Clean Air Act Proposed Interim Approval of Operating Permit Program; New Jersey

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[NJ001; FRL-5403-8]

Clean Air Act Proposed Interim Approval of Operating Permit

Program; New Jersey

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.

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SUMMARY: EPA proposes source category-limited interim approval of the

operating permit program submitted by the State of New Jersey for the

purpose of complying with federal requirements which mandate that

states develop, and submit to EPA, programs for issuing operating

permits to all major stationary sources and to certain other sources.

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

February 29, 1996.

ADDRESSES: Written comments on this action should be addressed to

Steven C. Riva, Chief, Permitting/Toxics Supports Section, Air

Compliance Branch, at the EPA Region 2 office listed below. Copies of

New Jersey's submittal and other supporting information used in

developing the proposed interim approval are available for inspection

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

Environmental Protection Agency, Region 2, 290 Broadway, 21st Floor,

New York, NY 10007-1866.

FOR FURTHER INFORMATION CONTACT: Ms. Suilin Chan, Air and Waste

Management Division, U.S. Environmental Protection Agency, Region 2,

290 Broadway, 21st Floor, New York, NY 10007-1866, (212) 637-4019.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

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

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

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

approvable state operating permit program and the corresponding

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

withdraw approval of state operating permit programs. These rules are

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

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

issuing operating permits to all major stationary sources and to

certain other sources.

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

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

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

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

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

than one year following receipt of the additional materials. EPA

reviews state operating permit programs pursuant to section 502 of the

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

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

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

approval for a period of up to two years. Additionally, where a state

can demonstrate to the satisfaction of EPA that reasons exist to

justify granting a source category-limited interim approval, EPA may so

exercise its authority. A program with a source category-limited

interim approval is one that substantially meets the requirements of

Part 70 and that applies to at least 60% of all affected sources which

account for 80% of the total emissions within the state. If EPA has not

fully approved a program by November 15, 1995, or by the end of an

interim program, it must establish and implement a federal operating

permit program for that state.

EPA received New Jersey's title V operating permit program

submittal initially on November 19, 1993. However, EPA found that

submittal to be incomplete. In a February 4, 1994 letter to the New

Jersey Department of Environmental Protection (NJDEP), EPA informed New

Jersey of the incompleteness determination and listed the deficiencies

that must be corrected. EPA received New Jersey's

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August 10th, 1995, revised program submittal on August 21, 1995 which

EPA determined to be complete on September 5, 1995.

B. Federal Oversight and Sanctions

Following the granting of final interim approval, if New Jersey

failed to submit a complete corrected program for full approval by the

date six months before expiration of the interim approval or if EPA

disapproved New Jersey's corrected program submittal, EPA would start

an 18-month clock for mandatory sanctions in either situation. If and

when the 18 months expire and New Jersey fails to submit a complete

corrected program to address the deficiencies identified in the interim

approval or identified in the disapproval, whichever the case may be,

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

of the Act. In either case, the sanction would remain in effect until

EPA determines that New Jersey had corrected the deficiencies that

triggered the mandatory sanctions clock. If six months after

application of the first sanction, New Jersey still had not submitted

the requisite complete program, a second sanction would be applied.

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

of New Jersey, both sanctions under section 179(b) would apply after

the expiration of the 18-month period until the Administrator

determines that New Jersey had come into compliance.

In addition, discretionary sanctions may be applied where warranted

any time after an interim approval expires and a state has failed to

submit a timely and complete corrected program or EPA has disapproved a

corrected program. Moreover, if a state does not have in place an

approved full program by the expiration date of its interim approval or

an approved program by the time the federal operating permit program,

to be codified at 40 CFR Part 71, is promulgated, EPA is mandated to

administer and enforce the federal program for that state.

II. Proposed Action and Implications

EPA has concluded that the operating permit program submitted by

New Jersey substantially meets the requirements of title V and Part 70.

Based upon EPA's review of New Jersey's request for source category-

limited interim approval and the substantiation submitted thereto and

of New Jersey's operating permit program in its entirety, EPA proposes

to grant source category-limited interim approval to the New Jersey

program. For detailed information on the analysis of the State's

submission, please refer to the Technical Support Document (TSD)

contained in the docket at the address noted above.

A. Analysis of State Submission

1. Support Materials

Pursuant to section 502(d) of the Act, each state must develop and

submit to the Administrator an operating permit program under state or

local law or under an interstate compact meeting the requirements of

title V of the Act. On November 19, 1993, EPA received the title V

operating permit program submitted by the State of New Jersey and

supplemental information submitted on August 10, 1995, and August 28,

1995. The New Jersey Department of Environmental Protection (NJDEP)

requested, under the signature of the New Jersey Governor's designee,

Commissioner Robert C. Shinn Jr. of the NJDEP, a source category-

limited interim approval of New Jersey's operating permit program with

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

New Jersey.

The following documents which were submitted by the State of New

Jersey in support of its request for a source category-limited interim

approval have been reviewed by EPA and have been found to substantially

meet the Part 70 requirements.

1. Pursuant to 40 CFR Sec. 70.4(b)(1), a complete program

description is presented under Chapter 3 of Volume I providing detailed

discussions on how the state intends to carry out its title V

responsibilities.

2. Pursuant to 40 CFR Sec. 70.4(b)(2), the regulations that

comprise the permitting program is submitted under Appendix A of Volume

II and copies of all applicable state or local statutes and regulations

are included in Appendix C of Volume II.

3. Pursuant to 40 CFR Sec. 70.4(b)(3), a legal opinion from the

State Attorney General is presented in Appendix B of Volume II. New

Jersey has demonstrated that the NJDEP has adequate authority to carry

out all aspects of New Jersey's operating permit program.

4. Pursuant to 40 CFR Sec. 70.4(b)(4), copies of the permit

application forms and relevant guidance that will assist in the State's

implementation of the operating permit program are presented in

Appendices F and G of Volume II. No permit form has been submitted by

New Jersey since each permit will be issued with conditions specific to

the source's operation. The contents of an operating permit is listed

in N.J.A.C. 7:27-22.16.

5. Pursuant to 40 CFR Sec. 70.4(b)(5), a complete description of

the State's compliance tracking and enforcement program is presented in

Chapter 6 of Volume I. This document describes how New Jersey will use

its data management system (AIMS) to track and report enforcement

activities. It also reaffirms New Jersey's commitment to continue to

follow air enforcement strategies stipulated in previous enforcement

agreements it has entered with the EPA.

6. Pursuant to 40 CFR Sec. 70.4(b)(6) and Sec. 70.4(b)(8), a

description of the state permit procedures and a statement on adequate

personnel and funding is presented in Chapter 4 of Volume I. This

chapter describes how the permit application reviews will be

coordinated with the other offices with NJDEP and what the duties of

the agency personnel will be for implementing the program.

7. Pursuant to 40 CFR Sec. 70.4(b)(7), a fee demonstration and a

workload analysis are presented in Appendices D and E of Volume II. New

Jersey adopted the presumptive minimum fee of $25 per ton of pollutant

per year (adjusted by the Consumer Price Index based on the 1989 value)

and is presumed to have adequate funding for the development and

implementation of its operating permit program.

8. Pursuant to 40 CFR Sec. 70.4(b)(9), New Jersey committed to

provide quarterly reports on enforcement activities via its data

management system as discussed in Chapter 5 of Volume I.

9. Pursuant to 40 CFR Sec. 70.4(b)(11), a transition plan is

presented in Chapter 2 of Volume I describing the application submittal

schedule and the permitting timeframe for the initial permits. Also

discussed in this chapter is New Jersey's rationale for requesting

source category-limited interim approval. New Jersey has demonstrated

in this chapter that its operating permit program will meet the 60/80

percent tests which require that the interim program applies to at

least 60% of the total number of Part 70-affected sources in New Jersey

and that these sources account for at least 80% of the total emissions.

2. Regulations and Program Implementation

The State of New Jersey adopted regulations in Subchapter 22 of

Chapter 27 of the New Jersey Administrative Code (N.J.A.C. 7:27-22) for

the implementation of the requirements of 40 CFR Part 70. This rule,

which was initially adopted on October 3, 1994, was re-proposed with

changes and adopted in August 10, 1995. There is sufficient evidence

such as responses to comments showing that the rule adoptions were

procedurally correct as required by 40 CFR Sec. 70.4(b)(2). The New

Jersey operating permit rule which

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contains the lists of exempt activities, insignificant operations, and

two tables of excluded emissions are included in Appendix A of Volume

II. The other applicable state statutes and regulations are included in

Appendix C of Volume II. Based on EPA's review, none of the applicable

state statutes or regulations restricts implementation of the New

Jersey operating permit program. New Jersey's rule meets the main

requirements of Part 70 as described below:

a. Applicability (40 CFR Sec. 70.2 and Sec. 70.3):

(1) New Jersey's rule requires facilities with the potential-to-

emit of any pollutants at major source threshold levels to obtain

operating permits. Facilities subject to requirements that are not

listed in N.J.A.C. 7:27-22.2(a) will not be subject to the New Jersey

operating permit program (i.e., non-major sources subject to Sec. 111

or Sec. 112 of the Act (NSPS or NESHAP)). New Jersey has elected to

defer these non-major sources until EPA completes rulemaking with

respect to future applicability. This is consistent with 40 CFR

Sec. 70.3(b)(1). However, 40 CFR Sec. 70.3(b)(2) states that non-major

sources subject to standards promulgated after July 21, 1992 are

required to obtain an operating permit unless the standard itself

contains specific language that would exempt them from Part 70

requirements. EPA interprets this Part 70 provision to mean that if the

standard were promulgated without the exemption clause, a Part 70

exemption for non-major sources is assumed not to exist and all sources

covered under that standard are required to obtain an operating permit.

Although New Jersey's rule in N.J.A.C. 7:27-22.2(b) alludes to an EPA

rulemaking as the triggering factor for title V applicability to non-

major sources, it does provide NJDEP with the necessary regulatory

authority to permit under Part 70 those non-major sources that are not

exempt from post-1992 standards based on its reference to 40 CFR

Sec. 70.3(b)(2). Therefore, EPA does not find this to be a problem for

granting interim approval. In addition, section 22.5(i) of New Jersey's

rule provides the mechanism under which non-major sources would be

required to submit an application. To ensure that national consistency

is maintained in the implementation of 40 CFR Sec. 70.3(b)(2), EPA will

require New Jersey to submit a commitment in the corrected program

asserting that New Jersey will require non-major sources subject to

section 111 and 112 standards promulgated after July 21, 1992 to apply

for an operating permit as required by the Administrator. Applications

from these sources should be submitted in accordance with the schedule

specified in the standard and/or rulemaking. This commitment must be

submitted in order to receive full program approval.

(2) New Jersey's rule excludes activities such as office equipment,

water storage tanks, and other minimally emitting facilities from the

operating permit application. The entire list of exempt activities is

included in the definition section of the New Jersey rule (N.J.A.C.

7:27-22.1). Since these facilities either do not emit any air

pollutants or are not part of a source's production process, EPA finds

it appropriate to exclude them from the operating permit application.

EPA believes exclusion of the listed activities from the application is

highly unlikely to interfere with determining applicability of or

imposing any applicable requirements. In addition, N.J.A.C. 7:27-

22.6(f)(5) requires that permit applications contain all information

needed to determine the applicability of or to impose any applicable

requirement. Therefore, EPA proposes to approve the list of exempt

activity as defined in N.J.A.C. 7:27-22.1 from New Jersey's operating

permit program. This list may be expanded with prior EPA input and

approval during the state rulemaking process for the rule revision

consistent with 40 CFR Sec. 70.4(i).

(3) Consistent with the Part 70 regulations, New Jersey's rule

requires inclusion of fugitive emissions only if the source belongs to

one of the 27 source categories listed in 40 CFR Sec. 70.2.

(4) New Jersey's rule at N.J.A.C 7:27-22.2 did not include the

``support facility test'' as an additional criterion for separating the

R & D facility from the primary source operation. EPA does not find

this to be an issue for program approval since New Jersey's R&D

definition requires that the R&D facility not be ``engaged in the

manufacture of products for commercial sale, except in a de minimis

manner''. However, it is EPA's understanding of New Jersey's intention

that if the R&D facility is not connected to the manufacturing process

except in a de minimis capacity that the R&D facility would not be a

support facility to the manufacturing process. Thus, if the R&D

facility is contributing to the manufacturing process in a material,

rather than de minimis capacity, it would be a support facility to the

manufacturing process. Under the support facility test, co-located and

commonly owned sources would be considered one source (and therefore

their emissions aggregated) if the output of one is more than 50

percent devoted to support the other.

(5) New Jersey's rule at N.J.A.C.7:27-22.2(d) allows sources with

equipment that can be operated in both R&D and manufacturing modes to

segregate emissions attributable to the R&D operation from the source's

potential to emit when determining whether the source is major. In many

cases, the segregation could result in separating a facility into a

minor facility and a R&D facility which would render the source as a

whole not subject to Part 70. In order for the entire facility to be

excluded from the Part 70 requirements, federally enforceable permit

conditions must be obtained by the source. As in other synthetic minor

situations, New Jersey plans to use its SIP-approved new source review

preconstruction permit program to provide the federally enforceable

permit limitations necessary to cap source emissions at below the title

V major source threshold levels. New Jersey provided a supplement to

the August 10, 1995 title V operating permit program which describes in

detail how these sources will be capped out of the New Jersey operating

permit program. Based upon EPA's review, the mechanism to be used by

New Jersey to limit emissions from such ``dual equipment'' is federally

and practicably enforceable and is sufficient to prevent Part 70

circumvention.

The ``dual equipment'' type sources are subject to federally

enforceable NSR requirements if the source (and its associated process

units) meets the criteria set out in the NSR regulations of New

Jersey's rule (N.J.A.C. 7:27-8). Most of these types of sources become

subject to New Jersey's NSR requirements because they process more than

50 pounds per hour of all materials combined with the exclusion of air

and water. The permit issued to such sources is called a ``Dual

Permit'' which consists of two sections, one specific to the R&D

operation and the other to the manufacturing operation. The permit also

contains common emission caps for each pollutant with recordkeeping

requirements to monitor when the emission limits will be reached. When

the emission limits are reached, the source is required to cease

operation of all equipment or process covered under the permit or apply

for a permit revision to raise the emission limits, at which time

additional requirements such as installation of the state-of-the-art

controls may be required. Although it has the legal authority to do so,

NJDEP has not issued a dual permit that covers the entire facility. It

is EPA's belief that in situations where the facility has the

flexibility to change operation at will,

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facility-wide emission caps or summation of individual permits at a

source is essential to prevent circumvention of the Part 70

regulations.

b. Permit Application (40 CFR Sec. 70.5):

(1) Consistent with EPA's policy as discussed in the July 10th,

1995 ``White Paper for Streamlined Development of Part 70 Permit

Applications'', New Jersey's rule streamlines the application

requirements for emitting activities that meet the definition of

insignificant source operations. Such emitting activities or units are

not required to be listed individually on the application; they may be

listed by source type. On the application, an estimate of the total

emissions from all of the insignificant source operations shall be

listed for each criteria pollutant with the applicable requirements

which generally apply to them. The list of insignificant source

operations which EPA hereby approves is defined in N.J.A.C. 7:27-22.1.

This list may be changed with prior EPA input and approval during the

state rulemaking process for the rule revision consistent with 40 CFR

Sec. 70.4(i).

(2) New Jersey's rule also provides for some streamlining for

significant source operations that have extremely small emissions. For

emitting activities or units that meet the definition of significant

source operations and have emission rates that are less than those

listed in Tables A and B of Appendix I of New Jersey's operating permit

rule, their emissions are only required to be listed as ``de minimis''.

The emissions levels listed under these tables are so small that EPA

does not have any objections to requiring a listing of these emission

units without their specific emission rates.

c. Permit Content (40 CFR Sec. 70.6):

(1) Part 70 requires prompt reporting of deviations from the permit

requirements. 40 CFR Sec. 70.6(a)(3)(iii)(B) requires the permitting

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

deviation likely to occur and the applicable requirements. Where

``prompt'' is defined in the individual permit but not in the program

regulations, EPA may veto permits that do not contain sufficiently

prompt reporting of deviations. The State of New Jersey has defined

``prompt'' in its regulations at N.J.A.C. 7:27-22.19 in the manner

discussed below. Immediate reporting on the NJDEP hotline is required

if the air contaminants are released in a quantity or concentration

which poses a potential threat to public health, welfare or the

environment. Where the air contaminants are released in a quantity or

concentration which poses no potential threat to public health,

welfare, or the environment but the permittee intends to assert an

affirmative defense for the deviation, the instance must be reported

within 2 days. Deviations that were discovered during source emissions

testing must be reported in 30 days as part of the testing report.

Other reporting obligations required by the permit including deviations

recorded by the emissions monitors are to be submitted semi-annually.

EPA finds New Jersey's definition of ``prompt'' reporting of deviations

as delineated above to be inadequate. In order for EPA to consider this

definition adequate for protecting public health and safety, New Jersey

must add a provision requiring reporting of deviations within 10 days

where the air contaminants are released in a quantity or concentration

that pose no potential threat to public health, welfare, or the

environment and the permittee does not intend to assert affirmative

defense for the deviation.

(2) Alternative operating scenarios may be made part of the initial

permit or added via a significant modification, a minor modification or

a 7-day notice change. Sources that are allowed to operate under

different scenarios are required to operate within the range or limit

specified for each operating parameter in the approved operating

scenario. The New Jersey rule (N.J.A.C. 7:27-22.27(a)(2)) allows the

addition of new alternative operating scenarios to an existing

operating permit via a 7-day notice change provided the emission limit

for the source operation included in the scenario does not exceed the

maximum allowable emission limits in the existing permit. Another

provision in N.J.A.C. 7:27-22.22(b)(5) disallows Title I modifications

from being incorporated into the existing permit via the 7-day notice

procedure. These two provisions in effect assure that a new NSR permit

could not be added to the existing permit through the 7-day notice

procedure by calling it an alternative operating scenario bypassing the

minor or significant permit modification procedures. In addition,

N.J.A.C. 7:27-22.26(b) rules out the possibility that a source might

try to incorporate a MACT standard into the existing permit via a 7-day

notice change by calling it an alternative operating scenario. Based on

EPA's review of the New Jersey rule, the alternative operating scenario

provisions are consistent with 40 CFR Sec. 70.6(a)(9).

(3) New Jersey's Act permits an affirmative defense for start-ups,

shut-downs, equipment maintenance and malfunctions. New Jersey's

legislation (N.J.S.A. 26:2C-19.1 and 19.2) allows such a defense and

sections 22.3(nn) and 22.16(l) of the rule discuss when it can be used.

The Part 70 regulations allows an affirmative defense in emergency

situations only and do not extend this defense to start-ups, shut-

downs, equipment maintenance or malfunctions per se. Because start-up,

shut-down, and malfunction events will not always qualify as an

``emergency,'' as defined in part 70, NJ's rule and legislation are

inconsistent with 40 CFR Sec. 70.6(g). EPA finds this to be an

impediment to full program approval. In addition, both NJ's legislation

and rule are also inconsistent with 40 CFR Sec. 70.6(g) because they do

not limit the application of the affirmative defense to technology-

based emission limits. 40 CFR Sec. 70.6(g) provides that the emergency

affirmative defense is only applicable to technology-based emission

limits and not health-based emission limits. Therefore, EPA has

determined that the NJ legislation as stated in N.J.S.A. 26:2C-19.1 and

19.2 and/or the NJ rule provisions on affirmative defenses as stated in

N.J.A.C. 7:27-22.3(nn) and 22.16(l) must be revised to clarify its law

to conform with 40 CFR Sec. 70.6(g).

d. Public Participation (40 CFR Sec. 70.7): Consistent with the

Part 70 regulations, the public will be provided with notice of, and an

opportunity to comment on, draft permits related to initial permit

issuance, permit renewals, and significant modifications (N.J.A.C.

7:27-22.11).

e. Permit Modification (40 CFR 70.7):

(1) New Jersey's rule provides the following mechanism for

modifying an operating permit: administrative amendments, changes to

insignificant source operations (these are similar to Part 70's off-

permit changes), 7-day notice changes, minor modifications, and

significant modifications. Each of these procedures requires a

different level of review/processing time to complete. Public review is

required for significant modifications but is discretionary for minor

modifications. No public review is afforded within the other types of

permit modification procedures. The criteria for determining the proper

procedure for a modification are addressed in the specific sections of

the New Jersey rule for each type of modification (N.J.A.C. 7:27-22.20,

22.21, 22.22, 22.23, and 22.24). These procedures are consistent with

the requirements of 40 CFR 70.7 and the provisions of 40 CFR

70.4(b)(12) and 40 CFR 70.4(b)(14).

(2) Under New Jersey's administrative amendment procedure (N.J.A.C.

7:27-22.20(b)(7)), provisions of a

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preconstruction permit may be incorporated into the operating permit if

the preconstruction permit was issued through public participation

requirements substantially equivalent to those for operating permits as

stipulated in N.J.A.C. 7:27-22.11 (public comment) and 22.12 (EPA

comment). As written, New Jersey's rule is inconsistent with 40 CFR

Sec. 70.7(d)(1)(v). Instead of requiring the preconstruction permit to

have gone through procedures of N.J.A.C. 7:27-22.11 and 22.12, it only

requires the permit to have undergone procedures that are

``substantially equivalent.'' This might allow New Jersey to decide

what ``substantially equivalent'' means on a case by case basis. This

discretion is not contemplated by 40 CFR Sec. 70.7(d)(1)(v). In fact,

it expressly contravenes the language of that section, which says that

the preconstruction review ``program'' can be substantially equivalent.

In other words, incorporation by administrative amendment can occur

even if the procedures of the NSR program do not match part 70 exactly,

if they are nevertheless approved by EPA as being substantially

equivalent. Therefore, in order to receive full program approval, New

Jersey must either:

i. Specify in Sec. 7:27-22.20(b)(7) the procedures under which

preconstruction permits must have been issued (Secs. 70.7 and .8) and

permit content (Sec. 70.6) requirements the permit must meet in order

to be eligible for incorporation by administrative amendment, or

ii. Codify those procedural and permit content requirements into

the preconstruction review regulations and obtain EPA's approval of

those regulations.

(3) One characteristic of New Jersey's minor and significant

modification procedures, which is not prohibited or required by the

Part 70 regulations, is the integration of the preconstruction permit

review process with the operating permit review. For significant

modifications, draft permits covering respectively, the preconstruction

and operating permit requirements will be issued for public review at

the same time. At the conclusion of the public comment period, the

final preconstruction approval will be issued to the applicant and the

proposed operating permit will be submitted to EPA for a 45-day review.

For minor modifications, public review is not required but the EPA and

affected states will have 45 days to object to the proposed minor

modification. If no objection is received, New Jersey will issue the

preconstruction approval and the revised portion of the operating

permit in final.

f. EPA oversight (40 CFR Sec. 70.8): Each permit, renewal, and

minor or significant modification is subject to EPA review/veto prior

to issuance. New Jersey's rule states that if NJDEP fails to revise a

permit based on an EPA objection or if EPA objects (in response to a

public petition) to the proposed permit after final permit issuance,

EPA would take action to issue the revised permit or re-issue the

permits under federal operating permit regulations to be promulgated at

40 CFR Part 71. In these situations, before EPA takes any action

pursuant to the Part 71 regulations, NJDEP must take action to withdraw

approval of the operating permit upon receipt of EPA's veto. EPA will

then revise and re-issue such permits in accordance with 40 CFR Part

71.

g. Enforcement authority (40 CFR Sec. 70.11): New Jersey's Air

Pollution Control Act provides NJDEP with adequate enforcement

authority and penalties for civil and criminal violations of permits

and rules. Penalties may be assessed in the maximum amount of $10,000

per day per violation. This also covers violations associated with the

applicant's failure to pay the required fees.

h. Initial application submittal and issuance (40 CFR

Sec. 70.4(b)(11) (i) and (ii): While 40 CFR 70 requires all

applications to be submitted within the first 12 months after state

program approval, New Jersey has divided its subject sources into seven

groups in an effort to maintain a smooth phase-in at the beginning of a

new program. With an interim program approval, New Jersey is required

to receive, during the first year, applications from 60% of the sources

subject to the interim program. Permits for these sources will be

issued one-third (of the 60%) each year during the first three years of

program approval. The remaining 40% of the subject sources will submit

applications during the first year of full program approval. The

permits for these source will be issued one-third (of the 40%) each

year during the initial three years after full approval. Based on Table

2-3 of page 2-8 of Chapter 2, New Jersey would have received four

``waves'' of applications from subject sources by November 15, 1996.

This would cover 57.2 percent of all sources as opposed to 60%. To

ensure that the 60% is met, New Jersey encouraged early submission of

applications in February 1995 (6 months prior to program submittal).

Also, since New Jersey's interim approval will not take place until at

least February 1996, two months into the fifth waves of application

submittal, it is certain that New Jersey would have received 60% of all

applications by February 1997. As such, EPA does not consider this to

be an issue for program approval.

3. Permit Fee Demonstration

New Jersey's title V fee program consists of four types of fees

which includes an emissions based fee, an initial application fee,

permit modification fee, and a surcharge for rebuilding the

infrastructure of its Air Programs. New Jersey has adopted the

presumptive minimum of $25 per ton per year (to be adjusted by the

consumer price index annually) as its emissions based fee.

It should be noted, however that the actual appropriation for the

New Jersey program has been limited by the fee legislation to $9.51

million dollars per year from the collected fees. EPA acknowledges that

the program costs and fee revenue figures submitted in New Jersey's fee

demonstration are only projections based on New Jersey's current

experience with similar permitting programs. A more accurate assessment

of the actual program costs will not be possible until the state has

had the opportunity to implement the program. Therefore, EPA is

requiring New Jersey to re-submit a more refined fee demonstration that

assures sufficient funding for the operating permit program prior to

EPA granting full approval. Should the revised fee demonstration show

that the $9.51 million dollar funding level is insufficient, New Jersey

must correct the deficiency prior to submitting the corrected program.

New Jersey is aware of the need to revisit the fee demonstration and

has committed to re-evaluate the fee program during the interim

approval period and take all necessary steps to ensure sufficient

funding for the operating permit program.

With respect to New Jersey's intention to use fees collected in

excess of $9.51 million in reengineering NJDEP's Air Program, EPA does

not find that to be a problem for interim approval for two reasons.

First of all, based on the restricted use of the ``Air Surcharge

Reengineering Fund'' as stipulated in New Jersey's legislation, the

``excess title V fees are not used for activities that are totally

unrelated to title V. EPA has thoroughly reviewed the activities listed

in the legislation that are earmarked for the ``Air Surcharge

Reengineering Fund'' and found them to be related to the development

and maintenance of the infrastructure for implementing New Jersey's

operating permit program. The costs associated with those activities

are indirect costs to

[[Page 2988]]

the title V program. Therefore, EPA finds it acceptable for New Jersey

to use ``excess'' title V fees to fund those activities. In addition,

this is consistent with guidance issued by EPA on August 4, 1993 and

July 21, 1994, which stated that ``Title V does not limit a

jurisdiction's discretion to collect fees pursuant to independent state

authority beyond the minimum amount required by Title V''. These

guidance documents clearly allow a state to charge fees in excess of

that which are needed to run the operating permit program.

EPA also notes that New Jersey requires fee payments from all title

V affected sources including title IV Phase I units. There is one Phase

I unit in the State of New Jersey. The Part 70 regulation (40 CFR

Sec. 70.9(b)(4)) states that ``during the years 1995 through 1999

inclusive, no fee for purposes of title V shall be required to be paid

with respect to emissions from any affected unit under section 404 of

the Act''. This Part 70 provision, however, does not restrict the state

from collecting title V fees from Phase I units based on emissions that

occurred prior to January 1, 1995 or after December 31, 1999. It also

does not restrict a state from collecting non-title V related emissions

based fee or non-emission based title V related fees from these units.

Therefore, in this notice, EPA is proposing to grant interim approval

to New Jersey's fee program. New Jersey may assess fees from any title

IV Phase I units provided these fees are not used for purposes of title

V.

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

a. Authority for Section 112 Implementation

New Jersey has demonstrated in its program submittal adequate legal

authority to implement and enforce all section 112 requirements through

its title V operating permit program. The implementing rule which is

found in N.J.A.C. 7:27-22 includes section 112 requirements in the

definition of applicable federal requirements with which all subject

sources must comply. New Jersey has sufficient legislative and

regulatory authorities to issue permits that assure compliance with the

following section 112 requirements:

i. Early reductions: N.J.A.C 7:27-22.34 authorizes New Jersey to

allow sources that achieved sufficient early reductions of hazardous

air pollutants (HAP) emissions to delay compliance with the MACT or

GACT standard for six years from the original compliance date if all of

the conditions of the operating permit are met and the reductions are

maintained throughout the six-year period.

ii. Case-by-case MACT determinations: In the event that no

applicable emissions limitations have been established by the

Administrator, N.J.A.C. 7:27-22.26 allows New Jersey to make case-by-

case MACT determinations as required under section 112 (g) and (j) of

the Act.

iii. Implementation of section 112(r): N.J.A.C 7:27-22.9 requires

applicants submitting an initial operating permit application to

include in its proposed compliance plan a statement certifying that the

permittee will ensure the compliance of the facility with the

accidental release provisions at 42 U.S.C. 7412(r). Annual

certification of compliance with each applicable requirement that

pertains to the facility is required under N.J.A.C. 7:27-22.19.

b. Implementation of Section 112(g) Upon Program Approval

Case-by-case MACT determinations: In the event that no applicable

emissions limitations for the hazardous air pollutants have been

established by the Administrator, NJDEP will make case-by case Maximum

Achievable Control Technology (MACT) determinations as required under

Sections 112(j) and (g) of the Act. The EPA issued an interpretive

notice on February 14, 1995 (60 FR 8333), which outlines EPA's revised

interpretation of 112(g) applicability. The notice postpones the

effective date of 112(g) until after EPA has promulgated a rule

addressing that provision. The notice sets forth in detail the

rationale for the revised interpretation.

The Section 112(g) interpretive notice explains that EPA is still

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

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

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

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

Section 112(g) rulemaking. NJDEP has provided broad language in its

regulation that will allow the implementation of 112(g) immediately

after EPA promulgates its rule. The permitting mechanism to be used by

the state of New Jersey to implement these requirements during the

period before EPA promulgates the final federal rule and after New

Jersey's title V program becomes effective is the State's

preconstruction process (as stated in N.J.A.C. 7:27-22.33). In the

event that EPA's final rulemaking under Sec. 112(g) requires changes in

New Jersey's operating permit rule/program to assure compliance with

federal requirements, New Jersey has committed to making all necessary

changes in a timely manner.

In this notice, EPA proposes to approve New Jersey's

preconstruction review program found in N.J.S.A.26:2C-1 et. seq. under

the authority of title V and Part 70 solely for the purpose of

implementing section 112(g) of the Act. However, this approval does not

have any effect on previous actions taken by EPA on the New Jersey

preconstruction review program found in N.J.S.A.26:2C-1 et. seq. Also,

this approval will be without effect if EPA decides in the final

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

the rule until State regulations are adopted. The duration of this

approval is limited to 18 months following promulgation by EPA of the

section 112(g) rule to provide adequate time for the State to adopt

regulations consistent with the federal requirements.

c. Program for Delegation of Section 112 Standards as Promulgated

Section 112(l): Requirements for approval specified in 40 CFR

Sec. 70.4(b), encompass Section 112(l)(5) approval requirements for

delegation of Section 112 standards as they apply to Part 70 sources.

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

authorities, adequate resources for implementation, an expeditious

compliance schedule, and adequate enforcement ability, which are also

requirements under Part 70. In a letter dated November 15, 1995, from

William O'Sullivan, Administrator of the Air Quality Permitting Program

of the NJDEP requested delegation through 112(l) of all existing 112

standards for Part 70 sources and infrastructure programs. With respect

to future section 112 standards, NJDEP intends to review every standard

within 45 days of receiving notice from EPA and determine whether to

accept the delegation of a standard on a case-by-case basis. In this

letter, NJDEP demonstrated that it has sufficient legal authorities,

adequate resources, capability for automatic delegation of future

standards, and adequate enforcement ability for implementation of

Section 112 of the Act for Part 70 sources. Therefore, the EPA is

proposing to grant approval under Section 112(l)(5) and 40 CFR Part

63.91 to New Jersey for its program mechanism for receiving delegation

of all existing and future 112(d) standards for Part 70 sources.

d. Commitment To Implement Title IV of the Act

As stated in N.J.A.C. 7:27-22.29, the state of New Jersey has

already adopted

[[Page 2989]]

and incorporated by reference the provisions of 40 CFR Part 72, and any

subsequent amendments thereto, for purposes of implementing an acid

rain program that meets the requirements of title IV of the Act. It

further stated that if provisions or requirements of 40 CFR Part 72

conflict with or are not included in New Jersey's rule that the Part 72

provision and requirements shall apply and take precedence.

B. Proposed Actions

EPA proposes source category-limited interim approval of the

operating permit program initially submitted by the state of New Jersey

on November 15, 1993, and revised on August 10, 1995. Under this

approval, New Jersey may collect fees from any title IV Phase I

facilities, provided that these are not used to meet the presumptive

title V fee level for the interim program.

In accordance with 40 CFR Sec. 70.4(b), this approval encompasses

EPA's approval under section 112(l)(5) and 40 CFR Sec. 63.91 to the

state of New Jersey for its program mechanism for receiving delegation

of all existing and future section 112(d) standards for all Part 70

sources. In order to receive full program approval, the State of New

Jersey must submit a corrected program that addresses the following

deficiencies six months before expiration of the interim approval:

1. Deferral of Non-Major Sources

As a condition for full program approval, New Jersey must submit a

commitment in the corrected program asserting that New Jersey will

require non-major sources subject to Sec. 111 or Sec. 112 standards

promulgated after July 21, 1992 to apply for an operating permit under

New Jersey's full program unless EPA exempts such sources in future

rulemaking or promulgation of future requirements. Applications from

these sources should be submitted in accordance with the schedule found

under N.J.A.C. 7:27-22.5(i).

2. Definition of Prompt Reporting of Deviations

In order to receive full program approval, the reporting

requirement in N.J.A.C. 7:27-22.19 must be revised to ensure adequate

protection of public health and safety. New Jersey must add a provision

requiring reporting of deviations within 10 days if the air

contaminants are released in a quantity or concentration that poses no

potential threat to public health, welfare, or the environment and the

permittee does not intend to assert an affirmative defense for the

deviation.

3. Affirmative Defense

In order to receive full program approval, the New Jersey

legislation as stated in N.J.S.A. 26:2C-19.1 and 19.2 and/or the New

Jersey rule provisions on affirmative defenses as stated in N.J.A.C.

7:27-22.3(nn) and 22.16(l) must be revised to clarify its law to

conform with 40 CFR Sec. 70.6(g).

4. Administrative Amendments

In order to receive full program approval, New Jersey must revise

its operating permit rule to ensure that the administrative amendment

procedure is properly used for incorporating preconstruction permits

into the operating permit. Specifically, New Jersey must either:

i. Specify in Sec. 7:27-22.20(b)(7) the procedures under which

preconstruction permits must have been issued (Secs. 70.7 and .8) and

permit content (Sec. 70.6) requirements the permit must meet in order

to be eligible for incorporation by administrative amendment, or

ii. Codify those procedural and permit content requirements into

the preconstruction review regulations and obtain EPA's approval of

those regulations. the following changes must be made to N.J.A.C. 7:27-

22.20(b)(7)(i) and (ii):

5. Permit Fees

In order to receive full program approval, New Jersey must submit a

revised fee demonstration showing that $9.51 million is adequate to

administer the operating permit program during the initial four years

of full program implementation. Should the cap of $9.51 million fall

short of the actual program costs, New Jersey must take all necessary

actions (including legislative changes) to correct the problem prior to

submitting the corrected program.

C. Options for Approval/Disapproval and Implications

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

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

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

EPA is not obligated to promulgate a federal operating permit program

in the State. Permits issued under a program with interim approval have

full standing with respect to Part 70, and the one-year time period for

submittal of permit applications by subject sources begins upon interim

approval, as does the three-year time period for processing the initial

permit applications.

The scope of New Jersey's Part 70 program that EPA proposes to

grant interim approval in this notice would apply to all Part 70

sources as listed in New Jersey's operating permit rule (N.J.A.C. 7:27-

22.5) and transition plan.

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

approval under section 112(l)(5) and 40 CFR 63.91 to New Jersey's

program for receiving delegation of section 112 standards that are

unchanged from federal standards as promulgated. In addition, EPA

proposes to delegate existing standards under 40 CFR Parts 61 and 63.

III. Administrative Requirements

A. Request for Public Comments

EPA requests comments on all aspects of this proposed interim

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

upon for the proposed interim approval are contained in docket number

NJ-95-01 maintained at the EPA Regional Office. The docket is an

organized and complete file of all the information submitted to, or

otherwise considered by, EPA in the development of this proposed

interim approval. The principal purposes of the docket are:

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

documents so that they can effectively participate in the approval

process; and

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

consider any comments received by February 29, 1996.

B. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

C. Regulatory Flexibility Act

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

requirements, but simply address operating permit programs submitted to

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

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

on a substantial number of small entities.

D. Unfunded Mandates Act

Under section 202 of the Unfunded Mandates Reform Act of 1995

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

must prepare a budgetary impact statement to accompany any proposed or

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

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

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

must select the most cost effective and least burdensome

[[Page 2990]]

alternative that achieves the objectives of the rule and is consistent

with statutory requirements. Section 203 requires EPA to establish a

plan for informing and advising any small governments that may be

significantly or uniquely impacted by the rule.

EPA has determined that the proposed approval action promulgated

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

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

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

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

imposes no new federal requirements. Accordingly, no additional costs

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

result from this action.

List of Subjects in 40 CFR Part 70

Environmental protection, Administrative practice and procedure,

Air pollution control, Intergovernmental relations, Operating permits,

Reporting and recordkeeping requirements.

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

Dated: December 18, 1996.

Jeanne M. Fox,

Regional Administrator.

[FR Doc. 96-1712 Filed 1-29-96; 8:45 am]

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