Clean Air Act Proposed Interim Approval of the Operating Permits Program; Monterey Bay Unified Air Pollution Control District, California

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5206-3]

Clean Air Act Proposed Interim Approval of the Operating Permits

Program; Monterey Bay Unified Air Pollution Control District,

California

AGENCY: 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 Monterey Bay Unified Air Pollution Control

District (Monterey or District) for the purpose of complying with

federal requirements for an approvable state program to issue operating

permits to all major stationary sources, and to certain other sources.

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

June 15, 1995.

ADDRESSES: Comments should be addressed to Regina Spindler, Mail Code

A-5-2, U.S. Environmental Protection Agency, Region IX, Air and Toxics

Division, 75 Hawthorne Street, San Francisco, CA 94105.

Copies of the District submittal and other supporting information

used in developing the proposed interim approval are available for

inspection during normal business hours at the following location: U.S.

Environmental Protection Agency, Region IX, 75 Hawthorne Street, San

Francisco, CA 94105.

FOR FURTHER INFORMATION CONTACT: Regina Spindler (telephone: 415/744-

1251), Mail Code A-5-2, U.S. Environmental Protection Agency, Region

IX, Air and Toxics Division, 75 Hawthorne Street, San Francisco, CA

94105.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

As required under title V of the Clean Air Act (Act) as amended

(1990), EPA has promulgated rules that define the minimum elements of

an approvable state operating permits program and the corresponding

standards and procedures by which EPA will approve, oversee, and

withdraw approval of state operating permits programs (see 57 FR 32250

(July 21, 1992)). These rules are codified at 40 CFR part 70 (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 title V programs to

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

each program within 1 year after receiving the submittal. The EPA's

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

70 regulations, which together outline criteria for approval or

disapproval. Where a program substantially, but not fully, meets the

requirements of part 70, EPA may grant the program interim approval for

a period of up to 2 years. If EPA has not fully approved a program by 2

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 State Submission

The analysis contained in this notice focuses on specific elements

of Monterey's title V operating permits program that must be corrected

to meet the minimum requirements of 40 CFR part 70. The full program

submittal, the Technical Support Document (TSD), which contains a

detailed analysis of the submittal, and other relevant materials are

available for inspection as part of the public docket. The docket may

be viewed during regular business hours at the address listed above.

[[Page 26014]]

1. Title V Program Support Materials

Monterey's original title V program was submitted by the California

Air Resources Board (CARB) on December 6, 1993. Additional material was

submitted on February 2, 1994 and April 7, 1994. The submittal was

found to be complete on February 4, 1994. The Governor's letter

requesting source category-limited interim approval, California

enabling legislation, and Attorney General's legal opinion were

submitted by CARB for all districts in California and therefore were

not included separately in Monterey's submittal. The Monterey

submission does contain a complete program description, District

implementing and supporting regulations, and all other program

documentation required by Sec. 70.4. An implementation agreement is

currently being developed between Monterey and EPA.

The EPA determined in its evaluation of Monterey's program that

Rule 218, the District's permitting regulation, contained several

deficiencies that were cause for disapproval of the program. The EPA

described these deficiencies and the corrections necessary to make the

program eligible for interim approval in a letter from Felicia Marcus,

EPA Region IX Administrator, to Abra Bennett, Monterey Air Pollution

Control Officer (APCO), dated July 22, 1994. In response, Monterey

adopted a revised regulation which was submitted by CARB on the

District's behalf on October 13, 1994. Section 70.4(e)(2) gives EPA the

option of extending the review period for a title V program submission

if the program is materially changed during the initial one-year

review. Because the revisions to Monterey's program were regulatory and

affect critical elements of part 70, such as applicability, permit

applications, and permit content, the program required additional

review and analysis. The EPA considered the program to be materially

changed and therefore decided to exercise the Sec. 70.4(e)(2) option

and extend its review period by six months. This extension moves the

deadline for EPA's final action on Monterey's title V operating permits

program from December 6, 1994, which is one year after receipt of the

original program submittal, to June 6, 1995.

2. Title V Operating Permit Regulations and Program Implementation

Monterey's regulations adopted or revised to implement title V

include Rule 218, Title V: Federal Operating Permits, adopted November

17, 1993 and revised on September 21, 1994; Rule 308, Title V: Federal

Operating Permit Fees, adopted November 17, 1993; and Rule 201, Sources

Not Requiring Permits, adopted September 1, 1974, as revised on April

21, 1993. The regulations substantially meet the requirements of 40 CFR

part 70, Secs. 70.2 and 70.3 for applicability; Secs. 70.4, 70.5, and

70.6 for permit content, including operational flexibility; section

70.7 for public participation and minor permit modifications; section

70.5 for criteria that define insignificant activities; section 70.5

for complete application forms; and section 70.11 for enforcement

authority. Although the regulations substantially meet part 70

requirements, there are several deficiencies in the program that are

outlined under section II.B. below as interim approval issues and

further described in the Technical Support Document.

a. Applicability and Duty To Apply

While the ``major source'' definition in Monterey's title V program

meets the applicability requirements of part 70, the District rule

provides that sources with actual emissions below certain thresholds

are exempt from the obligation to obtain a title V permit until three

years after program approval (Rule 218, section 1.3.3). Ordinarily,

part 70 requires that sources apply within one year of program

approval. A District may, however, request interim approval of a source

category-limited program that defers the obligation to obtain a permit

for a certain category or categories of sources. Monterey's source

category-limited program defers sources with actual emissions below 60%

of the criteria pollutant and 10 ton per year hazardous air pollutant

(HAP) major source thresholds and 72% of the 25 ton per year HAP

threshold. Two years after EPA grants interim approval to the source

category-limited program, these deferred sources must either have

federally enforceable conditions that limit their potential to emit to

below major source thresholds or will be required to apply for a title

V permit.

The EPA's policy on source category-limited interim approval is set

forth in a document entitled, ``Interim Title V Program Approvals,''

signed on August 2, 1993 by John Seitz, Director of the Office of Air

Quality Planning and Standards. This policy requires that a district

that requests interim approval of a source category-limited program

demonstrate that there are compelling reasons why the district cannot

address all sources in the interim. Additionally, the district must

demonstrate that the source category-limited program will apply to at

least 60 percent of all part 70 sources and cover sources that are

responsible for at least 80 percent of the aggregate emissions from

part 70 sources (60/80 test).

In an addendum to Monterey's revised title V program submittal,

dated October 25, 1994, from Fred Thoits, Engineering Division Chief to

Felicia Marcus, Region IX Administrator, Monterey demonstrated to EPA's

satisfaction that it meets this 60/80 test. With regard to the

demonstration of compelling reasons, the District asserts that while

many small sources in the District meet title V applicability criteria

based on their potential emissions, these sources' actual emissions are

well below the major source threshold. The District reasons that it is

a more productive use of its limited resources during the initial three

year transition period to issue title V permits to the larger sources

that are clearly intended to be permitted under title V and to

establish a prohibitory rule and synthetic minor permit program that

sources with lower actual emissions may use to establish federally

enforceable limits on their potential emissions. The EPA believes that

these are compelling reasons for implementing a source category-limited

interim program.

b. Insignificant Activities

Section 70.4(b)(2) requires states to include in their part 70

programs any criteria used to determine insignificant activities or

emission levels for the purpose of determining complete applications.

Section 70.5(c) states that an application for a part 70 permit may not

omit information needed to determine the applicability of, or to

impose, any applicable requirement, or to evaluate appropriate fee

amounts. Section 70.5(c) also states that EPA may approve, as part of a

state program, a list of insignificant activities and emissions levels

which need not be included in permit applications. Under part 70, a

state must request and EPA must approve as part of that state's program

any activity or emission level that the state wishes to consider

insignificant. Part 70, however, does not establish appropriate

emission levels for insignificant activities, relying instead on a

case-by-case determination of appropriate levels based on the

particular circumstances of the part 70 program under review.

Monterey submitted District Rule 201, its current permit exemption

rule, as its list of insignificant activities. It is clear that Rule

201 was not developed with the purpose of defining insignificant

activities under the District's title V program in mind; the

applicability provisions of the rule state that the exemptions apply to

the requirements of [[Page 26015]] Rule 200, the District requirements

for obtaining Authority to Construct permits and non-federally

enforceable Permits to Operate. Monterey did not provide EPA with

criteria used to develop the exemptions list, information on the level

of emissions from the activities, nor with a demonstration that these

activities are not likely to be subject to an applicable requirement.

Therefore, EPA cannot propose full approval of the list as the basis

for determining insignificant activities.

For other state and district programs, EPA has proposed to accept,

as sufficient for full approval, emission levels for insignificant

activities of 2 tons per year for criteria pollutants and the lesser of

1000 pounds per year, section 112(g) de minimis levels, or other title

I significant modification levels for hazardous air pollutants (HAP)

and other toxics (40 CFR 52.21(b)(23)(i)). The EPA believes that these

levels are sufficiently below the applicability thresholds of many

applicable requirements to assure that no unit potentially subject to

an applicable requirement is left off a title V application. The EPA is

requesting comment on the appropriateness of these emission levels for

determining insignificant activities in Monterey. This request for

comment is not intended to restrict the ability of other states and

districts to propose, and EPA to approve, different emission levels if

the state or district demonstrates that such alternative emission

levels are insignificant compared to the level of emissions from and

types of units that are permitted or subject to applicable

requirements.

c. Variances

Monterey has authority under State and local law to issue a

variance from State and local requirements. Sections 42350 et sec. of

the California Health and Safety Code and District Regulation VI,

Article 2 allow the District to grant relief from enforcement action

for permit violations. The EPA regards these provisions as wholly

external to the program submitted for approval under part 70, and

consequently, is proposing to take no action on these provisions of

State and local law.

The EPA has no authority to approve provisions of state or local

law, such as the variance provisions referred to, that are inconsistent

with the Act. The EPA does not recognize the ability of a permitting

authority to grant relief from the duty to comply with a federally

enforceable part 70 permit, except where such relief is granted through

procedures allowed by part 70. A part 70 permit may be issued or

revised (consistent with part 70 permitting procedures) to incorporate

those terms of a variance that are consistent with applicable

requirements. A part 70 permit may also incorporate, via part 70 permit

issuance or modification procedures, the schedule of compliance set

forth in a variance. However, EPA reserves the right to pursue

enforcement of applicable requirements notwithstanding the existence of

a compliance schedule in a permit to operate. This is consistent with

40 CFR Sec. 70.5(c)(8)(iii)(C), which states that a schedule of

compliance ``shall be supplemental to, and shall not sanction

noncompliance with, the applicable requirements on which it is based.''

d. Definition of Title I Modification

Among the several criteria that Monterey includes in its definition

of ``Significant Permit Modification'' is the provision that it involve

any ``significant change as specified in the EPA's title I regulations

in 40 CFR parts 51, 52, 50, 61 and 63.'' The EPA might interpret the

reference to title I regulations in part 51 to include changes reviewed

under a minor source preconstruction review program (``minor NSR

changes''). However, Monterey's inclusion of the term ``significant

change'' as well as the statement in its program description that title

I modifications include modifications that are ``major under federal

NSR, * * * major under PSD resulting in a `significant' net emissions

increase, or a modification at a major HAPs source resulting in a `de

minimis' increase of HAPs'' clearly indicates that Monterey does not

interpret ``title I modification'' to include ``minor NSR changes.''

Part 70 requires all modifications under title I of the Act to be

processed as significant permit modifications

(Sec. 70.7(e)(2)(i)(A)(5)). The EPA is currently in the process of

determining the proper definition of ``title I modification.'' As

further explained below, EPA has solicited public comment on whether

the phrase ``modification under any provision of title I of the Act''

in 40 CFR 70.7(e)(2)(i)(A)(5) should be interpreted to mean literally

any change at a source that would trigger permitting authority review

under regulations approved or promulgated under title I of the Act.

This would include state preconstruction review programs approved by

EPA as part of the State Implementation Plan under section 110(a)(2)(C)

of the Clean Air Act.

On August 29, 1994, EPA proposed revisions to the interim approval

criteria in 40 CFR 70.4(d) to, among other things, allow state programs

with a more narrow definition of ``title I modification'' to receive

interim approval (59 FR 44572). The Agency explained its view that the

better reading of ``title I modification'' includes minor NSR, and

solicited public comment on the proper interpretation of that term (59

FR 44573). The Agency stated that if, after considering the public

comments, it continued to believe that the phrase ``title I

modification'' should be interpreted as including minor NSR changes, it

would revise the interim approval criteria as needed to allow states

with a narrower definition to be eligible for interim approval.

The EPA hopes to finalize its rulemaking revising the interim

approval criteria under 40 CFR 70.4(d) expeditiously. If EPA

establishes in its rulemaking that the definition of ``title I

modification'' can be interpreted to exclude changes reviewed under

minor NSR programs, Monterey's definition of ``significant permit

modification'' and interpretation of ``title I modification'' would be

fully consistent with part 70. Conversely, if EPA establishes through

the rulemaking that the definition of ``title I modification'' must

include changes reviewed under minor NSR, Monterey's definition and

interpretation will become a basis for interim approval. If the

definition and interpretation become a basis for interim approval as a

result of EPA's rulemaking, Monterey would be required to revise its

definition and interpretation to conform to the requirements of part

70.

Accordingly, today's proposed approval does not identify Monterey's

definition of ``significant permit modification'' and interpretation of

``title I modification'' as necessary grounds for either interim

approval or disapproval. Again, although EPA has reasons for believing

that the better interpretation of ``title I modification'' is the

broader one, EPA does not believe that it is appropriate to determine

whether this is a program deficiency until EPA completes its rulemaking

on this issue.

3. Permit Fee Demonstration

Section 502(b)(3) of the Act requires that each permitting

authority collect fees sufficient to cover all reasonable direct and

indirect costs required to develop and administer its title V operating

permits program. Each title V program submittal must contain either a

detailed demonstration of fee adequacy or a demonstration that

aggregate fees collected from title V sources meet or exceed $25 per

ton per year (adjusted [[Page 26016]] annually based on the Consumer

Price Index (CPI), relative to 1989 CPI). The $25 per ton amount is

presumed, for program approval, to be sufficient to cover all

reasonable program costs and is thus referred to as the ``presumptive

minimum,'' (40 CFR 70.9(b)(2)(i)).

Monterey's title V fee rule (Rule 308) requires all title V sources

to pay an application fee, an evaluation fee of $80.00 per hour for

every District staff hour necessary to complete the title V permit

evaluation, and an emissions-based fee of $14.44 per ton of emissions,

as calculated by the District. This emissions-based fee will be

adjusted annually based upon the CPI. In addition to these title V

fees, title V sources must continue to pay existing District permit

fees. These fees combined result in collection of an average of $92.00

per ton per year, an amount that is well above the presumptive minimum.

Monterey expects revenues of $73,600 in the first year of the program

and revenues of $200,000 in the second and ensuing years. Monterey's

fee schedule was developed based on an estimation of workload

associated with administration of the title V program.

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

a. Authority and Commitments for Section 112 Implementation

Monterey has demonstrated in its title V program submittal adequate

legal authority to implement and enforce all section 112 requirements

through the title V permit. This legal authority is contained in the

State of California enabling legislation and in regulatory provisions

defining ``federally enforceable requirements'' and requiring each

permit to incorporate conditions that assure compliance with all such

federally enforceable requirements. Monterey has supplemented this

legal authority with a commitment to implement and enforce section 112

requirements and to adopt additional regulations as needed to issue

permits that implement and enforce the requirements of section 112.

This commitment is contained in a letter from Abra Bennett, Air

Pollution Control Officer to Debbie Jordan, Chief of the Operating

Permits Section at EPA, Region IX, dated April 7, 1994. The EPA has

determined that the legal authority and commitments are sufficient to

allow Monterey to issue permits that assure compliance with all section

112 requirements. For further discussion, please refer to the Technical

Support Document accompanying this action and the April 13, 1993

guidance memorandum entitled, ``Title V Program Approval Criteria for

Section 112 Activities,'' signed by John Seitz.

b. Authority and Commitments for Title IV Implementation

Monterey committed in a letter from Abra Bennett, Air Pollution

Control Officer, dated April 7, 1994, to submit a complete acid rain

program to EPA by January 1, 1995. The letter stated the District's

intentions to adopt part 72, EPA's acid rain regulation, by reference;

to use EPA acid rain application forms; to revise District regulations

as necessary to accommodate federal revisions; and to meet all acid

rain deadlines contained in part 72. Monterey incorporated part 72

(except provisions applicable to phase I units and permitting of acid

rain units by EPA) by reference into District Regulation II, Rule 219

on November 23, 1994. Rule 219 was subsequently submitted to EPA along

with proof of board adoption.

B. Proposed Interim Approval and Implications

The EPA is proposing to grant interim approval to the operating

permits program submitted by CARB on behalf of the Monterey Bay Unified

Air Pollution Control District on December 6, 1993, supplemented on

February 2, 1994 and April 7, 1994, and revised by the submittal made

on October 13, 1994. If EPA were to finalize this proposed interim

approval, it would extend for two years following the effective date of

final interim approval, and could not be renewed. During the interim

approval period, Monterey would be protected from sanctions, and EPA

would not be obligated to promulgate, administer and enforce a federal

permits program for the District. Permits issued under a program with

interim approval have full standing with respect to part 70, and the 1-

year time period for submittal of permit applications by subject

sources begins upon the effective date of interim approval, as does the

3-year time period for processing the initial permit applications.

Following final interim approval, if the District failed to submit

a complete corrective program for full approval by the date 6 months

before expiration of the interim approval, EPA would start an 18-month

clock for mandatory sanctions. If Monterey then failed to submit a

corrective program that EPA found complete before the expiration of

that 18-month period, EPA would be required to apply one of the

sanctions in section 179(b) of the Act, which would remain in effect

until EPA determined that the District had corrected the deficiency by

submitting a complete corrective program. Moreover, if the

Administrator found a lack of good faith on the part of the District,

both sanctions under section 179(b) would apply after the expiration of

the 18-month period until the Administrator determined that the

District had come into compliance. In any case, if, six months after

application of the first sanction, the District still had not submitted

a corrective program that EPA found complete, a second sanction would

be required.

If, following final interim approval, EPA were to disapprove

Monterey's complete corrective program, EPA would be required to apply

one of the section 179(b) sanctions on the date 18 months after the

effective date of the disapproval, unless prior to that date the

District had submitted a revised program and EPA had determined that it

corrected the deficiencies that prompted the disapproval. Moreover, if

the Administrator found a lack of good faith on the part of the

District, both sanctions under section 179(b) would apply after the

expiration of the 18-month period until the Administrator determined

that the District had come into compliance. In all cases, if, six

months after EPA applied the first sanction, Monterey had not submitted

a revised program that EPA had determined corrected the deficiencies

that prompted disapproval, a second sanction would be required.

In addition, discretionary sanctions may be applied where warranted

any time after the end of an interim approval period if a district has

not timely submitted a complete corrective program or EPA has

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

granted full approval to a district program by the expiration of an

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

EPA must promulgate, administer and enforce a federal permits program

for that district upon interim approval expiration.

1. Monterey's Title V Operating Permits Program

If EPA finalizes this interim approval, Monterey must make the

following changes, or changes that have the same effect, to receive

full approval (all required revisions are to District Rule 218 unless

otherwise noted):

(1) Revise section 1.3 to require that, regardless of the source's

actual or potential emissions, acid rain sources and solid waste

incineration units required to obtain a permit pursuant to section

129(e) of the Act may not be exempted from the requirement to

[[Page 26017]] obtain a permit pursuant to Rule 218. Section 70.3(b)

requires that major sources, affected sources (acid rain sources), and

solid waste incinerators may not be exempted from the program.

Monterey's deferral for certain major sources other than acid rain

sources and solid waste incinerators is allowable under John Seitz's

``Interim Approval Guidance,'' dated August 2, 1993.

(2) Revise section 2.1.4 of the definition of ``Administrative

Permit Amendments'' as follows:

``requires more frequent monitoring or reporting for the stationary

source; or''

Increasing monitoring requirements could be a significant change to

these requirements. Significant changes in monitoring must be processed

as significant permit modifications. (Sec. 70.7(d)(1)(iii),

Sec. 70.7(e)(4))

(3) Revise the definition of ``Federally Enforceable Requirement''

in section 2.12 to include any standard or other requirement provided

for in the State Implementation Plan approved or promulgated by EPA.

This revision is necessary to make the section 2.12 definition

consistent with the part 70 definition of ``Applicable requirement''

and with the Rule 218, section 4.2.4 requirement that each permit

require compliance with any standard or requirement set forth in the

applicable implementation plan.

(4) Revise section 2.18.4 of the definition of ``Minor Permit

Modification'' to require that a minor permit modification may not

establish or change a permit condition used to avoid a federally

enforceable requirement to which the source would otherwise be subject.

(Sec. 70.7(e)(2)(i)(A)(4))

(5) Revise section 3.1.6.12 to require that the compliance

certification within the permit application include a statement

indicating the source's compliance status with any applicable enhanced

monitoring and compliance certification requirements of the Act.

(Sec. 70.5(c)(9)(iv))

(6) Revise section 3.1.6.13 as follows to be consistent with

Sec. 70.5(c)(8)(iii)(C):

* * * a schedule of compliance approved by the District hearing

board that identifies remedial measures, including an enforceable

sequence of actions, with specific increments of progress, a final

compliance date, testing and monitoring methods, recordkeeping

requirements, and a schedule for submission of certified progress

reports to the USEPA and the APCO at least every 6 months. This

schedule of compliance shall resemble and be at least as stringent

as that contained in any judicial consent decree or administrative

order to which the source is subject; and * * *

(7) Provide a demonstration that activities that are exempt from

permitting under Rule 218 (pursuant to Rule 201, the District's permit

exemption list) are truly insignificant and are not likely to be

subject to an applicable requirement. Alternatively, Rule 218 may

restrict the exemptions to activities that are not likely to be subject

to an applicable requirement and emit less than District-established

emission levels. The District should establish separate emission levels

for HAP and for other regulated pollutants and demonstrate that these

emission levels are insignificant compared to the level of emissions

from and type of units that are required to be permitted or subject to

applicable requirements. Revise Rule 218 to require that insignificant

activities that are exempted because of size or production rate be

listed in the permit application. Revise Rule 218 to require that an

application may not omit information needed to determine the

applicability of, or to impose, any applicable requirement, or to

evaluate the fee amount required. (Sec. 70.5(c), Sec. 70.4(b)(2))

(8) Revise section 3.5.3 to provide that the APCO shall also give

public notice ``by other means if necessary to assure adequate notice

to the affected public.'' (Sec. 70.7(h)(1))

(9) Revise Rule 218 to include the contents of the public notice as

specified by Sec. 70.7(h)(2).

(10) Revise Rule 218 to provide that the District shall keep a

record of the commenters and of the issues raised during the public

participation process so that the Administrator may fulfill her

obligation to determine whether a citizen petition may be granted.

(Sec. 70.7(h)(5))

(11) The EPA must be provided with 45 days to review the version of

the permit that incorporates any public comments and that the District

proposes to issue. Rule 218 indicates that the District intends to

provide for concurrent public and EPA review of the draft permit.

Therefore, the District must revise the rule to provide that EPA will

have an additional 45 days to review the proposed permit if it is

revised as a result of comments received from the public.

(Sec. 70.8(a)(1))

(12) Revise Rule 218 to define and provide for giving notice to

affected states per Secs. 70.2 and 70.8(b). Although emissions from

Monterey may not currently be affecting any neighboring states, Native

American tribes may in the future apply for treatment as states for air

program purposes and if granted such status would be entitled to

affected state review under title V. (See EPA's proposed Tribal Air

Rule at 59 FR 43956, August 25, 1995.)

(13) Revise section 3.7.1 to require that the permit shall be

reopened under the circumstances listed in sections 3.7.1.1 to 3.7.1.3.

(Sec. 70.7(f)(1))

(14) Revise section 3.8.2 to provide, consistent with section

70.7(e)(2)(iv), that the District shall take action on a minor permit

modification application within 90 days of receipt of the application

or 15 days after the end of the 45-day EPA review period, whichever is

later. Currently, the District rule provides that the permit be issued

within 90 days after the application is deemed complete (section 3.3.2

provides 30 days from receipt for a completeness determination) or 60

days after written notice and concurrence from EPA, whichever is later.

The EPA will not necessarily provide written notice and concurrence on

minor permit modifications and the District rule does not address what

action is taken should EPA not provide written notice.

(Sec. 70.7(e)(2)(iv))

(15) Revise section 3.8.2 to provide that the action taken on a

minor permit modification application in the timeframes discussed above

in (14) shall be one of the following:

(a) Issue the permit modification as proposed;

(b) Deny the permit modification application;

(c) Determine that the requested modification does not meet the

minor permit modification criteria and should be reviewed under the

significant modification procedures; or

(d) Revise the draft permit modification and transmit to the

Administrator the new proposed permit modification.

The current District rule states that the minor permit modification

shall be completed within the timeframes discussed above in (14), but

does not specify that the District must take one of the actions listed

above. (Sec. 70.7(e)(2)(iv))

2. California Enabling Legislation--Legislative Source Category Limited

Interim Approval Issue

Because California State law currently exempts agricultural

production sources from permit requirements, the California Air

Resources Board has requested source category-limited interim approval

for all California districts. The EPA is proposing to grant source

category-limited interim approval to the operating permits program

submitted by the California Air Resources Board on behalf of Monterey

on December 6, 1993. In order for this program to receive full approval

(and to avoid a disapproval upon the expiration of this interim

approval), the California [[Page 26018]] Legislature must revise the

Health and Safety Code to eliminate the exemption of agricultural

production sources from the requirement to obtain a permit.

The above described program and legislative deficiencies must be

corrected before Monterey can receive full program approval. For

additional information, please refer to the TSD, which contains a

detailed analysis of Monterey's operating permits program and

California's enabling legislation.

3. District Preconstruction Permit Program Implementing Section 112(g)

The EPA has published an interpretive notice in the Federal

Register regarding section 112(g) of the Act (60 FR 8333; February 14,

1995). The interpretive notice explains that EPA is 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), Monterey must be able to implement section 112(g) during the

period between promulgation of the federal section 112(g) rule and

adoption of implementing District regulations.

For this reason, EPA is proposing to approve the use of Monterey's

preconstruction review program as a mechanism to implement section

112(g) during the transition period between promulgation of the section

112(g) rule and adoption by Monterey of rules specifically designed to

implement section 112(g).

However, since the sole purpose of this approval is to confirm that

the District has a mechanism to implement section 112(g) during the

transition period, the approval itself will be without effect if EPA

decides in the final section 112(g) rule that there will be no

transition period. The EPA is limiting the duration of this proposed

approval to 12 months following promulgation by EPA of the section

112(g) rule.

4. Program for Delegation of Section 112 Standards as Promulgated

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

section 112(l)(5) requirements for approval of a program 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, EPA is also proposing to grant approval under section

112(l)(5) and 40 CFR 63.91 of Monterey's program for receiving

delegation of section 112 standards that are unchanged from federal

standards as promulgated. California Health and Safety Code section

39658 provides for automatic adoption by CARB of section 112 standards

upon promulgation by EPA. Section 39666 of the Health and Safety Code

requires that districts then implement and enforce these standards.

Thus, when section 112 standards are automatically adopted pursuant to

section 39658, Monterey will have the authority necessary to accept

delegation of these standards without further regulatory action by the

District. The details of this mechanism and the means for finalizing

delegation of standards will be set forth in a Memorandum of Agreement

between Monterey and EPA, expected to be completed prior to approval of

Monterey's section 112(l) program for delegation of unchanged federal

standards. This program applies to both existing and future standards

but is limited to sources covered by the part 70 program.

III. Administrative Requirements

A. Request for Public Comments

The EPA is requesting comments on all aspects of this proposed

interim approval. Copies of the District'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

interim approval. The principal purposes of the docket are:

(1) To allow interested parties a means to identify and locate

documents so that they can effectively participate in the approval

process, and

(2) to serve as the record in case of judicial review. The EPA will

consider any comments received by June 15, 1995.

B. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

C. Regulatory Flexibility Act

The 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.

D. Unfunded Mandates Act

Under Section 202 of the Unfunded Mandates Reform Act of 1995

(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA

must prepare a budgetary impact statement to accompany any proposed or

final rule that includes a federal mandate that may result in estimated

costs to state, local, or tribal governments in the aggregate; or to

the private sector, of $100 million or more. Under Section 205, EPA

must select the most cost-effective and least burdensome alternative

that achieves the objectives of the rule and is consistent with

statutory requirements. Section 203 requires EPA to establish a plan

for informing and advising any small governments that may be

significantly or uniquely impacted by the rule.

EPA has determined that the proposed approval action promulgated

today does not include a federal mandate that may result in estimated

costs of $100 million or more to either state, local, or tribal

governments in the aggregate, or to the private sector. This federal

action approves pre-existing requirements under state or local law, and

imposes no new federal requirements. Accordingly, no additional costs

to state, local, or tribal governments, or to the private sector,

result from this action.

List of Subjects in 40 CFR Part 70

Environmental protection, Administrative practice and procedure,

Air pollution control, Intergovernmental relations, Operating permits,

Reporting and recordkeeping requirements.

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

Dated: May 2, 1995.

John Wise,

Acting Regional Administrator.

[FR Doc. 95-11794 Filed 5-15-95; 8:45 am]

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