Approval and Promulgation of Air Quality Implementation Plans; Colorado; Regulation 7

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CO9-3-5603; FRL-5106-6]

Approval and Promulgation of Air Quality Implementation Plans;

Colorado; Regulation 7

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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

SUMMARY: EPA is proposing to approve revisions to the Colorado Ozone

State Implementation Plan (SIP) submitted by the Governor on September

27, 1989, and August 30, 1990. The revisions consist of amendments to

Regulation No. 7, ``Regulation To Control Emissions of Volatile Organic

Compounds.'' In its review of the September 27, 1989 State submittal,

EPA identified several areas where the regulation still did not meet

EPA requirements. On August 30, 1990, the State submitted additional

revisions to Regulation No. 7 to address these deficiencies. This

Federal Register action applies to both of these submittals. The

amendments were made to conform Regulation No. 7 to federal

requirements, and to improve the clarity and enforceability of the

regulation. EPA's approval will serve to make the revisions federally

enforceable and was requested by the State of Colorado.

DATES: Comments must be received on or before December 16, 1994.

ADDRESSES: Written comments should be addressed to: Douglas M. Skie,

Chief Air Programs Branch (8ART-AP), United States Environmental

Protection Agency, Region VIII, 999 18th Street, suite 500, Denver,

Colorado 80202-2466.

Copies of the documents relevant to this action are available for

public inspection between 8 a.m. and 4 p.m., Monday through Friday at

the following office: United States Environmental Protection Agency,

Region VIII, Air Programs Branch, 999 18th Street, suite 500, Denver,

Colorado 80202-2466.

FOR FURTHER INFORMATION CONTACT: Tim Russ, Air Programs Branch (8ART-

AP), United States Environmental Protection Agency, Region VIII, 999

18th Street, Suite 500, Denver, Colorado 80202-2466 (303) 293-1814.

SUPPLEMENTARY INFORMATION: Section 110(a)(2)(H)(i) of the Clean Air Act

(CAA), as amended in 1990, provides the State the opportunity to amend

its SIP from time to time as may be necessary. The State is utilizing

this authority of the CAA to update and revise existing regulations

which are a part of the SIP.

I. Background

On March 3, 1978, EPA designated the Denver-Boulder metropolitan

area as nonattainment for the National Ambient Air Quality Standards

(NAAQS) for ozone (43 FR 8976). This designation was reaffirmed by EPA

on November 6, 1991 (56 FR 56694) pursuant to section 107(d)(1) of the

CAA, as amended in 1990. Furthermore, since the Denver-Boulder area had

not shown a violation of the ozone standard during the three-year

period from January 1, 1987 to December 31, 1989, the Denver-Boulder

area was classified as a ``transitional'' ozone nonattainment area

under section 185A of the amended Act. In order to meet the Reasonably

Available Control Technology (RACT) requirements of the CAA,

transitional areas must correct any RACT deficiencies regarding

enforceability.

The current Colorado Ozone SIP was approved by EPA in the Federal

Register on December 12, 1983 (48 FR 55284). The SIP contains

Regulation No. 7 (Reg 7), which applies RACT to stationary sources of

Volatile Organic Compounds (VOC). Reg 7 was adopted to meet the

requirements of Section 172(b)(2) and (3) of the 1977 CAA (concerning

the application of RACT to stationary sources.1) However, the

approved Ozone SIP did not rely on the emissions reduction credit that

Reg 7 would produce in order to demonstrate attainment; rather, the SIP

relied only on mobile source controls in order to demonstrate

attainment.

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

\1\The requirement to apply RACT to existing stationary sources

of VOC emissions was carried forth under the amended Act in section

172(c)(1).

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

During 1987 and 1988, EPA Region VIII conducted a review of Reg 7

for consistency with the Control Techniques Guidelines documents (CTGs)

and regulatory guidance, for enforceability and for clarity. The CTGs,

which are guidance documents issued by EPA, set forth measures that are

presumptively RACT for specific categories of sources that emit VOCs. A

substantial number of deficiencies were identified in Reg 7. In 1987,

EPA published a proposed policy document that included, among other

things, an interpretation of the RACT requirements as they applied to

VOC nonattainment areas (52 FR 45044, November 24, 1987, Post-87

Policy). On May 25, 1988, EPA published a guidance document entitled

``Issues Relating to VOC Regulation Cutpoints, Deficiencies, and

Deviations, Clarification to Appendix D of the November 24, 1987

Federal Register Notice'' (the ``Blue Book''). A review of Reg 7

against these documents uncovered additional deficiencies in the

regulation.

On May 26, 1988, EPA notified the Governor of Colorado that the

Carbon Monoxide (CO) SIPs for Colorado Springs and Fort Collins were

inadequate to achieve the CO NAAQS. In that letter, EPA also notified

the Governor that the Ozone SIP had significant deficiencies in design

and implementation, and requested that these deficiencies be remedied.

EPA did not make a formal call for a revised Ozone SIP in the May 1988

letter,2 even though the Denver-Boulder area was, and continues to

be, designated nonattainment for ozone. The reason for this decision

was that no violations of the ozone NAAQS had been recorded in the

nonattainment area for the previous three years. However, EPA indicated

that the deficiencies, if uncorrected, could jeopardize the area's

ability to obtain eventual redesignation as an attainment area for

ozone.

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

\2\Under the pre-amended Act, EPA had the authority under

section 110(a)(2)(H) to issue a ``SIP Call'' requiring a State to

correct deficiencies in an existing SIP. Section 110(a)(2)(H) was

not modified by the 1990 Amendments. In addition, the amended Act

contains new section 110(k)(5) which also provides authority for a

SIP Call.

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

1. 1989 SIP Revision Submittal

In a letter dated September 27, 1989, the Governor of Colorado

submitted revisions to Reg 7 to partially address EPA's concerns with

the Ozone SIP. A detailed description of the specific revisions to the

regulation is contained in the Docket for this Federal Register

document. Revisions were made to the following sections of Reg 7:

7.I Applicability

7.II General Provisions

7.III General Requirements for Storage and Transfer of Volatile

Organic Compounds

7.IV Storage of Highly Volatile Organic Compounds

7.V Disposal of Volatile Organic Compounds

7.VI Storage and Transfer of Petroleum Liquid

7.VIII Petroleum Processing and Refining

7.IX Surface Coating Operations

7.X Use of Solvents for Degreasing and Cleaning

7.XI Use of Cutback Asphalt

7.XII Control of VOC Emissions from Dry Cleaning Facilities Using

Perchloroethylene As a Solvent

7.XIII Graphic Arts

7.XIV Pharmaceutical Synthesis

7.XV Control of Volatile Organic Compound Leaks from Vapor

Collection Systems Located At Gasoline Terminals, Bulk Plants, and

Gasoline Dispensing Facilities

Appendix A Criteria for Control of Vapors from Gasoline Transfer to

Storage Tanks

Appendix B Criteria for Control of Vapors from Gasoline Transfer at

Bulk Plants (Vapor Balance System)

Appendix D Test Procedures for Annual Pressure/Vacuum Testing of

Gasoline Transport Trucks

In addition, the following new emission sources and appendices were

added to Reg 7:

7.IX.A.7 Fugitive Emission Control

7.IX.N. Flat Wood Paneling Coating

7.IX.O. Manufacture of Pneumatic Rubber Tires

7.XI.D. Coal Tar

Appendix E Emission Limit Conversion Procedure

In a letter dated September 27, 1989, the Governor of Colorado

submitted revisions to Reg 7 to address EPA's concerns with how the

State was addressing RACT for major non-CTG sources of VOC. A detailed

description of the specific revisions to the regulation is contained in

the Docket for this Federal Register document. Based upon the reasons

stated below, EPA is approving the State's non-CTG rule for its

strengthening effect on the SIP.

Areas of the country which requested extensions of the attainment

date for the ozone NAAQS beyond the initial 1982 target specified in

the CAA, as amended in 1977, were required to submit SIP revisions by

July 1, 1982 (46 FR 7182, January 22, 1981). This requirement applied

to the Denver-Boulder metropolitan area. The 1982 submittal was

required to include RACT regulations for all sources of VOC covered by

a CTG and for all remaining stationary sources in the nonattainment

area with potential to emit VOC emissions (before control) of 100 tons

per year or greater (``major non-CTG sources'').

This 1982 Ozone SIP revision was submitted to EPA on June 24, 1982.

Among other deficiencies, the SIP did not contain regulations requiring

RACT on major non-CTG sources of VOC. EPA noted this deficiency in

February 3, 1983, but proposed approval of the submitted SIP revision

(48 FR 5030). The State responded by committing to adopt RACT for any

VOC sources covered by a CTG and EPA approved this revision on December

12, 1983 (48 FR 55284).

EPA's review of the Ozone SIP during 1987 and 1988 revealed that

the intent of the requirement for RACT for major non-CTG sources had

not been met. EPA tentatively identified several stationary sources

which should have applied RACT since 1982, but were as yet unregulated.

Reg 7 contained no mechanism for requiring control of these sources,

other than a ``General Emission Limitation,'' for sources not

specifically regulated by Reg 7, of 450 pounds per hour or 3000 pounds

per day. This general limitation allowed sources to have actual

emissions of up to nearly 550 tons per year before control was

required. This provision clearly did not meet the 1982 SIP requirement,

which was reiterated in the May 25, 1998, Appendix D Clarification

document.

To address this concern, the State revised Reg 7 to delete the

existing ``General Emission Limitation'' and to require RACT for

stationary sources with potential emissions of VOC of 100 tons per year

or more, under certain conditions. Section 7.II.C. applies this new

RACT requirement to sources not specifically covered by the regulation

as follows:

(a) Sources with actual emissions of 100 tons per year or more of

VOCs must apply RACT.

(b) Sources with potential emissions of 100 tons per year or more

of VOCs, but with actual emissions of less than 100 tons per year, may

avoid having to apply RACT by obtaining a federally enforceable permit

to limit production or hours of operation to keep actual emissions

below 100 tons per year.

(c) Sources with potential emissions of 100 tons per year or more

of VOCs, but with actual emissions of less than 50 tons per year on a

12-month rolling average, may avoid RACT and permit requirements by:

(1) Submitting a report each year demonstrating that the 50 tons per

year threshold has not been exceeded; and (2) maintaining monthly

records of VOC usage and emissions to enable the State to verify these

reports.

The State developed this approach to regulating 100 tons per year

non-CTG sources after receiving comments on the proposed Reg 7

revisions from several industries in the Denver-Boulder area. These

sources indicated that their processes involved a number of non-CTG

category operations that are performed infrequently (such as painting

letters on four production units per year), resulting in low actual

emissions, but which would result in large potential emissions when

calculated on an 8760 hour per year basis.

EPA is approving section 7.II.C. of the State's rules for its

strengthening effect on the SIP. The submitted rule is stronger than

the pre-existing non-CTG RACT rule because it specifically applies to

sources that have a potential to emit more than 100 tons per year of

VOCs and that are not yet covered by a CTG. The rule requires those

sources to adopt RACT on a case-by-case basis. The previous rule, which

was a commitment of the State and did not directly affect non-CTG

sources, only applied to those sources for which EPA subsequently

issued a CTG. Therefore, the submitted rule strengthens the SIP because

it applies to major sources not covered by a CTG. It should be noted

that EPA is not addressing whether this rule establishes RACT for major

stationary sources not subject to a CTG.

The Denver-Boulder metropolitan area is classified as

``transitional'' for ozone under the CAA. This means that the area is

legally designated as an ozone nonattainment area, although it did not

experience violations of the ozone NAAQS during the 1987-1989 period

used to classify areas under the 1990 CAA amendments. Therefore, the

Denver-Boulder metropolitan area is not subject to the RACT fix-up

requirement of Section 182(a)(2)(A) of the CAA.

Under the transitional ozone classification, EPA must review the

available ambient air quality data and make a determination whether the

Denver-Boulder metropolitan area has, in fact, attained the ozone

NAAQS. In a letter dated October 22, 1992, from Jack McGraw, EPA Region

VIII Acting Regional Administrator, to Governor Roy Romer, EPA Region

VIII advised the State that EPA had reviewed ambient air quality data

which had been entered by the State into the Aerometric Information and

Retrieval System (AIRS) national database. EPA further advised that

these data indicated that the Denver-Boulder metropolitan transitional

ozone area, as defined in the November 6, 1991 Federal Register (56 FR

56694, codified at 40 CFR 81.306), had not violated the ozone NAAQS

during the period beginning January 1, 1987, and ending on December 31,

1991. EPA's October 22, 1992 letter was not a determination that the

Denver-Boulder nonattainment area had met the CAA's Section

107(d)(3)(E) criteria for redesignation to attainment, but rather

served as an affirmation that no violation of the ozone standard for

this area was found.

The State has indicated, in the current State-EPA Agreement (SEA),

that it will begin developing an ozone redesignation request and

maintenance plan for the Denver-Boulder metropolitan area. The

maintenance plan must demonstrate that the ozone NAAQS will be

maintained for an initial period of 10 years after the redesignation

request is approved by EPA. The maintenance plan must be updated, after

8 years into the initial 10-year period, to demonstrate that the NAAQS

will be maintained for an additional 10 years. During the development

of the maintenance plan, the State may consider additional revisions to

the ozone control strategy in order to demonstrate maintenance of the

ozone standard; such revisions could include further modification of

the VOC control requirements of Reg 7. For a maintenance plan to be

approved and the Denver-Boulder metropolitan area to be redesignated as

attainment pursuant to Section 107(d)(3)(E), the State may have to

develop specific RACT regulations for major non-CTG sources.

Information available to EPA suggests that there has been growth in

emissions from some non-CTG sources in the area; RACT regulations for

these sources may be necessary to ensure maintenance of the NAAQS for

the initial 10-year redesignation attainment period, as is required by

Section 175A of the Act.

2. 1990 SIP Revision Submittal

In general, the revised Reg 7 ( as submitted by the Governor on

September 27, 1989) met the CAA requirements, which were interpreted in

the CTGs, the Blue Book, and the Post-87 Policy. However, in its

review, EPA identified two remaining issues where the regulation did

not explicitly follow EPA guidance: A. The compliance schedule, and B.

Clarification of the Graphic Arts definition for potential to emit.

These remaining two issues were addressed by the State in its August

30, 1990 submittal and are described below.

In a letter dated August 30, 1990, the Governor of Colorado

submitted revisions to Reg 7 to address EPA's remaining concerns with

the September 27, 1989 Ozone SIP revision. A detailed description of

the additional specific revisions to Reg 7 is contained in the Docket

for this Federal Register document. Revisions were made to the

following sections of Reg 7:

7.I Applicability

7.XI Use of Cutback Asphalt

7.XIII Graphic Arts

A. Compliance Schedule: Reg 7 did not contain an explicit deadline

for compliance with the revised regulation. In response to EPA

comments, the State adopted additional revisions (Section 7.I.B. and

7.I.C.) to Section 7.I. (Applicability) of Reg 7, requiring all sources

to come into compliance with the revised Reg 7 by October 31, 1991. EPA

considered a 2-year timeframe for compliance with the Reg 7 revisions

to be acceptable because no ozone SIP Call was made in 1988 (no

violations of the ozone NAAQS have been monitored in the Denver-Boulder

area since 1984) and thus, the revisions were not immediately necessary

for the area to attain the NAAQS. The 2-year compliance timeframe

applies only to the regulation revisions, and not to requirements which

existed prior to October 30, 1989. Sources which were in existence

prior to the regulation revisions and which were covered by the

regulations at that time were required to maintain compliance with

those provisions.

B. Graphic Arts definition: The Graphic Arts definition of

potential to emit, contained in Section 7.XIII.A.2. of Reg 7, was

somewhat unclear. The definition referenced the EPA requirement that

potential to emit be determined at maximum capacity before control (per

the Appendix D Clarification document), but also included a requirement

that potential emissions be based on historical records of solvent and

ink consumption (per the previous regulatory guidance document,

Guidance to State and Local Agencies in Preparing Regulations to

Control Volatile Organic Compounds from Ten Stationary Source

Categories, September, 1979). As a result, the definition could have

been interpreted to require potential to emit to be calculated at both

maximum and historical operating rates, which in most cases will be

different. EPA's interpretation of this definition was that potential

to emit should be calculated at maximum capacity before control;

historical records of solvent and ink consumption should be used to

determine VOC emissions at a given operating rate, not to determine the

historical maximum operating rate. The Reg 7 revisions, submitted by

the Governor on August 30, 1990, addressed this concern by not

including a reference to the historical records.

C. Capture Efficiency: As a final issue, on January 13, 1992, EPA

notified the State that, prior to proposing this action, it was

necessary to document the State's position with regard to capture

efficiency (CE) determination. During earlier reviews of the State's

VOC regulations, EPA Region VIII indicated that, because EPA had not

issued final, generally-applicable CE test methods, an acceptable State

approach to CE was a commitment to develop test methods consistent with

the most recent EPA guidance on CE testing on a case-by-case basis as

needed, and a commitment to adopt test methods after EPA issued final

CE test methods. The CE provision adopted by the State in Section

IX.A.5.e of Reg 7 does address the requirement that testing for CE be

performed on a case-by-case basis, and that this testing be consistent

with EPA guidance. In a letter dated February 5, 1992, from John Leary,

Acting Director, Colorado Air Pollution Control Division, to Douglas

Skie, Chief, Air Programs Branch, EPA Region VIII, the State committed

to adopt and use all new CE methods as they are developed and

promulgated by EPA's rule-making process. In that same letter, the

State indicated that until changes are promulgated, the Air Pollution

Control Division will use the CE protocols that were published by EPA

on June 29, 1990 (55 FR 26814, codified at 40 CFR 52.741(a)(4)(iii) and

Appendix B).

Due to additional information received after the adoption of

revisions to Reg 7 in September, 1989, the State reconsidered its

regulation of coal tar under Section 7.XI. (Use of Cutback Asphalt). In

revisions submitted on August 30, 1990, Section 7.XI.D., covering coal

tar, was deleted. Regulation of coal tar is not covered by the CTG for

cutback asphalt use; EPA believes that it is not needed to meet the

RACT requirement of the CAA.3

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

\3\Under section 193 of the amended CAA, States cannot delete

control requirements in effect prior to enactment of the amendments

unless the modification ensures equivalent or greater emission

reductions of the same air pollutant. By this same submittal, the

State has submitted additional control requirements that more than

compensate for any greater emissions that may result from the

deletion of the coal tar regulation.

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

In this action, EPA is proposing to approve the State's VOC

definition as submitted in the 1989 and 1990 revisions to Reg 7.

However, on February 3, 1992, EPA published a revised definition of

volatile organic compounds (57 FR 3941). The definition excludes a

number of organic compounds from the definition of VOC on the basis

that they are of negligible reactivity and do not contribute to

tropospheric ozone formation. The State's definition excludes some, but

not all, of these compounds. Therefore, the State's definition of VOC

provides for the regulation of some compounds which are no longer

considered VOCs by EPA. In light of EPA's most recent definition of

VOC, EPA will not enforce against sources for failure to control the

emission of compounds that are exempt from the federal VOC definition.

EPA has informed the Region VIII States of the revised definition of

VOC and will request that future SIP revisions reflect the most recent

federal VOC definition.

Based on the above revisions, EPA believes that Colorado has met

the ozone RACT requirement of the CAA as it applies to the Denver-

Boulder metropolitan area. Colorado has corrected its RACT rule

deficiencies regarding enforceability.

This action was previously published as a Direct Final Rule on June

26, 1992 (57 FR 28614). This Direct Final Rule was withdrawn on August

12, 1992 (57 FR 36004) as EPA Region VIII received a letter, dated July

16, 1992, from William Owens, Executive Director of the Colorado

Petroleum Association (CPA), to Jeff Houk of EPA Region VIII,

expressing adverse comments. These comments will be considered by EPA

during the comment period, along with any other comments that are

received on this proposed rule.

II. Proposed Action

EPA proposes to approve Colorado's Ozone SIP revisions, submitted

by the Governor on September 27, 1989, and August 30, 1990. These

revisions consist of amendments to Reg 7.

Nothing in this action should be construed as permitting or

allowing or establishing a precedent for any future request for

revision to any State Implementation Plan. Each request for revision to

any State Implementation Plan shall be considered separately in light

of specific technical, economic, and environmental factors and in

relation to relevant statutory and regulatory requirements.

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

must prepare a regulatory flexibility analysis assessing 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.

SIP approvals under section 110 and subchapter I, part D of the CAA

do not create any new requirements, but simply approve requirements

that the State is already imposing. Therefore, because the federal SIP-

approval does not impose any new requirements, I certify that it does

not have significant impact on any small entities affected. Moreover,

due to the nature of the federal-state relationship under the CAA,

preparation of a regulatory flexibility analysis would constitute

federal inquiry into the economic reasonableness of state action. The

CAA forbids EPA to base its actions concerning SIPs 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).

This action has been classified as a Table 2 action by the Regional

Administrator under the procedures published in the Federal Register on

January 19, 1989 (54 FR 2214-2225), as revised by an October 4, 1993,

memorandum from Michael H. Shapiro, Acting Assistant Administrator for

Air and Radiation. The Office of Management and Budget has exempted

this regulatory action from Executive Order 12866 review.

The Agency has reviewed this request for revision of the federally-

approved SIP for conformance with the provisions of the 1990 Amendments

to the Clean Air Act enacted on November 15, 1990. The Agency has

determined that this action conforms with those requirements

irrespective of the fact that the submittal preceded the date of

enactment.

Approval of this specific revision to the SIP does not indicate EPA

approval of the SIP in its entirety.

Interested parties are invited to comment on all aspects of this

proposed action.

Executive Order 12866

The Office of Management and Budget has exempted this rule from the

requirements of Section 6 of Executive Order 12866.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Hydrocarbons,

Incorporation by reference, Intergovernmental relations, Ozone,

Reporting and recordkeeping requirements, Volatile organic compounds.

Note: Incorporation by reference of the State Implementation

Plan for the State of Colorado was approved by the Director of the

Federal Register on July 1, 1980.

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

Dated: October 13, 1994.

Jack W. McGraw,

Acting Regional Administrator.

[FR Doc. 94-28291 Filed 11-15-94; 8:45 am]

BILLING CODE 6560-50-P