Clean Air Act Proposed Full Approval of Operating Permits Program; State of Kansas, and Delegation of 112(l) Authority

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[KS-001; AD-FRL-5252-2]

Clean Air Act Proposed Full Approval of Operating Permits

Program; State of Kansas, and Delegation of 112(l) Authority

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed full approval.

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SUMMARY: The EPA proposes full approval of the Operating Permits

Program submitted by the state of Kansas, for the purpose of complying

with Federal requirements for states which develop, and submit to EPA,

programs for issuing operating permits to all major stationary sources

and to certain other sources. This notice explains EPA's rationale for

the proposed action, and identifies several revisions to the program

which must be made before EPA can take final action to approve it.

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

August 2, 1995.

ADDRESSES: Comments should be addressed to Wayne A. Kaiser at the

address below. Copies of the Kansas submittal and other supporting

information used in developing the proposed rule are available for

inspection at the U.S. Environmental Protection Agency, Region VII, Air

Branch, 726 Minnesota Avenue, Kansas City, Kansas 66101.

FOR FURTHER INFORMATION CONTACT: Wayne A. Kaiser at (913) 551-7603.

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 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 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 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 period, it must establish and implement a Federal program.

II. Proposed Action and Implications

A. Analysis of Submission by State Authority

1. Support Materials

The Governor of Kansas submitted an administratively and

technically complete Title V Operating permit program on December 12,

1994. EPA deemed the program submittal complete in a letter to the

governor on January 26, 1995. Comments noting deficiencies in the

Kansas program were sent to the state in a letter dated February 22,

1995. The state responded in letters dated April 7 and April 17, 1995.

The program submittal includes a legal opinion from the Attorney

General of Kansas stating that the laws of the state provide adequate

legal authority to carry out all aspects of the program, and a

description of how the state intends to implement the program. The

submittal additionally contains evidence of proper adoption of the

program regulations, permit application forms, a data management

system, and a permit fee demonstration.

2. Program Description

The Governor's letter states that the entire geography of Kansas

will be covered by this program and that the state will not administer

the program on any Indian lands. EPA will administer the Title V

program on Indian lands in Kansas. The letter also states that the

Kansas Department of Health and Environment (KDHE) will be the official

permitting authority responsible for implementation of the program.

Finally, the letter requests approval and delegation of authority to

implement section 112(l) of the Act.

In addition to the state's class I Title V permit rules, the state

is establishing a State Implementation Plan (SIP) based permit system

for creating Federally enforceable limitations, called the class II

permit. This permit mechanism will allow sources to avoid having to

obtain a part 70 operating permit. Finally, the state is requiring all

air emission sources not qualifying for a class I or class II permit to

obtain a class III permit.

The state has been collecting emission fees for two years, which

have been used for ``ramp-up'' activities, including the hiring of

additional staff and funding of a Small Business Assistance Program.

The state provided a resource demonstration, discussed later, to

justify deviating from the presumptive minimum of $25 per ton, Consumer

Price Index (CPI) adjusted. The state is also authorized to collect

fees for non-Title V program activities.

3. Regulations and Program Implementation

Except as noted below, the state submittal, including the core

operating permit regulations (Kansas Administrative Regulations

(K.A.R.) 28-19-500 through 518), meets the requirements of 40 CFR 70.2

and 70.3 with respect to applicability; 40 CFR 70.4, 70.5, and 70.6

with respect to permit content including operational flexibility; 40

CFR 70.5 with respect to complete application forms and criteria which

define insignificant activities; 40 CFR 70.7 with respect to public

participation and minor permit modifications; and 40 CFR 70.11 with

respect to requirements for enforcement authority.

Areas in which the Kansas program is deficient and corrective

action is required prior to full approval are discussed below. Although

failure to correct the program would require EPA to disapprove it,

Kansas has indicated that it can make the required changes and submit

them to EPA. Readers may refer to the Technical Support Document (TSD)

accompanying this rulemaking for a detailed explanation of each comment

and the corrective actions required of the state.

a. Rule revisions. K.A.R. 28-19-7, General provisions; definitions.

The state definition of applicable requirement as presently written

requires that an SIP or Federal Implementation Plan requirement must be

part of the Kansas air quality regulations. The state has SIP

requirements, such as source-specific permits, and local agency air

regulations, which are applicable requirements but are not in the

Kansas air quality regulations. The state has committed to revise

K.A.R. 28-19-7(e)(1) to remove this restriction.

Secondly, the applicable requirement definition does not include

construction permits issued pursuant to rules K.A.R. 28-19-300, and its

predecessor, K.A.R. 28-19-14. The state has committed to add a

paragraph (e)(2)(D) to the definition of applicable requirement to

correct this omission. These revisions are necessary to meet EPA's

definition of applicable requirement in 70.2.

K.A.R. 28-19-511. Class I operating permits; application contents.

Paragraph (b) details information which must be included in a permit

application. This paragraph must be revised in three areas. First,

511(b)(3) must be revised to clarify that fugitive emissions of

regulated pollutants must be included in the permit application.

Second, 511(b)(3)(A) must be revised to clarify that the state

maintains a list of insignificant activities which does not need to be

included on the application form. The state has decided to remove this

list from the application forms but maintain it separately. The state

must also submit its list of insignificant activities to EPA for

approval. And third, 511(b)(16) must be revised to clarify that

compliance plans apply to all sources. As written, the rule could be

read to apply only to acid rain sources. These revisions are necessary

to meet the requirements for applications for

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Title V permits in 70.3(d), 70.5(c), 70.5(c)(2), and 70.4(c)(8).

K.A.R. 28-19-512. Class I operating permits; permit content. Rule

512(a)(7) requires that ``where a permit contains an emission

limitation which is an alternative to an emission limitations contained

in'' the SIP, the alternative meet certain requirements. Unlike

70.6(a)(1)(iii), this provision is not qualified by the statement that

the SIP must expressly allow for alternative limits. The state has

committed to revise its rule to meet this requirement. Rule 512(a)(18),

pertaining to the terms and conditions for trading of emissions, does

not require the source to provide the state and EPA with a seven-day

notice as required by 70.4(b)(12)(iii). The state has committed to

revise its rule to meet this requirement.

K.A.R. 28-19-518. Class I operating permits; complete applications.

Rule 518(a) does not contain a requirement, consistent with 70.7(b)(1),

that an application be both ``timely'' filed and complete. The state

has committed to revise this rule to include the ``timely'' component.

Secondly, rule 518(b), pertaining to the determination of a complete

application, does not specify what must be included in a permit

application in order to be deemed complete. The state has committed to

add a statement to the effect that a complete application is one which

substantially complies with the requirements of K.A.R. 28-19-511, Class

I operating permits; application contents.

3. Other issues

K.A.R. 28-19-510. Class I operating permits; application timetable.

This rule requires a complete and timely application to be submitted

not later than the date specified by the KDHE, as published in the

Kansas Register, on which the source becomes subject to the permitting

program, and for sources operational at the time of the effective date

of the operating permit program, no later than the date specified by

the KDHE as published in the Kansas Register.

As a practical matter, Kansas will be notified by EPA as soon as

the anticipated date of publication of program approval in the Federal

Register becomes known. Kansas has committed to publishing its

application schedule in the Kansas Register within the 30-day period

preceding the effective date of the program. Thus, the state will have

the full year in which to receive applications. Kansas has provided a

sample Kansas Register notice which contains the draft application

schedule. Kansas plans to request applications in a staggered, three-

tiered, SIC code-based approach, which ensures that all applications

are received within one year of program approval pursuant to 70.5(a).

EPA concurs with this approach.

K.A.R. 28-19-513. Class I operating permits; permit amendment,

modification, or reopening and changes not requiring a permit action.

70.7(d)(1)(v) states that part 70 permit revisions which incorporate

the provisions of preconstruction permits may be accomplished through

the administrative amendment process, but only if the preconstruction

permit is issued under an EPA-approved program covering the relevant

procedural requirements substantially similar to those in part 70.

K.A.R. 28-19-513(a)(1)(E) includes a similar provision. However, the

Kansas preconstruction program does not contain procedures

substantially similar to the relevant part 70 procedures and has not

been approved by EPA. The Kansas Attorney General, in his April 7,

1995, supplemental opinion, has stated that the K.A.R. 513(a)(1)(E)

provision cannot be used to administratively amend permits, until EPA

approves revisions to the Kansas New Source Review program

incorporating the relevant part 70 procedural requirements. Therefore,

EPA believes this provision is approvable. Implementation Agreement

(I.A.)

The state has elected to include in an I.A., rather than

regulation, time lines for state action on a number of provisions

relating to permit processing. EPA believes that since most of the

deadlines to be established in the I.A. are for the benefit of EPA, the

deadlines may be in the I.A. rather than the regulation.

The state has committed to a schedule for adopting and submitting

the required rule revisions, for submitting its insignificant

activities list to EPA for approval, and has committed to finalizing an

I.A. with EPA which contains certain commitments and information which

EPA considers necessary for approval. If the state revises the

submission to correct the deficiencies as described in this notice and

no other program deficiencies are identified during the comment period

which preclude full approval, EPA's final action will be one of full

approval. Otherwise, EPA will confer disapproval.

4. Fee Demonstration

The state provided a detailed fee demonstration because the

emissions fee, $20 per ton, is below the presumptive minimum of $25

plus CPI. The KDHE 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 $20 fee is maintained. If this fee is reduced,

an additional demonstration will be required. A four-year estimate of

resources and costs was also submitted. The state has provided for

separate cost accounting procedures to ensure that fees collected are

used solely for the part 70 program. The state commits to conducting

periodic auditing reports and providing copies to EPA.

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

a. Authority and/or commitments for section 112 implementation.

Kansas has demonstrated in its program submittal adequate legal

authority to implement and enforce all section 112 requirements through

the Title V permit.

This legal authority is contained in Kansas' enabling legislation

and in regulatory provisions defining ``applicable requirements,'' and

states that the permit must incorporate all applicable requirements.

EPA has determined that this legal authority is sufficient to allow

Kansas to issue permits that ensure compliance with all section 112

requirements. EPA is interpreting the above legal authority to mean

that Kansas is able to carry out all section 112 activities. For

further rationale on this interpretation, please refer to the TSD

accompanying this rulemaking and the April 13, 1993, guidance

memorandum titled ``Title V Program Approval Criteria for Section 112

Activities,'' signed by John Seitz.

b. Section 112 (g)--Case-by-Case Maximum Achievable Control

Technology (MACT) For Modified/Constructed and Reconstructed Major

Toxic Sources. The EPA 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), Kansas

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must have a Federally enforceable mechanism for implementing section

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

112(g) rule and adoption of implementing Federal regulations.

The EPA is aware that Kansas lacks a program designed specifically

to implement section 112(g). However, Kansas does have a program for

review of new and modified hazardous air pollutant sources that can

serve as an adequate implementation vehicle during the transition

period, because it would allow Kansas to select control measures that

would meet MACT, as defined in section 112, and incorporate these

measures into a Federally enforceable preconstruction permit.

EPA is approving Kansas' preconstruction permitting program under

the authority of Title V and part 70, solely for the purpose of

implementing section 112(g) to the extent necessary during the

transition period between 112(g) promulgation and adoption of a state

rule implementing EPA's section 112(g) regulations. Although section

112(l) generally provides authority for approval of state air programs

to implement section 112(g), Title V and section 112(g) provide for

this limited approval because of the direct linkage between the

implementation of section 112(g) and Title V. The scope of this

approval is narrowly limited to section 112(g) and does not confer or

imply approval for purposes of any other provision under the Act (e.g.,

section 110). This approval will be without effect if EPA decides in

the final section 112(g) rule that sources are not subject to the

requirements of the rule until state regulations are adopted. The

duration of this approval is limited to 18 months following

promulgation by EPA of the 112(g) rule to provide adequate time for the

state to adopt regulations consistent with the Federal requirements.

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

approval, specified in 40 CFR 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. Kansas has

demonstrated that it meets these requirements. Therefore, the EPA is

proposing to grant approval under section 112(l)(5) and 40 CFR 63.91 to

Kansas 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. Kansas has informed EPA

that it intends to accept delegation of section 112 standards through

adoption by reference. In addition, EPA is also proposing delegation of

all existing standards and programs under 40 CFR Parts 61 and 63 for

part 70 and non-part 70 sources.

Kansas also requested that the program approval under 112(l)

include its pre-1990 amendments' National Emission Standard for

Hazardous Air Pollutants' program, and approval of its program to

regulate asbestos, Part 61, subpart M. Our proposed approval covers the

entire Kansas program under 112(l).

d. Title IV/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, titled ``Title V-Title IV

Interface Guidance for States.'' Kansas has met the criteria of this

guidance and has adopted by reference acid rain rules at 40 CFR part

72.

B. Proposed Actions

1. Full Approval

EPA is proposing to grant full approval contingent upon: first, the

state adopting and submitting the revisions to: (1) K.A.R. 28-19-7,

General Provisions; definitions, (2) K.A.R. 28-19-511, Class I

operating permits; applications contents, (3) K.A.R. 28-19-512, Class I

operating permits; permit content, (4) K.A.R. 28-19-518, Class I

operating permits, complete applications; second, the state submitting

its insignificant activities list to EPA for approval; and third,

finalization of an I.A. with EPA.

2. Program for Straight Delegation of Section 112 Standards

As discussed above, EPA is proposing to grant approval under

section 112(l)(5) and 40 CFR 63.91 to Kansas 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.

III. Administrative Requirements

A. Request for Public Comments

The EPA is requesting comments on all aspects of this proposed

rule. Copies of the state's submittal and other information relied upon

for the proposed 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 principal purposes of

the docket are:

1. To allow interested parties a means to identify and locate

documents for participating in the rulemaking process, and

2. To serve as the record in case of judicial review. The EPA will

consider any comments received by August 2, 1995.

B. Executive Order 12866

The Office of Management and Budget has exempted this regulatory

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.

D. Unfunded Mandates

Under Sections 202, 203, and 205 of the Unfunded Mandates Reform

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

1995, EPA must undertake various actions in association with proposed

or final rules that include a Federal mandate that may result in

estimated costs of $100 million or more to the private sector, or to

state, local, or tribal governments in the aggregate.

Through submission of this state operating permit program the state

and any affected local or tribal governments have elected to adopt the

program provided for under Title V of the Clean Air Act. These rules

may bind state, local, and tribal governments to perform certain

actions and also require the private sector to perform certain duties.

To the extent that the rules being proposed for approval by this action

will impose new requirements, sources are already subject to these

regulations under state law. Accordingly, no additional costs to state,

local, or tribal governments, or to the private sector, result from

this action. EPA has also

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determined that this proposed action does not include a mandate that

may result in estimated costs of $100 million or more to state, local,

or tribal governments in the aggregate or to the private sector.

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: June 22, 1995.

Dennis Grams,

Regional Administrator.

[FR Doc. 95-16277 Filed 6-30-95; 8:45 am]

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