ENVIRONMENTAL PROTECTION AGENCY

POSTAL SERVICE

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5000-2]

Clean Air Act Disapproval of Operating Permits Program;

Commonwealth of Virginia

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed disapproval.

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SUMMARY: EPA is proposing to disapprove the Operating Permits Program

submitted by the Commonwealth of Virginia for the purpose of complying

with Federal requirements which mandate that States develop, and submit

to EPA, programs for issuing operating permits to all major stationary

sources, and to certain other sources. The reasons for proposing

disapproval are as follows: Virginia's program does not contain the

necessary legal authority to afford judicial review to persons who have

participated in the public comment process, and it also does not

contain the necessary legal authority to prevent default issuance of a

permit. The submitted regulations have an expiration date of June 28,

1994 and cannot be applied or enforced after that date. Also, the

regulatory portion of the program does not include the proper universe

of sources required to be subject to a state operating permit program

or ensure that permits contain all applicable requirements, or

correctly delineating provisions enforceable only by the Commonwealth.

In addition, there are other deficiencies in Virginia's submitted

program, as specified in the Technical Support Document, which must be

corrected before EPA can grant full approval to Virginia's operating

permits program.

DATES: Comments on this proposed action must be received in writing by

July 18, 1994.

ADDRESSES: Comments should be mailed to Thomas J. Maslany, Director,

Air, Radiation & Toxics Division at the Region III address.

A copy of Virginia's submittal and other supporting information

used in developing the proposal are contained in the docket and

available for inspection during normal business hours at the following

location: EPA Region III, Air, Radiation & Toxics Division, 841

Chestnut Building, Philadelphia, PA 19107.

FOR FURTHER INFORMATION CONTACT: Lisa M. Donahue, Environmental

Scientist, at the Region III address, or call 215-597-9781.

SUPPLEMENTARY INFORMATION:

I. Background

A. Introduction

As required under title V of the Clean Air Act (``CAA''), EPA has

promulgated rules which define the minimum elements of an approvable

state operating permits program and the corresponding standards and

procedures by which the EPA will approve, oversee, and withdraw

approval of State operating permits programs (see 57 FR 32250 (July 21,

1992)). These rules are codified at 40 CFR part 70. Title V requires

States to develop, and submit to EPA, programs for issuing these

operating permits to all major stationary sources and to certain other

sources.

The CAA requires that states develop and submit these programs to

EPA by November 15, 1993, and that EPA take actions 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 CAA and

40 CFR part 70, which together outline criteria for approval or

disapproval. Where a program substantially, but not fully, meets the

requirements of 40 CFR 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 November 15, 1995, or by the end of an interim program

period, it must establish and implement a Federal operating permits

program.

On November 12, 1993, Virginia submitted an operating permits

program for review by EPA. It was received by EPA on November 19, 1994.

The submittal was supplemented by a letter dated January 14, 1994, and

was found to be administratively complete pursuant to 40 CFR

70.4(e)(1). The submittal contains a program description, a legal

opinion from the Virginia Attorney General, confirmation of regulatory

authority, program and fee regulations, relevant portions of Virginia

statutes, guidance and forms, a description of enforcement provisions,

a resource and fee demonstration, and a transition plan.

B. Federal Oversight and Sanctions

Sanctions must be imposed 18 months after EPA disapproves a state

submittal, unless prior to expiration of the 18-month period the state

submits a revised program that EPA approves. If a state has not

submitted a revised program that EPA approves within 6 months after EPA

applies the first sanction, a second sanction is required. In addition,

discretionary sanctions may be applied any time during the 18-month

period following the date required for program submittal or the date of

program disapproval. If the Commonwealth does not have an approved

program by November 15, 1995, EPA must promulgate, administer, and

enforce a Federal operating permits program for the Commonwealth.

II. Summary and Analysis of State Submission

The analysis contained in this document focuses on the major

portions of Virginia's submittal and particularly portions which must

be corrected to meet the minimum requirements of 40 CFR part 70. The

full program submittal, the Technical Support Document, and other

relevant materials are available for detailed information as part of

the public docket. The docket may be viewed during regular business

hours at the address listed above.

A. Statutory Authority

1. Standing for Judicial Review

The Attorney General of the Commonwealth, in his opinion dated

November 5, 1993, states that ``the laws of the Commonwealth provide

adequate authority to carry out all aspects of the Commonwealth's

program for Federal operating permits.'' The Attorney General cites Va.

Code section 10.1-1318(B) as providing an opportunity for judicial

review to any person who is aggrieved by a final decision of the State

Air Pollution Control Board and who meets certain criteria, including

having an immediate, pecuniary, and substantial interest. The

requirement for standing for judicial review, as specifically required

by section 502(b)(6) of the CAA and 40 CFR 70.4(b)(3)(x), must provide

standing for any person who has participated in the public comment

process and any other person who could obtain judicial review of that

action under applicable law. EPA interprets section 502(b)(6) of the

CAA as requiring that title V permits programs must provide judicial

review to any party who participated on the public comment process and

who at a minimum meets the threshold standing requirements of Article

III of the U.S. Constitution.

In comparison, Section 10.1-1318(B) of the Code of Virginia extends

the right to seek judicial review only to persons who have suffered an

``actual, threatened, or imminent injury...'' where ``such injury is an

invasions of an immediate, legally protected, pecuniary and substantial

interest which is concrete and particularized...'' The Virginia

statute, as well Virginia case law does not enable a party who meets

the minimum threshold standing requirements of Article III of the U.S.

Constitution access to the Commonwealth's court system. The

Commonwealth's Attorney General's opinion submitted with Virginia's

program states that ``the inclusion of the word 'pecuniary' in the

amended Virginia law means the requirement for standing to obtain

judicial review may be more stringent than Article III standing

requirements, as the EPA interprets them under the United States

Supreme Court decision in Lujan v. Defenders of Wildlife, 112 S.Ct.

2130, 2136 (1992) and related cases.''

The limitations on judicial review in Virginia do not meet the

minimum threshold standing requirements of Article III of the U.S.

Constitution and thus do not meet the minimum program approval criteria

under title V. Therefore, EPA is proposing to disapprove Virginia's

program because it does not meet the minimum requirement for standing

for judicial review. Va. Code section 10.1-1318(B) must be amended.

2. Default Issuance of Permits

Va. Code section 9-6.14:3 provides that the purpose of Virginia's

Administrative Process Act is to supplement present and future basic

laws. Although Regulations sections 120-08-0525 C and E provide for EPA

veto and affected states review, these regulations may be superseded by

the Administrative Process Act. Sections 9-6.14:11 and 9-6.14:12 of the

Administrative Process Act provide that a party may provide written

notice to the agency that a decision on a permit is due, and that the

decision is deemed in favor of the named party if no decision is

reached within 30 days. This provision prevents the Commonwealth from

meeting the requirement of section 505(b)(3) of the CAA that no permit

be issued unless it is revised to meet the objection of EPA, if EPA

objects to the permit within 45 days after receiving a copy of the

proposed permit. This provision also prevents the Commonwealth from

meeting Sec. 70.8(e), which requires the Attorney General to certify

that no provision of state law requires that a permit be issued after a

certain time if the permitting authority has failed to take action on

the application. Virginia must ensure that no permit will be issued by

default through this process until affected states and EPA have had a

chance to review the proposed permit as required by 40 CFR 70.8. In

addition Virginia must ensure that no permit will be issued through

this process if EPA has objected within 45 days. EPA is proposing to

disapprove Virginia's program because it does not ensure that EPA and

affected states are given an adequate opportunity for review of

proposed permits and that no permit will be issued if EPA objects.

B. Regulations and Program Implementation

1. Effectiveness and Enforceability of Rules

The Virginia operating permit program Regulations for the Control

and Abatement of Air Pollution (Regulations) Emergency Rule 8-5,

Federal Operating Permits for Stationary Sources, and Emergency Rule 8-

6, Permit Program Fees, do not meet the requirements of 40 CFR part 70.

Although the rules are currently effective, they expire on June 28,

1994 and cannot be implemented or enforced beyond that date. EPA is

proposing to disapprove Virginia's program because its regulations

expire on June 28, 1994.

2. Applicability Under the Operating Permits Program

a. Definitions and Exemptions. The requirements of Sec. Sec. 70.2

and 70.3 for applicability have not been met. Primarily, Virginia's

regulations at section 120-08-0502 and section 120-08-0602 do not

correctly define major source or stationary source. Virginia's

definitions, and the exemptions of insignificant activities and

affected sources found in section 120-08-0501 of Virginia's regulations

limit the universe of sources that are applicable to Rule 8-5 by

exempting or deferring sources that are required by 40 CFR part 70 to

obtain an operating permit. EPA is proposing to disapprove Virginia's

program because the regulations do not apply to the proper universe of

sources. Further discussion of these deficiencies is contained in the

Technical Support Document.

b. Variances. Virginia has the authority to issue a variance from

requirements imposed by Virginia law. The variance provision at Va.

Code section 10.1-1307.C. empowers the Air Pollution Control Board,

after a public hearing, to grant a local variance from any regulation

adopted by the board. EPA regards this provision as wholly external to

the program submitted for approval under 40 CFR part 70, and

consequently is proposing to take no action on this provision of

Virginia law. EPA has no authority to approve provisions of state law,

such as the variance provision referred to, which are inconsistent with

the CAA. EPA does not recognize the ability of a permitting authority

to grant relief from the duty to comply with a federally enforceable

permit, except where such relief is granted through procedures allowed

by 40 CFR part 70. EPA reserves the right to enforce the terms of the

permit where the permitting authority purports to grant relief from the

duty to comply with a permit in a manner inconsistent with 40 CFR part

70 procedures.

3. Applicable Federal Requirements and Federally Enforceable Provisions

Virginia's submittal does not ensure the Commonwealth's ability to

issue permits which include all applicable Federal requirements and

which correctly delineate requirements that are enforceable only by

Virginia. The Commonwealth also cites Virginia's regulations rather

than Federal regulations (in the form of federally promulgated

regulations or state regulations that have been approved into the State

Implementation Plan) in the definitions in section 120-08-0502. In

section 120-08-0507, Federal enforceability is incorrectly extended to

portions of Virginia's regulations that have been submitted, but not

yet approved, into the State Implementation Plan.

EPA is proposing to disapprove Virginia's program because it

explicitly purports to extend Federal enforceability to provisions

which are not enforceable by the administrator and also does not

include certain provisions which must be considered federally

enforceable (and thus applicable) requirements.

4. Public Participation and Affected State Review

Virginia uses the term ``locality particularly affected'' in

determining the geographic scope of notification to the public of a

public comment period on a draft permit. This scope is too narrow and

it does not fully meet the requirements of 40 CFR 70.7(h) for public

participation. For full approval, Virginia must ensure that any

locality that could potentially be affected by a permit would be

notified of the opportunity for public comment on that permit. In

addition, Virginia incorrectly exempts minor permit modifications from

the requirement under Sec. 70.8(b)(2) for affected state review of

those modifications. Virginia must also correct this deficiency before

EPA can grant full approval to Virginia's program.

C. Permit Fees and Demonstration

Va. Code section 10.1-1322.1 and Rule 8-6 allow for a fee rate of

up to $25 per ton, as adjusted by the consumer price index (CPI), of

emissions to be charged to a source. The fee is set by the Air

Pollution Control Board and can be adjusted annually, without exceeding

the statutory cap, to meet the costs of implementation of the program.

Virginia's fee revenue projections are based on revenues from a $25 per

ton fee, using 1990 as a base year, and adjusted annually by the CPI,

as set out in Section 502 of the CAA. However, no specific fee schedule

was included in the submittal and the cap on the fee amount limits the

Board's flexibility in ensuring that revenues are sufficient to cover

the direct and indirect costs of the program. (CAA section 502(b)(3)(A)

and Va. Code section 10.1-1322. B.) Va. Code section 10.1-1322. B.

precludes the Commonwealth from collecting title V fees to cover the

indirect costs charged and collected by the Commonwealth's Department

of Accounts. This provision violates 40 CFR 70.9(b).

The fee amounts projected by Virginia in the ``Total Fee Revenue

Projections'' table, although sufficient to cover the estimated costs

of the program (as set out in the resource demonstration), do not

accurately reflect the mandate of Va. Code section 10.1-1322.1 to

adjust fees using the CPI calculation method stipulated in CAA section

502. Also, it is unclear whether or not the estimated emissions used in

the ``Total Fee Revenue Projections'' table include emissions from acid

rain sources, which Virginia exempts from fees in the years 1995 to

1999 (section 120-08-0601 C.5.) or includes Hazardous Air Pollutants.

In order for EPA to grant full approval to Virginia's program, the

Commonwealth must remove the statutory impediment to using permit fees

to fund certain indirect costs of its program and ensure that the

Commonwealth's fee provision comply with 40 CFR part 70.

D. Provisions Implementing the Requirements of Other Titles of the CAA

1. Authority and Commitments for Section 112 Implementation

In Va. Code section 10.1-1322.A. and Rule 8-5, Virginia has

demonstrated broad legal authority to incorporate into permits and

enforce all applicable CAA section 112 requirements. However, Virginia

also indicated that additional authority may be necessary to conduct

specific section 112 activities, and did not commit to implementing CAA

section 112(r) for prevention of accidental release. Virginia

supplemented its broad legal authority with a commitment to ``develop

the state regulatory provisions as necessary to carry out these

programs and the responsibilities under the delegation after approval

of the operating permit program and EPA has issued the prerequisite

guidance for development of these title III programs.'' Also, Virginia

has the authority under section 120-08-0505 K to require that an

applicant state that the source has complied with CAA section 112(r) or

state in the compliance plan that the source intends to comply and has

set a schedule to do so. In the case of CAA section 112(g)

requirements, EPA notes that Virginia must begin to implement this

program upon approval of an operating permits program.

2. Authority and Commitments for Implementation of Acid Rain

Requirements

Virginia has committed to adopting regulations to meet the

requirements of the Acid Rain program by January 1, 1995. The Attorney

General, in his November 5, 1993 opinion, committed to including a

statutory and regulatory analysis of the acid rain portions of the

operating permits program in the January 1, 1995 submittal. Virginia

has begun its regulatory development process to adopt regulations for

the acid rain portion of the Virginia Operating Permits Program.

III. Request for Public Comments

EPA is soliciting public comments on the issues discussed in this

document or on other relevant matters. These comments will be

considered before taking final action. Interested parties may

participate in this Federal rulemaking action by submitting written

comments to the EPA Regional office listed in the Addresses section of

this document. EPA has received a petition from the Environmental

Defense Fund, dated December 23, 1993, to disapprove Virginia's

operating permits program. This petition will be included in the docket

and will be considered in EPA's final action.

Proposed Action

EPA is proposing to disapprove the operating permits program

submitted by the Commonwealth on November 12, 1993. If promulgated,

this disapproval will constitute a disapproval under section 502(d) of

the CAA (see generally 57 FR 32253-32254). As provided under section

502(d)(1) of the CAA, the Commonwealth will have up to 180 days from

the date of EPA's notification of disapproval for the Governor of

Virginia to revise and resubmit the program. EPA is proposing to

disapprove this program on the basis that Virginia has not met the

following five requirements:

1. Pursuant to section 502(b)(6) of the CAA and 40 CFR 70.4(b)(3)(x)

and 70.7(h), adequate provisions for public participation in the

permit process, including statutory authority that meets the minimum

threshold for judicial standing.

2. Pursuant to section 505(b)(3) of the CAA and 40 CFR 70.8(e),

authority to prevent default issuance of permits.

3. Regulations that expire on June 28, 1994.

4. Issuance of permits to the proper universe of sources required by

40 CFR part 70 to be included in the Commonwealth's operating permit

program.

5. Regulations that meet the requirements of 40 CFR part 70 ensuring

issuance of permits that contain all applicable Federal requirements

and correctly delineate provisions only enforceable by the

Commonwealth.

Virginia must amend its program to correct the deficiencies and

resubmit all relevant portions of the program, including a revised

Attorney General's opinion. The Technical Support Document discusses

Virginia's submittal in detail, and contains specific references to

revisions and modifications necessary to obtain full approval.

Submittal of revised portions of Virginia's operating permit program,

including revised statutes and regulations, will undergo additional

notice and comment in the Federal Register before EPA takes final

action on the program submittal, if those revised portions are received

before November 19, 1994. November 19, 1994 is one year from the date

of receipt of the submittal and the date by which EPA is required under

40 CFR 70.4(e) to take final action on the current submittal.

The Commonwealth of Virginia must submit a corrected program within

180 days following final EPA disapproval of the program. If Virginia

fails to submit a fully approvable whole part 70 program, or a required

revision thereto, in conformance with the provision of 40 CFR 70.4, EPA

may, at any time, apply one of the sanctions specified in section

179(b) of the Act. Sanctions must be imposed 18 months after EPA

disapproves a state's submittal.

The Office of Management and Budget (OMB) has exempted this action

from Executive Order 12866 review.

Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA

must prepare a regulatory flexibility analysisassessing the impact of

any proposed or final rule on small entities. 5 U.S.C. 603 and 604.

Alternatively, EPA may certify that the rule will not have a

significant impact on a substantial number of small entities. Small

entities include small businesses, small not-for-profit enterprises,

and government entities with jurisdiction over populations of less than

50,000.

EPA's disapproval of the State request under section 502 of the CAA

does not affect any existing requirements applicable to small entities.

Any pre-existing Federal requirements remain in place after this

disapproval. Federal disapproval of the State submittal does not affect

its state-enforceability. Moreover, EPA's disapproval of the submittal

does not impose any new Federal requirements. Therefore, EPA certifies

that this disapproval action does not have a significant impact on a

substantial number of small entities because it does not impose any new

Federal requirements.

The Regional Administrator's decision to approve or disapprove

Virginia's operating permits program will be based on whether it meets

the requirements of title V of the Clean Air Act, as amended, and EPA

regulations in 40 CFR part 70.

Authority: 42 U.S.C. 7401-76719.

Dated: May 5, 1994.

Stanley L. Laskowski,

Acting Regional Administrator.

[FR Doc. 94-14816 Filed 6-16-94; 8:45 am]

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