Final Conditional Special Exemption From Requirements of the Clean Air Act for the Territory of American Samoa, the Commonwealth of the Northern Mariana Islands, and the Territory of Guam

Federal RegisterNov 13, 1996

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SUMMARY: The EPA is promulgating a direct final rule conditionally

exempting the Territory of American Samoa (American Samoa), the

Commonwealth of the Northern Mariana Islands (CNMI), and the Territory

of Guam (Guam), as well as certain owners and operators of sources in

American Samoa, CNMI and Guam from the requirements of title V of the

Clean Air Act (Act). EPA is revising its September 13, 1995 proposed

rule with respect to Guam. In the proposed action, EPA granted American

Samoa and CNMI, as well as owners and operators of certain sources

within those territories, a conditional exemption from title V

requirements. In the proposal, EPA also granted Guam an extension of

time in which to adopt a title V permit program and owners or operators

of certain sources an extension of time in which to obtain title V

permits. EPA has revised the proposal and today is promulgating a

direct final rule that maintains the conditional exemptions granted to

American Samoa and CNMI and also conditionally exempts Guam from title

V of the Clean Air Act. EPA is granting these conditional exemptions

under the authority of section 325 of the Act.

DATES: The direct final rule for American Samoa, CNMI, and Guam is

effective on January 13, 1997 unless adverse or critical comments are

received by December 13, 1996. If the effective date is delayed, EPA

will publish a timely notice in the Federal Register.

ADDRESSES: Copies of the petitions, the response to comments document,

and other supporting information used in developing the final special

exemption are available for inspection during normal business hours at

the following location: Office of Pacific Islands and Native American

Programs, US EPA-Region IX, 75 Hawthorne Street, San Francisco,

California 94105.

FOR FURTHER INFORMATION CONTACT: Norm Lovelace (telephone 415/744-1599,

fax 415/744-1604), Chief, Office of Pacific Islands and Native American

Programs, or Sara Bartholomew (telephone 415/744-1250, fax 415/744-

1076), Operating Permits Section, Air and Toxics Division, at the EPA-

Region IX address listed above.

I. Background

Section 325(a) of the Act authorizes the Administrator of EPA, upon

petition by the Governor, to exempt any person or source or class of

persons in Guam, American Samoa, and CNMI from any requirement of the

Act except for requirements of Section 110 and Part D of subchapter I

of the Act (where necessary to attain and maintain the National Ambient

Air Quality Standards (NAAQS), and Section 112. Such exemption may be

granted if the Administrator finds that compliance with such

requirement is not feasible or is unreasonable due to unique

geographical, meteorological, or economic factors of such territory, or

such other local factors as the Administrator deems significant.

The Governors of American Samoa, CNMI, and Guam each submitted a

petition pursuant to section 325(a) of the Act for an exemption from

title V of the Act. Title V requires states, including American Samoa,

CNMI, and Guam, to adopt and submit to EPA a title V operating permit

program for major sources and certain other stationary sources. If any

state does not adopt an operating permit program, title V requires EPA

to apply certain sanctions within that area and to promulgate,

administer, and enforce a federal operating permit program for such

area. EPA proposed regulations to implement a federal operating permit

program on April 27, 1995 (60 FR 20804) and promulgated the final rule

on July 1, 1996, at 40 CFR part 71 (61 FR 34202) (part 71). Title V

also requires that sources located in states that do not adopt a title

V permitting program obtain a federal operating permit from the EPA.

On September 13, 1995, EPA issued a proposed rule (60 FR 47515)

(the proposal) in response to petitions from the Governors of American

Samoa, Guam and CNMI. In the proposal, EPA granted the government of

Guam a three-year extension of the deadlines for submitting a title V

program and also proposed granting certain sources on Guam a similar

three-year extension of time in which to obtain title V permits. After

the proposal, Guam submitted comments requesting an exemption and

committed to achieving several of the goals of title V by developing an

alternate operating permit program. EPA is now granting the government

of Guam an exemption from the requirement to adopt a title V program on

the condition that Guam adopt and implement a local alternate operating

permit program.

In the proposal, EPA also proposed granting American Samoa and CNMI

exemptions from the requirement to implement a title V permit program

and proposed granting owners or operators of certain sources subject to

title V a similar exemption from the requirement to apply for a title V

permit. Today's direct final rule exempts both American Samoa and CNMI

from the requirement to adopt a title V program on the condition that

American Samoa and CNMI adopt and implement programs to permit

stationary sources and programs to protect the NAAQS. The programs to

protect the NAAQS are described in the proposal and the petitions.

EPA is also granting owners or operators of certain sources on

American Samoa, CNMI, and Guam a conditional exemption from the

requirement to apply for a federal title V operating permit under part

71. This rulemaking does not waive part 71 permitting requirements for

owners or operators of solid waste incinerators required to obtain a

title V operating permit under section 129(e) of the Act or of major

sources under Section 112 of the Act required to obtain title V

permits. This rulemaking also does not waive or exempt the governments

of Guam, American Samoa, or CNMI, or owners or operators of sources

located in these territories, from complying with all other applicable

Clean Air Act provisions.

EPA is promulgating this action as a direct final rule because the

Agency views this as a noncontroversial action and anticipates no

adverse comments. In fact, the public comments received to date support

granting an exemption from title V requirements. In the Proposed Rules

Section of this Federal Register, however, EPA has also published a

proposal that allows the public 30 days to comment on the direct final

rule for American Samoa, CNMI, and Guam. If adverse comments are

received during the comment period, EPA will publish a subsequent

document in the Federal Register before the effective date of the

exemption and will withdraw the direct final rule for any territory for

which adverse comments are received. All public comments received will

then be addressed by the Agency in a subsequent final rule based on

this action serving as a proposed rule. The

[[Page 58285]]

EPA will not institute a second comment period on this action. Any

parties interested in commenting on this action should do so at this

time. If no such comments are received, the public is advised that this

action will be effective on January 13, 1997.

II. Final Action and Implications

A. Conditional Approval of Guam's Exemption Request

1. Guam's Commitment Letter

The Administrator of the Guam Environmental Protection Agency

(GEPA) sent a letter to EPA on December 18, 1995. The GEPA

Administrator committed to develop and implement an alternate air

operating permit program that addresses many of the elements of a title

V program in exchange for an exemption from title V. GEPA's commitment

letter states that Guam would develop an alternate operating permit

program that would: (1) permit all major sources; (2) incorporate all

applicable federal requirements in permit conditions; (3) incorporate

monitoring, recordkeeping and reporting requirements in permit

conditions; (4) allow for public review and comment; (5) enhance

enforcement authorities, including civil and criminal penalties; (6)

identify the resources necessary to maintain an alternate program; (7)

permit existing major sources within three years; (8) conduct regular

inspections of permitted sources; and (9) coordinate the local program

with EPA air programs.

EPA continues to believe that implementation of title V would

enhance air quality by ensuring that a comprehensive and effective

permitting program is implemented. However, in light of GEPA's new

commitment to develop an alternate operating permit program that

encourages compliance and allows public participation, EPA is allowing

Guam the opportunity to demonstrate that the proposed alternative

operating permit program can meet title V's goals. EPA is promulgating

an exemption for Guam from the requirement to develop a title V

permitting program on the condition that Guam adopt and implement the

alternate operating permit program.

2. Additional Comments

EPA received similar comments from four other commenters supporting

the Governor's petition for an exemption for Guam. Two commenters

objected to EPA's proposed requirement that Guam implement title V

within three years and requested that EPA grant an exemption from the

requirement to develop a title V permit program instead. They commented

that the costs of the title V program would be an economic burden and

would require that GEPA develop additional technical resources. They

also stated that thirty local businesses would be required to pay

$10,000 per year for the program.

EPA believes that the alternate program addresses concerns over the

program's costs by allowing Guam flexibility to develop a less

expensive program based on local priorities. The alternate air

operating permit program requires that Guam improve its air program and

obtain additional technical resources, but allows Guam flexibility to

reduce costs and address local needs. In addition, most of the local

businesses cited in the comments, including several with no emissions,

would not have been required to obtain a title V permit because they

are not major sources.

Two of the commenters also stated that air quality is pristine

because Guam is an isolated island and that title V will not improve

air quality. Guam has a significant number of major sources of criteria

pollutants and hazardous air pollutants. While Guam is unlikely to

suffer from or contribute to regional air pollution problems due to its

isolation, these major sources can contribute to localized air

pollution problems. EPA believes that a comprehensive permitting

program, such as title V, will help ensure that local air quality is

not degraded by improving compliance with applicable Clean Air Act

requirements. However, EPA is granting Guam flexibility to demonstrate

that a local alternate operating permit program would adequately

protect air quality under Guam's unique local circumstances.

Two of the commenters also stated that the title V permit program

is excessively intrusive to Guam's government because it requires that

Guam Power Authority, which is operated by Guam's government, obtain

title V permits and pay title V fees. EPA notes, however, that the

Clean Air Act requires that sources controlled by governments meet the

same air quality standards as other sources. Therefore, sources

controlled by Guam's government or the U.S. government must obtain an

operating permit under the alternate operating permit program.

Please see the response to comments document in the docket for more

details on the comments that were submitted and EPA's responses.

B. Final Conditions for the Alternate Operating Permit Programs for

American Samoa, CNMI, and Guam

The final requirements for each alternate operating permit program

address deficiencies in existing programs and generally reflect

commitments made by the petitioners. The conditions for Guam's

operating permit program are similar to the conditions set forth in the

proposal for the alternate operating permit programs for American Samoa

and CNMI. American Samoa and CNMI will also implement programs to

monitor compliance with the NAAQS and reduce emissions as necessary.

Guam is not required to implement new programs to protect ambient air

quality standards if granted a title V exemption, because a previous

waiver for Guam (see 40 CFR 69.11) imposed similar requirements. The

final conditions also include express terms clarifying that the

alternate program must require compliance certifications, include a

system of regular inspections, and provide that fees collected under

the program are not used for other purposes. The provisions clarify

that the permits must be renewed periodically. In addition, the final

rule explicitly sets forth EPA's opportunity to review permits, which

was previously included in the proposed conditions by reference to

EPA's general June 28, 1989 permit program guidelines. In order to

address EPA's concern that all owner or operators of sources subject to

title V permitting requirements eventually obtain an operating permit,

the exemptions for each territory provide instances in which the

exemption will expire by a certain date. First, the exemption will

expire two (2) years after the effective date of this rule if a

territory has not submitted an alternate operating permit program to

EPA by that time. Second, the exemption for owners or operators of

sources subject to title V requirements will expire six (6) years after

the effective date of this rule for any source subject to title V

permitting requirements that has not obtained a permit under an EPA

approved alternate permit program. If the exemption expires, the

requirements of part 71 apply. The exemptions for each territory also

include conditions when EPA will revoke the exemption in its entirety

or on a source specific basis. The exemptions for American Samoa and

CNMI have been revised to include these clarifications and additions.

Without these ``checks'' to ensure that sources will eventually be

permitted through an adequate air operating permit program, EPA does

not believe

[[Page 58286]]

that it could allow the exemption from the title V requirements that it

is granting today.

1. Inspections

Guam's conditional exemption requires that Guam implement a system

of regular inspections of permitted sources and a system to identify

any unpermitted major sources. 40 CFR Part 70 requires that states

adequately inspect and monitor sources (70.10(c)(iii)), and EPA

believes that the inspections required under title V are also essential

for the success of the alternate operating permit programs. Guam does

not currently have a program for routinely inspecting air pollution

sources, but GEPA committed to implement a system of regular

inspections as part of the alternate operating permit program in its

December 18, 1995 letter. EPA understands this commitment to mean that

Guam will provide adequate inspector staff and training and develop

appropriate internal procedures to inspect all permitted sources. EPA

also expects that Guam will develop appropriate guidelines for

responding to violations that are discovered. EPA will assist Guam by

providing guidance and manuals for inspecting permitted sources.

EPA is modifying the conditions set forth in the proposal for

American Samoa and CNMI to explicitly require that these territories

also implement a system of regular inspections. EPA believes that

inspections will be equally important for these air quality programs,

and the proposal for American Samoa and CNMI implicitly required

inspections and appropriate responses to violations to ensure

compliance with all applicable requirements. After considering Guam's

comments and the need for inspections on Guam, EPA has decided to

include this requirement as an explicit provision of each waiver.

2. Compliance Certifications

EPA is requiring that Guam's alternate operating permit program

require sources to submit compliance certifications and compliance

plans to address noncompliance. The program shall also require that

sources submit, as part of the compliance plan, a schedule to

expeditiously remedy any noncompliance or achieve compliance with

promulgated regulations that have a future compliance date. The

Governor of Guam and R.W. Beck stated that the compliance benefits of

title V will be achieved without implementing the compliance

requirements of title V. They cited an environmental audit conducted by

the Guam Power Authority (GPA) after an EPA enforcement action and

claimed that ``[t]here is no environmental benefit to be gained from a

repeat of the same exercise.''

EPA believes that a one-time confidential audit cannot achieve the

same compliance benefits as a comprehensive and ongoing permitting

program like title V. Title V improves air quality by requiring that

sources identify their emissions, all applicable requirements, and

their compliance status with each such requirement. Furthermore, permit

holders agree to remedy any noncompliance through a compliance

schedule, continue to meet applicable Clean Air Act obligations in the

future, and inform the public of their compliance status. (40 CFR

70.5(c)(8) and (9), 70.5(d), and 70.6(c)). State implementation of

title V programs has already created numerous examples of the program's

value in identifying ongoing compliance problems and prompting action

to resolve these problems. EPA is clarifying that the alternate local

programs must require that sources submit initial compliance

certifications and plans with permit applications and regular

compliance certifications at least annually thereafter to provide air

quality benefits and protect the public's right to know of any Clean

Air Act violations.

EPA is modifying the conditions set forth in the proposal for

American Samoa and CNMI to explicitly require compliance

certifications, plans, and schedules for the same reasons. The proposal

required that permits be enforceable and that they provide for

monitoring, recordkeeping, and reporting that would assure compliance

with applicable requirements. EPA believes that the conditions set

forth in the proposal would require that sources report and correct

violations to assure compliance with applicable requirements. However,

Guam's comment shows that explicit guidance is necessary to clarify

this requirement and ensure that compliance certifications, plans, and

schedules are submitted and that violations are corrected. EPA will

provide examples of approved compliance certifications so that the

petitioners may use them as models for the alternate operating permit

programs.

3. Resources

EPA is requiring that the petitioners develop appropriate

mechanisms to provide adequate funding for the local alternate air

permit programs. Most states have created a special fund to ensure that

title V operating permit programs are adequately funded and that permit

program funding is used solely for the permit program. While the

alternate programs will impose lower costs than title V programs,

adequate funding will still be necessary to develop and implement the

alternate programs. The alternate operating permit programs and the

NAAQS programs for American Samoa and CNMI must also ensure that

sufficient ongoing funding will be provided and not diverted from the

program. These safeguards are necessary to ensure that funds committed

to the permit program and used as the basis for EPA approval will be

used to support the air program.

4. EPA Review and Objection

EPA is replacing the review requirements that were included in the

proposal by reference to June 28, 1989 guidance (see 54 FR 27282) with

explicit provisions that allow EPA the opportunity to comment on and

object to permits that do not conform to the alternate operating permit

program requirements. EPA will object to draft permits that are not

consistent with the approved alternate operating permit program and the

40 CFR part 69 exemption conditions, including permits that do not

contain the correct applicable requirements and emission limits or are

not issued through the correct procedures. If EPA objects to a permit,

the permit must be revised to address EPA's concerns prior to issuance

or it will not be considered a valid federally enforceable permit that

complies with the conditions of the exemption and an alternate

operating permit program approved by EPA. In such a situation, the

source must obtain a permit that resolves EPA's objections or the

source and the permitting authority (Guam, CNMI or American Samoa) will

no longer meet the conditions of the exemption with respect to that

permit. If EPA objects to a permit, EPA will notify the permitting

authority of its objections and send a copy to the permit applicant.

The permitting authority will have 180 days to work with EPA to issue a

revised permit that resolves EPA's objections. If the territory does

not issue a permit that resolves EPA's objections within 180 days, the

exemption will be revoked for that source and the source will be

subject to the federal operating permit requirements of part 71.

EPA believes that this oversight role will lead to the issuance of

permits that both EPA and the permitting authority agree comply with

the exemption, the approved alternate operating permit program and all

applicable requirements. The petitioners all stated

[[Page 58287]]

that they currently lack the technical resources to issue comprehensive

operating permits, and EPA oversight will help them implement the

alternate operating permit program. In addition, federal review will

help prevent any perception of bias when government power plants are

permitted by essentially the same organization that operates them.

Therefore, EPA oversight will assist the implementation of the

alternate permitting programs. Finally, EPA believes that oversight

during the permit process will reduce subsequent disputes between EPA,

sources, and each territory over permit terms and conditions.

Therefore, EPA is including a condition in the exemption that EPA will

have a review period in which to object to permits that EPA believes do

not comply with the alternate program.

5. Renewals and Reopening for Cause

EPA is requiring each territory to include a provision in the

alternate operating permit program for permit renewal within five years

of issuance. Regular renewals will be necessary to incorporate any new

or revised requirements, add or remove compliance schedules, and keep

permits current. The petitioners may choose to issue permits for any

fixed duration that does not exceed five years.

EPA is also requiring that each alternate program allows each

petitioner to reopen permits for cause. For instance, an application

may contain incorrect information or a permit may contain an incorrect

applicability determination or other material mistake. In addition, a

new or revised applicable requirement may be substantially inconsistent

with a permit that would not otherwise be updated for up to five years.

Petitioners should reopen permits to incorporate new requirements in

such situations if, in their estimation, there is a substantial amount

of time remaining in the permit term. Therefore, EPA is requiring that

each territory and EPA have authority to reopen permits that are not

consistent with the Act. The program must provide for notice to the

permittee and the public when a permit is reopened in this manner.

Consistent with the requirements for EPA objection discussed above, if

EPA determines that cause exists for reopening a permit issued to a

source (i.e. the permit is inconsistent with the applicable

requirements and the terms of this exemption), and the permitting

agency does not issue a new permit that corrects the deficiency within

180 days of receiving EPA's notice, EPA will revoke the exemption and

issue a permit under part 71. EPA is basing the 180 day deadline on the

longest period allowed under section 40 CFR 70.7, which it finds is a

reasonable deadline for issuing corrected permits under the alternate

operating permit programs.

6. Revocation, Expiration or Modification of Exemption

This rulemaking establishes the conditions for which the exemption

for Guam, American Samoa, or CNMI will expire or will be revoked or

modified, and explains the appropriate administrative mechanism. First,

the exemption for any territory will expire two years after the

effective date of this rule without further rulemaking unless the

territory submits an alternate operating permit program by the date

specified in the rule. The program should substantively address each

requirement of the exemption. If a program is not submitted by the

deadlines set forth in this rule, part 71 will become effective for the

territory on that date. As set forth in Section E, below, American

Samoa and CNMI are required by this rule to conduct modeling and to

submit any State Implementation Plan (SIP) revision necessary to

address compliance with the NAAQS. For American Samoa, the exemption

will also expire if American Samoa fails to submit air quality modeling

and supporting data within two years of the effective date of this

rule. For CNMI the exemption will expire if CNMI fails to submit a SIP

to assure compliance with the NAAQS for SO2, unless CNMI

demonstrates within one year through additional modeling and site

specific meteorological data that the NAAQS for SO2 is protected.

If an alternate program is submitted by the deadline, the exemption

will continue while EPA reviews the program to determine if it

qualifies for approval. EPA will approve the program and provide notice

of the approval in the Federal Register if the program meets the

conditions of the exemption and will disapprove the program and revoke

the exemption by rulemaking if it does not. In addition, EPA may revoke

or modify the conditional exemption through rulemaking if the

permitting authority does not adequately implement and enforce the

alternate program.

EPA is including additional procedures for expiration or revocation

of the exemption in this rulemaking to assure that all sources will

eventually obtain a valid federally enforceable operating permit under

either an approved alternate operating permit program or part 71.

First, if the local agency fails to issue an operating permit under an

approved alternate program to a source within six years of the

effective date of this rulemaking, the exemption will expire for any

source without a permit and that source will become subject to the part

71 federal operating permit requirements. The six year date is based on

similar deadlines set forth in Title V of the Clean Air Act for

submittal and approval of the operating permit program and issuance of

permits to all sources. These expiration and revocation provisions will

not apply to any source that has obtained an operating permit through

an alternate operating permit program approved by EPA within the six

year deadline. This requirement provides a backstop for assuring that

all subject sources will have a means for applying for an operating

permit no later than six years from today.

These new termination/revocation provisions are necessary to fill

gaps that existed in the proposal. With these procedures EPA will

ensure that all owners or operators of subject sources that would have

been required to obtain a Title V permit will eventually be permitted

under an approved program. These provisions will also ensure that all

owners and operators of subject sources will apply for an operating

permit by a date certain so that no source goes unpermitted.

EPA may determine in the future that the implementation of a title

V permitting program or the modification of the exemption is necessary

to ensure compliance with applicable Clean Air Act requirements and to

protect air quality. If EPA determines that revocation or modification

of the exemption is necessary due to changed circumstances or other

causes, EPA will conduct a rulemaking to revoke or modify the

exemption. In this case the exemption and its conditions will remain

effective until EPA has completed its rulemaking.

7. Federal Enforceability

In order for EPA to authorize an exemption for each territory as

set forth in this rule, EPA must ensure that permits issued under the

alternate programs required by this rule are federally enforceable.

This is consistent with the title V permit program and is an important

component to assure that each territory attains and/or maintains

compliance with the NAAQS. Therefore, EPA is requiring, as a condition

of the exemptions authorized in this rule, that each territory submit a

revision to its SIP to make permits issued under an approved alternate

program federally enforceable. The SIP revision should provide that a

person shall not violate any permit condition or term in a permit that

has been issued

[[Page 58288]]

under an alternate operating permit program approved by EPA.

C. Implementation of Title V for Hazardous Air Pollutant Sources and

Solid Waste Incineration Units

This action does not waive any title V permitting requirement that

applies to major sources of hazardous air pollutants (HAPs) in American

Samoa, CNMI, or Guam and is conditioned to address special concerns

presented by the local impact of HAPs. Any source that would be subject

to title V because it is a major source under Section 112 of the Clean

Air Act or a solid waste incinerator regulated under section 129 of the

Clean Air Act must obtain a title V permit under part 71.

Any nonmajor source of hazardous air pollutants that is subject to

a standard or other requirement under Section 112 may be subject to the

requirement to obtain a title V permit. Currently, the requirement to

obtain a title V permit has been deferred for such sources, as noted in

each applicable standard 1. If at any time in the future EPA

requires these nonmajor sources of HAPs to obtain a title V permit, it

is EPA's intent that these nonmajor sources be permitted under the

local alternate permitting program authorized by today's rule. Sources

subject to Section 112 standards under 40 CFR part 63 should refer to

the applicable subpart of part 63 for the dates required for submission

of permit applications.

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\1\ On June 3, 1996, EPA published in the Federal Register (61

FR 27785) an amendment to certain hazardous air pollutant standards

for Chromium Electroplating and Chromium Anodizing Tanks (subpart

N); Ethylene Oxide Commercial Sterilization and Fumigation

Operations (subpart O); Perchloroethylene Dry Cleaning Facilities

(subpart M); and Secondary Lead Smelting (subpart X). In that

action, EPA amended the requirement in each of these rules that

required nonmajor sources (emitting or having the potential to emit

less than 10 tons per year of any hazardous air pollutant or less

than 25 tons per year of any combination of hazardous air

pollutants) to obtain Title V permits. For certain of these nonmajor

sources, the rules have been amended to allow the permitting

authority the option of deferring the requirement to obtain a title

V permit for 5 years. Certain nonmajor sources subject to subpart N

of part 63 (Chromium Anodizing Tanks) that are not located at major

sources are permanently exempted from the requirement to obtain a

title V permit consistent with 40 CFR Sec. 63.340(e)(1) (61 FR

27787, June 3, 1996). Any nonmajor batch cold solvent cleaning

machines subject to subpart T of part 63 (Halogenated Solvent

Cleaners) that are not located at major sources are permanently

exempted from the requirement to obtain a title V permit consistent

with 40 CFR Sec. 63.468(j) (59 FR 61801, December 2, 1994). For any

other nonmajor solvent cleaning machines subject to subpart T of

part 63 (Halogenated Solvent Cleaners) that are not located at major

sources, the rules have been amended to allow the permitting

authority the option of deferring the requirement to obtain a title

V permit for 5 years (59 FR 61801, December 2, 1994).

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1. Title V Permits

As noted earlier, title V requires that EPA implement a federal

operating permitting program in any area that does not have an approved

title V program (Section 502(e) of the Act, 42 U.S.C. 7661(e)). The

part 71 program at 40 CFR part 71 (61 FR 34202) became effective on

July 31, 1996. EPA's proposal of September 13, 1995 required that the

existing major sources of HAPs, and owners and operators of any new

source on Guam subject to title V because it is a major source under

section 112, or a solid waste incinerator subject to section 129,

obtain title V permits under part 71. In the proposal EPA requested

comments on whether any existing municipal waste incinerators or major

HAP sources on American Samoa and CNMI should be required to obtain

title V permits under part 71. No comments were received. EPA has

decided that the exemptions for Guam, American Samoa, and CNMI

authorized in today's action do not apply to these solid waste

incinerators and major HAP sources and that owners or operators of

these sources must obtain part 71 permits. This final rule will ensure

that section 112 standards that apply to major sources of HAPs are

appropriately implemented through the title V operating permit program.

Section 112 of the Clean Air Act recognizes that HAP sources can have a

significant impact on human health regardless of geographic location,

and section 325 of the Act explicitly prohibits waivers from section

112 requirements. Because sections 112 and 129 generally rely on an

effective title V permitting program to ensure that the standards are

implemented correctly and HAP reductions are achieved, EPA believes

that sources subject to section 129 and major sources of HAPs must have

title V permits. Several sources on Guam currently subject to Section

112 standards did not meet the deadline for submitting initial

applicability notifications to EPA. EPA believes that expeditious

compliance with title V will resolve any potential applicability

questions or compliance problems for title V sources and that waiving

title V for these sources could result in confusion and greater

emissions of HAPs. EPA believes that regulating these sources under

title V will not impose an undue burden, because, as noted above, EPA

has deferred nonmajor HAP sources from the requirement to obtain a

title V permit.

EPA will be the permitting authority and will issue title V permits

to these sources under part 71, as each of the petitioners has

demonstrated that it currently lacks the technical resources to issue a

title V permit. EPA published a Federal Register Notice on July 31,

1996 (61 FR 39877, July 31, 1996), listing the state and local

jurisdictions where a Federal Operating Permits Program became

effective on that day. This notice included Guam, American Samoa and

CNMI. Applications for major sources of HAPs and solid waste

incinerators under part 71 are due to be submitted to the permitting

authority by July 31, 1997, except for those major perchloroethylene

dry cleaning facilities, which are due by April 1, 1997.

2. Case-By-Case Maximum Achievable Control Technology (MACT)

Determinations

Section 112 MACT requirements for case-by-case MACT determinations

apply to major sources in certain situations where EPA has not

promulgated an applicable MACT standard. Section 112 (j) requires that

where EPA has missed a deadline for promulgating a section 112(d)

standard then any major source of HAPs in the applicable source

category must submit an application for a case-by-case MACT

determination within 18 months of the missed deadline. Section 112(g)

sets forth certain case-by-case MACT requirements for newly constructed

or reconstructed sources. These requirements apply to all major sources

of HAPs in American Samoa, CNMI, and Guam after the effective date of

part 71.

The regulations implementing 112(j) at 40 CFR part 63, subpart B,

apply as of the effective date of part 71 (July 31, 1996), but the

petitioners' source inventories indicate that there are no major

sources that are subject to 112(j) at this time. Should any source be

subject to this requirement, EPA will use part 71 permit applications

as the compliance mechanism for implementing these case-by-case MACT

approvals, as the petitioners have demonstrated that they lack the

technical resources to conduct such a determination.

EPA recently reopened the comment period and published a notice of

availability of a draft rule implementing Section 112(g) (61 FR 13125,

March 26, 1996). After the 112(g) regulation becomes effective, any

newly constructed or reconstructed major source of HAPs in each

territory must comply with a MACT level of control. This will be

determined on a case-by-case basis when no applicable standard has been

promulgated by EPA. Any new source subject to section 112(g) must apply

for case-by-case MACT approval after the effective date of the

regulation.

[[Page 58289]]

Other section 112 requirements, such as 112(d) MACT standards,

automatically apply to all HAP sources in American Samoa, CNMI, and

Guam. This exemption does not waive any Section 112 requirements

applicable to any sources; this rule only exempts the nonmajor sources

from the requirement to obtain a part 71 permit.

EPA's proposal required that American Samoa and CNMI develop an

implementation agreement with EPA regarding hazardous air pollutant

sources, but EPA believes that the EPA's implementation of part 71

(which includes section 129(e) solid waste incinerators and major HAP

sources) renders this agreement unnecessary as a waiver condition.

D. Effective Date of Title V Approval for Other Programs

In addition to sections 112(g) and 112(j), the implementation of

other regulations may depend on the approval date of a title V

permitting program. For instance, EPA has considered implementing 40

CFR part 64 compliance assurance monitoring through title V permitting

programs, and other future regulations may also be implemented or

triggered by the effective date of an approved title V program. In this

case, for sources that are not required to obtain a part 71 permit

under today's rule, the local alternate operating permit programs,

after approval by EPA, will implement all applicable requirements,

including any part 64 monitoring rule. This rule grants a conditional

exemption to owners and operators only from the requirement to obtain a

title V permit and to each territory from the requirement to adopt a

title V program. All sources on American Samoa, CNMI, and Guam must

comply with all other applicable Clean Air Act provisions. For any

requirement other than the case-by-case MACT requirement addressed

above that is implemented or triggered by an approved title V program,

the implementation or trigger date is July 31, 1996, the date

individual sources became subject to part 71.

E. Air Quality Modeling and SIP Submittals

In the proposal, EPA discussed potential problems with air quality

on American Samoa and CNMI and required these territories to conduct

modeling and make any SIP revision necessary to ensure compliance with

the NAAQS. EPA is retaining the requirements for American Samoa and

CNMI set forth in the proposal for air quality modeling and SIP

submittals.

III. Administrative Requirements

A. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

B. Regulatory Flexibility Act

This action under section 325 of the Act does not impose new

requirements, but allows local agencies flexibility to reduce the

impacts of title V on small entities. Because this action does not

impose any new requirements, and merely approves requests for

additional flexibility to meet existing requirements, it does not have

a significant impact on a substantial number of small entities.

C. Unfunded Mandates

Under Section 202 of the Unfunded Mandates Reform Act of 1995,

signed into law on March 22, 1995, EPA must prepare a budgetary impact

statement to accompany any proposed or final rule that includes a

federal mandate that may result in estimated costs to state, local, or

tribal governments in the aggregate; or to the private sector, of $100

million or more. Under Section 205, EPA must select the most cost-

effective and least burdensome alternative that achieves the objectives

of the rule and is consistent with statutory requirements. Section 203

requires EPA to establish a plan for informing and advising any small

governments that may be significantly or uniquely impacted by the rule.

EPA has determined that this exemption 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 exemptions requested to

reduce the cost of implementing the Clean Air Act. Accordingly, this

action will reduce costs to state governments and the private sector.

D. Small Business Regulatory Enforcement Fairness Act

Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business

Regulatory Enforcement Fairness Act of 1996, EPA submitted a report

containing this rule and other required information to the U.S. Senate,

the U.S. House of Representatives and the Comptroller General of the

General Accounting Office prior to publication of the rule in today's

Federal Register. This rule is not a ``major rule'' as defined by 5

U.S.C. 804(2).

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

List of Subjects in 40 CFR Part 69

Environmental protection, Administrative practice and procedure,

Air pollution control, Hazardous air pollutants, Intergovernmental

relations, Nitrogen oxides, Operating permits, Reporting and

recordkeeping requirements, Sulfur dioxide, Volatile organic compounds.

Dated: October 28, 1996.

Carol M. Browner,

Administrator.

40 CFR part 69 is amended as follows:

PART 69--[AMENDED]

1. The authority citation for part 69 continues to read as follows:

Authority: Sec. 325, Clean Air Act, as amended (42 U.S.C. 7625-

1).

Subpart A--Guam

2. Subpart A is amended by adding Sec. 69.13 to read as follows:

Sec. 69.13 Title V conditional exemption.

(a) Conditional exemption. In response to a petition submitted by

the Governor of Guam and pursuant to section 325(a) of the Clean Air

Act (Act), the Administrator of the United States EPA (EPA) grants the

following conditional exemptions:

(1) Guam is exempted from the requirement to develop, submit for

approval, and implement an operating permit program under title V of

the Clean Air Act on the condition that Guam meets the requirements of

paragraph (b) of this section and subject to the provisions of

paragraphs (c) through (e) of this section.

(2) Except for sources listed under paragraph (a)(4) of this

section, owners or operators of sources located in Guam subject to the

operating permit requirements of title V of the Clean Air Act are

exempt from the requirement to apply for and obtain a title V operating

permit, on the condition that the owner or operator of each such source

must apply for and obtain an operating permit under an EPA approved

alternate program that meets the requirements of paragraph (b) of this

section and subject to the provisions of paragraphs (c) through (e) of

this section. The owner or operator of each such source shall apply for

and obtain a permit under the alternate operating permit program by the

deadlines set forth in the approved program, but in any event shall

obtain a permit no later than March 14, 2003. If the owner or operator

of any source has not obtained an operating permit under an alternate

operating program approved by EPA for Guam by March 14, 2003, the

exemption for such source

[[Page 58290]]

shall expire and the owner or operator of such source shall become

subject to the permitting requirements of 40 CFR part 71 on that date,

consistent with paragraph (d)(4) of this section.

(3) Upon EPA approval of an alternate operating permit program

adopted by Guam in accordance with this Sec. 69.13, a person shall not

violate any permit condition or term in a permit that has been issued

under such alternate permit program.

(4) This exemption does not apply to owners or operators of major

sources of hazardous air pollutants (HAPs) as defined under section 112

of the Clean Air Act or to owners or operators of solid waste

incinerators subject to the title V requirements of section 129(e) of

the Act. Owners or operators of major sources of HAPs or solid waste

incinerators shall be subject to the requirements of 40 CFR part 71 and

shall apply for and obtain a part 71 permit by the deadlines specified

in 40 CFR part 71. Any owner or operator of a major source of HAPs

subject to 40 CFR part 63, subpart B, shall submit a timely part 71

permit application as required by 40 CFR part 71 and 40 CFR part 63,

subpart B, requesting a case-by-case section 112(g) or 112(j) Maximum

Achievable Control Technology (MACT) determination.

(b) Requirements for the alternate operating program. Guam shall

develop and submit an alternate operating permit program (the program)

to EPA for approval. Upon approval by EPA, Guam shall implement the

program. The program, including the necessary statutory and regulatory

authority, must be submitted by March 15, 1999 for approval. The

submittal shall include the following elements:

(1) The program must contain regulations that ensure that:

(i) The permits shall include emission limits and standards, and

other terms or conditions necessary to ensure compliance with all

applicable federal requirements, as defined under 40 CFR 70.2.

(ii) The limitations, controls, and requirements in the permits

shall be permanent, quantifiable, and otherwise enforceable as a

practical matter.

(iii) Permits shall contain monitoring, recordkeeping and reporting

requirements sufficient to ensure compliance with applicable federal

requirements during the reporting period.

(iv) The program shall require that the owner or operator of each

source submit permit applications with compliance certifications

describing the source's compliance status with all applicable

requirements. The program shall also provide that each permit contain a

requirement that the owner or operator of a source submit annual

compliance certifications. The compliance certification shall contain a

compliance plan, and shall contain a schedule for expeditiously

achieving compliance if the source is not in compliance with all

applicable requirements. The program must provide that approval of a

permit with a compliance plan and schedule does not sanction

noncompliance.

(2) The program shall provide for the collection of fees from

permitted sources or other revenues in an amount that will pay for the

cost of operation of such a program and ensure that these funds are

used solely to support the program.

(3) The program shall provide for public notice and a public

comment period of at least 30 days for each permit, significant permit

modification, and permit renewal, and shall include submittal to EPA of

each permit, significant permit modification, and permit renewal.

(4) The program shall provide EPA at least 45 days from receipt of

a permit, modification, or renewal for EPA review and objection prior

to issuance. The program shall provide that if EPA objects to a permit

sent to EPA for review, Guam cannot issue such permit until the permit

is revised in a manner that resolves EPA's objections. The program

shall provide that Guam will have no more than 180 days to resolve

EPA's objections and that if the objections are not resolved within

that time period, EPA shall issue the permit under 40 CFR part 71.

(5) The program shall provide that all documents other than

confidential business information will be made available to the public.

(6) The program shall provide Guam with the authority to enforce

permits, including the authority to assess civil and criminal penalties

up to $10,000 per day per violation and to enjoin activities that are

in violation of the permit, the program, or the Act without first

revoking the permit.

(7) The program shall require that owners or operators of nonmajor

sources of hazardous air pollutants that are required to obtain title V

permits, and owners or operators of major sources of all other air

pollutants as defined at 40 CFR 70.2 that are exempted from 40 CFR part

71 under paragraph (a) of this section, obtain an operating permit

under the approved program. The program shall include a schedule for

issuing permits to all subject sources within three years of EPA

approval of the program.

(8) The program shall include a system of regular inspections of

permitted sources, a system to identify any unpermitted major sources,

and guidelines for appropriate responses to violations.

(9) The program shall provide for the issuance of permits with a

fixed term that shall not exceed five years.

(10) The program shall allow Guam or the EPA to reopen a permit for

cause. The program shall provide that if EPA provides Guam with written

notice that a permit must be reopened for cause, Guam shall issue a

revised permit within 180 days (including public notice and comment)

that sufficiently addresses EPA's concerns. The program shall provide

that if Guam fails to issue a permit that resolves EPA's concerns

within 180 days, then EPA will terminate, modify, or revoke and reissue

the permit under part 71 after providing the permittee and the public

with notice and opportunity for comment.

the submittal of the alternative operating permit program, Guam shall,

no later than March 15, 1999 submit a revision to its SIP that provides

that a person shall not violate a permit condition or term in an

operating permit that has been issued under an EPA approved alternate

operating permit program adopted by Guam pursuant to the exemption

authorized in this Sec. 69.13.

(d) Expiration and revocation of the exemption. This exemption

shall expire or may be revoked under the following circumstances:

(1) If Guam fails to submit an alternate operating permit program

by March 15, 1999, the exemption shall automatically expire with no

further rulemaking and 40 CFR part 71 shall become effective for all

subject sources in Guam on that date.

(2) In the event that EPA disapproves Guam's alternate operating

permit program because the program does not meet the requirements set

forth in paragraph (b) of this section, EPA will revoke the exemption

by rulemaking.

(3) If, by March 14, 2003, the owner or operator of any subject

source has not obtained a federally enforceable operating permit under

an EPA approved program, the exemption shall automatically expire for

such source and such source shall be subject to the permitting

requirements of 40 CFR part 71. Guam will work with EPA to identify

such sources prior to expiration of the exemption under this paragraph

(d).

(4) EPA shall revoke the exemption in its entirety through

rulemaking if Guam does not adequately administer and

[[Page 58291]]

enforce an alternate operating permit program approved by EPA.

(5) EPA shall revoke the exemption by rulemaking with respect to

the owner or operator of any source if, during the 45-day review

period, EPA objects to issuance of a permit and Guam fails to resolve

EPA's objections within 180 days. EPA shall also revoke the exemption

by rulemaking for the owner or operator of any source in the event that

EPA reopens a permit for cause and Guam does not issue a permit that

resolves the concerns as set forth in EPA's notice to reopen within 180

days.

(6) EPA reserves its authority to revoke or modify this exemption

in whole or in part.

(e) Scope of the exemption. This exemption applies solely to the

requirement that an owner or operator obtain an operating permit under

title V of the Clean Air Act and the requirement that Guam implement a

title V permit program. In addition, this exemption does not apply to

owners or operators of sources set forth in paragraph (a)(4) of this

section. Owners and operators of air pollutant sources are required to

comply with all other applicable requirements of the Clean Air Act. For

purposes of complying with any applicable requirement that is triggered

or implemented by the approval of a title V permit program, the

approval date for owners or operators to which this exemption applies

shall be the date that EPA approves the alternate program for each

territory or, for owners or operators of sources that are subject to 40

CFR part 71, the approval date shall be the effective date of 40 CFR

part 71, which is July 31, 1996.

3. Subpart B is amended by revising the subpart heading and adding

Sec. 69.22 to read as follows:

Subpart B--American Samoa

Sec. 69.22 Title V conditional exemption.

(a) Conditional exemption. In response to a petition submitted by

the Governor of American Samoa (American Samoa) and pursuant to section

325(a) of the Clean Air Act (Act), the Administrator of the United

States EPA (EPA) grants the following conditional exemptions:

(1) American Samoa is exempted from the requirement to develop,

submit for approval, and implement an operating permit program under

title V of the Clean Air Act on the condition that American Samoa meets

the requirements of paragraph (b) of this section and subject to the

provisions of paragraphs (c) through (f) of this section.

(2) Except for sources listed under paragraph (a)(4) of this

section, owners or operators of sources located in American Samoa

subject to the operating permit requirements of title V of the Clean

Air Act are exempt from the requirement to apply for and obtain a title

V operating permit, on the condition that the owner or operator of each

such source must apply for and obtain an operating permit under an EPA

approved alternate program that meets the requirements of paragraph (b)

of this section and subject to the provisions of paragraphs (c) through

(f) of this section. The owner or operator of each such source shall

apply for and obtain a permit under the alternate operating permit

program by the deadlines set forth in the approved program, but in any

event shall obtain a permit no later than March 14, 2003. If the owner

or operator of any source has not obtained an operating permit under an

alternate operating program approved by EPA for American Samoa by March

14, 2003, the exemption for such source shall expire and the owner or

operator of such source shall become subject to the permitting

requirements of 40 CFR part 71 on that date, consistent with paragraph

(e)(4) of this section.

(3) Upon EPA approval of an alternate operating permit program

adopted by American Samoa in accordance with this Sec. 69.22, a person

shall not violate any permit condition or term in a permit that has

been issued under such alternate permit program.