Approval and Promulgation of Air Quality Implementation Plans; DelawareMinor New Source Review and federally Enforceable State Operating Permit Program

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[DE-031-1011; FRL-5991-4]

Approval and Promulgation of Air Quality Implementation Plans;

Delaware--Minor New Source Review and federally Enforceable State

Operating Permit Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing limited approval of a State Implementation

Plan (SIP) revision submitted by the State of Delaware pursuant to

requirements of the Clean Air Act (CAA). This SIP revision amends

Delaware's minor New Source Review (NSR) permit program. It also

creates a federally Enforceable State Operating Permits Program

(FESOPP) which provides a mechanism for the terms and conditions of a

permit issued pursuant to Regulation No. 2 to be made ``federally

enforceable'' for purposes of limiting a source's potential to emit

(PTE) a regulated air pollutant. EPA is proposing limited approval of

changes to the minor NSR program, because while the SIP revision

submitted by Delaware strengthens the SIP, it does not fully meet the

current Federal requirements for public participation. EPA is proposing

full approval of the FESOPP.

DATES: Comments must be received on or before May 6, 1998.

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ADDRESSES: Comments may be mailed to Ms. MaryBeth Bray, Engineer,

Permit Programs Section, Air Protection Division (3AP11), U.S.

Environmental Protection Agency, Region III, 841 Chestnut Building,

Philadelphia, Pennsylvania 19107. Copies of the documents relevant to

this action are available for public inspection during normal business

hours at the Air, Radiation, and Toxics Division, U.S. Environmental

Protection Agency, Region III, 841 Chestnut Building, Philadelphia,

Pennsylvania 19107; and Delaware Department of Natural Resources &

Environmental Control, 89 Kings Highway, P.O. Box 1401, Dover, Delaware

19903.

FOR FURTHER INFORMATION CONTACT: Ms. MaryBeth Bray, (215) 566-2632, at

the EPA Region III address.

SUPPLEMENTARY INFORMATION:

I. Background

On June 4, 1997, the State of Delaware submitted a revision of its

SIP for Regulation No. 2--PERMITS. This revision amends the State's

minor NSR program and creates a FESOPP which provides a mechanism for

the terms and conditions of a permit issued pursuant to Regulation No.

2 to be made ``federally enforceable'' for purposes of limiting a

source's PTE a regulated air pollutant.

A. Minor New Source Review

Section 110(a)(2)(C) of the Clean Air Act (CAA) requires every SIP

to ``include a program for the . . . regulation of the modification and

construction of any stationary source within the areas covered by the

plan as necessary to assure that national ambient air quality standards

are achieved.'' EPA's regulations now codified at 40 CFR 51.160-51.164

have since the early 1970s required a NSR program be included in every

SIP. This requirement is separate from the requirement also set forth

in section 110(a)(2)(C) that a State's SIP have ``major'' NSR

permitting programs under part C for the prevention of significant

deterioration of air quality (PSD) and part D for nonattainment area

permitting (nonattainment NSR) of title I.

B. Federally Enforceable State Operating Permit Programs

Many stationary source requirements of the CAA apply only to

``major'' sources. Major sources are those sources whose emissions of

air pollutants exceed applicability threshold emissions levels

specified in various portions of the CAA. To determine whether a source

is major, the CAA focuses not only on a source's actual emissions, but

also on its potential emissions (i.e., ``PTE''). Thus, a source that

has maintained actual emissions at levels below the major source

threshold could still be subject to major source requirements if it has

the PTE major amounts of air pollutants. In situations where

unrestricted operation of a source would result in a PTE above major

source levels, one way such a source may legally avoid program

requirements is by accepting federally-enforceable permit conditions

which limit its PTE below the applicable major source thresholds. As a

result, the source becomes what is commonly referred to as a

``synthetic minor'' source. 1Federally-enforceable permit

conditions, if violated, are subject to enforcement by EPA and by

citizens in addition to the state or local agency. On June 28, 1989,

EPA published guidance on the basic requirements for EPA approval of

(non-title V) federally enforceable state operating permit programs

commonly referred to as FESOPPs. See 54 FR 27274. Permits issued

pursuant to such programs may be used to establish federally

enforceable limits on a source's potential emissions to create

``synthetic minor'' sources.

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\1\ Several other mechanisms for major sources (including major

sources of hazardous air pollutants) to become ``synthetic minors''

and legally avoid major source program requirements exist. For more

information, refer to the memorandums entitled ``Extension of

January 25, 1995 Potential to Emit Transition Policy (August 28,

1996), ``Release of Interim Policy on Federal Enforceability of

Limitations on Potential to Emit'' (January 22, 1996), ``Options for

Limiting the Potential to Emit (PTE) of a Stationary Source under

Section 112 and Title V of the Clean Air Act (Act)'' (January 25,

1995), and ``Approaches to Creating Federally-Enforceable Emissions

Limits'' (November 3, 1993).

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II. Summary of Delaware's SIP Revisions

A. Minor NSR

In order to evaluate the approvability of Delaware's submittal as a

SIP revision, the changes from the current SIP-approved version of

Regulation No. 2 must meet all applicable requirements (procedural and

substantive) of 40 CFR part 51 and the CAA. EPA's requirements for SIP

approval applicable to minor NSR permitting programs are established in

40 CFR part 51, subpart I--Review of New Sources and Modifications,

Sec. Sec. 51.160. through 51.164. Other sections of subpart I,

applicable only to new sources and modifications which are major, do

not apply and are thus not addressed in this analysis. 2The

docket for this rulemaking action contains a Technical Support Document

(TSD) prepared by EPA which more fully details the evaluation it

performed to determine that Delaware's SIP revision meets the

requirements of 40 CFR 51.160-51.164. The TSD is available, upon

request, from the EPA Region listed in the Addresses section of this

document. Overall, the revised Regulation No. 2 is a strengthening of

Delaware's current SIP-approved minor NSR program.

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\2\ 2 Delaware has a separate rule to meet the requirements of

subpart I applicable to major sources, namely, Regulation No. 25--

``Requirements for Preconstruction Review''.

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With the exception of certain public participation requirements, as

described below, EPA has determined that Delaware's revised Regulation

No. 2 fully meets the requirements of 40 CFR 51.160-51.164 for minor

NSR programs.

Public Participation--The requirements for public participation of

minor NSR programs are set forth in 40 CFR 51.161 (Public Availability

of Information). Among the requirements for public participation are

the following:

(a) Availability for public inspection in at least one location in

the area affected of the information submitted by the owner or operator

and of the permitting authority's analysis of the effect on air

quality;

(b) A 30-day period for submittal of public comment; and

(c) A notice by prominent advertisement in the area affected of the

location of the source information and the agency's analysis of the

effect on air quality.

Section 12.2 of Delaware's Regulation No. 2 requires the Delaware

Department of Natural Resources and Environmental Control (Department)

to make available in at least one location in the state a public file

containing a copy of all materials submitted by the applicant (except

those granted confidential treatment). It also requires the Department

to place an advertisement in a newspaper of general circulation in the

county in which the source is located and in a daily newspaper of

general circulation throughout the state. These notices must include:

(1) The fact that the application has been received and the

facility's name and location;

(2) A brief description of the nature of the application, including

the activities and emissions involved; and

(3) A contact person for the Department, the place where the permit

file can be inspected, and procedures to request a hearing.

[[Page 16753]]

The Department must also send the above information by mail to

anyone who has requested to be placed on a mailing list. The Department

must hold a public hearing on the application if it receives a

meritorious request to do so within 15 days of the public notice, or if

the Department deems it to be in the best interest of the State to do

so. Within 20 days of a public hearing, the Department must issue a

public notice announcing the date, time and location of the hearing.

The Department must consider all comments submitted by the applicant

and the public in reaching its final determination.

The current SIP-approved version of Regulation No. 2 does not

contain any provisions for public participation of minor NSR permits.

However, prior to the revision of Regulation No. 2, EPA understands

that Delaware followed the public participation provisions of its

statute, 7 Del. C., Chapter 60, Section 6004, which is not part of the

SIP. The statute provides that the public shall have a minimum of 15

days to request a public hearing, unless Federal law requires a longer

time, in which case the longer time shall be stated. However, the

revised Regulation No. 2 defers to the statutory minimum 15-day public

comment period. Since the current SIP-approved version of Regulation

No. 2 does not provide any public participation procedures, the revised

Regulation No. 2 is a strengthening of the SIP, even though it does not

fully meet the public comment requirements of 40 CFR 51.161 which

specify a 30-day public comment period.

On August 31, 1995, EPA proposed revisions to 40 CFR 51.161 to

provide that, except for certain specified activities (which would

still be required to have a 30-day comment period), states may vary the

procedures for, and timing of, public participation in light of the

environmental significance of the activity. See 60 FR 45564. EPA is in

the process of finalizing this rulemaking action. It is, therefore,

possible that Delaware's revised Regulation No. 2, which provides for a

minimum 15-day public comment period, would be consistent with EPA's

final revisions to 40 CFR 51.161, at least for some types of minor NSR

activities.

EPA has determined that the revised Regulation No. 2 overall is a

strengthening of the current minor NSR program in Delaware's SIP. The

revised Regulation No. 2 meets the criteria of 40 CFR 51.160-51.164,

with the exception of the requirements of 40 CFR 51.161(b)(2), which

requires a 30-day period for submittal of public comment. As explained

above, Delaware's revised Regulation No. 2 strengthens the SIP by

specifying public participation procedures and by providing a minimum

15-day public comment period (i.e., time period provided for the public

to request a public hearing). Therefore, EPA believes that Delaware's

revised minor NSR regulation warrants limited approval.

Under a limited approval, if EPA's future final rulemaking action

for revisions to 40 CFR 51.161 is consistent with Delaware's public

participation requirements under Regulation No. 2, the limited approval

would convert to a full approval. However, if the final revisions to 40

CFR 51.161 are not consistent, but more stringent than, Delaware's

Regulation No. 2, EPA would make a SIP call for Delaware to amend its

minor NSR public participation procedures in accordance with EPA's

final regulatory changes to 40 CFR 51.161.

B. Federally Enforceable State Operating Permits Program

EPA's Federal enforceability criteria applicable to state operating

permit program (non-title V) SIP submittals are discussed in a June 28,

1989 Federal Register (54 FR 27274). In the June 28, 1989 notice, EPA

amended the definition of ``federally enforceable'' to clarify that

terms and conditions contained in state-issued operating permits are

federally enforceable for purposes of limiting a source's PTE, provided

that the state's operating permits program is approved into the SIP

under section 110 of the CAA as meeting certain conditions, and

provided that the permit conforms to the requirements of the approved

program. The conditions for EPA approval discussed in the June 28, 1989

notice establish five criteria for approving a state operating permit

program. See 54 FR 27274-27286. In summary, the criteria require state

programs to:

(a) Be approved into the SIP;

(b) Impose legal obligations to conform to the permit limitations;

(c) Provide for limits that are enforceable as a practical matter;

(d) Issue permits through a process that provides for review and an

opportunity for comment by the public and by EPA; and

(e) Ensure that there will be no relaxation of otherwise applicable

Federal requirements.

The TSD prepared by EPA for this rulemaking action describes each

of the criteria for approval of a state's program for the issuance of

federally enforceable operating permits for purposes of limiting a

source's PTE and how Delaware's SIP submittal satisfies those criteria.

The revised Regulation No. 2 establishes a process whereby sources

can voluntarily seek to identify terms and conditions of an operating

permit as federally-enforceable. EPA interprets this to mean that

limits on PTE would be recognized for purposes of avoiding the

applicability of major source requirements. Such terms and conditions

would be specifically designated as ``federally enforceable'' within

each permit. Regulation No. 2 establishes a separate public

participation process, including a 30-day public comment period, for

sources that opt to make terms and conditions federally-enforceable.

As explained above, Regulation No. 2 also implements Delaware's

minor NSR program, as required under the CAA and 40 CFR 51.160-51.164.

In this proposed rulemaking notice, EPA is also taking action on

revisions to Delaware's minor NSR program. Since construction permits

under Regulation No. 2 are converted into operating permits after the

source completes construction, any permit terms designed to meet minor

NSR requirements are transferred to a Regulation No. 2 operating

permit. Because Regulation No. 2 operating permits become the permits

in which the minor NSR applicable requirements reside, EPA considers

the terms and conditions of Regulation No. 2 operating permits to be

federally-enforceable (as well as Regulation No. 2 construction

permits). In other words, EPA views Delaware's minor NSR program as

being comprised of Regulation No. 2 as a whole--including both

construction and operating permits issued under Regulation No. 2.

However, although Regulation No. 2 operating permits are considered

federally-enforceable, EPA currently does not recognize PTE limits

contained in those permits as legitimate limits for sources wishing to

avoid major source applicability, because the existing SIP-approved

version of Regulation No. 2 does not meet EPA's minimum criteria for

establishing PTE limits, including practical enforceability and public

participation. (See 54 FR 27274; June 28, 1989). Today's action

proposes to approve the revised Regulation No. 2 because it now does

meet EPA's criteria for establishing federally enforceable PTE limits,

so that EPA will recognize a source's limits on PTE for avoiding major

source applicability, so long as the individual permit issued under the

approved program meets those same requirements. EPA reserves the right

to deem any individual permit as not

[[Page 16754]]

``federally enforceable'' for purposes of limiting PTE (and, thus,

avoiding major source requirements) if a permit contains terms and

conditions which are not quantifiable or practically enforceable in

accordance with the revised version of Regulation No.2 proposed for SIP

approval and the June 28, 1989 criteria.

EPA has determined that the Federal enforceability ``opt-in''

process established in revised Regulation No. 2 (whereby sources can

request to have certain permit terms and conditions be designated as

federally enforceable for purposes of limiting PTE) fully meets the

requirements of EPA's June 28, 1989 criteria for federally enforceable

state operating permits programs. EPA proposes full approval of the

Regulation No. 2 provisions as meeting the June 28, 1989 criteria for a

FESOPP.

EPA is soliciting public comments on the issues discussed in this

document or on other relevant matters. These comments will be

considered before taking final action. Interested parties may

participate in the Federal rulemaking procedure by submitting written

comments to the EPA Regional office listed in the Addresses section of

this document.

III. Proposed Action

EPA is proposing limited approval of revisions to the Delaware

minor NSR program submitted on June 4, 1997, because the revised

Regulation No. 2 strengthens the SIP, but does not fully meet the

current requirements for public participation of minor NSR programs

under 40 CFR 51.161. EPA is proposing full approval of the provisions

of Regulation No. 2 establishing a FESOPP which provides a mechanism

for sources to request that certain terms and conditions of Regulation

No. 2 permits be designated as federally-enforceable for purposes of

limiting the PTE regulated air pollutants. Final action by EPA to

approve Delaware's FESOPP would confer Federal enforceability status,

and EPA would recognize limits on PTE for sources to avoid major source

requirements, to existing permits which are issued in accordance with

the revised Regulation No. 2 and the June 28, 1989 criteria, including

permits which have been issued prior to EPA's final action.

Nothing in this action should be construed as permitting or

allowing or establishing a precedent for any future request for

revision to any state implementation plan. Each request for revision to

the state implementation plan shall be considered separately in light

of specific technical, economic, and environmental factors and in

relation to relevant statutory and regulatory requirements.

IV. Administrative Requirements

A. Executive Order 12866

The Office of Management and Budget (OMB) has exempted this

regulatory action from E.O. 12866 review.

B. Regulatory Flexibility Act

Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA

must prepare a regulatory flexibility analysis assessing the impact of

any proposed or final rule on small entities. 5 U.S.C. 603 and 604.

Alternatively, EPA may certify that the rule will not have a

significant impact on a substantial number of small entities. Small

entities include small businesses, small not-for-profit enterprises,

and government entities with jurisdiction over populations of less than

50,000. SIP approvals under sections 110 and 301, and subchapter I,

part D of the CAA do not create any new requirements but simply approve

requirements that the State is already imposing. Therefore, because the

Federal SIP approval does not impose any new requirements, EPA

certifies that it does not have a significant impact on any small

entities affected. Moreover, due to the nature of the Federal-State

relationship under the CAA, preparation of a flexibility analysis would

constitute Federal inquiry into the economic reasonableness of state

action. The Clean Air Act forbids EPA to base its actions concerning

SIPs on such grounds. Union Electric Co. v. U.S. EPA, 427 U.S. 246,

255-66 (1976); 42 U.S.C. 7410(a)(2).

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

private sector, of $100 million or more. Under Section 205, EPA must

select the most cost-effective and least burdensome alternative that

achieves the objectives of the rule and is consistent with statutory

requirements. Section 203 requires EPA to establish a plan for

informing and advising any small governments that may be significantly

or uniquely impacted by the rule. EPA has determined that the approval

action proposed 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 requirements. Accordingly, no additional costs

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

result from this action.

The Regional Administrator's decision to approve or disapprove this

revision to Delaware Regulation 2 will be based on whether it meets the

requirements of section 110(a)(2)(a)-(K) and part D of the Clean Air

Act, as amended, and EPA regulations in 40 CFR part 51.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Intergovernmental

relations, New source review, Reporting and recordkeeping requirements.

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

Dated: March 25, 1998.

Thomas Voltaggio,

Acting Regional Administrator, Region III.

[FR Doc. 98-8960 Filed 4-3-98; 8:45 am]

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