[Federal Register Volume 59, Number 231 (Friday, December 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29690]


[[Page Unknown]]

[Federal Register: December 2, 1994]


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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70

[AD-FRL-5116-2]

 

Clean Air Act Final Interim Approval Operating Permits Programs 
in Oregon

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final interim approval.

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SUMMARY: EPA is promulgating interim approval of the operating permits 
programs submitted by the Oregon Department of Environmental Quality 
(ODEQ) and Lane Regional Air Pollution Authority (LRAPA) for the 
purpose of complying with Federal requirements for an approvable State 
program to issue operating permits to all major stationary sources, and 
to certain other sources.

EFFECTIVE DATE: January 3, 1995.

ADDRESSES: Copies of Oregon's submittal and other supporting 
information used in developing the final interim approval are available 
for inspection during normal business hours at the following location: 
U.S. Environmental Protection Agency, Region 10, 1200 Sixth Avenue, 
Seattle, Washington.

FOR FURTHER INFORMATION CONTACT: Anne Dalrymple, U.S. Environmental 
Protection Agency, 1200 Sixth Avenue, AT-082, Seattle, Washington 
98101, (206) 553-0199.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

    Title V of the Clean Air Act Amendments of 1990 (sections 501-507 
of the Clean Air Act (``the Act'')), and implementing regulations at 40 
Code of Federal Regulations (CFR) part 70, require that States develop 
and submit operating permits programs to EPA by November 15, 1993, and 
that EPA act to approve or disapprove each program within one year 
after receiving the submittal. 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. 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 two years. 
If EPA has not fully approved a program by two years after the November 
15, 1993 date, or by the end of an interim program, it must establish 
and implement a Federal program.
    On September 14, 1994, EPA proposed interim approval of the 
operating permits programs for ODEQ and LRAPA, provided certain 
proposed revisions to Oregon rules were adopted and submitted to EPA as 
a program revision prior to EPA's statutory deadline for acting on the 
State's submittal. In the alternative, EPA proposed disapproval of the 
Oregon program if the proposed revisions were not adopted and submitted 
prior to the statutory deadline. See 59 FR 47105 (Sept. 14, 1994). EPA 
received four public comments on the proposal. In this notice EPA is 
taking final action on its proposal to promulgate interim approval of 
the operating permits programs for ODEQ and LRAPA.

II. Final Action and Implications

A. Analysis of State Submission and Response to Public Comments

1. Changes to Chapter 340, Division 28
    On July 11, 1994, ODEQ proposed for public comment revisions to OAR 
Chapter 340, Division 28 (Stationary Source Air Pollution Control and 
Permitting Procedures). EPA discussed these proposed changes in the 
September 14, 1994 Federal Register notice proposing action on Oregon's 
title V submittal.\1\ See 59 FR 47108-47111. The Oregon Environmental 
Quality Commission (EQC) adopted the revisions to OAR Chapter 340, 
Division 28 on October 21, 1994. These rules became effective on 
October 28, 1994. Oregon submitted these revised regulations to EPA on 
November 15, 1994 as an amendment to the Oregon title V submittal. The 
revisions make the regulatory changes necessary for the Oregon program 
to receive interim approval.
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    \1\Unless otherwise stated, all references to ``Oregon,'' 
``Oregon's submittal'' or ``Oregon's program'' refer to the 
operating permit programs submitted by the State of Oregon on behalf 
of ODEQ and LRAPA.
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    The following rules were adopted or revised in response to EPA's 
September 14, 1994 Federal Register notice: OAR 340-28-110(15); OAR 
340-28-2110(3)(c)(E); OAR 340-28-2110(7) (renumbered to OAR 340-28-
2110(8)); OAR 340-28-2120(3); OAR 340-28 2130(3)(a)(E); OAR 340-28-
2130(3)(c)(B); OAR 340-28-2170(1);\2\ OAR 340-28-2200(1)(d).
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    \2\This regulation was erroneously cited in the proposed Federal 
Register as OAR 340-28-2170(a).
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    The following rules were repealed in response to EPA's September 
14, 1994 Federal Register notice: OAR 340-28-110(41); OAR 340-28-
110(53); OAR 340-28-110(63); OAR 340-28-2230(1)(j).
    The following proposed rule was not adopted by the EQC on October 
21, 1994 in response to EPA's September 14, 1994 Federal Register 
notice: OAR 340-28-2110(4).
2. Response to Public Comment
    EPA received comments on the EPA's proposed action on the Oregon 
program from four commenters: ODEQ, the American Forest & Paper 
Association, the National Environmental Development Association/Clean 
Air Regulatory Project, and the Northwest Pulp and Paper Association. 
No commenters objected to approval of the Oregon permit program.
    a. Insignificant Emissions Units. One commenter objected to EPA's 
proposal that in order to avoid disapproval of its title V program, 
Oregon must revise its regulation defining ``categorically 
insignificant activities'' (OAR 340-28-110(15)) and the related 
provisions on permit applications (OAR 340-28-2120(3)) and 
applicability (OAR 340-28-2110(7)). The commenter disagreed with EPA's 
position that all activities subject to applicable requirements must be 
properly incorporated into title V permits. The commenter further 
stated that the Clean Air Act does not support EPA's position and that 
EPA's interpretation renders the Part 70 provisions on insignificant 
activities meaningless.
    EPA maintains, however, that title V and the part 70 rules preclude 
the exemption of activities as ``insignificant'' when such units are 
subject to an applicable requirement. Section 504(a) of the Act 
provides that ``each permit issued under this title shall include 
enforceable emission limitations and standards, a schedule of 
compliance, a requirement that the permittee submit to the permitting 
authority, no less often than every 6 months, the results of any 
required monitoring, and such other conditions as are necessary to 
assure compliance with applicable requirements of the Act, including 
the requirements of the applicable implementation plan.'' (emphasis 
added). Section 70.6(a)(1) provides that each permit shall include 
``emission limitations and standards, including those operational 
requirements and limitations that assure compliance with all applicable 
requirements at the time of permit issuance''. Furthermore, 70.6(c)(1) 
requires that each permit shall contain ``compliance, certification, 
testing, monitoring, reporting, and recordkeeping requirements 
sufficient to assure compliance with the terms and conditions of the 
permit.'' The fact that an emission unit may emit only small quantities 
of pollutants does not provide a basis to exempt it from the 
fundamental statutory requirement that title V permits must 
specifically include, and ensure compliance with, all applicable 
requirements.
    EPA disagrees that requiring all activities subject to applicable 
requirements to be properly incorporated into title V permits will 
render the insignificant activities provisions of Part 70 meaningless. 
For example, the requirement to ``describe'' emissions of regulated 
pollutants in a permit application is not a requirement to quantify 
those emissions. Smaller units can be aggregated and described in very 
general terms (i.e., ``all valves and flanges not otherwise 
specified'') provided the description is specific enough to determine 
the applicability of and to impose all applicable requirements. 
Furthermore, the requirement to include in a permit compliance 
certification testing, monitoring, reporting, and recordkeeping 
sufficient to assure compliance with the terms and conditions of the 
permit does not impose the same level of rigor with respect to small 
emission units that do not require extensive testing or monitoring in 
order to determine compliance with the applicable requirements.
    In any event, Oregon has made the changes to its insignificant 
activities regulations which EPA indicated in the September 14, 1994, 
Federal Register notice were necessary for approval and it is these 
revised regulations on which EPA is taking final action at this time. 
The versions of OAR 340-28-110(15), 340-28-2110(7) and 340-28-2120(3) 
originally submitted by Oregon to EPA on November 15, 1993, as part of 
its title V submittal are no longer effective as a matter of State law 
and are no longer before EPA for consideration. Accordingly, EPA is 
fully approving the Oregon program with respect to insignificant 
activities.
    b. Definition of Title I Modification. The definition of ``title I 
modification'' in the regulations submitted by Oregon as part of its 
Title V program does not include changes reviewed under a minor source 
preconstruction review program approved pursuant to section 
110(a)(2)(C) of the Act (``minor NSR changes'') or changes triggering 
the application of a National Emission Standard for Hazardous Air 
Pollutants (NESHAP) established pursuant to section 112 prior to the 
1990 Amendments (``part 61 NESHAP modifications''). In the September 
14, 1994 Federal Register notice proposing action on the Oregon title V 
program, EPA advised the State that it would be required to revise its 
definition of the term ``title I modification'' to obtain full EPA 
approval:

    Therefore, EPA proposes that, to receive full approval, Oregon 
must revise OAR 340-28-110(118) to include any determination 
established through a minor source pre-construction permit as well 
as changes reviewed under 40 CFR 61.15. EPA expects to revise its 
criteria for interim approval in 40 CFR 70.4(d) prior to final 
action on this proposal to grant interim approval to Oregon so that 
interim approval may be granted to State programs like Oregon's that 
include a narrower definition of ``title I modification.'' As noted, 
EPA believes the better interpretation of ``title I modifications'' 
would preclude granting full approval to the Oregon program. 
However, in the proposal to revise Part 70, EPA will be taking 
comment on whether the criteria in 40 CFR 70.7(e)(2)(i)(A), 
including the phrase ``modification under any provision of title 
I,'' should be interpreted in a manner that would allow changes 
reviewed under programs approved pursuant to section 110(a)(2)(C) of 
the Act and changes that trigger the application of NESHAP 
established prior to the 1990 Amendments to be eligible for 
processing through minor modification procedures. Should EPA adopt 
this alternative interpretation, the current definition of ``title I 
modification'' in the Oregon programs would be fully consistent with 
Part 70. See (59 FR 47108).

    In response to EPA's proposed interim approval of the Oregon 
program, three commenters objected to EPA's proposed requirement that 
Oregon revise its definition of ``title I modification'' to include 
minor new source review in order to obtain full approval. These 
commenters argued that Oregon's current definition fully meets the 
requirements of the Clean Air Act. One commenter contended that section 
110(a)(2) does not require a State Implementation Plan (SIP) to include 
a program to regulate the modification of any stationary source but 
rather to only include a program to regulate modifications as defined 
in other sections of title I. These commenters also stated that the 
changes required by the September 14, 1994, Federal Register notice 
would be completely unworkable and would frustrate the practical 
implementation of the operating permit program in Oregon by requiring 
sources to undergo significant permit modification procedures for 
changes covered by Oregon's Notice of Construction rule that was 
approved by EPA as part of the SIP under section 110(a)(2)(C) of the 
Act.
    As discussed below, EPA has reconsidered the approach proposed in 
the September 14, 1994 Federal Register notice and is fully approving 
Oregon's title V program with respect to the definition of ``title I 
modification.'' If EPA were to conclude at this time that the phrase 
``title I modification'' should be interpreted as including minor NSR 
changes, EPA would be required to disapprove Oregon's program because 
part 70 does not currently allow EPA to grant interim approval unless 
the permitting agency has adequate authority to issue permits that 
assure compliance with all applicable requirements. See 40 CFR 
70.4(d)(3)(ii). On August 29, 1994, EPA proposed revisions to the 
interim approval criteria to, among other things, allow State programs 
with a more narrow definition of ``title I modification,'' like 
Oregon's, to receive interim approval (59 FR 44572). The Agency also 
solicited public comment on the appropriate interpretation of ``title I 
modification'' (59 FR 44573). The Agency stated that if, after 
considering the public comments, it continued to believe that the 
phrase ``title I modification'' should be interpreted as including 
minor NSR changes, it would revise the interim approval criteria as 
needed to grant interim approval to States that adopted a narrower 
definition.
    As noted in the September 14, 1994 Federal Register notice 
proposing action on Oregon's title V program, EPA intended to finalize 
its revisions to the interim approval criteria under 40 CFR section 
70.4(d) before taking final action on Part 70 programs submitted by the 
States. However, that is no longer possible. Publication of the 
proposed revisions occurred on August 29, 1994, and EPA received 
several requests to extend the original 30-day public comment period. 
Given the importance to the States, sources and the public of the 
issues raised in that rulemaking, but mindful of the need to take 
action quickly, EPA agreed to extend the comment period until October 
28, 1994. See 59 FR 52122 (October 14, 1994). Consequently, final 
action to revise the interim approval criteria will not occur before 
the deadline for EPA action on State programs, such as Oregon's, that 
were submitted on or before November 15, 1993.3
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    \3\Section 502(d) requires, in relevant part, that ``[n]ot later 
than 1 year after receiving a program, and after notice and 
opportunity for public comment, the Administrator shall approve or 
disapprove such program, in whole or in part.''
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    EPA believes it would be inappropriate to delay action on Oregon's 
program, perhaps for several months, until final action is taken on the 
interim approval revisions. EPA also believes it would be inappropriate 
to grant interim approval to Oregon on this issue before final action 
is taken to revise the current interim approval criteria of 40 CFR 
Sec. 70.4(b) to provide a legal basis for such approval. Until the 
revision to the interim approval criteria is promulgated, EPA's choices 
are to either fully approve or to disapprove the narrower definition of 
``title I modification'' in States such as Oregon. For the reasons set 
forth below, EPA believes that disapproving such programs at this time 
solely because of this issue would be inappropriate.
    First, EPA has not yet conclusively determined that a narrower 
definition of ``title I modification'' is inappropriate and thus a bar 
to full approval. The Agency has received numerous comments on this 
issue as a result of the August 29, 1994 Federal Register notice, and 
EPA obviously cannot make a final decision on this issue until it has 
evaluated all of the comments. As such, EPA will address the concerns 
regarding its interpretation of ``title I modification'' which were 
raised by the commenters on EPA's proposed interim approval of the 
Oregon program within the context of the final rulemaking for revisions 
to part 70.
    Second, EPA believes that the Oregon program should not be 
disapproved because EPA itself has not yet completed rulemaking to 
resolve this issue. Moreover, disapproving programs from States such as 
Oregon that submitted their program to EPA on or before the November 
15, 1993 statutory deadline could lead to the inequitable result that 
these States would receive disapprovals, while States which were late 
in submitting programs could take advantage of revised interim approval 
criteria if and when these criteria become final. In effect, States 
would be severely penalized for having made timely program submissions 
to EPA. Finally, disapproval of a State program for a potential problem 
that primarily affects permit revision procedures would delay the 
initial issuance of Part 70 permits, hampering State and Federal 
efforts to improve environmental protection through the operating 
permits programs.
    Therefore, for the reasons described above, EPA is approving 
Oregon's use of a narrower definition of ``title I modification'' at 
this time.4 However, should EPA in the interim approval criteria 
rulemaking make a final determination that such a narrow definition of 
``title I modification'' is inappropriate and that a revision of the 
interim approval criteria is warranted, the Agency will propose further 
action on Oregon's program so that the State's definition of ``title I 
modification'' would become grounds for interim approval.5 A State 
program like Oregon's that receives full approval of its narrower 
``title I modification'' definition pending completion of EPA's 
rulemaking must ultimately be placed on an equal footing with States 
that receive interim approval in later months under any revised interim 
approval criteria because of the same issue. Converting the full 
approval on this issue to an interim approval after EPA completes its 
rulemaking will avoid this inequity. EPA anticipates that an action to 
convert the full approval on the ``title I modification'' issue to an 
interim approval would be done through an additional rulemaking to 
ensure that there is adequate notice of the change in approval status 
of Oregon's title V program.
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    \4\For similar reasons, EPA will not construe 40 CFR section 
70.7(e)(2)(i)(A)(3) to prohibit ODEQ and LRAPA from allowing minor 
new source review changes to be processed as minor permit 
modifications. See 59 FR 44573-44574.
    \5\ State programs with a narrower ``title I modification'' 
definition that are acted upon by EPA after an Agency decision that 
such a narrower definition is inappropriate would be considered 
deficient, but would be eligible for interim approval under revised 
40 CFR section 70.4(b).
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    c. Section 112(g) Modifications. Two commenters stated that, 
because EPA has not yet issued final regulations to implement section 
112(g) of the Act and no such final regulations are expected for 
several months, it was inappropriate for EPA to require Oregon to take 
delegation of section 112(g) authority as a condition of title V 
approval. These commenters also objected to EPA's transitional policy 
of allowing permitting authorities to use their existing State air 
toxics permitting rules, upon EPA approval, as an interim mechanism for 
implementing section 112(g) of the Act.
    EPA disagrees with the commenters' contention that it is 
inappropriate for EPA to require Oregon to implement section 112(g) 
until after EPA has promulgated implementing regulations. The statutory 
language in section 112(g)(2) prohibits the modification, construction, 
or reconstruction of a source after the effective date of a title V 
program unless maximum achievable control technology (MACT) (determined 
on a case-by-case basis, if necessary) is met. The unambiguous meaning 
of this provision is that the prohibition takes effect in a State on 
the effective date of title V in that State regardless of whether EPA 
or the State has promulgated implementing regulations. Furthermore, 
implementation of section 112(g) by a permitting authority is a 
requirement for receiving approval of its title V program (See 56 FR 
21722 (May 10, 1991) and the April 13, 1993 memorandum entitled, 
``Title V Program Approval Criteria for Section 112 Activities,'' 
signed by John Seitz, Director of the Office of Air Quality Planning 
and Standards). EPA's approval of Oregon's title V program is based 
upon Oregon's commitment to implement section 112(g) upon the effective 
date of its title V program.
    EPA has acknowledged that States may encounter difficulties 
implementing section 112(g) prior to promulgation of final EPA 
regulations (See June 28, 1994 memorandum entitled, ``Guidance for 
Initial Implementation of Section 112(g),'' signed by John Seitz, 
Director of the Office of Air Quality Planning and Standards). EPA has 
issued guidance, in the form of the proposed regulations implementing 
Section 112(g), which may be used to determine whether a physical or 
operational change at a source is not a modification either because it 
is below de minimis levels or because it has been offset by a decrease 
of more hazardous emissions. See 59 FR 15004 (April 1, 1994). EPA 
believes the proposed rule provides sufficient guidance to Oregon and 
sources until such time as EPA's section 112(g) rulemaking is 
finalized.
    EPA is aware that Oregon does not have a program designed 
specifically to implement section 112(g); however, Oregon does have 
several preconstruction review programs that can serve as procedural 
vehicles for rendering Federally enforceable case-by-case MACT or 
offset determinations. Oregon's preconstruction review programs may be 
used during the transition period between title V approval in Oregon 
and EPA approval of Oregon regulations to implement Section 112(g) to 
grant relief from the prohibition imposed by section 112(g).
    EPA believes Oregon's preconstruction review programs will be 
adequate in most, if not all, cases because they will allow Oregon to 
select control measures that would meet MACT, as defined in section 
112, and incorporate these measures into a Federally-enforceable 
preconstruction permit. Although it is true that the preconstruction 
review programs in the EPA-approved Oregon state implementation plan 
(SIP) apply only to criteria pollutants, Oregon should be able to 
impose Federally-enforceable measures reflecting MACT for most, if not 
all, changes qualifying as a modification, construction, or 
reconstruction under section 112(g). EPA believes this to be the case 
because most section 112(b) hazardous air pollutants (HAPs) are also 
criteria pollutants, and moreover because measures designed to limit 
criteria pollutant emissions will often have the incidental effect of 
limiting non-criteria pollutant HAPs.
    In those instances where a section 112(g) modification, 
construction, or reconstruction is entirely outside of Oregon's SIP 
preconstruction review programs, for example, where the change results 
only in non-criteria pollutant HAP emissions, sources may be able to 
utilize either one of two new provisions of Oregon's rules which have 
been submitted to EPA for approval under section 112(l) of the Act. 
Upon EPA approval of these rules, sources would be able to utilize 
Oregon's provision for voluntary HAP plant-site emission limits (see 
OAR 340-28-1050(2)(b)) or permits to construct or modify major sources 
of HAPs (see OAR 340-32-500 and 4500) to make case-by-case MACT or 
offset determinations Federally enforceable.
    Another consequence of the fact that Oregon lacks an EPA-approved 
program designed specifically to implement section 112(g) is that the 
applicability criteria found in its approved preconstruction review 
programs may differ from those in section 112(g). However, whether a 
particular source change qualifies as a modification, construction, or 
reconstruction for section 112(g) purposes will be determined according 
to the statutory provisions of section 112(g), using the proposed rule 
as guidance. As noted in the June 28, 1994 guidance, EPA intends to 
defer wherever possible to a State's judgement regarding applicability 
determinations. This deference must be subject to obvious limitations. 
For instance, a physical or operational change resulting in a net 
increase in HAP emissions above 10 tons per year could not be viewed as 
a de minimis increase under any interpretation of the Act. The EPA 
would expect Oregon to be able to issue a preconstruction permit 
containing a case-by-case determination of MACT in such a case even if 
review under its own preconstruction review programs would not be 
triggered.
    d. Limitations on Potential to Emit. Two commenters objected to 
EPA's requirement that Oregon refrain from adopting proposed revisions 
to Oregon's applicability provision (OAR 340-28-2110) on the grounds 
that such a revision would inappropriately exempt certain title V 
sources from the requirements of title V. In the September 14, 1994, 
Federal Register notice, EPA stated that the applicability provision 
originally submitted by Oregon on November 15, 1993, was fully 
approvable. EPA also stated, however, that it believed that Oregon's 
proposed revision to OAR 340-28-2110, which would exempt from title V 
sources subject to certain ``prohibitory rules'' Oregon had also 
proposed, would require disapproval of Oregon's program. The commenters 
stated, without elaboration, that Oregon's proposed revisions to OAR 
340-28-2110 are fully consistent with 40 CFR 70.3(b)(1), which allows 
States to exempt temporarily from title V certain categories of sources 
that are not major sources.
    EPA maintains that the exemptions Oregon proposed in OAR 340-28-
2110(4) exceeded the scope of the exemption allowed under part 70 
because the revisions would exempt four categories of sources from the 
requirements of title V as a matter of State law even if EPA does not 
approve the ``prohibitory rules'' into the SIP so as to make them 
Federally enforceable. In other words, Oregon's proposed revision to 
OAR 340-28-2110(4) would have impermissibly exempted title V sources 
that were in fact major sources under Federal law if the ``prohibitory 
rule'' under which the sources sought to operate were not approved by 
EPA. In addition, the proposed revision would have exempted sources 
within the four categories from title V even if such sources were 
subject to standards promulgated pursuant to section 111 or 112 of the 
Act after July 21, 1992, and the sources had been specifically 
determined in such promulgation not to be exempt from title V (see 40 
CFR 70.3(b)(2)). More to the point, if EPA approves a ``prohibitory 
rule'' into the Oregon SIP which has the effect of making sources 
subject to that rule ``minor sources,'' then those sources would be 
exempted from title V by the current provision in OAR 340-28-
2110(4)(b).
    In any event, Oregon did not adopt the proposed revision to OAR 
340-28-2110(4). Therefore, the version of the regulation which the 
commenters addressed in their comments is no longer before EPA for 
consideration. Rather, it is the version of OAR 340-28-2110(4) which 
Oregon originally submitted to EPA on November 15, 1993, and which EPA 
proposed to approve on September 14, 1994, that is currently before 
EPA. Accordingly, OAR 340-28-2110 does not present a bar to title V 
approval.
    e. Environmental Audit Privilege. One commenter raised several 
objections to EPA's discussion in the September 14, 1994 Federal 
Register notice of Oregon's environmental audit privilege (ORS 
468.963). EPA there stated that it was currently developing a national 
position regarding EPA approval of environmental programs in States 
which have environmental audit privileges and that it was proposing to 
take no action on the Oregon audit provision in the context of this 
title V approval. EPA further stated that it might consider such a 
provision grounds for withdrawing program approval under 40 CFR 
70.10(c) in the future if it later determined that the Oregon audit 
provision interfered with Oregon's enforcement responsibilities under 
part 70. See 59 FR 47106.
    Although acknowledging that EPA is taking no current action on the 
Oregon audit provision, the commenter stated that it is bad policy for 
EPA to threaten a State permit program by indicating that EPA's own 
policy is under review, and that the Oregon law is fully consistent 
with the Clean Air Act and Federal law on criminal enforcement. The 
commenter further stated that civil penalties, which the commenter 
believes are not precluded by the Oregon audit provision, are adequate 
to deter noncompliance and that the Oregon provision does not impinge 
on EPA's enforcement authorities.
    EPA's discussion of the environmental audit privilege was not 
intended to be taken as a threat to the approval of Oregon's title V 
program; rather, EPA merely intends to advise Oregon that the audit 
provision could be grounds for withdrawing Oregon's title V program in 
the future if EPA were to determine that the provision interfered with 
Oregon's enforcement responsibilities under part 70. Section 
70.11(c)(iii) allows EPA to withdraw program approval if it determines 
that a State has failed to enforce the requirements of part 70. EPA 
also disagrees with the premise underlying the commenter's assessment 
that the Oregon audit provision is consistent with the Clean Air Act 
and other Federal criminal law. The commenter stated that the Oregon 
audit statute provides a shield only against criminal liability. By its 
terms, however, the privilege applies to ``any civil, criminal or 
administrative proceeding'' except as otherwise provided by the 
statute. See ORS 468.963(2). Finally, the commenter's argument that the 
Oregon statute does not impinge on EPA's enforcement authorities, if 
carried to its logical conclusion, would mean that a State would not 
have to have any civil or criminal enforcement authorities to obtain 
title V approval. Such an argument contradicts the clear requirement 
that States must have certain civil and criminal enforcement 
authorities in order to obtain title V approval. See Section 
502(b)(5)(E) of the Act.
    In any event, the commenter's concerns are premature at this time. 
As the commenter acknowledged, EPA has not proposed to take any action 
on Oregon's environmental audit privilege in the context of this final 
action on Oregon's program. Such concerns would be properly raised when 
and if EPA proposed to withdraw Oregon's title V approval because EPA 
determines that the Oregon statute is interfering with Oregon's ability 
to enforce its title V program or EPA revised part 70 to prohibit 
environmental audit provisions such as Oregon's.
    f. Criminal Authorities. (i) Upset/Bypass. EPA received two 
comments on its proposed finding that ORS 468.959, which provides a 
specific defense to criminal liability for violations resulting from an 
``upset'' or a ``bypass,'' precludes full title V approval. In its 
proposal, EPA stated that the Oregon provision appears broader than the 
affirmative defense set forth in 40 CFR 70.6(g) for emissions in excess 
of technology-based emissions limits. See 59 FR 47108.
    One commenter stated simply that Oregon's statute is consistent 
with part 70, without further elaboration. The other commenter argued 
that the Oregon statute clearly places the burden of proof of 
establishing an upset or a bypass on the defendant, as required by 40 
CFR 70.6(g)(4). The commenter also stated that the Oregon statute 
merely sets forth an affirmative defense based on necessity and that 
nothing in the Clean Air Act authorizes EPA to preempt such 
longstanding notions of fairness that have been incorporated into State 
criminal law. The commenter further argued that if the Oregon upset/
bypass statute precludes full approval in Oregon, other States with 
similar statutes should be similarly treated.
    EPA agrees with the commenter that the Oregon statute appears to 
place the burden of proving an upset or bypass on the defendant, as 
required by 40 CFR 70.6(g)(4). EPA nonetheless maintains that the 
Oregon statute is broader than the emergency provisions of 40 CFR 
70.6(g) for several reasons. Section 70.6(g) requires a source to prove 
that the excess emissions were not caused by improperly designed 
control equipment, lack of preventive maintenance, careless or improper 
operation, or operator error. No similar showing is required for a 
source in Oregon to claim an affirmative defense to excess emissions 
due to a ``bypass.'' For example, the Oregon provision would allow a 
source to routinely bypass improperly designed control equipment with 
impunity simply by indicating that the control equipment would be 
severely damaged if operated during the periods of bypass. The 
recordkeeping and reporting requirements under part 70 are also more 
extensive than those required by ORS 468.959. Moreover, the emergency 
provision of part 70 provides a defense only to emissions in excess of 
a technology-based emissions limit, while the Oregon statute provides a 
defense to any emissions limit, including a health-based limit.
    EPA also disagrees with the commenter's assertion that the Clean 
Air Act does not authorize EPA to require States to make changes to 
their criminal statutes. Title V requires that States have appropriate 
criminal authorities in order to obtain title V approval. See Section 
502(b)(5)(E). EPA has interpreted this statutory provision in part 70 
section 70.11 and must evaluate State programs for consistency with the 
promulgated rule. In response to the commenter's concern that all 
States should be treated similarly on this issue, EPA notes the 
commenter's concern and agrees that evenhanded treatment is 
appropriate. In conclusion, EPA continues to believe that ORS 468.959 
poses a bar to full approval, but does allow for interim approval.
    (ii) Corporate criminal liability. EPA received three comments 
concerning EPA's interpretation of ORS 161.170, which addresses the 
extent to which a corporation can be subject to criminal liability in 
Oregon. Based on its initial review of the statute, EPA believed that, 
in order for a corporation to be criminally liable for knowing 
violations of permit terms and other applicable requirements under ORS 
468.936, the State must show that the board of directors or a high 
managerial agent ``engaged in, authorized, solicited, requested, 
commanded or knowingly tolerated'' the conduct giving rise to the 
violation. See ORS 161.170(1)(c). EPA's preliminary view was that the 
Oregon statute imposed a greater burden of proof and degree of 
knowledge or intent than Federal law, which requires only that the 
crime be committed by an employee of the corporation and that the 
employee was at the time performing that employee's duties for the 
corporation. See 59 FR 47108.
    One commenter responded that EPA's objection to ORS 161.170 was 
inappropriate because EPA should not interfere with State criminal law 
and that EPA already has sufficient authority to bring its own criminal 
actions. Another commenter stated, without further elaboration, that 
the burden of proof for criminal violations in Oregon is the same as 
for federal crimes because, in both jurisdictions, the prosecution must 
prove the existence of a crime beyond a reasonable doubt.
    As explained above, EPA disagrees that the Clean Air Act does not 
authorize EPA to require States to change their criminal laws to meet 
the requirements for an approvable title V program and that Federal 
criminal authority is sufficient in and of itself. Title V prohibits 
EPA from approving a State title V program if the State does not have 
appropriate criminal authority, so Congress obviously contemplated that 
States with insufficient criminal authority would need to amend their 
statutes. See Section 502(b)(5)(E). Moreover, as discussed above, if 
Congress thought that Federal criminal enforcement authorities provided 
sufficient deterrence, Congress would not have required that States 
have appropriate criminal authorities in order to obtain title V 
approval.
    A third comment was submitted by the State, which included an 
opinion letter from the Oregon Attorney General's office stating that 
the Oregon standard under ORS 161.170(1)(a) is equivalent to the 
Federal standard articulated by EPA in its September 14, 1994 Federal 
Register notice. The Attorney General opined that ORS 161.170(1)(a), 
like Federal law, adopts the principle of respondeat superior with the 
additional requirement that the employee's conduct occur on behalf of 
the corporation. In light of the most recent opinion letter submitted 
by the Oregon Attorney General's office, EPA concludes that Oregon law 
does not impose a different burden of proof or degree of knowledge or 
intent for corporations than does Federal law. In its September 14, 
1994, proposal, EPA had assumed that knowing violations of permits and 
applicable requirements would fall under ORS 161.170(1)(c), which 
requires proof that the employee's conduct was authorized or otherwise 
condoned by the board of directors or a high managerial agent. The 
Attorney General pointed out, however, that ORS 468.936, which 
satisfies the general criminal authority required by 40 CFR 
70.11(a)(3)(ii), is not defined as a felony under Oregon law, and is 
therefore a ``violation.'' Accordingly, a corporation which violated 
ORS 468.936 could be prosecuted under ORS 161.170(1)(a), which requires 
only that the illegal conduct was engaged in by an agent of the 
corporation acting within the scope of employment and on behalf of the 
corporation. As noted by the Attorney General and by EPA in its 
September 14, 1994 Federal Register notice, this is equivalent to the 
Federal standard. In short, based on the opinion letter of the Attorney 
General, EPA has determined that ORS 161.170 does not pose a bar to 
full approval of Oregon's program.
    g. Administrative Amendments. Two commenters disagreed that 
Oregon's regulation authorizing administrative permit amendments, OAR 
340-28-2230(1)(j), would allow the administrative amendment process to 
be used to change the content of a permit. These commenters asserted 
that this regulation would only allow the correction of minor 
misinterpretations of an applicable requirement, which they felt was 
appropriate. EPA objected to OAR 340-28-2230(1)(j) because, although 
the regulation could be used appropriately as the commenter suggested, 
the plain language of the rule would also allow the permitting 
authority to add or delete an applicable requirement from the title V 
permit without public participation if it determined the change was due 
to a ``minor misinterpretation of an applicable requirement.'' EPA 
maintains this position.
    In response to EPA's concerns, however, Oregon repealed OAR 340-28-
2230(1)(j) on October 21, 1994. Thus, that provision is no longer 
effective as a matter of State law and is not before EPA for 
consideration at this time. Rather, OAR 340-28-2230, as amended by 
Oregon on October 21, 1994, and submitted to EPA on November 15, 1994, 
is currently before EPA for consideration and is fully approvable.
    h. Variance Provision. 
    Two commenters objected to EPA's discussion of the Oregon variance 
provisions, ORS 468A.075 and LRAPA Title 23, section 23-005. In the 
September 14, 1994, Federal Register notice, EPA proposed to take no 
action on these variance provisions because EPA believed they were 
external to Oregon's title V program. EPA also stated, however, that a 
variance granted by a permitting authority cannot modify a source's 
obligations under a title V permit, even if the State variance 
provision or the source-specific variance itself has been approved into 
the State SIP, unless the variance is incorporated into the permit 
through appropriate permit revision procedures. See 59 FR 47106. The 
commenters argued that part 70 clearly recognizes that sources may not 
be in compliance with all provisions of a title V permit and that State 
variance provisions, such as Oregon's, are consistent with part 70, in 
particular, 40 CFR 70.5(c)(8)(iii) and 70.6(c)(3). The commenters 
further objected to any implication that a variance granted by the 
State does not have any effect on a source's compliance requirements or 
the extent to which a source can be subject to enforcement action.
    EPA agrees with the commenters that part 70 recognizes that some 
title V sources will not be in compliance with all terms of their title 
V permits. Section 70.5(c)(8)(iii)(C) requires that a source that will 
not be in compliance with all applicable requirements at the time of 
permit issuance must submit a schedule of compliance and section 
70.6(c)(3) requires the permitting authority to include such a 
compliance schedule in the source's title V permit.
    EPA disagrees, however, with the commenters' implicit assumption 
that a compliance schedule is the same mechanism and has the same 
effect as a variance. As the commenters recognize, a compliance 
schedule included in a title V permit does not sanction noncompliance 
with the underlying applicable requirement. See 40 CFR 70.5(c)(8)(C). A 
variance properly granted under a State variance provision, and 
approved by EPA as a revision to the SIP, however, changes the 
underlying applicable requirement of the SIP. Because title V requires 
that all applicable requirements be incorporated into a source's title 
V permit, any change to an applicable requirement, such as EPA approval 
of a variance as a SIP revision, must also be incorporated into the 
source's title V permit through appropriate permit revision procedures.
    Moreover, the commenters' concerns are premature at this time. As 
the commenters acknowledge, EPA is not taking any action on Oregon's 
variance provisions in this final action on Oregon's title V program.

Small Business Assistance Program Provisions

    EPA proposed that, as a condition of obtaining full approval, 
Oregon must ensure that no source subject to title V will be immune 
from inspections or enforcement actions resulting from technical 
assistance visits conducted under ORS 468A.330(4)(a). See 59 FR 47107-
47108. That provision states that ``Onsite technical assistance for the 
development and implementation of the Small Business Stationary Source 
Technical and Environmental Compliance Assistance Program shall not 
result in inspections or enforcement actions.''
    One commenter objected to EPA's proposal on this issue, arguing 
instead that ``EPA's current program for amnesty for small businesses 
should be expanded to other sources which conduct voluntary compliance 
audits'' and that such a revision would be consistent with 
Congressional intent. The commenter's reference to ``EPA's current 
program'' is apparently a reference to EPA's August 12, 1994, guidance 
memorandum entitled ``Enforcement Response Policy for Treatment of 
Information Obtained Through Clean Air Act Section 507 Small Business 
Assistance Programs'' signed by Steven A. Herman (herein referred to as 
the ``SBA Enforcement Guidance''). That document sets forth EPA's 
position that State Small Business Assistance Programs which provide 
small businesses voluntarily seeking compliance assistance a limited 
period to correct violations observed or revealed as a result of such 
assistance are approvable under Section 507 of the Act, provided the 
State program contains certain conditions.
    EPA disagrees that the Oregon statute is consistent with either 
title V or the SBA Enforcement Guidance. Section 70.11(a) requires that 
States be able to collect a penalty of up to $10,000 per day for each 
violation in order to obtain title V approval. ORS 468A.330(4)(a) would 
preclude Oregon from pursuing an enforcement action against a source if 
the enforcement action ``resulted from'' a technical assistance visit 
conducted under that provision. As discussed in EPA's proposal, 
Oregon's statute does not simply give a source a limited period of time 
in which to correct a violation observed during a technical assistance 
visit, but forever shields a source from further inspections or 
enforcement actions that ``result from'' a compliance assistance visit. 
For example, if a State inspector discovered a violation during a 
technical assistance visit and the source took no action to correct the 
violation, ORS 468A.330(4)(a) would shield the source indefinitely from 
further inspections or enforcement action unless the State had some 
independent reason for visiting the source not related to the 
information obtained during the technical assistance visit.
    The Oregon Attorney General has opined that no title V source that 
is a major source is eligible for assistance under ORS 468A.330(4)(a) 
because Oregon limits its Small Business Assistance Program to sources 
that meet the definition of ``small business stationary source'' under 
Section 507(b)(1)(C) of the Act. If, however, a source was determined 
to be a title V source as a result of a technical assistance visit, ORS 
468A.330(4)(a) would preclude the Oregon permitting authorities from 
pursing an enforcement action against that source for failure to obtain 
a title V permit.
    The Oregon statute also poses title V approval problems for non-
major sources that may later become subject to title V. In the SBA 
Enforcement Guidance, EPA interpreted Section 507 of the Act to allow 
States to grant non-major sources that meet the eligibility 
requirements of Section 507(b)(1)(C) a limited opportunity to correct 
violations observed during technical assistance visits. Even if EPA 
were to extend this policy to apply to all sources that conduct 
voluntary compliance audits, as the commenter urges, the amnesty 
granted under Oregon's statute far exceeds that policy. In short, the 
Oregon statute is inconsistent with the enforcement requirements of 
part 70 , even as EPA has interpreted those requirements under Section 
507 of the Act and in the SBA Enforcement Guidance, for certain non-
major sources. Accordingly, EPA maintains that ORS 468A.330(4)(a) bars 
full approval of Oregon's title V program, but does not preclude 
interim approval.

B. Options for Approval/Disapproval

    EPA is promulgating interim approval of the operating permits 
programs submitted by ODEQ and LRAPA.6 ODEQ will be implementing 
Oregon's title V program throughout the State, except within Lane 
County and the exterior boundaries of Indian Reservations in Oregon. 
LRAPA will be the title V permitting authority for title V sources in 
Lane County, except for sources located within the exterior boundaries 
of Indian Reservations.
---------------------------------------------------------------------------

    \6\The scope of this action does not include the issuance of 
permits or the enforcement of standards for sewage sludge 
incinerators under Section 405 of the Clean Water Act, 42 USC 1345. 
Delegation of sewage sludge incinerator permitting under the Clean 
Water Act, if requested by the State, would be considered in a 
separate administrative action (see 40 CFR Parts 122 and 501).
---------------------------------------------------------------------------

    In order to receive full approval, the Oregon permitting 
authorities must make the following changes:
1. Upset/Bypass as a Defense to Criminal Liability
    Oregon must demonstrate to EPA's satisfaction that ORS 468.959, 
which provides an affirmative defense to criminal liability for 
violations that result from an ``upset'' or a ``bypass,'' as those 
terms are defined in the Oregon statute, is consistent with 40 CFR 
70.6(g). The affirmative defense under ORS 468.959 is broader than the 
affirmative defense under part 70 for emissions in excess of a 
technology-based emissions limitation caused by an ``emergency'' (see 
40 CFR 70.6(g)).
2. Small Business Assistance Program Provisions
    Oregon must demonstrate to EPA's satisfaction that ORS 
468A.330(4)(a) is consistent with the enforcement responsibilities of 
40 CFR 70.11(a) and the SBA Enforcement Guidance. ORS 468A.330(4)(a) 
does not simply give a source an opportunity to correct a violation 
observed during a technical assistance visit before being subject to 
enforcement action, but rather protects the source from follow-up 
inspections or enforcement activities that ``result from'' observations 
made during a technical assistance visit.
    As a result of today's final interim approval of Oregon's part 70 
programs, the requirement to submit a permit application to ODEQ or to 
LRAPA applies to all part 70 sources, as defined in the approved 
program within the State, except for any source of air pollution over 
which a federally recognized Indian Tribe has jurisdiction. See 59 FR 
55813, 55815-55818 (November 9, 1994).
    This interim approval, which may not be renewed, extends until 
January 2, 1997. During this interim approval period, the State is 
protected from sanctions, and EPA is not obligated to promulgate, 
administer and enforce a Federal operating permits program in the 
State. Permits issued under a program with interim approval have full 
standing with respect to part 70, and the 1-year time period for 
submittal of permit applications by subject sources begins upon the 
effective date of this interim approval, as does the 3-year time period 
for processing the initial permit applications.
    If the State fails to submit a complete corrective program for full 
approval by July 2, 1996, EPA will start an 18-month clock for 
mandatory sanctions. If the State then fails to submit a corrective 
program that EPA finds complete before the expiration of that 18-month 
period, EPA will be required to apply one of the sanctions in section 
179(b) of the Act, which will remain in effect until EPA determines 
that the State has corrected the deficiency by submitting a complete 
corrective program. Moreover, if the Administrator finds a lack of good 
faith on the part of the State, both sanctions under section 179(b) 
will apply after the expiration of the 18-month period until the 
Administrator determined that the State had come into compliance. In 
any case, if, six months after application of the first sanction, the 
State still has not submitted a corrective program that EPA has found 
complete, a second sanction will be required.
    If EPA disapproves the State's complete corrective program, EPA 
will be required to apply one of the section 179(b) sanctions on the 
date 18 months after the effective date of the disapproval, unless 
prior to that date the State has submitted a revised program and EPA 
has determined that it corrected the deficiencies that prompted the 
disapproval. Moreover, if the Administrator finds a lack of good faith 
on the part of the State, both sanctions under section 179(b) shall 
apply after the expiration of the 18-month period until the 
Administrator determines that the State has come into compliance. In 
all cases, if, six months after EPA applies the first sanction, the 
State has not submitted a revised program that EPA has determined 
corrects the deficiencies, a second sanction is required.
    In addition, discretionary sanctions may be applied where warranted 
any time after the expiration of an interim approval period if the 
State has not timely submitted a complete corrective program or EPA has 
disapproved its submitted corrective program. Moreover, if EPA has not 
granted full approval to the State program by the expiration of this 
interim approval and that expiration occurs after November 15, 1995, 
EPA must promulgate, administer and enforce a Federal permits program 
for the State upon interim approval expiration.

III. Administrative Requirements

A. Docket

    Copies of the State's submittal and other information relied upon 
for the final interim approval, including public comments on the 
proposal received and reviewed by EPA, are contained in docket number 
OR-V-100 maintained at the EPA Regional Office. The docket is an 
organized and complete file of information submitted to, or otherwise 
considered by, EPA in the development of this final interim approval. 
The docket is available for public inspection at the location listed 
under the ADDRESSES section of this document.

B. Executive Order 12866

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

C. Regulatory Flexibility Act

    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

    Administrative practice and procedure, Air pollution control, 
Environmental protection, Intergovernmental relations, Operating 
permits, and Reporting and recordkeeping requirements.

    Dated: November 15, 1994.
Chuck Clarke,
Regional Administrator.

    Part 70, title 40 of the Code of Federal Regulations is amended as 
follows:

PART 70--[AMENDED]

    1. The authority citation for part 70 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.

    2. Appendix A to part 70 is amended by adding a sentence at the end 
of the introductory text and by adding the entry for Oregon in 
alphabetical order to read as follows:

Appendix A to Part 70--Approval Status of State and Local Operating 
Permits Programs

    * * * An approved State part 70 program applies to all part 70 
sources, as defined in that approved program, within such State, 
except for any source of air pollution over which a federally 
recognized Indian Tribe has jurisdiction.
* * * * *

Oregon

    (a) Department of Environmental Quality (ODEQ): Submitted on 
November 15, 1993, as amended November 15, 1994; effective on 
January 3, 1995; interim approval expires January 2, 1997.
    (b) Lane Regional Air Pollution Authority (LRAPA): submitted on 
November 15, 1993, as amended November 15, 1994; effective on 
January 3, 1995; interim approval expires January 2, 1997.
* * * * *
[FR Doc. 94-29690 Filed 12-1-94; 8:45 am]
BILLING CODE 6560-50-P