Clean Air Act Proposed Interim Approval of the Operating Permits Program; Washoe County District Health Department, Nevada

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 63 and 70

[AD-FRL-5057-7]

Clean Air Act Proposed Interim Approval of the Operating Permits

Program; Washoe County District Health Department, Nevada

AGENCY: Environmental Protection Agency.

ACTION: Proposed interim approval.

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SUMMARY: The EPA proposes interim approval of the operating permits

program submitted by the Washoe County District Health Department

(Washoe or District) for the purpose of complying with Federal

requirements that mandate that states develop, and submit to EPA,

programs for issuing operating permits to all major stationary sources,

and to certain other sources.

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

September 23, 1994.

ADDRESSES: Comments should be addressed to Celia Bloomfield, Mail Code

A-5-2, U.S. Environmental Protection Agency, Region IX, Air & Toxics

Division, 75 Hawthorne Street, San Francisco, CA 94105.

Copies of the District's submittal and other supporting information

used in developing the proposed rule are available for inspection

during normal business hours at the following location: U.S.

Environmental Protection Agency, Region IX, 75 Hawthorne Street, San

Francisco, CA 94105.

FOR FURTHER INFORMATION CONTACT: Celia Bloomfield (telephone 415/744-

1249), Mail Code A-5-2, U.S. Environmental Protection Agency, Region

IX, Air & Toxics Division, 75 Hawthorne Street, San Francisco, CA

94105.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

As required under title V of the Clean Air Act (Act) as amended

(1990), EPA has promulgated rules that 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 Code of Federal

Regulations (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 Act requires that states develop and submit these 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.

II. Proposed Action and Implications

This document focuses on specific elements of Washoe's title V

operating permits program submittal that must be corrected to meet the

requirements of 40 CFR part 70. The full program submittal, the

Technical Support Document containing a detailed analysis of the full

program, and other relevant materials are available as part of the

public docket.

A. Analysis of State Submission

1. Support Materials

Washoe submitted its title V operating permits program on November

18, 1993, and the program was found complete on January 13, 1994.

Washoe is authorized by State law (Nevada Revised Statues (NRS)

445.546) to develop and administer this program for the District.

Washoe's title V submittal includes a letter from the District Health

Officer requesting program approval and a legal opinion from the

District Attorney stating that Washoe has adequate authority to carry

out all aspects of the program. Washoe's program also contains a

complete program description, District implementing and supporting

regulations, and all other program documentation required by

Sec. 70.4(b), elements of the initial program submission. State

statutes were submitted separately by the Nevada Division of

Environmental Protection. Washoe's submittal also includes a proposed

implementation agreement defining District and EPA responsibilities and

commitments for administering the program. EPA and Washoe will work to

finalize this agreement prior to final approval.

2. Regulations and Program Implementation

Washoe's District Board of Health Regulations Governing Air Quality

Management were revised on October 20, 1993 to provide for the

implementation of a title V operating permits program. These

regulations substantially meet the requirements of 40 CFR part 70,

Sec. Sec. 70.2 and 70.3 for applicability; Sec. Sec. 70.4, 70.5, and

70.6 for permit content, including operational flexibility; Sec. 70.7

for public participation and minor permit modifications; Sec. 70.5 for

criteria that define insignificant activities; Sec. 70.11 for

requirements for enforcement authority; and Sec. 70.5 for complete

application forms. There are a few program deficiencies that are

outlined below as interim approval issues and detailed further in the

Technical Support Document.

Washoe has authority under State and local law to issue a variance

from State and local requirements. These variance provisions are

contained in Nevada Revised Statutes 445.506, 445.511, 445.516, 445.521

and 445.546, and by District regulations 020.0051, 020.020, 020.0251,

020.0253, and 020.0254. These provisions allow the Hearing Board

discretion to grant relief from compliance with District rules and

regulations. The EPA regards these provisions as wholly external to the

program submitted for approval under part 70, and consequently is

proposing to take no action on these provisions of local law. In

addition, the EPA has no authority to approve provisions of local law,

such as the variance provisions referred to, that are inconsistent with

the Act. The 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 (consistent with part 70 permitting procedures) to incorporate

those terms of a variance that are consistent with applicable

requirements. A part 70 permit may also 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 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's policy on

variances is supported by District rule 020.0254(I) that states that

variances may not be issued from any requirement established or

promulgated under the Act.

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 from 1989 by the Consumer Price Index (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,'' (Sec. 70.9(b)(2)(i)).

Washoe has opted to make a presumptive minimum fee demonstration.

Washoe's fee schedule is based on average pounds of pollutants emitted

per day. Title V sources in Washoe County are charged fees of $10 per

average pound per day, an amount determined by the District to cover

the direct and indirect costs of the program. Because the fee schedule

(mathematically equivalent to $54.79 per ton per year) exceeds the

presumptive minimum, Washoe was not required to submit a detailed fee

demonstration. As required by Sec. 70.9(b)(2)(iv), these fees will be

increased each year by an amount equal to or greater than the Consumer

Price Index (030.310). In addition, sources are subject to application

review fees. Finally, Washoe has committed to provide future accounting

demonstrations and to make revisions to its fee structure if necessary.

4. Provisions Implementing the Requirements of Other Titles of the Act

a. Title III--Washoe has demonstrated in its title V program

submittal broad legal authority to incorporate into permits and enforce

all applicable requirements; however, Washoe has also indicated that

additional regulatory authority may be necessary to carry out specific

section 112 activities. Washoe has therefore supplemented its broad

legal authority with a commitment to ``adopt any future standards and

regulations related to section 112 in a timely manner as they are

promulgated by EPA,'' (Letter from David Rice, Governor's designee,

November 10, 1993). EPA has determined that this commitment, in

conjunction with the broad statutory authority, adequately assures

compliance with all section 112 requirements. The EPA regards this

commitment as an acknowledgement by Washoe of its obligation to obtain

further regulatory authority as needed to issue permits that assure

compliance with section 112 applicable requirements. This commitment

does not substitute for compliance with part 70 requirements that must

be met at the time of program approval.

EPA is interpreting the above legal authority and commitment to

mean that Washoe is able to carry out all section 112 activities. For

further discussion, please refer to the Technical Support Document and

the April 13, 1993 guidance memorandum titled ``Title V Program

Approval Criteria for Section 112 Activities,'' signed by John Seitz.

b. Title IV--Washoe has committed in a letter from David Rice

(dated February 9, 1994) to obtain by January 1, 1995 the necessary

regulatory authority to administer an acid rain program and to make

regulatory revisions as necessary to accommodate Federal revisions and

additions.

B. Options for Approval/Disapproval and Implications

1. Title V Operating Permits Program Under the Authority of Section 502

of the Act

The EPA is proposing to grant interim approval to the operating

permits program submitted by the Nevada Division of Environmental

Protection on behalf of the Washoe County District Health Department on

November 18, 1993. Following interim approval, Washoe must make the

following changes to receive full approval:

(1) Revise insignificant activity provisions so that they comply

with Sec. 70.5(c). Specifically, 030.905(B)(3) must state that any

activity at a title V facility that is subject to an applicable

requirement may not qualify as an insignificant activity. Because

Washoe defines insignificant activities by size, both rule

030.020(C)(4) and the application form must require the applicant to

list all insignificant activities in enough detail to determine

applicability and fees, and to impose any applicable requirements.

(2) Revise 030.020 to state that each application must contain the

following information: (a) Description of any processes and products

associated with alternate scenarios (Sec. 70.5(c)(2)); (b) description

of compliance monitoring devices or activities (Sec. 70.5(c)(3)(v));

(c) when emissions trading provisions are requested by a source,

proposed replicable procedures and permit terms

(Sec. 70.4(b)(12)(iii)); and (d) statement that the source will, in a

timely manner, meet all applicable requirements that will become

effective during the permit term (Sec. 70.5(c)(8)). EPA has also noted

in the Technical Support Document recommended revisions to Washoe's

permit application form so that the form will better reflect the

information required by regulation. In addition, rule 030.020 must

clearly require that any application form, report, or compliance

certification submitted in the permit application include a

certification based on information and belief formed after reasonable

inquiry. (Sec. 70.5(d))

(3) Add a provision to the rule that imposes a general duty on the

permit applicant to submit supplementary facts or corrected information

upon becoming aware of any failure to submit relevant facts or

submittal of incorrect information. (Sec. 70.5(b))

(4) Revise 030.930 to provide public notice ``by other means if

necessary to assure adequate notice to the affected public.''

(Sec. 70.7(h)(1))

(5) Revise 030.960(C)(8) to state that the certifications must be

based on information and belief formed after reasonable inquiry.

(Sec. Sec. 70.6(c)(1) and 70.5(d))

(6) Revise 030.970(B) to state that schedules for compliance shall

resemble and be at least as stringent as that contained in any judicial

consent decree or administrative order. (Sec. Sec. 70.5(c)(8)(iii)(C)

and 70.6(c)(3))

(7) Revise 030.950(E) to ensure that all significant permit

modifications, other than those requiring an Authority to Construct,

may not be placed into operation until the permitting authority has

revised the source's part 70 permit. Washoe's program currently

provides this implementation time frame for modifications requiring an

Authority to Construct and modifications that are prohibited by an

existing permit; however, the time frame must be extended to the

remaining universe of significant modifications. (Sec. 70.5(a)(1)(ii))

The above program deficiencies must be corrected before Washoe can

receive full program approval. EPA may propose to grant interim

approval at this time because the program ``substantially meets'' the

requirements of part 70 (Sec. 70.4(d)(1)). This interim approval, which

may not be renewed, extends for a period of up to 2 years. During the

interim approval period, the District 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 1-year time period for submittal of permit applications by subject

sources begins upon EPA's final action granting interim approval, as

does the 3-year time period for processing initial permit applications.

2. District Preconstruction Permit Program Implementing Section 112(g)

of the Act

As a condition of approval of the operating permits program, Washoe

is required to implement section 112(g) of the Act from the effective

date of the title V program. Imposition of case-by-case determinations

of MACT or offsets under section 112(g) will require the use of a

mechanism for establishing federally enforceable restrictions on a

source-specific basis. The EPA is proposing to approve Washoe's

preconstruction permitting program found in District rules 030.000 and

030.002 under the authority of title V and part 70 solely for the

purpose of implementing section 112(g) during the transition period

between title V approval and adoption of a District rule implementing

EPA's section 112(g) regulations. EPA believes this approval is

necessary so that Washoe has a mechanism in place to establish

federally enforceable restrictions for section 112(g) purposes from the

date of title V approval. Although section 112(l) generally provides

the authority for approval of state air toxics programs, title V and

section 112(g) provide authority for this limited approval because of

the direct linkage between implementation of section 112(g) and title

V. The scope of this approval is narrowly limited to section 112(g),

and does not confer or imply approval for purposes of any other

provision under the Act. If Washoe does not wish to implement section

112(g) through its preconstruction permit program and can demonstrate

that an alternative means of implementing section 112(g) exists, the

EPA may, in its final approval action approve the alternative instead.

This approval of Washoe's preconstruction permit program as a

section 112(g) mechanism is for an interim period only, until the

District is able to adopt regulations consistent with regulations

promulgated by EPA to implement section 112(g). Accordingly, EPA is

proposing to limit the duration of this approval to a reasonable time

following EPA's final promulgation of section 112(g) regulations so

that Washoe, acting expeditiously, will be able to adopt regulations

consistent with the section 112(g) regulations. The EPA is proposing

here to limit the duration of this approval to 12 months following

promulgation by EPA of section 112(g) regulations. Comment is solicited

on whether 12 months is an appropriate period considering Washoe's

procedures for adoption of regulations.

3. Program for Straight Delegation of Section 112 Standards Under the

Authority of Section 112(l) of the Act

Requirements for title V program 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

Washoe's program contain adequate authorities, adequate resources for

implementation, and an expeditious compliance schedule, which are also

requirements under part 70. Therefore, the EPA is also proposing to

grant approval under section 112(l)(5) and 40 CFR 63.91 of Washoe's

program for receiving delegation of section 112 standards that are

unchanged from the Federal standards as promulgated.

Washoe has informed EPA that it intends to employ incorporation by

reference as the mechanism for accepting straight delegation of section

112 standards. The details of this delegation mechanism will be set

forth in a Memorandum of Agreement between Washoe and EPA, expected to

be completed prior to approval of Washoe's section 112(l) program for

straight delegations. This program applies to both existing and future

standards but is limited to sources covered by the part 70 program.

III. Administrative Requirements

A. Request for Public Comments

The EPA is requesting comments on all aspects of this proposed

interim approval. Copies of Washoe's submittal and other information

relied upon for the proposed interim approval are contained in a docket

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 proposed interim

approval. The principal purposes of the docket are:

(1) To allow interested parties a means to identify and locate

documents so that they can effectively participate in the approval

process; and

(2) To serve as the record in case of judicial review. The EPA will

consider any comments received by September 23, 1994.

B. Executive Order 12866

The Office of Management and Budget has exempted this regulatory

action from Executive Order 12866 review.

C. Regulatory Flexibility Act

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, 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.

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. Therefore,

because this action does not impose any new requirements, it does not

have a significant impact on a substantial number of small entities.

Moreover, due to the nature of the Federal-state relationship under the

Act, preparation of a regulatory flexibility analysis would constitute

Federal inquiry into the economic reasonableness of state action.The

Act forbids EPA to base its actions concerning operating permits

programs on such grounds. Union Electric Co. v. U.S. E.P.A., 427 U.S.

246, 256-66 (S.Ct 1976); 42 U.S.C. 7410(a)(2).

If the interim approval is converted to a disapproval, it will not

affect any existing District requirements applicable to small entities.

Federal disapproval of the District's 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

conversion from interim approval to disapproval would not have a

significant impact on a substantial number of small entities because it

does not remove existing District requirements nor does it substitute

any new Federal requirements.

Authority: 42 U.S.C.7401-7671q.

Dated: August 5, 1994.

Nora L McGee,

Acting Regional Administrator.

[FR Doc. 94-20812 Filed 8-23-94; 8:45 am]

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