Clean Air Act Proposed Interim Approval of Title V Operating Permits Program; Ventura County Air Pollution Control District, California

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5107-2]

Clean Air Act Proposed Interim Approval of Title V Operating

Permits Program; Ventura County Air Pollution Control District,

California

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The EPA proposes interim approval of the Operating Permits

Program submitted by the Ventura County Air Pollution Control District

(APCD) for the purpose of complying with Federal requirements that

mandate that states develop, and submit to EPA, programs for issuing

operating permits to all major stationary sources, and to certain other

sources.

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

December 22, 1994.

ADDRESSES: Comments should be addressed to Ginger Vagenas at the Region

9 address.

Copies of Ventura County APCD's submittal and other supporting

information used in developing this proposed interim approval are

available for inspection during normal business hours at the following

location: USEPA, Region 9, 75 Hawthorne Street, San Francisco, CA.

FOR FURTHER INFORMATION CONTACT: Ginger Vagenas, USEPA A-5-2; 75

Hawthorne Street, San Francisco, CA 94105; (415) 744-1252.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

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

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

elements of an approvable state operating permits program and the

corresponding standards and procedures by which the EPA will approve,

oversee, and withdraw approval of state operating permits programs (see

57 FR 32250 (July 21, 1992)). These rules are codified at 40 CFR part

70. Title V requires states to develop and submit to EPA, by November

15, 1993, programs for issuing these operating permits to all major

stationary sources and to certain other sources.

The Act requires 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, which outlines 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

The analysis contained in this notice focuses on specific elements

of Ventura's title V operating permits program that must be corrected

to meet the minimum requirements of 40 CFR part 70. The full program

submittal, the Technical Support Document (TSD), which contains a

detailed analysis of the submittal, and other relevant materials are

available for inspection as part of the public docket. The docket may

be viewed during regular business hours at the address listed above.

1. Title V Program Support Materials

Ventura's title V program was submitted by the California Air

Resources Board (CARB) on November 16, 1993. Additional material was

submitted on December 6, 1993. The submittal was found to be

administratively complete on February 4, 1994. The Governor's letter

requesting source category-limited interim approval, California

enabling legislation, and Attorney General's legal opinion were

submitted by CARB for all districts in California and therefore were

not included separately in Ventura's submittal. The Ventura submission

does contain a complete program description, District implementing and

supporting regulations, and all other program documentation required by

Sec. 70.4. An implementation agreement is currently being developed

between Ventura and EPA.

2. Title V Operating Permit Regulations and Program Implementation

Ventura's regulations that implement part 70 include Rule 8, Access

to Facilities; Rule 15, Standards for Permit Issuance; Rule 15.1,

Sampling and Testing Facilities; Rule 23, Exemption from Permit; Rule

26.1, New Source Review (definitions of ``modified emissions unit,''

``new emissions unit,'' and ``stationary source'' only); Rule 29,

Conditions on Permits (paragraph C only); Rule 33, Part 70 Permits; and

Rule 42, Permit Fees. These rules, in conjunction with authorities

granted under California State law, substantially meet the requirements

of 40 CFR part 70, sections 70.2 and 70.3 for applicability; sections

70.4, 70.5, and 70.6 for permit content, including operational

flexibility; section 70.7 for public participation and minor permit

modifications; section 70.5 for complete application forms; and section

70.11 for enforcement authority. Although the regulations substantially

meet part 70 requirements, there are several program deficiencies that

are outlined under section II.B. below as interim approval issues and

further described in the Technical Support Document.

Variances. Ventura County APCD has the authority to issue a

variance from requirements (except the requirement to obtain a permit

to construct or operate)imposed by state and local law. See California

HSC sections 42350-42364 and Ventura Regulation VII. In the opinion

submitted with California operating permit programs, California's

Attorney General states that ``[t]he variance process is not part of

the Title V permitting process and does not affect Federal enforcement

for violations of the requirements set forth in a Title V permit.''

(Emphasis in original.)

The EPA regards the State and District variance provisions as

wholly external to the program submitted for approval under part 70 and

consequently is proposing to take no action on these provisions of

state and local law. The EPA has no authority to approve provisions of

state law that are inconsistent with the CAA. The EPA does not

recognize the ability of a permitting authority to grant relief from

the duty to comply with a federally enforceable part 70 permit, except

where such relief is granted through procedures allowed by part 70. A

part 70 permit may be issued or revised (consistent with part 70

permitting procedures), to incorporate those terms of a variance that

are consistent with applicable requirements. A part 70 permit may also

incorporate, via part 70 permit issuance or revision procedures, the

schedule of compliance set forth in a variance. However, EPA reserves

the right to pursue enforcement of applicable requirements

notwithstanding the existence of a compliance schedule in a permit to

operate. This is consistent with 40 CFR 70.5(c)(8)(iii)(C), which

states that a schedule of compliance ``shall be supplemental to, and

shall not sanction noncompliance with, the applicable requirements on

which it is based.''

Permit content. EPA is specifically approving the General part 70

Permit Conditions that were submitted as part of Ventura's part 70

program. Any modifications to these general conditions must be approved

by EPA. Failure to include these conditions in part 70 permits will be

cause for EPA to object to a District operating permit. See

Sec. 70.8(c)(1).

Ventura's permit content rule (Rule 33.3) does not include the

level of detail regarding periodic monitoring found in

Sec. 70.6(a)(3)(i)(B). Paragraphs A.1. and A.3. of Rule 33 more

generally address the requirements for periodic monitoring. These

paragraphs provide that operating permits issued pursuant to this rule

will assure compliance with all applicable requirements and will

include conditions establishing all applicable emissions monitoring and

analysis procedures etc., required under all applicable requirements.

Although the rule does not explicitly state that the periodic

monitoring or testing will be ``sufficient to yield reliable data from

the relevant time period that are representative of the source's

compliance period * * *,'' the more general language cited above is

consistent with this requirement. Should Ventura draft a permit that

does not meet the requirements of Sec. 70.6(a)(3)(i)(B), EPA will

exercise its authority under Sec. 70.8(c)(1) and will object to the

permit.

Insignificant activities. Section 70.4(b)(2) requires states to

include in their part 70 programs any criteria used to determine

insignificant activities or emission levels for the purposes of

determining complete applications. Section 70.5(c) states that an

application for a part 70 permit may not omit information needed to

determine the applicability of, or to impose, any applicable

requirement, or to evaluate appropriate fee amounts. Section 70.5(c)

also states that EPA may approve, as part of a state program, a list of

insignificant activities and emissions levels which need not be

included in permit applications. Under part 70, a state must request

and EPA must approve as part of that state's program any activity or

emission level that the state wishes to consider insignificant. Part

70, however, does not establish appropriate emission levels for

insignificant activities, relying instead on a case-by-case

determination of appropriate levels based on the particular

circumstances of part 70 program under review.

Ventura provided its current permit exemption list as its list of

insignificant activities. Because EPA was provided no criteria or

information on the level of emissions of activities on Ventura's

exemptions list and no demonstration that these activities are not

likely to be subject to an applicable requirement, EPA cannot propose

full approval of the list as the basis for determining insignificant

activities.

For other state programs, EPA has proposed to accept, as sufficient

for full approval, emission levels for insignificant activities of 2

tons per year for criteria pollutants and the lesser of 1000 pounds per

year, section 112(g) de minimis levels, or other title I significant

modification levels for HAPs and other toxics (40 CFR 52.21(b)(23)(i)).

EPA believes that these levels are sufficiently below applicability

thresholds for many applicable requirements to assure that no unit

potentially subject to an applicable requirement is left off a title V

application and are consistent with current permitting thresholds in

Ventura County. EPA is requesting comment on the appropriateness of

these emission levels for determining insignificant activities in

Ventura County. This request for comment is not intended to restrict

the ability of the District to propose and EPA to approve other

emission levels if the District demonstrates that such alternative

emission levels are insignificant compared to the level of emissions

from and types of units that are permitted or subject to applicable

requirements.

Definition of title I modification. Ventura's definition of ``title

I modification'' does not include changes reviewed under a minor source

preconstruction review program (``minor NSR changes''). The EPA is

currently in the process of determining the proper definition of that

phrase. As further explained below, EPA has solicited public comment on

whether the phrase ``modification under any provision of title I of the

Act'' in 40 CFR 70.7(e)(2)(i)(A)(5) should be 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 Clean Air Act.

On August 29, 1994, EPA proposed revisions to the interim approval

criteria in 40 CFR 70.4(d) to, among other things, allow state programs

with a more narrow definition of ``title I modifications'' to receive

interim approval (59 FR 44572). The Agency explained its view that the

better reading of ``title I modifications'' includes minor NSR and pre-

1990 NESHAP requirements, and solicited public comment on the proper

interpretation of that term (59 FR 44573). The Agency 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 allow states with a narrower definition to be eligible for

interim approval.

The EPA hopes to finalize its rulemaking revising the interim

approval criteria under 40 CFR 70.4(d) expeditiously.1 If EPA

establishes in its rulemaking that the definition of ``title I

modifications'' can be interpreted to exclude changes reviewed under

minor NSR programs, Ventura's definition of ``title I modification''

would be fully consistent with part 70. Conversely, if EPA establishes

through the rulemaking that the definition must include changes

reviewed under minor NSR, Ventura's definition of ``title I

modifications'' will become a basis for interim approval. If the

definition becomes a basis for interim approval as a result of EPA's

rulemaking, Ventura would be required to revise its definition to

conform to the requirements of part 70.

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\1\ Publication of the proposed interim approval criteria

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

several requests to extend the public comment period until November

27, 1994. Given the importance of the issues in that rulemaking to

states, sources and the public, but mindful of the need to take

action quickly, EPA agreed to extend the comment period until

October 28, 1994 (see 59 FR 52122 (October 14, 1994)).

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Accordingly, today's proposed approval does not identify Ventura's

definition of ``title I modification'' as necessary grounds for either

interim approval or disapproval. Again, although EPA has reasons for

believing that the better interpretation of ``title I modifications''

is the broader one, EPA does not believe that it is appropriate to

determine whether this is a program deficiency until EPA completes its

rulemaking on this issue.

3. Permit Fee Demonstration

Section 502(b)(3) of the Act requires that each permitting

authority collect fees sufficient to cover all reasonable direct and

indirect costs required to develop and administer its title V operating

permits program. Each title V program submittal must contain either a

detailed demonstration of fee adequacy or a demonstration that

aggregate fees collected from title V sources meet or exceed $25 per

ton of emissions per year (adjusted from 1989 by the Consumer Price

Index (CPI)). The $25 per ton amount is presumed, for program approval,

to be sufficient to cover all reasonable program costs and is thus

referred to as the ``presumptive minimum'' (Sec. 70.9(b)(2)(i)).

Ventura has opted to make a presumptive minimum fee demonstration.

Ventura's existing fee schedule requires title V facilities to pay an

average of $65.34 per ton in annual renewal fees. Ventura calculated

its fee level at $65.34 per ton by adding up the annual renewal fees

paid by sources identified as title V facilities ($1,192,780), and

dividing that number by the permitted emissions (tons per year of

regulated air pollutants) of those facilities (18,254.2 tons per year).

The numbers in the calculation underestimate fee revenues and

overestimate actual emissions, and therefore result in a conservative

calculation of the fees collected per ton of pollutant. Ventura's fee

demonstration shows that currently assessed renewal fees will be

adequate to cover program costs for the next four years. For more

information, see section VI of Ventura's Title V Operating Permit

Program Description, available in the docket.

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

a. Authority and commitments for section 112 implementation.

Ventura 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 the

State of California enabling legislation and in regulatory provisions

defining ``federally enforceable requirements'' and stating that the

permit must incorporate all applicable requirements. EPA has determined

that this legal authority is sufficient to allow Ventura to issue

permits that assure compliance with all section 112 requirements.

EPA is interpreting the above legal authority to mean that Ventura

is able to carry out all section 112 activities. 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, Director of the Office of Air

Quality Planning and Standards, U.S. EPA.

b. District preconstruction permit program to implement 112(g). As

a condition of approval of the part 70 program, Ventura 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 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 Ventura's preconstruction

permitting program found in Ventura's Regulation II under the authority

of title V and part 70 solely for the purpose of implementing section

112(g) during the transition period between title V approval and

adoption of a District rule implementing EPA's section 112(g)

regulations. EPA believes this approval is necessary so that Ventura

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 the authority for

approval of state air toxics programs, title V and section 112(g)

provide authority for this limited approval because of the direct

linkage between implementation of section 112(g) and title V. The scope

of this approval is narrowly limited to section 112(g), and does not

confer or imply approval for purposes of any other provision under the

Act. If Ventura 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 Ventura's part 70 program, approve the alternative

instead.

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

District is able to adopt 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 Ventura,

acting expeditiously, will be able to adopt regulations consistent with

the section 112(g) regulations. The EPA is proposing here to limit the

duration of this approval to 12 months following promulgation by EPA of

section 112(g) regulations. Comment is solicited on whether 12 months

is an appropriate period considering Ventura'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) 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 District'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 Ventura's program for receiving

delegation of section 112 standards that are unchanged from the Federal

standards as promulgated. Ventura has informed EPA that it intends to

accept delegation of section 112 standards through automatic

delegation, as provided for by sections 39658 and 42301.10 of the

California Health and Safety Code. The details of this delegation

mechanism will be set forth in an Implementation Agreement between

Ventura and EPA, expected to be completed prior to approval of

Ventura's section 112(l) program for straight delegations. This program

applies to both existing and future standards but is limited to sources

covered by the part 70 program.

d. Commitments for title IV implementation. In a letter dated May

26, 1994, Ventura's Air Pollution Control Officer (APCO) committed to

propose to the District governing board (Board), a complete acid rain

program, with sufficient time to submit the program to EPA by January

1, 1995. The APCO stated his intent to propose to the Board that they

incorporate by reference the relevant provisions of part 72. The letter

further indicates that the incorporation by reference will

automatically incorporate Federal revisions to part 72.

B. Proposed Interim Approval and Implications

The EPA is proposing to grant interim approval to the operating

permits program submitted by Ventura County APCD on December 6, 1993.

If EPA were to finalize this proposed interim approval, it would extend

for two years following the effective date of final interim approval,

and could not be renewed. During the interim approval period, Ventura

would be protected from sanctions, and EPA would not be obligated to

promulgate, administer and enforce a Federal permits program for the

District. Permits issued under a program with interim approval have

full standing with respect to part 70, and the 1-year time period for

submittal of permit applications by subject sources begins upon the

effective date of interim approval, as does the 3-year time period for

processing the initial permit applications.

Following final interim approval, if Ventura failed to submit a

complete corrective program for full approval by the date 6 months

before expiration of the interim approval, EPA would start an 18-month

clock for mandatory sanctions. If the District then failed to submit a

corrective program that EPA found complete before the expiration of

that 18-month period, EPA would be required to apply one of the

sanctions in section 179(b) of the Act, which would remain in effect

until EPA determined that Ventura had corrected the deficiency by

submitting a complete corrective program. Moreover, if the

Administrator found a lack of good faith on the part of the the

District, both sanctions under section 179(b) would apply after the

expiration of the 18-month period until the Administrator determined

that the District had come into compliance. In any case, if, six months

after application of the first sanction, the District still had not

submitted a corrective program that EPA found complete, a second

sanction would be required.

If, following final interim approval, EPA were to disapprove

Ventura's complete corrective program, EPA would be required to apply

one of the section 179(b) sanctions on the date 18 months after the

effective date of the disapproval, unless prior to that date the

District had submitted a revised program and EPA had determined that it

corrected the deficiencies that prompted the disapproval. Moreover, if

the Administrator found a lack of good faith on the part of the

District, both sanctions under section 179(b) would apply after the

expiration of the 18-month period until the Administrator determined

that the District had come into compliance. In all cases, if, six

months after EPA applied the first sanction, Ventura had not submitted

a revised program that EPA had determined corrected the deficiencies

that prompted disapproval, a second sanction would be required.

In addition, discretionary sanctions may be applied where warranted

any time after the end of an interim approval period if a state or

district has not timely submitted a complete corrective program or EPA

has disapproved a submitted corrective program. Moreover, if EPA has

not granted full approval to a title V operating permits program by the

expiration of an interim approval and that expiration occurs after

November 15, 1995, EPA must promulgate, administer and enforce a

Federal permits program for that state of district upon interim

approval expiration.

1. Ventura's Title V Operating Permits Program

If interim approval is granted, Ventura must make the following

changes to receive full approval:

a. Insignificant activities. Rules 33.2 and 23 provide the

framework for Ventura's insignificant activities provisions. For its

program to be fully approvable, Ventura must provide a demonstration

that activities that are exempt from part 70 permitting are truly

insignificant and are not likely to be subject to an applicable

requirement. Alternatively, the District may restrict the exemptions to

activities that are not likely to be subject to an applicable

requirement and emit less than District-established emission levels.

The District should establish separate emission levels for HAPs and for

other regulated pollutants and demonstrate that these emission levels

are insignificant compared to the level of emissions from and type of

units that are required to be permitted or subject to applicable

requirements.

b. Revision process for significant changes to monitoring terms and

conditions. The definitions of ``minor permit modification'' and

``significant part 70 permit modification'' in Rule 33.1 must be

revised to ensure that significant changes to existing monitoring

permit terms or conditions are processed as significant permit

modifications. See Sec. 70.7(e)(4).

c. Operation of modifications prior to permit revision. Except in

the case when a federally enforceable permit condition would prohibit

it, Ventura's Rule 33.9 A.1. allows sources to make significant

modifications prior to receiving a part 70 permit revision. In order to

be consistent with part 70, Ventura must revise its rule so that the

only changes that may be operated prior to receiving a part 70 permit

revision are those modifications subject to section 112(g) and title I,

parts C and D of the Act, and that are not prohibited by the existing

part 70 permit. Under part 70, if a proposed change does not meet these

criteria, the source may not make the change until the permitting

authority has revised the source's part 70 permit. See

Sec. 70.5(a)(1)(ii).

d. Public notice. Revise Rule 33.7 B. to include notice ``by other

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

See Sec. 70.7(h)(1).

e. Permit content. Ventura's permit content requirements are found

in Rules 33.3 and 33.9. These regulatory provisions adequately address

nearly all of the part 70 requirements. Certain elements (e.g.

Sec. Sec. 70.6(a)(3)(ii)(B), 70.6(a)(6)(i)), are more fully detailed in

the General Part 70 Permit conditions, which were submitted in appendix

B.2.b. of Ventura's part 70 program submittal. Ventura must establish a

binding requirement that the General Part 70 Permit Conditions will be

included in all part 70 permits. Ventura may accomplish this by

modifying its regulation to reference the general conditions that were

submitted and approved by EPA, or by more fully addressing the

conditions within the regulation.

f. Recordkeeping requirements. Revise Rule 33.3 permit content

requirement to provide adequate specificity with regard to the

applicable recordkeeping requirements. See Sec. 70.6(a)(3)(C)(ii).

g. Emissions trading under applicable requirements. Add emissions

trading provisions consistent with Sec. 70.6(a)(10), which require that

trading must be allowed where an applicable requirement provides for

trading increases and decreases without a case-by-case approval.

h. Compliance schedule. Rule 33.3 B.2., which requires that a

schedule of compliance be included in the permit, does not create an

explicit link with 33.9 B.4., which details the contents of a

compliance schedule. Revise Rule 33.3 permit content requirements to

ensure that all elements of the compliance schedule under Sec. 70.5(c)

are incorporated into the permit.

i. EPA Notification of operational flexibility changes. Rule 33.5

D. must be revised to incorporate EPA notification of changes made

under the operational flexibility provisions, either by providing for

it within the regulation, or by making the general permit conditions,

which do specify EPA notification, required elements of each permit.

See Sec. 70.4(b)(14)(ii)

2. California Enabling Legislation

Legislative source category limited interim approval issue. Because

California state law currently exempts agricultural production sources

from permit requirements, the California Air Resources Board has

requested source category limited interim approval for all California

districts. EPA is proposing to grant source category limited interim

approval to the operating permits program submitted by the California

Air Resources Board on behalf of Ventura County on December 6, 1993. In

order for this program to receive full approval (and to avoid a

disapproval upon the expiration of this interim approval), the

California Legislature must revise the Health and Safety Code to

eliminate the exemption of agricultural production sources from the

requirement to obtain a permit.

The above described program and legislative deficiencies must be

corrected before Ventura can receive full program approval. For

additional information, please refer to the TSD, which contains a

detailed analysis of Ventura's operating permits program and

California's enabling legislation.

III. Administrative Requirements

A. Request for Public Comments

The EPA is requesting comments on all aspects of this proposed

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

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

maintained at the EPA Regional Office. The docket is an organized and

complete file of all the information submitted to, or otherwise

considered by, EPA in the development of this proposed interim

approval. The principal purposes of the docket are:

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

documents so that they can effectively participate in the approval

process; and

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

consider any comments received by [insert date 30 days after date of

publication].

B. Executive Order 12866

The Office of Management and Budget has exempted this regulatory

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.

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

Dated: November 9, 1994.

John Wise,

Acting Regional Administrator.

[FR Doc. 94-28713 Filed 11-21-94; 8:45 am]

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