Clean Air Act Interim Approval of Operating Permits Program; Commonwealth of Virginia

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5710-8]

Clean Air Act Interim Approval of Operating Permits Program;

Commonwealth of Virginia

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.

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SUMMARY: EPA proposes interim approval of the Commonwealth of

Virginia's Operating Permits Program, which Virginia submitted in

response to Federal statutory and regulatory directives that States

adopt programs providing for the issuance of operating permits to all

major stationary sources and to certain other sources. EPA is proposing

interim approval of Virginia's submittal because Virginia's program

substantially meets the requirements for approval set forth at 40 Code

of Federal Regulations (CFR) Part 70, but still requires some revisions

to fully meet those requirements. The required revisions which Virginia

will have to make before EPA could grant full approval are discussed in

this notice.

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

April 17, 1997. Comments should be addressed to the contact indicated

below.

ADDRESSES: Copies of the State's submittal and other supporting

information used in developing the proposed interim approval are

available for inspection during normal business hours at the following

locations: (1) U.S. EPA Region III; Air, Radiation, & Toxics Division;

841 Chestnut Building; Philadelphia, PA 19107, and (2) Virginia

Department of Environmental Quality; 629 East Main Street, Richmond,

Virginia 23219.

FOR FURTHER INFORMATION CONTACT: Ray Chalmers, 3AT23; U.S. EPA Region

III; Air, Radiation, & Toxics Division; 841 Chestnut Building;

Philadelphia, PA 19107. (215) 566-2061.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Submittal and Review Requirements

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

(sections 501-507 of the Clean Air Act (CAA)), EPA has promulgated

rules which define the minimum elements of an approvable State

operating permits program and the corresponding standards and

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

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

1992)). These rules are codified at 40 Code of Federal Regulations

(CFR) Part 70. Title V directs States to develop, and submit to EPA,

programs for issuing these operating permits to all major stationary

sources and to certain other sources.

The CAA directs States to develop and submit these programs to EPA

by November 15, 1993, and requires EPA to approve or disapprove each

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

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

70 regulations, which together outline criteria for approval or

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

requirements of section 502 of the CAA and Part 70, EPA may grant the

program interim approval for a period of up to 2 years. If EPA has not

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

interim program, it must establish and implement a Federal program.

Due in part to pending litigation over several aspects of the Part

70 rule promulgated on July 21, 1992, Part 70 is in the process of

being revised. When the final revisions to Part 70 are promulgated, the

requirements of the revised Part 70 will redefine EPA's criteria for

the minimum elements of an approvable State operating permits program

and the corresponding standards and procedures by which EPA will review

State operating permits program submittals. Until the date on which the

revisions to Part 70 are promulgated, the currently effective July 21,

1992, version of Part 70 shall be used as the basis for EPA review.

B. Federal Oversight and Potential Sanctions

If EPA were to finalize this proposed interim approval, it would

extend for two years following the effective date of the final interim

approval. During the interim approval period, Virginia would be

protected from sanctions, and EPA would not be obligated to promulgate,

administer and enforce a Federal permits program for the Commonwealth.

Permits issued under a program with interim approval have full standing

with respect to part 70, and the one year time period for submittal of

permit applications by subject sources begins upon the effective date

of interim approval, as does the three year time period for processing

the initial permit applications.

Following final interim approval, if Virginia failed to submit a

complete

[[Page 12779]]

corrective program for full approval by the date six months before

expiration of the interim approval, EPA would be required to start an

18 month clock for mandatory sanctions. If Virginia then failed to

submit a corrective program that EPA found complete before the

expiration of the 18 month period, EPA would be required to apply one

of the sanctions in section 179(b) of the CAA, which would remain in

effect until EPA determined that Virginia had remedied the deficiency

by submitting a complete corrective program. Moreover, if the

Administrator found a lack of good faith on the part of Virginia, both

sanctions under section 179(b) would be required to apply after the

expiration of the 18 month period until the Administrator determined

that Virginia had come into compliance. In any case, if, six months

after application of the first sanction, Virginia 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

Virginia's complete corrective program, EPA would be required to apply

one of the section 179(b) sanctions on the date 18 months after the

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

had submitted a revised program and EPA had determined that it

corrected the deficiencies that prompted the disapproval. Moreover, if

the Administrator found a lack of good faith on the part of Virginia,

both sanctions under section 179(b) would be required to apply after

the expiration of the 18 month period until the Administrator

determined that Virginia had come into compliance. In all cases, if,

six months after EPA applied the first sanction, Virginia had not

submitted a revised program that EPA had determined corrected the

deficiencies that prompted disapproval, a second sanction would be

required.

In addition, discretionary sanctions may be applied where warranted

any time after the end of an interim approval period if Virginia has

not timely submitted a complete corrective program or EPA has

disapproved a submitted corrective program. Moreover, if EPA has not

granted full approval to Virginia's program by the expiration of the

interim approval, EPA must promulgate, administer and enforce a Federal

permits program for Virginia after the interim approval expires.

II. Description of Virginia's Submittal

Virginia submitted an operating permits program to EPA on November

12, 1993, pursuant to the requirements of Title V. The submittal

included regulations, an Attorney General's opinion, a program

description, permitting program documentation, and other required

elements. On January 14, 1994, Virginia submitted a supplemental letter

pertaining to enhanced monitoring. EPA disapproved that submittal in a

Federal Register notice published on December 5, 1994 (59 FR 62324).

EPA disapproved the submittal because it did not provide citizens

with adequate judicial standing to challenge permits, did not prevent

the default issuance of permits, did not contain regulations which were

still in effect, did not cover the proper universe of sources, did not

ensure that permits would include all applicable requirements, and did

not correctly delineate permit provisions enforceable only by Virginia.

In addition, EPA identified numerous other deficiencies that Virginia

would need to correct to meet the federal requirements for a fully

approvable program, although these other deficiencies were not bases

for the disapproval action. These other issues were what EPA calls

``interim approval issues''--deficiencies that would prevent granting

full approval to the State's program, but that leave the program

qualified for interim approval because they don't cause it to fail to

``substantially meet'' the requirements of the CAA.

On January 9, 1995, Virginia submitted revised regulations and a

revised Attorney General's opinion as amendments to its original

program, and asked that EPA approve the revised program. On January 17,

1995, Virginia submitted an additional copy of the revised regulations

(the version published in the Virginia Register). Finally, on May 17,

1995, Virginia again amended its program by submitting revised

statutory language and an amended Attorney General's opinion. The

revisions addressed many of the disapproval bases and other

deficiencies EPA had previously identified. However, Virginia did not

submit revised judicial standing provisions. Virginia did not revise

these provisions because it believed its judicial standing provisions

were adequate and had sued EPA to contest EPA's conclusion that they

were not.

EPA proposed disapproval of Virginia's revised submittal in a

Federal Register notice published on September 19, 1995 (60 FR 48435).

EPA proposed disapproval because Virginia still did not provide

citizens with adequate judicial standing to challenge permits, because

Virginia did not assure that all sources required by the CAA to obtain

Title V permits would be required to obtain such permits, and because

Virginia did not adequately provide for collection of Title V program

fees. EPA also identified as interim approval issues the fact that

Virginia had defined units as ``insignificant'' at far higher emissions

levels than those which EPA considered ``sound,'' as well as certain

other provisions pertaining to insignificant activities.

On November 8, 1995, Virginia submitted revised Title V operating

permit regulations to EPA, which the Commonwealth asserted corrected

the major regulatory problems which EPA had identified in Virginia's

previous submittals, and again asked that EPA approve the State's

program. However, these were emergency regulations in effect for only

one year, and Virginia had taken no action to revise its judicial

standing provisions to give all affected citizens the right to

challenge in Virginia's courts operating permits issued by Virginia.

Moreover, Virginia had not corrected provisions pertaining to

insignificant activities which EPA had identified as raising interim

approval issues. On September 10 and 12, 1996, Virginia again submitted

to EPA revised Title V program regulations, this time regulations which

had been permanently adopted, and once more asked that EPA approve the

State's Title V program. However, Virginia had still not revised its

judicial standing provisions and had still not corrected provisions

pertaining to insignificant activities. Since Virginia's November, 1995

and September, 1996 submittals did not properly address previously

identified deficiencies, EPA did not propose to take action on these

submittals when EPA initially received them.

Virginia has since appropriately revised its judicial standing

provisions. After the Fourth Circuit Court of Appeals affirmed EPA's

disapproval of Virginia's program, 80 F.3d 869 (1996), Virginia

appealed its case to the U.S. Supreme Court. On January 21, 1997, the

Supreme Court decided not to hear Virginia's case. Virginia had

prepared for the possibility that the Courts might not rule in the

Commonwealth's favor by passing a revised judicial standing law,

acceptable to EPA, which would go into effect should the Courts not

find for Virginia.

On February 6, 1997, Virginia submitted to EPA an Attorney

General's opinion affirming that Virginia's acceptable judicial

standing law would be in effect as of February 15, 1997 as a result of

the U.S. Supreme Court's January 21, 1997 denial of Virginia's

petition. The Attorney General's

[[Page 12780]]

opinion also addressed several other remaining legal issues. In

addition, on February 27, 1997, Virginia's Department of Environmental

Quality (VADEQ) agreed to commit to recommending revisions to

regulatory requirements and also agreed to make certain interpretations

of existing regulatory requirements. These agreements are discussed

below when relevant.

As a result of these recent revisions, EPA has determined that

Virginia's Title V submittal now substantially meets the requirements

for approval set forth at 40 CFR part 70, and EPA is therefore

proposing interim approval of Virginia's submittal. The portions of the

submittal for which EPA is proposing interim approval consist of the

operating permit and operating permit fee regulations submitted on

September 10, 1996, the acid rain operating permit regulations

submitted on September 12, 1996, and other non-regulatory

documentation. EPA cannot propose full approval because Virginia must

still address certain ``interim approval issues,'' as discussed below.

Concurrently with this proposed interim approval, EPA is withdrawing

the proposal to disapprove Virginia's submittal which EPA published in

the Federal Register on September 19, 1995.

III. Analysis of Virginia's Submittal

This section focuses on how Virginia has corrected the program

deficiencies which EPA identified in Virginia's program in the proposed

disapproval notice which EPA published at 60 FR 48435 on September 19,

1995, and on certain other important deficiencies which Virginia must

still address before EPA can fully approve the Commonwealth's program.

Virginia's full program submittal, EPA's Technical Support Document

(TSD), which provides additional analysis of Virginia's submittal, and

other relevant materials are available as part of the public docket.

Virginia's Title V operating permit program submittal

substantially, but not fully, meets the requirements of the CAA and of

the implementing regulations at 40 CFR Part 70. Virginia has

substantially corrected the deficiencies which had earlier caused EPA

to disapprove and to propose to disapprove Virginia's programs. The

deficiencies which EPA identified as bases for disapproval when it

published its September 19, 1995, Federal Register notice proposing

disapproval of Virginia's program were that Virginia's Title V program

submittal: (1) Did not provide all citizens with adequate judicial

standing to challenge State permits; (2) did not assure that all

sources required by the CAA to obtain Title V permits would be required

to obtain such permits; and (3) did not contain an adequate provision

for collection of Title V program fees. EPA discusses below the changes

Virginia made in its Title V submittal to correct these deficiencies.

EPA also identified other deficiencies during its previous review,

which it identified as interim approval issues. Virginia has already

corrected some of these deficiencies. Discussed below are changes which

Virginia made which adequately address some of these previously

identified deficiencies, as well as certain additional changes which

Virginia must still make before EPA could grant full approval to

Virginia's program.

A. Deficiencies Corrected

1. Virginia's Judicial Standing Provisions

A major reason for EPA's disapproval and its proposal to disapprove

Virginia's earlier Title V operating permit program submittals was that

Virginia's law did not provide interested parties with adequate

standing to obtain judicial review in State court of final Title V

permit decisions. Virginia's judicial standing law restricted the right

to judicial review to those who had suffered an actual or imminent

injury which was an invasion of ``an immediate, pecuniary and

substantial interest which is concrete and particularized.'' EPA, and

the U.S. Court of Appeals for the 4th Circuit, concluded that

Virginia's requirement that a petitioner had to demonstrate a

``pecuniary'' interest was too restrictive to be approved under Title

V. See 80 F.3rd 869 (4th Cir., 1996).

After EPA's position was upheld by the Fourth Circuit Court of

Appeals, Virginia appealed the case to the U.S. Supreme Court. On

January 21, 1997, the Supreme Court declined to hear Virginia's case.

To be prepared should EPA's position that Virginia's judicial standing

provisions were deficient be upheld by the Courts, Virginia had adopted

revised and acceptable judicial standing provisions, at sections 10.1-

1318, 10.1-1457, and 62.1-44.29 of the Code of Virginia, but specified

that the revised provisions would become effective only if Virginia's

suit against EPA was unsuccessful.

The Supreme Court's refusal to take Virginia's appeal has caused

Virginia's revised judicial standing provisions to become effective,

and Virginia's standing provisions are now fully acceptable. Virginia's

revised standing law now provides judicial standing to any person who

``meets the standard for judicial review of a case or controversy

pursuant to Article III of the United States Constitution.'' It further

provides that ``a person shall be deemed to meet such standard if (i)

such person has suffered an actual or imminent injury which is an

invasion of a legally protected interest and which is concrete and

particularized; (ii) such injury is fairly traceable to the decision of

the Board and not the result of the independent action of some third

party not before the court; and (iii) such injury will likely be

redressed by a favorable decision by the court.'' This new standard is

consistent with the standard for Article III standing articulated by

the Supreme Court in Lujan v. Defenders of Wildlife, 112 S. Ct. 2130

(1992). Consequently, EPA has determined that Virginia's standing

provisions meet the requirements of CAA section 502(b)(6) and 40 CFR

70.4(b)(3).

2. Applicability Under the Operating Permits Program

In the original disapproval of Virginia's program, EPA identified

as a basis for disapproval Virginia's failure to require issuance of

permits to the proper universe of sources required by part 70. See 59

FR 62325. In addition, in its September 19, 1995, Federal Register

notice proposing disapproval of Virginia's previous operating permit

program submittal, EPA again cited the fact that the submittal did not

ensure the applicability of the Title V operating permit program to all

sources required to be subject to the program under 40 CFR 70.3 as a

reason for disapproving the submittal.

This was because in the applicability sections of the earlier

version of its regulations (which were designated as sections 120-08-

0501 and 120-08-0601) Virginia should have listed all of the CAA

requirements which trigger Title V applicability, as they are set forth

at 40 CFR 70.3. Instead of meeting this requirement by listing federal

CAA section 111 and 112 requirements, Virginia inappropriately listed

certain of its own air pollution control regulations, into which it had

incorporated federal CAA section 111 and 112 requirements. In the

revised regulations it submitted to EPA in September 1996, Virginia

correctly cited federal CAA section 111 and 112 requirements in the

applicability sections of its regulations (now designated as sections 9

VAC 5-80-50 and 9 VAC 5-80-310), thus correcting this deficiency. As

discussed later in this notice, Virginia's regulations regarding

applicability

[[Page 12781]]

continue to present a minor facial inconsistency with part 70, which

EPA does not view as an impediment to future full approval of the

Commonwealth's program.

3. Permit Fee Demonstration

In its September 19, 1995, Federal Register notice EPA cited the

inadequacy of the permit fee provisions in Virginia's submittal as

another reason for proposing disapproval of the submittal. The

deficiency in the fee provision was that Virginia had not set a minimum

fee amount of $25 per ton of emissions, to be adjusted for consumer

price inflation (CPI) using a 1989 base year. Virginia revised its

regulations to correct this deficiency.

In its prior notice EPA also identified as a concern a statutory

limit on the amount of fees which the Commonwealth can collect. This

statutory limit, which is found in the Virginia Air Pollution Control

Law at Sec. 10.1-1322 B, appears to create a cap of $25 per ton of

emissions, to be adjusted for inflation using a 1990 base year. EPA

stated that the statute should be revised to specify a base year of

1989. EPA believed that unless Virginia made this change the

Commonwealth would not be able to collect the full fee amount specified

by its regulations because of the statutory cap.

Virginia did not change this statutory provision. However,

Virginia's Attorney General provided an assurance that this cap would

not interfere with the State's ability to collect the full amount of

required fees. Virginia's Attorney General stated that: ``Virginia Code

Sec. 10.1-1322(B) provides that the annual permit fees `shall be

adjusted annually by the Consumer Price Index as described in Sec. 502

of the federal Clean Air Act.' '' Since Code Sec. 10.1-1322(B)

references Sec. 502 and Sec. 502 provides that adjustment shall be made

using 1989 as the base year, the CPI adjustment required by Code

Sec. 10.1-1322(B) also employs a 1989 base year. The reference in Code

Sec. 10.1-1322(B) to a 1990 base year does not pertain to the CPI

adjustment, but refers instead to the year in which the initial $ 25

per ton charge applies. In keeping with the requirements of section 502

of the CAA as interpreted by EPA and for this purpose only, the year

1990 runs from September 1, 1989 through August 31, 1990.'' See

Supplement to January 6, 1995 Attorney General's Opinion dated February

6, 1997. Because the fee cap as adjusted by the CPI under the Virginia

fee statute is in fact the same as the amount as the fee assessed under

the Virginia regulations (i.e., the calculation begins at $25 per ton

and is adjusted by changes in the CPI since 1989), EPA is satisfied

that Virginia will be able to assess fees which meet the presumptive

minimum required under Title V.

4. Other Deficiencies Corrected

In its September 19, 1995, Federal Register notice EPA cited

several other deficiencies in the insignificant activities provisions

in Virginia's submittal which would prevent EPA from being able to

grant full approval to the program. Virginia corrected some but not all

of these deficiencies. In this section EPA discusses the deficiencies

which Virginia corrected.

In its previous proposed disapproval notice, EPA expressed concern

regarding the fact that Virginia had defined as insignificant all

emissions units with uncontrolled emissions of less than 10 tons per

year of nitrogen dioxide, sulfur dioxide, and total suspended

particulates or particulate matter (PM10), less than seven tons per

year of volatile organic compounds, and less than 100 tons per year of

carbon monoxide (CO). EPA noted that it considered these levels too

high. Virginia responded to EPA's concerns by changing its

insignificant activity provisions to define units as insignificant

which had uncontrolled emissions of less than 5 tons per year (TPY) of

nitrogen dioxide, sulfur dioxide, total suspended particulates or

particulate matter (PM10), and volatile organic compounds. EPA

considers the exemption level of less than 5 TPY of uncontrolled

emissions of these pollutants to be acceptable. Virginia did not change

its specification that units with uncontrolled CO emissions of less

than 100 TPY are insignificant. For the reasons discussed in the

September 19, 1995 Federal Register notice, EPA continues to regard

this as a deficiency which must be corrected before EPA could grant

full approval to Virginia's program. This deficiency is discussed

further below in the section entitled Remaining Deficiencies.

EPA was also concerned by the fact that under Virginia's previous

rules a determination of whether or not a source is subject to the

operating permit program could be made without taking into account

emissions from units considered to be insignificant. If the total

emissions from units subject to Title V requirements were just below

the levels which would trigger Title V program applicability, failure

to take into account additional emissions from units which are exempt

could result in a source avoiding Title V requirements to which it

should have been subject. Virginia corrected this deficiency by stating

in Rule 8-5 at 9 VAC 5-80-90, and in Rule 8-7 at 9 VAC 5-80-440, that

``the emissions from any emissions unit shall be included in the permit

application if the omission of those emissions units from the

application would interfere with the determination of the applicability

of this rule, the determination or imposition of any applicable

requirement, or the calculation of permit fees,'' and by including a

similar statement in Article 4 at 9 VAC 5-80-710. Thus, EPA has

determined that Virginia has sufficiently corrected this prior

deficiency, and the Commonwealth need take no further action with

respect to it before EPA could grant full approval to Virginia's

program.

In addition, EPA was concerned by the fact that in Appendix W of

the Commonwealth's prior regulations (since redesignated as Article 4)

Virginia had defined as insignificant all pollutant emission units with

emissions less than the section 112(g) de minimis levels set forth at

40 CFR 63.44 or the accidental release threshold levels set forth at 40

CFR 68.130. See 9 VAC 5-80-720 B 6. EPA noted that these levels were

appropriate in many cases, but were too high in others. Virginia

adequately addressed this concern by adding the qualifier ``or 1000

pounds per year, whichever is less'' to the statement at 9 VAC 5-80-720

B 6.

Furthermore, while not a concern for purposes of program approval,

EPA notes that the references to emission units with emissions at or

below the section 112(g) de minimis levels established in 40 CFR 63.44

now have no meaning. See 9 VAC 5-80-720 B 5 and B 6. Virginia

apparently assumed when it prepared its regulation that EPA would

finalize the referenced list. However, EPA did not finalize this list

and there are now no emissions levels ``in 40 CFR 63.44.'' As a result,

emission units emitting hazardous air pollutants which are not 112(r)

pollutants need to be fully described in application forms. This fact

reduces the universe of units which can be considered insignificant

under Virginia's regulations, but this is not a concern with respect to

EPA's decision to approve or disapprove Virginia's program, because

part 70 does not require States to define any particular units as

insignificant.

Finally, EPA also expressed concern with the fact that in its prior

program Virginia had inappropriately included ``comfort air

conditioning'' and ``refrigeration systems,'' which are subject to

stratospheric ozone protection requirements, in the listing of

insignificant activities found in Article 4. Virginia removed these

items from

[[Page 12782]]

the list. Thus, this previous deficiency has been fully corrected.

B. Remaining Deficiencies (Interim Approval Issues)

As noted above, in its December 5, 1994 and September 19, 1995,

Federal Register notices EPA cited several other deficiencies in the

insignificant activities provisions in Virginia's submittal as another

impediment to granting full approval of the submittal. EPA stated that

Virginia would have to correct these deficiencies before EPA could

fully approve the Commonwealth's program. In this section EPA addresses

one insignificant activity related deficiency which Virginia did not

correct in its revised program, and several additional insignificant

activity related deficiencies which EPA has identified in reviewing the

Commonwealth's new program since publishing the September 1995 proposed

disapproval notice.

1. Units Emitting Up To 100 TPY of CO Inappropriately Considered to be

Insignificant

EPA remains concerned that Virginia continues to define any

emission unit emitting less than 100 TPY of carbon monoxide (CO) as

insignificant. As EPA stated in its September, 1995 proposed

disapproval notice, and as discussed previously in this notice, EPA has

determined that the 100 TPY emissions level is far too high. The

Director of the VADEQ has recently informed EPA that VADEQ will seek to

change this regulation to correct this problem. (See letter from VADEQ

Director dated February 27, 1997.) Virginia must complete this

correction before EPA can fully approve Virginia's program.

EPA does not consider this deficiency to be an impediment to

interim approval. Virginia has identified a specific provision in its

regulations that requires sources to provide emissions information in

permit applications if the omission of that information ``would

interfere with the determination of the applicability of the State's

Title V program, the determination or imposition of any applicable

requirement, or the calculation of fees.'' 9 VAC 5-80-90. See also 9

VAC 5-80-710 4. In addition, the majority of sources in Virginia which

have units emitting CO are not subject to applicable requirements for

CO. Sources that are subject to CO-related requirements are likely to

be subject to federal standards, such as new source performance

standards (NSPS), for those units, and should be aware of the specific

CO-related requirements applicable to them. Thus, in the interim period

before Virginia revises its regulations, EPA believes that the

potential for confusion caused by Virginia's 100 TPY CO threshold

should be minimized, provided the Commonwealth takes care to monitor

source compliance with applicable requirements. EPA therefore does not

believe it would be reasonable to disapprove Virginia's program due to

this deficiency. EPA's treatment of Virginia's high CO threshold is

consistent with how EPA has addressed similar problems in other States.

2. Applications Not Required to Include Sufficient Information To

Identify All Applicable Requirements for Emission Units Deemed

Insignificant

In connection with its review of Virginia's inappropriate

designation of units emitting up to 100 TPY of CO as insignificant EPA

carefully reviewed Virginia's ``gatekeeper'' provisions to determine

whether or not they might substantially address the concerns this

inappropriate designation had raised. ``Gatekeeper'' provisions are

meant to assure that all applicable requirements for units designated

as insignificant are included in both applications and permits, thereby

enabling permitting authorities, reviewing members of the public,

affected States, and EPA to adequately assess source compliance with

all applicable requirements. During the course of its review EPA

identified several deficiencies with these ``gatekeeper'' provisions.

Virginia's regulations at 9 VAC 5-80-90 D 1 now require emissions

information to be included in permit applications, even for

insignificant activities, ``if the omission of these emissions units

from the application would interfere with the determination of the

applicability of this rule, the determination or imposition of any

applicable requirement, or the calculation of permit fees.'' However,

with respect to including all applicable requirements in applications,

EPA notes that Virginia has inappropriately included a provision in the

applicability section of Rule 8-5, at 9 VAC 5-80-50 F, which states

that ``[t]he provisions of 9 VAC 5-80-90 concerning application

requirements shall not apply to insignificant activities designated in

9 VAC 5-80-720 with the exception of the requirements of 9 VAC 5-80-90

D 1 and 9 VAC 5-80-710,'' and that it has included a similar provision

in the applicability section of Rule 8-7, at 9 VAC 5-80-360 E. As a

result of these provisions, sources are required to provide only

emissions information for insignificant activities, but not any

additional information, such as that required by 9 VAC 5-80-90 D.2, E.,

or F. (which require all information necessary to determine applicable

requirements), which might be required to identify applicable

requirements when emissions information alone is not sufficient. Since

many applicable requirements under the CAA, particularly those relating

to 112(d) standards for hazardous air pollutants, could not be

identified solely by emissions information, EPA does not believe that

Virginia's existing ``gatekeeper'' provision fully meets the

requirements of Title V. Specifically, 40 CFR 70.5(c) provides that

applications ``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 schedule approved pursuant

to Sec. 70.9 of this part.'' (emphasis added). Before EPA can fully

approve Virginia's program Virginia must assure that the requirements

of Sec. 70.5(c) will be met by appropriately revising the provisions at

9 VAC 5-80-50 F and 9 VAC 5-80-360 E.

VADEQ agrees that permit applications must include all information

required to identify applicable requirements, and has agreed to seek

revisions to Virginia's regulations in the future to ensure that

sources provide such information. In addition, VADEQ has stated that

``[u]nder the provisions of 9 VAC 5-80-90 E 1, the Board (Virginia's

Air Pollution Control Board) will require that permit applications

contain a citation and description of all applicable requirements

including those covering activities deemed insignificant under 9 VAC 5

Chapter 80, Article 4.'' (See letter from VADEQ Director dated February

27, 1997.) In light of this, EPA has determined that Virginia's program

substantially meets the requirements of Title V with respect to this

issue and that it is appropriate to grant interim approval of

Virginia's program. This is consistent with how EPA has treated similar

deficiencies in other States.

3. Permits Not Required To Include Applicable Requirements for Emission

Units Deemed Insignificant

With respect to including all applicable requirements in permits,

Virginia Rule 8-5 contains an inappropriate provision at 9 VAC 5-80-110

which states that ``For major sources subject to this rule, the board

shall include in the permit all applicable requirements for all

emission units in the major source except those deemed insignificant in

Article 4 (9 VAC 5-80-710 et. seq.) of this part.'' Virginia's Rule 8-7

(the acid rain

[[Page 12783]]

regulation) essentially repeats this deficiency at 9 VAC 5-80-490.A.1.

These provisions in Rules 8-5 and 8-7 are inadequate because they

contain the qualification ``except those deemed insignificant in

Article 4 * * *'' EPA cannot fully approve Virginia's program until

Virginia removes these qualifications.

VADEQ agrees that the change EPA calls for above is required and

has committed to seek this change. In addition, VADEQ has stated that

``In addition to the provisions of 9 VAC 110 A 1, the Board will also

include in the permit those applicable requirements covering activities

deemed insignificant under 9 VAC 5 Chapter 80, Article 4.'' (See letter

from VADEQ Director dated February 27, 1997.) Finally, Virginia's

regulations elsewhere suggest that the Commonwealth's program

inadvertently contains the deficiencies identified at 9 VAC 5-80-110

A.1 and 5-80-490 A.1. This is suggested by the fact that 9 VAC 5-80-110

B.1, 5-80-150 A.4, 5-80-490 B.1 and 5-80-510 B 4 require that permits

``specify and reference applicable emission limitations and standards,

including those [* * *] that assure compliance with all applicable

requirements'' and that permits may be issued only if ``the conditions

of the permit provide for compliance with all applicable

requirements.'' In light of this, EPA has determined that Virginia's

program substantially meets the requirements of Title V with respect to

this issue and that it is appropriate to grant interim approval of

Virginia's program. EPA's treatment of this issue is consistent with

how it has been treated in other States.

4. Emergency or Standby Compressors, Pumps, and/or Generators

Inappropriately Defined as Insignificant

EPA also notes that under 9 VAC 5-80-720 C 4 Virginia designates as

insignificant emissions units ``Internal combustion powered compressors

and pumps used for emergency replacement or standby service, operating

at 500 hours per year or less, as follows'' and then goes on to cite

emergency generators of various horsepower ratings, depending on

whether or not the generators are gasoline, diesel, or natural gas

powered. EPA believes that 9 VAC 5-80-720 C 4 is confusing in that

Virginia first defines emergency or standby compressors or pumps as

insignificant, and then further qualifies the units considered

insignificant by discussing various sizes of emergency generators.

VADEQ has agreed to seek to clarify this provision in the revised

regulations Virginia will be submitting in the future. In the interim,

VADEQ has explained to EPA that ``With regard to the provisions of 9

VAC 5-80-720 C 4 regarding the designation of certain internal

combustion powered compressors and pumps as insignificant emissions

units, the exemption levels (expressed in horsepower) for the emergency

generators refer to the size of the engines that provide the power to

the compressors and pumps.'' (See letter from VADEQ Director dated

February 27, 1997.)

EPA notes that engines of the sizes designated will likely be large

enough to trigger certain NSPS standards, e.g., 40 CFR part 60, Subpart

Dc--Standards of Performance for Small Industrial-Commercial-

Institutional Steam Generating Units, or GG--Standards of Performance

for Stationary Gas Turbines, or be major sources in and of themselves.

EPA believes that to avoid confusion any list of insignificant

activities should not contain items which may clearly be subject to

applicable requirements. Accordingly, before EPA can grant full

approval to the Commonwealth's program, Virginia must not only clarify

its insignificant activity provision for emergency pumps, compressors,

or generators, but must also reduce the horsepower size designations

sufficiently to exclude any unit which would likely trigger an

applicable requirement or emit pollutants in major amounts. It is

important to note that the major source thresholds for air pollutants

will vary depending on nonattainment designations in the Commonwealth.

For example, given that there is a serious ozone nonattainment area in

northern Virginia, the State's insignificant activities will be judged

relative to the major source thresholds of 50 tons/year for volatile

organic compounds and nitrogen oxides.

EPA took a similar position in its notice giving final interim

approval to Tennessee's program. See 61 FR 39335 (July 29, 1996). In

that notice EPA stated that ``insignificant activities lists should

avoid the potential for confusion created when an activity that is

plainly subject to an applicable requirement is included.'' 61 FR

39337. EPA required, as an interim approval item, that Tennessee

address EPA's concerns regarding the potential for confusion which

arose because certain activities and emission units were listed as

insignificant which could also be subject to applicable requirements.

EPA took similar positions when it proposed approval of West Virginia's

program at 60 FR 44799 (August 29, 1995), and then approved that

program at 60 FR 57352 (November 15, 1995), and when it proposed

approval of Florida's program at 60 FR 32292 (June 21, 1995), and then

approved that program at 60 FR 49343 (September 25, 1995).

5. ``Off-Permit Changes'' Defined as Including Changes Subject to

Requirements Under Title IV

In addition to the acid rain regulatory provisions cited above that

track flaws in Virginia's main Title V rule, EPA is concerned with two

other provisions in the Commonwealth's regulations relating to acid

rain requirements. Currently, EPA's Part 70 rule allows sources to make

certain so-called ``off-permit'' changes that are not addressed or

prohibited by the permit without obtaining a permit revision. See 40

CFR 70.4(b)(14). However, this flexibility does not extend to changes

that are modifications under Title I of the CAA or those that are

subject to any of the acid rain requirements under Title IV of the CAA.

40 CFR 70.4(b)(15). Regarding acid rain requirements, EPA stated in its

preamble to the final part 70 rule that ``the allowance trading system

provided for in Title IV will not be feasible unless there is an

accurate accounting of each source's obligations thereunder in the

Title V permit.'' 57 FR 32250, 32270 (July 21, 1992). Virginia's

regulations allowing ``off permit'' changes at 9 VAC 5-80-280.C and 5-

80-680.C fail to exclude from eligibility changes that are subject to

requirements under Title IV. For the reasons discussed in the preamble

to the final part 70 rule, EPA has determined that it cannot grant full

approval to Virginia's program until Virginia revises its regulations

to correctly exclude Title IV changes from off-permit eligibility. In

the meantime, EPA does not view this deficiency as preventing

Virginia's program from substantially meeting the requirements of Title

V. Thus, the Commonwealth's program is still eligible for interim

approval.

6. Affirmative Defense Provisions Deficient

Part 70 provides that a source may qualify for an affirmative

defense for noncompliance with a technology based emission limitation

in ``emergency'' situations if certain conditions are met. Section

70.6(g)(1) defines what kind of situations may qualify as

``emergencies,'' and Sec. 70.6(g)(3) provides, in part, that the

affirmative defense of emergency shall be demonstrated through properly

signed, contemporaneous operating logs, or other relevant evidence

that, ``(iv) the permittee submitted notice of the emergency to the

permitting authority within 2 working days of the time when emission

limitations were exceeded due

[[Page 12784]]

to the emergency.'' Section 70.6(g)(3) further provides that this

notice would satisfy the requirement for ``prompt'' reporting of

deviations required by Sec. 70.6(a)(3)(iii)(B).

In its program Virginia uses the term ``malfunction'' instead of

emergency. Virginia's definition of this term is consistent with how

EPA defines ``emergency.'' However, Virginia's operating permit

regulations at 9 VAC 5-80-250.B.4 and 5-80-650 provide in part that

``[f]or malfunctions that occurred for one hour or more, the permittee

submitted to the board by the deadlines established in B.4.a and B.4.b.

a notice and a written statement containing a description of the

malfunction, any steps taken to mitigate emissions, and corrective

actions taken. The notice fulfills the requirement of 9 VAC 5-80-110

F.2.b. to report promptly deviations from permit requirements.''

(emphasis added)

Virginia allows sources to claim the affirmative defense for

malfunctions which last less than one hour even when the source does

not notify the Commonwealth of the malfunction. Thus, Virginia's

affirmative defense provision is less stringent than that required

under Sec. 70.6(g), and sources may be able to shield themselves from

liability beyond what is allowed under part 70. EPA cannot grant full

approval to Virginia's program until Virginia revises its regulations

to correct this deficiency. However, EPA does not view this deficiency

as preventing Virginia's program from substantially meeting the

requirements of Title V, since it is of limited scope and Virginia's

regulations otherwise comport with Sec. 70.6(g). Thus, the

Commonwealth's program is still eligible for interim approval.

C. Other EPA Comments

1. Acid Rain Provisions

Virginia submitted Rule 8-7 to require operating permits for

sources subject to acid rain emission reduction requirements or

limitations. Except for the deficiencies discussed elsewhere in today's

notice, EPA has determined that Virginia's Rule 8-7 for acid rain

sources is acceptable.

2. Authority and Commitments for Section 112 Implementation

Section 112 of the CAA requires EPA to control hazardous air

pollutant emissions from various categories of sources by establishing

maximum achievable control technology (MACT) standards. Upon request,

EPA delegates the authority to implement and enforce section 112

requirements to State and local agencies. Virginia requested that EPA

grant Virginia ``delegation of authority upon approval of the operating

permit program for all Section 112 programs except Section 112(r),

prevention of accidental releases.'' (See the VADEQ Director's 11/12/93

letter submitting Virginia's initial request for approval of its Title

V program.) Virginia demonstrated that it has in Va. Code Sec. 10.1-

1322.A. and Rule 8-5 the broad legal authority to incorporate into

permits and to enforce applicable CAA section 112 requirements.

Virginia supplemented its broad legal authority with a commitment to

``develop the state regulatory provisions as necessary to carry out

these programs and the responsibilities under the delegation after

approval of the operating permit program and EPA has issued the

prerequisite guidance for development of these Title III programs.''

(See the VADEQ Director's 11/12/93 letter submitting Virginia's initial

request for approval of its Title V program.) (Note: States must meet

their responsibilities under the CAA and part 70 without respect to

whether or not EPA has issued ``guidance.'' Nevertheless, EPA's view is

that it has issued sufficient guidance to enable States to develop all

necessary regulatory provisions pertaining to section 112 requirements

(formerly referred to as Title III requirements). With respect to CAA

section 112(r), Virginia has the authority under section 9 VAC 5-80-90

1C to require that an applicant state that the source has complied with

CAA section section 112(r) or state in the compliance plan that the

source intends to comply and has set a schedule to do so.

When EPA has not promulgated an applicable Federal MACT emission

limitation, section 112(g) of the Clean Air Act requires the Title V

permitting authority (generally a State or local agency responsible for

the program) to determine a MACT emission limitation on a case by case

basis. On December 27, 1996, EPA promulgated regulations at 40 CFR part

63 (61 FR 68384, December 27, 1996) (the 112(g) MACT rule) implementing

certain provisions in section 112(g). The 112(g) MACT rule assures that

owners or operators of a newly constructed, reconstructed, or modified

major sources of hazardous air pollutants (HAP)(unless they are

specifically exempted) will be required to install effective pollution

controls during the period before EPA can establish a national MACT

standard for a particular industry, provided they are located in a

State with an approved Title V permit program. The rule does not

require new source MACT for modifications to existing sources.

The 112(g) MACT rule establishes requirements and procedures for

owners or operators to follow to comply with section 112(g), and

contains guidance for permitting authorities in implementing 112(g).

Section 112(g) will be in effect in a State or local jurisdiction on

the date that the permitting authority, under Title V, places its

implementing program for section 112(g) into effect. Permitting

authorities have up to 18 months from the December 27, 1996, date of

publication of the 112(g) rule to initiate implementing programs. After

the 18 month transition period, if a State or local permitting

authority is unable to initiate a section 112(g) program, there are two

options for obtaining a MACT approval: Either (1) the EPA will issue

112(g) determinations for up to one year; or (2) the permitting

authority will make 112(g) determinations according to procedures

specified at 40 CFR 63.43, and will issue a notice of MACT approval

that will become final and legally enforceable after the EPA concurs in

writing with the permitting authority's determination. Requirements for

permitting authorities are found at 40 CFR 63.42.

To place its 112(g) implementing program into effect, the chief

executive officer of the State or local jurisdiction must certify to

EPA that its program meets all the requirements set forth in the 112(g)

rule, and publish a notice stating that the program has been adopted

and specifying its effective date. The program need not be officially

reviewed or approved by EPA.

3. Deferral of Area Sources

Virginia's regulations continue to present a minor facial

inconsistency with part 70's applicability requirements with respect to

permitting of area sources which EPA wishes to clarify in advance. In

Virginia Rule 8-5, 9 VAC 5-80-50 D.1 provides that area sources subject

to requirements promulgated under section 111 or 112 of the CAA are

deferred from the obligation to obtain permits, and that the ``decision

to require a permit for these sources shall be made at the time that a

new standard is promulgated and shall be incorporated into [Virginia's

regulations] along with the listing of the new standard.''

EPA's regulations at 40 CFR 70.3(b)(2) provide that the decision to

exempt area sources that become subject to section 111 or 112 standards

adopted after July 21, 1992, will be made when such standards are

promulgated. EPA interprets this language to mean that unless the new

standard explicitly exempts area sources from Title V

[[Page 12785]]

applicability, these area sources remain subject to the permitting

requirement of CAA section 502(a) and are required to obtain permits.

EPA was initially concerned that owners and operators of these area

sources might, based on Virginia's regulations, mistakenly believe they

are not required to obtain permits either because: (1) EPA may have not

made an explicit decision whether to exempt them in setting the

relevant standard, thus resulting in no ``decision'' to require them to

obtain a permit being incorporated into Virginia's regulations at the

time the standard is incorporated; or (2) Virginia may have not yet

incorporated into its regulations the relevant standard, and its

associated implicit or explicit decision whether to exempt area

sources. Regarding the first possible reason, EPA believes that

Virginia's regulations can be reasonably interpreted to properly

require such sources to obtain permits, if Virginia's incorporation of

relevant sections 111 and 112 standards is treated as having

incorporated both any explicit decisions to exempt sources from

permitting and any explicit or implicit decisions by EPA to subject

them to the permitting requirement. The VADEQ has committed to EPA that

``In cases where EPA has promulgated a standard under section 111 or

section 112 after July 21, 1992 and failed to declare whether or not

the facility or source category covered by the standard is subject to

the Title V program or not, the Board in making decisions under 9 VAC

5-80-90 D shall presume that the facility or source category is subject

to the Title V program.'' (See letter from the Director of the VADEQ

dated February 27, 1997.) Regarding the second possible area of

confusion, Virginia's provision does not require area sources to obtain

permits, even if EPA has explicitly stated in the substantive section

111 or section 112 rulemaking that they must, unless and until Virginia

incorporates the underlying standard into its regulations. Thus, if

Virginia does not incorporate the substantive federal rules into its

regulations, the requirement for these sources to obtain a permit is

not triggered under Virginia's program. The Commonwealth has

incorporated all relevant sections 111 and 112 standards to date,

including any that extend the permitting requirement to area sources.

Thus, the potential for confusion exists only with respect to section

111 or section 112 standards EPA promulgates in the future. EPA notes

that Virginia has procedures for prompt incorporation of new federal

standards. Since EPA has no reason to believe that the Commonwealth

will not continue to timely incorporate these standards as they become

promulgated, Virginia's regulations do not in the Agency's view present

an impediment to full approval regarding this issue. EPA will, of

course, in conducting its oversight of Virginia's implementation of the

program, watch for any indication that delayed incorporation of

substantive standards results in area sources not getting permitted in

a timely manner.

4. Audit Immunity and Privilege Law

Among other minimum elements required for approval of a State

operating permits program, the CAA includes the requirement that the

permitting authority has adequate authority to assure that sources

comply with all applicable CAA requirements as well as authority to

enforce permits through recovery of certain civil penalties and

appropriate criminal penalties. Sections 502(b)(5) (A) and (E) of the

CAA. In addition, Part 70 explicitly requires States to have certain

enforcement authorities, including authority to seek injunctive relief

to enjoin a violation, to bring suit to restrain violations imposing an

imminent and substantial endangerment to public health or welfare, and

to recover appropriate criminal and civil penalties. 40 CFR 70.11.

Moreover, section 113(e) of the CAA sets forth penalty factors for EPA

or a court to consider for assessing penalties for civil and criminal

violations of Title V permits. EPA is concerned about the potential

impact of some State privilege and immunity laws on the ability of such

States to enforce federal requirements, including those under Title V

of the CAA.

Virginia has adopted legislation that would provide, subject to

certain conditions, for an environmental assessment (audit)

``privilege'' for voluntary compliance evaluations performed by a

regulated entity. The legislation further addresses the relative burden

of proof for parties either asserting the privilege or seeking

disclosure of documents for which the privilege is claimed. Virginia's

legislation also provides, subject to certain conditions, for a penalty

waiver for violations of environmental laws when a regulated entity

discovers such violations pursuant to a voluntary compliance evaluation

and voluntarily discloses such violations to the Commonwealth and takes

prompt and appropriate measures to remedy the violations.

Virginia's Voluntary Environmental Assessment Privilege, Code

Sec. 10.1-1198, provides a privilege that protects from disclosure

documents 1 and information about the content of those documents

that are the product of a voluntary environmental assessment. The

privilege does not extend to documents or information that are: (1)

Generated or developed before the commencement of a voluntary

environmental assessment; (2) that are prepared independently of the

assessment process; (3) that demonstrate a clear, imminent and

substantial danger to the public health or environment; or (4) that are

required by law. Particularly since documents required by Title V of

the Act and by part 70 are documents ``required by law,'' EPA

interprets the Commonwealth's privilege as not extending to Title V

required documents. Virginia's Office of the Attorney General has

submitted a legal opinion which supports EPA's understanding that the

Commonwealth's Title V program requirements for compliance monitoring,

reporting of violations, record keeping, and compliance certification,

together render the privilege inapplicable to compliance evaluations,

at a Title V source, of the Commonwealth's Title V requirements.

---------------------------------------------------------------------------

\1\ Document is defined to include ``field notes, records of

observations, findings, opinions, suggestions, conclusions, drafts,

memoranda, drawings, photographs, videotape, computer-generated or

electronically recorded information, maps, charts, graphs and

surveys.'' Va. Code Sec. 10.1-1198.A.

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Virginia's immunity law, Va. Code Sec. 10.1-1199, provides that

``[t]o the extent consistent with requirements imposed by federal

law,'' any person making a voluntary disclosure of information to a

state agency regarding a violation of an environmental statute,

regulation, permit, or administrative order is granted immunity from

administrative or civil penalty.

The Office of the Attorney General's legal opinion states that the

phrase ``to the extent consistent with requirements imposed by federal

law'' renders this statute inapplicable to Title V enforcement. No

person can claim or be accorded immunity from any enforcement action

that involves the Commonwealth's Title V program because to do so would

be inconsistent with the requirements of Title V of the federal Clean

Air Act. Thus, the statute by its terms cannot apply to sources

operating under a Title V permit.'' Thus, EPA is not listing any

conditions on Virginia's Title V program approval for this issue

because the legislation will not preclude the Commonwealth from

enforcing its Title V permit program consistent with the CAA's

requirements.

[[Page 12786]]

5. Variance Provision

While not an issue for purposes of program approval, it should be

noted that Virginia has the authority to issue a variance from

requirements imposed by Virginia law. The variance provision at Va.

Code Sec. 10.1-1307.C. empowers the Air Pollution Control Board, after

a public hearing, to grant a local variance from any regulation adopted

by the board. EPA regards this provision as wholly external to the

program submitted for approval under Part 70, and consequently is

proposing to take no action on this provision of Virginia law. EPA has

no authority to approve provisions of State law, such as the variance

provision referred to, which are inconsistent with the CAA. EPA does

not recognize the ability of a permitting authority to grant relief

from the duty to comply with a federally enforceable permit, except

where such relief is consistent with the applicable requirements of the

CAA and is granted through procedures allowed by Part 70. EPA reserves

the right to enforce the terms of the permit where the permitting

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

permit in a manner inconsistent with the CAA and Part 70 procedures.

6. Permit Fee Changes

EPA notes that Virginia Rule 8-6 includes a provision, at 9 VAC 5-

80-40 D. and E., which allows Virginia to assess a fee of less than $25

per ton (1989 dollars) adjusted for inflation, if Virginia determines

that it would collect more money than required to fund its Title V

program if it assessed the full $25 per ton fee (1989 dollars),

adjusted for inflation. If Virginia chooses in the future to collect a

fee of less than $25 (1989 dollars), adjusted for inflation, its fee

assessment would no longer meet the requirement for presumed adequacy

under 40 CFR 70.9. Accordingly, Virginia would trigger the requirements

under 40 CFR 70.9(b)(5) that it provide EPA with a detailed accounting

that its fee schedule meets the requirements of 40 CFR 70.9(b)(1).

Before the Commonwealth assesses a fee lower than the presumptive

minimum of $25 per ton (1989 dollars), adjusted for inflation, it must

obtain EPA approval of such a fee. EPA would approve such a fee if

Virginia submitted a detailed accounting showing that the fee would

result in the collection of sufficient funds to run a fully adequate

Title V program. This requirement for EPA approval of any fee lower

than the presumptive minimum is consistent with the requirements of 40

CFR 70.9, and is implied by 9 VAC 5-80-40 D., which states that ``Any

adjustments made to the annual permit program fee shall be made within

the constraints of 40 CFR 70.9.''

7. Title I Modifications

The EPA proposed to define ``Title I modification'' in the August

31, 1995 Operating Permits Program and Federal Operating Permits

Program proposed rule. The EPA proposed to define Title I modification

to mean any modification under part C and D of Title I or sections

111(a)(4), 112(a)(5), or 112(g) of the Act and regulations promulgated

pursuant to Sec. 61.07 of part 61. If the definition of ``Title I

modification'' is finalized as proposed in the August 31, 1995,

proposed rule, the State's definition would be consistent with part 70.

If the definition of ``Title I modification'' is changed from that

proposed in the August 31, 1995, proposed rule to include minor new

source review changes, the Commonwealth will need to revise its permit

regulation to be consistent with part 70.

IV. Proposed Aaction

EPA is proposing to grant interim approval to the operating permits

program submitted by Virginia, and is soliciting public comment on

whether or not such approval is appropriate. The portions of the

submittal for which EPA is proposing interim approval consist of the

operating permit and operating permit fee regulations submitted on

September 10, 1996, the acid rain operating permit regulations

submitted on September 12, 1996, and other non-regulatory

documentation. If EPA does grant such approval, Virginia will be

required to correct all of the remaining deficiencies in its program

which are discussed earlier in this notice before EPA could grant full

approval to Virginia's program. The interim approval, which would not

be renewable, would extend for a period of two years. During the

interim approval period Virginia would be protected from sanctions for

failure to have a program, and EPA would not be obligated to promulgate

a Federal permits program in the Commonwealth. Permits issued under a

program with interim approval have full standing with respect to Part

70, and the one year time period for submittal of permit applications

by subject sources begins upon interim approval, as does the three year

time period for processing the initial permit applications.

Requirements for approval, specified in 40 CFR 70.4(b), encompass

section 112(l)(5) requirements for approval of a program for delegation

of section 112 standards as promulgated by EPA as they apply to Part 70

sources. Section 112(l)(5) requires that the State's program contain

adequate authorities, adequate resources for implementation, and an

expeditious compliance schedule, which are also requirements under Part

70. Therefore, EPA is also proposing to grant approval under section

112(l)(5) and 40 CFR 63.91 of the State's program for receiving

delegation of section 112 standards that are unchanged from Federal

standards as promulgated. This program for delegations only applies to

sources covered by the Part 70 program.

V. Sanctions Stayed

Pursuant to section 502(d)(2)(A) of the CAA, EPA may, at its

discretion, apply any of the sanctions in section 179(b) at any time

following the effective date of a final disapproval. The available

sanctions include a prohibition on the approval by the Secretary of

Transportation of certain highway projects or the awarding of certain

federal highway funding, and a requirement that new or modified

stationary sources or emissions units for which a permit is required

under Part D of Title I of the CAA achieve an emissions reductions-to-

increases ratio of at least 2-to-1. In addition, EPA is required by

section 502(d)(2)(B) of the CAA to apply one of the sanctions in

section 179(b), as selected by the Administrator, on the date 18 months

after the effective date of a final disapproval, unless prior to that

date the State had submitted a revised operating permits program and

EPA had determined that it corrected the deficiencies that prompted the

final disapproval. Moreover, if the Administrator finds a lack of good

faith on the part of the State, both sanctions are to apply after the

expiration of the 18-month period until the Administrator determines

that the State has come into compliance. In all cases, if, six months

after EPA applies the first sanction, the State has not submitted a

revised program that EPA has determined corrects the disapproved

program's deficiencies, a second sanction is required. Finally, if EPA

has not granted full approval to the State's program by November 15,

1995, and the State's program at that point does not have interim

approval status, EPA must promulgate, administer and enforce a Federal

permits program for the State on that date.

EPA first disapproved Virginia's operating permits program in a

Federal Register notice published on December 5, 1994, which became

effective on January 5, 1995. As a result, EPA's authority to apply

discretionary

[[Page 12787]]

sanctions to Virginia arose on January 5, 1995, and the 18-month period

before which EPA is required to apply sanctions also began on that

date. EPA was required to apply the first sanction on July 5, 1996 and

the second sanction on January 5, 1997, unless by those dates EPA had

determined that Virginia had corrected each of the deficiencies that

prompted EPA's original disapproval. EPA interprets the CAA to require

the Administrator to select by rulemaking which sanction to apply

first, before mandatory sanctions may actually be imposed. These

sanctions have not been applied in Virginia because EPA has not yet

published such a rule covering deficiencies under Title V.

EPA's sanctions policy for applying sanctions for State Title V

Operating Permits Program largely follows the approach under Title I of

the Act (see 40 CFR 52.31, 59 FR 39832 (August 4, 1994). Update to

Sanctions Policy for State Title V Operating Permits Programs, John S.

Seitz, Director Office of Air Quality Planning and Standards, (March

28, 1995).

Based on this proposed approval of the Virginia Title V operating

permits program, EPA is making an interim final determination by this

action that the Commonwealth has corrected the deficiencies prompting

the original disapproval of the Virginia Title V operating permits

program. EPA has determined that it is more likely than not that the

Commonwealth has corrected the deficiencies that prompted the original

disapproval of the Virginia operating permits program. This interim

final determination will stay the implementation of sanctions unless

and until either this proposed approval is finalized or is withdrawn.

Although this action regarding sanctions is effective upon

publication, EPA will take comment on this interim final determination

as well as on EPA's proposed interim approval of the Commonwealth's

submittal. EPA will publish a final notice taking into consideration

any comments received on EPA's proposed action and this interim final

action. EPA has determined that it is appropriate to give immediate

effect to this interim final determination that Virginia has corrected

its prior disapproval deficiencies because it would not be in the

public interest to leave Virginia vulnerable to sanctions pending

finalization of the proposed approval. See, e.g., 59 FR 39832, 39838

and 39849-50 (August 4, 1994).

Today EPA is also providing the public with an opportunity to

comment on this interim final determination. If, based on any comments

on this action and any comments on EPA's proposed interim approval of

Virginia's Title V submittal, EPA determines that the Virginia's Title

V submittal is not approvable and this final action was inappropriate,

EPA will take further action to disapprove the Title V submittal. If

EPA's proposed approval of the Virginia Title V submittal is reversed,

then Virginia would remain vulnerable to sanctions under section

502(d)(2)(A) of the CAA.

VI. Administrative Requirements

A. Request for Public Comments

The EPA is requesting comments on this proposed interim approval.

Copies of the State's submittal and other information relied upon for

the proposed interim approval are contained in a docket maintained at

the EPA Regional Office. The docket is an organized and complete file

of all the information submitted to, or otherwise considered by, EPA in

the development of this proposed interim approval. The principal

purposes of the docket are: (1) To allow interested parties a means to

identify and locate documents so that they can effectively participate

in the approval process; and (2) to serve as the record in case of

judicial review. The EPA will consider any comments received by April

17, 1997.

B. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

C. Regulatory Flexibility Act

The EPA's actions under section 502 of the CAA 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 significantly

impact a substantial number of small entities.

D. Federal Mandates

Under Section 202 of the Unfunded Mandates Reform Act of 1995

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

must prepare a budgetary impact statement to accompany any proposed or

final action 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 consider 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. This Federal

action proposes to approve Virginia's pre-existing Title V program, and

imposes no new Federal requirements. Accordingly, this action would not

impose a federal mandate which would result in additional costs for

State, local, or tribal governments, or for the private sector.

List of Subjects in 40 CFR Part 70

Environmental Protection, Administrative practice and procedure,

Air pollution control, Intergovernmental relations, Operating permits,

Reporting and recordkeeping requirements.

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

Dated: March 7, 1997.

W. Michael McCabe,

Regional Administrator,

Region III.

[FR Doc. 97-6826 Filed 3-17-97; 8:45 am]

BILLING CODE 6560-50-P