MEMORANDUM

SUBJECT:  Ozone Attainment Demonstrations

FROM:     Mary D. Nichols
          Assistant Administrator for Air and Radiation

TO:       Regional Administrator, Regions I-X

     The purpose of this memorandum is to provide guidance on an
alternative approach to provide States flexibility in their
planning efforts for ozone nonattainment areas classified as
serious and above.  The basic principles of this approach are: 1)
meeting the attainment dates in the Clean Air Act while
maintaining progress, 2) ensuring enforceability of commitments
to adopt additional measures needed to reach attainment, and 3)
promoting market-based alternatives.  The EPA will work with
States to encourage the development of market-based trading
programs to provide flexibility in meeting the requirements of
these control measures.  This guidance applies to areas
significantly affected by ozone transport.  In consultation with
your States, you should determine whether it is appropriate to
apply it to other areas as well.

Background

     The 1990 Clean Air Act Amendments set forth many new
requirements intended to address widespread nonattainment of the
NAAQS for ozone.  Although a great deal of work has been done and
significant progress has been made, many States have been unable
to complete these State implementation plan (SIP) requirements
within the schedules prescribed in the Act due to circumstances
beyond their control.  This is a particularly difficult problem
for areas affected by transport of ozone and ozone precursors. 
These areas must develop complex regulatory plans, based on
photochemical grid models that in many cases must take into
account upwind and downwind flow of ozone and precursors.  The
models, in turn, must be based on detailed emission inventories
and other inputs, the development of which has been unavoidably
delayed due to unforeseen difficulties in gathering the necessary
data.  Similarly, in many instances, the large amount of
reductions likely to be needed to demonstrate attainment, and the
consequent difficulties in developing control measures to achieve
those reductions, has resulted in unavoidable delays in rule
development by the States.

     This memorandum provides States with an approach for
obtaining full approval for their attainment demonstration State
implementation plans by implementing a two-phased program.  In
addition to the other requirements set forth in this memorandum,
States must fulfill all ozone nonattainment obligations due to be
completed prior to November 1994 (e.g., 15 percent plans, VOC and
NOx RACT) before EPA will approve ozone nonattainment plans based
on this approach.

Phase I

     Under the first phase, States should submit a plan to
implement, by May 1999, a set of specific control measures
(including at least a 9 percent reduction to satisfy rate-of-
progress requirements) to obtain major reductions in ozone
precursors.  In the Northeast ozone transport region (OTR), the
measures should include: 1) all mandatory Clean Air Act measures
required prior to November 1994, including: VOC and NOx RACT on
major sources, enhanced I/M, reformulated gasoline (where
required), rate-of-progress requirements (at least up to 1999),
clean fuel fleets; 2) the regional NOx MOU (on the timetable
agreed upon by the OTC); 3) LEV or a 49-State car program if one
is adopted.  The specific control measures required in areas
outside the OTR will be determined on a case-by-case basis based
on consultation between the States and the appropriate Regional
Office(s).  For the Lake Michigan States (Illinois, Indiana and
Wisconsin) the phase I measures should include all measures
necessary to meet the rate-of-progress requirements out to the
attainment date (2007).  At a minimum, the measures selected for
all other areas should be comparable to those in the OTR and Lake
Michigan area.

     In addition, SIPs should include either modeling with
interim assumptions about ozone transport (this modeling might
not show attainment) or modeling that shows attainment based on
an assumed boundary condition (to be determined in consultation
with EPA).  Finally, submittals should include an enforceable
commitment to 1) participate in a consultative process to address
regional transport, 2) adopt additional control measures as
necessary to attain the ozone NAAQS, meet rate-of-progress
requirements, and eliminate significant contribution to
nonattainment downwind, and 3) identify any reductions that are
needed from upwind areas for the area to meet the NAAQS.  The
commitment should also specify a schedule for completing adoption
of additional rules.  An enforceable commitment is one that has
been adopted into the SIP by the State and is submitted to EPA as
a SIP revision.  The EPA will work with States regarding the
specific commitments that are needed.

     States should submit, by May 1995, a letter committing to
follow the approach described in this guidance, as well as a
general explanation of efforts to date to complete both the
attainment modeling (and the emission inventory and other inputs
to the model) and the regulations necessary to achieve
reductions.  The letter should include a schedule for the
adoption of enforceable rules needed to implement the required
phase I control measures.

     In order to provide lead time for phased implementation of
those measures not later than May 1999, any measures not already
scheduled for earlier adoption should be adopted no later than
the end of 1995.  If administrative scheduling, such as
legislative sessions or State review procedures renders it
impossible for a control agency to complete the regulatory
process for certain rules by the end of 1995, the State may
propose a schedule providing for the adoption of such rules
during 1996.  Again, the important point is that the State must
adopt enforceable measures by a date that ensures adequate lead
time to enable full implementation no later than May 1999.  The
Regions should track States' progress toward completion of the
adoption process.

Phase II

     The second phase of this approach begins with a 2-year
process, ending at the close of 1996, to assess regional control
strategies and refine local control strategies, using
improvements in the modeling process (e.g., more refined emission
inventories) to perform further control strategy evaluations that
take into consideration potential regional control strategies. 
This will also give the States and EPA the opportunity to
determine appropriate regional strategies to resolve transport
issues.  The goal of phase II is for EPA and the affected States
to reach consensus on the additional regional, local and national
emission reductions that are needed for the remaining rate-of-
progress requirements and attainment.  In the event that
agreement is not reached, EPA intends, by the end of 1997, to use
its authority under the Act (e.g., under sections 126 and/or 110)
to work with all affected States to ensure that the required
reductions are achieved.

     Based on the results of the 2-year assessment, States will
be expected to submit by mid-1997 the modeling and attainment
plan to show attainment through local and regional controls.  The
attainment plan should identify the measures that are needed for
rate-of-progress and attainment.  The remaining rules needed for
serious areas to attain must be adopted and implemented in time
for those areas to meet their attainment date of 1999.  

     For nonattainment areas with later attainment dates, States
should adopt and implement local and regional control measures as
determined to be necessary to meet the statutory attainment
deadlines.  States should phase-in adoption of rules to provide
for implementation of measures for rate-of-progress beginning in
the period immediately following 1999.  These rules must be
submitted to EPA no later than the end of 1999 (unless they were
submitted as part of phase I), and provide for timely
implementation of progress requirements.

     If you have any questions during implementation of this
policy, please contact me or John Seitz, Director of the Office
of Air Quality Planning and Standards.  The staff contact is
Laurel Schultz (919-541-5511).

cc:  Air Branch Chief, Regions I-X
     Rob Brenner
     David Doniger
     Alan Eckert
     William Hunt
     Phil Lorang
     Mary Nichols   
     Rich Ossias
     Sally Shaver
     Lydia Wegman
     Richard Wilsonbcc: John Bachmann
     Jeff Clark
     David Cole     
     Gary Dolce
     Tom Helms
     Howard Hoffman
     Ned Meyer
     Sharon Reinders
     Kimber Scavo
     Laurel Schultz
     Joe Tikvart