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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5307-9]

Clean Air Act Final Interim Approval of Operating Permits

Program; Monterey Bay Unified Air Pollution Control District,

California

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final interim approval.

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SUMMARY: The EPA is promulgating interim approval of the Operating

Permits Program submitted by the Monterey Bay Unified Air Pollution

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

with federal requirements for an approvable state program to issue

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

sources.

EFFECTIVE DATE: November 6, 1995.

ADDRESSES: Copies of Monterey's submittal and other supporting

information used in developing the final interim approval are available

for inspection (docket number CA-MN-95-1-OPS) during normal business

hours at the following location: U.S. Environmental Protection Agency,

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

CA 94105.

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

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

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

94105.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

Title V of the 1990 Clean Air Act Amendments (sections 501-507 of

the Clean Air Act (``the Act'')), and implementing regulations at 40

Code of Federal Regulations (CFR) part 70 require that states develop

and submit operating permits programs to EPA by November 15, 1993, and

that EPA act to approve or disapprove each program within 1 year after

receiving the submittal. The EPA's program review occurs pursuant to

section 502 of the Act and the part 70 regulations, which together

outline criteria for approval or disapproval. Where a program

substantially, but not fully, meets the requirements of Part 70, EPA

may grant the program interim approval for a period of up to 2 years.

If EPA has not fully approved a program by 2 years after the November

15, 1993 date, or by the end of an interim program, it must establish

and implement a federal program.

On May 16, 1995, EPA proposed interim approval of the operating

permits program for the Monterey Bay Unified Air Pollution Control

District. See 60 FR 26013. The EPA received public comment on the

proposal and is responding to those comments in this document and in a

separate ``Response to Comments'' document contained in the docket at

the Regional Office. As a result of public comment, EPA has modified

one of the interim approval issues set forth in the May 16, 1995

proposal. The EPA's proposed action on the operating permits program is

therefore being revised to reflect the modification of the interim

approval issue. This change is discussed below in II.B. along with the

other issues raised during the public comment period. The May 16, 1995

Federal Register notice also proposed approval of Monterey's interim

mechanism for implementing section 112(g) and proposed approval under

section 112(l) of the District's program for accepting delegation of

section 112 standards as promulgated. The EPA did not receive any

public comment on these proposed actions. With the exception of the

modification to the interim approval issue discussed above, the

proposed actions discussed above have not been altered as a result of

public comment. In this notice EPA is taking final action to promulgate

interim approval of the operating permits program and approving the

section 112(g) mechanism and section 112(l) program for delegation

noted above for Monterey.

II. Final Action and Implications

A. Analysis of District Submission

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

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

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

found to be complete on February 4, 1994. The EPA determined in its

evaluation of Monterey's program that Rule 218, the

[[Page 52333]]

District's permitting regulation, contained several deficiencies that

were cause for disapproval of the program. The EPA described these

deficiencies and the corrections necessary to make the program eligible

for interim approval in a letter from Felicia Marcus, EPA Region IX

Administrator, to Abra Bennett, Monterey Air Pollution Control Officer

(APCO), dated July 22, 1994. In response, Monterey adopted a revised

regulation which was submitted by CARB on the District's behalf on

October 13, 1994. On May 16, 1995, EPA proposed interim approval of

Monterey's title V operating permits program in accordance with

Sec. 70.4(d), on the basis that the program ``substantially meets''

part 70 requirements. The analysis in the proposed document remains

unchanged and will not be repeated in this final document. With the

exception of the modification to the interim approval issue regarding

affected state review discussed below in II.B.5., the program

deficiencies identified in the proposed document, and outlined below in

II.C., remain unchanged and must be corrected for the District to have

a fully approvable program.

At the time of proposal, EPA believed that an implementation

agreement would be completed prior to final interim approval. The EPA

and Monterey have not yet finalized the implementation agreement, but

are working to do so as soon as practicable.

B. Public Comments and Responses

The EPA received comments on the proposed interim approval of the

Monterey program from one public commenter, the Monterey Bay Unified

Air Pollution Control District. These comments are discussed below.

1. Insignificant Activities

Monterey commented that it would like to propose, for full title V

program approval, emission levels for insignificant activities of 2

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

year, section 112(g) de minimis levels, or other title I significant

modification levels for hazardous air pollutants and other toxics. The

District commented that it believes these levels to be sufficiently

below the applicability thresholds for all applicable requirements and

will ensure that no unit potentially subject to an applicable

requirement is left off of a title V permit application.

In the May 16, 1995 proposed interim approval of Monterey's

program, EPA stated that it had proposed to accept, as sufficient for

full approval of other state and district programs, the emission levels

for insignificant activities as described above in Monterey's comment.

The EPA stated that it believes these levels to be sufficiently below

the applicability thresholds of many applicable requirements to assure

that no unit potentially subject to an applicable requirement is left

off a title V application. Monterey has commented that it believes

these levels to be appropriate for determining insignificant activities

in the District. If Monterey establishes these emission levels for

defining insignificant activities in its program and submits this as a

title V program revision to EPA, EPA will find that aspect of the

insignificant activity definition fully approvable. As discussed below

in II.C.7., to receive full approval of its insignificant activity

provisions, Monterey must also revise Rule 218 to require that

insignificant activities that are exempted because of size or

production rate be listed in the permit application and to require that

an application may not omit information needed to determine the

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

evaluate the fee amount required.

2. ``Title I Modification''

Monterey commented that ``title I modifications'' should not be

interpreted to include minor new source review and endorsed the

recommendations and legal arguments made by CARB in its September 27,

1994 letter from Michael Scheible to the EPA Air Docket.

At the time of the May 16, 1995 proposed interim approval, EPA was

in the process of determining the proper definition of title I

modification, and therefore did not identify Monterey's treatment of

title I modification as necessary grounds for either interim approval

or disapproval. In an August 29, 1994 rulemaking proposal, EPA

explained its view that the better reading of ``title I modifications''

includes minor NSR. However, the Agency solicited public comment on

whether the phrase 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. (59 FR

44572, 44573). 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.

The EPA has not yet taken final action on the August 29, 1994

proposal. However, in response to public comment on that proposal, the

Agency has decided that the definition of ``title I modifications'' is

best interpreted as not including changes reviewed under minor NSR

programs. This decision was announced in a June 20, 1995 letter from

Mary D. Nichols, EPA Assistant Administrator for Air and Radiation, to

Congressman John D. Dingell, and will be included in a supplemental

rulemaking proposal that will be published in September, 1995. Thus,

EPA expects to confirm that Monterey's definition of ``title I

modification'' is fully consistent with part 70.

The August 29, 1994 action proposed to, among other things, allow

state programs with a more narrow definition of ``title I

modifications'' to receive interim approval (59 FR 44572). 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. If EPA does conclude, during this

rulemaking, that Title I modifications should be read to include minor

NSR, it will implement the interim approval option spelled out in the

August 29, 1994 proposal.

3. Implementation Agreement

In the May 16, 1995 proposed interim approval, EPA stated that an

implementation agreement is currently being developed by EPA and

Monterey. Monterey commented that they disagree with EPA over the

structure and the basis for an implementation agreement and take

exception to the implementation agreement language contained in the

notice and therefore suggest that it be removed prior to publication of

the final notice. Since Monterey submitted this comment, EPA and the

District have engaged in numerous conversations regarding the

implementation agreement and Monterey has indicated that it does intend

to develop an agreement with EPA. EPA and the District are currently

negotiating the appropriate format and content of that agreement.

4. District Rule 201 Correction

Monterey commented that EPA had incorrectly stated in the May 16,

1995 proposal that Rule 201 ``was adopted or revised to implement title

V.'' The District pointed out that Rule 201 was adopted prior to

promulgation of part 70 and was not revised to implement title V. The

EPA therefore revises the statement made in the May 16, 1995 proposal

to state that Rule 201 was submitted as a supporting regulation of

[[Page 52334]]

the Monterey title V program. This change does not affect EPA's May 16,

1995 proposed action.

5. Affected State Review

In the May 16, 1995 proposed interim approval, EPA proposed that in

order to receive full approval Monterey must revise Rule 218 to define

and provide for giving notice to affected states per Secs. 70.2 and

70.8(b). The EPA reasoned that although emissions from Monterey may not

currently affect any neighboring states, Native American tribes may in

the future apply for treatment as states for air program purposes and

if granted such status would be entitled to affected state review under

title V. (See EPA's proposed Tribal Air Rule at 59 FR 43956, August 25,

1994.) Monterey commented that it would be appropriate to revise Rule

218 to provide for giving notice to affected states at such time as a

Native American tribe or tribes apply for treatment as a state. The EPA

is concerned about the timing issues involved with delaying the

adoption of affected state notice provisions in Monterey's program

until tribes apply for state status. Although the federal rule that

will enable tribes to apply for treatment as states has not yet been

finalized, and there are no tribes currently eligible for treatment as

a state under the Act, EPA believes that the likelihood of Native

American tribes qualifying as affected states under part 70 is great

and that Monterey will ultimately need to revise its rule to address

this outcome. Nonetheless, EPA is willing to accept as an alternative

to adopting affected state notice provisions up front, a commitment to:

(1) Initiate rule revisions upon being notified by EPA of an

application by an affected tribe for state status, and (2) provide

affected state notice to tribes upon their filing for state status

(i.e., prior to Monterey revising Rule 218 to incorporate affected

state notice procedures).

C. Final Action

1. Monterey's Title V Operating Permits Program

The EPA is promulgating interim approval of the operating permits

program submitted by the Monterey Bay Unified Air Pollution Control

District. The District must make the following changes, or changes that

have the same effect, to receive full approval:

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

actual or potential emissions, acid rain sources and solid waste

incineration units required to obtain a permit pursuant to section

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

permit pursuant to Rule 218. Section 70.3(b) requires that major

sources, affected sources (acid rain sources), and solid waste

incinerators may not be exempted from the program. Monterey's deferral

for certain major sources other than acid rain sources and solid waste

incinerators is allowable under EPA's ``Interim Approval Guidance,''

issued by John Seitz on August 2, 1993.

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

Permit Amendments'' as follows:

``requires more frequent monitoring or reporting for the stationary

source; or''

Increasing monitoring requirements could be a significant change to

these requirements. Significant changes in monitoring must be processed

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

Sec. 70.7(e)(4))

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

in section 2.12 to include any standard or other requirement provided

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

This revision is necessary to make the section 2.12 definition

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

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

require compliance with any standard or requirement set forth in the

applicable implementation plan.

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

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

establish or change a permit condition used to avoid a federally

enforceable requirement to which the source would otherwise be subject.

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

(5) Revise section 3.1.6.12 to require that the compliance

certification within the permit application include a statement

indicating the source's compliance status with any applicable enhanced

monitoring and compliance certification requirements of the Act.

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

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

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

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

board that identifies remedial measures, including an enforceable

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

compliance date, testing and monitoring methods, recordkeeping

requirements, and a schedule for submission of certified progress

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

schedule of compliance shall resemble and be at least as stringent

as that contained in any judicial consent decree or administrative

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

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

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

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

subject to an applicable requirement. Alternatively, Rule 218 may

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

to an applicable requirement and emit less than District-established

emission levels. The District should establish separate emission levels

for HAP and for other regulated pollutants and demonstrate that these

emission levels are insignificant compared to the level of emissions

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

applicable requirements. Revise Rule 218 to require that insignificant

activities that are exempted because of size or production rate be

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

application may not omit information needed to determine the

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

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

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

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

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

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

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

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

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

participation process so that the Administrator may fulfill her

obligation to determine whether a citizen petition may be granted.

(Sec. 70.7(h)(5))

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

the permit that incorporates any public comments and that the District

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

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

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

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

revised as a result of comments received from the public.

(Sec. 70.8(a)(1))

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

affected states per Secs. 70.2 and 70.8(b). Alternatively, Monterey may

make a commitment to: (1) Initiate rule revisions upon being notified

by EPA of an application by an affected tribe for state status, and (2)

provide affected

[[Page 52335]]

state notice to tribes upon their filing for state status (i.e., prior

to Monterey's adopting affected state notice rules).

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

reopened under the circumstances listed in sections 3.7.1.1 to 3.7.1.3.

(Sec. 70.7(f)(1))

(14) Revise section 3.8.2 to provide, consistent with

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

permit modification application within 90 days of receipt of the

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

whichever is later. Currently, the District rule provides that the

permit be issued within 90 days after the application is deemed

complete (section 3.3.2 provides 30 days from receipt for a

completeness determination) or 60 days after written notice and

concurrence from EPA, whichever is later. The EPA will not necessarily

provide written notice and concurrence on minor permit modifications

and the District rule does not address what action is taken should EPA

not provide written notice. (Sec. 70.7(e)(2)(iv))

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

minor permit modification application in the timeframes discussed above

in (14) shall be one of the following:

(a) Issue the permit modification as proposed;

(b) Deny the permit modification application;

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

minor permit modification criteria and should be reviewed under the

significant modification procedures; or

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

Administrator the new proposed permit modification.

The current District rule states that the minor permit modification

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

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

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

2. California Enabling Legislation--Legislative Source Category Limited

Interim Approval Issue

Because California State law currently exempts agricultural

production sources from permit requirements, the California Air

Resources Board had requested source category-limited interim approval

for all California districts. The May 16, 1995 proposed interim

approval included a proposal to grant source category-limited interim

approval to Monterey. The EPA is finalizing this source category-

limited interim approval. In order for this program to receive full

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

interim approval), the California Legislature must revise the Health

and Safety Code to eliminate the exemption of agricultural production

sources from the requirement to obtain a permit.

The above described program and legislative deficiencies must be

corrected before Monterey can receive full program approval.

The scope of Monterey's part 70 program approved in this notice

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

within the District, 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).

This interim approval, which may not be renewed, extends until

November 6, 1997. During this interim approval period, Monterey is

protected from sanctions, and EPA is not obligated to promulgate,

administer and enforce a federal operating permits program in the

District. Permits issued under a program with interim approval have

full standing with respect to part 70, and the 1-year time period for

submittal of permit applications by subject sources begins upon the

effective date of this interim approval, as does the 3-year time period

for processing the initial permit applications.

If Monterey fails to submit a complete corrective program for full

approval by May 6, 1997, EPA will start an 18-month clock for mandatory

sanctions. If Monterey then fails to submit a corrective program that

EPA finds complete before the expiration of that 18-month period, EPA

will be required to apply one of the sanctions in section 179(b) of the

Act, which will remain in effect until EPA determines that the District

has corrected the deficiency by submitting a complete corrective

program. Moreover, if the Administrator finds a lack of good faith on

the part of Monterey, both sanctions under section 179(b) will apply

after the expiration of the 18-month period until the Administrator

determined that the District had come into compliance. In any case, if,

six months after application of the first sanction, the District still

has not submitted a corrective program that EPA has found complete, a

second sanction will be required.

If EPA disapproves Monterey's complete corrective program, EPA will

be required to apply one of the section 179(b) sanctions on the date 18

months after the effective date of the disapproval, unless prior to

that date the District has submitted a revised program and EPA has

determined that it corrected the deficiencies that prompted the

disapproval. Moreover, if the Administrator finds a lack of good faith

on the part of the District, both sanctions under section 179(b) shall

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

Administrator determines that Monterey has come into compliance. In all

cases, if, six months after EPA applies the first sanction, Monterey

has not submitted a revised program that EPA has determined corrects

the deficiencies, a second sanction is required.

In addition, discretionary sanctions may be applied where warranted

any time after the expiration of an interim approval period if Monterey

has not timely submitted a complete corrective program or EPA has

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

granted full approval to the District program by the expiration of this

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

EPA must promulgate, administer and enforce a federal permits program

for Monterey upon interim approval expiration.

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

The EPA is approving the use of Monterey's preconstruction review

program as a mechanism to implement section 112(g) during the

transition period between promulgation of EPA's section 112(g) rule and

adoption by Monterey of rules specifically designed to implement

section 112(g). The EPA is limiting the duration of this approval to 12

months following promulgation by EPA of the section 112(g) rule.

4. Program for Delegation of Section 112 Standards as Promulgated

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

section 112(l)(5) requirements for approval of a program for delegation

of section 112 standards as promulgated by EPA as they apply to Part 70

sources. Section 112(l)(5) requires that the state's program contain

adequate authorities, adequate resources for implementation, and an

expeditious compliance schedule, which are also requirements under part

70. Therefore, EPA is also promulgating approval under section

[[Page 52336]]

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

delegation of section 112 standards that are unchanged from federal

standards as promulgated. This program for delegations only applies to

sources covered by the Part 70 program.

III. Administrative Requirements

A. Docket

Copies of the District's submittal and other information relied

upon for the final interim approval, including one public comment

letter received and reviewed by EPA on the proposal, are contained in

docket number CA-MN-95-1-OPS 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 final interim approval. The docket is available for public

inspection at the location listed under the ADDRESSES section of this

document.

B. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

C. Regulatory Flexibility Act

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

new requirements, but simply address operating permits programs

submitted to satisfy the requirements of 40 CFR part 70. Because this

action does not impose any new requirements, it does not have a

significant impact on a substantial number of small entities.

D. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995

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

must prepare a budgetary impact statement to accompany any proposed or

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

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

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

must select the most cost-effective and least burdensome alternative

that achieves the objectives of the rule and is consistent with

statutory requirements. Section 203 requires EPA to establish a plan

for informing and advising any small governments that may be

significantly or uniquely impacted by the rule.

The EPA has determined that the approval action promulgated today

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

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

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

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

imposes no new federal requirements. Accordingly, no additional costs

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

result from this action.

List of Subjects in 40 CFR Part 70

Environmental protection, Administrative practice and procedure,

Air pollution control, Intergovernmental relations, Operating permits,

Reporting and recordkeeping requirements.

Dated: September 21, 1995.

John Wise,

Acting Regional Administrator.

Part 70, title 40 of the Code of Federal Regulations is amended as

follows:

PART 70--[AMENDED]

1. The authority citation for part 70 continues to read as follows:

Authority: 42 U.S.C. 7401, et seq.

2. Appendix A to part 70 is amended by adding paragraph (r) to the

entry for California to read as follows:

Appendix A to Part 70--Approval Status of State and Local Operating

Permits Programs

* * * * *

The following district program was submitted by the California

Air Resources Board on behalf of:

(r) Monterey Bay Unified Air Pollution Control District:

submitted on December 6, 1993, supplemented on February 2, 1994 and

April 7, 1994, and revised by the submittal made on October 13,

1994; interim approval effective on November 6, 1995; interim

approval expires November 6, 1997.

* * * * *

[FR Doc. 95-24453 Filed 10-5-95; 8:45 am]

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