Clean Air Act Final Approval Of Amendments to Title V Operating Permits Program; Pima County Department of Environmental Quality, Arizona

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-6165-8]

Clean Air Act Final Approval Of Amendments to Title V Operating

Permits Program; Pima County Department of Environmental Quality,

Arizona

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is promulgating final approval of the following

revisions to the operating permits program submitted by the Arizona

Department of Environmental Quality (``DEQ'') on behalf of the Pima

County Department of Environmental Quality (``Pima'' or ``County''): a

revision to the fee provisions; and a revision that will defer the

requirement for minor sources subject to standards under sections 111

or 112 of the Act to obtain title V permits, unless such sources are in

a source category required by EPA to obtain title V permits. EPA is

also promulgating final approval under section 112(l) of Pima's program

for delegation of section 112 standards as they apply to sources not

required to obtain a title V permit.

EPA took final action on Pima's title V operating permits program

on October 30, 1996 (61 FR 55910). However, because Pima's title V

program contains certain flaws, EPA did not fully approve it, but

instead granted the program an ``interim approval.'' Under its interim

approval, Pima is required to adopt and submit program changes to EPA

that will correct its program flaws. The program revisions being

approved in this document do not address the program issues identified

by EPA. This final action approving revisions to Pima's title V program

therefore does not constitute a full approval of Pima's title V

program.

DATES: This rule is effective on October 23, 1998.

ADDRESSES: Copies of Pima's submittals and other supporting information

used in developing this final approval are available for inspection

(AZ-Pima-97-1-OPS and AZ-Pima-97-2-OPS) during normal business hours at

the following location: U.S. Environmental Protection Agency, Region 9;

75 Hawthorne Street; San Francisco, CA 94105.

FOR FURTHER INFORMATION CONTACT: Erica Ruhl (telephone 415-744-1171),

Mail Code AIR-3, U.S. Environmental Protection Agency, 75 Hawthorne

Street; San Francisco, CA 94105.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

As required under title V of the Clean Air Act as amended (1990),

EPA has promulgated rules that 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 (57 FR 32250,

July 21, 1992). These rules are codified at 40 CFR part 70. Title V

requires states to develop and submit to EPA, by November 15, 1993,

programs for issuing these operating permits to all major stationary

sources and to certain other sources. The EPA's program review occurs

pursuant to section 502 of the Act, which outlines criteria for

approval or disapproval.

On November 15, 1993, Pima's title V program was submitted. EPA

proposed interim approval of the program on July 13, 1995 (60 FR

36083). The fee provisions of the program were found to be fully

approvable. On November 14, 1995, in response to changes in state law,

Pima amended its fee provisions under Chapter 12, Article VI of Title

17 of the Pima County Air Quality Control Code. Those changes were

submitted to EPA on January 14, 1997, after it promulgated final

interim approval of Pima's title V program (61 FR 55910, October 30,

1996). EPA subsequently proposed to approve Pima's revised fee

provisions (62 FR 16124, April 4, 1997).

On July 17, 1997, EPA received a submittal from ADEQ on behalf of

Pima requesting that EPA approve a revision to the applicability

provisions of Pima's title V program. Because EPA's evaluation of

Pima's title V fee provisions takes into account the numbers and types

of sources requiring permits, EPA decided it would be appropriate to

reevaluate the approvability of the fee changes in the context of the

change to program applicability. EPA therefore withdrew its proposed

approval of Pima's revised fee program (63 FR 7109, February 12, 1998)

and, in the same document, proposed approval of the changes to Pima's

fee and applicability provisions.

[[Page 50770]]

II. Final Action and Implications

A. Analysis of State Submission

The analysis of the submittals given in the February 12, 1998

proposed action is supplemented by the discussion of public comment

made on the notice of proposed rulemaking (see section II.B. of this

document). That analysis remains unchanged and will not be repeated in

this final document.

1. Applicability

The amendment to the applicability provisions of Pima's title V

program was submitted by the Arizona DEQ on July 17, 1997. The

submittal includes the deletion of the term ``Title V Source'' from

Pima County Air Quality Control Code (PCC) 17.04.340.133, proof of

adoption, evidence of necessary legal authority, evidence of public

participation including comments submitted on the rulemaking, and a

supplemental legal opinion from the County Attorney regarding the legal

adequacy of Pima's title V program, including implementation of section

111 and 112 of the Clean Air Act. In a letter dated November 7, 1997,

Pima clarified which sections of its title V program it wished to have

rescinded and which sections approved.

With this change, only those sources required to obtain a Class I

(title V) permit, (i.e., major sources, solid waste incinerators

required to obtain a permit pursuant to section 129(e) of the CAA, and

sources required by the Administrator to obtain a permit), are subject

to the District's title V program. Non-major sources, including those

regulated under sections 111 and 112 of the CAA, are deferred from the

requirement to obtain a Class I/title V permit, to the extent allowed

by the Administrator.

2. Program for Delegation of Section 112(l) Standards as Promulgated

In a letter dated December 2, 1997, Pima specifically requested

approval under section 112(l) of a program for delegation of unchanged

section 112 standards applicable to sources that are not subject to

mandatory permitting requirements under title V. (See letter from David

Esposito, Director, PDEQ to David Howekamp, Director, Air and Toxics

(sic) Division, EPA Region IX.)

3. Fees

An amendment to the fee provisions of Pima's title V program was

submitted by the Arizona DEQ on January 14, 1997. The submittal

includes the revised fee regulations (Chapter 12, Article VI of Title

17 of the Pima County Air Quality Control Code as amended on November

14, 1995), a technical support document, and a legal opinion by the

County Attorney. Additional materials, including proof of adoption and

a commitment to provide periodic updates to EPA regarding the status of

the fee program, were submitted on February 26, 1997. In a letter dated

July 25, 1997, Pima submitted a detailed discussion of the expected

costs of and anticipated revenue from its title V program.

B. Public Comments and Responses

Only one comment letter was received. That letter, from Steven Burr

of Lewis and Roca (representing the Arizona Mining Association or

``AMA'') incorporated by reference both the comments AMA made on the

EPA's previous proposal to approve Pima's fee provisions (62 FR 16124,

April 4, 1997) as well as AMA's ``supplemental comments'' dated January

2, 1998.

1. Adequacy of Fees under Section 502(b)(3) of the CAA

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

authority collect fees sufficient to cover all reasonable direct and

indirect costs required to develop and administer its title V operating

permits program. The commenter disagreed with EPA's proposed approval

of the revision to the Pima County title V program because he contends

the fee program fails to meet the minimum requirements of section

502(b)(3) of the Clean Air Act. The commenter states that the

documentation submitted by Pima County fails to demonstrate that the

County's fees will cover the full costs of the title V program and that

the fees Pima County collects will not cover the costs of issuing

permits to existing title V sources.

Pima uses a combination of emissions fees and fees for issuance and

revision to cover program costs.

Fees for issuance and revision. Pima's fee provisions require that

applicants for permits to construct and operate that are subject to

title V must pay the total actual cost of reviewing and acting upon

applications for permits and permit revisions. See sections

17.12.510.G. and 17.12.510.I. These fees are used to cover the cost of

issuing permits to new sources and for processing revisions to permits.

Pima estimated the permitting-related average hourly billing costs for

permitting of title V facilities, including salary, fringe benefits,

direct non-salary costs and indirect costs including cost estimates of

various types of permit related activities. The estimated hourly cost

is $53.60. However, because state law caps hourly fees at $53.00,

Pima's hourly charges are capped at $53.00. See section 17.12.510.M.

Although this cap is 60 cents per hour less than the District's

estimated hourly costs for permit processing, EPA finds this provision

to be fully approvable. In view of the fact that the estimation of

program cost inherently involves projections and approximation, and of

the fact that fee adequacy can be monitored on an ongoing basis as the

program is implemented, EPA concludes that this provision is sufficient

to adequately fund the program.

Emission Fees. Emission fees are used by Pima to cover the direct

and indirect costs of the title V related activities not covered the

fees charged for permit issuance to new sources and revisions to all

sources. These activities are: (1) part 70 program development and

implementation; (2) issuance of title V permits to existing sources;

(3) part 70 source compliance, including inspection services; and (4)

part 70 business assistance, which helps sources determine and meet

their obligations under part 70. Pima estimates the annual cost of

these activities in the first three years of program implementation to

range between $83,562 and $87,674. Based upon the fall 1996 dollar per

ton value ($35.78), invoicing records and emissions estimates, Pima

projects it will collect $98,275 in emissions fees annually.

As set out in the February 12, 1998 notice of proposed approval,

EPA finds that Pima County's fee provisions meet the requirements of

502(b)(3). Materials submitted by Pima County demonstrate that the cost

of issuing initial permits to existing title V sources is covered by

annual emission fees.

2. Validity of EPA's October 30, 1996 Interim Approval

On October 30, 1996, EPA promulgated interim approval of Pima's

title V program. The commenter observes that Pima County adopted the

amendment to its fee rule almost one year before EPA granted interim

approval to the title V program. Pima County did not, however, submit

the amended rule until after EPA had granted interim approval. The

commenter argues that the fee rule that EPA purported to approve does

not exist and did not exist when EPA issued its interim approval,

therefore, Pima County's title V program does not include an approved

or approvable fee rule. The commenter contends that a fee rule

satisfying section 502(b)(3) is a requirement for interim approval and

therefore, EPA should acknowledge that

[[Page 50771]]

its interim approval of Pima County's title V program is void.

The proposal on which EPA is taking final action is limited to the

question of whether the revision to Pima's fee provisions is approvable

under part 70. As described in the notice of proposed rulemaking and in

the preceding response, EPA has evaluated the submitted revision to

Pima's program and has found that it meets the requirements of part 70

and section 502(b) of the Act. An evaluation of the validity of EPA's

grant of interim approval to Pima's title V program is beyond the scope

of this action. The issue raised in this comment has also been raised

as an issue in a petition to the Ninth Circuit challenging EPA's final

interim approval of Pima's title V program. EPA believes that is the

appropriate forum in which to resolve this issue.

3. Validity of Pima's Fee Provisions under State Law

The commenter contends that the revision to the Pima County title V

program cannot be approved by EPA because it is unenforceable as a

matter of state law. The commenter notes that the Arizona Revised

Statutes (section 49-112(B)) require that fees charged by county

agencies must be approximately equal to or less than permit fees

charged by the Arizona Department of Environmental Quality (ADEQ). He

contends that, although the language in the amendment Pima adopted is

identical to the language in ADEQ's rule,1 Pima County's

interpretation of the rules, as described by both the County and EPA in

its proposed approval, would result in substantially higher fees being

paid in Pima County. The commenter states that ADEQ interprets its rule

to apply only to new sources while Pima charges fees to both new and

existing sources.

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\1\ The language referenced is: ``Before the issuance of a

permit to construct and operate a source that is required to obtain

a permit pursuant to title V of the Act, the applicant for the

permit shall pay to the Director a fee billed by the Director

representing the total actual cost of reviewing and action upon the

application.'' AMA alleges that Pima interprets this provisions to

allow the collection of a ``fee for service'' from an existing

source for its initial a permit to operate whereas ADEQ interprets

this to mean that a fee for service may only be collected from new

sources that are applying for both a permit to construct and a

permit to operate.

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In order to determine if the commenters allegations were well

founded, on May 21, 1997, EPA sent a letter to Pima County requesting

information on differences between Pima County and ADEQ with respect to

how their fee provisions are implemented. EPA asked that Pima address

the question of whether fees are charged for the issuance of permits to

existing sources. On July 25, 1997, Pima County responded to EPA's

letter. The response included an affidavit prepared by the Pima County

Attorney's office and signed by Pima staff stating that the District

does not charge a permit processing fee to existing part 70 sources. As

explained above, the cost of issuing initial permits to existing

sources is covered by revenue from emissions fees. In the absence of

any documentation of practices to the contrary, EPA has concluded that

Pima's implementation of the fee rule is consistent with ADEQ's

implementation.

4. Timing of EPA Action in Light of AMA Litigation in State Court

The commenter points out that the AMA is in the midst of litigating

in state court the question of the validity of the Pima County fee

rules that EPA now proposes to approve. He states his belief that it is

not the EPA's policy to substitute its judgement for that of a state

court on a matter of the legality of a state provision and that, at the

very least, EPA should defer action on the approval of Pima County's

fee rule until the court has decided the issue of its legality. The

commenter goes on to say that if the court upholds AMA's position, the

rule will be declared void ab initio and that EPA has no authority to

approve a fee rule that is not enforceable as a matter of state law.

As long as the rule is effective as a matter of state law, EPA will

treat it as such. If a state court strikes down the law, this might be

a basis for EPA action, consistent with 70.10(c)(1)(i)(B). For the

purpose of this federal approval action, and without expressing further

opinion on the validity of the commenter's suit in state court, it does

not appear to EPA that Pima's fee provisions run afoul of state law. As

required by Arizona Revised Statutes section 49-112(B), Pima's fee

provisions are consistent with those of ADEQ, and as evidenced by

Pima's submittal, County representatives have attested that the County

will implement its fee rule in a manner consistent with that of ADEQ.

EPA does not have reason to believe that Pima County's fee rule is

unenforceable as a matter of state law. As explained in the February

12, 1998 Federal Register document, EPA is satisfied that Pima's fee

rules meet the requirements of title V of the CAA and 40 CFR part 70.

Section 70.4(i) of part 70 does require that permitting authorities

keep EPA apprised of any proposed changes to their basic statutory or

regulatory structure. EPA therefore expects that if any part of a part

70 program is deleted or modified, either by the district hearing board

or by court action, it will be notified by the permitting authority.

Were such changes to render a program deficient or prevent a permitting

authority from adequately implementing the program, EPA would follow

the procedures set of under section 70.4(i) to ensure that such

inadequacies are promptly corrected. If corrections are not made in a

timely manner, part 70 sets out a mechanism for the withdrawal of its

approval of the program and for implementation of the federal operating

permits program in its place. See section 70.10.

C. Final Action

EPA is finalizing its approval of the submitted amendments to the

applicability and fee provisions of Pima's title V operating permits

program. EPA is also finalizing its approval under section 112(l) to

include Pima's program for delegation of section 112 standards as they

apply to those sources not required to obtain a title V permit.

EPA's approval of the change in applicability results in the

following revision to Pima's title V program: Rule 17.04.340.240

(definition of ``title V source'' adopted September 28, 1993) will be

removed from the County's title V program.

EPA's approval of the amendments to Pima County's fee provisions

results in the following changes to the County's title V program. Rules

17.12.320, 17.12.500, 17.12.520 , 17.12.580 (adopted September 28,

1993); Rule 17.12.610 (adopted November 14, 1989); and Rules 17.12.640

and 17.12.650 (adopted December 10, 1991) will be removed. Rules

17.12.320, 17.12.500, and 17.12.510 (adopted November 14, 1995) will be

added. With this rulemaking, EPA is taking action to approve the fee

changes and bring the approved version of the program in line with the

current version in place at the county.

IV. Administrative Requirements

A. Docket

Copies of Pima's submittal and other information relied upon for

this final action, including public comments, are contained in dockets

(AZ-Pima-97-1-OPS, and AZ-Pima-97-2-OPS) 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 final approval. The dockets are available for

[[Page 50772]]

inspection at the location listed under the ADDRESSES section of this

document.

B. Regulatory Flexibility Act

Pursuant to section 605(b) of the Regulatory Flexibility Act, 5

U.S.C. 605(b), the Administrator certifies that this action will not

have a significant economic impact on a substantial number of small

entities. The EPA's actions under section 502 of the Act do not create

any new requirements, but simply address revisions to Pima County's

existing operating permits program that were submitted to satisfy the

requirements of 40 CFR part 70.

C. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA''),

Pub. L. 104-4, establishes requirements for Federal agencies to assess

the effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, EPA

generally must prepare a written statement, including a cost-benefit

analysis, for proposed and final rules with Federal mandates that may

result in expenditures to State, local, and tribal governments, in the

aggregate, or to the private sector, of $100 million or more in any one

year. Under section 205, the 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 the EPA to establish a plan for informing and advising any

small governments that may be significantly or uniquely impacted by the

rule.

The EPA has determined that the approval action promulgated in this

rulemaking document 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, in any

one year. This federal action approves pre-existing requirements under

state or local law, and imposes no new federal requirements.

Accordingly, no additional costs to state, local, or tribal

governments, or to the private sector, result from this action.

D. Submission to Congress and the General Accounting Office

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the

Small Business Regulatory Enforcement Fairness Act of 1996, generally

provides that before a rule may take effect, the agency promulgating

the rule must submit a rule report, which includes a copy of the rule,

to each House of the Congress and to the Comptroller General of the

United States. The EPA will submit 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 United States prior

to publication of the rule in the Federal Register. A major rule cannot

take effect until 60 days after it is published in the Federal

Register. This rule is not a ``major rule'' as defined by 5 U.S.C.

804(2). This rule will be effective October 23, 1998.

E. Executive Order 12866

Under Executive Order 12866 (58 FR 51735, October 4, 1993), EPA

must determine whether its regulatory actions are ``significant'' and

therefore subject to Office of Management and Budget review and the

requirements of the Executive Order. The Order defines a significant

regulatory action ``as one that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $ 100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or state, local, or tribal governments or

communities; (2) create a serious inconsistency or otherwise interfere

with an action taken or planned by another agency; (3) materially alter

the budgetary impact of entitlement, grants, user fees, or loan

programs or the rights and obligations of recipients thereof; or (4)

raise novel legal or policy issues arising out of legal mandates, the

President's priorities, or the principles set forth in the Executive

Order. The Office of Management and Budget has exempted this action

from Executive Order 12866 review.

F. Executive Order 13045

Executive Order 13045, ``Protection of Children from Environmental

Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997), applies

to any rule that: (1) is determined to be ``economically significant''

as defined under E.O. 12866, and (2) concerns an environmental health

or safety risk that EPA has reason to believe may have a

disproportionate effect on children. If the regulatory action meets

both criteria, the Agency must evaluate the environmental health or

safety effects of the planned rule on children, and explain why the

planned regulation is preferable to other potentially effective and

reasonably feasible alternatives considered by the Agency.

This rule is not subject to E.O. 13045 because it is not an

economically significant rule as defined by E.O. 12866, and because it

does not involve decisions based on environmental health or safety

risks.

G. Executive Order 12875: Enhancing Intergovernmental Partnerships

Under Executive Order 12875, EPA may not issue a regulation that is

not required by statute and that creates a mandate upon a State, local

or tribal government, unless the Federal government provides the funds

necessary to pay the direct compliance costs incurred by those

governments. If the mandate is unfunded, EPA must provide to the Office

of Management and Budget a description of the extent of EPA's prior

consultation with representatives of affected State, local and tribal

governments, the nature of their concerns, copies of any written

communications from the governments, and a statement supporting the

need to issue the regulation. In addition, Executive Order 12875

requires EPA to develop an effective process permitting elected

officials and other representatives of State, local and tribal

governments ``to provide meaningful and timely input in the development

of regulatory proposals containing significant unfunded mandates.''

Today's rule approves preexisting State requirements and does not

impose new Federal mandates on State, local or tribal governments. The

rule does not impose any enforceable duties on these entities.

Accordingly, the requirements of section 1(a) of Executive Order 12875

do not apply to this rule.

H. Executive Order 13084: Consultation and Coordination With Indian

Tribal Governments

Under Executive Order 13084, EPA may not issue a regulation that is

not required by statute, that significantly or uniquely affects the

communities of Indian tribal governments, and that imposes substantial

direct compliance costs on those communities, unless the Federal

government provides the funds necessary to pay the direct compliance

costs incurred by the tribal governments. If the mandate is unfunded,

EPA must provide to the Office of Management and Budget, in a

separately identified section of the preamble to the rule, a

description of the extent of EPA's prior consultation with

representatives of affected tribal governments, a summary of the nature

of their concerns, and a statement supporting the need to issue the

regulation. In addition, Executive Order 13084 requires EPA to develop

an effective process permitting elected and other representatives of

Indian tribal governments ``to provide meaningful and timely input in

the development of

[[Page 50773]]

regulatory policies on matters that significantly or uniquely affect

their communities.'' Today's rule does not impose new Federal mandates

on Indian tribal governments and does not significantly or uniquely

affect the communities of Indian tribal governments. Accordingly, the

requirements of section 3(b) of Executive Order 13084 do not apply to

this rule.

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. sections 7401-7671q.

Dated: September 14, 1998.

Felicia Marcus,

Regional Administrator, Region 9.

Part 70, Chapter I, Title 40 of the Code of Federal Regulations is

amended as follows:

PART 70--[AMENDED]

1. The authority citation for part 70 continues to read as follows:

Authority: 42 U.S.C. 7401, et seq.

2. Appendix A to part 70 is amended by revising paragraph (c) under

Arizona to read as follows:

Appendix A to Part 70--Approval Status of State and Local Operating

Permits Programs

* * * * *

Arizona

* * * * *

(c) Pima County Department of Environmental Quality:

(1) Submitted on November 15, 1993 and amended on December 15,

1993; January 27, 1994; April 6, 1994; April 8, 1994; August 14,

1995; July 22, 1996; August 12, 1996; interim approval effective on

November 29, 1996; interim approval expires June 1, 2000.

(2) Revisions submitted on January 14, 1997; February 26, 1997;

July 17, 1997; July 25, 1997; November 7, 1997; approval effective

October 23, 1998; interim approval expires June 1, 2000.

* * * * *

[FR Doc. 98-25323 Filed 9-22-98; 8:45 am]

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