Operating Permit Program: Proposed Interim Approval; Minnesota Pollution Control Agency

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5071-2]

Operating Permit Program: Proposed Interim Approval; Minnesota

Pollution Control Agency

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.

-----------------------------------------------------------------------

SUMMARY: The EPA proposes interim approval of the Operating Permit

Program submitted by the Minnesota Pollution Control Agency (MPCA) 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.

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

October 13, 1994.

ADDRESSES: Comments should be addressed to Rachel Rineheart (AE-17J) at

the Region 5 address indicated.

Copies of the State'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 5, Air Enforcement Branch (AE-

17J), 77 West Jackson Boulevard, Chicago, Illinois 60604.

Please contact Rachel Rineheart at (312) 886-7017 to arrange a time

if inspection of the submittal is desired.

FOR FURTHER INFORMATION CONTACT: Rachel Rineheart, U.S. Environmental

Protection Agency, Region 5, Air Enforcement Branch (AE-17J), 77 West

Jackson Boulevard, Chicago, Illinois 60604, (312) 886-7017.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

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

amended (1990), EPA has promulgated rules which define the minimum

elements of an approvable State operating permit program and the

corresponding standards and procedures by which the EPA will approve,

oversee, and withdraw approval of State operating permit 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.

B. Scope

MPCA's permitting rule, Minnesota Rules, Chapter 7007, combines the

State's preconstruction and operating permit programs into a single

permitting program. This approval is limited solely to Minnesota's part

70 operating permit program submittal of November, 15, 1993. This is

not a rulemaking under section 110 of the Act. The State has submitted

a separate request for approval of this rule as a preconstruction

permitting program and a federally enforceable state operating permit

program as a revision to the State Implementation Plan.

Minnesota's submittal includes a statement that the program will be

enforceable in the entire State of Minnesota except Indian tribal

lands. Because MPCA has not demonstrated, consistent with applicable

principles of Indian law and Federal Indian policies, legal authority

to regulate sources on tribal lands, the proposed interim approval of

Minnesota's operating permits program will not extend to lands within

the exterior boundaries of any Indian reservation in the State of

Minnesota.1 Title V sources located within the exterior boundaries

of Indian reservations in Minnesota will be subject to either the

Federal operating permits program, to be promulgated at 40 CFR part 71,

or to a tribal operating permits program approved pursuant to title V

and the regulations that will be promulgated under section 301(d) of

the Act. The section 301(d) regulations will authorize EPA to treat

tribes in the same manner as States for appropriate Act

provisions.2

---------------------------------------------------------------------------

\1\This is not a determination that MPCA could not possibly

demonstrate jurisdiction over sources within the exterior boundaries

of Indian reservations in Minnesota. However, no such showing has

been made.

\2\Tribes may also have inherent sovereign authority to regulate

air pollutants from sources on tribal lands.

---------------------------------------------------------------------------

II. Proposed Action and Implications

A. Analysis of State Submission

1. Support Materials

Charles W. Williams, Commissioner, MPCA, submitted Minnesota's part

70 Operating Permit Rule on November 15, 1993, requesting source

category-limited interim approval of the State's program. The

Commissioner of MPCA has the authority to submit this rule on behalf of

the Governor of Minnesota under Minnesota Statutes section 116.03,

subdivision 3. The submittal contained all required elements under 40

CFR 70.4, including a description of Minnesota's operating permit

program, permitting program documentation, and the Attorney General's

legal opinion that the laws of the State of Minnesota provide adequate

authority to carry out all aspects of the program required by the Clean

Air Act.

2. Regulations and Program Implementation

The Minnesota permitting regulations (Minnesota Rules, Chapter

7007) substantially meet the requirements of 40 CFR 70.4, 70.5, and

70.6 with respect to permit content including operational flexibility;

40 CFR 70.7 and 70.8 with respect to permit processing requirements

(including public participation and minor permit modifications); and 40

CFR 70.11 with respect to requirements for enforcement authority. The

Minnesota permitting regulations meet the requirements of 40 CFR 70.2

and 70.3 with respect to applicability and 40 CFR 70.5 with respect to

criteria which define insignificant activities and complete application

forms.

Minnesota Rules 7007.0100, subpart 26 defines ``Title I

modification'' as ``any change that constitutes a modification under

any provision of [T]itle I of the Act.'' In addition, Minnesota's rule

specifically includes major modifications under parts C and D of title

I, modifications subject to a New Source Performance Standard, and

modifications subject to a National Emission standard for Hazardous Air

Pollutants (NESHAPs) or any other rules adopted by the Administrator

under section 112 of the Act. Commissioner Charles Williams states in

his April 19, 1994, letter that Minnesota interprets its definition to

include modifications made pursuant to a preconstruction permitting

program approved into the State Implementation Plan under section

110(a)(2)(C) of the Act. The EPA is soliciting comment, as part of the

proposal to revise part 70, on the proper definition of ``Title I

modifications.'' However, EPA believes that Minnesota's definition, in

light of this clarification, would be consistent with any definition of

``Title I modifications'' EPA may adopt.

For further discussion on the State's regulations, please refer to

the Technical Support Document accompanying this approval. The program

submittal meets the program requirements of title V and 40 CFR part 70

except as discussing in II.B of this document.

3. Permit Fee Demonstration

Minnesota's fee collection rule, Minnesota Rules 7002.0035, sets

the minimum amount of funding the State receives from title V sources

by multiplying the number of tons of regulated pollutants listed in the

most recent available emissions inventory, with a maximum of 4,000 tons

per pollutant per facility, by $25 + the Consumer Price Index (CPI) per

ton. However, the current definition of regulated pollutant in MPCA's

fee rule (Minnesota Rules 7007.0015, subpart 4) does not include

particulate matter greater than 10 microns in diameter, total reduced

sulfur, hydrogen chloride, or sulfuric acid mist, all of which are

included in the Federal definition. MPCA intends to remedy this

discrepancy in a rulemaking scheduled for 1994. When this discrepancy

has been corrected, MPCA's fee rule will set the minimum funding the

State will receive at the presumptive minimum. However, during the

first year after interim approval is granted, the fees that the State

of Minnesota will be collecting, which has already been established

through the State's regulations, will result in collection of a dollar

per ton amount less than the presumptive minimum.

Minnesota will collect $6,558,000 in emission fees for the first

year of its program, and has demonstrated that the fees collected will

be sufficient to run the program for the first year. However, the fee

demonstration in Minnesota's submittal does not contain all information

required by 40 CFR 70.9. Specifically, Minnesota's fee demonstration

does not contain an estimate of permit program costs for the first four

years after program approval. Therefore, the State's fee demonstration

may only be given an interim approval.

In order for the State to receive full approval of it's program,

the State must either change its definition of regulated air pollutant

in its fee rule to include all pollutants included in the Federal

definition, or it must submit a four year projection of costs and fees

to be collected that demonstrates that the State will collect fees in

an amount sufficient to run its program.

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

a. Authority and/or Commitments for Section 112 Implementation.

Minnesota 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

Minnesota's enabling legislation and in regulatory provisions defining

``applicable requirements'' and stating that the permit must

incorporate all applicable requirements. EPA has determined that this

legal authority is sufficient to allow Minnesota to issue permits that

assure compliance with all section 112 requirements.

EPA is interpreting the above legal authority to mean that

Minnesota is able to implement and enforce all section 112

requirements. For further rationale on this interpretation, please

refer to the Technical Support Document accompanying this rulemaking

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

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

b. Implementation of 112(g) Upon Program Approval. As a condition

of approval of the part 70 program, Minnesota is required to implement

section 112(g) of the Act from the date of approval of the part 70

program. Imposition of case-by-case determinations of Maximum

Achievable Control Technology (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 Minnesota's preconstruction permitting program

found in Minnesota Rules Chapter 7007 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

State rule implementing EPA's section 112(g) regulations. EPA believes

this approval is necessary so that Minnesota has a mechanism in place

to establish federally enforceable restrictions for section 112(g)

purposes from the date of part 70 approval. Although section 112(l)

generally provides 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, for example section 110. If Minnesota 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 the final action approving

Minnesota's part 70 program, approve the alternative instead.

This approval is for an interim period only, until such time as the

State adopts rules implementing 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 promulgation

of section 112(g) regulations so that Minnesota, 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 18 months following promulgation by EPA of section 112(g)

regulations. Comment is solicited on whether 18 months is an

appropriate period considering Minnesota's procedures for adoption of

regulations.

c. Program for Delegation of Section 112 Standards as Promulgated.

Requirements for approval, specified in 40 CFR 70.4(b), encompass

section 112(l)(5) approval 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 the State'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 Minnesota's program for

receiving delegation of section 112 standards that are unchanged from

the Federal standards as promulgated. Minnesota has informed EPA that

it intends to accept delegation of section 112 standards through

automatic delegation. The details of this delegation mechanism will be

set forth in a Memorandum of Agreement between Minnesota and EPA,

expected to be completed prior to approval of Minnesota's section

112(l) program for delegation of unchanged Federal standards. This

program applies to both existing and future standards, but is limited

to sources that will obtain part 70 permits.

d. Title IV. Minnesota's program contains adequate authority to

issue permits which reflect the requirements of title IV and its

implementing regulations. In addition, Minnesota's submittal contains a

commitment to revise its regulations as necessary to accommodate

Federal revisions and additions to title IV and the Acid Rain

regulations once they are promulgated.

B. Options for Approval/Disapproval and Implications

The EPA is proposing to grant interim approval to the operating

permit program submitted by Minnesota on November 15, 1993. If this

approval is promulgated, the State must make the following changes to

receive full approval:

1. Remove from the State's legislation Minnesota Statutes section

609.671, subdivision 14 which provides an exemption from criminal

prosecution for sources which give notice of a violation and take

reasonable steps to remedy the violation.

2. Revise Minnesota Rules 7007.0800, Subpart 6 to clearly state that

all part 70 sources must submit semi-annual reports.

3. Revise Minnesota Rules 7007.1400 to be consistent with the

requirements of 40 CFR 70.7(d). Minnesota Rules 7007.1400 provides

that the administrative amendment procedure may be used to ``clarify

a permit term.'' This ambiguous provision is not consistent with the

requirements of 40 CFR 70.7(d) and could be interpreted broadly

enough to allow changes to a permit which should be handled through

the permit modification procedures.

4. Revise Minnesota Rules 7007.0800, Subpart 16 to require that the

permit terms included in 40 CFR 70.6(a) be expressly stated in part

70 permits. Minnesota Rules 7007.0800, Subpart 16 allows permit

terms which are required by 40 CFR 70.6(a) to be included in the

permit by reference to the state regulation. Failure to have these

provisions expressly stated in the permit may create difficulties in

enforcing those terms and may make it difficult for citizens to

understand what provisions apply to a source.

5. Revise the definition of regulated pollutant at Minnesota Rules

7002.0035 to include any ``regulated pollutant for presumptive fee

calculation'' as defined at 40 CFR 70.2, or submit a detailed fee

demonstration containing all required elements under 40 CFR 70.9.

6. Revise Minn. Rules 7007.0750, subpart 2.C to require the

permitting authority to take action on minor and moderate permit

amendments within 90 days of receipt of a complete application.

This interim approval, which may not be renewed, extends for a period

of up to 2 years. During the interim approval period, the State is

protected from sanctions for failure to have a program, and EPA is not

obligated to promulgate a Federal permit program in the State. 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 interim approval, as does

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

Minnesota has requested Source Category-Limited (SCL) interim

approval of its part 70 operating permit program. Although the State

would be required to issue permits within 3 years to all sources

subject to the program that obtains interim approval, some sources

would not be subject to the requirement to obtain a permit until full

approval is granted. Part 70 sources which are not addressed until full

approval are also subject to the 3-year time period for processing

initial permit applications. The 3-year period for these sources would

begin on the date full approval of the State's program is granted.

Therefore, initial permitting of all part 70 sources might not be

completed until 5 years after interim approval is granted.

Minnesota has presented the following as compelling reasons for why

SCL interim approval should be granted in the November 15, 1993,

submittal:

1. Minnesota does not have nonattainment areas for ozone.

Consequently, Minnesota has not adopted Volatile Organic Compound

(VOC) Reasonably Available Control Technology rules, nor does it

have its own State air toxics rules. Therefore, MPCA and the

facilities regulated by the air toxics program are not familiar with

and have not implemented measures to control VOC emissions. MPCA

staff and the regulated community will need additional time to catch

up with other States in becoming familiar with control techniques

and to identify and contact VOC/toxic sources.

2. Minnesota has a variety of large, complex sources which require

extensive amounts of time to permit. The time spent issuing permits

to these sources will take considerable time away from issuing

permits to other sources, making it impossible given MPCA's resource

constraints for MPCA to issue permits to all part 70 sources within

3 years.

3. MPCA expects to lose a portion of its experienced permitting

engineers to private industry when facilities are required to submit

permit applications. The time which is necessary to train new staff

as this occurs will increase the amount of time needed to issue a

permit.

4. Although MPCA has almost doubled its staff since January of 1992

in anticipation of the workload associated with title V, the

workload will surpass available resources. MPCA intends to request

additional funding during the 1995 legislative session; however,

MPCA will still be unable to take final action on all applications

within 3 years.

EPA believes Minnesota has presented compelling reasons for a SCL

interim approval.

The EPA believes that a program granted SCL interim approval must

apply to at least 60 percent of all part 70 sources, which are

responsible for at least 80 percent of the aggregate emissions from all

part 70 sources. The EPA requires a demonstration that these criteria

are met when a significant percentage of sources or aggregate emissions

are excluded from the interim program. The Minnesota submittal which

included a schedule for permitting part 70 sources which would permit

60.71 percent of part 70 sources emitting 81.35 percent of aggregate

emissions from part 70 sources within 3 years of program approval met

the criteria.d.

EPA believes that SCL interim approval is warranted for Minnesota's

program. For further discussion on EPA's determination, see the

Technical Support Document accompanying this approval.

III. Administrative Requirements

A. Request for Public Comments

The EPA is requesting comments on all aspects of this proposed

rule. Copies of the State'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 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 October 13, 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 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.

Interim approvals under section 502 of the Act do not create any

new requirements, but simply approve requirements that the State is

already imposing. Therefore, because the Federal approval of a State

operating permit program does not impose any new requirements, I

certify that it does not have a significant impact on any small

entities affected. 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 permit 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 state requirements applicable to small entities.

Federal disapproval of the State submittal does not affect its state-

enforceability. Moreover, EPA's disapproval of the submittal does not

impose a new Federal requirement. Therefore, EPA certifies that this

disapproval action does not have a significant impact on a substantial

number of small entities because it does not remove existing state

requirements nor does it substitute a new Federal requirement.

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.

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

Dated: August 31, 1994.

Valdas V. Adamkus,

Regional Administrator.

[FR Doc. 94-22582 Filed 9-12-94; 8:45 am]

BILLING CODE 6560-50-F