[Federal Register Volume 60, Number 8 (Thursday, January 12, 1995)]
[Proposed Rules]
[Pages 2917-2921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-700]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70

[SD-001; FRL-5137-4]


Clean Air Act Proposed Interim Approval of Operating Permits 
Program; State of South Dakota

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.

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SUMMARY: EPA proposes interim approval of the Operating Permits Program 
submitted by the State of South Dakota 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.

DATES: Comments on this proposed action must be received in writing by 
February 13, 1995.

ADDRESSES: Comments should be addressed to Laura Farris at the Region 8 
address. Copies of the State's submittal and other supporting 
information used in developing this proposed rule are available for 
inspection during normal business hours at the following location: U.S. 
Environmental Protection Agency, [[Page 2918]] Region 8, 999 18th 
Street, suite 500, Denver, Colorado 80202.

FOR FURTHER INFORMATION CONTACT: Laura Farris, 8ART-AP, U.S. 
Environmental Protection Agency, Region 8, Air Programs Branch, 999 
18th Street, suite 500, Denver, Colorado 80202, (303) 294-7539.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

    As required under title V of the 1990 Clean Air Act Amendments 
(sections 501-507 of the Clean Air Act (``the Act'')), 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 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. Based on 
material changes to the State's submission that consisted of 
regulations changes adopted by the State on November 17, 1994, EPA is 
extending the review period for an additional 3 months. EPA will act to 
approve or disapprove the submission by April 11, 1995. 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 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.

B. Federal Oversight and Sanctions

    If EPA were to finalize this proposed interim approval, it would 
extend for two years following the effective date of final interim 
approval, and could not be renewed. During the interim approval period, 
the State would be protected from sanctions, and EPA would not be 
obligated to promulgate, administer and enforce a Federal permits 
program for 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 interim approval, as does the 3-year 
time period for processing the initial permit applications.
    Following final interim approval, if the State failed to submit a 
complete corrective program for full approval by the date 6 months 
before expiration of the interim approval, EPA would start an 18-month 
clock for mandatory sanctions. If the State then failed to submit a 
corrective program that EPA found complete before the expiration of 
that 18-month period, EPA would apply sanctions as required by section 
502(d)(2) of the Act, which would remain in effect until EPA determined 
that the State had corrected the deficiency by submitting a complete 
corrective program.
    If, following final interim approval, EPA were to disapprove the 
State's complete corrective program, EPA would be required under 
section 502(d)(2) to apply sanctions on the date 18 months after the 
effective date of the disapproval, unless prior to that date the State 
had submitted a revised program and EPA had determined that it 
corrected the deficiencies that prompted the disapproval.
    In addition, discretionary sanctions may be applied where warranted 
any time after the end of an interim approval period if a State has not 
timely submitted a complete corrective program or EPA has disapproved a 
submitted corrective program. Moreover, if EPA has not granted full 
approval to a State program by the expiration of an interim approval 
and that expiration occurs after November 15, 1995, EPA must 
promulgate, administer and enforce a Federal permits program for that 
State upon interim approval expiration.

II. Proposed Action and Implications

A. Analysis of State Submission

1. Support Materials
    The Governor of South Dakota's designee, Robert E. Roberts, 
Secretary of the Department of Environment and Natural Resources, 
submitted the State of South Dakota Title V Operating Permit Program 
(PROGRAM) to EPA on November 12, 1993. Amendments to the PROGRAM 
requested by EPA were received on January 11, 1994. EPA deemed the 
PROGRAM administratively and technically complete in a letter to the 
Governor's designee dated January 14, 1994. The PROGRAM submittal 
includes a legal opinion from the Attorney General of South Dakota 
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, a 
permit fee demonstration and a memorandum of agreement which defines 
how the PROGRAM will be administered by the State and reviewed by EPA.
2. Regulations and Program Implementation
    The South Dakota PROGRAM, including the operating permit regulation 
(Administrative Rules of South Dakota (ARSD), Article 74:36, Air 
Pollution Control Program), 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 (no insignificant 
activities were identified in the PROGRAM); Sec. 70.7 with respect to 
public participation and minor permit modifications; and Sec. 70.11 
with respect to requirements for enforcement authority.
    South Dakota has the authority to issue variances from requirements 
imposed by State law. Section 34A-1-24 of the South Dakota Codified 
Laws (SDCL) allows the Board of Minerals and Environment, the 
permitting board, discretion to grant relief from compliance with State 
rules and regulations governing the quality, nature, duration or extent 
of emissions. Succeeding sections of the SDCL specify under what 
circumstances a variance may be granted or denied. In its review of 
South Dakota's PROGRAM, EPA has previously taken the position that, in 
order to gain full approval for its PROGRAM, South Dakota would have to 
amend SDCL 34A-1-24 to make it clear that variances may not be granted 
to part 70 sources. EPA has reevaluated its position on this issue. 
Although EPA would support such an amendment to SDCL 34A-1-24, EPA has 
not required other states to change similar statutory variance 
provisions. Thus, EPA believes it would not be appropriate to require 
South Dakota to amend SDCL 34A-1-24 before full PROGRAM approval is 
granted. EPA's reasoning is as follows: EPA regards SDCL 34A-1-24 as 
wholly external to the PROGRAM submitted for approval under part 70, 
and consequently is proposing to take no action on this provision of 
State law. EPA has no authority to approve provisions of State law, 
such as the variance provision referred to, which [[Page 2919]] are 
inconsistent with part 70. EPA does not recognize the ability of a 
permitting authority to grant relief from the duty to comply with a 
Federally enforceable part 70 permit, except where such relief is 
granted through procedures allowed by part 70. EPA reserves the right 
to enforce the terms of the part 70 permit where the permitting 
authority purports to grant relief from the duty to comply with a part 
70 permit in a manner inconsistent with part 70 procedures.
    Part 70 of the operating permit 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 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. The South Dakota PROGRAM will define prompt reporting of 
deviations in each permit consistent with the applicable requirements.
    There are certain provisions of South Dakota's operating permit 
regulation for which EPA feels it is appropriate to offer clarification 
to ensure that they are interpreted to be consistent with part 70. 
These are as follows: (1) The definition of ``federally enforceable'' 
which appears at ARSD 74:36:01:01(28) reads as follows:

    ``Federally enforceable,'' all limits and conditions that are 
enforceable by the administrator of EPA pursuant to federal law. 
These limits and conditions include those requirements developed 
pursuant to this article, those appearing in 40 CFR 60 and 61 (July 
1, 1993), requirements within the state implementation plan and 
permit requirements established pursuant to this article or 40 CFR 
51 Subpart I (July 1, 1993). The use of this term does not impede 
the Department's authority under state law to enforce these limits 
and conditions.

    This definition could be significant for determining whether a 
source is subject to the part 70 PROGRAM. Thus, the second sentence of 
the above definition cannot and should not be read to expand on the 
first sentence of the definition. For example, requirements developed 
pursuant to ARSD Article 74:36 might be, but wouldn't necessarily be, 
Federally enforceable. EPA's interpretation is that the requirements 
delineated in the second sentence of the definition are only Federally 
enforceable if they are enforceable by the administrator of EPA 
pursuant to federal law.
    (2) The second sentence of ARSD 74:36:01:08(1) reads as follows: 
Emissions from any oil exploration or production well and its 
associated equipment and emissions from any pipeline compressor or pump 
station may not be aggregated with emissions from other similar units, 
whether or not such units are in a contiguous area or under common 
control, to determine whether such units or stations are major sources.
    To be consistent with part 70, this sentence must be read as only 
being applicable to a determination of whether a source is major under 
section 112 of the Act. This language cannot be applied when 
determining whether a source is major under other sections of the Act.
    Comments noting deficiencies in the South Dakota PROGRAM were sent 
to the State in a letter dated July 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 
full PROGRAM approval. In a letter dated August 18, 1994, the State 
committed to complete the regulatory process to correct both interim 
and full PROGRAM approval deficiencies related to its PROGRAM 
regulations, and submit these changes to EPA by approximately December 
15, 1994. EPA responded in a letter dated October 3, 1994 that they 
would review all of the State's corrective actions. However, these 
corrective actions would be considered a material change to the PROGRAM 
and the date for final interim approval would be extended. The State 
adopted the regulatory changes on November 17, 1994, which EPA has 
reviewed and has determined to be adequate to allow for interim 
approval.
    One remaining issue noted in EPA's July 8, 1994 letter that require 
corrective action prior to full PROGRAM approval is as follows: The 
PROGRAM submittal contained an Attorney General's opinion which stated 
that South Dakota's criminal enforcement authorities are not equivalent 
to those required in part 70.11. The State's criminal enforcement 
statute only allows for a maximum penalty of $1,000 for failure to 
obtain a permit and $500 for violation of a permit condition. The State 
must adopt legislation consistent with Sec. 70.11 prior to receiving 
full PROGRAM approval to allow for a maximum criminal fine of not less 
than $10,000 per day per violation for knowing violation of operating 
permit requirements, including making a false statement and tampering 
with a monitoring device.
    Refer to the technical support document accompanying this 
rulemaking for a detailed explanation of each comment and the 
corrective actions required of the State.
3. Permit Fee Demonstration
    The State of South Dakota established an initial fee for regulated 
air pollutants below the presumptive minimum set in title V, section 
502 and part 70, and was required to submit a detailed permit fee 
demonstration as part of its PROGRAM submittal. The basis of this fee 
demonstration included a workload analysis, which estimated the annual 
cost of running the PROGRAM in fiscal year (FY) 1995 to be $438,215; a 
fee structure based on the estimated direct and indirect costs of the 
PROGRAM, the number of part 70 sources permitted, and the actual 
emissions for the previous year. The fees established for FY 1995 are 
as follows: rock crushers will be charged a flat fee of $250.00; an 
annual administrative fee will be assessed to all major sources (based 
on actual emissions of each source for one calendar year), excluding 
rock crushers, consisting of $100.00 for sources emitting less than 50 
tons per year, $500.00 for sources emitting 50 to less than 100 tons 
per year, and $1,000.00 for sources emitting 100 tons per year or 
greater; and an air emission fee will be assessed to all major sources 
(excluding rock crushers) of $6.10 per ton per year based on emissions 
from calendar year 1992 (the State will not use the 4,000 tons per year 
per pollutant emissions cap allowed by Act). This fee structure will be 
reevaluated each year. After careful review, the State of South Dakota 
has determined that these fees would support the South Dakota PROGRAM 
costs as required by 40 CFR 70.9(a).
4. Provisions Implementing the Requirements of Other Titles of the Act
    a. Authority and/or commitments for section 112 implementation 
South Dakota has demonstrated in its [[Page 2920]] PROGRAM submittal 
adequate legal authority to implement and enforce all section 112 
requirements through the title V permit. This legal authority is 
contained in South Dakota'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 South Dakota to issue 
permits that assure compliance with all section 112 requirements. EPA 
is interpreting the above legal authority to mean that South Dakota is 
able to carry out all section 112 activities. 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, South Dakota 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 South Dakota's combined preconstruction/operating 
permit program found in section 74:36:05 of the State's regulations 
under the authority of title V and part 70 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. South Dakota has combined their preconstruction 
permitting regulations and their part 70 permitting regulations for all 
new part 70 sources, except those sources subject to prevention of 
significant deterioration (PSD) or nonattainment new source review 
(NSR) permitting. South Dakota will require sources subject to section 
112(g) to obtain a title V permit prior to construction, thereby 
creating a Federally enforceable limit. EPA believes this approval is 
necessary so that South Dakota 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. If South Dakota does not wish to 
implement section 112(g) through these authorities and can demonstrate 
that an alternative means of implementing section 112(g) exists, EPA 
may, in the final action approving South Dakota's PROGRAM, approve the 
alternative instead. To the extent South Dakota 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 South 
Dakota, acting expeditiously, will be able to adopt regulations 
consistent with the section 112(g) regulations. 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 South 
Dakota's procedures for adoption of Federal regulations.
    c. Program for straight delegation of section 112 standards. 
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 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, 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. South Dakota has informed EPA that it intends to accept 
delegation of section 112 standards through 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 an applicable requirement under the State 
PROGRAM. Currently the State of South Dakota has no part 70 sources 
which emit radionuclides. However, sources which are not currently part 
70 sources may be defined as major and become part 70 sources under 
forthcoming Federal radionuclide regulations. In that event, the State 
will be responsible for issuing part 70 permits to those sources.
    d. Program for implementing title IV of the act. South Dakota'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. Proposed Action

    EPA is proposing to grant interim approval to the operating permits 
program submitted by the State of South Dakota on November 12, 1993. If 
promulgated, the State must make the following change, as discussed in 
detail above, to receive full PROGRAM approval: The State must adopt 
legislation consistent with Sec. 70.11 prior to receiving full PROGRAM 
approval to allow for a maximum criminal fine of not less than $10,000 
per day per violation for knowing violation of operating permit 
requirements, including making a false statement and tampering with a 
monitoring device.
    Evidence of this statutory change must be submitted to EPA within 
18 months of EPA's interim approval of the South Dakota PROGRAM.
    Today's proposal to give interim approval to the State's part 70 
PROGRAM does not extend to ``Indian Country,'' as defined in 18 U.S.C. 
1151, including the following ``existing or former'' Indian 
reservations in the State: 1. Cheyenne River; 2. Crow Creek; 3. 
Flandreau; 4. Lower Brule; 5. Pine Ridge; 6. Rosebud; 7. Sisseton; 8. 
Standing Rock; and 9. Yankton.
    The State has asserted it has jurisdiction to enforce a part 70 
PROGRAM within some or all of these ``existing or former'' Indian 
reservations and has provided an analysis of such jurisdiction. EPA is 
in the process of evaluating the State's analysis and will issue a 
supplemental notice regarding this issue in the future. Before EPA 
would approve the State's part 70 PROGRAM for any portion of ``Indian 
Country,'' EPA would have to be satisfied that the State has authority, 
either pursuant to explicit Congressional authorization or applicable 
principles of Federal Indian law, to enforce its laws against existing 
and potential pollution sources within any geographical area for which 
it seeks program approval and that such approval would constitute sound 
administrative practice. This is a complex and controversial issue, and 
[[Page 2921]] EPA does not wish to delay interim approval of the 
State's part 70 PROGRAM with respect to undisputed sources while EPA 
resolves this question.
    In deferring final action on program approval for sources located 
in ``Indian Country,'' EPA is not making a determination that the State 
either has adequate jurisdiction or lacks such jurisdiction. Instead, 
EPA is deferring judgment regarding this issue pending EPA's evaluation 
of the State's analysis.
    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.
    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, EPA is also proposing to grant approval under section 
112(l)(5) and 40 CFR 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 
interim approval. 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 interim 
approval. 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 approval 
process, and
    (2) to serve as the record in case of judicial review. The EPA will 
consider any comments received by February 13, 1995.

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

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

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

    Dated: December 29, 1994.
Jack W. McGraw,
Acting Regional Administrator.
[FR Doc. 95-700 Filed 1-11-95; 8:45 am]
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