John Silvasi USEPA OAQPS

1. 8-Hour Ozone NAAQS Implementation(This presentation is based on the version of the proposed rule that has been signed by the Administrator. This has not been reviewed by EPA management.) John Silvasi USEPA OAQPS draft June 13, 2003

2. Counties violating the 8-hr ozone NAAQS 1999-2001 1999-2001 Data

3. CHRONOLOGY • 7/18/97 – Final NAAQS for O3 & PM published • Nov 1998 – Draft Planning Guidance—provided for implementation under less prescriptive subpart 1 (CAA) (OMB reviewed/commented on draft) • May 1999 – US Court of Appeals in DC ruled against NAAQS and implementation approach • Feb. 2001 – US Supreme Court • Upheld NAAQS • Ruled against EPA implementation approach • Ruled EPA can’t ignore CAA subpart 2 provisions (more prescriptive than subpart 1)

4. CHRONOLOGY • March 2002 –US Court of Appeals in DC upheld NAAQS • Since Supreme Court ruling, EPA– • Developed numerous internal options for how to implement 8-hr O3 NAAQS to meet Supreme Court ruling and still provide some flexibility as we originally desired. • Held 3 public meetings on major issues with selected best options at the time • Developed draft proposed rulemaking • Next step: propose rule early 2003.

5. Timelines for 8-Hour Ozone and PM2.5Implementation Programs • Activity timelines merging in the future … *Early action compact areas would receive deferred effective date

6. PRINCIPLES FOR DEVELOPING PROPOSED APPROACH • Incentives for expeditious attainment of 8-hour standard • Reasonable attainment deadlines • Basic, straightforward structure–communicated easily • Consistent with CAA and Supreme Court decision • Provide flexibility to states • Emphasize national and regional measures; reduce the need for more expensive local controls • Smooth transition from 1-hr O3 NAAQS to 8-hr O3 NAAQS

8. Topics for the rule include…. • Area classification approaches …what subpart to use • Attainment dates • Transition from 1-hr to 8-hr NAAQS • Anti-backsliding • Flexibility vs mandatory controls • Ozone transport issues • Modeling & attainment demonstrations • Reasonable further progress requirements • Reasonably available control measures/technology • Conformity • New Source Review • Optimizing for O3 and PM • Tribal issues

9. RECONCILING SUBPARTS 1 AND 2; CLASSIFICATION AND ATTAINMENT DATES • Option 1–Classify 8-hr nonattainment areas based on 8-hr ozone (O3) design values • Uses 8-hr design values–more accurately reflects the magnitude of the 8-hour ozone problem • All 8-hr nonattainment areas would be classified under subpart 2. In general, areas classified under subpart 2 would need to meet subpart 2 requirements for their classification level and would have attainment dates in subpart 2 • Requires a regulatory change of subpart 2's classification table to reflect 8-hr rather than 1-hour design value thresholds. • Thresholds for each classification (e.g., moderate, serious, etc.) would be the same percentage above the 8-hour standard as the current statutory thresholds are above the 1-hour standard.

10. **For 8-hr ozone standard, EPA proposing to interpret the maximum period for attainment starting from date of designation.

11. RECONCILING SUBPARTS 1 AND 2; CLASSIFICATION AND ATTAINMENT DATE—cont’d • Option 2 – 2-step approach(EPA’s preferred option) • Step 1: Separate areas into two groups based on whether their 1-hour design value would require them to be placed in subpart 2. • Group 1 < 0.121 ppm • Group 2 $ 0.121 ppm • Step 2: Classify areas. Group 1 areas (generally, those meeting the 1-hour standard), would be regulated under subpart 1. For these areas, EPA could develop a classification scheme (see issue below). Group 2 areas would receive subpart 2 classifications according to their 8-hr ozone design value. • Would result in over half of the hypothetical nonattainment areas being covered by subpart 1 (with less specific SIP requirements). • Attainment dates for subpart 1 areas—AEAP but no later than 5 yrs from designation; can obtain add’l 5 year extension

12. RECONCILING SUBPARTS 1 AND 2; CLASSIFICATION AND ATTAINMENT DATE—cont’d • Proposed Incentive Feature–applicable to either classification option. • Allows an area to qualify for a lower classification by demonstrating it will meet the attainment date of the lower classification (through national or local measures) • Could be done via EPA regional/national modeling or a State’s demonstration using EPA-approved modeling (but taking comment on whether regional-scale modeling is appropriate for this purpose) • Would solicit comment on whether the demonstration would have to be done prior to initial classification or whether it could be submitted afterward, in which case EPA would reclassify the area.

13. These hypothetical nonattainment areas do not reflect–nor are they intended to prejudge–8-hour ozone non-attainment areas. The names and boundaries for the 8-hour non-attainment areas have not yet been determined. These hypothetical areas were developed to help compare the possible results of various classification options under consideration in implementing the 8-hour standard. • The hypothetical areas are the larger of C/MSAs or 1-hour nonattainment areas except for the Los Angeles CMSA, which is divided into three 1-hour nonattainment areas. • Violating counties adjacent to a nonattaining C/MSA were included in that hypothetical area. • If a violating county is adjacent to a C/MSA without a monitored violation, the C/MSA and the violating county were combined into the hypothetical nonattainment area. • Air quality data is based on the period 1998-2000, except in cases of incomplete recent data. The design value for the area is based on the monitor with the highest design value in the area. • A hypothetical nonattainment area may contain several 1-hour nonattainment/maintenance areas.

14. RECONCILING SUBPARTS 1 AND 2; CLASSIFICATION AND ATTAINMENT DATE—cont’d • Classification of Subpart 1 areas • Preferred Option–No classification program. • Would consider an overwhelming transport classification on a case-by-case basis • Would allow more time to fully attain due to transport.

15. 1-Year Attainment Date Extensions • Both subpart 1 and subpart 2 provide for two 1-year attainment date extensions for areas in limited circumstances where they do not attain by their attainment date. • Section 172(a)(2)(C) under subpart 1—area must have complied with all requirements in SIP, and no more than a minimal number of exceedances of the relevant NAAQS • Section 181(a)(5) under subpart 2–similar provision, but provides for only one exceedance of the standard in the year preceding the extension year.

16. 1-Year Attainment Date Extensions • 8-hour standard is a concentration standard, not an exceedance form, so EPA needs to interpret provision. • EPA would apply the subpart 1 test, i.e., whether there was a minimal number of exceedances. • For both subparts, EPA proposes that the area would be eligible for the first of the 1-year extensions under the 8-hour standard if, for the attainment year, the area’s 4th highest daily 8-hour average is 0.084 ppm or less. • An area that has received the first of the 1-year extensions under the 8-hour standard would be eligible for the second extension if the area’s 4th highest daily 8-hour value, averaged over both the original attainment year and the first extension year, is 0.084 ppm or less.

17. Transition/Anti-Backsliding–Areas Designated Nonattainment under the 8-hour Standard–Background • Section 110(l) – EPA may not approve a SIP revision if it interferes with any applicable requirement concerning attainment and reasonable further progress or any other requirement of the CAA • Section 193 – prohibits modification of control requirements in an implementation plan in effect before 11/15/90 unless such a modification would ensure equivalent or greater emissions reductions.

18. Transition/Anti-Backsliding–Areas Designated Nonattainment under the 8-hour Standard—Background (cont’d) • In addition, 1991 designations for pre-CAAA nonattainment areas and classifications for all 1-hour ozone nonattainment areas were “by operation of law,” so the requirements that apply (by virtue of that) would continue to apply (e.g., for an area whose 1-hr classification is higher than its 8-hr classification).

19. Transition/Anti-Backsliding–Areas Designated Nonattainment under the 8-hour Standard—Background (cont’d) • Section 172(e) applies when EPA revises a NAAQS and makes it less stringent. • Specifies that States cannot relax or avoid control obligations that apply in nonattainment area SIPs. • Because Congress specifically mandated that such control measures need to be adopted or retained even when EPA relaxes a standard, EPA believes that Congress did not intend to permit States to remove control measures when EPA revises a standard to make it more stringent.

20. Transition from 1-hour to 8-hour Standard–Ensuring Continued Momentum in States’ Efforts Toward Cleaner Air • Discusses which obligations would remain in effect for areas designated nonattainment under the 1-hour ozone NAAQS. • Proposes two alternatives for revoking the 1-hour ozone standard: revocation in whole and revocation in part.

21. Transition/Anti-Backsliding–Areas Designated Nonattainment under the 8-hour Standard–Proposal • All areas designated 8-hr nonattainment remain subject to certain obligations that applied by virtue of the area’s classification for the 1-hour standard (e.g., where the area’s 1-hour classification was higher than classification for the 8-hour standard) • Subpart 2 obligations include major source thresholds, inspection/maintenance programs and fuel programs. • NOx SIP call requirements would also be retained under EPA proposal. • Obligations would not apply to portions of an 8-hour ozone nonattainment area that was not a part of a 1-hour ozone nonattainment area. • EPA is soliciting comment on: Should areas that have not met a 1-hour planning obligation (e.g., attainment demonstration or ROP plan) remain subject to that obligation? (e.g., due to past failure or a recent bump-up)

22. Transition/Anti-Backsliding–Areas Designated Attainment under the 8-hour Standard–Proposal • Would not remain subject to the nonattainment NSR offset and major source thresholds that applied due to their classification for the 1 hour standard. • Control obligations that applied by virtue of the area’s 1-hour classification would remain. • Obligated to submit a maintenance plan under section 110(a)(1). • Not required to meet outstanding attainment demonstration and ROP requirements, if they remain in attainment. If area violates 8-hour standard and does not have an approved maintenance plan for the 8-hour standard under section 110(a)(1), those obligations will once again apply.

23. Transition/Anti-Backsliding–Areas Designated Attainment under the 8-hour Standard–Proposal (cont’d) • Need contingency measures in their section 110(a)(1) maintenance plans but not under section 175A – these contingency measures need not include an obligation to implement all control obligations in the previously approved SIP. • All areas designated attainment for the 8-hour ozone NAAQS–requirement to demonstrate conformity to the 1-hour standard would no longer apply once the 1-hour standard is revoked or determined not to apply for that purpose.

24. Transition/Anti-Backsliding –Concerning the NOx SIP Call –Proposal • States must continue to adhere to the emission budgets established by the NOx SIP Call after the 1-hour standard is revoked in whole or in part. • EPA not proposing to revoke or modify its section 126 regulation.

25. Transition/Anti-Backsliding–Obligations under Part D of Title I of the CAA that Cease after Revocation of 1-hour Standard–Proposal • Areas would not be obligated to continue to demonstrate conformity for the 1-hour standard once the 1-year grace period for application of conformity for the 8-hour standard has elapsed. • EPA would no longer make findings of failure to attain the 1-hour standard and, therefore, also would not reclassify areas to a higher classification for the 1-hour standard based on a failure to meet the 1-hour standard.

26. Transition/Anti-Backsliding–Duration of Obligations under the 1-hour Standard–Proposal • These measures would not expire. • Two options for when the State may relegate these measures to contingency measures: • Option 1. When the area achieves the level of the 1-hour ozone standard (even if the area has not yet attained the 8-hour standard). • Option 2. When the area attains the 8-hour standard and is designated attainment (regardless of when, if ever, the area attains the 1-hour standard).

27. Transition/Anti-Backsliding–Mechanism to Effect the Transition from the 1-hour to the 8-hour Standard–Background • 40 CFR 50.9(b) currently (but being stayed due to litigation)–1-hour standard revoked after • All litigation on the 8-hour ozone standard is completed and • EPA determines that an area has air quality meeting the 1-hour standard. • EPA reconsidering this approach. • Transportation conformity and ensuring continued implementation of the 1-hour program are the most significant issues regarding the timeframe for phasing out the 1-hour ozone standard.

28. Transition/Anti-Backsliding–Mechanism to Effect the Transition from the 1-hour to the 8-hour Standard • Proposing 2 mechanisms • For both mechanisms, EPA is proposing that the revocation of the 1-hour standard would occur 1 year following designations for the 8-hour NAAQS. • Option 1: Complete revocation of the 1-hour standard. • Option 2: Partial revocation of 1-hour standard. • Both mechanisms are designed to accomplish the same policy ends (ensure continued applicability of subpart 2 requirements and ensure continued air quality improvement, while shifting focus toward implementation of the 8-hour standard).

29. Transition/Anti-Backsliding–Mechanism to Effect the Transition from the 1-hour to the 8-hour Standard Option 1: Complete revocation of the 1-hour standard (our preferred option) • EPA would revoke the 1-hour standard and the associated designations and classifications 1 year following the effective date of the designations for the 8-hour NAAQS. • Anti-backsliding provisions would still apply.

30. Transition/Anti-Backsliding–Mechanism to Effect the Transition from the 1-hour to the 8-hour Standard Option 2: Partial revocation of 1-hour standard. • EPA would retain the 1-hour standard and its associated designations and classifications for limited purposes (those discussed above under anti-backsliding) until the area meets the 1-hour standard. • Obligations include subpart 2 requirements, including major source thresholds, inspection/maintenance programs and fuel programs, plus NOx SIP call requirements. • For all remaining purposes, EPA would revoke the 1-hour standard and the associated designations and classifications 1 year after the effective date of designations for the 8-hour standard.

31. FLEXIBILITY FOR PRESCRIBED REQUIREMENTS OF SUBPART 2 • EPA may have some limited ability to change or limit subpart 2 controls, consistent with the statutory language, but EPA cannot broadly waive those requirements. • Also, case law may provide EPA with some flexibility to waive federally applicable requirements on a case-by-case basis where application of these requirements would produce an “absurd result.”

32. FLEXIBILITY FOR PRESCRIBED REQUIREMENTS OF SUBPART 2—cont’d • We would propose that subpart 2 requirements would apply to all areas covered under subpart 2 consistent with the area’s classification. • We also propose to consider allowing case-by-case waivers of specific subpart 2 requirements when sufficient evidence is presented that absurd results would occur if an area were subject to a specific subpart 2 requirement

33. Ozone Transport • We intend to investigate the extent, severity and sources of interstate ozone transport that will exist after the NOx SIP Call and the Section 126 rule are implemented in 2004. • The Agency believes that any additional requirements for reducing the transport of ozone or ozone precursors should be considered along with the need to reduce interstate pollution transport that contributes to unhealthy levels of PM2.5 in downwind areas. • Under this approach, any additional reduction in ozone transport would be accomplished through legislation such as Clear Skies or through a separate rulemaking, not through the 8-hour ozone implementation rule.

34. Modeling & Attainment Demonstration • An attainment demonstration SIP consists of • Technical analyses to locate and identify sources of emissions that are causing violations within nonattainment areas, • Adopted measures with schedules for implementation, • Commitment in some cases, to perform a mid-course review, and • Contingency measures to cover emissions shortfalls in RFP plans and failures to attain.

35. Modeling & Attainment Demonstration • Multi-pollutant assessments (one-atmosphere modeling) • Many factors affecting formation and transport of secondary fine particles (i.e., PM2.5 components) are the same as those affecting formation and transport of ozone. • EPA taking comment on whether or not ozone attainment demonstrations should include multi-pollutant assessments.

36. Modeling & Attainment Demonstration • Areas with early attainment dates • Section 182(a) does not require (marginal) areas with early attainment dates (within 3 years after designation) to perform photochemical grid modeling, • EPA is proposing to allow such areas to rely on existing modeling

37. Modeling & Attainment Demonstration • Areas with later attainment dates • Areas with attainment dates more than 3 years after designation would be required to do an attainment demonstration SIP. • Local, regional and national modeling developed to support Federal or local controls may be used provided the modeling is consistent with EPA’s modeling guidance.

38. REASONABLE FURTHER PROGRESS • RFP is the CAA requirement to phase in emission reductions from the time of SIP development to the attainment date. • Subpart 1 contains a more general requirement “. . . annual incremental reductions in emissions . . . for the purpose of ensuring attainment . . . by the applicable date.” • Subpart 2, provides much more specificity regarding the base year emission inventory upon which reasonable further progress was to be planned for and implemented, the increments of emission reductions required over which time periods, and the process for determining whether the RFP milestones were achieved.

39. REASONABLE FURTHER PROGRESS (cont’d) • FR will cover several issues; • Requirement for 15% VOC reductions in first 6 years • Baseline year for starting (2002) • Moderate areas—timing of ROP reductions relative to attainment date • Timing of submission of ROP plan • CAA requirements for creditability of control measures • Subpart 1 RFP • Cases where 8-hr NA area encompasses & is larger than current 1-hr NA area

40. REASONABLE FURTHER PROGRESS Issue 1 • RFP issue 1–for subpart 2 areas, should VOC emission reductions alone be required for the initial 15 percent progress period? • Option 1. Continue to require 15 percent VOC reductions within 6 years of base year from all moderate and above 8-hour ozone nonattainment areas. After 6 years, all areas classified serious or above would be required to achieve a 9 percent reduction every 3 years via combined VOC/NOx emissions, i.e., an avg. of 3 percent per year. • Option 2.(Preferred approach) Exempt areas that have approved 15 percent plans under the 1-hour ozone standard from an additional 15 percent VOC-only requirement. Moderate areas are held to RFP under subpart 1 (see 2 options below). (Serious and above areas would need to do 3% per year NOx/VOC ROP from 2002)

41. REASONABLE FURTHER PROGRESS Issue 1 Option 1 (cont’d) • Moderate areas only: • 1st 6 years: 2002 (base year) to 2008—15% VOC reduction (period would run from the last day of the base year (12/31/02)) • “Subpart 1” RFP from 2008 to 2010 attainment date • Serious & above areas: from 2008 to attainment: • 15% ROP SIP: 1st 6 years: 2002 (base year) to 2008—15% VOC reduction (period would run from the last day of the base year (12/31/02))—due 2 years after designation • 9% VOC and/or NOx reductions every three years. • Plans for post-15% ROP due 3 years after designation.

42. REASONABLE FURTHER PROGRESSIssue 2 • Baseline year • Proposing 2002 • 2002 emission inventory would be available at the time of designation (2004). • EPA issued recent memorandum on this.

43. REASONABLE FURTHER PROGRESSIssue 3 • Timing of ROP reductions relative to attainment date • For areas moderate and higher, the 15 percent reduction would run from the last day of the base year (12/31/02) through 2008. (Some moderate areas may need to do RFP under subpart 1) • Moderate areas would be required to meet attainment around April 2010 (i.e., 6 years after the area is designated nonattainment). • This leaves a gap between the end of the 6-year period for the ROP requirement and the attainment date. Subpart 1 RFP (see issue below) would apply from end of 2008 to 2010 attainment date.

44. REASONABLE FURTHER PROGRESSIssue 3 • Serious & above areas from end of 2008 to attainment date • Need to provide 9% VOC and/or NOx emission reduction over each subsequent 3-year period beyond 2008 through the attainment year (e.g, 2013 for a serious area).

45. REASONABLE FURTHER PROGRESSIssue 4 • Timing of the submission of the RFP plan • Subpart 2 required 15% VOC plan in 1993 (~2 years after designations under CAAA of 1990) • Post 1996 plans were due in 1994. • To ensure timely reductions & consistency with CAA, EPA is proposing that 15% VOC or first 6 year 18% NOx/VOC ROP plans be submitted 2 years after nonattainment designation (i.e., in 2006). • Plans for Subpart 2 “after 6 year” NOx/VOC ROP or Subpart 1 RFP would be due 3 years after designation (i.e., in 2007)

46. REASONABLE FURTHER PROGRESSIssue 5 • Creditable measures • CAA imposes limits on creditability toward ROP—basically no measures that should have been adopted prior to 1990 CAAA are creditable, nor are federal measures in existence prior to 1990 CAAA creditable. • Same principle still applies—federal measures put in place after 1990 CAAA are creditable (e.g., Tier 2 federal tailpipe standards) for emission reductions that occur after baseline year

47. REASONABLE FURTHER PROGRESSIssue 6 • Issue 6: RFP for subpart 1 areas • 3 cases depending on attainment date: • Attain date <= 3 years after designation • Attain date > 3 and <= 6 years after desig. • Attain date > 6 years after desig.

48. REASONABLE FURTHER PROGRESSIssue 6 (Subpart 1 areas) • Case 1:Attain date <= 3 years after designation (similar to marginal areas under subpart 2) • Area requires no separate RFP requirement

49. REASONABLE FURTHER PROGRESSIssue 6 (Subpart 1 areas) • Case 2: Areas with attain date > 3 and <= 6 years after designation (similar to moderate areas under subpart 2) • 2 Options: • Option 1: SIP would have to provide all reductions needed for attainment by attainment date. • submitted with attainment demo—3 years after designation • Option 2: Similar requirement as for moderate areas (a specific % reduction from baseline within 6 years after base year), but NOx could be substituted for VOC • Submitted 2 years after designation • Proposing 15% but would entertain comment on other percentages. • Remainder of measures providing for reductions needed for attainment would be submitted with attainment demonstration 3 years after designation.

50. REASONABLE FURTHER PROGRESSIssue 6 (Subpart 1 areas) • Case 3: Areas with attain date > 6 years after designation (similar to serious and above areas under subpart 2) (attain date <= 10 years after designation under subpart 1) • Generally, show RFP for certain increments from the baseline emission inventory year out to the attainment date. • Amount of the progress requirement/emissions reductions for each 3-year period would be proportionate to the time between the base year and the attainment date. • However, the first increment of reduction would have to be 6 years after the base year and be submitted 2 years after designation and be a specified percent of the base year inventory (proposing 15% but will take comment on other percentages) • Plan for remaining increments would have to be submitted with attainment demo (3 years after designation).