Clean Air Act Final Disapproval of Operating Permits Program; Commonwealth of Virginia

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5116-6]

Clean Air Act Final Disapproval of Operating Permits Program;

Commonwealth of Virginia

AGENCY: U.S. Environmental Protection Agency (EPA).

ACTION: Final disapproval.

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SUMMARY: EPA is taking final action to disapprove the Clean Air Act

operating permits program under title V of the Clean Air Act Amendments

of 1990 submitted to EPA by the Commonwealth of Virginia. The reasons

for this disapproval action were fully described in EPA's notice of

proposed disapproval (see the June 17, 1994 Federal Register) and can

be summarized as follows: (1) Virginia's program submittal does not

contain the necessary legal authority to allow persons who have

participated in the permit program's public comment process to obtain

review of the final permit decision in State court; (2) the program

does not contain the necessary legal authority to prevent the default

issuance of permits; (3) the submitted regulations expired on June 28,

1994 and cannot be applied or enforced after that date; (4) the

regulatory portion of the program submittal does not include the proper

universe of sources required to be subject to a State operating permits

program; and (5) the program does not ensure that permits contain all

applicable Clean Air Act requirements and does not correctly delineate

permit provisions enforceable only by the Commonwealth.

DATES: This action will become effective on January 4, 1995.

ADDRESSES: A copy of Virginia's submittal and other supporting

information relevant to this action, including all public comment

letters, are available for public inspection during normal business

hours at the following location: U.S. Environmental Protection Agency,

Region III, Air, Radiation & Toxics Division, 841 Chestnut Building,

Philadelphia, PA 19107.

FOR FURTHER INFORMATION CONTACT: Mr. David J. Campbell, Air and

Radiation Programs Branch (3AT10), U.S. Environmental Protection

Agency, Region III, 841 Chestnut Building, Philadelphia, PA 19107,

Telephone: 215 597-9781.

SUPPLEMENTARY INFORMATION:

I. Background

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

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

part 70 (see 57 FR 32250 (July 21, 1992)) 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 (1) year

after receiving the submittal. EPA's program review occurs pursuant to

section 502 of the CAA and the part 70 regulations, which together

outline the criteria for approval or disapproval. If EPA has not

approved a program by November 15, 1995 for a State, it must establish

and implement a Federal program in that State.

On June 17, 1994, EPA proposed disapproval of the operating permits

program for the Commonwealth of Virginia. (See 59 FR 31183.) EPA

received public comment on the proposal and will address those comments

in this notice. EPA is taking final action to disapprove the operating

permits program for the Commonwealth of Virginia. By promulgating this

disapproval action within one (1) year of receipt of Virginia's

November 12, 1993 operating permits program submittal, EPA has

fulfilled its requirements for timely program review under section

502(d).

II. Analysis of State Submittal

On November 12, 1993, as supplemented on January 14, 1994, the

Commonwealth of Virginia submitted an operating permits program to

satisfy the requirements of the CAA and 40 CFR part 70. EPA reviewed

the program against the criteria for approval and disapproval in

section 502 of the CAA and the part 70 regulations. EPA determined, as

fully described in the notice of proposed disapproval of Virginia's

program (see 59 FR 31183 (June 17, 1994)) and the Technical Support

Document for this action, that the Commonwealth's operating permits

program does not substantially meet the requirements of the CAA or part

70. In summary, the deficiencies of the Commonwealth's program which

require disapproval are:

1. Inadequate provisions, pursuant to section 502(b)(6) of the CAA

and 40 CFR 70.4(b)(3)(x) and 70.7(h), for public participation in the

permit process and the opportunity for judicial review in State court.

Specifically, the Commonwealth lacks statutory authority for judicial

review of final permit decisions that meets the CAA's minimum threshold

for judicial standing.

2. Lack of authority, pursuant to section 505(b)(3) of the CAA and

40 CFR 70.8(e), to prevent the default issuance of permits by

Commonwealth.

3. The regulations to implement the program expired on June 28,

1994 and have not been re-promulgated.

4. The Commonwealth's operating permits program does not require

issuance of permits to the proper universe of sources required by 40

CFR part 70.

5. The program does not contain regulations meeting the

requirements of 40 CFR part 70 to ensure issuance of permits that

contain all applicable Federal requirements and to correctly delineate

provisions only enforceable by the Commonwealth.

Pursuant to section 502(d)(1) of the CAA, the Commonwealth of

Virginia must correct these deficiencies, as well as those defined in

the Technical Support Document by June 7, 1995, in order to receive

approval of its operating permits program from EPA.

III. Response to Public Comments

EPA received 32 letters of comment in response to the proposed

disapproval of Virginia's operating permits program submittal. As

mentioned in the June 17, 1994 notice of proposed disapproval, EPA

received a petition from the Environmental Defense Fund, dated December

23, 1993, to disapprove Virginia's operating permits program. That

petition is considered in this action. EPA received a total of 26

comment letters supporting the notice of proposed disapproval of

Virginia's program. EPA received adverse comment letters from the

Virginia Manufacturers Association, Virginia Aggregates Association,

Northeast Maryland Waste Disposal Authority, AES, Ogden Martin Systems

of Montgomery, Inc., Ogden Martin Systems of Fairfax, Inc., Ogden

Martin Systems of Lancaster, Inc., and Ogden Martin Systems of

Alexandria/Arlington, Inc. The Attorney General of Virginia submitted

specific comments on the judicial standing issue. Additionally, the

Commonwealth of Virginia Department of Environmental Quality submitted

a separate letter which describes how it intends to address the

deficiencies as outlined in the notice of proposed disapproval and the

accompanying Technical Support Document, with the notable exception of

the judicial standing issues. Finally, one letter of comment was

received recommending specific changes to Virginia's operating permits

program. The following is in response to comments which do not directly

support EPA's disapproval action.

Comment: The Commonwealth of Virginia's judicial review statute is

legally sufficient to satisfy the requirements of title V and 40 CFR

part 70.

EPA Response: EPA proposed disapproval of Virginia's program

because it, in part, fails to meet the minimum requirements for

standing for judicial review as required by section 502(b)(6) of the

Act and 40 CFR 70.4(b)(3)(x).

Section 502(b)(6) states that every permit program must provide the

applicant and ``any person who participated in the public comment

process'' with the opportunity for judicial review of the final permit

action in State court. The same opportunity must also be afforded to

any other person who could obtain judicial review of the action under

any applicable State law.

The Commonwealth and the other contesting commenters assert that a

reading of the language of section 502(b)(6) and the legislative

history indicates that Congress intended that States be given

discretion to determine who should be allowed to obtain judicial review

of actions under a State's title V program. EPA does not agree with

this interpretation of section 502's judicial review provision.

EPA believes that for a State title V operating permits program to

be approved by EPA, that program must provide access to judicial review

to any party who participated in the public comment process and who at

a minimum meets the threshold standing requirements of Article III of

the U.S. Constitution. This interpretation is consistent with the

language, structure, and legislative history of the Act which provides

affected members of the public an opportunity for judicial review of

permit actions to ensure an adequate and meaningful opportunity for

public participation in the permit process. The Senate managers of the

Clean Air Act Amendments of 1990 stated that:

Several other provisions [in section 502(b)(6)] are included to

ensure fair treatment in the permit process. For example, we make

clear that judicial review of final actions by the permitting

authority to issue or deny permits shall be available in State court

to anyone who could obtain such review under any applicable law.

This provision ensures that existing provisions of law governing the

availability of review of final actions on permit applications are

in no way limited, and that interested parties who arguably are

affected by permit decisions are guaranteed their day in court.

Chafee-Baucus Statement of Senate Managers, S.1630, the Clean Air

Act Amendments of 1990, reprinted in 136 Cong. Rec. S169941 (daily ed.

October 27, 1990). This language, together with the expansive language

of section 502(b)(6), demonstrates the clear intent of the Congress to

provide citizens a broad opportunity for judicial review.

In addition, if EPA were to implement an operating permits program

pursuant to section 502(d)(3) of the Act, citizens would have access to

judicial review of EPA permitting decisions if they met the minimal

standing requirements of Article III. With respect to the nature of the

injury that an ``interested person'' must show to have standing under

Article III, the Supreme Court held in Sierra Club v. Morton, 405 U.S.

727, 734-35 (1972), that harm to an economic interest is not required

to confer standing. Harm to an aesthetic, environmental, or

recreational interest is sufficient, as long as the party seeking

judicial review is among the injured. This holding was reaffirmed by

the Supreme Court in Lujan v. Defenders of Wildlife, 504 U.S. ----, 112

S.Ct. 2130, 2136, 119 L.Ed.2d 351, 365-66 (1992). See also, Middlesex

County Sewerage Authority v. National Sea Clammers Ass'n, 453 U.S. 1,

16-17 (1981) (citizen suit provision of CWA intended by Congress to

apply to plaintiffs suffering noneconomic and economic injury).

One commenter observed that in addition to the constitutional

requirements for standing, ``prudential'' standing requirements would

apply where a Federal court reviews an EPA-issued permit. The

prudential standing inquiry requires that a court ask whether a would-

be challenger to Agency action is pursuing an ``interest'' arguably

within the zone of interests Congress intended to either regulate or

protect. Hazardous Waste Treatment Council v. EPA (HWTC IV), 885 F.2d

918, 922 (D.C. Cir. 1989). EPA has considered the issue and has

determined that it agrees with the commenter that courts should apply

traditional prudential standing requirements to parties seeking

judicial review pursuant to section 502(b)(6). Id. at 921. However, by

requiring that States provide an opportunity for judicial review to,

inter alia, ``any person who participated in the public comment

process'' on a proposed permit, Congress declared that any such person

is within the zone of interests addressed by title V. Thus, EPA

believes that the Act clearly enables such persons to meet prudential

standing requirements. In Virginia, however, all persons who have

participated in the public comment process are not considered within

the zone of interests protected by title V. Accordingly, the

Commonwealth's standing provision is more restrictive than traditional

prudential standing requirements. Hazardous Waste Treatment Council v.

Thomas (HWTC II), 861 F.2d 277 (D.C. Cir. 1988), cert. denied, 490 U.S.

1106 (1989).

Comment: The CAA, specifically section 502(b)(6), may violate the

Tenth Amendment of the U.S. Constitution. The commenters believe that

Congress cannot preempt a traditional State power with the ambiguous

language of section 502(b)(6) and that Congress cannot coerce State

legislative action. Additionally, these commenters contend that the

sanctions provisions in section 502(d)(2) of the Act unconstitutionally

compel the States to enact and enforce the title V permits program.

EPA Response: The Commonwealth and the contesting commenters assert

that EPA's interpretation of section 502(b)(6) of the Act is an

invasion of State sovereignty in violation of the Tenth Amendment of

the U.S. Constitution. They assert that Congress cannot require States

to regulate. However, EPA does not believe that the Clean Air Act, and

more specifically section 502(b)(6), is an unconstitutional invasion of

State sovereignty.

It is fundamental under the Tenth Amendment to the U.S.

Constitution that Congress lacks the power directly to compel States to

enact and enforce a Federal regulatory program. Equally fundamental,

however, is Congress' authority to establish a program of cooperative

federalism in which States are encouraged to enact a State regulatory

program using Federal standards in a federally preemptible area. When

Congress created the operating permits program in title V of the Clean

Air Act Amendments of 1990, it could have entirely preempted State

regulation by creating a regulatory scheme to be enforced exclusively

by EPA. Instead, Congress created a regulatory scheme where States

could enact permit programs meeting Federal standards or have EPA

promulgate such a program. When Congress chooses to allow the States

such a regulatory role in a federally preemptible area, such as it has

done in title V, the Supreme Court has found no violation of the Tenth

Amendment to the U.S. Constitution and therefore no unconstitutional

invasion of State sovereignty. Hodel v. Virginia Surface Mining &

Reclamation Assn., Inc., 452 U.S. 264, 290 (1981); FERC v. Mississippi,

456 U.S. 742, 764 (1982). The title V operating permits program does

not ``commandeer the legislative processes of the States by directly

compelling them to enact and enforce a Federal regulatory program.''

Hodel, supra, at 288; FERC, supra, at 764-765. Rather, this program is

clearly one of cooperative federalism that encourages the States to

enact and enforce a State program, incorporating title V's standards,

by offering incentives to do so.

Congress can encourage States to regulate in a particular manner by

attaching conditions on the receipt of Federal funds and/or offering

States the choice of regulating an activity in conformance with Federal

standards or having the State law preempted by Federal regulation. New

York v. United States, 112 S. Ct. 2408 (1992). Congress has provided

States with two incentives to encourage them to adopt and implement an

operating permits program consistent with Federal regulations. If a

State fails to submit an approvable program, it is subject to one or

more of the sanctions described under section 179(b) of the Act. Again,

it is well established that Congress is empowered to further Federal

policy objectives by conditioning the receipt of Federal moneys upon

compliance by the recipient State with Federal statutory and

administrative directives. See, e.g., South Dakota v. Dole, 483 U.S.

203 (1987); Fullilove v. Klutznick, 448 U.S. 448 (1980). In addition,

under section 502(d)(3), if a State does not submit a title V operating

permits program or if the State program does not meet the requirements

of title V, EPA is required to promulgate, administer, and enforce an

operating permits program in that State. Thus, if the Commonwealth does

not submit a permanent program that complies with the Act and 40 CFR

part 70, the full regulatory burden will be borne by EPA.

The Commonwealth asserts that EPA's interpretation of section

502(b)(6) is a violation of the Eleventh Amendment of the U.S.

Constitution. Virginia's concern is misplaced because section 502(b)(6)

provides for judicial review of a State's permitting decisions in State

court and therefore does not implicate the Eleventh Amendment.

Comment: The Commonwealth of Virginia should receive interim

approval of its operating permits program. Several commenters believe

that Virginia's program will meet the minimum requirements to be

considered for interim approval as described at 40 CFR 70.4(d) once

proposed modifications to the permits program regulations are adopted.

It has also been stated that the issue of judicial standing is not a

relevant criterion for assessing interim approvability.

EPA Response: Pursuant to Sec. 70.4(d)(1), an operating permits

program submittal that is not fully approvable must first substantially

meet the requirements of part 70 in order to be considered for interim

approval. Once a submittal has been deemed to substantially meet the

requirements of part 70, the criteria established at Sec. 70.4(d)(3)

are applied as a second test for eligibility for interim approval. On

the basis of the five disapproval issues, EPA has determined that

Virginia's operating permits program submittal does not substantially

meet the requirements of part 70 and, therefore, is not eligible for

interim approval. Moreover, the fact that the emergency regulations

establishing the permits program have expired sufficiently indicates

that the program does not substantially meet the requirements of part

70.

Comment: EPA judged the adequacy of the Commonwealth of Virginia's

operating permits program prior to official submittal. Specifically,

EPA notified the Commonwealth of Virginia that it lacked adequate

statutory provisions for standing for judicial review prior to the

receipt of its November 12, 1993 program submittal.

EPA Response: EPA attempted to alert Virginia to potential

impediments to the approval of any operating permits program submitted

by the Commonwealth prior to the November 15, 1993 program submittal

due date. It was EPA's intention to supply constructive comments to

Virginia prior to November 15, 1993 in order to provide the

Commonwealth with adequate time to seek any statutory or regulatory

revisions as needed. EPA has a well-established policy of providing

comments on draft and proposed regulations and programs which will

later come before it for formal rulemaking action. Notwithstanding

EPA's policy of providing timely comment, the Agency's position on the

standing for judicial review issue has been consistent throughout its

correspondence with the relevant parties in Virginia and that position

has been maintained and reflected in the rulemaking actions undertaken

in response to the official submittal of Virginia's operating permits

program.

Comment: EPA may be applying inconsistent approval standards among

the various State and Local jurisdictions seeking approval of operating

permits programs to satisfy the requirements of title V of the CAA. The

commenter indicated that EPA is not providing a consistent level of

review and comment of other States' standing provisions.

EPA Response: EPA has applied consistent standards to other states.

EPA has not proposed approval for any State operating permits program

that does not substantially meet the requirements for standing for

judicial review as required by section 502(b)(6) of the Act and 40 CFR

70.4(b)(3)(x). EPA will evaluate each program separately to determine

if it meets the requirements of 40 CFR part 70.

Comment: The Commonwealth of Virginia Department of Environmental

Quality submitted comments to address the regulatory deficiencies cited

in EPA's notice of proposed disapproval and the Technical Support

Document accompanying that action. The comments specifically exclude

discussion of the standing for judicial review issue. The Department of

Environmental Quality details the regulatory modifications it plans to

make to the previously adopted regulations for its operating permits

program.

EPA Response: EPA is encouraged that the Department of

Environmental Quality is working to address the regulatory deficiencies

of its operating permits program as cited in the proposed disapproval.

At such time that EPA receives an official submittal replacing the

Commonwealth's November 12, 1993 submittal being considered by this

action, the Agency will evaluate the new submittal in an additional

rulemaking action. To comment on the adequacy of proposed modifications

would not be appropriate in this action.

Comment: One commenter provided EPA with letters it had previously

submitted to the Virginia Department of Environmental Quality. The

letters discuss the commenter's concerns regarding Virginia's operating

permits program. The letters also offer suggested modifications to the

program. The commenter suggested that EPA consider these letters when

reviewing Virginia's program.

EPA Response: EPA has considered the comments contained in the

letters provided by the commenter. EPA's final disapproval of the

Virginia operating permits program as submitted on November 12, 1993

sufficiently addresses the concerns of the commenter.

IV. Final Action and Implications

A. Program Modification

EPA is promulgating disapproval of the operating permits program

submitted by the Commonwealth of Virginia on November 12, 1993, as

supplemented on January 14, 1994. This disapproval constitutes a

disapproval under section 502(d) of the CAA (see 57 FR 32253). Pursuant

to section 502(d)(1), the Commonwealth has 180 days from the date of

EPA's notification of the Governor of Virginia to revise and resubmit

the program. EPA will notify the Governor of Virginia by letter that

the Commonwealth has 180 days from the effective date of this final

disapproval in which to make the necessary modifications to its

operating permits program and resubmit it to EPA for review.

Virginia must amend its operating permits program to correct the

deficiencies and resubmit the program, including a revised Attorney

General's opinion, to EPA for review. The notice of proposed

disapproval and the Technical Support Document discuss Virginia's

submittal in detail, and contain specific references to revisions and

modifications necessary to obtain full approval. Once submitted,

Virginia's operating permits program, including revised statutes and

regulations, will undergo an additional notice and comment period

before EPA takes final action on the program submittal.

B. Sanctions

Based on the disapproval of its operating permits program, the

Commonwealth of Virginia may become subject to sanctions under the CAA.

Pursuant to section 502(d)(2)(A), EPA may, at its discretion, apply any

of the sanctions described in section 179(b) at any time subsequent to

the effective date of this disapproval action. Furthermore, EPA is

compelled by the CAA to apply one of the sanctions in section 179(b),

as selected by the Administrator, on July 5, 1996, unless prior to that

date the Commonwealth submits a revised operating permits program for

Virginia and EPA determines that the Commonwealth has corrected the

deficiencies that prompted this disapproval action. If, six (6) months

after EPA applies the first sanction, Virginia has not submitted a

revised program and EPA has not determined that the Commonwealth has

corrected the deficiencies, a second sanction is required. Finally, if

the Commonwealth of Virginia does not have an approved program by

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

Federal operating permits program for Virginia.

Final Action

EPA is disapproving the operating permits program submitted by the

Commonwealth of Virginia on November 12, 1993, as supplemented on

January 14, 1994. This disapproval constitutes a disapproval under

section 502(d) of the CAA (see 57 FR 32253). As provided under section

502(d)(1) of the CAA, the Commonwealth will have up to 180 days from

the date of EPA's notification of disapproval for the Governor of

Virginia to revise and resubmit the program. EPA is disapproving this

program on the basis that Virginia has not met the following five

requirements: provision for adequate judicial standing; prevention of

default permit issuance; reliance on permanent regulations; issuance of

permits to the proper universe of sources; and issuance of permits that

contain all applicable Federal requirements and correctly delineate

provisions only enforceable by the Commonwealth.

The Office of Management and Budget (OMB) has exempted this action

from Executive Order 12866 review.

EPA's actions under section 502 of the CAA do not create any new

requirements, but simply address operating permits programs submitted

to satisfy the requirements of 40 CFR part 70. Because EPA's

disapproval of the Commonwealth of Virginia's request under section 502

of the CAA for approval of its operating permits program 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.

Peter H. Kostmayer,

Regional Administrator.

Part 70, title 40 of the Code of Federal Regulations is amended as

follows:

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

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

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

Virginia in alphabetical order to read as follows:

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

Permits Programs

* * * * *

Virginia

(a) Department of Environmental Quality: submitted on November

19, 1993; disapproval effective on January 4, 1995.

(b) [Reserved]

* * * * *

[FR Doc. 94-29849 Filed 12-2-94; 8:45 am]

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