[Federal Register Volume 61, Number 169 (Thursday, August 29, 1996)]
[Rules and Regulations]
[Pages 45330-45336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21950]
[[Page 45330]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70
[AD-FRL-5559-1]
Clean Air Act Interim Approval of Operating Permits Program;
South Coast Air Quality Management District, California
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
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SUMMARY: The EPA is promulgating direct final interim approval of the
title V operating permits program submitted by the California Air
Resources Board, on behalf of the South Coast Air Quality Management
District (South Coast or District), for the purpose of complying with
federal requirements for an approvable state program to issue operating
permits to all major stationary sources and to certain other sources.
Today's action also promulgates direct final approval of South Coast's
mechanism for receiving delegation of section 112 standards as
promulgated.
EFFECTIVE DATE: This direct final rule is effective on October 28, 1996
unless adverse or critical comments are received by September 30, 1996.
If the effective date is changed, a timely notice will be published in
the Federal Register.
ADDRESSES: Copies of the District's submittal and other supporting
information used in developing this direct final rule are available for
public inspection (docket number CA-SC-96-1-OPS) during normal business
hours at the following location: Operating Permits Section (A-5-2), Air
and Toxics Division, U.S. Environmental Protection Agency, Region IX,
75 Hawthorne Street, San Francisco, CA 94105.
FOR FURTHER INFORMATION CONTACT: Ginger Vagenas (telephone 415/744-
1252), Operating Permits Section (A-5-2), Air and Toxics Division, U.S.
Environmental Protection Agency, Region IX, 75 Hawthorne Street, San
Francisco, CA 94105.
SUPPLEMENTARY INFORMATION:
I. Background and Purpose
A. Introduction
Title V of the 1990 Clean Air Act Amendments (sections 501-507 of
the Clean Air Act (Act)), and implementing regulations at 40 Code of
Federal Regulations (CFR) part 70 (part 70), require that states
develop and submit operating permits programs to EPA by November 15,
1993, and that EPA act to approve or disapprove each program within 1
year after receiving the submittal. The EPA's program review occurs
pursuant to section 502 of the Act and the part 70 regulations, which
together outline criteria for approval or disapproval. Where a program
substantially, but not fully, meets the requirements of part 70, EPA
may grant the program interim approval for a period of up to 2 years.
If EPA has not fully approved a program by 2 years after the November
15, 1993 date, or by the end of an interim program, it must establish
and implement a federal program.
The EPA is publishing this action without prior proposal because
the Agency views this as a noncontroversial action and anticipates no
adverse comments. However, in a separate document in this Federal
Register publication, the EPA is proposing interim approval of the
operating permit program submitted by South Coast should adverse or
critical comments be filed.
If EPA receives adverse or critical comments, this action will be
withdrawn before the effective date by publishing a subsequent document
that will withdraw the final action. All public comments received will
then be addressed in a subsequent final rule based on this action
serving as the proposed rule. The EPA will not institute a second
comment period. Any parties interested in commenting on this action
should do so at this time. If no such comments are received, the public
is advised that this action will be effective on October 28, 1996.
B. Federal Oversight and Sanctions
This interim approval, which may not be renewed, extends until
October 29, 1998. During this interim approval period, South Coast is
protected from sanctions, and EPA is not obligated to promulgate,
administer and enforce a federal operating permits program in the
District. Permits issued under a program with interim approval have
full standing with respect to part 70, and the 1-year time period for
submittal of permit applications by subject sources begins upon the
effective date of this interim approval, as does the 3-year time period
for processing the initial permit applications.
If South Coast fails to submit a complete corrective program for
full approval by April 29, 1998, EPA will start an 18-month clock for
mandatory sanctions. If South Coast then fails to submit a corrective
program that EPA finds complete before the expiration of that 18-month
period, EPA will be required to apply one of the sanctions in section
179(b) of the Act, which will remain in effect until EPA determines
that South Coast has corrected the deficiency by submitting a complete
corrective program. Moreover, if the Administrator finds a lack of good
faith on the part of the District, both sanctions under section 179(b)
will apply after the expiration of the 18-month period until the
Administrator determines that South Coast has come into compliance. In
any case, if, six months after application of the first sanction, the
District still has not submitted a corrective program that EPA has
found complete, a second sanction will be required.
If EPA disapproves South Coast's complete corrective program, EPA
will be required to apply one of the section 179(b) sanctions on the
date 18 months after the effective date of the disapproval, unless
prior to that date South Coast has submitted a revised program and EPA
has determined that it corrected the deficiencies that prompted the
disapproval. Moreover, if the Administrator finds a lack of good faith
on the part of the District, both sanctions under section 179(b) shall
apply after the expiration of the 18-month period until the
Administrator determines that South Coast has come into compliance. In
all cases, if, six months after EPA applies the first sanction, the
District has not submitted a revised program that EPA has determined
corrects the deficiencies, a second sanction is required.
In addition, discretionary sanctions may be applied where warranted
any time after the expiration of an interim approval period if South
Coast has not timely submitted a complete corrective program or EPA has
disapproved its submitted corrective program. Moreover, if EPA has not
granted full approval to the District's program by the expiration of
this interim approval, EPA must promulgate, administer and enforce a
federal permits program for South Coast upon interim approval
expiration.
II. Direct Final Action and Implications
A. Analysis of State Submission
The analysis contained in this notice focuses on specific elements
of South Coast's title V operating permits program that must be
corrected to meet the minimum requirements of part 70. The full program
submittal; the Technical Support Document (TSD), which contains a
detailed analysis of the submittal; and other relevant materials are
available for inspection as part of the public docket (CA-SC-96-1-OPS).
The docket may be viewed during regular business hours at the address
listed above.
[[Page 45331]]
1. Support Materials
South Coast's title V program was submitted by the California Air
Resources Board (CARB) on December 27, 1993. The South Coast submittal
included the following implementing and supporting regulations:
Regulation XXX--Title V Permits; Rule 204--Permit Conditions; Rule
206--Posting of Permit to Operate; Rule 210--Applications; Rule 301--
Permit Fees; Rule 518--Hearing Board Procedures for Title V Facilities;
and Rule 219--Equipment not Requiring a Written Permit Pursuant to
Regulation II. The EPA found the program to be incomplete on March 4,
1994 because it lacked permit application forms. On March 6, 1995, the
District submitted its forms and EPA deemed the program complete on
March 30, 1995. On February 10, 1995, the District adopted a rule to
implement title IV. EPA deemed the South Coast acid rain program
acceptable on March 29, 1995 (see 60 FR 16127) and on April 11, 1995,
it was submitted to EPA as part of the District's title V program. On
August 11, 1995, the District amended the regulatory portion of its
submittal. On September 26, 1995, EPA received from CARB, on behalf of
the District, the revised Regulation XXX, revised Rule 518--Variance
Procedures for Title V Facilities, and a new rule, Rule 518.1--Permit
Appeal Procedures for Title V Facilities. Additional materials were
received on April 24, 1996, including draft revised application forms,
a demonstration of adequacy of the District's group processing
provisions, and several additional rules, including the following,
which are relied upon to implement the title V program: Rule 219--
Equipment not Requiring a Written Permit Pursuant to Regulation II,
adopted August 12, 1994 (supersedes previously submitted version); Rule
301--Permit Fees, adopted October 13, 1995 (supersedes previously
submitted version); and Rule 441--Research Operations, adopted May 5,
1976. In conjunction with its evaluation of the South Coast's title V
operating permits program, EPA reviewed all of the rules, including
Regulations XX and XIII, submitted by the District. While EPA is not
specifically approving rules not directly relied upon to implement part
70 as part of the District's operating permits program, changes to
these rules will be reviewed by EPA to ensure implementation of the
part 70 program is not compromised. See the TSD for a complete listing
of rules submitted by the District. Rule 518.2, Federal Alternative
Operating Conditions, adopted January 12, 1996, was also submitted and
is discussed below under II.A.2.g.
On May 6, 1996 application completeness criteria were received and
on June 5, 1996 revised application forms were received. The District
submitted a demonstration that shows South Coast will permit 60% of its
title V sources and 80% of emissions attributable to title V sources
within three years of program approval (see section II.A.2.d. below)
along with a sample of facility permit application on May 23, 1996.
Finally, on July 29, 1996, the District submitted revised application
forms and completeness criteria.
Enabling legislation for the State of California and the Attorney
General's legal opinion were submitted by CARB for all districts in
California and therefore were not included separately in South Coast's
submittal. The South Coast submission now contains a Governor's letter
requesting source category-limited interim approval, District
implementing and supporting regulations, and all other program
documentation required by section 70.4. An implementation agreement is
currently being developed between South Coast and EPA.
2. Regulations and Program Implementation
South Coast's title V implementing regulation, District Regulation
XXX, was first adopted on October 8, 1993. EPA reviewed Regulation XXX
both before and after rule adoption and identified numerous regulatory
deficiencies. These deficiencies were communicated to South Coast in
letters dated October 7, 1993, December 7, 1994, April 6, 1995, April
13, 1995, and May 1, 1995. In response, South Coast revised Regulation
XXX and Rule 518. The amended rules were adopted on August 11, 1995 and
submitted to EPA by CARB, on behalf of the District, on September 26,
1995. EPA is therefore evaluating and acting on the August 11, 1995
version of Regulation XXX and Rule 518.
South Coast's title V implementing regulations substantially meet
the requirements of 40 CFR part 70, sections 70.2 and 70.3 for
applicability; sections 70.4, 70.5, and 70.6 for permit content,
including operational flexibility; section 70.7 for public
participation and permit modifications; section 70.5 for criteria that
define insignificant activities; section 70.5 for complete application
forms; and section 70.11 for enforcement authority. Although the
regulations substantially meet part 70 requirements, there are a few
deficiencies in the program that are outlined under section II.B.1.
below as interim approval issues and further described in the TSD.
a. Variances. South Coast's Hearing Board has the authority to
issue variances from requirements imposed by State and local law. See
California Health and Safety Code sections 42350 et seq. In the legal
opinion submitted for California operating permit programs,
California's Attorney General states that ``[t]he variance process is
not part of the Title V permitting process and does not affect federal
enforcement for violations of the requirements set forth in a Title V
permit.'' (Emphasis in original.)
EPA regards the State and District variance provisions as wholly
external to the program submitted for approval under part 70, and
consequently, is not taking action on those provisions of State and
local law. EPA has no authority to approve provisions of state or local
law, such as the variance provisions referred to, that are inconsistent
with the Act.
A part 70 permit may incorporate, via part 70 permit issuance or
modification procedures, the schedule of compliance set forth in a
variance. However, EPA reserves the right to pursue enforcement of
applicable requirements notwithstanding the existence of a compliance
schedule in a permit to operate. This is consistent with 40 CFR
Sec. 70.5(c)(8)(iii)(C), which states that a schedule of compliance
``shall be supplemental to, and shall not sanction noncompliance with,
the applicable requirements on which it is based.''
EPA does not recognize the ability of a permitting authority to
grant relief from the duty to comply with a federally enforceable part
70 permit, except where such relief is granted through procedures
allowed by part 70. A part 70 permit may be issued or revised to
incorporate those terms of a variance that are consistent with
applicable requirements.
b. Group Processing Provisions. Part 70 provides for the group
processing of minor permit modifications, providing the cumulative
emissions increases from the pending changes do not exceed 10% of
allowable emissions for the unit, 20% of the major source threshold, or
5 tons per year (tpy), which ever is lower. Section 70.7(e)(3)(i)(B)
allows the District to establish and EPA to approve alternative levels,
if such alternative levels would reasonably alleviate severe
administrative burdens and the individual processing of changes below
the levels would yield trivial environmental benefits.
South Coast allows cumulative emissions increases of up to 5 tons
per year under its group processing
[[Page 45332]]
provisions. This will in some cases exceed the levels set out in part
70. For example, 20% of the major source threshold for NOX and VOC
in the South Coast is 2 tons per year. Appendix C of the South Coast's
April 24, 1996 submittal contains a demonstration that supports the use
of a 5 ton per year cut-off for group processing. The District notes
that its requirement that sources obtain a permit revision prior to
making a change eliminates any environmental risk associated with
delays allowed by group processing. It also points out that the ability
to group several changes into one permit action alleviates the
administrative burden of multiple rounds of processing and provides for
a shorter period of time when a facility permit is in flux. EPA
believes the District has met the requirements of 70.7(e)(3)(i)(B) and
is therefore approving the alternative group processing level in the
South Coast regulation.
c. Provisions for Processing Certain Modifications Subject to Major
NSR Via the Minor Permit Revision Track. The South Coast Air Quality
Management District is the only extreme ozone nonattainment area in the
country. Because of its nonattainment status, any increase of emissions
of NOX or VOC from a discrete operation, unit or other pollutant
emitting activity is a modification subject to major NSR. Such
modifications are generally required by part 70 to undergo public
review. Potentially several hundred to several thousand major NSR
modifications can occur each year in the South Coast under applicable
definitions of major source (10 tons per year) and major modification
(any emissions increase). For perspective, a major modification in
serious or severe ozone nonattainment areas is triggered by 25 tons of
emissions accumulated over a five year period, and in most areas in the
country, a major modification does not occur unless there is an
emissions increase of 40 tons per year (tpy).
The District has included in its rule provisions allowing
modifications that result in cumulative (over the 5 year term of the
permit) emissions increases of up to 40 pounds per day (about 7.3 tpy)
of NOX and 30 pounds per day (about 5.5 tpy) of VOC to be
processed via its minor permit revision procedures. South Coast does
not allow applicants to implement minor permit revisions prior to final
action by the District on the revision. Therefore, what distinguishes
this treatment from the significant permit revision procedure that
would otherwise be required is that there would be no public comment
period during the permit issuance process. The public does have the
opportunity, however, to review the revision after it is issued and to
petition EPA to object to the permit. (See 70.8 and 3003(l).)
EPA believes that this aspect of the South Coast program is
approvable. Requiring full public participation procedures for
modifications that result in emissions increases below the levels
specified in the District's operating permits rule would be unworkable
in the South Coast. The sheer number of notices that would be required
if all major modifications were handled in this way would dilute
attention that should be focused on the more significant of the changes
that qualify as ``major.'' Although it makes sense that the scope of
changes subject to prior public review should be broadest in areas with
the greatest nonattainment problems, EPA believes that such a notice
requirement ceases to yield a benefit, and may in fact be damaging to
the purpose of a public review requirement, if applied to the smallest
changes that would qualify as ``major'' in an extreme area. EPA further
believes that the threshold levels for prior public review found in the
South Coast program are reasonable, and will strike an appropriate
balance between the need for broad public review on the one hand, and
on the other, the administrative burden on the District and the
quantitative limits on the public's ability to provide review that is
meaningful. EPA notes that it has previously considered these
``triggers'' for public notice in the context of the District's new
source review program, and believes them to be adequate.
EPA wishes to emphasize that this finding is unique to the South
Coast. As the only extreme area in the nation, the South Coast District
is subject to statutory constraints referred to above that affect NSR
and title V. These constraints, which flow directly from the provisions
of the CAA, result in both a volume and proportion of changes
classified as ``major'' that distinguish the South Coast from all other
title V programs.
See section II.B.1.(3) below for a discussion of aspects of the
South Coast permit modification procedures that are proposed for
interim approval.
d. Applicability and Duty to Apply: Two Phases of Permitting. While
the ``title V facility'' definition in South Coast's title V program
fully meets the applicability requirements of part 70, the District has
allowed sources with actual emissions below certain thresholds to defer
the obligation to apply for title V permits until no later than three
and a half years after the program effective date (3000(b)(28),
3001(b), and 3003(a)(3)). Ordinarily, part 70 requires sources to apply
within one year of the program effective date. This deferral is
effectively a request for source category-limited interim approval for
sources with actual emissions below the given thresholds.
EPA's policy on source category-limited interim approval is set
forth in a document entitled, ``Interim Title V Program Approvals,''
signed on August 2, 1993 by John Seitz. In order to meet the interim
approval criteria described in that memorandum, South Coast
demonstrated that it would permit, during the first phase of the
program, more than 60% of the District's title V sources and more than
80% of the pollutants emitted by title V sources. This requirement is
addressed in a letter from Pang Mueller, Senior Manager of Stationary
Source Compliance, dated May 16, 1996. South Coast estimated that there
are more than 1600 title V facilities located in the District and that
the workload to permit all of those sources in the initial three year
period would be ``excessively burdensome.'' The EPA believes that South
Coast has demonstrated compelling reasons for a source category-limited
interim approval. The Seitz memo also requires that source category-
limited interim approval be granted only if all sources will be
permitted within five years of the date required for EPA final action.
Because the South Coast program guarantees that all title V sources
will be permitted within five years following program approval, and
because South Coast has satisfied the criteria set forth in the August
2, 1993 memorandum, EPA finds the District's program to be eligible for
source category-limited interim approval.
e. Enhanced New Source Review. South Coast's title V permit program
provides for enhanced preconstruction review, an optional process that
allows sources to satisfy both new source review and title V permit
modification requirements at the same time. Any modification processed
pursuant to South Coast's enhanced preconstruction review procedures
may be incorporated into the title V permit as an administrative permit
amendment. These enhanced procedures obviate the need to undergo two
application, public notice, and permit issuance/revision processes for
the same change. (See 3000(b)(1)(D).)
f. Regional Clean Air Incentives Market (RECLAIM). RECLAIM is the
South Coast's emissions-limiting economic incentives program. It
targets facilities with four or more tons of NOX
[[Page 45333]]
or SOX emissions per year from permitted equipment for
participation in a pollutant-specific market with the goal of reducing
emissions at a significantly lower cost. The program subsumes fourteen
SCAQMD Air Quality Management Plan (AQMP) control measures and is
projected to reduce emissions by an equivalent amount. Sources are not,
however, relieved from the duty to comply with new source review
requirements and must comply with best available control technology
requirements established pursuant to the District's new source review
process.
For the most part, RECLAIM facilities that are subject to
Regulation XXX are treated the same as non-RECLAIM facilities. Certain
aspects of the permit modification provisions do, however, set out
different treatment for RECLAIM and non-RECLAIM facilities, and the
regulation sets out different means for establishing applicability. EPA
has evaluated the procedures for modifying part 70 operating permits
that are issued to RECLAIM facilities along with the means for
determining the applicability of Regulation XXX to RECLAIM facilities
and has found them to be adequate for approval. For additional
background and analysis, see Attachment J of the TSD.
g. Alternative Operating Conditions. EPA has no authority to
approve provisions of state or local law, such as the variance
provisions discussed above, that are inconsistent with the Act.
Districts, however, have always had the ability to make the terms of a
variance federally enforceable by submitting a source-specific SIP
revision to EPA that demonstrates, pursuant to section 110(l) of the
Clean Air Act, that the proposed change will not interfere with any
applicable requirement concerning attainment of the ambient air quality
standards and reasonable further progress.
As noted above, it is possible for a permitting authority to grant
relief from the duty to comply with a federally enforceable part 70
permit, where such relief is granted through procedures allowed by part
70 and is consistent with applicable requirements, including section
110(l) of the Act. South Coast has adopted and submitted Rule 518.2--
Federal Alternative Operating Conditions which, if approved, will
enable the District to incorporate alternative operating conditions for
certain requirements into part 70 permits. Alternative operating
conditions are not available for federally promulgated rules,
regulations, or permit conditions, including standards promulgated
pursuant to section 111 or 112 of the Clean Air Act, title IV or title
VI requirements, or requirements to obtain an operating permit or an
authority to construct.
Rule 518.2 is based on two fundamental concepts. First, in order to
preserve the opportunity for public and EPA review, the SIP will be
revised to incorporate Rule 518.2, which combines district variance
procedures with the significant permit revision procedures of part 70.
Second, to ensure that a federally enforceable alternative operating
condition does not interfere with Clean Air Act progress or attainment
requirements, the rule establishes an emissions bank. This bank
provides the District with the ability to offset excess emissions
resulting from the granting of an alternative operating condition.
EPA believes Rule 518.2 meets the requirements of sections 110(l)
and 193 of the Clean Air Act for approval in the SIP and is not
inconsistent with the requirement under part 70 that operating permits
must assure compliance with applicable requirements. EPA therefore will
propose approval of this revision to the South Coast portion of the
California State Implementation Plan in the near future.
3. Permit Fee Demonstration
Section 502(b)(3) of the Act requires that each permitting
authority collect fees sufficient to cover all reasonable direct and
indirect costs required to develop and administer its title V operating
permits program. Each title V program submittal must contain either a
detailed demonstration of fee adequacy or a demonstration that
aggregate fees collected from title V sources meet or exceed $25 per
ton per year (adjusted annually based on the Consumer Price Index
(CPI), relative to 1989 CPI). The $25 per ton amount is presumed, for
program approval, to be sufficient to cover all reasonable program
costs and is thus referred to as the ``presumptive minimum'' (40 CFR
70.9(b)(2)(i)).
South Coast has opted to make a presumptive minimum fee
demonstration. By dividing the fees charged to facilities it believes
will be subject to its title V program by those facilities' emissions,
the District calculates its effective fee rate is $323 per ton of
emissions. This amount is appreciably higher than the current
presumptive minimum of $30.93.
4. Provisions Implementing the Requirements of Other Titles of the Act
a. Authority and Commitments for Section 112 Implementation. South
Coast has demonstrated in its title V program submittal adequate legal
authority to implement and enforce all section 112 requirements through
the title V permit. This legal authority is contained in the State of
California enabling legislation and in regulatory provisions defining
federal ``applicable requirements'' and requiring each permit to
incorporate conditions that assure compliance with all applicable
requirements. EPA has determined that this legal authority is
sufficient to allow South Coast to issue permits that assure compliance
with all section 112 requirements. For further discussion, please refer
to the TSD accompanying this action and the April 13, 1993 guidance
memorandum entitled, ``Title V Program Approval Criteria for Section
112 Activities,'' signed by John Seitz.
b. Authority for Title IV Implementation. On February 11, 1995,
South Coast incorporated by reference part 72, the federal acid rain
permitting regulations. The incorporation by reference was codified in
Regulation XXXI. EPA determined Regulation XXXI to be acceptable on
March 29, 1995 (See 60 FR 16127).
B. Proposed Interim Approval and Implications
1. Title V Operating Permits Program
The EPA is promulgating direct final interim approval of the
operating permits program submitted by the California Air Resources
Board, on behalf of the South Coast Air Quality Management District, on
December 27, 1993 and amended on March 6, 1995, April 11, 1995,
September 26, 1995, April 24, 1996, May 6, 1996, May 23, 1996, June 5,
1996, and July 29, 1996. Areas in which South Coast's program is
deficient and requires corrective action prior to full approval are as
follows:
(1) California State law currently exempts agricultural production
sources from permit requirements. CARB has requested source category-
limited interim approval for all California districts. In order for
South Coast's program to receive full approval (and to avoid a
disapproval upon the expiration of this interim approval), the
California Legislature must revise the Health and Safety Code to
eliminate the exemption of agricultural production sources from the
requirement to obtain a permit.
(2) Section 70.5(c) states that EPA may approve, as part of a state
program, a list of insignificant activities and emissions levels which
need not be included in permit applications. Section 70.5(c) also
states that an application for a part 70 permit may not omit
information needed to determine the
[[Page 45334]]
applicability of, or to impose, any applicable requirement, or to
evaluate appropriate fee amounts. Section 70.4(b)(2) requires states to
include in their part 70 programs any criteria used to determine
insignificant activities or emission levels for the purpose of
determining complete applications.
Under part 70, a state must request and EPA may approve as part of
that state's program the activity or emission level that the state
wishes to consider insignificant. Part 70, however, does not establish
appropriate emission levels for insignificant activities, relying
instead on a case-by-case determination of appropriate levels based on
the particular circumstances of the part 70 program under review. South
Coast submitted an extensive list of insignificant activities in the
form of Rule 219--Equipment Not Requiring a Written Permit Pursuant to
Regulation II. The District did not provide criteria that were used to
determine that the listed activities are appropriately treated as
insignificant. The regulation does not ensure that activities to which
non-general applicable requirements apply are excluded from the list of
insignificant activities, nor does the program demonstrate that
emissions from the listed activities are truly insignificant.
While many of the listed activities do appear to be reasonable
candidates for such treatment, some do not. For instance, paragraph
(d)(2) of Rule 219 exempts most refrigeration units regardless of size.
Such units, if they have a charge rate of 50 pounds or more of a Class
I or II ozone-depleting compound, may be subject to unit-specific
applicable requirements and could not, therefore, be considered
insignificant. EPA believes that, for the insignificant activities
provisions to be fully approvable, the list must not create confusion
regarding the regulated community's obligation to provide all
information needed to determine the applicability of, or to impose, any
applicable requirement, nor may the list interfere with the permitting
authority's obligation to issue permits that assure compliance with all
applicable requirements.
For interim approval, EPA is relying on certain provisions in
Regulation XXX that affect the scope and usage of insignificant
activities. Specifically, paragraph (b) of Rule 3003 requires that
applicants shall submit ``* * * all information necessary to evaluate
the subject facility and the application, including all information
specified in 40 CFR 70.5(c), to determine the applicability of and to
impose any regulatory requirement * * *.'' The application forms
require the listing of all equipment that is exempt from permitting. In
addition, Rule 3001(b), (c) and (d), and Rule 3000(b)(15) ensure that
the source's potential to emit, which does not exclude unpermitted
activities, will generally determine title V applicability.
For full approval, South Coast must provide supporting criteria and
revise its list of insignificant activities, as appropriate. The
District must remove any activities from its list of insignificant
activities that are subject to a unit-specific applicable requirement
and adjust or add size cut-offs to ensure that the listed activities
are truly insignificant. (See sections 70.4(b)(2) and 70.5(c).)
(3) The South Coast rule (3005(b)(1)) allows the following types of
changes, which are required under part 70 to be processed as
significant permit modifications, to be processed under minor
modification procedures:
(1) NSPS and NESHAP (parts 60 and 61) modifications that result in
emissions increases up to ``de minimis'' emissions thresholds (the de
minimis levels are: HAP, VOC and PM10--5.5 tpy; NOX--7.3 tpy;
SOX--11 tpy; and CO--40 tpy). (Any emissions increase resulting
from an NSPS or NESHAP modification should be processed under the
significant modification procedures);
(2) Establishment of or changes to case-by-case emissions
limitations, providing the changes do not result in emissions increases
above the de minimis thresholds. (Part 70 requires that such actions
must be processed as significant modifications, regardless of any
resulting changes in emissions); and
(3) Changes to permit conditions that the facility has assumed to
avoid an applicable requirement, providing the changes do not result in
emissions increases above the de minimis thresholds. (Part 70 requires
that all such changes must be processed as significant modifications,
regardless of any resulting changes in emissions.)
The District must modify its program so that these changes will be
subject to the procedural requirements of the significant modification
track. (See 70.7(e)(2)(i)(3),(4), and (4)(A).)
(4) Because the initial implementation of the South Coast program
will not include all title V sources (see section II.A.2.d. above), the
District is receiving a source category limited interim approval. The
District's regulation, however, does include language that expands the
applicability of the program after three years and ensures that all
title V sources will be permitted within five years. Although this
phase-in is considered to be an interim approval issue, no change to
the regulation is required to resolve it.
(5) The South Coast's group processing provisions are set out in
paragraph (c) of Rule 3005. Subparagraph (c)(1)(B) provides that when
emissions increases resulting from pending revisions exceed 5 tons per
year for a given pollutant, the pending revisions must be processed.
Rule 3005(c)(2), however, references 3000(b)(6) (South Coast's higher
de minimis significant permit revision levels) when instructing the
applicant of its responsibilities. This reference conflicts with
3005(c)(1)(B) and must be amended. In order to properly implement its
program, South Coast must adhere to the levels specified in
3005(c)(1)(B).
(6) The language in rule 3004(a)(3)(C) must be amended to conform
with the part 70 language. It currently requires that the permit
include ``periodic monitoring or recordkeeping * * * representative of
the source's compliance for the term of the permit'' rather than ``with
the terms of the permit.'' (See 70.6(a)(3)(i)(B).)
(7) Rule 3004(a)(9) must be revised to specify that any trading of
emissions increases and decreases allowed without changes to the permit
must meet the requirements of the part 70 program. (See
70.6(a)(10)(iii).)
(8) The South Coast program must be amended to provide that a
source that is granted a general permit shall be subject to enforcement
action for operating without a permit if the source is later determined
not to qualify for the conditions and terms of the general permit,
regardless of any application shield provisions. (See 70.6(d)(1).)
(9) 3002(g)(1) allows an emergency to constitute an affirmative
defense if ``properly signed, contemporaneous operating logs or other
credible evidence are kept at the facility.'' The rule must be amended
to require that the logs or other evidence demonstrate that the
conditions set out in the rule were met by the facility. (See
70.6(g)(3).)
(10) The definition of ``renewal'' in 3000(b)(22) must be modified
to clarify that permits will be renewed at least every 5 years,
regardless of whether renewal is necessary to incorporate new
regulatory requirements.
(11) Paragraph (g)(1) of Rule 3005 provides for Section 502(b)(10)
changes (changes that violate an express permit term or condition). The
South Coast rule appropriately limits the types of changes that can
qualify for this treatment, except 3005(g)(1)(C)(i) excludes compliance
plan requirements instead of compliance certification
[[Page 45335]]
requirements. The rule must be revised to state that changes that would
violate compliance certification requirements are not allowed.
(12) Paragraph (g) of Rule 3005 must be amended to specify that the
District and the source must attach a copy of any notice of 502(b)(10)
changes to the permit. (See 70.4(b)(12).)
(13) Provisions must be added to Rule 3005(i) that specify the
following: (1) Any change allowed under this section must meet all
applicable requirements and shall not violate existing permit terms;
(2) the source must provide contemporaneous notice to the District and
EPA; and (3) the source must keep a record of the change. (See
70.4(b)(14).)
(14) Rule 3002(g) provides that, in addition to meeting the
Regulation XXX requirements implementing 70.6(g), a source must comply
with District Rule 430--Breakdown Provisions in order to avail itself
of the affirmative defense set out in 70.6(g). Paragraph (5) of 70.6(g)
states that the provisions of 70.6(g) are in addition to any emergency
or upset provisions contained in any applicable requirement. Because
Rule 430 is not SIP approved, however, it is not an applicable
requirement. In order to resolve this issue, South Coast is required to
either submit an approvable version of Rule 430 to EPA for inclusion in
the SIP or to delete the reference to Rule 430. Note that the cross
reference to Rule 430 included in 3002(g) does not alter the provisions
of 70.6(g) and that Rule 430 is wholly external to the part 70 program.
This interim approval, which may not be renewed, extends for a
period of up to two years. During the interim approval period, South
Coast is protected from sanctions for failure to have a program, and
EPA is not obligated to promulgate a federal permits program in the
District. Permits issued under a program with interim approval have
full standing with respect to part 70, and the one-year time period for
submittal of permit applications by subject sources begins upon interim
approval, as does the three-year time period for processing the initial
permit applications.
The scope of South Coast's part 70 program that EPA is acting on in
this notice applies to all part 70 sources (as defined in the approved
program) within South Coast's jurisdiction. The approved program does
not apply to any part 70 sources over which an Indian tribe has
jurisdiction. See, e.g., 59 FR 55813, 55815-18 (Nov. 9, 1994). The term
``Indian tribe'' is defined under the Act as ``any Indian tribe, band,
nation, or other organized group or community, including any Alaska
Native village, which is federally recognized as eligible for the
special programs and services provided by the United States to Indians
because of their status as Indians.'' See section 302(r) of the CAA;
see also 59 FR 43956, 43962 (Aug. 25, 1994); 58 FR 54364 (Oct. 21,
1993).
2. State Preconstruction Permit Program Implementing Section 112(g)
The EPA has published an interpretive notice in the Federal
Register regarding section 112(g) of the Act (60 FR 8333; February 14,
1995) that postpones the effective date of section 112(g) until after
EPA has promulgated a rule addressing that provision. The interpretive
notice also explains that EPA is considering whether the effective date
of section 112(g) should be delayed beyond the date of promulgation of
the federal rule so as to allow states time to adopt rules implementing
the federal rule, and that EPA will provide for any such additional
delay in the final section 112(g) rulemaking. Unless and until EPA
provides for such an additional postponement of section 112(g), South
Coast must be able to implement section 112(g) during the period
between promulgation of the federal section 112(g) rule and adoption of
implementing State regulations.
For this reason, EPA is approving the use of South Coast's
preconstruction review program as a mechanism to implement section
112(g) during the transition period between promulgation of the section
112(g) rule and adoption by South Coast of rules specifically designed
to implement section 112(g). However, since the sole purpose of this
approval is to confirm that the District has a mechanism to implement
section 112(g) during the transition period, the approval itself will
be without effect if EPA decides in the final section 112(g) rule that
there will be no transition period. The EPA is limiting the duration of
this approval to 18 months following promulgation by EPA of the section
112(g) rule.
3. Program for Delegation of Section 112 Standards as Promulgated
Requirements for approval, specified in 40 CFR 70.4(b), encompass
section 112(l)(5) requirements for approval of a program for delegation
of section 112 standards as promulgated by EPA as they apply to part 70
sources. Section 112(l)(5) requires that a state's program contain
adequate authorities, adequate resources for implementation, and an
expeditious compliance schedule, which are also requirements under part
70. Therefore, EPA is also promulgating approval under section
112(l)(5) and 40 CFR 63.91 of South Coast's program for receiving
delegation of section 112 standards that are unchanged from federal
standards as promulgated. California Health and Safety Code section
39658 provides for automatic adoption by CARB of section 112 standards
upon promulgation by EPA. Section 39666 of the Health and Safety Code
requires that districts then implement and enforce these standards.
Thus, when section 112 standards are automatically adopted pursuant to
section 39658, South Coast will have the authority necessary to accept
delegation of these standards without further regulatory action by the
District. The details of this mechanism and the means for finalizing
delegation of standards will be set forth in an implementation
agreement between South Coast and EPA. This program applies to both
existing and future standards but is limited to sources covered by the
part 70 program.
III. Administrative Requirements
A. Docket
Copies of South Coast's submittal and other information relied upon
for this direct final action is contained in docket number CA-SC-96-1-
OPS maintained at the EPA Regional Office. The docket is an organized
and complete file of all the information submitted to, or otherwise
considered by, EPA in the development of this direct final rulemaking.
The docket is available for public inspection at the location listed
under the ADDRESSES section of this document.
B. Regulatory Flexibility Act
The EPA's actions under section 502 of the Act do not create any
new requirements, but simply address operating permits programs
submitted to satisfy the requirements of 40 CFR part 70. Because this
action does not impose any new requirements, it does not have a
significant impact on a substantial number of small entities.
C. Unfunded Mandates
Under section 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA
must prepare a budgetary impact statement to accompany any proposed or
final rule that includes a federal mandate that may result in estimated
costs to state, local, or tribal governments in the aggregate; or to
the private sector, of $100 million or more. Under section 205, EPA
must select the most cost-effective and least burdensome alternative
that achieves the objectives of the rule and is consistent with
[[Page 45336]]
statutory requirements. Section 203 requires EPA to establish a plan
for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
EPA has determined that the approval action promulgated today does
not include a federal mandate that may result in estimated costs of
$100 million or more to either state, local, or tribal governments in
the aggregate, or to the private sector. This federal action approves
pre-existing requirements under state or local law, and imposes no new
federal requirements. Accordingly, no additional costs to state, local,
or tribal governments, or to the private sector, result from this
action.
D. Small Business Regulatory Enforcement Fairness Act
Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business
Regulatory Enforcement Fairness Act of 1996, EPA submitted a report
containing this rule and other required information to the U.S. Senate,
the U.S. House of Representatives and the Comptroller General of the
General Accounting Office prior to publication of the rule in today's
Federal Register. This rule is not a ``major rule'' as defined by 5
U.S.C. 804(2).
E. Executive Order 12866
The Office of Management and Budget has exempted this action from
review under Executive Order 12866.
List of Subjects in 40 CFR Part 70
Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Operating permits,
Reporting and recordkeeping requirements.
Dated: August 9, 1996.
Felicia Marcus,
Regional Administrator.
Part 70, title 40 of the Code of Federal Regulations is amended as
follows:
PART 70--[AMENDED]
1. The authority citation for part 70 continues to read as follows:
Authority: 42 U.S.C. 7401, et seq.
2. Appendix A to part 70 is amended by adding paragraph (dd) to the
entry for California to read as follows:
Appendix A to Part 70--Approval Status of State and Local Operating
Permits Programs
* * * * *
(dd) South Coast Air Quality Management District: submitted on
December 27, 1993 and amended on March 6, 1995, April 11, 1995,
September 26, 1995, April 24, 1996, May 6, 1996, May 23, 1996, June 5,
1996 and July 29, 1996; approval effective on October 28, 1996 unless
adverse or critical comments are received by September 30, 1996.
* * * * *
[FR Doc. 96-21950 Filed 8-28-96; 8:45 am]
BILLING CODE 6560-50-P
