Clean Air Act Proposed Interim Approval of Operating Permits Program; State of South Dakota

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[SD-001; FRL-5137-4]

Clean Air Act Proposed Interim Approval of Operating Permits

Program; State of South Dakota

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.

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SUMMARY: EPA proposes interim approval of the Operating Permits Program

submitted by the State of South Dakota 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.

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

February 13, 1995.

ADDRESSES: Comments should be addressed to Laura Farris at the Region 8

address. Copies of the State's submittal and other supporting

information used in developing this proposed rule are available for

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

Environmental Protection Agency, [[Page 2918]] Region 8, 999 18th

Street, suite 500, Denver, Colorado 80202.

FOR FURTHER INFORMATION CONTACT: Laura Farris, 8ART-AP, U.S.

Environmental Protection Agency, Region 8, Air Programs Branch, 999

18th Street, suite 500, Denver, Colorado 80202, (303) 294-7539.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

As required under title V of the 1990 Clean Air Act Amendments

(sections 501-507 of the Clean Air Act (``the Act'')), EPA has

promulgated rules which define the minimum elements of an approvable

State operating permits program and the corresponding standards and

procedures by which the EPA will approve, oversee, and withdraw

approval of State operating permits programs (see 57 FR 32250 (July 21,

1992)). These rules are codified at 40 CFR part 70. Title V requires

States to develop, and submit to EPA, programs for issuing these

operating permits to all major stationary sources and to certain other

sources.

The Act requires that States develop and submit these programs to

EPA by November 15, 1993, and that EPA act to approve or disapprove

each program within 1 year after receiving the submittal. Based on

material changes to the State's submission that consisted of

regulations changes adopted by the State on November 17, 1994, EPA is

extending the review period for an additional 3 months. EPA will act to

approve or disapprove the submission by April 11, 1995. 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.

B. Federal Oversight and Sanctions

If EPA were to finalize this proposed interim approval, it 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 would be protected from sanctions, and EPA would not be

obligated to promulgate, administer and enforce a Federal permits

program for the State. 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 interim approval, as does the 3-year

time period for processing the initial permit applications.

Following final interim approval, if the State failed to submit a

complete corrective program for full approval by the date 6 months

before expiration of the interim approval, EPA would start an 18-month

clock for mandatory sanctions. If the State then failed to submit a

corrective program that EPA found complete before the expiration of

that 18-month period, EPA would apply sanctions as required by section

502(d)(2) of the Act, which would remain in effect until EPA determined

that the State had corrected the deficiency by submitting a complete

corrective program.

If, following final interim approval, EPA were to disapprove the

State's complete corrective program, EPA would be required under

section 502(d)(2) to apply sanctions on the date 18 months after the

effective date of the disapproval, unless prior to that date the State

had submitted a revised program and EPA had determined that it

corrected the deficiencies that prompted the disapproval.

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 permits program for that

State upon interim approval expiration.

II. Proposed Action and Implications

A. Analysis of State Submission

1. Support Materials

The Governor of South Dakota's designee, Robert E. Roberts,

Secretary of the Department of Environment and Natural Resources,

submitted the State of South Dakota Title V Operating Permit Program

(PROGRAM) to EPA on November 12, 1993. Amendments to the PROGRAM

requested by EPA were received on January 11, 1994. EPA deemed the

PROGRAM administratively and technically complete in a letter to the

Governor's designee dated January 14, 1994. The PROGRAM submittal

includes a legal opinion from the Attorney General of South Dakota

stating that the laws of the State provide adequate legal authority to

carry out all aspects of the PROGRAM, and a description of how the

State intends to implement the PROGRAM. The submittal additionally

contains evidence of proper adoption of the PROGRAM regulations, a

permit fee demonstration and a memorandum of agreement which defines

how the PROGRAM will be administered by the State and reviewed by EPA.

2. Regulations and Program Implementation

The South Dakota PROGRAM, including the operating permit regulation

(Administrative Rules of South Dakota (ARSD), Article 74:36, Air

Pollution Control Program), substantially meets the requirements of 40

CFR 70.2 and 70.3 with respect to applicability; Secs. 70.4, 70.5, and

70.6 with respect to permit content including operational flexibility;

Sec. 70.5 with respect to complete application forms (no insignificant

activities were identified in the PROGRAM); Sec. 70.7 with respect to

public participation and minor permit modifications; and Sec. 70.11

with respect to requirements for enforcement authority.

South Dakota has the authority to issue variances from requirements

imposed by State law. Section 34A-1-24 of the South Dakota Codified

Laws (SDCL) allows the Board of Minerals and Environment, the

permitting board, discretion to grant relief from compliance with State

rules and regulations governing the quality, nature, duration or extent

of emissions. Succeeding sections of the SDCL specify under what

circumstances a variance may be granted or denied. In its review of

South Dakota's PROGRAM, EPA has previously taken the position that, in

order to gain full approval for its PROGRAM, South Dakota would have to

amend SDCL 34A-1-24 to make it clear that variances may not be granted

to part 70 sources. EPA has reevaluated its position on this issue.

Although EPA would support such an amendment to SDCL 34A-1-24, EPA has

not required other states to change similar statutory variance

provisions. Thus, EPA believes it would not be appropriate to require

South Dakota to amend SDCL 34A-1-24 before full PROGRAM approval is

granted. EPA's reasoning is as follows: EPA regards SDCL 34A-1-24 as

wholly external to the PROGRAM submitted for approval under part 70,

and consequently is proposing 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, which [[Page 2919]] are

inconsistent with part 70. 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

granted through procedures allowed by part 70. EPA reserves the right

to enforce the terms of the part 70 permit where the permitting

authority purports to grant relief from the duty to comply with a part

70 permit in a manner inconsistent with part 70 procedures.

Part 70 of the operating permit regulations 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.

The 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 Sec. 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. The South Dakota PROGRAM will define prompt reporting of

deviations in each permit consistent with the applicable requirements.

There are certain provisions of South Dakota's operating permit

regulation for which EPA feels it is appropriate to offer clarification

to ensure that they are interpreted to be consistent with part 70.

These are as follows: (1) The definition of ``federally enforceable''

which appears at ARSD 74:36:01:01(28) reads as follows:

``Federally enforceable,'' all limits and conditions that are

enforceable by the administrator of EPA pursuant to federal law.

These limits and conditions include those requirements developed

pursuant to this article, those appearing in 40 CFR 60 and 61 (July

1, 1993), requirements within the state implementation plan and

permit requirements established pursuant to this article or 40 CFR

51 Subpart I (July 1, 1993). The use of this term does not impede

the Department's authority under state law to enforce these limits

and conditions.

This definition could be significant for determining whether a

source is subject to the part 70 PROGRAM. Thus, the second sentence of

the above definition cannot and should not be read to expand on the

first sentence of the definition. For example, requirements developed

pursuant to ARSD Article 74:36 might be, but wouldn't necessarily be,

Federally enforceable. EPA's interpretation is that the requirements

delineated in the second sentence of the definition are only Federally

enforceable if they are enforceable by the administrator of EPA

pursuant to federal law.

(2) The second sentence of ARSD 74:36:01:08(1) reads as follows:

Emissions from any oil exploration or production well and its

associated equipment and emissions from any pipeline compressor or pump

station may not be aggregated with emissions from other similar units,

whether or not such units are in a contiguous area or under common

control, to determine whether such units or stations are major sources.

To be consistent with part 70, this sentence must be read as only

being applicable to a determination of whether a source is major under

section 112 of the Act. This language cannot be applied when

determining whether a source is major under other sections of the Act.

Comments noting deficiencies in the South Dakota PROGRAM were sent

to the State in a letter dated July 8, 1994. The deficiencies were

segregated into those that require corrective action prior to interim

PROGRAM approval, and those that require corrective action prior to

full PROGRAM approval. In a letter dated August 18, 1994, the State

committed to complete the regulatory process to correct both interim

and full PROGRAM approval deficiencies related to its PROGRAM

regulations, and submit these changes to EPA by approximately December

15, 1994. EPA responded in a letter dated October 3, 1994 that they

would review all of the State's corrective actions. However, these

corrective actions would be considered a material change to the PROGRAM

and the date for final interim approval would be extended. The State

adopted the regulatory changes on November 17, 1994, which EPA has

reviewed and has determined to be adequate to allow for interim

approval.

One remaining issue noted in EPA's July 8, 1994 letter that require

corrective action prior to full PROGRAM approval is as follows: The

PROGRAM submittal contained an Attorney General's opinion which stated

that South Dakota's criminal enforcement authorities are not equivalent

to those required in part 70.11. The State's criminal enforcement

statute only allows for a maximum penalty of $1,000 for failure to

obtain a permit and $500 for violation of a permit condition. The State

must adopt legislation consistent with Sec. 70.11 prior to receiving

full PROGRAM approval to allow for a maximum criminal fine of not less

than $10,000 per day per violation for knowing violation of operating

permit requirements, including making a false statement and tampering

with a monitoring device.

Refer to the technical support document accompanying this

rulemaking for a detailed explanation of each comment and the

corrective actions required of the State.

3. Permit Fee Demonstration

The State of South Dakota established an initial fee for regulated

air pollutants below the presumptive minimum set in title V, section

502 and part 70, and was required to submit a detailed permit fee

demonstration as part of its PROGRAM submittal. The basis of this fee

demonstration included a workload analysis, which estimated the annual

cost of running the PROGRAM in fiscal year (FY) 1995 to be $438,215; a

fee structure based on the estimated direct and indirect costs of the

PROGRAM, the number of part 70 sources permitted, and the actual

emissions for the previous year. The fees established for FY 1995 are

as follows: rock crushers will be charged a flat fee of $250.00; an

annual administrative fee will be assessed to all major sources (based

on actual emissions of each source for one calendar year), excluding

rock crushers, consisting of $100.00 for sources emitting less than 50

tons per year, $500.00 for sources emitting 50 to less than 100 tons

per year, and $1,000.00 for sources emitting 100 tons per year or

greater; and an air emission fee will be assessed to all major sources

(excluding rock crushers) of $6.10 per ton per year based on emissions

from calendar year 1992 (the State will not use the 4,000 tons per year

per pollutant emissions cap allowed by Act). This fee structure will be

reevaluated each year. After careful review, the State of South Dakota

has determined that these fees would support the South Dakota PROGRAM

costs as required by 40 CFR 70.9(a).

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

a. Authority and/or commitments for section 112 implementation

South Dakota has demonstrated in its [[Page 2920]] PROGRAM submittal

adequate legal authority to implement and enforce all section 112

requirements through the title V permit. This legal authority is

contained in South Dakota's enabling legislation and in regulatory

provisions defining ``applicable requirements'' and stating that the

permit must incorporate all applicable requirements. EPA has determined

that this legal authority is sufficient to allow South Dakota to issue

permits that assure compliance with all section 112 requirements. EPA

is interpreting the above legal authority to mean that South Dakota is

able to carry out all section 112 activities. For further rationale on

this interpretation, please refer to the Technical Support Document

accompanying this rulemaking and the April 13, 1993 guidance memorandum

titled ``Title V Program Approval Criteria for Section 112

Activities,'' signed by John Seitz.

b. Implementation of 112(g) upon program approval. As a condition

of approval of the part 70 PROGRAM, South Dakota is required to

implement section 112(g) of the Act from the effective date of the part

70 PROGRAM. Imposition of case-by-case determinations of maximum

achievable control technology (MACT) or offsets under section 112(g)

will require the use of a mechanism for establishing Federally

enforceable restrictions on a source-specific basis. The EPA is

proposing to approve South Dakota's combined preconstruction/operating

permit program found in section 74:36:05 of the State's regulations

under the authority of title V and part 70 for the purpose of

implementing section 112(g) during the transition period between title

V approval and adoption of a State rule implementing EPA's section

112(g) regulations. South Dakota has combined their preconstruction

permitting regulations and their part 70 permitting regulations for all

new part 70 sources, except those sources subject to prevention of

significant deterioration (PSD) or nonattainment new source review

(NSR) permitting. South Dakota will require sources subject to section

112(g) to obtain a title V permit prior to construction, thereby

creating a Federally enforceable limit. EPA believes this approval is

necessary so that South Dakota has a mechanism in place to establish

Federally enforceable restrictions for section 112(g) purposes from the

date of part 70 approval. Section 112(l) provides statutory authority

for approval for the use of State air programs to implement section

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

limited approval because of the direct linkage between implementation

of section 112(g) and title V. If South Dakota does not wish to

implement section 112(g) through these authorities and can demonstrate

that an alternative means of implementing section 112(g) exists, EPA

may, in the final action approving South Dakota's PROGRAM, approve the

alternative instead. To the extent South Dakota does not have the

authority to regulate HAPs through existing State law, the State may

disallow modifications during the transition period.

This approval is for an interim period only, until such time as the

State is able to adopt regulations consistent with any regulations

promulgated by EPA to implement section 112(g). Accordingly, EPA is

proposing to limit the duration of this approval to a reasonable time

following promulgation of section 112(g) regulations so that South

Dakota, acting expeditiously, will be able to adopt regulations

consistent with the section 112(g) regulations. EPA is proposing here

to limit the duration of this approval to 12 months following

promulgation by EPA of section 112(g) regulations. Comment is solicited

on whether 12 months is an appropriate period considering South

Dakota's procedures for adoption of Federal regulations.

c. Program for straight delegation of section 112 standards.

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 General Provisions Subpart A and 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 proposing to grant approval under section 112(l)(5) and 40 CFR

Part 63.91 of the State's program for receiving delegation of section

112 standards that are unchanged from the Federal standards as

promulgated. South Dakota has informed EPA that it intends to accept

delegation of section 112 standards through incorporation by reference.

This program applies to both existing and future standards but is

limited to sources covered by the part 70 program.

The radionuclide national emission standard for HAPs (NESHAP) is a

section 112 regulation and an applicable requirement under the State

PROGRAM. Currently the State of South Dakota has no part 70 sources

which emit radionuclides. However, sources which are not currently part

70 sources may be defined as major and become part 70 sources under

forthcoming Federal radionuclide regulations. In that event, the State

will be responsible for issuing part 70 permits to those sources.

d. Program for implementing title IV of the act. South Dakota's

PROGRAM contains adequate authority to issue permits which reflect the

requirements of Title IV of the Act, and commits to adopt the rules and

requirements promulgated by EPA to implement an acid rain program

through the title V permit.

B. Proposed Action

EPA is proposing to grant interim approval to the operating permits

program submitted by the State of South Dakota on November 12, 1993. If

promulgated, the State must make the following change, as discussed in

detail above, to receive full PROGRAM approval: The State must adopt

legislation consistent with Sec. 70.11 prior to receiving full PROGRAM

approval to allow for a maximum criminal fine of not less than $10,000

per day per violation for knowing violation of operating permit

requirements, including making a false statement and tampering with a

monitoring device.

Evidence of this statutory change must be submitted to EPA within

18 months of EPA's interim approval of the South Dakota PROGRAM.

Today's proposal to give interim approval to the State's part 70

PROGRAM does not extend to ``Indian Country,'' as defined in 18 U.S.C.

1151, including the following ``existing or former'' Indian

reservations in the State: 1. Cheyenne River; 2. Crow Creek; 3.

Flandreau; 4. Lower Brule; 5. Pine Ridge; 6. Rosebud; 7. Sisseton; 8.

Standing Rock; and 9. Yankton.

The State has asserted it has jurisdiction to enforce a part 70

PROGRAM within some or all of these ``existing or former'' Indian

reservations and has provided an analysis of such jurisdiction. EPA is

in the process of evaluating the State's analysis and will issue a

supplemental notice regarding this issue in the future. Before EPA

would approve the State's part 70 PROGRAM for any portion of ``Indian

Country,'' EPA would have to be satisfied that the State has authority,

either pursuant to explicit Congressional authorization or applicable

principles of Federal Indian law, to enforce its laws against existing

and potential pollution sources within any geographical area for which

it seeks program approval and that such approval would constitute sound

administrative practice. This is a complex and controversial issue, and

[[Page 2921]] EPA does not wish to delay interim approval of the

State's part 70 PROGRAM with respect to undisputed sources while EPA

resolves this question.

In deferring final action on program approval for sources located

in ``Indian Country,'' EPA is not making a determination that the State

either has adequate jurisdiction or lacks such jurisdiction. Instead,

EPA is deferring judgment regarding this issue pending EPA's evaluation

of the State's analysis.

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

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

State is protected from sanctions for failure to have a program, and

EPA is not obligated to promulgate a Federal permits 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.

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 proposing to grant approval under section

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. Request for Public Comments

The EPA is requesting comments on all aspects of this proposed

interim approval. Copies of the State's submittal and other information

relied upon for the proposed interim approval are contained in a docket

maintained at the EPA Regional Office. The docket is an organized and

complete file of all the information submitted to, or otherwise

considered by, EPA in the development of this proposed 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. The EPA will

consider any comments received by February 13, 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 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.

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: December 29, 1994.

Jack W. McGraw,

Acting Regional Administrator.

[FR Doc. 95-700 Filed 1-11-95; 8:45 am]

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