Clean Air Act Proposed Interim Approval, Operating Permits Program; State of Alaska and Clean Air Act Proposed Approval in Part and Proposed Disapproval in Part, Section 112(l) Program Submittal; State of Alaska

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 61, 63 and 70

[AD-FRL-5612-1]

Clean Air Act Proposed Interim Approval, Operating Permits

Program; State of Alaska and Clean Air Act Proposed Approval in Part

and Proposed Disapproval in Part, Section 112(l) Program Submittal;

State of Alaska

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval, and proposed approval in part and

proposed disapproval in part.

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SUMMARY: EPA proposes interim approval of the operating permits program

submitted by the Alaska Department of Environmental Conservation for

the purpose of complying with Federal requirements for an approvable

State program to issue operating permits to all major stationary

sources, and to certain other sources.

EPA also proposes approval in part and disapproval in part of the

program submitted by the Alaska Department of Environmental

Conservation for the purpose of implementing and enforcing the

hazardous air pollutant requirements under section 112 of the Act.

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

October 18, 1996.

ADDRESSES: Comments should be addressed to David C. Bray, Office of Air

Quality, OAQ-107, U.S. Environmental Protection Agency, 1200 Sixth

Avenue, Seattle, Washington 98101. Copies of the State's submittal and

other supporting information used in developing this action are

available for inspection during normal business hours at the following

location: U.S. Environmental Protection Agency, Region 10, Office of

Air Quality, 1200 Sixth Avenue, Seattle, Washington.

FOR FURTHER INFORMATION CONTACT: David C. Bray, Office of Air Quality,

OAQ-107, U.S. Environmental Protection Agency, 1200 Sixth Avenue,

Seattle, Washington 98101; telephone (206) 553-4253.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Title V Background

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

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

promulgated rules which define the minimum elements of an approvable

State operating permits program and the corresponding standards and

procedures by which EPA will approve, oversee, and withdraw approval of

State operating permits programs (see 57 FR 32250 (July 21, 1992)).

These rules are codified at 40 Code of Federal Regulations (CFR) part

70. Title V requires States to develop, and submit to EPA, programs for

issuing these operating permits to all major stationary sources and to

certain other sources.

The Act requires that States develop and submit these programs to

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

each program within one year after receiving the submittal. EPA's

program review occurs pursuant to section 502 of the Act and the part

70 regulations, which together outline criteria for approval or

disapproval. Where a program substantially, but not fully, meets the

requirements of part 70, EPA may grant the program interim approval for

a period of up to two years. If EPA has not fully approved a program by

two years after the November 15, 1993 date, or by the end of an interim

program, it must establish and implement a Federal program.

EPA must apply sanctions to a State 18 months after EPA disapproves

the program. In addition, discretionary sanctions may be applied any

time during the 18-month period following the date required for program

submittal or program revision. If the State has no approved program two

years after the date required for submission of the program, EPA will

impose additional sanctions, where applicable, and EPA must promulgate,

administer, and enforce a Federal permits program for the State. EPA

has the authority to collect reasonable fees from the permittees to

cover the costs of administering the program.

B. Section 112 Background

Section 112(l) of the Act established new, more stringent

requirements for a State or local agency that wishes to implement and

enforce a hazardous air pollutant program pursuant to section 112 of

the Act. Prior to November 15, 1990, delegation of NESHAP regulations

to the State and local agencies could occur without formal rulemaking

by EPA. However, the new section 112(l) of the Act requires EPA to

approve State and local hazardous air pollutant rules and programs

under section 112 through formal notice and comment rulemaking. Now

State and local air agencies that wish to implement and enforce a

Federally-approved hazardous air pollutant program must make a showing

to EPA that they have adequate authorities and resources. Approval is

[[Page 49092]]

granted by EPA through the authority contained in section 112(l), and

implemented through the Federal rule found in 40 CFR part 63, subpart E

if the Agency finds that: (1) The State or local program or rule is

``no less stringent'' than the corresponding Federal rule or program,

(2) adequate authority and resources exist to implement the State or

local program or rule, (3) the schedule for implementation and

compliance is sufficiently expeditious, and (4) the State or local

program or rule is otherwise in compliance with Federal guidance.

II. Proposed Action on Title V Submittal and Implications

A. Analysis of State Title V Submittal

1. Support Materials

On May 31, 1995, the Alaska Department of Environmental

Conservation (referred to herein as ``ADEC,'' ``the Department,''

``Alaska'' or ``the State'') submitted a title V program for EPA review

and approval. EPA notified the State in writing on July 13, 1995, that

the submittal was complete. The State submitted additional information

to EPA to supplement its May 31, 1995 submittal on August 16, 1995,

February 6, 1996, February 27, 1996, July 5, 1996, and August 2, 1996.

EPA considers these supplemental submittals to be a material change to

ADEC's May 31, 1995 program submittal and therefore extends its

official review period by 8 months to January 31, 1997.

Section II of the Alaska submittal addresses the requirement of 40

CFR part 70.4(b)(1) by describing how the State intends to carry out

its responsibilities under the part 70 regulations. An implementation

agreement is currently being developed between ADEC and EPA. EPA has

deemed the program description to be sufficient for meeting the

requirement of 40 CFR 70.4(b)(1).

Section IV of the Alaska submittal includes a legal opinion from

the Attorney General of Alaska addressing the thirteen program elements

set forth in 40 CFR part 70 that are specifically required by title V

and 40 CFR part 70, as well as several additional program elements.

With the exception of the proposed interim approval items discussed

below, this opinion letter demonstrates adequate legal authority to

implement all aspects of the title V operating permits program in

Alaska.

Alaska has submitted draft copies of its permit application and

permit forms, as required by 40 CFR 70.4(b)(4). Final versions of these

forms will need to be available in time to implement the program.

In summary, EPA believes that Alaska's title V operating permits

program substantially meets the requirements of 40 CFR part 70,

sections 70.2 and 70.3 for applicability; section 70.4, 70.5, and 70.6

for permit content, including operational flexibility; section 70.7 for

public participation and minor permit modifications; section 70.8 for

permit review by EPA; section 70.5 for criteria which define

insignificant activities; section 70.11 for requirements for

enforcement authority; and section 70.5 for complete application forms.

The issues that EPA proposes the State must address in order to obtain

full approval are discussed below under ``Options for Program Approval

and Implications.''

The full program submittal and the Technical Support Document (TSD)

are contained in the docket at the address noted above and provide more

detailed information on the State's program.

2. Regulations and Program Implementation

a. Regulations. The Alaska title V operating permits program is

authorized by the Air Quality Control Act, Title 46, Chapter 14 of the

Alaska Statutes. The State of Alaska revised its Air Quality Control

Regulations (18 Alaska Administrative Code (AAC) 50) to implement the

requirements of 40 CFR part 70 and the Alaska Air Quality Control Act.

These revisions were adopted on May 17, 1995 and, together with the

enabling legislation, become effective upon EPA's interim approval of

Alaska's title V operating permit program. Additional revisions to

these rules were adopted on February 22, 1996, April 9, 1996, and July

3, 1996. These rules and statutes, as well as other rules and statutes

governing State permitting and administrative actions, were submitted

by Alaska with evidence of procedurally correct adoption as required by

40 CFR 70.4(b)(2).

Title 18, chapter 50 of Alaska's regulations contain requirements

pertaining to both title V and non-title V sources. Therefore, this

notice proposes to approve certain regulations within 18 AAC 50 as part

of Alaska's title V program. The TSD identifies the title V-related

regulations acted upon in this rulemaking. Other portions of 18 AAC 50

have been submitted by the State for EPA approval under section 112(l)

of the Act, and the TSD also identifies which section 112-related

regulations are acted upon in this rulemaking. Portions of 18 AAC 50

have been submitted by the State as revisions to the Alaska state

implementation plan (SIP) and will be approved or disapproved as part

of the Alaska SIP in a separate rulemaking. Finally, portions of 18 AAC

50 have been submitted to EPA in support of a request for delegation

under section 111(b) of the Act and will be acted upon later pursuant

to that section.

b. Scope of proposed action. ADEC has requested approval to

implement its title V program in all geographic regions of the State

except within ``Indian Country,'' as defined in 18 U.S.C. section 1151.

Therefore, EPA proposes that interim approval of the Alaska operating

permits program not extend to sources located in Indian Country in

Alaska. Because the extent of Indian Country is currently unknown and

in litigation, the exact boundaries of Indian Country have not been

established. At present, the lands acknowledged to be Indian Country

are the Annette Island Reserve, and trust lands identified as Indian

Country by the United States in Klawock, Kake, and Angoon. By proposing

to grant interim approval to Alaska's title V operating permits program

throughout the State except within Indian Country, EPA does not intend

to affect the rights of Federally-recognized Indian tribes in Alaska,

nor does it intend to limit existing rights of the State of Alaska.

Title V sources located within Indian Country in Alaska will be subject

to the Federal operating permits program, promulgated at 40 CFR part

71, see 61 FR 34202 (July 1, 1996), or subject to the operating permit

program of any Tribe approved after issuance of regulations under

section 301(d) of the Clean Air Act authorizing EPA to treat Tribes in

the same manner as States for appropriate Clean Air Act provisions, see

59 FR 43956 (August 25, 1994) (proposed rules implementing section

301(d)).

c. Program implementation. There are several areas where the Alaska

program does not directly address certain requirements of part 70, but

EPA believes either that (1) the Alaska program, as a whole, satisfies

the requirements of part 70 in that particular respect or (2) no

changes are currently required to the Alaska program to comply with

part 70, but changes will likely be required some time in the future.

i. Application submittal. Part 70 defines a ``timely application''

for sources applying for a title V permit for the first time as an

application that is submitted within 12 months after the source becomes

subject to the program or on or before such time as the permitting

authority may establish. See 40 CFR 70.5(a)(1)(i). For sources required

to meet the preconstruction requirements of section 112(g) of the Act

or required to have a permit under the

[[Page 49093]]

preconstruction review program approved into the SIP under part C or

part D of the Act, a ``timely application'' is one that is submitted

within 12 months after the source commences operation or such earlier

date set by the permitting authority. 40 CFR 70.5(a)(1)(ii).

The Alaska program requires a source to submit an application

within 12 months of becoming subject to the title V program or 60 days

before beginning construction of a source if the facility containing

the source is a new source that is not required to obtain a

construction permit under AS 46.14.130(a). See AS 46.14.150(a).

However, the Alaska program does not specifically address new sources

under section 112(g) or parts C or D of the Act. EPA understands that

the Alaska program would consider such sources as ``becoming subject to

the title V program'' at the time the source commences operation,

thereby making the Alaska program consistent with 40 CFR

70.5(a)(1)(ii).

ii. Applicable requirements. The Alaska program does not use the

term ``applicable requirements'' and therefore does not contain a

concise definition of the Federally-enforceable requirements which must

be contained in a title V permit. Rather, the Alaska program simply

indicates that a title V permit must contain each ``air quality control

requirement,'' which is defined in 18 AAC 50.990 as an obligation

created by AS 46.14, 18 AAC 50 or a term or condition of a

preconstruction permit issued by ADEC. In an attempt to ensure that all

EPA-promulgated requirements are covered, ADEC has adopted by reference

into 18 AAC 50.040 Federal regulations that currently apply to sources

in Alaska. ADEC has not adopted those existing EPA-promulgated

requirements for which there are currently no subject sources in

Alaska. However, as described in section B.1.iii. below, ADEC failed to

adopt several NESHAP that currently apply to Title V sources in Alaska.

If at some future time, sources in Alaska become subject to these

existing Federal regulations, ADEC will need to expeditiously update

its incorporation by reference in order to adequately implement its

title V program. In addition, as new EPA regulations are promulgated

which apply to sources in Alaska, ADEC is expected to expeditiously

incorporate these new regulations into 18 AAC 50.040.1

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\1\ As discussed in Sections II.B.1 below, additional issues

with Alaska's treatment of ``applicable requirements'' are listed as

proposed interim approval issues.

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iii. Applicable requirements in EPA-issued PSD permits. Part 70

requires all ``applicable requirements,'' as defined in 40 CFR 70.2, to

be included in title V permit applications and permits. As stated

above, the Alaska program does not use the term ``applicable

requirements'', but instead requires that a title V permit contain each

``air quality control requirement,'' which is defined in 18 AAC 50.990

as an obligation created by AS 46.14, 18 AAC 50 or a term or condition

of a preconstruction permit issued by ADEC. However, Part 70 defines

``applicable requirement'' as including the terms and conditions of any

preconstruction permits issued pursuant to regulations approved or

promulgated through rulemaking under title I of the Act, including

parts C or D of the Act. See 40 CFR 70.2. Prior to July 5, 1983, EPA

issued permits to construct to new and modified major stationary

sources in Alaska under the PSD permitting regulations. See 40 CFR

52.96 as it existed prior to July 5, 1983. These permits are still in

effect and contain Federally-enforceable requirements for sources

subject to those permits. Since Alaska's regulations incorporate by

reference 40 CFR 52.96 as it applies to title V sources, and EPA

permits issued pursuant to 40 CFR 52.96 are considered to be Federally-

enforceable parts of the Alaska SIP, such permits are considered to be

``air quality control requirements'' under the Alaska rules.

iv. Inclusion of fugitive emissions. EPA's regulations require that

fugitive emissions be included in the permit and permit application in

the same manner as stationary source emissions whether or not the

source category in question is included in the list of sources for

which fugitives must be included in determining a source's potential to

emit. See 40 CFR 70.3(d). Alaska's regulations do not include a similar

requirement, but rather, only contain the provisions regarding the

inclusion of fugitives when determining a source's potential to emit.

However, the Alaska rules do not include any provision which would

explicitly allow a permit to exclude fugitive emissions once a source

has been determined to require a permit. Accordingly, EPA believes that

the Alaska program complies with the requirements of EPA's regulations.

EPA is, therefore, proposing to approve this portion of the Alaska

program based on an understanding that Alaska will implement its

program consistently with the requirements of 40 CFR 70.3(d).

v. Changes provided for in the permit. Part 70 requires a permit to

contain a provision stating that no permit revision shall be required,

under any approved economic incentives, marketable permits, emissions

trading and other similar programs or processes for changes that are

provided for in the permit. See 40 CFR 70.6(a)(8). Similarly, part 70

requires that, if an applicable implementation plan allows a

determination of an alternative emission limit, equivalent to that

contained in the plan, to be made in the permit issuance, renewal or

significant modification process and the State elects to use such

process, any permit containing such an equivalency determination shall

contain provisions to ensure that any resulting emissions limit has

been demonstrated to be quantifiable, accountable, enforceable and

based on replicable procedures. See 40 CFR 70.6(a)(1)(iii). The Alaska

program does not contain corresponding requirements for permit content

because there are currently no such programs in the Alaska SIP. EPA is

proposing to approve this portion of the Alaska program based on an

understanding that, should any such program be added to the Alaska SIP

in the future, the provisions required by 40 CFR 70.6(a)(8) and 40 CFR

70.6(a)(1)(iii), as applicable, will be added to Alaska's title V rules

at the same time.

vi. Administrative amendments. Part 70 authorizes States to allow

certain ministerial types of changes to title V permits to be made by

administrative amendment, which does not require EPA or public review

or participation. See 40 CFR 70.7(d). That section contains a list of

five types of changes which may be made by administrative amendment,

and authorizes EPA to approve as appropriate for incorporation by

administrative amendment other types of changes which are similar to

those specifically enumerated in 40 CFR 70.7(d)(1). See 40 CFR

70.7(d)(1)(vi). The Alaska program authorizes three types of changes to

be made by administrative amendment in addition to the five listed in

part 70. See 18 AAC 50.370(a)(4), (5) and (6). As discussed below in

section II.B.1., EPA believes that one of the three additional changes

is not approvable and must be revised as a condition of full approval.

EPA proposes to approve the two other types of changes, however, as

appropriate for administrative amendment with the following

understandings.

The Alaska program allows a change in assessable emissions to be

made by administrative amendment, provided the change does not allow

emissions to exceed emissions allowable under the permit. See 18 AAC

50.370(a)(4). ``Assessable emissions'' is defined as the lesser of the

annual rate of emissions of

[[Page 49094]]

each air contaminant authorized by the facility's title V permit or the

projected annual rate of emissions of each air contaminant based on

previous actual annual emissions if the facility can make a certain

showing to ADEC. See AS 46.14.240(h)(1). EPA interprets Alaska's

administrative amendment procedures as allowing a change of assessable

emissions only if the facility's assessable emissions are based on the

facility's projected annual rate of emissions, and the change does not

increase assessable emissions above the emissions allowable under the

permit.

Finally, Alaska's program allows a source to convert an approval to

operate under a general permit to a facility-specific permit with

identical terms and conditions and the same expiration date. See 18 AAC

50.370(a)(6). According to Alaska's submittal, the purpose of allowing

conversion from a general permit to a facility-specific permit is so

that the permit can then be modified, by means other than

administrative amendment, without affecting other facilities operating

under the general operating permit. By the express terms of 18 AAC

50.370(a)(6), such a change is a change in the type of permit and not

in the permit terms themselves. EPA therefore believes that this type

of change is sufficiently similar to the other truly ``administrative''

types of changes specified in part 70 as appropriate for administrative

amendment.

vii. Affected State review. Part 70 requires permit programs to

contain provisions for notifying ``affected States'' of title V

permitting actions. See, e.g., 40 CFR 70.8. ``Affected State'' is

defined as a State (1) whose air quality may be affected and that is

contiguous to the State in which the permit activity is occurring or

(2) that is within 50 miles of the permitted source. 40 CFR 70.2. There

are no ``affected States'' vis-a-vis Alaska and the Alaska title V

program therefore does not contain provisions requiring the

notification of affected States.

viii. Option to obtain permit. Part 70 requires States to allow any

source exempt under 40 CFR 70.3(b) to opt to obtain a part 70 permit.

See 40 CFR 70.3(b)(3). The Alaska regulations do not contain a

comparable provision. Unlike most other State operating permit

programs, however, Alaska has not deferred permitting minor sources

subject to section 111 and 112 standards, as authorized by 40 CFR

70.3(b). Instead, Alaska has exempted from title V permitting

requirements only those minor sources which would be required to obtain

an operating permit solely because they are subject to 40 CFR part 60,

subpart AAA (NSPS for new residential wood heaters), 40 CFR 61.145

(asbestos NESHAP for demolition and renovation), or 40 CFR 63.340(e)(1)

(chromium NESHAP for hard and decorative chromium electroplating and

chromium anodizing tanks). Given the very limited exemption from title

V permitting requirements in Alaska, EPA believes it is highly

improbable that any exempt sources in Alaska would apply for a title V

operating permit. Accordingly, EPA believes that Alaska satisfies the

requirements of 40 CFR 70.3(b)(3).

3. Permit Fee Demonstration

Section 502(b)(3) of the Clean Air Act requires each permitting

authority to collect fees sufficient to cover all reasonable direct and

indirect costs necessary for the development and administration of its

title V operating permit program. Each title V program submittal must

contain either a detailed demonstration of fee adequacy or a

demonstration that aggregate fees collected from title V sources meet

or exceed $25 per ton of emission per year (adjusted from 1989 by the

Consumer Price Index). See 40 CFR 70.4(b)(7); 40 CFR 70.9. The adjusted

amount is currently $30.07. The $30.07 per ton is presumed, for

purposes of program approval, to be sufficient to cover all reasonable

program costs and is thus referred to as the ``presumptive minimum''.

The State of Alaska has adopted a fee structure that is a

combination of emissions fees and user fees. User fees are currently

set at $78 per billable hour. Emission fees are currently $5.07 per ton

of assessable emissions. These fees will result in the collection of

over $1,200,000 per year based on the State's current estimate of

assessable emissions and the billable hours for permit actions. Based

on a detailed demonstration of program costs, the amount of fees

collected under the State's fee structure appears sufficient to cover

the direct and indirect costs of administering the State's title V

program. EPA therefore is approving the State's fee structure as

meeting the requirements of section 502(b)(3) of the Act and 40 CFR

70.9. Title V fees are deposited in a ``clean air protection fund''

which must be appropriated by the Alaska Legislature. In order to

retain approval of its title V program, the State must ensure that

adequate funds are appropriated to cover all of the program costs.

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

a. Authority for section 112 implementation. Except as discussed

below in section B.1.iii. and the section proposing action on Alaska's

section 112(l) submittal, Alaska has demonstrated adequate legal

authority to implement and enforce section 112 requirements through the

title V permit. Alaska has incorporated by reference most of the

regulations that have been promulgated by EPA under section 112 of the

Act that may affect Alaska sources. See 18 AAC 50.040(b) (relevant

standards under 40 CFR part 61); 18 AAC 50.040(c) (relevant standards

under 40 CFR part 63); AS 46.14.130(a) and 18 AAC 50.300 to 50.322

(preconstruction review of major sources of hazardous air pollutants

(``HAPs''). All title V permit applications are required to cite and

describe all sources regulated by a Federal emission standard adopted

by reference in 18 AAC 50.040 and the standard that applies to the

source (18 AAC 50.335(e) (2) and (6)) and all title V permits issued by

the State are required to include terms and conditions that assure

compliance with the applicable requirements of 18 AAC 50.040 (18 AAC

50.350(d)(1)(A) and (d)(3)).

b. Implementation of Title IV of the Act. Title IV does not apply

in Alaska. See section 401(b) of the Act.

B. Options for Title V Program Approval and Implications

1. Proposed Interim Approval

EPA is proposing to grant interim approval to the Alaska program.

If interim approval is promulgated, Alaska must address to EPA's

satisfaction the following issues in order to receive full approval.

i. Applicability. The Alaska definition of ``regulated air

contaminant'' in AS 46.14.990(21) is inconsistent with the EPA

definition of the term ``regulated air pollutant'' in 40 CFR 70.2.

Specifically, EPA's definition requires that any pollutant subject to

section 112(j) of the Act be considered a regulated air pollutant on

the date 18 months after the applicable date established pursuant to

section 112(e) of the Act (i.e., the date that major sources are

required to submit permit applications under section 112(j)(2)). The

Alaska definition, however, requires a pollutant to be considered a

regulated air contaminant only after a permit has been issued pursuant

to section 112(j). Because there are currently no sources or pollutants

subject to section 112(j) of the Act, EPA

[[Page 49095]]

does not consider this deficiency to be a disapproval issue. However,

because sources and pollutants may become subject to section 112(j) in

the future, the Alaska definition must be revised. As a condition of

full approval, EPA proposes that Alaska demonstrate to EPA's

satisfaction that its definition of ``regulated air contaminant'' is

consistent with EPA's definition of ``regulated air pollutant'' in 40

CFR 70.2.

ii. Applicable requirements. Part 70 requires all ``applicable

requirements'' to be included in a permit application and permit, and

defines ``applicable requirement'' to include, among other things, the

requirements of title VI of the Act (Stratospheric Ozone Protection).

See 40 CFR 70.2. The Alaska definition of ``applicable requirement''

does not include all of the EPA regulations implementing title VI (40

CFR part 82) but only subparts B and F. Although EPA has proposed to

revise 40 CFR part 70 to limit the definition of ``applicable

requirement'' to only those provisions promulgated under sections 608

and 609 of the Act (which EPA has promulgated in 40 CFR part 82,

subparts B and F), this proposed revision is not yet adopted. As such,

EPA believes it must propose interim approval of the Alaska program at

this time because it does not meet the requirements of part 70. Should

EPA revise part 70 as proposed, Alaska's rules will be consistent and

no revisions will be needed. However, if EPA does not revise part 70 as

proposed, EPA proposes to require that Alaska adopt and submit

appropriate revisions as a condition of interim approval.

iii. Authority to implement section 112 requirements. Alaska failed

to adopt by reference into 18 AAC 50.040 certain NESHAP that apply to

sources in Alaska, specifically 40 CFR 61.150 (asbestos NESHAP for

waste disposal), 40 CFR 61.154 (asbestos NESHAP for active waste

disposal sites) and 40 CFR Part 61 Subpart I (radionuclide NESHAP for

facilities licensed by the Nuclear Regulatory Commission). As a result,

sources subject to these NESHAP are not required to obtain title V

permits, contrary to Alaska statutes which require operating permits

for all sources subject to section 112 of the Act (unless exempted by

EPA from the obligation to have a title V permit pursuant to section

502()) of the Act. Moreover, these NESHAP would not be considered to be

``applicable requirements'' under the Alaska program and therefore

would not be required to be included in title V permits for subject

sources.

EPA believes that these deficiencies are not so serious as to

warrant disapproval of the Alaska program, but rather, the Alaska

program can be granted interim approval on the following grounds.

Regarding the issue of sources required to have title V permits, EPA

has deferred from the obligation to have a permit sources which are not

major sources but are subject to a standard under section 111 or

section 112. The fact that the Alaska program has not generally

deferred non-major sources from its program, but may have inadvertently

deferred non-major sources subject to these three NESHAP, is a matter

of State law is not an issue for EPA approval. Since the Alaska program

does not exempt any more sources subject to these NESHAP than allowed

under EPA's deferral, this aspect of the Alaska program is approvable.

On the issue of applicable requirements, Alaska has pointed out

that other provisions of the Alaska rules, specifically 18 AAC

50.335(g) and 18 AAC 50.350(f)(4) allows ADEC to include in a permit

any Federally-enforceable requirement that the source requests be

included. If the source does not request the State to include an

applicable Federal requirement, EPA would have to object to the permit

and eventually issue a Federal permit which includes the requirement.

While this does not sufficiently address the deficiency in the State's

legal authority to require inclusion of all applicable requirements in

a permit, it does provide an opportunity for the State to issue

adequate permits for the period of interim approval. Furthermore, there

appears to be only a small number of sources which will be impacted by

this deficiency, so its impact on the program will be minimal. As such,

EPA is requiring, as a condition of full approval, that Alaska update

its incorporation by reference to include all of the NESHAP that

currently apply to title V sources in Alaska.

iv. Insignificant emission units. Part 70 authorizes EPA to approve

as part of a State program a list of insignificant activities and

emissions levels which need not be included in the permit application,

provided that an application may not omit information needed to

determine the applicability of, or to impose, any applicable

requirement, or to evaluate the fee amount required under the EPA-

approved schedule. 18 AAC 50.335(q) through (v) contain criteria for

identifying insignificant sources and consist of a list of emission

rates below which sources would be defined as insignificant, but must

be listed in the permit application; a list of sources that are defined

as ``categorically exempt'' and may be omitted from the permit

application; a list of sources that are defined as ``insignificant''

based on size or production rate, but must be listed in the permit

application; a list of sources that will be deemed ``insignificant'' on

a case-by-case basis, but must be listed on the permit application; and

a list of ``categorically exempt'' sources that could have significant

emissions but are considered ``administratively insignificant'' for the

purpose of operating permit applications because the sources are not

regulated as stationary sources in Alaska. Sources that are subject to

a Federally-enforceable requirement other than a requirement of the SIP

that applies generally to all sources in Alaska (a so-called

``generally applicable requirement'' 2) are not deemed

``insignificant'' under Alaska's program even if they otherwise qualify

under one of the five lists. 18 AAC 50.335(q). Importantly, 18 AAC

50.335(m) includes a so-called ``gatekeeper,'' which expressly states

that no permit application can omit information necessary to determine

the applicability of, and include in a permit, all applicable

requirements, including those for insignificant sources. In addition,

18 AAC 50.350(m)(2) states that the permit will contain all Federally-

enforceable requirements that apply to insignificant sources.

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\2\ ``Generally applicable requirements'' are those that apply

universally to all sources, as opposed to requirements that focus on

a category of sources.

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EPA believes that, notwithstanding the gatekeeper and the

requirement that a permit must contain all Federally-enforceable

requirements that apply to insignificant sources, full approval of the

Alaska provisions for insignificant sources is inappropriate for two

reasons. First, 18 AAC 50.335(u) contains a list of sources that may be

determined to be ``insignificant'' on a case-by-case basis. In order

for EPA to approve such a ``director's discretion'' provision, Alaska

must first demonstrate that each of the sources on that list (for

example, pilot plants) would otherwise qualify as ``insignificant'' in

all cases. EPA does not believe that 40 CFR 70.5(c) allows EPA to

approve regulations that give a permitting authority complete

discretion to determine on a case-by-case basis that a particular

source is ``insignificant.'' See 60 FR 54990, 54995 (October 27, 1995)

(proposed action on Idaho operating permits program). Alaska has

advised EPA that upon further review of the sources listed in 18 AAC

50.335(u), it has determined that several of those sources do not

qualify as ``insignificant'' and that Alaska plans

[[Page 49096]]

on removing them from the list in a future revision of the rules.

Therefore, as a condition of interim approval, EPA proposes to require

that Alaska must demonstrate to EPA's satisfaction that each of the

sources identified in 18 AAC 50.335(u) are insignificant or must delete

those sources from the list.

EPA's second concern with Alaska's program for insignificant

sources concerns the State's exemption from monitoring, recordkeeping,

reporting, and compliance certification requirements for insignificant

sources that are subject only to generally applicable SIP requirements.

See 18 AAC 50.350(m)(3). EPA believes that part 70 does not exempt such

sources from the monitoring, recordkeeping, reporting and compliance

certification requirements of 40 CFR 70.6, but instead provides only a

limited exemption from permit application requirements for

insignificant sources. See 61 FR 39335 (July 29, 1996) (final interim

approval of Tennessee operating permits program based on exemption of

insignificant emission units from certain permit content requirements);

61 FR 9661 (March 11, 1996) (proposed interim approval of Tennessee

operating permits program on same basis); 60 FR 62992 (December 5,

1992) (final interim approval of Washington operating permits program

based on exemption of insignificant emission units from certain permit

content requirements); 60 FR 50166 (September 28, 1995) (proposed

interim approval of Washington's operating permits program on same

basis). On March 5, 1996, EPA issued a guidance document entitled

``White Paper Number 2 for Improved Implementation of the Part 70

Operating Permits Program'' by Lydia N. Wegman, Deputy Director, Office

of Air Quality Planning and Standards, to Regional Air Directors

(``White Paper No. 2''), which specifically addresses the issue of how

title V permits can address insignificant emission units and activities

subject to generally applicable SIP requirements in a manner that

minimizes the burden associated with the permitting of such emission

units and activities. Briefly summarized, the guidance provides that it

is within the permitting authority's discretion to decide that no

additional monitoring (beyond that provided in the applicable

requirement itself) will be required in the title V permit for

insignificant emission units or activities subject to generally

applicable requirements, if there is little or no likelihood that a

violation could occur from those emission units or activities.3

However, this is in part a factual finding, and White Paper No. 2

therefore contemplates that this discretion would be exercised on a

permit-by-permit basis, where the finding can be reviewed in a context

that is specific enough to be meaningful.4

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\3\ If no monitoring is required, it would follow that the

permit can also dispense with recordkeeping and reporting for those

units because there is no compliance data being regularly generated.

\4\ EPA does not rule out that a State might structure an

insignificant activities list narrowly enough that such a finding

could be made programmatically, thereby allowing for a categorical

exemption from part 70 monitoring, recordkeeping, and reporting.

However, EPA does not find this to be the case for the current

Alaska insignificant activities provisions because Alaska has not

demonstrated to EPA that it has so narrowly defined the types of

sources that can be deemed ``insignificant'' that there is little or

no likelihood that a violation could occur from those sources.

EPA believes that more often than not it will be the case that

part 70 monitoring, recordkeeping, and reporting requirements will

not be necessary where the State's insignificant activities are

subject only to generally applicable requirements. Therefore, Alaska

may address this interim approval condition by modifying the

exemption from these requirements to a regulatory presumption that

the monitoring, recordkeeping, and reporting requirements will not

apply in those instances, but leaving the State with the authority

to prescribe those requirements as needed on a permit-by-permit

basis.

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White Paper No. 2, however, in no way suggests that emission units

and activities subject to applicable requirements can be exempted from

compliance certification, even on a permit-by-permit basis. To the

contrary, White Paper No. 2 clearly states that compliance

certification is required, but suggests a streamlined way in which

compliance certifications may be made for these types of emission units

and activities.

The Ninth Circuit Court of Appeals has recently decided a case

addressing this same issue. Western States Petroleum Association v.

EPA, No. 95-70034 (June 17, 1996) (``WSPA''). Because of the

similarities between that case and this action, EPA believes it

appropriate to address here how it plans to respond to that decision.

EPA wishes to emphasize that the WSPA decision is very recent, and that

EPA is still in the process of developing a more thorough response that

addresses other title V programs. However, given the State's desire to

avoid imposition of the Federal Part 71 operating permits program, EPA

decided it is in the State's best interest not to delay approval until

a more thorough response could be articulated.

The WSPA case concerned EPA's approval of the Washington State

operating permits program, which contained an exemption from

monitoring, recordkeeping, reporting, and compliance certification

requirements for insignificant emission units and activities subject to

generally applicable SIP requirements. See 60 FR 62996; 60 FR 50171.

The Alaska insignificant sources provisions are modeled closely after

the Washington provisions. Industry petitioners challenged EPA's

identification of this exemption as grounds for interim approval,

asserting that such an exemption was allowed by part 70, and that EPA

had acted inconsistently by approving other title V programs with

similar exemptions. The Ninth Circuit did not opine on whether EPA's

position was consistent with part 70. It did, however, find that EPA

had acted inconsistently in its title V approvals, and had failed to

explain the departure from precedent that the Court perceived in the

Washington interim approval.

As explained in the Federal Register notice granting final interim

approval to the Tennessee operating permits program, 61 FR 39337-39340,

EPA accepts the broader holding of the WSPA decision, namely, that EPA

should act consistently in its program approvals or else explain any

departures. However, EPA does not necessarily agree with the specific

findings of the Court regarding inconsistent actions in other State

programs. The WSPA court found that EPA had acted to approve title V

programs with exemptions from permit content requirements in eight

instances. An inconsistency would exist where EPA had approved a title

V program that exempts insignificant emissions units and activities

from permit content requirements even where those emission units or

activities are subject to an applicable requirement.

EPA is still in the process of reviewing the insignificant emission

units and activities provisions of the Ohio; North Carolina; Hawaii;

and Jefferson County, Kentucky operating permit programs in order to

determine whether EPA acted inconsistently in approving those programs.

EPA has carefully reviewed the insignificant emission units and

activities provisions of the Massachusetts; North Dakota; Knox County,

Tennessee; and Florida operating permit programs, however, and has

concluded that EPA did not act inconsistently in approving these

programs.

A careful examination of the Massachusetts permitting rule

demonstrates that Massachusetts' insignificant emission units and

activities provisions represent a careful effort to list emission units

and activities that are not relevant to permit content. The North

Dakota and Knox County title V regulations do not in any way suggest

that emission units subject to applicable requirements may be

[[Page 49097]]

exempted from permit content, although the language of the Federal

Register notices approving these provisions could be read as suggesting

such an exemption existed. The language of EPA's approval notices,

imprecise though it may have been, cannot create an exemption where

none exists in the State program rules. With respect to Florida, the

program regulations do appear to exempt insignificant activities from

title V permitting. The Court concluded that EPA had not identified

this provision as grounds for interim approval. EPA does not

necessarily agree. In EPA's view, in order to remedy the deficiencies

identified by EPA in the Florida interim approval notice, which

included the State's failure to include gatekeeper language that

assured the completeness of permit applications, the State would

necessarily have to address the exemption created from permit content

requirements. It follows that, to the extent Florida's regulations can

be read as creating an exemption from permit content, this should also

be considered grounds for interim approval. For a more detailed

explanation of EPA's conclusion that the Massachusetts, North Dakota,

Knox County, Tennessee, and Florida operating permit programs are not

inconsistent with EPA's proposed action on the Alaska operating permits

program and EPA's interim approval of the Washington operating permits

program regarding treatment of insignificant emission units and

activities, please refer to the docket available at the addresses

listed at the beginning of this Notice.

EPA also does not necessarily agree that the Washington interim

approval constituted a departure from the precedent established

generally in title V program approvals nationwide. The WSPA opinion

states that:

the EPA may not depart, sub silentio, from its usual rules of

decision to reach a different, unexplained result in a single case *

* * To the contrary, the EPA must clearly set forth the ground for

its departure from prior norms so that we may understand the basis

of the EPA's action and judge the consistency of that action with

EPA's mandate. Slip Op., at 6990 (emphasis added).

EPA reads this to mean that a regulatory interpretation proffered by

the Agency is not entitled to judicial deference if it conflicts with

the de facto policy established through the Agency's actions on

specific programs. That is, if the ``norms'' established through

program approvals are other than the Agency's articulated policy,

courts will not uphold the Agency's efforts to impose the latter.

The Court in WSPA appeared to base its specific holding of

inconsistency on its assumption that EPA had approved eight programs

with exemptions from permit content, but had acted to impose the policy

against permit content exemptions in only two instances.5 This

assumption is incorrect. At the time the Washington State program

received interim approval, EPA had approved 22 State and 39 local

programs, and had proposed approval of another 13 State and 13 local

programs. As of today, EPA has approved 45 State and 56 local programs,

and has proposed approval of another 8 State and 4 local

programs.6 Each program submitted to EPA necessarily addresses

this issue, although most do so simply by providing for permit content

language consistent with part 70--that is, by not affirmatively

establishing any permit content exemption. Of 113 title V programs

approved or in the process of approval, EPA believes that there are at

most four with regulations that present inconsistencies on this issue,

which represents a relatively minor set of deviations from the normal

policy manifested in the vast majority of title V program approvals. In

short, EPA believes it is clear from these totals that its ``prior

norm'' has been to grant full approval only where emission units and

activities subject to applicable requirements are not exempted from the

permit, and that its interpretation of part 70, as manifested both in

its articulated policy and in actual program approvals, is consistent

with the position EPA proposes here with respect to the Alaska program.

In those few instances where confirmed inconsistencies exist, EPA plans

to take appropriate action to follow the WSPA Court's mandate that it

act consistently or explain any departures.

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\5\ ``[T]he EPA has identified only two Title V programs that in

fact apply permitting requirements to IEU's . . ..'' Slip Op., at

6988.

\6\ Altogether, 116 State and local agencies will have title V

programs.

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In summary, EPA proposes as a condition of full approval that

Alaska must adequately address these two identified issues: (1) The

designation and definition of insignificant sources on a case-by-case

basis; and (2) the exemption of insignificant sources from monitoring,

recordkeeping, reporting, and compliance certification requirements.

EPA does not believe, however, that these problems with Alaska's

program preclude interim approval. The ``gatekeeper'' provisions of 18

AAC 50.335(m), along with 18 AAC 50.350(m)(2), adequately assure that

Alaska has the necessary authority to issue permits that assure

compliance with all applicable requirements to subject sources during

the interim approval period, as required by 40 CFR 70.4(d)(3)(ii) and

70.6(a)(1).

v. Emissions trading provided for in applicable requirements. Part

70 requires that the permitting authority must include terms and

conditions, if the permit applicant requests them, for trading of

emissions increases and decreases in the permitted facility, to the

extent that the applicable requirements provide for trading such

increases without a case-by-case approval of each emissions trade. See

40 CFR 70.6(a)(10). The Alaska program does not contain a comparable

provision. This appears to be based on the State's assumption that no

applicable requirements currently provide for such trading. Certain of

the EPA standards in 40 CFR part 63, however, do allow for such

trading, and as such, EPA believes that the Alaska program must contain

such a provision as a condition of full approval. Therefore, EPA

proposes that Alaska ensure that its program include the necessary

provisions to meet the requirements of 40 CFR 70.6(a)(10).

vi. Inspection and entry requirements. Part 70 requires each title

V permit to contain a provision allowing the permitting authority or an

authorized representative, upon presentation of credentials and other

documents as may be required by law, to perform specified inspection

and entry functions. See 40 CFR 70.6(c)(2). The Alaska program fails to

meet the requirements of part 70 in an important respect. Alaska law

conditions ADEC's inspection and entry authority on first obtaining the

consent of the owner or operator or obtaining a warrant. See AS

46.03.860; 46.14.515(a); 18 AAC 50.345(7). The owner or operator is not

required to consent to such inspections and entry as a condition of

obtaining a title V permit. EPA proposes to require, as a condition of

full approval, that Alaska demonstrate to EPA's satisfaction that its

inspection and entry authority meets the requirements of 40 CFR

70.6(c)(2).

vii. Progress reports. Part 70 requires a title V permit to require

the submission of progress reports, consistent with the applicable

schedule of compliance and 40 CFR 70.5(c)(8), to be submitted at least

semiannually, or at a more frequent period if specified in the

applicable requirement or by the permitting authority. See 40 CFR

70.6(c)(4). Alaska requires the submission of such reports semi-

annually, but requires that they be submitted more frequently only if

required by the permitting authority.

[[Page 49098]]

See 18 AAC 50.350(k)(3). There is therefore no assurance that more

frequent progress reports will be required in the permit if specified

in the applicable requirement. As a condition of full approval, EPA

proposes to require that Alaska demonstrate to EPA's satisfaction that

its program complies with the requirements of 40 CFR 70.6(c)(4).

viii. Compliance certification. Part 70 requires a permitting

program to contain requirements for compliance certification with terms

and conditions contained in the permit, including emissions

limitations, standards or work practices. See 40 CFR 70.6(c)(5). The

Alaska program requires a title V permit to contain compliance

certification requirements only with permit terms and conditions

established under 18 AAC 50.345 (standard conditions) and 18 AAC

50.350(d) (source specific permit requirements), (e) (facility-wide

permit requirements) and (f) (certain other requirements). It therefore

does not require certification of compliance with all permit terms and

conditions, such as monitoring, recordkeeping, reporting and compliance

plan requirements. See 18 AAC 50.350(g), (h), (i) and (j). There may

also be other terms and conditions of a permit that are required by a

statute or regulation other than those specifically enumerated in 18

AAC 50.350(j). As a condition of full approval, EPA proposes to require

that Alaska demonstrate to EPA's satisfaction that its program complies

with the requirements of 40 CFR 70.6(c)(5).

ix. General permits. Part 70 allows States to issue ``general

permits,'' which are permits issued after notice and opportunity for

public participation that cover numerous similar sources. See 40 CFR

70.6(d). The Alaska program authorizes the issuance of general permits.

See AS 46.14.210; 18 AAC 50.380. The Alaska provisions for general

permits, however, fail to comply with the requirements of part 70 in

one respect. Part 70 allows permitting authorities to provide for

applications for general permits which deviate from the requirements of

40 CFR 70.5, provided that such applications otherwise meet the

requirements of title V. 40 CFR 70.6(d)(2). The Alaska regulations

indicate that ADEC will issue specialized permit applications for

general permits, see 18 AAC 50.380(c) (source shall submit a completed

application form issued by ADEC for the specific facility type), but do

not require that such general permit applications meet the requirements

of title V. Accordingly, EPA proposes to require, as a condition of

full approval, that Alaska demonstrate to EPA's satisfaction that

applications for general permits meet the requirements of title V.

x. Affirmative defense for emergencies. Part 70 provides an

affirmative defense to an action brought for noncompliance with a

technology-based limitation in a title V permit if certain specified

conditions are met. See 40 CFR 70.6(g). In the August 1995 proposed

revisions to part 70, EPA has clarified that, ``By technology-based

standards, EPA means those standards the stringency of which are based

on determinations of what is technologically feasible, considering

relevant factors. The fact that technology-based standards contribute

to the attainment of the health-based NAAQS or help protect public

health from hazardous air pollutants does not change their character as

technology-based standards.'' See 59 FR 45530, 45559 (August 31, 1995).

Alaska's program provides an affirmative defense for unavoidable

emergencies, malfunctions and nonroutine repairs that closely parallels

40 CFR 70.6(g), but is slightly broader than that section in a few

respects. See AS 46.14.560; 18 AAC 50.235; 18 AAC 50.990. First, the

Alaska regulations include a definition of ``technology-based

standard'' which closely corresponds to the definition in the proposed

part 70 revisions, but requires that the stringency of the standard be

based ``primarily'' on determinations of what is technologically

feasible. 18 AAC 50.990(82). EPA is concerned that, with the addition

of the word ``primarily,'' this provision could be used to incorrectly

classify a health-based standard, such as an opacity limit or grain

loading standard, as a technology-based standard. Second, although the

Alaska program requires a permittee claiming the affirmative defense to

notify ADEC within two working days of the exceedance, Alaska gives a

permittee up to one week after the discovery of the exceedance to

provide ADEC with a written notice describing the cause of, and its

response to, the exceedance. 18 AAC 50.235. Part 70 requires that

written notice of the exceedance containing this information be

provided within two working days of the exceedance. See 40 CFR

70.6(g)(3)(iv). As a condition of full approval, EPA proposes to

require that Alaska demonstrate to EPA's satisfaction that its

emergency provisions are consistent with the requirements of 40 CFR

70.6(g).

xi. Off-permit provisions. Part 70 authorizes an approved permit

program to include certain ``off-permit'' provisions whereby a source

can make a change at the permitted facility without the need for a

permit revision. See 40 CFR 70.4(b) (14) and (15). These provisions

require the permittee to keep a record at the facility describing each

off-permit change and to provide ``contemporaneous'' notice of each

off-permit change to EPA and the permitting authority. See 40 CFR

70.4(b)(14). The Alaska program, however, limits the requirement to

provide notice and keep records to only those sources required to

provide certain information under 18 AAC 50.335. Although EPA has

proposed to revise 40 CFR part 70 to eliminate the off-permit

requirements, this proposed revision is not yet adopted. As such, EPA

believes it must propose interim approval of the Alaska program at this

time because it does not meet the requirements of part 70. Should EPA

revise part 70 as proposed, Alaska's rules will be consistent with part

70 in this respect and no revisions will be needed. However, if EPA

does not revise part 70 as proposed, EPA proposes to require that

Alaska ensure that its program requires notice and records for all off-

permit changes.

xii. Statement of basis. Part 70 requires that the permitting

authority shall provide and send to EPA, and to any other person who

requests it, a statement that sets forth the legal and factual basis

for the draft permit conditions (including references to the applicable

statutory or regulatory provisions). See 40 CFR 70.7(a)(5). The Alaska

title V program does not contain a comparable requirement. As a

condition of full approval, Alaska must demonstrate to EPA's

satisfaction that its program satisfies the requirements of 40 CFR

70.7(a)(5).

xiii. Administrative amendments. As discussed above, part 70

authorizes States to allow certain ministerial types of changes to

title V permits to be made by administrative amendment, which does not

require EPA or public review or participation. See 40 CFR 70.7(d). That

section contains a list of five types of changes which may be made by

administrative amendment, and authorizes EPA to approve as appropriate

for incorporation by administrative amendment other types of changes

which are similar to those specifically enumerated in 40 CFR

70.7(d)(1). See 40 CFR 70.7(d)(1)(vi). As also discussed above, EPA

believes that one of the three additional changes in the Alaska

regulations is not approvable and must be revised as a condition of

full approval.

Alaska's program allows alterations in the identification of

equipment or components that have been replaced

[[Page 49099]]

with equivalent equipment or components to be made by administrative

amendment provided certain conditions are met. See 18 AAC 50.370(a)(5).

EPA believes that the restrictions on such permit alterations for

equivalent replacement equipment or components are sufficient to ensure

that any resulting change would be truly ministerial, with the

following exception. 18 AAC 50.370(a)(5)(D) prohibits such a change to

be made by administrative amendment if the revision would result in a

modification under 40 CFR part 60, which is adopted by reference in 18

AAC 50.040. This restriction is too narrow, in that it would allow

alterations in equivalent replacement equipment or components even if

the change resulted in a modification or reconstruction under 40 CFR

part 61 or 63. Such changes are title I modifications and as such must

be made by significant permit modification procedures. See 18 AAC

50.990(82); 18 AAC 50.375. Accordingly, EPA proposes to require, as a

condition of full approval, that Alaska revise 18 AAC 50.370(a)(5)(D)

to expand the prohibition to include modifications and reconstructions

made pursuant to 40 CFR parts 60, 61 and 63, or to eliminate 18 AAC

50.370(a)(5) from the list of changes that may be made by

administrative amendment.

xvi. Minor permit modifications. Part 70 requires States to

establish procedures for minor permit modifications which are

substantially equivalent to those set forth in 40 CFR 70.7(e). The part

70 regulations contain criteria that a revision must meet in order to

be processed as a minor permit modification and then contains

procedures for those changes qualifying as minor permit modifications.

See 40 CFR 70.7(e)(2)(i)(A). The Alaska program takes the same basic

approach to permit modifications as part 70, but contains several

differences which EPA believes require interim approval. See 18 AAC

50.375.

First, part 70 prohibits a permit revision to be made as a minor

permit modification if the revision involves ``significant changes to

existing monitoring, reporting, or recordkeeping requirements in the

permit.'' 40 CFR 70.7(e)(2)(i)(A)(2). Part 70's significant

modification procedures further restrict the class of revisions that

may be processed as a minor permit modification, stating that ``every

significant change in existing monitoring permit terms or conditions

and every relaxation of reporting or recordkeeping permit terms shall

be considered significant.'' See 40 CFR 70.7(e)(4). Like part 70, the

Alaska program prohibits changes to be made by minor permit

modification if the change would ``materially alter or reduce the

frequency, accuracy, or precision of existing monitoring,

recordkeeping, or reporting requirements in the permit.'' 18 AAC

50.375(a)(6). In contrast to part 70, however, neither Alaska's minor

nor significant modification procedures ensure that a relaxation of

reporting or recordkeeping permit terms must be processed as a

significant modification. Instead, the Alaska program simply states

that any revision that cannot be processed as an administrative

amendment or minor permit modification shall be processed as a

significant modification. 18 AAC 50.370(h). The Alaska program would,

therefore, allow a relaxation of reporting or recordkeeping

requirements to be processed as a minor modification, as long as the

revision did not ``materially alter or reduce'' the frequency,

accuracy, or precision of existing reporting or recordkeeping

requirements.

Second, the Alaska program also appears deficient with respect to

the information required in applications for minor permit

modifications. Part 70 requires that an application for a minor permit

modification must include a description of the change, the emissions

resulting from the change and any new applicable requirements that will

apply if the change occurs. 40 CFR 70.7(e)(2)(ii)(A). The Alaska

program requires that an application for a minor permit modification

contain a description of changes at the facility that would result from

the proposed revision and, for any resulting changes at the facility,

the information required by 18 AAC 50.335, which sets forth the

requirements for permit applications for title V permits. That section,

however, does not appear to require a facility applying for a minor

permit modification to provide information on the emissions resulting

from the modification.

Finally, the Alaska program fails to include provisions which allow

minor permit modification procedures to be used for permit

modifications involving the use of economic incentives, marketable

permits, emissions trading, and other similar approaches to the extent

that such minor permit modification procedures are explicitly provided

for in an applicable implementation plan or in applicable requirements

promulgated by EPA. See 70.7(e)(2)(B). Again, this appears to be based

on an incorrect assumption by the State that no applicable requirements

currently provide for the use of such minor permit modification

procedures. However, as stated above, certain of the EPA standards in

40 CFR part 63 do allow for the use of minor modification procedures,

and as such, this provision is required as a condition of full

approval. Therefore, as a condition of full approval, EPA proposes to

require Alaska to ensure that its program include the necessary

provisions to meet the requirements of 40 CFR 70.7(e)(2)(B).

xv. Group processing of minor permit modifications. Part 70 allows

a permitting authority to process as a group certain categories of

applications for minor permit modifications at a single source. See 40

CFR 70.7(e)(3). Section 70.7(e)(3)(i) establishes standard thresholds

for determining whether requests for permit modifications can be

grouped, but allows EPA to approve alternative thresholds, if the

permitting authority can justify the alternative thresholds based on

two specified criteria. The Alaska program contains provisions allowing

group processing of minor permit modifications. See 18 AAC 50.375(d).

The Alaska program, however, does not contain any thresholds, either

the standard thresholds set forth in 40 CFR 70.7(e)(3)(i) or proposed

thresholds tailored to Alaska sources, for determining whether minor

permit modifications may be processed as a group.

The failure of the Alaska program to establish thresholds for group

processing leads to two additional deficiencies in the Alaska program.

First, the Alaska program allows for group processing of minor permit

modifications on a quarterly basis. Section 70.7(e)(3)(iii) requires

that the permitting authority notify EPA of requested permit

modifications to be processed as a group on a quarterly basis, or

within 5 working days of receipt of an application demonstrating that

the aggregate of a source's pending applications equals or exceeds the

approved threshold levels, whichever is earlier. Second, Alaska's

regulations do not require a source to include in an application for

group processing, a determination of whether a requested modification,

when aggregated with the other pending applications to be processed as

a group, equals or exceeds the approved threshold levels, as required

by 40 CFR 70.7(e)(3)(ii)(D).7 As

[[Page 49100]]

a condition of full approval, EPA proposes that Alaska be required to

demonstrate that its group processing procedures are consistent with

the requirements of 40 CFR 70.7(e)(3).

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\7\ Because the Alaska group processing provision relies on the

State's general minor permit modification procedures, Alaska's group

processing provision is also deficient for the reasons set forth

above in the discussion of the problems with Alaska's minor permit

modification procedures. These issues must also be addressed for

group processing as a condition of full approval.

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xvi. Significant permit modifications. Part 70 requires a State to

provide for a review process that will assure completion of review of

the majority of significant permit modifications within 9 months after

receipt of a complete application. 40 CFR 70.7(e)(4)(ii). The Alaska

submittal does not address this requirement in its regulations or

otherwise in its program submittal. EPA proposes to require, as a

condition of full approval, that Alaska provide assurances that its

program is designed and will be implemented so as to complete review on

the majority of significant permit modifications within this timeframe.

xvii. Reopenings. Part 70 establishes minimum requirements a State

must meet where the State or EPA determines that cause exists to

terminate, modify or revoke and reissue a permit. See 40 CFR 70.7 (f)

and (g). The Alaska program contains reopening provisions, but the

provisions fail to comply with part 70 in several respects. Part 70

requires that a permit be reopened if additional requirements become

applicable to a major part 70 source with a remaining term of 3 or more

years. Reopening is not required if the effective date of the

requirement is later than the date the permit is due to expire, except

this exception to the reopening requirement shall not apply if the

permit or its terms have been administratively extended. See 40 CFR

70.7(f)(1)(i). The Alaska program satisfies the requirements for

reopening a permit in the event of new applicable requirements, except

that there is nothing in the Alaska program that would require

reopening in the event that the effective date of a new applicable

requirement is later than the permit expiration date and the permit has

been administratively extended. See AS 46.14.280(a)(3)(B).

Part 70 also requires that a permit shall be reopened or revised if

the State or EPA determines that the permit contains a material mistake

or that inaccurate statements were made in establishing the emissions

standards or other terms or conditions of the permit. See 40 CFR

70.7(f)(2)(iii). The Alaska program states that ADEC may reopen a

permit if, among other things, the permit was obtained by

misrepresentation of a material fact, the permit was obtained by

failure of the facility to disclose fully the facts relating to

issuance of the permit, the permit contains a material mistake or there

has been a material change in the quantity or type of emissions. See AS

46.14.280(1)(A), (2)(A) and (2)(B). This provision of Alaska's program

does not appear to comply with part 70 in that the Alaska program

merely authorizes ADEC to reopen a permit under the stated

circumstances, where as part 70 requires that a permit be reopened if

ADEC or EPA makes such a finding.

The Alaska program also fails to contain required procedures in the

event of a reopening for cause by EPA. Part 70 requires that, within 90

days of receiving notice from EPA that cause exists to terminate,

modify or revoke and reissue a permit, the permitting authority shall

forward to EPA a proposed determination of termination, modification,

or revocation and reissuance. 40 CFR 70.7(g)(2). If EPA then objects to

the permitting authority's proposed determination, the permitting

authority has 90 days to resolve the objection by terminating,

modifying, or revoking and reissuing the permit in accordance with

EPA's objection. 40 CFR 70.7(g)(4). The Alaska program does not appear

to contain any comparable provisions.

Finally, part 70 requires that a State title V program assure that

reopenings are made as expeditiously as practicable. 40 CFR 70.7(f)(2).

The Alaska program does not appear to contain a comparable provision

either in its regulations or otherwise in its program submittal. EPA

proposes to require, as a condition of full approval, that Alaska

demonstrate to EPA's satisfaction that its provisions for reopenings

comply with the requirements of 40 CFR 70.7(f) and (g).

xviii. Public petitions to EPA. Part 70 allows any person, within

60 days after expiration of EPA's 45-day review period, to petition EPA

to object to a permit based on grounds raised during the public comment

period. See 40 CFR 70.6(d). If, as a result of such a petition, EPA

objects to the permit and the permit has not already been issued, the

permitting authority may not issue the permit until EPA's objection has

been resolved. If the permit has been issued at the time of an EPA

objection resulting from a public petition, the petition for review

does not stay the effectiveness of the permit and, after any action by

EPA to modify, terminate, or revoke the permit, the permitting

authority may thereafter issue only a revised permit that satisfies

EPA's objection. Alaska's program does not appear to address these

requirements. The prohibition on issuance of a permit if the EPA

objects appears to apply only if EPA objects during its 45-day review

period. AS 46.14.220(a). In the case of an EPA objection in response to

a petition, EPA's objection would occur after the 45-day review period.

EPA proposes to require, as a condition of full approval, that Alaska

demonstrate to EPA's satisfaction that Alaska's provisions regarding

public petitions to EPA, comply with the requirements of 40 CFR

70.8(d).

xix. Public participation. Part 70 requires that the permitting

authority make available to the public any permit application,

compliance plan, permit, and monitoring and compliance certification

report pursuant to section 503(e) of the Clean Air Act, except for

information entitled to confidential treatment pursuant to section

114(c) of the Act, and expressly provides that the contents of a title

V permit are not entitled to confidential treatment. See 40 CFR

70.4(b)(3)(viii). Alaska's statutes and regulations regarding public

access to information appear to be comparable to the requirements of

part 70 with one exception. See AS 09.25.110 to .220; 46.14.520;

45.50.910 to .945. There is no express assurance under Alaska law that

the terms and contents of a title V permit will not be entitled to

confidential treatment. EPA believes that it is very unlikely that

anything in a title V permit would qualify for confidential treatment

under Alaska law in light of the narrow scope of information entitled

to confidential treatment in Alaska and the provisions specifying the

content of a title V permit. EPA therefore believes that the failure of

the Alaska program to expressly state that nothing in a title V permit

shall be entitled to confidential treatment does not pose a bar to

interim approval. See 40 CFR 70.4(d)(3)(iv); see also 60 FR 54990,

54999 (October 27, 1995)(proposed interim approval of Idaho title V

program). In order to obtain full approval, however, Alaska must

demonstrate to EPA's satisfaction that nothing in a title V permit will

be entitled to confidential treatment.

2. Effect of proposed action

Final interim approval may be granted for up to two years following

the effective date of final interim approval, and cannot be renewed.

During the interim approval period, Alaska would be protected from

sanctions, and EPA would not be obligated to promulgate, administer and

enforce a Federal permits program for the State of Alaska. Permits

issued under a program with interim approval have full standing with

respect to part 70. In addition, the one-year time period for submittal

of permit applications by subject sources and the

[[Page 49101]]

three-year time period for processing the initial permit applications

begin upon the effective date of interim approval.

If, following the grant of interim approval, Alaska were to fail to

submit a complete corrective program for full approval by the date six

months before expiration of the interim approval, EPA would start an

18-month clock for mandatory sanctions. If Alaska then failed to submit

a corrective program that EPA found complete before the expiration of

that 18-month period, EPA would be required to apply one of the section

179(b) sanctions, which would remain in effect until EPA determined

that Alaska had corrected the deficiency by submitting a complete

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

faith on the part of the State, both sanctions under section 179(b)

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

Administrator determined that the State had come into compliance. In

any case, if, six months after application of the first sanction,

Alaska still had not submitted a corrective program that EPA found

complete, a second sanction would be required.

If, following final interim approval, EPA were to disapprove

Alaska's complete corrective program, the consequences would be the

same as if EPA had initially disapproved, rather than granted interim

approval to, Alaska's submittal.

3. Scope of Proposed Interim Approval

If EPA grants final interim approval to the Alaska title V program,

EPA proposes that the program would apply to all title V sources (as

defined in the approved program) within all geographic regions of the

State of Alaska, except within ``Indian Country'' as defined in 18

U.S.C. section 1151.

III. Proposed Action on Section 112(l) Submittal and Implications

A. Authority for Section 112 Implementation

In its title V program submittal, Alaska has demonstrated adequate

legal authority to implement and enforce all section 112 (hazardous air

pollutants) requirements through its title V operating permit process.

All Alaska title V permit applications are required to cite and

describe each source regulated by a Federal emission standard adopted

by reference in 18 AAC 50.040 and the standard that applies to the

source (18 AAC 50.335(e)(2) and (6)). In addition, all title V permits

issued by the State are required to include terms and conditions that

assure compliance with the applicable requirements of 18 AAC 50.040 (18

AAC 50.350(d)(1)(A) and (d)(3)).

Alaska has incorporated by reference and is requesting delegation

for all source-applicable sections of the following Federal regulations

promulgated by EPA under section 112 of the Act: 40 CFR part 61,

subparts A (except Sec. 61.16 8), E, J, V, Y, FF, Sec. 61.145 of

subpart M (along with other sections and appendices which are

referenced in 61.145) as this rule applies to sources required to

obtain an operating permit under AS 46.14.130(b)(1)-(3) and 18 AAC

50.330 9, and appendices A, B, and C; and 40 CFR part 63, subparts

A (except 63.12 through 63.15 10), B (except 63.50 11 and

63.54 12), D, and M. See 18 AAC 50.040(b) (relevant standards

under 40 CFR part 61); 18 AAC 50.040(c) (relevant standards under 40

CFR part 63); AS 46.14.130(a) and 18 AAC 50.300 through 50.322

(preconstruction review of major sources of HAPs). Alaska is also

requesting authority to implement and enforce all future 40 CFR parts

61 and 63 regulations which Alaska adopts by reference into State law.

Finally, Alaska requests approval under the authority of 40 CFR 63.93

to substitute its state preconstruction review program for the Federal

preconstruction review requirements in 40 CFR 63.5(b)(2)-(4) and 63.54,

as these rules apply to newly constructed major affected sources

13 or the construction of a new emission unit 14.

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\8\ 40 CFR 61.16 references the Federal public information

requirements set out in 40 CFR Part 2 which apply solely to EPA and

do not place any information disclosure requirements on a State or

local agency. Alaska has adopted similar requirements under AS

46.14.520 and 46.14.525 which apply to the public availability of

information provided to the State by affected facilities.

\9\ 18 AAC 50.330 exempts from the requirement under AS

46.14.130(b)(3) to obtain an operating permit those facilities which

would only be subject to such requirement because they contain

sources regulated by the asbestos demolition and renovation

provisions of 40 CFR 61.145 and those sources exempted from part 70

permitting under the chromium electroplating and anodizing

provisions of 40 CFR 63.340(e)(1).

\10\ 40 CFR 63.12 through 63.15 refer to EPA administrative

activities which do not apply to Alaska and therefore are not

necessary for delegation purposes.

\11\ 63.50 ``Applicability'' defines when a source becomes

subject to the provisions of 63.51 through 63.56. Although Alaska

did not adopt 63.50 into State law, they have adopted the relevant

applicability language of 63.50(a) into 18 AAC 50.040(c)(2)(B),

which EPA believes is sufficient for purposes of implementing the

requirements of subpart B.

\12\ Section 63.54 defines optional notice and approval

requirements for newly constructed and reconstructed sources which

EPA is not requiring the State to adopt for delegation purposes.

\13\ See definitions of ``Major source'' and ``Affected source''

in 40 CFR 63.2.

\14\ As defined in 40 CFR 63.51.

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B. Program for Delegation of Section 112 Standards as Promulgated

The requirements for part 70 program approval, specified in 40 CFR

70.4(b), encompass section 112(l)(5) requirements for approval of a

State program for delegation of section 112 standards promulgated by

EPA as they apply to title V sources. Section 112(l)(5) requires that

the State's program contain adequate authorities, adequate resources

for implementation, and an expeditious compliance schedule, which are

also requirements under part 70. Because the State program has met

these basic requirements for the purpose of approval of its title V

program, it has also met these requirements for the purpose of

receiving delegation of the section 112 standards that Alaska has

adopted by reference.

However, in regard to the delegation of 40 CFR 61.145, EPA is

concerned that Alaska does not currently have inspection personnel

trained to perform asbestos inspections. EPA believes that proper

training is necessary if Alaska is to properly enforce and assure

compliance with 40 CFR 61.145. In this regard EPA has requested Alaska

to provide for adequate training of its staff who will be performing

asbestos inspections. Although EPA is proposing to approve delegation

of this portion of the asbestos program to Alaska, EPA plans to

continually monitor Alaska's asbestos program to ensure that the staff

are properly trained and that the program is being properly implemented

and enforced.

C. Substitution of State Preconstruction Review Regulations

As stated above, Alaska seeks to replace the Federal

preconstruction review regulations of 40 CFR 63.5(b)(3) and 63.54 with

comparable State-adopted regulations. Alaska adopted 40 CFR 63.5(b)(3),

(d) and (e) 15 into 18 AAC 50.040 but did not adopt 40 CFR 63.54.

EPA has determined that the State preconstruction review requirements

of AS 46.14.130 and 18 AAC 50.300 through 50.322, are less stringent

than 40 CFR 63.5(b)(3) and 40 CFR 63.54 as these rules apply to newly

constructed major sources of HAPs. Alaska's program requires newly

constructed, installed, or modified facilities that emit or have the

potential

[[Page 49102]]

to emit hazardous air contaminants 16 equal to or greater than

major source thresholds to obtain a construction permit. See AS

46.14.130(a)(4). In this respect, Alaska's program is as stringent as

40 CFR 63.5(b)(3) and 63.54. The Alaska program also provides for

similar application, review, and approval procedures as provided for in

40 CFR 63.5(d), (e), and 63.54. See 18 AAC 50.300 through 50.322. But,

unlike 40 CFR 63.5(b)(3), Alaska preconstruction review procedures

allow newly constructed sources at an existing facility to ``net out''

of preconstruction review. See Section IV.G.1 of the Alaska SIP, Alaska

Point Source Control Program. In other words, if a facility can offset

emission increases from the new source, thereby showing that no net

increase in emissions will occur, the facility is relieved from

obtaining pre-approval from Alaska to construct this new emission

source.

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\15\ Alaska adopted these rules only as these rules apply to

reconstructed hazardous air contaminant major facilities through a

permit condition in 18 AAC 50.345(b).

\16\ ''Hazardous air contaminant'' is a State term that has the

same meaning as the federal term ``hazardous air pollutant.'' See AS

46.14.990.

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Additionally, 40 CFR 63.5(b)(3) requires all new major affected

sources (i.e., new major sources which have the potential to emit HAPs

in quantities above major source thresholds, and ``affected sources''

which are considered ``major sources'' for the purpose of establishing

maximum achievable control technology standards under the authority of

section 112 of the Clean Air Act but do not have the potential to emit

HAPs above major source thresholds) to obtain approval prior to

construction, whereas Alaska's preconstruction program regulations only

applies to new major HAPs sources (i.e., those sources that have the

potential to emit HAPs above major source thresholds). For example, a

facility which builds a new hard chromium electroplating operation that

has a potential rectifier capacity greater than 60 million ampere-hours

per year would be subject to preconstruction review and approval under

40 CFR 63.5(b)(3) but would not be required to undergo preconstruction

review under Alaska's program since it would not have the potential to

emit chromium in quantities greater than 10 tons per year. Given this,

EPA has determined that Alaska's preconstruction review program is less

stringent than 40 CFR 63.5(b)(3) and EPA is therefore cannot be

approved.

D. Options for Section 112(l) Approval and Implications

In conjunction with the actions being taken in regard to Alaska's

title V program submittal, EPA proposes to approve Alaska's delegation

request made on May 17, 1995, and supplemented on February 27, and July

5, 1996, for all existing applicable 40 CFR parts 61 and 63 regulations

adopted by reference in 18 AAC 50.040, with the exception of 40 CFR

63.6(g) which the state has adopted by reference in 50.040(c)(1)(D).

EPA is disapproving Alaska's request for delegation of authority for

approving alternative non-opacity emission standards under 40 CFR

63.6(g) because such authority is reserved for the EPA Administrator

and cannot be delegated to a State or local agency. Because the State's

request for approval of authority to implement and enforce 40 CFR parts

61 and 63 does not include implementation and enforcement for part 70

exempted sources, EPA will retain the responsibility for implementing

and enforcing 40 CFR part 61, subpart M, for area source asbestos

demolition and renovation activities, and 40 CFR part 63, subpart N,

for area source chromium electroplating and anodizers operations which

have been exempted from part 70 permitting in 40 CFR 63.340(e)(1). See

61 FR 27785, 27787 (June 3, 1996). EPA also proposes to grant approval,

under section 112(l)(5) and 40 CFR 63.91, of Alaska's mechanism for

receiving delegation of future 40 CFR part 63 regulations as adopted

unchanged into State law.17 EPA is proposing to disapprove

Alaska's request to implement and enforce its State-adopted

preconstruction review regulations in 18 AAC 50.300 through 50.322 in

place of 40 CFR 63.5(b)(3). In this respect, EPA retains the authority

to administer the Federal preconstruction review program under 40 CFR

63.5(b)(3) as this rule applies to the construction of a new major

affected source; therefore, owners and operators subject to 40 CFR

63.5(b)(3) must still obtain EPA approval prior to commencing

construction.

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\17\ Under this streamlined approach, Alaska will only need to

send a letter of request to EPA for all future NESHAP regulations

which the State has adopted by reference. As appropriate, EPA would

in turn respond to this request by sending a letter back to the

State delegating the appropriate NESHAP standard(s) as requested. No

further formal response from the State would be necessary at this

point, and if a negative response from the State is not received

within 10 days of this letter of delegation from EPA, the delegation

would then become final. Such delegations will periodically be

published in the Federal Register.

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Although EPA is delegating authority to Alaska to enforce the

NESHAP regulations as they apply to affected sources, it is important

to note that EPA retains oversight authority for all sources subject to

these Federal requirements. EPA has the authority and responsibility to

enforce the Federal regulations in those situations where the State is

unable to do so or fails to do so.

E. Scope of Proposed Approval

If EPA approves the Alaska section 112(l) programs as proposed, EPA

proposes that, as with Alaska's title V program, the section 112(l)

programs would apply to all sources within all geographic regions of

the State of Alaska, except within ``Indian Country,'' as defined in 18

U.S.C. section 1151.

IV. Administrative Requirements

A. Request for Public Comments

EPA is requesting comments on all aspects of this proposed action.

Copies of the State's submittal and other information relied upon for

the proposed action are contained in a docket maintained at the EPA

Regional Office. The docket is an organized and complete file of all

the information submitted to, or otherwise considered by, EPA in the

development of this proposed action. 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 October 18, 1996.

B. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

C. Regulatory Flexibility Act

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

must prepare a regulatory flexibility analysis assessing the impact of

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

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

significant impact on a substantial number of small entities. Small

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

and government entities with jurisdiction over populations of less than

50,000.

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

requirements, but simply address operating permits programs submitted

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

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

on a substantial number of small entities.

D. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995

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

must

[[Page 49103]]

prepare a budgetary impact statement to accompany any proposed or final

rule that includes a Federal mandate that may result in estimated costs

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

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

select the most cost-effective and least burdensome alternative that

achieves the objectives of the rule and is consistent with statutory

requirements. Section 203 requires EPA to establish a plan for

informing and advising any small governments that may be significantly

or uniquely impacted by the rule.

EPA has determined that the action proposed 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.

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

Dated: September 9, 1996.

Chuck Clarke,

Regional Administrator.

[FR Doc. 96-23785 Filed 9-17-96; 8:45 am]

BILLING CODE 6560-50-P