Clean Air Act Proposed Interim Approval of Operating Permit Program; North Carolina, Western North Carolina Mecklenburg County, Forsyth County

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[NC-95-01; FRL-5288-2]

Clean Air Act Proposed Interim Approval of Operating Permit

Program; North Carolina, Western North Carolina Mecklenburg County,

Forsyth County

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.

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SUMMARY: EPA proposes interim approval of the operating permit programs

submitted by the State of North Carolina Department of Health,

Environment and Natural Resources (DEHNR), Western North Carolina

Regional Air Pollution Control Agency (WNCRAPCA), Forsyth County

Department of Environmental Affairs (FCDEA), and Mecklenburg County

Department of Environmental Protection (MCDEP) for the purpose of

complying with Federal requirements which mandate that states develop,

and submit to EPA, programs for issuing operating permits to all major

stationary sources, and to certain other sources.

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

September 28, 1995.

ADDRESSES: Written comments on this action should be addressed to Carla

E. Pierce, Chief, Air Toxics Unit/Title V Team, Air Programs Branch, at

the EPA Region 4 office listed below. Copies of the DEHNR, WNCRAPCA,

FCDEA, and MCDEP submittals and other supporting information used in

developing the proposed interim approval are available for inspection

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

Environmental Protection Agency, Region 4, 345 Courtland Street, NE,

Atlanta, GA 30365.

FOR FURTHER INFORMATION CONTACT: Scott Miller, Title V Program

Development Team, Air Programs Branch, Air Pesticides & Toxics

Management Division, U.S. Environmental Protection Agency, Region 4,

345 Courtland Street, NE, Atlanta, GA 30365, (404) 347-3555, Ext. 4153.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

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

amended by the 1990 Clean Air Act Amendments, EPA promulgated rules on

July 21, 1992 (57 FR 32250), that define the minimum elements of an

approvable state operating permit program and the corresponding

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

withdraw approval of state operating permit programs. These rules are

codified at 40 Code of Federal Regulations (CFR) part 70. Title V and

part 70 require that states develop, and submit to EPA, programs for

issuing operating permits to all major stationary sources and to

certain other sources.

The Act requires states to develop and submit these programs to EPA

by November 15, 1993, and EPA to approve or disapprove each program

within one year after receiving the submittal. If the State's

submission is materially changed during the one-year review period, 40

CFR Part 70.4(e)(2) allows EPA to extend the review period for no more

than one year following receipt of the additional materials. EPA

received the DEHNR, WNCRAPCA, FCDEA, and MCDEP's title V operating

permit program submittals on November 12, 1993. The State provided EPA

with additional materials in supplemental submittals dated December 17,

1993, February 28, 1994, May 31, 1994, and August 9, 1995. Because

these supplements materially changed the State's title V program

submittal, EPA has extended the review period and will work

expeditiously to promulgate a final decision on the State's program.

EPA reviews state operating permit programs pursuant to section 502

of the Act and 40 CFR part 70, which together outline criteria for

approval or disapproval. Where a program substantially, but not fully,

meets the requirements of part 70, EPA may grant the program interim

approval for a period of up to two years. If EPA has not granted full

or interim approval to a whole program by November 15, 1995, it must

establish and implement a Federal operating permit program for that

state.

B. Federal Oversight and Sanctions

If EPA grants interim approval to the DEHNR, WNCRAPCA, FCDEA, and

MCDEP programs, the interim approval would extend for two years

following the effective date of final interim approval, and could not

be renewed. During the interim approval period, the State of North

Carolina, WNCRAPCA, FCDEA, and MCDEP would not be subject to sanctions,

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

Federal permit program for the State. Permits issued under a program

with interim approval are fully effective with respect to part 70, and

the 12-month time period for submittal of permit applications by

sources subject to part 70 requirements begins upon the effective date

of final interim approval, as does the three-year time period for

processing the initial permit applications.

Following the granting of final interim approval, if the DEHNR,

WNCRAPCA, FCDEA, or MCDEP failed to submit complete corrective programs

for full approval by the date six months before expiration of the

interim approval, EPA would start an 18-month clock for mandatory

sanctions. If the DEHNR, WNCRAPCA, FCDEA, or MCDEP then failed to

submit a corrective program that EPA found complete before the

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

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

effect until EPA determined that DEHNR, WNCRAPCA, FCDEA, or MCDEP had

corrected the deficiency by submitting a complete corrective program.

Moreover, if the Administrator found a lack of good faith on the part

of DEHNR, WNCRAPCA, FCDEA, or MCDEP, both sanctions under section

179(b) would apply after the expiration of the 18-month period and

would extend until the Administrator determined that these programs had

come into compliance. In any case, if, six months after application of

the first sanction, DEHNR, WNCRAPCA, FCDEA, or MCDEP still had not

submitted a corrective program that EPA found complete, the second

sanction would be applied.

If, following final interim approval, EPA were to disapprove any of

the North Carolina State or local program complete corrective programs,

EPA would be required to apply one of the section 179(b) sanctions on

the date 18 months after the effective date of the disapproval, unless

prior to that date the DEHNR, WNCRAPCA, FCDEA, or MCDEP had submitted a

revised program and EPA had determined that it corrected the

deficiencies that prompted the disapproval. Moreover, if the

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

Carolina State or local agencies, both sanctions under section 179(b)

would apply after the expiration of the 18-month period until the

Administrator determined that the North Carolina State or local

agencies had come into compliance. In all cases, if six months after

EPA applied the first sanction, the North Carolina State or local

agencies had not submitted a revised program that EPA had determined

corrected the deficiencies that prompted disapproval, a second sanction

would be required.

[[Page 44806]]

In addition, discretionary sanctions may be applied where warranted

any time after the end of an interim approval period if a state has not

timely submitted a complete corrective program or EPA has disapproved a

submitted corrective program. Moreover, if EPA has not granted full

approval to a state program by the expiration of an interim approval

and that expiration occurs after November 15, 1995, EPA must

promulgate, administer, and enforce a Federal operating permit program

for that state upon interim approval expiration.

II. Proposed Action and Implications

A. Analysis of State Submission

EPA believes that the operating permit programs submitted by the

DEHNR, WNCRAPCA, FCDEA, and MCDEP substantially meet the requirements

of title V and part 70, and EPA proposes to grant interim approval to

these programs. For detailed information on the analysis of the State

and local agency submission, please refer to the Technical Support

Document (TSD) contained in the docket at the address noted above.

1. Support Materials

On November 12, 1993, EPA received the title V operating permit

programs submitted by the DEHNR, WNCRAPCA, FCDEA, and MCDEP. The DEHNR

requested, under the signature of the State of North Carolina

Governor's designee, approval of its operating permit program with full

authority to administer the program in all areas of the State of North

Carolina, with the exceptions of Indian reservations and tribal lands.

The State and local agencies submitted supplements to their title V

operating permits programs submittals dated December 17, February 28,

1994, May 31, 1994, and July 27, 1995.

The DEHNR, WNCRAPCA, FCDEA, and MCDEP submittals address, in

Section II entitled ``Complete Program Description,'' the requirement

of 40 CFR Part 70.4(b)(1) by describing how the State and local

agencies intend to carry out their responsibilities under the part 70

regulations. EPA believes the program descriptions are sufficient for

meeting the requirement of 40 CFR Part 70.4(b)(1).

Pursuant to 40 CFR Part 70.4(b)(3), each state is required to

submit a legal opinion from the Attorney General (or the attorney for

the state air pollution control agency that has independent legal

counsel) demonstrating adequate authority to carry out all aspects of

the title V operating permit program. The DEHNR submitted a General

Counsel Opinion and a Supplementary General Counsel Opinion

demonstrating adequate legal authority as required by Federal law and

regulation. WNCRAPCA, FCDEA, and MCDEP each submitted a General Counsel

Opinion. EPA believes that these opinions adequately address the

thirteen provisions listed at 40 CFR 70.4(b)(3)(i)-(xiii).

Section 70.4(b)(4) requires the submission of relevant permitting

program documentation not contained in the regulations, such as permit

application forms, permit forms, and relevant guidance to assist in the

State's implementation of its permit program. Section IV of the DEHNR,

WNCRAPCA, and FCDEA submittals and Appendix C of the MCDEP submittal

include permit application forms. EPA has determined that the

application forms meet the requirements of 40 CFR Part 70.5(c).

2. Regulations and Program Implementation

The State of North Carolina developed 15A North Carolina

Administrative Code (NCAC) Subchapter 2Q.0500 entitled ``Title V

Procedures'' for the implementation of the substantive requirements of

40 CFR part 70. The State also made changes to 15A NCAC 2Q.0200 and 15A

NCAC 2Q.0100 to implement other part 70 requirements. These rules, and

several other rules and statutes providing for State permitting and

administrative actions, were submitted by North Carolina with

sufficient evidence of procedurally correct adoption as required by 40

CFR Part 70.4(b)(2). The FCDEA adopted the State regulations verbatim

in the Forsyth County Air Quality Technical Code (FCAQTC) Subchapter 3Q

Sections .0500, .0100, and .0200. The WNCRAPCA adopted the State

regulations verbatim in WNCRAPCA Rules and Regulations (WNCRAPCARR)

Chapter 17 Sections .0500, .0100, and .0200. The MCDEP adopted the

State regulations verbatim in Mecklenburg County Air Pollution Control

Ordinance (MCAPCO) Article 1 Sections .5500, .5231, .5211. The local

programs contain regulations that differ from the State program

concerning the collection of title V fees. Since the local agency

programs adopted the State regulations verbatim with the exception of

fee collection, this proposed rulemaking will discuss the State

regulations and how they meet the requirements of part 70 and follow

with regulatory citations for the local agency regulations which

implement the equivalent State regulation. Fee regulations will be

discussed separately for each local agency.

The DEHNR program, in Regulation 15A NCAC 2Q.0502 (MCAPCO

Regulation 1.5502, FCAQTC Regulation 3Q.0502, and WNCRAPCARR Regulation

17.0502), substantially meets the requirements of 40 CFR Part 70.2 and

70.3 regarding applicability. However, Regulation 15A NCAC 2Q.0502(c)

(MCAPCO Regulation 1.5502(c), FCAQTC Regulation 3Q.0502(c), and

WNCRAPCARR Regulation 17.0502(c)) allows Research and Development (R&D)

facilities to be treated as separate facilities from other stationary

facilities that are part of the same industrial grouping, are located

on contiguous or adjacent property, and are under common control. Such

an approach is inconsistent with the definition of major source found

in 40 CFR Part 70.2, which requires all sources located on contiguous

or adjacent properties, under common control, and belonging to a single

major industrial grouping to be considered as the same facility.

However, EPA notes that relatively few sources will be excluded from

the scope of the State's title V program as a result of this approach.

Moreover, the State has committed to undertake a rulemaking designed to

assure that R&D facilities that are collocated with manufacturing

facilities and which are under common control and belonging to a single

major industrial grouping will be considered as the same facility for

determining title V applicability to the source. Finalization of this

rulemaking is a prerequisite to obtaining full program approval.

The DEHNR, WNCRAPCA, FCDEA, and MCDEP definition of ``title I

modification'' does not include changes reviewed under a minor source

preconstruction review program (``minor NSR changes''). The EPA is

currently in the process of determining the proper definition of that

phrase. As further explained below, EPA has solicited public comment on

whether the phrase ``modification under any provision of title I of the

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

literally any change at a source that would trigger permitting

authority review under regulations approved or promulgated under title

I of the Act. This would include state preconstruction review programs

approved by EPA as part of the State Implementation Plan under section

110(a)(2)(C) of the Clean Air Act.

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

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

with a more

[[Page 44807]]

narrow definition of ``title I modifications'' to receive interim

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

reading of ``title I modifications'' includes minor NSR and pre-1990

NESHAP requirements, and solicited public comment on the proper

interpretation of that term (59 FR 44573). The Agency stated that if,

after considering the public comments, it continued to believe that the

phrase ``title I modifications'' should be interpreted as including

minor NSR changes, it would revise the interim approval criteria as

needed to allow states with a narrower definition to be eligible for

interim approval.

The EPA hopes to finalize its rulemaking revising the interim

approval criteria under 40 CFR 70.4(d) expeditiously.1 If EPA

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

modifications'' can be interpreted to exclude changes reviewed under

minor NSR programs, the definition of ``title I modification'' would be

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

the rulemaking that the definition must include changes reviewed under

minor NSR, the DEHNR, WNCRAPCA, FCDEA, and MCDEP definition of ``title

I modifications'' will become a basis for interim approval. If the

definition becomes a basis for interim approval as a result of EPA's

rulemaking, the DEHNR, WNCRAPCA, FCDEA, and MCDEP would be required to

revise their definition to conform to the requirements of part 70.

\1\Publication of the proposed interim approval criteria

revisions was delayed until August 29, 1994, and EPA received

several requests to extend the public comment period until November

27, 1994. Given the importance of the issues in that rulemaking to

states, sources and the public, but mindful of the need to take

action quickly, EPA agreed to extend the comment period until

October 28, 1994 (see 59 FR 52122 (October 14, 1994)).

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Accordingly, today's proposed approval does not identify the DEHNR,

WNCRAPCA, FCDEA, and MCDEP definition of ``title I modification'' as

necessary grounds for either interim approval or disapproval. Again,

although EPA has reasons for believing that the better interpretation

of ``title I modifications'' is the broader one, EPA does not believe

that it is appropriate to determine whether this is a program

deficiency until EPA completes its rulemaking on this issue.

The DEHNR program, in Regulation 15A NCAC 2Q.0507 and associated

permit application forms (MCAPCO Regulation 1.5507, FCAQTC Regulation

3Q.0507, and WNCRAPCARR Regulation 17.0507), substantially meets the

requirements of 40 CFR Part 70.5 for complete permit application forms.

However, Regulation 15A NCAC 2Q.0507 (MCAPCO Regulation 1.5507, FCAQTC

Regulation 3Q.0507, and WNCRAPCARR Regulation 17.0507) does not require

an applicant to include all fugitive emissions regardless of whether

such emissions will be used to determine title V applicability.

Pursuant to 40 CFR Part 70.3(d), an applicant must include all fugitive

emissions regardless of whether such emissions will be used to

determine title V applicability. The State has committed to undertake a

rulemaking designed to assure that this requirement in 40 CFR Part

70.3(d) is included in the State's regulations. Finalization of this

rulemaking is a prerequisite to obtaining full program approval.

Section 70.4(b)(2) requires state and local agencies to include in

their part 70 programs any criteria used to determine insignificant

activities or emission levels for the purposes of determining complete

applications. Section 70.5(c) states that an application for a part 70

permit may not omit information needed to determine the applicability

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

appropriate fee amounts. Section 70.5(c) also states that EPA may

approve, as part of a state or local program, a list of insignificant

activities and emissions levels which need not be included in permit

applications. Under part 70, a state or local agency must request and

EPA must approve as part of that program any activity or emission level

that the state wishes to consider insignificant. Part 70, however, does

not establish appropriate emission levels for insignificant activities,

relying instead on a case-by-case determination of appropriate levels

based on the particular circumstances of part 70 program under review.

For other state programs, EPA has proposed to accept, as sufficient

for full approval, potential per emission unit levels for insignificant

activities of 5 tons per year for criteria pollutants and the lesser of

1000 pounds per year or section 112(g) de minimis levels for hazardous

air pollutants (HAP). Provided the State or local program does not

allow applications to omit information needed to determine the

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

evaluate the fee amount required under the program's approved fee

schedule, EPA believes that these levels are sufficiently below

applicability thresholds for many applicable requirements to assure

that no unit potentially subject to an applicable requirement is left

off a title V application and are consistent with current permitting

thresholds in the State of North Carolina.

The State and local agency title V programs include three different

approaches to establishing insignificant activities and emissions

levels. Regulation 15A NCAC 2Q.0102(b)(1) (MCAPCO Regulation

1.5211(e)(1), FCAQTC Regulation 3Q.0102(b)(1), and WNCRAPCARR

Regulation 17.0102(b)(1)) establishes exemptions according to source

category and activity. These activities are not required to be included

in permit applications or permits issued by the State or local

agencies. Regulation 15A NCAC 2Q.0102(b)(2) (MCAPCO Regulation

1.5211(e)(2), FCAQTC Regulation 3Q.0102(b)(2), and WNCRAPCARR

Regulation 17.0102(b)(2)) establishes exemptions on the basis of size

or production rate. These activities are required to be included in the

permit application but are not required to be included in a facility's

permit. Some of these activities are exempted at levels of up to 40 tpy

for criteria pollutants. These levels are a substantial fraction of the

major source threshold and would almost certainly exclude units with

applicable requirements. EPA, therefore, finds that these emission

levels are too high to be considered insignificant. EPA proposes that,

in order to obtain full approval, the State must revise this regulation

to revise these threshold levels downward from potential emissions of

40 tpy for these activities to potential per emission unit levels for

insignificant activities of 5 tons per year for criteria pollutants and

the lesser of 1000 pounds per year or section 112(g) de minimis levels

for HAP or such other level as the State or local agencies can

demonstrate will not be likely to interfere with determining and

imposing an applicable requirement. Regulation 15A NCAC

2Q.0102(b)(2)(F) (MCAPCO Regulation 1.5211(e)(2)(F), FCAQTC Regulation

3Q.0102(b)(2)(F) and WNCRAPCARR Regulation 17.0102(b)(2)(F)) allows an

applicant to demonstrate to the satisfaction of the respective air

program Director that an activity would be negligible in air quality

impacts, not require an air pollution control device, and not violate

any applicable emission control standard when operating at maximum

design capacity or maximum operating rate, whichever is greater. If an

applicant could demonstrate that an activity qualified under the above

criteria or conditions, the activity would then be considered as an

insignificant activity. In order to obtain full program approval, the

DEHNR, WNCRAPCA, FCDEA, and MCDEP must revise their

[[Page 44808]]

regulations to provide that any insignificant activity granted under

15A NCAC 2Q.0102(b)(2)(F) or other respective local agency regulations

would be limited to potential per emission unit levels for

insignificant activities of 5 tons per year for criteria pollutants and

the lesser of 1000 pounds per year or section 112(g) de minimis levels

for HAP.

EPA is requesting comment on the appropriateness of these emission

levels for determining insignificant activities in the State of North

Carolina. This request for comment is not intended to restrict the

ability of the North Carolina State and local agencies to propose and

EPA to approve other emission levels if the State and local agencies

demonstrate that such alternative emission levels are insignificant

compared to the level of emissions from and types of units that are

permitted or subject to applicable requirements.

The DEHNR program, in Regulations 15A NCAC 2Q.0508 through 2Q.0513

and 2Q.0523 (MCAPCO Regulations 1.5508 through 1.5513 and 1.5523,

FCAQTC Regulation 3Q.0508 through 3Q.0513 and 3Q.0523, and WNCRAPCARR

Regulation 17.0508 through 17.0513 and 17.0523), substantially meets

the requirements of 40 CFR Parts 70.4, 70.5, and 70.6 for permit

content (including operational flexibility). The DEHNR, WNCRAPCA,

FCDEA, and MCDEP programs do provide for limited use of off-permit

changes as described in 40 CFR 70.4(b)(14). However, the State and

local agency programs limit the use of off-permit to changes which are

not governed by applicable requirements and changes which are

insignificant activities that remain as insignificant activities after

the change.

Part 70 requires prompt reporting of deviations from the permit

requirements. Section 70.6(a)(3)(iii)(B) requires the permitting

authority to define ``prompt'' in relation to the degree and type of

deviation likely to occur and the applicable requirements. Although the

permit program regulations should define ``prompt'' for purposes of

administrative efficiency and clarity, an acceptable alternative is to

define ``prompt'' in each individual permit. EPA believes that

``prompt'' should generally be defined as requiring reporting within

two to ten days of the deviation. Two to ten days is sufficient time in

most cases to protect public health and safety as well as to provide a

forewarning of potential problems. For sources with a low level of

excess emissions, a longer time period may be acceptable. However,

prompt reporting must be more frequent than the semiannual reporting

requirement, given this is a distinct reporting obligation under 40 CFR

70.6(a)(3)(iii)(A). Where ``prompt'' is defined in the individual

permit but not in the program regulations, EPA may veto permits that do

not contain sufficiently prompt reporting of deviations.

Regulation 15A NCAC 2Q.0508(f)(3) (MCAPCO Regulation 1.5508(f)(3),

FCAQTC Regulation 3Q.0508(f)(3), and WNCRAPCARR Regulation

17.0508(f)(3)) defines ``prompt'' in the DEHNR program with respect to

the reporting of deviations. The regulations require a permittee to

report by the next business day deviations from permit requirements or

any excess emissions and to follow up this report within two business

days with a written report to the respective air pollution control

agency.

The DEHNR, WNCRAPCA, FCDEA, and MCDEP have the authority to issue

variances from requirements imposed by State law. North Carolina

General Statutes (G.S.) 143-215.3E allows the DEHNR, WNCRAPCA, FCDEA,

and MCDEP discretion to grant relief from compliance with State

statutes and rules. EPA regards this provision as wholly external to

the program submitted for approval under part 70, and consequently

proposes to take no action on this provision of State law. EPA has no

authority to approve provisions of state law, such as the variance

provision referred to, that are inconsistent with title V or other

applicable requirements of the Act and would render permits and the

applicable requirements they implement unenforceable. EPA does not

recognize the ability of a permitting authority to grant relief from

the duty to comply with a Federally enforceable part 70 permit, except

where such relief is consistent with the applicable requirements of the

Act and is granted through the procedures allowed by part 70. A part 70

permit may be issued or revised (consistent with part 70 permitting

procedures) to incorporate those terms of a variance that are

consistent with applicable requirements. A part 70 permit may also

incorporate, via part 70 permit issuance or modification procedures,

the schedule of compliance set forth in a variance. However, EPA

reserves the right to pursue enforcement of applicable requirements

notwithstanding the existence of a compliance schedule in a permit to

operate. This is consistent with 40 CFR 70.5(c)(8)(iii)(C), which

states that a schedule of compliance ``shall be supplemental to, and

shall not sanction noncompliance with, the applicable requirements on

which it is based.''

Regulation 15A NCAC 2Q.0513 through 2Q.0516 and 2Q.0521 (MCAPCO

Regulation 1.5513 through 1.5516 and 1.5521, FCAQTC Regulation 3Q.0513

through 3Q.0516 and 3Q.0521, and WNCRAPCARR Regulation 17.0513 through

17.5516 and 17.5521), substantially meets the permit processing

requirements of 40 CFR 70.7 (including minor permit modifications) and

70.8. However, Regulation 15A NCAC 2Q.0514(a)(4) (MCAPCO Regulation

1.5514(a)(4), FCAQTC Regulation 3Q.0514(a)(4), and WNCRAPCARR

Regulation 17.0514(a)(4)) allows administrative permit amendments to be

used to change test dates or construction dates. While EPA believes

that this is an acceptable way to utilize administrative permit

amendments, EPA is concerned that this provision could be used to alter

other requirements of the Act. The State has proposed changes to this

regulation that if adopted will clarify that such changes can be

accommodated under an administrative amendment such that no applicable

requirements are violated. Regulation 15A NCAC 2Q.0514(a)(5) (MCAPCO

Regulation 1.5514(a)(5), FCAQTC Regulation 3Q.0514(a)(5), and

WNCRAPCARR Regulation 17.0514(a)(5)) allows administrative permit

amendments to move terms and conditions from the State-enforceable only

portion of the permit to the State-and-Federal enforceable portion of

the permit. EPA does not believe that all such changes would qualify to

be treated as administrative permit amendments. The State has proposed

changes to this regulation that if adopted will clarify that 15A NCAC

2Q.0514(a)(5) will only be used for those requirements which have

become Federally enforceable through section 110, 111, or 112 or other

parts of the Clean Air Act. Regulation 15A NCAC 2Q.0515(f) (MCAPCO

Regulation 1.5515(f), FCAQTC Regulation 3Q.0515(f), and WNCRAPCARR

Regulation 17.0515(f)) grants a permit shield for minor permit

modifications once a minor permit modification has been approved by the

State and EPA. Section 70.7(e)(2)(vi) expressly prohibits a permit

shield for minor permit modifications. The State has proposed changes

to this regulation that if adopted will clarify that a permit shield

may not be granted for minor permit modifications. Regulation 15A NCAC

2Q.0515(d) does not make provisions for the event a single minor permit

modification would exceed the thresholds listed in Regulation 15A

[[Page 44809]]

NCAC 2Q.0515(c). In this instance, 40 CFR 70.7 requires that a minor

permit modification be processed within 90 days after receiving an

application or 15 days after the end of EPA's 45-day review period,

whichever is later. The State has proposed changes to this regulation

that if adopted will clarify in the event a single minor permit

modification is submitted that exceeds the thresholds listed in

Regulation 15A NCAC 2Q.0515(c) the minor permit modification will be

processed within 90 days after receiving the minor permit modification

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

is later. Regulation 15A NCAC 2Q.0517(b) (MCAPCO Regulation 1.5517(b),

FCAQTC Regulation 3Q.0517(b), and WNCRAPCARR Regulation 17.0517(b))

stipulates that any permit reopening will be completed within 18 months

after submittal of a complete application is required or within 18

months after the applicable requirement is promulgated if no

application is required. Section 70.7(f) requires that a title V permit

be reopened and the newly applicable requirement added within 18 months

after the applicable requirement is promulgated regardless of whether a

permit application is required to be submitted. The State has proposed

changes to this regulation that if adopted will clarify that a title V

permit be reopened and the new applicable requirement added within 18

months after the applicable requirement is promulgated. Regulation 15A

NCAC 2Q.0517(b)(2) (MCAPCO Regulation 1.5517(b)(2), FCAQTC Regulation

3Q.0517(b)(2), and WNCRAPCARR Regulation 17.0517(b)(2)) requires that

no reopening of a permit is required if the effective date of a new

applicable requirement is after the expiration of the permit term.

Section 70.7(f)(1)(i) stipulates that no reopening of a permit term is

required if the effective date of a newly applicable requirement is

after the expiration of the permit term unless the permit term was

extended based on the fact that the State had not renewed the permit

prior to the expiration of the permit. The State has proposed changes

to this regulation that if adopted will clarify that no reopening of a

permit term is required if the effective date of a newly applicable

requirement is after the expiration of the permit term unless the

permit term was extended based on the fact that the State had not

renewed the permit prior to the expiration of the permit. Regulation

15A NCAC 2Q.0518(f) (MCAPCO Regulation 1.5517(f), FCAQTC Regulation

3Q.0517(f), and WNCRAPCARR Regulation 17.0517(f)) provides that final

permit action will be taken within 18 months of a submittal of a

completed application, subject to adjudication, for a significant

permit modification or issuance of a title V permit. Section 70.7(a)(2)

requires that a state must issue a final permit within 18 months after

a complete application is received. Since this requirement is not

subject to adjudication, the State has proposed changes to this

regulation that if adopted will remove the phrase ``subject to

adjudication'' from this regulation. Finalization of these proposed

changes is required as a condition to full approval of the DEHNR,

WNCRAPCA, FCDEA, and MCDEP programs.

The public participation requirements of 40 CFR 70.7(h) were

addressed in Regulation 15A NCAC 2Q.0521 (MCAPCO Regulation 1.5521,

FCAQTC Regulation 3Q.0521, and WNCRAPCARR Regulation 17.0521). The

North Carolina State and local agency programs also substantially meet

the requirements of 40 CFR 70.11 regarding enforcement authority.

The aforementioned TSD contains the detailed analysis of the DEHNR,

WNCRAPCA, FCDEA, and MCDEP programs and describes the manner in which

these program substantially meet all of the operating permit program

requirements of 40 CFR part 70.

3. Permit Fee Demonstration

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

collect fees sufficient to cover all reasonable direct and indirect

costs necessary for the development and administration of its title V

operating permit program. Each title V program submittal must contain

either a detailed demonstration of fee adequacy or a demonstration that

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

ton of emissions per year (adjusted from 1989 by the Consumer Price

Index (CPI)). The $25 per ton + CPI is presumed, for program approval,

to be sufficient to cover all reasonable program costs and is thus

referred to as the ``presumptive minimum.''

The State of North Carolina, Forsyth County, and Mecklenburg County

have elected to assess a title V operating permit fee that is

equivalent to the Federal presumptive minimum fee amount. These

agencies do so by collecting an annual recurring flat fee in addition

to collecting a fee per ton of actual emissions. When the annual

recurring fee is added to the corresponding fee per ton of actual

emissions, the result is that each agency is collecting the presumptive

fee. Each agency's fee amounts differ based on program costs, number of

air pollution-emitting facilities, and the amount of each regulated

pollutant emitted that would produce the needed revenue for funding the

title V permit program operations. The DEHNR assesses a $14.63 per ton

fee plus an annual recurring flat fee of $5,100 for existing sources,

$10,900 for a new title V source, $7,200 for every significant

modification, $700 for every minor modification, and a $21,200 fee for

every new title V source which is also a Prevention of Significant

Deterioration (PSD) facility. The MCDEP assesses a per ton fee of $25

per ton plus the CPI. In addition, the County charges application fees

for modifications, initial permit issuance, and a surcharge for complex

processes which require greater staff time to evaluate. The FCDEA

assesses a $24 per ton fee plus an annual recurring flat fee of $4000.

Each of the three agencies submitted a fee demonstration which showed

that the fees collected will adequately cover the anticipated costs of

the operating permit program for the years 1995 through 1999.

The WNCRAPCA opted to charge less than the presumptive minimum fee.

The Agency's program submittal, therefore, included a detailed fee

demonstration in accordance with 40 CFR 70.9(b)(5). The fee

demonstration showed that the Agency was in fact collecting fees

adequate to support the title V permitting program. The Agency is

charging $21.29 per ton as well as an annual recurring flat fee of

$5000 per facility.

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

a. Authority for Section 112 Implementation

In its program submittal, the DEHNR, WNCRAPCA, FCDEA, and MCDEP

agencies demonstrated adequate legal authority to implement and enforce

all section 112 requirements through a title V permit. This legal

authority is contained in the North Carolina General Statutes and in

the North Carolina Administrative Code in regulatory provisions

defining ``applicable requirements'' and provisions stating that

permits must address all applicable requirements. EPA has determined

that this legal authority is sufficient to allow the State to issue

permits that assure compliance with all section 112 requirements.

EPA is interpreting the above legal authority to mean that the

DEHNR, WNCRAPCA, FCDEA, and MCDEP agencies are able to carry out all

section 112 activities with respect to part 70

[[Page 44810]]

and non-part 70 sources. For further rationale on this interpretation,

please refer to the TSD.

b. Implementation of 112(g) Upon Program Approval

EPA issued an interpretive notice on February 14, 1995 (60 FR

8333), which outlines EPA's revised interpretation of 112(g)

applicability. The notice postpones the effective date of 112(g) until

after EPA has promulgated a rule addressing that provision. The notice

sets forth in detail the rationale for the revised interpretation.

The section 112(g) interpretative notice explains that EPA is

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

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

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

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

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

additional postponement of section 112(g), the North Carolina State and

local agencies must have a Federally enforceable mechanism for

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

the Federal section 112(g) rule and adoption of implementing State

regulations.

EPA is aware that the DEHNR, WNCRAPCA, FCDEA, and MCDEP lack a

program designed specifically to implement section 112(g). However, the

DEHNR, WNCRAPCA, FCDEA, and MCDEP do have preconstruction review

programs that can serve as adequate implementation vehicles during the

transition period because it would allow the State and local programs

to select control measures that would meet maximum achievable control

technology (MACT), as defined in section 112, and incorporate these

measures into a Federally enforceable preconstruction permit.

For this reason, EPA proposes to approve the use of the State of

North Carolina's preconstruction review program found in Regulation 15A

NCAC 2Q.0300 through 15A NCAC 2Q.0311 (MCAPCO Regulation 1.5210 through

1.5221, FCAQTC Regulation 3Q.0300 through 3Q.0311, and WNCRAPCARR

Regulation 17.0300 through 17.0311), under the authority of title V and

part 70, solely for the purpose of implementing section 112(g) to the

extent necessary during the transition period between EPA's section

112(g) regulation promulgation and adoption of a State rule

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

generally provides authority for approval of state air programs to

implement section 112(g), title V and section 112(g) provide for this

limited approval because of the direct linkage between the

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

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

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

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

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

requirements of the rule until State and local regulations are adopted.

The duration of this approval is limited to 18 months following

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

for the State and local agencies to adopt regulations consistent with

the Federal requirements.

c. Program for Delegation of Section 112 Standards as Promulgated

The requirements for part 70 program approval, specified in 40 CFR

70.4(b), encompass section 112(l)(5) requirements for approval of a

state program for delegation of section 112 standards promulgated by

EPA as they apply to title V sources. Section 112(l)(5) requires that

the DEHNR, WNCRAPCA, FCDEA, and MCDEP programs contain adequate

authorities, adequate resources for implementation, and an expeditious

compliance schedule, which are also requirements under part 70.

Therefore, EPA also proposes to grant approval, under section 112(l)(5)

and 40 CFR 63.91, of the DEHNR, WNCRAPCA, FCDEA, and MCDEP programs for

receiving delegation of future section 112 standards and infrastructure

programs that are unchanged from the Federal standards as promulgated.

In addition, EPA proposes delegation of all existing standards and

infrastructure programs under 40 CFR parts 61 and 63 for part 70

sources and non-part 70 sources.2

\2\The radionuclide National Emission Standards for Hazardous

Air Pollutant (NESHAP) is a section 112 regulation and therefore,

also an applicable requirement under the State operating permits

program for part 70 sources. There is not yet a Federal definition

of ``major'' for radionuclide sources. Therefore, until a major

source definition for radionuclide is promulgated, no source would

be a major section 112 source solely due to its radionuclide

emissions. However, a radionuclide source may, in the interim, be a

major source under part 70 for another reason, thus requiring a part

70 permit. EPA will work with the State in the development of its

radionuclide program to ensure that permits are issued in a timely

manner.

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The DEHNR, WNCRAPCA, FCDEA, and MCDEP agencies have informed EPA

that they intend to accept the delegation of future section 112

standards on an automatic basis. The details of this delegation

mechanism are set forth in an addendum to the North Carolina State and

local agencies' title V program submittals.

d. Commitment to Implement Title IV of the Act

The DEHNR, WNCRAPCA, FCDEA, and MCDEP committed to take action,

following promulgation by EPA of regulations implementing sections 407

and 410 of the Act, or revisions to either part 72 or the regulations

implementing sections 407 or 410, to either incorporate the revised

provisions by reference or submit State and local regulations

implementing these provisions. In a subsequent review, it was found

that several additions were needed to the acid rain regulations for the

State and local agency rules to be adequate. In a letter dated August

7, 1995, the State committed to ensure that an acid rain rule which is

acceptable to EPA will be state-effective by April 1, 1996. The

WNCRAPCA, FCDEA, and MCDEP have agreed to update their regulations upon

the State's finalization of an acceptable acid rain regulation.

B. Proposed Actions

EPA proposes interim approval of the operating permit programs

submitted by the DEHNR, WNCRAPCA, FCDEA, and MCDEP on November 12,

1993, and as supplemented on December 17, 1993, February 28, 1994, May

31, 1994, and July 27, 1995. If promulgated, the DEHNR, WNCRAPCA,

FCDEA, and MCDEP must make the following changes to receive full

approval:

1. Definition of ``Major Source''

To obtain full approval, the DEHNR, WNCRAPCA, FCDEA, and MCDEP must

complete a rulemaking removing Regulation 15A NCAC 2Q.0502(c) (MCAPCO

Regulation 1.5502(c), FCAQTC Regulation 3Q.0502(c), and WNCRAPCARR

Regulation 17.0502(c)) to assure that R&D facilities which are

collocated with manufacturing facilities and which are under common

control and belonging to a single major industrial grouping will be

considered as the same facility for determining title V major source

applicability for a facility.

2. Inclusion of Fugitive Emissions in Permit Applications

To obtain full approval, the DEHNR, WNCRAPCA, FCDEA, and MCDEP must

amend their regulations such that an applicant must include all

fugitive emissions regardless of whether such emissions will be used to

determine title V applicability.

[[Page 44811]]

3. Insignificant Activities

To obtain full approval, the DEHNR, WNCRAPCA, FCDEA, and MCDEP must

revise Regulation 15A NCAC 2Q.0102(b)(2)(B) to adjust the insignificant

emission threshold levels downward from potential emissions of 40 tpy

to potential per emission unit levels for insignificant activities of 5

tons per year for criteria pollutants and the lesser of 1000 pounds per

year or section 112(g) de minimis levels for HAP. The DEHNR, WNCRAPCA,

FCDEA, and MCDEP must also revise Regulation 15A NCAC 2Q.0102(b)(2)(F)

to provide that the list granted under 15A NCAC 2Q.0102(b)(2)(F) must

be subject to the above-mentioned potential emission caps.

4. Administrative Permit Amendment Applicability

To obtain full approval, the DEHNR, WNCRAPCA, FCDEA, and MCDEP must

change Regulation 15A NCAC 2Q.0514(a)(4) to clarify that administrative

permit amendments may be used to change test dates or construction

dates only as long as no applicable requirements would be violated by

doing so. Also, the DEHNR, WNCRAPCA, FCDEA, and MCDEP agencies must

change the language of Regulation 15A NCAC 2Q.0514(a)(4) to clarify an

administrative permit amendment may used to move terms and conditions

from the State-enforceable side of the permit to the State and Federal

enforceable portion of the permit provided that the term being moved is

a requirement which has become Federally enforceable through sections

110, 111, or 112 or other parts of the Clean Air Act.

5. Minor Permit Modifications

To obtain full approval, the DEHNR, WNCRAPCA, FCDEA, and MCDEP must

change Regulation 15A NCAC 2Q.0515(f) to stipulate that a permit shield

may not be granted for any minor permit modification. In addition, to

obtain full approval, the DEHNR, WNCRAPCA, FCDEA, and MCDEP must change

Regulation 15A NCAC 2Q.0515(d) to specify that in the event an

applicant submits a single minor permit modification which exceeds the

thresholds listed in 15A NCAC 2Q.0515(c), the minor permit modification

must be processed within 90 days after receiving the application or 15

days after the end of EPA's 45 day review period, whichever is later.

6. Permit Reopenings To Incorporate Newly Applicable Requirements

To obtain full approval, the DEHNR, WNCRAPCA, FCDEA, and MCDEP must

amend Regulation 15A NCAC 2Q.0517(b) to provide that a title V permit

shall be reopened and reissued within 18 months after a newly

applicable requirement is promulgated. Also, to obtain full approval,

the DEHNR, WNCRAPCA, FCDEA, and MCDEP must amend Regulation 15A NCAC

2Q.0517(b)(2) to clarify that no reopening of a permit is required only

if the effective date of a newly applicable requirement is after the

expiration of the permit, unless the term of the permit was extended

based on the fact that the DEHNR, WNCRAPCA, FCDEA, and MCDEP had not

renewed the permit prior to its expiration.

7. Final Action on Permit Issuance

To obtain full approval, the DEHNR, WNCRAPCA, FCDEA, and MCDEP must

amend Regulation 15A NCAC 2Q.0518(f) to remove the phrase ``subject to

adjudication.''

This interim approval, which may not be renewed, extends for a

period of up to two years. During the interim approval period, the

DEHNR, WNCRAPCA, FCDEA, and MCDEP are protected from sanctions for

failure to have a program, and EPA is not obligated to promulgate a

Federal operating permit program in the State. Permits issued under a

program with interim approval have full standing with respect to part

70, and the one-year time period for submittal of permit applications

by subject sources begins upon interim approval, as does the three-year

time period for processing the initial permit applications.

The scope of the DEHNR, WNCRAPCA, FCDEA, and MCDEP part 70 programs

that EPA proposes to interimly approve in this notice would apply to

all part 70 sources (as defined in the approved program) within the

State, except any sources of air pollution over which an Indian Tribe

has jurisdiction. See, e.g., 59 FR 55813, 55815-18 (Nov. 9, 1994). The

term ``Indian Tribe'' is defined under the Act as ``any Indian tribe,

band, nation, or other organized group or community, including any

Alaska Native village, which is Federally recognized as eligible for

the special programs and services provided by the United States to

Indians because of their status as Indians.'' See section 302(r) of the

CAA; see also 59 FR 43956, 43962 (Aug. 25, 1994); 58 FR 54364 (Oct. 21,

1993).

As discussed above in section II.A.4.c., EPA also proposes to grant

approval under section 112(l)(5) and 40 CFR 63.91 to the DEHNR,

WNCRAPCA, FCDEA, and MCDEP for receiving delegation of future section

112 standards and infrastructure programs that are unchanged from

Federal standards as promulgated. In addition, EPA proposes to delegate

existing standards and infrastructure programs under 40 CFR parts 61

and 63 for both part 70 sources and non-part 70 sources.

III. Administrative Requirements

A. Request for Public Comments

EPA requests comments on all aspects of this proposed interim

approval. Copies of the DEHNR, WNCRAPCA, FCDEA, and MCDEP submittals

and other information relied upon for the proposed interim approval are

contained in docket number NC-95-01 maintained at the EPA Regional

Office. The docket is an organized and complete file of all the

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

development of this proposed interim approval. The principal purposes

of the docket are:

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

documents so that they can effectively participate in the approval

process; and

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

consider any comments received by September 28, 1995.

B. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

C. Regulatory Flexibility Act

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

requirements, but simply address operating permit programs submitted to

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

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

on a substantial number of small entities.

D. Unfunded Mandates Reform Act of 1995

Under section 202 of the Unfunded Mandates Reform Act of 1995

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

must prepare a budgetary impact statement to accompany any proposed or

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

costs to State, local, or tribal governments in the aggregate, or to

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

must select the most cost-effective and least burdensome alternative

that achieves the objectives of the rule and is consistent with

statutory requirements. Section 203 requires EPA to establish a plan

for informing and advising any small

[[Page 44812]]

governments that may be significantly or uniquely impacted by the rule.

EPA has determined that the proposed interim approval action

promulgated today does not include a Federal mandate that may result in

estimated costs of $100 million or more to State, local, or tribal

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

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

imposes no new Federal requirements. Accordingly, no additional costs

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

result from this action.

List of Subjects in 40 CFR Part 70

Environmental protection, Administrative practice and procedure,

Air pollution control, Intergovernmental relations, Operating permits,

Reporting and recordkeeping requirements.

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

Dated: August 18, 1995.

Patrick M. Tobin,

Acting Regional Administrator.

[FR Doc. 95-21415 Filed 8-28-95; 8:45 am]

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