[Federal Register Volume 60, Number 94 (Tuesday, May 16, 1995)]
[Proposed Rules]
[Pages 26013-26018]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11794]



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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5206-3]


Clean Air Act Proposed Interim Approval of the Operating Permits 
Program; Monterey Bay Unified Air Pollution Control District, 
California

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The EPA proposes interim approval of the Operating Permits 
Program submitted by the Monterey Bay Unified Air Pollution Control 
District (Monterey or District) 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 
June 15, 1995.

ADDRESSES: Comments should be addressed to Regina Spindler, Mail Code 
A-5-2, U.S. Environmental Protection Agency, Region IX, Air and Toxics 
Division, 75 Hawthorne Street, San Francisco, CA 94105.
    Copies of the District submittal and other supporting information 
used in developing the proposed interim approval are available for 
inspection during normal business hours at the following location: U.S. 
Environmental Protection Agency, Region IX, 75 Hawthorne Street, San 
Francisco, CA 94105.

FOR FURTHER INFORMATION CONTACT: Regina Spindler (telephone: 415/744-
1251), Mail Code A-5-2, U.S. Environmental Protection Agency, Region 
IX, Air and Toxics Division, 75 Hawthorne Street, San Francisco, CA 
94105.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

    As required under title V of the Clean Air Act (Act) as amended 
(1990), EPA has promulgated rules that define the minimum elements of 
an approvable state operating permits program and the corresponding 
standards and procedures by which 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 (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 title V 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. 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

    The analysis contained in this notice focuses on specific elements 
of Monterey's title V operating permits program that must be corrected 
to meet the minimum requirements of 40 CFR part 70. The full program 
submittal, the Technical Support Document (TSD), which contains a 
detailed analysis of the submittal, and other relevant materials are 
available for inspection as part of the public docket. The docket may 
be viewed during regular business hours at the address listed above. 
[[Page 26014]] 
1. Title V Program Support Materials
    Monterey's original title V program was submitted by the California 
Air Resources Board (CARB) on December 6, 1993. Additional material was 
submitted on February 2, 1994 and April 7, 1994. The submittal was 
found to be complete on February 4, 1994. The Governor's letter 
requesting source category-limited interim approval, California 
enabling legislation, and Attorney General's legal opinion were 
submitted by CARB for all districts in California and therefore were 
not included separately in Monterey's submittal. The Monterey 
submission does contain a complete program description, District 
implementing and supporting regulations, and all other program 
documentation required by Sec. 70.4. An implementation agreement is 
currently being developed between Monterey and EPA.
    The EPA determined in its evaluation of Monterey's program that 
Rule 218, the District's permitting regulation, contained several 
deficiencies that were cause for disapproval of the program. The EPA 
described these deficiencies and the corrections necessary to make the 
program eligible for interim approval in a letter from Felicia Marcus, 
EPA Region IX Administrator, to Abra Bennett, Monterey Air Pollution 
Control Officer (APCO), dated July 22, 1994. In response, Monterey 
adopted a revised regulation which was submitted by CARB on the 
District's behalf on October 13, 1994. Section 70.4(e)(2) gives EPA the 
option of extending the review period for a title V program submission 
if the program is materially changed during the initial one-year 
review. Because the revisions to Monterey's program were regulatory and 
affect critical elements of part 70, such as applicability, permit 
applications, and permit content, the program required additional 
review and analysis. The EPA considered the program to be materially 
changed and therefore decided to exercise the Sec. 70.4(e)(2) option 
and extend its review period by six months. This extension moves the 
deadline for EPA's final action on Monterey's title V operating permits 
program from December 6, 1994, which is one year after receipt of the 
original program submittal, to June 6, 1995.
2. Title V Operating Permit Regulations and Program Implementation
    Monterey's regulations adopted or revised to implement title V 
include Rule 218, Title V: Federal Operating Permits, adopted November 
17, 1993 and revised on September 21, 1994; Rule 308, Title V: Federal 
Operating Permit Fees, adopted November 17, 1993; and Rule 201, Sources 
Not Requiring Permits, adopted September 1, 1974, as revised on April 
21, 1993. The regulations substantially meet the requirements of 40 CFR 
part 70, Secs. 70.2 and 70.3 for applicability; Secs. 70.4, 70.5, and 
70.6 for permit content, including operational flexibility; section 
70.7 for public participation and minor permit modifications; section 
70.5 for criteria that define insignificant activities; section 70.5 
for complete application forms; and section 70.11 for enforcement 
authority. Although the regulations substantially meet part 70 
requirements, there are several deficiencies in the program that are 
outlined under section II.B. below as interim approval issues and 
further described in the Technical Support Document.
a. Applicability and Duty To Apply
    While the ``major source'' definition in Monterey's title V program 
meets the applicability requirements of part 70, the District rule 
provides that sources with actual emissions below certain thresholds 
are exempt from the obligation to obtain a title V permit until three 
years after program approval (Rule 218, section 1.3.3). Ordinarily, 
part 70 requires that sources apply within one year of program 
approval. A District may, however, request interim approval of a source 
category-limited program that defers the obligation to obtain a permit 
for a certain category or categories of sources. Monterey's source 
category-limited program defers sources with actual emissions below 60% 
of the criteria pollutant and 10 ton per year hazardous air pollutant 
(HAP) major source thresholds and 72% of the 25 ton per year HAP 
threshold. Two years after EPA grants interim approval to the source 
category-limited program, these deferred sources must either have 
federally enforceable conditions that limit their potential to emit to 
below major source thresholds or will be required to apply for a title 
V permit.
    The EPA's policy on source category-limited interim approval is set 
forth in a document entitled, ``Interim Title V Program Approvals,'' 
signed on August 2, 1993 by John Seitz, Director of the Office of Air 
Quality Planning and Standards. This policy requires that a district 
that requests interim approval of a source category-limited program 
demonstrate that there are compelling reasons why the district cannot 
address all sources in the interim. Additionally, the district must 
demonstrate that the source category-limited program will apply to at 
least 60 percent of all part 70 sources and cover sources that are 
responsible for at least 80 percent of the aggregate emissions from 
part 70 sources (60/80 test).
    In an addendum to Monterey's revised title V program submittal, 
dated October 25, 1994, from Fred Thoits, Engineering Division Chief to 
Felicia Marcus, Region IX Administrator, Monterey demonstrated to EPA's 
satisfaction that it meets this 60/80 test. With regard to the 
demonstration of compelling reasons, the District asserts that while 
many small sources in the District meet title V applicability criteria 
based on their potential emissions, these sources' actual emissions are 
well below the major source threshold. The District reasons that it is 
a more productive use of its limited resources during the initial three 
year transition period to issue title V permits to the larger sources 
that are clearly intended to be permitted under title V and to 
establish a prohibitory rule and synthetic minor permit program that 
sources with lower actual emissions may use to establish federally 
enforceable limits on their potential emissions. The EPA believes that 
these are compelling reasons for implementing a source category-limited 
interim program.
b. Insignificant Activities
    Section 70.4(b)(2) requires states to include in their part 70 
programs any criteria used to determine insignificant activities or 
emission levels for the purpose of determining complete applications. 
Section 70.5(c) states that an application for a part 70 permit may not 
omit information needed to determine the applicability of, or to 
impose, any applicable requirement, or to evaluate appropriate fee 
amounts. Section 70.5(c) also states that EPA may approve, as part of a 
state program, a list of insignificant activities and emissions levels 
which need not be included in permit applications. Under part 70, a 
state must request and EPA must approve as part of that state's program 
any activity or emission level that the state wishes to consider 
insignificant. Part 70, however, does not establish appropriate 
emission levels for insignificant activities, relying instead on a 
case-by-case determination of appropriate levels based on the 
particular circumstances of the part 70 program under review.
    Monterey submitted District Rule 201, its current permit exemption 
rule, as its list of insignificant activities. It is clear that Rule 
201 was not developed with the purpose of defining insignificant 
activities under the District's title V program in mind; the 
applicability provisions of the rule state that the exemptions apply to 
the requirements of [[Page 26015]] Rule 200, the District requirements 
for obtaining Authority to Construct permits and non-federally 
enforceable Permits to Operate. Monterey did not provide EPA with 
criteria used to develop the exemptions list, information on the level 
of emissions from the activities, nor with a demonstration that these 
activities are not likely to be subject to an applicable requirement. 
Therefore, EPA cannot propose full approval of the list as the basis 
for determining insignificant activities.
    For other state and district programs, EPA has proposed to accept, 
as sufficient for full approval, emission levels for insignificant 
activities of 2 tons per year for criteria pollutants and the lesser of 
1000 pounds per year, section 112(g) de minimis levels, or other title 
I significant modification levels for hazardous air pollutants (HAP) 
and other toxics (40 CFR 52.21(b)(23)(i)). The EPA believes that these 
levels are sufficiently below the applicability thresholds of many 
applicable requirements to assure that no unit potentially subject to 
an applicable requirement is left off a title V application. The EPA is 
requesting comment on the appropriateness of these emission levels for 
determining insignificant activities in Monterey. This request for 
comment is not intended to restrict the ability of other states and 
districts to propose, and EPA to approve, different emission levels if 
the state or district demonstrates that such alternative emission 
levels are insignificant compared to the level of emissions from and 
types of units that are permitted or subject to applicable 
requirements.
c. Variances
    Monterey has authority under State and local law to issue a 
variance from State and local requirements. Sections 42350 et sec. of 
the California Health and Safety Code and District Regulation VI, 
Article 2 allow the District to grant relief from enforcement action 
for permit violations. The EPA regards these provisions as wholly 
external to the program submitted for approval under part 70, and 
consequently, is proposing to take no action on these provisions of 
State and local law.
    The EPA has no authority to approve provisions of state or local 
law, such as the variance provisions referred to, that are inconsistent 
with the Act. The 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. A part 70 permit may be issued or 
revised (consistent with part 70 permitting procedures) to incorporate 
those terms of a variance that are consistent with applicable 
requirements. A part 70 permit may also incorporate, via part 70 permit 
issuance or modification procedures, the schedule of compliance set 
forth in a variance. However, EPA reserves the right to pursue 
enforcement of applicable requirements notwithstanding the existence of 
a compliance schedule in a permit to operate. This is consistent with 
40 CFR Sec. 70.5(c)(8)(iii)(C), which states that a schedule of 
compliance ``shall be supplemental to, and shall not sanction 
noncompliance with, the applicable requirements on which it is based.''
d. Definition of Title I Modification
    Among the several criteria that Monterey includes in its definition 
of ``Significant Permit Modification'' is the provision that it involve 
any ``significant change as specified in the EPA's title I regulations 
in 40 CFR parts 51, 52, 50, 61 and 63.'' The EPA might interpret the 
reference to title I regulations in part 51 to include changes reviewed 
under a minor source preconstruction review program (``minor NSR 
changes''). However, Monterey's inclusion of the term ``significant 
change'' as well as the statement in its program description that title 
I modifications include modifications that are ``major under federal 
NSR, * * * major under PSD resulting in a `significant' net emissions 
increase, or a modification at a major HAPs source resulting in a `de 
minimis' increase of HAPs'' clearly indicates that Monterey does not 
interpret ``title I modification'' to include ``minor NSR changes.'' 
Part 70 requires all modifications under title I of the Act to be 
processed as significant permit modifications 
(Sec. 70.7(e)(2)(i)(A)(5)). The EPA is currently in the process of 
determining the proper definition of ``title I modification.'' As 
further explained below, EPA has solicited public comment on whether 
the phrase ``modification under any provision of title I of the Act'' 
in 40 CFR 70.7(e)(2)(i)(A)(5) should be interpreted to mean literally 
any change at a source that would trigger permitting authority review 
under regulations approved or promulgated under title I of the Act. 
This would include state preconstruction review programs approved by 
EPA as part of the State Implementation Plan under section 110(a)(2)(C) 
of the Clean Air Act.
    On August 29, 1994, EPA proposed revisions to the interim approval 
criteria in 40 CFR 70.4(d) to, among other things, allow state programs 
with a more narrow definition of ``title I modification'' to receive 
interim approval (59 FR 44572). The Agency explained its view that the 
better reading of ``title I modification'' includes minor NSR, and 
solicited public comment on the proper interpretation of that term (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 allow states 
with a narrower definition to be eligible for interim approval.
    The EPA hopes to finalize its rulemaking revising the interim 
approval criteria under 40 CFR 70.4(d) expeditiously. If EPA 
establishes in its rulemaking that the definition of ``title I 
modification'' can be interpreted to exclude changes reviewed under 
minor NSR programs, Monterey's definition of ``significant permit 
modification'' and interpretation of ``title I modification'' would be 
fully consistent with part 70. Conversely, if EPA establishes through 
the rulemaking that the definition of ``title I modification'' must 
include changes reviewed under minor NSR, Monterey's definition and 
interpretation will become a basis for interim approval. If the 
definition and interpretation become a basis for interim approval as a 
result of EPA's rulemaking, Monterey would be required to revise its 
definition and interpretation to conform to the requirements of part 
70.
    Accordingly, today's proposed approval does not identify Monterey's 
definition of ``significant permit modification'' and interpretation of 
``title I modification'' as necessary grounds for either interim 
approval or disapproval. Again, although EPA has reasons for believing 
that the better interpretation of ``title I modification'' is the 
broader one, EPA does not believe that it is appropriate to determine 
whether this is a program deficiency until EPA completes its rulemaking 
on this issue.
3. Permit Fee Demonstration
    Section 502(b)(3) of the Act requires that each permitting 
authority collect fees sufficient to cover all reasonable direct and 
indirect costs required to develop and administer its title V operating 
permits program. Each title V program submittal must contain either a 
detailed demonstration of fee adequacy or a demonstration that 
aggregate fees collected from title V sources meet or exceed $25 per 
ton per year (adjusted [[Page 26016]] annually based on the Consumer 
Price Index (CPI), relative to 1989 CPI). The $25 per ton amount is 
presumed, for program approval, to be sufficient to cover all 
reasonable program costs and is thus referred to as the ``presumptive 
minimum,'' (40 CFR 70.9(b)(2)(i)).
    Monterey's title V fee rule (Rule 308) requires all title V sources 
to pay an application fee, an evaluation fee of $80.00 per hour for 
every District staff hour necessary to complete the title V permit 
evaluation, and an emissions-based fee of $14.44 per ton of emissions, 
as calculated by the District. This emissions-based fee will be 
adjusted annually based upon the CPI. In addition to these title V 
fees, title V sources must continue to pay existing District permit 
fees. These fees combined result in collection of an average of $92.00 
per ton per year, an amount that is well above the presumptive minimum. 
Monterey expects revenues of $73,600 in the first year of the program 
and revenues of $200,000 in the second and ensuing years. Monterey's 
fee schedule was developed based on an estimation of workload 
associated with administration of the title V program.
4. Provisions Implementing the Requirements of Other Titles of the Act
a. Authority and Commitments for Section 112 Implementation
    Monterey has demonstrated in its title V program submittal adequate 
legal authority to implement and enforce all section 112 requirements 
through the title V permit. This legal authority is contained in the 
State of California enabling legislation and in regulatory provisions 
defining ``federally enforceable requirements'' and requiring each 
permit to incorporate conditions that assure compliance with all such 
federally enforceable requirements. Monterey has supplemented this 
legal authority with a commitment to implement and enforce section 112 
requirements and to adopt additional regulations as needed to issue 
permits that implement and enforce the requirements of section 112. 
This commitment is contained in a letter from Abra Bennett, Air 
Pollution Control Officer to Debbie Jordan, Chief of the Operating 
Permits Section at EPA, Region IX, dated April 7, 1994. The EPA has 
determined that the legal authority and commitments are sufficient to 
allow Monterey to issue permits that assure compliance with all section 
112 requirements. For further discussion, please refer to the Technical 
Support Document accompanying this action and the April 13, 1993 
guidance memorandum entitled, ``Title V Program Approval Criteria for 
Section 112 Activities,'' signed by John Seitz.
b. Authority and Commitments for Title IV Implementation
    Monterey committed in a letter from Abra Bennett, Air Pollution 
Control Officer, dated April 7, 1994, to submit a complete acid rain 
program to EPA by January 1, 1995. The letter stated the District's 
intentions to adopt part 72, EPA's acid rain regulation, by reference; 
to use EPA acid rain application forms; to revise District regulations 
as necessary to accommodate federal revisions; and to meet all acid 
rain deadlines contained in part 72. Monterey incorporated part 72 
(except provisions applicable to phase I units and permitting of acid 
rain units by EPA) by reference into District Regulation II, Rule 219 
on November 23, 1994. Rule 219 was subsequently submitted to EPA along 
with proof of board adoption.

B. Proposed Interim Approval and Implications

    The EPA is proposing to grant interim approval to the operating 
permits program submitted by CARB on behalf of the Monterey Bay Unified 
Air Pollution Control District on December 6, 1993, supplemented on 
February 2, 1994 and April 7, 1994, and revised by the submittal made 
on October 13, 1994. 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, Monterey would be protected from sanctions, and EPA 
would not be obligated to promulgate, administer and enforce a federal 
permits program for the District. 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 District 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 Monterey then failed to submit a 
corrective program that EPA found complete before the expiration of 
that 18-month period, EPA would be required to apply one of the 
sanctions in section 179(b) of the Act, which would remain in effect 
until EPA determined that the District had corrected the deficiency by 
submitting a complete corrective program. Moreover, if the 
Administrator found a lack of good faith on the part of the District, 
both sanctions under section 179(b) would apply after the expiration of 
the 18-month period until the Administrator determined that the 
District had come into compliance. In any case, if, six months after 
application of the first sanction, the District still had not submitted 
a corrective program that EPA found complete, a second sanction would 
be required.
    If, following final interim approval, EPA were to disapprove 
Monterey's complete corrective program, EPA would 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 
District had submitted a revised program and EPA had determined that it 
corrected the deficiencies that prompted the disapproval. Moreover, if 
the Administrator found a lack of good faith on the part of the 
District, both sanctions under section 179(b) would apply after the 
expiration of the 18-month period until the Administrator determined 
that the District had come into compliance. In all cases, if, six 
months after EPA applied the first sanction, Monterey had not submitted 
a revised program that EPA had determined corrected the deficiencies 
that prompted disapproval, a second sanction would be required.
    In addition, discretionary sanctions may be applied where warranted 
any time after the end of an interim approval period if a district 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 district 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 district upon interim approval expiration.
1. Monterey's Title V Operating Permits Program
    If EPA finalizes this interim approval, Monterey must make the 
following changes, or changes that have the same effect, to receive 
full approval (all required revisions are to District Rule 218 unless 
otherwise noted):
    (1) Revise section 1.3 to require that, regardless of the source's 
actual or potential emissions, acid rain sources and solid waste 
incineration units required to obtain a permit pursuant to section 
129(e) of the Act may not be exempted from the requirement to 
[[Page 26017]] obtain a permit pursuant to Rule 218. Section 70.3(b) 
requires that major sources, affected sources (acid rain sources), and 
solid waste incinerators may not be exempted from the program. 
Monterey's deferral for certain major sources other than acid rain 
sources and solid waste incinerators is allowable under John Seitz's 
``Interim Approval Guidance,'' dated August 2, 1993.
    (2) Revise section 2.1.4 of the definition of ``Administrative 
Permit Amendments'' as follows:
    ``requires more frequent monitoring or reporting for the stationary 
source; or''
    Increasing monitoring requirements could be a significant change to 
these requirements. Significant changes in monitoring must be processed 
as significant permit modifications. (Sec. 70.7(d)(1)(iii), 
Sec. 70.7(e)(4))
    (3) Revise the definition of ``Federally Enforceable Requirement'' 
in section 2.12 to include any standard or other requirement provided 
for in the State Implementation Plan approved or promulgated by EPA. 
This revision is necessary to make the section 2.12 definition 
consistent with the part 70 definition of ``Applicable requirement'' 
and with the Rule 218, section 4.2.4 requirement that each permit 
require compliance with any standard or requirement set forth in the 
applicable implementation plan.
    (4) Revise section 2.18.4 of the definition of ``Minor Permit 
Modification'' to require that a minor permit modification may not 
establish or change a permit condition used to avoid a federally 
enforceable requirement to which the source would otherwise be subject. 
(Sec. 70.7(e)(2)(i)(A)(4))
    (5) Revise section 3.1.6.12 to require that the compliance 
certification within the permit application include a statement 
indicating the source's compliance status with any applicable enhanced 
monitoring and compliance certification requirements of the Act. 
(Sec. 70.5(c)(9)(iv))
    (6) Revise section 3.1.6.13 as follows to be consistent with 
Sec. 70.5(c)(8)(iii)(C):

    * * * a schedule of compliance approved by the District hearing 
board that identifies remedial measures, including an enforceable 
sequence of actions, with specific increments of progress, a final 
compliance date, testing and monitoring methods, recordkeeping 
requirements, and a schedule for submission of certified progress 
reports to the USEPA and the APCO at least every 6 months. This 
schedule of compliance shall resemble and be at least as stringent 
as that contained in any judicial consent decree or administrative 
order to which the source is subject; and * * *

    (7) Provide a demonstration that activities that are exempt from 
permitting under Rule 218 (pursuant to Rule 201, the District's permit 
exemption list) are truly insignificant and are not likely to be 
subject to an applicable requirement. Alternatively, Rule 218 may 
restrict the exemptions to activities that are not likely to be subject 
to an applicable requirement and emit less than District-established 
emission levels. The District should establish separate emission levels 
for HAP and for other regulated pollutants and demonstrate that these 
emission levels are insignificant compared to the level of emissions 
from and type of units that are required to be permitted or subject to 
applicable requirements. Revise Rule 218 to require that insignificant 
activities that are exempted because of size or production rate be 
listed in the permit application. Revise Rule 218 to require that an 
application may not omit information needed to determine the 
applicability of, or to impose, any applicable requirement, or to 
evaluate the fee amount required. (Sec. 70.5(c), Sec. 70.4(b)(2))
    (8) Revise section 3.5.3 to provide that the APCO shall also give 
public notice ``by other means if necessary to assure adequate notice 
to the affected public.'' (Sec. 70.7(h)(1))
    (9) Revise Rule 218 to include the contents of the public notice as 
specified by Sec. 70.7(h)(2).
    (10) Revise Rule 218 to provide that the District shall keep a 
record of the commenters and of the issues raised during the public 
participation process so that the Administrator may fulfill her 
obligation to determine whether a citizen petition may be granted. 
(Sec. 70.7(h)(5))
    (11) The EPA must be provided with 45 days to review the version of 
the permit that incorporates any public comments and that the District 
proposes to issue. Rule 218 indicates that the District intends to 
provide for concurrent public and EPA review of the draft permit. 
Therefore, the District must revise the rule to provide that EPA will 
have an additional 45 days to review the proposed permit if it is 
revised as a result of comments received from the public. 
(Sec. 70.8(a)(1))
    (12) Revise Rule 218 to define and provide for giving notice to 
affected states per Secs. 70.2 and 70.8(b). Although emissions from 
Monterey may not currently be affecting any neighboring states, Native 
American tribes may in the future apply for treatment as states for air 
program purposes and if granted such status would be entitled to 
affected state review under title V. (See EPA's proposed Tribal Air 
Rule at 59 FR 43956, August 25, 1995.)
    (13) Revise section 3.7.1 to require that the permit shall be 
reopened under the circumstances listed in sections 3.7.1.1 to 3.7.1.3. 
(Sec. 70.7(f)(1))
    (14) Revise section 3.8.2 to provide, consistent with section 
70.7(e)(2)(iv), that the District shall take action on a minor permit 
modification application within 90 days of receipt of the application 
or 15 days after the end of the 45-day EPA review period, whichever is 
later. Currently, the District rule provides that the permit be issued 
within 90 days after the application is deemed complete (section 3.3.2 
provides 30 days from receipt for a completeness determination) or 60 
days after written notice and concurrence from EPA, whichever is later. 
The EPA will not necessarily provide written notice and concurrence on 
minor permit modifications and the District rule does not address what 
action is taken should EPA not provide written notice. 
(Sec. 70.7(e)(2)(iv))
    (15) Revise section 3.8.2 to provide that the action taken on a 
minor permit modification application in the timeframes discussed above 
in (14) shall be one of the following:
    (a) Issue the permit modification as proposed;
    (b) Deny the permit modification application;
    (c) Determine that the requested modification does not meet the 
minor permit modification criteria and should be reviewed under the 
significant modification procedures; or
    (d) Revise the draft permit modification and transmit to the 
Administrator the new proposed permit modification.
    The current District rule states that the minor permit modification 
shall be completed within the timeframes discussed above in (14), but 
does not specify that the District must take one of the actions listed 
above. (Sec. 70.7(e)(2)(iv))
2. California Enabling Legislation--Legislative Source Category Limited 
Interim Approval Issue
    Because California State law currently exempts agricultural 
production sources from permit requirements, the California Air 
Resources Board has requested source category-limited interim approval 
for all California districts. The EPA is proposing to grant source 
category-limited interim approval to the operating permits program 
submitted by the California Air Resources Board on behalf of Monterey 
on December 6, 1993. In order for this program to receive full approval 
(and to avoid a disapproval upon the expiration of this interim 
approval), the California [[Page 26018]] Legislature must revise the 
Health and Safety Code to eliminate the exemption of agricultural 
production sources from the requirement to obtain a permit.
    The above described program and legislative deficiencies must be 
corrected before Monterey can receive full program approval. For 
additional information, please refer to the TSD, which contains a 
detailed analysis of Monterey's operating permits program and 
California's enabling legislation.
3. District Preconstruction Permit Program Implementing Section 112(g)
    The EPA has published an interpretive notice in the Federal 
Register regarding section 112(g) of the Act (60 FR 8333; February 14, 
1995). The interpretive notice explains that EPA is considering whether 
the effective date of section 112(g) should be delayed beyond the date 
of promulgation of the federal rule so as to allow states time to adopt 
rules implementing the federal rule, and that EPA will provide for any 
such additional delay in the final section 112(g) rulemaking. Unless 
and until EPA provides for such an additional postponement of section 
112(g), Monterey must be able to implement section 112(g) during the 
period between promulgation of the federal section 112(g) rule and 
adoption of implementing District regulations.
    For this reason, EPA is proposing to approve the use of Monterey's 
preconstruction review program as a mechanism to implement section 
112(g) during the transition period between promulgation of the section 
112(g) rule and adoption by Monterey of rules specifically designed to 
implement section 112(g).
    However, since the sole purpose of this approval is to confirm that 
the District has a mechanism to implement section 112(g) during the 
transition period, the approval itself will be without effect if EPA 
decides in the final section 112(g) rule that there will be no 
transition period. The EPA is limiting the duration of this proposed 
approval to 12 months following promulgation by EPA of the section 
112(g) rule.
4. Program for Delegation of Section 112 Standards as Promulgated
    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 Monterey's program for receiving 
delegation of section 112 standards that are unchanged from federal 
standards as promulgated. California Health and Safety Code section 
39658 provides for automatic adoption by CARB of section 112 standards 
upon promulgation by EPA. Section 39666 of the Health and Safety Code 
requires that districts then implement and enforce these standards. 
Thus, when section 112 standards are automatically adopted pursuant to 
section 39658, Monterey will have the authority necessary to accept 
delegation of these standards without further regulatory action by the 
District. The details of this mechanism and the means for finalizing 
delegation of standards will be set forth in a Memorandum of Agreement 
between Monterey and EPA, expected to be completed prior to approval of 
Monterey's section 112(l) program for delegation of unchanged federal 
standards. This program applies to both existing and future standards 
but is limited 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 District'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 June 15, 1995.

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.

D. Unfunded Mandates Act

    Under Section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a federal mandate that may result in estimated 
costs to state, local, or tribal governments in the aggregate; or to 
the private sector, of $100 million or more. Under Section 205, EPA 
must select the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule and is consistent with 
statutory requirements. Section 203 requires EPA to establish a plan 
for informing and advising any small governments that may be 
significantly or uniquely impacted by the rule.
    EPA has determined that the proposed approval action promulgated 
today does not include a federal mandate that may result in estimated 
costs of $100 million or more to either state, local, or tribal 
governments in the aggregate, or to the private sector. This federal 
action approves pre-existing requirements under state or local law, and 
imposes no new federal requirements. Accordingly, no additional costs 
to state, local, or tribal governments, or to the private sector, 
result from this action.

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: May 2, 1995.
John Wise,
Acting Regional Administrator.
[FR Doc. 95-11794 Filed 5-15-95; 8:45 am]
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