[Federal Register Volume 60, Number 127 (Monday, July 3, 1995)]
[Proposed Rules]
[Pages 34493-34497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16277]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70

[KS-001; AD-FRL-5252-2]


Clean Air Act Proposed Full Approval of Operating Permits 
Program; State of Kansas, and Delegation of 112(l) Authority

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed full approval.

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SUMMARY: The EPA proposes full approval of the Operating Permits 
Program submitted by the state of Kansas, for the purpose of complying 
with Federal requirements for states which develop, and submit to EPA, 
programs for issuing operating permits to all major stationary sources 
and to certain other sources. This notice explains EPA's rationale for 
the proposed action, and identifies several revisions to the program 
which must be made before EPA can take final action to approve it.


[[Page 34494]]

DATES: Comments on this proposed action must be received in writing by 
August 2, 1995.

ADDRESSES: Comments should be addressed to Wayne A. Kaiser at the 
address below. Copies of the Kansas submittal and other supporting 
information used in developing the proposed rule are available for 
inspection at the U.S. Environmental Protection Agency, Region VII, Air 
Branch, 726 Minnesota Avenue, Kansas City, Kansas 66101.

FOR FURTHER INFORMATION CONTACT: Wayne A. Kaiser at (913) 551-7603.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

    As required under Title V of the Clean Air Act (the Act'') as 
amended (1990), EPA has promulgated rules which define the minimum 
elements of an approvable state operating permits program, and the 
corresponding standards and procedures by which the EPA will approve, 
oversee, and withdraw approval of state operating permits programs (see 
57 FR 32250 (July 21, 1992)). These rules are codified at 40 Code of 
Federal Regulations (CFR) part 70. Title V requires states to develop, 
and submit to EPA, programs for issuing these operating permits to all 
major stationary sources and to certain other sources.
    The Act requires that states develop and submit these programs to 
EPA by November 15, 1993, and that EPA act to approve or disapprove 
each program within one 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 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 period, it must establish and implement a Federal program.

II. Proposed Action and Implications

A. Analysis of Submission by State Authority

1. Support Materials
    The Governor of Kansas submitted an administratively and 
technically complete Title V Operating permit program on December 12, 
1994. EPA deemed the program submittal complete in a letter to the 
governor on January 26, 1995. Comments noting deficiencies in the 
Kansas program were sent to the state in a letter dated February 22, 
1995. The state responded in letters dated April 7 and April 17, 1995.
    The program submittal includes a legal opinion from the Attorney 
General of Kansas 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, permit application forms, a data management 
system, and a permit fee demonstration.
2. Program Description
    The Governor's letter states that the entire geography of Kansas 
will be covered by this program and that the state will not administer 
the program on any Indian lands. EPA will administer the Title V 
program on Indian lands in Kansas. The letter also states that the 
Kansas Department of Health and Environment (KDHE) will be the official 
permitting authority responsible for implementation of the program. 
Finally, the letter requests approval and delegation of authority to 
implement section 112(l) of the Act.
    In addition to the state's class I Title V permit rules, the state 
is establishing a State Implementation Plan (SIP) based permit system 
for creating Federally enforceable limitations, called the class II 
permit. This permit mechanism will allow sources to avoid having to 
obtain a part 70 operating permit. Finally, the state is requiring all 
air emission sources not qualifying for a class I or class II permit to 
obtain a class III permit.
    The state has been collecting emission fees for two years, which 
have been used for ``ramp-up'' activities, including the hiring of 
additional staff and funding of a Small Business Assistance Program. 
The state provided a resource demonstration, discussed later, to 
justify deviating from the presumptive minimum of $25 per ton, Consumer 
Price Index (CPI) adjusted. The state is also authorized to collect 
fees for non-Title V program activities.
3. Regulations and Program Implementation
    Except as noted below, the state submittal, including the core 
operating permit regulations (Kansas Administrative Regulations 
(K.A.R.) 28-19-500 through 518), meets the requirements of 40 CFR 70.2 
and 70.3 with respect to applicability; 40 CFR 70.4, 70.5, and 70.6 
with respect to permit content including operational flexibility; 40 
CFR 70.5 with respect to complete application forms and criteria which 
define insignificant activities; 40 CFR 70.7 with respect to public 
participation and minor permit modifications; and 40 CFR 70.11 with 
respect to requirements for enforcement authority.
    Areas in which the Kansas program is deficient and corrective 
action is required prior to full approval are discussed below. Although 
failure to correct the program would require EPA to disapprove it, 
Kansas has indicated that it can make the required changes and submit 
them to EPA. Readers may refer to the Technical Support Document (TSD) 
accompanying this rulemaking for a detailed explanation of each comment 
and the corrective actions required of the state.
    a. Rule revisions. K.A.R. 28-19-7, General provisions; definitions. 
The state definition of applicable requirement as presently written 
requires that an SIP or Federal Implementation Plan requirement must be 
part of the Kansas air quality regulations. The state has SIP 
requirements, such as source-specific permits, and local agency air 
regulations, which are applicable requirements but are not in the 
Kansas air quality regulations. The state has committed to revise 
K.A.R. 28-19-7(e)(1) to remove this restriction.
    Secondly, the applicable requirement definition does not include 
construction permits issued pursuant to rules K.A.R. 28-19-300, and its 
predecessor, K.A.R. 28-19-14. The state has committed to add a 
paragraph (e)(2)(D) to the definition of applicable requirement to 
correct this omission. These revisions are necessary to meet EPA's 
definition of applicable requirement in 70.2.
    K.A.R. 28-19-511. Class I operating permits; application contents. 
Paragraph (b) details information which must be included in a permit 
application. This paragraph must be revised in three areas. First, 
511(b)(3) must be revised to clarify that fugitive emissions of 
regulated pollutants must be included in the permit application. 
Second, 511(b)(3)(A) must be revised to clarify that the state 
maintains a list of insignificant activities which does not need to be 
included on the application form. The state has decided to remove this 
list from the application forms but maintain it separately. The state 
must also submit its list of insignificant activities to EPA for 
approval. And third, 511(b)(16) must be revised to clarify that 
compliance plans apply to all sources. As written, the rule could be 
read to apply only to acid rain sources. These revisions are necessary 
to meet the requirements for applications for 

[[Page 34495]]
Title V permits in 70.3(d), 70.5(c), 70.5(c)(2), and 70.4(c)(8).
    K.A.R. 28-19-512. Class I operating permits; permit content. Rule 
512(a)(7) requires that ``where a permit contains an emission 
limitation which is an alternative to an emission limitations contained 
in'' the SIP, the alternative meet certain requirements. Unlike 
70.6(a)(1)(iii), this provision is not qualified by the statement that 
the SIP must expressly allow for alternative limits. The state has 
committed to revise its rule to meet this requirement. Rule 512(a)(18), 
pertaining to the terms and conditions for trading of emissions, does 
not require the source to provide the state and EPA with a seven-day 
notice as required by 70.4(b)(12)(iii). The state has committed to 
revise its rule to meet this requirement.
    K.A.R. 28-19-518. Class I operating permits; complete applications. 
Rule 518(a) does not contain a requirement, consistent with 70.7(b)(1), 
that an application be both ``timely'' filed and complete. The state 
has committed to revise this rule to include the ``timely'' component. 
Secondly, rule 518(b), pertaining to the determination of a complete 
application, does not specify what must be included in a permit 
application in order to be deemed complete. The state has committed to 
add a statement to the effect that a complete application is one which 
substantially complies with the requirements of K.A.R. 28-19-511, Class 
I operating permits; application contents.
3. Other issues
    K.A.R. 28-19-510. Class I operating permits; application timetable. 
This rule requires a complete and timely application to be submitted 
not later than the date specified by the KDHE, as published in the 
Kansas Register, on which the source becomes subject to the permitting 
program, and for sources operational at the time of the effective date 
of the operating permit program, no later than the date specified by 
the KDHE as published in the Kansas Register.
    As a practical matter, Kansas will be notified by EPA as soon as 
the anticipated date of publication of program approval in the Federal 
Register becomes known. Kansas has committed to publishing its 
application schedule in the Kansas Register within the 30-day period 
preceding the effective date of the program. Thus, the state will have 
the full year in which to receive applications. Kansas has provided a 
sample Kansas Register notice which contains the draft application 
schedule. Kansas plans to request applications in a staggered, three-
tiered, SIC code-based approach, which ensures that all applications 
are received within one year of program approval pursuant to 70.5(a). 
EPA concurs with this approach.
    K.A.R. 28-19-513. Class I operating permits; permit amendment, 
modification, or reopening and changes not requiring a permit action. 
70.7(d)(1)(v) states that part 70 permit revisions which incorporate 
the provisions of preconstruction permits may be accomplished through 
the administrative amendment process, but only if the preconstruction 
permit is issued under an EPA-approved program covering the relevant 
procedural requirements substantially similar to those in part 70. 
K.A.R. 28-19-513(a)(1)(E) includes a similar provision. However, the 
Kansas preconstruction program does not contain procedures 
substantially similar to the relevant part 70 procedures and has not 
been approved by EPA. The Kansas Attorney General, in his April 7, 
1995, supplemental opinion, has stated that the K.A.R. 513(a)(1)(E) 
provision cannot be used to administratively amend permits, until EPA 
approves revisions to the Kansas New Source Review program 
incorporating the relevant part 70 procedural requirements. Therefore, 
EPA believes this provision is approvable. Implementation Agreement 
(I.A.)
    The state has elected to include in an I.A., rather than 
regulation, time lines for state action on a number of provisions 
relating to permit processing. EPA believes that since most of the 
deadlines to be established in the I.A. are for the benefit of EPA, the 
deadlines may be in the I.A. rather than the regulation.
    The state has committed to a schedule for adopting and submitting 
the required rule revisions, for submitting its insignificant 
activities list to EPA for approval, and has committed to finalizing an 
I.A. with EPA which contains certain commitments and information which 
EPA considers necessary for approval. If the state revises the 
submission to correct the deficiencies as described in this notice and 
no other program deficiencies are identified during the comment period 
which preclude full approval, EPA's final action will be one of full 
approval. Otherwise, EPA will confer disapproval.
4. Fee Demonstration
    The state provided a detailed fee demonstration because the 
emissions fee, $20 per ton, is below the presumptive minimum of $25 
plus CPI. The KDHE provided a list of sources and the estimated actual 
and potential emissions from each source with a projected total 
revenue. This estimate adequately covers the program's anticipated 
operating costs if the $20 fee is maintained. If this fee is reduced, 
an additional demonstration will be required. A four-year estimate of 
resources and costs was also submitted. The state has provided for 
separate cost accounting procedures to ensure that fees collected are 
used solely for the part 70 program. The state commits to conducting 
periodic auditing reports and providing copies to EPA.
5. Provisions Implementing the Requirements of Other Titles of the Act
    a. Authority and/or commitments for section 112 implementation. 
Kansas has demonstrated in its program submittal adequate legal 
authority to implement and enforce all section 112 requirements through 
the Title V permit.
    This legal authority is contained in Kansas' enabling legislation 
and in regulatory provisions defining ``applicable requirements,'' and 
states that the permit must incorporate all applicable requirements. 
EPA has determined that this legal authority is sufficient to allow 
Kansas to issue permits that ensure compliance with all section 112 
requirements. EPA is interpreting the above legal authority to mean 
that Kansas is able to carry out all section 112 activities. For 
further rationale on this interpretation, please refer to the TSD 
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. Section 112 (g)--Case-by-Case Maximum Achievable Control 
Technology (MACT) For Modified/Constructed and Reconstructed Major 
Toxic Sources. The EPA issued an interpretive notice on February 14, 
1995 (60 FR 8333), which outlines EPA's revised interpretation of 
112(g) applicability. The notice postpones the effective date of 112(g) 
until after EPA has promulgated a rule addressing that provision. The 
notice sets forth in detail the rationale for the revised 
interpretation.
    The section 112(g) interpretive notice explains that EPA is still 
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), Kansas 

[[Page 34496]]
must have a Federally enforceable mechanism for implementing section 
112(g) during the period between promulgation of the Federal section 
112(g) rule and adoption of implementing Federal regulations.
    The EPA is aware that Kansas lacks a program designed specifically 
to implement section 112(g). However, Kansas does have a program for 
review of new and modified hazardous air pollutant sources that can 
serve as an adequate implementation vehicle during the transition 
period, because it would allow Kansas to select control measures that 
would meet MACT, as defined in section 112, and incorporate these 
measures into a Federally enforceable preconstruction permit.
    EPA is approving Kansas' preconstruction permitting program under 
the authority of Title V and part 70, solely for the purpose of 
implementing section 112(g) to the extent necessary during the 
transition period between 112(g) promulgation and adoption of a state 
rule implementing EPA's section 112(g) regulations. Although section 
112(l) generally provides authority for approval of state air programs 
to implement section 112(g), Title V and section 112(g) provide for 
this limited approval because of the direct linkage between the 
implementation of section 112(g) and Title V. The scope of this 
approval is narrowly limited to section 112(g) and does not confer or 
imply approval for purposes of any other provision under the Act (e.g., 
section 110). This approval will be without effect if EPA decides in 
the final section 112(g) rule that sources are not subject to the 
requirements of the rule until state regulations are adopted. The 
duration of this approval is limited to 18 months following 
promulgation by EPA of the 112(g) rule to provide adequate time for the 
state to adopt regulations consistent with the Federal requirements.
    c. Section 112(l)--State Air Toxics Programs. Requirements for 
approval, specified in 40 CFR 70.4(b), encompass section 112(l)(5) 
approval requirements 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. Kansas has 
demonstrated that it meets these requirements. Therefore, the EPA is 
proposing to grant approval under section 112(l)(5) and 40 CFR 63.91 to 
Kansas for its program mechanism for receiving delegation of all 
existing and future section 112(d) standards for both part 70 and non-
part 70 sources, and section 112 infrastructure programs, that are 
unchanged from Federal rules as promulgated. Kansas has informed EPA 
that it intends to accept delegation of section 112 standards through 
adoption by reference. In addition, EPA is also proposing delegation of 
all existing standards and programs under 40 CFR Parts 61 and 63 for 
part 70 and non-part 70 sources.
    Kansas also requested that the program approval under 112(l) 
include its pre-1990 amendments' National Emission Standard for 
Hazardous Air Pollutants' program, and approval of its program to 
regulate asbestos, Part 61, subpart M. Our proposed approval covers the 
entire Kansas program under 112(l).
    d. Title IV/Acid Rain. The legal requirements for approval under 
the Title V operating permits program for a Title IV program were cited 
in EPA guidance distributed on May 21, 1993, titled ``Title V-Title IV 
Interface Guidance for States.'' Kansas has met the criteria of this 
guidance and has adopted by reference acid rain rules at 40 CFR part 
72.

B. Proposed Actions

1. Full Approval
    EPA is proposing to grant full approval contingent upon: first, the 
state adopting and submitting the revisions to: (1) K.A.R. 28-19-7, 
General Provisions; definitions, (2) K.A.R. 28-19-511, Class I 
operating permits; applications contents, (3) K.A.R. 28-19-512, Class I 
operating permits; permit content, (4) K.A.R. 28-19-518, Class I 
operating permits, complete applications; second, the state submitting 
its insignificant activities list to EPA for approval; and third, 
finalization of an I.A. with EPA.
2. Program for Straight Delegation of Section 112 Standards
    As discussed above, EPA is proposing to grant approval under 
section 112(l)(5) and 40 CFR 63.91 to Kansas for its program mechanism 
for receiving delegation of all existing and future section 112(d) 
standards for both part 70 and non-part 70 sources, and infrastructure 
programs under section 112 that are unchanged from Federal rules as 
promulgated. In addition, EPA proposes to delegate existing standards 
under 40 CFR Parts 61 and 63 for both part 70 and non-part 70 sources.

III. Administrative Requirements

A. Request for Public Comments

    The EPA is requesting comments on all aspects of this proposed 
rule. Copies of the state's submittal and other information relied upon 
for the proposed approval are contained in a docket maintained at the 
EPA Regional Office. The docket is an organized and complete file of 
all the information submitted to, or otherwise considered by, EPA in 
the development of this proposed rulemaking. The principal purposes of 
the docket are:
    1. To allow interested parties a means to identify and locate 
documents for participating in the rulemaking process, and
    2. To serve as the record in case of judicial review. The EPA will 
consider any comments received by August 2, 1995.

B. Executive Order 12866

    The Office of Management and Budget has exempted this regulatory 
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.
D. Unfunded Mandates

    Under Sections 202, 203, and 205 of the Unfunded Mandates Reform 
Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22, 
1995, EPA must undertake various actions in association with proposed 
or final rules that include a Federal mandate that may result in 
estimated costs of $100 million or more to the private sector, or to 
state, local, or tribal governments in the aggregate.
    Through submission of this state operating permit program the state 
and any affected local or tribal governments have elected to adopt the 
program provided for under Title V of the Clean Air Act. These rules 
may bind state, local, and tribal governments to perform certain 
actions and also require the private sector to perform certain duties. 
To the extent that the rules being proposed for approval by this action 
will impose new requirements, sources are already subject to these 
regulations under state law. Accordingly, no additional costs to state, 
local, or tribal governments, or to the private sector, result from 
this action. EPA has also 

[[Page 34497]]
determined that this proposed action does not include a mandate that 
may result in estimated costs of $100 million or more to state, local, 
or tribal governments in the aggregate or to the private sector.

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: June 22, 1995.
Dennis Grams,
Regional Administrator.
[FR Doc. 95-16277 Filed 6-30-95; 8:45 am]
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