Clean Air Act Proposed Disapproval of the Title V Operating Permit Programs for Glenn County, Lake County, Shasta County and Tehama County, California; Proposed Disapproval of the Lake County, California, State Implementation Plan

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52 and 70

[CA 99-01-6614; FRL-5112-5]

Clean Air Act Proposed Disapproval of the Title V Operating

Permit Programs for Glenn County, Lake County, Shasta County and Tehama

County, California; Proposed Disapproval of the Lake County,

California, State Implementation Plan

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing disapproval of the operating permits programs

submitted by the California Air Resources Board on behalf of Glenn

County Air Pollution Control District (APCD), Lake County Air Quality

Management District (AQMD), Shasta County AQMD, and Tehama County APCD.

These programs were submitted for the purpose of complying with federal

requirements in title V of the Clean Air Act which mandates that states

develop, and submit to EPA, programs for issuing operating permits to

all major stationary sources and to certain other sources. In the

alternative, EPA is proposing to grant source category-limited interim

approval to any of these programs for which the California Air

Resources Board submits certain revisions to each District's upset/

breakdown rule and, except for Tehama County, equipment shutdown rule.

The EPA is also proposing to disapprove a revision to Lake County's

portion of the California State Implementation Plan (SIP) regarding a

regulation for issuing federally enforceable state operating permits to

non-title V sources. In the alternative, the EPA proposes to approve

this regulation if Lake County makes revisions to its upset/breakdown

and shutdown rules.

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

December 29, 1994.

ADDRESSES: Comments on the Lake County program and SIP should be

addressed to Ed Pike, Operating Permits Section, A-5-2, Air and Toxics

Division, US EPA-Region IX, 75 Hawthorne Street, San Francisco,

California 94105. Comments on the other programs should be addressed to

Sara Bartholomew at the same address.

Copies of the submissions and other supporting information used in

developing the proposed disapprovals/interim approvals including the

Technical Support Documents are available for inspection during normal

business hours at the following location: Operating Permits Section, A-

5-2, Air and Toxics Division, U.S. EPA-Region IX, 75 Hawthorne Street,

San Francisco, California 94105.

FOR FURTHER INFORMATION CONTACT: For information on the Lake County

program and SIP, please contact: Ed Pike, (415) 744-1248. For

information on the programs for the other Districts, please contact:

Sara Bartholomew, (415) 744-1170.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

1. Title V

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 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, programs for

issuing these operating permits to all major stationary sources and to

certain other sources.

The Act requires that states develop and submit these programs to

EPA by November 15, 1993, and that EPA act to approve or disapprove

each program within one year after receiving the submittal. 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 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.

2. Federally-Enforceable State Operating Permit Programs

On June 28, 1989 (54 FR 27282), the EPA published criteria for

approving and incorporating into SIPs under section 110 of the Act,

regulatory programs for the issuance of federally-enforceable operating

permits. These programs are known as federally-enforceable state

operating permit (FESOP) programs. Permits issued under a FESOP program

approved into the SIP pursuant to the June, 1989, notice are considered

federally enforceable. EPA has allowed states to develop such programs

in conjunction with title V operating permit programs for the purpose

of creating federally-enforceable limits on sources' potential to emit.

This mechanism would allow potentially major sources to become

synthetic minor sources and avoid being subject to title V by reducing

their potential to emit to below the title V applicability thresholds.

For further information, see the EPA guidance document entitled

``Limitation of Potential to Emit with Respect to Title V Applicability

Thresholds,'' dated September 18, 1992. A copy of this document is

contained in the Lake County docket.

B. Federal Oversight and Sanctions

EPA is proposing to disapprove the title V operating permit

programs for the Glenn County APCD, Lake County AQMD, Shasta County

AQMD, and Tehama County APCD. If EPA were to finalize this proposed

disapproval for any one of these Districts, the District may become

subject to sanctions under the Act. Pursuant to section 502(d)(2)(A) of

the Act, EPA may, at its discretion, apply any of the sanctions in

section 179(b) at any time following the effective date of a final

disapproval. The available sanctions include a prohibition on the

approval by the Secretary of Transportation of certain highway projects

or the awarding of certain federal highway funding, and a requirement

that new or modified stationary sources or emissions units for which a

permit is required under part D of title I of the Act achieve an

emissions reductions-to-increases ratio of at least 2-to-1. The latter

sanction, however, is available only in areas that are classified

nonattainment. Because none of the four Districts is classified

nonattainment for any criteria pollutant, the only available sanction

is the highway approval and funding sanction. In addition, EPA is

required by section 502(d)(2)(B) of the Act to apply sanctions on the

date 18 months after the effective date of a final disapproval, unless

prior to that date the District has submitted a revised operating

permits program and EPA has determined that it corrects the

deficiencies that prompted the final disapproval. Finally, if EPA has

not granted either full or interim approval to the District program by

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

Federal permits program for that District on that date.

EPA is also proposing to disapprove Lake County's FESOP program.

Sanctions are available only for requirements of the Act. FESOP

programs are not required by the Act; therefore, disapproval of Lake's

program will not trigger a sanctions deadline for the District.

II. Proposed Action and Implications

A. Analysis of State Submission

The analysis contained in this notice focuses on the major elements

of the Districts' title V operating permits program submittals and on

specific elements that must be corrected to meet the minimum

requirements of 40 CFR part 70. The four District programs being

reviewed are based on a model rule and program description developed by

the California Air Resources Board (CARB). As a result, the programs

are very similar. A detailed analysis of each program can be found in

Technical Support Document (TSDs) for each District. The full program

submittals, TSDs, and other relevant materials are available for public

review in the public docket for each District. The dockets may be

viewed during regular business hours at the address listed above.

1. Title V Support Materials

In submitting each District's title V program, CARB requested

source category-limited interim approval for the program because

California law currently exempts agricultural sources from all

permitting requirements including title V. Each District's submission

contains a complete program description, District implementing and

supporting regulations, application and reporting forms, and other

supporting information. In addition, CARB submitted for all Districts

in the State a single Attorney General's opinion, State enabling

legislation, and certain other information regarding State law.

EPA has reviewed each District's program to assure that it contains

all the elements required by Sec. 70.4 (b) (elements of the initial

program submission) and has found each program complete pursuant to

Sec. 70.4 (e)(1) in letters to the California Air Resources Board on

January 13, 1994 (Shasta), February 4, 1994 (Tehama), March 4, 1994

(Glenn), and May 20, 1994 (Lake). Copies of these letters are in the

dockets. Prior to final action to approve these operating permit

programs, EPA intends to have in place an implementation agreement with

each of these Districts that addresses data management, acid rain

provisions, procedures for delegation of hazardous air pollutant

standards under section 112(l) of the Act, and other elements regarding

the implementation of the District's title V program.

2. Title V Operating Permit Regulations and Program Implementation

This section discusses how the Districts' rules in general comply

with the requirements of part 70. In each case, the Districts' rules/

regulations are identical to or very similar to the CARB model;

therefore, the discussion below is applicable to all four programs. If

a District's program differs substantially from the CARB model and the

other Districts' programs in a way that is not fully approvable under

part 70, it is noted in sections later in this notice that discuss the

interim approval issues for each District.

Applicability. All programs meet the source applicability

requirements of Secs. 70.2 (Definitions) and 70.3 (Applicability)

except that current California law exempts agricultural sources from

all permitting requirements including title V. This exemption must be

removed from State law in order for the District programs to receive

full approval. All programs opted to defer the permitting of minor

sources subject to New Source Performance Standards (NSPS) or National

Emission Standards for Hazardous Air Pollutants (NESHAP) as allowed

under Sec. 70.3 (b)(1).

Permit application. The rules substantially meet the application

deadlines and application content requirements of Sec. 70.5 (Permit

applications). Each program contains the application forms that the

District intends to use for initial permit, permit renewal, and permit

modification applications. In this action, EPA is proposing to approve

these application forms as part of each District's program. All rules

require sources to list all emission units in sufficient detail to

establish applicable requirements and permit fees. EPA has identified

several interim approval issues regarding permit application

requirements that must be corrected for full approval. The interim

approval issues are discussed in detail later in this notice. In the

TSD, EPA has also identified other recommended changes that are not

required for full approval but would improve, clarify, or strengthen

the Districts' title V programs.

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.

All four Districts provided their current permit exemption lists as

their list of insignificant activities. Several of these lists provide

unbounded discretion to the APCO to determine additional exemptions.

For criteria, Glenn, Shasta, and Tehama either provided no criteria or

stated that their criteria for insignificance was the list of

activities in their current permit exemption list. Because EPA was

provided no criteria or information on the level of emissions of

activities on most Districts' 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 lists as the basis

for determining insignificant activities.

Lake submitted several permit exemptions for their part 70

permitting program. Lake County did not submit emission levels or other

criteria for these exemptions, although Lake stated that sources above

the significance levels in their new source review regulations (Section

602) could not be exempted. These ``significance levels'' are 20 pounds

per hour or 150 pounds per day of any criteria pollutant except carbon

monoxide and lead, 150 pounds per hour or 1500 pounds per day of carbon

monoxide, and more than 27 pounds per day of lead. These levels are a

substantial fraction of the major source thresholds for Lake County and

would almost certainly exclude units with applicable requirements. EPA,

therefore, finds that these emission levels are too high to be

considered insignificant.

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

for full approval, emission levels for insignificant activities of 2

tons per year and the lesser of 1000 pounds per year, section 112(g) de

minimus 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 for the nineteen

Districts under consideration here. EPA is requesting comment on the

appropriateness of these emission levels for determining insignificant

activities in these Districts. This request for comment is not intended

to restrict the ability of individual Districts 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.

Permit content. The rules substantially meet the permit content

requirements of Sec. 70.6 (Permit content) including assuring

compliance with all applicable requirements, monitoring and related

recordkeeping and reporting requirements, and compliance requirements.

None of the programs opted to use general permits or the permit shield.

In addition, the programs substantially meet the operational

flexibility requirements of Sec. 70.4 (b)(12). The programs also

prohibit changes that are considered minor under new source review from

being made under the operational flexibility provisions. EPA has

identified several problems with the permit content and the operational

flexibility provisions that must be corrected for full approval. These

interim approval issues are discussed in detail later in this notice.

In the TSDs, EPA has also identified other recommended changes that are

not required for full approval but would improve, clarify, or

strengthen the Districts' title V programs.

Permit issuance and modifications. All programs provide adequate

criteria and procedures for deeming applications complete as required

by Sec. 70.5 (a)(2). Most programs provide deadlines and procedures

(including public participation and EPA/affected state review) for

acting on permits consistent with Sec. 70.7 (a) (Action on

applications) and (h) (Public participation) and Sec. 70.8 (Permit

review by EPA and affected States); the exceptions are noted in the

discussions of each District's program given below. All programs have

permit modification procedures that are, for the most part, consistent

with Sec. 70.7 (e) (Permit modification). All programs contain

procedures that allow new emission units that do not trigger major

source NSR, are not acid rain units, and whose operations are not

addressed or prohibited by the existing part 70 permit to be handled

``off-permit.'' EPA has identified several problems with the permit

issuance and modification procedures that must be corrected for full

approval. The interim approval issues are discussed in detail later in

this notice. In the TSDs, EPA has also identified other recommended

changes that are not required for full approval but would improve,

clarify, or strengthen the Districts' title V programs.

Definition of title I modification. Part 70 prohibits changes that

are modifications under any provisions of title I of the Clean Air Act

(``title I modification'') from being treated as minor permit

modifications, being made ``off-permit,'' or being made under an

operational flexibility provision. None of the Districts' programs

specifically define ``title I modification'' although it is clear from

the use of the term that the programs do not treat changes reviewed

under a minor source preconstruction review program (``minor NSR

changes'') as title I modifications. See, for example, the distinction

made between ``a modification under Title I of the CAA'' and ``any

provision of [the District NSR and PSD rules]'' in Shasta's Rule 5,

sections V.I. and V.I.3.c. See also the discussion on operational

flexibility in each District's Program Description: ``Title I

modifications include a modification that is major under federal NSR *

* *, a modification that is major under PSD * * *.''

The EPA is currently in the process of determining the proper

definition of title I modification. As further explained below, EPA has

solicited public comment on whether the phrase ``modification under any

provision of title I of the Act'' 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 treatment or definition of title I modifications to

receive interim approval (59 FR 44572). EPA explained its view that the

better reading of title I modifications includes minor NSR, and

solicited public comment on the proper interpretation of that term (59

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

it continues 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 and changes that trigger the application of a pre-

1990 NESHAP requirement, the Districts' treatment of title I

modifications would be fully consistent with part 70. Conversely, if

EPA establishes through the rulemaking that the definition must include

changes reviewed under minor NSR, the Districts' treatment of title I

modifications will become a basis for interim approval. If the

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

rulemaking, each of the four Districts would be required to revise its

treatment of title I modifications 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 the

Districts' treatment 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. District Title V Enforcement and Compliance Provisions

The EPA is proposing to disapprove the operating permits programs

for Glenn County APCD, Lake County AQMD, Shasta County AQMD, and Tehama

County APCD because of deficiencies in the Districts' enforcement

authorities. The primary deficiency lies in provisions in the

Districts' equipment breakdown/upset rules that state that excess

emissions during equipment breakdowns/upsets are not violations. In

addition, the Glenn, Lake, and Shasta Districts have rules that state

that excess emissions during equipment shutdown for maintenance are not

violations.

On January 24, 1978 (43 FR 3275) EPA disapproved Glenn's Rules 95.2

and 95.3, Lake's Rules 500, 510, and 511 (now, codified as Articles I

and II of Chapter III), Shasta's Rule 3:10 and Tehama's Rule 4:17 as

revisions to the California State Implementation Plan (SIP) because

each rule provided a priori that emission exceedances during

malfunctions or equipment shutdowns were not violations.\2\ The

disapproval action was taken consistent with EPA's policy that SIPs

cannot contain automatic exemptions from emission limitations during

malfunctions/shutdowns. This policy was originally established in 1977

(42 FR 21472 (April 27, 1977) and 42 FR 58171 (November 8, 1977)),

restated in 1983 (Memorandum, ``Policy on Excess Emissions During

Startup, Shutdown, Maintenance, and Malfunctions.'' Kathleen M.

Bennett, Assistant Administrator for Air, Noise and Radiation, to

Regional Administrators, Region I-X. February 15, 1983) (provided in

the dockets), and reflected in the emergency provisions included in the

1992 promulgation of part 70.

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\2\Although both the Shasta and Lake Districts have revised

their rules since the disapproval, neither has revised the language

that resulted in the SIP disapproval.

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In its 1978 disapproval of these breakdown rules, EPA stated that

automatic exemptions to SIP limits during malfunctions/shutdowns

``render [SIP] emission limitations potentially unenforceable.'' The

rules pose similar enforceability problems in the context of title V.

The potential impact on enforceability is of special concern in title V

because title V permits will contain emission limits that not only

include SIP limits but also limits in NSPS, NESHAP, and MACT standards,

and preconstruction permits.

A permitting program that includes rules specifically stating that

excess emissions during malfunctions or shutdowns are not violations

cannot meet the minimum requirements of Sec. 70.11 (Requirements for

enforcement authority). These rules may also compromise the ability of

the Districts to issue permits that assure compliance with all

applicable requirements. The ability to enforce permits as specified in

Sec. 70.11 and issue permits that assure compliance with all applicable

requirements are identified as minimum elements for interim approval of

title V programs in Sec. 70.4(d)(3). Programs that do not have the

minimum requirements listed in Sec. 70.4(d)(3) and otherwise do not

substantially meet the requirements of part 70 are subject to

disapproval.

Other than the emergency/shutdown provisions, California law and

District rules and regulations provide the Districts with the

enforcement authorities required by Sec. 70.11. See the California

Attorney General's Opinion and the TSDs (especially Attachments A and

F).

Variances. The Hearing Boards of all four Districts have authority

to issue variances from requirements imposed by State and local law.

See California Health and Safety Code 42350 et seq. 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.)

EPA regards State and District variance provisions as wholly

external to the programs submitted for approval under part 70 and

consequently is proposing to take no action on these provisions of

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

state law that are inconsistent with the Act. 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 Sec. 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.''

Prompt reporting of deviations. Section 70.6 (a)(3)(iii)(B) states

that permits must require prompt reporting of deviations from the

permit requirements and that the permitting authority shall define

prompt in relation to the degree and type of deviation likely to occur

and the applicable requirements. The Districts' rules do not define

``prompt'' and instead leave the determination of what constitutes

``prompt'' to the discretion of the Air Pollution Control Officer.

Although the permit program regulations should define ``prompt'' for

purposes of administrative efficiency and clarity, it is acceptable to

define the term in each permit. EPA believes that prompt means

reporting a deviation that is not the result of an emergency or

breakdown within two to ten days of the occurrence. Two to ten days is

sufficient time in most cases to protect public health and safety as

well as to provide a forewarning of potential problems. For sources

with a low level of excess emissions, a longer time period may be

acceptable. However, prompt reporting must be more frequent than the

semiannual reporting requirement, since this is a separate reporting

obligation under Sec. 70.6(a)(3)(iii)(A). Where ``prompt'' is defined

in the individual permit but not in the program regulations, EPA may

veto permits that do not require sufficiently prompt reporting of

deviations.

4. Permit Fee Demonstration

Section 502(b)(3) of the Act and Sec. 70.9 (a) require 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)). All four Districts have opted to make a

presumptive minimum fee demonstration.

Currently, the four Districts charge fees for permitting based on

some combination of equipment type and/or size, number of emission

units, permitting action, and actual cost of services. All Districts

have adopted supplemental fee rules or revised existing fee rules to

assure that title V sources (either individually or in the aggregate)

will pay fees that will remain at or above the CPI-adjusted presumptive

minimum. These annual fees are all about $29.26 per ton with total

annual revenue from title V sources ranging from $4,096 (in Tehama with

one title V source) to $101,506 (in Shasta County with 10 title V

sources). (All figures are for 1993). All four Districts demonstrated

in their program descriptions that the presumptive minimum fees are

adequate to cover the direct and indirect costs of their title V

programs.

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

a. Section 112--Hazardous Air Pollutants. The Districts have

demonstrated in their title V program submittals 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 in each

District's rule defining ``applicable requirements'' and mandating that

all federal air quality requirements must be incorporated into permits.

EPA has determined that this legal authority is sufficient to allow the

Districts to issue permits that assure compliance with all section 112

requirements. For further discussion on the District's legal authority,

please refer to the TSDs accompanying this action and the April 13,

1993 guidance memorandum entitled, ``Title V Program Approval Criteria

for Section 112 Activities,'' signed by John Seitz, Director, Office of

Air Quality Planning and Standards, USEPA, which can be found in the

dockets.

b. Title IV--acid rain. No Districts in California have Phase I

acid rain sources and none of the four Districts has identified Phase

II sources. The Glenn, Lake, and Tehama Districts have provided

commitments to expeditiously adopt the appropriate regulatory authority

necessary to issue a timely title IV permit to any new or existing

source in the District that becomes subject to, or wants to opt into,

the acid rain program. For the Shasta District, EPA will require this

commitment as part of the District-EPA implementation agreement.

6. Lake County AQMD's FESOP Program

On February 28, 1994, CARB submitted for approval into Lake

County's portion of the California SIP, a District operating permit

program designed to create federally-enforceable limits on sources'

potential to emit. This program is contained in sections 12.800 through

12.850 of Lake County's rule as well as relevant definitions in section

12.200. If approved into the SIP, the program will allow major sources

to become synthetic minor sources by limiting their potential to emit

to less than the major source level. A detailed analysis of the program

can be found in the TSD for Lake County.

B. Proposal for and Implications of Disapproval and Interim Approval

1. Title V Programs

EPA is proposing to disapprove the operating permits programs

submitted by the California Air Resources Board on behalf of Glenn

County APCD (received: December 27, 1993), Lake County AQMD (received:

November 16, 1993 and March 15, 1994), Shasta County AQMD (received:

November 16, 1993), and Tehama County APCD (received: December 6,

1993). If promulgated, these disapprovals would constitute disapprovals

under section 502(d) of the Act. As provided under section 502(d)(1) of

the Act, CARB and these Districts would have up to 180 days from the

date of EPA's final action to revise and resubmit the programs.

EPA is proposing to disapprove the operating permits programs for

these four Districts because of provisions in their equipment

breakdown/upset rules that state that excess emissions during equipment

breakdowns/upsets are not violations. In addition, EPA is proposing to

disapprove the programs for the Glenn, Lake, and Shasta Districts

because these Districts have rules that state that excess emissions

during equipment shutdown for maintenance are not violations.

As discussed earlier in this notice, these provisions mean that the

Districts do not have enforcement authorities that meet the minimum

requirements of Sec. 70.11. These provisions also compromise the

ability of the Districts to issue permits that assure compliance with

all applicable requirements. The minimum requirements for interim

approval in Sec. 70.4(d)(3) require that the permitting authority have

the ability to both enforce permits (Sec. 70.4(d)(3)(vii)) and issue

permits that assure compliance with all applicable requirements

(Sec. 70.4(d)(3)(ii)). Programs that do not have the minimum

requirements listed in Sec. 70.4(d)(3) and otherwise do not

substantially meet the requirements of part 70 are subject to

disapproval.

If EPA were to finalize this proposed disapproval for any of the

four Districts, that District may become subject to sanctions under the

Act within 18 months following final action to disapprove its program

if the District fails to submit a corrected program that EPA determines

corrects the disapproved program's deficiencies.

In the alternative, EPA proposes to grant source-category limited

interim approval to any of these four programs for which, prior to the

final disapproval action, the District adopts and CARB submits to EPA,

revisions to the breakdown/shutdown rules that remove the ``no

violation'' language. For the breakdown rules, these Districts can

either adopt the language of Sec. 70.6(g) that an emergency constitutes

an affirmative defense to noncompliance with technology-based emission

limitations or that emissions exceeding emission limitations during

equipment breakdowns constitute a violation of District rules. The Air

Pollution Control Officer may exercise enforcement discretion where an

emergency has caused a violation. The latter language is used in most

California district equipment breakdown rules and is acceptable to EPA.

Provisions for the special treatment of excess emissions during non-

emergency equipment shutdown must be deleted altogether. No special

treatment of excess emissions during equipment shutdown is allowed

because shutdowns are part of the normal operation of a source and,

thus, proper design of the equipment should eliminate excess emissions

during shutdowns. See the February 15, 1983, Bennett memo cited above

for a further discussion of the treatment of excess emissions during

shutdowns.

If EPA finalizes an interim approval for a District in lieu of the

disapproval, each District (and in some instances the State) must make

the changes noted below in order for its title V program to receive

full approval. This interim approval, which may not be renewed, extends

for a period of 2 years. During the interim approval period, a District

is protected from sanctions for failure to have a program, and EPA is

not obligated to promulgate a Federal permits program in the District.

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.

Following final interim approval, if any of the Districts fail to

submit a complete corrective program for full approval by the date six

months before expiration of the interim approval, EPA would start an

18-month clock for mandatory sanctions. If the District then fails to

submit a corrective program that EPA can find 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 then remain

in effect until EPA determines that the District has corrected the

deficiency by submitting a complete corrective program.

If, following final interim approval, EPA were to disapprove the

District'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 submits a revised program and EPA determines that it corrects

the deficiencies that prompted the disapproval.

In addition, discretionary sanctions may be applied where warranted

any time after the end of an interim approval period if a 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 District 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 District upon interim approval expiration.

2. Lake County AQMD's FESOP Program

The EPA is also proposing to disapprove the Lake District's FESOP

program because it does not meet the criteria for approving federally

enforceable state program for issuing synthetic minor operating permits

in EPA's June 28, 1989, Federal Register notice (54 FR 27282). As

discussed above, the Lake District currently has rules that state that

excess emissions during equipment breakdowns and maintenance are not

violations of District, state, and federal emission limitations. This

``no violation'' language calls into question the practical

enforceability of any limits on potential to emit established under

Lake's synthetic minor permitting program. Under the June 28, 1989

criteria, state operating permit programs that do not create

practically enforceable limits cannot create federally-enforceable

limits on potential to emit.

In the alternative, EPA is proposing to approve Lake's FESOP

program into the California SIP under section 110 of the Act if the

District removes the no violation language from its equipment breakdown

rule and eliminates any special treatment of excess emissions during

non-emergency equipment shutdowns. The program otherwise meets the June

28, 1989 approval criteria by ensuring that the limits on potential to

emit will be permanent and quantifiable and be no less stringent than

any other applicable federal limitations and requirements, by requiring

the source comply with the limits in its permit, and by providing

adequate notice to EPA and the public of the proposed permit. An

analysis of the June 28, 1989 criteria as they apply to Lake County's

FESOP program can be found in the TSD for Lake County.

Neither CARB nor Lake County AQMD requested approval of the

District's FESOP under section 112(l) of the Act for the purpose of

creating federally enforceable limitations on the potential to emit of

hazardous air pollutants (HAPs). A separate request for approval under

section 112(l) is necessary because the proposed SIP approval discussed

above only provides a mechanism for controlling criteria pollutants.

While federally enforceable limits on criteria pollutants (i.e.,

volatile organic compounds or particulate matter) may have the

incidental effect of limiting certain HAP listed pursuant to section

112(b), section 112 of the Act provides the underlying authority for

controlling HAP emissions that are not criteria pollutants. As a legal

matter, no additional program approval by EPA is required in order for

the criteria pollutant limits to be recognized as federally enforceable

for HAPs; however, because EPA is not proposing to approve Lake

County's FESOP program under section 112(l), federally-enforceable

potential to emit limits established specifically for HAPs cannot be

created through the program.

C. District Title V Interim Approval Issues Common to All Four

Districts

In order to receive full approval for its title V program, each

District must make the following changes:

(1) 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 (including any director's discretion

provisions) 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.

(2) Revise the exemption list to remove the general exemption for

agricultural production sources or to restrict the exemption to non-

title V sources. Insignificant activities at agricultural production

sources may still be listed.

(3) Revise the rule's application content requirements so that any

compliance schedule required by the rule for a source not in compliance

must resemble and be at least as stringent as that contained in any

judicial consent decree, administrative order, or schedule approved by

the hearing board to which the source is subject, as required by

Sec. 70.5(c)(4)(iii)(C), rather than simply a schedule of compliance

approved by the District's hearing board.

(4) Revise the rule's application content requirements to clarify

that all reports and other documents submitted in the permit

application must be certified by a responsible official as required by

Sec. 70.5(d) and to provide the full text of the responsible official's

certification in Sec. 70.5(d).

(5) Provide in the rule a permit application deadline for sources

that become subject to the District's title V rule after the rule's

effectiveness date for reasons other than commencing operation. This

deadline cannot be any later than 12 months after the source becomes

subject to the rule as required by Sec. 70.5(a)(1).

(6) Revise the rule's permit issuance procedures to provide for

notifying EPA and Affected States in writing of any refusal by the

District to accept all recommendations for the proposed permit that the

Affected State submitted during the public/Affected State review period

as required by Sec. 70.8(b)(2).

(7) Incorporate in the rule provisions citing the right of the

public to petition EPA after the expiration of EPA's 45-day review

period under Sec. 70.8(d) and prohibiting the District from issuing a

permit, if it has not already done so, until the EPA's objections in

response to the petition are resolved as required by Sec. 70.8(d).

(8) Revise the rule to provide for public notice of permitting

actions by other means if necessary to assure adequate notice to the

affected public as required by Sec. 70.7(h)(1).

(9) Revise the rule's permit content requirements to clarify that

all reports and other documents required by the permit must be

certified by a responsible official as required by Sec. 70.6(c)(1) and

to provide the full text of the responsible official's certification in

Sec. 70.5(d).

(10) Revise the rule's permit content requirements to require that

any compliance schedule for a source not in compliance must resemble

and be at least as stringent as that contained in any judicial consent

decree, administrative order, or schedule approved by the hearing board

to which the source is subject as required by Secs. 70.6(c)(3) and

70.5(c)(8)(iii)(C).

(11) Revise the rule's permit content requirements to require the

submission of compliance certifications more frequently than annually

if a more frequent period is specified in the applicable requirement or

by the District as required by Sec. 70.6(c)(5)(i).

(12) Revise the rule's operational flexibility provisions to

require notification by the source of operational flexibility changes

to both the EPA and the District as required by Sec. 70.4(b)(12).

D. Basis for Title V Source Category-Limited Interim Approval

California state law currently exempts agricultural production

sources from permit requirements; therefore, EPA is proposing to grant

source category-limited interim approval to the operating permits

program of any of the four Districts that corrects the disapproval

issues discussed above. At this time, none of the Districts has

identified any agricultural production sources as potential title V

sources. In order for these programs to receive full approval (and to

avoid a disapproval upon the expiration of the 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 and the District must revise its permit

exemption rules to eliminate any blanket exemption granted agricultural

sources.

III. Individual District Title V Interim Approval Issues

A. Glenn County APCD

In addition to the disapproval and interim approval issues noted

above for all Districts, the Glenn District must make the following

changes to its title V rule, Article VIII--Additional Procedures for

Issuing Permits to Operate for Sources Subject to Title V of the

Federal Clean Air Act Amendments of 1990, adopted October 19, 1993, in

order to receive full approval:

(1) Revise Article VIII V.C.6\3\ to take final action on early

reduction applications within nine months of receipt of the complete

application rather than within nine months of the date the application

was deemed complete as required by Sec. 70.4(b)(11)(iii).

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

\3\The EPA has cited specific sections of District rules and

regulations to illustrate appropriate places for making the

revisions/changes necessary for full approval. The District may,

however, revise other sections of their rules to satisfy the interim

approval issue.

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

B. Lake County AQMD

In addition to the disapproval and interim approval issues noted

above for all Districts, the Lake District must make the following

changes to its title V rule, Chapter XII--Requirements for Issuing

Permits to Operate for Sources Subject to Title V of the Federal Clean

Air Act Amendments of 1990, adopted October 19, 1993, in order to

receive full approval:

(1) Revise all deadlines for final permit action in Chapter VII,

Section 12.520 (except for (a) and (e)) to be no later than the

appropriate number of months after the complete application is

received, rather than after the application is deemed complete, as

required by Secs. 70.4(b)(11)(iii) and 70.7(a)(2).

C. Shasta County AQMD

In addition to the disapproval and interim approval issues noted

above for all Districts, the Shasta District must make the following

changes to its title V rule, Rule 5--Additional Procedures for Issuing

Permits to Operate for Sources Subject to Title V of the Federal Clean

Air Act Amendments of 1990, adopted September 28, 1993, and Rule 3:10--

Excusable Malfunctions, last amended on July 22, 1986, in order to

receive full approval:

(1) Revise all deadlines for final permit action in Rule 5 IV.C.

(except for C.1. and C.5.) to be no later than the appropriate number

of months after the complete application is received, rather than after

the application is deemed complete, as required by

Secs. 70.4(b)(11)(iii) and 70.7(a)(2).

(2) Revise Rule 3:10 to remove the prohibition on the use of

reports required by Rule 3:10 in enforcement/permitting actions.

D. Tehama County APCD

In addition to the disapproval and interim approval issues noted

above for all Districts, the Tehama District must make the following

changes to its title V rule, Rule 7:1--Federal Operating Permit

Program, adopted October 26, 1993, in order to receive full approval:

(1) Revise Rule 7:1 IV.B.4. to incorporate the compliance

provisions of Sec. 70.7(e)(2)(v). Rule 7:1 IV.B.4. allows the air

pollution control officer (APCO) to approve a minor permit modification

when the proposed permit revision is sent to EPA for review. While this

is allowed under Sec. 70.7(e)(2)(v), Rule 7:1 does not state, as does

Sec. 70.7(e)(2)(v), that until the District takes final action to issue

or deny the requested permit modification or determines that it is a

significant modification, the source must comply with the applicable

requirements governing the change and the proposed permit terms and

conditions in lieu of complying with the existing permit terms and

conditions being modified. Rule 7:1 should also be revised to state

that if the source fails to comply with the permit terms and conditions

in the requested modification, the existing permit terms and conditions

may be enforced against it.

(2) Revise Rule 7:1 IV.B.3. to limit the discretion of the APCO to

authorize sources to commence operation of significant permit

modifications prior to final permit action to when the changes meet the

criteria of Sec. 70.5(a)(1)(ii). Rule 7:1 IV.B.3. allows the APCO to

authorize sources to commence operation of significant permit

modifications when the proposed permit revision is publicly noticed but

prior to final permit action. Part 70 prohibits sources from making

significant permit modification changes prior to final permit issuance

unless the changes have undergone preconstruction review pursuant to

section 112(g) or a program approved into the SIP pursuant to part C or

D of title I, and the changes are not otherwise prohibited by the

source's existing part 70 permit. See Sec. 70.5(a)(1)(ii). The

authority in Rule 7:1 IV.B.3. is discretionary with the APCO, and EPA

expects that the APCO will exercise this authority during the interim

approval period only where the change meets the criteria of

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

IV. Approvals Under Section 112 of the Act

A. Implementation of 112(g) Upon Program Approval

As a condition of approval of its part 70 program, each District is

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

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

maximum achievable control technology (MACT) or offsets under section

112(g) will require the use of a mechanism for establishing federally

enforceable restrictions on a source-specific basis. EPA is proposing

to approve each District's preconstruction permitting program 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 each

District 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) of the Act generally provides the

authority for approval of State and local 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. The specific District rules that EPA is

approving for this purpose are listed in Attachment I of the TSD for

each District. If a District does not wish to implement section 112(g)

through its preconstruction permit program and can demonstrate prior to

EPA taking final action on its title V program that an alternative

means of implementing section 112(g) exists, EPA may, in the final

action approving that District's part 70 program, approve the

alternative instead.

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

each 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 each District, acting expeditiously, will be able to adopt

regulations consistent with the section 112(g) regulations. 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

each District's procedures for adoption of regulations.

B. Program for Delegation of Section 112 Standards as Promulgated

Requirements for approval, specified in Sec. 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 each state and/or local

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 each District's

program for receiving delegation of section 112 standards that are

unchanged from the Federal standards as promulgated. EPA has

interpreted California law (AB 2728) to mean that Districts receive

automatic delegation of section 112(d) standards. The details of this

delegation mechanism will be set forth in a Memorandum of Agreement as

part of the implementation agreement between each District and EPA. EPA

expects to be completed this MOA prior to approval of the District'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.

V. Administrative Requirements

A. Request for Public Comments

EPA is requesting comments on all aspects of this proposed

disapproval/interim approval. Copies of the Districts' submittals and

other information relied upon for the proposed disapproval/interim

approval are contained in dockets maintained at the EPA Region IX

Office. Each docket is an organized and complete file of all the

information submitted to, or otherwise considered by, EPA in the

development of this proposed disapproval/interim approval and EPA

detailed analysis of each program. 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/

disapproval process, and

(2) to serve as the record in case of judicial review.

EPA will consider any comments received by [insert date 30 days

after date of publication].

Docket number for this proposal is CA-MULTI-94-1-OPS. The docket

for each of the four Districts is located in a separate section of this

overall docket.

B. Executive Order 12866

The Office of Management and Budget has exempted this regulatory

action from Executive Order 12866 review.

C. Regulatory Flexibility Act

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.

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

Dated: November 9, 1994.

John Wise,

Acting Regional Administrator.

[FR Doc. 94-29268 Filed 11-28-94; 8:45 am]

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