Clean Air Act Withdrawal of Proposed Approval of Amendment to Title V Operating Permits Program and Proposed 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-5966-5]

Clean Air Act Withdrawal of Proposed Approval of Amendment to

Title V Operating Permits Program and Proposed Approval of Amendments

to Title V Operating Permits Program; Pima County Department of

Environmental Quality, Arizona

AGENCY: Environmental Protection Agency (EPA).

ACTION: Withdrawal of proposed rule; proposed rule.

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SUMMARY: The EPA withdraws its proposed approval (62 FR 16124, April 4,

1997) of revisions to the Pima County Department of Environmental

Quality (``Pima'' or ``County'') title V operating permits program. In

this document EPA also proposes approval of the following revisions to

the operating permits program submitted by the Arizona Department of

Environmental Quality (``DEQ'') on behalf of Pima: 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.

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

March 16, 1998. Comments should be addressed to the contact indicated

below.

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

used in developing this proposed 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: Ginger Vagenas (telephone 415-744-

1252), 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

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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.

II. Withdrawal of April 4, 1997 Proposed Action

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

takes into account the numbers and types of sources requiring permits,

EPA believes that, in light of the proposed changes to Pima's

applicability provisions, it must reconsider its proposed action. EPA

is therefore withdrawing its previous proposal to approve revisions to

Pima's fee provisions and will in this notice evaluate the

approvability of the fee changes in the context of the submitted

changes to program applicability.

III. Proposed Action

EPA is proposing to approve the submitted amendments to the

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

program. A description of the submitted materials and an analysis of

the amendments are included below.

A. Applicability

1. Submitted Materials

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, and on December 2, 1997, Pima

sent a letter to EPA requesting approval under section 112(l) of the

Clean Air Act for the delegation of unchanged section 112 standards

applicable to sources that are not required to obtain title V permits.

2. Analysis of Submission

As approved by EPA, Pima's title V program requires nonmajor

sources subject to a standard under section 111 or section 112 to

obtain a title V permit. While not currently required by part 70, this

provision is fully approvable. On November 14, 1995, Pima revised its

regulations in order to allow nonmajor sources regulated under sections

111 and 112 to defer or be exempted from the title V permit requirement

to the extent allowed by the Administrator. This was accomplished by

deleting the term ``Title V Source,'' which was defined to include

nonmajor sources subject to section 111 and 112 standards, from PCC

17.04.340. 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. See PCC 17.12.140 and the

supplemental County Attorney's opinion dated June 24, 1997.

The approach taken in Pima's revised program is consistent with the

minimum criteria specified by part 70. EPA is therefore proposing to

approve the above described changes to Pima's title V program.

3. Amendments to the Applicability Provisions in Pima County's Title V

Program

If EPA finalizes its approval of the proposed amendments to Pima

County's applicability provisions, Rule 17.04.340.240 (definition of

``title V source'' adopted September 28, 1993) will be removed from the

County's title V program.

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

As EPA stated in its proposed approval of Pima's original title V

program, requirements for approval under 40 CFR 70.4(b) encompass the

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. Because Pima's original submittal included all sources subject

to section 112 standards in the universe of sources subject to its

title V permitting requirements, EPA's approval of Pima's program under

section 112(l) extended to section 112 standards as applicable to minor

as well as major sources.

The change in applicability of Pima's title V program affects EPA's

approval under section 112(l) of Pima's program for accepting

delegation of section 112 standards as promulgated. If the proposed

changes are approved, Pima will not be issuing part 70 permits to

nonmajor sources (unless such sources are designated by EPA being

required to obtain a part 70 permit). As a result, EPA's 112(l)

delegation, which relied upon part 70 permits as the vehicle for

implementing section 112 standards, would no longer cover minor

sources.

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.) Pima's request for approval under

section 112(l) for non-part 70 sources references the information

contained in its original title V program submittal as demonstration

that Pima meets the criteria under section 112(l) and 40 CFR 63.91 for

approval of a delegation program. EPA is therefore proposing to expand

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.

B. Fees

1. Submitted Materials

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. The County's

analysis is based on the amended applicability provisions adopted on

November 14, 1995, which EPA is also proposing to approve today.

2. Permit Fee Demonstration

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. Each title V program submittal must contain either a

[[Page 7111]]

detailed demonstration of fee adequacy or a demonstration that

aggregate fees collected from title V sources meet or exceed $25 per

ton of emissions per year (adjusted from 1989 by the Consumer Price

Index (CPI)). Pima has submitted a detailed fee analysis that

demonstrates the fees it will collect under the amended rules are

adequate to cover program costs.

Title V emission fees. Pima's fee provisions require that the owner

or operator of each source required to obtain a title V permit shall

pay an annual emissions fee equal to $28.15 per year per ton of actual

emissions of all regulated air pollutants, or a specified minimum,

whichever is greater. See 17.12.510.C. and 17.12.510.C.5. The

regulations also require a yearly adjustment in the emissions fee rate

to reflect the increase, if any, in the Consumer Price Index. See

17.12.510.C.4.

Emission fees are used by Pima to cover the direct and indirect

costs of the title V related activities not covered by title V permit

fees. 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. For more

detail, see July 25, 1997 letter from David Esposito, Director of Pima

Department of Environmental Quality, to Ginger Vagenas, US E.P.A.

Permit fees. 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 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.

Because state law caps hourly fees at $53.00, Pima's hourly charges

are capped at $53.00. See 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. Given the

inherent uncertainty in the cost estimates, EPA believes that the

difference is insignificant and unlikely to cause a shortfall in

revenues. Further, Pima is tracking its program costs and revenues and

has committed to provide EPA with periodic updates that will

demonstrate whether fee revenues are meeting the costs of the program.

If EPA finds that the County is not collecting fees sufficient to fund

the title V program, it will require a program revision.

In addition to imposing a cap on hourly fees, state law also limits

the maximum chargeable fee for issuing and revising permits. State law

and Pima regulations cap title V permit issuance fees at $30,000. See

17.12.510.G. Pima has estimated the cost of issuing a title V permit to

a new source at $21,484. Fees for processing permit revisions are

capped at $25,000 for significant revisions and $10,000 for minor

permit revisions. See 17.12.510.I. Because the workload associated with

these classes of permit revisions is likely to vary a great deal, Pima

did not attempt to estimate the cost of these actions. The County

believes that costs for permit revisions will be less than the maximum

allowable fees. (See letter to Dave Howekamp, EPA, from David Esposito,

Pima County, dated February 17, 1997.) EPA will periodically review the

County program to ensure adequate fees are collected.

3. Amendments to the Fee Provisions in Pima County's Title V Program

If EPA finalizes its approval of the proposed amendments to Pima

County's fee provisions, the following changes will be made 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.

IV. Administrative Requirements

A. Request for Public Comments

The EPA is requesting comments on all aspects of this proposed

approval. Copies of Pima's submittal and other information relied upon

for the proposed interim approval 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 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 March 16, 1998.

B. Regulatory Flexibility Act

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

new requirements, but simply address operating permits programs

submitted to satisfy the requirements of 40 CFR part 70. Because this

action does not impose any new requirements, it does not have a

significant impact on a substantial number of small entities.

C. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995

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

must prepare a budgetary impact statement to accompany any proposed or

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

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

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

must select the most cost-effective and least burdensome alternative

that achieves the objectives of the rule and is consistent with

statutory requirements. Section 203 requires EPA to establish a plan

for informing and advising any small governments that may be

significantly or uniquely impacted by the rule.

The EPA has determined that the approval action promulgated today

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

of $100 million or more to either state, local, or tribal governments

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

approves pre-existing requirements under state or local law, and

imposes no new federal requirements. Accordingly, no additional costs

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

result from this action.

D. Small Business Regulatory Enforcement Fairness Act

Under section 801(a)(1)(A) of the Administrative Procedures Act

(APA) as amended by the Small Business Regulatory Enforcement Fairness

Act of 1996, EPA submitted a report containing

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

House of Representatives and the Comptroller General of the General

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

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

804(2) of the APA as amended.

E. Executive Order 12866

The Office of Management and Budget has exempted this action from

Executive Order 12866 review.

List of Subjects in 40 CFR Part 70

Environmental protection, Administrative practice and procedure,

Air pollution control, Intergovernmental relations, Operating permits,

and Reporting and recordkeeping requirements.

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

Dated: February 2, 1998.

Felicia Marcus,

Regional Administrator.

[FR Doc. 98-3581 Filed 2-11-98; 8:45 am]

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