draft 7/30/02

b. How will EPA transition from the 1-hour to the 8-hour standard?

(i) Background

This issue deals primarily with two elements: the time for determining when the 1-hour ozone standard would no longer apply (i.e., revoking the 1-hour standard) as the 8-hour standard is implemented, and how to prevent anti-backsliding after the 1-hour standard is revoked.

(A) Timeframe for revoking the 1-hour standard

40 CFR 50.9(b) (the rule for the 1-hour ozone standard) reads: "The 1-hour standards set forth in this section will remain applicable to all areas notwithstanding the promulgation of 8-hour ozone standards under Sec. 50.10. In addition, after the 8-hour standard has become fully enforceable under part D of title I of the CAA and subject to no further legal challenge, the 1-hour standards set forth in this section will no longer apply to an area once EPA determines that the area has air quality meeting the 1-hour standard. Area designations and classifications with respect to the 1-hour standards are codified in 40 CFR part 81." Thus, the 1-hour ozone standard–and the attainment and nonattainment designations under that standard–would remain in effect for an area until EPA revokes the 1-hour standard.

After the 1-hour standard is revoked, certain requirements from the 1-hour ozone SIPs will have to continue to be retained under the anti-backsliding provisions discussed below. However, there will no longer be a requirement that areas will have to meet the 1-hour standard, and therefore there will be no reclassification for failure to attain by an area's former attainment date established under the 1-hour standard.

The transportation conformity requirements appear to raise the most significant issues regarding how the 1-hour ozone standard is phased out. The following presents a brief background on conformity:

Transportation conformity is required in nonattainment areas, regardless of classification. Transportation conformity also applies to areas that were nonattainment and are subsequently redesignated to attainment and subject to a maintenance plan. These areas are called maintenance areas.

Some areas that will be designated as nonattainment under the 8-hour ozone standard are currently nonattainment or maintenance areas under the 1-hour ozone standard.

Some areas that will be designated as nonattainment under the 8-hour ozone standard will be "brand new," that is, they have never been designated nonattainment for the 1-hour ozone standard.

Areas designated nonattainment for the first time for a new standard (e.g., the 8-hour ozone standard) have a one-year grace period before conformity applies for that standard (i.e., a one-
year grace period before conformity applies for the 8-hour ozone standard -- conformity obligations for the 1-hour ozone standard would not be affected). This one-year grace period before conformity is required for the 8-hour standard applies regardless of whether an area is currently designated nonattainment under the 1-hour standard.

(B) Anti-backsliding

Section 110(l) provides that 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 of the CAA 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, thus the term anti-backsliding.

EPA's interpretation of the Clean Air Act is that SIP measures not specifically required under subpart 2 (but required for attainment) could be replaced by other measures as long as the CAA's anti-backsliding provisions (section 110(l), section 193) are met. In general, however, measures required under subpart 2 would continue to be required within the areas that were subject to those requirements for the 1-hour standard. One approach for implementing anti-backsliding is to establish a regulation that relies on the CAA anti-backsliding provisions.

(ii) Issues

There are two issues related to the transition from the 1-hour to the 8-hour ozone standard.

Issue 1: When should EPA revoke the 1-hour ozone standard to ensure a smooth transition to the 8-hour ozone standard?

Prior to the public meetings, EPA identified three options for the timing of revocation of the 1-
hour standard. In addition, at least three other options arose as a result of comment at the public meetings. These three options were intended to address concerns related to conformity:

EPA is proposing two options for comment.

Option 1: EPA would revoke the 1-hour ozone standard 1 year after EPA designated attainment and nonattainment areas for the 8-hour O3 NAAQS. This would be consistent with the 1-year grace period for application of conformity, and would basically have conformity apply for purposes of only one standard at a time. It should be noted that under this option, the motor vehicle emissions budget under the 8-hour standard would likely not be available for several additional years after conformity is applicable to the area, with the consequence that conformity determinations would likely have to be made using the build/no-build test or the "no-greater-
than-baseline" test, both of which may be difficult to meet.

Option 2: EPA would revoke the 1-hour ozone standard at the time of EPA finding the area's motor vehicle emissions budget under the 8-hour standard adequate. EPA's transportation conformity rules allow EPA to find a nonattainment area's emissions budget adequate before actually approving the attainment demonstration and/or reasonable further progress provisions of the SIP on which the budget is based. Of course, EPA can only find a budget adequate if it has a reasonable expectation that the attainment demonstration and/or reasonable further progress provision is adequate. This option would likely result in revocation of the 1-hour standard sometime after the timing in the first option described above (and of course after the areas are designated nonattainment for the 8-hour standard). Conformity would apply under both standards from 1 year following the nonattainment designation for the 8-hour standard and until a conformity budget for the 8-hour ozone attainment demonstration and/or reasonable further progress provision is determined adequate and thus the 1-hour standard is revoked.

Under the second option being proposed (viz., revoking the 1-hour standard at the time EPA finds an area's budget adequate for conformity purposes), there are some practical implications of implementing both standards simultaneously. For instance, transportation conformity would apply under both standards. Until a new budget is established under the 8-hour standard, the area would have to meet not only the current 1-hour ozone NAAQS SIP budget, but also either pass the build/no-build conformity test or the no-greater-than baseline (?) test, which generally may be more difficult for an area to meet. Also, for 8-hour ozone nonattainment areas that are larger than–but encompass–1-hour ozone nonattainment areas, and for the period when both standards apply and nonattainment designations exist under both standards, the transportation conformity requirements would likely have to be met individually for both standards, which may add complexity to the process.

In addition, for 8-hour ozone nonattainment areas that are larger than but encompass 1-hour nonattainment areas, the requirements for new source review could potentially be implemented in several ways. The section of this rulemaking notice on new source review discusses and addresses this situation.

EPA's preference is for the first option, since it would result in conformity being applicable under only one standard at a time. This outcome was favored by a number of commenters at EPA's public meetings and in written comments. However, EPA is soliciting comment on both options.

Options that EPA considered but which are not being proposed

EPA presented other options at the public meetings and received suggestions for additional options, but did not believe these would ensure a smooth transition from the 1-hour standard to the 8-hour ozone standard, particularly in light of concerns about conformity.

•	An option whereby EPA would revoke the 1-hour standard at time of 8-hour O3 attainment/nonattainment designation would ensure a quick transition to the 8-hour standard, but there would be a gap in conformity coverage during the 1-year grace period after designation of the 8-hour ozone standard.

•	An option whereby EPA would revoke the 1-hour standard at the time EPA determines that the area meets 1-hour O3 NAAQS (after 8-hour O3 designation) is basically how EPA originally intended to phase out the 1-hour standard. However, some areas may not actually achieve the 1-hour standard for many years, so there would be two standards in effect for many years, presenting concerns for conformity and possibly new source review in terms of simultaneous applicability due to a nonattainment designation for two standards.

•	An option whereby EPA would revoke the 1-hour standard at the time of approval of 8-
hour O3 SIPs (for 8-hour O3 nonattainment areas) would ensure that there will actually be rules in place under the 8-hour standard before the 1-hour standard is revoked, but it also would permit both standards to remain in place and thereby have applicability for conformity and possibly new source review for both standards for a period of time likely to be longer than one of the above options that EPA is proposing. If EPA designates nonattainment areas in 2004, and SIPs are due for submission in 2007/2008, then EPA approval of the SIPs could occur as late as 2009.

•	An option whereby EPA would revoke the 1-hour ozone standard at the time the State SIP rules are enforceable at the State level with some preliminary assessment by EPA that the SIP is approvable would reduce the amount of time two standards were in existence (compared to waiting until EPA approval of the SIP), but would still leave two standards in place for an extended period and present similar problems as described above for transportation conformity. This option would differ from the second option that EPA is proposing in that it would require all emission control measures needed for attainment to be actually adopted and effective at the State level, and not merely that the State has submitted as part of its SIP an enforceable commitment to adopt a measure. Thus, compared to the second option for proposal, this option could result in a longer period of time when both standards would apply at the same time.

One possible argument to have a longer period of time with both standards (1-hour and 8-hour ozone standards) and nonattainment areas in existence simultaneously is to ensure that 1-hour ozone SIP provisions continue to be in force and to prevent air quality from degrading until approved plans for the 8-hour standard are in place and approved. As described below, however, EPA believes the Clean Air Act's anti-backsliding provisions would address that concern. Another argument to have such a longer period of time with both standards in effect simultaneously is as a contingency in the event that the 8-hour standard or the implementation rule for it are affected by litigation, in which case EPA would not have to reinstate a revoked 1-
hour standard as it had to do a few years ago. EPA solicits comment on whether the potential effects of litigation should be considered in deciding when to determine that the 1-hour standard no longer applies, e.g., to ensure that areas do not backslide from the existing level of control and consequently degrade air quality.

Issue 2: How will the CAA's anti-backsliding provisions work regarding current Clean Air Act requirements under the 1-hour ozone standard? Once the 1-hour standard is revoked, what portions of the 1-hour SIP must be retained?

EPA proposes the following provisions to address the CAA's anti-backsliding provisions:

A. No SIP revision to remove or revise a control measure or provision contained in the 1-
hour SIP would be approved except in accordance with section 110(l). This provision requires that EPA find that the revision would not interfere with "any applicable requirement concerning attainment and reasonable further progress . . . or any other applicable requirement of this Act." Thus without such a determination, all SIP control measures and provisions contained in an attainment or maintenance plan would have to remain in place. If a control strategy measure was required under the CAA, and the State submitted such a measure, the measure will remain in place after EPA approves the measure as part of the SIP.

B. Any part of an 8-hour O3 nonattainment area that was designated nonattainment for the 1-hour O3 NAAQS and classified under subpart 2 as of the date the area is designated for the 8-hour NAAQS would still be required to meet the requirements of the 1-hour classification, including required control measures not yet submitted or approved.

C. SIP measures not specifically required under subpart 2 based on the area's nonattainment classification for the 1-hour standard could be replaced by other measures as long as the CAA's anti-backsliding provisions (section 110(l), section 193) are met.

D. Commitments to adopt additional measures needed for the attainment demonstration to be valid. There are several SIPs for which approval of the attainment demonstration has relied on the State's enforceable commitment to adopt additional emission control measures at specified times in the future. These include the ozone SIPs for the South Coast Air Quality Management District in California and for Houston, Texas. Some commenters at the public meeting felt these should continue to be honored. There are several reasons put forth for why these commitments should be maintained under the anti-backsliding provisions. One, they are action-forcing provisions to reduce ozone-forming emissions. Second, these measures were part of the approved attainment plan. They are intended as a temporary "filler" for conventional enforceable measures that under the anti-backsliding provisions would clearly have to be maintained. The anti-backsliding policy will apply to all measures making up the attainment demonstration in areas that did not rely on "committal" measures, so for equity reasons (as well as public health) the anti-backsliding provisions arguably should apply to all parts of the attainment demonstration in areas that relied in part on the committal measures.

E. There are other components of the SIP that are not clear. For these elements, there are at least two options: continue to require them, and do not continue to require them. EPA is soliciting comments on these options for the following elements.

1. SIPs for areas that are designated nonattainment for the 1-hour standard (and are attaining the 1-hour standard) but that are designated attainment for the 8-hour standard. Some commenters favored dropping 1-hour standard's associated requirements such as transportation conformity, although others felt that some kind of maintenance plan should be required prior to revoking the 1-hour standard for the area. Also such areas may never have prepared an air quality maintenance plan and requested redesignation to attainment; if such areas had prepared a maintenance plan and EPA approved it, such areas would have to continue to implement their maintenance plan (and transportation conformity would have applied) under the proposed anti-backsliding provisions.

2. SIPs for areas that are maintenance areas for the 1-hour standard but that are designated attainment for the 8-hour standard. Some commenters felt that if the area is attaining the 8-hour standard, the area should not remain subject to conformity under EPA rules, which provide that maintenance areas remain subject to conformity.

3. SIP provisions that are not "control measures." Here are some examples:

a. New source review requirements–The new source review requirement is not generally considered a "control measure" that provides emission reductions needed for attainment. If an area is classified e.g., moderate under the 8-hour standard, but is currently severe under the 1-hour standard, should the portion of the 8-hour nonattainment area that was classified severe for the 1-hour standard remain subject to–

–an offset ratio of 1.3:1 and a major source threshold of 25 tons/year; or

–should all portions of the 8-hour area now be subject to the offset ration for moderate areas (1.15:1) and the moderate area major source threshold (100 tons/year)?

b. "Enhanced Monitoring"–Section 182(c)(1) of the CAA requires the establishment of an "enhanced monitoring" program "(i)n order to obtain more comprehensive and representative data on ozone air pollution." The provision covers (among other provisions) "ambient concentrations of ozone, oxides of nitrogen and volatile organic compounds and to improve monitoring of emissions of oxides of nitrogen and volatile organic compounds." The requirement applies to areas classified serious, severe and extreme. EPA's response to this requirement was to establish a rule for the States to develop and operate the Photochemical Ambient Monitoring Stations (PAMS) program. Under the classification schemes proposed above, only a limited number of 8-hour ozone nonattainment areas would continue to have this requirement apply. A number of areas where it is currently required would no longer technically be required to maintain the network. There is a further discussion of the PAMS program elsewhere in this notice.

c. The section 185 penalty fee for nonattainment of severe or extreme areas under the 1-hour ozone NAAQS–SIPs for areas classified severe and above for the 1-
hour ozone standard are required to contain provisions for assessing a penalty fee for major sources if the area does not attain the 1-hour ozone standard by the area's attainment date. The penalty fee must be $5000 per ton of emissions in excess of 8- percent of the baseline amount–viz., the lower of actual or allowable emissions allowed under the permit applicable to the source–during each calendar year that the area remains in nonattainment. The fee must be adjusted to account for inflation. It appears that Congress intended the fee for certain areas, viz., areas classified severe or above for the 1-hour ozone standard. The classification scheme options considered by EPA (discussed elsewhere) would result in fewer areas that are classified severe or extreme. Therefore, it could be argued that Congress did not intend EPA to be able to waive the section 185 penalty fee requirement simply by developing a new standard–particularly one that is more stringent–and a new classification scheme. On the other hand, it could be argued that an area should not be subject to a fee for a standard that is no longer the health-based standard.

(Note that tribes are not required to develop TIPs, follow the schedules for TIP submittals and are not be subject to sanctions.)

d. Milestone compliance demonstration. Section 182(g) provides that serious, severe and extreme nonattainment areas must submit a demonstration that they obtained the rate of progress emission reductions required for the area. The reductions are the mandatory 9 percent reduction of ozone precursors–volatile organic compounds (VOC) and/or oxides of nitrogen (NOx) emissions every three years. As noted above, the classification scheme options considered by EPA (discussed elsewhere) would result in fewer areas that are classified serious, severe or extreme under the 8-hour ozone standard compared to the number under the 1-hour standard. Take for example an area that is currently a severe-17 area for the 1-hour ozone standard. This area has a 1-hour ozone standard attainment date of 2007, and is required to submit a milestone compliance demonstration after 2005 (in early 2006). The 1-hour standard may be revoked as early as 2005. This same area may be classified moderate for the 8-hour ozone standard (and therefore not have the milestone compliance demonstration requirement apply to it. Should the area continue to be required to submit the milestone compliance demonstration for the reductions that are in the SIP for the milestone period?

e. Commitments for elements that are not control measures. One example is the commitments that a number of 1-hour nonattainment area SIPs contain for a mid-
course review due in many cases by the end of 2004. Of course, if the 1-hour standard is not revoked until some time after 2004, this may be a moot point, since the commitment would be due prior to the 1-hour standard being revoked.

Issue 3: How will EPA ensure that the public knows which areas must continue provisions under the 1-hour SIPs under the anti-backsliding provisions?

In the same action where EPA revokes the 1-hour ozone standard, and with it the attainment/unclassifiable and nonattainment designations under the 1-hour standard, the CFR would retain the definition of the 1-hour nonattainment and maintenance areas so that it is clear which areas must continue certain requirements from their 1-hour ozone standard SIPs to meet the anti-backsliding provisions. In other words, the list of the areas and their boundaries where the 1-hour attainment or maintenance SIPs apply would be printed in the CFR, although there would be no 1-hour nonattainment (or attainment/unclassifiable) areas afterwards.