Approval and Promulgation of Implementation Plans; Kentucky

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[KY-087-1-6957a; FRL-5290-5]

Approval and Promulgation of Implementation Plans; Kentucky

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is approving a revision to the Kentucky State

Implementation Plan (SIP) to incorporate new permitting regulations and

to allow the Commonwealth of Kentucky to issue Federally enforceable

state operating permits (FESOP). This revision consists of Sections 1

through 7 of the State Rules in 401 KAR 50:035, entitled ``Permits.''

On December 29, 1994, the Commonwealth of Kentucky through the Kentucky

Natural Resources and Environmental Protection Cabinet (NREPC),

submitted a SIP revision which updates the procedural rules governing

the issuance of air permits in Kentucky and fulfills the requirements

necessary for a state FESOP program to become Federally enforceable. In

order to extend the Federal enforceability of Kentucky's FESOP program

to hazardous air pollutants (HAPs), EPA is also approving Kentucky's

FESOP program pursuant to section 112 of the Clean Air Act as amended

in 1990 (CAA) so that Kentucky may issue Federally enforceable

operating permits for HAPs.

DATES: This final rule is effective November 27, 1995 unless adverse or

critical comments are received by October 27, 1995. If the effective

date is delayed, timely notice will be published in the Federal

Register.

ADDRESSES: Written comments should be addressed to Yolanda Adams, at

the EPA Regional Office listed below. Copies of the documents relative

to this action are available for public inspection during normal

business hours at the following locations. The interested persons

wanting to examine these documents should make an appointment with the

appropriate office at least 24 hours before the visiting day.

Air and Radiation Docket and Information Center (Air Docket 6102), U.S.

Environmental Protection Agency, 401 M Street, SW., Washington, DC

20460.

Environmental Protection Agency, Region 4 Air Programs Branch, 345

Courtland Street, NE., Atlanta, Georgia 30365.

Division for Air Quality, Department for Environmental Protection,

Natural Resources and Environmental Protection Cabinet, 803 Schenkel

Lane, Frankfort, Kentucky 40601.

FOR FURTHER INFORMATION CONTACT: Yolanda Adams, Air Programs Branch,

Air, Pesticides & Toxics Management Division, Region 4 Environmental

Protection Agency, 345 Courtland Street, NE., Atlanta, Georgia 30365.

The telephone number is 404/347-3555 x4149. Reference file KY087-01-

6957.

SUPPLEMENTARY INFORMATION:

I. Summary of State Submittal

On December 29, 1994, the Commonwealth of Kentucky through the

NREPC submitted revised air permitting rules for approval as part of

the SIP. These rules represent Kentucky's consolidated permitting

regulations, which include provisions for operating permits for major

sources pursuant to title V of the CAA, construction permits for major

new sources and major source modifications pursuant to Parts C and D of

title I, and operating and construction permits for minor sources and

minor modifications pursuant to State law. Thus, this submittal

complements Kentucky's submittal seeking EPA approval of the same

regulations as satisfying title V requirements. Separate rulemaking is

being conducted with respect to whether these regulations satisfy title

V requirements.

Kentucky's December 29, 1994, submittal does not seek to satisfy

any specific mandate under the Clean Air Act. As noted above, a

separate submittal seeks to satisfy the requirements of title V.

Instead, Kentucky's submittal of December 29, 1994, seeks approval of

updated State permitting regulations which have superseded previously

approved regulations. Kentucky intended with this submittal: (1) to

provide a mechanism for intermediate size sources to obtain Federally

enforceable limitations to become ``synthetic minor sources,'' and (2)

to update the Federally approved regulations to reflect the updated

State permitting regulations. Each of these purposes requires

evaluation under different criteria. These purposes and the associated

EPA criteria for approval are discussed individually in subsequent

sections.

A. Federally Enforceable Limitations on Potential To Emit

The first purpose of Kentucky's submittal was to provide a

mechanism for intermediate size sources to obtain Federally enforceable

limitations such that the sources' potential to emit would be below the

size thresholds at which major source permits are required. This

mechanism involves FESOPs incorporating the relevant limitations.

Kentucky is requesting this authority with respect to HAPs as well as

criteria pollutants. This voluntary SIP revision allows EPA and

citizens under the CAA to enforce the terms and conditions of

Kentucky's FESOP program. Operating permits that are issued under the

Kentucky FESOP program after approval into the State SIP and under

section 112(l) will provide Federally enforceable limits on an air

pollution source's potential to emit. Limiting of a source's potential

to emit through Federally enforceable operating permits can affect the

applicability of Federal regulations such as title V operating permits,

New Source Review (NSR) preconstruction permits, Prevention of

Significant Deterioration (PSD) preconstruction permits for criteria

pollutants, and Federal air toxics requirements under section 112 of

the CAA.

Criteria for EPA approval of FESOP programs are specified in a

Federal Register document entitled,

[[Page 49776]]

``Requirements for the preparation, adoption, and submittal of

implementation plans; air quality, new source review; final rules.''

(see 54 FR 22274, June 28, 1989). In this document, EPA listed five

criteria that must be met for a State's minor source operating permit

program to be Federally enforceable and, therefore, approvable into the

SIP. Kentucky's SIP revision satisfies the five criteria for Federal

enforceability of the State's FESOP program.

The first criterion for a state's operating permit program to be

Federally enforceable is EPA's approval of the permit program into the

SIP. On December 29, 1994, the Commonwealth of Kentucky submitted

through the DEP a SIP revision designed to meet the five criteria for

Federal enforceability. Today's action will approve these regulations

into the Kentucky SIP, and therefore satisfy the first criterion for

Federal enforceability.

The second criterion for a state's operating permit program to be

Federally enforceable is that the regulations approved into the SIP

must impose a legal obligation that operating permit holders adhere to

the terms and limitations of such permits. Kentucky's program meets

this criterion in Rule 401 KAR 50:035, section 4(1)(f)1., by requiring

the permittee to comply with all conditions of the permit. The rule

further states that ``Noncompliance shall be a violation of this

administrative regulation and, for Federally enforceable permits, is

also a violation of 42 U.S.C 7401 through 7671q (the Act) and is

grounds for an enforcement action, including but not limited to the

termination, revocation and reissuance, or revision of a permit, or

denial of a permit application.'' Hence, the second criterion for

Federal enforceability is satisfied.

The third criterion for a state's operating permit program to be

Federally enforceable is that the state operating permit program must

require all emissions limitations, controls, and other requirements

imposed by permits to be at least as stringent as any other applicable

limitations and requirements contained in the SIP or enforceable under

the SIP, and the program may not issue permits that waive, or make less

stringent, any limitations or requirements contained in or issued

pursuant to the SIP, or that are otherwise ``Federally enforceable''

(e.g., standards established under sections 111 and 112 of the CAA).

Kentucky's Rule 401 KAR 50:035, section 4(1)(a) explicitly requires

that issued permits include emission limitations and standards,

including operational requirements and limitations, that assure

compliance with all applicable requirements. The rule further states

that Kentucky will not issue permits that waive, or make less

stringent, any limitation or requirements contained in or issued

pursuant to the SIP or that are otherwise Federally enforceable.

Therefore, this section of Kentucky's permits rule satisfies the third

criterion for Federal enforceability.

The fourth criterion for a state's operating permit program to be

Federally enforceable is that limitations, controls, and requirements

in the operating permits be permanent, quantifiable, and otherwise

enforceable as a practical matter. With respect to this criterion,

enforceability is essentially provided on a permit-by-permit basis,

particularly by writing practical and quantitative enforcement

procedures into each permit. EPA will review the enforceability of

permits using the policy memorandum entitled ``Options for Limiting the

Potential to Emit (PTE) of a Stationary Source Under Section 112 and

title V of the Clean Air Act (Act),'' dated January 25, 1995, which

describes the types of limitations that reduce potential to emit in a

Federally enforceable manner. Nevertheless, enforceability also

requires proper permit program design. Kentucky's regulations (e.g.,

Rule 401 KAR 50:035, section 4(1)(a) quoted above) provide for fully

enforceable limitations. Concerning permanence, permit conditions have

the duration provided for under title V (i.e., the conditions expire

with permit expiration but are typically renewed with permit

reissuance). Consequently, Kentucky's rules provide for the degree of

permanence necessary for enforcement of the applicable provisions, and

more generally provide that the permit limitations will be fully

enforceable.

The fifth criterion for a state's operating permit program to be

Federally enforceable is providing EPA and the public with timely

notice of the proposal and issuance of such permits, and providing EPA,

on a timely basis, with a copy of each proposed (or draft) and final

permit intended to be Federally enforceable. This process must also

provide for an opportunity for public comment on the permit

applications prior to issuance of the final permit. Kentucky's Rule 401

KAR 50:035, section 7 entitled ``Procedures for Public Participation''

contains explicit requirements for public notice and review of proposed

permitting actions. Subsection (1) requires that public notice of the

opportunity to comment be provided for the following permit actions:

(a) Issuance of a draft permit; (b) Intended denial of a permit

application; (c) Issuance of a draft significant permit revision; (d)

Issuance of a draft general permit; (e) Issuance of a permit renewal;

and (f) Scheduling of a public hearing. Subsection (6) states that a

minimum of 30 days will be provided for public comment on all permit

proceedings. In addition, subsection (7) provides the opportunity for a

public hearing on any permit action where the DEP believes there is

sufficient interest. EPA notes that any permit which has not gone

through an opportunity for public comment and EPA review under the

Kentucky FESOP program will not be Federally enforceable.

In addition to requesting approval into the SIP, Kentucky has also

requested approval of its FESOP program under section 112(l) of the Act

for the purpose of creating Federally enforceable limitations on the

potential to emit of HAPs through the issuance of Federally enforceable

state operating permits. Approval under section 112(l) is necessary

because the proposed SIP approval discussed above only extends to the

control of criteria pollutants.

EPA believes that the five criteria for Federal enforceability, are

also appropriate for evaluating and approving FESOP programs under

section 112(l). The June 28, 1989, Federal Register document did not

specifically address HAPs because it was written prior to the 1990

amendments to section 112, not because it establishes requirements

unique to criteria pollutants.

In addition to meeting the criteria in the June 28, 1989, document,

a FESOP program that addresses HAPs must meet the statutory criteria

for approval under section 112(l)(5). Section 112(l) allows EPA to

approve a program only if it: (1) contains adequate authority to assure

compliance with any section 112 standards or requirements; (2) provides

for adequate resources; (3) provides for an expeditious schedule for

assuring compliance with section 112 requirements; and (4) is otherwise

likely to satisfy the objectives of the CAA. The January 25, 1995,

memorandum cited above, provides further discussion of these criteria

and of the extent to which limits on criteria pollutants such as

volatile organic compounds and particulate matter may be considered to

limit sources' potential to emit HAPs.

EPA plans to codify the approval criteria for programs limiting the

potential to emit HAPs, such as FESOP programs, through amendments to

Subpart E of Part 63, the regulations promulgated to implement section

[[Page 49777]]

112(l) of the CAA. (See 58 FR 62262, November 26, 1993). EPA

anticipates that these regulatory criteria, as they apply to FESOP

programs, will mirror those set forth in the June 28, 1989, Federal

Register document. The EPA also anticipates that since FESOP programs

approved pursuant to section 112(l) prior to the planned Subpart E

revisions will have been approved as meeting these criteria, further

approval actions for those programs will not be necessary.

EPA has authority under section 112(l) to approve programs to limit

the potential to emit HAPs directly under section 112(l) prior to the

Subpart E revisions. Section 112(l)(5) requires the EPA to disapprove

programs that are inconsistent with guidance required to be issued

under section 112(l)(2). This might be read to suggest that the

``guidance'' referred to in section 112(l)(2) was intended to be a

binding rule. Even under this interpretation, EPA does not believe that

section 112(l) requires this rulemaking to be comprehensive. That is to

say, it need not address every possible instance of approval under

section 112(l). EPA has already issued regulations under section 112(l)

that would satisfy any section 112(l)(2) requirement for rulemaking.

Given the severe timing problems posed by impending deadlines set forth

in ``maximum achievable control technology'' (MACT) emission standards

under section 112 and for submittal of title V permit applications, EPA

believes it is reasonable to read section 112(l) to allow for approval

of programs to limit potential to emit prior to promulgation of a rule

specifically addressing this issue. Therefore, EPA is approving

Kentucky's FESOP program so that Kentucky may begin to issue Federally

enforceable operating permits as soon as possible.

Regarding the statutory criteria of section 112(l)(5) referred to

above, EPA believes Kentucky's FESOP program contains adequate

authority to assure compliance with section 112 requirements because

the third criterion of the June 28, 1989, Federal Register document is

met. That is to say, Kentucky's program does not allow for the waiver

of any section 112 requirements. Sources that become minor through a

permit issued pursuant to this program would still be required to meet

the section 112 requirements applicable to non-major sources.

Regarding the requirement for adequate resources, EPA believes

Kentucky has demonstrated that it will provide adequate resources to

support the FESOP program. EPA expects that resources will continue to

be adequate to administer that portion of the State's minor source

operating permit program under which Federally enforceable operating

permits will be issued since Kentucky has administered a minor source

operating permit program for several years. EPA will monitor Kentucky's

implementation of its FESOP program to ensure that adequate resources

are in fact available. EPA also believes that Kentucky's FESOP program

provides for an expeditious schedule to assure compliance with section

112 requirements. This program will be used to allow a source to

establish a voluntary limit on potential to emit to avoid being subject

to a CAA requirement applicable on a particular date. Nothing in

Kentucky's FESOP program would allow a source to avoid or delay

compliance with a CAA requirement if it fails to obtain an appropriate

Federally enforceable limit by the relevant deadline. Finally, EPA

believes Kentucky's program is consistent with the intent of section

112 and the CAA for states to provide a mechanism through which sources

may avoid classification as major sources by obtaining Federally

enforceable limits on potential to emit.

Eligibility for Federally enforceable permits extends not only to

permits issued after the effective date of this rule, but also to

permits issued under the State's current rule prior to the effective

date of today's rulemaking. If the State followed its own regulation,

each issued permit that established a title I condition (e.g. for a

source to have minor source potential to emit) was subject to public

notice and prior EPA review. Therefore, EPA will consider all such

operating permits which were issued in a manner consistent with both

the State regulations and the five criteria as federally enforceable

upon the effective date of this action provided that any permits that

the State wishes to make federally enforceable are submitted to EPA and

accompanied by documentation that the procedures approved today have

been followed. EPA will expeditiously review any individual permits so

submitted to ensure their conformity with the program requirements.

With Kentucky's addition of these provisions and EPA's approval of

this revision to the SIP, Kentucky's FESOP program satisfies the

criteria described in the June 28, 1989, Federal Register document.

B. Review of Updated New Source Review Requirements

The second purpose of Kentucky's submittal was to update the

Federally approved regulations to reflect the updated State permitting

regulations. In adopting a single set of air permitting regulations for

both construction permits and operating permits, the State updated

numerous new source review provisions in conjunction with its adoption

of title V regulations. These rules specify which sources must have

title V permits (namely major sources), which sources must have State

minor source permits, and which minor sources do not need a permit.

Additional rules specify requirements for minor sources, which are

substantially equivalent to the title V operating permit requirements

in 40 CFR Part 70. These requirements include application procedures,

permit content, permit processing procedures, permit revision

procedures, criteria for treating activities as insignificant, Federal

enforceability, and coverage by a permit shield.

Numerous provisions governing major source new source review in

Kentucky are unaffected by the State's submittal. Kentucky's rules,

codified at 401 KAR 51:017 and 401 KAR 51:052, continue to provide

substantive requirements for prevention of significant deterioration

(i.e., major new source review in attainment areas) and major new

source review in nonattainment areas.

II. Final Action

In this action, EPA is approving Kentucky's air permitting

regulations as submitted on December 29, 1994. Furthermore, EPA

concludes that Kentucky's purposes in submitting these regulations have

been fulfilled. First, Kentucky has satisfied the criteria for issuing

Federally enforceable state operating permits. Second, these new

permitting regulations continue to satisfy relevant new source review

requirements.

EPA is publishing this action without prior proposal because the

Agency views this as a noncontroversial amendment and anticipates no

adverse comments. However, in a separate document in this Federal

Register publication, EPA is proposing to approve the SIP revision

should adverse or critical comments be filed. This action will be

effective November 27, 1995 unless, by October 27, 1995, adverse or

critical comments are received. If EPA receives such comments, this

action will be withdrawn before the effective date by publishing a

subsequent document that will withdraw the final action. All public

comments received will then be addressed in a subsequent final rule

based on this action serving as a proposed rule. EPA will not institute

a second comment period on this action.

[[Page 49778]]

Any parties interested in commenting on this action should do so at

this time. If no such comments are received, the public is advised that

this action will be effective November 27, 1995.

The Agency has reviewed this request for revision of the Federally-

approved SIP for conformance with the provisions of the 1990 Clean Air

Act Amendments enacted on November 15, 1990. EPA has determined that

this action conforms with those requirements.

This action has been classified as a Table 3 action for signature

by the Regional Administration under the procedures published in the

Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a

July 10, 1995, memorandum from Mary Nichols, Assistant Administrator

for Air and Radiation. The office of Management and Budget (OMB) has

exempted this regulatory action from review under Executive Order

12866.

Under section 307(b)(1) of the CAA, 42 U.S.C. 7607(b)(1), petitions

for judicial review of this action must be filed in the United States

Court of Appeals for the appropriate circuit by November 27, 1995.

Filing a petition for reconsideration by the Administrator of this

final rule does not affect the finality of this rule for purposes of

judicial review nor does it extend the time within which a petition for

judicial review may be filed, and shall not postpone the effectiveness

of such rule or action. This action may not be challenged later in

proceedings to enforce its requirements. (See section 307(b)(2) of the

CAA, 42 U.S.C. 7607(b)(2).)

Nothing in this action shall be construed as permitting or allowing

or establishing a precedent for any future request for a revision to

any SIP. Each request for revision to the SIP shall be considered

separately in light of specific technical, economic, and environmental

factors and in relation to relevant statutory and regulatory

requirements.

Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA

must prepare a regulatory flexibility analysis assessing the impact of

any proposed or final rule on small entities. 5 U.S.C. 603 and 604.

Alternatively, EPA may certify that the rule will not have a

significant impact on a substantial number of small entities. Small

entities include small businesses, small not-for-profit enterprises,

and government entities with jurisdiction over populations of less than

50,000.

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

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

1995, EPA must undertake various actions in association with proposed

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

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

State, local, or tribal governments in the aggregate.

Through submission of this state implementation plan or plan

revision, the State has elected to adopt the program provided for under

Section 110 of the Clean Air Act. These rules may bind the State

government to perform certain actions and also require the private

sector to perform certain duties. To the extent that the rules being

approved by this action would impose no new requirements, such sources

are already subject to these regulations under State law. Accordingly,

no additional costs to the State government, or to the private sector,

result from this action. EPA has also determined that this final action

does not include a mandate that may result in estimated costs of $100

million or more to the State government in the aggregate or to the

private sector.

SIP approvals under section 110 and subchapter I, part D of the CAA

do not create any new requirements, but simply approve requirements

that the State is already imposing. Therefore, because the Federal SIP-

approval does not impose any new requirements, I certify that it does

not have a significant impact on any small entities affected. Moreover,

due to the nature of the Federal-state relationship under the CAA,

preparation of a regulatory flexibility analysis would constitute

Federal inquiry into the economic reasonableness of state action. The

CAA forbids EPA to base its actions concerning SIPs on such grounds.

Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.Ct. 1976);

42 U.S.C. 7410(a)(2).

List of Subjects in 40 CFR Part 52

Air pollution control, Carbon monoxide, Hydrocarbons, Incorporation

by reference, Intergovernmental relations, Lead, Nitrogen dioxide,

Ozone, Particulate matter, Sulfur oxides.

Dated: August 23, 1995.

Patrick M. Tobin,

Acting Regional Administrator.

Part 52 of chapter I, title 40, Code of Federal Regulations, is

amended as follows:

PART 52--[AMENDED]

1. The authority citation for part 52 continues to read as follows:

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

Subpart S--Kentucky

2. Section 52.920 is amended by adding paragraph (c)(81) to read as

follows:

Sec. 52.920 Identification of plan.

* * * * *

(c) * * *

(81) Revisions to air permit rules submitted by the Kentucky

Natural Resources and Environmental Protection Cabinet on December 29,

1994.

(i) Incorporation by reference. Revised Rule 401 KAR 50:035,

``Permits'', Sections 1 through 7, effective September 28, 1994.

(ii) Other material. None.

[FR Doc. 95-23963 Filed 9-26-95; 8:45 am]

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