# Federal Operating Permits Program

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URL: https://www.frixlaw.com/law-library/documents/fr%3A96-16257

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** July 1, 1996
- **Citation:** 61 FR 34202

## Text

SUMMARY: This action promulgates regulations setting forth the
procedures and terms under which the Administrator will administer
programs for issuing operating permits to covered stationary sources,
pursuant to title V of the Clean Air Act as amended in 1990 (Act).
Although the primary responsibility for issuing operating permits to
such sources rests with State, local, and Tribal air agencies, EPA will
remedy gaps in air quality protection by administering a Federal
operating permits program in areas lacking an EPA-approved or
adequately administered operating permits program. Federally issued
permits will clarify which requirements apply to sources and will
enhance understanding of and compliance with air quality regulations.

EFFECTIVE DATE: July 31, 1996.

FOR FURTHER INFORMATION CONTACT: Candace Carraway (telephone 919-541-
3189) or Kirt Cox (telephone 919-541-5399), U. S. Environmental
Protection Agency, Office of Air Quality Planning and Standards,
Information Transfer and Program Integration Division, Mail Drop 12,
Research Triangle Park, North Carolina 27711.

SUPPLEMENTARY INFORMATION:

Docket

Supporting information used in developing the promulgated rules is
contained in Docket No. A-93-51. Supporting information used in
developing 40 CFR part 70 is contained in Dockets No. A-90-33 and No.
A-93-50. These dockets are available for public inspection and copying
between 8:30 a.m. and 3:30 p.m. Monday through Friday at EPA's Air
Docket, Room M-1500, Waterside Mall, 401 M Street SW, Washington, D.C.
20460. A reasonable fee may be charged for copying.

Background Information Document

A background information document (BID) for the promulgated rule
may be obtained from the docket. Please refer to ``Federal Operating
Permits Program - Response to Comments.'' The BID contains a summary of
the public comments made on the proposed Federal Operating Permits
Program rule and EPA responses to the comments.

Regulated Entities

Entities potentially regulated by this action are major sources,
affected sources under title IV of the Act (acid rain sources), solid
waste incineration units required to obtain a permit under section 129
of the Act, and those areas sources subject to a standard under section
111 or 112 of the Act which have not been exempted or deferred from
title V permitting requirements. Regulated categories and entities
include:

------------------------------------------------------------------------
Category Examples of regulated entities
------------------------------------------------------------------------
Industry.......................... Major sources under title I or
section 112 of the Act; affected
sources under title IV of the Act
(acid rain sources); solid waste
incineration units required to
obtain a permit under section 129
of the Act; area sources subject to
new source performance standards or
national emission standards for
hazardous air pollutants that are
not exempted or deferred from
permitting requirements under title
V.
------------------------------------------------------------------------

This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
could potentially be regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
your facility is regulated by this action, you should carefully examine
the applicability criteria in section 71.3(a) of the rule. If you have
questions regarding the applicability of this action to a particular
entity, consult the person listed in the preceding FOR FURTHER
INFORMATION CONTACT section or the EPA Regional Office that is
administering the part 71 permit program for the State or area in which
the relevant source or facility is located.
Outline. The information presented in this preamble is organized as
follows:

I. Background
II. Summary of Promulgated Rule
III. Significant Changes to the Proposed Rule
IV. Administrative Requirements
A. Docket
B. Executive Order 12286
C. Regulatory Flexibility Act
D. Paperwork Reduction Act
E. Unfunded Mandates Reform Act

I. Background

A. Background of EPA's Development of the Proposed Part 71 Rule

Title V of the Act requires that if a permits program meeting the
requirements of title V has not been approved for any State by November
15, 1995, EPA must promulgate, administer, and enforce a Federal title
V program for that State (42 U.S.C. section 7661a(d)(3)). Thus, from
the date of enactment of the 1990 Amendments to the Act, EPA was
subject to a 5-year deadline to establish a Federal program for States
that do not obtain EPA approval of their State programs within that
time. The Act had also placed EPA under a 1-year deadline to promulgate
regulations establishing the minimum elements of approvable State
permit programs (42 U.S.C. section 7661a(b)). The EPA promulgated its
regulations establishing these criteria, codified at 40 CFR part 70
(the part 70 rule), on July 21, 1992 (57 FR 32250). States were then to
submit their title V programs for EPA review by November 15, 1993, and
EPA was to approve or disapprove those submitted programs within 1 year
of receiving them (42 U.S.C. section 7661a(d)(1)). Thus, under the
temporal scheme of title V, EPA was to approve or disapprove timely
submitted State title V programs by November 15, 1994, exactly 1 year
before EPA's duty to establish a Federal program for unapproved States
would ripen.
Almost immediately upon promulgation of part 70, numerous industry,
State and local government, and environmentalist petitioners challenged
EPA's final rule in litigation in the Court of Appeals. See Clean Air
Implementation Project v. EPA, No. 92-1303 (D.C. Cir.). Petitioners
identified dozens of issues to which they objected in the part 70 rule,
and EPA decided to conduct broad-based settlement discussions with all
petitioners concerning these issues. These discussions occurred for
over a year following the commencement of the litigation, and resulted
in EPA, with the consultation of all of the litigants, developing
proposed revisions to many provisions in the part 70 rule. These
provisions mainly concerned the flexibility provisions of part 70,
which governed when permits would need to be revised to reflect changes
in operation at sources, and the procedures by which permits would be
revised. On August 29, 1994, EPA published proposed substantial
revisions to part 70 reflecting the outcome of these discussions (59 FR
44460) (hereafter ``August 1994 proposed revisions to part 70''). That
proposal reflected EPA's

[[Page 34203]]

most current thinking at the time concerning the proper implementation
of title V, and departed in numerous respects from positions taken in
the existing promulgated part 70 rule.
When EPA began developing part 71 in the fall of 1993, settlement
discussions concerning part 70 were still ongoing and were yielding
what appeared to be fruitful results. The Agency believed at the time
that any needed revisions to part 70 would be finalized well in advance
of the deadline for establishing any necessary Federal programs, and so
decided to develop part 71 based on contemplated proposed revisions to
part 70, as EPA wished to model part 71 on its long-term implementation
goals for title V, rather than on provisions of a part 70 rule that EPA
did not believe would remain as promulgated in the current rule.
When EPA published its proposed revisions to part 70 in August
1994, the Agency still believed that the revisions would be finalized
in time for EPA to base its part 71 Federal program rule on the revised
part 70. Consequently, when EPA published its proposed part 71
regulations on April 27, 1995, the proposal was based on the August
1994 proposed revisions to part 70 (60 FR 20804; hereafter, ``part 71
proposal''). The part 71 proposal thus contained provisions concerning
critical definitions under title V, the scope of applicability of the
program to sources, requirements governing applications and permit
content, and, most significantly, operational flexibility and permit
revisions that departed from the current part 70 rule's corresponding
provisions. In the proposal notice, the Agency specifically solicited
comment on whether the Agency had appropriately based part 71 upon the
relevant provision of the existing part 70 rule and the recently
proposed revision to part 70. See 60 FR at 20805.
At the time of proposal of part 71, the Agency was aware of many
adverse comments on the August 1994 proposed revisions to part 70, and
EPA had engaged in discussions with stakeholders to obtain
recommendations for publishing a supplemental proposal to revise the
flexibility provisions of part 70. See 60 FR at 20805, 20817. The part
71 proposal notice indicated that the Agency believed it might not be
possible to promulgate final permit revision procedures for part 71, in
light of the ongoing discussions to develop part 70 permit revision
procedures in time to meet the statutory deadline for establishing
Federal programs in States lacking approved part 70 programs. As a
result, the notice suggested that EPA may have to finalize the part 71
rule in two phases, the first without any provisions for revising
permits, which would be addressed in a later supplemental proposal. Id.
Indeed, EPA's supplemental proposal for both parts 70 and 71, published
on August 31, 1995, described how part 71's future permit revision
procedures would be modelled upon the part 70 procedures for permit
revisions proposed in that notice (60 FR 45530; hereafter, ``August
1995 supplemental proposal'').

B. The Need for Part 71 To Facilitate Transition

In the part 71 proposal notice, EPA stressed the need for
implementation of part 71 to facilitate a smooth transition to State
implementation of title V through approved part 70 programs. See 60 FR
at 20805, 20816. The EPA continues to believe that Congress envisioned
that States would have primary responsibility for implementing title V,
just as they do for implementing much of the rest of the Act. See, for
example, section 101(a)(3) of the Act, in which Congress found that air
pollution prevention and air pollution control at its source is the
primary responsibility of States and local governments (42 U.S.C.
section 7401(a)(3)). Note also that under title V of the Act, Congress
gave States the initial opportunity to develop and administer title V
programs, while directing EPA to function as a backstop if States are
unable to adopt provisions under State law to take on title V
responsibilities, rather than directing EPA to establish the Federal
program first and then allowing States to apply to take over title V
administration, as under prior permitting programs such as the
prevention of significant deterioration (PSD) and the national
pollutant discharge elimination system (NPDES) under the Clean Water
Act.
The EPA believes that granting States primary responsibility to
implement title V makes good policy sense. States are far better
positioned than EPA to administer permitting programs covering their
resident sources for several reasons. First, States are more familiar
with the operational characteristics of resident sources, and with the
applicable requirements to which they are subject. In having had the
lead on developing State implementation plans (SIP's) and implementing
other provisions of the Act that apply to these sources, States have
developed substantial expertise in, among other things, running air
permit programs that govern new construction and changes in emissions
of air pollutants such as the new source review (NSR) and PSD programs.
States have developed enforcement programs based on this structure, and
are able to coordinate their permitting programs with the goals and
needs of their overall air pollution control programs. Finally,
compared to EPA Regional offices, States are simply closer to their
sources, have greater resources, and are better able to respond to the
regulated community and its needs for expeditious permit processing.
In light of this, EPA has repeatedly stated its belief that
federally-implemented part 71 programs would be of short duration,
lasting only until the few remaining States that have not developed
approvable part 70 programs are able to submit title V programs that
meet the requirements of the Act. Rather than viewing part 71 only as a
means of exerting leverage in States that have not yet adopted adequate
part 70 programs, EPA has also viewed part 71 as an opportunity to aid
States in taking up responsibility to implement title V. To this end,
EPA has attempted to structure the rule so that States in which part 71
programs are established will be able to use the program as an aid to
adopting and implementing their own part 70 programs. For example,
today's rule provides that States can take delegation of administration
of the Federal program in their States. If a State that for whatever
reason has not been successful in developing its own statutes and
regulations to implement title V is nevertheless capable of running a
Federal program, EPA sees no reason not to offer the State the
opportunity to more efficiently run the permit program than EPA
believes the Agency could. The EPA also believes that the experience of
running the Federal program may assist States in overcoming any
remaining hurdles that have so far prevented them from adopting
adequate title V programs under State law.

C. Basing Part 71 on the Part 70 Program

In the part 71 proposal notice, EPA stated its view that it is
appropriate to model part 71 procedures on those required by part 70,
in order to promote national consistency between title V programs that
are administered throughout the country. See 60 FR at 20816. Such
national consistency would ensure that sources are not faced with
substantially different programs simply because EPA, as opposed to
State agencies, is the relevant title V permitting authority, would
promote uniformity in affected State and public participation, and
would provide a level playing field for sources. Basing part 71 on part
70 would also encourage States

[[Page 34204]]

that are still developing their title V programs to take delegation of
the part 71 program, as it would be more consistent with the programs
they are preparing to implement under State law. States taking
delegation would in turn ensure smoother transition to State
administration of part 70 programs, as sources would have already
become familiar with the State as the title V permitting authority and
would not need to restart their permit application process anew when
the State program receives EPA approval.
Since at the time the part 71 proposal was being developed it
appeared to EPA that part 70 would soon be revised in many significant
respects, EPA chose to base the proposal upon the recent proposed
revisions to part 70, rather than on the existing promulgated rule.
This was due in part to the fact that the August 1994 proposed
revisions to part 70 addressed a number of basic issues under title V
that necessarily would govern how those issues are addressed in part 71
(such as the definition of major source and the necessary provisions to
implement section 502(b)(10) of the Act), and in part to the Agency's
wish to provide in the Federal rule many of the benefits of the August
1994 proposed revisions to part 70. As noted above, however, EPA
specifically asked commenters to address whether EPA had
inappropriately either followed or departed from the approaches taken
in both the current part 70 rule and its proposed revisions.
Echoing their comments on the August 1994 proposed revisions to
part 70, industry commenters unanimously argued that the permit
revisions procedures contained in the part 71 proposal were too complex
and confusing and would hinder sources' abilities to make rapid changes
in response to market needs. In addition, most industry commenters
presented three general arguments in response to EPA's proposal to
establish a uniform national part 71 rule based on the August 1994
proposed revisions to part 70. The first type of argument was that EPA
should not promulgate a uniform national part 71 rule at all, but
rather should develop part 71 programs case-by-case, taking into
account the specific characteristics of the State's existing air
program, and basing the State's part 71 program as much as possible on
the State's part 70 program that it has developed to date and that EPA
had not found to be inadequate. According to this argument, the best
way to facilitate transition from Federal to State implementation of
title V is to make sure the Federal and State programs are virtually
identical in each relevant State, even if that means the Federal
programs would differ from State to State. It would follow that EPA
should approve whatever adequate elements a State had adopted for its
title V program, and then only fill the remaining gaps with Federal
provisions as necessary. This argument also held that section 502 of
the Act actually requires a case-by-case approach to developing part 71
programs for States, and that the Act does not authorize EPA to
promulgate a nationally uniform rule.
While EPA agrees that in theory the smoothest transition from
Federal to State implementation might occur where the Federal program
is identical to the State's, the Agency does not agree that it is
inappropriate to promulgate a nationally uniform rule for part 71. At
the outset, EPA disagrees with the assertion that the Agency lacks
legal authority to establish a nationally uniform rule for part 71.
While section 502(d)(3) of the Act does require EPA to promulgate,
administer and enforce a title V program ``for'' any State that does
not obtain part 70 approval, 42 U.S.C. section 7661a(d)(3), that
language does not compel a separate State-by-State approach to
establishing a Federal title V program; nor does it compel a Federal
program that is based on the State's existing but as yet unapproved
State program. Indeed, EPA would be hard-pressed to base a Federal
program on a State program where no State program has ever been adopted
or submitted for EPA evaluation. Even if a State had adopted and
submitted a program, EPA stresses that the Agency can only evaluate the
adequacy of State programs through notice and comment rulemaking, which
might not occur before a Federal program is due. The EPA believes
Congress must have recognized the possibility that EPA would be called
upon to establish a Federal program even where a State has never
adopted any State program of its own or where a program had not been
submitted in time for EPA to find it adequate; in such situations, it
would be impossible for EPA to base the Federal program on the State's.
The EPA also believes that the resource burden of establishing and
implementing different case-by-case programs for States would overwhelm
EPA Regional offices and establishing a generic template for part 71 is
a far more efficient use of Agency resources to get the Federal program
up and running. The EPA has consequently concluded that a nationally
uniform regulation is necessary for purposes of carrying out the
Agency's functions under title V. Section 301(a)(1) of the Act
authorizes EPA to prescribe such regulations as are necessary to carry
out the Administrator's functions under the Act (42 U.S.C. section
7601(a)(1)). Thus, EPA believes it has ample statutory authority to
establish the most efficient and nationally consistent part 71
regulation possible. Finally, EPA notes that EPA's other permitting
programs under its environmental statutes, such as the NPDES program
and the PSD program, are governed by nationally uniform regulations,
implementation of which have been very successful. The EPA sees no
reason to depart from this established approach for purposes of running
Federal title V programs, especially since Congress clearly did
anticipate that EPA would first address title V through establishing
regulations that would govern the minimum elements of title V programs
to be administered by any air pollution control agency. See section
502(b) of the Act, 42 U.S.C. section 7661a(b).
The second type of industry argument in response to basing the part
71 proposal on the proposed revisions to part 70 stressed that EPA
should delay promulgation of any part 71 rule until the revisions to
part 70 are finalized. This argument pointed out that promulgating part
71 based on the August 1994 proposed revisions to part 70 would result
in the part 71 rule being based on an approach that the Agency itself
had begun to revise in developing the supplemental proposed revisions
to part 70 (which were eventually published just 4 months after the
date of the part 71 proposal). The argument noted that since EPA is
envisioning substantial changes to the part 70 rule, the part 71 rule
should not finalize title V issues that will remain in transition until
the part 70 rule is finally revised. This argument also specifically
responded adversely to EPA's statement in the proposal that it may be
necessary to split finalization of part 71 into two phases in which the
operational flexibility and permit revision procedures would remain
reserved until a second phase. In the view of these commenters, such
provisions are critical components of any part 71 rule that is adopted,
and it would not be appropriate to leave them out of part 71 for any
unspecified time. This argument also stated that finalizing part 71 now
based upon the proposed revisions to part 70 would actually impede
transition to approved State part 70 programs, since the Federal
program, and the approved State program based on the current part 70
that replaces it, would take very different approaches to such
fundamental issues as applicability of the program, operational
flexibility

[[Page 34205]]

and permit revision procedures. Finally, this argument offered a theory
that title V actually does not require EPA to adopt part 71 programs
for States until May 15, 1997; under this theory, a commenter argued
that the Act actually gives States until May 15, 1995, rather than
November 15, 1993, to submit initial title V programs, since States
have 18 months following the first ``due date'' to submit any remedies
to deficient programs and avoid sanctions that would fall after that
18-month period. The commenter would interpret the date on which the
18-month period expires as the date referred to in section 502(d)(3)
and argues that EPA is not required to promulgate a Federal program
until 2 years after the expiration of the 18-month period.
First, EPA is not persuaded by the commenter's argument that part
71 programs are not due until May 15, 1997. Section 502(d)(1) of the
Act clearly provides that States are to submit their title V programs
``[n]ot later than 3 years after the date of enactment of the Clean Air
Act Amendments of 1990,'' 42 U.S.C. section 7661a(d)(1), which occurred
on November 15, 1990. Moreover, section 502(d)(3) clearly refers to
``the date required for submission of such a program under paragraph
(1) (of section 502),'' 42 U.S.C. section 7661a(d)(3), as the trigger
for the 2-year period after which EPA must establish Federal programs.
There is no reference to any 18-month grace-period in section
502(d)(3), and EPA disputes the assertion that the date on which a
sanctions clock expires under section 502(d)(2) can be viewed as the
``real'' deadline for submission of State programs in the face of the
plain language of section 502(d)(1) and section 502(d)(3)'s reference
to the deadline in section 502(d)(1). Thus, while EPA is sympathetic to
concerns that finalizing part 71 in advance of the Agency finally
revising part 70 could result in the Agency promulgating provisions
that are essentially moving targets in the Federal rule, EPA does not
believe it has the authority to delay issuance of part 71 beyond the
deadline prescribed by Congress. Moreover, as a policy matter, EPA
believes it is necessary to put part 71 in place to aid States that to
date have unsuccessfully struggled to develop approvable title V
programs, as it is a potential vehicle for State administration of
title V (through delegation of part 71) even where obstacles remain
that block certain States from obtaining part 70 approval. The EPA does
not believe that the environmental benefits of title V should be
delayed simply due to the fact that some States have not been
successful at developing title V programs. Moreover, EPA does not feel
it would be appropriate to attempt to justify delaying promulgation and
implementation of the Federal program because of the continuing
difficulties in revising the part 70 rule. However, EPA is persuaded by
commenters that the part 71 rule should not contain gaps to be filled
in at a second stage for provisions for operational flexibility and
permit revisions, and is sympathetic to concerns that basing these
provisions on the August 1994 proposed revisions to part 70 might even
interfere with transition to State programs approved under the current
part 70 rule. These latter points are discussed in more detail below.
The third general type of industry argument in response to basing
part 71 on the August 1994 proposal was that if EPA must establish a
Federal program now, it should do so based on the existing part 70
rule, and revise the program later when part 70 is revised. This
argument recognized that EPA may simply be unable in certain cases to
base a State-specific part 71 program on an existing State program, but
stressed the fact that any program that the State is still struggling
to adopt would be based on the existing part 70 rule, rather than on
the proposed revisions thereto. The argument pointed out the fact that
under the August 1994 proposed revisions to part 70, EPA planned to
allow States several years following final promulgation before States
would be expected to implement new part 70 programs based on the
revised rule. Thus, commenters observed, States would likely be
developing and implementing part 70 programs based on the July 1992
rule for considerable time. In light of this, it would actually
interfere with smooth transition from Federal to State implementation
to base part 71 on the future part 70 rule, especially in light of the
fact that at this point how part 70 will be ultimately revised is only
speculative; rather, transition could be facilitated only where the
Federal rule resembles the model that the State rule is expected to
follow. States might be less inclined to take delegation of a Federal
rule that does not resemble existing part 70 and the State analogues
that are being developed, and thus sources would be more likely to be
faced with different permitting authorities under part 71 and part 70
programs. Moreover, the relevant guidance that EPA had issued to date
to aid implementation of the current rule, such as the Agency's ``White
Paper for Streamlined Development of Part 70 Permit Applications''
(herein referred to as the ``first white paper'') and the March 5, 1996
guidance document entitled ``White Paper Number 2 for Improved
Implementation of the Part 70 Operating Permits Program, could be less
valuable as an aid in implementing a Federal rule that is not based on
the current part 70, and both sources and part 71 permitting
authorities could be forced to start somewhat from scratch in
implementing the program.
The EPA agrees that the most appropriate course of action is to
promulgate, on an interim basis, part 71 based on the current part 70
rule. In reaching this conclusion, EPA was persuaded by concerns about
impeding transition to part 70 approval under the current rule and by
industry concerns about issuing a rule containing gaps regarding
operational flexibility and permit revisions. Moreover, as many issues
in part 70 are still outstanding following the August 1994 and August
1995 proposals, and as many of those issues concern key definitions and
procedures under title V, it would be premature for EPA to finalize
part 71 based upon the proposed revisions to part 70 until it makes
final decisions on these issues in part 70. Thus, the only way EPA can
fulfill its mandate to step in as the title V permitting authority for
States that have not obtained part 70 approval at this time, and to do
so by establishing a complete part 71 program that provides the
flexibility needed by industry and mandated by title V, is to
promulgate the rule based upon the current part 70 regulation. The EPA
stresses, however, that by finalizing this interim approach in part 71,
the Agency does not preclude itself from revising part 71 in the future
as based on appropriate aspects of either the August 1994, April 1995,
or August 1995 proposals for parts 70 and 71. In fact, EPA intends to
issue a second round of final rulemaking for part 71 (hereafter ``phase
II rulemaking) in the future once the Agency has resolved with relevant
stakeholders the outstanding issues and is prepared to promulgate final
revisions to part 70. As a general matter, EPA stresses that the most
current reflection of the Agency's intended policy regarding many of
these provisions is the August 31, 1995 supplemental proposal.
Consequently, while the provisions adopted today in part 71 that relate
to outstanding issues under the definitions, applicability, permit
application, permit content, permit revisions and reopenings, and
affected State and EPA review sections are consistent with the
corresponding

[[Page 34206]]

provisions in the existing part 70 rule, rather than with provisions in
the proposals mentioned above, it should be expected that EPA will
issue a second final rulemaking, without a second round of proposal, to
conform part 71 to the revised part 70 rule when the Agency is prepared
to issue it.
The EPA believes that this approach is a logical outgrowth of the
part 71 proposal issued in April 1995. While that proposal only
contained regulatory provisions based on the August 1994 proposed
revisions to part 70, EPA explicitly solicited comment on whether the
proposal was in any way inappropriately inconsistent with the current
part 70 rule. Clearly, the commenters noted such inconsistencies, and
the proposal facilitated meaningful comment on what approach the Agency
should take in promulgating part 71 vis-a-vis the outstanding issues in
the part 70 revision process. As discussed above, the proposal enabled
industry commenters to fall into three basic categories in response to
the proposal--in fact, many commenters advanced more than one of the
basic types of arguments in their comments, realizing that the
different arguments might have different force depending upon the
extent to which States had actually developed and submitted their own
programs. The approach adopted today was urged by numerous industry
commenters as the most reasonable in light of the need to issue a part
71 program now, as opposed to leaving gaps to be filled in later at a
second stage of final rulemaking. In addition, today's rule is
consistent with the existing part 70 rule under which States continue
to submit programs, and under which EPA continues to approve those
programs. Thus, EPA does not believe that a second round of proposed
rulemaking is necessary before finalizing part 71 to conform to the
Agency's currently effective regulation implementing title V, part 70.
In the following sections of this notice, the specific provisions
that are being finalized based upon current part 70 rather than upon
the provisions of the part 71 proposal are identified and further
discussed. For each of them, the general governing principle is that
while the Agency has proposed to revise part 70 to modify many of the
provisions corresponding to the part 71 provisions adopted today, EPA
is not yet prepared to adopt final positions on those issues and so, in
the interests of promoting smooth transition from Federal to State
implementation of title V, is choosing to issue, on an interim basis, a
part 71 rule that matches as closely as possible the existing part 70
rule. The EPA's finalization of those provisions today in no way
reflects the Agency's ultimate decision to renounce any of the
positions articulated in the proposed revisions to part 70 or the
corresponding proposals for part 71.

II. Summary of Promulgated Rule

A. Applicability

The Federal operating permits program requires all part 71 sources
to submit permit applications to the permitting authority no later than
within 1 year of the effective date of the program. The operating
permit program applies to the following sources:
1. Major sources, defined as follows:
a. Air toxics sources, as defined in section 112 of the Act, with
the potential to emit 10 tons per year (tpy), or more, of any hazardous
air pollutant (HAP) listed pursuant to 112(b); 25 tpy, or more, of any
combination of HAP listed pursuant to 112(b); or a lesser quantity of a
given pollutant, if the Administrator so specifies (501(2)(A)).
b. Sources of air pollutants, as defined in section 302, with the
potential to emit 100 tpy, or more, of any pollutant (501(2)(B)).
c. Sources subject to the nonattainment area provisions of title I,
part D, with the potential to emit, depending on the nonattainment area
designation 10 or more tpy of volatile organic compound (VOC) or oxides
of nitrogen, 50 or more tpy of carbon monoxide, and seventy or more tpy
of particulate matter (501(2)(B)).
2. Any other sources subject to a standard under section 111 or
112.
3. Sources subject to the acid rain program (501(1)).
4. Any source subject to the PSD program or the NSR program under
title I, part C or D.
5. Any other stationary source in a category EPA designates, in
whole or in part, by regulation, after notice and comment.
For purposes of determining applicability, a source's total
emissions of a pollutant are found by summing the potential emissions
of that pollutant from all emissions units under common control at the
same plant site. If a source is a major source, even if only due to the
total emissions from one pollutant, then a source must submit (with few
exceptions) a permit application that includes all emissions of all
regulated air pollutants from all emissions units located at the plant.
Part 71 follows the approach of part 70 in deferring nonmajor
sources from permitting requirements. The permitting requirements for
nonmajor sources subject to a standard under section 111 or 112 of the
Act prior to July 21, 1992 are deferred for 5 years from the effective
date of the first approved part 70 program that deferred nonmajor
sources. The EPA may determine on a case-by-case basis permitting
requirements for nonmajor sources when they become subject to new
section 111 or 112 standards. Sources subject to the new source
performance standard for new residential wood heaters or the national
emission standards for hazardous air pollutants for asbestos as it
applies to demolition and renovation activities are permanently exempt
from permitting requirements.

B. Program Implementation

The EPA will administer a part 71 program for those portions of a
State that lack EPA approval for its operating permits program or for a
State that fails to adequately administer and enforce an approved
program. However, the requirement that EPA establish a Federal program
for States lacking a fully approved program is suspended if a State
program is granted interim approval. The EPA will also administer part
71 programs in Tribal areas. Should a part 71 program become effective
prior to the issuance of part 70 permits to all sources (under an
approved part 70 program), EPA will require part 71 permit applications
from sources that have not received part 70 permits. Applications shall
be due within a year of the effective date of the part 71 program. The
EPA will take final action on at least one-third of the applications
annually.
Section 71.4 also establishes procedures that would be used for
issuing permits to certain sources located on the Outer Continental
Shelf (OCS) and after EPA objects to a proposed or issued State permit.
The EPA may also delegate the responsibility for administering the
part 71 program to the State or eligible Tribe if the requirements of
section 71.10 have been met. However, delegation will not constitute
approval of a State or Tribal operating permits program under part 70.
The EPA will suspend the issuance of part 71 permits upon
publication of notice of approval of a State or Tribal operating
permits program under part 70. The EPA or the delegate agency will
continue to administer and enforce part 71 permits until they are
replaced by permits issued under the approved part 70 program.
The EPA will publish a notice in the Federal Register informing the
public of the effective dates or delegation of any part 71 programs for
States, Tribal areas,

[[Page 34207]]

and OCS sources. Where practicable, EPA will also publish notice in a
newspaper of general circulation within the area subject to the part 71
program and will notify the affected government.

C. Permit Applications

Each source meeting the applicability criteria of this part is
required to submit timely and complete information on standard
application forms provided by the permitting authority. Streamlined
forms for electronic formats may be provided.
An initial part 71 permit application is required within 12 months
of the later of:
1. The effective date of this part in a State, Tribal area, or OCS
area where a source is located, unless the source has an existing part
70 permit;
2. The expiration of any deferral for a nonmajor source;
3. The date a source commences operation; or
4. The date a source meets any of the applicability criteria of
section 71.3.
Sources with part 70 permits in force at the time part 71 becomes
effective in the area where they are located would not have to apply
for a part 71 permit until their part 70 permit expires. Prior to its
expiration, the part 70 permit may be modified by EPA.
Sources would be notified of the requirement to submit an
application at least 180 days prior to when the application is due.
The permitting authority will perform a completeness determination
within 60 days of receipt of an application, or the application will be
deemed complete by default. A complete application would contain all
the information needed to begin processing the permit application,
including, at a minimum, a completed standard application form (or
forms) and a compliance plan.
The compliance plan describes how the source plans to maintain or
to achieve compliance with all applicable air quality requirements
under the Act. This plan must include a schedule of compliance and a
schedule for the source to submit progress reports to the permitting
authority. Each source must submit a compliance certification report in
which it certifies its status with respect to each requirement, and the
method used to determine the status.
Each operating permit application, report, or compliance
certification submitted pursuant to part 71 must include a
certification signed by a responsible official attesting to the truth,
accuracy, and completeness of the information submitted.
Applicants may be required to update information in the application
after the filing date and prior to the release of the draft permit.

D. Permit Content

Part 71 permits must meet all applicable requirements of the Act
and, among other things, must contain:
1. A 5-year term for acid rain sources, up to a 12-year term for
certain municipal waste combustors, and up to a 5-year term for all
other sources.
2. Limits and conditions to assure compliance with all applicable
requirements under the Act.
3. A schedule of compliance, where applicable.
4. Inspection, entry, monitoring, compliance certification,
recordkeeping, and reporting requirements to assure compliance with the
permit terms and conditions.
5. A provision describing permit reopening conditions.
6. Provisions under which the permit can be revised, terminated,
modified, or reissued for cause.
7. Provisions ensuring operational flexibility so that certain
changes can be made within a permitted facility without a permit
revision.
8. A provision that nothing in the permit or compliance plan
affects allowances under the acid rain program.
All terms and conditions in a part 71 permit, including any
provisions designed to limit a source's potential to emit, are
enforceable by the Administrator and citizens under the Act.
Like part 70, part 71 would allow sources to apply for a permit
shield, i.e., a provision in the permit that states that if the source
complies with terms and conditions of the permit, the source shall be
deemed in compliance with any applicable requirements reflected in the
permit as of the date of permit issuance.

E. Permit Issuance and Review

Regulations concerning the processes for permit issuance, review,
renewal, revision, and reopening are found in sections 71.7 and 71.11.
Briefly, these include:
1. Action on Applications for Permit Issuance and Permit Renewal
Section 71.7(a) describes the conditions that must be satisfied
before EPA or a delegate agency may issue a permit. These include
receipt of a complete application, compliance with public participation
requirements, and notification of affected States, Indian Tribes, and
EPA (if the program has been delegated). Except during the initial
phase-in of the program, the permitting authority is required to act on
permit applications within 18 months after receiving a complete
application.
The timely submittal of a complete application and any additional
required information creates a ``shield'' against enforcement for
failure to have a part 70 or part 71 permit. Permits being renewed are
subject to the same procedural requirements that apply to initial
permit issuance, as provided in section 71.7(c). The administrative
procedures for permit issuance are contained in section 71.11 and are
generally based on analogous provisions governing other EPA permitting
programs at 40 CFR part 124.
2. Permit Revisions
Sections 71.7 (d) and (e) outline the mechanisms for permit
modification and administrative amendments that are needed to revise
part 71 permits to accommodate changes that would otherwise violate
terms and conditions of the permit.
Administrative amendments can be accomplished by the permitting
authority without public or EPA review. These permit revisions include
correction of typographical errors, changes in address or source
ownership, as well as incorporation of requirements established under
State preconstruction review that meet certain procedural and
compliance requirements.
If a change is not prohibited or addressed by the permit, the
permittee may make the change after submitting a notice, and the permit
is revised at renewal.
The regulations establish minor and significant permit modification
procedures for changes that go beyond the activities allowed in the
original permit or that increase the total emissions allowed under the
permit.
Minor permit modifications reflect increases in permitted emissions
that do not amount to modifications under any requirement of title I
and that do not meet certain other requirements. Minor permit
modification procedures require a source to provide advance notice of
the proposed change, but allow a change to take effect prior to the
conclusion of the revision procedures.
A source that makes a change before the minor permit modification
has been issued does so at its own risk. It is not protected from
underlying applicable requirements by any shield. It is only afforded a
temporary exemption from the formal requirement that it operate in
accordance with the permit terms that it seeks to change in its
modification application. Should the proposed permit modification be
rejected, the source would be subject to enforcement

[[Page 34208]]

proceedings for any violation of these requirements.
Significant permit modifications are inherently more complex, and
will require additional time to accomplish. Permitting authorities will
initiate their review of the proposed changes after receipt of an
application.
Sources subject to requirements of the acid rain program must hold
allowances to cover their emissions of sulfur dioxide (SO2).
Allowance transactions registered by the Administrator will be
incorporated into the source's permit as a matter of law, without
following either the permit modification or amendment procedures
described above.
3. Reopening for Cause
The permitting authority may terminate, modify, or revoke and
reissue a permit for cause. Reopening and reissuing procedures follow
the same procedures as apply to initial issuance. Advance notice is
required before permit reopenings may be initiated.
Section 71.7(f) requires that permits issued to major sources with
3 or more years remaining in the permit's term be reopened to
incorporate applicable requirements which are promulgated after the
issuance of the permit. Revisions must be made as expeditiously as
practicable, but no later than 18 months after the promulgation of such
additional requirements.
4. Permit Notification to EPA and Affected States
Consistent with 40 CFR section 70.8(b), EPA or the delegate agency
would be required to provide notice of draft permits to all affected
States and to certain Indian Tribes.
Affected States are those whose air quality may be affected and
that are contiguous to the State in which the source is located, or
that are within 50 miles of the source. The permitting authority must
give affected States an opportunity to submit written recommendations
for the permit and notify any affected State in writing of any refusal
to accept all of its recommendations.
Although Indian Tribes are not considered affected States unless
they establish their compliance with criteria for being treated in the
same manner as States pursuant to section 301(d) of the Act, the Agency
believes federally recognized Tribes should be given notice of draft
permits that may be issued to sources that could affect Tribal air
quality. The regulation requires that the permitting authority send
such notices.
The Act authorizes EPA to object to any permit that would not be in
compliance with the applicable requirements of the Act. In the case of
a delegated program, the permitting authority may not issue a part 71
permit if the Administrator has objected to its issuance in writing
within 45 days of receipt of the proposed permit.
5. Administrative and Judicial Review
After the close of the public comment period on a draft permit, the
permitting authority will issue a final permit decision. Within 30 days
of the final permit decision, anyone who filed comments on the draft
permit or participated in the public hearing may petition the
Environmental Appeals Board (EAB) to review any condition of the
permit. In general, the objections in the petition must have been
raised during the public participation period on the permit. The
petition will stay the effectiveness of the specific terms of the
permit which are the subject of the request for review, pending
conclusion of the appeal proceedings.
The EAB will issue an order either granting or denying the petition
for review. To the extent review is denied, the conditions of the final
permit decision become final agency action and are subject to judicial
review in the United States Court of Appeals under section 307(b) of
the Act. The decision of the EAB to issue or deny the permit is also
subject to judicial review.
Interested persons (including permitees) are authorized to petition
the Administrator to reopen an already issued permit for cause.
Petitions would be required to be in writing and to contain facts or
reasons supporting the request.

F. Permit Fees

Section 71.9 establishes the Federal operating permits program fee
requirements for owners or operators of part 71 sources. The fees must
be sufficient to cover the permits program costs, including the
following:
1. Reviewing and acting on any permit, permit revision, or permit
renewal, and processing permit reopenings.
2. Administering the permit program.
3. Implementing and enforcing the terms of any part 71 permit.
4. Monitoring, modeling, manipulating, and tracking emissions.
5. Providing support to small business stationary sources.
Consistent with the two-phased approach to part 71 promulgation
described in this notice, EPA is today implementing a two-phased
approach to part 71 fee requirements. Phase I fee collection will be
sufficient to cover Phase I costs. Since Phase II fee collection is
associated with permit revision procedures, a fee amount for Phase II
cannot be finalized in today's rule. The Phase II fee will add the
costs for the permit revision procedures that are finalized in that
rulemaking.
The dollar per ton fee will vary depending on the implementation
mechanism EPA uses to administer a part 71 program. A program that is
administered completely by EPA would charge $32 per ton per year (ton/
yr). Permit fees for a program for which EPA relies on contractor
assistance to the greatest extent possible would be approximately $57
per ton/yr. Program costs (and fees) would vary among part 71 programs
depending on the hourly rate paid to the contractor for its work on the
particular State's part 71 program. The costs of a program that is
staffed in part by EPA employees and in part by contractors or by the
delegate agency would vary in accordance with the percentage of
personnel time allocated to non-EPA staff and the hourly rate paid to
the contractor for its work on the State's part 71 program.
The EPA may suspend collection of part 71 fees for part 71 programs
which are fully delegated to States and for which EPA incurs no
administrative costs.
The EPA may promulgate a separate fee schedule for a particular
part 71 program if the Administrator determines that the fee schedule
in the rule does not adequately reflect the cost of administering the
program.
Sources are required to submit fee calculation worksheets and fees
at the same time as their initial permit applications are due and
thereafter on an annual basis.
Part 71 program costs and permit fees will be reviewed by the
Administrator at least every 2 years, and changes will be made to the
fee schedule as necessary to reflect permit program costs.

G. Federal Oversight of Delegated Programs

Section 71.10 establishes the procedures EPA would follow when
delegating the authority to administer a part 71 program to a State,
eligible Indian Tribe, or other air pollution control agency. The EPA
will delegate authority to run the program where possible in order to
take advantage of existing expertise of the delegate agency or where it
seems probable that the delegate agency's submitted part 70 program
will be approved within a short time by EPA, provided in both cases
that the delegate agency has the authority to administer the program
that would be delegated.

[[Page 34209]]

A delegate agency must submit a formal request for delegation and
other documentation that shows the agency or eligible Tribe has
adequate legal authority and capacity to administer and enforce the
part 71 program. If the request for delegation is accepted, EPA and the
delegate agency will enter into an agreement that sets forth the terms
and conditions of the delegation.
As part of its oversight of delegated programs, EPA would review
copies of applications, compliance plans, proposed permits and final
permits that the delegate agency would be required to send to EPA. The
EPA would have 45 days in which to review proposed permits. If EPA
objects to the issuance of a permit within that time, the delegate
agency would be required to revise and resubmit the proposed permit to
EPA.
Delegation of a part 71 program would not relieve a State of its
obligation to submit an approvable part 70 program, nor from any
sanctions that the Administrator may apply for the State's failure to
have an approved part 70 program.

H. Enforcement

The Federal enforcement authority available under section 113 of
the Act for violations of title V and the regulations thereunder
provides broader enforcement authority than States are required to have
under the part 70 regulations. Examples of the Federal enforcement
authorities available under the Act include, but are not limited to,
the authority to: (1) restrain or enjoin immediately any person by
order or by suit in court from engaging in any activity in violation of
the Act that is presenting an imminent and substantial endangerment to
the public health or welfare, or the environment; (2) seek injunctive
relief in court to enjoin any violation of the Act; (3) issue
administrative orders that assess civil administrative penalties; (4)
assess and recover civil penalties; and (5) assess criminal fines.

III. Significant Changes to the Proposed Regulations

A. Section 71.2--Definitions

The Agency has adopted definitions in today's rulemaking that are
consistent with and are mainly modelled on corresponding definitions in
the current part 70 rule, rather than on the part 71 proposal.
Consequently, many of the definitions adopted today differ from those
contained in the part 71 proposal which were largely based upon the
August 1994 proposed revisions to corresponding definitions in part 70
which the Agency is not yet prepared to finalize.
Several definitions found in the proposed section 71.2 have been
revised to conform more closely to the definitions used in the current
part 70 rule. These include ``affected State,'' ``applicable
requirements,'' ``final permit,'' ``major source,'' ``permit
revision,'' ``permitting authority,'' and ``responsible official,''
each of which is discussed briefly below. Similarly, EPA adopted
definitions for ``permit modification'' and ``section 502(b)(10)
change'' from the current part 70 rule, because these terms are
integral parts of today's rulemaking, which is based on the existing
part 70 regulations. Also, several definitions in the part 71 proposal
describe terms and concepts that the Agency has concluded are either
not necessary or are not ready to be finalized in today's rulemaking.
The terms for which EPA has not adopted a definition include
``insignificant activity or emissions,'' ``major new source review,''
``minor new source review,'' ``potential to emit,'' ``title I
modification,'' and ``Tribal area.'' To the extent these proposed terms
were based on the August 1994 proposed revisions to part 70, EPA will
finally address them in the Phase II rulemaking.
In addition, the Agency has retained several definitions found in
the part 71 proposal that are not found in the current part 70 rule,
but are needed for part 71. These include definitions for ``delegate
agency,'' ``part 71 permit,'' ``part 71 program,'' and ``part 71
source.'' The Agency has also adopted definitions for ``eligible Indian
Tribe,'' ``Federal Indian reservation,'' and ``Indian Tribe,'' which
were added to clarify which Tribes would be eligible to receive
delegation of the part 71 program and to be considered ``affected
States.''
The part 71 proposal and the August 1995 supplemental proposal
reflect the Agency's position on what definitions would be appropriate
in conjunction with the permit revision procedures, operational
flexibility provisions, and other provisions that have been proposed
for finalization in the Phase II rulemaking. Subsequent to reviewing
all of the comments on both of these proposals, EPA may finalize
definitions that differ from those adopted today.
1. Affected States
a. Indian Tribes. The EPA received numerous comments from Indian
Tribes suggesting that federally recognized Indian Tribes should be
considered to be ``affected States'' if their air quality may be
affected or the Tribal area is contiguous to the State in which the
permittee is located or is within 50 miles of the permittee. They
contended that Tribes should not have to meet any type of eligibility
criteria in order to be considered an ``affected State.'' Contrary to
the view of these commenters, the EPA interprets section 301(d)(2) of
the Act as authorizing the Agency to treat Indian Tribes in the same
manner as a State for purposes of being an ``affected State'' only when
EPA has determined that the Indian Tribe has demonstrated that it has
met the eligibility criteria of section 301(d)(2) of the Act. The
second paragraph of the proposed definition of ``affected State'' was
inconsistent with this interpretation in that it would have treated
Tribes in the same manner as States if the permitting action concerned
a source located in a Tribal area, regardless of the Tribe's
eligibility status. Therefore, EPA has amended this paragraph to
include the same eligibility requirement as the first paragraph. That
is, that the Indian Tribe must have demonstrated that it has met the
eligibility criteria of section 301(d)(2). However, in the interest of
furthering government-to-government relationships with Tribes, EPA has
adopted a provision in section 71.8 that requires the part 71
permitting authority to provide notice of draft permits to any
federally recognized Indian Tribe whose air quality may be affected by
the permitting actions and whose reservation or Tribal area is
contiguous to the jurisdiction in which the part 71 permit is proposed
or is within 50 miles of the permitted source. (See discussion at
section III.G. of this notice.)
b. Local agencies. The proposed definition of ``affected State'' in
the part 71 proposal added language not found in the current part 70
definition of ``affected State'' to the effect that, when a part 71
permit, permit modification, or permit renewal is proposed for a source
located within the jurisdiction of a local agency, that agency would be
considered an affected State. Today's rulemaking retains this approach
because it pertains to a situation which is unique to part 71, i.e.,
when EPA administers a part 71 program in an area where the local
agency would normally be the permitting authority of record under an
approved part 70 program. The proposal also differed from today's
rulemaking in that under the proposal, local agencies would not
otherwise be considered affected States. Since the approach taken to
such jurisdictions is an issue for both parts 70 and 71, it will be
addressed in the Phase II rulemaking. In the interim, the proposed
language has been deleted to comport with the current part 70
definition.

[[Page 34210]]

2. Applicable Requirements
The part 71 proposal expanded the part 70 definition of
``applicable requirement'' to include the provision that any
requirement enforceable by the Administrator and by citizens under the
Act which limits emissions for the purpose of creating offset credits
or avoiding any applicability requirement is itself an applicable
requirement. This addition, while helpful for understanding what
constitutes an applicable requirement, was based on the August 1994
proposed revisions to part 70, which EPA is not yet prepared to finally
promulgate. As such, EPA believes it is not appropriate to finalize
this change for purposes of part 71 at this time, but intends to
address this issue in the Phase II rulemaking. It was therefore deleted
to comport with the current part 70 definition.
The definition of ``applicable requirement'' in the part 71
proposal also differed from the definition in the current part 70 rule
in that it limited the title VI requirements that would have to be
included in a title V permit. This proposed language, while consistent
with the August 1994 proposed revisions to part 70, which, again, EPA
is not yet prepared to finalize, was removed so that the definition
would conform to the definition in the current part 70 regulation.
3. Final Permit
The proposal contained a proposed definition of ``final action or
final permit action.'' The final rule changes this term to ``final
permit'' in order to better harmonize the definition with the term
``final permit'' in the current part 70 regulation promulgated at
section 70.2.
4. Major Source
The proposed part 71 rule contained a definition of ``major
source'' that was based on the proposed change to the term contained in
the August 1994 proposed revisions to part 70. Since publication of the
part 71 proposal, EPA has also proposed additional changes to the term
in the August 1995 supplemental proposal for parts 70 and 71. The EPA
is currently in the process of reviewing, evaluating and developing
positions in response to comments on this very important term and other
issues raised in the August 1995 proposal. Consequently, EPA is not yet
prepared to promulgate part 71 in general, or the major source
definition in particular, as based on the August 1994, April 1995 or
August 1995 proposals. The only exception to this approach is in regard
to source categories for which fugitive emissions are to be counted in
determining whether a source is a major source under section 302 of the
Act.
Consistent with PSD and nonattainment NSR, current part 70 requires
the counting of fugitive emissions from source categories which have
been listed pursuant to section 302(j) in major source applicability
determinations. See the definition of ``major source'' at 40 CFR
section 70.2. The one difference, however, between the list of source
categories under PSD and nonattainment NSR and current part 70 is in
regard to the 27th category of sources that are required to count
fugitive emissions. In parts 51 and 52, the 27th category is stated as
follows:

Any other stationary source category which, as of August 7,
1980, is being regulated under section 111 or 112 of the Act.

In current part 70, the 27th category reads as follows:

All other stationary source categories regulated by a standard
promulgated under section 111 or 112 of the Act, but only with
respect to those air pollutants that have been regulated for that
category;

As can be seen from the above, one of the principal differences
between these two paragraphs is the date of August 7, 1980, which is
specified in the PSD and nonattainment NSR regulations, but is absent
from the current part 70 regulation. The result of this difference is
that part 70 literally requires sources to count fugitives even where
those sources are not required to do so in determining whether they are
major for purposes of PSD or nonattainment NSR. As stated in the
preamble to the August 1994 part 70 proposal, EPA acknowledges that it
did not follow the procedural steps necessary under section 302(j) to
expand the scope of sources in this category for which fugitives must
be counted in part 70 major source determinations. See memorandum of
June 2, 1995, entitled ``EPA Reconsideration of Application of
Collocation Rules to Unlisted Sources of Fugitive Emissions for
Purposes of Title V Permitting,'' from Lydia Wegman, Deputy Director,
Office of Air Quality Planning and Standards, to Regional Air
Directors. Instead of perpetuating this problem by following this
aspect of current part 70, and even though the Agency is not yet ready
to finalize the approach taken in the August 1995 supplemental proposal
for parts 70 and 71, EPA believes that an appropriate interim solution
is to finalize this category similar to how it was proposed in the
April 1995 part 71 proposal and consistent with the provisions in the
PSD and nonattainment NSR regulations. As a result, the 27th category
will read as follows:

Any other stationary source category which, as of August 7,
1980, is being regulated under section 111 or 112 of the Act.

Use of the above language best ensures that, until EPA is prepared to
finalize part 70's proposed revisions, there will be no discrepancy
between the treatment of fugitive emissions under PSD and nonattainment
NSR and the corresponding provision in this phase I part 71 rule. This
language further ensures that sources which are considered major
sources under PSD and nonattainment NSR are also major sources under
part 71. This consistency is compelled by section 501(2) which requires
any stationary source to be considered major under title V if it is a
major source under section 112 or a major stationary source under
section 302 or part D of title I.
It is important to remember that EPA has proposed additional
modifications to the list of source categories, including this 27th
category, in the August 1995 proposal for parts 70 and 71. However, as
EPA is currently in the process of reviewing and evaluating comments
regarding these revisions, EPA cannot at this time finalize any of
these proposed modifications.
The EPA stresses that the definition of major source in today's
rulemaking does not constitute a decision to reject other proposed
changes to the term contained in the recent proposals. Rather, EPA
expects the Phase II part 71 rulemaking to make whatever changes to the
term are necessary in order to maintain harmonization with part 70, if
the part 70 definition of major source is ultimately revised as the
Agency intends. In the meantime, however, in order to avoid delay in
fulfilling the Agency's responsibilities under title V, and in order to
avoid repeating a procedural mistake that occurred in the development
of the first part 70 rule, EPA has concluded, in response to the
commenters, that at this point it is most reasonable to promulgate a
definition that is consistent with the major source definition
contained in the current part 70 rule, except for the 27th category of
sources listed pursuant to section 302(j). As EPA has already told
States that they may receive interim approval of their State programs
even if they do not literally match with current part 70's 27th
category, due to EPA's concession that the Agency did not take the
procedural steps necessary in part 70 to constitute a section 302(j)
rulemaking, EPA believes it is reasonable to take this limited
departure from part 70. The EPA will respond to specific comments on

[[Page 34211]]

the major source definition as proposed in April 1995 and August 1995
in the context of finalizing the Phase II part 71 rule.
5. Permit Modification and Permit Revision
For the purposes of this rulemaking, EPA adopted the definition of
permit modification in the current part 70 regulation and revised the
definition of ``permit revision'' to be consistent with the current
part 70 definition.
6. Permitting Authority
The final rule changes the proposed definition of ``permitting
authority'' to more closely match the definition of the term currently
promulgated at section 70.2.
7. Potential to Emit
Today's rule does not include a final regulatory definition of the
term ``potential to emit.'' The part 71 proposal contained a proposed
definition of potential to emit that was based on the August 1994
proposed revisions to part 70. The current part 70 definition of the
term provides that physical or operational limits on a source's
capacity to emit an air pollutant shall be considered part of the
source's design if the limitation is enforceable by the Administrator.
Under the proposed definition, the phrase ``and by citizens under the
Act'' would have been added. The EPA is still in the process of
evaluating comments on the proposed revisions to part 70 with respect
to this issue, and is not yet prepared to adopt the revision to the
definition into a final rule. Consequently, it is premature to adopt
this change into the final part 71 rule at this time.
In addition, EPA also received substantial adverse comment on the
proposed requirement that limitations on potential to emit be
enforceable by the Administrator (i.e., ``federally enforceable'').
Industry commenters noted that EPA's policy on Federal enforceability
was the subject of several pending lawsuits against the Agency in the
Court of Appeals. These commenters have long held that emissions
limitations enforceable under State law should not have to be federally
enforceable in order to be considered part of a source's physical or
operational design and a valid limit on potential to emit. These
commenters also urged EPA to codify the Agency's January 25, 1995,
memorandum in which EPA stated it would not require certain sources
that otherwise have the potential to emit an air pollutant in major
amounts to obtain permits under state part 70 programs. See, memorandum
of January 25, 1995, 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),'' from John Seitz, Director, Office of Air Quality
Planning and Standards, to Regional Air Division Directors (hereafter
``January 25, 1995 memorandum from John Seitz'').
Since the close of the comment period, the U.S. Court of Appeals
for the District of Columbia Circuit has ruled on two occasions that
EPA in two separate regulations had failed to explain why the Agency
had adopted a restrictive interpretation of ``potential to emit.'' See
National Mining Association v. EPA, 59 F.3d 1351 (D.C. Cir. July 21,
1995), and Chemical Manufacturers Association v. EPA, No. 89-1514 (D.C.
Cir. Sept. 15, 1995). In response to these rulings, EPA has begun a
rulemaking effort that would consistently apply to all of its
regulations and programs that base applicability on sources' potential
to emit. This rulemaking will address potential to emit not only in the
regulations that were the subject of the two court rulings (EPA's
``General Provisions'' regulations under section 112 of the Act
promulgated at 40 CFR part 63, and the NSR and PSD regulations at parts
51 and 52), but also to parts 70 and 71.
In the meantime, however, the Agency believes it would not be
appropriate to delay issuance of the part 71 regulation (and
implementation of the Federal operating permit program in States that
have not yet obtained part 70 approval) due to the pendency of the
Agency's general potential to emit rulemaking. At the same time, EPA
does not believe it would be appropriate to merely recodify the part 70
definition of potential to emit in this Phase I part 71 rule, in light
of the recent court decisions concerning the section 112 and NSR and
PSD regulations. Consequently, for this interim part 71 rule, EPA is
not adopting a regulatory definition of potential to emit for purposes
of part 71. This definition will be added to part 71 at a later time,
when the Agency completes its general rulemaking to define potential to
emit for its various stationary source programs under the Act.
Nevertheless, the absence of a regulatory definition of potential
to emit in today's rule should not prevent sources from being able to
determine whether they are subject to the part 71 program because they
are major sources. The EPA stresses that the term ``major source'' is
already defined as a statutory matter in title V at section 501(2) of
the Act to mean a major source as defined in section 112 and a major
stationary source as defined in section 302 or part D of title I of the
Act. Moreover, the definition of major source adopted today also tracks
these statutory provisions, and, as discussed in the recent memorandum
entitled ``Interim Policy on Federal Enforceability Requirement for
Limitations on Potential to Emit,'' from John Seitz, Director, Office
of Air Quality Planning and Standards (hereafter January 22, 1996
memorandum from John Seitz), most current regulatory requirements and
policies regarding potential to emit, including the interim policy
discussed in the January 25, 1995 Seitz memorandum, remain in effect
while EPA conducts expedited rulemaking to address these issues in
detail. Consequently, in determining whether a source is major, the
part 71 permitting authority and source operator should look to the
regulatory definition of major source adopted in today's rule and the
statutory definitions in section 112, section 302, and part D of title
I (as those provisions are implemented by applicable regulations
thereunder) as controlling for purposes of this Phase I part 71 rule.
In National Mining Association v. EPA, 59 F.3d 1351 (D.C. Cir. July
21, 1995), the Court dealt with the potential to emit definition under
the hazardous air pollutant programs promulgated pursuant to section
112. In this decision, the Court agreed with EPA that only
``effective'' State-issued controls should be cognizable in limiting
potential to emit. In addition, the Court did not question the validity
of current federally enforceable mechanisms in limiting potential to
emit. However, the Court found that EPA had not adequately explained
why only federally enforceable measures should be considered in
assessing the effectiveness of State-issued controls. Accordingly, the
Court remanded the section 112 General Provisions regulation to EPA for
further proceedings. Thus, EPA must either provide a better explanation
as to why Federal enforceability promotes the effectiveness of State
controls, or remove the exclusive Federal enforceability requirement.
The Court did not vacate the section 112 regulations, and they remain
in effect pending completion of EPA rulemaking proceedings in response
to the Court's remand.
The EPA reiterates that independent from the decision in National
Mining, current EPA policy already recognizes State-enforceable
potential to emit limits under section 112 and title V in many
circumstances under the

[[Page 34212]]

transition policy discussed in the January 25, 1995 John Seitz
memorandum, as recently revised by the January 22, 1996 John Seitz
memorandum. In recognition of the absence in some States of suitable
federally enforceable mechanisms to limit potential to emit applicable
to sources that might otherwise be subject to section 112 major source
requirements or to title V, EPA's policy provides for the consideration
of State-enforceable limits as a gap-filling measure during a
transition period that extends until January 1997. Under this policy,
restrictions contained in State permits issued to sources that actually
emit more than 50 percent, but less than 100 percent, of a relevant
major source threshold are treated by EPA as acceptable limits on
potential to emit, provided that the permit and the restriction in
particular are enforceable as a practical matter. In addition, sources
with consistently low levels of actual emissions relative to major
source thresholds can avoid section 112 major source requirements even
absent any permit or other enforceable limit on potential to emit.
Specifically, the policy provides that sources which maintain their
emissions at levels that do not exceed 50 percent of any applicable
major source threshold are not treated as major sources and do not need
a permit to limit potential to emit, so long as they maintain adequate
records to demonstrate that the 50 percent level is not exceeded.
Under today's Phase I part 71 rule, sources that are not treated as
major under this policy would also not be treated as major for purposes
of part 71. However, if a source would be treated as major under the
applicable regulations implementing section 112 and this policy, the
source would be required to obtain a part 71 permit. The EPA notes that
this policy is to end in January 1997. In conjunction with the general
rulemaking on potential to emit, EPA will consider whether it is
appropriate to extend the transition period beyond January 1997.
In Chemical Manufacturers Association v. EPA, No. 89-1514 (D.C.
Cir. Sept. 15, 1995), the Court addressed the potential to emit
definition in the PSD and NSR programs. Specifically, this case
challenged the June 1989 rulemaking in which EPA reaffirmed the
requirement for Federal enforceability of potential to emit limits
taken to avoid major source permitting requirements in these programs.
In a briefly worded judgment, the Court, in light of National Mining,
remanded the PSD and NSR regulations to EPA. In addition, in contrast
to its disposition of the section 112 regulations in National Mining,
the Court in Chemical Manufacturers vacated the federal enforceability
requirement of the potential to emit definitions in the PSD and NSR
regulations.
The EPA interprets the Court's decision to vacate the PSD/NSR
Federal enforceability requirement as causing an immediate change in
how EPA regulations should be read, although EPA expects that the
effect of this change will be limited. Specifically, regarding
provisions of the definitions of potential to emit and related
definitions requiring that physical or operational changes or
limitations be ``federally enforceable'' to be taken into account in
determining PSD/NSR applicability, the term ``federally enforceable''
should now be read to mean ``federally enforceable or legally and
practically enforceable by a State or local air pollution control
agency.''
However, the effects of the vacatur will be limited during the
period prior to completion of new EPA rulemaking on this issue. Thus,
during this interim period, Federal enforceability is still required to
create ``synthetic minor'' new and modified sources in most
circumstances pending completion of EPA rulemaking. This is because EPA
interprets the order vacating certain provisions of the PSD/NSR
regulations as not affecting the provisions of any current State or
Federal implementation plan (SIP or FIP), or of any permit issued under
any current SIP or FIP. Thus, previously issued federally enforceable
permits issued under such programs remain in effect.
Moreover, new or modified sources that seek to lawfully avoid
compliance with the major source requirements of PSD or nonattainment
NSR by limiting potential to emit to achieve synthetic minor status
must still obtain a general or ``minor'' NSR preconstruction permit
under section 110(a)(2)(C) of the Act and 40 CFR section 52.23. (This
requirement was not at issue in the Chemical Manufacturers case, and is
unaffected by the Court's ruling.) Every SIP contains a minor NSR
program that applies generally to new or modified sources of air
pollutants, and permits issued under such programs are, like all other
SIP measures, federally enforceable. In sum, the precise impact of the
vacatur on PSD/NSR applicability in any State, and hence the
applicability of part 71 under the section 302 and part D of title I
prongs of the definition of major source adopted in part 71, can be
definitively established only by reviewing the provisions of the
particular SIP or FIP to which the source is subject.
8. Regulated Air Pollutant
In the August 1995 supplemental proposal, EPA proposed a less
inclusive definition than is currently promulgated in part 70 or was
proposed for part 71 in the April 1995 notice. However, for purposes of
today's rulemaking, EPA is retaining the definition in the part 71
proposal, which is consistent with the current part 70 definition. The
EPA intends to take final action on the term as proposed in the
supplemental proposal in the Phase II rulemaking.
9. Responsible Official
Although EPA has proposed, in the August 1994 proposed revisions to
part 70, to clarify that the criteria for selecting the designated
representative is the same at an affected source as at other sources,
the Agency has adopted a definition of this term for purposes of
today's rulemaking that is consistent with the definition in current
part 70. The EPA will take final action in Phase II consistent with the
Agency's final resolution of this issue in response to comments on the
August 1994 notice.
10. Section 502(b)(10) Changes
The part 71 proposal, in omitting the definition of ``section
502(b)(10) changes'' from section 71.2, followed the approach used in
the August 1994 proposed revisions to part 70. The Agency's reasons for
the omission are articulated in that proposal at 59 FR 44467-8. As
indicated in the August 1995 supplemental proposal, this is still the
Agency position. However, EPA will not adopt a final position on
proposed revisions regarding operational flexibility for part 70 or 71
until the Phase II rulemaking. For purposes of today's rulemaking, EPA
has adopted a definition of the section 502(b)(10) changes that
comports with the current part 70 regulation, in order to better
harmonize the Phase I part 71 rule and the current part 70 regulation.
11. Title I Modification
The part 71 proposal, based on the August 1994 proposed revision to
part 70, contained a proposed definition of the phrase ``Title I
modification or modification under any provision of title I of the
Act.'' Subsequently, EPA issued a revised proposed definition in the
August 1995 supplemental proposal for parts 70 and 71. The EPA is in
the process of reviewing and developing a position in response to the
comments on the several proposals with respect to this issue, and is
not yet prepared to define the term in a final rule. The EPA will add a
definition in the Phase II rulemaking that is consistent with how

[[Page 34213]]

EPA ultimately defines the term under part 70.
A detailed discussion of the history of this definition is
contained in the preamble to the August 1995 part 70 proposal (60 FR
45545). At issue is whether the phrase ``modifications under any
provision of title I'' as used in section 502(b)(10) of the Act
includes not only modifications subject to major NSR requirements of
parts C and D of title I but also modifications subject to minor NSR
programs established by the States pursuant to section 110(a)(2)(C).
In August 1994, EPA proposed to interpret the title I modification
language of part 70 to include minor as well as major NSR modifications
(55 FR 44527). The EPA received many comments from industry and States
contesting this interpretation. The commenters argued that EPA had
defined title I modification in the preamble to the May 1991 proposed
part 70 rule to exclude minor NSR (56 FR 21746-47 and footnote 6) and
did not redefine it in the final July 1992 rule. As a result, they
argued that they were relying on the current rule to be interpreted
consistent with the proposed rule preamble and that EPA could not
change its interpretation without undertaking further rulemaking.
Based in part on the arguments raised by commenters, EPA revised
its proposed interpretation of the definition of title I modification
in the August 1995 supplemental notice to exclude modifications subject
to minor NSR. In addition, EPA proposed regulatory language defining
title I modification which excluded the reference to section 110(a)(2)
of the Act.
While EPA is not yet prepared to adopt a final definition for the
term, in implementing the Phase I part 71 program EPA will treat the
issue consistently with the approach the Agency has advised States to
take under the current part 70 regulation. Consequently, it will not
consider title I modifications to include changes subject to State
minor NSR programs.

B. Section 71.3--Sources Subject to Permitting Requirements

The final rule promulgates provisions regarding applicability of
the program at section 71.3. These provisions are based on their
counterparts in the currently promulgated part 70 rule at section 70.3.
Consequently, in several aspects, they differ from section 71.3 as
proposed, which was based on the August 1994 proposed revisions to
section 70.3 which the Agency is not yet prepared to finalize.
Paragraph (a)(1) of the part 71 proposal contained an exemption
from title V for major sources that would be subject to title V only if
they have the potential to accidentally release pollutants listed
pursuant to section 112(r)(3) in major amounts. This exemption has been
deleted, even though it garnered reviewer support, consistent with the
decision to match the part 70 requirements except where unique
circumstances make a change necessary. If EPA ultimately revises part
70 to add the deleted language, the Agency would intend to revise part
71 consistently.
Proposed section 71.3(a)(4) which was modelled upon the August 1994
proposed revisions to part 70 and would have stated that any source
subject to title I parts C or D would be required to obtain a permit
was also deleted from the final regulation to comport with the part 70
regulation. The purpose of this provision was to ensure that all
sources subject to preconstruction permitting as major sources under
parts C or D of the Act are also subject to title V permitting. Again,
if part 70 is ultimately revised to add this provision, EPA would
intend to revise part 71 to add it as well.
Similarly, paragraph (b)(2) has been changed to conform with
section 70.3(b)(2), which addresses applicability for sources subject
to section 111 or 112 standards promulgated after July 21, 1992.
Proposed section 71.3(b)(2) differed from both existing section
70.3(b)(2) and the August 1994 proposed revisions thereto. If section
70.3(b)(2) is ultimately revised, EPA would expect to revise section
71.3(b)(2) to harmonize it with part 70.
Paragraphs (c) and (d) of this section, found in the proposal at
sections 71.6(a)(1)(iv) and 71.5(f)(3)(i), respectively, were moved to
this section for compatibility with the current part 70 provisions at
sections 70.3 (c) and (d).

C. Section 71.4--Program Implementation

The major issues raised by commenters on proposed section 71.4
related to the need to base part 71 on finalized (as opposed to
proposed) provisions of part 70, how the part 71 program should be
customized to fit the unique needs of the State or area for which the
program is administered, and jurisdictional issues with respect to
programs on Tribal lands. The Agency's approach to the first issue is
discussed at length in section II of this document. This section
addresses the second and third issues in addition to several minor
changes to the proposed rule that were adopted today.
1. National Template Approach
With respect to the second issue, EPA received divergent comments.
For example, commenters suggested that a national template should be
flexible, that a national template should be used only to fill in the
gaps of deficient State programs, and that there should be no national
template because title V does not authorize EPA to develop such a rule.
The Agency carefully considered the statutory framework for the
program and interprets title V as authorizing a national template
approach. For a further discussion of this issue, see section II of
this document. The EPA chose a national template approach because EPA
believes the national template is flexible enough to be an effective
program in nearly all areas, and individual rulemakings for each area
that has a part 71 program would be needlessly burdensome on the
Agency. Since the national template will serve the needs of most areas,
it is more efficient to promulgate the program once while allowing for
separate rulemakings, as needed, in some areas. The EPA recognizes the
desirability of providing a flexible approach to administering the
program, as the commenters have suggested, when the national template
does not adequately fit the unique State or Tribal situation. Such
flexibility is already contained in section 71.4. When EPA determines
that the national template rule is not appropriate for a State, EPA may
adopt, through a separate rulemaking, appropriate portions of a State
or Tribal program in combination with provisions of part 71 in order to
craft a suitable part 71 program, as provided in section 71.4(f).
Furthermore, section 71.9(c)(7) provides that when the national fee
structure would not reflect the cost of administering a part 71
program, the Administrator shall through a separate rulemaking set an
appropriate fee. Finally, as provided in section 71.5 and as discussed
in section III.D of this document, EPA has designed part 71 to provide
significant flexibility to accommodate the localized air quality
issues. For example, EPA will use State application forms whenever
possible and will try to match the list of trivial activities which may
be left off application forms to the lists established in the State
operating permit program.
2. Part 71 Programs in Tribal Areas
The EPA is deferring promulgation of regulations that would
describe how the Agency would determine the boundaries of a part 71
program for a

[[Page 34214]]

Tribal area. The EPA has published a proposed rule, pursuant to section
301(d)(2) of the Act, specifying the provisions of the Act for which
EPA believes it is appropriate to treat Indian Tribes in the same
manner as States and outlining the Agency's position on the authority
of Indian Tribes to administer air programs under the Act. See 59 FR
43956 (Aug. 25, 1994)(``Indian Tribes: Air Quality Planning and
Management,'' hereafter ``proposed Tribal rule''). As indicated in the
part 71 proposal, EPA intends to follow the approach of the Tribal rule
with respect to issues of jurisdiction and resolution of jurisdictional
disputes. The EPA agrees that it would be more practical to defer
addressing jurisdictional issues until the promulgation of the Tribal
rule. The Agency will finalize an approach to jurisdiction as well as a
definition of Tribal area in the Phase II rulemaking or in conjunction
with finalizing the Tribal rule. In the interim, the Agency will not be
able to implement part 71 programs in Tribal areas unless it completes
a rulemaking that establishes the boundaries of the part 71 program in
the Tribal area. Rulemakings for the Tribal rule and Phase II will be
completed well in advance of the November 1997 deadline for EPA to
implement part 71 programs on Tribal lands. Therefore, EPA does not
expect that the deferral of jurisdictional issues will delay
implementation of the part 71 program. Although part 71 contains no
definition of ``Tribal area,'' EPA will provide (and will require
delegate agencies to provide) notice of proposed permitting actions
pursuant to section 71.8(d) even prior to the Phase II rulemaking. In
the interim, federally recognized Indian Tribes will receive notice
with respect to permitting actions related to sources whose emissions
may affect Tribal air quality and that are located in contiguous
jurisdictions or are within 50 miles of the exterior boundaries of the
reservation.
3. Expiration of Part 71 Permits
The Agency received comments suggesting that part 71 permits should
be rescinded automatically, without the Agency taking any action, when
they are replaced by a part 70 permit. The EPA agrees that no separate
agency action should be required when a part 71 permit is replaced by a
part 70 permit issued under the approved part 70 program because unless
the rescission happens simultaneously with the issuance of the part 70
permit, a source could be subject to a part 70 and a part 71 permit
which may contain different requirements. Accordingly, EPA has deleted
proposed section 71.4(l)(3) which provided that the Administrator would
rescind part 71 permits when they were replaced with part 70 permits.
Further, the EPA has adopted section 71.6(a)(11) which provides that
part 71 permits shall contain a provision to ensure that a part 71
permit will expire when the source is issued a part 70 permit.
4. Suspension of Issuance of Part 71 Permits
The EPA revised the first paragraph of proposed section 71.4(l) to
clarify, consistent with EPA's original intent, that EPA may suspend
issuance of part 71 permits whenever the Agency has granted full or
interim approval to a State part 70 program. Section 502(e), which
addresses suspension of the issuance of part 71 permits, provides that
the triggering event for suspension is publication of notice of
approval. Thus, there is no statutory requirement that a State program
must ``fully'' meet the requirements of part 70 or be fully approvable
in order for EPA to suspend permit issuance. The Agency believes it is
appropriate to suspend issuance of part 71 permits when a State program
substantially meets the requirements of part 70 and has received
interim approval because it would be confusing and burdensome to have
two title V permit programs operating simultaneously in the same
jurisdiction. Therefore, EPA has deleted the word ``fully'' from the
first paragraph of proposed section 71.4(l).
5. Delegation Agreements
The final rule makes a minor change to proposed section 71.4(j) in
parallel with a change to proposed section 71.10(b) to reflect the fact
that under the final rule, EPA will not publish its delegation
agreement with a delegate agency. Therefore, section 71.4(j) provides
that the roles of the delegate agency and EPA in administering the part
71 program will be defined in a delegation agreement, not in a Federal
Register notice. The EPA will follow the procedures for delegation
agreements established for the PSD program under which EPA does not
publish its delegation agreements. Delegation agreements reflect the
understanding of EPA and the delegate agency as to their respective
responsibilities and are not subject to any notice requirement. This
approach allows EPA and the delegate agency to modify their agreement
as circumstances change, without the burden of publishing a Federal
Register notice.
6. Early Reductions Permits
The Agency retained in section 71.4(i)(3) the requirement that the
permitting authority take action on complete permit applications
containing an early reduction demonstration within 12 months of receipt
of the complete application. Although the current part 70 regulation
sets a 9 month deadline for State action, EPA Regional offices are
allowed 12 months to take action on the permit applications submitted
under the interim permitting rule for early reduction sources that EPA
adopted prior to the approval of any State part 70 programs. See 40 CFR
section 71.26(a)(2). The Agency believes that this time frame is
reasonable given the effort required to process the permits and the
need for sources qualifying for a compliance extension under the Early
Reductions Rule to obtain a permit prior to certain deadlines set by
the rule.

D. Section 71.5--Permit Applications

The part 71 proposal addressed permit applications at proposed
section 71.5 (a) through (i). This proposed section was based upon a
combination of corresponding provisions in the existing part 70 rule
and in the August 1994 proposed revisions to part 70, and was presented
in a slightly different structure from the part 70 rule. In light of
EPA's decision to promulgate part 71 on an interim basis, more
consistently with the existing part 70 rule, the provisions based upon
the August 1994 proposal are not being adopted today. Moreover, in
order to facilitate transition from implementing part 71 to part 70
programs, the final rule is being adopted in a structure that is more
consistent with that of the current part 70 rule.
1. Timely Application
Under section 71.5(b)(1) of the proposal all initial permit
applications would have to be submitted within 12 months or an earlier
date after the source becomes subject to part 71. The proposal would
have required that the permitting authority provide notice of the
earlier date to the source and that this notice would be given at least
120 days in advance of the application submittal date.
Several commenters argued that the 120 days (4 months) minimum
notice would not give sources sufficient time to prepare an
application. They also argued that 4 months was insufficient time for
sources to submit their applications early for purposes of addressing
deficiencies and ensuring they receive the application shield.
In response to these comments, EPA has lengthened the notice period
from 4

[[Page 34215]]

months to 6 months. Section 503(c) of the Act requires the submittal of
all applications within 12 months of the effective date of a permit
program or such earlier date as the permitting authority may establish
and that one-third of these applicants be issued permits in this first
year. In order to issue one-third of the permits in the first year, EPA
must receive at least one-third of the applications prior to 12 months
after the effective date of the program.
The EPA considered and rejected commenters' suggestions for 8 to 12
months' advance notice because they would interfere with EPA's
requirement to issue one-third of the permits in the first year. The
EPA believes that the 6 month alternative will allow EPA enough time to
process and issue permits. The EPA believes that 6 months is sufficient
time for sources to prepare applications for several reasons that had
not been announced at time of proposal. First, on July 10, 1995, EPA
issued the first white paper that examines options for simplifying part
70 permit applications and sets minimum expectations concerning how
much information must be included in order for the application to be
found complete. In today's notice EPA announces its intention to
implement both of the white papers for part 71 program purposes.
Second, EPA has revised the rule to clarify that part 71 permit
application forms may be developed by the delegate agency or the EPA
allowing a part 71 application form to be based on a State form
developed for part 70 purposes, as long as the form meets the minimum
requirements of part 71 (discussed in more detail below). Third,
because the final rule more closely follows the part 70 program upon
which most State operating programs are based, sources will be familiar
with most part 71 permit application requirements.
In addition, proposed sections 71.5(b) (2) and (3) have been
deleted because they referred to off-permit changes and a four-track
permit revision system which the Agency is not finalizing today.
2. Complete Applications
The final rule adopts the language from the current part 70 rule
concerning complete applications. However, EPA believes that several
clarifications will help applicants understand the flexibility
available for submitting simplified permit applications that can be
found complete. The terms ``simplified permit application'' or
``streamlined permit application'' refer to applications that require
less information.
In the part 71 proposal, EPA proposed to adopt language from the
August 29, 1994 part 70 revision notice (59 FR 44518) that would have
clarified that an application would be found complete if it contained
information ``sufficient to begin processing the application.'' As
stated previously, today's rulemaking is based on provisions of current
part 70; therefore, this language does not appear in today's
rulemaking. However, EPA believes, as stated more fully in the first
white paper, that considerable flexibility already exists in the part
70 rule to find simplified permit applications complete. Since the
white papers will be implemented for part 71 purposes, this flexibility
also exists in the part 71 permit program.
Furthermore, the proposed revisions to part 70 (August 29, 1994)
and the part 71 proposal discussed several additional options currently
available to States for developing simplified permit applications and
finding them complete, and did not propose any rule changes necessary
to implement these options. These options were: (1) a two-step
application completeness determination process for simplified
applications and (2) simplified application content requirements for
applicable requirements with future compliance dates. After the
publication of these proposal notices, the first white paper included
these two flexibility options, as well as many additional options, and
reaffirmed EPA's interpretation that implementation of these options
does not depend on making changes to the part 70 rule or State part 70
programs.
The EPA believes this approach will provide flexibility for sources
to prepare simplified permit applications and for permitting
authorities to find them complete. This approach will also promote
consistency between the part 71 and part 70 programs, which in turn,
will provide for a smoother transition between the programs. Guidance
on the implementation of the white papers and other flexibility options
for completeness determinations for a part 71 program implemented in a
particular State may be provided by the EPA or delegate agency soon
after the program takes effect.
Additionally, proposed section 71.5(d), concerning the treatment of
business confidential information, has been revised in the final rule.
The language of the proposal discussed the responsibilities of
permitting authorities to process requests for confidential treatment
and included a general reference to 40 CFR part 2. Considering the
structure of these regulations and this section's position in these
regulations, the Agency believes that the promulgated language
clarifies the procedures that applicants must follow to request
confidential treatment for business information in applications,
provides a more precise cross-reference to those procedures, and does
not add any new requirements regarding the treatment of confidential
information not intended by the proposal.
Note also that certain technical changes are being made to part
71's completeness provisions as a result of the final rule's greater
harmonization with the existing part 70 rule. First, the completeness
criteria are being promulgated at section 71.5(a)(2) while the proposal
addressed completeness at section 71.5(c). In addition, the final rule
references section 71.5(c) as the provision setting out required
information in permit applications, while the proposal referenced
proposed section 71.5(f). Moreover, the final rule cites section
71.5(d) as the provision concerning certification by a responsible
official, while the proposal cited proposed section 71.5(i). Finally,
the citation in the proposal to section 71.7(a)(3) has been changed in
the final rule to section 71.7(c)(4) as a result of the changes to
section 71.7.
3. Standard Application Form and Required Application
Proposed section 71.5(f) would have required part 71 sources to
submit ``applications provided by the permitting authority, or if
provided by the permitting authority, an electronic reporting method''
and did not include any preamble discussion of the interpretation of
this phase. One commenter on the proposal encouraged EPA to use
existing State forms in States where EPA assumes part 71 authority.
Final section 71.5(c) has been revised to more closely follow the
corresponding language of section 70.5(c). The EPA agrees with the
commenter and will provide forms developed by delegate agencies
(States), or the EPA, including electronic application methods, for
purposes of applying for part 71 permits. This approach to application
development is possible because ``permitting authority'' is defined in
section 71.2 as including the EPA or the delegate agency. This approach
to providing part 71 forms will lead to less disruption and a smoother
transition for sources preparing initial part 71 applications because,
in many cases, sources will be familiar with the State form on which
the part 71 form is based. For example, sources may already be
collecting information and drafting an operating permit using the State
form in expectation of part 70 program approval by EPA. In addition,
commenters asked

[[Page 34216]]

that EPA clarify and simplify the requirements for emissions-related
information in part 71 applications consistent with EPA's guidance in
the first white paper. In response to these comments, EPA intends to
implement the white paper guidance with respect to the collection and
reporting of emission-related information and EPA believes that no
changes to part 71 are necessary to do so.
Numerous technical changes have been made to the final rule
regarding information to be required in permit applications to better
match the current part 70 rule. In the proposal, information
requirements were addressed at proposed sections 71.5(f) through (i),
while the final rule follows part 70 by covering these requirements in
sections 71.5(c) and (d). New citations to other provisions of part 71
are also due to the final rule's harmonization with part 70.
4. Insignificant Activities and Emission Levels
Extensive comments were received on the proposed insignificant
activity and emission levels provisions of proposed section 71.5(g).
Commenters argued, in part, that activities subject to applicable
requirements should be eligible for the exemption for insignificant
activities and emission levels, that the requirement that applications
not exclude information needed to determine whether a source is subject
to the requirement to obtain a part 71 permit would be too restrictive,
that the list of insignificant activities in the final rule should be
expanded, that the list of trivial activities in the first white paper
should be codified in part 71, that the exemption for mobile sources as
insignificant activities should be removed, that the single emissions
unit emissions thresholds for insignificant emissions should be raised,
and that the aggregate source-wide emission thresholds for
insignificant emissions should be deleted.
a. Eligibility for Insignificant Treatment and Information Required
in Applications. Section 71.5(c) of the final rule addresses, in part,
information that must not be omitted from permit applications. These
requirements have special relevance for applicants when determining
what information must be included in applications for emission units
that are eligible for insignificant treatment. To be consistent with
current part 70, final section 71.5(c) deletes certain proposed
provisions that do not follow the corresponding language of section
70.5(c) and that were based upon the proposed revisions to part 70
published in August 1994. Accordingly, deleted from final section
71.5(c) is the proposed language that would have not allowed the
application to omit information needed to: (1) Determine whether a
source is major, and (2) determine whether a source is subject to the
requirement to obtain a part 71 permit. Notwithstanding these
deletions, EPA continues to believe that the definition of major source
at section 71.2 controls the determination of which units are counted
for major source applicability purposes and that emissions of units
that qualify for insignificant treatment in the application are not
exempt from these determinations. Consistent with the Agency's approach
in implementing the current part 70 rule, the EPA is reversing its
interpretation, first expressed in the proposed preamble, that would
have excluded the eligibility of activities for treatment as
insignificant when such activities are subject to applicable
requirements. The EPA believes that no change to the final rule is
necessary to implement this new interpretation.
Industry commenters were particularly concerned that EPA's
interpretation that proposed section 71.5(g) would not allow activities
with applicable requirements to be eligible for insignificant treatment
would render the insignificant activity and emissions level provisions
meaningless because few sources would be eligible for streamlined
treatment in the application.
The EPA now believes that it was overly broad in stating that
emission units were precluded from eligibility as ``insignificant'' if
such units would be subject to applicable requirements. As discussed
below, EPA believes there are circumstances in which an emission unit
or activity can be treated as ``insignificant'' under a Federal
operating permits program, even if it is subject to an applicable
requirement. However, a title V application must still contain
information needed to determine the applicability of or to impose any
applicable requirement or any required fee and a permit must still meet
the requirements of section 71.6 for all emission units subject to
applicable requirements, including those eligible for insignificant
treatment.
Both sections 71.5(c) and 71.5(c)(3)(i) require sufficient
information to verify the requirements applicable to the source and to
collect appropriate permit fees.
This means that some of the information required by sections
71.5(c) (3) through (9) may be needed in the permit application for
insignificant activities in order for the permitting authority to draft
an adequate operating permit. As an example, where an insignificant
activity is not in compliance with an applicable requirement at the
time of permit issuance, the permit application would need to contain a
compliance plan, including a compliance schedule, for achieving
compliance with the applicable requirement. As another example, if a
source has some insignificant activities within a category that are
subject to an applicable requirement and some within that same category
that are not subject to that applicable requirement because the
applicability criteria for the applicable requirement are different
from the applicability criteria for insignificant activities, the
permit application would generally be required to include sufficient
information on the insignificant activity for the permitting authority
to determine which units are subject to the applicable requirement and
to include that applicable requirement in the permit for the subject
insignificant activity. The EPA believes that a part 71 permit
application may simply list the applicable requirements that apply to
insignificant activities generally, rather than requiring the permit
application to explicitly identify which insignificant activities are
subject to which applicable requirements. The permitting authority
would then issue a permit imposing the applicable requirements in the
permit, but not specifically identifying which insignificant activities
are subject to those applicable requirements. (For a more detailed
discussion, see the first white paper and the proposed interim approval
and proposed notice of correction for the State of Washington's part 70
program, 60 FR 50166 (September 28, 1995).)
b. Insignificant Activity Lists. Section 70.5(c), in part, allows
States to develop lists of insignificant activities and emission levels
that need not be included in applications and requires activities (or
equipment) exempted due to size or production rate to be listed in the
application. State part 70 program submittals were approved by EPA that
implement this provision in a variety of ways. The structure of the
proposed regulations was based on the structure of these State
implementing regulations, and included a short list of insignificant
activities and provisions setting insignificant emissions levels. The
proposed list of insignificant activities, section 71.5(g)(1), included
a list of specific source categories, activities, or equipment that
could be left off the application. The proposed insignificant

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emissions provisions, section 71.5(g)(ii), allowed sources the
flexibility to treat additional source categories, equipment, or
activities as insignificant, provided certain eligibility criteria were
met, including not exceeding certain emissions levels, and provided
that the activities were listed in the application. The EPA believed
that the proposed insignificant emissions approach was flexible enough
that extensive lists of insignificant activities would not be needed in
the final rule. The EPA reasoned that no list of insignificant
activities would ever be so inclusive as to list every type of activity
potentially eligible for insignificant treatment at industrial sources,
and therefore, additions to the list would require resource-intensive
notice and comment rulemaking on an ongoing basis. The proposal asked
for comment on its approach and asked whether the proposed approach
would be compatible with approaches developed by States.
Numerous industry commenters argued, in general, that the proposed
part 71 list was not extensive enough to provide meaningful relief for
industry from the administrative burdens associated with submitting
detailed information for emission units or activities that pose little
or no environmental risk and that the part 71 list was not as extensive
as lists developed by States for their part 70 programs.
The EPA is finalizing the proposed list of insignificant activities
with one revision. The EPA believes that the commenters' concerns that
there be more opportunities for streamlining the information required
by part 71 permit applications is best addressed by implementing the
white papers for part 71 purposes, and that no changes to the final
rule are necessary to implement this approach. The EPA believes that
the white papers provide for application streamlining that is
comparable and, in many ways, superior to approaches based on omitting
certain emission unit or activities from the application only when
eligibility for insignificant treatment is established in a rule. In
general, the white papers allow sources to provide little or no
detailed source-specific information for emissions units or activities
where the information is not reasonably available and to the extent the
information is not needed to resolve disputed questions of major source
status, applicability of requirements, compliance with applicable
requirements, or needed to calculate fees.
For example, section B.3. Insignificant Activities of the first
white paper allows trivial activities to be completely omitted from
applications. The white paper defines trivial activities as activities
without specific applicable requirements (although they may have
``generic'' applicable requirements, explained below) and with
extremely small emissions and included a list of trivial activities in
Appendix A. Many of the trivial activities identified in the first
white paper are common to State lists of insignificant activities.
Under part 71, sources may rely on this list, and EPA or the delegate
agency may add to it without the need for Federal rulemaking. This
allows EPA to expand the list of trivial activities for a part 71
program in a specific location, consistent with trivial activity lists
established in the State operating permit program, thus tailoring the
program for a specific program implemented in a State.
Also providing considerable streamlining is section B.4 Generic
Grouping of Emission Units and Activities of the first white paper
which allows emissions units or activities with ``generic'' applicable
requirements to be omitted from the application, independent of
eligibility for insignificant treatment. Under this section, sources
may provide little or no detailed source-specific information, even for
units with ``generic'' requirements, provided that the ``generic''
requirements are described in the application such that their scope and
manner of enforcement are clear. ``Generic'' requirements are certain
broadly applicable requirements that apply and are enforced in the same
manner for all subject units or activities and that are often found in
the SIP. Examples of such requirements include requirements that apply
identically to all emissions units at a facility (e.g., source-wide
opacity limits), general housekeeping requirements, and requirements
that apply identical emissions limits to small units (e.g., certain
process weight requirements). Where the applicable requirement is
amenable to this approach, part 71 permitting authorities may follow
this approach regardless of whether subject activities have been listed
as trivial or insignificant. A lengthy list of the types of
requirements suitable for this treatment is not possible here because,
among other reasons, the examples of which EPA is aware are SIP
requirements, and so vary from State to State. The EPA or delegate
agency will decide which SIP requirements can be treated in this
generic fashion for specific locations where part 71 programs are
implemented.
The EPA has determined that the insignificant activity exemption
for air-conditioning units used for human comfort at final section
71.5(c)(11)(i)(B) should be changed to clarify that substances other
than class I or II substances may be regulated under title VI of the
Act. This change is necessary because effective November 15, 1995,
title VI requires recycling or recovery of substitute refrigerants
regardless of whether or not they are ozone depleting substances (Class
I and Class II substances) unless EPA makes a refrigerant-specific
decision that the substitute will not harm human health or the
environment and can, therefore, be vented.
c. Insignificant Emissions Levels. In response to comments, EPA has
revised proposed section 71.5(g)(2)(i), which is section
71.5(c)(11)(ii)(A) of the final rule, to increase the insignificant
emissions threshold for regulated air pollutants other than (HAP) from
a single emissions unit from 1 tpy to 2 tpy and to delete the 1,000
pounds (lb) per year threshold in extreme ozone nonattainment areas.
The EPA believes this decision is appropriate since, as commenters
pointed out, EPA has previously stated in part 70 approval notices that
insignificant emissions thresholds set at 2 tpy would be approvable in
most locations. The EPA believes that due to the similarity between
part 70 and part 71 programs it can logically conclude that this level
is also appropriate for a part 71 program, regardless of where it is
located. This level will provide a measure of additional flexibility
for sources to exempt insignificant activities, thus simplifying the
application, with little additional risk that significant emission
units will be excluded from the application. As further discussed
below, there are several safeguards available in the final rule that
should ensure that significant units are not excluded from applications
due to their eligibility for insignificant treatment. In addition, EPA
is deleting the proposed 1,000 lb per year threshold for extreme ozone
nonattainment areas. This will simplify the rule by setting the same
tpy emission thresholds for attainment and nonattainment pollutants,
while requiring the thresholds in relative terms to be no more than 20
percent of the major source threshold for nitrogen oxides and VOC and 2
percent of the major source threshold for the remaining criteria
pollutants. Two tpy is considered trivial by EPA for all pollutants
other than HAP in relation to major source thresholds in all attainment
or

[[Page 34218]]

nonattainment areas and will not prevent the EPA from collecting
information of a consequential or significant nature. In addition,
these levels are more commonly found in State part 70 programs and
therefore should help to ease the transition from part 71 to part 70
operating permit programs.
In response to comments, EPA has decided to delete the aggregate
source-wide emissions criteria for insignificant emissions of regulated
air pollutants (sections 71.5(c)(11)(ii) (A) and (B) of the final
rule). The EPA proposed these aggregate source-wide emissions criteria
as an additional means to ensure that emissions that might otherwise
trigger the applicability of applicable requirements or major source
status would not be excluded from applications. However, EPA now
believes that the proposed aggregate emissions thresholds would have
significantly limited the value of the insignificant emissions
provisions for most medium to large sources. This deletion should not
impede the permitting authority's ability to write permits which assure
compliance with applicable requirements and the requirements of part
71. The EPA also believes that the utility of aggregate plant-wide
thresholds is negligible because of various other safeguards already
provided in the rule; in particular, section 71.5(c)(11) requires
applications to not exclude information needed to determine the
applicability of, or to impose, any applicable requirement. In
addition, the requirement of section 71.5(c)(11)(ii) that units or
activities with insignificant emissions be listed in the application
provides an opportunity for the permitting authority to review the
source's decisio

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A96-16257. Public record. Not legal advice.