[Federal Register Volume 59, Number 198 (Friday, October 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25388]


[[Page Unknown]]

[Federal Register: October 14, 1994]


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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70

[CO-001; FRL-5090-5]

 

Clean Air Act Proposed Interim Approval of Operating Permit 
Program; State of Colorado

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.

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SUMMARY: The EPA proposes interim approval of the Operating Permits 
Program submitted by the State of Colorado. Colorado's Operating 
Permits Program was submitted 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.

DATES: Comments on this proposed action must be received in writing by 
November 14, 1994.

ADDRESSES: Comments on this action should be addressed to Laura Farris, 
8ART-AP, U.S. Environmental Protection Agency, Region 8, Air Programs 
Branch, 999 18th Street, Suite 500, Denver, Colorado 80202.
    Copies of the State's submittal and other supporting information 
used in developing the proposed rule are available for inspection 
during normal business hours at the following location: U.S. 
Environmental Protection Agency, Region 8, 999 18th Street, suite 500, 
Denver, Colorado 80202.

FOR FURTHER INFORMATION CONTACT: Laura Farris, (303) 294-7539.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

Introduction

    As required under title V of the Clean Air Act (``the Act'') as 
amended (1990), 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 Code of 
Federal Regulations (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 Act requires that states develop and submit these programs to 
EPA by November 15, 1993, and that EPA act 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 Act and the part 
70 regulations, which together outline criteria for approval or 
disapproval. Based on a material change to the State's submittal, which 
consisted of a revised permit fee demonstration, the EPA is extending 
the review period for an additional 3 months. Where a program 
substantially, but not fully, meets the requirements of 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 2 years after the November 
15, 1993 date, or by the end of an interim program, it must establish 
and implement a Federal program.

II. Proposed Action and Implications

A. Analysis of State Submission

1. Support Materials
    The Governor of Colorado submitted an administratively complete 
Title V Operating Permit Program (PROGRAM) for the State of Colorado on 
November 5, 1993. EPA deemed the PROGRAM administratively complete in a 
letter to the Governor dated December 28, 1993. The PROGRAM submittal 
includes a legal opinion from the Attorney General of Colorado stating 
that the laws of the State provide adequate legal authority to carry 
out all aspects of the PROGRAM, and a description of how the State 
intends to implement the PROGRAM. The submittal additionally contains 
evidence of proper adoption of the PROGRAM regulations, application and 
permit forms, a transition plan, and a permit fee demonstration.
2. Regulations and Program Implementation
    The Colorado PROGRAM, including the operating permit regulation 
(part C of Regulation No. 3), substantially meets the requirements of 
40 CFR 70.2 and 70.3 with respect to applicability; Secs. 70.4, 70.5, 
and 70.6 with respect to permit content including operational 
flexibility; Sec. 70.5 with respect to complete application forms and 
criteria which define insignificant activities; Sec. 70.7 with respect 
to public participation and minor permit modifications; and Sec. 70.11 
with respect to requirements for enforcement authority.
    Section II.E. of part C of Regulation 3 lists the insignificant 
activities that sources do not have to include in their operating 
permit application. This list includes emission thresholds for criteria 
pollutants in nonattainment areas (less than one ton per year), 
criteria pollutants in attainment areas (less than two tons per year); 
lead (less than 100 pounds per year); non-criteria pollutants (less 
than the de minimis levels determined by the method set forth in 
Appendix A of Regulation 3); as well as other specific activities and 
sources which are considered to be insignificant activities. Section 
II.E. states that sources may not use any insignificant activity 
exemptions from the list to avoid any applicable requirements.
    Part 70 of the operating permits regulations requires prompt 
reporting of deviations from the permit requirements. Section 
70.6(a)(3)(iii)(B) requires the permitting authority to define 
``prompt'' in relation to the degree and type of deviation likely to 
occur and the applicable requirements. Although the permit program 
regulations should define ``prompt'' for purposes of administrative 
efficiency and clarity, an acceptable alternative is to define 
``prompt'' in each individual permit. The EPA believes that ``prompt'' 
should generally be defined as requiring reporting within two to ten 
days of the deviation. Two to ten days is sufficient time in most cases 
to protect public health and safety as well as to provide a forewarning 
of potential problems. For sources with a low level of excess 
emissions, a longer time period may be acceptable. However, prompt 
reporting must be more frequent than the semiannual reporting 
requirement, given that this is a distinct reporting obligation under 
Sec. 70.6(a)(3)(iii)(A). Where ``prompt'' is defined in the individual 
permit but not in the program regulations, EPA may veto permits that do 
not contain sufficiently prompt reporting of deviations. Colorado's 
PROGRAM, in section V.C.7.b of part C of Regulation 3, states that 
``prompt'' will be defined in each individual permit, depending on the 
type and degree of deviation likely to occur and the applicable 
requirements; however, ``prompt'' reporting will be required at least 
every six months, except as otherwise specified by the State in the 
permit.
    Colorado State law does not authorize variances from Clear Air Act 
requirements. Additionally, the Attorney General's opinion that was 
part of the PROGRAM submittal states that the State will not authorize 
the granting of a variance from an applicable requirement or from the 
terms of an operating permit.
    Comments noting deficiencies in the Colorado PROGRAM were sent to 
the State in a letter dated April 8, 1994. The deficiencies were 
segregated into those that require corrective action prior to interim 
PROGRAM approval, and those that require corrective action prior to 
final PROGRAM approval. The State committed to address the deficiencies 
that require corrective action prior to interim PROGRAM approval in a 
letter dated May 12, 1994, and subsequently held a public hearing to 
consider and finalize these changes on August 18, 1994. EPA has 
reviewed these changes and has determined that they are adequate to 
allow for interim approval. One issue noted in the April 8th letter 
related to insignificant activities requires further corrective action 
prior to full PROGRAM approval as follows: The State must revise its 
administrative process in section II.D.5 of part A of Regulation 3, for 
adding additional exemptions to the insignificant activities list, to 
require approval by the EPA of any new exemptions before such 
exemptions can be utilized by a source. An additional deficiency that 
requires corrective action prior to full PROGRAM approval regarding the 
implementation of section 112(r) of the Act is addressed in section 4.a 
below. Refer to the technical support document accompanying this 
rulemaking for a detailed explanation of each comment and the State's 
corrective actions.
    1994 Colorado Senate Bill 94-139, now codified at section 13-25-
126.5 of the Colorado Revised Statutes, contains an ``environmental 
self-evaluation privilege'' which prevents the admission of voluntary 
environmental audit reports as evidence in any civil, criminal or 
administrative proceeding, with certain exceptions. It is not clear at 
this time what effect, if any, this privilege might have on title V 
enforcement actions. In addition, EPA is currently establishing a 
national position regarding EPA approval of environmental programs in 
States which adopt statutes that confer an evidentiary privilege for 
environmental audit reports. The EPA regards Senate Bill 94-139 as 
wholly external to the program submitted for approval under part 70, 
and consequently proposes to take no action on this provision of State 
law. If, during PROGRAM implementation, EPA determines that this 
provision interferes with Colorado's enforcement responsibilities under 
part 70, EPA will consider this grounds for withdrawing PROGRAM 
approval in accordance with 40 CFR section 70.10(c).
3. Permit Fee Demonstration
    The Colorado PROGRAM included an original fee structure that set 
fees below the presumptive minimum set in part 70. Specific fee 
provisions included $17.23 per ton fee for regulated air pollutants for 
fiscal year 1994, to be increased on an annual basis to $22.17 in 
fiscal year 1995, $27.01 in fiscal year 1996 and $28.30 in fiscal year 
1997; an additional fee of $100 per ton for hazardous air pollutants 
(HAPs), including ozone depleting substances, for fiscal year 1994 and 
thereafter; a permit application processing fee of $50 per hour; and a 
fee of $100 to accompany air pollution emission notices required of 
new, modified and existing sources by the State which must be renewed 
every five years (fees will not be charged on emissions exceeding 4,000 
tons per year per pollutant at a source). Because Colorado's estimated 
aggregate fee per ton (i.e. total revenues divided by annual tons of 
emissions subject to fees) was below the presumptive minimum set in 
part 70, it was necessary for the State to include a permit fee 
demonstration in their PROGRAM submittal.
    Legislation recently adopted by the Colorado Legislature (SB 217) 
reduced the per ton fee for regulated air pollutants. After careful 
review, the State has determined that these fees would support the 
Colorado PROGRAM costs as required by 40 CFR part 70.9(a). 
Subsequently, the State submitted a material change to their original 
PROGRAM submittal on July 27, 1994, which consisted of a revised permit 
fee demonstration and addressed how the State will adjust to the new 
fees set in SB 217 and adequately fund the operation of the Colorado 
PROGRAM. The revised permit fee demonstration also included a workload 
analysis which estimated the annual cost of running the PROGRAM to be 
$1.87 million for fiscal year 1994/1995; and a new fee structure that 
consists of a $9.02 per ton fee for regulated air pollutants for fiscal 
year 1994, to be increased on an annual basis to $10.87 in fiscal year 
1995, $13.66 in fiscal year 1996 and $11.58 in fiscal year 1997; with 
the additional HAP and permit application processing fees given above.
    Upon review of the revised permit fee demonstration, the EPA noted 
the following concern (which is not a disapproval issue at this time): 
Although the Colorado Legislature gives the State the authority to 
assess and collect annual permit fees in an amount sufficient to cover 
all reasonable direct and indirect costs of the PROGRAM for a two year 
period of time, the State must authorize an increase in the spending of 
such fees for title V activities annually. If such an increase in 
spending authority is not granted, and the State is not able to fund 
all the costs of the PROGRAM, the EPA would be required to disapprove 
or withdraw the part 70 program, impose sanctions, and implement a 
federal permitting program.
4. Provisions Implementing the Requirements of Other Titles of the Act
    a. Authority and/or commitments for section 112 implementation. 
Colorado has demonstrated in its PROGRAM submittal adequate legal 
authority to implement and enforce all section 112 requirements through 
the title V permit. This legal authority is contained in Colorado's 
enabling legislation and in regulatory provisions defining ``applicable 
requirements'' and stating that the permit must incorporate all 
applicable requirements. EPA has determined that this legal authority 
is sufficient to allow Colorado to issue permits that assure compliance 
with all section 112 requirements.
    EPA is interpreting the above legal authority to mean that Colorado 
is able to carry out all section 112 activities. However, the following 
areas of concern have been identified in the Colorado PROGRAM: The 
Colorado Air Quality Control Act (25-7-109.6(5)) states that 
implementation and effectiveness of an accidental release prevention 
program, required under section 112(r) of the Act, is contingent on the 
receipt of federal funding. This condition is unacceptable since the 
State cannot put a condition on a specific requirement mandated through 
EPA rulemaking. Section 25-7-109.6(5) of the Colorado Air Quality 
Control Act must be revised before full PROGRAM approval can be 
granted. An additional concern lies in the definition of applicable 
requirement in section I.B.9. of part A of Regulation 3 which excludes 
the contents of any risk management plan, and in section V.C.17 of part 
C of Regulation 3 which specifies that the contents of risk management 
plans shall not be incorporated into operating permits. Although the 
contents of risk management plans are not an applicable requirement at 
this time that must be incorporated into operating permits, section 
112(r) rulemaking is ongoing in an effort to define the requirements. 
Changes to the PROGRAM may be necessary in the future to comply with 
any new or supplemental rulemaking concerning section 112(r).
    For further rationale on this interpretation, please refer to the 
Technical Support Document accompanying this rulemaking and the April 
13, 1993 guidance memorandum titled ``Title V Program Approval Criteria 
for Section 112 Activities,'' signed by John Seitz.
    b. Implementation of 112(g) upon program approval. As a condition 
of approval of the part 70 PROGRAM, Colorado is required to implement 
section 112(g) of the Act from the effective date of the part 70 
PROGRAM. Imposition of case-by-case determinations of maximum 
achievable control technology (MACT) or offsets under section 112(g) 
will require the use of a mechanism for establishing federally 
enforceable restrictions on a source-specific basis. The EPA is 
proposing to approve Colorado's preconstruction permitting program 
found in Regulation 3, part B under the authority of title V and part 
70 solely for the purpose of implementing section 112(g) during the 
transition period between title V approval and adoption of a State rule 
implementing EPA's section 112(g) regulations. EPA believes this 
approval is necessary so that Colorado has a mechanism in place to 
establish federally enforceable restrictions for section 112(g) 
purposes from the date of part 70 approval. Section 112(l) provides 
statutory authority for approval for the use of State air programs to 
implement section 112(g), and title V and section 112(g) provide 
authority for this limited approval because of the direct linkage 
between implementation of section 112(g) and title V. The scope of this 
approval is narrowly limited to section 112(g), and does not confer or 
imply approval for purposes of any other provision under the Act. If 
Colorado does not wish to implement section 112(g) through its 
preconstruction permit program and can demonstrate that an alternative 
means of implementing section 112(g) exists, the EPA may, in the final 
action approving Colorado's PROGRAM, approve the alternative instead. 
To the extent Colorado does not have the authority to regulate HAPs 
through existing State law, the State may disallow modifications during 
the transition period.
    This approval is for an interim period only, until such time as the 
State is able to adopt regulations consistent with any regulations 
promulgated by EPA to implement section 112(g). Accordingly, EPA is 
proposing to limit the duration of this approval to a reasonable time 
following promulgation of section 112(g) regulations so that Colorado, 
acting expeditiously, will be able to adopt regulations consistent with 
the section 112(g) regulations. The EPA is proposing here to limit the 
duration of this approval to 12 months following promulgation by EPA of 
section 112(g) regulations. Comment is solicited on whether 12 months 
is an appropriate period considering Colorado's procedures for adoption 
of federal regulations.
    c. Program for straight delegation of section 112 standards. 
Requirements for approval, specified in 40 CFR Sec. 70.4(b), encompass 
section 112(l)(5) requirements for approval of a program for delegation 
of section 112 General Provisions Subpart A and standards as 
promulgated by EPA as they apply to part 70 sources. Section 112(l)(5) 
requires that the State's PROGRAM contain adequate authorities, 
adequate resources for implementation, and an expeditious compliance 
schedule, which are also requirements under part 70. Therefore, the EPA 
is also proposing to grant approval under section 112(l)(5) and 40 CFR 
Part 63.91 of the State's program for receiving delegation of section 
112 standards that are unchanged from the Federal standards as 
promulgated. Colorado has informed EPA that it intends to accept 
delegation of section 112 standards through a combination of case-by-
case rulemaking and incorporation by reference. This program applies to 
both existing and future standards but is limited to sources covered by 
the part 70 program.
    The radionuclide national emission standard for HAPs (NESHAP) is a 
section 112 regulation and therefore, also an applicable requirement 
under the State PROGRAM. Sources which are currently defined as part 70 
sources and emit radionuclides are subject to federal radionuclide 
standards. Additionally, sources which are not currently part 70 
sources may be defined as major sources under forthcoming federal 
radionuclide regulations. The EPA will work with the State in the 
development of its radionuclide program to ensure that permits are 
issued in a timely manner.
    d. Program for implementing title IV of the Act. Colorado's PROGRAM 
contains adequate authority to issue permits which reflect the 
requirements of Title IV of the Act, and commits to adopt the rules and 
requirements promulgated by EPA to implement an acid rain program 
through the title V permit.

B. Options for Approval/Disapproval and Implications

    The EPA is proposing to grant interim approval to the operating 
permits program submitted by the State of Colorado on November 5, 1993. 
The State must make the following changes, as discussed above, to 
receive full PROGRAM approval: (1) The State must revise its 
administrative process in section II.D.5 of part A of Regulation 3, for 
adding additional exemptions to the insignificant activities list, to 
require approval by the EPA of any new exemptions before such 
exemptions can be utilized by a source. (2) The State must revise the 
Colorado Air Quality Control Act (25-7-109.6(5)) to remove the 
condition that an accidental release prevention program will only be 
implemented if federal funds are available. Evidence of these statutory 
and regulatory revisions must be submitted to the EPA within 18 months 
of the EPA's interim approval of the Colorado PROGRAM.
    This interim approval, which may not be renewed, extends for a 
period of up to two years. During the interim approval period, the 
State is protected from sanctions for failure to have a program, and 
EPA is not obligated to promulgate a Federal permits program in the 
State. Permits issued under a program with interim approval have full 
standing with respect to part 70, and the one year time period for 
submittal of permit applications by subject sources begins upon interim 
approval, as does the three year time period for processing the initial 
permit applications.
    The EPA is proposing to disapprove the operating permits program 
submitted by Colorado if the specified changes are not made within 18 
months of the effective date of final interim approval. If promulgated, 
this disapproval would constitute a disapproval under section 502(d) of 
the Act (see generally 57 FR 32253-54). As provided under section 
502(d)(1) of the Act, Colorado would have up to 180 days from the date 
of EPA's notification of disapproval to the Governor of Colorado to 
revise and resubmit the PROGRAM. The EPA will apply sanctions to 
Colorado if the Governor fails to submit a corrected PROGRAM within 18 
months following EPA disapproval of the PROGRAM. If the State has not 
come into compliance 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 
PROGRAM disapproval. If the State has not received full PROGRAM 
approval within two years after final interim PROGRAM approval, the EPA 
must promulgate, administer, and enforce a Federal permits program for 
the State.
    Requirements for approval, specified in 40 CFR 70.4(b), encompass 
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. Section 112(l)(5) requires that the State's program contain 
adequate authorities, adequate resources for implementation, and an 
expeditious compliance schedule, which are also requirements under part 
70. Therefore, the EPA is also proposing to grant approval under 
section 112(l)(5) and 40 CFR Part 63.91 of the State's program for 
receiving delegation of section 112 standards that are unchanged from 
federal standards as promulgated. This program for delegations only 
applies to sources covered by the part 70 program.

III. Administrative Requirements

A. Request for Public Comments

    The EPA is requesting comments on all aspects of this proposed 
rule. Copies of the State's submittal and other information relied upon 
for the proposed interim approval are contained in a docket 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 rulemaking. 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 rulemaking 
process, and
    (2) To serve as the record in case of judicial review. The EPA will 
consider any comments received by November 14, 1994.

B. Executive Order 12866

    The Office of Management and Budget has exempted this action from 
Executive Order 12866 review.

C. 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.

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. 7401-76719.

    Dated: September 30, 1994.
Jack W. McGraw,
Acting Regional Administrator.
[FR Doc. 94-25388 Filed 10-13-94; 8:45 am]
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