[Federal Register Volume 59, Number 36 (Wednesday, February 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4053]


[[Page Unknown]]

[Federal Register: February 23, 1994]


=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[MN13-1-5623; FRL-4840-8]

 

Approval and Promulgation of Implementation Plans; Minnesota

AGENCY: United States Environmental Protection Agency (USEPA).

ACTION: Proposed rule.

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

SUMMARY: USEPA is proposing to approve a revision to the Minnesota 
State Implementation Plan (SIP) for new source review in nonattainment 
areas, submitted to meet longstanding requirements as well as new 
requirements imposed by the Clean Air Act Amendments of 1990. This 
revision consists of the State Rules 7005.3010 through 7005.3060, which 
incorporate by reference the new source review requirements specified 
in appendix S to title 40 Code of Federal Regulations part 51 (40 CFR 
part 51), ``Emission Offset Interpretive Ruling,'' except for the 
deletion of unacceptable exemptions included in appendix S. Final 
approval of this revision would lift the current ban on permitting 
major sources and major modifications in Minnesota nonattainment areas.

DATES: Comments on this proposed action must be received in writing by 
March 25, 1994.

ADDRESSES: Written comments should be sent to: William L. MacDowell, 
Chief, Regulation Development Section (AE-17J), U.S. Environmental 
Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604.
    Copies of the SIP revision request and USEPA's analysis are 
available for inspection at the following address: (It is recommended 
that you telephone John Summerhays at (312) 886-6067, before visiting 
the Region 5 Office.) U.S. Environmental Protection Agency, Region 5, 
Air and Radiation Division, 77 West Jackson Boulevard, Chicago, 
Illinois 60604.

FOR FURTHER INFORMATION CONTACT: John Summerhays, Regulation 
Development Section, Air Enforcement Branch, U.S. Environmental 
Protection Agency, Region 5, Chicago, Illinois 60604.

SUPPLEMENTARY INFORMATION:

I. Summary of State Submittal

    Part D of title I of the Clean Air Act sets forth SIP requirements 
for nonattainment areas. Section 173 and the various subparts of title 
I contain the program requirements for the review and issuance of 
permits for the construction of major new sources and major 
modifications in a nonattainment area. Currently, Minnesota has no 
approved nonattainment area permitting program. On August 5, 1992, and 
August 26, 1993, Minnesota submitted revised new source review 
regulations for the purpose of meeting these requirements.
    The statutory requirements that apply to State regulations for new 
source review in nonattainment areas are set forth at part D of title I 
of the Clean Air Act, particularly in sections 172(c)(5) and 173. 
Federal regulations developed prior to enactment of the Clean Air Act 
Amendments of 1990 for nonattainment area new source review programs 
are set forth at title 40 Code of Federal Regulations part 51 (40 CFR 
part 51), particularly 40 CFR 51.165. The Clean Air Act Amendments of 
1990 also establish assorted new requirements, for which preliminary 
guidance was published April 16, 1992 (57 FR 13498), and April 28, 1992 
(57 FR 18070). For example, section 189(a)(1)(A) requires that sections 
172(c)(5) and 173 be met for fine particulate matter nonattainment 
areas.
    The Minnesota Pollution Control Agency (MPCA) has submitted general 
permitting regulations to USEPA on various occasions, including January 
28, 1972; May 28, 1972; January 23, 1981; and January 7, 1985. USEPA 
approved the 1972 submittals on May 31, 1972; the 1981 submittal on May 
6, 1982; and the 1985 submittal on May 13, 1988. However, these rules 
did not address the specific requirements for permitting new and 
modified major sources in nonattainment areas. Consequently, Minnesota 
has no approved nonattainment area permitting program, and the State 
continues to be subject to a prohibition against permitting major new 
sources and major modifications in the State's nonattainment areas, as 
promulgated by USEPA on July 2, 1979 (44 FR 38583). More recent MPCA 
submittals, which are the subjects of this proposed rulemaking, were 
intended to address the requirements for nonattainment area new source 
permitting and allow USEPA to lift the permitting prohibition.
    MPCA has submitted SIP revisions for meeting the permitting 
requirements of part D on two previous occasions. MPCA's first 
submittal was on December 22, 1981. USEPA proposed conditional approval 
of this rule in the July 29, 1982, Federal Register (47 FR 32742). 
Minnesota used the plant-wide definition of source in its rule. Before 
final rulemaking could be published, the D.C. Circuit Court ruled 
against the plant-wide definition of source. This decision was later 
overturned (Chevron, U.S.A., Inc. v. NRDC, 104 S.Ct. 2778 (1984)), but 
USEPA never approved this SIP revision because of other concerns. This 
submittal was ultimately withdrawn, in an August 21, 1990, letter from 
the Commissioner of MPCA, and USEPA's proposed action on this submittal 
was withdrawn in the Federal Register of November 7, 1990 (55 FR 
46829).
    MPCA submitted its second revision for meeting the permitting 
requirements on March 13, 1989. In February 1990, USEPA provided MPCA 
with comments, stating that the rule would not be approved. In a 
February 24, 1992, letter, Charles W. Williams, Commissioner, MPCA, 
withdrew the March 13, 1989, submittal.
    The current revisions being addressed in this rulemaking include 
State submittals of August 5, 1992, and August 26, 1993. These 
submittals include State Rules 7005.3010 through 7005.3060 (``Offset 
Rule''). These rules incorporate appendix S to 40 CFR part 51 into 
these State rules, modified in response to recommendations by USEPA.
    Section 173 of the Act identifies four essential requirements that 
State new source permit regulations must impose in nonattainment areas: 
(1) New source emissions must be offset by equivalent or greater 
emission reductions in the area, (2) the new source must have lowest 
achievable emission rates (LAER), (3) other sources owned by the owner 
or operator of the new source must be in compliance or on a schedule to 
achieve compliance with applicable regulations, and (4) the area must 
not be subject to a finding of failure to implement the SIP.

Incorporation of Appendix S

    In general, adoption of appendix S of 40 CFR part 51 into the 
State's regulations serves to impose the requirements identified in 
section 173. Part IV. A. of appendix S provides multiple conditions for 
granting a permit, including a requirement for lowest achievable 
emission rates (requirement 2 above), a requirement for compliance of 
commonly owned sources (requirement 3 above), and a requirement for 
offsets (requirement 1 above). Although appendix S contains no 
provision prohibiting permits in ``failure to implement'' areas, USEPA 
has adequate authority under section 113(a)(5) to take any necessary 
action to address permits that violate this prohibition.
    Nevertheless, the adoption of appendix S by reference as a State 
rule fails to satisfy permitting requirements under subpart I of 40 CFR 
part 51. In particular, appendix S exempts certain source types and is 
insufficiently clear on some issues. A letter from USEPA dated May 17, 
1991, recommended the following modifications:
    1. The requirement for LAER must apply to all new sources or 
modifications meeting the applicability requirements of 40 CFR 51.165. 
Footnotes 4 and 5 must be deleted.
    2. Requirements for offsets must be clarified to ensure that 
offsets are based on actual emissions as defined in 40 CFR 
51.165(a)(3). This clarification must also be made in Part IV, section 
C. Footnote number 7 must be deleted.
    3. Footnote 8, which provided an exemption from the requirement for 
net air quality benefit, must be deleted.
    4. Section B of Part IV, which exempts certain source types, must 
be deleted.
    5. Section C, paragraph 5, which allows ``banking'' of emissions 
offset credits, must either be deleted or supplemented with approvable 
banking regulations.
    Minnesota has made each of these modifications to its rules. Most 
of these modifications were included in the rule revisions submitted 
August 5, 1992. In addition, pursuant to communications from USEPA 
subsequent to the May 1991 letter, the State made further 
modifications, including deletion of the general provisions for 
banking.

Relationship to Subsequent Rule Revisions

    At present, the rules in the Minnesota SIP governing permit 
processing are the Consolidated Permit Rules adopted by the State on 
July 24, 1984, and approved by USEPA on May 13, 1988 (53 FR 17033). The 
subject of today's rulemaking is a supplemental rule known as the 
``Offset Rule,'' which establishes the substantive requirements for new 
sources in nonattainment areas. Minnesota then adopted significant 
revisions to its regulations on permit processing on August 24, 1993, 
which it submitted for SIP rulemaking on November 23, 1993. The primary 
purposes of these regulations were to satisfy requirements in Title V 
of the Clean Air Act for a State operating permit program and to amend 
the new source permitting regulations to provide an integrated set of 
permitting regulations. In developing these regulations, the State 
incorporated language intended to address various concerns USEPA had 
identified with respect to the prior permitting rules.
    Today's rulemaking does not address the approvability of the 
submittal of November 23, 1993. Nevertheless, this latter submittal is 
germane to this rulemaking, insofar as these more recent revisions 
assure that certain potential problems which could have arisen under 
the prior general permitting rules will not arise. It should be noted 
that the November 1993 submittal does not amend the rules under 
consideration in this action, i.e. the ``Offset Rule'' submitted by the 
State in August 1992 and amended in August 1993, but instead revises 
the general provisions in the Consolidated Permit Rules concerning 
permit processing. The following paragraphs identify the issues that 
were of concern and how the November 1993 submittal affects these 
issues.
    The first issue was provision in the prior general permitting 
regulations for expiration of permits, and a concern that expiration of 
a permit could cause the construction permit conditions to expire. The 
State's general permitting regulations now define ``Title I 
conditions'' to include conditions established to satisfy new source 
review requirements, and state that ``[a]ny Title I condition shall 
remain in effect without regard to permit expiration or reissuance, and 
shall be restated in the reissued permit.'' Therefore, USEPA believes 
that requirements imposed on sources during new source review clearly 
do not expire as a result of permit expiration.
    The second issue of concern was the authority granted in State law 
for the State agency to grant variances, including variances from 
Federal requirements. However, the revised general permitting 
regulations state that: (1) The State agency ``shall not issue 
variances from any Federal requirement to obtain an air quality permit, 
unless explicitly authorized to do so in writing by [USEPA],'' and (2) 
the State agency ``shall issue a permit * * * only if [various 
conditions have been met including that] the permit does not reflect a 
variance from any federally enforceable applicable requirement * * *.'' 
For purposes of this action, these provisions render the second issue 
moot, insofar as the State agency no longer has the ability to grant 
variances from Federal requirements. Nevertheless, it is appropriate to 
state that USEPA believes that the statutory provision for variances is 
not being approved and that issuance of a variance from Federal 
requirements would be contrary to both State and Federal regulations 
and would have no bearing on enforcement of the applicable requirement.
    The third issue of concern was that public notice for new source 
review permits was provided for only in a Memorandum of Understanding 
(MOU) containing several outdated references. The revised general 
permitting regulations provide public notification procedures and a 30 
day public comment period. Minnesota has clearly committed itself both 
in the MOU and its regulations to continuing to provide for proper 
opportunity for public input into permitting decisions in accordance 
with USEPA requirements.
    For all three of these issues, Minnesota has made clear through its 
revised general permitting regulations that the SIP as revised by the 
rule under consideration in this action would satisfy Federal 
requirements. Therefore, USEPA believes that the three issues discussed 
above are no longer impediments to today's proposed conclusion that 
Minnesota has satisfied nonattainment area permitting requirements.
    The fourth issue of concern was whether Minnesota had satisfied the 
requirement of 40 CFR 51.160(a) to assure that new sources do not 
interfere with attainment or maintenance of the air quality standards. 
The general permitting regulations in Minnesota's SIP require permits 
for facilities with emissions above 25 tons per year of any criteria 
pollutant except lead, or with more than \1/2\ ton of lead emissions 
per year. (At such a facility, any modification would require a 
permit.) The recently submitted permitting rules raise some of these 
size cutoffs. In support of the raised cutoffs, the State's recent 
submittal includes a modeling analysis to show that the revised size 
cutoffs do not interfere with attainment or maintenance. A preliminary 
review indicates that this analysis adequately supports the size 
cutoffs in the current SIP. Consequently, USEPA believes that the 
general permitting rules in the SIP as supplemented by the Offset Rule 
satisfy 40 CFR 51.160(a). Nevertheless, USEPA is reserving judgment on 
the acceptability of the recently raised size cutoffs, which will be 
addressed in the context of rulemaking on the more recent submittal.
    The fifth issue of concern pertained to a provision in the State's 
Rule 7001.0150 authorizing the State not to enforce ``local laws, rules 
and plans.'' Although this provision clearly applies to local laws and 
not Federal laws, this provision is arguably ambiguous as to whether 
the State is authorized not to enforce Federal as well as local rules 
and plans. The recent rule revisions did not modify this provision. 
Nevertheless, the State's intent is presumably that the regulations 
only authorize nonenforcement of relevant local laws, local rules, and 
local plans. USEPA is expressly not proposing approval of any provision 
for State nonenforcement of Federal rules or Federal plans. USEPA 
solicits public comment on this element of the proposed approval.
    USEPA has reviewed whether the new requirements in the Clean Air 
Act Amendments of 1990 have been satisfied. These new requirements 
include an analysis of alternatives, and a requirement for submitting 
information to the RACT/BACT/LAER Clearinghouse. The Amendments also 
introduce numerous new requirements that are not currently relevant to 
Minnesota, in part because the State has no ozone nonattainment areas. 
The TSD provides a more detailed discussion of the new requirements and 
how these requirements are addressed in Minnesota. The conclusion of 
this review is that Minnesota has satisfactorily addressed these 
requirements as they currently apply in the State.
    USEPA is currently developing a rule to implement the changes under 
the Clean Air Act Amendments of 1990 in the new source review 
provisions in Parts C and D of Title I of the Act. The Agency 
anticipates that the proposed rule will be published for public comment 
in the spring or summer of 1994. If USEPA has not taken final action on 
Minnesota's new source review submittal by that time, USEPA may 
generally refer to the proposed rule as guidance regarding the 
approvability of the submittal. USEPA expects to take final action to 
promulgate a rule to implement the Parts C and D changes sometime 
during 1994 or 1995. Upon promulgation of those regulations, USEPA will 
review new source review SIPs to determine whether additional SIP 
revisions are necessary to satisfy the requirements of the rule.
    Section 189(e) states that ``control requirements applicable * * * 
for major stationary sources of PM10 shall also apply to major 
stationary sources of PM10 precursors, except where the 
Administrator determines that such sources do not contribute 
significantly to PM10 levels which exceed the standard in the 
area.'' On June 25, 1993 (at 58 FR 34397), USEPA proposed such a 
determination of the insignificance of particulate matter precursors in 
Minnesota. If that proposed action is finalized, section 189(e) would 
no longer require new source review of major particulate matter 
precursor sources.

II. Proposed Rulemaking Action

    USEPA believes that the regulations submitted by Minnesota on 
August 5, 1992, and August 26, 1993, satisfy the requirements under 
Part D for a new source permitting program in nonattainment areas. 
Therefore, USEPA proposes to approve this SIP revision.
    Under the rules in the SIP, permits for nonattainment area sources 
that satisfy the substantive requirements of the Offset Rule (Rules 
7005.3010 through 7005.3060) would be processed in accordance with 
permit processing provisions in the Consolidated Permit Rules (Rules 
7001.0010 through 7001.0210 and Rules 7001.1200 through 7001.1220). 
Rulemaking of May 13, 1988 (53 FR 17033) approved the Consolidated 
Permit Rule as satisfying attainment area permitting requirements but 
noted that nonattainment area permitting requirements were not met. 
Today's action proposes to lift the current ban on construction of 
major new sources and major modifications in Minnesota nonattainment 
areas, and would impose Minnesota's Consolidated Permit Rule and Offset 
Rule as Federally enforceable requirements for such new sources and 
modifications. Subsequent rulemaking will address the approvability of 
more recent revisions to State permitting regulations.
    The rules submitted by Minnesota were intended to address 
nonattainment area new source review requirements and did not address 
visibility-related permitting requirements specified in 40 CFR 51.307. 
Therefore, USEPA is retaining the provisions of 40 CFR 52.1236, which 
note the absence of approvable State regulations for visibility 
protection and impose the Federally promulgated regulations of 40 CFR 
52.26 and 52.28.
    Public comment is solicited on all elements of USEPA's proposed 
rulemaking action. Written comments received by [Insert date 30 days 
from date of publication] will be considered in the development of 
USEPA's final rulemaking action.
    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., USEPA 
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, USEPA 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 section 110 and subchapter I, part D of the Act 
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, I certify 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 Act, 
preparation of a regulatory flexibility analysis would constitute 
federal inquiry into the economic reasonableness of state action. The 
Act forbids USEPA to base its actions concerning SIPs on such grounds. 
Union Electric Co. v. USEPA, 427 U.S. 246, 256-66 (S.Ct. 1976); 42 
U.S.C. 7410(a)(2).
    The Office of Management and Budget has exempted this rule from the 
requirements of section 6 of Executive Order 12866.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, 
Incorporation by reference, Intergovernmental relations, Lead, 
Particulate matter, Reporting and recordkeeping requirements, Sulfur 
oxides.

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

    Dated: January 19, 1994.
David Kee,
Acting Regional Administrator.
[FR Doc. 94-4053 Filed 2-22-94; 8:45 am]
BILLING CODE 6560-50-P