draft 7/30/02

a. How will EPA reconcile Subparts 1 and 2? How will EPA classify nonattainment areas for the 8-hour standard? What attainment dates would apply?

(i) Background/Context

The nonattainment area provisions for State implementation plans are found in the Clean Air Act, Title I, Part D. Subpart 1 of Part D contains general requirements for SIPs for all nonattainment areas whereas subpart 2 provides more specific requirements for ozone. When EPA published the 8 hour ozone standard on July 18, 1997, EPA indicated its intent to implement that standard under the less prescriptive subpart 1 requirements.

The 8-hour ozone standard is 0.08 parts per million (ppm), daily maximum 8-hour average. The standard is met when the average (over 3 years) of the annual fourth-highest daily maximum 8-hour average ozone concentration is less than or equal to 0.08 ppm.

The 1-hour ozone standard is 0.12 parts per million. The standard is attained when the expected number of days per calendar year (over a 3-year average) with maximum hourly average concentrations above 0.12 parts per million is equal to or less than 1.

As noted above, in February 2001, the Supreme Court upheld the constitutionality of the standard-setting process in the CAA, but ruled that EPA's implementation approach was unlawful and that EPA could not ignore subpart 2 when implementing the 8-hour standard. Specifically, with respect to classifying areas, the Supreme Court stated:

[D]oes subpart 2 provide for classifying nonattainment ozone areas under the revised standard? It unquestionably does.

However, despite recognizing that subpart 2 does provide classifications applicable for the 8-
hour standard, the Supreme Court also recognized that the subpart 2 scheme did not entirely fit with a subsequent revision to the 8-hour standard and with a standard of a different averaging time and left it to EPA to develop a reasonable resolution of the roles of subparts 1 and 2 in implementing a revised ozone standard. The court noted, "It may well be ... that some provisions of Subpart 2 are ill fitted to implementation of the revised standard." The court specifically noted:

Using the old 1-hour averages of ozone levels, for example, as subpart 2 requires ... would produce at best an inexact estimate of the new 8-hour averages.

The court also noted:

To the extent the new ozone standard is stricter than the old one, . . . the classification system of Subpart 2 contains a gap, because it fails to classify areas whose ozone levels are greater than the new standard (and thus nonattaining) but less than the approximation of the old standard codified by Table 1.

Furthermore, the Court stated:

Subpart 2's method for calculating attainment dates – which is simply to count forward a certain number of years from November 15, 1990 . . . seems to make no sense for areas that are first classified under a new standard after November 15, 1990.

As noted above, in March and April of 2002, EPA held three public meetings on 4 classification options. As a result of comments, we are discarding for now one of the options: The option under which classification is based on 1-hour design values.

In addition, several other options have been suggested, which EPA has considered in formulating this proposal; these are discussed below.

In evaluating the impact of the various classification options, EPA has developed a set of 122 hypothetical nonattainment areas based on the counties with measured violations of the 8-hour ozone standard for the 3-year period of 1998-2000. It should be noted that EPA's grouping of counties into hypothetical nonattainment areas was done only for illustrative and analysis purposes and does not have any implications for the boundaries of nonattainment areas that may ultimately be recommended by States or designated by EPA.

(ii) Options for classification

EPA is proposing two options for comment, but will select only one for the final implementation rule.

Option 1–Classify 8-hour nonattainment areas based on 8-hour ozone (O3) design values. This option would use 8-hour design values, which would reflect the magnitude of the 8-hour ozone problem more accurately than would the 1-hour design values currently in section 181's Table 1.

Under this option, all 8-hour nonattainment areas would be classified under subpart 2. In general, areas classified under subpart 2 would need to attain the standard as expeditiously as practicable, but no later than the dates as specified under Table 1 of section 181 for their classification.

This option would require EPA to adapt the classification scheme in section 181's Table 1 to reflect 8-hour design value thresholds. The translation of Table 1 being proposed is based on using the percentages of Table 1's threshold 1-hour ozone design values above the 1-hour ozone standard and multiplying them by the 8-hour standard to yield 8-hour threshold values. An examination of the percentages derived indicated that the original intent of Congress was to set the thresholds at certain percentages or fractions above the level of the standard. The upper thresholds of the marginal, moderate, serious, severe-15, and severe-17 classifications are precise percentages or fractions above the level of the standard, namely 15.000 percent (3/20ths more than the standard) , 33.333 percent (one-third more than the standard), 50.000 percent (one-half more than the standard), 58.333 (7/12ths more than the standard) and 133.333 percent (one and one-third more than the standard).

Table 1 below depicts how the translation would be done and the results.

Option 2 – Hybrid 2-step approach. Use 1-hour design value to determine which areas are required to be placed under subpart 2, then classify all areas considering 8-hour design values. This option would require 2 steps:

Step 1: Separate areas into two groups based on whether their 1-hour design value would require them to be placed in subpart 2. Under one possible interpretation of the Supreme Court decision, areas with 1-hour design values at or above 0.121 ppm (the lowest end of the range in subpart 2's table 1) must be classified under subpart 2, while areas with a design value below 0.121 ppm fall into a "gap" in the statute, thus providing EPA with discretion as to whether such areas should fall under subpart 1 or subpart 2.1 Based on this reading, EPA would separate areas into two groups: areas with 1-hour design values below 0.121 ppm (Group 1 areas), and areas with 1-hour ozone levels at or above this level (Group 2 areas).

Step 2: Classify areas. For Group 1 areas, EPA would need to determine which subpart (subpart 1 or subpart 2) should apply to specific areas or groups of areas. For areas that EPA determined would be subject to subpart 1, EPA could develop a classification scheme. That classification scheme could provide greater flexibility in considering what requirements should apply. Group 2 areas and any Group 1 areas placed in subpart 2 would receive subpart 2 classifications according to their 8-hour ozone design value. This would be done in the same manner as option 1 proposed above, in which the Table 1 threshold design values are converted from 1-hour values to 8-hour values.

There are several variations of Option 2 based on factors considered in determining whether some or all Group 1 areas should be subject to subpart 1. EPA is proposing only one such variation as follows.

Option 2 Proposal: All areas in Group 1 (also referred to as "submarginal" areas since they would are below the marginal threshold of section 181's Table 1 based on their 1-hour design value) would remain in subpart 1 based on the fact that Table 1 of subpart 2 itself does not cover areas with one hour design values that are less than the smallest value in Table 1. This option would result in over half of the hypothetical nonattainment areas being covered by subpart 1. Areas covered under subpart 1 would have attainment dates established under the provisions in subpart 1, while areas covered under subpart 2 would have attainment dates that could be no later than the dates specified in Table 1 of section 181.

This option would result in a number of apparent inequitable situations, in which, for instance, areas with relatively high 8-hour ozone design values would be covered under the less specific SIP requirements of subpart 1, while areas with relatively low 8-hour design values would be covered under subpart 2 with its more specific SIP requirements. Despite this drawback, EPA is still proposing this option to try to honor the principle of providing as much flexibility as possible to areas in implementing the 8-hour standard in light of the Supreme Court's ruling.

Other variations of proposed option 2 are possible. For example, Group 1 areas with 8-hour design value greater or equal to some threshold, e.g., 0.092 ppm, would be placed in subpart 2. (0.092 is the lower 8-hour threshold for moderate areas.) Such variations of Option 2 would reduce the number of inequitable situations that would be encountered in proposed Option 2, but obviously place more areas into subpart 2, with fewer remaining in subpart 1. EPA is not proposing this variant because it is more complex than the variant that is being proposed, and therefore does not meet one of EPA's principles as stated above, namely, to have a basic, straightforward structure that can be communicated easily.

Proposed Incentive Feature: In addition to the two basic options being proposed above, EPA is also proposing an early attainment incentive feature that could be applicable to either of the above proposed options. Under this feature, EPA would classify a subpart 2 area at a lower classification than it would otherwise receive based on a modeled demonstration that the area will attain by an attainment date consistent with the lower classification. For instance, if a subpart 2 area has an 8-hour ozone design value of 0.094 ppm, it would ordinarily be classified as moderate, with an attainment date 6 years after the area's designation as nonattainment for the 8-hour standard. If this area also has been shown by modeling acceptable to EPA to attain within 3 years after designation, the area would be eligible for classification as a marginal area, since marginal areas have a maximum attainment date of 3 years after their nonattainment designation date. In addition to soliciting comment on this proposed incentive feature itself, EPA is soliciting comment on whether such modeled demonstration would have to be made prior to the initial classification of areas, or whether it could be submitted after EPA has already classified the area initially at the higher classification, in which case EPA would have to revise the classification downward at a subsequent time.

It should be noted that an option was presented and discussed at the public meetings similar to this incentive feature in conjunction with the option that would have classified all areas based on their 8-hour design values but also relied on modeled results to adjust the classification. The option received much criticism from a wide variety of commenters, who argued that modeling could be applied inappropriately in classifying areas. EPA nonetheless believes it is appropriate to propose this feature to alleviate some of the other concerns that many commenters raised about the inappropriate amount of mandatory VOC measures required under the higher classifications of subpart 2.

Table 2 below presents a summary of the numbers of hypothetical nonattainment areas and their classification under each of the proposed options.

(iii) Other Options EPA considered

Classification based on area's 1-hour ozone design value. This option received mostly adverse comment at the public meetings due to the fact that 1-hour design values do not reflect 8-hour ozone problems in many cases.

Construct a revised classification table (Table 1 of subpart 2) based on the 8-hour ozone values used in EPA's Air Quality Index. The AQI levels are designed to trigger immediate actions that will keep an area from reaching short-term levels that approach the level considered to cause significant harm to the health of persons. Therefore, these levels were designed for an entirely different purpose than the levels in the Clean Air Act for classifications, which are used for longer-term planning purposes.

Implement the 8-hour standard in a sequential manner. Under this option, areas that are currently designated nonattainment under the 1-hour standard would continue to implement their SIP under subpart 2 until they either reached attainment of the 1-hour standard or the area has implemented all measures under subpart 2 before areas are classified for the 8-hour standard. All areas would be classified under subpart 1 for the 8-hour standard, although the "textually applicable" subpart 2 requirements would continue to apply for the implementation of the 8-hour standard.

EPA believes that the CAA and the Supreme Court ruling does not permit such an interpretation. Under section 107 of the CAA (and under other statutory amendments and provisions), EPA is given a limited amount of time to designate nonattainment areas under the 8-hour ozone standard. Once an area is designated nonattainment under the 8-hour standard, subpart 1 provides areas with a limited amount of time to develop and submit an implementation plan. The option proposed by the commenter fails to account for this timing.

All areas classified under subpart 2 and place a higher percentage of 8-hour ozone nonattainment areas into higher classifications to reflect the fact that the 8-hour standard is more stringent than the 1-hour standard. One of the options being proposed (Option 1) would place all 8-hour ozone NAAQS nonattainment areas in subpart 2. EPA does not believe that it is appropriate to subject areas to the more stringent classifications simply to reflect the fact that the 8-hour standard is more stringent. Rather, as Congress did in 1990, EPA believes it is more appropriate to link the stringency of the mandated controls to the time in which it would take an area to attain the standard. Thus, an area should not be classified as severe if its air quality reflects a moderate or serious level of classification and if EPA believes the aera cann attain the standard in 6 (for moderate) or 9 (for serious) years.

This commenter also recommended that the category names for the classification scheme (in subpart 2) should be reflective of the public health significance of the ozone problem. EPA does not believe that the classification scheme should be the primary way of informing the public of the quality of the air in a particular area, and that there are other mechanisms for doing that such as the air quality index (AQI) program or the general requirement for public notification under section 127 of the CAA. As an illustration, even CAA section 107 requires designation as nonattainment nearby clean air areas that contribute to another area's nonattainment. In these cases, the nonattainment designation for the contributing part of the area would not be an accurate characterization of the quality of the air for public information purposes for that part of the nonattainment area, so any classification of that area would also not accurately characterize the health problem for that part of the nonattainment area. The nonattainment designation is intended for two basic purposes: to identify the areas that are not meeting the air quality standard and also to identify the areas that must apply certain emissions control programs to help the areas attain the standard, such as reasonably available control measures, new source review and conformity. The classification under subpart 2 is intended to set forth maximum attainment dates and requirements for the emission control program for areas.

Options that do not appear to comport with the structure of the Clean Air Act. These options do not appear to address the Act's provisions that link an area's classification to the amount of time the area needs to attain the standard and its design value.

–New areas nonattainment subject to subpart 1; pre-existing nonattainment areas subject to subpart 2.

–Use the same distribution of areas/classification that existed for the 1991 designations/ classifications. Under this option, if 10 percent of the areas were placed in severe-15 in 1991, then 10 percent of the current nonattainment areas would be placed in that classification.

Other methods for translating section 181's Table 1 from 1-hour to 8-hour ozone design values:

Other translations were considered but do not have the same degree of consonance with the apparent original intent of Congress and were therefore not pursued. Any attempt to derive a scientific relationship between 1-hour values and 8-hour values would result in an relationship that does not fit all situations. For instance, a relationship could be established between 1-hour and 8-hour ozone levels based on historical air quality data through a variety of means. Even a cursory examination of the 1-hour and 8-hour design values for each county, or each hypothetical nonattainment area shows a rather large scatter (large standard deviation). In other words, areas with the same 1-hour design values may have a range of 8-hour design values.

Rather than using the area's design values, one could try to establish a relationship between daily maximum 1-hour values with daily maximum 8-hour values on a county or monitor basis. This also results in fairly large scatter, with large standard deviation. Other non-linear relationships could also be derived using logarithmic functions, and could yield slightly less scatter (lower standard deviation), but even those would still present too much scatter. EPA therefore believes there is no obvious technical method for performing the translation. Thus, EPA believes it is best to rely on what appeared to be Congress's intent in developing a proper translation for purposes of applying section 181's Table 1 to the 8-hour ozone standard. EPA solicits comment, however, on other ways of interpreting Congressional intent.

(iv) Implications for the options

As noted above, for analysis purposes, EPA has grouped counties that violate the 8-hour standard (using 1998, 1999 and 2000 data) into 122 hypothetical nonattainment areas. Table 2 below presents the numbers of areas that would be classified based on each of the above proposed options.

(v) Other considerations

In addition to the overall classification options being proposed, it should be noted that the "5 percent" provision of the Clean Air Act also provides that classifications may be adjusted upward or downward for an area. This provision (sect. 181(a)(4) reads: "If an area classified under [Table 1] would have been classified in another category if the design value in the area were 5 percent greater or 5 percent less than the level on which such classification was based, the Administrator may, in the Administrator's discretion, within 90 days after the initial classification, . . . adjust the classification to place the area in such other category. In making such adjustment, the Administrator may consider the number of exceedances of the national primary ambient air quality standard for ozone in the area, the level of pollution transport between the area and other affected areas, including both intrastate and interstate transport, and the mix of sources and air pollutants in the area." Thus, if a downwind area is subjected to a Subpart 2 classification and there is evidence that the area will not benefit significantly from local controls mandated by subpart 2 for the area's classification, the area may obtain some relief based on the 5% rule in the Clean Air Act. Similarly, the 5% provision may also be used to reclassify an upwind area to a higher classification where additional controls are needed to address transport from the area to downwind areas.

In addition, the 5% rule could help in adjusting some moderate areas to marginal if evidence shows that the area could attain within 3 years after classification. This provision, however, does not establish a mechanism for removing areas from the subpart 2 classification scheme.

TABLE 1/SUBPART 2 1-HOUR O3 CLASSIFICATION TABLE

TRANSLATION TO 8-HOUR DESIGN VALUES
Area class	CAA design value thresholds

1-hour O3 ppm	% above

1-hour O3 NAAQS	Translated 8-hour design value thresholds

ppm O3	Primary standard attainment date–years after enactment (1-
hour std) or after nonattainment designation (8-
hour std)

Marginal	from	0.121	0.833	0.081	3 years

Marginal	up to	0.138	15.000	0.092
Moderate	from	0.138	15.000	0.092	6 years

Moderate	up to	0.160	33.333	0.107
Serious	from	0.160	33.333	0.107	9 years

Serious	up to	0.180	50.000	0.120
Severe -15	from	0.180	50.000	0.120	15 years

Severe -15	up to	0.190	58.333	0.127
Severe -17	from	0.190	58.333	0.127	17 years

Severe -17	up to	0.280	133.333	0.187
Extreme	equal to or above	0.280	133.333	0.187	20 years

TABLE 2

PROPOSED CLASSIFICATION OPTIONS

COUNTS OF HYPOTHETICAL NONATTAINMENT AREAS
Subpart 2	Subpart 1
Extreme	Severe-17	Severe-15	Serious	Moderate	Marginal	"Sub-
marginal"	Total
Option 1 (8-hour DV)	0	1	1	6	53	61	0	122
Option 1 (8-hour DV)–with incentive feature*	0	1	1	6	30	84	0	122
Option 2 (hybrid--areas w/1-hour DV < 0.121 ppm = submarg)	0	1	1	6	26	12	76	122
Option 2 (hybrid--areas w/1-hour DV < 0.121 ppm = submarg)–with incentive feature*	0	1	1	6	21	17	76	122
*Areas that would be moderate using their 8-hour design value but that are projected to attain by 2007 would be classified marginal.

(vi) Classification of Subpart 1 Areas

(A) Background

As noted above, classification Option 2 above would result in a number of areas classified under subpart 1, while the rest would be classified under subpart 2. Subpart 2 contains its own method for classification, but it is discretionary for EPA to establish a classification system for areas covered under subpart 1. Section 171 (a) says in part:

(1) Classifications. (A) On or after the date the Administrator promulgates the designation of an area as a nonattainment area pursuant to section 107(d) with respect to any national ambient air quality standard (or any revised stan-dard, including a revision of any standard in effect on the date of the enactment of the Clean Air Act Amendments of 1990), the Administrator may classify the area for the purpose of applying an attainment date pursuant to paragraph (2), and for other purposes. In determining the appropriate classification, if any, for a nonattainment area, the Administrator may consider such factors as the severity of nonattainment in such area and the availability and feasibility of the pollution control measures that the Administrator believes may be necessary to provide for attainment of such standard in such area."

Prior to the lawsuit against EPA on the 8-hour ozone standard, EPA had proposed that all 8-hour ozone nonattainment areas be covered under subpart 1, and that EPA would establish 3 classifications for the areas: traditional, transitional, and international transport. These were described in the November 17, 1998 draft implementation guidance.

EPA is proposing several options for classifying subpart 1 areas for the 8-hour standard as described below.

(B) Options for proposal

Option 1. No classification program. Under this option, all subpart 1 areas would be treated alike, i.e., no special treatment for areas that submit early SIPs and no special treatment for international transport areas. (These topics are discussed below separately, however.) Subpart 1 attainment date provisions would apply, with each area demonstrating attainment as expeditiously as practicable, but no later than 5 years after designation or 10 years after designation if the severity of the area's air pollution and the availability and feasibility of pollution control measures indicate more time is needed.

Option 2. The previous 1998 proposed classification system:

a. Transitional for areas that are attaining the 1-hour ozone NAAQS, submit an attainment demonstration prior to designations, which provides for attainment earlier than would be required under the Clean Air Act. This classification was a feature of the "Presidential Directive" that was issued in 1997 concurrent with the publication of the 8-hour ozone and PM2.5 standards. Areas with this classification would be able to take advantage of less restrictive new source review and conformity requirements.

b. Traditional for most other areas that do not qualify for the transitional classification. These would still be required to meet subpart 1 requirements, including submission of an attainment demonstration, RACM analysis and measures as appropriate, reasonable further progress requirement, NSR program and conformity program.

c. International Transport–this classification would be available for areas significantly affected by international transport from Canada or Mexico. This classification would be based on the section 179B provision that allows these kinds of areas to show that their SIPs would be adequate to attain the NAAQS "but for" emissions emanating from outside the U.S.

Option 3. Inclusion of an interstate transport classification. This option could be combined with either of the above options and is patterned after an approach being considered for PM2.5 (also being handled under subpart 1). Under this option, an area could be reclassified as a "Transport Area" upon submission of a SIP that demonstrates, using modeling, that the nonattainment problem in the area is due to "overwhelming transport" emissions.

The area would only be required to apply local control measures sufficient to demonstrate that the area would attain the standard by its attainment date "but for" transport from upwind States.

Less restrictive NSR and conformity requirements would apply to the area.

The area would receive an attainment date consistent with the attainment date of upwind areas contributing to the downwind area's problem.

Since the CAA treats tribal areas as States, this option would also be supportive of tribal concerns about designations where the tribal area designated nonattainment but has limited contribution to the nonattainment problems. This is one of the key issues for the tribes who have difficulty getting offsets from sources located outside tribal lands and could be disadvantaged in their attempts to establish an economic base by the inability to obtain offsets.