[Federal Register Volume 59, Number 116 (Friday, June 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14816]


[[Page Unknown]]

[Federal Register: June 17, 1994]


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


POSTAL SERVICE
 

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5000-2]

Clean Air Act Disapproval of Operating Permits Program; 
Commonwealth of Virginia

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed disapproval.

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

SUMMARY: EPA is proposing to disapprove the Operating Permits Program 
submitted by the Commonwealth of Virginia for the purpose of complying 
with Federal requirements which mandate that States develop, and submit 
to EPA, programs for issuing operating permits to all major stationary 
sources, and to certain other sources. The reasons for proposing 
disapproval are as follows: Virginia's program does not contain the 
necessary legal authority to afford judicial review to persons who have 
participated in the public comment process, and it also does not 
contain the necessary legal authority to prevent default issuance of a 
permit. The submitted regulations have an expiration date of June 28, 
1994 and cannot be applied or enforced after that date. Also, the 
regulatory portion of the program does not include the proper universe 
of sources required to be subject to a state operating permit program 
or ensure that permits contain all applicable requirements, or 
correctly delineating provisions enforceable only by the Commonwealth. 
In addition, there are other deficiencies in Virginia's submitted 
program, as specified in the Technical Support Document, which must be 
corrected before EPA can grant full approval to Virginia's operating 
permits program.
DATES: Comments on this proposed action must be received in writing by 
July 18, 1994.

ADDRESSES: Comments should be mailed to Thomas J. Maslany, Director, 
Air, Radiation & Toxics Division at the Region III address.
    A copy of Virginia's submittal and other supporting information 
used in developing the proposal are contained in the docket and 
available for inspection during normal business hours at the following 
location: EPA Region III, Air, Radiation & Toxics Division, 841 
Chestnut Building, Philadelphia, PA 19107.

FOR FURTHER INFORMATION CONTACT: Lisa M. Donahue, Environmental 
Scientist, at the Region III address, or call 215-597-9781.

SUPPLEMENTARY INFORMATION:

I. Background

A. Introduction

    As required under title V 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 CFR part 70. Title V requires 
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 requires that states develop and submit these programs to 
EPA by November 15, 1993, and that EPA take actions to approve or 
disapprove each program within 1 year after receiving the submittal. 
The EPA's program review occurs pursuant to section 502 of the CAA and 
40 CFR part 70, which together outline criteria for approval or 
disapproval. Where a program substantially, but not fully, meets the 
requirements of 40 CFR 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 
period, it must establish and implement a Federal operating permits 
program.
    On November 12, 1993, Virginia submitted an operating permits 
program for review by EPA. It was received by EPA on November 19, 1994. 
The submittal was supplemented by a letter dated January 14, 1994, and 
was found to be administratively complete pursuant to 40 CFR 
70.4(e)(1). The submittal contains a program description, a legal 
opinion from the Virginia Attorney General, confirmation of regulatory 
authority, program and fee regulations, relevant portions of Virginia 
statutes, guidance and forms, a description of enforcement provisions, 
a resource and fee demonstration, and a transition plan.

B. Federal Oversight and Sanctions

    Sanctions must be imposed 18 months after EPA disapproves a state 
submittal, unless prior to expiration of the 18-month period the state 
submits a revised program that EPA approves. If a state has not 
submitted a revised program that EPA approves within 6 months after EPA 
applies the first sanction, a second sanction is required. In addition, 
discretionary sanctions may be applied any time during the 18-month 
period following the date required for program submittal or the date of 
program disapproval. If the Commonwealth does not have an approved 
program by November 15, 1995, EPA must promulgate, administer, and 
enforce a Federal operating permits program for the Commonwealth.

II. Summary and Analysis of State Submission

    The analysis contained in this document focuses on the major 
portions of Virginia's submittal and particularly portions which must 
be corrected to meet the minimum requirements of 40 CFR part 70. The 
full program submittal, the Technical Support Document, and other 
relevant materials are available for detailed information as part of 
the public docket. The docket may be viewed during regular business 
hours at the address listed above.

A. Statutory Authority

1. Standing for Judicial Review
    The Attorney General of the Commonwealth, in his opinion dated 
November 5, 1993, states that ``the laws of the Commonwealth provide 
adequate authority to carry out all aspects of the Commonwealth's 
program for Federal operating permits.'' The Attorney General cites Va. 
Code section 10.1-1318(B) as providing an opportunity for judicial 
review to any person who is aggrieved by a final decision of the State 
Air Pollution Control Board and who meets certain criteria, including 
having an immediate, pecuniary, and substantial interest. The 
requirement for standing for judicial review, as specifically required 
by section 502(b)(6) of the CAA and 40 CFR 70.4(b)(3)(x), must provide 
standing for any person who has participated in the public comment 
process and any other person who could obtain judicial review of that 
action under applicable law. EPA interprets section 502(b)(6) of the 
CAA as requiring that title V permits programs must provide judicial 
review to any party who participated on the public comment process and 
who at a minimum meets the threshold standing requirements of Article 
III of the U.S. Constitution.
    In comparison, Section 10.1-1318(B) of the Code of Virginia extends 
the right to seek judicial review only to persons who have suffered an 
``actual, threatened, or imminent injury...'' where ``such injury is an 
invasions of an immediate, legally protected, pecuniary and substantial 
interest which is concrete and particularized...'' The Virginia 
statute, as well Virginia case law does not enable a party who meets 
the minimum threshold standing requirements of Article III of the U.S. 
Constitution access to the Commonwealth's court system. The 
Commonwealth's Attorney General's opinion submitted with Virginia's 
program states that ``the inclusion of the word 'pecuniary' in the 
amended Virginia law means the requirement for standing to obtain 
judicial review may be more stringent than Article III standing 
requirements, as the EPA interprets them under the United States 
Supreme Court decision in Lujan v. Defenders of Wildlife, 112 S.Ct. 
2130, 2136 (1992) and related cases.''
    The limitations on judicial review in Virginia do not meet the 
minimum threshold standing requirements of Article III of the U.S. 
Constitution and thus do not meet the minimum program approval criteria 
under title V. Therefore, EPA is proposing to disapprove Virginia's 
program because it does not meet the minimum requirement for standing 
for judicial review. Va. Code section 10.1-1318(B) must be amended.
2. Default Issuance of Permits
    Va. Code section 9-6.14:3 provides that the purpose of Virginia's 
Administrative Process Act is to supplement present and future basic 
laws. Although Regulations sections 120-08-0525 C and E provide for EPA 
veto and affected states review, these regulations may be superseded by 
the Administrative Process Act. Sections 9-6.14:11 and 9-6.14:12 of the 
Administrative Process Act provide that a party may provide written 
notice to the agency that a decision on a permit is due, and that the 
decision is deemed in favor of the named party if no decision is 
reached within 30 days. This provision prevents the Commonwealth from 
meeting the requirement of section 505(b)(3) of the CAA that no permit 
be issued unless it is revised to meet the objection of EPA, if EPA 
objects to the permit within 45 days after receiving a copy of the 
proposed permit. This provision also prevents the Commonwealth from 
meeting Sec. 70.8(e), which requires the Attorney General to certify 
that no provision of state law requires that a permit be issued after a 
certain time if the permitting authority has failed to take action on 
the application. Virginia must ensure that no permit will be issued by 
default through this process until affected states and EPA have had a 
chance to review the proposed permit as required by 40 CFR 70.8. In 
addition Virginia must ensure that no permit will be issued through 
this process if EPA has objected within 45 days. EPA is proposing to 
disapprove Virginia's program because it does not ensure that EPA and 
affected states are given an adequate opportunity for review of 
proposed permits and that no permit will be issued if EPA objects.

B. Regulations and Program Implementation

1. Effectiveness and Enforceability of Rules
    The Virginia operating permit program Regulations for the Control 
and Abatement of Air Pollution (Regulations) Emergency Rule 8-5, 
Federal Operating Permits for Stationary Sources, and Emergency Rule 8-
6, Permit Program Fees, do not meet the requirements of 40 CFR part 70. 
Although the rules are currently effective, they expire on June 28, 
1994 and cannot be implemented or enforced beyond that date. EPA is 
proposing to disapprove Virginia's program because its regulations 
expire on June 28, 1994.
2. Applicability Under the Operating Permits Program
    a. Definitions and Exemptions. The requirements of Sec. Sec. 70.2 
and 70.3 for applicability have not been met. Primarily, Virginia's 
regulations at section 120-08-0502 and section 120-08-0602 do not 
correctly define major source or stationary source. Virginia's 
definitions, and the exemptions of insignificant activities and 
affected sources found in section 120-08-0501 of Virginia's regulations 
limit the universe of sources that are applicable to Rule 8-5 by 
exempting or deferring sources that are required by 40 CFR part 70 to 
obtain an operating permit. EPA is proposing to disapprove Virginia's 
program because the regulations do not apply to the proper universe of 
sources. Further discussion of these deficiencies is contained in the 
Technical Support Document.
    b. Variances. Virginia has the authority to issue a variance from 
requirements imposed by Virginia law. The variance provision at Va. 
Code section 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 40 CFR 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 granted through procedures allowed 
by 40 CFR 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 40 CFR part 
70 procedures.
3. Applicable Federal Requirements and Federally Enforceable Provisions
    Virginia's submittal does not ensure the Commonwealth's ability to 
issue permits which include all applicable Federal requirements and 
which correctly delineate requirements that are enforceable only by 
Virginia. The Commonwealth also cites Virginia's regulations rather 
than Federal regulations (in the form of federally promulgated 
regulations or state regulations that have been approved into the State 
Implementation Plan) in the definitions in section 120-08-0502. In 
section 120-08-0507, Federal enforceability is incorrectly extended to 
portions of Virginia's regulations that have been submitted, but not 
yet approved, into the State Implementation Plan.
    EPA is proposing to disapprove Virginia's program because it 
explicitly purports to extend Federal enforceability to provisions 
which are not enforceable by the administrator and also does not 
include certain provisions which must be considered federally 
enforceable (and thus applicable) requirements.
4. Public Participation and Affected State Review
    Virginia uses the term ``locality particularly affected'' in 
determining the geographic scope of notification to the public of a 
public comment period on a draft permit. This scope is too narrow and 
it does not fully meet the requirements of 40 CFR 70.7(h) for public 
participation. For full approval, Virginia must ensure that any 
locality that could potentially be affected by a permit would be 
notified of the opportunity for public comment on that permit. In 
addition, Virginia incorrectly exempts minor permit modifications from 
the requirement under Sec. 70.8(b)(2) for affected state review of 
those modifications. Virginia must also correct this deficiency before 
EPA can grant full approval to Virginia's program.

C. Permit Fees and Demonstration

    Va. Code section 10.1-1322.1 and Rule 8-6 allow for a fee rate of 
up to $25 per ton, as adjusted by the consumer price index (CPI), of 
emissions to be charged to a source. The fee is set by the Air 
Pollution Control Board and can be adjusted annually, without exceeding 
the statutory cap, to meet the costs of implementation of the program. 
Virginia's fee revenue projections are based on revenues from a $25 per 
ton fee, using 1990 as a base year, and adjusted annually by the CPI, 
as set out in Section 502 of the CAA. However, no specific fee schedule 
was included in the submittal and the cap on the fee amount limits the 
Board's flexibility in ensuring that revenues are sufficient to cover 
the direct and indirect costs of the program. (CAA section 502(b)(3)(A) 
and Va. Code section 10.1-1322. B.) Va. Code section 10.1-1322. B. 
precludes the Commonwealth from collecting title V fees to cover the 
indirect costs charged and collected by the Commonwealth's Department 
of Accounts. This provision violates 40 CFR 70.9(b).
    The fee amounts projected by Virginia in the ``Total Fee Revenue 
Projections'' table, although sufficient to cover the estimated costs 
of the program (as set out in the resource demonstration), do not 
accurately reflect the mandate of Va. Code section 10.1-1322.1 to 
adjust fees using the CPI calculation method stipulated in CAA section 
502. Also, it is unclear whether or not the estimated emissions used in 
the ``Total Fee Revenue Projections'' table include emissions from acid 
rain sources, which Virginia exempts from fees in the years 1995 to 
1999 (section 120-08-0601 C.5.) or includes Hazardous Air Pollutants.
    In order for EPA to grant full approval to Virginia's program, the 
Commonwealth must remove the statutory impediment to using permit fees 
to fund certain indirect costs of its program and ensure that the 
Commonwealth's fee provision comply with 40 CFR part 70.

D. Provisions Implementing the Requirements of Other Titles of the CAA

1. Authority and Commitments for Section 112 Implementation
    In Va. Code section 10.1-1322.A. and Rule 8-5, Virginia has 
demonstrated broad legal authority to incorporate into permits and 
enforce all applicable CAA section 112 requirements. However, Virginia 
also indicated that additional authority may be necessary to conduct 
specific section 112 activities, and did not commit to implementing CAA 
section 112(r) for prevention of accidental release. 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.'' Also, Virginia 
has the authority under section 120-08-0505 K to require that an 
applicant state that the source has complied with CAA section 112(r) or 
state in the compliance plan that the source intends to comply and has 
set a schedule to do so. In the case of CAA section 112(g) 
requirements, EPA notes that Virginia must begin to implement this 
program upon approval of an operating permits program.
2. Authority and Commitments for Implementation of Acid Rain 
Requirements
    Virginia has committed to adopting regulations to meet the 
requirements of the Acid Rain program by January 1, 1995. The Attorney 
General, in his November 5, 1993 opinion, committed to including a 
statutory and regulatory analysis of the acid rain portions of the 
operating permits program in the January 1, 1995 submittal. Virginia 
has begun its regulatory development process to adopt regulations for 
the acid rain portion of the Virginia Operating Permits Program.

III. Request for Public Comments

    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 this Federal rulemaking action by submitting written 
comments to the EPA Regional office listed in the Addresses section of 
this document. EPA has received a petition from the Environmental 
Defense Fund, dated December 23, 1993, to disapprove Virginia's 
operating permits program. This petition will be included in the docket 
and will be considered in EPA's final action.

Proposed Action

    EPA is proposing to disapprove the operating permits program 
submitted by the Commonwealth on November 12, 1993. If promulgated, 
this disapproval will constitute a disapproval under section 502(d) of 
the CAA (see generally 57 FR 32253-32254). As provided under section 
502(d)(1) of the CAA, the Commonwealth will have up to 180 days from 
the date of EPA's notification of disapproval for the Governor of 
Virginia to revise and resubmit the program. EPA is proposing to 
disapprove this program on the basis that Virginia has not met the 
following five requirements:

1. Pursuant to section 502(b)(6) of the CAA and 40 CFR 70.4(b)(3)(x) 
and 70.7(h), adequate provisions for public participation in the 
permit process, including statutory authority that meets the minimum 
threshold for judicial standing.
2. Pursuant to section 505(b)(3) of the CAA and 40 CFR 70.8(e), 
authority to prevent default issuance of permits.
3. Regulations that expire on June 28, 1994.
4. Issuance of permits to the proper universe of sources required by 
40 CFR part 70 to be included in the Commonwealth's operating permit 
program.
5. Regulations that meet the requirements of 40 CFR part 70 ensuring 
issuance of permits that contain all applicable Federal requirements 
and correctly delineate provisions only enforceable by the 
Commonwealth.

    Virginia must amend its program to correct the deficiencies and 
resubmit all relevant portions of the program, including a revised 
Attorney General's opinion. The Technical Support Document discusses 
Virginia's submittal in detail, and contains specific references to 
revisions and modifications necessary to obtain full approval. 
Submittal of revised portions of Virginia's operating permit program, 
including revised statutes and regulations, will undergo additional 
notice and comment in the Federal Register before EPA takes final 
action on the program submittal, if those revised portions are received 
before November 19, 1994. November 19, 1994 is one year from the date 
of receipt of the submittal and the date by which EPA is required under 
40 CFR 70.4(e) to take final action on the current submittal.
    The Commonwealth of Virginia must submit a corrected program within 
180 days following final EPA disapproval of the program. If Virginia 
fails to submit a fully approvable whole part 70 program, or a required 
revision thereto, in conformance with the provision of 40 CFR 70.4, EPA 
may, at any time, apply one of the sanctions specified in section 
179(b) of the Act. Sanctions must be imposed 18 months after EPA 
disapproves a state's submittal.
    The Office of Management and Budget (OMB) has exempted this action 
from Executive Order 12866 review.
    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA 
must prepare a regulatory flexibility analysisassessing 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.
    EPA's disapproval of the State request under section 502 of the CAA 
does not affect any existing requirements applicable to small entities. 
Any pre-existing Federal requirements remain in place after this 
disapproval. Federal disapproval of the State submittal does not affect 
its state-enforceability. Moreover, EPA's disapproval of the submittal 
does not impose any new Federal requirements. Therefore, EPA certifies 
that this disapproval action does not have a significant impact on a 
substantial number of small entities because it does not impose any new 
Federal requirements.
    The Regional Administrator's decision to approve or disapprove 
Virginia's operating permits program will be based on whether it meets 
the requirements of title V of the Clean Air Act, as amended, and EPA 
regulations in 40 CFR part 70.

    Authority: 42 U.S.C. 7401-76719.

    Dated: May 5, 1994.
Stanley L. Laskowski,
Acting Regional Administrator.
[FR Doc. 94-14816 Filed 6-16-94; 8:45 am]
BILLING CODE 6560-50-F