Clean Air Act Proposed Interim Approval of Operating Permits Program; State of Iowa

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5197-2]

Clean Air Act Proposed Interim Approval of Operating Permits

Program; State of Iowa

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

ACTION: Proposed rule.

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SUMMARY: The EPA proposes interim approval of the Operating Permits

Program submitted by the state of Iowa for the purpose of complying

with Federal requirements which mandate that states develop, and submit

to EPA, programs for issuing operating permits to all major stationary

sources, and to certain other sources.

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

May 26, 1995.

ADDRESSES: Comments may be mailed to: Christopher D. Hess,

Environmental Protection Agency, Air Branch, 726 Minnesota Avenue,

Kansas City, Kansas 66101.

FOR FURTHER INFORMATION CONTACT: Copies of the Iowa submittal and other

supporting information used in developing the proposed rule are

available for inspection during normal business hours by contacting

Christopher D. Hess at (913) 551-7213.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

As required under Title V of the Clean Air Act (``the Act'') as

amended (1990), EPA has promulgated rules which define the minimum

elements of an approvable state operating permits program and the

corresponding standards and procedures by which the EPA will approve,

oversee, and withdraw approval of state operating

[[Page 20466]] permits programs (see 57 FR 32250 (July 21, 1992)).

These rules are codified at 40 Code of Federal Regulations (CFR) part

70. Title V requires states to develop, and submit to EPA, programs for

issuing these operating permits to all major stationary sources and to

certain other sources.

The Act requires that states develop and submit these programs to

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

each program within one year after receiving the submittal. The EPA's

program review occurs pursuant to section 502 of the Act and the part

70 regulations, which outline criteria for approval or disapproval.

Where a program substantially, but not fully, meets the requirements of

part 70, EPA may grant the program interim approval for a period of up

to two years. If EPA has not fully approved a program by two years

after the November 15, 1993, date, or by the end of an interim program,

it must establish and implement a Federal program.

II. Proposed Action and Implications

A. Analysis of Submission by State Authority

Introduction. What follows are brief explanations indicating how

the submittal meets the requirements of Part 70. The reader may consult

the technical support document (TSD) for a more detailed explanation of

these topics.

1. Support Materials

a. Governor's Letter. The state of Iowa's submittal includes a

request for approval in a cover letter by the Governor. This request

also states that the entire geography of Iowa will be covered by this

program. The letter further indicates that the state will not

administer the program on any Indian lands. Therefore, EPA will retain

jurisdiction over any Indian lands.

b. Regulations. The state of Iowa has submitted regulations which

comprise the Title V program in Iowa, Administrative Code (IAC) 567-

22.100-116. The regulations are analyzed in detail under various topics

of the TSD.

Although some rule changes are required by the state as outlined in

other portions of this notice, the submittal does not identify any

provisions which restrict the operation of the program and that would,

therefore, prevent proposal of interim approval of the program by the

EPA. The Iowa Attorney General's opinion does note, however, some areas

in which the regulations may not fully match the Title V requirements.

EPA has analyzed those provisions which do not clearly match the Title

V requirements, and has provided its rationale in the TSD for

determining that they are not sufficient to prevent EPA from proposing

interim approval of the program.

Iowa has submitted evidence, consistent with the applicable part 70

requirements, that the regulations comprising the program were properly

adopted by the Environmental Protection Commission. The submittal

includes a discussion of the public review and hearing process which

the commission followed in adopting the rules.

c. Attorney General's Legal Opinion. The opinion of the Attorney

General contains the elements required by 40 CFR 70.4(b)(3) and states

there is adequate authority to meet all of the Title V and Part 70

requirements.

2. Implementation

a. Program Description. A comprehensive plan for implementing the

Title V program is included in the submittal. This plan includes

program authority, agency organization, and staffing. As noted

elsewhere in this notice, EPA's concerns with the state's uncertainty

about the exact amount of personnel and operating permit fees have

resulted in a recommendation for interim approval.

In other matters related to the program description, it is noted

that an implementation agreement was not included in Iowa's submittal,

but the EPA and the Iowa Department of Natural Resources (IDNR) are

pursuing its development in anticipation of interim approval.

Iowa intends to defer for five years sources that are not major,

except for affected sources and solid waste incineration units. The

state intends to use a voluntary SIP-based operating permit program

that will capture some of these non-Title V sources.

The state has elected not to use the presumptive minimum for its

operating permit fee. Instead, Iowa's Title V rules require a flat

(without Consumer Price Index adjustment) $24 to fund the operating

permit program. Thus, a fee demonstration was submitted by the state

which demonstrates the adequacy of the proposed $24 fee to cover the

costs of the program.

Since adoption of the rule requiring $24, the state has elected to

collect only one-half of this amount and will subsequently determine if

the total amount is necessary to implement the program and, if so, will

collect the balance of the fee at a later time.

Finally, the state will fund two local programs (Linn County and

Polk County) to prepare draft Title V permits and assist in inspections

and compliance activities in their respective jurisdictions. The IDNR

will fund the programs through a 28E interagency agreement.

b. Program Implementation. Iowa's submittal includes requirements

for permit content, procedures for permit issuance, renewal,

reopenings, revisions, and for payment of fees by sources. It further

identifies two local agencies which will participate in the operating

permit program, and contains a description of the annual compliance

inspections.

The state describes how one-third of all permit applications will

be reviewed each year for the first three years of the program. A

description of the computerized permit tracking database and data

management in general is also provided.

The submittal also indicates that the guidance outlined for the

state concerning annual inspections, stack tests, and other compliance

measures will be issued to the two local agencies in implementing the

Title V program.

c. Personnel. In its original submission of November 15, 1993, Iowa

provided a workload analysis projecting the need for 73 FTE in the

state's air bureau, with additional Title V personnel augmenting the

program from the local permitting agencies. EPA's analysis of the

state's workload verified that this estimate was adequate to

successfully implement the operating permit program.

However, in a supplemental letter dated December 6, 1994 (herein

referenced as ``supplemental letter''), the state described a decision

to hire only 10 additional personnel in FY-95, 15 in FY-96, and more

personnel in later years. Since the state's air bureau currently has

approximately 21 personnel, the current staffing plus modified

projections would result in a total of 46 personnel in contrast to the

73 originally projected.

Since modifying the original projection in its supplemental letter,

the state has not officially demonstrated to the EPA that a fully

adequate number of personnel will be hired to implement the program.

The IDNR has presented a proposal to the Environmental Protection

Commission to increase the amount of personnel to 61 FTE (instead of

46), although this has not yet been approved or officially submitted to

EPA for consideration.

For EPA to propose full approval of the program when the interim

period expires, the state must either hire additional personnel to

fulfill its original workload analysis or [[Page 20467]] demonstrate

that successful implementation of the program may be accomplished with

fewer personnel.

d. Data Management. Iowa specifies that the Administrator shall

receive a copy of each permit application or modification application

(including any attachments and compliance plan), each proposed permit,

and each final permit. This information may be submitted in a computer-

readable format compatible with the Administrator's national data base

system.

The state's submittal describes a permit tracking data base

consistent with part 70. This permit tracking system will record all

Title V applications. After issuance of the final permits, the

information from this tracking system will be used to update EPA's

Aerometric Information Retrieval System (AIRS) database. The IDNR will

maintain Title V records for a minimum of five years. Any claim of

confidentiality requires the source to submit a copy of such claim

directly to the Administrator.

e. Applicability Provisions. The program proposed by Iowa defers

for five years sources that are not major sources, affected sources, or

solid waste incineration units required to obtain a permit pursuant to

section 129(e) of the Act. This deferral is allowed by Sec. 70.3(b)(1)

until such time as the Administrator completes a rulemaking to

determine how the program should be structured for nonmajor sources.

The Administrator is making this determination for some new section 112

standards as they are being promulgated.

In some cases, nonmajor sources subject to section 112 standards

will be required to obtain Title V permits. Iowa is proposing revisions

to its regulations to require sources not exempted or deferred to

receive Title V permits, consistent with Part 70 requirements.

The state exempts from inclusion in the permit application emission

units of a certain size, emission level, or production rate if not

needed to determine the applicability of or to impose any applicable

requirements. This conforms to the provisions of Sec. 70.5(c).

The state's current regulations exempt sources subject to new

source performance standards for new residential wood heaters and the

national emission standard for hazardous air pollutants for asbestos

demolition/renovation activities, which are located at major sources

from being included in permit applications. In its supplemental letter,

the state has committed to modify this rule consistent with Part 70.

f. Permit Content. Iowa's regulations require Title V permits to

include Part 70 terms and conditions for all applicable requirements at

the time the permit is issued. These terms include the permit duration,

required monitoring, and related recordkeeping and reporting

requirements, as required by Sec. 70.6. Iowa's regulations also require

the permit to contain a condition prohibiting emissions exceeding any

allowances that the source lawfully holds under Title IV of the Act, as

required by Sec. 70.6(a)(4). The regulations further require that the

terms and conditions of each alternative scenario meet the requirements

of Part 70. Permits are also required to contain terms and conditions,

if the permit applicant requests them, for the trading of emissions

increases and decreases at the facility.

Iowa's program provides for general permits and permit shields and

meets all corresponding part 70 requirements. The program does not

include provisions for temporary sources. Instead, sources will be

required to obtain a separate part 70 permit for each location.

Iowa's program does allow for section 502(b)(10) changes, but

requires these changes to involve an emissions trade. In its

supplemental letter, the state has committed to modify this rule

consistent with part 70.

Iowa's regulations do allow for permits that contain terms and

conditions allowing for the trading of emissions increases and

decreases in the permitted facility, solely for the purpose of

complying with a Federally enforceable emissions cap.

g. Permit Applications. Iowa's regulations require sufficient

information to be submitted with the application, in accordance with

the requirements of Sec. 70.5. However, the EPA has separately notified

the state of needed modifications to the permit application forms. In

several instances, the state's rules require information to be

submitted as part of the application in accordance with 70.5, but the

forms themselves do not request all of this information.

EPA is therefore proposing approval of the program in that it meets

the requirement to include standardized forms, but will continue to

request that the state modify these forms to fully meet all of the

specified requirements.

With respect to specific permit application criteria, sources are

required to submit permit applications within 12 months after becoming

subject to the permit program or at an earlier date established under

the state operating permit registry. Applications for permit renewals

are due between six and eighteen months prior to expiration of the

permit.

Source permit applications must conform to the standard Iowa

application form, and must contain information sufficient to allow the

IDNR to determine all applicable requirements with respect to the

applicant. Iowa regulations also require that an application be deemed

complete within 60 days of receipt unless the IDNR determines them to

be incomplete.

The Iowa regulations further require that no Title V source may

operate after the time it is required to submit a timely and complete

application, except in compliance with its Title V permit. However, an

application shield is applicable if a timely and complete application

is submitted by the source. This allows the source to continue to

operate without a permit, as long as the source has submitted any

additional information requested in writing by the IDNR within the time

frame allowed.

h. Permit Issuance. The state's current regulations do not require

that when a part 70 permit prohibits construction or a change in

operation, the owner/operator must obtain a Title V permit revision

before commencing construction as required by 70.5(a)(1)(ii). However,

in its supplemental letter, the state has agreed to modify this rule to

meet part 70 requirements.

The Iowa regulations require that final action be taken on complete

applications within 18 months of submittal of a complete application,

except for initial permit applications which are subject to the three

year transition plan set forth by the Clean Air Act Amendments of 1990.

The Iowa rules require submittal of a complete application,

compliance with public participation procedures, compliance with

notification to affected states, compliance with all applicable

requirements, and allow for a 45-day period for EPA objection to a

draft permit.

The Iowa regulations provide for priority on applications for

construction or modification under an EPA-approved preconstruction

review program. Furthermore, the Iowa rules do not affect the

requirement that any source have a preconstruction permit under an EPA-

approved preconstruction review program. The Iowa program also provides

that permits being renewed are subject to the same procedural

requirements (including those for public participation, affected state,

and EPA review) that apply to initial permit issuance. The Iowa

operating permit program also provides for

[[Page 20468]] administrative amendments, which meets part 70

requirements.

Permit modification processing procedures in the Iowa program are

consistent with part 70 requirements as they provide for the same

degree of permitting authority, EPA and affected state review, and

public participation.

The Iowa program also meets the Federal minor permit modification

procedures. The Iowa program provides for promptly sending to EPA any

notice that the IDNR refuses to accept all recommendations of an

affected state regarding a proposed minor permit modification. In

addition, the Iowa program provides that the permitting authority may

approve, but may not issue, a final permit modification until after

EPA's 45-day review period or until EPA has notified the permitting

authority that EPA will not object to issuance, whichever is first.

Significant modification procedures as defined in the Iowa program

also parallel the Federal program. Iowa has included provisions which

provide that a permit shall be reopened and revised when additional

requirements become applicable to a major source with a remaining

permit term of three or more years. The state also requires that such a

reopening be completed within 18 months after promulgation of the

applicable requirement. In addition, the Iowa program provides that

proceedings to reopen a permit will follow the same procedures as apply

to initial issuance, will affect only those parts of the permit for

which cause to reopen exists, and will ensure reopenings are made as

expeditiously as practicable.

i. Compliance Tracking and Enforcement. The requirement for a

compliance tracking and enforcement program has been met by the state.

Compliance tracking will be accomplished through two means. The first

is monthly entry of compliance and enforcement information into AIRS.

The second is an ongoing commitment in the annual section 105 grant

workplans to provide EPA with copies of all enforcement documents. The

enforcement program will consist of periodic ``for cause'' inspections,

followed by any appropriate enforcement action consistent with the

State/EPA Enforcement Agreement. The state has demonstrated adequate

enforcement authority consistent with Sec. 70.1 to seek injunctive

relief, to assess or sue to recover civil penalties, and to seek

criminal remedies, including fines. Civil and criminal penalties are

recoverable in a maximum amount of not less than $10,000 per day.

j. Public Participation, EPA, and Affected States Review. Iowa's

submittal ensures that all permit applications are available to the

public. All requirements are included to ensure that each interested

citizen will be aware of proposed and final permit actions. This

includes the commitment to keep a record of proceedings that will allow

citizens to object to a permit up to 60 days after the EPA review

period.

Iowa has adopted rules that ensure mutual review by affected states

and the EPA. The state will not issue a permit when it is objected to

in accordance with Part 70.8(c).

3. Fee Demonstration

The state's rules provide for a fee of $24 per ton per year, which

is required to be reviewed and adjusted as necessary by the

Environmental Protection Commission annually. Thus, a detailed fee

demonstration was submitted by the state since this amount is below the

presumptive minimum set forth in Sec. 70.9(b)(12). The IDNR provided a

list of sources and the estimated actual and potential emissions from

each source with a projected total revenue. This estimate adequately

covers the program's anticipated operating costs if the $24 fee is

maintained. If this fee is reduced, a revised demonstration will be

required from the state.

The state is also required by Sec. 70.9(d) to provide an initial

accounting of how required fee revenues are to be used solely to cover

the costs of meeting the various functions of the permitting program.

IAC Sec. 455.133B provides that any Title V fees collected shall be

deposited in an air contaminant source fund. This provision further

states that these fees ``shall be used solely to defray the costs

related to the permit, monitoring, and inspection program, including

the small business stationary source technical and environmental

compliance assistance program required pursuant to the Federal Clean

Air Act Amendments of 1990, sections 502 and 507.'' The State Auditor

will also audit the program according to the supplemental letter.

Section 70.4(b)(8)(v) requires the permitting authority to submit

an estimate of the permit program costs for the first four years after

approval, and a description of how the state plans to cover those

costs. The IDNR provided an estimate that adequately satisfies the

four-year projection requirement if the $24 fee is maintained. A new

forecast will be required if the fee is reduced.

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

a. Acid rain. The legal requirements for approval under the Title V

operating permits program for a Title IV program were cited in EPA

guidance distributed on May 21, 1993, entitled ``Title V--Title IV

Interface Guidance for States.'' Iowa has met the five major criteria

of this guidance which include legal authority, regulatory authority,

forms, regulatory revisions, and a commitment to acid rain deadlines.

Iowa developed acid rain rules based on a model state acid rain rule

described in guidance issued by the EPA in May 1993.

The EPA's Acid Rain Division has identified necessary rule changes

in its January 27, 1994, review of the state's program. The state has

committed to make these changes in its supplemental letter.

b. Section 112. The state has demonstrated adequate authority to

adopt section 112 standards and other requirements in a timely manner.

The specific Title V program approval criteria with respect to section

112 provisions are enumerated in a memorandum from John Seitz, Office

of Air Quality Planning and Standards, dated April 13, 1993. Iowa has

met these criteria as described in the following topics:

(1) Section 112(d), (f), and (h).--EPA Emissions Standards. In

accordance with Part 70, Iowa will not issue any permit (or permit

revision addressing any emissions unit subject to a newly promulgated

section 112 standard) unless it would ensure compliance with all

applicable section 112 standards. Additionally, Part 70 permits will be

reopened which have three or more years remaining before their

expiration date to incorporate any newly promulgated standard (section

70.7(f)(1)(i)).

(2) Section 112(g)--The EPA has issued an interpretive notice on

February 14, 1995 (60 FR 8333), which outlines EPA's revised

interpretation of 112(g) applicability. The notice postpones the

effective date of 112(g) until after EPA has promulgated a rule

addressing that provision. The notice sets forth in detail the

rationale for the revised interpretation.

The section 112(g) interpretive notice explains that EPA is still

considering whether the effective date of section 112(g) should be

delayed beyond the date of promulgation of the Federal rule so as to

allow states time to adopt rules implementing the Federal rule, and

that EPA will provide for any such additional delay in the final

section 112(g) rulemaking. Unless and until EPA provides for such an

additional postponement of section 112(g), Iowa must have a Federally

enforceable mechanism for implementing section 112(g) during the period

between [[Page 20469]] promulgation of the Federal section 112(g) rule

and adoption of implementing Federal regulations.

The EPA is aware that Iowa lacks a program designed specifically to

implement section 112(g). However, Iowa has proposed rule 22.3(6) that

gives the state authority to limit emissions of HAPs. Iowa may use this

authority to establish case-by-case MACTs as needed for the review of

new or modifed hazardous air pollutant sources until such time as they

adopt 112(g).

(3) Section 112(i)(5)--Early Reductions. Since the state has

elected not to adopt the November 29, 1992, early reduction rule by

reference, the state will need to submit a delegation request and

demonstration, pursuant to 40 CFR Part 63, Subpart E, in order for EPA

to delegate authority to the state for implementation and enforcement

of the Federal early reduction program.

(4) Section 112(j)--Case-by-case MACT Hammer. It is the agency's

intent to make case-by-case MACT determinations and to issue permits to

subject sources in accordance with the 112(j) requirements.

(5) Section 112(l)--State Air Toxics Programs. Requirements for

approval, specified in 40 CFR Sec. 70.4(b), encompass section 112(l)(5)

approval requirements for delegation of section 112 standards as

promulgated by EPA as they apply to part 70 sources. Section 112(l)(5)

requires that the state's program contain adequate authorities,

adequate resources for implementation, and an expeditious compliance

schedule, which are also requirements under part 70. Therefore, the EPA

is proposing to grant approval under section 112(l)(5) and 40 CFR part

63.91 to Iowa for its program mechanism for receiving delegation of all

existing and future section 112(d) standards for both part 70 and non-

part 70 sources, and section 112 infrastructure programs, that are

unchanged from Federal rules as promulgated. In addition, EPA is also

proposing delegation of all existing standards and programs under CFR

parts 61 and 63 for part 70 and non-part 70 sources.

Iowa has informed the EPA that it intends to accept delegation of

section 112 standards through adoption by reference. The details of

this delegation mechanism will be set forth in an implementation

agreement between the state and EPA, to be implemented upon program

approval.

(6) Section 112(r)--Accidental Release Plans. The agency has

provided for the section 112(r) requirements in its rules. These rules

specifically state that if any source is required to develop and

register a risk management plan, the permit shall state the requirement

for submission of the plan to the IDNR. This rule also requires that an

annual certification be filed with the IDNR that the plan is being

properly implemented.

Finally, for sources failing to make the required risk management

plan submittal, Iowa rule 22.105(2)h(3)2 states that the permit

application shall include a compliance schedule for sources that are

not in compliance with all applicable requirements at the time of

permit issuance.

B. Options for Approval/Disapproval and Implications

The EPA is proposing to grant interim approval for two years to the

operating permits program submitted by the state of Iowa on November

15, 1993. In order to receive full approval, the state must adopt and

submit to the EPA the rule changes identified above within 18 months of

receiving full approval. Specifically, the state must amend the

following rules for consistency with part 70:

(1) IAC Sec. 22.101 pertaining to nonmajor sources which are not

exempted from future section 112 standards;

(2) IAC Sec. 22.102 and Sec. 103 pertaining to insignificant

activities and exempt sources;

(3) IAC Sec. 22.105 pertaining to permit revisions prior to

commencing construction;

(4) IAC Sec. 22.110 pertaining to section 502(b)(10) changes.

The state must also finalize its operating permit fee and submit a

revised fee demonstration as necessary. And, the state must either hire

the originally forecasted amount of personnel to implement the Title V

program or provide a revised workload analysis that adequately

describes how the program may be successfully implemented with fewer

personnel.

Finally, the state must correct its acid rain regulations to be

consistent with EPA's rules as discussed in the technical support

document.

Requirements for approval, specified in 40 CFR Sec. 70.4(b),

encompass section 112(l)(5) approval requirements for delegation of

section 112 standards as promulgated by EPA as they apply to part 70

sources. Section 112(l)(5) requires that the Iowa program contain

adequate authorities, adequate resources for implementation, and an

expeditious compliance schedule, which are also requirements under part

70. Therefore, the EPA is also proposing to grant approval, under

section 112(l)(5) and 40 CFR 63.91, to Iowa for its program mechanism

for receiving delegation of all existing and future section 112(d)

standards for both part 70 and non-part 70 sources, and infrastructure

programs under section 112 that are unchanged from Federal rules as

promulgated. In addition, EPA proposes to delegate existing standards

under 40 CFR parts 61 and 63 for both part 70 and non-part 70 sources.

The scope of Iowa's part 70 program that EPA proposes to approve in

this notice would apply to all part 70 sources as defined in the

approved program within Iowa.

III. Administrative Requirements

A. Request for Public Comments

Copies of Iowa's submittal and other information relied upon for

the proposed interim approval are contained in a docket maintained at

the EPA Regional Office. The docket is an organized and complete file

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

the development of this proposed rulemaking. The docket is available

for public inspection at the location listed under the ADDRESSES

section of this document.

B. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

C. Regulatory Flexibility Act

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

requirements, but simply address operating permits programs submitted

to satisfy the requirements of 40 CFR Part 70. Because this action does

not impose any new requirements, it does not have a significant impact

on a substantial number of small entities.

IV. Miscellaneous

A. Proposed Rulemaking Action

List of Subjects in 40 CFR Part 70

Environmental protection, Air pollution control, Intergovernmental

relations, Operating permits, Reporting and recordkeeping requirements.

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

Dated: April 3, 1995.

Dennis Grams,

Regional Administrator.

[FR Doc. 95-10244 Filed 4-25-95; 8:45 am]

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