Clean Air Act Final Interim Approval Operating Permits Program; New Mexico Environment Department

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[NM001; AD-FRL-S107-4]

Clean Air Act Final Interim Approval Operating Permits Program;

New Mexico Environment Department

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is promulgating interim approval of the operating

permits program submitted by the New Mexico Environment Department

(NMED) for the purpose of complying with Federal requirements for an

approvable State program to issue operating permits to all major

stationary sources, and to certain other sources with the exception of

Bernalillo County and Indian Lands.

EFFECTIVE DATE: December 19, 1994.

ADDRESSES: Copies of the State's submittal and other supporting

information used in developing the final interim approval are available

for inspection during normal business hours at the following locations.

Interested persons wanting to examine these documents should make an

appointment with the appropriate office at least 24 hours before

visiting day.

Environmental Protection Agency, Region 6, Air Programs Branch (6T-AN),

1445 Ross Avenue, suite 700, Dallas, Texas 75202-2733.

New Mexico Environment Department, Harold Runnels Building, room So.

2100, 1190 St. Francis Drive, Santa Fe, New Mexico 87503.

FOR FURTHER INFORMATION CONTACT: Adele D. Cardenas, New Source Review

Section, Environmental Protection Agency, Region 6, 1445 Ross Avenue,

suite 700, Dallas, Texas 75202-2733, telephone 214-665-7210.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

Introduction

Title V of the 1990 Clean Air Act Amendments (sections 501-507 of

the Clean Air Act (``the Act'')), and implementing regulations at 40

Code of Federal Regulations (CFR) part 70 required that States develop

and submit operating permits programs to EPA by November 15, 1993, and

that EPA act to approve or disapprove each program within one 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 and 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 two years.

If EPA has not fully approved a program by two years after the November

15, 1993, date, or by the end of an interim program, it must establish

and implement a Federal program.

On May 19, 1994, EPA proposed interim approval of the operating

permits program for the State of New Mexico. (See 59 FR 26158 (May 19,

1994)). The EPA received public comment on the proposal and compiled a

final Technical Support Document (TSD) responding to those comments and

briefly describing and clarifying aspects of the operating permits

program. In this document, EPA is taking final action to promulgate

interim approval of the operating permits program for the State of New

Mexico.

II. Final Action and Implications

A. Analysis of State Submission

The State of New Mexico submitted to EPA, under a cover letter from

the Governor dated November 15, 1993, the State's operating permits

program. The submittal has adequately addressed all sixteen (16)

elements required for full approval as discussed in part 70, except

with regard to criminal fine authority. The State of New Mexico

appropriately addressed all requirements necessary to receive interim

approval of the State operating permits program pursuant to title V of

the Act and 40 CFR part 70. The NMED agreed to seek correction of the

statutory defect in the State's criminal fine authority during the next

legislative session.

B. Response to Comments

1. Provisions for Implementing the Requirements of Section 112(g) of

the Act

Two commenters questioned the timing for the implementation of

section 112(g). The commenters were concerned that New Mexico will be

forced to implement section 112(g) without the direction of a

promulgated rule, thereby placing undo burden on sources striving to

maintain compliance. For example, the commenters were concerned that a

source would be required to implement case-by-case maximum achievable

control technology (MACT) requirements twice; once as defined by the

State and later, as defined by the promulgated section 112(g) rule.

Both commenters requested that EPA defer issuance of the New Mexico

interim approval until the section 112(g) rule has been promulgated by

EPA. In the event that the EPA could not defer interim approval until

the section 112(g) rule is promulgated, the commenters requested that

the interim approval be deferred until the statutory deadline for

approval of the State's title V program (November 15, 1994).

The EPA recognizes the complexity of implementing section 112(g)

requirements prior to promulgation of the Federal section 112(g) rule.

EPA maintains, however, that despite delays in issuing a final section

112(g) rule, the Act still requires any State with an approved part 70

operating permits program to implement section 112(g) for all

qualifying new and modified sources of hazardous air pollutants.

Regarding the suggestion to delay issuance of the final interim

approval notice for New Mexico, the EPA would like to clarify that it

is a statutory requirement of the Act that the EPA must approve or

disapprove a State's operating permits program within one year after

the State's program submittal. The EPA must therefore approve the New

Mexico Operating Permits Program no later than November 15, 1994. The

State has requested that the approval of the program not be delayed.

The EPA has recently developed guidance discussing the period of

initial section 112(g) implementation, ``Guidance for Initial

Implementation of Section 112(g),'' from John Seitz, Director, Office

of Air Quality Planning and Standards, June 28, 1994, addressing some

of the concerns expressed by the commenters. In general, it allows

States flexibility during the initial implementation period and

indicates that the proposed section 112(g) rule (59 FR 15504, April 1,

1994) should be considered guidance for States as they make decisions

regarding program implementation. In addition, this memorandum

recommends not revisiting case-by-case MACT determinations made before

the State adopts rules to implement the final Federal section 112(g)

rule.

The proposed approval for the New Mexico Operating Permits Program

published on May 19, 1994 (59 FR 26158), explained that New Mexico

intends to implement section 112(g) of the Act with regard to new

sources through the State's preconstruction process (See 59 FR 26158,

26160). For informational purposes, the EPA wishes to reaffirm that, as

also stated in the proposed approval at 59 FR 26160, the State of New

Mexico commits to appropriately implementing the existing and future

requirements of section 112 in a timely manner, and modifications,

including section 112(g) modifications, for all existing sources must

be made through the procedures outlined in subsection II(2) of the

proposed approval notice at 59 FR 26160. The notice proposing approval

of New Mexico's operating permits program at 59 FR 26160 cited the

State's applicability requirements contained in Air Quality Control

Regulation (AQCR) 770 section II(B)(3). Those requirements provide that

the State's preconstruction process applies to all new and modified

sources and its requirements become applicable requirements of all part

70 permits. No exceptions to these requirements for modifications to

existing sources were noted in the proposed approval as to sources of

hazardous air pollutants, and no such exceptions exist under New Mexico

law or regulation. Therefore, this notice reaffirms these requirements

set out in the proposed approval notice for modifications to all

existing sources, without exception for those covered by section

112(g), and clarifies that, as with new sources, the State intends to

implement section 112(g) for existing sources through its

preconstruction process, as set out in AQCR 770 section II(B)(3) and

referenced in subsection II(2) of the proposed approval notice at 59 FR

26160.

The EPA also wishes to clarify the mechanism the State intends to

use for the implementation of Federal section 112(g) during the

transition period before the Federal section 112(g) rule, proposed on

April 1, 1994 (59 FR 15504) becomes final, and is adopted by the State.

During this transition period, the State intends to use a two-pronged

approach utilizing its existing preconstruction process. Immediately

upon approval of the State's operating permits program, the State

intends to implement section 112(g) through its existing

preconstruction rule, AQCR 702. This rule was previously approved by

the EPA to implement the preconstruction requirements of title I of the

Act.

The second phase of New Mexico's section 112(g) implementation

approach during the transition period is expected to be based on the

State's adoption of a new rule based on the proposed Federal section

112(g) rule. This rule, AQCR 755, as proposed by the State, would

reference the State's current preconstruction rule, and further clarify

the requirements set out in the proposed Federal section 112(g) rule

and its preamble. The State has already begun the process of revising

its preconstruction program through the adoption of this new rule.

The State anticipates that AQCR 755 could be effective as early as

December 18, 1994. When final, this new rule is expected to enhance the

mechanism contained in the State's existing preconstruction rule, AQCR

702, for the implementation of section 112(g). The EPA is still

evaluating what additional steps may be necessary so that permits

issued pursuant to AQCR 755 will be federally enforceable for the

purpose of satisfying section 112(g). If AQCR 755 is not finally

adopted by the State, or is adopted with substanial changes, AQCR 702

will continue to provide authority for the implementation of Federal

section 112(g). After the final Federal section 112(g) rule is

promulgated, the State will be required to formally revise its State

rules accordingly.

The EPA further wishes to clarify certain aspects of the Federal-

State relationship with regard to section 112(g). Implementation of

section 112(g) by the State, including case-by-case determinations of

MACT, is a requirement for approval of a State title V program. In

other words, approval of the title V operating permits program confers

on the State responsibility to implement section 112(g). Since the

requirement to implement section 112(g) lies with the State in the

first instance, there is no need for a delegation action apart from the

title V program approval. EPA's approval of New Mexico's program for

delegation of section 112 standards as promulgated does not affect this

responsibility to implement section 112(g).

As noted above and set out in the proposed approval notice, the

State's commitment to implement all existing and future requirements of

section 112 of the Act, and all MACT standards promulgated in the

future in a timely manner, includes a commitment to implement both

promulgated section 112 Federal standards and section 112 requirements

such as section 112(g) that are not federally promulgated standards.

2. Provisions for Implementing the Requirements for Radionuclide

Sources

One commenter expressed the belief that an operator of a new

radionuclide source would be exempt from Federal permitting

requirements if modeling demonstrated that emissions from the facility

would be below \1/10\ Maximum Permissible Concentration. The commenter

suggested that, if the permitting function is transferred from EPA to

NMED, this exemption would apply through the State operating permits

program.

The EPA is not aware of any exemptions from operating permit

requirements for radionuclide sources. The EPA notes that any source

subject to title V operating permits requirements which is also a

radionuclide source, is required to obtain a part 70 operating permit,

regardless of the source's emissions levels and Nuclear Regulatory

Commission (NRC) licensing status.

Another commenter requested clarification with respect to the

applicability of the operating permits program to radionuclide sources,

stating that inconsistencies existed between testimony on this subject

presented by the NMED Air Quality Bureau in the development of the

State regulations, and the language of the New Mexico Operating Permits

Program proposed approval notice (59 FR 26158) with regard to

radionuclides. The commenter further expressed the belief that

radionuclides were not subject to State operating permits program

requirements because the EPA has not yet defined the term ``major

source'' for radionuclides.

The EPA would like to clarify that under the Act, all existing

National Emission Standards for Hazardous Air Pollutants (NESHAPs) are

considered applicable requirements for purposes of the operating

permits program, and therefore must be included in the operating

permits of part 70 sources and enforced as all other applicable

requirements. However, at this time, part 70 requirements only apply to

``major sources.'' Because EPA has not yet defined what would

constitute a ``major source'' based solely on radionuclide emissions,

sources of radionuclides are deferred from part 70 requirements until

EPA forms a policy for non-major sources or for sources of

radionuclides emissions, unless such sources are major under any other

definition of ``major source'' contained in part 70. Sources which are

major under another part 70 definition of ``major source'' are required

to obtain part 70 operating permits, and their permits must include

appropriate provisions to cover radionuclide NESHAPs.

The commenter further stated a belief that, based on the State's

testimony during the State AQCR 770 hearing, it is not the intent of

the New Mexico regulations to include radionuclides in the State's part

70 operating permits program until the EPA has established its national

program for radionuclides. It is EPA's understanding that this is

accurate with respect to any radionuclide sources that would be

required to obtain permits solely because of emissions of

radionuclides. However, for those radionuclide sources which are major

sources subject to part 70 requirements for other reasons, part 70

operating permits must be obtained without exception under the New

Mexico AQCR 770 permit regulations.

The commenter also stated that EPA has a responsibility to ensure

that Memoranda Of Understanding (MOUs) and settlement agreements with

the NRC are considered prior to adoption and implementation of any new

radionuclide regulations. As an example of a document which the

commenter believes should be considered, the commenter cites EPA's

February 7, 1994, proposed rescission notice for the 40 CFR part 61,

subpart T regulation.

The EPA would like to note that all MOUs and settlement agreements

will be considered when implementing new radionuclide regulations. In

addition, the final rule rescinding 40 CFR part 61, subpart T, as

applied to NRC-licensed uranium mill tailings, was published in the

Federal Register on July 15, 1994, and subpart T is no longer an

applicable requirement under part 70. However, for those major sources

which are subject to part 70 requirements and also emit radionuclides

at levels subject to NESHAPs requirements other than those formerly

contained in subpart T, the radionuclide sources should be included in

the part 70 operating permit.

The commenter also expressed the opinion that, prior to the

adoption and implementation of radionuclide programs as part of the

title V program, EPA must, through public rulemaking, promulgate a

definition of ``major source'' for radionuclides under the provisions

of section 112(q), and through public rulemaking, modify existing

radionuclide standards established by EPA.

As discussed above, no source will be required to obtain an

operating permit solely because of radionuclide emissions, until EPA

forms a policy for non-major sources or for sources of radionuclide

emissions. However, as stated above, radionuclide sources subject to

part 70 requirements under another part 70 definition of ``major

source'' must obtain part 70 operating permits which govern

radionuclide emissions.

3. Definition of Title I Modification

For the reasons set forth in the EPA's proposed rulemaking to

revise the interim approval criteria of 40 CFR part 70 (59 FR 44572,

August 29, 1994), the EPA believes the phrase ``modification under any

provisions of title I of the Act'' in 40 CFR 70.7(e)(2)(i)(A)(5) is

best interpreted to mean literally any change at a source that would

trigger permitting authority review under regulations approved or

promulgated under title I of the Act. This would include State

preconstruction review programs approved by EPA as part of the State

Implementation Plan under section 110(a)(2)(C) of the Act and

regulations addressing source changes that trigger the application of

NESHAPs established pursuant to section 112 of the Act prior to the

1990 amendments. New Mexico's operating permits program does not define

``title I modification'' to include any modification permitted through

its minor new source review (NSR) preconstruction permit program.

On August 29, 1994, the EPA proposed revisions to its criteria for

interim approval of State operating permits programs under 40 CFR

70.4(d) to allow State operating permits programs with a narrower

definition of ``title I modification'' like New Mexico's to receive

interim approval (59 FR 44572). The EPA also solicited public comment

on the proper interpretation of ``title I modification.'' (59 FR 44572,

44573). The EPA stated that if, after considering the public comments,

it continued to believe that the phrase ``title I modifications''

should be interpreted as including minor NSR changes, it would revise

the interim approval criteria as needed to grant States that adopted a

narrower definition, interim approval.

The EPA intended to finalize its revisions to the interim approval

criteria under 40 CFR 70.4(d) before taking final action on part 70

operating permits programs submitted by the States. However, it will

not be possible to delay approval of operating permits programs until

final action has been taken on EPA's proposed revisions to the part 70

interim approval criteria. This is because publication of the proposed

revisions was delayed until August 29, 1994, and the EPA received

several requests to extend the public comment period until November 27,

1994.\1\ Given the importance of the issues in that rulemaking to

States, sources and the public, but mindful of the need to take action

quickly, the EPA agreed to extend the comment period until October 28,

1994 (see 59 FR 52122 (October 14, 1994)). Consequently, final action

to revise the interim approval criteria will not occur before the

deadline for EPA action on State operating permits programs such as New

Mexico's, that were submitted on or before November 15, 1993.\2\ The

EPA believes it would be inappropriate to delay action on New Mexico's

operating permits program, perhaps for several months, until final

action is taken on the proposed revisions to the part 70 interim

approval criteria. The EPA also believes it would be inappropriate to

grant interim approval to New Mexico on this issue before final action

is taken to revise the current interim approval criteria of 40 CFR

70.4(b) to provide a legal basis for such an interim approval. Until

the revision to the interim approval criteria is promulgated, the EPA's

choices are to either fully approve or disapprove the narrower ``title

I modification'' definition in States such as New Mexico. For the

reasons set forth below, the EPA believes that disapproving such

operating permits programs at this time based solely on this issue

would be inappropriate.

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\1\EPA originally established a 30-day public comment period for

the August 29, 1994 proposal. In response to several requests for

extension, however, EPA agreed to allow an additional thirty days

for public comments. See 59 FR 52122 (October 14, 1994).

\2\Section 502(d) requires, in relevant part, that ``[n]ot later

than 1 year after receiving a program, and after notice and

opportunity for public comment, the Administrator shall approve or

disapprove such program, in whole or in part.''

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First, the EPA has not yet conclusively determined that a narrower

definition of ``title I modification'' is incorrect and thus a basis

for disapproval (or even interim approval). The EPA has received

numerous comments on this issue as a result of the August 29, 1994

Federal Register notice, and the EPA cannot and will not make a final

decision on this issue until it has evaluated all comments on that

proposed rulemaking. Second, the EPA believes that the New Mexico

Operating Permits Program should not be disapproved because the EPA

itself has not yet been able to resolve this issue through rulemaking.

Moreover, disapproving operating permits programs from States such as

New Mexico that submitted their operating permits programs to the EPA

on or before the November 15, 1993, statutory deadline, could lead to

the unfair result that these States would receive disapprovals, while

States which were late in submitting operating permits programs could

take advantage of revised interim approval criteria should those

criteria become final. In effect, States would be severely penalized

for having made timely operating permits program submissions to the

EPA. Finally, disapproval of a State operating permits program for a

potential problem that primarily affects permit revision procedures

would delay the issuance of part 70 permits, hampering State/Federal

efforts to improve environmental protection through the operating

permits program.

For the reasons mentioned above, the EPA is approving the New

Mexico Operating Permits Program's use of the narrower definition of

``title I modification'' at this time.\3\ However, should the EPA in

the interim approval criteria rulemaking make a final determination

that such a narrow definition of ``title I modification'' is incorrect

and that a revision of the interim approval criteria is warranted, the

EPA will propose further action on New Mexico's operating permits

program so that the State's definition of ``title I modification''

could become grounds for interim approval requiring revision prior to

the EPA's granting of full approval to that program.\4\ An operating

permits program like New Mexico's that receives full approval of its

narrower ``title I modification'' definition pending completion of the

EPA's rulemaking must ultimately be placed on an equal footing with

programs of States that receive interim approval in later months under

any revised interim approval criteria because of the same issue.

Converting the full approval on this issue to an interim approval after

the EPA completes its rulemaking would avoid this inequity. The EPA

anticipates that an action to convert the full approval on the ``title

I modification'' issue to an interim approval would be effected through

an additional rulemaking, so as to ensure that there is adequate notice

of the change in approval status.

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\3\At the present time, therefore, the EPA is not construing 40

CFR 70.7(e)(2)(i)(A)(3) and 70.7(e)(2)(i)(A)(5) to prohibit New

Mexico from allowing minor NSR changes to be processed as minor

permit modifications.

\4\State programs with a narrower ``title I modification''

definition that are acted upon by EPA after an Agency decision that

such a narrower definition is inappropriate would be considered

deficient, but would be eligible for interim approval under revised

40 CFR 70.4(b).

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C. Options for Approval

The EPA is promulgating interim approval of the State's operating

permits program submitted by the NMED on November 15, 1993. The State

must make the following change to receive full approval: correct the

statutory defect in criminal fine authority. In addition to raising the

criminal fine amounts to at least $10,000 for all offenses listed in 40

CFR 70.11(a)(3)(ii), statutory revisions must provide authority for the

imposition of those fines on a per day per violation basis, as required

by 40 CFR 70.11(a)(3)(ii). Evidence of these statutory revisions and

their procedurally correct adoption must be submitted to the EPA within

18 months of the EPA's interim approval of the New Mexico Operating

Permits Program. This interim approval, which may not be renewed,

extends until November 18, 1996. During this interim approval period,

the State is protected from sanctions for failure to have a program,

and the EPA is not obligated to promulgate a Federal operating permits

program in the State. Permits issued under a program with interim

approval have full standing with respect to part 70, and the one-year

time period for submittal of permit applications by subject sources

begins upon interim approval, as does the three-year time period for

processing the initial permit applications.

Requirements for 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 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 promulgating approval of the State's

program under section 112(l)(5) and 40 CFR 63.91 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.

The EPA's policy is to apply sanctions to State programs if the

Governor fails to submit a corrected program within 18 months after the

due date for the submittal. If the State fails to submit a corrected

program for full approval by May 20, 1996, the EPA will start an 18-

month clock for mandatory sanctions. If the State fails to submit a

complete program before the expiration of the 18 month period, the EPA

would impose sanctions. If the EPA disapproves a State's corrective

program, and has not granted full approval within 18 months after the

disapproval, then the EPA must impose mandatory sanctions. In both

cases, if the State has not come into compliance within 6 months after

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

addition, discretionary sanctions may be applied where warranted any

time after the end of the interim approval period. If the EPA has not

granted full approval to the State program by November 18, 1996, the

EPA must promulgate, administer, and enforce a Federal operating

permits program for the New Mexico Environment Department.

III. Administrative Requirements

A. Docket

Copies of the State's submittal and other information relied upon

for the final interim approval, including four public comments received

during the public comment period and two received after the close of

the public comment period, are contained in docket number FR Doc. 94-

12246, 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 final interim

approval. The docket is available for public inspection at the location

listed under the ADDRESSES section of this document.

B. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

C. Regulatory Flexibility Act

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. Because this

action does not impose any new requirements, it does not have a

significant impact on a substantial number of small entities.

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.

Dated: November 1, 1994.

Jane N. Saginaw,

Regional Administrator (6A).

40 CFR part 70 is amended as follows:

PART 70--[AMENDED]

1. The authority citation for part 70 continues to read as follows:

Authority: 42 U.S.C. 7401 et seq.

2. Appendix A to part 70 is amended by adding the entry for New

Mexico in alphabetical order to read as follows:

Appendix A to Part 70--Approval Status of State and Local Operating

Permits Programs

* * * * *

New Mexico

(a) Environment Department; submitted on November 15, 1993;

Effective Date on December 19, 1994; Interim Approval Expires on

December 19, 1996.

(b) [Reserved]

* * * * *

[FR Doc. 94-28544 Filed 11-17-94; 8:45 am]

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