Clean Air Act Final Interim Approval Operating Permits Programs in Oregon

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5116-2]

Clean Air Act Final Interim Approval Operating Permits Programs

in Oregon

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final interim approval.

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SUMMARY: EPA is promulgating interim approval of the operating permits

programs submitted by the Oregon Department of Environmental Quality

(ODEQ) and Lane Regional Air Pollution Authority (LRAPA) 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.

EFFECTIVE DATE: January 3, 1995.

ADDRESSES: Copies of Oregon's submittal and other supporting

information used in developing the final interim approval are available

for inspection during normal business hours at the following location:

U.S. Environmental Protection Agency, Region 10, 1200 Sixth Avenue,

Seattle, Washington.

FOR FURTHER INFORMATION CONTACT: Anne Dalrymple, U.S. Environmental

Protection Agency, 1200 Sixth Avenue, AT-082, Seattle, Washington

98101, (206) 553-0199.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

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

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

Code of Federal Regulations (CFR) part 70, require 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. 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.

On September 14, 1994, EPA proposed interim approval of the

operating permits programs for ODEQ and LRAPA, provided certain

proposed revisions to Oregon rules were adopted and submitted to EPA as

a program revision prior to EPA's statutory deadline for acting on the

State's submittal. In the alternative, EPA proposed disapproval of the

Oregon program if the proposed revisions were not adopted and submitted

prior to the statutory deadline. See 59 FR 47105 (Sept. 14, 1994). EPA

received four public comments on the proposal. In this notice EPA is

taking final action on its proposal to promulgate interim approval of

the operating permits programs for ODEQ and LRAPA.

II. Final Action and Implications

A. Analysis of State Submission and Response to Public Comments

1. Changes to Chapter 340, Division 28

On July 11, 1994, ODEQ proposed for public comment revisions to OAR

Chapter 340, Division 28 (Stationary Source Air Pollution Control and

Permitting Procedures). EPA discussed these proposed changes in the

September 14, 1994 Federal Register notice proposing action on Oregon's

title V submittal.\1\ See 59 FR 47108-47111. The Oregon Environmental

Quality Commission (EQC) adopted the revisions to OAR Chapter 340,

Division 28 on October 21, 1994. These rules became effective on

October 28, 1994. Oregon submitted these revised regulations to EPA on

November 15, 1994 as an amendment to the Oregon title V submittal. The

revisions make the regulatory changes necessary for the Oregon program

to receive interim approval.

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\1\Unless otherwise stated, all references to ``Oregon,''

``Oregon's submittal'' or ``Oregon's program'' refer to the

operating permit programs submitted by the State of Oregon on behalf

of ODEQ and LRAPA.

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The following rules were adopted or revised in response to EPA's

September 14, 1994 Federal Register notice: OAR 340-28-110(15); OAR

340-28-2110(3)(c)(E); OAR 340-28-2110(7) (renumbered to OAR 340-28-

2110(8)); OAR 340-28-2120(3); OAR 340-28 2130(3)(a)(E); OAR 340-28-

2130(3)(c)(B); OAR 340-28-2170(1);\2\ OAR 340-28-2200(1)(d).

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\2\This regulation was erroneously cited in the proposed Federal

Register as OAR 340-28-2170(a).

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The following rules were repealed in response to EPA's September

14, 1994 Federal Register notice: OAR 340-28-110(41); OAR 340-28-

110(53); OAR 340-28-110(63); OAR 340-28-2230(1)(j).

The following proposed rule was not adopted by the EQC on October

21, 1994 in response to EPA's September 14, 1994 Federal Register

notice: OAR 340-28-2110(4).

2. Response to Public Comment

EPA received comments on the EPA's proposed action on the Oregon

program from four commenters: ODEQ, the American Forest & Paper

Association, the National Environmental Development Association/Clean

Air Regulatory Project, and the Northwest Pulp and Paper Association.

No commenters objected to approval of the Oregon permit program.

a. Insignificant Emissions Units. One commenter objected to EPA's

proposal that in order to avoid disapproval of its title V program,

Oregon must revise its regulation defining ``categorically

insignificant activities'' (OAR 340-28-110(15)) and the related

provisions on permit applications (OAR 340-28-2120(3)) and

applicability (OAR 340-28-2110(7)). The commenter disagreed with EPA's

position that all activities subject to applicable requirements must be

properly incorporated into title V permits. The commenter further

stated that the Clean Air Act does not support EPA's position and that

EPA's interpretation renders the Part 70 provisions on insignificant

activities meaningless.

EPA maintains, however, that title V and the part 70 rules preclude

the exemption of activities as ``insignificant'' when such units are

subject to an applicable requirement. Section 504(a) of the Act

provides that ``each permit issued under this title shall include

enforceable emission limitations and standards, a schedule of

compliance, a requirement that the permittee submit to the permitting

authority, no less often than every 6 months, the results of any

required monitoring, and such other conditions as are necessary to

assure compliance with applicable requirements of the Act, including

the requirements of the applicable implementation plan.'' (emphasis

added). Section 70.6(a)(1) provides that each permit shall include

``emission limitations and standards, including those operational

requirements and limitations that assure compliance with all applicable

requirements at the time of permit issuance''. Furthermore, 70.6(c)(1)

requires that each permit shall contain ``compliance, certification,

testing, monitoring, reporting, and recordkeeping requirements

sufficient to assure compliance with the terms and conditions of the

permit.'' The fact that an emission unit may emit only small quantities

of pollutants does not provide a basis to exempt it from the

fundamental statutory requirement that title V permits must

specifically include, and ensure compliance with, all applicable

requirements.

EPA disagrees that requiring all activities subject to applicable

requirements to be properly incorporated into title V permits will

render the insignificant activities provisions of Part 70 meaningless.

For example, the requirement to ``describe'' emissions of regulated

pollutants in a permit application is not a requirement to quantify

those emissions. Smaller units can be aggregated and described in very

general terms (i.e., ``all valves and flanges not otherwise

specified'') provided the description is specific enough to determine

the applicability of and to impose all applicable requirements.

Furthermore, the requirement to include in a permit compliance

certification testing, monitoring, reporting, and recordkeeping

sufficient to assure compliance with the terms and conditions of the

permit does not impose the same level of rigor with respect to small

emission units that do not require extensive testing or monitoring in

order to determine compliance with the applicable requirements.

In any event, Oregon has made the changes to its insignificant

activities regulations which EPA indicated in the September 14, 1994,

Federal Register notice were necessary for approval and it is these

revised regulations on which EPA is taking final action at this time.

The versions of OAR 340-28-110(15), 340-28-2110(7) and 340-28-2120(3)

originally submitted by Oregon to EPA on November 15, 1993, as part of

its title V submittal are no longer effective as a matter of State law

and are no longer before EPA for consideration. Accordingly, EPA is

fully approving the Oregon program with respect to insignificant

activities.

b. Definition of Title I Modification. The definition of ``title I

modification'' in the regulations submitted by Oregon as part of its

Title V program does not include changes reviewed under a minor source

preconstruction review program approved pursuant to section

110(a)(2)(C) of the Act (``minor NSR changes'') or changes triggering

the application of a National Emission Standard for Hazardous Air

Pollutants (NESHAP) established pursuant to section 112 prior to the

1990 Amendments (``part 61 NESHAP modifications''). In the September

14, 1994 Federal Register notice proposing action on the Oregon title V

program, EPA advised the State that it would be required to revise its

definition of the term ``title I modification'' to obtain full EPA

approval:

Therefore, EPA proposes that, to receive full approval, Oregon

must revise OAR 340-28-110(118) to include any determination

established through a minor source pre-construction permit as well

as changes reviewed under 40 CFR 61.15. EPA expects to revise its

criteria for interim approval in 40 CFR 70.4(d) prior to final

action on this proposal to grant interim approval to Oregon so that

interim approval may be granted to State programs like Oregon's that

include a narrower definition of ``title I modification.'' As noted,

EPA believes the better interpretation of ``title I modifications''

would preclude granting full approval to the Oregon program.

However, in the proposal to revise Part 70, EPA will be taking

comment on whether the criteria in 40 CFR 70.7(e)(2)(i)(A),

including the phrase ``modification under any provision of title

I,'' should be interpreted in a manner that would allow changes

reviewed under programs approved pursuant to section 110(a)(2)(C) of

the Act and changes that trigger the application of NESHAP

established prior to the 1990 Amendments to be eligible for

processing through minor modification procedures. Should EPA adopt

this alternative interpretation, the current definition of ``title I

modification'' in the Oregon programs would be fully consistent with

Part 70. See (59 FR 47108).

In response to EPA's proposed interim approval of the Oregon

program, three commenters objected to EPA's proposed requirement that

Oregon revise its definition of ``title I modification'' to include

minor new source review in order to obtain full approval. These

commenters argued that Oregon's current definition fully meets the

requirements of the Clean Air Act. One commenter contended that section

110(a)(2) does not require a State Implementation Plan (SIP) to include

a program to regulate the modification of any stationary source but

rather to only include a program to regulate modifications as defined

in other sections of title I. These commenters also stated that the

changes required by the September 14, 1994, Federal Register notice

would be completely unworkable and would frustrate the practical

implementation of the operating permit program in Oregon by requiring

sources to undergo significant permit modification procedures for

changes covered by Oregon's Notice of Construction rule that was

approved by EPA as part of the SIP under section 110(a)(2)(C) of the

Act.

As discussed below, EPA has reconsidered the approach proposed in

the September 14, 1994 Federal Register notice and is fully approving

Oregon's title V program with respect to the definition of ``title I

modification.'' If EPA were to conclude at this time that the phrase

``title I modification'' should be interpreted as including minor NSR

changes, EPA would be required to disapprove Oregon's program because

part 70 does not currently allow EPA to grant interim approval unless

the permitting agency has adequate authority to issue permits that

assure compliance with all applicable requirements. See 40 CFR

70.4(d)(3)(ii). On August 29, 1994, EPA proposed revisions to the

interim approval criteria to, among other things, allow State programs

with a more narrow definition of ``title I modification,'' like

Oregon's, to receive interim approval (59 FR 44572). The Agency also

solicited public comment on the appropriate interpretation of ``title I

modification'' (59 FR 44573). The Agency stated that if, after

considering the public comments, it continued to believe that the

phrase ``title I modification'' should be interpreted as including

minor NSR changes, it would revise the interim approval criteria as

needed to grant interim approval to States that adopted a narrower

definition.

As noted in the September 14, 1994 Federal Register notice

proposing action on Oregon's title V program, EPA intended to finalize

its revisions to the interim approval criteria under 40 CFR section

70.4(d) before taking final action on Part 70 programs submitted by the

States. However, that is no longer possible. Publication of the

proposed revisions occurred on August 29, 1994, and EPA received

several requests to extend the original 30-day public comment period.

Given the importance to the States, sources and the public of the

issues raised in that rulemaking, 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). Consequently, final

action to revise the interim approval criteria will not occur before

the deadline for EPA action on State programs, such as Oregon's, that

were submitted on or before November 15, 1993.3

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\3\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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EPA believes it would be inappropriate to delay action on Oregon's

program, perhaps for several months, until final action is taken on the

interim approval revisions. EPA also believes it would be inappropriate

to grant interim approval to Oregon on this issue before final action

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

Sec. 70.4(b) to provide a legal basis for such approval. Until the

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

are to either fully approve or to disapprove the narrower definition of

``title I modification'' in States such as Oregon. For the reasons set

forth below, EPA believes that disapproving such programs at this time

solely because of this issue would be inappropriate.

First, EPA has not yet conclusively determined that a narrower

definition of ``title I modification'' is inappropriate and thus a bar

to full approval. The Agency has received numerous comments on this

issue as a result of the August 29, 1994 Federal Register notice, and

EPA obviously cannot make a final decision on this issue until it has

evaluated all of the comments. As such, EPA will address the concerns

regarding its interpretation of ``title I modification'' which were

raised by the commenters on EPA's proposed interim approval of the

Oregon program within the context of the final rulemaking for revisions

to part 70.

Second, EPA believes that the Oregon program should not be

disapproved because EPA itself has not yet completed rulemaking to

resolve this issue. Moreover, disapproving programs from States such as

Oregon that submitted their program to EPA on or before the November

15, 1993 statutory deadline could lead to the inequitable result that

these States would receive disapprovals, while States which were late

in submitting programs could take advantage of revised interim approval

criteria if and when these criteria become final. In effect, States

would be severely penalized for having made timely program submissions

to EPA. Finally, disapproval of a State program for a potential problem

that primarily affects permit revision procedures would delay the

initial issuance of Part 70 permits, hampering State and Federal

efforts to improve environmental protection through the operating

permits programs.

Therefore, for the reasons described above, EPA is approving

Oregon's use of a narrower definition of ``title I modification'' at

this time.4 However, should EPA in the interim approval criteria

rulemaking make a final determination that such a narrow definition of

``title I modification'' is inappropriate and that a revision of the

interim approval criteria is warranted, the Agency will propose further

action on Oregon's program so that the State's definition of ``title I

modification'' would become grounds for interim approval.5 A State

program like Oregon's that receives full approval of its narrower

``title I modification'' definition pending completion of EPA's

rulemaking must ultimately be placed on an equal footing with 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 EPA completes its

rulemaking will avoid this inequity. EPA anticipates that an action to

convert the full approval on the ``title I modification'' issue to an

interim approval would be done through an additional rulemaking to

ensure that there is adequate notice of the change in approval status

of Oregon's title V program.

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\4\For similar reasons, EPA will not construe 40 CFR section

70.7(e)(2)(i)(A)(3) to prohibit ODEQ and LRAPA from allowing minor

new source review changes to be processed as minor permit

modifications. See 59 FR 44573-44574.

\5\ 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 section 70.4(b).

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c. Section 112(g) Modifications. Two commenters stated that,

because EPA has not yet issued final regulations to implement section

112(g) of the Act and no such final regulations are expected for

several months, it was inappropriate for EPA to require Oregon to take

delegation of section 112(g) authority as a condition of title V

approval. These commenters also objected to EPA's transitional policy

of allowing permitting authorities to use their existing State air

toxics permitting rules, upon EPA approval, as an interim mechanism for

implementing section 112(g) of the Act.

EPA disagrees with the commenters' contention that it is

inappropriate for EPA to require Oregon to implement section 112(g)

until after EPA has promulgated implementing regulations. The statutory

language in section 112(g)(2) prohibits the modification, construction,

or reconstruction of a source after the effective date of a title V

program unless maximum achievable control technology (MACT) (determined

on a case-by-case basis, if necessary) is met. The unambiguous meaning

of this provision is that the prohibition takes effect in a State on

the effective date of title V in that State regardless of whether EPA

or the State has promulgated implementing regulations. Furthermore,

implementation of section 112(g) by a permitting authority is a

requirement for receiving approval of its title V program (See 56 FR

21722 (May 10, 1991) and the April 13, 1993 memorandum entitled,

``Title V Program Approval Criteria for Section 112 Activities,''

signed by John Seitz, Director of the Office of Air Quality Planning

and Standards). EPA's approval of Oregon's title V program is based

upon Oregon's commitment to implement section 112(g) upon the effective

date of its title V program.

EPA has acknowledged that States may encounter difficulties

implementing section 112(g) prior to promulgation of final EPA

regulations (See June 28, 1994 memorandum entitled, ``Guidance for

Initial Implementation of Section 112(g),'' signed by John Seitz,

Director of the Office of Air Quality Planning and Standards). EPA has

issued guidance, in the form of the proposed regulations implementing

Section 112(g), which may be used to determine whether a physical or

operational change at a source is not a modification either because it

is below de minimis levels or because it has been offset by a decrease

of more hazardous emissions. See 59 FR 15004 (April 1, 1994). EPA

believes the proposed rule provides sufficient guidance to Oregon and

sources until such time as EPA's section 112(g) rulemaking is

finalized.

EPA is aware that Oregon does not have a program designed

specifically to implement section 112(g); however, Oregon does have

several preconstruction review programs that can serve as procedural

vehicles for rendering Federally enforceable case-by-case MACT or

offset determinations. Oregon's preconstruction review programs may be

used during the transition period between title V approval in Oregon

and EPA approval of Oregon regulations to implement Section 112(g) to

grant relief from the prohibition imposed by section 112(g).

EPA believes Oregon's preconstruction review programs will be

adequate in most, if not all, cases because they will allow Oregon to

select control measures that would meet MACT, as defined in section

112, and incorporate these measures into a Federally-enforceable

preconstruction permit. Although it is true that the preconstruction

review programs in the EPA-approved Oregon state implementation plan

(SIP) apply only to criteria pollutants, Oregon should be able to

impose Federally-enforceable measures reflecting MACT for most, if not

all, changes qualifying as a modification, construction, or

reconstruction under section 112(g). EPA believes this to be the case

because most section 112(b) hazardous air pollutants (HAPs) are also

criteria pollutants, and moreover because measures designed to limit

criteria pollutant emissions will often have the incidental effect of

limiting non-criteria pollutant HAPs.

In those instances where a section 112(g) modification,

construction, or reconstruction is entirely outside of Oregon's SIP

preconstruction review programs, for example, where the change results

only in non-criteria pollutant HAP emissions, sources may be able to

utilize either one of two new provisions of Oregon's rules which have

been submitted to EPA for approval under section 112(l) of the Act.

Upon EPA approval of these rules, sources would be able to utilize

Oregon's provision for voluntary HAP plant-site emission limits (see

OAR 340-28-1050(2)(b)) or permits to construct or modify major sources

of HAPs (see OAR 340-32-500 and 4500) to make case-by-case MACT or

offset determinations Federally enforceable.

Another consequence of the fact that Oregon lacks an EPA-approved

program designed specifically to implement section 112(g) is that the

applicability criteria found in its approved preconstruction review

programs may differ from those in section 112(g). However, whether a

particular source change qualifies as a modification, construction, or

reconstruction for section 112(g) purposes will be determined according

to the statutory provisions of section 112(g), using the proposed rule

as guidance. As noted in the June 28, 1994 guidance, EPA intends to

defer wherever possible to a State's judgement regarding applicability

determinations. This deference must be subject to obvious limitations.

For instance, a physical or operational change resulting in a net

increase in HAP emissions above 10 tons per year could not be viewed as

a de minimis increase under any interpretation of the Act. The EPA

would expect Oregon to be able to issue a preconstruction permit

containing a case-by-case determination of MACT in such a case even if

review under its own preconstruction review programs would not be

triggered.

d. Limitations on Potential to Emit. Two commenters objected to

EPA's requirement that Oregon refrain from adopting proposed revisions

to Oregon's applicability provision (OAR 340-28-2110) on the grounds

that such a revision would inappropriately exempt certain title V

sources from the requirements of title V. In the September 14, 1994,

Federal Register notice, EPA stated that the applicability provision

originally submitted by Oregon on November 15, 1993, was fully

approvable. EPA also stated, however, that it believed that Oregon's

proposed revision to OAR 340-28-2110, which would exempt from title V

sources subject to certain ``prohibitory rules'' Oregon had also

proposed, would require disapproval of Oregon's program. The commenters

stated, without elaboration, that Oregon's proposed revisions to OAR

340-28-2110 are fully consistent with 40 CFR 70.3(b)(1), which allows

States to exempt temporarily from title V certain categories of sources

that are not major sources.

EPA maintains that the exemptions Oregon proposed in OAR 340-28-

2110(4) exceeded the scope of the exemption allowed under part 70

because the revisions would exempt four categories of sources from the

requirements of title V as a matter of State law even if EPA does not

approve the ``prohibitory rules'' into the SIP so as to make them

Federally enforceable. In other words, Oregon's proposed revision to

OAR 340-28-2110(4) would have impermissibly exempted title V sources

that were in fact major sources under Federal law if the ``prohibitory

rule'' under which the sources sought to operate were not approved by

EPA. In addition, the proposed revision would have exempted sources

within the four categories from title V even if such sources were

subject to standards promulgated pursuant to section 111 or 112 of the

Act after July 21, 1992, and the sources had been specifically

determined in such promulgation not to be exempt from title V (see 40

CFR 70.3(b)(2)). More to the point, if EPA approves a ``prohibitory

rule'' into the Oregon SIP which has the effect of making sources

subject to that rule ``minor sources,'' then those sources would be

exempted from title V by the current provision in OAR 340-28-

2110(4)(b).

In any event, Oregon did not adopt the proposed revision to OAR

340-28-2110(4). Therefore, the version of the regulation which the

commenters addressed in their comments is no longer before EPA for

consideration. Rather, it is the version of OAR 340-28-2110(4) which

Oregon originally submitted to EPA on November 15, 1993, and which EPA

proposed to approve on September 14, 1994, that is currently before

EPA. Accordingly, OAR 340-28-2110 does not present a bar to title V

approval.

e. Environmental Audit Privilege. One commenter raised several

objections to EPA's discussion in the September 14, 1994 Federal

Register notice of Oregon's environmental audit privilege (ORS

468.963). EPA there stated that it was currently developing a national

position regarding EPA approval of environmental programs in States

which have environmental audit privileges and that it was proposing to

take no action on the Oregon audit provision in the context of this

title V approval. EPA further stated that it might consider such a

provision grounds for withdrawing program approval under 40 CFR

70.10(c) in the future if it later determined that the Oregon audit

provision interfered with Oregon's enforcement responsibilities under

part 70. See 59 FR 47106.

Although acknowledging that EPA is taking no current action on the

Oregon audit provision, the commenter stated that it is bad policy for

EPA to threaten a State permit program by indicating that EPA's own

policy is under review, and that the Oregon law is fully consistent

with the Clean Air Act and Federal law on criminal enforcement. The

commenter further stated that civil penalties, which the commenter

believes are not precluded by the Oregon audit provision, are adequate

to deter noncompliance and that the Oregon provision does not impinge

on EPA's enforcement authorities.

EPA's discussion of the environmental audit privilege was not

intended to be taken as a threat to the approval of Oregon's title V

program; rather, EPA merely intends to advise Oregon that the audit

provision could be grounds for withdrawing Oregon's title V program in

the future if EPA were to determine that the provision interfered with

Oregon's enforcement responsibilities under part 70. Section

70.11(c)(iii) allows EPA to withdraw program approval if it determines

that a State has failed to enforce the requirements of part 70. EPA

also disagrees with the premise underlying the commenter's assessment

that the Oregon audit provision is consistent with the Clean Air Act

and other Federal criminal law. The commenter stated that the Oregon

audit statute provides a shield only against criminal liability. By its

terms, however, the privilege applies to ``any civil, criminal or

administrative proceeding'' except as otherwise provided by the

statute. See ORS 468.963(2). Finally, the commenter's argument that the

Oregon statute does not impinge on EPA's enforcement authorities, if

carried to its logical conclusion, would mean that a State would not

have to have any civil or criminal enforcement authorities to obtain

title V approval. Such an argument contradicts the clear requirement

that States must have certain civil and criminal enforcement

authorities in order to obtain title V approval. See Section

502(b)(5)(E) of the Act.

In any event, the commenter's concerns are premature at this time.

As the commenter acknowledged, EPA has not proposed to take any action

on Oregon's environmental audit privilege in the context of this final

action on Oregon's program. Such concerns would be properly raised when

and if EPA proposed to withdraw Oregon's title V approval because EPA

determines that the Oregon statute is interfering with Oregon's ability

to enforce its title V program or EPA revised part 70 to prohibit

environmental audit provisions such as Oregon's.

f. Criminal Authorities. (i) Upset/Bypass. EPA received two

comments on its proposed finding that ORS 468.959, which provides a

specific defense to criminal liability for violations resulting from an

``upset'' or a ``bypass,'' precludes full title V approval. In its

proposal, EPA stated that the Oregon provision appears broader than the

affirmative defense set forth in 40 CFR 70.6(g) for emissions in excess

of technology-based emissions limits. See 59 FR 47108.

One commenter stated simply that Oregon's statute is consistent

with part 70, without further elaboration. The other commenter argued

that the Oregon statute clearly places the burden of proof of

establishing an upset or a bypass on the defendant, as required by 40

CFR 70.6(g)(4). The commenter also stated that the Oregon statute

merely sets forth an affirmative defense based on necessity and that

nothing in the Clean Air Act authorizes EPA to preempt such

longstanding notions of fairness that have been incorporated into State

criminal law. The commenter further argued that if the Oregon upset/

bypass statute precludes full approval in Oregon, other States with

similar statutes should be similarly treated.

EPA agrees with the commenter that the Oregon statute appears to

place the burden of proving an upset or bypass on the defendant, as

required by 40 CFR 70.6(g)(4). EPA nonetheless maintains that the

Oregon statute is broader than the emergency provisions of 40 CFR

70.6(g) for several reasons. Section 70.6(g) requires a source to prove

that the excess emissions were not caused by improperly designed

control equipment, lack of preventive maintenance, careless or improper

operation, or operator error. No similar showing is required for a

source in Oregon to claim an affirmative defense to excess emissions

due to a ``bypass.'' For example, the Oregon provision would allow a

source to routinely bypass improperly designed control equipment with

impunity simply by indicating that the control equipment would be

severely damaged if operated during the periods of bypass. The

recordkeeping and reporting requirements under part 70 are also more

extensive than those required by ORS 468.959. Moreover, the emergency

provision of part 70 provides a defense only to emissions in excess of

a technology-based emissions limit, while the Oregon statute provides a

defense to any emissions limit, including a health-based limit.

EPA also disagrees with the commenter's assertion that the Clean

Air Act does not authorize EPA to require States to make changes to

their criminal statutes. Title V requires that States have appropriate

criminal authorities in order to obtain title V approval. See Section

502(b)(5)(E). EPA has interpreted this statutory provision in part 70

section 70.11 and must evaluate State programs for consistency with the

promulgated rule. In response to the commenter's concern that all

States should be treated similarly on this issue, EPA notes the

commenter's concern and agrees that evenhanded treatment is

appropriate. In conclusion, EPA continues to believe that ORS 468.959

poses a bar to full approval, but does allow for interim approval.

(ii) Corporate criminal liability. EPA received three comments

concerning EPA's interpretation of ORS 161.170, which addresses the

extent to which a corporation can be subject to criminal liability in

Oregon. Based on its initial review of the statute, EPA believed that,

in order for a corporation to be criminally liable for knowing

violations of permit terms and other applicable requirements under ORS

468.936, the State must show that the board of directors or a high

managerial agent ``engaged in, authorized, solicited, requested,

commanded or knowingly tolerated'' the conduct giving rise to the

violation. See ORS 161.170(1)(c). EPA's preliminary view was that the

Oregon statute imposed a greater burden of proof and degree of

knowledge or intent than Federal law, which requires only that the

crime be committed by an employee of the corporation and that the

employee was at the time performing that employee's duties for the

corporation. See 59 FR 47108.

One commenter responded that EPA's objection to ORS 161.170 was

inappropriate because EPA should not interfere with State criminal law

and that EPA already has sufficient authority to bring its own criminal

actions. Another commenter stated, without further elaboration, that

the burden of proof for criminal violations in Oregon is the same as

for federal crimes because, in both jurisdictions, the prosecution must

prove the existence of a crime beyond a reasonable doubt.

As explained above, EPA disagrees that the Clean Air Act does not

authorize EPA to require States to change their criminal laws to meet

the requirements for an approvable title V program and that Federal

criminal authority is sufficient in and of itself. Title V prohibits

EPA from approving a State title V program if the State does not have

appropriate criminal authority, so Congress obviously contemplated that

States with insufficient criminal authority would need to amend their

statutes. See Section 502(b)(5)(E). Moreover, as discussed above, if

Congress thought that Federal criminal enforcement authorities provided

sufficient deterrence, Congress would not have required that States

have appropriate criminal authorities in order to obtain title V

approval.

A third comment was submitted by the State, which included an

opinion letter from the Oregon Attorney General's office stating that

the Oregon standard under ORS 161.170(1)(a) is equivalent to the

Federal standard articulated by EPA in its September 14, 1994 Federal

Register notice. The Attorney General opined that ORS 161.170(1)(a),

like Federal law, adopts the principle of respondeat superior with the

additional requirement that the employee's conduct occur on behalf of

the corporation. In light of the most recent opinion letter submitted

by the Oregon Attorney General's office, EPA concludes that Oregon law

does not impose a different burden of proof or degree of knowledge or

intent for corporations than does Federal law. In its September 14,

1994, proposal, EPA had assumed that knowing violations of permits and

applicable requirements would fall under ORS 161.170(1)(c), which

requires proof that the employee's conduct was authorized or otherwise

condoned by the board of directors or a high managerial agent. The

Attorney General pointed out, however, that ORS 468.936, which

satisfies the general criminal authority required by 40 CFR

70.11(a)(3)(ii), is not defined as a felony under Oregon law, and is

therefore a ``violation.'' Accordingly, a corporation which violated

ORS 468.936 could be prosecuted under ORS 161.170(1)(a), which requires

only that the illegal conduct was engaged in by an agent of the

corporation acting within the scope of employment and on behalf of the

corporation. As noted by the Attorney General and by EPA in its

September 14, 1994 Federal Register notice, this is equivalent to the

Federal standard. In short, based on the opinion letter of the Attorney

General, EPA has determined that ORS 161.170 does not pose a bar to

full approval of Oregon's program.

g. Administrative Amendments. Two commenters disagreed that

Oregon's regulation authorizing administrative permit amendments, OAR

340-28-2230(1)(j), would allow the administrative amendment process to

be used to change the content of a permit. These commenters asserted

that this regulation would only allow the correction of minor

misinterpretations of an applicable requirement, which they felt was

appropriate. EPA objected to OAR 340-28-2230(1)(j) because, although

the regulation could be used appropriately as the commenter suggested,

the plain language of the rule would also allow the permitting

authority to add or delete an applicable requirement from the title V

permit without public participation if it determined the change was due

to a ``minor misinterpretation of an applicable requirement.'' EPA

maintains this position.

In response to EPA's concerns, however, Oregon repealed OAR 340-28-

2230(1)(j) on October 21, 1994. Thus, that provision is no longer

effective as a matter of State law and is not before EPA for

consideration at this time. Rather, OAR 340-28-2230, as amended by

Oregon on October 21, 1994, and submitted to EPA on November 15, 1994,

is currently before EPA for consideration and is fully approvable.

h. Variance Provision.

Two commenters objected to EPA's discussion of the Oregon variance

provisions, ORS 468A.075 and LRAPA Title 23, section 23-005. In the

September 14, 1994, Federal Register notice, EPA proposed to take no

action on these variance provisions because EPA believed they were

external to Oregon's title V program. EPA also stated, however, that a

variance granted by a permitting authority cannot modify a source's

obligations under a title V permit, even if the State variance

provision or the source-specific variance itself has been approved into

the State SIP, unless the variance is incorporated into the permit

through appropriate permit revision procedures. See 59 FR 47106. The

commenters argued that part 70 clearly recognizes that sources may not

be in compliance with all provisions of a title V permit and that State

variance provisions, such as Oregon's, are consistent with part 70, in

particular, 40 CFR 70.5(c)(8)(iii) and 70.6(c)(3). The commenters

further objected to any implication that a variance granted by the

State does not have any effect on a source's compliance requirements or

the extent to which a source can be subject to enforcement action.

EPA agrees with the commenters that part 70 recognizes that some

title V sources will not be in compliance with all terms of their title

V permits. Section 70.5(c)(8)(iii)(C) requires that a source that will

not be in compliance with all applicable requirements at the time of

permit issuance must submit a schedule of compliance and section

70.6(c)(3) requires the permitting authority to include such a

compliance schedule in the source's title V permit.

EPA disagrees, however, with the commenters' implicit assumption

that a compliance schedule is the same mechanism and has the same

effect as a variance. As the commenters recognize, a compliance

schedule included in a title V permit does not sanction noncompliance

with the underlying applicable requirement. See 40 CFR 70.5(c)(8)(C). A

variance properly granted under a State variance provision, and

approved by EPA as a revision to the SIP, however, changes the

underlying applicable requirement of the SIP. Because title V requires

that all applicable requirements be incorporated into a source's title

V permit, any change to an applicable requirement, such as EPA approval

of a variance as a SIP revision, must also be incorporated into the

source's title V permit through appropriate permit revision procedures.

Moreover, the commenters' concerns are premature at this time. As

the commenters acknowledge, EPA is not taking any action on Oregon's

variance provisions in this final action on Oregon's title V program.

Small Business Assistance Program Provisions

EPA proposed that, as a condition of obtaining full approval,

Oregon must ensure that no source subject to title V will be immune

from inspections or enforcement actions resulting from technical

assistance visits conducted under ORS 468A.330(4)(a). See 59 FR 47107-

47108. That provision states that ``Onsite technical assistance for the

development and implementation of the Small Business Stationary Source

Technical and Environmental Compliance Assistance Program shall not

result in inspections or enforcement actions.''

One commenter objected to EPA's proposal on this issue, arguing

instead that ``EPA's current program for amnesty for small businesses

should be expanded to other sources which conduct voluntary compliance

audits'' and that such a revision would be consistent with

Congressional intent. The commenter's reference to ``EPA's current

program'' is apparently a reference to EPA's August 12, 1994, guidance

memorandum entitled ``Enforcement Response Policy for Treatment of

Information Obtained Through Clean Air Act Section 507 Small Business

Assistance Programs'' signed by Steven A. Herman (herein referred to as

the ``SBA Enforcement Guidance''). That document sets forth EPA's

position that State Small Business Assistance Programs which provide

small businesses voluntarily seeking compliance assistance a limited

period to correct violations observed or revealed as a result of such

assistance are approvable under Section 507 of the Act, provided the

State program contains certain conditions.

EPA disagrees that the Oregon statute is consistent with either

title V or the SBA Enforcement Guidance. Section 70.11(a) requires that

States be able to collect a penalty of up to $10,000 per day for each

violation in order to obtain title V approval. ORS 468A.330(4)(a) would

preclude Oregon from pursuing an enforcement action against a source if

the enforcement action ``resulted from'' a technical assistance visit

conducted under that provision. As discussed in EPA's proposal,

Oregon's statute does not simply give a source a limited period of time

in which to correct a violation observed during a technical assistance

visit, but forever shields a source from further inspections or

enforcement actions that ``result from'' a compliance assistance visit.

For example, if a State inspector discovered a violation during a

technical assistance visit and the source took no action to correct the

violation, ORS 468A.330(4)(a) would shield the source indefinitely from

further inspections or enforcement action unless the State had some

independent reason for visiting the source not related to the

information obtained during the technical assistance visit.

The Oregon Attorney General has opined that no title V source that

is a major source is eligible for assistance under ORS 468A.330(4)(a)

because Oregon limits its Small Business Assistance Program to sources

that meet the definition of ``small business stationary source'' under

Section 507(b)(1)(C) of the Act. If, however, a source was determined

to be a title V source as a result of a technical assistance visit, ORS

468A.330(4)(a) would preclude the Oregon permitting authorities from

pursing an enforcement action against that source for failure to obtain

a title V permit.

The Oregon statute also poses title V approval problems for non-

major sources that may later become subject to title V. In the SBA

Enforcement Guidance, EPA interpreted Section 507 of the Act to allow

States to grant non-major sources that meet the eligibility

requirements of Section 507(b)(1)(C) a limited opportunity to correct

violations observed during technical assistance visits. Even if EPA

were to extend this policy to apply to all sources that conduct

voluntary compliance audits, as the commenter urges, the amnesty

granted under Oregon's statute far exceeds that policy. In short, the

Oregon statute is inconsistent with the enforcement requirements of

part 70 , even as EPA has interpreted those requirements under Section

507 of the Act and in the SBA Enforcement Guidance, for certain non-

major sources. Accordingly, EPA maintains that ORS 468A.330(4)(a) bars

full approval of Oregon's title V program, but does not preclude

interim approval.

B. Options for Approval/Disapproval

EPA is promulgating interim approval of the operating permits

programs submitted by ODEQ and LRAPA.6 ODEQ will be implementing

Oregon's title V program throughout the State, except within Lane

County and the exterior boundaries of Indian Reservations in Oregon.

LRAPA will be the title V permitting authority for title V sources in

Lane County, except for sources located within the exterior boundaries

of Indian Reservations.

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

\6\The scope of this action does not include the issuance of

permits or the enforcement of standards for sewage sludge

incinerators under Section 405 of the Clean Water Act, 42 USC 1345.

Delegation of sewage sludge incinerator permitting under the Clean

Water Act, if requested by the State, would be considered in a

separate administrative action (see 40 CFR Parts 122 and 501).

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

In order to receive full approval, the Oregon permitting

authorities must make the following changes:

1. Upset/Bypass as a Defense to Criminal Liability

Oregon must demonstrate to EPA's satisfaction that ORS 468.959,

which provides an affirmative defense to criminal liability for

violations that result from an ``upset'' or a ``bypass,'' as those

terms are defined in the Oregon statute, is consistent with 40 CFR

70.6(g). The affirmative defense under ORS 468.959 is broader than the

affirmative defense under part 70 for emissions in excess of a

technology-based emissions limitation caused by an ``emergency'' (see

40 CFR 70.6(g)).

2. Small Business Assistance Program Provisions

Oregon must demonstrate to EPA's satisfaction that ORS

468A.330(4)(a) is consistent with the enforcement responsibilities of

40 CFR 70.11(a) and the SBA Enforcement Guidance. ORS 468A.330(4)(a)

does not simply give a source an opportunity to correct a violation

observed during a technical assistance visit before being subject to

enforcement action, but rather protects the source from follow-up

inspections or enforcement activities that ``result from'' observations

made during a technical assistance visit.

As a result of today's final interim approval of Oregon's part 70

programs, the requirement to submit a permit application to ODEQ or to

LRAPA applies to all part 70 sources, as defined in the approved

program within the State, except for any source of air pollution over

which a federally recognized Indian Tribe has jurisdiction. See 59 FR

55813, 55815-55818 (November 9, 1994).

This interim approval, which may not be renewed, extends until

January 2, 1997. During this interim approval period, the State is

protected from sanctions, and EPA is not obligated to promulgate,

administer and enforce 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 1-year time period for

submittal of permit applications by subject sources begins upon the

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

for processing the initial permit applications.

If the State fails to submit a complete corrective program for full

approval by July 2, 1996, EPA will start an 18-month clock for

mandatory sanctions. If the State then fails to submit a corrective

program that EPA finds complete before the expiration of that 18-month

period, EPA will be required to apply one of the sanctions in section

179(b) of the Act, which will remain in effect until EPA determines

that the State has corrected the deficiency by submitting a complete

corrective program. Moreover, if the Administrator finds a lack of good

faith on the part of the State, both sanctions under section 179(b)

will apply after the expiration of the 18-month period until the

Administrator determined that the State had come into compliance. In

any case, if, six months after application of the first sanction, the

State still has not submitted a corrective program that EPA has found

complete, a second sanction will be required.

If EPA disapproves the State's complete corrective program, EPA

will 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 State has submitted a revised program and EPA

has determined that it corrected the deficiencies that prompted the

disapproval. Moreover, if the Administrator finds a lack of good faith

on the part of the State, both sanctions under section 179(b) shall

apply after the expiration of the 18-month period until the

Administrator determines that the State has come into compliance. In

all cases, if, six months after EPA applies the first sanction, the

State has not submitted a revised program that EPA has determined

corrects the deficiencies, a second sanction is required.

In addition, discretionary sanctions may be applied where warranted

any time after the expiration of an interim approval period if the

State has not timely submitted a complete corrective program or EPA has

disapproved its submitted corrective program. Moreover, if EPA has not

granted full approval to the State program by the expiration of this

interim approval and that expiration occurs after November 15, 1995,

EPA must promulgate, administer and enforce a Federal permits program

for the State upon interim approval expiration.

III. Administrative Requirements

A. Docket

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

for the final interim approval, including public comments on the

proposal received and reviewed by EPA, are contained in docket number

OR-V-100 maintained at the EPA Regional Office. The docket is an

organized and complete file of 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

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

Administrative practice and procedure, Air pollution control,

Environmental protection, Intergovernmental relations, Operating

permits, and Reporting and recordkeeping requirements.

Dated: November 15, 1994.

Chuck Clarke,

Regional Administrator.

Part 70, title 40 of the Code of Federal Regulations 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 a sentence at the end

of the introductory text and by adding the entry for Oregon in

alphabetical order to read as follows:

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

Permits Programs

* * * An approved State part 70 program applies to all part 70

sources, as defined in that approved program, within such State,

except for any source of air pollution over which a federally

recognized Indian Tribe has jurisdiction.

* * * * *

Oregon

(a) Department of Environmental Quality (ODEQ): Submitted on

November 15, 1993, as amended November 15, 1994; effective on

January 3, 1995; interim approval expires January 2, 1997.

(b) Lane Regional Air Pollution Authority (LRAPA): submitted on

November 15, 1993, as amended November 15, 1994; effective on

January 3, 1995; interim approval expires January 2, 1997.

* * * * *

[FR Doc. 94-29690 Filed 12-1-94; 8:45 am]

BILLING CODE 6560-50-P