Federal Operating Permits Program

SUMMARY: The EPA is proposing a new subpart containing regulations

setting forth the procedures and terms under which the Administrator

will administer programs for issuing operating permits to covered

stationary sources, pursuant to title V of the Clean Air Act as amended

in 1990 (the Act). Although the primary responsibility for issuing

operating permits to such sources rests with State, local, and Tribal

air agencies, EPA will remedy gaps in air quality protection by

administering a Federal operating permits program in areas lacking an

EPA-approved or adequately administered operating permits program.

Federally issued permits will clarify which requirements apply to

sources and will enhance understanding of and compliance with air

quality regulations.

DATES: Comments. Comments on the proposed regulations must be received

by EPA's Air Docket on or before June 26, 1995.

Public Hearing. A public hearing is scheduled for 10:00 a.m., on

May 30, 1995, at the address listed below. Requests to present oral

testimony must be received by May 12, 1995, and the hearing may be

canceled if no speakers have requested time to present their comments

by that date. Written comments in lieu of, or in addition to, testimony

are encouraged.

ADDRESSES: Comments should be mailed (in duplicate if possible) to: EPA

Air Docket (Mail Code 6102), Attn: Docket No. A-93-51, Room M-1500,

Waterside Mall, 401 M Street SW, Washington, DC 20460. The public

hearing will be held in the Waterside Mall auditorium at the U.S.

Environmental Protection Agency, 401 M Street SW, Washington, DC 20460.

Docket. Supporting information used in developing the proposed

rules is contained in Docket No. A-93-51. Supporting information used

in developing 40 CFR part 70 is contained in Dockets No. A-90-33 and

No. A-93-50. These dockets are available for public inspection and

copying between 8:30 a.m. and 3:30 p.m. Monday through Friday, at EPA's

Air Docket, Room M-1500, Waterside Mall, 401 M Street SW, Washington,

DC 20460. A reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: Candace Carraway (telephone 919/541-

3189) or Kirt Cox (telephone 919/541-5399), U.S. Environmental

Protection Agency, Office of Air Quality Planning and Standards,

Information Transfer and Program Integration Division, Mail Drop 12,

Research Triangle Park, North Carolina 27711. Persons interested in

attending the hearing or wishing to present oral testimony should

contact Ms. Susan Curtis in writing at the U.S. Environmental

Protection Agency, Office of Air Quality Planning and Standards,

Information Transfer and Program Integration Division, Mail Drop 12,

Research Triangle Park, North Carolina 27711.

SUPPLEMENTARY INFORMATION:

Comments

The EPA is unlikely to be able to extend the public comment period.

Two paper copies of each set of comments are requested. If possible,

comments should be sent in both paper and computerized form. Comments

generated on computer should be sent on an IBM-compatible diskette and

clearly labeled. Computer files created with the WordPerfect 5.1

software package should be sent as is. Files created on other software

packages should be saved in an ``unformatted'' mode for easy retrieval

into WordPerfect. Comments should refer to specific page numbers of

today's proposal whenever possible.

Outline

The contents of today's preamble are listed in the following

outline:

I. Background and Purpose

II. Proposal Summary

III. Detailed Discussion of Key Aspects of the Proposed Regulations

A. Section 71.2--Definitions

B. Section 71.3--Sources Subject to Permitting Requirements

C. Section 71.4--Program Implementation

D. Section 71.5--Permit Applications

E. Section 71.6--Permit Content

F. Section 71.7--Permit Review, Issuance, Renewal, Reopenings,

and Revisions

G. Section 71.8--Affected State Review

H. Section 71.9--Permit Fees

I. Section 71.10--Delegation of Part 71 Program

J. Section 71.11--Administrative Record, Public Participation,

and Administrative Review

K. Section 71.12--Prohibited Acts

IV. Administrative Requirements

A. Reference Documents

B. Office of Management and Budget (OMB) Review

C. Regulatory Flexibility Act Compliance

D. Paperwork Reduction Act

I. Background and Purpose

Title V of the Act as amended in 1990 (42 U.S.C. 7661 et seq.)

imposes on States the duty to develop, administer, and enforce

operating permits programs that comply with the requirements of title V

(section 502(d)(1)). The EPA has 1 year to approve or disapprove a

submitted program (section 502(d)(1)). Once EPA has approved a State

program, the covered sources within that program's scope have 1 year to

submit permit applications to the permitting authority (section 503(c))

unless the permitting authority establishes an earlier date. Within the

first 3 years of the program, the permitting authority must act on all

applications submitted in the first year of the program (section

503(c)), and EPA must have an opportunity to object to the proposed

permit if it does not comply with the Act's requirements (section

505(b)). Once the permitting authority issues a source its permit, the

source may not violate any requirement of its permit or operate except

in compliance with it (section 502(a)).

Title V also requires that EPA stand ready to issue Federal

operating permits when States default in their duty to develop and

administer part 70 programs. Section 502(b) of the Act requires that

EPA promulgate regulations setting forth provisions under which States

will develop operating permits programs and submit them to EPA for

approval. Pursuant to this section, EPA promulgated 40 CFR part 70 on

July 21, 1992 (57 FR 32250), which specifies the minimum elements of

State operating permits programs.

The operating permits program's potential consequences for air

pollution control and for sources' ability to meet changing market

demands have made the process of developing and implementing the

program complex and controversial. Indeed, nearly 20 entities,

including State and local governments, environmental groups, and

industry associations, petitioned for judicial review of the part 70

regulations. Subsequently, EPA decided to propose revisions to part 70.

See 59 FR 44460 (Aug. 29, 1994). In light of ongoing discussions with

petitioners, EPA may propose additional revisions to part 70 in the

future that may also necessitate supplementing the part 71 provisions

proposed today.

The EPA intends that proposed part 71 generally follow the approach

taken in 40 CFR part 70, including the [[Page 20805]] recently proposed

revisions to part 70. Differences between part 70 and part 71 are noted

in the discussion of each section of the proposed rule. Where possible

and appropriate, provisions of part 71 are consistent with part 70.

Some of the differences between the provisions of part 71 and part 70

reflect the fact that part 71 programs are expected to be of limited

duration. The EPA expects that States (and many Tribes) will revise

their programs so that they become approvable, and responsibility for

the permits program will be transferred back to the State or Tribe.

The Agency is aware that many parties have already submitted

comments expressing both their concerns about and their support for the

proposed revisions and that these parties are interested in the final

Agency decisions on many of the issues raised in the part 70

rulemaking. This proposal for part 71 is not intended in any way to

prejudge the Agency's decisions in the part 70 rulemaking, but rather

simply parallels the proposed part 70 revisions in order to be

consistent with that proposal.

The primary purpose of the proposed rule is to provide the

mechanism by which EPA can assume responsibility to issue permits in

situations where the State, local, or Tribal agency has not developed,

administered, or enforced an acceptable permits program or has not

issued permits that comply with the applicable requirements of the Act.

Secondarily, the proposed rule provides for delegation of certain

duties that may provide for a smoother program transition when State

programs are approved. For both of these reasons, the proposed rule

should strengthen implementation of the Act and enhance air quality

planning and control.

Additional benefits of the proposed rule are much the same as those

of the part 70 State operating permits rule. For example, permits

issued under part 71 will clarify which requirements apply to a source.

This clarification should enhance compliance with the requirements of

the Act. The part 71 program will enable the sources, EPA, and the

public to better understand the requirements to which the source is

subject and whether the source is meeting those requirements. Part 71

permits also provide the vehicle for implementing air toxics programs

under section 112.

The comment period for the proposed revisions to part 70 will end

prior to the comment period for today's rulemaking proposal. It would

therefore be of limited value for commenters to suggest in response to

today's rulemaking proposal their concerns with those aspects of the

part 70 proposed revisions on which proposed part 71 is based. Rather,

EPA solicits comments on whether there are any provisions in proposed

part 71 for which EPA has inappropriately proposed consistency with

part 70 or its proposed revisions or has inappropriately departed from

part 70 or its proposed revisions.

The rationale for today's proposal and many of the issues addressed

in this proposal are discussed in greater detail in a document entitled

``Supplementary Information for Proposed Federal Operating Permits

Rule'' (Supplementary Information Document) which is contained in the

docket for this proposal (Docket No. A-93-51).

This preamble makes frequent use of the term ``State,'' usually

meaning the State air pollution control agency that would be the

permitting authority for a part 70 permit program. The reader should

assume that use of ``State'' may also include reference to a local air

pollution agency. In some cases, the term ``permitting authority'' is

used and can refer to State, local, and Tribal agencies. The term may

also apply to EPA, where the Agency is the permitting authority of

record.

II. Proposal Summary

Sections 502(d)(3) and 502(i)(4) of the Act require EPA to

promulgate a Federal operating permits program when a State has

defaulted on its obligation to submit an approvable program within the

timeframe set by title V or on its obligation to adequately administer

and enforce an approved program. The rule proposed in this action would

establish a national template for a Federal operating permits program

that EPA may administer and enforce in a State. In addition, the

proposed rule would establish the procedures for issuing Federal

permits to sources for which States do not have jurisdiction (i.e., OCS

sources outside of State jurisdictions and sources located in Tribal

areas). Finally, the proposed rule would establish the procedures used

when EPA must take action on a permit that has been proposed or issued

by a State or local agency or Indian Tribe having an approved part 70

program and that EPA determines is not in compliance with the

applicable requirements of the Act.

Like part 70, part 71 requires: (1) The use of a standard permit

application form; (2) that sources subject to permitting requirements

pay permit fees that assure adequate program resources and funding; and

(3) permit issuance, appeal, and renewal procedures that ensure that

each regulated source can obtain a permit that will assure compliance

with all of its applicable requirements under the Act. Part 71 sources

must obtain an operating permit addressing all applicable pollution

control obligations under the State implementation plan (SIP), Federal

implementation plan (FIP), or Tribal implementation plan (TIP); the

acid rain program; the air toxics program under section 112; and other

applicable provisions of the Act. Sources must also submit periodic

reports to EPA concerning the extent of their compliance with permit

obligations.

When EPA implements a part 71 program, it will cover only the

geographic area that is not covered by an approved State, local, or

Tribal program. For example, if a local agency within a State has an

approved program but the entire State is not covered by an approved

program, EPA's implementation of a part 71 program for the State would

not affect the area subject to the approved local program.

In appropriate circumstances, EPA may delegate to a State, local,

or Tribal permitting authority some or all of its authority to

administer a part 71 program. The responsibilities of EPA and the

delegate agency will be set forth in a Delegation of Authority

Agreement.

The EPA will generally cease implementation of a part 71 program

subsequent to approval of a State operating permits program.

III. Detailed Discussion of Key Aspects of the Proposed Regulations

A. Section 71.2--Definitions

Generally, the proposed definitions in part 71 would follow the

definitions in currently promulgated part 70 and its proposed

revisions, as appropriate. However, some of the definitions used in 40

CFR part 70 would be modified for use in this part. The key part 71

definitions (including some which would be defined differently than in

part 70) are discussed in this section. Others are discussed in the

preamble sections describing the program areas where they are primarily

used. Still others are defined in other titles of the Act and the

regulations promulgated thereunder.

1. Affected State

The definition of ``affected State'' for purposes of proposed

Sec. 71.8 would include lands within the exterior boundaries of an

Indian reservation or other areas over which an Indian Tribe has

jurisdiction (hereafter ``Tribal area''). If EPA administers a part 71

program for such an area, EPA would consider the Indian Tribe to be an

[[Page 20806]] affected State and would provide the Tribe notice of

draft permits, permit renewals, permit reopenings, and permit

revisions. Such notice would also be provided when a part 71 program is

implemented outside of a Tribal area and an applicant source is within

50 miles of the Tribal area, or is in an area that is contiguous to the

Tribal area and may affect the air quality in that area, provided the

Indian Tribe meets the eligibility criteria for being treated in the

same manner as a State for programs under the Act. See 59 FR 43956

(Aug. 25, 1994).

The definition of ``affected State'' for purposes of proposed

Sec. 71.8 would also include the State or Tribal area and the area

within the jurisdiction of the air pollution control agency in which

the part 71 permit, permit revision, or permit renewal is being

proposed. EPA believes this provision is necessary for part 71, while

not for part 70. In some cases under a part 71 program, the title V

permitting authority (EPA) would not be the same as the governmental

body with general jurisdiction over the area (i.e., the State, Tribe,

or local air pollution control agency). When EPA is the permitting

authority, EPA believes it is necessary to notify the States, Tribal

authorities, and local agencies with jurisdiction over the areas in

which EPA's action is proposed. Otherwise, these authorities would be

less apprised of EPA's actions than the neighboring areas that do not

have jurisdiction over these areas and are less likely to be impacted

by EPA's actions. The EPA solicits comment on this expansion of the

term ``affected State,'' and on whether other mechanisms might

adequately serve to apprise ``host'' jurisdictions of EPA part 71

actions.

2. Applicable Requirements

An ``applicable requirement'' is any standard or other requirement

that applies to a source. This includes any relevant requirement in an

approved SIP or preconstruction permit. It also includes any pertinent

standard or other requirement imposed pursuant to any title of the Act,

such as sections 111, 112, 114(a)(3), 129, 183(e), 183(f), 328, 504(b),

504(e), 608, or 609. However, EPA does not believe that the provisions

of sections 604 through 606 and 610 through 612 of title VI of the Act

must be considered as applicable requirements for title V and included

in title V permits. The rationale for this determination can be found

in the preamble to the proposed revision of the part 70 regulations, at

IV.A.1(b). See 59 FR 44460 (Aug. 29, 1994).

For purposes of part 71, EPA today incorporates that rationale by

reference. The EPA also incorporates by reference that notice's

rationale for adding to the list of applicable requirements any

requirements that create offsets or limit emissions for the purpose of

complying with, or avoiding applicable requirements. The proposed

addition to the part 70 list and today's proposal for part 71 would add

as an applicable requirement any emissions-limiting requirement that is

enforceable by citizens or EPA under the Act and that is placed on a

source for purposes of creating an offset credit or avoiding the

applicability of applicable requirements.

3. Tribal Areas

The EPA has published a proposed rule, pursuant to section

301(d)(2), specifying the provisions of the Act for which EPA believes

it is appropriate to treat Indian Tribes in the same manner as States.

See 59 FR 43956 (Aug. 25, 1994) (``Indian Tribes: Air Quality Planning

and Management,'' hereafter ``proposed Tribal rule''). The proposed

Tribal rule also addresses the criteria a Tribe must meet in order to

be eligible for treatment in the same manner as a State for the

specified provisions of the Act.

For a Tribe to be eligible for treatment in the same manner as a

State, it must be Federally recognized (section 302(r)) and must meet

the three criteria set forth in section 301(d)(2)(A)-(C). Briefly,

these criteria consist of the following: (1) The Tribe must have a

governing body carrying out substantial governmental duties and powers;

(2) the functions to be exercised by the Tribe must pertain to the

management and protection of air resources within the exterior

boundaries of the reservation or other areas within the Tribe's

jurisdiction; and (3) the Tribe must be capable of carrying out the

functions to be exercised consistent with the terms and purposes of the

Act and applicable regulations. These criteria and EPA's streamlined

process for determining compliance with these criteria are described in

detail in the Tribal rule (59 FR 43961-43964).

In the Tribal rule, EPA proposes to interpret the Act as granting,

to Tribes approved by EPA to administer programs under the Act in the

same manner as States, authority over all air resources within the

exterior boundaries of an Indian reservation. This would enable Tribal-

approved programs under the Act to address conduct on all lands,

including non-Indian owned fee lands, within the exterior boundaries of

a reservation. The proposed Tribal rule would also authorize an

eligible Tribe to develop and implement programs under the Act for off-

reservation lands that are determined to be within a Tribe's inherent

sovereign authority to regulate. The rationale for this proposed

interpretation of Tribal jurisdiction under programs under the Act is

set out in detail in the proposed Tribal rule, and is incorporated here

by reference. See 59 FR 43958-43961.

EPA's final interpretation of Tribal jurisdiction under this Act

may affect the scope of a part 71 program administered by EPA for

Tribes. When, pursuant to Federal implementation authority, EPA is

acting in the place of a State or Tribe under the Act, all of the

rights and duties that would otherwise fall to the State or Tribe

accrue instead to EPA. See Central Arizona Water Conservation Dist. v.

EPA, 990 F.2d 1531, 1541 (9th Cir. 1993), cert. denied, 114 S.Ct. 94

(1993). Therefore, the scope of Tribal authority under the Act may

inform EPA's authority in administering a part 71 program for Tribes.

More specifically, EPA would have authority to implement a Tribal

part 71 program for any lands within the exterior boundaries of a

reservation and any off-reservation land over which a Tribe has

inherent sovereign authority. Tribes determined eligible to be treated

in the same manner as a State under the Act would be given notice under

proposed Secs. 71.8 and 71.10 of certain permit actions. All land

within the exterior boundaries of a reservation and any other lands

over which a Tribe has demonstrated inherent authority would be

considered in providing notice to a Tribe. Further, the proposed part

71 rules provide that, in all instances, the Tribe for the area in

which a part 71 permit program is being administered will receive

notice.

The EPA's proposed Tribal rule is subject to public comment and may

be modified before it is issued in final form. The EPA may need to make

conforming changes to the part 71 rules proposed today to reflect any

relevant revisions made to the Tribal rule.

4. Major Source

The EPA is proposing to utilize the same approaches to defining

``major source'' as were used for 40 CFR parts 63 and 70, except that

today's proposal, like the recently proposed revisions to part 70,

would change the definition of major source to conform to the

definition in section 112(a) of the Act and to implementing regulations

governing hazardous air pollutants (HAP) sources recently promulgated

in 40 CFR part 63. Section 501(2) of the Act provides, in relevant

part, that the term ``major source'' means ``any stationary source (or

any group of stationary sources located within a

[[Page 20807]] contiguous area and under common control)'' that would

be a major source under section 112 or a major stationary source under

section 302 or part D of title I of the Act. Other conditions and

requirements relevant to the major source definition are:

a. Section 302 and Part D Sources. Except for sources qualifying as

support facilities (see paragraph (c) of this section), stationary

sources can only be aggregated to determine whether they constitute a

major stationary source subject to section 302 or part D of the Act if

they are in the same industrial grouping, as determined by their 2-

digit code. These codes can be found in the Standard Industrial

Classification Manual, 1987.

b. Section 112 Sources. Stationary sources of HAP must be

aggregated for the purpose of determining whether they are major

sources subject to section 112 without regard to their industrial

grouping.

c. Support Facilities. The EPA proposes to include in the

definition of a major source pursuant to section 302 or part D of title

I of the Act, any facility or emission unit used to support the main

activity of the source, regardless of its 2-digit code. A support

facility must be located on the same property as the source it

supports, or on adjacent property, and be under the control of the same

entity. Also, at least 50 percent of the support facility's output must

be dedicated to the source.

d. Emission Requirements. To be major, a stationary source must

have the potential to emit pollutants in amounts at or above the major

source threshold, which is determined by the type of pollutant emitted

and by the attainment status of the area in which the source is

located. Thus, the term ``major source'' encompasses the following:

(1) Air toxics sources with the potential to emit 10 tons per year

(tpy) or more of any HAP listed pursuant to section 112(b); 25 tpy or

more of any combination of HAP listed pursuant to section 112(b); or a

lesser quantity of a given pollutant, if the Administrator so

specifies. And, once the Administrator promulgates a definition of

major source for radionuclides, a source would be major if it emits, or

has the potential to emit, major amounts of radionuclides.

(2) Sources of air pollutants, as defined in section 302 of the Act

with the potential to emit 100 tpy or more of any pollutant.

(3) Except as noted in paragraph (d)(4) of this section, sources

subject to the nonattainment area provisions of title I, part D, with

the potential to emit pollutants in the following, or greater, amounts:

(a) 50 tpy VOC or NOX in serious ozone nonattainment areas;

(b) 25 tpy VOC or NOX in severe ozone nonattainment areas;

(c) 10 tpy VOC or NOX in extreme ozone nonattainment areas;

(d) 50 tpy VOC in ozone transport regions established pursuant to

section 189 of the Act;

(e) 50 tpy carbon monoxide (CO) in serious CO nonattainment areas;

and

(f) 70 tpy particulate matter (PM-10) in serious particulate matter

nonattainment areas.

(4) The NOX thresholds in paragraph (d)(3) of this section do

not apply in nonattainment areas qualifying for an exemption under

section 182(f) of the Act. This exemption applies in the case where

reducing NOX emissions would not reduce ozone formation. In those

areas, a stationary source of NOX is not considered a major source

under part D of title I of the Act unless its potential to emit is 100

tpy or more. In areas not qualifying for this exemption, NOX

sources are subject to the lower thresholds defined in part D and

listed in paragraph (d)(3) of this section. Whatever its location, any

100 tpy source would be considered a major source under section 302 of

the Act. Also, the major source threshold for VOC in ozone transport

regions in paragraph (d)(3) of this section does not apply for

NOX. This threshold was created by section 184(b) of the Act.

Because section 182(f) of the Act (which requires NOX sources to

meet the same thresholds as VOC sources) does not refer to section

184(b) of the Act, the lower threshold for VOC sources in ozone

transport regions does not apply to NOX sources.

e. Fugitive Emissions. The fugitive emissions from a stationary

source shall be considered in making the determination as to whether it

is a major source when:

(1) The source belongs to one of the source categories listed in

the definition of ``major stationary source'' at 40 CFR parts 51 and 52

which includes source categories regulated by a section 111 or section

112 standard as of August 7, 1980. Thus, proposed part 71 would follow

the proposed revisions to part 70 in that sources in categories subject

to standards set after August 7, 1980, if not otherwise listed, would

be exempted from the requirement to include fugitive emissions when

making their major source determination until such time as EPA conducts

section 302(j) rulemaking to require that fugitive emissions from those

sources be included.

(2) The air pollutants emitted are HAP or radionuclides. The EPA

believes the Act requires that fugitive emissions of HAP or

radionuclides, to the extent quantifiable, be counted. Section

112(a)(1) of the Act uses the term ``major source,'' rather than

``major stationary source,'' and legislative history indicates an

intent by Congress to treat this definition differently than the

section 302(j) ``major stationary source'' definition. Moreover,

section 112 of the Act establishes a new program with a relatively

narrow focus; it applies only for specific HAP at source categories to

be determined by EPA. All this suggests that the section 302(j)

rulemaking requirement does not apply in the context of section 112,

and that fugitive emissions must therefore be included for the purpose

of determining whether a source is major under section 112(a)(1).

4. New Source Review

The definitions for major and minor NSR have been included so they

can be used to describe the proposed permit revision procedures. In

some cases, the action to revise a permit will depend on whether the

change was subjected to major or minor NSR before being processed as a

part 71 revision.

5. Potential To Emit

In the proposed definition of ``potential to emit,'' limitations on

a source's potential to emit would be federally enforceable only if

they are enforceable by the Administrator and citizens under the Act.

This differs from the definition currently in part 70 of this chapter,

in that the part 70 definition only requires that the limitations be

enforceable by the Administrator. This proposal would follow the

definition in the proposed revisions to part 70. See 59 FR 44460 (Aug.

29, 1994).

6. Responsible Official

The proposed definition of ``responsible official'' would follow

the definition in the recently proposed revisions to part 70.

7. Title I Modification

The proposed rule would adopt the definition of ``title I

modification'' or ``modification under any provision of title I of the

Act'' that is used in part 70. The proposed definition parallels a

proposed revision to the regulations at part 70 of this chapter, on

which EPA solicited comment, and the rationale for the definition in

the preamble to the proposed revision to part 70 is incorporated herein

by reference. See 59 CFR 44460 (Aug. 29, 1994). [[Page 20808]]

B. Section 71.3--Sources Subject to Permitting Requirements

Section 502(a) of the Act subjects all affected sources (as

provided in title IV), major sources, sources (including area sources)

subject to standards or regulations under sections 111 or 112, sources

required to have permits under parts C or D of title I, and any other

source in a category designated by EPA, to the permitting requirements

of title V. Section 502(a) also provides the Administrator the

discretion to exempt one or more source categories (in whole or in

part) from the requirement to obtain a permit ``if the Administrator

finds that compliance with such requirements is impracticable,

infeasible or unnecessarily burdensome on such categories.'' The Act

specifies that major sources may not be exempted from these

requirements. This requirement applies both to sources that are major

for criteria pollutants and those that are major emitters of the HAP

listed at section 112(b). However, section 112(r)(7)(F) of the Act also

provides that sources that are subject solely to regulations or

requirements under section 112(r) of the Act are not required to obtain

a permit under this part.

1. Temporary Exemptions for Nonmajor Sources

Section 70.3(b)(1) of this chapter deferred the applicability of

part 70 to nonmajor sources (except for affected sources and solid

waste incineration sources) that would otherwise be subject because

they are in a source category that is subject to part 70, such as one

regulated by a section 111 or 112 standard. In the final part 70 rule,

EPA stated its intent to propose rulemaking to resolve the exception

status of these nonmajor sources within 5 years following the first

full or partial approval of a State program with a deferral.

The EPA proposes to follow the same approach to deferrals for

purposes of part 71.

2. Permanently Exempted Source Categories

The EPA proposes to exempt permanently two source categories from

the requirement to obtain a part 71 permit:

(1) All sources that would be required to obtain a permit solely

because they are subject to regulation under the demolition and

renovation provisions of the NESHAP for asbestos (40 CFR 61.145); and

(2) All sources that would be required to obtain a permit solely

because they are subject to regulation under the NSPS for residential

wood heaters (40 CFR 60.530).

These source categories were exempted from permitting requirements

under part 70 because the Administrator determined that permitting such

sources would be impracticable, infeasible, and unnecessarily

burdensome. This exemption is proposed to be continued for part 71. A

more detailed rationale for this exemption is provided in the preamble

to the part 70 regulations at 57 FR 32263-32264 (July 21, 1992), which

EPA today incorporates by reference for purposes of part 71.

3. Major Section 112 (HAP) Sources

Like the proposed revisions to part 70 of this chapter, today's

proposal would ensure that the definition of major source in this part

matches the definition in section 112(a) of the Act and in the

regulations governing HAP sources recently promulgated in 40 CFR part

63. Under 40 CFR Part 63, EPA definition of a major source of HAP is

more inclusive than the definition originally promulgated in part 70.

Unlike part 70, the part 63 definition of major source does not

reference standard industrial classification (SIC) codes. As defined in

part 63, an entire contiguous or adjacent plant site is considered a

single source, rather than being subdivided according to industrial

classification. See 59 FR 12412 (March 16, 1994). This definition does

not limit the sources (or emission units) that can be included in a

stationary source to those having the same 2-digit code. One result of

this more inclusive definition is that there will likely be some HAP

sources that are major under part 63 but are not major under part 70,

as originally promulgated. The EPA believes it is necessary to expand

the major source definition in part 70 and part 71 to include all

sources that are major for part 63. Otherwise, those sources subject to

a section 112 standard or other requirement will not have to apply for

and obtain a part 71 permit until required to do so by a specific

section 112 standard. Today's proposal, and the proposed revisions to

part 70 of this chapter, reflect the more inclusive part 63 definition

and ensure that HAP sources are treated consistently under rules

promulgated pursuant to section 112 and title V of the Act.

4. Section 112(r) Pollutants

Section 70.3(a)(3) of this chapter, as originally promulgated,

requires any source subject to a standard or other requirement under

section 112 of the Act to obtain a part 70 permit unless it would be

subject to part 70 solely because it is subject to regulations or

requirements under section 112(r). Section 112(r)(3) requires EPA to

promulgate a list of regulated substances and thresholds for the

prevention of accidental releases. Section 112(r)(4) establishes

criteria for the development of a list of regulated substances,

focusing on acute effects that result in serious off-site consequences,

rather than chronic effects. As a result, many of the substances listed

in Sec. 68.130 of this chapter pursuant to section 112(r)(3) (59 FR

4478 (January 31, 1994)) are not regulated elsewhere under the Act.

Questions have been raised as to whether Sec. 70.3(a)(1) of this

chapter, which provides that ``any major source'' is subject to the

permit rule, requires that sources that have major source levels of

section 112(r) pollutants must be permitted. Setting aside the issues

of whether and how major source status is to be determined for section

112(r) purposes, section 112(r)(7)(F) exempts from title V permitting

requirements any source that would be subject to title V only as result

of being subject to section 112(r) requirements. That section provides

that ``(n)otwithstanding the provisions of title V or this section, no

stationary source shall be required to apply for, or operate pursuant

to, a permit issued under such title solely because such source is

subject to regulations or requirements under this subsection.'' Thus,

it is clear that even if a source could be considered a ``major

source'' for section 112(r) purposes, it would not be subject to title

V permitting on that basis alone. The EPA's proposed revisions to 40

CFR part 70 would revise Sec. 70.3(a) of this chapter to clarify this

point. Similarly, proposed Sec. 71.3(a) reflects this approach.

C. Section 71.4--Program Implementation

Proposed section 71.4(a) describes the circumstances in which EPA

would establish a full or partial Federal operating permits program for

a State, excluding Tribal areas. Section 502(d)(3) of the Act requires

EPA to promulgate, administer, and enforce a program for a State if an

operating permits program for the State has not been approved in whole

by November 15, 1995. However, the requirement that EPA establish a

Federal program by November 15, 1995 for States lacking a fully

approved program is suspended if a State program is granted interim

approval. The duty to implement a Federal program then reapplies upon

expiration of an interim approval, if the State has not received full

approval by that time.

As provided in proposed Sec. 71.4(a)(3), EPA would have the

authority to [[Page 20809]] establish a partial part 71 program in

limited geographical areas of a State if EPA has approved a part 70

program (or combination of part 70 programs) for the remaining areas of

the State. This should avoid unnecessary disruption of partial programs

that have been approved within a State and avoid intruding into the

State's administration of its air program where only certain

jurisdictions have failed to implement an approvable part 70 program.

The proposed rule also provides for EPA implementation of part 71

programs to ensure coverage of Tribal areas. The proposed Tribal rule

generally describes EPA's authority for implementing programs under the

Act to protect Tribal air quality. 59 FR 43960-43961. That discussion

is incorporated here by reference.

In broad overview, the Act authorizes EPA to protect air quality on

lands over which Indian Tribes have jurisdiction. The overarching

purpose of the Act is ``to protect and enhance the quality of the

Nation's air resources so as to promote the public health and welfare

and the productive capacity of its population.'' section 101(b)(1). The

members of the public residing on lands over which Tribes have

jurisdiction are equally entitled to air quality protection as those

residing elsewhere.

Several provisions of the Act evince Congressional intent to

authorize EPA to directly implement programs under the Act where there

are voids in program coverage (e.g., sections 110(c)(1), 301 (d)(4) and

502 (d)(3), (i)(4)). Federal implementation of Clean Air Act programs

on Indian lands is particularly appropriate where Federal action will

prevent a ``vacuum of authority'' in air quality protection. See

Phillips Petroleum Co. v. EPA, 803 F.2d 545, 555-56 (10 Cir. 1986)

(affirming EPA's authority to directly implement Safe Drinking Water

Act Underground Injection Control program on Indian lands where

concluding otherwise would contradict the meaning and purpose of the

Act by creating ``a vacuum of authority over underground injections on

Indian lands, leaving vast areas of the nation devoid of protection

from groundwater contamination''). Based on the proposed interpretation

of Tribal jurisdiction under the Act in EPA's Tribal rule, discussed

previously, EPA would have authority under today's proposed rules to

implement part 71 programs for all areas within the exterior boundaries

of an Indian reservation and other areas over which an Indian Tribe has

jurisdiction.

If finalized as proposed, the Tribal rule will authorize Tribes to

develop and submit title V operating permit programs to EPA for

approval. The EPA's principal objective would be to assist Tribes in

developing and administering their own title V operating permit

programs, similar to the manner in which EPA has assisted States. The

EPA recognizes that ultimately Tribes are best situated to provide

primary protection of Tribal air resources. To these ends, EPA's

proposed Tribal rule provides the following:

It is EPA's policy to assist Tribes in developing comprehensive

and effective air quality management programs to insure that Tribal

air quality management programs will be implemented to the extent

necessary on Indian reservations. EPA will do this by, among other

things, providing technical advice and assistance to Indian Tribes

on air quality issues. EPA intends to consult with Tribes to

identify their particular needs for air program development

assistance and to provide on-going assistance as necessary.

59 FR 43961.

However, EPA also intends to be prepared to implement title V

programs in the event Tribes do not. To avoid gaps in title V permits

program coverage, the rules proposed today authorize EPA to implement a

title V operating permits program for Tribes that do not develop their

own programs.

The more difficult issue is when EPA should implement title V

programs for Tribes. EPA believes it is reasonable to give Tribes some

opportunity to develop their own title V programs, assuming EPA's final

Tribal rule authorizes them to do so, before EPA directly implements

title V programs.

The part 71 rules propose to authorize EPA to implement the title V

permit program for Tribes if a Tribal program has not been fully

approved by November 15, 1997. Within the first two years of the

program, the permitting authority would be required to take action on

all applications submitted in the first year of the program. Nothing in

today's proposal would prevent EPA from implementing a part 71 program

for a Tribal area subsequent to November 15, 1995 but prior to November

15, 1997. It may be appropriate, particularly where the absence of an

operating permits program would create a gap in coverage, for EPA to

implement part 71 programs in advance of the effective date set by the

rule. The EPA would discuss early implementation with the affected

Tribe before adopting an earlier effective date. In such a case, the

program would become effective when the Administrator provides written

notice to the Tribal chairperson or analogous Tribal leader.

The EPA considered several factors in addressing this issue

including: The opportunity for the development of Tribal programs that

would render Federal implementation unnecessary; the importance of

title V coverage, whether Tribal or Federal, in protecting Tribal air

quality; and, the need to treat the potentially affected regulated

community fairly and to facilitate certainty in business planning. The

EPA solicits comments on whether the EPA's proposed approach to the

effective date of the program is appropriate and whether the two-year

deadline for taking action on permit applications is appropriate and

feasible.

The proposed Tribal rule describes an administrative procedure by

which EPA would resolve jurisdictional issues affecting Tribes. See 59

FR 43962-43963 (Aug. 25, 1994). That discussion is incorporated here by

reference. Generally, EPA expects these issues to involve the precise

boundary of the reservation in question and, less frequently, competing

claims of jurisdiction over land which is outside of the exterior

boundaries of a reservation.

Briefly summarized, the proposed Tribal rule would require EPA to

notify the appropriate governmental entities regarding the Tribe's

assertion of jurisdiction.1 Those entities would have fifteen days

following receipt of EPA's notification to provide formal comments to

EPA regarding any dispute they might have with the Tribe's assertion of

jurisdiction. Where the dispute concerns jurisdiction over off-

reservation lands, appropriate governmental entities may request a one-

time fifteen-day extension to the comment period. In all cases,

comments from appropriate governmental entities would have to be

offered in a timely manner and be limited to the Tribe's jurisdictional

assertion. Where no timely comments are presented, EPA would conclude

there is no objection to the Tribe's assertion. To raise a competing or

conflicting claim, a commenter would be required to clearly explain the

substance, basis, and extent of its objections. Finally, where EPA

receives timely notification of a dispute, it could obtain such

additional information and documentation as it believes appropriate

and, at its option, consult with the Department of the Interior.

\1\For purposes of this rule, EPA is proposing to adopt the same

definition of ``governmental entities'' as the Agency did in its

December 1991 Water Quality Standards regulation. See 56 FR 64876 at

64884 (Dec. 12, 1991).

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For purposes of identifying the Tribal area for which a part 71

program is [[Page 20810]] implemented, EPA proposes to follow the

approach to resolving jurisdictional issues taken in the Tribal air

rule. If the Tribal rule is finalized as proposed, EPA would notify

appropriate governmental entities of the boundary of the Tribal area

for a part 71 program at least 90 days prior to the effective date of

the program. Those entities would then have an opportunity to provide

formal comments prior to the program's effective date, as discussed

above. Where no timely comments are presented, EPA would make a

determination that the boundary for the part 71 program would be as

proposed in the notice. Subsequently, EPA would publish a notice in the

Federal Register which describes the precise boundaries of the part 71

program.

Where EPA identifies a jurisdictional dispute, it may obtain

additional information and documentation and consult with the

Department of the Interior prior to making a determination. The EPA

would subsequently publish a notice in the Federal Register which

describes the precise boundaries of the part 71 program. If the dispute

cannot be resolved promptly, EPA would retain the option of

implementing the part 71 program in the areas that are clearly shown to

be part of the reservation (or are otherwise within the Tribe's

jurisdiction). This will allow EPA to implement a part 71 program that

covers all undisputed areas, while withholding action on the portion

that addresses areas where a jurisdictional issue has not been

satisfactorily resolved.

As proposed in Sec. 71.4(c), EPA would promulgate a part 71 program

for a permitting authority (including an eligible Tribe) if EPA

determines that an approved program is not adequately administered or

enforced and the permitting authority fails to correct the deficiencies

that precipitated EPA's finding.2 Where the acid rain portion of

an operating permits program is not adequately administered, EPA could

withdraw either the entire program or just the acid rain portion of the

program. If EPA finds that the nonacid rain portion of the operating

permits program is being adequately administered, EPA would generally

withdraw only the acid rain portion. In such a case, EPA would issue

the acid rain portion of the source's permit using the procedures set

forth in 40 CFR part 72, and the State would continue to issue the

remaining portion of the operating permits and would issue all permits

to sources other than acid rain sources.

\2\Although this preamble section addresses withdrawing approval

of State operating permit programs, note that eligible Tribes would

be treated in the same manner as States for purposes of withdrawal

of program approval, assuming the Tribal rule is finalized as

proposed. In that case, the provisions of 40 CFR 70.10(b)(1), which

address State failure to administer or enforce an approved part 70

program, and 40 CFR 70.10(c), which addresses criteria for

withdrawal of State programs, would apply equally to Tribal

programs.

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When EPA determines that a State is not adequately administering

its program, EPA would provide notice to the State as required by 40

CFR 70.10(b)(1). The State would then have 90 days in which to take

significant action to assure adequate administration and enforcement of

the program. Where EPA determines that the State has not taken such

significant action within the specified time, EPA could begin

implementing a Federal program immediately. Otherwise, if the State had

not fully corrected the deficiency that prompted EPA's determination of

failure to administer or enforce within 18 months of the determination,

EPA would begin implementing a Federal program 2 years after the date

of the determination. This framework is identical to that which EPA

promulgated in part 70 at 40 CFR 70.10(b) (2) and (4).

The EPA acknowledges that its intent to retain the option of

withdrawing only the acid rain portion of a program in appropriate

situations is a change of position from EPA's statement in the preamble

to the final part 70 rule (see 57 FR 32260) that should a State fail to

adequately administer phase II of the acid rain program, EPA will take

back the entire operating permits program. There, EPA stated that in

such a situation EPA would implement part 71, as supplemented by

Federal acid rain permit issuance procedures, and would issue permits

to acid rain sources within the State. The EPA notes that this

discussion was not reflected in regulatory language in the finally

promulgated part 70 rule, which instead provided EPA discretion to

withdraw program approval in whole or in part. See 40 CFR 70.10(c)(1).

Moreover, EPA explained in a May 21, 1993 guidance document entitled

``Title IV-Title V Interface Guidance for States,'' that if EPA finds

that a part 70 program is not being properly administered or enforced

for title IV purposes, EPA will publish a notice in the Federal

Register making this announcement and noting where permit applications

are to be delivered. When publishing such a Federal Register notice,

EPA may elect to withdraw approval for an entire part 70 program

submittal or only the acid rain portion of it and may apply appropriate

sanctions under section 179(b) of the Act.

Under part 71, EPA would retain the option of withdrawing only the

acid rain portion of the program and issuing a phase II acid rain

permit, rather than withdrawing the entire part 70 program and issuing

a comprehensive part 71 operating permit. The EPA believes that it is

reasonable and appropriate to depart from the policy stated in the

preamble to the final part 70 rule regarding withdrawal of phase II

acid rain authority because EPA believes that deficiencies with respect

to the acid rain portion of a State program would generally not

adversely affect the remaining portions of the State program. By

withdrawing approval of just the acid rain portion, EPA would minimize

disruption of otherwise adequate State air programs. It should be noted

that the acid rain portion of a source's operating permit contains

discreet requirements that are not intertwined with the remaining

provisions of the permit. For example, phase II acid rain permits

generally contain a requirement that a source hold sufficient

allowances to cover emissions, specify requirements for NOX

emissions and provide for continuous emissions monitoring in accordance

with 40 CFR part 75. Amendments and revisions to such provisions are

subject to a different set of procedures as specified in 40 CFR part

72. Thus, separate Federal administration of the acid rain permitting

program in a State that fails to adequately administer the acid rain

portion of its operating permits program would be a logical step where

the remainder of the part 70 program was being adequately administered

by the State.

The EPA solicits comment on this approach, and on whether this

approach is consistent with the requirements of title V. The EPA

stresses that section 502(i)(1) of the Act allows EPA to determine that

only a portion of an approved State program is not being adequately

administered and enforced. While section 502(i)(1) does not explicitly

provide that where a State fails to correct an identified deficiency in

a finding under section 502(i)(4), EPA may promulgate, administer, and

enforce only the relevant portion of the program, EPA believes that

Congress could not have intended for EPA to be compelled to withdraw

and take over entire part 70 programs where only discrete portions of

the program are deficient. Such a result would be unnecessarily

disruptive of State air programs and would require much greater Federal

intrusion into the State's air program than may be necessary to correct

the faulty portion. [[Page 20811]]

Section 71.4(d) addresses the circumstances in which EPA proposes

to issue permits to OCS sources (sources located in offshore waters of

the United States) pursuant to the requirements of section 328(a) of

the Act. Section 328 of the Act transferred from the Department of the

Interior to EPA the authority to regulate air pollution from sources

located on the OCS off of the Atlantic, Arctic, and Pacific coasts and

in the Gulf of Mexico east of 87.5 degrees longitude. In today's

notice, which proposes revisions to 40 CFR part 55 in addition to the

proposed Federal operating permit rules, EPA is proposing to require an

OCS source to comply with the requirements of part 71 if the source is

located beyond 25 miles of States' seaward boundaries or if the source

is located within 25 miles of a State's seaward boundary and the

requirements of part 71 are in effect in the corresponding onshore area

(COA). Section 328 requires that EPA establish requirements for sources

located within 25 miles of a State's seaward boundary that are the same

as would be applicable if the source were located in the COA.

Part 71 permits would be issued to OCS sources by the Administrator

or a State or local agency that has been delegated the OCS program in

accordance with part 55 of this chapter. As OCS sources beyond 25 miles

of States' seaward boundaries would become subject to part 71

immediately upon the effective date of part 71, they would be required

to submit part 71 permit applications within 1 year of becoming subject

to this part.

Proposed Sec. 71.4(e) describes how EPA would take action on

objectionable permits that have already been proposed or issued by a

permitting authority. Section 505(b) of the Act and 40 CFR 70.8 (c) and

(d) require EPA to object to the issuance of any permit that EPA

determines is not in compliance with the applicable requirements of the

Act. If the permitting authority does not take appropriate action in

response to EPA's objection, EPA shall revise, terminate, or revoke the

permit if it has been issued and shall correct and issue the permit if

it has not been issued.

As provided in 40 CFR 70.7(g) (Sec. 70.7(j) in the proposed

revisions to part 70), if EPA finds that a State-issued permit must be

reopened to correct an error or add newly applicable requirements, EPA

will notify the permitting authority. If the permitting authority does

not take appropriate action, EPA will revise and reissue the permit

under part 71.

As provided at 40 CFR 70.8(c)(1), EPA will object to the issuance

of any proposed permit that EPA determines is not in compliance with

the applicable requirements of the Act or the requirements of part 70.

If EPA objects within 45 days of receipt of a copy of the proposed

permit, the permitting authority may not issue the proposed permit to

the source. The EPA's objection, as required by 40 CFR 70.8(c)(2),

shall include a statement of EPA's reasons for objecting and a

description of the permit terms that the permit must include to respond

to the objection. Moreover, under 40 CFR 70.8(c)(3), failure of the

permitting authority to: (1) Comply with requirements in 40 CFR 70.8

(a) and (b) to notify EPA and affected States, (2) submit to EPA any

information necessary to adequately review the proposed permit, or (3)

process the permit under procedures approved to meet the public

participation requirements of part 70 would also constitute grounds for

EPA objection to a proposed permit.

Under 40 CFR 70.8(c)(4), if the permitting authority fails within

90 days after EPA's objection to revise and submit to EPA a new

proposed permit responding to the objection, EPA will issue or deny the

permit. Proposed Sec. 71.4(e)(1) would establish the authority for

EPA's permit issuance or denial in these situations.

Likewise, proposed Sec. 71.4(e)(1) would establish the authority

for EPA to revise, terminate, or revoke a permit in response to a

citizen petition filed under 40 CFR 70.8(d). The EPA's action to

revise, terminate or revoke a permit would then occur consistent with

40 CFR 70.7(g)(4) or (5)(i) and (ii) (Secs. 70.7(j)(4) or (5)(i) and

(ii) of the proposed revisions to part 70), except in unusual

circumstances, such as where there is a substantial and imminent threat

to the public health and safety resulting from the deficiencies in the

permit. Usually, the permitting authority would have 90 days from

receipt of EPA's objection in response to a citizen petition to resolve

the objection and terminate, revise, or revoke and reissue the permit

in accordance with EPA's objection. See 40 CFR 70.7(g)(4),

Sec. 70.7(j)(4) of the proposed revisions to part 70. If the permitting

authority failed to resolve the objection, EPA would terminate, revise,

or revoke and reissue the permit, after providing at least 30 days

notice to the permittee in writing of the reasons for such action

(which may be given at any time during the time period after EPA

objects to the permit) and providing the permittee an opportunity for

comment on EPA's proposed actions and an opportunity for a hearing. See

40 CFR 70.7(g)(5)(i) and (ii) and Secs. 70.7(j)(5)(i) and (ii) of the

proposed revisions to part 70. Proposed Sec. 71.4(e)(2) would provide

the authority for EPA to take such action.

Section 71.4(f) of the proposed rule would authorize EPA to use

part 71 in its entirety or any portion of the regulations, as needed.

For example, EPA could use the provisions for permitting OCS sources

without permitting any other types of sources. Similarly, EPA could use

only portions of the regulations to correct and issue a State permit

without, for example, requiring an entirely new application. Proposed

Sec. 71.4(f) would also authorize EPA to exercise its discretion in

designing a part 71 program. The EPA would be able to, through

rulemaking, modify the national template by adopting appropriate

portions of a State's program as part of the Federal program for that

State, provided the resulting program is consistent with the

requirements of title V.

The EPA believes it is reasonable and appropriate to provide this

flexibility in implementing a part 71 program. First, such flexibility

would enable EPA to intervene in the administration and enforcement of

an operating permits program only to the extent necessary to correct

deficiencies. Second, it would provide EPA, after notice and comment

rulemaking, the ability to appropriately tailor part 71 to the State in

which it would be implemented, thus resulting in less disruption of the

State air program and the daily operations of covered sources than

might otherwise occur. While EPA believes that part 71 as proposed

today should not result in unnecessary disruption, the Agency

recognizes that further State-specific tailoring may be appropriate.

Proposed Sec. 71.4(g) clarifies that EPA would publish a notice of

the effective dates of part 71 programs. The EPA would publish such

notice in the Federal Register and would, to the extent practicable,

publish notice in a newspaper of general circulation in the area

affected by the part 71 program. The EPA would also publish such notice

for delegations of part 71 programs. Finally, in addition to notices in

the Federal Register and newspapers of general circulation, EPA would

send a letter to the Governor (or his or her designee) or the Tribal

governing body for the affected area informing him or her of when the

part 71 program or its delegation would become effective.

Section 71.4(h) proposes that EPA would be authorized to promulgate

and administer a part 71 program in its entirety even if only limited

deficiencies exist in a State or Tribal program. The EPA believes that

such authority is [[Page 20812]] necessary because limited deficiencies

could have wide-ranging impacts within a program. For example, if a

State program failed to provide adequate opportunities for public or

affected State participation in permitting actions, the integrity of

permit content could become suspect, the public and affected States

would be excluded from administrative and judicial review of permit

actions, and EPA oversight of such actions could suffer, as a result of

citizens not having standing to petition EPA to object to permits.

Section 71.4(i) of the proposed rule describes how EPA would take

action on the initial part 71 permits in the event that a full or

partial part 71 program becomes effective in a State or Tribal area

prior to the permitting authority issuing part 70 permits to all

subject sources. The EPA proposes to utilize a 3-year transition plan

similar to that required of States under Sec. 70.4(b)(11)(ii) of this

chapter. Under proposed Sec. 71.4(i)(1), any remaining sources that had

not yet received part 70 permits from the permitting authority would be

required to submit applications to EPA for part 71 permits within 1

year of becoming subject to the part 71 program. The sources that had

already received part 70 permits, if any, would continue to operate

under those permits, unless EPA had withdrawn part 70 approval due to

the inadequacy of the part 70 permits, in which case those sources

would be required to obtain part 71 permits. After receiving part 71

permit applications, EPA would act on one-third of those applications

each year for the first 3 years of the part 71 program. As previously

issued part 70 permits needed to be revised or renewed, sources would

apply to EPA for such revisions or renewals under part 71.

As provided in proposed Sec. 71.4(j), EPA would have the discretion

to delegate some or all of its authority to administer a part 71

program to a State or eligible Tribe. The delegation process is

described further in the discussion of proposed Sec. 71.10.

Section 71.(4)(k) of the proposed rule would authorize EPA to

administer and enforce part 70 permits issued by a permitting authority

under a previously-approved part 70 program after EPA has withdrawn

approval of such program until they are replaced by part 71 permits

issued by EPA.

Proposed Sec. 71.4(l) describes what would happen after EPA

approves a part 70 program for an area in which a part 71 program has

been effective and how the Administrator, or the new part 70 permitting

authority, will administer and enforce the part 71 permits until they

are replaced by part 70 permits. For a State that submits a late part

70 submittal to EPA such that EPA has not approved or disapproved the

submittal by November 15, 1995, part 71 becomes automatically effective

until the State's part 70 program is approved by EPA. However, sources

are not obligated to submit applications to EPA until 12 months after

they have become subject to an effective part 71 program (unless an

earlier submittal date is set by EPA). Therefore, if the State's part

70 program is approved shortly after part 71 is effective, it is highly

likely that sources will submit applications to the permitting

authority rather than to EPA. Upon approval of the part 70 program, EPA

will suspend further action on applications for part 71 permits. Where

appropriate, applications received by EPA prior to approval of the part

70 program will be forwarded to the permitting authority after approval

of the part 70 program.

Finally, proposed Sec. 71.4(m) provides how EPA would implement the

provision of section 325 of the Act if the Governor of Guam, American

Samoa, the Virgin Islands, or the Commonwealth of the Northern Mariana

Islands petitions the Administrator to exempt any source or class of

sources from the requirements of title V of the Act.

D. Section 71.5--Permit Applications

Much of proposed Sec. 71.5 is modeled on the provisions currently

promulgated at 40 CFR 70.5, and on the proposed revisions to that

section. See 59 FR 44460 (Aug. 29, 1994). In this notice, EPA

incorporates by reference the rationale provided for these provisions,

to the extent such rationale apply to a Federal operating permit

program as well as to State permit programs. Copies of the part 70 rule

as promulgated in July 1992 and of the notice proposing revisions to

part 70 have been included in the docket for this rulemaking. The

Supplementary Information Document contains a general discussion and

explanation of the proposed rule's application requirements. Where

proposed part 71 differs from promulgated part 70 or the proposed

revisions to part 70 the discussion goes into greater detail describing

the part 71 proposal. Where proposed part 71 follows part 70 precedent,

shorter general descriptions of the part 71 proposal are supplied. It

should be noted that the formatting of proposed Sec. 71.5 does not

correspond to that of 40 CFR 70.5. In developing proposed part 71, EPA

determined that the formatting of 40 CFR 70.5 could be improved so that

it is easier to follow. The EPA requests comment on this proposed

formatting difference.

1. Insignificant Activities and Emission Levels

Proposed Sec. 71.5(g) would allow insignificant activities or

emission levels to be exempt from the application content requirements

of proposed Sec. 71.5(f). These exemptions would reduce the

administrative burden on sources by eliminating the requirement that a

source include in its application an extensive analysis of

insignificant activities (or emissions units) and quantities of

emissions. This proposal is based on the part 70 provisions regarding

insignificant activities and emissions levels, and is supported by the

Alabama Power decision, where the court found that emissions from

certain small modifications and emissions of certain pollutants at new

sources could be exempted from some or all PSD review requirements on

the grounds that such emissions would be de minimis. See Alabama Power

v. Costle, 636 F.2d 323, 360 (D.C. Cir., 1979). In other words, EPA may

determine levels below which there is no practical value in conducting

an extensive review. In general, an agency can create this exemption

where the application of a regulation across all classes will yield a

gain of trivial or no value. A determination of when a matter can be

classified as de minimis turns on the assessment of particular

circumstances of the individual case. For EPA to establish that an

emissions threshold is trivial and of no consequence, EPA must consider

the size of the particular emissions threshold relative to the major

source threshold applicable in the various areas where a regulation

will be in effect.

In the rulemaking establishing requirements for State operating

permits programs under part 70, many commenters suggested that EPA

create a de minimis exemption level for regulated air pollutants, and

that emissions information not be required for pollutants below this de

minimis level. In the final part 70 rule, EPA gave States discretion to

develop lists of insignificant activities and to set insignificant

emission levels if certain criteria were met and subject to EPA review

and approval. In the proposed part 71 rule, EPA has fashioned

provisions for insignificant activities or emission levels that meet

the minimum requirements for States under the part 70 rulemaking, while

taking a unique Federal approach, based on the Agency's experience in

reviewing State provisions for insignificant activities and emission

levels in the course of part [[Page 20813]] 70 operating permits

program reviews. The EPA notes, however, that the part 70 provisions on

insignificant activities and emissions levels are the subject of

ongoing litigation settlement discussions, and that a possible result

of these discussions could be a modification of the part 70 provisions

on this issue. To the extent any future proposed revisions to the part

70 insignificant activities and emissions level criteria are more

stringent than the provisions proposed for part 71, EPA may have to

supplement this proposal to make the two rules consistent.

In this rulemaking, EPA proposes to exempt all information required

by proposed Sec. 71.5(f) concerning insignificant activities inclusion

in the permit application, while for insignificant emission levels,

application information completeness requirements would vary from

proposed Sec. 71.5(f). To ensure that all significant information is

included in the permit application, the proposed rule includes a

provision stating that no activities or emission levels shall be exempt

from proposed Sec. 71.5(g) if the information omitted from the

application is needed to determine or impose any applicable

requirement, to determine whether a source is major, to determine

whether a source is subject to the requirement to obtain a part 71

permit, or to calculate the fee amount required under the fee schedule

established pursuant to proposed Sec. 71.9. The proposed prohibition

against omitting information from the application that is relevant to

the determination or imposition of applicable requirements means that

an activity (or emissions unit) that has applicable requirements could

not be considered as an insignificant activity or to have insignificant

emission levels. Applicable requirements in this context include any

standard or requirement as defined in proposed Sec. 71.2. The proposed

provision that the exemption not interfere with the requirement to

obtain a part 71 permit is necessary to insure that all the

requirements of the Act are met, because the requirements of title V of

the Act are not included in the proposed definition of applicable

requirements. An activity or emission level could not be insignificant

if it constitutes a major source. An activity or emission level could

not be insignificant if omitting the emissions from the application

would prevent the aggregate source emissions from exceeding the major

source threshold or a threshold that would trigger an applicable

requirement, such as a modification under section 112(g). This proposal

would further prohibit these exemptions from being used by applicants

when information needed to calculate the fee amount required under the

fee schedule would be omitted from the application. Although the fee

schedule provided in proposed Sec. 71.9(c)(1) would exclude

insignificant emissions from being counted for fee purposes, this

provision would be retained for instances where the Administrator

promulgates a different fee schedule for a particular state pursuant to

proposed Sec. 71.9(c)(7). Under such a fee schedule, information

concerning insignificant activities or emissions may be needed to

calculate the fee amount.

a. Insignificant Activities. To meet the requirements of part 70,

States submitted rules incorporating a wide variety of approaches for

implementing these provisions. Many State part 70 program submittals

included extensive lists of insignificant activities. Some of the

listed activities were so broadly defined that it was difficult to

determine if they would interfere with the determination or imposition

of applicable requirements or affect major source status, seemingly

inviting the omission of significant information. Some were so narrowly

defined that industry would be invited to propose an endless number of

additional listings for inclusion in the rules in future years,

creating an administrative burden on the States. In the course of EPA's

review of part 70 permit program submittals, it was also clear that

there were very few insignificant activities that are common among the

States. The EPA proposes to include a short list of broadly-defined

insignificant activities that are frequently included in State part 70

program submittals. These activities commonly occur in residential

settings, are not subject to applicable requirements (with the possible

exception of certain SIP-based requirements for residential heating

sources that are not commonly adopted on a nation-wide basis), and

normally have small quantities of emissions. Emission units at a source

that are on the list of insignificant activities in proposed

Sec. 71.5(g)(1) could not be treated as insignificant (1) when the

activities are subject to an applicable requirement, including an

applicable requirement of a Federal or Tribal implementation plan, (2)

if information concerning the activities would interfere with any

applicability determination, (3) if the insignificant activities

constitute a major source, (4) if not counting the emissions from

insignificant activities in the total source emissions would prevent

the source from being determined to be a major source, or (5) if any

information that would otherwise be left off of the permit application

would be needed to calculate the fee amount required under the fee

schedule established under proposed Sec. 71.9.

b. Insignificant Emission Levels. The proposal would further allow

emission units or activities with small emissions to be included in the

application in a streamlined manner, as long as the application did not

exclude information needed to (1) determine or impose applicable

requirements, (2) determine the requirement to obtain a permit, (3)

determine whether the source is a major source, or (4) calculate the

fee amount, and provided the emissions caps of proposed Sec. 71.5(g)(2)

were not exceeded. The EPA believes that this would ensure that enough

information will be provided that the permitting authority can make a

quick assessment of whether the emissions are insignificant.

Nevertheless, to ensure that the rule is being applied properly by the

applicant, the permitting authority could request additional

information if needed. Note that to qualify as insignificant emissions,

the emissions could not count toward or trigger a unit-based de minimis

permit revision under proposed Sec. 71.7(f). The only emissions units

that would have emissions levels qualifying as insignificant under

proposed Sec. 71.5(g) would be units that would not be included in the

part 71 permit anyway because they could not be subject to applicable

requirements, contribute to the triggering of an applicable

requirement, or affect a major status determination. Therefore, for

existing units with insignificant emissions there would not be any

permit terms or conditions to revise and for new units with

insignificant emissions there would not be any permit terms or

conditions to add to the part 71 permit.

The emissions caps of proposed Sec. 71.5(g)(2) are expressed in

terms of potential to emit, not actual emissions. The use of potential

to emit is consistent with how major source thresholds (which were used

in developing the proposed caps) are defined. Furthermore, EPA believes

that basing the caps on potential to emit provides greater assurance

that only truly insignificant levels of emissions would be eligible for

streamlined treatment on the permit application form.

In commenting on the necessity of de minimis levels to be

established in the part 70 rulemaking, one commenter suggested the

level be set at 5 tpy or 20 percent of the applicable major source

threshold. An examination of these [[Page 20814]] levels in terms of

major source thresholds is necessary to determine if they are trivial.

For example, a 5-ton emission is 20 percent of the major source

threshold for serious and severe ozone nonattainment areas, but 50

percent of the major source threshold in extreme ozone nonattainment

areas. A level set at 20 percent of the applicable threshold would

equal 2 tons in extreme ozone nonattainment areas, but would be 20 tons

in moderate nonattainment areas. It is not clear that emissions of this

size could be characterized as trivial in all areas for all air

pollutants, especially because emissions at these levels may trigger

State major new source review (NSR), thus triggering applicable

requirements.

Therefore, EPA is proposing and soliciting comment on setting the

threshold for insignificant emission levels at 1 tpy for regulated air

pollutants, except HAP, in all areas except extreme ozone nonattainment

areas, where the threshold is proposed to be 1,000 pounds (lb) per

year. These levels would be 1 percent of the major source threshold in

moderate nonattainment areas, 2 percent in serious ozone nonattainment

areas, 4 percent in severe ozone nonattainment areas, and 5 percent of

the threshold in extreme ozone nonattainment areas. The EPA believes

that these levels are trivial and would not prevent EPA from collecting

any information of a consequential or significant nature. The lower

threshold for extreme ozone nonattainment areas is necessary due to the

increased concern that permitting authorities would have in such areas.

Permitting authorities in these areas have collected information

pertaining to permitted sources with relatively small emissions. This

level of concern has been necessary in order to achieve emission

reductions sufficient to make progress towards meeting the NAAQS.

The EPA proposes and solicits comment on setting the exemption

threshold for HAP for any single emissions unit to be the lesser of

1,000 lb per year or the de minimis levels established under section

112(g) of the Act. In the part 70 rulemaking, EPA recommended that the

emissions levels for HAP established for the purpose of setting

insignificant emission levels not be less stringent than the levels

established for modifications under section 112(g) of the Act. Although

this was only a recommendation, many States structured their emissions

levels for HAP using these levels as upper bounds. Note that the

provisions of proposed Sec. 71.5(g) would prevent a part 71 emissions

unit from having insignificant emissions levels if the unit was subject

to applicable requirements of section 112(g). The EPA also proposes

that the level for HAP should never be higher than 1,000 pounds per

year. This is necessary because the major source threshold is 10 tpy

for a single HAP, thus ensuring that insignificant emissions of HAP

will never exceed 5 percent of the major source threshold. The EPA

believes that these levels are trivial and would not prevent EPA from

collecting any information of a consequential or significant nature.

The EPA proposes and solicits comment on setting the threshold for

insignificant emissions for the aggregate emissions of any regulated

air pollutant, excluding HAP, from all emission units located at a

facility to not exceed a potential to emit of 10 tpy, except in extreme

ozone nonattainment areas, where potential to emit may not exceed 5

tpy. The EPA further proposes and solicits comment on setting the

threshold for insignificant emissions levels for the aggregate

emissions of all HAP from all emission units located at a facility to

not exceed a potential to emit of 5 tpy or the section 112(g) de

minimis levels, whichever is less. These provisions would provide more

certainty to the permitting authority because no emissions values in

terms of potential or actual emissions would be required to be included

in the application for emissions qualifying as insignificant, and it is

conceivable that large quantities of emissions could be hidden from

scrutiny without such aggregate emission thresholds. In addition, these

provisions would clarify for applicants that large numbers of similar

sources, such as valves or flanges, that might be exempt on an

individual basis, would have to be described in detail in the

application if the aggregate emissions from all the units are relevant

to the applicability of the Act's requirements or the determination of

major source status.

Minimal information concerning emissions units with insignificant

emissions would have to be provided in a list in the application. This

list would have to describe the emission units in sufficient detail to

identify the source of emissions and demonstrate that the exemption

applies. For example, the description ``space heaters'' on a list may

not provide sufficient information because there could be an unlimited

number of units with potentially significant emissions, but the

description, ``two propane-fired space heaters,'' places a limit on any

estimate of emissions and would provide enough information.

Descriptions may need to specify not only the number of units meeting

the description, when more than one unit is included under a single

description, but in many cases capacity, throughput, material being

processed, combusted, or stored, or other pertinent information may

need to be provided. For example, ``storage tank'' would be

insufficient, but ``250-gallon underground storage tank storing

unleaded gasoline, annual throughput less than 2,000 gallons,'' would

be sufficient for quick assessment, because this level of information

is sufficient to demonstrate whether any applicable requirements apply

and that the 1 tpy emissions cap would most likely not be exceeded.

Emissions units (or activities) with insignificant emissions that

might be logically grouped together on the list that would be required

by proposed Sec. 71.5(g)(2) but that have dissimilar descriptions,

including dissimilar capacities or sizes, would be required to be

listed separately in the application. This is necessary to prevent

large numbers of emissions units from being grouped together on the

list in such a way that the description would be too broad to provide

sufficient information to identify the emissions units and provide an

indication of whether or not the exemption applies. On the other hand,

in certain cases, large numbers of certain activities could be grouped

together on the list. For example, a complex facility may have hundreds

of valves and flanges where the aggregate potential to emit of all the

valves and flanges does not exceed the aggregate emissions cap and

there are no applicable requirements that apply to the valves and

flanges. In this case, it would most likely be appropriate to list all

the valves and flanges together as one listed item, including the

number of units meeting the exemption.

The EPA solicits comment on the approach regarding insignificant

activities and emission levels proposed in this notice, particularly on

whether this approach provides greater clarity than that discussed in

promulgated part 70, and whether the approach proposed in this notice

would be compatible with the approaches developed by States to date.

The EPA also solicits comment regarding whether the approach proposed

today provides adequate safeguards to insure that part 71 permit

applications do not exclude significant information, especially all

information necessary to determine applicability of Act requirements

and major source status.

2. Cross Referencing Information in the Application

The permitting authority could allow the application to cross-

reference [[Page 20815]] relevant materials where they are current and

clear with respect to information required in the permit application.

Such might be the case where a source is seeking to update its title V

permit based on the same information used to obtain a NSR permit or

where a source is seeking renewal of its title V permit and no change

in source operation or in the applicable requirements has occurred. Any

cross-referenced documents would have to be included in the title V

application that is sent to the permitting authority and that is made

available as part of the public docket on the permit action.

3. Application Completeness Determinations

As provided by proposed Sec. 71.5(c), a complete application would

be one that the permitting authority has determined contains all the

information needed to begin processing. The preamble to the proposed

revisions to part 70 discusses two options for providing flexibility

when determining application completeness. The first option addresses

applications for sources with future-effective compliance dates, and

the second option addresses the submittal of less detailed applications

for sources that are scheduled to be permitted in the second and third

years of the initial phase-in of a part 70 program. See 59 FR 44460

(Aug. 29, 1994).

Although the regulatory language concerning completeness

determinations in the part 71 proposal is consistent with the

regulatory language in the proposed part 70 revisions, EPA is not

anticipating revising the proposed part 71 regulatory language to

specifically implement either of the flexibility options discussed in

the preamble to the proposed revisions to part 70. As EPA is not as

familiar with sources as State and local permitting authorities, EPA is

not in a position to adequately quality assure applications that apply

such flexibility options. Thus, the use of such flexibility options in

determining application completeness could increase the risk of

inappropriate completeness determinations by EPA, as well as increase

EPA's administrative burden. As a result of this concern, EPA is not

proposing to provide for the flexibility options described in the

preamble to the revisions to part 70, but solicited comment on this

position in the part 71 proposal.

E. Section 71.6--Permit Content

Many of the proposed provisions of Sec. 71.6 follow the provisions

of 40 CFR 70.6, which were described and discussed at length in the

proposed and final preambles to 40 CFR part 70, and in the recently

proposed revisions to part 70. This notice incorporates the rationale

provided in the part 70 notices by reference, as appropriate. This

discussion focuses on those provisions that are affected by the legal

challenges to the part 70 rule and those issues for which the approach

proposed to be taken in part 71 differs from that taken in part 70 or

the proposed revisions thereto.

The provisions of proposed Sec. 71.6 have been formatted

differently than those in 40 CFR 70.6 to consolidate the provisions

related to compliance and to make the section easier to follow. The EPA

solicits comment on the proposed formatting change.

1. Prompt Reporting of Deviations

Like part 70, proposed part 71 would require that each permit

contain provisions for prompt notification of deviations. In both

cases, the definition of ``deviation'' is consistent with the

definition of deviation in the proposed enhanced monitoring rule.

However, part 71 proposes to define ``promptly'' for purposes of

reporting deviations from federally-issued permits.

Under this proposal and the proposed enhanced monitoring rule,

deviation means any of the following conditions: Where emissions exceed

an emission limitation or standard; where process or control device

parameter values demonstrate that an emission limitation or standard

has not been met; or where observations or data collected demonstrates

noncompliance with an emission limitation or standard or any work

practice or operating condition required by the permit. These

conditions (except in cases where provisions that exempt such

conditions from being federally enforceable violations have been

promulgated or approved by the Administrator) would be deemed

deviations from part 71 permit requirements and would require prompt

reporting to the permitting authority.

Part 71 sources would be required to promptly notify the permitting

authority of any deviations. Under part 71, promptly has more than one

meaning. This follows the model established in part 70. Where the

underlying applicable requirement contains a definition of prompt or

otherwise specifies a time frame for reporting deviations, that

definition or time frame shall govern. Where the underlying applicable

requirement fails to address the time frame for reporting deviations,

prompt is defined differently depending on the type of pollutant

emitted. For deviations concerning a HAP or toxic air pollutant that

exceed a permit requirement for at least a one hour duration, prompt

reporting would be defined as within 24 hours. Sources emitting other

regulated air pollutants at levels that exceed permit requirements for

at least two hours would be required to report the deviation within 48

hours.

The EPA recognizes that there are other notification requirements

that have been established under other statutes that require sources to

provide immediate notification of releases of specific chemicals in

reportable quantities to agencies other than EPA and State permitting

authorities. Generally these notifications apply to a potential

emergency situation such as those requirements in CERCLA and SARA title

III. In addition, pursuant to section 112(r), the Chemical Safety and

Hazards Investigation Board has the authority to develop regulations

for reporting accidental releases of section 112(r) substances. If a

reporting regulation is established, it would become an applicable

requirement on the source. The EPA stresses that sources must comply

with such notice requirements even if they have provided notice to the

permitting authority pursuant to proposed Sec. 71.6(f)(3). Failure to

provide notices required by these other statutes and their implementing

regulations may result in enforcement actions and penalties.

Because the emissions from sources could cover a very large

spectrum with a wide range of health effects, the permitting authority

may also define in the permit the concentration and time duration of a

deviation that must be reported promptly and the schedule for such

reporting.

Sources may notify the permitting authority of a deviation by

telephone or facsimile within their required time schedule, and must

then submit certified written notice within ten working days. All

deviations would still have to be included in monitoring reports which

would be required to be submitted at least every 6 months or more

frequently if required by another applicable requirement (e.g., NSPS or

enhanced monitoring).

2. General Permits

Proposed Sec. 71.6(l) would implement section 504(d), which

authorizes the permitting authority to issue a ``general permit

covering numerous similar sources.'' The approach proposed for part 71

would follow that of part 70 and the recently proposed revisions

thereto.

In response to the concerns raised in the legal challenges to the

part 70 rule, EPA has reevaluated its approach to

[[Page 20816]] providing for public participation for general permits.

In the most recent part 70 proposal, the following items concerning

general permits were proposed: (1) authorization to operate under a

general permit is a final action subject to judicial review; and (2)

the permitting authority is required to notify the public of sources

who have been authorized to operate under a general permit. The latter

action could be done as a monthly summary. Proposed Sec. 71.6 follows

the approach of the recent part 70 proposal for general permits.

3. Emergency Defense

As provided in proposed Sec. 71.6(o), part 71 permits could contain

permit terms that provide that a source can establish an affirmative

defense to an enforcement action based on noncompliance due to an

emergency. The affirmative defense would not apply to permit terms

other than technology-based emission limitations (e.g., MACT standards)

and would not apply unless the source provides appropriate

documentation as specified in proposed Sec. 71.6(o)(3). The emergency

defense would be independent of any emergency or upset provision

contained in an applicable requirement.

Although part 71 permits could contain provisions for an emergency

defense, EPA notes that sources that produce, process, handle or store

a listed substance under section 112(r) or any other extremely

hazardous substance nonetheless have a general duty in the same manner

and to the same extent as section 654, title 29 of the United States

Code, to identify hazards assessment techniques, to design and maintain

a safe facility, and to minimize the consequences of accidental

releases.

The EPA is reevaluating the provisions in parts 70 and 71 relating

to the emergency defense in light of concerns identified in legal

challenges to the part 70 rule. The EPA may propose revisions to the

part 70 and part 71 sections providing for the emergency defense before

EPA would include such defense in any part 71 permits. In the interim,

to ensure consistency with currently promulgated part 70, EPA would

include in part 71 provisions allowing permit terms to establish an

emergency defense.

4. Operational Flexibility

Section 502(b)(10) of the Act requires that the minimum elements of

an approvable permit program include provisions to allow changes within

a permitted facility without requiring a permit revision. In the

current part 70 rule, EPA included three different methods for

implementing this mandate. However, in response to concerns raised by

petitioners and State permitting authorities charged with implementing

part 70, EPA recently proposed to revise part 70 to eliminate one of

those methods and clarify the operation of the others. Today's part 71

proposal adopts the same approach to operational flexibility as

discussed in the proposed revision to part 70. The rationale for EPA's

position on operational flexibility is set out in the proposed

revisions to part 70 (59 FR 44460 (Aug. 29, 1994)), which today's

notice incorporates by reference.

5. Referencing of Requirements

Petitioners in the part 70 litigation have asked EPA for

clarification on the subject of data that may be referenced but not

included in the permit.

In the recently proposed revisions to part 70, EPA has indicated

that some referencing might be appropriate, and has requested comment

on whether referencing should be allowed for: (1) test methods, (2)

definitions, (3) startup, shutdown, or malfunction requirements or

plans, and (4) detailed emission calculation protocols. The EPA

solicits comments on referencing for part 71 permits.

F. Section 71.7--Permit Review, Issuance, Renewal, Reopenings, and

Revisions

This section of the preamble describes EPA's proposed regulations

governing permit issuance, renewal, reopening, and revision procedures

under part 71. Generally, under a part 71 program such procedures would

follow the procedures in the currently promulgated part 70 rule, as

recently proposed to be revised. See 40 CFR 70.7 and 59 FR 44460 (Aug.

29, 1994). To the extent part 71 would follow the procedures in

existing part 70 and the proposed revisions thereto, this notice

incorporates the rationale for those procedures by reference. Where

possible, EPA believes it is appropriate to model part 71 procedures on

those required by part 70, in order to promote national consistency

between the title V permit programs that will be administered

throughout the country. National consistency will ensure that sources

are not faced with substantially different programs when EPA, as

opposed to State agencies, is the permitting authority. Moreover, as

most part 71 programs are likely to be of limited duration, consistency

with part 70 will enable smooth transition between Federal and State

programs, encourage States to take delegation of administration of part

71 programs, help States that have been unable to obtain part 70

approval to phase into the title V program, promote uniformity in

public and affected State participation, and provide a level playing

field for sources.

In certain respects, the procedures under proposed part 71 would

vary from the procedures in part 70. This is usually due to the fact

that EPA, as a Federal permitting authority, will not be implementing

State air programs in general when it assumes title V responsibilities.

Consequently, certain opportunities under part 70, such as new source

review merged with title V permit revision procedures, would not be

available where EPA is the permitting authority. However, where a State

takes delegation of the administration of a part 71 program, some of

these opportunities would be available. These variations are discussed

in the relevant sections of the discussion below. In other cases, where

part 70 and the proposed revisions thereto provide States with

flexibility to decide among alternative approaches or define specific

elements of permit program procedures in developing their State

programs, part 71 would decide these issues in the regulation itself,

rather than rely upon further program development. Moreover, in today's

notice EPA proposes detailed procedures for permitting actions, similar

to those found at 40 CFR part 124 governing other permit programs

administered by EPA.

1. Permit Issuance and Renewal

Part 71 would generally follow the currently promulgated part 70,

as proposed to be revised in the August 29, 1994, Federal Register

notice, in establishing procedures for permit issuance and renewal.

These procedures are set forth in proposed Sec. 71.7(a)-(c) and are

discussed in greater detail in section 3-F-1 of the Supplementary

Information Document.

In certain respects, part 71 would differ from part 70 and the

proposed revisions thereto. For example, part 71 permitting authorities

would be required to provide EPA with statements describing the legal

and factual basis for draft permit terms only where the part 71 program

has been delegated to a State or Tribal agency for administration.

Also, only in cases where EPA has delegated part 71 administration to a

State or Tribal agency would EPA would reserve the right to terminate

or revoke and reissue a permit when the delegate permitting authority

is not taking appropriate action to expeditiously process a permit

renewal application. [[Page 20817]]

2. Permit Revisions

Proposed Secs. 71.7(d)-(h) would govern how permits are revised

under part 71 programs. These procedures would generally follow the 4-

track system contained in the recently proposed revisions to part 70.

However, certain aspects of the 4-track system would not be available

unless EPA had delegated administration of a part 71 program to a State

or eligible Tribal agency. Moreover, where the proposed revisions to

part 70 would leave it to State discretion to decide certain issues on

a program-by-program basis, part 71 would contain specific provisions.

Where the permit revision procedures under part 71 would differ from

those under proposed part 70, the rationale for those differences is

provided in detail. Where the procedures under part 71 would be the

same as those under the proposed part 70 4-track system, this notice

incorporates by reference the rationale for those provisions contained

in the notice for the proposed revisions to part 70. See 59 FR 44460

(Aug. 29, 1994). The part 71 permit revision procedures are discussed

in greater detail in section 3-F-2 of the Supplementary Information

Document.

The EPA wishes to stress that in first describing this permit

revision structure in the proposed revisions to part 70, the Agency

solicited comments on ways to simplify what is admittedly a complex

system. In light of the extensive comments received concerning the

complexity of the proposal, EPA will publish a supplemental proposal

covering part 70 permit revision procedures that differs from the

August 29, 1994 proposal. The supplemental proposal is expected to be

published within a few months of the publication of today's part 71

proposal and has not been developed in time to be incorporated into

today's proposal. After the new part 70 procedures are proposed, EPA

will most likely need to publish a supplemental proposal for part 71

pertaining to permit revision procedures. If so, EPA would finalize

other portions of the rule first in order to be able to administer part

71 programs by November 15, 1995. The EPA expects to promulgate the

part 70 permit revisions procedure in time to adjust corresponding

sections of proposed part 71, as appropriate, before EPA would receive

any applications for permit revisions under a part 71 program.

a. Administrative Amendments. The provisions governing

administrative amendments to part 71 permits would be located at

proposed Sec. 71.7(e). Today's proposal would follow existing part 70

in allowing changes that are generally clerical in nature to be made

pursuant to administrative amendment procedures. Also, like the

proposed revisions to part 70, part 71 would allow increases in the

frequency of required testing, monitoring, recordkeeping and reporting

to be incorporated through the administrative amendment process. While

part 70 provides a subsequent opportunity for identifying other changes

similar to those just described for processing as administrative

amendments in the program approval stage, part 71 would not, simply

because after promulgation of this rule there would be no further stage

of part 71 program development.

Where EPA has delegated administration of a part 71 program to a

State or eligible Tribe, part 71 would follow the recent proposed

revisions to part 70 by allowing changes that undergo ``merged'' part

71/NSR or part 71/section 112(g) process to be incorporated into the

part 71 permit as administrative amendments. For purposes of part 71,

this opportunity to follow proposed part 70 would exist only where

States or eligible Tribes take delegation of the part 71 program. When

administering a part 71 program for a State, EPA would not also be

implementing the State's preconstruction program, so EPA would not be

able to upgrade the State's preconstruction program to part 71 process.

While this eliminates a significant opportunity for streamlined permit

revision where EPA is acting as the permitting authority, EPA believes

that it is infeasible for EPA to merge preconstruction review and part

71 review unless the same permitting authority processes both actions.

Moreover, to the extent States take delegation of part 71 programs,

this opportunity for flexibility will be present. The EPA solicits

comment on the proposed limited availability of merged processing under

part 71 and suggestions for ways in which this merged processing could

be more feasibly provided.

In delegation agreements, EPA and delegate agencies could agree

that delegate agencies could conduct merged processing on a case-by-

case basis. That is, delegate agencies could be authorized to provide

merged process for all or some of their preconstruction determinations

or to allow sources to elect merged process for only individual

changes. Delegate agencies that provided merged process on only a case-

specific basis would have to state when they are doing so in the

initial notification of the permit action sent to EPA. A delegate

agency that wished to provide for merged NSR changes would have to set

out the eligibility criteria and process for merged NSR changes in its

application for delegation to EPA. Depending on existing State

statutory or regulatory provisions, no changes would be required to

existing NSR programs.

While under the proposed revisions to part 70 EPA would require

States to submit eligibility criteria for merged processing in their

part 70 programs that EPA would review in the context of program

approval, EPA believes that the process in part 71 for applying for

delegation and entering into delegation agreements provides an adequate

forum for evaluating a delegate agency's ability to provide merged

processing. Similarly, EPA believes that delegation agreements are

adequate vehicles for establishing a delegate agency's authority to

merge preconstruction and part 71 actions on a case-by-case basis. The

delegation process requires the State to submit evidence of adequate

statutory and regulatory authority to carry out part 71

responsibilities, and EPA would publish delegation agreements in the

Federal Register, giving notice of the delegate agency's authorization

to provide for merged processing.

Consistent with the proposed revisions to part 70, part 71 would

allow administrative amendment procedures to be used to incorporate

standards promulgated after permit issuance pursuant to section 112 of

the Act.

For all changes that qualify as administrative amendments, the part

71 permitting authority would use specific procedures to incorporate

those changes into the permit. Generally, these procedures would follow

those contained in the August 29, 1994, proposed revisions to part 70,

but would differ in certain respects. For example, the part 71

permitting authority would be required to provide EPA with a copy of

the effective permit addendum reflecting the change only where EPA has

delegated a part 71 program to a State or eligible Tribe.

b. De Minimis Permit Revisions. Following the proposed revisions to

part 70, EPA is proposing at Sec. 71.7(f) a de minimis permit revision

track in part 71 for changes that do not undergo merged program

administrative amendment procedures but that have only a small

emissions impact. Under this track, a source would be able to operate

the change as early as the day it submits its permit revision

application. Public and affected State review of the change would then

follow. See the more detailed discussion in section 3-F-2-b of the

Supplementary Information Document, as well as the Agency's preamble

for the proposed revisions to [[Page 20818]] part 70 (59 FR 44460, Aug.

29, 1994) regarding the types of changes that would be eligible for

this process, the details of the process itself, and the rationale for

the creation of this revision track.

In certain respects, the de minimis track in part 71 would differ

from that in proposed part 70. For example, a person who was

unsuccessful in persuading the part 71 permitting authority to

disapprove a source's requested de minimis change could not petition

EPA to object to the permit. This is because both when EPA is the

permitting authority and when EPA has delegated that responsibility,

citizens will already have the opportunity to directly appeal the final

de minimis permit revision to the Environmental Appeals Board. Thus,

requiring an intermediate step of requesting EPA to object to its own

permitting action would both be redundant and delay citizen access to

administrative, and ultimately judicial, review of the change. The

Agency solicits comment on this approach. While the proposed revisions

to part 70 would leave States discretion in developing their part 70

programs in determining whether the source, versus the State permitting

authority, would have the responsibility to provide public notice of de

minimis changes, under part 71, sources would have that duty. This

specificity is due to the fact that EPA, unlike States, will not be

conducting further program development for part 71 programs beyond

promulgating part 71, so it is necessary for EPA to establish in this

rule whether the public notification duty will fall on sources or the

permitting authority. The EPA proposes to place the public notice

responsibility on sources because the Agency believes that sources will

be in a better position to provide timely notice of their de minimis

changes than EPA regional offices would be and will have more ready

access to area newspapers for providing such notice. Consequently,

requiring sources to provide notice should ensure that de minimis

changes are expeditiously processed. Moreover, EPA believes that under

the proposed revisions to part 70, revised State programs could

commonly require sources to provide such notice, and consistency in

implementation of de minimis permit revision procedures will aid

program transition when States obtain part 70 approval or when EPA

assumes permitting responsibilities.

As under the proposed revisions to part 70, the scope of de minimis

changes would be defined in two ways. Any change at a small emissions

unit (``unit-based'' de minimis) would qualify, as would a small change

at a large unit (``increment-based'' de minimis), provided certain

conditions designed to ensure the enforceability of the resulting

permit limit were met. Unlike the proposed revisions to part 70, for

part 71 EPA is not proposing that permitting authorities, whether they

are EPA or delegate States or eligible Tribes, could establish

alternative de minimis emissions thresholds based on a demonstration

submitted subsequent to final promulgation of part 71. This is because,

again, after promulgation of part 71, EPA will not be further

developing part 71 programs, so there will not be an opportunity to

consider alternative de minimis thresholds. Moreover, EPA does not

believe that EPA delegation of part 71 administration to States or

eligible Tribes provides an adequate forum for evaluating alternative

thresholds developed by States or eligible Tribes, since there will be

no formal approval action in those delegations and the public will not

have an opportunity to comment upon them before they are effective.

Procedurally, part 71 would also provide more specificity than

would the proposed revisions to part 70. For example, the source could

operate the requested de minimis change 7 days after the permitting

authority received the application or, with the permitting authority's

permission, as early as the day its application is submitted. The

proposed revisions to part 70 provide that States in developing their

part 70 programs would have discretion to allow changes to be made 7

days following receipt of the application, and such authorization would

be included in their program submittals for EPA approval; as discussed

above, since promulgation of part 71 will represent the final stage of

part 71 program development, proposed part 71 specifies that sources

could make de minimis implement changes after 7 days.

Also, under part 71, sources would be required to provide public

notice of de minimis changes on a monthly, batched basis, publishing

one notice listing all changes at the source for which applications for

de minimis permit revisions had been sent to the permitting authority

in the preceding month. The EPA solicits comment on this approach,

particularly regarding the extent to which States intend to impose the

public notification duty on sources under the proposed revisions to

part 70. While the proposed revisions to part 70 specified neither who

has the responsibility for providing public notice nor the manner in

which public notice should be given, part 71 would be specific on these

points, for the reasons discussed above. The EPA solicits comment,

however, on the method or methods sources could use to provide such

notice. For example, sources could be required to publish notice of de

minimis changes in a newspaper of general circulation within the area

where the source is located or in State or local governmental

publications, to send actual notice to interested persons on a list

developed by the source or the permitting authority, or both. At

minimum, the final rule will provide a mechanism to ensure that public

notice reaches all interested citizens.

c. Minor Permit Revisions. Under today's proposal, most changes

ineligible for administrative amendment or de minimis permit revision

procedures would be eligible for the minor permit revision process.

Taking the current part 70 rule's minor permit modification process as

a starting point and following the proposed revisions to part 70,

proposed part 71 would add expedited procedures for providing public

notice and a 21-day comment period, allow the source to operate the

requested change at the end of the 21-day comment period when no

objections are received, and provide for permitting authority final

action to be taken on applications within 60 days of their receipt. The

description of and the rationale for EPA's proposed minor permit

revision process for part 70 is contained in the preamble to the

proposed revisions to part 70 (see 59 FR 44460, Aug. 29, 1994). To the

extent applicable to part 71, EPA incorporates that rationale for this

notice. However, where elements of the minor permit revision track

differ in proposed part 71 from those in part 70, this notice describes

those differences. A more detailed discussion of the part 71 minor

permit revision process is contained in section 3-F-2-c of the

Supplementary Information Document.

For part 71 minor permit revisions, as for de minimis changes and

merged program administrative amendments, notice to EPA, and EPA's 45-

day review period and opportunity to veto would occur only where EPA

had delegated its role as the permitting authority to a State or

eligible Tribe. While this is a departure from the proposed revisions

to part 70, as discussed previously, EPA does not believe there is any

utility, when EPA is the permitting authority, in requiring EPA review

of EPA permitting action, since sources, affected States and public

citizens that object to EPA permitting actions will be able to directly

appeal those decisions to the Environmental Appeals Board.

[[Page 20819]] Consequently, providing for an additional step of EPA

review and opportunity to object would unnecessarily slow down this

expedited revision track and would also delay access of interested

parties to administrative and judicial review.

Moreover, in cases of objections to minor permit modifications

filed by affected States, only where EPA had delegated part 71

administration to a State or eligible Tribe would the part 71

permitting authority have to forward to EPA a written response to any

of these objections that were not accepted.

Another difference under the part 71 program would be that if the

permitting authority failed to act on a public objection, the commenter

could file suit in Federal court, rather than State court, to force the

permitting authority to take action on the written comment. In

addition, commenters would be able to bring suit in Federal court to

seek an injunction against the source implementing or continuing to

implement requested changes before they are approved. Injunctive relief

would be available in accordance with applicable standards for

obtaining such relief under Federal law.

Also, only where EPA had delegated a part 71 program to a State or

eligible Tribe, would the part 71 permitting authority be required to

wait until the date after EPA's 45-day review period had expired,

provided EPA had not objected, before issuing the final minor permit

revision. The delegate agency would be required to take final action by

day 60, or 15 days after the close of EPA's review period, whichever is

later. In addition, under part 71 programs, commenters may not petition

EPA to object to minor permit revisions for the reasons discussed above

with respect to de minimis permit revisions.

d. Significant Permit Revisions. Following the proposed revisions

to part 70, under proposed part 71 the significant permit revision

process would essentially follow that of the significant permit

modification track in existing part 70. See the description of this

process in the Agency's proposed revisions to part 70 (59 FR 44460,

Aug. 29, 1994) for the rationale for this approach, which EPA

incorporates by reference for purposes of part 71. See also the more

detailed description of the part 71 significant permit revision process

contained in section 3-F-2d of the Supplementary Information Document.

Proposed part 71 would require the permitting authority to take

final action on applications for significant permit revisions within 18

months of receipt of the application. However, because prompt action on

permit revisions is of critical importance to industry, the EPA intends

to complete such revisions within 12 months and expects that only the

most complex revisions would require more than a year to complete.

e. Alternative Option for Monitoring Changes. Following the

proposed revisions to part 70, EPA also proposes as an option in part

71 alternative provisions governing changes involving monitoring

requirements. While this option essentially adheres to the 4-track

system discussed above, certain provisions of the system would need to

be modified to incorporate the alternative option for monitoring

changes. The rationale for this alternative option is discussed in

detail in the preamble to the proposed revisions to part 70 (see 59 FR

44460, Aug. 29, 1994), and this notice incorporates that rationale by

reference, to the extent it is applicable to part 71. As appropriate,

EPA intends to match in the final part 71 rule the final part 70

provisions regarding this option. For a more detailed discussion of

this option under part 71, see section 3-F-2-e of the Supplementary

Information Document.

Under part 71, the source, rather than the permitting authority,

would have the responsibility to provide monthly batch public notice of

monitoring changes processed under this option's de minimis permit

revision track. Moreover, for monitoring changes processed under this

option's significant permit revision track, part 71 permitting

authorities would be required to send demonstrations and their

evaluations to EPA only where EPA has delegated part 71 program

administration. Again, EPA believes that expeditious process of de

minimis permit revisions is better served by sources providing notice,

and that the non-permitting authority EPA review and veto role adds

value to the permitting process only where there is a separate entity

such as a delegated State functioning as the part 71 permitting

authority.

3. Incorporation of New Standards

The process by which EPA proposes to incorporate into permits new

MACT standards promulgated under section 112 would follow that

contained and discussed in detail in the proposed revisions to part 70

(see 59 FR 44460, Aug. 29, 1994). This notice incorporates by reference

the rationale for this process contained in the preamble to the

proposed revisions to part 70. To the extent appropriate, EPA intends

the final part 71 rule to be consistent with the part 70 rule as it is

finally promulgated. For a more detailed discussion of this process for

purposes of part 71, see section 3-F-3 of the Supplementary Information

Document.

Note that under a delegated part 71 program, if EPA receives the

initial notification because the MACT standard has not yet been

delegated to the State, local or Tribal agency, EPA will send this

notice to the delegate part 71 permitting authority, and upon receipt

of this notice the permitting authority could begin processing the

administrative amendment. Also, under delegated part 71 programs, where

the NSR programs have been enhanced to meet part 71 requirements, minor

and major NSR actions would be acceptable for addressing and

establishing part 71 permit conditions needed to assure compliance with

MACT standards. Thus, the merged preconstruction review process

applying to NSR permits could also be used to revise the part 71 permit

to incorporate the MACT requirements applicable to the source. If the

NSR action were not merged (as would be the case if EPA had not

delegated part 71 administration to a State or eligible Tribe), the

part 71 revision would be eligible under the minor permit revision

track, or, if it met the criteria, the de minimis permit revision

track.

4. Permit Reopenings

Under proposed Sec. 71.7(i), part 71 would follow the currently

promulgated part 70 in providing when and how permits would be

reopened. For a more detailed discussion of the part 71 permit

reopening procedures, see section 3-F-4 of the Supplementary

Information Document. Where EPA has delegated a part 71 program to a

State or eligible Tribe, special provisions for EPA notification to the

delegate agency that cause exists to reopen would apply. These

procedures follow those in existing part 70 for notification to

approved part 70 permitting authorities. Briefly, if EPA finds that

cause exists to reopen a permit, it would notify the delegate agency

and the source. The delegate agency would have 90 days after receipt of

this notice to forward to EPA a proposed determination of termination,

revision, or revocation and reissuance of the permit. The EPA could

extend the 90-day period for an additional 90 days if a new application

or additional information is necessary. The EPA could then review the

proposed determination for 90 days. If the delegate agency fails to

submit a determination or if EPA objects to the determination, EPA may

terminate, revise, or revoke and reissue the permit after providing the

source at least 30 days written notice and an opportunity

[[Page 20820]] for comment and a hearing on EPA's proposed action.

G. Section 71.8--Affected State Review

Following the proposed revisions to part 70, proposed Sec. 71.8

would implement section 505(a)(2) of the Act and require that the

permitting authority provide notice to all affected States (as defined

in proposed Sec. 71.2) of each draft permit and addenda to permits that

incorporate de minimis permit revisions. Under the proposed procedures

for minor permit revisions, sources, rather than permitting

authorities, would have the responsibility to provide notice to

affected States for such changes. Affected States are those States

whose air quality may be affected, and that are contiguous to, the

State in which a part 71 permit, permit revision, or permit renewal is

being proposed, or those within 50 miles of the source. Tribal areas or

areas under the jurisdiction of a local air pollution control area may

be considered affected States in some cases.

Affected States that receive notice pursuant to proposed Sec. 71.8

could submit written recommendations and comments to the permitting

authority. If the permitting authority refuses to accept the

recommendations, the reasons for the refusal would have to be provided

in writing to the affected State(s) that provided the recommendations

or comments during the public or affected State review period.

H. Section 71.9--Permit Fees

1. Authority to Impose Fees

The EPA believes that title V provides EPA the authority to charge

sources fees whenever EPA is required to administer a part 71 program.

Section 502(b)(3)(C)(i) of the Act provides that if EPA determines that

the fee provisions of a State's part 70 program do not meet the

requirements of title V, or if EPA determines that a permitting

authority is not adequately administering or enforcing its approved fee

program, EPA may, in addition to taking any other action authorized

under title V, collect reasonable fees from the sources that should be

paying adequate fees pursuant to an approved part 70 fee program. Thus,

EPA has the discretion to charge fees whenever a State fails to

establish an approvable fee program or fails to implement its approved

fee program, even if there are no other deficiencies in the State's

operating permits program. Section 502(b)(3)(C)(i) also provides that

fees charged by EPA shall be designed solely to cover EPA's costs of

administering the provisions of the permits program promulgated by EPA.

2. Fee Calculation and Assessment

The fee schedule proposed in Sec. 71.9 would establish a dollar per

ton charge on actual emissions of each regulated pollutant (for fee

calculation) that is emitted from a source.

Under the fee schedule in this proposal, the date of the initial

fee submittal would be contingent upon several factors. If EPA

withdraws approval of a part 70 program, initial part 71 fees would be

due in accordance with a schedule based upon a source's primary SIC

Code, as provided in proposed Sec. 71.9(f)(1).

If EPA implements a part 71 program in an area that did not have a

part 70 program in place, initial fee calculation work sheets and fees

would be due at the same time the initial permit application is due, in

accordance with the requirements of proposed Sec. 71.5(b)(1).

Regardless of whether a part 70 program preceded a part 71 program,

sources that become subject to the part 71 program after the part 71

program's effective date would be required to submit initial fee

calculation work sheets and fees at the same time the initial permit

application would be due, in accordance with the requirements of

proposed Sec. 71.5(b)(1).

Sources would be allowed to pay their initial annual fee in two

installments. The first payment equalling one-third of the annual fee

would have to be submitted along with the initial fee calculation

worksheet. The balance would be due four months later, but in no event

later than a year after the program's effective date.

As provided in proposed Sec. 71.9(g), for sources that receive a

part 71 permit as a result of an EPA veto of the State's proposed part

70 permit (as provided in proposed Sec. 71.4(e)), the initial fee

calculation work sheet and fees would be due 3 months after the date

the part 71 permit is issued. Delaying the source's fee payment in this

manner would provide the State an opportunity to issue a permit that

satisfies EPA's objection, thereby relieving sources of the burden of

paying both State and Federal permit fees. However, such sources would

not be permitted to pay fees in installments because their obligation

to pay fees arises after EPA has completed the permit issuance process.

For sources that commenced operation during the calendar year

preceding the date on which a source's initial application is due, the

initial fee calculation would be based on an estimate of the current

calendar year's actual emissions. This estimated fee would be adjusted

in the first annual emission report. In addition, sources that would be

required to submit initial fee calculation work sheets and fees between

January 1 and March 31, as required by either proposed Sec. 71.9(f)(1)

or Sec. 71.9(g), would have the option of basing their initial fee

calculation on an estimate of the preceding calendar year's actual

emissions. This provision would provide sources with a means for

meeting the initial fee submittal requirements if their initial fee

submittal date does not provide for sufficient time to calculate the

previous calendar year's actual emissions. This estimation would also

have to be reconciled in the first annual emission report.

For purposes of subsequent annual emissions reporting and fee

assessments, the date (month and day) on which the initial part 71 fee

calculation work sheet and fees were due would be considered the

``anniversary date'' for that source. Each source would be required to

submit an annual report of its actual emissions for the preceding

calendar year by its anniversary date. However, to allow sources with

anniversary dates between January 1 and March 31 the time needed to

analyze the preceding calendar year's emissions data, the anniversary

date for these sources would be April 1. The annual report would have

to include a fee calculation work sheet and full payment.

As discussed above, sources that commenced operation during the

preceding calendar year would base their initial fee calculation on an

estimate of the current calendar year's actual emissions. When the

permitting authority receives the first annual emissions report, the

permitting authority would compare the estimate to the emissions report

and would adjust the initial fee to reflect the annual emissions listed

in the report. If an additional fee is required, payment would be due

with the submittal of the annual emissions report. If the source has

overpaid, the permitting authority would credit the source's account.

Regardless of this adjustment procedure, the source would be required

to pay its current emissions fee based on the actual emissions listed

in the first annual emissions report.

Sources subject to proposed Sec. 71.9(f)(1) or Sec. 71.9(g) that

have initial application and fee calculation work sheets due between

January 1 and March 31 could opt to base their initial fee on an

estimate of the past year's [[Page 20821]] actual emissions. The first

annual emissions report for such sources would have to reconcile the

emissions fee from the initial fee calculation. In addition to

calculating the current emissions fee, the report would be required to

include actual emissions data from the estimated year, and the source's

account would have to be revised accordingly.

Section 502(b)(3)(C)(ii) requires that sources that fail to pay

fees in a timely fashion shall be assessed interest at a rate equal to

the sum of the Federal short-term rate determined by the Secretary of

the Treasury in accordance with section 6621(a)(2) of the Internal

Revenue Code of 1986, plus 3 percentage points and shall pay a penalty

charge of 50 percent of the fee amount. Proposed Sec. 71.9(l) would

implement section 502(b)(3)(C)(ii) by providing that the penalty charge

shall be due if the fee is not paid within 30 days of the payment due

date or if sources that compute fees based on estimated annual

emissions substantially underestimate these emissions.

Fee payments would be required to be in United States currency in

the form of a money order, bank draft, certified check, corporate

check, or electronic funds transfer payable to the order of the U. S.

Environmental Protection Agency. The EPA intends to develop additional

guidance regarding remittance procedures as the Federal operating

permits program is implemented.

3. Principles for Developing Fee Structure

The following principles were used to develop the proposed fee

requirements:

a. Fees Based on Average Annual Costs. By means of the fee

structure proposed in this rule, EPA intends to recover both direct and

indirect costs for the various activities conducted to administer part

71 programs. Direct costs would include personnel benefits and

salaries, travel, equipment costs, and contractor expenses. Indirect

costs would be those resources, outside of direct program costs, used

to manage, oversee and provide counsel to program offices. These would

include costs such as those incurred by EPA's management,

administrative, and policy staff. Indirect costs would also include

overhead costs, such as utilities and rents.

The methodology proposed to be used for setting fees is to estimate

the cost of implementing the part 71 program nationwide and to divide

that cost by the estimated emissions that would be subject to the fee.

The result is a fee expressed in dollars per ton/yr of pollutants

emitted. A detailed discussion of the assumptions and calculations

involved in determining fees is found in ``Federal Operating Permits

Program Costs and Fee Analysis'' (Fee Analysis), which is contained in

the docket for this rulemaking.

The cost estimates presented in the Fee Analysis are based on

operating a part 71 program for two years. The EPA believes this is a

reasonable average program duration, given the expected transitory

nature of the program.

For purposes of the cost analysis, the hourly personnel costs were

assumed to be the same for EPA and for delegate agencies. Therefore,

the total personnel costs for an EPA administered program and one which

is delegated in whole or in part would be identical except for the cost

of additional EPA oversight (which would be covered by a $3 per ton/yr

surcharge discussed below).

Because part 71 programs will generally be transitional programs,

EPA may in some cases decide to staff the program primarily through

contractor assistance. The emissions fee for a particular part 71

program would vary depending on the extent to which EPA relies on

contractor support and the cost of contractor assistance. If the

program is administered by EPA without contractor assistance, the

proposed fee would be $45 per ton/yr. If the program were staffed

through contractor assistance (except for those functions for which the

use of contractors is not appropriate such as final permit issuance

determinations), EPA would establish a fee based on the contractor

costs for a particular program.

As provided in proposed Sec. 71.9(c)(3), the fee for a contractor

assisted program is the sum of the permitting authority's costs

associated with activities that it undertakes, the cost of paying a

contractor to undertake other activities, and a surcharge that covers

EPA's oversight costs. The formula for determining the cost of

contractor assistance is as follows:

C=[B+T+N] divided by 12,300,000

Where B represents the base cost (contractor costs), where T represents

travel costs, and where N represents non-personnel data management and

tracking costs.

B, T and N, when summed, are divided by the total tonnage of

national emissions that would be subject to fees (12.3 million tons) to

convert the cost into a per ton fee rate.

The Fee Analysis discusses the methodology used in computing the

base cost of the part 71 program, travel costs and non-personnel data

management and tracking costs. Travel costs and non-personnel data

management and tracking costs would be the costs ($14,488,000 and

$13,400,000 respectively) indicated in Table A-3 of that document.

As indicated above, the base cost would vary depending on the

hourly rate paid for contractor assistance. Table A-3 presents the base

cost for a program in which contractor assistance (costing $62 per

hour) was used to the maximum extent possible. This $62 figure reflects

the average hourly cost of several large contracts awarded by EPA for

projects relating to air quality control. Using that hourly rate, the

resulting per ton fee would be $77. The base cost was computed by

summing the costs of contractor assistance for years 1 and 2 for the

activities listed in Table A-1 of the Fee Analysis (except those

activities which EPA should undertake, i.e., presiding over hearings,

transition planning, guidance, contract management, and training) and

then computing an annualized cost. To determine the fee for a

particular part 71 program, EPA would substitute a different hourly

rate (based on the actual rate charged by the contractor) into the

computation.

Each time a part 71 program is implemented, EPA would determine the

percentage of personnel time allocated to contractors by considering

who could best perform each type of permitting activity (e.g.,

technical review and processing of permit applications and compliance

plans, preparation for public hearings, compliance inspections). This

flexibility would allow EPA to develop a staffing pattern that meets

the unique needs of the part 71 program being administered. By using

the formula specified in proposed Sec. 71.9(c)(3), EPA would arrive at

the basic emissions fee. If the program is delegated or staffed largely

by contractors, there would be additional costs due to the oversight

that EPA must provide to the program. These additional costs of EPA's

review of permit applications, compliance plans, draft permits, permit

revisions and reopenings would increase the emissions fee by $3 per

ton/yr.

The EPA currently uses contractors for permits related work

pursuant to competitively bid contracts which compensate contractors on

a level of effort basis, using set hourly fees. These contracts, which

provide for a certain number of hours of services at a fixed hourly

rate, were used in projecting the costs of using contractors to

implement part 71 programs and could be used by EPA for part 71

programs when contractor assistance is needed. It has been suggested

that for part 71 programs [[Page 20822]] it may be more cost effective

if contracts for part 71 programs were independently bid. Therefore,

EPA solicits comments on whether fees for part 71 programs should be

based on contractor costs established by a new competitive bid process.

While not wanting to dismiss this alternative, the EPA is concerned

about the costs involved with preparing the documentation required for

the competitive bid process and that the length of time required to

undertake this process (usually 12-18 months) would make this

alternative impractical in light of the program's effective date. In

particular, EPA solicits comments on whether this approach would result

in cost savings.

The EPA considered several other options for setting fees. For

example, EPA considered the possibility of basing fees for each part 71

program on the fee structure submitted by a State or local government

as part of its part 70 submittal. This approach, however, has limited

utility in that it is not appropriate where the submittal contains an

inadequate fee program or where no submittal is made. Furthermore, the

administrative burden (and the delay in program implementation)

involved with completing individual rulemakings for each part 71

program made this option infeasible.

Given that it is not practical to craft a fee schedule that fits

each State, and given that EPA is unable to foresee with certainty when

and where it may be necessary to implement part 71 programs, EPA

proposes to base its fees on the average cost of implementing a part 71

program.

The EPA considered whether the average cost of the part 71 program

would be recovered by charging a fee of $25 per ton/yr (1989 baseline

with CPI adjustments), which is the amount of fee revenue that EPA

would presume is adequate for purposes of funding State operating

permits programs under part 70. For fiscal year 1995, this fee would

equal $30.18. However, EPA believes that there would be some

differences in costs between the Federal program and State programs

which made use of the presumptive fee inappropriate.

Using the approach outlined above, EPA has developed a proposed fee

structure that will reflect the cost of the Federal operating permits

program, though not necessarily the cost of implementing the program in

any particular State. The proposed fee is expected to be adequate for

nearly all part 71 programs and should, on average, collect sufficient

revenue to fund permitting under this part. However, if EPA determines

that the fee structure provided in proposed Sec. 71.9(c)(1)-(4) does

not adequately reflect the program costs for a particular area, such as

a Tribal area, then EPA may by separate rulemaking establish a

different fee for a part 71 program.

b. Minimizing Administrative Burdens. Although EPA could design a

fee system that imposes different fees based on such factors as source

categories, the particular pollutants emitted, or the type of

permitting action requested, EPA proposes a straight forward emissions-

based fee system. For sources, the fee computation would be simple.

Similarly, EPA's administrative burden related to assessing fees and

monitoring compliance with fee requirements would be minimized.

c. Fees Calculated Based on Existing Information. The EPA would

provide sources with fee calculation work sheets. Using these work

sheets, sources would compute their actual emissions of the appropriate

pollutants and multiply by the appropriate per ton/yr rate. Sources

would submit fees within the first 12 months of the effective date of

the program, and annually thereafter. Many sources are already subject

to annual emissions reporting requirements. Thus, except for new

sources, there would generally be no requirement that sources develop

any information for the work sheets that would not already be required

on the application form or as an emission reporting requirement.

d. Fees Imposed in Advance of EPA's Rendering Services. Under the

proposal, all part 71 sources would remit fees within 12 months of the

effective date of the permit program, even if the source is not issued

a part 71 permit within that time. Those fees will provide a stable

source of revenue from which to fund the initial start-up costs of the

program, the costs of issuing permits within the first year of the

program, as well as cover ongoing activities such as inspections,

reviewing monitoring reports, and other compliance and enforcement

activities.

This procedure would comply with Federal policy for user fees

established in OMB Circular A-25 (July 8, 1993), which provides that

fees are to be collected before services are administered or goods

provided to ensure that fees are actually paid for the services

provided, that the Treasury receives funds in a timely manner, and that

additional administrative burdens and costs for collecting fees are

avoided.

4. Revision of Fee Structure

To reflect changes in operating costs, fees would be adjusted

automatically every year (after 1997) by the same percentage as the

percent change in the CPI. Also, the fee schedule would be revisited

every two years as required by section 902(a)(8) of the Chief Financial

Officer's Act of 1990. (31 U.S.C. 501 et seq.)

I. Section 71.10--Delegation of Part 71 Program

1. Delegation Process

Section 301(a)(1) of the Act provides that the Administrator is

authorized to prescribe such regulations as are necessary to carry out

his or her functions under the Act. Pursuant to this authority,

proposed Sec. 71.10 provides that a part 71 program may be delegated in

whole or in part, with or without signature authority (i.e., the

authority to issue permits) to any State or local agency or eligible

Tribe that is found to have the requisite legal authority to administer

such a program. For purposes of the rule, an eligible Indian Tribe

would be a Tribe that EPA has determined meets the criteria for being

treated in the same manner as a State, pursuant to regulations

implementing section 301(d)(2) of the Act.

The EPA recognizes that in some cases States could fail to receive

part 70 program approval due to program flaws that are not related to

the permitting authority's practicable ability to implement a title V

program. For example, the submitted part 70 program may contain

elements in it enabling legislation or its regulations that prevent EPA

from granting program approval, even though EPA may be confident that

the State permitting authority could adequately administer and enforce

a title V program that meets the requirements of the Act. While title V

requires EPA to promulgate Federal title V programs for States that

fail to receive part 70 program approval, EPA believes that in

situations where State permitting authorities appear capable of

implementing programs that meet the requirements of title V, it would

be consistent with the general policies of the Act to involve States in

implementing required Federal permits programs, rather than exclude

State permitting authorities.

The Act has long provided that air pollution control is the primary

responsibility of States and local governments. (See, e.g., section

101(a)(3) of the Act, 42 U.S.C. 7401(a)(3).) Moreover, while title V

requires States to submit permit programs for approval by EPA, the Act

does not provide that program approval is the sole mechanism available

for State air pollution control [[Page 20823]] agencies to become

permitting authorities under title V. Section 501(4) of the Act defines

``permitting authority'' to mean both the Administrator or the air

pollution control agency ``authorized'' by the Administrator to carry

out a permit program under title V. Section 302(b) of the Act defines

``air pollution control agency'' to include State and local government

agencies. The EPA believes the word ``authorized'' as used in section

501(4) may reasonably be interpreted to apply not only to instances in

which EPA approves a submitted part 70 program, but also to instances

in which EPA determines that a State or local air pollution control

agency demonstrates that it is capable of carrying out a title V permit

program even where the State has not submitted a part 70 program that

has received EPA approval.

The EPA could exercise its discretion to delegate authority to

administer some portion or all of a part 71 program where, for example,

it makes sense to take advantage of existing expertise of the delegate

agency or where it seems probable that the delegate agency's submitted

part 70 program will be approved within a short time by EPA, provided

in both cases that the delegate agency has the authority to administer

the portion of the program that would be delegated.

Any agency that seeks to obtain delegation of a part 71 program

would be required to submit a formal request for delegation, in

accordance with the provisions of proposed Sec. 71.10, and such other

documentation as is necessary for review and consideration by the

Administrator to make a determination that the agency or eligible Tribe

has adequate legal authority and procedures to administer and enforce a

part 71 program.

The EPA would adopt a flexible approach in evaluating delegation

requests. The EPA would not demand that each delegate agency administer

a part 71 program in precisely the same way because each delegate

agency would have to comply with its own procedures, administrative

codes, regulations, and laws as well as the requirements of this part.

The Governor or designee for a State, a local agency, or the Tribal

governing body for an eligible Tribe, would be required to submit to

EPA a written request for delegation of authority on behalf of the

State or local agency or eligible Tribe pursuant to proposed

Sec. 71.10. The request would have to include a legal opinion that

certifies that the State or local agency or eligible Tribe has the

requisite legal authority to implement and administer the program. The

request would also have to identify the officers or agencies

responsible for carrying out the State, local, or Tribal procedures,

regulations, and laws.

The EPA would respond in writing to each delegation request and

shall state to what extent the request has been accepted or rejected.

If the request is accepted in whole or in part, the Administrator would

delegate to the Governor or designee, the local agency, or Tribal

governing body, the authority to carry out the accepted portions of the

delegation. If the request is rejected in whole or in part, the

notification shall specify the reasons for such rejection.

The terms and conditions of the delegation would be set forth in a

``delegation of authority agreement'' that specifies the effective date

for the agreement. The delegation of authority agreement would be

published in the Federal Register by EPA and would identify the

delegate State, local, or Tribal procedures to be used for implementing

and administering the program by reference to the request and to any

additional submission by the Governor or designee, or Tribal governing

body supplementing or modifying the State, local or Tribal procedures.

2. Full and Partial Delegation

Although EPA encourages delegate agencies to accept full delegation

of all aspects of the administration of part 71 programs, there are

situations where a delegate agency may be unable or unwilling to assume

all responsibility for administering these programs. Where appropriate,

EPA could choose to grant partial delegations as follows:

(1) Delegation of authority may be granted for only a portion of

the State or regulatory area;

(2) Delegation of authority may be restricted to certain source

categories or parts thereof; or

(3) Authority may be delegated for selected parts of the procedural

responsibility in implementing a part 71 program with EPA acting as a

partner in completing the remaining actions (e.g., delegation of

authority may be granted with regard to the administrative and/or

technical portion of implementing the part 71 program, with EPA

providing enforcement should such action become necessary);

(4) Authority may be delegated for only the acid rain portion of a

title V program, or for other parts of the title V program, not

including the acid rain portion.

3. Procedural Requirements for Delegation

The delegate agency would be required to provide notice to the

Administrator of all applications for any permit, permit renewal, or

permit revision, including any compliance plan, or any portion thereof

that the Administrator determines to be necessary to review the

application and permit effectively, each proposed permit, and each

final permit as provided in proposed Sec. 71.10(d). The delegate agency

would also have to provide notice of each draft permit to affected

States on or before the time that the delegate agency provides this

notice to the public under proposed Secs. 71.7 (e)(4), (h), or (i) or

Sec. 71.11(d) and would be required to provide any affected State a

copy of the addendum for a de minimis permit revision within 7 days of

the date on which the addendum takes effect.

Affected States that receive notice pursuant to proposed

Sec. 71.8(a) could submit written recommendations and comments on the

permit to the delegate agency. If the delegate agency refuses to accept

the recommendations, the reasons for the refusal would have to be

provided in writing to the State(s) providing the recommendations.

The EPA could waive its own and affected States' review of permits

for any category of sources, except major sources, by nationwide

regulation for a category of sources. The EPA could also waive its own

right to review, but maintain the requirement for a delegate agency to

notify affected States. During Phase II of the acid rain program, the

Agency does not intend to waive its own right to review permits for

affected sources under the acid rain program.

When a part 71 program has been delegated with signature authority

in accordance with the provisions of this section, the Administrator

could object, in writing, to a part 71 permit if the delegate agency

fails to properly submit, process, or provide notice as would be

required by this part or if the part 71 permit does not assure

compliance with applicable requirements of the Act. If the delegate

agency fails to revise the proposed permit in response to the

objection, the Administrator could deny the permit or issue a permit in

accordance with the part 71 program.

4. Delegation of Authority Agreement

A delegation of authority agreement would specify the terms and

conditions of the delegation and would be required to include, but not

be limited to:

(1) A provision that the delegation is made in accordance with

proposed Sec. 71.10; [[Page 20824]]

(2) A provision that describes the source categories, geographic

areas, and the administrative and enforcement activities governed by

the delegation;

(3) A provision that requires the delegate agency to comply with

the public notice requirements of proposed Secs. 71.7 and 71.11;

(4) A provision that requires the delegate agency to provide a

copy, through the appropriate Regional Office, of each permit

application, proposed permit, and final permit to the Administrator as

required in proposed Sec. 71.10(d);

(5) A provision that any permit issued by a delegate agency contain

a statement identifying the permit as a title V, part 71 permit;

(6) A provision that requires EPA's concurrence on any

applicability determination or policy statement regarding title V or

parts 70 or 71 not covered by determinations or guidance provided to

the delegate agency;

(7) A provision that requires immediate notification to be provided

to EPA if the delegate agency is unable or unwilling to administer or

enforce a provision of the delegated part 71 program with respect to

any source; and

(8) A provision that the delegate agency may not grant any waiver

to a permit requirement or issue any order that violates an effective

provision or requirement of part 71 or the Act.

J. Section 71.11--Administrative Record, Public Participation, and

Administrative Review

Section 71.11 of the proposal establishes procedures by which the

part 71 permitting authority would act on permit applications, issue

draft permits, provide opportunities for public comment, and issue

final permits. The emphasis in proposed Secs. 71.11(a)-(j) is on a

description of the notice and public participation procedures for

initial permit issuance, permit renewals, permit reopenings, and

significant permit revisions. The notice and public participation

procedures for administrative amendments, de minimis permit revisions,

and minor permit revisions are described in proposed Sec. 71.7.

Proposed Secs. 71.11(k)-(m) describe the administrative record for

permits, the procedure for appeal of permits, and the determination of

the beginning and ending days for any scheduled time period. Unlike

proposed Secs. 71.11(a)-(j), provisions in proposed Secs. 71.11(k)-(m)

would apply to all permit actions, including administrative amendments,

de minimis permit revisions, minor permit revisions and significant

permit revisions.

The EPA considered two alternative methods of establishing the

public participation and administrative review procedural requirements.

The first alternative would be to amend the existing procedures in 40

CFR part 124, which establishes specific decision making procedures for

RCRA, Underground Injection Control (UIC), PSD, and NPDES permits, so

that the procedures would be compatible with the part 71 program. The

EPA would then incorporate those provisions by reference into the part

71 permit rule. The second alternative was to establish public

participation and administrative appeal procedures as a separate

section of this rule. This alternative has the advantage of allowing

these procedures to focus specifically on the needs of the part 71

program as well as appear in close proximity to the permit program

requirements in the Code of Federal Regulations.

Today's proposal follows the second alternative. The proposed

public participation and administrative appeals procedures are set out

at Sec. 71.11 and are based closely on selected provisions of part 124,

subpart A. The EPA does not believe the choice of one format over the

other will have a substantial impact on the implementation of this

rule.

Once a permit application is complete, including an application to

revise an existing permit, the permitting authority would tentatively

decide whether to prepare a draft permit. Such draft permits would

contain permit conditions specified in proposed Sec. 71.6, public

notice of the draft permit would be issued and the draft would be made

available for comment. Administrative amendments of permits would not

be subject to draft permit or public notice requirements. Public notice

of de minimis permit revisions would be on a post hoc basis, and draft

permits for minor permit revisions would be publicly noticed by the

applicant source. All draft permits issued by the permitting authority

would be accompanied by a statement that briefly describes the

derivation of the conditions of the draft permit and the reasons for

them.

Proposed Sec. 71.11(d) would establish public notice and comment

procedures for part 71 permit actions not addressed elsewhere in the

proposal, including application denials, draft permit preparation,

scheduling of public hearings, reopening of the public comment period,

and granting of appeals. Where other provisions of this proposal

establish permitting procedures for specific types of actions, such as

in the provisions on administrative amendments, de minimis permit

revisions, and minor permit revisions, those provisions would govern.

Notice of draft permits under proposed Sec. 71.11(d) (including permit

revisions) would provide at least 30 days for public comment, and

notices of hearings would be issued at least 30 days before hearings

are held. Notice would be provided by mail to interested persons, by

publication, or by other reasonable means and would include information

on the permittee, contact persons, and general procedures on submitting

comments and requesting to speak at hearings. In addition, notices of

hearings would provide information on dates, times, and places of

hearings, as well as applicable rules and procedures. The permitting

authority could hold hearings either upon the basis of requests or on

its own initiative.

Proposed Sec. 71.11(e) would establish requirements for

consideration of comments on a draft permit. It would require that a

request for a public hearing be in writing and include a statement of

the nature of the issues proposed to be raised at the hearing. It would

also stipulate that all comments be considered in making the final

decision on the draft permit, and that a publicly available record be

kept of commenters and issues raised.

Proposed Sec. 71.11(f) on public hearings would require that a

public hearing be held if there was a significant degree of interest in

a draft permit. The permitting authority would designate a Presiding

Officer who would be responsible for conducting the hearing. This

proposed procedure would allow statements from any person, with

reasonable limits on time allowed for oral statements. A tape recording

or written transcript would be required to be made available to the

public.

Proposed Sec. 71.11(g) would require that all reasonably

ascertainable issues and all reasonably ascertainable arguments be

raised or submitted by the close of the public comment period. It would

require that supporting materials be submitted in full, rather than

incorporated by reference. In order to comply with this proposed

requirement, the comment period could be longer than 30 days, at the

discretion of the permitting authority.

Proposed Sec. 71.11(h) would allow the permitting authority to

reopen the public comment period if any person believed that a

condition of the draft permit is inappropriate, or that the permitting

authority's decision to deny an application, terminate a permit, or

prepare a draft permit is inappropriate. If information submitted

during the public comment period appeared to raise substantial new

questions, the [[Page 20825]] permitting authority would have the

flexibility to prepare a new draft permit, or prepare a revised

statement of basis and reopen or extend the comment period.

Proposed Sec. 71.11(i) would require the permitting authority to

issue a final permit decision once the public comment period had

closed. The final decision, which becomes effective immediately upon

issuance of the decision or a later date specified in the decision,

would be a decision to issue, deny, revise, revoke and reissue, renew,

or terminate a permit.

Proposed Sec. 71.11(j) would require the permitting authority to

issue a response to comments. The response would specify what

provisions, if any, of the draft permit were changed in the final

permit decision, and why. It would also require a description and

response to all significant comments, and require inclusion of any

cited documents in the administrative record. If an affected State

recommended changes to the draft permit that were not accepted by the

permitting authority, proposed Sec. 71.11(j) would require written

notification to the affected State.

Final permit decisions would be based on the administrative record

defined in proposed Sec. 71.11(k), including comments received, hearing

transcripts, the response to comments, the final permit, the permit

application, and the draft permit and its statement of basis.

Proposed Sec. 71.11(l) grants a right of appeal of all final permit

decisions, including those taken under provisions establishing

procedures for administrative amendments, de minimis permit revisions,

and minor permit revisions, and establishes procedures for such

appeals. Within 30 days of a final permit decision, interested persons

could petition the Environmental Appeals Board to review the final

permit decision. Petitions for review would be required to include a

statement of the reasons supporting review and could address only

issues raised during the public comment period, unless it was

impracticable to raise the relevant objections during such period or

the grounds for objection arose after the period closed. An example of

a situation in which it is impracticable to raise an objection during

the comment period would be when a significant change is made from a

draft to final permit without providing an opportunity for public

comment. Moreover, while persons who participated in the comment or

hearing processes could petition the Board to review any condition of

the final permit decision, persons who failed to file comments or

participate in hearings could petition the Board only with respect to

changes from the draft to final permit decision. When a part 71 permit

is appealed, it would nevertheless remain

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