
to
NOx
must
also
address
the
ozone
and
PM
impacts.
Because
section
166(
a)
directs
EPA
to
separately
promulgate
pollutantspecific
PSD
regulations
for
photochemical
oxidants
(
i.
e.,

ozone),
we
believe
the
duty
to
promulgate
increments
for
14
In
the
1988
final
preamble
on
NO2
increments,
we
gave
limited
consideration
to
whether
limiting
increases
of
NOx
emissions
would
worsen
ozone
ambient
concentrations,
in
response
to
comments
raising
this
issue.
53
FR
at
40668.
We
did
not,
however,
attempt
to
set
the
NO2
increment
to
address
ozone
public
health
and
welfare
impacts,
nor
do
we
believe
that
is
required
here,
for
the
reasons
stated
above.
Increments
for
ozone
have
not
been
established
because
of
the
technical
difficulty
associated
with
predicting
ambient
concentration
changes
resulting
from
a
single
stationary
source.
61
FR
65764,
65776
(
Dec.
13,
1996).

55
"
nitrogen
oxides"
does
not
include
consideration
of
ozone.
14
We
believe
that
Congress
did
not
intend
for
EPA
to
establish
duplicative
PSD
regulations.
Several
pollutants
are
identified
in
section
166(
a)
for
the
promulgation
of
regulations
to
"
prevent
the
significant
deterioration
of
air
quality
which
would
result
from
the
emissions
of
such
pollutants."
In
addition
to
"
nitrogen
oxides,"
the
statute
lists
"
photochemical
oxidants"
and
any
pollutants
for
which
NAAQS
are
later
promulgated.
Increments
for
PM10
are
separately
authorized
in
section
166(
f).

In
addition,
we
believe
it
would
be
unreasonable
to
establish
pollutant­
specific
PSD
regulations
to
protect
against
the
effects
of
ozone
without
considering
the
other
major
precursor
for
ozone
 
volatile
organic
compounds.
Any
PSD
regulation
attempting
to
mitigate
the
ozone
impacts
from
NOx,
notwithstanding
the
ozone
NAAQS,
would
be
unfounded
without
also
addressing
this
significant
component.
Thus,

we
believe
the
contribution
of
NOx
to
the
formation
of
ozone
15
NO2
may
be
transformed
to
nitrate
particulates
by
means
of
chemical
reactions
in
the
atmosphere.
Nitrate
is
a
major
constituent
of
atmospheric
PM.
Due
to
limited
scientific
literature
addressing
the
health
impacts
of
nitrates,
exposure
currently
is
analyzed
as
exposure
to
fine
PM.
NAPAP
Biennial
Report
to
Congress,
May
1998
56
should
be
considered
only
in
the
context
of
the
establishment
of
pollutant­
specific
PSD
regulations
for
ozone.

For
similar
reasons,
we
believe
the
duty
to
promulgate
PSD
regulations
for
"
nitrogen
oxides"
under
section
166
of
the
Act
does
not
include
a
requirement
to
consider
effects
attributable
to
PM.
Instead,
Congress
established
increments
for
PM
(
then
measured
as
total
suspended
particulate
or
TSP)
and
authorized
EPA
to
replace
the
TSP
increments
with
increments
for
PM10.
See
CAA
§
§
163
and
166(
f).
Thus,
we
believe
it
would
be
inappropriate
to
promulgate
pollutant­
specific
regulations
for
NOx
based
on
its
transformation
into
PM.
Regulations
for
NOx
that
address
PM
effects
in
such
a
narrow
manner
(
i.
e.,
nitrates15
only)
could
potentially
affect
the
stringency
of
the
PM
increment
and
considerations
regarding
the
baseline
concentration
and
baseline
date.
Additionally,
like
ozone,

PM
has
several
precursors,
of
which
NOx
is
only
one.
Any
PSD
strategy
for
PM
should
consider
both
direct
PM
emissions
and
all
of
the
regulated
precursors
instead
of
placing
disproportionate
emphasis
on
only
one
component
of
the
57
pollutant.
In
a
separate
notice,
EPA
intends
to
consider
options
for
regulating
precursors
to
PM2.5.

B.
Data
Included
in
Review
Our
review
of
the
available
scientific
and
technical
information
focuses
primarily
on
the
health
and
welfare
information
contained
in
the
1993
NO2
Criteria
Document
(
1993
CD)
and
the
1995
OAQPS
Staff
Paper
(
1995
SP)
used
for
the
periodic
review
of
the
NO2
NAAQS
completed
in
1996.
We
have
also
considered
information
contained
in
more
recent
studies,
particularly
concerning
the
types
of
effects
on
ecosystems
associated
with
atmospheric
nitrogen
deposition
because
the
Act
does
place
an
emphasis
on
protection
of
air
quality
values
and
national
parks
and
other
special
areas
of
national
or
regional
interest.

The
court's
opinion
in
EDF
v.
EPA
did
not
indicate
what
data
set
EPA
should
use
in
its
review
under
the
statutory
criteria
in
section
166(
c)
and
166(
d).
When
EPA
promulgated
the
NO2
increments
in
1988,
the
health
and
welfare
information
used
for
completing
the
periodic
review
of
the
NO2
NAAQS
(
50
FR
25532,
June
19,
1985)
was
contained
in
EPA's
1982
NO2
Criteria
Document.
The
same
document
represented
the
Agency's
latest
official
documentation
of
health
and
welfare
effects
when
the
1988
increments
were
challenged
by
Environmental
Defense.

In
general,
we
believe
that
it
is
appropriate
to
rely
58
on
the
latest
information
used
for
promulgating
or
reviewing
the
NAAQS
in
order
to
evaluate
the
effectiveness
of
a
set
of
increments
or
other
PSD
regulations
for
the
same
pollutant.

This
is
because,
under
normal
circumstances,
the
Act
provides
that
EPA
promulgate
new
PSD
regulations
under
section
166,
including
new
increments
if
appropriate,
within
2
years
from
the
promulgation
of
any
NAAQS
after
1977.
42
U.
S.
C.
7476(
a).
In
such
instances,
the
health
and
welfare
information
used
for
the
setting
of
the
NAAQS
would
also
be
"
current"
for
purposes
of
establishing
pollutant­
specific
PSD
regulations.

The
record
of
information
used
for
the
most
recent
periodic
review
of
the
NO2
NAAQS
includes
the
1993
CD
and
1995
SP.
This
information
was
used
in
1996
to
carry
out
the
required
periodic
review
of
the
NO2
NAAQS
and
to
conclude
that
the
existing
primary
and
secondary
NAAQS
for
NO2
should
be
retained
in
the
original
form.
61
FR
52852
(
October
8,

1996).

The
most
recent
review
of
the
NAAQS
for
NO2
contains
information
that
was
not
part
of
the
scope
of
the
previous
NAAQS
review.
Specifically,
the
1993
CD
and
1995
SP
considered
as
part
of
the
secondary
standard
review
"

shortand
long­
term
effects
of
nitrogen
deposition
on
biological,

physical
and
chemical
components
of
ecosystems
and
the
resulting
effect
of
changes
to
these
components
on
ecosystem
59
structure
and
function
as
well
as
the
traditional
issue
of
visibility
impairment,
and
materials
damage."
The
expanded
scope
is
particularly
relevant
to
the
types
of
effects
that
should
be
used
to
consider
the
effectiveness
of
the
PSD
increments.

While
we
believe
that
it
is
in
keeping
with
congressional
intent
to
rely
in
the
ordinary
case
on
only
the
information
used
in
the
most
recent
NAAQS
review
when
establishing
pollutant­
specific
PSD
regulations
under
section
166,
the
situation
we
face
here
with
NOx
is
unique.

Considerable
time
has
passed
since
the
1996
review
of
the
NO2
NAAQS.
Thus,
in
this
unique
case
where
we
are
reevaluating
the
NO2
increment,
we
have
also
evaluated
information
contained
in
a
number
of
more
recent
studies,

published
since
completion
of
the
last
NAAQS
review,
to
determine
whether
there
have
been
significant
advances
in
scientific
and
technical
information.
However,
our
review
of
the
post­
1996
scientific
and
technical
information
does
not
represent
the
level
of
effort
appropriate
for
the
development
of
a
criteria
document.
Nevertheless,
we
believe
our
review
was
sufficient
to
determine
that
there
has
not
been
a
substantial
advance
in
scientific
understanding
of
the
ambient
pollutant
concentration
levels
at
which
adverse
effects
may
occur
as
a
result
of
NOx
emissions.
Thus,
we
believe
the
research
summarized
in
the
60
most
recent
criteria
document
and
Staff
Paper
remains
valid
and
relevant
for
purposes
of
this
review.
Although
the
more
recent
data
augment
our
understanding
of
the
effects
that
may
be
caused
by
emissions
of
NOx,
they
do
not
provide
significant
new
information
on
the
specific
ambient
air
pollutant
concentrations
that
may
ultimately
cause
or
contribute
to
these
effects.
Thus,
the
NOx
data
concerning
pollutant
impacts
do
not
provide
sufficient
information
from
which
it
would
be
possible
to
conclude
that
the
levels
of
the
existing
NO2
increments
are
inadequate.

C.
Analysis
of
Effects
This
section
contains
a
summary
of
the
health
and
welfare
effects
reviewed
by
EPA
as
part
of
the
reconsideration
of
the
pollutant­
specific
PSD
regulations
for
NOx.
More
detailed
analysis
is
contained
in
section
V.

These
effects
are
within
the
scope
of
effects
reviewed
by
EPA
as
part
of
its
decision
in
1996
to
retain
the
existing
primary
and
secondary
NAAQS
for
NO2.
The
objective
of
this
technical
review
is
to
determine
whether
there
is
any
compelling
basis
for
proposing
to
modify
the
original
NO2
increments,
which
were
based
on
the
"
percentage­
of­
NAAQS"

approach,
in
order
to
ensure
that
we
promulgate
pollutantspecific
PSD
regulations
for
NOx
that
adequately
protect
air
quality
values,
parks
and
special
areas,
and
health
and
welfare
from
adverse
effects
which
may
occur
in
some
areas
16
61
FR
52852
(
October
8,
1996).

17
Based
on
the
1993
CD
used
for
the
decision
in
1996
to
retain
the
existing
NAAQS
for
NO2,
EPA
reaffirmed
its
previous
conclusion
that
NO2
is
the
only
oxide
of
nitrogen
sufficiently
widespread
and
commonly
found
in
ambient
air
at
high
enough
concentrations
to
be
a
matter
of
public
health
concern.
60
FR
52878,
October
11,
1995.
Due
to
limited
scientific
literature
addressing
the
health
impacts
of
nitrates,
exposure
to
nitrates
is
currently
assessed
in
the
context
of
analyzing
exposure
to
fine
PM
(
NAPAP
1998,
at
p.
75).

61
notwithstanding
compliance
with
the
NAAQS.

1.
Health
Effects
In
1996,
EPA
announced
its
conclusions
that
the
current
primary
ambient
air
quality
standard
for
NO2,
which
is
in
the
form
of
an
annual
standard
for
NO2,
"
appears
to
be
both
adequate
and
necessary
to
protect
human
health
against
both
long­
and
short­
term
NO2
exposures."
16
In
reaching
this
conclusion,
EPA
considered
a
variety
of
acute
(
short­
term)

and
chronic
(
long­
term)
health
effects
associated
with
exposure
to
NO2
concentration.
17
Some
of
the
most
serious
health
effects
reviewed
by
EPA
were
shown
to
occur
at
significantly
higher
exposure
concentrations
than
are
allowed
by
the
NAAQS;
other
health
effects,
however,
were
found
to
occur
at
levels
near
the
NAAQS.
For
our
review
purposes
herein,
only
the
adverse
health
effects
that
were
found
to
occur
at
levels
at
or
near
the
NAAQS
are
being
18
For
the
purposes
of
this
review,
we
are
only
summarizing
some
of
the
adverse
health
effects
that
were
identified
during
EPA's
periodic
review
of
the
NO2
NAAQS
in
1996.
A
detailed
discussion
of
pertinent
studies
can
be
found
in
the
1993
CD
and
the
1995
SP.

62
considered.
18
The
health
effects
of
most
concern
at
ambient
or
nearambient
concentrations
of
NO2
with
short­
term
(
e.
g.,
less
than
3
hours)
exposure
include
mild
changes
in
airway
responsiveness
(
airway
constriction
and
narrowing)
and
decrease
in
pulmonary
function.
In
addition,
there
is
some
evidence
of
increased
respiratory
illnesses
among
children
associated
with
long­
term,
low­
level
exposure
to
NO2.
Each
of
these
effects
is
summarized
below.

While
there
is
little
evidence
to
show
that
healthy
individuals
experience
increases
in
airway
responsiveness
when
exposed
to
NO2
concentrations
below
1.0
ppm,
clinical
studies
of
asthmatics
have
reported
evidence
of
increased
airway
narrowing
at
relatively
low
concentrations
(
mostly
within
the
range
of
0.2
to
0.3
ppm
NO2)
at
short­
term
exposures
of
less
than
3
hours.
However,
such
responses
did
not
appear
to
cause
airway
inflammation
and
were
fully
reversible.
In
addition,
the
exposure
concentrations
studied
exceeded
the
ambient
levels
typically
monitored
in
areas
that
meet
the
annual
NAAQS.

Small
changes
in
pulmonary
function
have
been
observed
63
in
asthmatics
at
NO2
concentrations
generally
ranging
between
0.2
and
0.5
ppm
NO2
either
at
rest
or
following
periods
of
exercise.
Some
findings
of
airway
resistance
occurred
in
mild
asthmatics
exposed
to
concentrations
as
low
as
0.1
ppm
NO2
at
rest.
However,
EPA
concluded
that
this
finding
was
not
considered
statistically
significant.
As
above,
the
concentrations
related
to
these
effects
exceed
the
levels
typically
monitored
in
areas
meeting
the
NAAQS.

Increases
in
respiratory
illnesses
in
children
5
to
12
years
old
resulting
from
exposure
typically
averaging
over
a
2­
week
period
were
reported
in
a
number
of
epidemiological
studies
investigating
effects
of
indoor
exposure
to
NO2
emitted
from
gas
stoves.
In
these
studies,
NO2
concentrations
were
estimated
in
terms
of
two­
week
average
NO2
exposures,
where
mean
weekly
exposure
concentrations
in
bedrooms
were
predominantly
between
0.008
and
0.065
ppm
NO2.

The
EPA
found
various
limitations
with
these
studies,

however,
which
made
it
extremely
difficult
to
extrapolate
the
results
in
a
manner
that
would
yield
quantitative
estimates
of
health
impacts
for
outdoor
exposure
to
NO2.

2.
Welfare
Effects
In
its
1996
review
of
the
NAAQS,
EPA
concluded
that
the
"
available
scientific
and
technical
evidence
...
does
not
provide
an
adequate
basis
for
setting
a
separate
secondary
standard
for
NO2"
to
address
the
welfare
effects
considered
64
by
EPA.
61
FR
52855.
In
addition,
because
of
the
multiple
causes
and
regional
character
of
many
of
the
welfare
effects
that
may
be
associated
with
NOx
emissions,
the
Administrator
concluded
that
"
adoption
of
a
nationally
uniform
secondary
standard
would
not
be
an
effective
approach
to
addressing
them."
Id.
Thus,
EPA
adopted
a
secondary
standard
for
NO2
that
is
the
same
as
the
primary
standard.

However,
as
discussed
earlier,
the
goals
and
purposes
of
the
PSD
program
include
protection
of
welfare,
air
quality
values
and
areas
of
special
national
and
regional
interest
(
national
parks,
national
wilderness
areas,
etc.).

Nitrogen
dioxide
and
other
nitrogen
compounds
have
been
associated
with
a
wide
range
of
environmental
effects.

Thus,
EPA
has
reviewed
the
information
on
welfare
effects
to
determine
whether
there
is
any
basis
for
modifying
the
existing
NO2
increments
or
to
establish
an
alternative
regulatory
framework
in
order
to
provide
additional
protection
notwithstanding
attainment
of
the
NAAQS
in
PSD
areas.

a.
Direct
welfare
effects.

The
periodic
review
of
the
NO2
NAAQS,
leading
to
EPA's
final
decision
published
in
1996,
expanded
the
scope
of
coverage
over
the
previous
periodic
review
in
that
it
included
new
environmental
considerations,
set
forth
by
the
Clean
Air
Act
Amendments
of
1990
(
1990
Amendments),
not
65
included
in
the
earlier
review.
In
addition
to
the
environmental
features
identified
for
protection
by
the
secondary
standard
in
the
definition
of
public
welfare
(
see
section
302(
h)
of
the
Act),
the
1990
Amendments
expressed
a
new
determination
on
the
part
of
Congress
to
investigate
through
research
"
short­
term
and
long­
term
causes,
effects,

and
trends
of
ecosystems
damage
from
air
pollutants..."
(
see
section
301(
e)
of
the
Act).
Thus,
in
addition
to
the
traditional
issues
of
visibility
impairment,
and
vegetation
and
materials
damage,
EPA's
most
recent
periodic
review
of
the
NO2
NAAQS
addressed
as
part
of
the
secondary
standard
review
short­
and
long­
term
effects
of
nitrogen
deposition
on
biological,
physical
and
chemical
components
of
ecosystems
and
the
resulting
effect
of
changes
in
these
components
on
ecosystems
structure
and
function.

Information
in
the
1993
CD,
not
available
in
the
previous
criteria
document,
indicated
that
single
exposures
to
NO2
for
less
than
24
hours
can
produce
effects
on
growth,

development,
and
reproduction
of
plants.
However,
the
data
did
not
suggest
significant
effects
at
or
below
the
current
ambient
standards
level.
Instead,
the
observed
effects
generally
occurred
at
concentrations
greatly
exceeding
the
ambient
levels
of
NO2
measured
in
the
U.
S.
Some
studies
have
shown
that
NO2
in
combination
with
other
pollutants
(
i.
e.,
SO2,
ozone)
can
increase
plant
sensitivity,
thus
66
lowering
concentration
and
time
of
exposure
required
to
produce
injury/
growth
effects.
Again,
however,
the
pollutant
concentrations
used
in
these
experimental
studies
were
well
above
those
observed
in
the
ambient
air
and
at
a
frequency
of
occurrence
not
typically
found
in
the
U.
S.

Nitrogen
dioxide
has
been
qualitatively
associated
with
various
adverse
effects
on
materials.
For
example,
exposure
to
NO2
may
contribute
to:
enhancing
the
fading
of
dyes;

diminishing
the
strength
of
fabrics,
plastics
and
rubber
products;
assisting
the
corrosion
of
metals;
and
reducing
the
useful
life
of
electric
components,
paints,
and
masonry.

Compared
to
studies
on
sulfur
oxides,
however,
there
is
limited
information
available
quantifying
the
effects
of
NO2
or
other
nitrogen
compounds.
The
available
evidence
shows
that
it
is
difficult
to
distinguish
a
single
causative
agent
for
observed
damage
because
many
agents,
together
with
a
number
of
environmental
stresses,
act
on
the
surface
of
materials
over
time.

Another
potential
direct
effect
of
NO2
is
visibility
impairment.
NO2
and
other
pollutants
can
degrade
the
visual
appearance
of
distant
objects
and
reduce
the
range
at
which
they
can
be
distinguished
from
the
background.
NO2
appears
as
a
yellow
to
reddish­
brown
gas
because
it
absorbs
blue
light,
allowing
red
wavelengths
to
reach
the
eye.

The
discoloration
effect
is
most
noticeable
as
local
19
"
Protecting
Visibility:
An
EPA
Report
to
Congress,"
OAQPS,
October,
1979.

67
scale
or
"
reasonably
attributed
impairment,"
defined
as
a
coherent,
identifiable
impairment,
which
can
be
seen
as
an
optical
entity
(
plume)
against
the
background
sky
or
a
distant
object.
NO2
does
not
normally
contribute
significantly
to
haze
in
remote
areas,
because
of
its
high
reactivity
and
relatively
short
lifetime
in
the
atmosphere.

Large­
scale
"
regional
haze"
is
more
commonly
associated
with
the
light­
scattering
properties
of
PM,
including
nitrate
PM
formed
by
chemical
reactions
involving
NO
and
NO2
with
other
substances
in
the
atmosphere,
and
is
discussed
below
as
an
indirect
effect
of
NO2.

The
1993
CD
indicated
that
less
than
0.1
ppm­
km
NO2
is
sufficient
to
produce
a
color
shift
that
is
distinguishable
in
carefully
controlled,
color
matching
tests.
95
SP
at
87.

However,
at
concentrations
below
0.01
ppm
(
approximately
the
concentration
increase
allowed
by
the
Class
II
increment
for
NO2),
area­
wide
impacts
of
NO2
absorption
are
not
considered
important.
19
In
addition,
some
studies
have
shown
that
brownish
discoloration
can
result
from
particles
alone,
thus
making
it
difficult
to
determine
a
reliable
relationship
between
ground­
level
concentrations
of
NO2
at
any
given
point
and
discoloration
caused
by
particles
which
may
also
be
in
a
source's
plume.
The
1995
SP
noted
that
despite
the
68
known
light­
absorbing
qualities
of
NO2,
"
there
are
relatively
little
data
available
for
judging
the
actual
importance
of
NO2
to
visual
air
quality."

b.
Indirect
welfare
effects.

Various
other
welfare
effects
associated
with
NO2
of
environmental
concern
are
indirect
effects
that
NO2
may
have
on
ecosystems.
These
indirect
effects
occur
following
the
transformation
of
ambient
NO2
to
other
nitrogen
compounds
by
chemical
reactions
in
the
atmosphere
and
the
transfer
of
these
compounds
from
the
atmosphere
to
other
media
through
a
process
known
as
atmospheric
nitrogen
deposition
(
nitrogen
deposition).
Nitrogen
deposition
is
the
process
by
which
nitrogen
in
airborne
compounds
is
transferred
to
a
variety
of
surfaces,
e.
g.,
water,
soil,
vegetation,
and
other
materials.

In
terrestrial
or
agricultural
systems,
for
example,

that
are
nitrogen
limited,
some
amount
of
nitrogen
deposition
can
enhance
growth
of
some
forest
species
and
crops.
However,
in
areas
where
deposition
occurs
in
excess
of
plant
and
microbial
demand
(
also
known
as
nitrogen
saturation)
the
added
nitrogen
can
disturb
the
nitrogen
cycle,
contributing
to
such
adverse
effects
as
increased
plant
susceptibility
to
natural
stresses
and
modification
of
interplant
competition.

To
have
an
effect
on
a
particular
ecosystem,
nitrogen
69
that
has
been
released
to
the
atmosphere
must
enter
the
ecosystem
by
either
wet
(
rain
or
snow),
dry
(
transfer
of
gases
or
particles),
or
occult
(
fog,
mist
or
cloud)

deposition.
Nitrogen
deposition
occurs
primarily
as
nitrates,
which
are
formed
in
the
atmosphere
by
the
oxidation
of
NO
and
NO2,
or
as
ammonia,
which
is
released
by
agricultural
or
soil
microbial
activity.
When
the
nitrogen
transfer
process
involves
acids
(
e.
g.,
nitric
acid)
or
acidifying
compounds,
the
deposition
process
is
referred
to
as
"
acidic
deposition."
The
adverse
welfare
effects
associated
with
both
types
of
nitrogen
deposition
are
discussed
in
greater
detail
in
the
subsections
below.

In
the
1995
SP
assessing
the
scientific
and
technical
information
contained
in
the
1993
CD,
it
was
reported
that
little,
if
any,
research
had
been
initiated
to
determine
what
percentage
of
total
(
wet
and
dry)
nitrogen
deposition
can
be
attributed
to
emissions
of
stationary
and
mobile
sources
of
NOx.
The
EPA
did,
however,
estimate
at
that
time
that
approximately
one­
third
to
one­
half
of
the
emissions
of
NOx
in
the
United
States
(
U.
S.)
are
removed
by
wet
deposition,
and
it
was
generally
assumed
that
dry
deposition
was
equal
to
wet
deposition
for
areas
directly
adjacent
to
emissions
sources.
The
same
assumption
for
wet
deposition
could
not
be
made
in
receptor
locations
remote
from
the
emissions
sources.
70
More
recently,
at
least
one
study
has
been
published
reporting
on
the
relationship
between
emissions
of
NOx
and
nitrate
concentrations
(
and
deposition)
in
the
eastern
U.
S.

The
results
of
this
study
suggest
linearity,
specifically,

that
a
reduction
in
NOx
emissions
may
reduce
NO3
­

concentrations
and
acidic
precipitation
(
wet
deposition)

with
an
efficiency
ranging
between
75
and
95
percent
(
Butler,
2003).
The
study
was
limited
to
the
eastern
U.
S.,

and
left
unanswered
the
percentage
contribution
of
total
NOx
emissions
to
the
total
nitrogen
deposition.

Studies
such
as
this
can
provide
potentially
useful
information
to
help
estimate
the
relative
benefits
(
in
terms
of
anticipated
reductions
in
NO3
­
deposition)
resulting
from
different
NOx
emissions
control
strategies.
Similarly,
such
information
could
prove
useful
in
evaluating
the
relationship
between
different
levels
of
allowable
ambient
NO2
concentration
increases
(
i.
e.,
PSD
increment
levels)
and
corresponding
total
nitrogen
deposition
rates.

Unfortunately,
there
are
additional
criteria
that
would
need
to
be
studied
in
order
to
be
able
to
adequately
evaluate
this
relationship
and
associated
environmental
effects.

To
further
complicate
matters,
dry
deposition
differs
from
wet
deposition
in
that
a
sample
taken
at
a
particular
location
cannot
be
assumed
to
represent
the
rate
of
dry
deposition
of
the
area
as
a
whole.
Instead,
dry
deposition
71
is
driven
by
surface
properties
that
are
site­
specific.

Thus,
a
regionally
representative
average
rate
of
dry
deposition
cannot
be
readily
derived
from
information
obtained
from
a
single
location
(
NOAA,
2004).

The
following
subsections
summarize
the
various
indirect
effects
of
NO2
on
ecosystems,
including
terrestrial
systems
(
i.
e.,
plant
communities),
wetlands,
and
aquatic
systems.
The
EPA
believes
that
the
effects
described
are
potentially
relevant
to
an
evaluation
of
the
pollutantspecific
PSD
regulations
for
NOx
because
these
effects
have
been
observed
in
areas
of
the
country
that
are
attaining
the
NAAQS.

(
1)
Terrestrial
ecosystems.
Soils
are
the
largest
pool
of
nitrogen
in
forest
ecosystems,
although
such
nitrogen
is
generally
not
available
for
plants
until
it
has
been
mineralized
by
bacteria
(
Fenn,
1998).
Another
important
source
of
nitrogen
is
atmospheric
wet
and
dry
deposition,

which
often
has
a
fertilizing
effect
on
terrestrial
ecosystems,
accelerating
plant
growth.
While
this
effect
can
sometimes
be
considered
beneficial,
nitrogen
deposition
may
also
cause
or
contribute
to
significant
adverse
changes
in
terrestrial
ecosystems,
including
soil
acidification,

increase
in
soil
susceptibility
to
natural
stresses,
and
alterations
in
plant
species
mix.

When
excess
nitrogen
input
causes
soil
acidification,
20
Aluminum
from
soil
seldom
appears
in
aquatic
systems
because
natural
aluminum
minerals
are
insoluble
in
the
normal
pH
range
of
natural
waters.
However,
the
term
"
aluminum
mobilization"
refers
to
the
the
conversion
of
aluminum
in
acidic
soils
into
dissolved
forms
and
its
transport,
as
runoff
or
subsurface
flow,
to
water
systems.
Mobilized
aluminum
can
then
alter
the
acid/
base
property
of
natural
water
systems
(
Wang).

72
it
can
alter
the
availability
of
plant
nutrients
(
i.
e.,

calcium
and
magnesium)
and
expose
tree
roots
to
toxic
levels
of
aluminum
and
manganese,
thereby
having
an
adverse
effect
on
tree
growth.
It
can
also
lead
to
the
mobilization
of
aluminum
from
the
soil
as
nitrates
are
leached
from
the
soil
and
transported
to
waterways,
where
the
aluminum
can
exhibit
toxic
effects
to
aquatic
organisms.
20
Air
pollution
is
not
the
sole
cause
of
soil
change;

many
studies
have
shown
that
acidic
deposition
is
not
a
necessary
condition
for
the
presence
of
extremely
acidic
soils.
High
rates
of
acidification
are
occurring
in
less
polluted
regions
of
western
U.
S.
because
of
internal
soil
processes,
such
as
tree
uptake
of
nitrate
and
nitrification
associated
with
excessive
nitrogen
fixation.
Although
nitrogen
deposition
can
accelerate
the
acidification
of
soils,
the
levels
of
nitrogen
necessary
to
produce
measurable
soil
acidification
are
quite
high.
The
1993
CD
indicated
that,
at
that
time,
nitrogen
deposition
had
not
been
directly
associated
with
the
acidification
of
soils
in
the
U.
S.
More
recent
information
suggests
that
in
parts
of
73
the
Northeast,
for
example,
acid
deposition
has
resulted
in
the
accumulation
of
sulfur
and
nitrogen
in
the
soil
beyond
the
levels
that
forests
can
use
and
retain,
and
has
accelerated
the
leaching
of
base
cations,
such
as
calcium
and
magnesium,
that
help
neutralize
acid
deposition.

(
Driscoll,
2001).
Some
western
forest
areas
may
also
be
experiencing
nitrogen
saturation
conditions,
although
the
role
of
nitrogen
deposition
may
vary
from
one
location
to
another
(
Fenn,
1998,
2003).

Aside
from
the
effects
of
soil
acidification,
some
studies
have
shown
that
increased
nitrogen
deposition
can
alter
tree
susceptibility
to
frost
damage,
insect
and
disease
attack,
and
plant
community
structure.
However,

other
studies
have
not
shown
that
similar
results
occur.
In
all,
the
studies
evaluated
in
the
1993
CD
which
focused
on
the
impact
of
excessive
inputs
of
nitrogen
in
forest
ecosystems
showed
mixed
results.
The
long
response
time
of
trees
to
environmental
stresses
has
made
it
difficult
to
fully
understand
how
acid
rain
may
affect
trees.
It
is
also
difficult
to
isolate
the
possible
effects
of
acid
rain
from
other
stresses
resulting
from
other
natural
and
anthropogenic
origins.
However,
more
recent
studies
appear
to
provide
some
evidence
that
acid
deposition
has
caused
the
death
of
red
spruce
trees,
particularly
at
higher
elevations
in
the
Northeast
by
decreasing
cold
tolerance,
and
may
be
in
74
part
responsible
for
the
extensive
loss
of
sugar
maple
in
Pennsylvania.
(
Driscoll,
2001).

Finally,
in
terrestrial
systems
in
which
the
preexisting
balance
is
marked
by
a
competition
among
species
for
the
available
nitrogen,
additional
nitrogen
inputs,
such
as
nitrogen
deposition,
may
bring
about
an
alteration
of
the
species
mix.
That
is,
a
displacement
of
one
kind
of
vegetation
(
e.
g.,
plants,
grasses)
with
another
may
occur.

While
the
1995
SP
noted
that
there
were
no
documented
accounts
of
terrestrial
ecosystems
undergoing
species
shifts
due
to
nitrogen
deposition
in
the
U.
S.,
recent
research
provides
some
evidence
suggesting
that
elevated
nitrogen
deposition
can
contribute
to
shifts
of
species
compositions
(
e.
g.,
Allen,
1998;
Bowman,
2000).

(
2)
Wetlands.
Wetlands
(
e.
g.,
swamps,
marshes,
bogs)
are
lands
where
saturation
with
water
is
the
dominant
factor
determining
the
nature
of
soil
development
and
the
types
of
plants
and
animal
communities
living
in
the
soil
and
on
its
surface.
These
areas
function
as
habitats
for
plant
and
wildlife
(
among
other
useful
environmental
purposes),

including
many
rare
and
threatened
plant
species.
Some
of
these
plants
adapt
to
systems
low
in
nitrogen
or
with
low
nutrient
levels.
Long­
term
studies
(
greater
than
3
years)

of
increased
nitrogen
loadings
to
wetland
systems
in
European
countries
have
reported
that
increased
primary
75
production
of
biomass
can
result
in
changes
of
interplant
competition.
The
1995
SP
reported
that,
based
on
the
evidence
reviewed
in
the
1993
CD,
"
the
staff
believes
we
can
anticipate
similar
effects
from
atmospheric
nitrogen
deposition
in
the
United
States...."
However,
EPA
found
no
documentation
providing
sufficient
evidence
that
such
species
changes
have
occurred
or
were
occurring
at
the
time
in
the
U.
S.

(
3)
Aquatic
ecosystems.
Nitrogen
deposition
may
adversely
affect
aquatic
ecosystems
as
a
result
of
either
acidification
or
eutrophication.
Both
processes
can
cause
a
reduction
in
water
quality
that
makes
the
body
of
water
unsuitable
for
many
aquatic
organisms.
The
basic
concern
is
that
deposition
of
nitrates
alters
the
availability
of
nitrogen
to
organisms
(
e.
g.,
algae,
fish,
submerged
vegetation,
and
amphibian
and
aquatic
vertebrate
communities)
and
causes
changes
in
species
composition
within
the
system.
In
addition,
the
affected
water
can
become
unfit
for
human
consumption.

The
1995
SP
indicated
that
growing
evidence
supported
the
concern
that
the
impact
of
nitrogen
deposition
on
sensitive
aquatic
systems
"
may
be
significant."
Atmospheric
nitrogen
can
enter
lakes
and
streams
either
as
direct
deposition
to
the
water
surfaces
or
as
nitrogen
deposition
to
the
watershed
of
which
they
are
a
part.
In
some
cases,
76
nitrate
may
be
temporarily
stored
in
snow
packs
from
which
it
is
subsequently
released
in
more
concentrated
form
in
snow
melt.
In
other
cases,
nitrogen
deposited
to
the
watershed
may
subsequently
be
routed
through
plants
and
soil
microorganisms
and
transformed
into
other
inorganic
or
organic
nitrogen
species
which,
when
they
reach
the
water
system,
are
only
indirectly
related
to
the
original
deposition.
In
addition
to
the
contribution
of
nitrogen
from
anthropogenic
sources,
recent
studies
suggest
that
nitrogen
released
from
the
weathering
of
nitrogen­
bearing
bedrock,
not
commonly
considered
in
the
biogeochemical
cycling
of
nitrogen,
may
contribute
a
"
surprisingly
large
amount"
of
nitrate
to
natural
waters.
(
Dahlgreen,
2002.)

Acidification
may
occur
in
two
ways:
chronic
(

longterm
acidification
and
episodic
(
short­
term
or
seasonal)

acidification.
Episodic
acidification
is
more
likely
to
be
the
primary
problem
in
most
situations,
with
chronic
acidification
occurring
mainly
where
excessive
nitrogen
saturation
exists.
(
NAPAP;
May
1998).
The
main
concern
with
acidification
of
aquatic
ecosystems
is
associated
with
freshwater
systems.
Acidification
impairs
the
water
quality
of
lakes
and
streams
by
lowering
the
pH
levels,
decreasing
acid­
neutralizing
capacity,
and
increasing
aluminum
concentrations.
(
Driscoll,
2001).
High
levels
of
aluminum,

as
well
as
increased
acidity,
create
unfit
conditions
for
77
habitat
and
cause
the
water
to
be
unfit
for
human
consumption.
Acid
deposition
may
also
increase
the
conversion
of
mercury
to
organic
(
methyl)
mercury
in
lakes
where
it
is
absorbed
by
aquatic
organisms
and
leads
to
increasing
concentrations
in
the
food
chain.
Human
consumption
of
fish
containing
high
levels
of
methylmercury
can
lead
to
problems
with
the
central
nervous
system.

Regions
of
North
America
differ
in
their
sensitivity
to
acidic
deposition
and
in
the
amount
of
acidic
deposition
they
receive.
Some
parts
of
the
eastern
U.
S.
are
highly
sensitive
and
chronically
or
episodically
receive
damaging
concentrations
of
acidic
deposition.
For
example,
a
recent
report
indicates
that
41
percent
of
lakes
in
the
Adirondack
Mountain
region
of
New
York
and
15
percent
of
lakes
in
New
England
show
evidence
of
either
chronic
or
episodic
acidification,
or
both.
(
Driscoll,
et
al.,
2001.)
Other
sensitive
regions,
such
as
the
western
U.
S.,
are
unlikely
to
suffer
adverse
chronic
effects
but
may
experience
acidic
conditions
more
on
an
episodic
basis.
Certain
highelevation
western
lakes,
in
particular,
are
subject
to
episodes
of
acidic
deposition.

Eutrophication
generally
is
a
natural
process
by
which
aquatic
systems
are
enriched
with
the
nutrients,
including
nitrogen,
that
are
presently
limiting
for
primary
production
in
that
system.
However,
this
process
can
be
accelerated
by
78
increased
nutrient
input
resulting
from
anthropogenic
sources,
e.
g.,
agricultural
runoff,
urban
runoff,
leaking
septic
systems,
sewage
discharge.
Studies
have
also
shown
that
nitrogen
deposition
may
directly
and
indirectly
play
a
role
in
accelerated
eutrophication.
When
nitrogen
is
a
limiting
nutrient,
input
from
various
origins
can
make
a
water
system
prone
to
eutrophication,
with
impacts
ranging
from
the
increased
turbidity
and
floating
mats
of
macro
algae
shading
out
beneficial
submersed
aquatic
vegetation
habitat,
to
the
exacerbation
of
noxious
algae
blooms,
to
the
creation
of
low
or
no­
oxygen
conditions
which
negatively
affect
fish
populations.
The
National
Park
Service
(
NPS)

has
reported
that
loadings
of
total
nitrogen
deposition
(
wet
and
dry)
have
caused
changes
in
aquatic
chemistry
and
biota
in
the
Rocky
Mountain
National
Park's
high
elevation
ecosystems.
(
NPS,
Sep
2002.)
In
the
same
report,
the
NPS
noted
that
increasing
trends
in
nitrogen
deposition
at
many
parks
in
the
western
U.
S.
result
from
both
nitrate
and
ammonium.

The
key
to
creating
a
linkage
between
levels
of
nitrogen
deposition
and
the
eutrophication
of
aquatic
systems
is
to
demonstrate
that
the
productivity
of
the
system
is
limited
by
nitrogen
availability,
and
to
show
that
nitrogen
deposition
is
a
major
source
of
nitrogen
to
the
system.
Thus,
while
it
appears
that
nitrogen
inputs
to
79
aquatic
systems
may
be
of
general
concern
for
eutrophic
conditions,
the
significance
of
nitrogen
input
will
vary
from
site
to
site.
(
1995
SP
at
77.)

A
1993
National
Research
Council
report
identified
eutrophication
as
the
most
serious
pollution
problem
facing
the
estuarine
waters
of
the
U.
S.
(
EPA,
1997).
Nitrogen
input
is
a
major
concern
because
nitrogen
is
the
limiting
nutrient
for
algae
growth
in
many
estuaries
and
coastal
water
systems.
In
contrast
to
the
eutrophication
concern,

acidification
typically
is
not
a
concern,
because
estuaries
and
coastal
waters
receive
substantial
amount
of
weathered
material
from
terrestrial
ecosystems
and
from
exchange
with
sea
water.

Estimation
of
the
contribution
of
atmospheric
nitrogen
deposition
to
the
eutrophication
problem
can
be
difficult
because
of
the
various
direct
anthropogenic
sources
of
nitrogen,
including
agricultural
runoff
and
sewage.
Some
studies
have
shown
that
nitrogen
deposited
from
the
atmosphere
can
be
a
significant
portion
of
the
total
nitrogen
loadings
in
specific
locations,
such
as
the
Chesapeake
Bay
 
the
largest
of
the
130
estuaries
in
the
U.
S.
It
has
been
estimated
that
the
proportion
of
the
total
nitrate
load
to
the
Bay
attributable
to
nitrogen
deposition
ranges
from
10
to
45
percent
(
NAPAP,
1998).

In
most
freshwater
systems,
including
lakes
and
80
streams,
phosphorus,
not
nitrogen,
is
the
limiting
nutrient.

Thus,
eutrophication
by
nitrogen
inputs
will
only
be
a
concern
in
lakes
that
are
chronically
nitrogen
limited
and
have
a
substantial
total
phosphorus
concentration.
This
condition
is
common
only
in
lakes
that
have
received
excessive
inputs
of
anthropogenic
phosphorous,
or
in
rare
cases,
have
high
concentrations
of
natural
phosphorus.
In
the
former
case,
the
primary
dysfunction
of
the
lakes
is
an
excess
supply
of
phosphorus,
and
controlling
nitrogen
deposition
would
be
an
ineffective
method
of
gaining
water
quality
improvement.
In
the
latter
case,
nitrogen
deposition
can
measurably
increase
biomass
and
thus
contribute
to
eutrophication
in
lakes
with
high
concentrations
of
natural
phosphorus.
Other
lakes,

including
some
high­
elevation
lakes
in
the
Rocky
Mountains
and
Sierra
Nevada,
are
very
low
in
both
phosphorus
and
nitrogen;
addition
of
nitrogen
can
increase
biomass
and
contribute
to
eutrophication
in
these
lakes
also.

(
4)
Direct
toxicity.
High
ammonia
(
NH3)
concentrations
in
aquatic
systems
are
associated
with
a
variety
of
adverse
effects
on
fish,
including
lesions
in
gill
tissue,
reduced
growth
rates
of
trout
fry,
reduced
quantities
of
egg
production,
increased
egg
mortality
and
increased
susceptibility
of
fish
to
other
diseases.
In
addition,

elevated
NH3
concentrations
may
cause
pathological
effects
81
in
invertebrates
and
aquatic
plants.
Because
critical
concentrations
of
NH3
that
cause
the
various
effects
are
wide
ranging
and
are
related
to
site
specific
temperature
and
pH
values,
EPA
reported
in
the
1995
SP
that
no
single
toxic
concentration
could
be
established.
In
addition,
from
the
information
available
for
EPA's
review,
it
was
concluded
that
the
potential
is
"
very
limited"
for
directly
toxic
effects
to
be
attributable
to
nitrogen
deposition
in
the
U.
S.

(
5)
Visibility
impairment
(
Regional
Haze).
Nitrate
particulates,
formed
as
a
result
of
chemical
reactions
involving
NO
and
NO2
with
other
substances
in
the
atmosphere,
are
considered
to
be
more
responsible
for
visibility
impairment
than
NO2
directly.
Nitrate
particles
are
observed
as
both
fine
and
coarse
particles.
The
fine
particles
that
can
remain
airborne
for
considerable
periods
of
time
and
may
be
transported
long
distances
from
the
NOx
source.
These
fine
particles
impair
visibility
by
scattering
or
absorbing
light.

Generally,
the
two
largest
contributors
to
visibility
impairment
are
sulfates
and
carbon­
based
particles.
The
major
cause
of
visibility
impairment
in
the
East
is
sulfate.

Nitrates
account
for
only
7
to
16
percent
of
the
light
extinction
in
the
East,
but
are
responsible
for
between
4
and
45
percent
of
the
light
extinction
in
the
West.
While
82
NO2,
a
precursor
of
nitrate
particulates,
is
minimized
through
the
control
of
NOx
emissions
from
new
and
modified
major
stationary
sources
under
the
PSD
requirements
for
NOx,

EPA
believes
that
the
problems
associated
with
nitrate
particulates,
along
with
other
forms
of
PM,
are
best
addressed
through
programs
focusing
on
strategies
to
effectively
reduce
PM.
For
example,
EPA's
Regional
Haze
program,
established
pursuant
to
section
169B
of
the
Act,

specifically
requires
reductions
in
emissions
of
NOx
from
certain
existing
stationary
sources.
The
Regional
Haze
program
is
discussed
in
greater
detail
later
in
this
preamble.

VI.
Proposed
Actions
As
noted
above,
section
166
directs
EPA
to
conduct
a
study
and
promulgate
regulations
to
prevent
significant
deterioration
for
NOx.
Those
regulations
may
include
an
increment
or
"
other
measures"
to
prevent
significant
deterioration,
so
long
as
those
other
measures
are
consistent
with
the
requirements
of
sections
166(
c)
and
166(
d)
of
the
Act.
Accordingly,
we
are
today
proposing
three
options
for
addressing
the
statutory
requirement
for
preventing
significant
deterioration
for
NOx
which
we
believe
satisfy
the
specific
criteria
described
herein.
The
first
option
involves
retaining
the
concept
of
numerical
increments
for
NOx,
and
the
other
two
options
qualify
as
83
"
other
measures"
and
include
(
1)
the
concept
of
a
cap
and
trade
program
that
would
serve
as
a
surrogate
for
increments,
and
(
2)
a
State
planning
option
providing
States
with
some
flexibility
for
developing
"
other
measures"
to
adequately
prevent
significant
deterioration
of
NOx.

A.
Retain
Existing
NO2
Increment
System
1.
How
Existing
Characteristics
of
the
Regulatory
Scheme
Fulfill
Statutory
Criteria
As
discussed
above,
EPA
does
not
interpret
the
Court's
decision
to
require
that
EPA
reevaluate
the
entire
regulatory
framework
of
the
NOx
PSD
regulations
established
in
1988.
Thus,
for
the
NO2
increment
option
set
forth
in
this
proposal,
EPA
is
only
reevaluating
the
level,
time
period,
and
pollutant
used
in
establishing
increments
in
its
PSD
regulations
for
NOx.

Because
section
166
of
the
Act
requires
that
EPA
establish
PSD
regulations
for
NOx
that
satisfy
the
criteria
set
forth
in
subsection
(
c)
and
(
d),
EPA
interprets
section
166
to
require
that
its
PSD
regulations
for
a
particular
pollutant
must,
as
a
whole,
satisfy
the
criteria
in
section
166.
However,
in
this
unusual
circumstance
where
EPA
is
reevaluating
specific
aspects
of
a
larger
body
of
PSD
regulations
under
an
order
of
a
court,
EPA
does
not
necessarily
consider
all
of
the
criteria
in
section
166(
c)

of
the
Act
to
be
relevant
to
the
specific
questions
84
regarding
the
characteristics
of
an
increment.
The
EPA
believes
that
many
of
the
factors
applicable
under
section
166(
c)
are
fulfilled
by
elements
of
the
increment
and
area
classification
regulatory
framework
that
were
not
controverted
in
EDF
v.
EPA.
Thus,
EPA
has
not
conducted
an
extensive
review
of
the
existing
increments
based
on
those
factors
that
are
sufficiently
satisfied
by
the
overall
increment
and
area
classification
system
that
was
not
controverted.

However,
we
believe
it
is
helpful
to
explain
how
several
aspects
of
the
overall
system
of
regulations
EPA
adopted
for
NOx
under
section
166
satisfy
the
factors
applicable
under
section
166(
c).
We
believe
our
obligations
under
section
166(
c)
of
the
Act
are
satisfied
when
the
entire
body
of
pollutant­
specific
regulations
for
NOx
(
including
the
level
and
other
characteristics
of
increment)

as
a
whole
meet
the
factors
applicable
under
166(
c)
of
the
Act.

a.
Increment
system.

An
increment
is
the
maximum
allowable
increase
in
air
pollution
that
is
allowed
to
occur
above
baseline
concentrations.
The
baseline
concentration
in
a
particular
area
is
the
ambient
pollutant
concentration
in
an
area
at
the
time
the
first
complete
PSD
permit
application
is
submitted
(
i.
e.,
the
baseline
date)
by
a
new
major
85
stationary
source
or
a
major
modification
for
a
source
affecting
that
area.
By
establishing
the
maximum
allowable
level
of
increase
in
air
pollution
in
a
particular
area,
an
increment
defines
"
significant
deterioration."
Once
a
proposed
new
major
stationary
source
or
major
modification
establishes
the
baseline
date
in
a
particular
area,
the
new
emissions
from
that
source
consume
increment
in
that
area,

as
do
any
subsequent
emissions
increases
that
occur
from
any
source
in
the
area.
When
the
increment
is
totally
consumed,

additional
PSD
permits
cannot
be
issued
until
sufficient
amounts
of
the
increment
are
"
freed
up"
via
emissions
reductions
that
may
be
required
by
the
permitting
authority.

Moreover,
the
air
quality
in
a
region
cannot
deteriorate
to
a
level
in
excess
of
the
applicable
NAAQS,
even
if
all
the
increment
has
not
been
consumed.
Thus,
areas
experiencing
air
quality
levels
near
the
level
allowed
by
the
NAAQS
may
not
be
able
to
use
the
full
amount
of
pollutant
concentration
increase
allowed
by
the
increment.

Congress
did
not
require
EPA
to
utilize
increments
in
its
PSD
regulations
for
NOx
promulgated
under
section
166
but
gave
EPA
the
discretion
to
employ
increments
if
appropriate
to
meet
the
criteria
and
goals
and
purposes
set
forth
in
sections
166
and
160.
42
U.
S.
C.
7474(
d);
EDF
v.

EPA,
898
F.
2d
at
185
("
Congress
contemplated
that
EPA
might
use
increments").
In
adopting
its
PSD
regulations
for
NOx
86
in
1988,
EPA
elected
to
base
those
regulations
on
the
concept
of
an
increment
because
increments
represented
the
most
workable
option
at
the
time
for
establishing
a
numerical
measure
against
which
permit
applications
could
be
evaluated.
In
addition,
EPA
recognized
that
in
using
the
increment
approach,
it
would
be
able
to
take
advantage
of
expertise
that
State
and
local
agencies
had
already
developed
in
implementing
an
increment­
based
program
for
PM
and
SO2.
53
FR
40657.

Thus,
EPA
concluded
that
an
increment­
based
program
was
the
best
way
to
fulfill
its
obligation
under
section
166(
c)

to
provide
"
specific
numerical
measures
against
which
permit
applications
may
be
evaluated."
Under
section
165(
a)(
3)
of
the
Act,
a
permit
applicant
must
demonstrate
that
emissions
from
the
proposed
construction
and
operation
of
a
facility
"
will
not
cause,
or
contribute
to,
air
pollution
in
excess
of
any
(
A)
maximum
allowable
increase
or
maximum
allowable
concentration
for
any
pollutant."
42
U.
S.
C.
7475(
a)(
3).
An
increment
is
a
quantitative
value
that
establishes
the
"
maximum
allowable
increase"
for
a
particular
pollutant.
It
functions,
therefore,
as
a
specific
numerical
measure
that
can
be
used
to
evaluate
whether
an
applicant's
proposed
project
will
cause
or
contribute
to
air
pollution
in
excess
of
allowable
levels.
Since
this
aspect
of
EPA's
regulations
was
not
controverted
in
EDF
v.
EPA,
we
are
not
proposing
to
87
include
this
criterion
in
our
analysis
of
the
characteristics
of
the
increment
below.

In
addition,
EPA
also
determined
that
using
increments
in
the
PSD
regulations
NOx
also
satisfied
the
second
factor
in
section
166(
c)
by
providing
"
a
framework
for
stimulating
improved
control
technology."
In
1988,
we
concluded
that
increments
establish
an
incentive
to
apply
more
stringent
control
technologies
in
order
to
avoid
violating
the
increment.
53
FR
40657.
Given
that
the
PSD
increment
level
is
consumed
over
time,
the
level
of
control
required
to
avoid
causing
exceedance
of
the
increment
becomes
more
stringent.
Consequently,
new
or
modified
sources
in
such
localities
may
have
to
install
control
technologies
more
effective
than
those
normally
considered
representative
of
BACT
in
order
to
comply
with
the
increment,
or
to
preserve
some
portion
of
the
increment
for
future
economic
growth.

The
control
technologies
utilized
in
these
areas
will
become
the
basis
of
BACT
determinations
elsewhere,
as
the
technologies
become
more
commonplace
and
the
costs
tend
to
fall.
See
also
S.
Rep.
95­
127
at
18,
30
(
3
LH
at
1392,

1404)
("
the
incremental
ceiling
should
serve
as
an
incentive
to
technology,
as
a
potential
source
may
wish
to
push
the
frontiers
of
technology
in
a
particular
case
to
obtain
greater
productive
capacity
within
the
limits
of
the
increments").
We
believe
the
existing
regulatory
framework,
88
which
was
not
controverted
in
EPA
v.
EDF,
satisfies
this
criterion
and
do
not
propose
to
consider
it
further
under
the
increment
option
of
this
proposal.

b.
Area
classifications.

In
1988,
EPA
chose
to
establish
NO2
increments
of
different
stringency
based
on
the
three­
tiered
classification
scheme
established
by
Congress.
53
FR
40657.

Under
this
scheme,
Class
I
areas
are
generally
national
parks,
wilderness
areas,
and
other
special
areas
that
require
an
extra
level
of
protection.
The
most
stringent
increment
is
imposed
in
Class
I
areas.
Class
III
areas,

which
have
the
least
stringent
increment
level,
are
those
areas
in
where
a
State
wishes
to
permit
a
higher
level
of
industrial
development.
Areas
that
are
not
especially
sensitive
or
that
do
not
wish
to
allow
for
a
higher
level
of
industrial
growth
are
classified
as
Class
II.
When
Congress
established
this
three­
tiered
scheme
for
SO2
and
PM,
it
intended
that
Class
II
areas
be
subject
to
an
increment
that
allows
"
moderately
large
increases
over
existing
pollution."

H.
R.
Rep.
95­
294,
4
Legislative
History
at
2609.
The
Petitioner's
in
EDF
v.
EPA
did
not
contest
EPA's
decision
to
employ
this
same
classification
scheme
for
NOx.
We
believe
that
adopting
such
an
area
classification
scheme
for
NOx
with
a
different
level
of
increment
for
each
type
of
area
helps
to
fulfill
two
of
the
factors
applicable
under
section
89
166(
c)
of
the
Act.

First,
Class
I
areas
generally
cover
the
kinds
of
parks
and
special
areas
covered
by
section
160(
2)
of
the
Act.

Thus,
establishing
the
lowest
level
of
increment
in
these
areas
helps
fulfill
EPA's
obligation
to
establish
regulations
for
NOx
that
"
preserve,
protect,
and
enhance
the
air
quality"
in
these
areas.

With
the
air
quality
in
Class
I
areas
subject
to
the
greatest
protection,
this
scheme
then
provides
two
additional
area
classifications
with
higher
levels
of
increment
to
help
satisfy
the
goal
in
section
160(
3)
of
the
Act
that
EPA
"
insure
that
economic
growth
will
occur
in
a
manner
consistent
with
preservation
of
clean
air
resources."

In
those
areas
where
clean
air
resources
may
not
require
as
much
protection,
more
growth
is
allowed.
By
employing
an
intermediate
level
(
Class
II
areas)
and
higher
level
(
Class
III
area),
this
classification
scheme
helps
ensure
that
growth
can
occur
where
it
is
needed
(
Class
III
areas)

without
putting
as
much
pressure
on
existing
clean
air
resources
in
other
areas
where
some
growth
is
still
desired
(
Class
II
areas).

By
redesignating
an
existing
Class
II
area
to
Class
III,
States
may
accommodate
economic
growth
and
air
quality
in
areas
where
the
Class
II
increment
is
too
stringent
to
allow
the
siting
of
new
or
modified
sources.
The
procedures
21
EPA
does
not
formally
track
the
issuance
of
PSD
permits
across
the
country,
but
EPA's
Regional
Offices
have
confirmed
that
various
PSD
permits
for
sources
of
NOx
have
been
issued
by
many
of
the
States
in
their
respective
jurisdictions.

90
specified
by
the
Act
for
such
a
redesignation
require
a
commitment
of
the
State
government
to
the
creation
of
such
an
area,
extensive
public
review,
participation
in
the
State
Implementations
Plan
(
SIP)
area
redesignation
process,
and
a
finding
that
the
redesignation
will
not
result
in
the
applicable
increment
being
exceeded
in
a
nearby
Class
I
or
Class
II
area.
See
42
U.
S.
C.
7474(
a)­(
b)
(
Section
164(
a)­

(
b)).
Our
1988
analysis,
53
FR
at
3702­
05
and
the
subsequent
issuance
of
PSD
permits
for
major
new
and
modified
sources
NOx
since
that
time,
21
tend
to
confirm
that,
with
the
existing
increment
levels,
the
three­
tiered
classification
system
has
allowed
for
economic
growth,

consistent
with
the
preservation
of
clean
air
resources.

Because
it
helps
fulfill
these
goals
and
purposes
and
was
not
controverted
in
EDF
v.
EPA,
we
do
not
propose
to
revisit
our
decision
to
employ
this
area
classification
scheme
for
NOx.
However,
we
do
not
believe
that
this
framework
alone
completely
satisfies
the
factors
applicable
under
section
166(
c)
of
the
Act.
The
level
of
increment
that
is
employed
for
each
class
of
area
is
also
relevant
to
an
evaluation
of
whether
the
area
classification
scheme
91
achieves
the
competing
goals
of
the
PSD
program.
Thus,
we
propose
to
further
consider
the
goals
of
protecting
parks
and
special
areas
and
ensuring
economic
growth
consistent
with
the
preservation
of
clean
air
resources
as
we
reevaluate
the
level
of
increment
at
the
direction
of
the
Court.

c.
Permitting
procedures.

The
framework
of
our
existing
PSD
regulations
employs
the
preconstruction
permitting
system
and
procedures
required
under
section
165
of
the
Act.
42
U.
S.
C.
7475.

These
requirements
are
generally
reflected
in
sections
51.166
and
52.21
of
EPA's
PSD
regulations
in
Title
40
of
the
Code
of
Federal
Regulation
(
40
CFR).
These
permitting
and
review
procedures,
which
we
interpret
to
apply
to
construction
on
any
new
or
modified
major
source,
fulfill
several
of
the
factors
applicable
under
section
166(
c)
of
the
Act
for
EPA's
PSD
regulations
for
NOx.
Two
of
the
goals
and
purposes
of
the
PSD
program,
in
particular,
seem
especially
amenable
to
being
fulfilled
through
a
case­

bybase
permit
review.

Under
section
160(
5)
of
the
Act,
as
incorporated
in
section
166(
c),
EPA
should
develop
PSD
regulations
for
NOx
that
"
assure
that
any
decision
to
permit
increased
air
pollution
in
any
area
to
which
this
part
applies
is
made
only
after
careful
evaluation
of
all
the
consequences
of
92
such
a
decision,
and
after
adequate
procedural
opportunities
for
informed
public
participation
in
the
decisionmaking
process."
The
permit
evaluation
and
review
procedures
reflected
in
the
existing
PSD
regulations,
which
are
applicable
to
sources
of
NOx,
call
for
a
careful
evaluation
that
involves
a
source
impact
analysis
(
section
51.166(
k)

and
52.21(
k)),
air
quality
analysis
(
sections
51.166(
m)
and
52.21(
m)),
additional
impacts
analysis
(
sections
51.166(
o)

and
52.21(
o)),
and
an
analysis
of
impacts
on
Class
I
areas
(
sections
51.166(
p)
and
52.21(
p)).
In
addition,
the
procedures
incorporated
in
sections
51.166(
q)
and
52.21(
q)

ensure
public
participation
in
the
decisionmaking
process.

Thus,
we
believe
the
existing
framework
for
the
PSD
regulations
for
NOx
fulfills
the
goals
and
purposes
set
forth
in
section
160(
5)
by
employing
the
permit
review
procedures
described
above.
Because
the
goal
in
section
160(
5)
is
satisfied
by
the
existing
regulatory
framework
that
was
not
controverted
in
EDF
v.
EPA,
we
do
not
propose
to
further
consider
this
factor
in
our
evaluation
of
the
characteristics
of
the
NO2
increment.

In
addition,
we
believe
the
permit
review
component
of
the
framework
also
fulfills
the
goals
and
purposes
set
forth
in
section
160(
4)
of
the
Act.
As
incorporated
through
section
166(
c)
of
the
Act,
section
160(
4)
calls
on
EPA
to
establish
PSD
regulations
that
prevent
one
State
from
93
interfering
with
the
PSD
program
for
any
other
State.
This
goal
is
also
one
that
we
believe
can
be
best
implemented
through
individual
permit
review
when
we
use
an
increment
system.
In
the
course
of
such
a
review,
a
source
must
demonstrate
that
it
does
not
cause
or
contribute
to
an
increment
violation
in
any
area
subject
to
part
C
of
the
Act.
See
§
165(
a)(
3)(
A).
These
areas
include
areas
in
other
States.
Thus,
we
do
not
propose
to
further
consider
the
goal
in
section
160(
4)
in
our
reevaluation
of
the
characteristics
of
the
NO2
increments.
We
believe
the
existing
permit
evaluation
procedures
incorporated
into
the
framework
of
our
existing
PSD
regulations
for
NOx
operate
to
satisfy
the
goal
in
section
160(
4)
and
do
not
require
further
analysis
for
the
increment
option.

d.
Additional
Impacts
Analysis.

One
particular
aspect
of
the
permit
review
procedures
described
above
is
worthy
of
more
particular
attention
because
it
also
helps
fulfill
the
substantive
criteria
and
goals
and
purposes
in
sections
166(
c)
and
section
160.

Where
applicable,
the
additional
impact
analysis
required
under
section
165(
e)(
3)(
B)
and
the
PSD
regulations
(
51.166(
o),
52.21(
o))
provides
a
case­
by­
case
review
of
the
potential
harm
that
a
pollutant
may
cause
to
certain
resources
in
all
classes
of
areas.
The
following
type
of
analysis
is
required
to
be
conducted
by
the
permit
94
applicant:

(
1)
The
owner
or
operator
shall
provide
an
analysis
of
the
impairment
to
visibility,
soils
and
vegetation
that
would
occur
as
a
result
of
the
source
or
modification,
and
general
commercial,

residential,
industrial
and
other
growth
associated
with
the
source
or
modification.
The
owner
or
operator
need
not
provide
an
analysis
of
the
impact
on
vegetation
having
no
significant
commercial
or
recreational
value.

(
2)
The
owner
or
operator
shall
provide
an
analysis
of
the
air
quality
impact
projected
for
the
area
as
a
result
of
general
commercial,

residential,
industrial,
and
other
growth
associated
with
the
source
or
modification.

Section
165(
e)(
3)(
B).
The
Additional
Impacts
Analysis
requirements
are
the
most
relevant
in
this
rulemaking
action
to
Class
II
and
Class
III
areas
which
are
not
subject
to
the
additional
FLM
review
that
applies
in
Class
I
areas.

e.
Federal
Land
Manager
review.

In
the
1988
rulemaking
addressing
PSD
for
NOx,
EPA
extended
the
FLM
review
procedures
set
forth
in
sections
51.166(
p)
and
52.21(
p)
to
cover
NO2.
53
FR
at
3704.
These
FLM
review
procedures
were
established
based
on
section
165(
d),
and
they
were
originally
applied
only
in
the
context
22
In
response
to
concerns
that
Class
I
increment
would
hinder
growth
in
areas
surrounding
the
Class
I
area,
Class
I
increments
were
established
as
a
means
of
determining
where
the
burden
of
proof
should
lie
for
a
demonstration
of
adverse
effects
on
AQRVs.
See
Senate
Debate,
June
8,
1977
(
3
LH
at
725).

95
of
the
statutory
increments
for
PM
and
SO2.
However,

because
they
also
address
many
of
the
factors
applicable
under
section
166(
c)
of
the
Act,
EPA
also
applied
them
to
NOx
through
regulation.
Under
an
increment
approach,
we
view
the
FLM
review
procedures
as
an
additional
measure
that
helps
to
satisfy
the
factors
in
section
166(
c)
and
160(
2)

which
require
that
EPA's
PSD
regulations
for
NOx
protect
air
quality
values
and
parks
and
other
special
areas.

Section
165(
d)
creates
a
scheme
under
which
the
FLM
has
an
affirmative
responsibility
to
protect
the
AQRVs
in
Class
I
areas,
and
may
object
to
or
concur
in
the
issuance
of
a
PSD
permit
based
on
the
impact
or
lack
thereof
on
any
affected
AQRV
that
the
FLM
has
identified,
irrespective
of
whether
the
increment
is
exceeded.
The
exceedance
of
the
increment
determines
only
where
the
burden
of
proof
lies.
22
That
is,
if
the
proposed
source
will
cause
or
contribute
to
a
violation
of
a
Class
I
increment,
the
permit
shall
not
be
issued
unless
the
owner
or
operator
demonstrates
to
the
satisfaction
of
the
FLM
that
there
will
23
Even
if
such
a
waiver
of
the
Class
I
increment
is
allowed
upon
a
finding
of
no
adverse
impact,
the
source
must
comply
with
such
emissions
limitations
as
may
be
necessary
to
ensure
that
the
Class
II
increment
for
SO2
or
PM
is
not
exceeded.
Section
165(
d)(
2)(
C)(
iv).
In
1988,
EPA
made
this
provision
applicable
to
the
NO2
PSD
provisions,
with
a
cap
of
25
µ
g/
m3
­
the
NO2
Class
II
increment.
53
FR
at
3704;
40
CFR
51.166(
p)(
4)
and
52.21(
p)(
5).

96
be
no
adverse
impact
on
AQRVs.
23
Section
165(
d)(
2)(
C)(
ii).

On
the
other
hand,
if
the
proposed
source
does
not
cause
or
contribute
to
a
violation
of
a
Class
I
increment,
the
FLM
may
prevent
issuance
of
the
permit
by
demonstrating
to
the
satisfaction
of
the
permitting
authority
that
the
source
will
have
an
adverse
impact
on
AQRVs.

Incorporating
these
FLM
procedures
into
the
PSD
regulations
for
NOx
helps
to
provide
protection
for
parks
and
special
areas
(
which
are
generally
the
Class
I
areas
subject
to
this
review)
and
air
quality
values
(
which
are
factors
considered
in
the
review).
Section
166(
d)
on
its
face
provides
that
measures
other
than
increments
may
be
promulgated
to
satisfy
the
duty
under
section
166.

Legislative
history
indicates
that
the
FLM
provisions
of
section
165(
d)
were
intended
to
provide
another
layer
of
protection,
beyond
that
provided
by
increments.
The
Senate
committee
report
stated
the
following:
"
A
second
test
of
protection
is
provided
in
specified
Federal
land
areas
(
Class
I
areas),
such
as
national
parks
and
wilderness
areas;
these
areas
are
also
subjected
to
a
review
process
97
based
on
the
effect
of
pollution
on
the
area's
air
quality
related
values."
S.
Rep.
95­
127,
at
17,
4
Legislative
History
at
1401.

f.
Installation
of
Best
Available
Control
Technology.

Finally,
another
important
element
of
the
existing
framework
of
PSD
regulations
applicable
to
NOx
emissions
is
the
requirement
that
a
permit
applicant
apply
BACT
when
constructing
a
new
source
or
making
a
major
modification
to
an
existing
source.
This
requirement,
based
on
section
165(
a)(
4)
of
the
CAA,
is
included
in
EPA's
PSD
regulations
and
thus
is
also
part
of
the
regulatory
framework
for
the
Agency's
pollutant­
specific
regulations
for
NOx.
40
CFR
52.21(
j);
40
CFR
51.166(
j).
Our
existing
regulations
define
"
best
available
control
technology
as
"
an
emission
limitation
...
based
on
the
maximum
degree
of
reduction
for
each
pollutant
subject
to
regulation
under
the
Act
...
which
the
Administrator,
on
a
case­
by­
case
basis,
taking
into
account
energy,
environmental,
and
economic
impacts
and
other
costs,
determines
is
achievable
for
such
source
through
application
of
production
processes
or
available
methods,
systems,
and
techniques
...
."
40
CFR
52.21(
b)(
12);
40
CFR
52.166(
b)(
12).
This
pollutant
control
technology
requirement
is
rigorous
and
in
practice
has
required
significant
reductions
in
the
pollutant
emissions
from
new
and
modified
sources.
Thus,
the
BACT
requirement
24
We
paraphrase
these
factors
here
and
in
the
sections
that
follow
to
facilitate
the
explanation
of
our
reasoning.
However,
we
recognize
that
the
statutory
language
is
broader
than
the
short
hand
we
use
here
for
convenience.

98
is
an
additional
measure
in
the
framework
of
PSD
regulations
applicable
to
NOx
that
helps
to
satisfy
the
factors
in
sections
166(
c),
160(
1),
and
160(
2),
which
require
that
EPA's
PSD
regulations
for
NOx
protect
air
quality
values,

public
health
and
welfare,
and
parks
and
other
special
areas.

2.
Proposed
Actions
Regarding
Characteristics
of
NO2
Increments
We
believe
our
review
of
the
characteristics
of
the
existing
increment
should
apply
the
following
four
factors
applicable
under
section
166(
c)
:
(
1)
protect
air
quality
values;
(
2)
protect
public
health
and
welfare
from
adverse
effects
from
air
pollution
that
occur
even
if
in
attainment;

(
3)
protect
air
quality
in
parks
and
special
areas;
and
(
4)

ensure
economic
growth
consistent
with
preservation
of
clean
air
resources.
24
As
noted
earlier,
we
believe
sections
166
and
160
direct
that
we
balance
the
fourth
factor
(
fostering
economic
growth)
against
the
other
three
environmentally
protective
factors
listed
above.
The
other
four
factors
identified
in
section
166(
c)
and
160
of
the
Act
do
not
appear
to
relate
to
the
characteristics
of
the
increment
and
are
more
appropriately
considered
when
establishing
the
99
overall
framework
for
PSD
regulations.
As
described
above,

we
believe
that
the
framework
adopted
for
the
PSD
regulations
for
NOx
satisfies
the
other
factors.
Since
EPA
is
not
reconsidering
the
entire
framework
in
this
proposed
option,
we
do
not
believe
that
it
is
appropriate
to
further
consider
these
other
four
factors.

a.
Level
of
increment.

Consistent
with
the
"
contingent
safe
harbor"
approach
described
above,
our
analysis
of
the
appropriate
levels
for
NO2
increments
begins
by
establishing
a
"
safe
harbor"

increment
level
that
is
"
at
least
as
effective
as"
the
increments
established
by
Congress
in
section
163
of
Act.

42
U.
S.
C.
7476(
d).
The
court
in
EDF
v.
EPA
recognized
that
this
standard
from
section
166(
d)
of
the
Act
is
satisfied
when
we
establish
increments
using
the
percentage­
of­
NAAQS
approach
that
Congress
used
to
establish
the
statutory
increments.
See
898
F.
2d
at
188.
This
approach
involves
using
the
same
percentages
that
Congress
used
to
calculate
the
PM
and
SO2
increments
from
the
NAAQS
in
effect
at
that
time
for
these
pollutants.

Because
the
only
nitrogen
oxide
for
which
we
have
a
NAAQS
is
NO2,
we
can
only
utilize
the
percentage
of
NAAQS
approach
to
establish
a
"
safe
harbor"
increment
level
for
NO2.
We
consider
below
whether
we
should
establish
an
increment
for
other
forms
of
NOx.
100
Because
Congress
used
different
percentages
to
calculate
the
Class
I
increments
for
PM
and
SO2,
we
must
determine
which
of
these
percentages
is
appropriate
for
the
Class
I
NO2
increment.
For
the
reasons
described
in
the
1988
rulemaking,
we
believe
that
it
is
appropriate
for
NO2
increments
to
be
derived
using
the
same
percentages
that
Congress
used
for
SO2
because
NO2
more
closely
resembles
SO2
than
PM
in
its
characteristics
and
sources.
See
53
FR
3698,

3700
(
February
8,
1988).
Thus,
we
begin
our
analysis
with
a
"
safe
harbor"
increment
level
for
each
class
of
area
that
is
set
at
the
same
percentage
of
the
NO2
NAAQS
as
the
SO2
increment
is
of
the
SO2
NAAQS.
Because
the
NO2
increment
has
not
changed
since
1988,
the
percentage­
of­
NAAQS
approach
yields
the
same
levels
that
we
derived
in
1988.
Thus,
using
this
approach,
the
"
safe
harbor"
level
for
the
Class
I
increment
for
NO2
is
2.5
µ
g/
m3
(
annual
average),
a
level
that
is
2.5
percent
of
the
NO2
NAAQS.
For
the
Class
II
increment
for
NO2,
the
"
safe
harbor"
level
is
25
µ
g/
m3
 
25
percent
of
the
NO2
NAAQS.
For
the
Class
III
increment
for
NO2,
the
"
safe
harbor"
level
is
50
µ
g/
m3
 
50
percent
of
the
NO2
NAAQS.

Under
our
interpretation
of
the
Act,
these
"
safe
harbor"
levels
establish
the
minimum
stringency
levels
(
or
highest
concentration
levels)
that
we
may
use
as
the
increments
for
NO2.
Our
next
step
is
to
consider
the
101
factors
applicable
under
section
166(
c)
and
evaluate
whether
we
need
to
revise
the
"
safe
harbor"
level
to
satisfy
these
factors.
Thus,
under
the
increment
option
in
this
proposed
rulemaking,
to
satisfy
the
requirements
of
section
166
of
the
Act,
we
believe
we
must
evaluate
whether
it
is
necessary
to
adjust
the
increments
for
NO2
to
a
level
more
stringent
than
the
"
safe
harbor"
level
we
derived
using
the
percentage­
of­
NAAQS­
approach.
In
this
analysis
of
the
level
of
the
increment,
we
propose
to
apply
the
four
factors
applicable
under
section
166(
c)
that
have
not
already
been
satisfied
by
the
regulatory
framework
described
above.

Thus,
we
consider
whether
a
different
level
of
increment
is
necessary
to
(
1)
protect
air
quality
values;
(
2)
protect
public
health
and
welfare
from
any
effects
occurring
at
levels
below
the
NAAQS;(
3)
protect
parks
and
special
areas;

and
(
4)
ensure
economic
growth
consistent
with
preservation
of
clean
air
resources.

(
1)
An
increment
is
an
allowable
marginal
increase
in
air
pollution.
Increments
represent
the
maximum
allowable
level
of
increase
in
an
area
that
is
in
attainment
with
the
NAAQS
or
unclassifiable.
Thus,
increments
are
essentially
a
marginal
level
of
increase
in
air
pollution
that
is
allowable
for
particular
areas.
The
statutory
increments
are
expressed
as
concentration
rather
than
mass
values.

Thus,
in
applying
the
factors
applicable
under
section
102
166(
c),
we
believe
section
166
of
the
Act
requires
that
we
analyze
the
impacts
on
air
quality
values,
health
and
welfare,
and
parks
and
special
areas
that
may
occur
as
a
result
of
some
marginal
increase
in
the
concentration
of
air
pollution
in
an
area.

Using
the
"
contingent
safe
harbor"
approach,
we
first
derive
the
highest
level
of
marginal
increase
that
may
be
permitted
for
each
class
of
areas
using
the
percentage­

ofthe
NAAQS
approach.
We
must
then
consider
whether
this
level
of
marginal
increase
satisfies
the
factors
applicable
under
section
166(
c).
If
the
marginal
increase
in
concentration
allowed
by
the
"
safe
harbor"
level
does
not
adequately
protect
against
these
effects
and
ensure
economic
growth
consistent
with
preservation
of
clean
air
resources,

then
we
must
attempt
to
identify
an
alternative
level
of
marginal
increase
that
will
satisfy
the
factors
applicable
under
section
166(
c).

As
noted
earlier,
EPA
does
not
interpret
the
PSD
program
to
require
it
to
set
increments
at
a
level
where
there
will
be
no
adverse
effects
from
a
marginal
increase
in
air
pollution
in
the
amount
of
the
increment.
Congress
did
not
anticipate
that
an
increment
would
be
a
level
of
increase
below
which
there
would
be
no
effects.
An
increment
is
the
level
that
defines
"
significant"

deterioration
but
does
not
prohibit
all
deterioration
of
air
103
quality.
The
PSD
program
allows
for
some
increase
in
effects
when
necessary
to
ensure
that
economic
growth
may
continue
to
occur
consistent
with
the
preservation
of
clean
air
resources.

(
2)
Increment
is
not
intended
to
remedy
existing
effects
but
to
maintain
levels
of
air
quality
achieved
by
other
programs.
Because
an
increment
is
an
allowable
level
of
increase,
it
does
not
function
to
reduce
existing
air
pollution.
The
PSD
program
is
intended
to
protect
against
significant
deterioration
of
the
air
quality
in
attainment
and
unclassifiable
areas
from
the
construction
and
operation
of
new
and
modified
sources
of
a
particular
size.
Thus,
the
PSD
program
limits
increases
in
emissions
from
these
sources
but
does
not
seek
to
reduce
emissions
or
ambient
air
pollutant
concentrations
to
a
particular
level.
The
increments
established
by
Congress
were
only
intended
to
define
the
allowable
levels
of
marginal
increase
in
air
pollution
above
a
baseline
concentration
that
are
established
in
each
area
when
the
first
major
source
applies
for
a
PSD
permit
in
that
area.
42
U.
S.
C.
7479(
4).
As
a
result,
we
do
not
believe
we
are
required
to
set
increments
at
a
level
intended
to
alleviate
existing
adverse
effects.

An
increment
is
a
marginal
level
of
increase
in
air
pollutant
concentrations
that
functions
to
prevent
significant
deterioration
of
air
quality.
Thus,
in
25
When
the
visibility
provisions
were
enacted,
the
House
committee
report
specifically
recognized
that
the
"
visibility
problem
is
caused
primarily
by
emission
into
the
atmosphere
of
sulfur
dioxide,
oxides
of
nitrogen,
and
particulate
matter
.
.
."
H.
R.
Rep.
95­
294,
at
204,
reprinted
in
4
Legislative
History
at
2671.
NOx
may
result
in
visibility
impairment
either
locally
(
a
brown
plume
effect)
or
contributing
to
regional
haze,
which
has
been
recognized
as
primarily
a
fine
particle
phenomenon.
1995
SP
at
89.
For
the
reasons
discussed
earlier,
we
do
not
believe
we
need
to
consider
PM
effects
in
this
reevaluation
of
the
increments
for
NOx.

104
evaluating
the
level
of
increment
that
is
necessary
to
prevent
significant
deterioration,
we
consider
that
there
are
other
programs
authorized
under
the
CAA
that
are
operating
(
or
will
be
operating)
to
reduce
the
adverse
effects
from
existing
air
pollution
sources.
If
we
use
an
increment
approach,
these
programs
will
serve
the
role
of
bringing
existing
emissions
down,
while
increments
included
in
our
PSD
regulations
established
under
section
166
of
the
Act
will
be
designed
to
limit
increases
in
emissions
from
the
construction
of
new
major
sources
and
the
modification
of
existing
ones.

For
example,
existing
visibility
problems
are
being
addressed
through
implementation
of
the
Regional
Haze
Program
under
sections
169A
and
169B
of
part
C.
25
Section
169A
establishes
as
a
national
goal
"
the
prevention
of
any
future,
and
the
remedying
of
any
existing,
impairment
of
visibility
in
mandatory
Class
I
Federal
areas
which
impairment
results
from
manmade
pollution."
42
U.
S.
C.
105
7491(
a).
In
the
1990
Amendments,
Congress
added
section
169B,
which
called
for
additional
research
into
the
visibility
problem
and
directed
EPA
to
issue
regional
haze
rules
taking
into
account
such
studies
and
reports
within
18
months
after
receipt
of
a
final
report
from
the
Grand
Canyon
Transport
Visibility
Commission.
The
EPA
promulgated
these
regulations
on
July
1,
1999.
64
FR
35714
("
Regional
Haze
rule").
The
main
components
of
this
rule
require
States
to:

(
1)
submit
SIPs
that
provide
for
"
reasonable
progress"

toward
achieving
"
natural
visibility
conditions"
in
Class
I
areas;
(
2)
provide
for
an
improvement
in
visibility
in
the
20
percent
most
impaired
days;
(
3)
ensure
no
degradation
in
visibility
occurs
on
the
20
percent
clearest
days;
and
(
4)

determine
the
annual
rate
of
visibility
improvement
that
would
lead
to
"
natural
visibility"
conditions
in
60
years.

At
the
time
that
the
Regional
Haze
Program
was
established,
a
Congressional
committee
recognized
that
the
PSD
program
was
not
necessarily
created
to
alleviate
existing
adverse
effects
resulting
from
contributions
by
existing
sources.
When
it
was
writing
section
169A
of
the
Act
at
the
same
time
that
it
established
the
PSD
program,

the
House
recorded
the
following
observations
in
a
committee
report:

[
T]
he
committee
recognizes
that
one
mechanism
which
has
been
suggested
for
protecting
these
areas,
the
106
mandatory
Class
I
increments
of
new
section
160
('
Prevention
of
Significant
Deterioration')
do
not
protect
adequately
visibility
in
Class
I
areas.
First,

inadequately
controlled,
existing
gross
emitters
such
as
the
Four
Corners
plant
would
not
be
affected
by
the
significant
deterioration
provisions
of
the
bill.

Their
emissions
are
part
of
the
baseline,
and
would
not
be
required
to
be
reduced
by
new
section
160
of
the
act.

H.
Rep.
95­
294,
at
205,
4
Legis.
History
at
2672
(
emphasis
added).
This
statement
indicates
that
protection
of
air
quality
values
under
section
166(
c)
is
provided
when
an
increment
limits
significant
deterioration
of
air
quality,

but
does
not
require
an
increment
that
eliminates
all
adverse
impacts
on
air
quality
values,
such
as
visibility,

that
may
be
caused
by
existing
sources.

In
addition,
in
the
1990
Amendments,
Congress
enacted
title
IV
to
address
the
problem
of
acid
deposition.
We
believe
this
supports
an
interpretation
that
the
PSD
measures
called
for
in
section
166
need
not
eliminate
acid
deposition
impacts
that
may
be
caused
by
existing
sources.

Rather,
under
an
increment
approach,
our
view
is
that
the
PSD
program
is
intended
to
focus
on
establishing
a
marginal
level
of
increase
in
emissions
that
will
prevent
significant
air
quality
deterioration
and,
in
conjunction
with
AQRVs
107
identified
by
the
FLM,
provide
protection
against
increases
in
adverse
effects
resulting
from
acid
deposition.

Reduction
of
NOx
emissions
from
existing
sources
is
also
required
under
EPA's
NOx
SIP
Call
and
the
proposed
CAIR.
Under
both
programs,
emissions
of
NOx
are
regulated
as
a
precursor
of
either
ozone
or
fine
PM,
or
both.
The
programs
are
based
on
State
obligations
to
address
interstate
transport
of
pollution
under
section
110(
a)(
2)(
D)

of
the
Act,
which
is
discussed
in
more
detail
above
in
the
section
on
our
legal
authority.
The
NOx
SIP
Call
requires
the
affected
States
and
the
District
of
Columbia
to
submit
SIP
revisions
that
reduce
NOx
emissions
by
specified
amounts
by
a
specified
date.
The
EPA
has
projected
that
over
1
million
tons
of
NOx
per
ozone
season
will
be
reduced
as
a
result
of
this
particular
program.
As
proposed,
the
CAIR
requires
that
emissions
reductions
be
implemented
in
two
phases,
with
the
first
phase
in
2010
and
the
second
phase
in
2015.
The
EPA's
estimates
of
the
NOx
reductions
that
would
result
from
the
CAIR
proposal
are
1.5
million
tons
by
2010
and
an
additional
0.3
million
tons
by
2015
(
for
a
total
of
1.8
million
tons).

In
areas
where
the
PSD
baseline
has
not
yet
been
established,
the
emissions
reductions
achieved
by
these
programs
may
result
in
lower
baselines
being
established
when
triggering
does
occur.
Then,
the
increments
we
are
108
reevaluating
in
this
rulemaking
will
operate
as
intended
as
an
allowable
level
of
marginal
increase
that
prevents
the
significant
deterioration
of
air
quality
in
attainment
areas.
This
approach
is
consistent
with
Congressional
intent
that
the
baseline
concentration,
representing
the
air
quality
in
an
attainment
area
subject
to
PSD,
be
established
on
the
date
of
the
first
application
for
a
permit
by
a
PSD
source
affecting
that
area.
42
U.
S.
C.
7479(
4).
See
also,

Alabama
Power
v.
Costle,
606
F.
2d
1068,
1088­
89
(
D.
C.
Cir.

1979).

(
3)
Increment
should
be
uniform
across
the
nation.
When
we
use
the
framework
of
an
area
classification
system
in
PSD
regulations
for
a
particular
pollutant,
we
believe
that
we
must
establish
a
single
increment
for
each
class
of
area
such
that
this
allowable
level
of
increase
applies
uniformly
to
all
areas
in
the
nation
with
that
particular
classification.
This
is
necessary
to
ensure
equitable
treatment
by
allowing
the
same
level
of
economic
growth
for
all
regions
of
the
country
that
a
State
elects
to
classify
in
a
particular
manner.
We
believe
that
Congress
intended
for
the
PSD
program
to
allow
air
quality
in
each
area
of
the
country
with
the
same
classification
to
change
by
the
same
amount
in
order
to
avoid
a
disproportionate
impact
on
growth
that
might
disadvantage
some
communities.
The
following
statement
from
the
legislative
history
of
the
PSD
program
109
supports
our
interpretation:

Some
suggestions
were
made
that
the
pollution
increments
should
be
calculated
as
a
function
of
existing
levels
of
pollution
in
each
area.
But
the
inequities
inherent
in
such
an
approach
are
readily
evident...
.
The
committee's
approach
 
increments
calculated
as
a
percentage
of
the
national
standard
 
eliminates
those
inequities.

All
areas
of
the
same
classification
would
be
allowed
the
same
absolute
increase
in
pollution,

regardless
of
existing
levels
of
pollution."

H.
Rep.
95­
294,
at
153,
4
Legis.
History
at
2620.
See
also
S.
Rep.
95­
127,
at
30,
3
Legislative
History
at
1404
("
These
increments
are
the
same
for
all
nondeterioration
areas,
thus
providing
equity
for
all
areas.").
This
indicates
that
Congress
did
not
intend
to
impose
more
stringent
restrictions
under
the
PSD
program
on
particular
areas
of
the
country
based
on
their
current
levels
of
air
pollution,

unless,
of
course,
the
current
levels
are
so
near
the
NAAQS
that
the
full
amount
of
incremental
change
cannot
be
allowed.

Instead,
Congress
generally
left
it
up
to
the
States
to
determine
the
areas
where
a
greater
or
lesser
level
of
protection
was
needed.
Although
Congress
established
certain
parks
and
wilderness
areas
as
mandatory
Class
I
110
areas,
it
classified
all
other
areas
as
Class
II
areas
and
gave
the
States
the
power
to
reclassify
these
areas
to
Class
I
or
Class
III
to
provide
for
greater
protection
of
air
quality
or
allow
more
growth,
depending
on
the
values
of
the
State
and
the
community
in
that
area.
This
allows
the
States
to
make
their
own
choices
about
which
areas
require
more
protection
of
air
quality
and
which
areas
should
be
allowed
more
growth
consistent
with
the
protection
of
air
quality.
See
H.
R.
Rep.
95­
294,
at
153­
154,
4
Legislative
History
at
2620­
2621.

We
believe
that
the
same
equitable
considerations
are
applicable
when
we
establish
PSD
regulations
containing
increments
and
area
classifications
under
section
166
of
the
Act.
Since
Congress
did
not
intend
for
the
increments
it
established
to
impose
a
disproportionate
impact
on
particular
areas,
we
do
not
believe
it
intended
to
grant
EPA
the
power
to
do
so
under
section
166
of
the
Act.
Thus,
to
treat
all
areas
of
the
country
in
an
equitable
manner,
it
is
necessary
for
us
to
establish
uniform
increments
for
NO2
that
establish
the
same
maximum
allowable
increase
for
each
class
of
area.

However,
we
must
also
weigh
these
equitable
considerations
against
the
unique
variability
in
ecosystem
effects
that
may
be
result
from
NOx
emissions.
In
our
review
of
the
NAAQS
for
NO2,
we
observed
that
"
a
great
111
degree
of
diversity
exists
among
ecosystem
types,
as
well
as
in
the
mechanism
by
which
these
systems
assimilate
nitrogen
inputs."
60
FR
at
52881.
As
a
result,
we
concluded,
"
the
relationship
between
nitrogen
deposition
rates
and
their
potential
environmental
impact
is
to
a
large
degree
site
or
regionally­
specific
and
may
vary
considerably
over
broader
geographical
areas
or
from
one
system
to
another
because
of
the
amount,
form,
and
timing
of
nitrogen
deposition,
forest
type
and
status,
soil
types
and
status,
the
character
of
the
receiving
waterbodies,
the
history
of
land
management
and
disturbances
across
the
watersheds
and
regions,
and
exposure
to
other
pollutants."
Id.
Consistent
with
these
earlier
conclusions,
our
more
recent
review
in
this
rulemaking
action
of
the
studies
on
the
effects
of
NOx
indicates
that
some
levels
of
air
pollution
resulting
from
emissions
of
NOx
may
cause
or
contribute
to
adverse
effects
on
welfare,
air
quality
values,
and
parks
in
some
areas
of
the
country
while
not
necessarily
causing
the
same
degree
of
effects
on
similar
ecosystems
and
receptors
in
other
areas
of
the
country.

In
light
of
the
equitable
considerations
discussed
earlier,
we
believe
the
best
way
to
address
the
potential
regional
variability
in
the
occurrence
of
effects
attributable
to
NOx
emissions
is
to
retain
uniform
national
increments
that
accommodate
growth
and
provide
a
basic
112
degree
of
protection
across
the
country,
but
to
augment
this
with
a
procedural
review
that
will
require
permitting
authorities
to
consider
adverse
effects
that
may
occur
in
more
sensitive
areas
before
the
increment
is
consumed.
This
approach,
which
we
believe
is
reflected
in
existing
regulations,
allows
EPA
to
achieve
the
equity
of
setting
a
uniform
increment
level
for
all
areas
with
a
particular
classification,
while
directing
that
permitting
authorities
conduct
a
more
intensive,
site­
specific
review
to
identify
effects
that
might
occur
in
a
more
sensitive
area
but
not
necessarily
in
all
areas
of
the
country
with
that
classification.

This
approach
is
embodied
in
the
framework
for
the
NOx
PSD
regulations
that
we
adopted
in
1988.
As
described
above,
each
permit
application
is
subject
to
an
"
additional
impacts"
analysis
that
allows
the
permitting
authority
to
consider
the
sensitivity
of
a
particular
area.
In
Class
I
areas,
the
FLM
review
procedures
provide
further
protection,

notwithstanding
the
existence
of
a
Class
I
increment,
for
the
air
quality
values
and
the
national
parks
and
wilderness
areas
included
in
Class
I
areas.

As
we
noted
earlier,
we
believe
our
ultimate
obligation
under
section
166
of
the
Act
is
to
establish
a
system
of
regulations
containing
provisions
that
collectively
satisfy
the
content
requirements
in
section
166(
c)
and
166(
d)
of
the
113
Act.
Thus,
we
think
that
Congress
contemplated
that
we
would
consider
the
entire
framework
of
regulations
when
establishing
particular
aspects
of
those
regulations.
As
a
result,
we
believe
it
is
appropriate
and
consistent
with
our
statutory
obligations
to
consider
the
protection
provided
by
the
additional
impacts
analysis
and
the
FLM
review
of
AQRVs
when
evaluating
the
level
of
NO2
increments.
Therefore,
to
achieve
equity
and
protect
against
effects
that
are
variable
across
regions
of
the
country,
we
believe
each
of
the
NO2
increments
should
be
set
at
a
level
that
reasonably
protects
air
quality
values,
health
and
welfare,
and
parks
and
special
areas
across
the
country
while
also
balancing
the
need
to
allow
economic
growth.
To
the
extent
necessary,
the
case­
by­
case
additional
impact
analysis
and
FLM
review
should
provide
additional
protection
of
air
quality
in
particular
areas
that
may
be
more
sensitive
to
nitrogen
loadings
resulting
from
NOx
emissions.

Because
of
the
equitable
considerations
and
State
prerogatives
to
classify
areas
described
above,
we
do
not
believe
that
Congress
intended
to
create
a
federally
imposed
system
of
regional
or
locally
based
measures
or
to
authorize
EPA
to
do
so
to
address
any
variability
in
potential
effects.
Likewise,
we
do
not
believe
it
is
permissible
or
appropriate
for
us
to
establish
increments
at
a
level
that
prevents
any
adverse
impact
on
the
most
sensitive
receptors
114
in
any
part
of
the
country.
Although
such
a
"
lowest
common
denominator"
approach
might
achieve
uniformity
across
all
areas,
it
would
not
necessarily
achieve
equity
because
it
would
unduly
restrict
growth
in
those
areas
of
the
country
where
adverse
effects
may
not
occur
at
a
higher
level.
In
addition,
as
discussed
further
below,
the
available
research
on
the
effects
of
NOx
does
not
readily
provide
sufficient
information
to
identify
that
level
of
increase
below
which
significant
effects
would
not
occur
to
the
most
sensitive
receptors
in
any
area
of
the
country.

Thus,
EPA
believes
that
the
factors
applicable
under
section
166(
c)
of
the
Act
are
met
when
we
establish
a
uniform
national
increment
for
NO2
for
each
class
of
area
that
is
augmented
by
an
additional
case­
by­
case
procedural
review
to
identify
and
protect
against
variable
effects
that
could
occur
in
especially
sensitive
areas
before
the
increment
is
fully
consumed.

(
4)
Evaluation
of
effects
at
levels
of
increase
below
the
"
safe
harbor"
level.
With
the
above
considerations
in
mind,

we
have
reviewed
the
available
effects
information
to
determine
whether
there
is
a
basis
for
using
it
to
either
support
the
existing
increments
or
to
find
them
inadequate
for
satisfying
the
criteria,
goals,
and
purposes
set
forth
in
sections
166(
c)
and
160
of
the
Act.
Selecting
a
framework
for
applying
the
criteria
is
an
important
first
115
step.
Because
the
increments
define
an
allowable
change
in
air
quality
rather
than
establish
a
uniform
air
quality
"
ceiling"
for
a
particular
pollutant,
we
believe
that
the
basis
for
determining
the
adequacy
of
the
increments
should
be
a
comparison
of
the
maximum
allowable
pollutant
increase
or
change
(
ambient
pollutant
concentration
that
would
result
from
full
increment
consumption)
with
the
pollutant
concentrations
at
which
the
effects
of
concern
(
particularly
the
adverse
effects
associated
with
air
quality
values
under
section
166(
c)
of
the
Act)
may
occur.
This
approach
relies
upon
the
premise
that
in
specific
attainment
areas
where
adverse
effects
caused
by
existing
emissions
may
be
experienced,
specific
control
strategies
designed
to
adequately
reduce
current
levels
of
emissions
(
and
air
pollution)
will
be
evaluated
and
the
most
appropriate
course
of
action
determined
independently
from
the
PSD
program.

The
problem
that
EPA
immediately
faces
in
trying
to
make
the
necessary
comparative
analysis
of
the
"
safe
harbor"

level
and
a
lower
increment
level
is
that
for
the
adverse
effects
identified,
in
most
instances
the
pollutant
concentrations
at
which
the
effects
may
occur
are
not
well
defined.
Based
on
the
availability
of
scientific
and
technical
information
available
during
the
period
when
the
NO2
increments
were
promulgated
in
1988
as
well
as
for
the
periodic
review
of
the
NO2
NAAQS
completed
in
1996,
there
is
116
great
uncertainty
about
the
specific
relationship
between
the
pollutant
and
its
precise
role
in
causing
the
effect.

Moreover,
while
more
recent
research
and
studies
have
shed
new
light
on
the
mechanisms
by
which
NO2
contributes
 
both
directly
and
indirectly
 
to
known
adverse
environmental
effects,
efforts
to
establish
quantitative
relationships
(
as
explained
further
below)
are
only
now
under
way.

Nevertheless,
what
is
already
known
about
some
of
these
cause­
effect
relationships
is
also
helpful
in
enabling
us
to
reach
a
conclusion
about
the
adequacy
of
the
current
increment
levels.

As
described
earlier
in
the
preamble
under
the
discussion
of
environmental
effects,
many
of
the
adverse
effects
indirectly
related
to
emissions
of
NOx
(
NO
and
NO2)

are
caused
(
or
contributed
to)
largely
by
nitrogen
compounds
(
e.
g.,
nitrates,
nitric
acid)
which
are
the
result
of
chemical
transformations
from
NO2
while
in
the
atmosphere.

Thus,
in
order
to
attempt
to
determine
an
acceptable
level
of
increase
for
ambient
NO2
concentrations,
it
is
necessary
to
understand
the
quantitative
relationship
between
the
emissions
of
NO2
and
the
adverse
effect.
This,
in
part,

requires
an
understanding
of
the
intermediate
transformation
processes,
the
deposition
patterns
and
total
quantities
of
those
nitrogen
compounds
which
may
cause
the
effect
of
concern,
as
well
as
the
nitrogen
contribution
to
ecosystems
117
from
natural
geobiochemical
processes.
Unfortunately,
the
atmospheric
chemistry
associated
with
NOx
is
significantly
more
complex
than
that
for
SO2.
In
addition
to
wet
and
dry
nitric
acid
and
nitrate
aerosols
such
as
ammonium
nitrate
(
NH4NO3),
emissions
of
NOx
can
also
produce
other
end
products,
such
as
peroxyacetyl
nitrates
(
PAN).
Also,
NOx
may
result,
either
directly
or
indirectly,
in
the
formation
of
oxidant
species
such
as
the
OH
radical,
O3,
and
H2O2,

which
alter
transformation
rates
of
NOx.
(
Butler,
2003).

The
difficulty
of
establishing
these
relationships
is
further
illustrated
by
EPA's
experience
in
evaluating
the
feasibility
of
setting
an
acid
deposition
standard.
Under
section
404
of
the
1990
Amendments,
Pub.
L.
101­
549,

Congress
directed
EPA
to
conduct
a
study
of
the
feasibility
and
effectiveness
of
an
acid
deposition
standard(
s),
to
report
to
Congress
on
the
role
that
a
deposition
standard(
s)

might
play
in
supplementing
the
acidic
deposition
program
adopted
in
title
IV,
and
to
determine
what
measures
would
be
needed
to
integrate
an
acid
deposition
standard
with
that
program.
The
EPA
completed
this
study,
"
Acid
Deposition
Feasibility
Study,
Report
to
Congress
(
1995),
which
concluded
that
current
scientific
uncertainties
associated
with
determining
the
level
of
an
acid
deposition
standard(
s)

are
significant,"
and
did
not
recommend
setting
an
acid
deposition
standard.
See
State
of
New
York
v.
Browner,
50
118
F.
Supp.
2d
141,
149
(
N.
D.
N.
Y.
1999)
(
rejecting
States'

claim
that
section
404
required
that
the
report
include
a
deposition
standard
that
would
be
sufficient
to
protect
sensitive
aquatic
and
terrestrial
resources,
and
affirming
EPA
interpretation
that
duty
was
limited
to
"
consideration
of
a
description"
of
such
standards).
While
EPA
has
recognized
that
programs,
such
as
the
proposed
CAIR
(
69
FR
4566,
Jan.
30,
2004)),
that
are
intended
to
achieve
NOx
reductions
pursuant
to
other
statutory
provisions,
will
help
mitigate
acid
deposition
problems,
none
of
those
programs
purport
to
set
an
acid
deposition
standard.

Some
recent
studies
are
attempting
to
address
the
various
parameters
that
together
could
establish
a
quantitative
relationship
between
emissions
of
NOx
and
the
adverse
environmental
effects
resulting
from
nitrogen
deposition
and
acidic
deposition
from
nitrates.
While
some
study
results
provide
evidence
of
a
relationship
between
NOx
emissions
and
precipitation
(
wet
deposition)
NO3
­,
the
results
of
efforts
to
establish
a
quantitative
relationship
between
NOx
emissions
and
total
(
wet
and
dry)
nitrogen
deposition
have
been
inconclusive
(
Butler,
2000,
2003).

Other
recent
studies
examine
the
various
sources
of
the
nitrogen
input
(
industry,
transportation,
agriculture)
the
geographical
location
of
different
nitrogen
loadings,
trends
in
deposition
rates,
as
well
as
the
specific
effects
of
119
nitrogen
deposition
on
specific
ecosystems.
These
studies
in
general
emphasize
the
importance
of
reducing
current
emissions
of
NOx
as
part
of
a
strategy
for
reducing
observed
impacts
and
promoting
ecosystem
recovery.
However,
such
studies
have
not
yielded
the
type
of
information
needed
to
adequately
evaluate
different
levels
of
maximum
allowable
pollutant
increases
with
respect
to
the
specific
impacts
such
levels
would
have
on
the
ecosystems.

We
have
evaluated
whether
the
concept
of
a
"
critical
load,"
as
described
more
fully
in
section
VII
of
this
preamble,
could
be
used
to
identify
an
alternative
increment
level,
but
we
believe
our
current
knowledge
about
critical
loads
for
nitrogen
does
not
provide
a
sufficient
basis
for
establishing
a
uniform,
national
standard
such
as
a
PSD
increment.
Because
of
the
vastly
differing
sensitivities
and
potential
effects
associated
with
ecosystem
resources
in
different
regions
of
the
country,
we
believe
that
critical
loads
do
not
represent
an
appropriate
tool
for
setting
a
single,
uniform,
national
standard,
such
as
a
PSD
increment
level.
Even
in
cases
where
the
deposition
rate
of
a
pollutant
is
relatively
consistent
from
one
location
to
another,
the
sensitivity
of
individual
ecosystems
varies
greatly
depending
on
a
number
of
different
variables,

including
climate,
diversity
of
species,
history
of
land
use,
and
the
existence
of
other
natural
and
anthropogenic
120
stresses.

Identifying
the
cause­
effect
relationship
of
nitrogen
deposition
on
various
ecosystems
can
be
problematic
for
a
number
of
other
reasons
as
well.
Some
effects
are
believed
to
be
the
result
of
combined
pollutant
impacts,
such
as
the
acidification
of
lakes
from
both
sulfur
and
nitrogen
deposition.
Some
water
systems
have
exhibited
high
levels
of
nitrogen
in
the
absence
of
anthropogenic
sources.
In
addition,
some
effects
of
changing
deposition
may
take
years
before
the
ecosystem
comes
into
balance
with
the
cumulative
amounts
of
nitrogen
inputs.
A
noted
problem
in
the
West
is
that
nitrogen
deposition
can
include
the
combined
contributions
of
emissions
from
NOx
(
nitrates
and
nitric
acid)
and
ammonia
(
ammonium).

For
the
above
reasons,
we
believe
that
it
is
not
technically
or
practicably
feasible
to
identify
a
basis
for
concluding
that
the
existing
NO2
increments
are
inadequate
to
provide
protection
against
the
types
of
adverse
effects
on
ecosystems
that
may
occur
in
some
areas
notwithstanding
compliance
with
the
NAAQS.
In
particular,
it
is
not
possible
to
determine
a
different
level
of
increment
protection
that
would
define
an
significance
level
for
ecosystem
effects
associated
with
emissions
of
NOx.

Currently
available
information
does
not
provide
a
nationally
applicable,
quantitative
basis
for
revising
the
121
current
levels
of
the
NO2
increments.
The
EPA
solicits
comment
on
possible
approaches
that
should
be
considered,

including
the
concept
of
critical
loads,
for
further
evaluating
the
existing
NO2
increments.
However,
under
today's
action,
we
are
not
proposing
any
changes
to
those
increments.

(
5)
Qualitative
consideration
of
factors.
Because
we
cannot
use
the
effects
data
to
quantify
an
alternative
level
of
increase
to
the
"
safe
harbor"
that
protects
air
quality
values,
health
and
welfare,
and
parks
while
ensuring
economic
growth
consistent
with
the
preservation
of
clean
air
resources,
we
must
instead
make
a
qualitative
judgment
whether
the
existing
increment
or
some
alternative
meets
the
applicable
factors.
In
this
situation,
we
believe
that
determining
the
level
of
increment
that
satisfies
the
factors
applicable
under
section
166(
c)
is
ultimately
a
policy
choice
that
the
Administrator
must
make,
similar
to
the
policy
choice
the
Administrator
must
make
in
setting
a
primary
NAAQS
"
with
an
adequate
margin
of
safety."
See
Lead
Industries
Ass'n
v.
EPA,
647
F.
2d
1130,
1147
(
D.
C.
Cir.

1980)
(
where
information
is
insufficient
to
permit
fully
informed
factual
determinations,
the
Administrator's
decisions
rest
largely
on
policy
judgments
).
Using
a
similar
approach
is
warranted
because
both
section
109
and
section
166
place
great
weight
"
in
the
Administrator's
122
judgment"
in
making
choices
regarding
an
adequate
margin
of
safety
or
protecting
against
any
effects
that
may
still
occur
 
both
areas
of
inquiry
characterized
by
great
uncertainty.
Thus,
in
the
process
for
setting
NAAQS,
the
Administrator
looks
to
factors
such
as
the
uncertainty
of
the
science,
the
seriousness
of
the
health
effects,
and
the
magnitude
of
the
environmental
problem
(
isolated
or
commonplace).
E.
g.,
62
FR
38652
(
July
18,
1997)
(
PM2.5
NAAQS).

A
pure
environmental
protection
analysis
(
protecting
AQRVs,
health
and
welfare,
and
parks)
might
suggest
that
we
permit
no
or
minimal
increases
in
some
areas
because
there
are
some
data
indicating
that
an
effect
may
be
attributable
to
NOx
emissions.
However,
as
explained
earlier,
we
do
not
believe
that
Congress
intended
for
the
PSD
program
to
eliminate
all
adverse
effects.
Thus,
rather
than
just
seeking
to
eliminate
all
effects,
we
must
attempt
to
identify
a
level
of
increase
at
which
any
effects
would
be
"
significant"
and
protect
against
those
potential
effects.

Furthermore,
we
need
to
ensure
that
our
increments
provide
room
for
economic
growth.
Congress
intended
for
EPA
to
weigh
these
considerations
carefully
and
establish
regulations
that
balance
economic
growth
and
environmental
protection.

In
making
this
policy
judgment,
we
give
particular
123
weight
to
the
policy
judgment
that
Congress
made
when
it
set
the
statutory
increments
as
a
percentage­
of­
the­
NAAQS.
In
section
166
of
the
Act,
Congress
directed
that
EPA
study
the
establishment
of
PSD
regulations
for
other
pollutants
for
which
Congress
did
not
wish
to
set
standards
at
the
time.

Congress'
own
reluctance
to
set
increments
for
NOx,
and
the
provisions
ensuring
time
for
Congressional
review
and
action,
suggest
that
Congress
intended
for
EPA
to
avoid
speculative
judgments
about
the
science
where
data
is
lacking.
Having
conducted
such
a
study
and
finding
difficulty
establishing
a
direct
relationship
between
adverse
effects
and
particular
levels
of
increase
in
pollution,
we
believe
it
is
appropriate
to
consider
the
approach
that
Congress
used.
Thus,
in
the
absence
of
specific
data
showing
that
a
marginal
increase
of
a
particular
level
below
the
"
safe
harbor"
would
better
protect
health,
welfare,
parks,
and
air
quality
values,
we
give
weight
in
our
qualitative
analysis
of
the
factors
applicable
under
section
166(
c)
to
the
method
that
Congress
used
to
establish
the
statutory
increments.

In
making
this
qualitative
judgment,
we
also
consider
the
overall
regulatory
framework
that
we
have
established
in
the
PSD
regulations
for
NOx.
This
framework
includes
a
case­
by­
case
analysis
of
each
permit
application
to
identify
additional
impacts
(
e.
g.,
soils
and
vegetation),
a
special
124
review
by
the
FLM
of
potential
adverse
effects
on
air
quality
values
in
parks
and
special
areas,
and
a
requirement
that
all
new
and
modified
sources
install
BACT.
In
addition,
the
area
classification
system
ensures
that
there
will
be
economic
growth
in
particular
areas
that
are
consistent
with
the
values
of
each
State
and
individual
communities
within
States.

When
coupled
with
the
overall
framework
of
PSD
regulations
applicable
to
NOx,
we
believe
the
"
safe
harbor"

approach
for
setting
the
level
of
increment
is
sufficient
to
satisfy
the
factors
applicable
under
section
166(
c).
This
approach
ensures
economic
growth
and
that
each
area
receives
a
basic
level
of
protection
consistent
with
Congressional
policy
and
an
additional
case­
by­
case
review
of
effects
on
air
quality
values
and
parks
and
special
areas.
Under
this
circumstance,
we
see
no
basis
to
deviate
from
approach
established
by
Congress
for
the
statutory
increments.
Thus,

we
propose
to
retain
the
existing
increments
for
NO2
that
were
established
at
the
"
safe
harbor"
level
using
the
percentage­
of­
NAAQS
approach.
We
request
comment
on
this
proposal,
the
supporting
analysis,
and
reasoning
described
above.

b.
Additional
increments.

(
1)
Pollutant
for
which
increment
is
set.
Another
disputed
issue
in
the
EDF
v.
EPA
case
was
EPA's
action
in
1988
to
125
establish
an
increment
for
only
one
form
of
nitrogen
oxides
 
nitrogen
dioxide.
We
promulgated
an
increment
for
NO2
in
1988
because
this
was
the
only
form
of
NOx
for
which
we
had
established
a
NAAQS
at
that
time.
However,
in
EDF
v.
EPA,

the
court
held
that
subsection
166(
c)
of
the
Act
"
commands
the
Administrator
to
inquire
into
a
pollutant's
relation
to
the
goals
and
purposes
of
the
statute,
and
we
find
nothing
in
the
language
or
legislative
history
suggesting
that
this
duty
could
be
satisfied
simply
by
referencing
the
ambient
standards."
898
F.
2d
at
190.
Thus,
in
this
rulemaking
action
on
remand,
we
must
evaluate
whether,
considering
the
factors
applicable
under
section
166(
c),
we
should
promulgate
additional
increments
for
other
forms
of
NOx.

Under
the
"
contingent
safe
harbor"
approach
discussed
above,
we
begin
our
analysis
with
a
"
safe
harbor"
increment
that
only
addresses
increases
in
ambient
NO2
concentrations.

Since
1988,
EPA
has
not
identified
a
basis
to
establish
a
NAAQS
for
any
form
of
NOx
other
than
NO2.
Thus,
it
remains
the
case
today
that
the
only
NAAQS
established
for
NOx
are
the
current
NO2
NAAQS
which
have
not
changed
since
1971.
We
believe
that
an
increment
based
on
the
same
pollutant
for
which
we
have
a
NAAQS
is
the
"
safe
harbor"
for
purpose
of
this
rulemaking.
Establishing
an
increment
for
this
form
of
NOx
is
"
at
least
as
effective"
as
the
statutory
increments
in
section
163
of
the
Act.
Congress
established
statutory
26
Since
that
time,
we
have
refined
the
original
NAAQS
for
PM
(
then
measured
as
TSP)
to
focus
on
coarse
(
PM10)
and
fine
(
PM2.5)
particulate
matter.
We
subsequently
established
an
increment
for
PM10
under
in
accordance
with
section
166(
f)
of
the
Act.
58
FR
31622,
June
3,
1993.
We
are
considering
establishing
an
increment
for
PM2.5.

126
increments
in
section
163
for
only
those
forms
of
PM
and
sulfur
oxides
for
which
we
had
promulgated
a
NAAQS.
26
As
discussed
above,
the
need
for
an
increment
necessarily
derives
from
the
establishment
of
a
NAAQS,
which
is
the
basic
measure
of
air
quality
under
the
CAA.
Thus,
an
increment
based
on
this
basic
measure
of
air
quality
is
"
at
least
as
effective"
as
the
statutory
increments
in
section
163
of
the
Act.
The
court
in
EDF
v.
EPA
rejected
the
argument
that
an
increment
based
on
the
same
form
of
NOx
as
the
NAAQS
was
not
"
as
effective
as"
the
increments
in
section
163.
898
F.
2d
at
190.

We
noted
earlier
in
this
preamble
that
seven
oxides
of
nitrogen
are
known
to
occur
in
the
atmosphere.
(
See
footnote
9.)
Among
these,
EPA
recognizes
the
significant
role
that
nitrates
play
in
many
of
the
indirect
welfare
effects
of
NO2.
Nitrate
is
a
principal
contributor
to
the
effects
on
ecosystems
of
both
nitrogen
deposition
(
eutrophication
and
acidic
deposition)
and
visibility
impairment
(
regional
haze).
As
such,
nitrates
conceivably
could
represent
a
form
of
NOx
which
should
be
considered
for
regulation
under
the
PSD
increments.
For
several
reasons,
27
Another
source
of
nitrates,
not
associated
with
emissions
of
NOx,
is
the
nitrification
of
ammonium
by
bacteria
in
stream
beds.

127
however,
EPA
believes
that
it
is
not
necessary
to
adopt
individual
increments
for
nitrate.

First,
nitrate
compounds
found
in
the
atmosphere
generally
are
formed
from
the
oxidation
of
NO
and
NO2
as
they
are
transported
in
the
atmosphere.
27
Thus,
the
existing
NO2
increment
can
generally
can
be
viewed
as
a
limiting
factor
in
the
formation
of
nitrate
concentrations
downwind.
By
limiting
the
allowable
increase
in
ambient
concentrations
of
NO2
in
the
immediate
area
surrounding
proposed
new
or
modified
PSD
source,
some
limit
can
effectively
be
placed
on
downwind
NO3
­
formation
as
well.

Another
consideration
is
that
ambient
nitrate
can
often
exist
in
the
atmosphere
in
particulate
form,
e.
g.,
ammonium
nitrate
or
nitric
acid
vapor.
Nitric
acid
(
a
nitrate
formed
through
the
gas­
phase
reaction
of
NO2
and
OH),
which
plays
a
key
role
in
acid
rain,
in
its
gaseous
phase
can
also
react
with
airborne
particle
surfaces
to
form
nitrate
salts.
When
ambient
concentrations
of
ammonia
and
nitric
acid
are
sufficiently
high,
ammonium
nitrate
can
be
formed.
Nitrate
particulates
contribute
to
regional
haze.
The
EPA
believes
that
it
can
more
effectively
regulate
nitrates
particulate
under
the
PM
program.
In
fact,
the
effects
of
nitrate
128
particulate
were
considered
in
setting
the
NAAQS
for
PM2.5
and
will
be
considered
in
the
development
of
the
upcoming
PSD
increments
for
PM2.5
as
well.

Finally,
EPA
does
not
believe
that
sufficient
information
is
available
to
adequately
establish
levels
for
nitrate
increments,
even
if
it
were
to
determine
that
the
establishment
of
increments
for
nitrate
are
necessary
to
satisfy
the
factors
applicable
under
section
166(
c).
We
described
the
difficulties
of
establishing
alternative
increment
levels
using
the
available
information
in
the
previous
section.

In
the
absence
of
information
showing
that
an
increment
based
on
the
same
pollutant
of
the
NAAQS
fails
to
protect
air
quality
values,
health
and
welfare,
and
parks
and
special
areas,
from
emissions
increases
associated
with
new
and
modified
PSD
sources,
we
propose
to
retain
the
"
safe
harbor"
increment
for
NO2
without
adopting
additional
increments.
Under
these
circumstances,
the
NAAQS
provides
a
reasonable
benchmark
for
identifying
the
pollutant
to
be
used
in
an
increment.
Section
160(
1)
of
the
Act
is
expressed
by
using
the
NAAQS
as
a
benchmark
and
also
uses
standards
that
mirror
the
standards
applicable
to
the
NAAQSsetting
process
 
"
protect
public
health
and
welfare."
The
court
in
EDF
v.
EPA
rejected
use
of
the
NAAQS
as
the
"
sole
basis"
for
deriving
the
increment
but
did
not
preclude
EPA
129
from
adopting
only
an
increment
based
on
the
same
pollutant
as
the
NAAQS
when
EPA
has
determined
that
such
an
increment
is
sufficient
to
satisfy
the
special
values
embodied
in
the
factors
applicable
under
section
166(
c)
of
the
Act.
See
898
F.
2d
at
190.

Thus,
we
propose
to
retain
the
increment
for
NO2
and
do
not
propose
to
establish
additional
increments
for
other
forms
of
NOx.
We
request
comment
on
this
proposed
action
and
our
basis
for
it.

(
2)
Time
periods
for
increments.
In
accordance
with
the
court's
opinion
in
EDF
v.
EPA,
we
have
also
evaluated
whether
we
should
promulgate
additional
NO2
increments
based
on
a
short­
term
averaging
time.
In
the
1988
rule,
EPA
did
not
set
short­
term
increments
for
NO2
because
a
short­
term
NAAQS
for
NO2
that
would
define
short­
term
air
quality
for
NO2
did
not
exist.
However,
the
court
directed
us
to
evaluate
whether,
considering
the
factors
applicable
under
section
166(
c),
we
should
promulgate
additional
increments
for
short­
term
averaging
times.
898
F.
2d
at
190.

Under
the
"
contingent
safe
harbor"
approach
discussed
above,
we
begin
our
analysis
with
a
"
safe
harbor"
increment
that
is
based
on
the
same
annual
averaging
time
used
in
the
NAAQS.
Since
1988,
EPA
has
not
found
cause
to
promulgate
a
NAAQS
for
any
averaging
time
shorter
than
annual.
Thus,

since
this
is
the
only
averaging
time
used
in
the
current
130
NAAQS,
we
consider
an
increment
that
employs
this
averaging
time
to
be
a
"
safe
harbor"
that
is
"
at
least
as
effective"

as
the
statutory
increments
in
section
163
of
the
Act.
The
increments
listed
in
section
163
of
the
Act
are
based
on
the
same
averaging
times
that
were
contained
in
the
NAAQS
at
the
time
Congress
adopted
this
provision.
The
NAAQS
are
the
basic
measure
of
air
quality
under
the
CAA.
Therefore,
an
increment
that
uses
this
standard
as
a
benchmark
is
"
at
least
as
effective"
as
the
statutory
increments
in
section
163
of
the
Act.
The
court
in
EDF
v.
EPA
rejected
the
argument
that
an
increment
based
on
the
same
averaging
time
as
the
NAAQS
was
not
"
as
effective
as"
the
increments
in
section
163.
898
F.
2d
at
190.

We
have
further
analyzed
whether
a
short­
term
increment
is
necessary
to
satisfy
the
factors
applicable
under
section
166(
c)
of
the
Act.
Based
on
this
review,
we
believe
that
an
annual
average
increment
for
NO2
is
sufficient
to
protect
air
quality
values,
health
and
welfare,
and
parks
and
special
areas
from
potential
short­
term
effects.
Thus,
we
propose
to
retain
the
existing
annual
increments
for
NO2
and
do
not
propose
to
adopt
additional
increments
for
shorter
time
periods.

The
same
reasons
that
supported
our
decision
not
to
set
a
short­
term
NAAQS
for
NO2
weigh
against
setting
a
shortterm
NO2
increment.
We
have
not
identified
health
effects
131
from
short­
term
exposure
to
NO2
that
occur
in
areas
in
attainment
with
the
NAAQS.
In
addition,
we
do
not
have
sufficient
information
to
conclude
that
the
welfare
effects
within
the
scope
of
our
review
are
caused
solely
by
shortterm
NOx
concentrations.

In
our
last
(
1995­
1996)
NAAQS
review
for
NO2,
EPA
reviewed
the
short­
term
effects
of
NO2
on
human
health
and
concluded
that
a
short­
term
standard
was
not
justified.

With
regard
to
public
health,
the
Administrator
concluded
that
the
annual
standard
of
0.053
ppm
NO2
provides
"
substantial
protection"
against
the
identified
health
effects
(
mild
changes
in
pulmonary
function
or
airway
responsiveness
in
sensitive
individuals)
associated
with
short­
term
peaks
occurring
in
the
range
of
0.2
to
0.5
ppm
­

almost
one
order
of
magnitude
higher
than
the
annual
standard.
60
FR
52875,
52879­
80
(
October
11,
1995).
The
adequacy
of
the
annual
standard
to
protect
against
these
potential
short­
term
effects
was
further
supported
by
the
absence
of
documented
effects
in
some
studies
at
higher
concentrations
(
3
ppm
to
4
ppm).
The
Administrator
also
took
into
account
that
where
the
annual
NO2
standard
is
attained
 
currently
all
areas
of
the
country
 
the
occurrence
of
1­
hour
NO2
values
greater
than
0.15
ppm
would
be
unlikely.
Id.

With
respect
to
public
welfare
effects
from
NO2,
the
132
Administrator
also
concluded
that
the
impact
on
terrestrial
vegetation
from
short­
term
exposures
to
NO2
under
existing
ambient
levels
is
insignificant
and
did
not
warrant
a
shortterm
standard
(
1995
SP,
p.
91).
The
Administrator
also
considered
the
welfare
impacts
from
nitrates
during
the
last
NO2
NAAQS
review.
Although
we
believe
we
are
not
required
to
consider
these
PM
impacts
in
selecting
measures
for
prevention
of
significant
deterioration
from
NOx
under
section
166(
a),
we
find
it
noteworthy
that
none
of
the
welfare
impacts
from
nitrates
were
attributed
to
short­
term
exposure
to
nitrates
and
that
significant
uncertainties
in
the
data
were
recognized.
Even
in
those
cases
where
nitrogen
deposition
was
shown
to
cause
episodic
or
"

shortterm
effects,
the
problem
was
typically
the
result
of
a
long­
term
accumulation
of
nitrogen
compounds
that
were
released
suddenly
to
the
ecosystem
(
e.
g.,
snowmelt
runoff
to
lakes
and
streams)
rather
than
the
result
of
short­
term
concentrations
of
nitrogen
compounds
in
the
air.

Additionally,
independent
of
the
short­
term
exposure
issue,
as
discussed
in
another
section
of
this
preamble,
EPA
has
previously
identified
problems
that
preclude
the
establishment
of
a
national
standard
to
protect
against
eutrophication
and
acid
deposition.
These
include:
(
a)
the
site­
specific
nature
of
such
impacts
(
e.
g.,
existing
levels
of
nitrogen
in
the
ecosystem
and
sensitivity
of
vegetation
133
to
additional
inputs),
which
cannot
be
addressed
by
a
uniform
national
standard;
and
(
b)
significant
uncertainties
over
the
level
of
contribution
of
NOx
sources
to
nitrogen
deposition,
determining
whether
an
ecosystem
was
nitrogen
saturated,
and
a
lack
of
data
establishing
the
quantitative
levels
of
concern.
60
FR
52874,
52884
(
October
11,
1995).

The
conclusions
from
the
last
NAAQS
review
regarding
the
lack
of
a
quantitative
basis
for
establishing
any
shortterm
NO2
standard
were
also
reported
in
an
EPA
document
issued
in
1997,
entitled
"
Nitrogen
Oxides:
Impacts
on
Public
Health
and
the
Environment."
Id.
at
33
("
While
short­
term
effects
from
NO2
are
documented
in
the
scientific
literature,
the
available
information
is
insufficient
to
provide
an
adequate
scientific
basis
for
establishing
any
specific
short­
term
standard.")

EPA
has
also
recognized
that
NOx
results
in
the
formation
of
ozone
and
nitrate
particulates
under
certain
conditions.
Although
ozone,
PM10,
and
PM2.5
have
short­
term
NAAQS
to
protect
against
public
health
effects
associated
with
short­
term
exposure
to
these
pollutants,
EPA
does
not
consider
the
impacts
from
these
criteria
pollutants,
because
it
interprets
section
166
to
require
consideration
of
these
criteria
pollutants
separate
and
distinct
from
the
duty
to
consider
NOx.

Thus,
considering
the
factors
applicable
under
section
134
166(
c),
EPA's
proposed
option
1
is
to
retain
the
annual
average
increment
and
not
establish
any
additional
increment
based
on
a
shorter
averaging
time.
We
request
comment
on
this
option
and
our
basis
for
proposing
it.

B.
Regional
Cap
and
Trade
Program
EPA's
second
proposed
option
for
achieving
the
goals
and
objectives
set
forth
in
the
Act
to
prevent
significant
deterioration
of
air
quality
for
NOx
is
to
create
an
incentive
for
the
States
to
implement
a
market­
based
cap
and
trade
program
to
achieve
the
goals
and
purposes
of
PSD.

Under
this
approach,
we
would
permit
States
that
adopt
a
cap
and
trade
program
under
specific
CAA
programs
being
considered
by
EPA
to
implement
this
cap
and
trade
program
in
lieu
of
the
NO2
increment
system.
Thus,
States
would
avoid
the
need
to
require
source­
specific
compliance
demonstrations
for
the
NO2
increments
under
their
PSD
regulations.
This
cap
and
trade
program
would
have
to
be
included
in
the
EPA­
approved
SIP
for
each
affected
State
and
would
have
to
satisfy
the
requirements
of
section
166(
c)
and
166(
d)
of
the
Act.

Under
this
option,
we
propose
a
finding
that
a
cap
and
trade
program
with
specific
elements
and
characteristics
would
be
sufficient
to
fulfill
the
requirements
of
section
166,
and
thus
obviate
the
need
for
States
to
implement
the
NO2
increments
and
conduct
case­
by­
case
analyses
of
whether
135
a
proposed
new
or
modified
major
source
would
cause
or
contribute
to
an
exceedance
of
an
increment.
We
propose
to
allow
States
to
request
elimination
of
the
NO2
increment
system
from
their
PSD
programs
following
their
submission
of
a
SIP
revision
that
contains
a
cap
and
trade
program
with
these
specific
elements.

EPA
believes
that
the
requirements
of
section
166
to
prevent
significant
deterioration
from
emissions
of
NOx
could
be
satisfied
if
States
were
to
adopt
the
model
EGU
cap
and
trade
program
proposed
for
States
in
the
eastern
U.
S.
in
the
CAIR.
Under
the
CAIR
proposal,
specific
States
in
the
East
and
Midwest
would
be
required
to
submit
SIPs
that
contain
controls
sufficient
to
eliminate
specified
amounts
of
NOx
emissions
in
order
to
reduce
emissions
contributing
to
nonattainment
of
the
PM2.5
and
ozone
NAAQS
in
downwind
States.
The
EPA
indicated
in
the
CAIR
proposal
that
States
subject
to
CAIR
have
the
option
to
achieve
these
reductions
by
participating
in
a
regional
cap
and
trade
program
for
EGUs
that
would
be
administered
by
EPA.
Because
this
cap
and
trade
program
would
require
statewide
reductions
in
emissions
of
NOx
from
specific
sources,
we
believe
it
would
be
equivalent
to
or
better
than
the
existing
NO2
increment
approach
which
allows
increases
in
emissions.
Thus,
to
encourage
States
to
participate
in
the
model
cap
and
trade
program,
EPA
would
determine
that
States
participating
in
136
this
program
could
rely
upon
it
as
a
substitute
for
implementing
the
traditional
NO2
increments
system.

EPA
does
not
propose
to
adopt
or
require
the
States
to
implement
such
a
cap
and
trade
program
under
legal
authority
contained
in
the
statutory
provisions
for
PSD.
However,
we
believe
the
air
quality
benefits
that
such
a
program
would
provide
could
serve
to
ensure
that
no
significant
air
quality
deterioration
will
occur.
Based
on
our
analysis
for
the
CAIR
proposal,
we
believe
the
CAIR
model
cap
and
trade
program
will
achieve
reductions
in
NOx
emissions
from
EGUs
that
are
sufficient
to
compensate
for
projected
increases
in
NOx
emissions
from
new
or
modified
major
sources
in
other
source
categories.

We
also
requested
comment
in
the
CAIR
proposal
on
whether
we
should
develop
a
similar
cap
and
trade
approach,

under
the
Regional
Haze
program,
for
the
States
not
subject
to
the
CAIR
(
generally
those
in
the
western
U.
S.).
To
the
extent
we
adopt
such
a
program
for
such
States,
we
request
comment
on
whether
this
kind
of
program
could
meet
the
objectives
of
PSD
in
other
parts
of
the
country.

1.
Description
of
Cap
and
Trade
Programs
A
cap
and
trade
program
is
a
market­
based
system
that
is
designed
to
achieve
required
emissions
reductions
as
needed
to
reach
a
particular
emissions
goal
or
cap
within
a
predetermined
geographical
area.
The
basis
for
the
overall
137
emissions
cap
is
typically
to
meet
specific
air
quality
objectives
for
the
area
or
an
affected
downwind
area.
The
emissions
"
cap"
limits
the
total
mass
emissions
for
the
area
of
interest
by
providing
a
limited
number
of
emission
allowances
 
each
allowance
authorizing
the
emission
of
a
specific
amount
(
e.
g.,
one
Acid
Rain
Program
allowance
authorizes
the
emission
of
one
ton
of
SO2).
Setting
the
emissions
cap
properly
is
key
to
achieving
the
desired
environmental
outcome.
The
allowance
trading
market
provides
a
flexible
mechanism
for
sources
to
find
the
leastcost
reductions
necessary
to
meet
the
cap.

For
example,
a
source
with
a
total
of
400
allowances
(
400
tons
of
NOx
emissions)
that
is
currently
emitting
700
tpy
of
NOx
could,
factoring
in
economic
considerations,
meet
its
total
allowances
by
(
1)
directly
reducing
current
emissions
by
300
tons
via
the
installation
of
controls,
fuel
switching,
legally
enforceable
operating
limitations,
etc.,

(
2)
purchasing
allowances
in
the
form
of
emissions
reductions
credits
from
other
capped
sources
within
the
prescribed
region
that
have
controlled
their
emissions
beyond
the
level
needed
to
meet
their
allowances,
or
(
3)

some
combination
of
these
two
approaches.

In
the
case
of
the
NOx
SIP
Call,
the
regionwide
emissions
cap
was
apportioned
to
individual
States,
thereby
creating
State­
level
"
emission
budgets."
Typically,
the
138
emissions
from
an
entire
sector
are
"
capped"
to
ensure
that
emissions
are
not
simply
shifted
from
one
unit
to
the
next.

Once
an
emissions
goal
or
cap
is
established
for
an
area,
the
regulating
authority
allocates
emission
allowances
to
individual
sources.
In
the
case
of
the
Acid
Rain
Program
and
the
NOx
SIP
Call,
EPA
and
individual
States,

respectively,
allocate
the
emission
allowances
to
the
sources.
Sources
comply
with
cap
and
trade
programs
by
holding
enough
allowances
in
their
account
to
cover
their
reported
emissions.
This
is
independent
of
the
allocation
process,
as
the
allowance
trading
market
allows
sources
to
reduce
their
emissions
or
purchase
additional
emission
allowances.

A
cap
and
trade
program
is
more
cost­
effective
when
sources
are
eligible
to
participate
and
allowances
can
be
freely
traded.
For
example,
in
a
regionally
based
cap
and
trade
program,
when
affected
States
allow
the
sources
within
their
jurisdiction
to
participate
in
the
opportunity
for
emissions
trading
anywhere
within
the
defined
region,
this
trading
affords
the
flexibility
needed
to
enable
sources
to
achieve
established
emission
goals
at
lowest
possible
cost
and
encourage
least­
cost
compliance
over
the
entire
region.

EPA
and
States
have
had
considerable
success
achieving
specific
air
quality
goals
through
the
implementation
of
cap
and
trade
programs.
Title
IV
of
the
1990
Amendments
28
The
Acid
Rain
Program
requires
a
phased
reduction
of
emissions
of
SO2
(
and,
to
a
lesser
extent,
NOx)
from
power
generators
that
sell
electricity.

139
established
the
Acid
Rain
Program
to
address
the
deposition
of
acidic
particles
and
gases.
28
The
Acid
Rain
Program
utilizes
a
market­
based
cap
and
trade
approach
to
require
power
plants
to
reduce
SO2
emissions
to
50
percent
of
the
1980
emission
levels.
At
full
implementation
after
2010,

emissions
will
be
limited
(
i.
e.,
"
capped")
to
8.95
million
tons
in
the
contiguous
U.
S.
Individual
existing
units
are
directly
allocated
their
share
of
the
total
emissions
allowances
 
each
allowance
being
an
authorization
to
emit
a
ton
of
SO2
 
in
perpetuity.

The
cap
and
trade
program
under
the
Acid
Rain
Program
has
created
financial
incentives
for
electricity
generators
to
look
for
new
and
low­
cost
ways
to
reduce
emissions,
and
to
improve
the
effectiveness
of
pollution
control
equipment,

at
costs
much
lower
than
predicted.
The
cap
on
emissions,

automatic
penalties
for
noncompliance,
and
stringent
emissions
monitoring
and
reporting
requirements
ensure
that
environmental
goals
are
achieved
and
sustained,
while
allowing
for
flexible
compliance
strategies
that
take
advantage
of
trading
and
banking.
The
level
of
compliance
under
the
Acid
Rain
Program
continues
to
be
quite
high,

measuring
over
99
percent.
29
The
jurisdictions
are:
Alabama,
Connecticut,
Delaware,
District
of
Columbia,
Georgia,
Illinois,
Indiana,
Kentucky,
Maryland,
Massachusetts,
Michigan,
Missouri,
New
Jersey,
New
York,
North
Carolina,
Ohio,
Pennsylvania,
Rhode
Island,
South
Carolina,
Tennessee,
Virginia,
West
Virginia,
and
Wisconsin.

30
See
"
Finding
of
Significant
Contribution
and
Rulemaking
for
Certain
States
in
the
Ozone
Transport
Assessment
Group
Region
for
Purposes
of
Reducing
Regional
Transport
of
Ozone;
Final
Rule,"
63
FR
57356
(
October
27,
1998).
The
EPA
also
published
two
Technical
Amendments
revising
the
NOx
SIP
Call
emission
reduction
requirements
(
64
FR
26298,
May
14,
1999;
and
65
FR
11222,
March
2,
2000).

31
Under
the
NOx
SIP
Call,
States
are
only
required
to
provide
for
the
prescribed
emissions
reductions
during
the
summer
ozone
season,
and
not
year­
round.

140
In
1998,
EPA
promulgated
a
rule
determining
that
22
States29
and
the
District
of
Columbia
in
the
eastern
half
of
the
country
significantly
contribute
to
1­
hour
and
8­
hour
ozone
nonattainment
problems
in
downwind
States.
30
This
rule,
generally
known
as
the
NOx
SIP
Call,
required
those
affected
jurisdictions
to
revise
their
SIPs
to
include
NOx
control
measures
to
mitigate
the
significant
ozone
transport.
The
NOx
SIP
Call
requires
ozone
season
NOx
reductions
which
EPA
determined
by
projecting
NOx
emissions
to
2007
for
all
source
categories,
and
then
reducing
those
emissions
through
controls
that
EPA
determined
to
be
highly
cost­
effective.
31
The
affected
States
were
required
to
submit
SIPs
providing
the
resulting
amounts
of
emissions
reductions.

Under
the
NOx
SIP
Call,
States
have
the
flexibility
to
141
determine
the
mix
of
controls
to
meet
their
emissions
reductions
requirements.
However,
the
rule
provides
that
if
the
SIP
controls
EGUs,
then
the
SIP
must
establish
a
budget,

or
cap,
for
EGUs.
The
EPA
recommended
that
each
State
authorize
a
trading
program
for
NOx
emissions
from
EGUs.

Consequently,
each
State
chose
to
adopt
a
cap
and
trade
program
based
on
a
model
rule
developed
by
EPA.
Some
States
essentially
adopted
EPA's
full
model
rule
"
as
is,"
while
other
States
adopted
the
model
rule
with
changes
to
the
sections
that
EPA
specifically
identified
as
areas
in
which
States
may
have
some
flexibility.

Following
the
NOx
SIP
Call,
EPA
carried
out
a
broader
assessment
to
determine
the
role
of
transported
emissions
from
upwind
States
in
contributing
to
unhealthy
levels
of
fine
particles
(
PM2.5)
and
8­
hour
ozone
in
downwind
States.

As
a
result,
on
January
30,
2004,
at
69
FR
4566,
EPA
proposed
to
find
that
29
States
and
the
District
of
Columbia
contribute
significantly
to
nonattainment
of
the
NAAQS
for
fine
particles
(
PM2.5)
and/
or
8­
hour
ozone
in
downwind
States
through
transport
of
both
NOx
and
SO2
emissions.
In
this
proposal,
originally
known
as
the
IAQR,
EPA
expressed
its
intent
to
assist
States
to
attain
the
NAAQS
in
a
way
that
is
timely,
practical,
and
cost
effective,
by
proposing
emissions
reduction
requirements
for
NOx
and
SO2,
that
would
apply
to
upwind
States.
32
Clean
Air
Act
section
110(
a)(
2)(
D)
requires
SIPs
to
contain
adequate
provisions
prohibiting
air
pollutant
emissions
from
sources
or
activities
in
those
States
that
contribute
significantly
to
nonattainment
in,
or
interfere
with
maintenance
by,
any
other
State
with
respect
to
a
NAAQS.
EPA
proposed
the
IAQR
requiring
SIP
revisions
in
28
States
and
the
District
of
Columbia
to
reduce
SO2
and/
or
NOx
emissions,
which
are
important
precursors
of
PM2.5
(
NOx
and
SO2)
and
ozone
(
NOx).

142
The
proposed
IAQR
(
now
known
as
the
CAIR)
requires
certain
States
in
the
eastern
portion
of
the
U.
S.
to
submit
SIP
measures
to
ensure
that
emissions
reductions
are
achieved
as
needed
to
mitigate
transport
of
PM2.5)
and/
or
ozone
pollution
and
its
main
precursors
 
SO2
and
NOx
 
across
State
boundaries.
32
The
proposed
CAIR
focuses
on
States
whose
emissions
are
significantly
contributing
to
fine
particle
and
ozone
pollution
on
other
downwind
States
in
the
eastern
half
of
the
U.
S.
The
EPA
identified
emissions
control
requirements
in
the
form
of
emissions
budgets
for
29
States
and
the
District
of
Columbia
on
the
basis
of
their
contribution
to
nonattainment
problems
in
the
eastern
half
of
the
U.
S.
In
determining
States'
emissions
reduction
requirements,
EPA
considered
both
the
level
and
timing
of
the
emissions
budgets
for
the
electric
power
industry
at
a
regional
level
and
State
level.
The
EPA
calculated
the
amount
of
each
State's
NOx
emissions
reduction
requirement
based
on
reductions
that
were
determined
to
be
highly
cost­
effective
33
EPA
based
its
emissions
reduction
requirements
on
reductions
from
large
EGUs,
i.
e.,
boilers
and
turbines
serving
an
electric
generator
with
a
nameplate
capacity
exceeding
25
MW
and
producing
power
for
sale.
EPA
further
proposed
that
its
model
regional
cap
and
trade
program
would
apply
to
these
units.

143
for
large
electric
generating
units
(
EGUs).
33
EPA's
selection
of
the
electric
power
industry
resulted
in
part
from
the
fact
that
we
had
relatively
complete
information
with
respect
to
a
number
of
key
factors
for
that
industry,
that
was
not
available
for
other
sources.
In
addition,
the
electric
power
industry
emits
relatively
large
amounts
of
the
relevant
emissions.
This
factor
was
considered
particularly
important
in
a
case
where
the
Federal
government
was
proposing
a
multi­
State
regional
approach
to
reducing
transported
pollution.

As
proposed,
each
affected
State
may
independently
determine
which
emissions
sources
to
subject
to
controls,

and
which
control
measures
to
adopt
to
satisfy
its
reduction
requirements.
Alternatively,
States
were
given
the
opportunity
to
participate
in
a
regional
cap
and
trade
program
to
cap
emissions
from
EGUs.
The
EPA
indicated
that
it
would
administer
the
cap
and
trade
program
in
a
manner
similar
to
the
NOx
SIP
Call
program.

If
the
State
chooses
to
control
EGUs,
then
it
must
establish
a
budget
 
that
is,
an
emissions
cap
 
for
those
sources.
The
State
may
allow
them
to
participate
in
the
144
interstate
cap
and
trade
program,
and,
if
so,
the
State
must
follow
EPA
rules
for
allocating
allowances
(
including
significant
automatic
penalties
for
noncompliance),
and
for
year­
round
emissions
monitoring
and
reporting
for
each
source.
If
a
State
wants
to
control
EGUs
but
does
not
want
to
allow
EGUs
to
participate
in
the
interstate
cap
and
trade
program,
the
State
has
flexibility
in
allocating,
but
it
must
cap
EGUs.

A
supplemental
notice,
issued
on
June
10,
2004
(
69
FR
32684),
provided
additional
detail
on
establishing
State
emissions
budgets
(
i.
e.,
emissions
reductions
requirements)

and
significant
additional
information
concerning
EPA's
model
cap
and
trade
program
for
EGUs,
including,
among
other
things,
requirements
for
adopting
the
model
cap
and
trade
rules,
flexibility
afforded
to
States
in
adopting
certain
program
features,
and
proposed
regulatory
language
covering
monitoring,
recordkeeping,
and
reporting
requirements.

The
emission
reductions
for
NOx
expected
under
the
CAIR
are
significant.
Under
the
CAIR,
EPA
proposes
to
implement
highly
cost­
effective
reductions
in
two
phases,
with
a
Phase
I
compliance
date
of
January
1,
2010,
and
a
Phase
II
compliance
date
of
January
1,
2015.
When
fully
implemented,

NOx
emission
reductions
would
be
substantial,
measuring
about
1.5
million
tons
in
2010
and
1.8
million
tons
in
2015.

This
represents
a
reduction
approximately
65
percent
below
34On
June
5,
2003,
EPA
revised
its
Regional
Haze
rule
to
incorporate
certain
provisions
for
western
States
145
current
NOx
levels.

Believing
that
the
emissions
reductions
resulting
from
the
proposed
program
would
also
help
the
affected
States
in
making
substantial
progress
toward
meeting
the
goals
and
requirements
of
the
Regional
Haze
rules
in
the
East,
EPA's
January
30,
2004,
proposal
also
requested
comments
on
the
potential
applicability
of
the
cap
and
trade
approach
for
addressing
regional
haze
problems
in
other
parts
of
the
country.
We
indicated
that
a
similar
approach
could
be
applied
to
areas
identified
in
the
final
Regional
Haze
Rule
(
64
FR
35714,
July
1,
1999).
Thus,
we
indicated
that
we
might
be
able
to
expand
the
concept
of
the
cap
and
trade
nationwide
by
considering
two
separate
NOx
emissions
levels
and
cap
and
trade
zones
for
NOx.
At
this
time,
however,
no
formal
proposal
of
a
cap
and
trade
program
for
the
West
currently
exists
as
a
result
of
the
CAIR
proposal.
34
2.
Using
a
Cap
and
Trade
Program
for
Prevention
of
Significant
Deterioration
of
Air
Quality
for
NOx
a.
Cap
and
trade
program
would
meet
requirements
of
section
166.

We
believe
that
EPA's
obligations
to
promulgate
pollutant­
specific
PSD
regulations
for
NOx
under
section
166
of
the
CAA
could
be
satisfied
by
giving
States
the
option
to
146
implement
a
cap
and
trade
regulatory
framework
for
sources
of
NOx
that
achieves
the
objectives
of
the
PSD
program.

More
specifically,
we
believe
that
a
State
cap
on
EGU
NOx
emissions
at
the
level
described
in
the
CAIR
proposal
for
that
State
would
achieve
emissions
reductions
that
would
prevent
significant
deterioration
of
air
quality
from
emissions
of
NOx.
By
participating
in
this
program
and
establishing
a
cap
on
NOx
emissions
from
EGUs
at
such
a
level,
we
believe
States
could
achieve
emissions
reductions
that
produce
ambient
air
quality
levels
equivalent
to
or
better
than
the
air
quality
allowed
by
the
existing
NO2
increments
and
associated
regulations.
Moreover,
a
marketbased
cap
and
trade
system
would
provide
greater
certainty
that
a
specific
level
of
emissions
and
air
quality
will
be
attained
and
maintained.
Thus,
we
believe
this
may
be
an
effective
alternative
to
an
increment
system
for
the
prevention
of
significant
air
quality
deterioration.

(
1)
Cap
and
trade
framework
fulfills
obligations
under
section
166.
A
cap
and
trade
framework
has
many
elements
that
satisfy
the
requirements
of
section
166(
c),
and
such
an
approach
would
qualify
as
an
"
other
measure"
that
is
permissible
under
section
166(
d).
Thus,
we
propose
to
allow
States,
in
lieu
of
an
increment
approach,
to
implement
a
cap
and
trade
framework
that,
in
combination
with
specific
program
elements,
would
meet
the
requirements
of
section
147
166(
c)
and
166(
d).

A
cap
on
emissions
that
is
allocated
to
States
through
budgets
and
to
individual
sources
in
the
form
of
tradeable
allowances
provides
a
numerical
measure
against
which
permit
applications
can
be
judged.
Under
a
cap
and
trade
approach,

States
could
prohibit
the
issuance
of
a
PSD
permit
to
a
new
or
modified
source
that
is
subject
to
the
cap
unless
the
source
can
ensure
that
it
will
have
a
sufficient
number
of
allowances
to
cover
its
proposed
emissions
increase.
In
evaluating
a
permit
application
for
such
a
source,
a
permit
writer
would
only
need
to
verify
that
the
applicant
holds
a
sufficient
number
of
allowances.
This
would
not
only
satisfy
the
"
numerical
measure"
requirement
but,
for
those
sources
subject
to
the
cap,
would
also
be
much
more
efficient
and
less
time­
consuming
than
the
current
process
of
conducting
a
source
impact
analysis
to
make
sure
the
proposed
emissions
increase
will
not
cause
or
contribute
to
an
increment
violation.
Where
a
cap
is
used
to
achieve
emissions
reductions
necessary
to
offset
future
growth
by
sources
not
subject
to
the
cap,
the
permit
writer
would
need
to
verify
that
emissions
from
the
sources
subject
to
the
cap
remain
below
required
levels
in
order
to
issue
a
permit
to
a
source
not
covered
by
the
cap.

A
cap
and
trade
framework
could
also
provide
a
powerful
stimulus
for
improved
control
technology
at
those
sources
148
subject
to
the
cap,
particularly
if
allowances
under
the
program
are
distributed
only
to
existing
sources
subject
to
the
cap.
If
new
and
modified
sources
subject
to
the
cap
were
required
to
obtain
emissions
allowances
from
existing
sources
subject
to
the
cap,
this
would,
in
many
cases,
have
a
technology­
forcing
effect.
Even
if
new
major
sources
and
major
modifications
subject
to
the
cap
still
have
to
meet
requirements
for
BACT,
the
cost
of
acquiring
allowances
from
another
source
subject
to
the
cap
could
cause
the
proposed
facility
to
select
a
more
stringent
BACT
than
would
normally
be
selected,
in
order
to
minimize
the
costs
associated
with
acquiring
the
necessary
allowances.
This,
in
turn,
could
also
have
a
carry­
over
effect
for
subsequent
BACT
determinations
involving
other
new
sources
that
are
not
under
the
cap
and
trade
program.

By
allowing
States
to
implement
a
regional
cap
and
trade
system,
we
could
address
the
goal
in
section
160(
4)
of
the
Act
to
assure
that
emissions
in
one
State
do
not
interfere
with
the
PSD
program
in
another
State.
By
first
developing
an
overall
cap
for
an
entire
region
and
then
allocating
that
cap
to
States
in
the
form
of
a
statewide
budget,
we
can
take
interstate
transport
issues
into
account
when
deciding
how
much
of
the
cap
should
be
allocated
to
sources
in
each
State.
Thus,
an
emissions
cap
could
provide
assurance
to
downwind
States
that
emissions
from
upwind
149
States
will
be
effectively
managed
over
time.

A
cap
and
trade
approach
that
operates
in
concert
with
the
PSD
preconstruction
permit
program
would
continue
to
fulfill
the
PSD
goal
in
section
160(
5)
that
any
decision
to
permit
increased
air
pollution
not
be
made
without
careful
evaluation
and
public
participation.
Major
new
sources
and
major
modifications
will
still
require
preconstruction
permits
and
will
have
to
comply
with
existing
requirements
for
BACT.
Thus,
the
public
will
have
an
opportunity
to
comment
on
each
permit.
However,
the
total
allowable
emissions
from
sources
subject
to
the
cap
would
be
determined
by
regulatory
authorities
at
the
time
that
the
cap
is
first
developed.
This
process
would
still
involve
the
evaluation
required
under
section
160(
5),
but
it
would
be
conducted
in
up­
front
modeling
to
demonstrate
the
effectiveness
of
the
cap,
well
in
advance
of
any
case­

bycase
permit
review
for
sources
subject
to
the
cap
that
must
obtain
allowances
and
other
sources
outside
the
cap
and
trade
system
that
could
not
be
permitted
without
verification
that
emissions
from
affected
sources
do
not
exceed
the
cap.
The
public
would
have
the
opportunity
to
comment
on
the
cap
and
thus
could
participate
in
any
decision
to
establish
a
cap
that
allows
increased
air
pollution.
However,
we
are
proposing
to
permit
States
to
adopt
a
cap
and
trade
program
that
would
achieve
overall
150
reductions
in
NOx
emissions
by
reducing
emissions
from
certain
sources
to
offset
expected
increases
from
other
sources.

In
order
to
fulfill
the
minimum
requirements
of
section
166(
d)
under
the
"
contingent
safe
harbor"
approach,
the
cap
selected
for
the
cap
and
trade
program
would
have
to
be
at
least
as
effective
as
the
increments
established
by
statute
for
PM
and
SO2
in
each
affected
State.
As
discussed
above,

these
statutory
increments
were
established
as
a
percentage
of
the
NAAQS,
which
are
expressed
as
an
ambient
concentration
of
air
pollution.
As
a
result,
the
PM
and
SO2
increments
are
also
expressed
in
ambient
concentration
form
and
reflect
the
maximum
marginal
increase
in
air
pollution
concentration
allowed
in
an
attainment
area.
Under
the
cap
and
trade
approach,
we
would
allow
States
to
establish
a
cap
on
total
NOx
emissions
from
specific
sources,
expressed
in
terms
of
mass
(
tons)
rather
than
an
ambient
concentration
(
e.
g.,
micrograms
per
cubic
meter).
To
show
that
a
particular
emissions
cap
on
specific
sources
is
as
effective
as
the
concentration­
based
increments
for
PM
and
SO2,
we
could
rely
on
ambient
air
quality
modeling
that
projects
the
concentration
in
each
part
of
a
State
that
would
result
from
achieving
a
particular
cap.
A
cap
that
maintains
ambient
concentrations
of
NO2
within
a
certain
percentage
of
the
pre­
cap
NO2
levels
in
most
areas
(
assuming
no
increment
151
violations
currently
exist)
could
then
be
demonstrated
to
be
at
least
as
effective
as
the
statutory
increments.
However,

to
the
extent
that
modeling
is
not
available
or
is
insufficient
to
make
such
a
showing,
we
request
comment
on
how
we
might
use
qualitative
measures
to
identify
whether
a
particular
cap
is
at
least
as
effective
as
the
increments
for
PM
and
SO2.

A
cap
at
a
level
that
is
as
effective
as
the
increments
for
PM
and
SO2
would
represent
the
"
safe
harbor"
cap
under
the
"
contingent
safe
harbor"
interpretation
we
are
proposing
today
for
section
166
of
the
Act.
Under
the
cap
and
trade
option,
once
the
safe
harbor
is
identified
in
this
manner,

we
would
then
analyze
whether
it
satisfies
the
requirements
of
section
166(
c)
by
using
the
same
balancing
test
discussed
above.
We
would
use
this
balancing
test
to
determine
whether
a
cap
other
than
the
"
safe
harbor"
cap
is
needed
to
protect
public
health
and
welfare,
as
well
as
air
quality
values,
while
also
allowing
for
economic
growth
consistent
with
the
preservation
of
existing
clear
air
resources.

We
believe
a
cap
and
trade
framework
is
particularly
well­
suited
for
striking
the
required
balance
between
effective
environmental
protection
at
a
cost
that
is
not
detrimental
to
economic
growth.
The
capping
of
total
emissions
of
pollutants
throughout
a
geographic
region,
and
over
a
period
of
time,
ensures
achievement
of
the
152
environmental
goal
while
allowing
economic
growth
(
new
sources
or
increased
use
of
existing
sources).
In
an
uncapped
system
(
where,
for
example,
sources
are
required
only
to
demonstrate
that
they
meet
a
given
emission
rate),

the
addition
of
new
sources
to
the
regulated
sector
or
an
increase
in
activity
at
existing
sources
can
increase
total
emissions
even
though
the
desired
emission
rate
control
is
in
effect.

(
2)
Cap
on
NOx
emissions
proposed
in
the
CAIR
would
satisfy
PSD
requirements.
Using
this
analytical
approach,
we
propose
to
find
that
a
cap
and
trade
program
that
caps
NOx
emissions
at
the
levels
proposed
in
the
CAIR
would
fulfill
the
requirements
of
section
166
of
the
Act.
We
believe
a
cap
on
NOx
of
this
magnitude
would
strike
the
required
balance
between
the
environmental
protection
and
the
economic
growth
goals
of
the
PSD
program.

The
proposed
cap
on
NOx
emissions
contained
in
the
CAIR
would
be
established,
under
the
authority
of
section
110(
a)(
2)(
D)
of
the
Act,
on
the
basis
of
emissions
reductions
that
can
be
achieved
by
installing
highly
costeffective
controls
on
EGUs.
We
believe
a
cap
on
NOx
emissions
at
this
"
highly
cost­
effective"
level
would
meet
the
objectives
of
PSD
by
providing
the
most
protection
for
AQRVs,
health
and
welfare,
and
parks
and
other
special
areas,
while
also
ensuring
economic
growth.
153
Our
analysis
in
the
CAIR
proposal
showed
that
a
cap
on
NOx
emissions
of
this
magnitude
in
the
relevant
region
would
produce
improvements
in
visibility
and
reduce
acid
deposition
and
eutrophication
of
water
bodies
in
the
eastern
U.
S.
See
69
FR
4566,
4642
(
Jan.
30,
2004)
(
Section
X:

Benefits
of
Emissions
Reductions
in
Addition
to
the
PM
and
Ozone
NAAQS).
A
more
detailed
discussion
of
these
beneficial
effects
is
provided
in
a
document
prepared
for
the
CAIR
and
is
entitled,
"
Benefits
of
the
Proposed
Interstate
Air
Quality
Rule
(
January
2004)."

Allowing
States
to
improve
ecosystem
health
in
this
manner,
through
a
cap
and
trade
approach,
would
satisfy
our
obligation
to
develop
regulations
under
section
166
of
the
Act
that
provide
protection
for
AQRVs,
health
and
welfare,

and
parks.
Our
analysis
to
date
indicates
that
a
cap
on
NOx
emissions
equivalent
to
the
reductions
proposed
in
the
CAIR
for
the
eastern
U.
S.
would
reduce
adverse
effects
on
AQRVs,

health
and
welfare,
and
parks
in
this
region.

As
noted
above,
visibility
is
an
important
AQRV
that
is
affected
by
emissions
of
NOx.
Reductions
in
emissions
of
NOx
at
the
level
required
in
the
CAIR
proposal
are
expected
to
contribute
to
substantial
visibility
improvements
in
many
parts
of
the
eastern
U.
S.,
including
Class
I
areas
such
as
the
Great
Smoky
Mountains.
On
the
other
hand,
preliminary
modeling
in
the
West
(
based
on
impacts
from
combined
154
reductions
of
both
SO2
and
NOx)
shows
improvements
in
visibility
in
Class
I
areas,
but
not
to
the
extent
shown
in
the
East.
Clearly
any
improvements
in
the
East
or
West
will
necessarily
depend
upon
the
caps
that
EPA
establishes
in
the
two
regions.

NOx
emissions
may
also
contribute
to
effects
on
AQRVs,

welfare,
and
parks
resulting
from
the
deposition
of
nitrogen
onto
land
and
water.
The
reductions
in
NOx
emissions
required
in
the
CAIR
proposal
are
anticipated
to
reduce
nitrogen
deposition.
Reductions
in
nitrogen
deposition
will,
in
turn,
reduce
acidification
and
eutrophication
of
water
bodies
and
have
a
positive
impact
upon
current
eutrophic
conditions
in
estuaries
and
coastal
areas
in
the
eastern
region
of
the
country.
We
would
expect
similar
benefits
from
a
cap
in
the
western
region
of
the
country.

Reductions
in
nitrogen
deposition
are
likely
to
have
positive
effects
on
the
health
and
productivity
of
forest
systems
as
well.
Furthermore,
reductions
of
this
magnitude
would
reduce
deposition
that
damages
cultural
monuments
and
other
materials.

In
the
CAIR
proposal,
we
assessed
the
quantitative
impacts
of
the
proposed
levels
of
NOx
and
SO2
reductions
on
the
acidification
of
water
bodies.
Areas
especially
sensitive
to
acidification
include
portions
of
the
Northeast
(
particularly
the
Adirondack
and
Catskill
Mountains,
155
portions
of
New
England,
and
streams
in
the
mid­
Appalachian
highlands)
and
Southeastern
streams.
Modeling
for
the
CAIR
indicated
that
as
a
result
of
the
proposed
reductions
in
SO2
and
NOx,
lakes
in
the
Northeast
and
Adirondack
Mountains
would
improve
in
acid
buffering
capacity.
Specifically,
we
found
that
no
lakes
in
the
Adirondack
Mountains
were
projected
to
be
categorized
as
chronically
acidic
in
2030
as
a
result
of
the
reductions
proposed
for
the
CAIR.
In
contrast,
12
percent
of
these
lakes
were
projected
to
be
chronically
acidic
without
the
emissions
reductions
envisioned
in
the
CAIR
proposal.
For
Northeast
lakes
in
general,
6
percent
of
the
lakes
were
anticipated
to
be
chronically
acidic
before
implementation
of
the
proposal.

The
NOx
and
SO2
reductions
called
for
in
the
CAIR
proposal
are
expected
to
decrease
the
percentage
of
chronically
acidic
lakes
in
the
Northeast
to
1
percent.

We
believe
State
implementation
of
caps
on
NOx
emissions
at
the
levels
set
forth
in
the
CAIR
proposal
would
provide
sufficient
protection
for
AQRVs
in
all
the
Class
I
areas
in
the
eastern
half
of
the
U.
S.
However,
we
request
comment
on
whether,
even
with
caps
of
this
magnitude,
States
would
need
to
implement
additional
measures
under
the
model
cap
and
trade
program
to
guard
against
site­
specific
degradation
in
Class
I
areas.

(
3)
Cap
and
trade
approach
would
provide
ambient
air
quality
156
analysis
for
all
sources.
Under
this
cap
and
trade
program
for
EGUs,
we
do
not
believe
it
will
be
necessary
for
any
sources
to
conduct
a
site­
specific
ambient
air
quality
analysis
for
NOx
in
order
to
satisfy
the
requirements
of
section
165(
a)(
3)
of
the
Act
by
showing
that
the
source
will
not
cause
or
contribute
to
air
pollution
in
excess
of
the
NAAQS
or
an
increment.
In
order
to
permit
States
to
adopt
the
CAIR
model
cap
and
trade
program
in
lieu
of
NO2
increments,
EPA
or
the
States
would
have
to
perform
an
ambient
air
quality
analysis
to
show
that
the
NOx
caps
applicable
to
each
State
achieve
enough
reductions
to
ensure
that
increases
in
NOx
emissions
from
all
new
our
modified
sources
will
not
result
in
an
exceedance
of
the
NO2
NAAQS
or
cause
significant
deterioration
of
air
quality.

If
States
adopt
a
cap
and
trade
system
and
are
not
required
to
enforce
the
increment,
sources
would
not
be
required
under
section
165(
a)(
3)
to
show
that
they
would
not
cause
or
contribute
to
a
violation
of
the
NO2
increment.

Instead,
the
cap
and
trade
program
would
fulfill
the
function
of
the
increment
to
prevent
significant
deterioration.
However,
the
requirements
of
section
165(
a)(
3)
would
still
be
satisfied
because
EPA,
rather
than
each
individual
source,
would
demonstrate
that
the
proposed
cap
is
sufficient
to
prevent
significant
deterioration
or
a
violation
of
the
NAAQS.
Thus,
it
would
be
redundant
and
157
unnecessarily
costly
to
require
an
individual
source
to
conduct
a
site­
specific
air
quality
analysis
under
a
cap
and
trade
approach.
A
source
subject
to
the
cap
would
only
need
to
show
that
it
has
enough
allowances
to
cover
its
emissions.
The
total
amount
and
distribution
of
allowances
would
already
reflect
the
results
of
an
air
quality
analysis
conducted
by
the
regulatory
authority.

b.
Using
a
cap
and
trade
program
to
streamline
the
PSD
permitting
process.

The
discussion
above
illustrates
some
ways
in
which
a
cap
and
trade
program
can
enable
substantial
streamlining
of
the
PSD
permit
process.
Such
streamlining,
allowing
applicants
to
avoid
various
preconstruction
review
requirements,
could
significantly
reduce
both
the
resources
needed
to
acquire
the
necessary
construction
permit
and
the
time
required
to
complete
the
permitting
process.
Both
are
important
ways
in
which
the
PSD
permit
program
can
be
improved
so
long
as
adverse
impacts
on
the
environment
are
not
allowed
to
occur
as
a
result.

Even
though
the
model
cap
and
trade
program,
as
presently
conceived,
would
apply
only
to
certain
electric
power
plants,
the
benefits
of
the
streamlined
PSD
permitting
process
would
be
shared
with
all
PSD
applicants
because
of
the
inherent
ability
of
the
cap
and
trade
program
to
enable
a
reduction
in
total
statewide
NOx
emissions
from
EGUs
158
sufficient
to
compensate
for
increases
in
NOx
emissions
in
the
State
from
other
source
categories
of
NOx
emissions.

Under
the
approach
being
proposed
today,
States
have
the
option
to
revise
their
implementation
plans
to
include
the
necessary
regulations
to
enable
participation
in
and
implementation
of
the
EPA­
administered
cap
and
trade
program
for
NOx
under
CAIR.
Once
the
necessary
revisions
are
in
place
and
in
effect
under
the
applicable
SIPs,
EPA
would
respond
affirmatively
to
State
requests
to
use
the
cap
and
trade
program
in
lieu
of
source­
specific
compliance
demonstration
for
the
NO2
increments.
The
State
would
not
be
required
to
conduct
source­
specific
increment
analyses
so
long
as
the
State
continues
to
implement
the
cap
and
trade
program.

The
cap
and
trade
program
would
not
provide
a
full
exemption
from
the
PSD
permitting
process.
All
new
major
stationary
sources
and
major
modifications,
including
both
EGUs
directly
affected
by
the
cap
and
trade
program
and
non­

EGU
major
sources,
would
still
have
to
undergo
some
preconstruction
review
for
a
PSD
permit
prior
to
commencing
construction
on
new
projects
that
result
in
a
significant
net
emissions
increase
for
NOx.
Such
permits
would
still
need
to
include
emissions
limitations
based
on
BACT.
The
primary
benefit
comes
from
the
fact
that
a
source­
specific
increment
and
NAAQS
analysis
would
not
be
required,
as
35
State
participation
in
a
cap
and
trade
mechanism
would
not
replace
the
statutory
requirement
to
meet
the
NAAQS
for
NO2
at
the
local
level,
but
rather
helps
achieve
this
requirement
through
significant
reductions
in
background
concentrations.
While
States
will
continue
to
have
the
obligation
and
the
authority
under
the
Act
to
assure
that
the
NAAQS
for
NO2
is
being
met,
we
do
not
believe
this
needs
to
be
done
on
a
source­
specific
basis
under
the
PSD
permitting
program,
but
rather
through
the
ongoing
monitoring
of
ambient
air
quality
using
EPArecognized
monitoring
sites
(
showing
current
attainment
status)
and
possibly
periodic
modeling
assessments,
in
conjunction
with
the
initial
modeling
demonstration
showing
downward
emissions
trends
and
air
quality
levels
resulting
from
the
overall
cap
and
trade
program.

159
described
in
the
above
subsection.
35
The
EPA
believes
other
requirements
pertaining
to
air
quality
analyses
might
also
become
unnecessary
under
a
cap
and
trade
approach.
For
example,
statewide
air
quality
improvements
shown
to
result
from
a
cap
and
trade
program,

as
described
elsewhere
in
this
preamble,
may
eliminate
the
need
for
source­
specific
FLM
review
in
Class
I
areas.
In
its
1988
PSD
regulations
for
NOx,
EPA
applied
this
process
to
NOx
on
the
basis
of
section
166.
We
also
propose
to
retain
this
requirement
under
the
increment
option
discussed
above.
However,
we
do
not
interpret
section
165(
d)(
2)(
C)
to
require
this
process
for
NOx
regulations
established
under
section
166.
Section
165(
d)(
2)(
C)
appears
to
be
limited
by
its
terms
to
only
PM
and
SO2.
Nevertheless,
we
believe
we
have
the
authority
to
apply
this
FLM
review
process
to
NOx
on
the
basis
of
section
166.
However,
if
the
requirements
160
of
section
166
are
otherwise
fulfilled
by
a
cap
and
trade
approach,
we
believe
section
166
would
give
us
the
discretion
not
to
employ
the
FLM
review
process
described
in
section
165(
d)(
2)(
C).

We
are
also
evaluating,
and
request
comment
on,
whether
certain
source­
specific
preconstruction
requirements
could
be
satisfied
by
a
cap
and
trade
approach.
These
include
(
1)

the
air
quality
impact
analysis
required
under
section
165(
a)(
6)
that
is
codified
in
regulations
as
the
additional
impacts
analysis
(
see,
e.
g.,
40
CFR
52.21(
o));
(
2)
the
analysis
of
air
quality,
climate
and
meteorology,
terrain,

soils
and
vegetation,
and
visibility
required
under
section
166(
e)(
3)(
B);
and
(
3)
the
air
quality
monitoring
requirement
in
section
165(
a)(
7).
In
the
latter
case,
PSD
applicants,

where
applicable,
must
set
up
air
quality
monitoring
stations
and
begin
collecting
relevant
air
quality
data
up
to
12
months
in
advance
of
their
submittal
of
a
complete
PSD
application.

c.
What
are
some
issues
that
still
need
to
be
resolved?

EPA
recognizes
certain
significant
issues
that
still
need
to
be
resolved
before
a
comprehensive
proposal
can
be
set
forth
for
public
review
and
comment.
These
issues
are
presented
here
for
public
consideration.

(
1)
Failure
to
show
ongoing
statewide
downward
trend
in
NOx
emissions.
The
EPA
recognizes
that
it
may
not
be
possible
161
to
show
that
NOx
emissions
decreases
in
every
State
from
CAIR
at
least
offset
the
expected
contribution
of
NOx
emissions
that
non­
EGU
sources
make
in
the
State.

Consequently,
in
States
where
the
amount
of
NOx
reductions
achieved
through
regulating
EGUs
under
the
proposed
cap
and
trade
program
does
not
more
than
compensate
for
increases
at
other
sources
of
NOx,
it
may
be
difficult
to
justify
the
use
of
the
proposed
cap
and
trade
program
in
lieu
of
the
existing
NO2
increment
system.

Preliminary
air
quality
modeling
by
EPA
indicates
that
total
NOx
emissions
will
generally
decline
on
a
statewide
basis
across
the
nation.
"
Total
NOx
emissions"
includes
contributions
from
electric
utilities,
non­
utilities,
area
sources,
and
mobile
sources
(
onroad,
nonroad).
As
proposed,

the
statewide
emissions
budgets
for
NOx
apply
only
to
affected
EGUS.
Sources
not
covered
under
the
regional
cap
and
trade
program
may
face
emissions
limitations
stemming
from
other
Federal
or
State
programs
(
e.
g.,
Federal
Motor
Vehicle
Emissions
Reduction
Program)
but
would
not
typically
be
restricted
from
potential
increases
under
any
kind
of
cap
for
the
source
category
in
general.

Thus,
in
cases
where
EPA's
modeling
cannot
initially
show
a
downward
trend
in
statewide
NOx
emissions
for
a
particular
State
because
increases
from
another
source
sector
are
exceeding
the
reductions
being
generated
by
EGUS
162
under
the
cap
and
trade
program,
EPA
tentatively
intends
to
announce
the
continued
applicability
of
the
NO2
increment
system
for
that
State
as
part
of
the
final
rulemaking
for
today's
proposed
action.

As
part
of
the
comprehensive
modeling
demonstration
that
EPA
intends
to
carry
out
to
support
this
cap
and
trade
option,
we
will
assess
the
likelihood
that
total
statewide
NOx
emissions
will
continue
to
exhibit
a
downward
trend
for
future
years.
The
EPA
believes
that
it
will
be
necessary
to
conduct
periodic
assessments
(
e.
g.,
10­
year
intervals)
of
air
quality
trends
for
NOx
in
order
to
continue
justifying
the
cap
and
trade
program
as
a
substitute
for
the
increment
system
for
preventing
significant
air
quality
deterioration
for
NOx.
The
EPA
seeks
comments
on
the
frequency
of
any
necessary
periodic
assessment,
as
well
as
other
possible
mechanisms
for
determining
when
adjustments
may
need
to
be
made
to
the
cap
and
trade
program
to
retain
its
viability
as
a
replacement
for
the
NO2
increment
system
or
other
means
of
preventing
significant
air
quality
deterioration
for
NOx.

(
2)
Potential
for
localized
adverse
impacts
resulting
from
emissions
increases
from
new
and
modified
sources.
The
EPA
is
mindful
of
the
potential
for
localized
impacts
of
proposed
sources
and
modifications
even
where
statewide
emissions
are
shown
to
be
declining.
In
response
to
this
concern,
we
note
that
the
January
30,
2004,
CAIR
notice
of
163
proposed
rulemaking
addressed
the
issue
of
localized
adverse
impacts.
In
that
notice,
EPA
indicated
that
experience
under
the
title
IV
Acid
Rain
Program
shows
that
"
the
combination
of
trading
with
a
stringent
emissions
cap
results
in
substantial
reductions
throughout
the
region,

with
the
greatest
reductions
achieved
in
the
areas
where
pollution
was
originally
the
highest."
(
69
FR
4629­
30)
The
notice
further
stated
that
other
independent
analyses
have
supported
the
finding
that
emissions
trading
under
this
type
of
program
has
not
resulted
in
the
creation
of
localized
air
quality
problems.

We
believe
that
this
trend
will
continue
to
occur
as
a
result
of
the
extended
use
of
a
cap
and
trade
program,
so
that
localized
air
quality
problems
generally
will
not
occur.
Nevertheless,
there
may
be
the
potential
for
localized
adverse
impacts,
especially
around
Class
I
areas,

particularly
when
a
source
of
NOx
locating
near
a
Class
I
area
is
not
subject
to
a
cap.
We
believe
this
situation
is
unlikely
to
occur
and
are
allowing
States
that
participate
in
one
of
the
cap
and
trade
programs
under
consideration
(
East
or
West)
to
avoid
all
case­
by­
case
source
impact
analyses
under
the
preconstruction
review
for
PSD.
We
solicit
comments
on
whether
there
is
any
need
for
a
limited
source­
specific
analysis
under
certain
circumstances.

(
3)
Role
of
the
Federal
Land
Manager
in
the
PSD
permit
164
process.
The
Act
provides
that
the
FLMs
have
an
affirmative
responsibility
to
protect
any
AQRVs
that
have
been
identified
for
the
Class
I
areas
under
their
control.

Section
165(
d)(
2)(
B).
Section
52.21(
p)
of
the
PSD
regulations
requires
notification
of
the
applicable
FLM
when
there
is
a
potential
for
adverse
Class
I
area
impacts,
and
it
authorizes
direct
involvement
by
the
FLM
in
cooperation
with
the
applicable
permitting
authority
to
identify
any
adverse
effects
on
any
known
AQRVs.

Although
the
cap
and
trade
program
would
significantly
diminish
the
possibility
that
PSD
sources
would
adversely
impact
a
Class
I
area,
in
light
of
the
overall
NOx
reductions
that
would
occur,
the
potential
for
some
adverse
impacts
could
still
exist.
In
the
absence
of
individual
source­
specific
air
quality
analyses,
which
include
data
that
may
be
reviewed
by
the
FLM
early
in
the
permitting
process
to
determine
the
potential
for
adverse
impacts,
FLMs
would
have
to
rely
upon
other
means
of
detecting
such
adverse
impacts
at
a
point
in
the
permitting
process
when
remedial
action
could
be
sought.

One
possible
remedy
to
this
potential
problem
is
for
EPA
to
include
specific
criteria
that,
if
not
satisfied
by
a
particular
PSD
applicant,
could
enable
the
FLM,
in
cooperation
with
the
permitting
authority,
to
call
for
an
analysis
of
source
impacts
on
the
Class
I
area.
For
165
example,
regulatory
procedures
could
be
established
which
authorize
an
FLM
to
call
for
a
source
impact
analysis
when
a
proposed
new
or
modified
source
locates
within
150
kilometers
of
a
particular
Class
I
area
and
(
1)
NOx
(
and
possibly
nitrate)
concentrations
are
not
decreasing
for
the
region,
as
determined
by
ambient
monitoring
data,
or
(
2)
a
significant
level
of
source
(
major
or
minor)
growth
has
been
documented
within
the
150­
kilometer
area
surrounding
the
Class
I
area.
The
EPA
seeks
public
input
on
the
most
effective
way
to
ensure
continued
protection
against
localized
adverse
impacts
from
source
growth
under
a
cap
and
trade
program.

(
4)
States
that
are
not
affected
by
the
proposed
CAIR.

Many
States
are
not
subject
to
the
proposed
CAIR.
We
believe
that
States
that
are
not
part
of
a
regionally
based
cap
and
trade
program
could
develop
a
State
cap
and
trade
program
that
could
be
considered
to
meet
the
goals
and
purposes
of
the
Act
for
prevention
of
significant
deterioration
for
NOx.
The
EPA
solicits
comments
on
the
best
way
to
address
States
that
are
not
subject
to
CAIR
but
that
wish
to
participate
in
an
EPA­
administered
cap
and
trade
program,
or
that
wish
to
develop
a
State
cap
and
trade
program
to
replace
the
NO2
increment
system
currently
in
their
State
PSD
program.

C.
State
Planning
Approach
166
As
a
third
option,
we
propose
to
allow
a
State
to
submit
a
demonstration
that
its
SIP
contains
measures,
in
conjunction
with
Federal
requirements,
that
would
prevent
significant
deterioration
of
air
quality
for
NOx.
Under
this
option,
we
would
establish
a
procedure
for
a
State
to
submit
a
SIP
demonstration
to
EPA
to
fulfill
the
requirements
of
section
166(
c)
and
166(
d)
of
the
Act.
If
EPA
determines
that
the
SIP
demonstration
meets
the
requirements
of
section
166,
then
we
would
approve
the
demonstration
and
allow
the
State
to
implement
the
SIP
in
lieu
of
an
increment
system
for
NO2.
Thus,
the
State
planning
approach,
like
the
cap
and
trade
approach,
would
provide
States
with
an
incentive
to
implement
a
program
to
prevent
significant
deterioration
of
air
quality
for
NOx
that
may
be
more
effective
than
an
increment
system.

The
State
planning
approach
will
be
implemented
through
States'
SIPs.
Any
State
choosing
this
option
could
submit
a
demonstration
that
its
SIP
establishes
a
clear
planning
goal,
of
the
State's
own
design,
to
satisfy
the
section
166
PSD
requirements
for
NOx.
To
achieve
the
goal
of
its
SIP,
a
State
could
impose
NOx
emission
limitations
on
any
emissions
sources
it
chooses,
whether
new
or
existing,
or
demonstrate
that
existing
Federal
and
SIP
limitations
have
the
appropriate
effect.

While
this
approach
gives
States
more
flexibility
to
167
design
a
program
to
prevent
significant
deterioration
for
NOx
using
a
system
other
than
increments,
the
EPA
review
and
approval
process
would
be
more
time­
and
data­
intensive.

Under
this
approach,
the
State
would
need
to
provide
a
rigorous
demonstration
that
its
planning
goal
and
measures
(
in
conjunction
with
Federal
requirements)
for
meeting
that
goal
are
at
least
as
effective
in
preventing
significant
air
quality
deterioration
for
NOx
as
the
increments
for
PM
and
SO2
(
fulfilling
the
safe
harbor
requirement
of
section
166(
d))
and
are
consistent
with
the
criteria
in
section
166(
c)
and
the
goals
and
purpose
of
PSD
in
section
160
of
the
Act.

In
contrast
to
the
cap
and
trade
option
described
above,
under
this
State
planning
option,
we
are
not
proposing
that
the
State
must
demonstrate
that
the
SIP
includes
a
specific
type
of
program
that
we
have
already
found
to
be
sufficient
to
satisfy
the
requirements
of
section
166.
However,
under
this
State
planning
option,
we
could
establish
a
specific
planning
goal
that
we
find
to
be
sufficient
to
satisfy
the
requirements
of
section
166.

Thus,
if
the
State
demonstrates
that
its
SIP
achieves
our
recommended
planning
goal,
this
could
streamline
EPA
action
on
the
plan.
However,
if
we
do
not
establish
such
a
goal,
a
State
would
have
to
define
this
on
its
own
and
demonstrate
to
EPA
how
a
program
that
achieves
that
goal
would
satisfy
168
the
requirements
of
section
166
of
the
Act.

An
example
of
a
State
planning
goal
that
we
believe
could
meet
the
requirements
of
section
166
would
be
a
goal
that
statewide
NOx
emissions
from
all
sources
would
remain
below
the
level
observed
in
a
specific
baseline
year
that,

in
turn,
is
identified
to
be
equivalent
to
the
level
of
emissions
that
results
in
significant
deterioration.
A
State
could
propose
to
achieve
such
a
goal
by
tracking
and
managing
the
inventory
of
emissions
from
all
sources
in
the
State
to
ensure
that
statewide
emissions
of
NOx
do
not
increase
above
this
level.
This
approach
would
in
effect
authorize
a
State
to
replace
the
NOx
increment
requirement
by
demonstrating
that
its
SIP
measures,
in
conjunction
with
Federal
measures,
achieve
reductions
in
NOx
emissions
from
all
sources
that
are
sufficient
to
offset
projected
increases
from
all
types
of
new
and
modified
sources.
We
believe
this
approach
could
be
an
effective
alternative
to
an
increment
system.
This
kind
of
a
State
planning
approach
would
prevent
significant
deterioration
with
a
goal
that
effectively
permits
no
emissions
increases
from
a
specific
baseline
date.
The
State
would
have
to
track
its
inventory
of
emissions
and
establish
control
measures
on
all
types
of
sources
(
new
and
existing)
as
appropriate
to
meet
the
goal.

1.
Description
of
State
Planning
Approach
This
State
planning
option
allows
States
to
achieve
169
prevention
of
significant
deterioration
for
NOx
through
specific
statewide
control
strategies.
In
developing
its
approach,
the
State
may
consider
broad
scientific
research
and
assessment
of
various
means
of
meeting
air
quality
management
goals
(
visibility
progress,
emission
density
requirements,
or
other
markers).

The
State
planning
approach
may
be
workable
for
source
categories
such
as
mobile
and
area
sources,
for
which
a
budget
approach
is
unproven
and
for
which
the
available
emissions
quantification
techniques
are
too
imprecise
to
support
the
budget
approach.
As
stated
before,
a
State
may
achieve
its
SIP
goal
by
controlling
NOx
emissions
from
any
emissions
sources
it
chooses.

The
State's
control
requirements,
when
implemented,

must
result
in
the
prevention
of
significant
deterioration
from
NOx
emissions.

Under
this
option,
a
State
may
choose
to
develop
its
own
NOx
emissions
cap,
with
approval
based
on
the
cap's
meeting
the
requirements
of
sections
166(
c)
and
166(
d).

That
is,
for
purposes
of
this
proposed
rule,
the
State
would
not
be
subject
to
an
EPA­
determined
NOx
budget.
The
State
would
be
responsible
for
tracking
its
NOx
emissions
and
for
identifying
and
reacting
to
needed
corrections
in
its
allowable
NOx
emissions.

Under
the
State
planning
option,
SIPs
could
include
170
emission
targets
that
provide
for
growth
from
new
and
modified
sources.
SIPS
should
be
required
to
track
actual
emissions
increases
from
new
and
modified
sources
and
provide
mechanisms
for
addressing
areas
that
exceed
these
projected
increases.
The
State
is
manager
of
the
air
quality
resource
and
decides
how
much
growth
it
will
allow
consistent
with
the
requirement
to
prevent
significant
deterioration.

a.
SIP
requirements.

Under
the
State
planning
option,
a
State
may
impose
NOx
emissions
control
requirements
in
the
form
of
a
NOx
emission
rate
limit,
a
specified
type
of
technology,
or
even
a
cap
on
NOx
emissions.
However,
to
demonstrate
that
its
plan
is
at
least
as
effective
as
the
increments
for
PM
and
SO2,
the
State
must
demonstrate
through
its
emissions
inventory
that
its
control
requirements
are
adequate
from
an
air
quality
standpoint.

Critical
to
SIP
planning
are
the
elements
of
accountability
and
emissions
tracking.
To
ensure
that
the
SIP
goal
is
achieved,
the
State
planning
approach
requires
an
accurate
baseline
emissions
estimate.
Then,
to
demonstrate
the
amount
of
emissions
control
from
the
controlled
sources,
the
State
must
take
into
account
the
amount
of
emissions
attributable
to
the
sources
or
source
category
both
in
the
base
case
year
and
in
the
control
case.
171
The
SIP
must
include
monitoring,
recordkeeping,
and
reporting
requirements.
Unlike
under
the
cap
and
trade
option
(
option
2),
under
the
State
planning
option
(
option
3),
the
State
must
bear
the
responsibility
for
monitoring
progress
and
tracking
emissions.

The
EPA
is
soliciting
comment
on
what
requirements
are
needed
to
ensure
that
the
SIP
goal
is
met.
Overarching
considerations
include
whether
the
requirements:
(
1)
provide
certainty
that
all
emissions
that
are
controlled
pursuant
to
this
option
are
adequately
controlled;
(
2)
ensure
that
controls
will
continue
to
be
adequate
in
future
years;
and
(
3)
ensure
that
the
control
requirements
can
be
feasibly
implemented.

Pursuant
to
section
166(
c),
the
State
goal
must
provide
specific
numerical
measures
against
which
permit
applications
may
be
evaluated.
Under
option
3,
we
propose
that
each
SIP
demonstration
must
include
a
NOx
emissions
inventory
for
its
baseline
year
(
1990
or
other).
The
State
will
have
to
weigh
its
projected
reductions
against
its
projected
increases
(
so
as
to
allow
for
growth)
over
the
next
10
years.
Each
State
will
need
to
demonstrate
that
the
objectives
of
the
statutory
PSD
program
for
NOx
are
being
met,
for
example,
by
demonstrating
that
NOx
increases
are
less
than
or
equal
to
NOx
reductions
at
the
end
of
a
10­
year
period,
or
by
some
other
scheme
that
can
accommodate
172
significant
growth
of
emissions,
which
is
particularly
anticipated
in
the
western
U.
S.
Based
on
the
State's
demonstration
through
statewide
modeling
and
analysis
that
it
will
meet
the
SIP
goal,
the
State
would
be
permitted
to
waive
some
of
the
case­
by­
case
analysis
for
new
and
modified
major
sources
subject
to
PSD
preconstruction
permitting.

b.
Benefits
of
State
planning
approach.

The
State
planning
approach
could
effectively
serve
in
the
same
way
that
an
increment
system
does
to
prevent
significant
air
quality
deterioration,
with
the
added
benefit
of
eliminating
the
need
for
some
types
of
case­

bycase
source
analyses
as
currently
required
for
sources
applying
for
preconstruction
permits
under
State
PSD
programs.
Depending
on
how
a
program
is
designed
by
the
State,
a
State
planning
approach
could
not
only
prevent
significant
air
quality
deterioration
but
also
provide
substantial
improvements
in
air
quality
over
time
as
any
required
controls
are
installed
on
sources
in
order
to
meet
the
State
goal.
For
example,
reductions
in
NOx
will
contribute
to
visibility
improvements
(
69
FR
June
10,
2004,

at
37205­
6)
and
will
also
help
to
reduce
acidification
and
eutrophication
of
water
bodies
(
69
FR
January
30,
2004,
at
4642­
3).

2.
Using
State
Planning
Program
for
Prevention
of
Significant
Deterioration
of
Air
Quality
from
NOx
Emissions
173
a.
State
planning
approach
can
meet
requirements
of
section
166
of
Clean
Air
Act.

We
believe
EPA's
obligation
under
section
166
to
promulgate
pollutant­
specific
regulations
for
NOx
could
be
satisfied
by
permitting
States
to
demonstrate
that
"
other
measures"
besides
increments
will
prevent
significant
deterioration,
so
long
as
those
measures
are
consistent
with
the
requirements
of
sections
166(
c)
and
166(
d)
of
the
Act.

The
EPA
could
satisfy
these
requirements
by
establishing
a
planning
goal
based
on
the
requirements
of
these
provisions
and
then
providing
a
process
for
States
to
demonstrate
how
the
measures
in
their
SIPs
would
achieve
this
goal.

(
1)
State
planning
framework
fulfills
many
of
the
factors
applicable
under
section
166.
A
State
planning
framework
has
many
characteristics
that
satisfy
the
requirements
of
section
166(
c),
and
such
an
approach
could
qualify
as
an
"
other
measure"
that
is
permissible
under
section
166(
d).
A
State
planning
program
framework,
in
combination
with
the
specific
measures
in
the
State
SIP
and
other
Federal
measures,
could
fulfill
the
requirements
of
sections
166(
c)

and
166(
d).

Under
a
State
planning
framework,
an
emissions
inventory
could
function
as
a
specific
numerical
measure
that
could
be
used
to
evaluate
permit
applications.
The
inventory
could
be
expressed
in
terms
of
a
mass
of
total
174
emissions
(
tons)
across
the
State
rather
than
an
air
quality
concentration
(
µ
g/
m3)
as
is
the
case
with
increments
and
NAAQS.
The
State
permitting
authority
could
evaluate
the
permit
application
against
the
inventory
of
total
emissions
for
all
sources
and
determine
if
there
was
room
in
the
inventory
for
a
new
source
or
an
increase
in
emissions
from
a
modified
source.
If
so,
then
a
preconstruction
permit
could
be
issued
without
causing
emissions
to
exceed
the
level
of
the
inventory.
If
there
was
not
room
in
the
inventory
for
emissions
from
a
new
or
modified
source,
then
the
permit
applicant
would
have
to
obtain
offsetting
reductions
from
other
sources.
This
type
of
numerical
measure
could
also
streamline
permitting
because
the
evaluation
of
a
permit
application
against
an
emissions
inventory
would
be
a
relatively
simple
exercise
that
does
not
require
extensive
air
quality
modeling
by
the
permit
applicant.

A
State
planning
framework
that
utilizes
an
emissions
inventory
would
also
stimulate
improvements
in
control
technology
at
both
new
and
existing
sources.
In
order
to
make
room
in
the
inventory
for
growth
from
new
sources
or
modifications
to
existing
sources,
a
State
may
elect
to
establish
additional
control
measures
on
existing
sources.

This
would
stimulate
improvements
in
control
technology
at
those
sources.
However,
a
State
might
instead
elect
to
175
require
that
new
and
modified
sources
bear
a
greater
burden
of
controlling
emissions
and
thus
stimulate
these
sources
to
make
improvements
in
control
technology.
Major
new
and
modified
sources
would
still
have
to
install
BACT
under
this
option,
but
the
State
could
also
establish
limitations
that
give
minor
sources
incentive
to
employ
improved
control
technology
to
keep
emissions
below
the
inventory.
A
State
could
also
develop
some
combination
of
these
approaches
that
balances
the
burdens
across
new
and
existing
sources.
Thus,

a
State
planning
approach
of
this
nature
would
stimulate
improvements
in
control
technology
while
also
providing
the
States
with
the
flexibility
to
identify
the
sources
in
that
State
that
can
most
cost­
effectively
install
improved
controls.

A
State
planning
framework
could
also
address
the
goal
in
section
160(
4)
of
the
Act
to
assure
that
emissions
in
one
State
do
not
interfere
with
the
PSD
program
in
another
State.
The
EPA
could
adopt
this
goal
as
a
criterion
that
must
be
met
in
order
for
the
State
planning
process
to
prevent
significant
deterioration
for
NOx.
Thus,
in
addition
to
showing
that
emissions
would
not
exceed
the
inventory,
States
might
have
to
demonstrate
that
their
SIPs
will
not
cause
the
inventory
to
be
exceeded
in
neighboring
or
downwind
States.
The
EPA
would
not
approve
a
SIP
that
does
not
meet
this
goal
and
could
thereby
ensure
that
176
emissions
from
upwind
States
are
effectively
managed
to
prevent
significant
deterioration
in
other
States.
This
goal
is
to
a
large
extent
already
embodied
in
the
State
planning
process
based
on
section
110(
a)(
2)(
D)(
i)(
II)
of
the
CAA.
This
section
requires
that
SIPs
contain
adequate
provisions
to
prohibit
emissions
from
any
source
from
interfering
with
the
part
C
(
PSD)
program
in
another
State.

Thus,
we
may
not
need
to
make
any
changes
to
our
SIP
planning
regulations
to
satisfy
the
section
160(
4)
goal
if
we
allowed
States
to
use
the
State
planning
approach
to
satisfy
section
166
of
the
Act.

With
respect
to
the
PSD
goal
in
section
160(
5)
that
any
decision
to
increase
air
pollution
be
made
only
after
careful
evaluation
and
public
participation,
the
evaluation
would
be
conducted
and
opportunities
for
public
participation
would
occur
when
the
baseline
year
for
the
statewide
emissions
inventory
is
established
by
EPA
or
the
State.
Any
decision
to
permit
an
increase
in
air
pollution
would
be
reflected
in
this
decision
that
significant
deterioration
would
result
if
emissions
exceeded
the
levels
in
this
baseline
year.
The
EPA
or
the
State
would
thus
conduct
a
careful
evaluation
at
this
time
and
provide
an
opportunity
for
public
comment.
Once
the
inventory
baseline
is
established,
it
will
guide
future
permit
evaluations.
If
a
project
subject
to
the
permit
requirement
would
not
cause
177
statewide
emissions
to
exceed
this
level,
the
permit
could
be
issued
without
as
extensive
a
review
at
the
permitting
stage
as
would
be
required
under
the
increment
system.
The
careful
evaluation
conducted
at
the
time
the
baseline
year
is
selected
will
have
already
established
whether
an
emissions
increase
could
be
allowed
without
preventing
significant
deterioration.
In
addition,
major
sources
will
still
need
to
obtain
permits
and
achieve
BACT,
so
there
would
continue
to
be
some
case­
by­
case
review
and
public
participation
under
a
State
planning
framework.

To
satisfy
the
minimum
requirements
of
section
166(
d)

under
the
"
contingent
safe
harbor"
approach,
the
baseline
inventory
selected
for
a
State
planning
program
would
have
to
represent
a
level
that
is
at
least
as
effective
as
the
increments
for
PM
and
SO2.
As
discussed
above,
these
statutory
increments
were
established
as
a
percentage
of
the
NAAQS,
which
are
expressed
as
a
concentration
of
air
pollution.
To
make
a
quantitative
showing
that
the
massbased
emissions
inventory
is
as
effective
as
the
concentration­
based
increments
for
PM
and
SO2,
EPA
or
the
States
(
depending
on
who
establishes
the
inventory)
could
conduct
ambient
air
quality
modeling
to
predict
the
statewide
concentrations
of
NO2
achieved
by
maintaining
the
inventory
of
emissions
at
a
specific
level.
The
EPA
or
the
State
might
then
be
able
to
show
that
the
selected
emissions
178
inventory
will
maintain
NO2
concentrations
within
a
certain
percentage
of
the
ambient
concentrations
of
NO2
as
of
the
applicable
baseline
date
(
or
dates)
in
the
area.
However,

to
the
extent
this
type
of
modeling
is
not
available
or
is
too
resource
intensive,
we
request
comment
on
other
approaches
(
both
qualitative
and
quantitative)
that
we
might
use
to
show
that
maintaining
statewide
emissions
at
a
specific
level
is
at
least
as
effective
as
the
increments
for
PM
and
SO2.

The
statewide
emissions
level
that
is
as
effective
as
the
increments
for
PM
and
SO2
would
represent
the
"
safe
harbor"
under
the
contingent
safe
harbor
interpretation
of
section
166
of
the
Act.
Once
the
safe
harbor
level
is
identified
in
this
manner,
we
would
conduct
further
review
to
determine
whether
it
satisfies
the
requirements
of
section
166(
c)
by
using
the
same
balancing
test
discussed
above.
We
would
use
this
balancing
test
to
determine
whether
an
emissions
level
other
than
the
"
safe
harbor"

level
should
be
maintained
to
protect
air
quality
values,

public
health
and
welfare,
and
parks
and
other
special
areas,
while
also
ensuring
economic
growth
consistent
with
the
preservation
of
existing
clear
air
resources.

(
2)
A
SIP
that
permits
no
increase
in
NOx
above
1990
levels
could
satisfy
section
166
requirements.
To
achieve
both
the
environmental
protection
and
the
economic
growth
goals
of
179
the
PSD
program
in
our
pollutant­
specific
PSD
regulations
for
NOx,
we
propose,
under
this
State
planning
option,
to
establish
a
goal
that
the
State
maintain
an
emissions
inventory
at
the
level
of
NOx
emissions
observed
in
1990.

We
believe
maintaining
emissions
at
this
level
in
most
States
would
prevent
significant
deterioration
and
protect
AQRVs,
health
and
welfare,
and
parks
and
other
special
areas,
while
also
ensuring
economic
growth.
However,
we
also
solicit
comment
on
whether,
under
this
State
planning
option,
we
should
permit
a
State
to
select
a
baseline
year
later
than
1990.

Maintaining
NOx
emissions
at
the
1990
level
would
serve
to
maintain
ecosystem
health
and
provide
protection
for
AQRVs,
health
and
welfare,
and
parks.
In
addition,
such
a
level
of
emissions
would
permit
reasonable
economic
growth
to
continue.

There
are
two
additional
reasons
why
we
propose
a
goal
to
maintain
the
inventory
at
1990
levels.
First,
1990
is
a
year
for
which
we
have
developed
sound
NOx
emissions
inventories
for
all
States
as
a
result
of
our
work
on
the
CAIR
proposal.
In
addition,
1990
levels
would
reflect
a
reasonable
and
conservatively
low
approximation
of
the
existing
PSD
baselines
for
NOx
across
States,
as
explained
below.

Under
the
PSD
regulations
for
NOx
that
EPA
first
180
promulgated
in
1988,
we
established
1988
as
the
trigger
date
for
NOx.
Thus,
the
earliest
that
a
minor
source
baseline
date
could
have
been
triggered
was
in
1988.
Once
the
trigger
date
passed,
minor
source
baseline
dates
for
NOx
were
established
in
specific
PSD
baseline
areas
at
the
time
of
the
first
application
for
a
PSD
permit
by
a
major
source
that
emitted
NOx
in
significant
amounts.
Thus,
the
PSD
baselines
for
NOx
have
been
triggered
across
the
country
at
various
times
from
1988
to
the
present.
Because
these
permit
applications
and
increment
consumption
analyses
have
generally
been
reviewed
by
the
States,
we
do
not
have
specific
data
on
when
baseline
dates
were
triggered
in
each
State.
However,
we
can
assume
that
most
baseline
dates
were
established
in
the
1990s.
Thus,
we
propose
to
conservatively
establish
a
goal
to
maintain
emissions
at
1990
levels
to
ensure
that
this
level
is
generally
not
higher
than
the
emissions
that
occurred
on
the
existing
PSD
baseline
dates
that
were
established
in
the
1990s.
Since
the
increment
system
permits
increases
in
pollutant
concentrations
above
baseline
concentrations,
using
a
1990
emissions
level
would
not
necessarily
allow
more
emissions
than
would
be
permitted
under
an
increment
system
when
the
baseline
concentration
was
established
in
1988.
To
the
extent
that
the
1990
date
allows
emissions
in
a
particular
area
to
increase
over
emissions
on
the
date
the
PSD
baseline
181
was
triggered,
this
would
be
balanced
out
by
other
areas
in
the
State
where
baseline
dates
were
triggered
with
emissions
at
higher
levels
than
in
1990
or
areas
in
which
baselines
have
yet
to
be
established.

(
3)
State
planning
approach
satisfies
ambient
air
quality
review
requirements.
If
we
permit
States
to
employ
a
State
planning
framework
in
lieu
of
increment
to
meet
requirements
of
section
166
for
NOx,
we
believe
it
will
no
longer
be
necessary
for
sources
to
conduct
a
site­
specific
ambient
air
quality
analysis
for
NO2
to
comply
with
the
requirements
of
section
165(
a)(
3)
of
the
Act.
If
there
is
room
under
a
properly
derived
emissions
inventory
for
a
particular
new
or
modified
source,
it
will
already
be
clear
that
the
source
will
not
cause
or
contribute
to
air
pollution
in
excess
of
the
NAAQS.
Before
the
permit
is
evaluated,
EPA
or
the
State
will
have
already
performed
an
ambient
air
quality
analysis
across
the
State
to
show
that
holding
emissions
at
the
chosen
level
is
sufficient
to
prevent
significant
deterioration
or
an
exceedance
of
the
NAAQS.
The
statewide
emissions
level
would
fill
the
role
of
the
increment,
so
section
165(
a)(
3)
would
be
satisfied
without
a
sourcespecific
showing
that
a
source's
proposed
emissions
increase
does
not
cause
or
contribute
to
air
pollution
increases
in
excess
of
the
increment.
The
permit
applicant
would
only
need
to
show
that
there
is
room
in
the
State's
emissions
182
inventory
for
its
emissions.
As
with
the
cap
and
trade
approach
discussed
above,
it
would
become
redundant
and
unnecessarily
costly
to
require
an
individual
source
to
conduct
a
site­
specific
air
quality
analysis
if
EPA
or
the
State
has
already
established
that
maintaining
emissions
at
a
specific
level
does
not
cause
air
pollution
to
exceed
standards
and
meets
the
goals
and
purposes
of
PSD
and
the
requirements
of
section
166.

b.
Using
a
State
planning
approach
to
streamline
the
PSD
permitting
process.

If
a
State
makes
the
necessary
demonstration
under
this
option,
we
would
not
require
the
State
to
implement
some
of
the
existing
PSD
preconstruction
permitting
requirements
for
NOx.
A
source­
specific
ambient
air
quality,
increment,
and
NAAQS
analysis
would
not
be
required,
as
described
in
the
above
subsection.
However,
as
with
the
cap
and
trade
program
option
described
above,
we
do
not
propose
for
this
State
planning
approach
to
replace
all
aspects
of
the
PSD
permitting
process.

All
new
major
stationary
sources
and
major
modifications
would
still
have
to
obtain
a
permit
prior
to
commencing
construction
on
new
projects
that
result
in
a
significant
net
emissions
increase
for
NOx.
These
sources
will
also
have
to
comply
with
emissions
limitations
based
on
BACT.
183
We
request
comment
on
whether
other
elements
of
the
preconstruction
analysis
would
remain
necessary
under
this
approach.
If
a
State
can
maintain
emissions
at
levels
that
prevent
significant
deterioration,
this
might
also
eliminate
the
need
for
source­
specific
FLM
review
in
Class
I
areas.

See
40
CFR
52.21(
p).
As
discussed
above
in
the
cap
and
trade
option,
we
propose
to
interpret
the
Act
not
to
require
this
process
for
NOx
but
to
permit
EPA
in
its
discretion
to
require
the
process,
as
necessary,
to
meet
the
requirements
of
section
166.
To
the
extent
the
State
planning
goal
protects
AQRVs,
this
process
may
not
be
necessary
under
this
option
for
NOx.
We
also
request
comment
on
whether
the
additional
impacts
analysis
(
see
CAA
165(
a)(
6)
and
40
CFR
52.21(
o))
could
be
performed
through
the
State
planning
process
and
then
not
be
required
on
each
individual
permit
application.
Likewise,
we
request
comment
on
whether,
under
this
State
planning
option,
it
is
necessary
to
require
applicants
to
collect
pre­
application
air
quality
monitoring
data
over
a
12­
month
period
preceding
the
submittal
date
of
an
application.
We
believe
that
this
kind
of
data
may
need
to
be
gathered
by
the
States
in
order
to
demonstrate
that
a
SIP
planning
goal
meets
the
PSD
requirements.

c.
What
are
some
issues
that
still
need
to
be
resolved?

EPA
recognizes
certain
significant
issues
that
still
need
to
be
resolved
before
a
comprehensive
proposal
can
be
184
set
forth
for
public
review
and
comment.
These
issues
are
presented
here
for
public
consideration.
The
EPA
will
review
the
comments
submitted
and
present
its
findings
in
a
supplemental
notice
in
the
future
if
the
Agency
intends
to
continue
to
pursue
this
option.

(
1)
Failure
to
show
ongoing
statewide
downward
trend
in
NOx
emissions.
The
EPA
recognizes
that
it
may
not
be
possible
to
show
a
continuing
downward
trend
of
total
NOx
emissions
in
every
State.
Consequently,
in
those
States,
it
may
be
difficult
to
demonstrate
the
use
of
the
State
planning
option
as
a
substitute
for
the
NO2
increment
system.
As
stated
earlier,
it
is
the
obligation
of
the
State
to
demonstrate
that
the
objectives
of
the
statutory
PSD
program
for
NOx
are
being
met,
whether
or
not
NOx
emissions
remain
below
the
baseline
at
the
end
of
a
10­
year
period.

As
part
of
the
demonstration
that
States
must
make
to
support
the
State
planning
option,
the
State
will
have
to
conduct
a
comprehensive
assessment
of
the
likelihood
that
total
statewide
NOx
emissions
will
continue
to
exhibit
a
downward
trend
for
future
years.
The
EPA
believes
that
it
will
be
necessary
for
the
State
to
conduct
periodic
assessments
(
e.
g.,
10­
year
intervals)
of
air
quality
trends
for
NO2
in
order
to
continue
justifying
the
SIP
as
a
substitute
for
an
increment
system
for
preventing
significant
air
quality
deterioration
for
NOx.
The
EPA
185
seeks
comments
on
the
frequency
of
any
necessary
periodic
assessment,
as
well
as
other
possible
mechanisms
for
determining
when
adjustments
may
need
to
be
made
to
a
SIP
that
does
not
employ
an
NO2
increment
system
to
prevent
significant
air
quality
deterioration
from
NOx
emissions.

(
2)
Potential
for
localized
adverse
impacts
resulting
from
emissions
increases
from
new
and
modified
sources.
We
recognize
the
possibility
under
this
proposed
option
that
sources
may
have
potentially
adverse
localized
impacts
even
when
fulfilling
statewide
NOx
emissions
requirements.
A
related
concern
arises
if
not
all
source
categories
are
subject
to
the
statewide
NOx
emissions
requirements
under
this
option.

Thus,
while
we
are
tentatively
considering
allowing
States
to
avoid
the
need
under
their
PSD
rules
to
require
case­
by­
case
source
impact
analyses
(
including
the
process
of
involving
FLMs)
under
the
preconstruction
review
for
PSD,

we
are
at
the
same
time
soliciting
comments
on
the
extent
to
which
the
possibility
of
localized
adverse
impacts,

especially
near
Class
I
areas,
represents
a
potential
problem
under
the
State
planning
approach,
and
what
possible
options
may
exist
for
addressing
such
problem.

(
3)
Additional
measures
under
a
SIP.
We
believe
the
SIP
under
the
State
planning
option
will
have
to
include
additional
measures
toward
NOx
emissions
control
and/
or
a
186
fall­
back
increments
program.
A
backstop
for
the
State
planning
option
might
involve
a
margin
of
progress.
The
SIP
would
contain
provisions
for
additional
reductions
or
NO2
increments
if
the
margin
of
progress
is
exceeded.
For
example,
if
a
State's
NOx
emissions
rate
(
tons
per
year)

increases
such
that
it
is
within
5
percent
of
the
baseline
rate,
then
the
State
would
be
obliged
to
employ
the
additional
measures
in
its
SIP
to
correct
its
NOx
emissions.

We
solicit
comment
on
whether
States
under
option
3
should
be
required
to
continue
to
track
NO2
increment
for
new
and
modified
sources.

VII.
Other
Alternative
Considered
EPA
is
not
proposing
to
utilize
"
critical
load"
as
the
basis
for
a
regulatory
measure
for
prevention
of
significant
deterioration
for
NOx
at
this
time,
given
that
the
science
is
still
being
developed
for
the
concept.

The
National
Park
Service
(
NPS)
has
been
focusing
on
the
concept
of
a
"
critical
load"
to
assess
the
risk
to
park
ecosystems
from
atmospheric
deposition.
Critical
loads
can
be
defined
as
"
quantitative
estimates
of
an
exposure
to
one
or
more
pollutants
below
which
significant
harmful
effects
on
specified
sensitive
elements
of
the
environment
do
not
occur
according
to
present
knowledge"
(
1995
SP
at
xi­
xii).

In
its
1995
report
titled,
"
Acid
Deposition
Standard
Feasibility
Study:
Report
to
Congress,"
EPA
noted
that
187
critical
loads
had
been
developed
in
other
countries
and
that,
in
the
U.
S.,
several
States
had
developed
critical
loads
for
acid
deposition,
expressed
as
deposition
rates
for
sulfur.
Only
in
California
had
critical
loads
been
established
for
nitrogen
as
recommendations
to
protect
certain
sensitive
California
resources
(
1995
SP
at
53­
55).

Ecosystems
research
over
the
last
few
decades
has
produced
findings
that
may
be
sufficient
to
identify
changes
to
sensitive
elements
of
the
environment
resulting
from
exposure
to
atmospheric
nitrogen
in
its
various
forms.
In
some
cases,
the
available
scientific
literature
has
indicated
the
possibility
of
estimating
levels
of
exposure
at
which
a
particular
adverse
impact
will
result.

For
exposure
to
nitrogen,
deposition
critical
load
determinations
are
based
on
indicators
of
harmful
ecological
change
that
include
episodic
and
chronic
acidification
of
streams
and
rivers,
chemical
changes
in
soils
and
vegetation,
nutrient
enrichment
and
eutrophication,
and
shifts
in
plant
species
composition.
A
more
detailed
description
of
these
types
of
adverse
effects
is
contained
in
section
V
of
this
preamble.
Nitrogen
critical
load
thresholds
are
expressed
in
kilograms
or
equivalents
of
nitrogen
deposited
per
hectare
per
year.
Federal
Land
Managers
are
beginning
to
evaluate
the
European
approach
for
ecosystem
assessment
that
uses
the
concept
of
critical
188
loads.

Nitrogen
impacts
have
been
documented
in
areas
ranging
from
East
Coast
estuaries
to
southern
California
chaparral
communities.
These
impacts
are
found
in
diverse
ecological
communities
ranging
from
fisheries
to
grasslands
to
lichens.

At
a
given
location,
different
critical
loads
can
be
developed
for
different
ecosystem
changes
(
e.
g.,
the
loading
at
which
episodic
acidification
begins
to
occur
may
be
different
than
the
loading
at
which
plant
species
shifts
occur
in
the
same
area).

VIII.
Statutory
and
Executive
Order
Reviews
A.
Executive
Order
12866
­
Regulatory
Planning
and
Review
Under
Executive
Order
12866
(
58
FR
51735,
October
4,

1993),
the
Agency
must
determine
whether
the
regulatory
action
is
"
significant"
and
therefore
subject
to
review
by
the
Office
of
Management
and
Budget
(
OMB)
and
the
requirements
of
the
Executive
Order.
The
Order
defines
"
significant
regulatory
action"
as
one
that
is
likely
to
result
in
a
rule
that
may:

(
1)
have
an
annual
effect
on
the
economy
of
$
100
million
or
more
or
adversely
affect
in
a
material
way
the
economy,
a
sector
of
the
economy,
productivity,
competition,

jobs,
the
environment,
public
health
or
safety,
or
State,

local,
or
tribal
governments
or
communities;

(
2)
create
a
serious
inconsistency
or
otherwise
189
interfere
with
an
action
taken
or
planned
by
another
agency;

(
3)
materially
alter
the
budgetary
impact
of
entitlements,
grants,
user
fees,
or
loan
programs,
or
the
rights
and
obligations
of
recipients
thereof;
or
(
4)
raise
novel
legal
or
policy
issues
arising
out
of
legal
mandates,
the
President's
priorities,
or
the
principles
set
forth
in
the
Executive
Order.

Pursuant
to
the
terms
of
Executive
Order
12866,
it
has
been
determined
that
this
rule
is
a
"
significant
regulatory
action"
because
.
As
such,

this
action
was
submitted
to
OMB
for
review.
Changes
made
in
response
to
OMB
suggestions
or
recommendations
will
be
documented
in
the
public
record.

B.
Paperwork
Reduction
Act
This
action
does
not
impose
any
new
information
collection
burden.
Under
the
proposed
action,
one
option
is
to
retain
the
existing
increments
and
regulatory
framework
of
the
PSD
regulations
for
NOx
will
be
retained.
Another
option
is
to
implement
a
cap
and
trade
program
to
manage
NOx
emissions
that
are
already
being
controlled
through
other
rulemakings.
A
third
option
is
to
utilize
a
State
planning
approach
to
manage
NOx
emissions
that
are
already
being
controlled
by
individual
States.
If
the
proposed
action
results
in
our
retaining
the
existing
increments
program,

the
Office
of
Management
and
Budget
(
OMB)
has
previously
190
approved
the
information
collection
requirements
contained
in
the
existing
regulations
(
40
CFR
parts
51
and
52)
under
the
provisions
of
the
Paperwork
Reduction
Act,
44
U.
S.
C.

3501,
et
seq.,
and
has
assigned
OMB
control
number
2060­

0003,
EPA
ICR
number
1230.11.
A
copy
of
the
OMB­
approved
Information
Collection
Request
(
ICR)
may
be
obtained
from
Susan
Auby,
Collection
Strategies
Division,
U.
S.

Environmental
Protection
Agency
(
2822T),
1200
Pennsylvania
Ave.,
NW,
Washington,
DC
20460,
or
by
calling
(
202)
566­

1672.
If
the
proposed
action
results
in
our
adopting
the
second
or
third
options,
then
we
will
be
publishing
a
supplemental
notice
and
will
at
that
time
identify
changes
in
information
collection
requirements.

Burden
means
the
total
time,
effort,
or
financial
resources
expended
by
persons
to
generate,
maintain,
retain,

or
disclose
or
provide
information
to
or
for
a
Federal
agency.
This
includes
the
time
needed
to
review
instructions;
develop,
acquire,
install,
and
utilize
technology
and
systems
for
the
purposes
of
collecting,

validating,
and
verifying
information,
processing
and
maintaining
information,
and
disclosing
and
providing
information;
adjust
the
existing
ways
to
comply
with
any
previously
applicable
instructions
and
requirements;
train
personnel
to
be
able
to
respond
to
a
collection
of
information;
search
data
sources;
complete
and
review
the
191
collection
of
information;
and
transmit
or
otherwise
disclose
the
information.

An
agency
may
not
conduct
or
sponsor,
and
a
person
is
not
required
to
respond
to
a
collection
of
information
unless
it
displays
a
currently
valid
OMB
control
number.

The
OMB
control
numbers
for
EPA's
regulations
in
40
CFR
are
listed
in
40
CFR
part
9.

C.
Regulatory
Flexibility
Act
(
RFA)

The
Regulatory
Flexibility
Act
(
RFA)
generally
requires
an
agency
to
prepare
a
regulatory
flexibility
analysis
of
any
rule
subject
to
notice
and
comment
rulemaking
requirements
under
the
Administrative
Procedure
Act
or
any
other
statute
unless
the
agency
certifies
that
the
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
Small
entities
include
small
businesses,
small
organizations,
and
small
governmental
jurisdictions.

For
purposes
of
assessing
the
impacts
of
today's
proposed
rule
on
small
entities,
small
entity
is
defined
as:

(
1)
a
small
business
as
defined
by
the
Small
Business
Administration's
(
SBA)
regulations
at
13
CFR
121.201;
(
2)
a
small
governmental
jurisdiction
that
is
a
government
of
a
city,
county,
town,
school
district
or
special
district
with
a
population
of
less
than
50,000;
or
(
3)
a
small
organization
that
is
any
not­
for­
profit
enterprise
which
is
192
independently
owned
and
operated
and
is
not
dominant
in
its
field.

After
considering
the
economic
impacts
of
today's
proposed
rule
on
small
entities,
I
certify
that
this
action
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
This
proposed
rule
will
not
impose
any
requirements
on
small
entities
and
in
fact
may
relieve
them
of
certain
permit­
related
expenses.
We
continue
to
be
interested
in
the
potential
impacts
of
the
proposed
rule
on
small
entities
and
welcome
comments
on
issues
related
to
such
impacts.

D.
Unfunded
Mandates
Reform
Act
Title
II
of
the
Unfunded
Mandates
Reform
Act
of
1995
(
UMRA),
P.
L.
104­
4,
establishes
requirements
for
Federal
agencies
to
assess
the
effects
of
their
regulatory
actions
on
State,
local,
and
tribal
governments
and
the
private
sector.
Under
section
202
of
the
UMRA,
EPA
generally
must
prepare
a
written
statement,
including
a
cost­
benefit
analysis,
for
proposed
and
final
rules
with
"
Federal
mandates"
that
may
result
in
expenditures
to
State,
local,

and
tribal
governments,
in
the
aggregate,
or
to
the
private
sector,
of
$
100
million
or
more
in
any
one
year.
Before
promulgating
an
EPA
rule
for
which
a
written
statement
is
needed,
section
205
of
the
UMRA
generally
requires
EPA
to
identify
and
consider
a
reasonable
number
of
regulatory
193
alternatives
and
adopt
the
least
costly,
most
costeffective
or
least
burdensome
alternative
that
achieves
the
objectives
of
the
rule.
The
provisions
of
section
205
do
not
apply
when
they
are
inconsistent
with
applicable
law.

Moreover,
section
205
allows
EPA
to
adopt
an
alternative
other
than
the
least
costly,
most
cost­
effective,
or
least
burdensome
alternative
if
the
Administrator
publishes
with
the
final
rule
an
explanation
why
that
alternative
was
not
adopted.
Before
EPA
establishes
any
regulatory
requirements
that
may
significantly
or
uniquely
affect
small
governments,

including
tribal
governments,
it
must
have
developed
under
section
203
of
the
UMRA
a
small
government
agency
plan.
The
plan
must
provide
for
notifying
potentially
affected
small
governments,
enabling
officials
of
affected
small
governments
to
have
meaningful
and
timely
input
in
the
development
of
EPA
regulatory
proposals
with
significant
Federal
intergovernmental
mandates,
and
informing,

educating,
and
advising
small
governments
on
compliance
with
the
regulatory
requirements.

Today's
action
contains
no
Federal
mandates
(
under
the
regulatory
provisions
of
Title
II
of
the
UMRA)
for
State,

local,
or
tribal
governments
or
the
private
sector.
The
proposed
rule
imposes
no
enforceable
duty
on
any
State,

local
or
tribal
governments
or
the
private
sector.
In
any
event,
EPA
has
determined
that
this
proposed
rule
does
not
194
contain
a
Federal
mandate
that
may
result
in
expenditures
of
$
100
million
or
more
for
State,
local,
and
tribal
governments,
in
the
aggregate,
or
in
the
private
sector
in
any
one
year.
Thus,
today's
proposed
rule
is
not
subject
to
the
requirements
of
sections
202
and
205
of
the
UMRA.

E.
Executive
Order
13132
­
Federalism
Executive
Order
13132,
entitled
"
Federalism"
(
64
FR
43255,
August
10,
1999),
requires
EPA
to
develop
an
accountable
process
to
ensure
"
meaningful
and
timely
input
by
State
and
local
officials
in
the
development
of
regulatory
policies
that
have
federalism
implications."

"
Policies
that
have
federalism
implications"
is
defined
in
the
Executive
Order
to
include
regulations
that
have
"
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,

or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government."

This
proposed
rule
does
not
have
federalism
implications.
This
proposed
rule
will
not
have
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,
or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government,
as
specified
in
Executive
Order
13132.

If
the
existing
regulations
for
increments
are
retained,
no
new
regulatory
restrictions
will
be
imposed.
If
today's
195
proposed
action
instead
results
in
adoption
of
a
cap
and
trade
program
or
other
State
planning
option,
such
program
will
be
based
on
compliance
with
other
rulemakings.
Direct
compliance
costs
associated
with
today's
proposed
action
could
be
incurred
when
States
incorporate
any
required
changes
into
their
State
implementation
plans,
but
these
direct
compliance
costs
would
not
be
significant.
Thus,

Executive
Order
13132
does
not
apply
to
this
proposed
rule.

In
the
spirit
of
Executive
Order
13132,
and
consistent
with
EPA
policy
to
promote
communications
between
EPA
and
State
and
local
governments,
EPA
specifically
solicits
comment
on
this
proposed
rule
from
State
and
local
officials.

F.
Executive
Order
13175
­
Consultation
and
Coordination
with
Indian
Tribal
Governments
Executive
Order
13175,
entitled
"
Consultation
and
Coordination
with
Indian
Tribal
Governments"
(
65
FR
67249,

November
9,
2000),
requires
EPA
to
develop
an
accountable
process
to
ensure
"
meaningful
and
timely
input
by
tribal
officials
in
the
development
of
regulatory
policies
that
have
tribal
implications."
This
proposed
rule
does
not
have
tribal
implications,
as
specified
in
Executive
Order
13175.

The
proposed
action,
whether
to
retain
existing
regulations
or
to
claim
benefit
from
emission
reductions
pursuant
to
other
rulemakings,
does
not
impose
any
new
regulatory
restrictions.
Thus,
Executive
Order
13175
does
not
apply
to
196
this
proposed
rule.
The
EPA
specifically
solicits
additional
comment
on
the
proposed
rule
from
tribal
officials.

G.
Executive
Order
13045
­
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks
Executive
Order
13045,
"
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks"
(
62
FR
19885,

April
23,
1997),
applies
to
any
rule
that:
(
1)
is
"
economically
significant"
as
defined
under
Executive
Order
12866;
and
(
2)
concerns
an
environmental
health
or
safety
risk
that
EPA
has
reason
to
believe
may
have
a
disproportionate
effect
on
children.
If
the
regulatory
action
meets
both
criteria,
the
Agency
must
evaluate
the
environmental
health
or
safety
effects
of
the
planned
rule
on
children
and
explain
why
the
planned
regulation
is
preferable
to
other
potentially
effective
and
reasonably
feasible
alternatives
considered
by
the
Agency.

This
proposed
rule
is
not
subject
to
the
Executive
Order
because
it
is
not
economically
significant
as
defined
in
Executive
Order
12866,
and
because
the
Agency
does
not
have
reason
to
believe
the
environmental
health
or
safety
risks
addressed
by
this
action
present
a
disproportionate
risk
to
children.
The
proposed
action
does
not
impose
any
new
regulatory
restrictions.
The
public
is
invited
to
submit
or
identify
peer­
reviewed
studies
and
data,
of
which
197
the
agency
may
not
be
aware,
that
assessed
results
of
early
life
exposure
to
NOx.

H.
Executive
Order
13211
­
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use
This
proposed
rule
is
not
a
"
significant
energy
action"

as
defined
in
Executive
Order
13211,
"
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,

Distribution,
or
Use"
(
66
FR
28355,
May
22,
2001),
because
it
is
not
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy.
Any
regulatory
restrictions
from
which
the
proposed
action
claims
benefit
would
be
imposed
by
rulemakings
other
than
the
proposed
action.

I.
National
Technology
Transfer
and
Advancement
Act
of
1995
Section
12(
d)
of
the
National
Technology
Transfer
and
Advancement
Act
of
1995
("
NTTAA"),
P.
L.
104­
113,
12(
d)
(
15
U.
S.
C.
272
note),
directs
EPA
to
use
voluntary
consensus
standards
in
its
regulatory
activities
unless
to
do
so
would
be
inconsistent
with
applicable
law
or
otherwise
impractical.

Voluntary
consensus
standards
are
technical
standards
(
e.
g.,
materials
specifications,
test
methods,
sampling
procedures,
and
business
practices)
that
are
developed
or
adopted
by
voluntary
consensus
standards
bodies.
The
NTTAA
PSD
for
NOx
 
Page
198
of
201
198
directs
EPA
to
provide
Congress,
through
OMB,
explanations
when
the
Agency
decides
not
to
use
available
and
applicable
voluntary
consensus
standards.
This
proposed
rule
does
not
involve
technical
standards.
Therefore,
EPA
is
not
considering
the
use
of
any
voluntary
consensus
standards.

The
EPA
welcomes
comments
on
this
aspect
of
the
proposed
rulemaking
and
specifically
invites
the
public
to
identify
potentially
applicable
voluntary
consensus
standards
and
to
explain
why
such
standards
should
be
used
in
this
regulation.

List
of
Subjects
in
40
CFR
Parts
51
and
52
Environmental
protection,
Administrative
practices
and
procedures,
Air
pollution
control,
Intergovernmental
relations,
nitrogen
oxides,
Ozone,
Particulate
Matter,

Reporting
and
recordkeeping
requirements.

Dated:

Stephen
L.
Johnson,
Acting
Administrator.

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