# Operating Permits Program and Federal Operating Permits Program

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A95-21300

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** August 31, 1995
- **Citation:** 60 FR 45530

## Text

SUMMARY: The EPA is today proposing new streamlined procedures for
revising stationary source operating permits issued by State and local
permitting authorities or EPA under title V of the Clean Air Act (Act).
This proposal is a supplement to actions published in the Federal
Register on August 29, 1994 and on April 27, 1995 as they relate to
permit revisions. In addition, today's action proposes changes to the
certification that responsible officials of permitted sources are
required to submit and the emergency defense available for violations
of permit terms. It also clarifies the application of title I and title
V permitting requirements to non-major research and development (R&D)
facilities that are located with sources that are major under the Act.
Finally, it proposes to revise the procedural requirements applicable
to minor new source review (NSR) permitting under title I of the Act to
clarify the flexibility States possess in providing adequate process
for minor NSR actions.
Several concerns over complexity and burden of the previously
proposed permit revision system were raised in response to these
actions. As a result, the Agency today is proposing to establish a
system for revising operating permits that is simpler, more flexible,
and easier to implement than that proposed in the prior notices.
Implementation of today's proposal would benefit the environment
primarily through enhanced implementation of, and compliance with, air
quality control requirements. The extent of benefit would be nationwide
and could potentially include all requirements of the Act applicable to
part 70 sources.

DATES: Comments on the proposed regulatory changes must be received by
October 30, 1995. Comments on the revised Information Collection
Request (ICR) for the revised part 70 must be received by October 30,
1995.

ADDRESSES: Comments on the proposed revisions to 40 CFR part 70 must be
mailed (in duplicate if possible) to: EPA Air Docket (LE-131), Attn:
Docket No. A-93-50, room M-1500, Waterside Mall, 401 M Street SW,
Washington, DC 20460. Comments regarding the 40 CFR part 71 Federal
operating permits program must be mailed to the same address, Attn:
Docket No. A-93-51. Please identify comments as pertaining to today's
proposal by date and FR cite. Comments on the draft ICR for the revised
part 70 are to be submitted as per instructions in Section VI. E.,
Paperwork Reduction Act, of this preamble.
Docket: Supporting information used in developing the proposed
regulatory revisions to part 70 and part 71 are contained in Docket
Nos. A-93-50 and A-93-51 respectively, at the preceding address. This
docket is available for public inspection and copying between 8:30 a.m.
and 3:30 p.m. Monday through Friday. A reasonable fee may be charged
for copying.

FOR FURTHER INFORMATION CONTACT: Regarding proposed revisions to parts
51 and 70, Michael Trutna (919/541-5345), Ray Vogel (919/541-3153), or
Roger Powell (919/541-5331), mail drop 12, United States Environmental
Protection Agency, Office of Air Quality Planning and Standards,
Information Transfer and Program Integration Division, Research
Triangle Park, North Carolina 27711. Regarding proposed revisions to
part 71, Candace Carraway (919/541-3189) or Kirt Cox (919/541-5399) at
the same address.

SUPPLEMENTARY INFORMATION: Today's proposal reflects the principles
articulated in the President's and the Vice President's March 16, 1995
report, ``Reinventing Environmental Regulation.'' That report
establishes as goals for environmental regulation building partnerships
between EPA and State and local agencies, minimizing costs, providing
flexibility in implementing programs, tailoring solutions to the
problem, and shifting responsibilities to State and local agencies. The
Agency believes that today's proposal meets the goals of the report.

Public Comments

If possible, comments should be sent in both paper and computerized
form. Two paper copies of each set of comments are requested. Comments
generated on computer should also be sent on an IBM-compatible, 3\1/2\-
inch diskette and clearly labeled. Please identify comments as
pertaining to today's proposal by date and FR cite.

Table of Contents

The contents of today's preamble are in the following format:

I. Background
A. Operating Permit Revision System
B. Proposed Permit Revision System
C. Other Proposed Revisions in Today's Notice
D. Environmental Benefits
E. August 1994 Proposed Revisions
II. Alternative Proposal for Part 70 Permit Revision System
A. Overview
B. When is a Permit Revision Required
C. Automatic Incorporation for Changes Subject to State Review
Programs
D. Incorporation of Changes Not Subject to State Review Programs
E. Opportunity for EPA to Object and Permit Shield
F. Flexible Permits
G. Title I Modifications
H. EPA Issuance of PSD Permits
I. Rulemaking Under Section 302(j)
J. Revisions to Sec. 51.161
K. Incorporation of MACT Standards
L. Clarification for Section 112(r)
M. Solicitation of Input
III. Part 70 Program Revisions
IV. Proposal for the Federal Operating Permits Program
A. Overview
B. Changes Subject to State Review Programs
C. Changes Not Subject to State Review Programs
D. Combination Changes
E. Opportunity for EPA to Object and Permit Shield
F. Other Part 71 Changes
V. Other Changes and Clarifications
A. Rationale for Proposed Exemption for Non-major R&D Activities
B. Emergency Defense
C. Certification Language
D. Provisions Related to Tribal Programs
VI. Administrative Requirements
A. Public Hearing
B. Docket
C. Office of Management and Budget Review
D. Regulatory Flexibility Act Compliance
E. Paperwork Reduction Act
F. Unfunded Mandates

I. Background

A. Operating Permits Regulations

Title V requires that EPA develop regulations which set minimum
standards for State operating permits programs. Those regulations,
codified in part 70 of chapter I of title 40 of the Code of Federal
Regulations, were originally promulgated on July 21, 1992 (57 FR
32250). On August 29, 1994, EPA proposed a number of revisions to the
part 70 regulations as a result of negotiations with litigants who
petitioned for review of part 70 after its promulgation. The August
1994 proposal included new provisions governing permit revision
processes. Today's proposal supplements that part of the August 1994
proposal and defines a simpler approach to revising permits designed to
build upon existing State permitting programs.

[[Page 45531]]

Title V also requires that States submit their operating permit
programs for EPA approval and that EPA promulgate and administer a
Federal operating permits program for States that have not obtained EPA
approval by November 15, 1995. The EPA's proposed regulations, to be
codified at part 71, for the Federal operating permits program were
published on April 27, 1995 (60 FR 20804). In large part the proposed
regulations were modeled on the original part 70. However, the permit
revision procedures for proposed part 71 were based on the August 1994
proposal for part 70 permit revisions. Today EPA is proposing an
alternative permit revision process for part 71 that is based on
today's proposal for part 70 permit revision procedures.
B. Proposed Permit Revision System

The August 1994 notice proposed to revise Sec. 70.7 of part 70 to
set out a four-track system for revising operating permits. Comments
received at the October 19, 1994 public hearing and comments submitted
to the docket indicate that the proposed four-track system was widely
perceived as too complicated, prescriptive, and disruptive to existing
State programs. In response to those concerns, EPA sought further input
from representatives of State and local permitting agencies, industry,
and environmental groups to learn more directly of their implementation
concerns. The EPA received thoughtful ideas from these groups about how
the process for permit revisions might be accomplished in a more
streamlined fashion. The docket for today's action contains some
specific alternative permit revision approaches recommended by these
commenters.
Representatives of the various groups were in general agreement on
a number of issues. First, any permit revision system would need to be
far simpler to implement than that laid out in the August 1994
proposal. Second, it should be as streamlined and expeditious as
possible so as not to impede unduly a source's ability to respond to
changes in market conditions. Third, it should provide public process
commensurate with the environmental significance of the change. Fourth,
for changes subject to a State preconstruction review program
established pursuant to the Act (e.g., NSR), public, affected State,
and EPA review of the more environmentally significant changes should
occur during the underlying process, instead of a subsequent part 70
permit revision process. Finally, the process should maximize State and
local agency flexibility.
As discussed in Section II of this preamble, today's alternative
proposal satisfies all of these criteria by building on underlying
State review programs. After considering comments received on today's
proposal, EPA intends to promulgate final rules regarding permit
revisions along with the other issues addressed in the August 1994 and
April 1995 proposals.

C. Other Proposed Revisions in Today's Notice

Today's notice also proposes additional rule revisions to address
other issues raised by litigants in their petitions for review of part
70. These issues involve the current rule's provisions regarding
responsible official certifications, the emergency defense for
violations of some types of permit terms, section 302(j) rulemaking
regarding inclusion of fugitive emissions in the definition of major
source, and the definition of title I modification. It also proposes to
clarify the public review requirements of title I and title V
applicable to minor NSR permits and their subsequent incorporation into
part 70 permits. The EPA currently expects to complete rulemaking on
these issues at the same time it takes final action on the other issues
addressed in the August 1994 proposal. Proposed actions regarding
responsible official certifications, the emergency defense, and the
definitions of major source and title I modification are also included
in today's notice with respect to the part 71 Federal operating permits
program provisions.
Finally, in today's notice EPA is clarifying that non-major R&D
activities located with a source that is major under sections 112 or
302(j) of the Act or parts C or D of title I of the Act need not be
considered part of that major source. Depending on the extent to which
a non-major R&D facility contributes to the activity of the major
source, the R&D facility need not be subject to permitting under title
I or title V.
A number of revisions to the definitions in Sec. 70.2 are included
in today's notice to be consistent with the proposed revisions. Other
definitions are proposed to be added where needed for clarity.

D. Environmental Benefits

The operating permits program provides a uniform vehicle for State
and local agencies to administer other titles of the Act; not only the
requirements for attainment and maintenance of the national ambient air
quality standards (NAAQS) but of other provisions such as those to
protect the public from harmful effects of HAPs. It is through an
efficient permit program that many of the environmental benefits of
these programs are realized.
Part 70 helps achieve these benefits by giving company officials
the opportunity to be fully knowledgeable about their compliance
obligations and creates strong incentives for assuring that compliance
is maintained. This will in turn result in improved air quality for the
public, and States will not have to adopt new regulations to meet air
quality standards to make up for noncompliance with existing rules. In
the process of developing permit applications for part 70 programs,
companies have discovered new uncontrolled emission points or air
pollution requirements that applied to them but of which they were not
previously aware. As a result, these facilities are taking steps to
comply with those requirements. The vast majority of businesses in this
country want to comply with environmental regulations. The part 70
program clarifies their obligations while avoiding possibly costly
litigation.
Implementation of today's proposal will facilitate accomplishing
the described environmental benefits. The proposed revisions would
focus public and EPA review on, and ensure that resources will be
targeted to reviewing, changes with the most environmentally
significant impacts. In addition, the proposed streamlined permit
revision system assures that permits are speedily revised to include
all Act obligations for a source while avoiding unnecessary procedural
delays and opportunity costs. This will assure certainty of compliance
obligations for all parties.
Implementation of today's proposal also will help achieve
environmental benefits through its requirements for flexible permits.
In particular, the flexible permit provisions of today's proposal would
allow more options for sources in designing their title V permits to
meet environmental obligations. This increased flexibility would allow
sources to rely on emissions trading to meet pollution control
requirements and to use pollution prevention approaches which can
achieve additional emissions reductions.

E. August 1994 Proposed Revisions

The August 1994 proposal is not being withdrawn, but is instead
being supplemented by today's proposal. Today's proposal primarily
addresses provisions in Sec. 70.7 for revising permits, which was also
the primary focus of the August 1994 notice. There were, however, many
proposed revisions to

[[Page 45532]]
part 70 in the August 1994 notice that addressed other portions of part
70. These proposed changes, which are described in the next several
paragraphs, are still being considered for promulgation after review of
comments. The period of comment has closed for the August 1994 notice;
however, EPA will consider additional comments on any of the August
1994 proposed provisions to the extent they would be affected by the
proposed revisions in today's notice.
In Sec. 70.2, revisions were proposed in the August 1994 notice for
the definitions of ``Applicable requirement,'' ``Major source,''
``Potential to emit,'' and ``Responsible official.'' The notice
proposed new definitions for ``Major NSR'' and ``Minor NSR'' and
proposed to delete the definition of ``Section 502(b)(10) changes.''
Proposed revisions to Sec. 70.3 would exempt sources from part 70
applicability if they were subject solely because of being major for a
section 112(r)-only pollutant and would add to the list of sources
subject to part 70 those sources subject to parts C and D of the Act.
Proposed revisions to Sec. 70.4 included consolidating provisions
for program modification in paragraph (i)(1), changing the maximum
period for judicial review from 90 days to 125 days, changing the time
period for acting on early reductions permits from 9 to 12 months,
revising the interim approval criteria for part 70 programs, and adding
a provision that EPA can continue to issue phase II acid rain permits.
For Sec. 70.5, the August 1994 proposal included provisions for
deleting the 12-month deferral for permit application submittals except
for new major sources, provisions for flexibility in submitting acid
rain permit applications, clarification of the information needed for a
permit application to be deemed complete, clarification that emissions
may not be discounted when determining major source status, and
addition of the requirement for applications to identify units eligible
for emissions trading.
Section 70.6 was proposed to be revised to add provisions for
defining ``prompt'' with respect to reporting deviations from the
permit and for defining ``upset conditions'' and to require weekly
reporting if the source switched to a new alternative scenario unless
the type of monitoring indicated the switch.
Changes proposed to Sec. 70.7 other than for permit revisions
included provisions for accommodating changes that occur during permit
issuance, changing the time period for acting on early reductions
permits from 9 months to 12 months, and adding a provision for
notifying the public of sources covered under general permits.
Section 70.8 was proposed to be revised to include a provision that
the public would be notified of the end of EPA's 45-day review period.
A clarification was proposed for Sec. 70.9 that periodic updates of the
permit fee demonstration were necessary as required by EPA. Section
70.10 was proposed to be revised to specify the application of
sanctions for failure to submit a program or obtain program approval
and operation of a Federal program. Finally, Sec. 70.11 was proposed to
be revised to allow mental state to be considered for penalties
assessed above $10,000.

II. Alternative Proposal for Part 70 Permit Revision System

A. Overview

Pursuant to the Act, States have adopted programs for reviewing and
potentially regulating the air quality impacts of constructing or
modifying sources of air pollution (e.g., NSR). States will also adopt
programs for reviewing changes to sources of toxic air emissions prior
to their operation under certain circumstances. (For the sake of
brevity, these programs will be generally referred to as ``State review
programs.'' 1)

\1\ By using the term ``State review programs,'' however, EPA
does not mean to imply that such programs necessarily subject all
changes governed by the program to prior permitting authority review
and approval. As discussed later in this notice, at least several
existing State review programs do not require such review for some
categories of changes but instead subject those changes to general
rules or permits. To make this type of change for purposes of the
State review program, a source need not obtain affirmative
permitting authority review and approval but need only comply with
the applicable requirement set forth in the general rule or permit.
---------------------------------------------------------------------------

Today's proposal for revising part 70 permits builds on these State
review programs by providing for automatic incorporation into part 70
permits of all changes subject to those programs. It makes use of the
procedural requirements already applicable to those programs to provide
adequate public review of the part 70 permit revisions occasioned by
those changes. For the more environmentally significant changes
reviewed by State programs, the public, affected States, and EPA would
have a 30-day review opportunity during the State review process. For
all other changes subject to a State review program, States would have
broad discretion to use procedures that are commensurate with the
environmental significance of the change. De minimis changes (as
defined by the State and approved by EPA in the State's part 70
program) could be processed without public, affected State, or EPA
review. Further, changes subject to an applicable requirement that do
not conflict with existing permit terms could generally be made
immediately upon notice of the change by the source.
Since most State preconstruction review programs govern nearly all
source changes requiring a part 70 permit revision, EPA expects the
vast majority of changes would qualify for this automatic incorporation
process. However, for changes that are not subject to a State review
program, the proposal would provide for a separate part 70 process. The
more significant changes of this type would get public process
consistent with the procedures required for initial permit issuance.
For other changes, States would have discretion to devise procedures
that match the amount and timing of public process to the environmental
significance of the change. Changes that a State defines and EPA
approves as de minimis could be processed without public, affected
State, or EPA review. Indeed, certain changes that render a source
subject to a newly applicable requirement could be incorporated into
the part 70 permit by means of a notice submitted by the permittee, so
long as the change did not conflict with existing permit terms and no
source-specific determinations need be made in applying the requirement
to the source. States would have to provide for periodic notification
to the public of all part 70 permit revisions and for public access to
decisions.
The Agency's opportunity to object to a permit revision would
generally be limited to the relatively small group of more
environmentally significant changes. Even for these changes, EPA would
be required to object before the State took final action on the
proposed change for all defects that are reasonably apparent at that
time. For de minimis changes, EPA would waive its opportunity to object
until permit renewal. For all other less environmentally significant
changes, EPA would waive its opportunity to object for a 5-year period
after approval of a program except in response to a citizen's
meritorious petition where the error in the permit revision would have
a significant adverse environmental effect. During this 5-year period,
EPA would audit State program implementation to ascertain whether its
waiver of its review should be suspended or extended for one or more
States.

[[Page 45533]]

The fundamental premise of this proposal is that the section
502(b)(6) requirement for adequate, streamlined, and reasonable permit
revision procedures is best met by building on State review programs
established pursuant to the Act. The Federal regulations governing
these underlying State programs address most of the procedural
requirements of title V. For example, Federal NSR regulations generally
address the need for, and extent of, opportunities for public
participation in NSR permitting (Secs. 51.160-161). (The EPA is also
proposing revisions to its NSR regulations to clarify the extent of
States' discretion in providing public process for minor NSR permit
actions.) Section 502(b)(6) does not require more public process than
the regulations governing these programs require. To the extent a State
program meets the requirements of applicable Federal regulations, the
public procedures afforded by the State program are sufficient for
title V purposes as well.
In those few instances where the applicable Federal regulations or
the State programs themselves do not address title V requirements (such
as those in Sec. 70.6 requiring sufficient permit conditions to assure
compliance with all applicable requirements), States would have to
augment either their underlying program or their part 70 program so as
to avoid the need for a part 70 revision process subsequent to the
State review process. By building on State review programs in this way,
title V permit revision procedures would be more streamlined than those
afforded by the current part 70 rule and at the same time provide
public review of the more significant changes prior to the change being
made, when public comments can have the most effect. Only where a
change is not subject to a State review program would the proposal call
for a separate title V process to be provided.
Another central tenet of today's proposal is that EPA should not
prescribe for State part 70 programs detailed revision procedures for
all or even most potential source changes. As a result of States'
differing circumstances, State air programs vary widely in scope and
the type and stringency of controls they impose. The diversity of State
requirements is not susceptible to precise or simple categorization, so
nationally prescribed procedures run the risk of being complicated and/
or ill-suited to at least some types of changes. The Agency therefore
believes that States should be afforded broad discretion to determine
permit revision procedures, including the amount and timing of public
review, for all but the most significant changes.
While today's proposal does specify minimum requirements for permit
revision procedures, it also provides that States may obtain part 70
program approval by adopting substantially equivalent alternative
procedures. States would thus have additional flexibility to craft
procedures that vary somewhat from the specified minima but that
achieve substantially equivalent results.

B. When Is a Permit Revision Required

As a starting point, it is necessary to know when a permit revision
is needed. In the August 1994 notice, EPA proposed to amend the
regulations to make clear that permit revisions are needed for changes
that (1) cannot be operated without violating the existing part 70
permit or (2) render the source newly subject to an applicable
requirement. Today's proposal maintains that approach to defining when
a permit revision is needed.
The Agency would like to reiterate that the applicable requirements
resulting from minor or major NSR are the terms and conditions of an
NSR permit. Simply triggering NSR at a source with an existing part 70
permit does not in and of itself require a part 70 permit revision. A
part 70 permit revision would be necessary only to add any new or
different NSR permit terms that result from the review and any
additional provisions to assure compliance with them.
Even changes that would result in application of a minor NSR or
other requirement might not require a permit revision to the extent the
permit has been crafted to accommodate the change. For example, a State
may create an ``advance'' NSR provision or include a minor NSR standard
exemption in a source's part 70 permit. Both of these provisions would
define the minor NSR requirement applicable to a particular change or
changes such that the source could undertake the changes without an
approval process, provided that the terms of the advance NSR provisions
were met. In essence, the change would already be authorized by the
permit as long as it met the requirements (including any necessary
conditions) already in the permit. A change meeting these conditions,
therefore, would not trigger a part 70 permit revision unless the
change contravened a permit term or triggered some other applicable
requirement not provided for in the permit.
As another example, if a source installs a piece of equipment that
is subject to a reasonably available control technology (RACT)
requirement, the installation would not require a permit revision if
the RACT requirement was already adequately described in the permit. A
permit revision would be needed only if the installation would
contravene the permit or trigger some other applicable requirement not
addressed by the permit. The source would, however, likely need to
provide notice to the permitting authority describing the equipment
being installed and the applicable requirement to which it is subject.
The August 1994 notice proposed to narrow, but not eliminate, the
current rule's ``off-permit'' provisions. Under those provisions, a
change that a source can operate without violating its permit but that
renders the source newly subject to an applicable requirement may be
incorporated into the part 70 permit after the change is operated, if
the State's program provides the off-permit mechanism. Today's
proposal, however, would require a permit revision by the time the
change is operated. Since under today's proposal all changes that
undergo a State review program would be immediately incorporated into
the part 70 permit on completion of that review, the need for the off-
permit mechanism would be substantially reduced. For changes that do
not undergo such review but are subject to applicable requirements the
terms of which do not vary from source to source, today's proposal
would allow the source to revise the permit, and thus operate the
change, upon notifying the permitting authority, provided the change
can be operated without violating any existing permit terms. (See
Section II. D. of this preamble, Incorporation of Changes Not Subject
to State Review Programs.) Today's proposed approach would thus ensure
that the part 70 permit is a contemporaneous and comprehensive summary
of all applicable Act requirements, an approach most consistent with
the statutory purposes of title V and favored by many State permitting
authorities. Consequently, EPA is proposing to eliminate the off-permit
provision of the current rule if it adopts today's proposed permit
revision system.
At the same time, the Agency is interested in receiving comment on
whether changes that are expressly exempted from minor NSR but are
nevertheless subject to an applicable requirement such as new source
performance standards (NSPS) or RACT should be allowed to remain off-
permit until permit renewal. As explained elsewhere in today's notice,
EPA is proposing a streamlined means of incorporating such requirements
into

[[Page 45534]]
permits that would maintain the comprehensiveness of the permit. The
Agency solicits comment on whether its proposed revision procedures
appropriately balance the need for source flexibility and a
comprehensive permit with regard to these changes or whether these
changes should only be incorporated into the permit at permit renewal.
It is worth pointing out that today's notice also supplements the
August 1994 notice's proposed revisions of the part 70 regulations
implementing section 502(b)(10) of the Act. Under the August 1994
proposal, part 70 would implement section 502(b)(10) by providing for
the establishment of emissions caps in part 70 permits and for
emissions trading under such caps. Today's notice provides a further
explanation in Secs. 70.2 and 70.4 of the utility of emissions caps and
how such caps may be implemented. It further proposes regulatory
changes to codify relevant definitions and program elements.

C. Automatic Incorporation for Changes Subject to State Review Programs

1. Scope
As indicated above, today's proposal would establish two basic
categories of changes for permit revision purposes. The first category
would include all changes that are subject to State review programs
established pursuant to the Act. These changes would be automatically
incorporated into a part 70 permit upon completion of that review or,
where the State review program does not require prior permitting
authority review and approval, upon submission by the source of a
notice describing the change and identifying the requirement applicable
to the change. The second category would include all other changes that
require a permit revision, and States would have broad discretion to
design a part 70 permit review process for these changes.
Under today's proposal, the first category of changes would include
all changes that are subject to major or minor NSR or regulations
implementing section 112(g) and changes that entail a source-specific
revision of the State's implementation plan (SIP). The process afforded
by these State review programs would (1) have to include an adequate
opportunity for public participation and affected State and EPA review,
and (2) have to define revisions needed to the part 70 permit as a
result of the change.
Under some State minor NSR programs, not all changes subject to
minor NSR requirements get case-by-case permitting authority review and
approval. Instead, some types of changes are subject to general rules,
and the source may make such a change without prior permitting
authority approval so long as it complies with the applicable
requirements. These changes would be included in the first category
even though they individually do not receive affirmative permitting
authority review and approval. In the case of such changes, the State
has determined that particular categories of changes do not require
case-by-case review and may be adequately controlled by application of
general requirements. (Changes subject to general rules are typically
changes that occur frequently enough and are defined and understood
well enough that a generic approach to their control is both efficient
and effective.) Presumably there would also be no need for permitting
authority review upon incorporation of the change into the part 70
permit, unless the change would require revision of an existing part 70
permit term. The Agency thus believes that part 70 permits may be
revised to reflect such changes by means of a notice submitted by the
source describing the change and the Act requirements newly applicable
to the source as a result of the change, provided the change can be
made without violating an existing part 70 permit term. As explained
further below, a permit revision made in this way (i.e., without prior
permitting authority review and approval) would not shield a source
against enforcement action for failing to comply with the requirements
actually applicable to change.
As also described in more detail below, what constitutes an
adequate opportunity for public participation and affected State and
EPA review would vary with the environmental significance of the
change. Briefly, for the more environmentally significant changes, the
full process required by the Federal regulations applicable to the
State review program would be required. For instance, for changes
subject to major NSR, a 30-day prior public comment period would be
required (Secs. 51.160-166). For less environmentally significant
changes, States would have discretion to vary the amount and timing of
public process provided with the environmental significance of the
change. The State could exempt those de minimis categories of changes
subject to minor NSR from prior public, affected State, and EPA review
altogether based on its determination approved by EPA that subjecting
such changes to review would yield a gain of trivial or no value
(Alabama Power Co. v. Costle, 626 F. 2d 323 (D.C.Cir. 1979).2 As
EPA is making clear in today's proposed revisions to the regulations
governing NSR, States already have discretion to provide public review
for minor NSR actions commensurate with the environmental impact of the
change, including exempting de minimis changes from public process
entirely.

\2\ Use of the term ``de minimis'' should not be confused with
use of that term in the August 1994 notice proposing a permit
revision system that included a track entitled ``de minimis permit
revisions.'' Today's proposal would replace the permit revision
system proposed in the August 1994 notice and use the term ``de
minimis'' only to describe changes at sources that meet the de
minimis criteria set forth in the Alabama Power case.
---------------------------------------------------------------------------

Process aside, part 70 includes permit content requirements not all
of which are necessarily addressed by current State programs. To gain
part 70 program approval, States would have to impose these
requirements pursuant to State regulations governing either the
underlying program(s) or the part 70 program.
Changes subject to a State review program may affect a part 70
permit limit not governed by the review program or render a source
subject to Act requirements in addition to those imposed by the review
program itself. For example, a change subject to minor NSR may also
render the source subject to a maximum achievable control technology
(MACT) standard. For such ``combination changes'' the question arises
as to what revision process applies. With the exception of establishing
new monitoring approaches, the general rule would be that a combination
change (i.e., a change that renders a source subject to two or more
applicable requirements, not all of which are imposed pursuant to a
State review program) can be processed together using the automatic
incorporation process, provided the change receives public or EPA
review in the State process as appropriate for the different applicable
requirements triggered. For example, where an emissions increase is
subject to minor NSR and section 112(j) of the Act, the change could be
processed using the State's minor NSR program, but the process provided
would have to meet the procedural requirements applicable to section
112(j) determinations. As explained in Section II. D. of this preamble
regarding changes not reviewed under a State review program, section
112(j) determinations would be included in the category of more
environmentally significant changes and would thus be subject to a
required 30-

[[Page 45535]]
day opportunity for prior public, affected State, and EPA review.
Under today's proposal, a change would be included in the first
category of changes and be automatically incorporated into a part 70
permit if it is subject to a State review program. Several groups have
suggested that RACT and MACT requirements that do not entail source-
specific determinations be eligible for automatic incorporation even if
the change triggering the RACT or MACT requirement is not subject to a
State review program. The EPA agrees with the basic premise of this
suggestion that incorporation of such requirements into part 70 permits
warrants little or no review, provided they do not conflict with any
existing part 70 permit term. Where RACT and MACT are so specifically
defined that little or no judgement need be exercised in applying the
requirement to the source, there is little to be gained from reviewing
the source's judgement that the requirement applies. Instead, it should
be enough for the source to submit a notice to the permitting authority
upon making the change stating that the source is consequently subject
to the MACT or RACT requirement and that the notice is attached to the
source's permit. Under such a process, the source would not be shielded
from enforcement action if it were mistaken as to the scope or nature
of the Act requirements applicable to the change.
The EPA is proposing that such requirements, when triggered by a
change that is not subject to a State review program, be included in
the second category of changes but nevertheless get the benefit of an
automatic incorporation process (see Section II. D. of this preamble).
Eligible requirements would be those that do not require interpretation
as to applicability and do not require creation of source-specific
permit terms or conditions. The justification for automatic
incorporation of these types of requirements is that their application
is so straightforward that little is to be gained from additional
process.
The EPA is proposing to place these requirements in the second
category. However, the Agency is not now in a position to say that no
RACT or MACT requirement warrants additional process or to catalog
which requirements warrant additional process and which do not. While
most RACT requirements and some MACT requirements now appear candidates
for automatic incorporation, a determination would have to be made for
specific requirements whether further process is warranted. In the case
of MACT, EPA could make that determination when it issues new MACT
standards, and as the Agency indicated in the August 1994 proposal,
MACT compliance schedules could be automatically incorporated into a
permit. As for RACT and other SIP requirements, States are in the best
position to judge whether specific requirements are appropriate for
automatic incorporation. States could make such judgments for SIP-based
requirements and provide for automatic incorporation of those it deemed
appropriate, as well as for those MACT requirements that EPA has
determined are eligible for automatic incorporation.
To the extent they must be incorporated into part 70 permits at
all, title VI requirements (relating to stratospheric ozone protection)
may also be candidates for automatic incorporation where they entail
few if any source-specific determinations. The Agency solicits comment
on what title VI requirements would be appropriately processed in this
way.
2. Automatic Incorporation Process
For changes that are reviewed by a State review program, the
permitting authority would automatically incorporate the change into
the part 70 permit immediately on completion of the review. The
permitting authority could accomplish this by simply attaching the
results of the review to the part 70 permit. The source could operate
the change upon completion of the review process. For changes regulated
by a State review program through a general rule, the source would
submit a notice describing the change and the applicable requirements
that attach as a result of the change. As part of the notice, the
source would have to certify that it could operate the change without
violating any existing permit terms and supply any additional permit
terms required by part 70 (i.e., periodic reporting requirements). The
source could operate the change upon submitting the notice.
Preconstruction permits in many cases impose new applicable
requirements or alter existing ones. These new or altered requirements
and other terms and conditions of the new preconstruction permit would
be applicable requirements for incorporation into the part 70 permit.
Any existing terms and conditions of the part 70 permit that no longer
applied or were revised as a result of the preconstruction permitting
action would need to be either replaced by the new terms and
conditions, declared no longer applicable, or revised as part of the
permit issued pursuant to preconstruction review. The permitting
authority would then attach this permit upon issuance to the part 70
permit.
Under the proposed system, it would be important for the permitting
authority to identify during the preconstruction review process which
terms of the existing part 70 permit would be changed or eliminated
because they would no longer be relevant. For instance, during
consideration of a minor NSR permit for a replacement emissions unit,
the public notice would need to include information about any part 70
permit terms affected by the change. The permitting authority would
also have to specify in the final NSR action which terms and conditions
of the operating permit were being revised by the automatic
incorporation process. One way for the permitting authority to do this
would be to prepare an attachment to the permit identifying which terms
of the part 70 permit were replaced or revised.
The mechanism for automatically incorporating a change would also
have to ensure that the part 70 permit content requirements of
Secs. 70.6(a) and (c) of the current rule are addressed. Many of these
requirements could be included in the original part 70 permit as
boilerplate conditions, so as to cover any subsequent permit revisions.
Requirements relating to reporting, annual certification, and
inspection and entry should translate well to boilerplate conditions.
Since new requirements established in a prior review could be attached
to the part 70 permit, the original part 70 permit would have to ensure
that the boilerplate conditions applied to any new requirements
attached to the permit as well. On the other hand, some requirements
are often created or revised on a unit-by-unit basis. In such cases,
these requirements would have to be explicitly addressed by the State
pursuant to its review program. The permitting authority would also
have to approve as part of that review the adequacy of any associated
changes to previously approved conditions.
Under a unitary permit program permitting authorities need not
attach new or different applicable requirements to the permit, provided
the unitary permit has already incorporated them and contains
sufficient terms or conditions to assure compliance with any new or
different applicable requirements consistent with Sec. 70.6. For
purposes of part 70, a unitary permit means a single permit which
contains all terms and conditions needed to meet the requirements of
part 70 and the requirements of major or

[[Page 45536]]
minor NSR or actions requiring review under regulations implementing
section 112(g) of the Act.
3. Criteria for State Review Programs
Background. As noted earlier, State review programs are generally
governed by Federal regulations. These regulations address procedural
requirements, including the provision of an opportunity for public
participation. In the case of major NSR, EPA believes that all State
programs meet the applicable Federal procedural requirements, which
call for prior public notice and a 30-day public comment period.
Regulations governing section 112(g) are not yet final, but States will
presumably establish programs that comply with the requirements of
those regulations.
Under the applicable Federal regulations, States have broad
discretion to determine the scope of their minor NSR programs as needed
to attain and maintain the national ambient air quality standards.
Indeed, States may exempt categories of changes from minor NSR
altogether on de minimis grounds (i.e., the change is trivial in size
and of no importance in safeguarding ambient standards). States have
exercised this discretion to subject some or many, but generally not
all, minor source changes to their minor NSR programs. The EPA does not
intend to revisit the scope of State minor NSR programs as part of the
review process for approving State part 70 programs.
Just as States may exclude some categories of sources or changes
from minor NSR, they have also exempted at least some from public
procedures. The EPA recognizes that States may also structure their
minor NSR program to limit the public process afforded during
preconstruction review consistent with the environmental significance
of the change. Elsewhere in today's notice, EPA is proposing to revise
the Federal regulations governing minor NSR at Sec. 51.161 to clarify
the scope of State discretion in affording public process for minor NSR
actions.
As discussed in the August 1994 preamble (59 FR 44478-79), the
circumstances surrounding some of the exemptions from public process in
minor NSR programs may have changed since they were adopted and thus
the basis for these exemptions warrant review. The EPA, however,
believes that the majority of State minor NSR programs generally afford
adequate public process for the less environmentally significant
changes, as EPA is proposing to define them in today's notice, for both
title I and title V purposes. Indeed, EPA is proposing to revise
Sec. 51.161 to make clear the considerable flexibility States have to
fashion public participation requirements to the environmental
significance of changes subject to minor NSR. The Agency also believes
that States are in the best position to make an initial assessment of
the continuing adequacy of their procedures. As further explained
subsequently in this preamble, if a State's procedures should be found
in need of some changes, the changes could be accomplished through
revisions of either the State's minor NSR program or its part 70
program. States would thus have flexibility to make changes in the
context they found most appropriate.
Beyond public process requirements, State programs do not
necessarily address all of part 70's permit content requirements, since
some of those requirements are not found in the Federal regulations
governing the State preconstruction programs. Thus, for States to
provide automatic incorporation for changes that undergo a State review
program, States may need to revise their regulations governing either
their part 70 program or preconstruction review programs, to ensure
that all of part 70's permit content requirements are addressed.
More Environmentally Significant Changes Reviewed by States. For
purposes of establishing the adequacy of a State review program,
today's proposal would divide changes subject to such review into two
categories, those that are more environmentally significant and those
that are less environmentally significant. The Agency proposes to
include in the category of changes that are more environmentally
significant the following:
Any change subject to major NSR;
Any physical change or change in the method of operation
of a part 70 source associated with a project where the prospective
emissions increases from such changes, considered by themselves, would
be a significant emissions increase of any pollutant subject to
regulation under part C or D of the Act;
Any change subject to review as a modification under the
regulations implementing section 112(g) of the Act; and
Any other change determined by the permitting authority to
have a similarly significant environmental impact.
The Agency has identified the types of changes listed above as
being more environmentally significant because they either have been
specifically identified in the Act for preconstruction or pre-operation
review (i.e., major NSR under parts C and D or prior review under
section 112(g) of the Act) or involve difficult judgments which affect
whether construction activity would be subject to one or more of the
reviews prescribed by Congress (i.e., minor NSR governing net-outs).
While all major NSR actions have been included in the category of
more environmentally significant changes, EPA recognizes that in an
extreme ozone nonattainment area any change at a major stationary
source which results in any increase in emissions of nitrogen oxides
(NOx) or volatile organic compounds (VOC) from a discrete
operation, unit, or other pollutant emitting activity is a modification
subject to major NSR. In the South Coast Air Quality Management
District (SCAQMD) of California, the only extreme ozone nonattainment
area, potentially several hundred, if not several thousand, major
modifications can occur each year under applicable definitions of major
source (10 tons per year (tpy)) and major modification (any increase,
as described above). As a comparison, in most areas of the country, a
major modification does not occur unless there is an increase of 40 tpy
or more of VOC.
Today's proposal would require that all changes in the more
environmentally significant category meet the full public process
requirements specified by the Federal regulations governing the
underlying State review program. Thus, for all major NSR changes,
including major modifications, the State permitting authority would
have to provide (as is currently required) prior public notice and a
30-day public comment period. The Agency is concerned, however, that
full NSR procedures may be unworkable for extreme ozone nonattainment
areas in light of the ``any increase'' threshold for triggering major
NSR for modifications in those areas. Some relief from the full NSR
procedural requirements may thus be appropriate for smaller major NSR
actions in extreme nonattainment areas. The Agency is considering a
proposal to revise the Federal major NSR requirements to allow States
to devise more streamlined public procedures for smaller actions in
extreme ozone nonattainment areas, and it solicits comment on whether
and how to provide such relief.
The Agency is proposing to include one category of minor NSR
changes, i.e., certain net outs, in the more environmentally
significant category. Net-outs are minor NSR actions which allow a
source to avoid major NSR where the prospective emissions increases
from changes associated with

[[Page 45537]]
a project considered by themselves would require major NSR except that
the source makes a contemporaneous emissions decrease at the same site
sufficient to keep the net increase below the major NSR applicability
threshold. Netting transactions often involve some of the most
complicated analyses undertaken by permitting authorities. They are
also among the most important minor NSR decisions permitting
authorities make, since they shield changes which significantly
increase emissions from the control requirements of major NSR. The EPA
is concerned about the number of net-outs that might be subject to
today's proposal and the possible burden of requiring 30-day public
review. The Agency solicits information from States on the number of
net-outs that would fall within the proposed category of net-outs and
the relative difficulty and complexity these net-out determinations
would typically require. The EPA is also interested in learning from
the experience of States and industry as to what percentage of net-outs
involve a project where the prospective emissions increase from a
single physical change or change in the method of operation is greater
than the significance levels (as opposed to projects comprised of small
changes that individually do not exceed the significance level but do
exceed the levels when summed).
In including net-out transactions in the more environmentally
significant category, EPA proposes to cover those changes where
emissions increases from changes associated with a project, considered
by themselves, would exceed major source thresholds or modification
levels before including decreases at the source. In a moderate ozone
nonattainment area, for example, where the major modification threshold
is 40 tpy for VOC, a 50 tpy VOC increase that is offset by an 11 tpy
decrease (net 39 tpy increase) would be classified as a more
environmentally significant change, but a 35 tpy increase would not. In
keeping with section 182(c)(6) of the Act, the definition of covered
net outs would also include individual changes whose emission increases
exceed cumulative major NSR applicability thresholds (e.g., 25 tpy over
5 years in severe and serious ozone nonattainment areas).
The Agency considered including in the category of more
environmentally significant changes minor NSR limits that a source
undertakes to keep its potential emissions below major NSR thresholds.
These limits on emissions which create so-called ``synthetic minor''
sources or modifications account for many minor NSR permit actions, and
play a critical role in shielding large sources or source modifications
from major NSR.
The types of controls used to establish synthetic minors vary
widely among States and sources. Many are straightforward in terms of
the limit's effect on emissions and its enforceability. However, others
are unique to a source and involve assessments of source-specific
operational limits. Synthetic minor controls also vary in terms of
their net effect on a source's emissions.
The Agency has decided not to propose inclusion of synthetic minor
actions in the category of more environmentally significant changes,
largely because of the difficulty of formulating a national definition
of those synthetic minors that merit full public review procedures.
Instead, it is proposing to include all synthetic minors in the less
environmentally significant category of changes that undergo prior
review. As subsequently explained in more detail, States have broad
discretion to fashion revision procedures for this category that match
public process to the environmental significance of the change. In
light of the potential environmental significance of synthetic minor
controls, however, EPA expects each State to identify the more
significant types of synthetic minor actions it issues and afford these
a substantial opportunity for public and affected State review prior to
the State's final action in the minor NSR process.
Several factors would be relevant in identifying the more
significant synthetic minors. One is the size of the source or
modification before the synthetic minor control is applied. In some
cases, the source or modification far exceeds the applicable major NSR
threshold without the control. Another is the use of synthetic minor
controls to reduce a source's emissions to just below the applicable
major NSR threshold. In these cases, the control leaves little margin
for error. A third factor to consider is whether the synthetic minor
control entails the application of technology or other control measures
whose effect on emissions is not well or easily established. In these
situations, the permitting authority is required to exercise
considerable judgment in determining the efficacy of the control.
Depending on a State's situation and experience, synthetic minor
actions meeting any one of these criteria may warrant providing prior
public review. Where an action meets more than one of the criteria,
e.g., where the source without controls is very large and the effect of
proposed controls is not well established, an increased opportunity for
prior public review and comment may be in order.
Finally, EPA is proposing that States have discretion to designate
other types of actions for inclusion in the more environmentally
significant category. As explained earlier, minor NSR controls vary by
State in scope, type, stringency, and significance, and States may thus
find it appropriate to include other types of minor NSR actions in the
more environmentally significant category.
Adequate Review for the More Environmentally Significant Changes.
For the more environmentally significant changes, permitting actions by
a State would have to follow the full public procedures required by
existing regulations (or in the case of section 112(g) of the Act,
those defined in EPA's final implementing regulations) with respect to
public (including affected States) and EPA notice and opportunity to
comment. (As discussed earlier, for smaller major NSR changes in
extreme ozone nonattainment areas, EPA is considering the need to
revise the Federal NSR regulations to provide for less than full
process for such changes.) In the case of minor NSR, the Agency is
today proposing changes to the Federal regulations governing that
program to clarify States' discretion in affording adequate public
process. For net-outs, the only category of minor NSR changes that
would be included in the more environmentally significant category, the
proposed revisions of Sec. 51.161 would clarify that such actions are
subject to the full procedures set forth in the existing regulations.
The public process requirements for the more environmentally
significant changes would include prior notice and a 30-day opportunity
to comment on the permitting authority's proposed action on the
source's application for the change. Affected States and EPA would also
have to be notified and afforded the same opportunity to comment.
Because the State review process would have to address any part 70
permit revision, the public notice of the change would have to contain
draft part 70 permit terms as needed to revise the existing part 70
permit and to meet the part 70 permit content requirements of
Secs. 70.6(a) and (c).
Finally, EPA recognizes that in some situations part 70 permit
terms based on decisions made in the preconstruction review process may
require revision before the source can operate the change. In many of
these instances, such changes arise from a shakedown period which the
source undergoes prior to full scale operation. The Agency believes
that, in general, shakedown changes are

[[Page 45538]]
being adequately addressed in the day-to-day implementation of State
NSR programs, and that the State procedures afforded these changes
should typically suffice for part 70 permit revision purposes. As with
the change before shakedown, EPA would expect States to match the type
and amount of additional review to the significance of the shakedown
change. Only where a second major NSR process is necessary to review
the change (i.e., the change would involve substantially new emissions
or represent a fundamental departure from the previously approved
project) would a full opportunity for public, affected State, and EPA
review of the change be required.
Less Environmentally Significant Changes Subject to a State Review
Program. All changes that are subject to a State review program other
than those designated more environmentally significant would be
included in a second (``less environmentally significant'') category.
The changes in this second category would range from significant
synthetic minor actions that shield sources from major NSR requirements
to changes with minimal environmental impact. States would have the
flexibility to vary the process provided for the changes in this second
category with the relative environmental significance of the change. A
State may designate certain categories of minor NSR changes, subject to
EPA approval, as de minimis based upon its determination approved by
EPA that meets the test prescribed by the Alabama Power case. For
changes that fall in these de minimis categories, the State may forego
prior public, affected State, or EPA review altogether.
As noted previously, most States already exempt at least some minor
NSR actions from public process. In evaluating what changes may be
considered de minimis, many factors are potentially relevant and will
vary to some extent with States' varying situations. The scope of the
de minimis category is properly determined on a State-by-State basis as
permitting authorities develop program revisions to meet the revised
part 70 requirements. In determining the coverage of the de minimis
category, the State should examine the relevant factors in the context
of the State's situation, subject its proposed findings to public
review, and base its final determination on the relevant record. The
State may accomplish this as part of the rulemaking to revise its
program to conform with EPA's revised part 70 rule or in a separate
rulemaking.
The most important factor for States to consider in identifying de
minimis changes is the air quality in an area. Changes that are
important in a nonattainment area may be of considerably less interest
to the public (or EPA) in an attainment area. Due to differences in the
nature of the air quality problems in different nonattainment areas,
the need for or appropriateness of EPA and public involvement may also
vary.
Another important factor is the emissions impact of the types of
changes being considered for the de minimis category. In this context,
the size of any emissions increase and the type of emissions involved
are relevant. Smaller increases of relatively less harmful pollutants
are more likely candidates for de minimis categorization.
Also relevant is the nature of applicable controls. Changes which
are typically addressed by the application of well established control
technology are not likely to require public scrutiny. Registration
requirements pursuant to which sources must report, but not necessarily
mitigate, emission increases below a specified threshold would in many
States warrant an exemption from public review. On the other hand,
public review may be appropriate for changes which require unfamiliar
control technologies or source-specific determinations of control
levels.
A State's prior experience with public interest in permitting
decisions for particular types of changes is another factor the State
may weigh. A State which does not now provide public notice and
opportunity to comment on permit revisions for many or all changes
could not use the lack of past public involvement in the permitting
actions for those changes to establish a lack of public interest in
them. On the other hand, if a State's experience shows the public does
not comment or express interest in certain types of changes, the State
could well conclude that such changes are de minimis. The public's
response to the State's rulemaking to determine the scope of the de
minimis category is similarly pertinent. The general compliance status
of sources in the relevant jurisdiction may also suggest that more or
less public oversight of permitting actions would be appropriate.
The factors described above are not mutually exclusive; for
example, the size, complexity, and track record of particular types of
changes, when considered together, may establish that de minimis
categorization is or is not appropriate. The Agency further recognizes
that other factors may also be relevant, and solicits comment on
whether other circumstances should also be considered by States in
determining the scope of the de minimis category.
In view of the nature and number of the factors described above,
EPA anticipates that States' determination of de minimis changes will
justifiably differ, even to a significant extent. In States with
relatively extensive minor NSR programs, EPA would expect that the de
minimis category could be established such that the majority of changes
would be processed as de minimis but the bulk of total emission
increases governed by minor NSR would be subject to public review. This
is because, in the case of extensive programs, many or even most minor
NSR changes typically involve very small emissions increases. The
Agency is aware of one State, for example, in which 90 per cent of
minor NSR changes involve emissions units of less than 5 tpy, and those
changes together account for only about 10 per cent of total emissions
increases governed by the program. In this State, defining a de minimis
category at or below 5 tpy would mean that only 10 per cent of the
changes by number would go through public and affected State review,
but that review would cover 90 per cent of total emissions increases.
Such an approach would be acceptable under today's proposal and would
be an appropriate way to minimize the burden of the permitting program
on sources and permitting authorities without compromising citizens'
opportunity to participate in decisionmaking regarding the bulk of
emissions increases.
By providing the above example, EPA does not mean to suggest that
States need conduct the type of analysis described to determine an
appropriate de minimis category. It is merely one example of an
acceptable approach to defining de minimis changes. The Agency expects
States to consider their particular situations and make determinations
that are appropriate for their situations, in light of the relevant
factors. In States with less extensive minor NSR programs and less
significant air quality problems, for example, de minimis changes might
be appropriately defined to include changes that increase emissions by
as much as 25 tons. The Agency believes States are in the best position
to weigh the relevant factors in determining what changes may be exempt
from public review. A de minimis change category developed based on the
factors discussed above would be granted substantial deference in EPA's
review of States' part 70 program revisions.
Adequate Process for Less Environmentally Significant Changes.

[[Page 45539]]
For minor NSR actions not in the more environmentally significant
category, States would have considerable discretion to match the amount
and timing of process to the environmental significance of the change.
In reviewing State programs, EPA would recognize States' need for
flexibility in devising procedures that take into account the relevant
factors for a particular State, including existing air quality levels
and the scope and complexity of its minor NSR controls. States would
have to afford an adequate opportunity for public participation for all
changes other than de minimis changes, but could use various methods
including prior or after-the-fact notice and comment periods, batch
processing, and the use of general permits or permits by rule. For the
least significant changes, States could provide little public process
beyond a notice in some manner to the public, which could be after the
change occurred. Notice could be given by means other than newspapers
where alternative methods, such as State registers or computer bulletin
boards, are generally accessible by interested persons. States should
require prior notice and comment where actions involve larger emissions
that warrant greater scrutiny because of their environmental
significance, although comment periods need not be 30 days where a
shorter period such as 15 days or less would likely be sufficient in
view of the significance or complexity of the change.
All minor NSR actions (including those de minimis changes exempted
from public and EPA review) would have to be reviewed by the permitting
authority to assure that the change met all applicable requirements and
the part 70 permit requirements of Secs. 70.6(a) and (c). In
particular, changes to monitoring methods in part 70 permits would have
to be specifically approved by the permitting authority as adequate for
determining compliance with applicable requirements and part 70 permit
terms prior to revising the permit.
Program Revisions for NSR Changes. States could revise their
regulations as needed to provide for adequate review of minor NSR
changes in two ways: (1) Revise their minor NSR regulations as
necessary to meet the requirements outlined above, or (2) revise their
part 70 program regulations to provide that those requirements be met
in the context of the NSR review process. Either approach would ensure
that adequate process is provided, so a State may be given the
flexibility to decide which approach would be most suitable for it.
Comparison of Proposed Approach and Current Part 70 for Minor NSR
Changes. Before describing the proposed approach for changes not
subject to a State review program, the Agency would like to compare its
treatment under today's proposal of minor NSR changes to what is
currently required under part 70. The minor NSR process is the origin
of the vast majority of changes occurring at part 70 sources which
cause the need for a part 70 permit revision. It is therefore helpful
to compare these two regulatory approaches to understand the relative
effectiveness of the proposal in accomplishing streamlining. This
discussion addresses, in order, minor NSR changes that would be
considered more environmentally significant, synthetic minors, other
minor NSR changes that conflict with the part 70 permit, and finally
other minor NSR changes that do not conflict with the part 70 permit.
For minor NSR changes which would be classified as more
environmentally significant changes under today's proposal (i.e., major
net-outs), both the current and proposed part 70 would subject the
change to a full public and EPA review process involving a 30-day
public comment period. Today's proposal, however, would impose this
requirement in conjunction with the otherwise occurring State minor NSR
process. This is a much faster and more efficient process than under
the current part 70 where the sequential significant permit
modification process would be imposed (possibly for up to 18 months)
after the NSR process has been completed (unless the State chooses to
enhance its minor NSR process) 3.

\3\ Where a part 70 permit revision is needed, part 70 currently
allows the State to enhance its minor NSR process with additional
substance (e.g., other requirements where applicable and part 70
duties to certify compliance and report every 6 months) and process
(e.g., additional EPA and public review as necessary to meet
Sec. 70.7(e)) to meet the part 70 permit revision requirements and
thus revise the part 70 permit concurrent with the NSR process. This
optional ``enhanced NSR'' approach closely resembles the approach in
today's proposal for the required integration of part 70 review with
the minor or major NSR process (as applicable).
Whereas part 70 imposes the significant permit modification process
for synthetic minors, these would be considered in the less
environmentally significant category and subject under today's proposal
to a more streamlined combined process matched to the environmental
significance of the changes. In addition to shortening greatly the time
to complete permit revisions via combination of the part 70 process
with other State review processes, today's proposal would also limit
EPA's review role for less environmentally significant changes during
the first 5 years after program approval. This would add greater
certainty to the critical initial implementation of the program.
Other types of minor NSR changes that conflict with the terms of
the part 70 permit would be required to be adopted as a permit revision
before operation under both today's proposal and the current part 70.
Under today's proposal, EPA expects States to treat these either as de
minimis, for which no public or EPA review would be required, or as
being within the category of less environmentally significant changes
for which process would be matched to environmental significance of the
change. For the least significant of these changes (other than de
minimis), States could provide little public process beyond a notice in
some manner to the public, which could be after the change occurred.
The only EPA review for any of the less environmentally significant
changes over the first 5 years after program approval would be in the
event of a citizen petition. Under the current part 70, most of these
changes, (including those considered de minimis under today's
proposal), would be processed as minor permit modifications. For minor
permit modifications, even though the change may be made immediately
upon sending a notice to the permitting authority and there is no
public review, the uncertainty resulting from EPA's 45-day review
period and possible objection after-the-fact is a significant concern
to sources making changes under this process. Thus, under today's
proposal, a key benefit for these changes is the 5-year waiver of EPA's
objection (except in response to citizen's petitions) and the exclusion
of public, affected State, and EPA review for de minimis changes.
Today's proposal does not differentiate between those minor NSR
changes that conflict with the terms of the part 70 permit and those
that do not. The current part 70 does allow States to make this
distinction. Specifically, source changes reviewed under minor NSR that
do not conflict with the terms of an existing part 70 permit may be
treated under the current part 70 as off-permit, meaning the terms and
conditions of any resulting minor NSR permits need not be incorporated
into the part 70 permit until renewal. For changes that qualify for
off-permit treatment, the source must provide contemporaneous notice to
both EPA and the permitting authority. This notice requirement is in
addition to the review process required under the

[[Page 45540]]
State's minor NSR program. The requirements of Sec. 70.6 would of
course not attach until the off-permit change is incorporated into the
part 70 permit at renewal. A change that is not off-permit (either
because it conflicts with the existing part 70 permit or because the
State has chosen not to allow for off-permit) and that is neither a
net-out nor a synthetic minor could be treated as a minor permit
modification.

D. Incorporation of Changes Not Subject to State Review Programs

The EPA expects that the great majority of changes requiring a part
70 permit revision would qualify for automatic incorporation because
they are subject to a State program such as minor NSR. However, for
changes that are not subject to such review, States would have to
provide for a revision process at the part 70 permitting stage.
Depending on the scope of the State's minor NSR program, such
processing would be needed for changes that trigger RACT, MACT, or
other applicable Act requirements but not minor NSR, or for changes to
terms that were established only through the part 70 permit process. As
for changes that are subject to State review programs as previously
described, full public, affected State, and EPA review would be
required only for the more environmentally significant of these
changes. For less environmentally significant changes that are not
subject to State review programs, States could develop revision
procedures that match the process to the environmental significance of
the change.
More Environmentally Significant Changes Not Subject to State
Review Programs. Under today's proposal, opportunity for public,
affected State, and EPA review equivalent to that provided for permit
issuance or renewal must be afforded for the more environmentally
significant changes before the part 70 permit is revised and the change
is operated. For changes that are not subject to State review programs,
EPA proposes to define the more environmentally significant category as
including the establishment or revision of the following:

(1) MACT determinations made under section 112(j) of the Act;
(2) Alternative emission limits to meet section 112(i)(5) of the
Act (early reductions);
(3) Alternative limits established pursuant to
Sec. 70.6(a)(1)(iii) including any to implement RACT as authorized
by the SIP or any substitute section 112 standards established
pursuant to a program approved by EPA under section 112(l) of the
Act;
(4) New or alternative monitoring methods that have not been
authorized for adequacy under major or minor NSR or under
regulations implementing section 112(g) of the Act;
(5) (Establishment only) Emissions limits restricting the
potential to emit (PTE) of an entire source, including the
establishment of any plantwide applicability limit (PAL) for
defining applicability of NSR or of regulations implementing section
112(g) of the Act.

In revising part 70 permits to establish or change (except for PTE
limits) any of the above permit conditions, the State's part 70 program
would have to provide public, affected State, and EPA process focused
on the change equivalent to that afforded for initial permit issuance.
The permitting authority would also have to design and implement this
process so as to complete review of the majority of these types of
permit revisions within 6 months of receipt of an application for such
a revision. The requested change could only be made as allowed by the
underlying applicable requirement(s). The EPA is proposing to reduce
the processing time for the majority of these changes from the 9-month
period specified in the current rule to 6 months to promote necessary
streamlining and to minimize undue delays. The Agency, however,
solicits comment on the feasibility of a 6-month turn-around time and
on other time periods which might better accomplish these objectives.
The proposed list of the more environmentally significant changes
not otherwise subject to State review focusses the most extensive
review procedures on a relatively manageable number of changes that
involve actions that have, or potentially have, the greatest
environmental consequences. Congress clearly intended that the limits
associated with section 112(j) MACT decisions and early reductions be
determined in the context of the title V program. Section 112(j)
targets implementation after the effective date of the title V program,
requires applicable sources to file a permit application, and requires
the MACT limit be placed in a title V permit. Similarly, Congress in
section 112(i)(5) required the title V permitting authority to
establish in a title V permit an enforceable emissions limitation for
hazardous air pollutants (HAPs) reflecting the early reduction which
qualifies the source for an alternative emission limitation exemption
from MACT.
The EPA is also proposing to include in the more environmentally
significant list alternative emission limits as authorized by an
approved SIP or program under section 112(l) of the Act. Limits such as
alternative RACT or MACT are analogous to the two preceding types of
limits identified by Congress for title V implementation. Accordingly,
they warrant extensive review to assure that general criteria contained
in a SIP or a plan approved pursuant to section 112(l) of the Act are
applied in a reasonable and enforceable fashion to a particular source
change. Moreover, as explained subsequently, EPA's objection
opportunity under today's proposal would fully extend only to the more
environmentally significant categories of changes. Since under section
110 of the Act EPA must be able to object to alternative SIP limits for
them to qualify as such, it is important to include alternative SIP
limits in the more environmentally significant category of changes. The
EPA solicits comment on whether full public, affected State, and EPA
review are necessary for alternative MACT standards established under a
section 112(l) program or whether a lesser degree of public, affected
State, and EPA review would be adequate.
The establishment of limits on the PTE for an entire source or
plantwide emissions caps (see below) also warrants a similarly high
level of review. Development of such limits involves a comprehensive
review of a source's emissions to restrict a source's emissions to
below major source thresholds. Because of the extensive nature of these
reviews, the Agency believes that a 30-day public review period is
warranted for establishing such caps. While proposing these actions as
being more environmentally significant, the Agency does solicit comment
as to whether the establishment of (as well as revisions to) PTE limits
can be classified as less environmentally significant, particularly for
limits related to the applicability of minor NSR.
Finally, the Agency believes that changes involving shifts to new
or alternative monitoring approaches not otherwise matched to the
source (e.g., through a prior review) can often have potentially large
environmental impacts, because a new or different monitoring regime
could inadvertently allow emissions to increase without causing a
violation of the applicable requirements. The process reserved for more
environmentally significant changes is appropriate to safeguard the
integrity of the compliance conditions of the permit unless another
prior review serves this function (e.g., major or minor NSR under
today's proposal). Permitting authorities could approve such changes
only where the new or alternative monitoring or recordkeeping method
was determined adequate to assure

[[Page 45541]]
compliance with the applicable requirement.
The EPA solicits comment on whether any other changes not subject
to State review programs should be designated for inclusion in the more
environmentally significant category.
Other Changes Not Subject to State Review Programs. For all other
categories of changes for which a part 70 permit revision is required
but that are not otherwise subject to State review, a State could
develop a process that matches the review to the environmental
significance of the change. These categories of changes include, but
are not limited to:

(1) Revisions to emission limits restricting the PTE of an
entire source or any emissions unit, including any PALs for defining
applicability of NSR, or of regulations implementing section 112(g)
of the Act;
(2) Restrictions on the PTE of any emissions unit;
(3) Unique limits designed to meet an applicable requirement;
(4) New alternative operating scenarios;
(5) Changes within the same monitoring method, or ``intra-
monitoring changes;''
(6) Incorporation of MACT compliance details, including
applicability and compliance parameter level decisions; and
(7) Emissions averaging restrictions made pursuant to a standard
under section 112(d) of the Act.

For these changes, States again might use various methods to
provide adequate public participation, including prior or after-the-
fact notice and comment periods. As noted earlier, sources often take
limits on the PTE of an entire source to avoid being subject to more
stringent requirements that otherwise apply. Sources even more
frequently take limits on an emissions unit at the source to keep the
unit below major modification thresholds. Revising plantwide caps or
establishing or revising PTE limits for an emissions unit involve
making judgments regarding the sufficiency and practical enforceability
of a limit on maximum allowable emissions which, if exceeded, would
trigger the applicability of more environmentally significant
requirements. For this reason and as with significant synthetic minor
NSR actions, EPA would expect States to provide relatively more public
process for significant changes to PTE limits or caps. It would make
little sense to require full process to establish such plantwide limits
or caps if they could be revised with little or no process. Also, the
relative environmental significance of MACT applicability and
compliance parameter decisions can vary with the particular MACT
standard involved. The EPA, in promulgating individual MACT standards,
will provide guidance whenever it believes States should provide public
or EPA review during the permit process.
For those categories of changes that are determined by the
permitting authority to be de minimis, States may incorporate these
changes into part 70 permits without prior review by the public,
affected States, or EPA or an opportunity for EPA objection or for
citizens to petition EPA to object. The previously described
considerations relevant to identifying de minimis changes subject to
State review programs are also relevant in determining that categories
of changes not otherwise subject to State review are de minimis. States
could also exempt from public and EPA review on de minimis grounds
changes that qualify for administrative amendment treatment under
section 70.7(d) of the current part 70 rule. These include changes
which correct typographical errors, require more frequent monitoring or
reporting by the permittee, or alter ownership or operational control
of a source. The State would also identify other inconsequential
changes as de minimis and submit a list of those changes to EPA when
submitting part 70 program revisions for approval. Either the permittee
or the permitting authority could initiate the incorporation of any
such change into the permit by issuing a notice describing what
information in the part 70 permit is affected and sending the notice to
the permitting authority or the permittee as appropriate. The notice
would identify the terms of the existing part 70 permit being changed
and any new terms needed to meet part 70 permit content requirements.
The notice would revise the permit upon its mailing by the source to
the permitting authority through certified mail. No affirmative
authorization by the permitting authority would be required if the
permittee initiates the change.
Under today's proposal, the State part 70 program could also
provide that changes need not undergo State, EPA, or public review
before they are incorporated into the part 70 permit, provided that (1)
they can be operated in compliance with all applicable requirements and
the federally-enforceable terms of the existing part 70 permit, and (2)
the applicable requirements they trigger do not entail source-specific
determinations in applying the requirement to the source.
As previously noted, many minor NSR programs exempt from minor NSR
altogether changes that do not increase emissions above a certain
amount, or that are of a particular type or category. These changes may
nonetheless still be subject to applicable requirements such as NSPS or
SIP requirements. A small storage tank, for example, may be exempt from
NSR in certain States, but still may be subject to RACT or NSPS
requirements.
To the extent these changes do not conflict with the part 70 permit
and do not trigger requirements that entail source-specific tailoring,
EPA is proposing that they may be exempt from any additional public,
affected State, or EPA review in the part 70 process. The State part 70
program could provide that the source may operate the change upon
submitting a notice, provided that the change can be operated in
compliance with the existing part 70 permit. In the notice, the source
would describe the change, describe any new permit terms needed to
assure compliance with all applicable requirements and relevant part 70
requirements, and certify that the change is eligible for this process.
The part 70 permit would be revised upon mailing of the notice by the
source to the permitting authority by certified mail. No permit shield
would attach to changes so incorporated into permits, since not even
the permitting authority would have reviewed whether the source
correctly identified all of the Act requirements applicable to the
change.

E. Opportunity for EPA to Object and Permit Shield

Under section 505 of the Act, the Administrator is to receive and
review copies of permit applications, including applications for permit
revisions, and to object to the issuance of any permit which contains
provisions that are determined by the Administrator as not in
compliance with the applicable requirements of the Act, including title
V requirements. If the Administrator does not object to a permit within
the 45-day review period specified by the statute, any person may
petition the Administrator to do so within 60 days of the expiration of
the 45-day review period. Under the Act, the Administrator may waive
the requirements for receipt and review of permits for any category of
sources covered by the part 70 program other than major sources.
In fulfilling its review role with respect to permit revisions, EPA
will consider whether (1) all applicable requirements and part 70
requirements to which the source is subject as a result of the change
are contained in the permit revision, (2) the new or revised permit
terms and conditions are enforceable as a practical matter, and (3)
significant procedural requirements relating to adequate public
participation

[[Page 45542]]
and development of a supporting record have been met.
At the same time, EPA wants to minimize the potential for Agency
review to lengthen unduly the permit revision process. The Agency is
thus proposing to limit its review and objection opportunity in several
ways that will focus EPA's limited resources on providing a timely
reaction to the more environmentally significant permit revisions.
First, for the more environmentally significant changes (including
those that are subject to a State review program and those that are
not), EPA is proposing that the Agency would be required prior to the
permitting authority taking final action on the change to raise any
objections to the proposed change for any defect that was reasonably
apparent during the public review period. Failure by the Agency to
raise a timely objection would bar it from objecting to issuance of the
permit revision, except in response to a citizen's petition under
section 505(c). The Agency could still reopen the permit for cause
under section 505(e) of the Act and Sec. 70.7(g) of the current rule.
Second, changes which the State proposed and EPA approved as de
minimis under the Alabama Power test would not be subject to any EPA
review or objection opportunity or citizen petition opportunity prior
to renewal of the part 70 permit. Changes which meet the Alabama Power
de minimis test are by definition environmentally insignificant, and
EPA is therefore proposing to exercise its inherent administrative
authority to exempt such changes from the public, affected State, and
EPA review and objection opportunities that otherwise apply prior to
permit renewal. To the extent de minimis changes are improperly made or
incorporated into the permit, corrections can be made by reopening the
permit or when the permit is renewed with little or no cost to the
environment, provided the changes are in fact de minimis.
Third, for the less environmentally significant changes that do not
qualify as de minimis, EPA is proposing to limit its review and
objection opportunities for at least the first 5 years following
program approval. For such changes, EPA would object to a change only
in response to a citizen's meritorious petition under section 505(c)
where the permit revision at issue would likely lead to significant
adverse environmental consequences. During the 5-year period, the
Agency would rely on consultation with State officials and audits of
State programs to assist and monitor implementation of the permit
revision process with respect to changes in the less environmentally
significant category. Depending on what the audits reveal, the Agency
would revise as appropriate the time period or scope of the above-
described limit on its objection authority. The EPA contemplates
extending the waiver in States where the audit reveals no significant
problems due to the waiver, and reinstating the objection opportunity
in States where the audit shows otherwise.
For changes in the more environmentally significant category, EPA
would maintain its full authority to review and object to permits on
its own and in response to a citizen's petition. While the Agency does
not plan to routinely review all or even most of these changes, EPA
believes it should retain its authority to do so in light of the
potentially large emission increases such changes entail.
The Agency believes today's proposed approach to exercising its
review and objection authority would facilitate efficient
implementation of the proposed changes to the part 70 permit revision
process. Other aspects of today's proposal would improve the integrity
of part 70 permit revisions by ensuring public participation
commensurate with the environmental significance of the change and
public access to all permit revision decisions. To the extent that
potential public involvement increases, there is less need for regular
EPA oversight. The Agency also recognizes that the first years of
implementing any new or revised program are the most challenging.
States will need time and flexibility to work through the many new
issues that will inevitably arise as they begin to implement a revised
permit revision system. States are more apt to seek out EPA's help in
addressing difficult issues of first impression if EPA is in the role
of colleague rather than overseer.
Beyond that, EPA's own resources are limited. The Agency believes
that its resources would be best used to focus on the more
environmentally significant changes and to assist and audit States'
implementation of their programs. The Agency could, as an exercise of
its enforcement discretion, simply refrain from objecting to less
environmentally significant changes. The Agency believes, however, that
to realize the full benefits of its proposed approach to exercising its
objection authority, a regulatory limit is necessary. Regulations
specifying EPA's role in the permit revision process would best inform
the public, States, and sources as to what to expect and allow them to
plan accordingly. Particularly in the first critical years of program
implementation, a regulatory limit would provide an important measure
of certainty and stability at a time when all affected groups are
learning the new system.
The EPA is proposing a limit on its authority that would coincide
with States' early efforts to implement the revised program. The limit
on its authority would start upon approval of each revised State
program that implements these revisions to part 70 and would continue
for 5 years.
During the 5-year period, EPA would work with States to facilitate
a smooth transition to the revised program. Once State program
revisions were up and running, the Agency would also conduct audits to
determine States' performance in meeting minimum program requirements.
In conducting its audits, EPA would make use of the applications for
permit revisions that States are required by section 505(a) of the Act
and Sec. 70.8 of the current rule to send to EPA. Based on the results
of these audits, EPA would decide whether to revise the regulations to
suspend or extend the limit on its objection authority for particular
States or States in general.
An important safeguard in EPA's proposed approach is the ability of
citizens to petition the Agency to object to a permit revision under
section 505(c). If a citizen's petition brings to EPA's attention a
permit revision that allegedly fails to fully or accurately incorporate
all applicable requirements, including title V requirements, or for
which required opportunities for public review were not provided, the
Agency would review the revision for possible objection. Where its
review revealed an environmentally significant error in the permit
revision, EPA would object. For instance, an EPA objection would be
warranted in the case of a permit revision that purported to establish
or revise limits on a source's potential to emit to avoid application
of major NSR if the permit revision would in fact allow increases above
major NSR thresholds. On the other hand, errors that did not have an
adverse environmental effect would not warrant an EPA objection.
Correction of such errors could await permit renewal with little or no
cost to the environment and with significant potential savings to the
source.
As a further safeguard, a permit shield would not be available for
permit revisions to incorporate changes in the less environmentally
significant category unless they were revised and approved by EPA in
response to a

[[Page 45543]]
citizen's petition. In other words, if EPA were to find that a source
was not complying with an Act requirement that became applicable to the
source as a result of such a change, the Agency could take enforcement
action against the source for its non-compliance. The chance that a
permit revision would somehow incorrectly incorporate applicable
requirements due to a lack of EPA review would thus be offset by the
prospect of EPA enforcement of underlying applicable requirements.
In summary, EPA believes that the benefits of limiting its
objection authority with respect to the less environmentally
significant changes outweigh the potential risk of the limitations,
particularly in view of citizens' petition opportunity. The Agency
solicits comment on its proposed limitations and on its legal authority
to establish them.
Several parties have asked EPA to clarify how it would implement
EPA's objection opportunity for changes that have previously undergone
major NSR or minor NSR where a citizen petitions for an EPA objection
and the alleged error would have a significant environmental affect.
Section 505(b) of the Act provides for an objection if the permit
``contains provisions . . . not in compliance with the applicable
requirements of this Act, including the requirements of an applicable
implementation plan.'' To assure that the permit contains provisions
that are in compliance with all applicable requirements of the Act,
including SIP requirements, EPA would review a change resulting from a
NSR action to see if the terms of the NSR permit were properly
incorporated into the part 70 permit, if the terms are enforceable, and
if the applicable substantive and procedural requirements for public
review and development of supporting documentation were followed. For
major NSR, EPA would review the process followed by the permitting
authority in determining best available control technology (BACT) or
lowest achievable emission rate (LAER) to assure that the required SIP
procedures (including public participation opportunities) were
substantially met 4 and that any determination by the permitting
authority was properly supported, described in enforceable terms, and
consistent with all applicable requirements.

\4\ The Agency would only object to a part 70 permit for
procedural errors where EPA determined that the process required by
the SIP was not followed and, as a result, ``the errors were so
serious and related to matters of such central relevance to the rule
that there is a substantial likelihood that the [permit] would have
been significantly changed if such errors had not been made.'' This
is the same standard courts are to apply in reviewing Agency
procedural mistakes under the Act (see section 307(d)(8) of the
Act).
---------------------------------------------------------------------------

The EPA's purpose in reviewing whether an NSR action was consistent
with all applicable requirements would be to assure that any BACT
requirements were at least as stringent as any other applicable
requirements such as an NSPS and that any minimum control requirements
specifically articulated in the SIP were met. The EPA would not second-
guess case-by-case technology determinations that meet the minimum
criteria set forth above. For more environmentally significant changes
subject to minor NSR, EPA would also examine the calculations used to
base any decision that minor rather than major NSR was applicable to
the change.
At the discretion of the permitting authority, the permit shield
would be available for changes in the more environmentally significant
category, in view of the public, affected State, and EPA review
opportunities provided for those changes. For all other changes, the
permit shield would be available only for terms that are reviewed,
revised, or added by EPA in response to a citizen's petition.
For permit revisions other than those for de minimis changes,
citizens would have 60 days after the expiration of any EPA opportunity
to object, or from the time the permitting authority notified the
public as to its approval of the permit revision, to petition the
Administrator to make such objection. As in the current part 70, any
petition would (1) have to be based only on objections to the permit
which were raised with reasonable specificity during any prior
opportunity for public comment (unless the petitioner demonstrates that
it was impractical to raise such objections at that time); (2) have to
be based on germane and non-frivolous grounds; and (3) have to raise
issues related to the incorporation of or correctness of applicable
requirements, enforceability, or procedural requirements concerning
public review consistent with EPA's ability to object.
The EPA would like to avoid unnecessary petitions wherever
possible. Accordingly, the Agency suggests that concerned citizens work
with EPA early on in the process to resolve as many concerns as
possible before they rise to the level of a formal petition.
The Agency is aware of industry concerns that uncertainty is
created by allowing citizens to petition EPA to object to less
environmentally significant changes. Because such changes by their
nature are less environmentally significant, industry has suggested
that the opportunity for citizens' petitions be postponed until permit
renewal. The EPA believes that such postponement conflicts with the
explicit provisions of section 505(b)(2). Moreover, as explained
previously, at least some type of changes in the less environmentally
significant category have large potential environmental consequences
because they shield a source from more stringent environmental
controls. The Agency has attempted to address industry concerns by
allowing States to notify the public of permit revisions on a batched
basis where sources must make changes frequently (see following Section
II. F. Flexible Permits). The EPA also solicits comment on whether
there is a legal basis for postponing the opportunity for citizen
petitions on less environmentally significant changes until permit
renewal.

F. Flexible Permits

Aside from providing streamlined permit revision procedures, a
permit system can promote source flexibility by providing opportunities
to design a permit which will minimize the need for permit revisions.
Many ways have been identified to achieve this, including use of worst
case limits and alternative scenarios (56 FR 21748-49, May 10, 1991).
In addition, as the July 21, 1992 preamble to the final part 70
rulemaking stated, there are no limitations on changes which do not
trigger any applicable requirements and which are not prohibited or
addressed by the permit.
Section 502(b)(10) of the Act requires States to design their title
V programs to allow changes to be made at a source without revising the
source's title V permit so long as the change does not exceed the
emissions allowable under the permit and does not constitute a
``modification under any provision of [title I of the Act].'' The
current rule implements section 502(b)(10) by providing sources with a
potential means of establishing emissions caps in part 70 permits. Caps
may be designed such that changes can be made at a source without
triggering reviews which can produce additional applicable requirements
(e.g., NSR or section 112(g) requirements), and thus the need for a
permit revision, provided emissions do not exceed the cap. The current
rule further provides that sources granted such a cap may comply with
the cap through emissions trading as provided by the terms of the cap.
As discussed in the August 1994 proposal, EPA believes that the
flexibility afforded by section 502(b)(10)

[[Page 45544]]
is a mandatory minimum element of State permit programs. In that
notice, the Agency proposed to revise the current rule to require
States to establish a cap in a source's permit at the source's request,
so long as the source proposed a cap that met the terms of section
502(b)(10) (as well as the enforceability requirements set forth in
Sec. 70.6). In addition, the Agency proposal would require the permit
applicant to include in its application proposed replicable procedures
and permit terms that ensure the emissions cap is enforceable and
trades pursuant to it are quantifiable and enforceable. Any permit
terms and conditions establishing such a cap or allowing such trading
could be established only in a full permit issuance process. The
permitting authority would not be required to include in the cap or
emissions trading provisions any emissions units where the permitting
authority determined that the emissions were not quantifiable or where
it determined that there were no replicable procedures or practical
means to enforce the emissions trades. The permit shield described in
Sec. 70.6(f) could extend to terms and conditions that allowed such
increases and decreases in emissions.
As discussed in the July 1992 preamble (57 FR 32267-8) and in the
August 1994 preamble (59 FR 44471-2), EPA encourages the development of
trading provisions in part 70 permits consistent with section
502(b)(10). As allowed in the SIP, the Agency believes that an
important option for flexibility can be established through part 70
trading conditions which are specific enough so that any source
authorized to use them has a clear method of demonstrating compliance
through the trading program without the need for a permit revision. As
described in more detail in the July 1992 preamble, the trading
procedures approved into the SIP must assure that each trade is
quantifiable, accountable, enforceable, and based on replicable
procedures and meets the underlying requirements. One example of the
type of trading program which could provide such flexibility is the
open market trading system proposed on August 3, 1995 (60 FR 39668).
Under this approach, EPA intends to allow sources to engage in trading
of ``discrete emissions reductions'' to achieve compliance with those
applicable requirements authorized for such compliance in the SIP and
in the permit. Another example would be the ``emissions budget''
program, such as the acid rain program for sulfur dioxide, under which
sources can use allowances to meet the underlying requirements. It is
currently envisioned that the part 70 permit need only contain a
generic trading provision requiring that sufficient discrete emissions
reductions be held to meet those applicable requirements which are open
for trading. Permit revisions would not be needed to implement any
trades, but the trading rule may mandate that the part 70 permit
contain certain reporting and recordkeeping obligations to assure the
integrity of the trades themselves.
Another option for flexibility described in the August 1994
proposal allows the part 70 permit to contain ``advance NSR''
provisions to the extent compatible with State NSR requirements. Such
advance NSR provisions provide for including the result of the
preconstruction review process up front in the operating permit,
including any part 70 permit terms needed to address such future
change(s). Such a provision, however, must be compatible with the
constraints of the applicable requirements (e.g., limits on the term of
a BACT determination) and be developed with its implications of those
requirements in mind (e.g., possible consumption of the PSD increment).
Many States should immediately be able to rely on this provision to
avoid the need for a separate NSR permit or an operating permit
revision to be issued when the source actually makes the change. Even
where the issuance of a preconstruction permit is required, the need
for a part 70 permit revision can still be avoided unless the NSR
process results in new or different terms that must be placed in the
part 70 permit.
Several questions have arisen regarding the practicality of such
caps and advance NSR provisions. Concerns have been raised that these
opportunities would be severely limited by section 502(b)(10) of the
Act. While allowing certain changes at a source to occur without a
permit revision, this provision excludes title I modifications from
this relief and subjects eligible changes to a 7-day advance
notification requirement.
The EPA believes that section 502(b)(10) was enacted by Congress to
provide additional flexibility to sources and not to restrict any
flexibility that already may be available under the regulations
governing applicable requirements. For example, section 502(b)(10)
would not preclude the incorporation into a part 70 permit of an NSR
permit which defines how future changes at a source could occur in a
manner that would meet the relevant NSR requirement. The part 70 permit
itself may also define the scope of future NSR obligations for the
source so long as this is allowed under the State's permitting program.
No NSR requirements are circumvented under such an approach. Rather,
compliance is determined beforehand so that the source may operate the
pre-approved change without first obtaining a permit revision. The
source would effectively have a blueprint analogous to a type of
alternative scenario under which to operate if any of the pre-approved
NSR changes were to occur.
The exact design of an emissions cap to meet Sec. 70.4(b)(12)(i) of
the August 1994 proposal and section 502(b)(10) will depend on the
nature of the prospective source operation and the scope of the
relevant applicable requirements, including the State's NSR programs
and of regulations implementing section 112(g). For example, in one
State it may be possible to define a PAL (or series of PALs) which
defines when such requirements would be triggered. In other situations
(e.g., where minor NSR applies and requires a case-by-case technology
review whenever new capacity would be established), the PAL or series
of PALs would need to be coupled with an advance NSR provision to
address all NSR situations including those requiring an advance
technology review of any changes for which pre-authorization was sought
under the PAL.
Concerns have been raised that the 7-day advance notice provision
of section 502(b)(10) could hinder a source's ability to respond
quickly to changing market conditions by making changes already
authorized under a cap. The Agency believes that the section 502(b)(10)
notification requirement can be met by a generic notice describing a
class of trades authorized by the permit and the source's intent to
engage in such trades during a specified period of time. This notice
must be sent at least 7 days prior to initiating trading of emissions
under the cap, which incidentally could require notification during
permit issuance where a facility intends to trade as soon as it
receives its permit.
Concerns have also been raised that caps created pursuant to the
regulations at Sec. 70.4(b)(12) implementing section 502(b)(10) would
be severely limited if the Agency were to interpret the title I
modification limitation in 502(b)(10) to include changes subject to
minor NSR. As discussed in the next section of this preamble, (see
Section II. G. Title I Modifications), the Agency is proposing to add
regulatory language that defines the scope of title I modification to
clearly exclude modifications subject to States' minor NSR programs.
This action

[[Page 45545]]
would directly resolve these concerns. Thus, under today's proposal,
this definition of title I modification will enhance the ability of
sources to design emissions cap permits pursuant to section 502(b)(10).
To promote greater certainty in implementing caps under section
502(b)(10), the Agency proposes to codify into the part 70 regulations
the previous clarifications regarding emissions caps and advance NSR
provisions. Under today's proposal, EPA would build upon its August
1994 proposal by defining in Sec. 70.2 advance NSR, alternative
scenarios, emissions cap permits, and PALs. The Agency further proposes
to add to Sec. 70.4(b)(3) the obligation to issue emissions cap permits
pursuant to Sec. 70.4(b)(12)(i) (regarding the mandatory nature of
emissions caps) as the Agency proposed to revise it in the August 1994
proposal. This would require a permitting authority to accept
enforceable permit conditions proposed by a part 70 source that (1)
establish limits that keep the source from being subject to
requirements that apply above the limit and (2) assure compliance with
requirements applicable to future operations in which the source may
engage so as to avoid permit revisions. These conditions would be
established during permit issuance or permit revision procedures for
the more environmentally significant changes.
To illustrate the type of flexibility that is available using a
part 70 created cap incorporating advance NSR, the Agency refers
readers to a draft permit providing a plant-wide emission limit for a
semiconductor facility. A copy of this permit is available in the
docket for this rulemaking. This permit, when final, will include terms
that allow the source to undertake process changes without a permit
revision by combining an emissions cap on HAPs that renders the source
a synthetic minor and an emissions cap on criteria pollutants with an
advance NSR provision authorizing certain types of changes involving
VOCs and specific exemptions for insignificant activities and
emissions. Under this draft permit, the source's routine changes will
not trigger a part 70 permit revision obligation so long as: (1) Each
change complies with applicable RACT and SIP requirements; (2) each
change triggers no newly applicable requirement; and (3) total
emissions do not exceed an aggregate emission limit for VOCs. This
permit also incorporates additional conditions for pollution prevention
planning, reporting, and training to assure compliance with the
emissions cap. The final permit will also contain monitoring and other
conditions sufficient to demonstrate compliance with the VOC emission
limit.
While this permit is not yet final, EPA considers the basic
approach used in this permit as acceptable and appropriate under part
70 and anticipates that it will serve as a useful model which offers
operational flexibility in an environmentally protective framework.
When a final decision is made on the specific permit, it will be placed
in the docket for today's rulemaking.
The EPA encourages the use of the approach employed in the draft
permit by permitting authorities seeking to minimize administrative
burdens and maximize the flexibility of regulated facilities,
particularly those which make frequent process changes that have a
relatively small impact on emissions. The EPA does note, however, that
the terms and conditions needed to meet minor NSR in advance may well
vary from State to State. In particular, States with case-by-case
control requirements approved as part of their minor NSR programs may
require more specific conditions to allow sources to qualify for
advance NSR. The EPA solicits comment on the acceptability and
effectiveness of this approach.
Concerns have also been raised regarding the vast quantity of
trivial changes that can occur each year at certain sources, including
those in the electronics sector. These changes are peripheral to the
core processes of a source and often do not affect emissions. In these
cases, other types of advance NSR conditions are potentially useful. In
particular, the part 70 permit can define in advance a list of
activities which the permitting authority acknowledges are not physical
changes or changes in the method of operation and therefore do not
trigger minor NSR. Such changes when they subsequently occur would not
precipitate the need for a part 70 permit revision, since they would
not trigger minor NSR. The list of these activities developed by the
Oregon Department of Environmental Quality which EPA has placed in the
docket serves as an example of what might be defined in individual
permits.
Finally, the Agency would like to clarify that NSR registration
provisions under an EPA-approved minor NSR program that only require
reporting of changes in emissions levels, provided total emissions stay
below certain prescribed limits, could often be treated in the part 70
permit as a generic requirement which requires any necessary reporting
or notification by the source to the permitting authority but does not
require a revision to the permit. Alternatively, implementation of such
NSR registration rules would be eligible for permit revision by source
notice (see the previous discussion, Other Changes Not Otherwise
Reviewed by States) where the applicable requirement itself allows for
updating the permit through a notification procedure. Where neither of
these approaches to SIP-required NSR registration can be implemented
(e.g., State requires individual permit revisions for each
transaction), the Agency solicits comment on the ability to allow
permitting authorities to collect and batch process changes over a
month's time period and conduct one part 70 permit revision at that
time. This option would be available only for those changes that were
defined by the program as being individually eligible for this
treatment and that did not conflict with the part 70 permit.

G. Title I Modifications

The meaning of the section 502(b)(10) limitation, ``modifications
under any provision of title I,'' has been disputed since the rule's
promulgation. In its proposed rule to revise the criteria for granting
State programs interim approval (59 FR 44572 (August 29, 1994)), EPA
proposed that the phrase ``modifications under any provision of title
I'' would include not only changes subject to the major NSR
requirements of parts C and D of title I but also those subject to
minor NSR programs established by the States pursuant to section
110(a)(2)(C), which is also in title I. Based on that reading, EPA in
August 1994 proposed in part to interpret the title I modification
language of the current rule (which is found in the provisions
governing minor permit modification procedures and off-permit as well
as those implementing section 502(b)(10)) to include minor as well as
major NSR.
In response to the August 1994 proposal, EPA received many comments
from industry and States strongly contending that the proper
interpretation of the title I modification limitation of the current
rule should be read to exclude minor NSR. These commenters noted that
EPA had itself effectively defined the term to exclude minor NSR in the
preamble to the May 1991 proposed rule (56 FR 21746-47 and footnote 6).
They argued that commenters on the May 1991 proposed rule relied on
that definition, that EPA did not change the definition in promulgating
the final rule in July 1992, and therefore that EPA was not free to
change its interpretation without undertaking further rulemaking. Many
comments also pointed out that EPA's

[[Page 45546]]
August 1994 proposal to include minor NSR in the scope of title I
modifications would have the effect of greatly reducing, and in some
cases virtually eliminating, the relief that Congress sought to provide
sources under section 502(b)(10) (i.e., to avoid permit revisions for
changes that do not increase all

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A95-21300. Public record. Not legal advice.