Proposed Interim Approval of the Operating Permits Program; Wisconsin

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[WI001; FRL-5093-8]

Proposed Interim Approval of the Operating Permits Program;

Wisconsin

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.

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SUMMARY: The EPA proposes interim approval of the Operating Permits

Program submitted by the State of Wisconsin 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, with the exception of

sources on Indian lands.

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

November 18, 1994.

ADDRESSES: Written comments should be addressed to: Carlton Nash,

Chief, Regulation Development Section (AT-18J), EPA, 77 W. Jackson

Boulevard, Chicago, Illinois 60604.

Copies of the State's submittal and other supporting information

used in developing the proposed interim approval are available for

inspection during normal business hours at the following location: EPA

Region 5, Air and Radiation Division (AT-18J), 77 West Jackson

Boulevard, Chicago, Illinois 60604.

FOR FURTHER INFORMATION CONTACT: Beth Valenziano, Permits and Grants

Section (AT-18J), EPA, 77 W. Jackson Boulevard, Chicago, Illinois

60604, (312) 886-2703.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

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

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

an approvable State operating permits program and the corresponding

standards and procedures by which EPA will approve, oversee, and

withdraw approval of State operating permits programs. See 57 FR 32250

(July 21, 1992). These rules are codified at title 40 of the Code of

Federal Regulations (CFR) part 70. Title V requires States to develop,

and submit to EPA, programs for issuing 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

A. Analysis of State Submission

1. Support Materials

The Governor of Wisconsin submitted Wisconsin's title V Operating

Permits Program on January 27, 1994. The EPA deemed the submittal

complete in a letter to the Governor dated March 24, 1994. The

submittal contained all required elements of 40 CFR 70.4, including a

description of Wisconsin's operating permits program, permitting

program documentation, and the Attorney General's legal opinion that

the laws of the State of Wisconsin provide adequate authority to carry

out all aspects of the program required by the Act.

The Governor's letter to EPA states that Wisconsin's operating

permits program will cover all geographical areas of Wisconsin, except

for activities conducted by Indians on Indian reservation lands. Except

for a brief reiteration of this statement in the program description,

there is no further discussion in the submittal of any basis under

which the Wisconsin Department of Natural Resources (WDNR) might assert

jurisdiction over sources on tribal lands.

Because WDNR 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

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

the exterior boundaries of any Indian reservation in the State of

Wisconsin.1 Title V sources located within the exterior boundaries

of Indian reservations in Wisconsin 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

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

demonstrate jurisdiction over sources within the exterior boundaries

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

been made.

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

air pollutants from sources on tribal lands.

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2. Regulations and Program Implementation

Wisconsin's operating permits program, including the operating

permits program regulations (Chapters Natural Resources (NR) 400, 406,

407, 409, 410, 436, 438, 439, 484, 490, and 494, Wisconsin

Administrative Code) substantially meet the requirements of 40 CFR part

70, including: Sec. Sec. 70.2 and 70.3 with respect to applicability;

Sec. 70.5 with respect to application forms, completeness requirements,

and criteria for defining insignificant activities; Sec. Sec. 70.4,

70.5, and 70.6 with respect to permit content (including operational

flexibility); Sec. Sec. 70.7 and 70.8 with respect to permit processing

requirements (including minor permit modifications and public

participation); and Sec. 70.11 with respect to enforcement authority.

There are two references in Wisconsin's regulations which

incorrectly cite the program's compliance certification requirements.

The reference in section NR 407.09(4)(a)3.c., Wisconsin Administrative

Code (s.NR 407.09(4)(a)3.c., Wis. Adm. Code) to s.NR 439.03(7) is

incorrect. The correct reference is s.NR 439.03(8). The reference in

s.NR 439.03(1)(c), Wis. Adm. Code, to s.NR 439.03(7) is incorrect. The

correct reference is s.NR 439.03(8). WDNR is aware of these incorrect

citations and is planning to correct them.

For a detailed analysis of Wisconsin's program submittal, please

refer to the Technical Support Document (TSD) for this proposed action,

which is available in the docket at the address noted above. The TSD

shows that all operating permits program requirements of title V of the

Act, 40 CFR part 70, and relevant guidance were met by Wisconsin's

submittal, with the exception of those requirements described in

subpart II.B. below.

3. Permit Fee Demonstration

Wisconsin's operating permits program fee schedule is established

in section 144.399, Wisconsin Statutes (s. 144.399, Wis. Stats.), and

in Chapters NR 410 and 438, Wis. Adm. Code. Wisconsin's fee schedule is

based on the presumptive minimum program cost established in 40 CFR

70.9, and exceeds the presumptive minimum because the State charges

fees for more pollutants than those included in the 40 CFR 70.2

definition of ``regulated pollutant (for presumptive fee

calculation)''. In fiscal year 1995, WDNR estimates the dollar per ton

fee to be $30.18 (assuming a 3% increase in the Consumer Price Index).

Using the presumptive minimum model, the presumptive cost of the

program in fiscal year 1995 is $8,201,717. WDNR's estimated fees for

fiscal year 1995 is $8,435,612.

The EPA's approval of Wisconsin's fee schedule does not extend to

fees collected pursuant to s.144.399(2)(am), Wis. Stats. and s.NR

410.04(4), Wis. Adm. Code. These provisions allow WDNR to collect

emissions fees from utilities with affected units under section 404 of

the Act during the years 1995 through 1999. 40 CFR 70.9(b)(4) provides

that, for 1995 through 1999, no fee for purposes of title V shall be

required to be paid with respect to emissions from any affected unit

under section 404 of the Act.

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

a. Authority for Section 112 Implementation

Wisconsin has demonstrated in its title V program submittal

adequate legal authority to implement and enforce all section 112

toxics requirements through the title V permit. This legal authority is

contained in Wisconsin's enabling legislation and in regulatory

provisions that define ``applicable requirements'' and provide that the

permit must incorporate all applicable requirements. The EPA has

determined that this legal authority is sufficient to allow Wisconsin

to issue permits to part 70 sources that assure compliance with all

section 112 requirements.

EPA is interpreting the above legal authority to mean that

Wisconsin is able to carry out all section 112 activities for part 70

sources. For further rationale on this interpretation, please refer to

the TSD for this proposed action.

b. Implementation of Section 112(g) Upon Program Approval

As a condition of approval of the part 70 program, Wisconsin is

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

of the part 70 program. Imposition of case-by-case determinations of

Maximum Achievable Control Technology 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 Wisconsin's preconstruction permitting program

found in Chapters 406 and 408, Wis. Adm. Code, 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.

The EPA believes this approval is necessary so that Wisconsin 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

programs to implement section 112(g), title V and section 112(g)

provide authority for this limited approval because of the direct

linkage between the 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 Wisconsin 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, EPA may, in the final action on Wisconsin's part 70

program, approve the alternative instead.

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

State adopts regulations consistent with any 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 Wisconsin, 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 Wisconsin's procedures for

adoption of regulations.

c. Program for Straight Delegation of Section 112 Standards

Requirements for operating permits program approval, specified in

40 CFR 70.4(b), also address 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 the 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 proposing to grant approval under section

112(l)(5) and 40 CFR 63.91 of Wisconsin's program for receiving

delegation of section 112 standards that are unchanged from the Federal

standards as promulgated. Because Wisconsin has the authority under

s.144.394(12), Wis. Stats., to include any conditions in an operating

permit that are applicable to a source under the Act (including section

112 requirements), EPA proposes to approve the delegation of section

112 standards through automatic delegation. The details of this

delegation mechanism will be set forth in a Memorandum of Agreement

between Wisconsin and EPA. This program applies to both existing and

future standards, but is limited to sources covered by the part 70

program.

d. Implementation of Title IV

Wisconsin's operating permits program contains adequate authority

to issue permits which include the requirements of the title IV Acid

Rain Program. The WDNR also committed in the program submittal to

adopting and submitting to EPA by January 1, 1995, a program

implementing the Acid Rain Program.

B. Options for Approval/Disapproval and Implications

The EPA is proposing to grant interim approval to the title V

operating permits program submitted by the State of Wisconsin on

January 27, 1994. This interim approval of Wisconsin's operating

permits program applies to all title V sources, with the exception of

sources on Indian lands and source categories described in the source

category limited interim approval below (following B.8.). Non-major

stationary sources that may be required to obtain a title V operating

permit are currently exempted from the program under 40 CFR 70.3.

Wisconsin's operating permits program for non-title V sources has been

submitted as a revision to Wisconsin's State Implementation Plan and is

currently under EPA review.

If interim approval of Wisconsin's title V operating permits

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

receive full approval:

1. Revise Wisconsin's operating permit program regulations to

provide for criminal fines against any person who knowingly makes any

false material statement, representation, or certification in a permit

application. This provision is required by 40 CFR 70.11(a)(3)(iii). The

June 21, 1993, memorandum included in the Attorney General's opinion

states that s.144.426(2)(a), Wis. Stats., does not penalize a person

who knowingly submits false information because the statutes do not

require the submittal of accurate information to obtain a permit.

However, the memorandum further explains that WDNR has the authority to

promulgate a rule requiring the submittal of accurate information.

Section NR 439.03(11), Wis. Adm. Code, provides that all reports

required by an operating permit shall be truthful. However, there is no

regulatory provision which requires the application submittal itself to

be truthful.

2. Revise the following legislation and regulations to provide an

application shield for ``new'' and ``modified sources'' (as defined by

ss.144.30(20s) and (20e), Wis. Stats.): s.144.391(1)(b), Wis. Stats.;

s.144.3925(7), Wis. Stats.; s.NR 407.06(2), Wis. Adm. Code; and s.NR

407.08, Wis. Adm. Code. Wisconsin's program does provide an application

shield for ``existing sources'' (as defined by s.144.30(13). 40 CFR

70.7(b) requires that the application shield must apply to all part 70

sources which meet the application shield requirements.

3. Revise the following legislation and regulation to provide for

operational flexibility for ``new'' and ``modified sources'' (as

defined by ss.144.30(20s) and (20e), Wis. Stats.): s.144.391(4m), Wis.

Stats.; and s.NR 407.025, Wis. Adm. Code. Wisconsin's program does

provide for operational flexibility for ``existing sources'' (as

defined by s.144.30(13). 40 CFR 70.4(b)(12) requires that permit

flexibility apply to all part 70 sources.

4. Revise the appropriate legislation and regulations to provide

the authority to deny a renewal application for a source that is not in

compliance. 40 CFR 70.6(a)(6)(i) requires that any permit noncompliance

is grounds for denial of a permit renewal application. Section NR

407.09(1)(f)1., Wis. Adm. Code, states that the authority to deny a

permit renewal application for noncompliance is contingent upon the

requirements in s.144.3925(6), Wis. Stats., which do not currently

provide for a denial in such a circumstance. Appendix P of Wisconsin's

operating permits program submittal includes draft statutory revisions

that are intended to fix this deficiency. The draft revisions propose

to add this authority to s.144.396(3)(c), Wis. Stats. Regardless of the

statutory placement of this authority, s.NR 407.09(1)(f)1., Wis. Adm.

Code, must be revised if necessary to reference the correct statutory

authority.

5. Revise ss.NR 407.14(1)(b), (c), (d), and (h), Wis. Adm. Code, to

provide that if the conditions specified in these provisions are met,

WDNR is required to reopen a permit for cause. Under the State's

current provisions, reopening a permit under these circumstances is

discretionary. 40 CFR 70.7(f)(1) establishes the conditions under which

reopening a permit for cause is mandatory. However, the conditions of

ss.NR 407.14(1)(c) and (d), Wis. Adm. Code, are only mandatory if they

meet the 3 year requirement under 40 CFR 70.7(f)(1)(i), or are acid

rain requirements under 40 CFR 70.7(f)(1)(ii).

6. Revise s.NR 407.05, Wis. Adm. Code, to include the duty to

supplement or correct application provisions, as required under 40 CFR

70.5(b).

7. Revise s.144.3935(1)(a), Wis. Stats., to provide WDNR the

authority to issue operating permits to ``new'' and ``modified'' part

70 sources (as defined by ss.144.30(20s) and (20e), Wis. Stats.) that

are not in compliance. 40 CFR 70.3(a) requires that the permitting

agency must have authority to issue permits to all prt 70 sources.

Revise s.NR 407.05(4)(h)2.c., Wis. Adm. Code, to provide that

compliance plan application requirements for noncomplying new and

modified sources include a narrative description of how the sources

will achieve compliance. 40 CFR 70.5(c)(8)(ii)(C) requires this

compliance plan application requirement for all part 70 sources that

are not in compliance.

Revise s.NR 407.05(4)(h)3.c., Wis. Adm. Code, to provide for

schedule of compliance application requirements for noncomplying new

and modified sources. 40 CFR 70.5(c)(8)(iii)(C) requires schedules of

compliance in all noncomplying part 70 source applications.

Revise s.NR 407.05(4)(h)4., Wis. Adm. Code, to provide for progress

report application requirements for noncomplying new and modified

sources. 40 CFR 70.5(c)(8)(iv) requires progress report schedules in

all noncomplying part 70 source applications.

Revise s.NR 407.09(4)(b), Wis. Adm. Code, to provide for schedule

of compliance and progress report requirements in permits issued to

noncomplying new and modified sources. 40 CFR 70.6(c)(3) and (4)

require schedule of compliance and progress report requirements in all

part 70 permits that are issued to noncomplying sources.

8. Revise ss.NR 407.03(1)(d), (g), (h), (o), (s), (sm), and (t),

Wis. Adm. Code, to ensure that no part 70 sources are exempted from the

requirement to obtain an operating permit, as provided under 40 CFR

70.3. Section NR 407.03(1)(t) potentially exempts certain part 70

sources, and ss.NR 407.03(1)(d), (g), (h), (o), (s), and (sm) do not

provide for adequate procedures to limit these sources' potential to

emit. The 40 CFR 70.2 definition of ``major source'' considers the

potential to emit of a source in determining major source status. The

Wisconsin permitting exemptions listed above determine applicability

based in part or totally on these sources' actual emissions or

throughput, and the provisions in s.NR 407.03(4) do not provide an

enforceable mechanism for limiting these sources' potential emissions

to the actual emissions levels or throughput established in the

exemptions.

WDNR has demonstrated that the additional exemptions provided for

in s.NR 407.03 are acceptable because they do not exempt part 70

sources from the operating permit program. These exemptions are further

analyzed in the TSD for this proposed action.

To be eligible for interim approval, 40 CFR 70.4(d)(3)(ii) requires

that a program provide for adequate authority to issue permits

containing all applicable requirements to all title V sources. Due to

the deficiencies outlined in 7. and 8. above, EPA is proposing that

Wisconsin's operating permit program be granted source category limited

interim approval. See 57 FR 32270 (July 21, 1992). Therefore, EPA is

not proposing to include ``new'' and ``modified'' part 70 sources that

are not in compliance (as defined by Wisconsin's operating permits

program), and part 70 sources covered by Chapter NR 407.03(1)(d), (g),

(h), (o), (s), (sm), and (t) as part of the interim approval of

Wisconsin's program. The exclusion of these source categories from

approval, however, does not affect Wisconsin's obligation to fix these

deficiencies in order to be eligible for full approval.

For the deficiency outlined in 7. above, EPA considers the

legislative drafting oversight in the use of the term ``existing

source'' in a manner inconsistent with the definition of the term to be

a compelling reason for granting source category limited interim

approval.

For the deficiency outlined in 8. above, EPA considers the lack of

EPA guidance in developing prohibitory rules at the time Wisconsin

promulgated its operating permits regulations to be a compelling reason

for granting source category limited interim approval. For the

deficiency with the s.NR 407.03(1)(t) exemption, EPA considers the

additional analysis provided by WDNR showing that the exemption could

potentially exempt title V sources to be a compelling reason for

granting source category limited interim approval. At the time of

Wisconsin's operating permits program submittal, WDNR had determined

that this exemption would not exclude any title V sources from the

requirement to obtain an operating permit. However, WDNR later

determined that this exemption could exclude title V sources.

Wisconsin has not requested additional time for issuing initial

operating permits, as the State intends to fix the source category

limited interim approval deficiencies in time to permit all sources

within the 3 year phase-in period. In addition, based on estimates

provided by WDNR, EPA believes that only a small number of sources and

a small amount of emissions would be affected by source category

limited interim approval. For example, WDNR estimates that only 2 or 3

sources per year will be affected by the noncomplying new and modified

source deficiency. WDNR is also not aware of any part 70 sources that

would meet the s.NR 407.03(1)(t) exemption provisions. For further

information, refer to the TSD for this proposed action. EPA has

determined that Wisconsin's operating permits program can issue permits

to a sufficient number of part 70 sources, and can do so on a schedule

that substantially meets the requirements of part 70.

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 permits 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.

As outlined in II.A.4.c. above, EPA is also proposing to grant

approval under section 112(l)(5) and 40 CFR 63.91 of the State's

program for receiving delegation of section 112 standards that are

unchanged from Federal standards as promulgated. This program for

delegations only applies 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 the State's submittal and other information

relied upon for the proposed interim approval are contained in an

informal 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 November 18, 1994.

B. Executive Order 12866

The Office of Management and Budget has exempted this 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.

Operating permit program 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 operating

permit program approval 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).

List of Subjects in 40 CFR Part 70

Environmental protection, Administrative practice and procedure,

Air pollution control, Intergovernmental relations, Operating permits,

and Reporting and recordkeeping requirements.

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

Dated: September 27, 1994.

Robert Springer,

Acting Regional Administrator.

[FR Doc. 94-25866 Filed 10-18-94; 8:45 am]

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