Approval and Promulgation of Implementation Plans; Minnesota

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[MN13-1-5623; FRL-4840-8]

Approval and Promulgation of Implementation Plans; Minnesota

AGENCY: United States Environmental Protection Agency (USEPA).

ACTION: Proposed rule.

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

SUMMARY: USEPA is proposing to approve a revision to the Minnesota

State Implementation Plan (SIP) for new source review in nonattainment

areas, submitted to meet longstanding requirements as well as new

requirements imposed by the Clean Air Act Amendments of 1990. This

revision consists of the State Rules 7005.3010 through 7005.3060, which

incorporate by reference the new source review requirements specified

in appendix S to title 40 Code of Federal Regulations part 51 (40 CFR

part 51), ``Emission Offset Interpretive Ruling,'' except for the

deletion of unacceptable exemptions included in appendix S. Final

approval of this revision would lift the current ban on permitting

major sources and major modifications in Minnesota nonattainment areas.

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

March 25, 1994.

ADDRESSES: Written comments should be sent to: William L. MacDowell,

Chief, Regulation Development Section (AE-17J), U.S. Environmental

Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604.

Copies of the SIP revision request and USEPA's analysis are

available for inspection at the following address: (It is recommended

that you telephone John Summerhays at (312) 886-6067, before visiting

the Region 5 Office.) U.S. Environmental Protection Agency, Region 5,

Air and Radiation Division, 77 West Jackson Boulevard, Chicago,

Illinois 60604.

FOR FURTHER INFORMATION CONTACT: John Summerhays, Regulation

Development Section, Air Enforcement Branch, U.S. Environmental

Protection Agency, Region 5, Chicago, Illinois 60604.

SUPPLEMENTARY INFORMATION:

I. Summary of State Submittal

Part D of title I of the Clean Air Act sets forth SIP requirements

for nonattainment areas. Section 173 and the various subparts of title

I contain the program requirements for the review and issuance of

permits for the construction of major new sources and major

modifications in a nonattainment area. Currently, Minnesota has no

approved nonattainment area permitting program. On August 5, 1992, and

August 26, 1993, Minnesota submitted revised new source review

regulations for the purpose of meeting these requirements.

The statutory requirements that apply to State regulations for new

source review in nonattainment areas are set forth at part D of title I

of the Clean Air Act, particularly in sections 172(c)(5) and 173.

Federal regulations developed prior to enactment of the Clean Air Act

Amendments of 1990 for nonattainment area new source review programs

are set forth at title 40 Code of Federal Regulations part 51 (40 CFR

part 51), particularly 40 CFR 51.165. The Clean Air Act Amendments of

1990 also establish assorted new requirements, for which preliminary

guidance was published April 16, 1992 (57 FR 13498), and April 28, 1992

(57 FR 18070). For example, section 189(a)(1)(A) requires that sections

172(c)(5) and 173 be met for fine particulate matter nonattainment

areas.

The Minnesota Pollution Control Agency (MPCA) has submitted general

permitting regulations to USEPA on various occasions, including January

28, 1972; May 28, 1972; January 23, 1981; and January 7, 1985. USEPA

approved the 1972 submittals on May 31, 1972; the 1981 submittal on May

6, 1982; and the 1985 submittal on May 13, 1988. However, these rules

did not address the specific requirements for permitting new and

modified major sources in nonattainment areas. Consequently, Minnesota

has no approved nonattainment area permitting program, and the State

continues to be subject to a prohibition against permitting major new

sources and major modifications in the State's nonattainment areas, as

promulgated by USEPA on July 2, 1979 (44 FR 38583). More recent MPCA

submittals, which are the subjects of this proposed rulemaking, were

intended to address the requirements for nonattainment area new source

permitting and allow USEPA to lift the permitting prohibition.

MPCA has submitted SIP revisions for meeting the permitting

requirements of part D on two previous occasions. MPCA's first

submittal was on December 22, 1981. USEPA proposed conditional approval

of this rule in the July 29, 1982, Federal Register (47 FR 32742).

Minnesota used the plant-wide definition of source in its rule. Before

final rulemaking could be published, the D.C. Circuit Court ruled

against the plant-wide definition of source. This decision was later

overturned (Chevron, U.S.A., Inc. v. NRDC, 104 S.Ct. 2778 (1984)), but

USEPA never approved this SIP revision because of other concerns. This

submittal was ultimately withdrawn, in an August 21, 1990, letter from

the Commissioner of MPCA, and USEPA's proposed action on this submittal

was withdrawn in the Federal Register of November 7, 1990 (55 FR

46829).

MPCA submitted its second revision for meeting the permitting

requirements on March 13, 1989. In February 1990, USEPA provided MPCA

with comments, stating that the rule would not be approved. In a

February 24, 1992, letter, Charles W. Williams, Commissioner, MPCA,

withdrew the March 13, 1989, submittal.

The current revisions being addressed in this rulemaking include

State submittals of August 5, 1992, and August 26, 1993. These

submittals include State Rules 7005.3010 through 7005.3060 (``Offset

Rule''). These rules incorporate appendix S to 40 CFR part 51 into

these State rules, modified in response to recommendations by USEPA.

Section 173 of the Act identifies four essential requirements that

State new source permit regulations must impose in nonattainment areas:

(1) New source emissions must be offset by equivalent or greater

emission reductions in the area, (2) the new source must have lowest

achievable emission rates (LAER), (3) other sources owned by the owner

or operator of the new source must be in compliance or on a schedule to

achieve compliance with applicable regulations, and (4) the area must

not be subject to a finding of failure to implement the SIP.

Incorporation of Appendix S

In general, adoption of appendix S of 40 CFR part 51 into the

State's regulations serves to impose the requirements identified in

section 173. Part IV. A. of appendix S provides multiple conditions for

granting a permit, including a requirement for lowest achievable

emission rates (requirement 2 above), a requirement for compliance of

commonly owned sources (requirement 3 above), and a requirement for

offsets (requirement 1 above). Although appendix S contains no

provision prohibiting permits in ``failure to implement'' areas, USEPA

has adequate authority under section 113(a)(5) to take any necessary

action to address permits that violate this prohibition.

Nevertheless, the adoption of appendix S by reference as a State

rule fails to satisfy permitting requirements under subpart I of 40 CFR

part 51. In particular, appendix S exempts certain source types and is

insufficiently clear on some issues. A letter from USEPA dated May 17,

1991, recommended the following modifications:

1. The requirement for LAER must apply to all new sources or

modifications meeting the applicability requirements of 40 CFR 51.165.

Footnotes 4 and 5 must be deleted.

2. Requirements for offsets must be clarified to ensure that

offsets are based on actual emissions as defined in 40 CFR

51.165(a)(3). This clarification must also be made in Part IV, section

C. Footnote number 7 must be deleted.

3. Footnote 8, which provided an exemption from the requirement for

net air quality benefit, must be deleted.

4. Section B of Part IV, which exempts certain source types, must

be deleted.

5. Section C, paragraph 5, which allows ``banking'' of emissions

offset credits, must either be deleted or supplemented with approvable

banking regulations.

Minnesota has made each of these modifications to its rules. Most

of these modifications were included in the rule revisions submitted

August 5, 1992. In addition, pursuant to communications from USEPA

subsequent to the May 1991 letter, the State made further

modifications, including deletion of the general provisions for

banking.

Relationship to Subsequent Rule Revisions

At present, the rules in the Minnesota SIP governing permit

processing are the Consolidated Permit Rules adopted by the State on

July 24, 1984, and approved by USEPA on May 13, 1988 (53 FR 17033). The

subject of today's rulemaking is a supplemental rule known as the

``Offset Rule,'' which establishes the substantive requirements for new

sources in nonattainment areas. Minnesota then adopted significant

revisions to its regulations on permit processing on August 24, 1993,

which it submitted for SIP rulemaking on November 23, 1993. The primary

purposes of these regulations were to satisfy requirements in Title V

of the Clean Air Act for a State operating permit program and to amend

the new source permitting regulations to provide an integrated set of

permitting regulations. In developing these regulations, the State

incorporated language intended to address various concerns USEPA had

identified with respect to the prior permitting rules.

Today's rulemaking does not address the approvability of the

submittal of November 23, 1993. Nevertheless, this latter submittal is

germane to this rulemaking, insofar as these more recent revisions

assure that certain potential problems which could have arisen under

the prior general permitting rules will not arise. It should be noted

that the November 1993 submittal does not amend the rules under

consideration in this action, i.e. the ``Offset Rule'' submitted by the

State in August 1992 and amended in August 1993, but instead revises

the general provisions in the Consolidated Permit Rules concerning

permit processing. The following paragraphs identify the issues that

were of concern and how the November 1993 submittal affects these

issues.

The first issue was provision in the prior general permitting

regulations for expiration of permits, and a concern that expiration of

a permit could cause the construction permit conditions to expire. The

State's general permitting regulations now define ``Title I

conditions'' to include conditions established to satisfy new source

review requirements, and state that ``[a]ny Title I condition shall

remain in effect without regard to permit expiration or reissuance, and

shall be restated in the reissued permit.'' Therefore, USEPA believes

that requirements imposed on sources during new source review clearly

do not expire as a result of permit expiration.

The second issue of concern was the authority granted in State law

for the State agency to grant variances, including variances from

Federal requirements. However, the revised general permitting

regulations state that: (1) The State agency ``shall not issue

variances from any Federal requirement to obtain an air quality permit,

unless explicitly authorized to do so in writing by [USEPA],'' and (2)

the State agency ``shall issue a permit * * * only if [various

conditions have been met including that] the permit does not reflect a

variance from any federally enforceable applicable requirement * * *.''

For purposes of this action, these provisions render the second issue

moot, insofar as the State agency no longer has the ability to grant

variances from Federal requirements. Nevertheless, it is appropriate to

state that USEPA believes that the statutory provision for variances is

not being approved and that issuance of a variance from Federal

requirements would be contrary to both State and Federal regulations

and would have no bearing on enforcement of the applicable requirement.

The third issue of concern was that public notice for new source

review permits was provided for only in a Memorandum of Understanding

(MOU) containing several outdated references. The revised general

permitting regulations provide public notification procedures and a 30

day public comment period. Minnesota has clearly committed itself both

in the MOU and its regulations to continuing to provide for proper

opportunity for public input into permitting decisions in accordance

with USEPA requirements.

For all three of these issues, Minnesota has made clear through its

revised general permitting regulations that the SIP as revised by the

rule under consideration in this action would satisfy Federal

requirements. Therefore, USEPA believes that the three issues discussed

above are no longer impediments to today's proposed conclusion that

Minnesota has satisfied nonattainment area permitting requirements.

The fourth issue of concern was whether Minnesota had satisfied the

requirement of 40 CFR 51.160(a) to assure that new sources do not

interfere with attainment or maintenance of the air quality standards.

The general permitting regulations in Minnesota's SIP require permits

for facilities with emissions above 25 tons per year of any criteria

pollutant except lead, or with more than \1/2\ ton of lead emissions

per year. (At such a facility, any modification would require a

permit.) The recently submitted permitting rules raise some of these

size cutoffs. In support of the raised cutoffs, the State's recent

submittal includes a modeling analysis to show that the revised size

cutoffs do not interfere with attainment or maintenance. A preliminary

review indicates that this analysis adequately supports the size

cutoffs in the current SIP. Consequently, USEPA believes that the

general permitting rules in the SIP as supplemented by the Offset Rule

satisfy 40 CFR 51.160(a). Nevertheless, USEPA is reserving judgment on

the acceptability of the recently raised size cutoffs, which will be

addressed in the context of rulemaking on the more recent submittal.

The fifth issue of concern pertained to a provision in the State's

Rule 7001.0150 authorizing the State not to enforce ``local laws, rules

and plans.'' Although this provision clearly applies to local laws and

not Federal laws, this provision is arguably ambiguous as to whether

the State is authorized not to enforce Federal as well as local rules

and plans. The recent rule revisions did not modify this provision.

Nevertheless, the State's intent is presumably that the regulations

only authorize nonenforcement of relevant local laws, local rules, and

local plans. USEPA is expressly not proposing approval of any provision

for State nonenforcement of Federal rules or Federal plans. USEPA

solicits public comment on this element of the proposed approval.

USEPA has reviewed whether the new requirements in the Clean Air

Act Amendments of 1990 have been satisfied. These new requirements

include an analysis of alternatives, and a requirement for submitting

information to the RACT/BACT/LAER Clearinghouse. The Amendments also

introduce numerous new requirements that are not currently relevant to

Minnesota, in part because the State has no ozone nonattainment areas.

The TSD provides a more detailed discussion of the new requirements and

how these requirements are addressed in Minnesota. The conclusion of

this review is that Minnesota has satisfactorily addressed these

requirements as they currently apply in the State.

USEPA is currently developing a rule to implement the changes under

the Clean Air Act Amendments of 1990 in the new source review

provisions in Parts C and D of Title I of the Act. The Agency

anticipates that the proposed rule will be published for public comment

in the spring or summer of 1994. If USEPA has not taken final action on

Minnesota's new source review submittal by that time, USEPA may

generally refer to the proposed rule as guidance regarding the

approvability of the submittal. USEPA expects to take final action to

promulgate a rule to implement the Parts C and D changes sometime

during 1994 or 1995. Upon promulgation of those regulations, USEPA will

review new source review SIPs to determine whether additional SIP

revisions are necessary to satisfy the requirements of the rule.

Section 189(e) states that ``control requirements applicable * * *

for major stationary sources of PM10 shall also apply to major

stationary sources of PM10 precursors, except where the

Administrator determines that such sources do not contribute

significantly to PM10 levels which exceed the standard in the

area.'' On June 25, 1993 (at 58 FR 34397), USEPA proposed such a

determination of the insignificance of particulate matter precursors in

Minnesota. If that proposed action is finalized, section 189(e) would

no longer require new source review of major particulate matter

precursor sources.

II. Proposed Rulemaking Action

USEPA believes that the regulations submitted by Minnesota on

August 5, 1992, and August 26, 1993, satisfy the requirements under

Part D for a new source permitting program in nonattainment areas.

Therefore, USEPA proposes to approve this SIP revision.

Under the rules in the SIP, permits for nonattainment area sources

that satisfy the substantive requirements of the Offset Rule (Rules

7005.3010 through 7005.3060) would be processed in accordance with

permit processing provisions in the Consolidated Permit Rules (Rules

7001.0010 through 7001.0210 and Rules 7001.1200 through 7001.1220).

Rulemaking of May 13, 1988 (53 FR 17033) approved the Consolidated

Permit Rule as satisfying attainment area permitting requirements but

noted that nonattainment area permitting requirements were not met.

Today's action proposes to lift the current ban on construction of

major new sources and major modifications in Minnesota nonattainment

areas, and would impose Minnesota's Consolidated Permit Rule and Offset

Rule as Federally enforceable requirements for such new sources and

modifications. Subsequent rulemaking will address the approvability of

more recent revisions to State permitting regulations.

The rules submitted by Minnesota were intended to address

nonattainment area new source review requirements and did not address

visibility-related permitting requirements specified in 40 CFR 51.307.

Therefore, USEPA is retaining the provisions of 40 CFR 52.1236, which

note the absence of approvable State regulations for visibility

protection and impose the Federally promulgated regulations of 40 CFR

52.26 and 52.28.

Public comment is solicited on all elements of USEPA's proposed

rulemaking action. Written comments received by [Insert date 30 days

from date of publication] will be considered in the development of

USEPA's final rulemaking action.

Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., USEPA

must prepare a regulatory flexibility analysis assessing the impact of

any proposed or final rule on small entities. (5 U.S.C. 603 and 604.)

Alternatively, USEPA may certify that the rule will not have a

significant impact on a substantial number of small entities. Small

entities include small businesses, small not-for-profit enterprises,

and government entities with jurisdiction over populations of less than

50,000.

SIP approvals under section 110 and subchapter I, part D of the Act

do not create any new requirements, but simply approve requirements

that the State is already imposing. Therefore, because the federal SIP

approval does not impose any new requirements, I certify that it does

not have a significant impact on any small entities affected. Moreover,

due to the nature of the Federal-State relationship under the Act,

preparation of a regulatory flexibility analysis would constitute

federal inquiry into the economic reasonableness of state action. The

Act forbids USEPA to base its actions concerning SIPs on such grounds.

Union Electric Co. v. USEPA, 427 U.S. 246, 256-66 (S.Ct. 1976); 42

U.S.C. 7410(a)(2).

The Office of Management and Budget has exempted this rule from the

requirements of section 6 of Executive Order 12866.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Carbon monoxide,

Incorporation by reference, Intergovernmental relations, Lead,

Particulate matter, Reporting and recordkeeping requirements, Sulfur

oxides.

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

Dated: January 19, 1994.

David Kee,

Acting Regional Administrator.

[FR Doc. 94-4053 Filed 2-22-94; 8:45 am]

BILLING CODE 6560-50-P