[Federal Register Volume 60, Number 131 (Monday, July 10, 1995)]
[Proposed Rules]
[Pages 35538-35544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16827]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70

[AD-FRL-5256-6]


Clean Air Act Proposed Interim Approval of Operating Permits 
Program; Santa Barbara County 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 Santa Barbara County Air Pollution Control 
District (Santa Barbara 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 
August 9, 1995.

ADDRESSES: Comments should be addressed to Martha Larson, 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: Martha Larson (telephone: 415/744-
1238), 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 

[[Page 35539]]
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 Santa Barbara'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.
1. Title V Program Support Materials
    Santa Barbara's original title V program was submitted by the 
California Air Resources Board (CARB) on November 15, 1993. Additional 
material was submitted on March 2, 1994, August 8, 1994, December 8, 
1994 and June 15, 1995. The submittal was found to be complete on 
January 13, 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 Santa 
Barbara's submittal. The Santa Barbara 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 Santa 
Barbara and EPA.
2. Title V Operating Permit Regulations and Program Implementation
    Santa Barbara's regulations adopted or revised to implement title V 
include Regulation XIII, Part 70 Operating Permit Program, adopted 
November 9, 1993; Rule 202, Exemptions to Rule 201: Sections 202.A.1., 
202.A.2., 202.A.3., 202.C., 202.D., 202.E., and 202.F., adopted March 
10, 1992; Rule 205, Standards for Granting Applications: Sections 
205.C.1.a.23., definition of ``Net Emissions Increase,'' 
205.C.5.b.1.a.2.c., significant increases for new source nonattainment 
review, and 205.C.5.c.6., public notification and comment period, 
adopted July 30, 1991; and Rule 210, Fees, adopted May 7, 1991. 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; Sec. 70.7 for public 
participation and minor permit modifications; Sec. 70.5 for complete 
application forms; and Sec. 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. Variances--Santa Barbara 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 V, Rule 506 allow the District to grant relief from 
enforcement action for permit violations. In the opinion submitted with 
California operating permit programs, California's Attorney General 
states that ``(t)he variance process is not part of the Title V 
permitting process and does not affect federal enforcement for 
violations of the requirements set forth in a Title V permit.'' 
(Emphasis in original.)
    The EPA regards these State and district variance 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 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.''
    b. Permit Content--Santa Barbara's permit content rule (Rule 1303) 
does not include certain important Sec. 70.6 permit content 
requirements. Santa Barbara's rule does not require the level of detail 
regarding recordkeeping associated with monitoring found in 
Sec. 70.6(a)(3)(ii) (A) and (B). Paragraph D.1.f. of Rule 1303 more 
generally addresses the requirements for recordkeeping associated with 
monitoring. Paragraph 1303.D.1.f. provides that operating permits 
issued pursuant to this rule will contain conditions establishing 
applicable recordkeeping requirements. Although 1303.D.1.f. does not 
explicitly state the recordkeeping requirements associated with 
monitoring, the paragraph's general language is consistent with the 
requirements of Sec. 70.6(a)(3)(ii) (A) and (B).
    In addition to lacking specific recordkeeping requirements of 
Sec. 70.6, paragraph 1303.D.1.b. of Santa Barbara's rule does not 
require the permit to contain identification of any difference in form 
from the applicable requirement upon which a term or condition is 
based, as is required under Sec. 70.6(a)(1)(ii). Additionally, Santa 
Barbara's definition of ``prompt'' reporting in the case of deviations, 
found in 1303.D.1.g, applies only to deviations due to emergency upset 
conditions, and does not define ``prompt'' for all deviations, as is 
required under Sec. 70.6(a)(3)(iii)(B).
    Santa Barbara's part 70 program submittal included a ``Standard 
Permit Format,'' (Appendix B-1, submitted November 15, 1993). The 
conditions of the Standard Permit Format included conditions that would 
correct the deficiencies identified above. For interim approval, EPA is 
specifically approving the Standard Permit Format 

[[Page 35540]]
that was submitted as part of Santa Barbara's part 70 program [Appendix 
B-1, Sections C, E.3.c through h, and E.6, submitted November 15, 
1993.] Any modifications to these sections of the Standard Permit 
Format must be approved by EPA. Failure to include these conditions in 
part 70 permits will be cause for EPA to object to a District operating 
permit. See Sec. 70.8(c)(1). In order to receive full approval, Santa 
Barbara must modify Rule XIII to include the level of detail regarding 
recordkeeping associated with monitoring found in Sec. 70.6(a)(3)(ii) 
(A) and (B), identification of difference in form from the applicable 
requirement, consistent with the requirements of Sec. 70.6(a)(1)(ii), 
and definition of ``prompt'', consistent with Sec. 70.6(a)(3)(iii)(B).
    c. 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.
    Santa Barbara submitted District Rule 202, its current permit 
exemption rule, as its list of insignificant activities. It is clear 
that Rule 202 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 Rule 201, the District requirements for 
obtaining Authority to Construct permits and non-federally enforceable 
Permits to Operate. Santa Barbara 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 Santa Barbara. This request for 
comment is not intended to restrict the ability of States or districts, 
including Santa Barbara, 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.
    d. Definition of Title I Modification--Among the several criteria 
that Santa Barbara includes in its definition of ``significant part 70 
permit modification'' is the provision that it not included a ``minor 
permit modification.'' Santa Barbara's exclusion of minor permit 
modifications as well as its definition of ``title I (or major) 
modification'' to include only modifications that are major under 
federal NSR and PSD resulting in a `significant' net emissions 
increase, or a new or modified HAPs source resulting in a `de minimis' 
increase of HAPs, clearly indicates that Santa Barbara does not 
interpret ``title I modification'' to include ``minor NSR changes.'' 
Additionally, Santa Barbara's definition of ``title I modification'' 
does not include modifications under part 60. Santa Barbara's 
definition of ``significant part 70 permit modification'' includes only 
``Any equivalent or identical replacement of an emissions unit that is 
subject to standards promulgated under CAA, sections 111 or 112.'' 
Therefore, Santa Barbara's rule would not require all modifications 
under part 60 to be processed as significant permit revisions. 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.
    Santa Barbara's exclusion of certain types of modifications under 
part 60 from the definition of ``title I (or major) modification'' and 
``significant part 70 permit revision'' is an interim approval issue. 
EPA's initial part 70 proposal (56 FR 21712) identified part 60 
modifications as title I modifications. No comment was received on the 
inclusion of part 60 modifications in the definition of ``title I 
modification,'' and EPA is not considering modifying the definition to 
remove modifications under part 60. With respect to minor NSR, 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, Santa 
Barbara's exclusion of minor new source review from the definition of 
``significant part 70 permit modification'' and interpretation of 
``title I (or major) modification'' would be 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, Santa Barbara's definition and 

[[Page 35541]]
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, Santa Barbara would be required to revise 
its definition and interpretation to include minor NSR in addition to 
revising the definition and interpretation to include all part 60 
modifications in order to conform to the requirements of part 70.
    Accordingly, today's proposed approval does not identify Santa 
Barbara's exclusion of minor new source review from the definition of 
``significant part 70 permit modification'' and interpretation of 
``title I (or major) modification'' as necessary grounds for either 
interim approval or disapproval. EPA does not believe that it is 
appropriate to determine whether this is a program deficiency until EPA 
completes its rulemaking on this issue. Santa Barbara submitted a June 
15, 1995 letter from Peter Cantle, Engineering Division Manager, Santa 
Barbara County Air Pollution Control District, committing to revise the 
definitions of ``title I (or major) modification'' and ``significant 
part 70 permit revision'' to include all modifications under 40 CFR 
part 60. EPA has therefore identified Santa Barbara's definitions of 
``signification part 70 permit modification'' and ``title I (or major) 
modification'' as an interim approval issue on the basis that the 
definitions do not adequately include modifications under part 60.
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 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)).
    Santa Barbara has opted to make a presumptive minimum fee 
demonstration. The fees collected under Santa Barbara's existing fee 
schedule in Rule 210 results in title V facilities paying an average of 
$112.20 per permitted ton in permitting and emissions fees. Santa 
Barbara calculated its fee level at $112.20 per ton by adding up the 
annual permit equipment and emissions fees paid by sources identified 
as title V facilities ($2,373,000), and dividing that number by the 
permitted emissions (tons per year of regulated air pollutants) from 
those facilities.
    In addition, Santa Barbara's title V fee rule (Rule 1304.D.11) 
requires that all costs incurred by the District for issuance of Part 
70 permits be ``reimbursable costs.'' This will result in additional 
fees of $119,000 per year, an additional $20.65 per ton of actual 
emissions, as calculated by the District. Based on a conservative 
billing rate of $80 per hour, the District expects revenues of $119,000 
annually. These fees combined result in collection of an amount that is 
well above the presumptive minimum. The District does not specifically 
require this emissions-based fee to be adjusted annually based upon the 
CPI. However, the District meets this requirement as a practical 
matter, because Santa Barbara's fees are significantly above the 
presumptive minimum. Santa Barbara's fee schedule was developed based 
on an estimation of workload associated with administration of the 
title V program. For more information, see Section III.C of Santa 
Barbara's Title V Operating Permit Program Description, and Appendix B-
10 of the program submittal, available in the docket.
4. Provisions Implementing the Requirements of Other Titles of the Act
    a. Authority and Commitments for Section 112 Implementation--Santa 
Barbara 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. EPA has determined that this legal 
authority is sufficient to allow Santa Barbara to issue permits that 
assure compliance with all Section 112 requirements.
    EPA is interpreting the above legal authority to mean that Santa 
Barbara 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, Director of the Office of Air 
Quality Planning and Standards, U.S. EPA.
    b. Authority and Commitments for Title IV Implementation--Santa 
Barbara certified in a letter from Peter Cantle, Engineering Division 
Manager, Santa Barbara County Air Pollution Control District, dated 
March 2, 1994, that there are no acid rain sources in the District. 
Santa Barbara committed in the March 2, 1994 letter to expeditiously 
adopt the appropriate legal authority necessary to issue timely Title 
IV permits to new or existing sources that become subject to or opt 
into Title IV.
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 Santa Barbara County 
Air Pollution Control District on November 15, 1993, and supplemented 
on March 2, 1994, August 8, 1994, December 8, 1994, and June 15, 1995. 
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, Santa 
Barbara 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 Santa Barbara 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 

[[Page 35542]]
EPA found complete, a second sanction would be required.
    If, following final interim approval, EPA were to disapprove Santa 
Barbara'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, Santa Barbara 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 title V operating permits 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. Santa Barbara's Title V Operating Permits Program
    If EPA finalizes this interim approval, Santa Barbara must make the 
following changes, or changes that have the same effect, to receive 
full approval (all required revisions are to District Rule XIII unless 
otherwise noted):
    a. Variances--Revise Rule 1305.G(1) to read ``The terms and 
conditions of any variance or abatement order that would prescribe a 
compliance schedule shall be incorporated into the permit as a 
compliance schedule, to the extent required by Part 70 rules.''
    b. Permit Content--Revise Rule 1303.D.1.f. permit content 
requirements to provide adequate specificity with regard to the 
applicable recordkeeping requirements. See Sec. 70.6(a)(3)(ii)(A) and 
(B).
    c. Insignificant Activities--Provide a demonstration that 
activities that are exempt from permitting under Rule XIII, (pursuant 
to rule 202, the District's permit exemption list) are truly 
insignificant and are not likely to be subject to an applicable 
requirement. Alternatively, Rule XIII 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. See Sec. 70.4(b)(2).
    Additionally, Revise Rule XIII to require that insignificant 
activities that are exempted because of size or production rate be 
listed in the permit application. See Sec. 70.5(c). See 1302.D.1.f., 
Definition of insignificant activities.
    Additionally, Revise Rule 1301 definition of ``Insignificant 
Activities'' to delete the last sentence, which contradicts the 
requirement that applications may not omit information needed to 
determine the applicability of, or to impose, any applicable 
requirement, or to evaluate the fee amount required. See Sec. 70.5(c).
    d. Definition of Administrative Permit Amendment--Revise 1301, 
definition of ``Administrative Permit Amendment'' part 6. Santa Barbara 
must define by rule what ``other changes'' will be determined to be 
administrative permit amendments. In order for ``other changes'' to 
qualify as an administrative permit amendment, the specific changes 
must be approved by the Administrator as part of the part 70 program. 
See Sec. 70.7(d)(1)(iv).
    e. Operational Flexibility Notification--Rule 1304.E.2 and E.3 must 
be revised to incorporate a requirement that sources notify EPA of 
changes made under the operational flexibility provisions. See 
Sec. 70.4(b)(12).
    f. Public Notification Requirement--Revise Rule 1304.D.6 to include 
notice ``by other means if necessary to assure adequate notice to the 
affected public.'' See Sec. 70.7(h)(1).
    g. Significant Changes to Monitoring Requirements--Revise Rule 
1301, definition of ``Minor Permit Modification'' part (4) to read 
``The modification does not involve any relaxation of any existing 
reporting or recordkeeping requirements in the permit, or any 
significant changes to existing monitoring requirements in the 
permit.'' See Sec. 70.7(e)(2)(i)(2) and Sec. 70.7(e)(4)(i).
    h. Form of Applicable Requirement--The rule does not require the 
identification of any difference in form from the applicable 
requirement upon which the term or condition is based. Regulation XIII 
must be revised to include this requirement. This requirement is 
included in the Standard Permit Format. EPA is specifically approving 
the Standard Permit Format that was submitted as part of Santa 
Barbara's part 70 program (Appendix B-1, Section C, November 15, 1993 
submittal). Any modifications to the standard permit format must be 
approved by EPA. Failure to include these conditions in part 70 permits 
will be cause for EPA to object to a District operating permit. See 
Sec. 70.6(a)(1)(i).
    i. Applicable Requirement Trading--Add emissions trading provisions 
consistent with Sec. 70.6(a)(10), which require that trading must be 
allowed where an applicable requirement provides for trading increases 
and decreases without a case-by-case approval.
    j. Prompt Reporting of Deviations--Santa Barbara has not defined 
``prompt'' in their program with respect to reporting of all 
deviations. Part 70 of the operating permits regulations requires 
prompt reporting of deviations from the permit requirements. Section 
70.6(a)(3)(iii)(B) requires the permitting authority to define prompt 
in relation to the degree and type of deviation likely to occur and the 
applicable requirements. Santa Barbara's requirement for reporting of 
deviations is limited to deviations due to emergency upset conditions. 
Under part 70, deviations include, but are not limited to, upset 
conditions. Santa Barbara must revise rule 1303.D.1.g to be consistent 
with the more inclusive part 70 requirement. To make Rule XIII more 
inclusive, Rule 1303.D.1.g could be revised to read ``* * * Deviations 
shall be reported within 72 hours of the occurrence * * *.''
    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. Therefore, 
as an alternative to the revision to Rule 1303.D.1.g above, Rule XIII 
could be revised to require prompt reporting of all deviations, and to 
require that prompt be defined in each permit. Rule 1303.D.1.g could be 
revised to read ``Conditions establishing all applicable reporting 
requirements; conditions establishing prompt reporting of any 
deviations from permit-stipulated requirement, including definition(s) 
of ``prompt'' for all deviations. All applicable reports shall be 
submitted every 6 months and shall be certified by a responsible 
official. Deviations due to emergency upset conditions shall be 
reported within 72 

[[Page 35543]]
hours of the occurrence. All other deviations shall be reported 
promptly, as defined in the permittee's permit. The probable cause of 
deviations and remedial measure taken to correct this shall also be 
reported at this time.'' 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.
    As a third alternative, Santa Barbara could revise Rule XIII to 
include definitions of ``prompt'' for other types of deviations in 
addition to those caused by emergency upset conditions. Part 70 allows 
the permitting authority to define ``prompt'' in relation to the degree 
and type of deviation. Therefore, Santa Barbara may also revise Rule 
XIII to define reporting times for other types of deviations, if the 
types of deviations and their related reporting times are specifically 
defined in Santa Barbara's rule.
    Meeting the requirements of Sec. 70.6(a)(3)(iii)(B) through one of 
the three methods outlined above is a requirement for full approval of 
Santa Barbara's part 70 program.
    k. Exemptions--Delete Rule 1301.B.4. Section 70.3(b) requires that 
major sources, affected sources (acid rain sources), and solid waste 
incinerators regulated pursuant to section 129(e) of the CAA may not be 
exempted from the program. Although section 129(g)(1)(3) of the CAA 
exempts solid waste incineration units subject to section 3005 of the 
Solid Waste Disposal Act, part 70 does not exempt these units. Any 
solid waste incineration unit that meets the definition of ``major 
source'' under part 70 would be subject to the requirement to obtain a 
part 70 permit regardless of the unit's applicability under section 
129.
    l. Recordkeeping for off-permit changes--Santa Barbara's rule does 
not require that the permittee keep records describing off-permit 
changes and the emissions resulting from these changes. Santa Barbara's 
rule must be revised to be consistent with the requirements of 
Sec. 70.4(b)(14)(iv).
    m. Definition of Title I Modifications and Significant Part 70 
Permit Modifications--Rule 1301 defines ``modification'' to include all 
modifications under 40 CFR part 60. However, the definitions of ``title 
I (or major) modification'' and ``significant part 70 permit 
modification'' do not clearly define all modifications under part 60 as 
title I modifications and do not clearly ensure they will be treated as 
significant permit modifications. See discussion in Section II.A.2.d of 
this notice. Santa Barbara submitted a June 15, 1995 letter from Peter 
Cantle, Engineering Division Manager, Santa Barbara County Air 
Pollution Control District, committing to provide interpretive guidance 
demonstrating that all modifications under 40 CFR part 60 will be 
treated as significant permit modifications. In order to receive final 
interim approval, Santa Barbara must finalize and submit to EPA 
interpretive guidance demonstrating that all modifications under 40 CFR 
part 60 will be treated as significant permit modifications. In order 
to receive full approval, Santa Barbara must clarify the definitions of 
``title I (or major) modification'' and ``significant part 70 permit 
modification'' to include all modifications under 40 CFR part 60.
    n. Reporting of an Emergency--In order to obtain an affirmative 
defense in an emergency, Santa Barbara requires in Rule 1303.F.d., 
among other things, that the permittee submit a description of the 
emergency within 4 days of the emergency. Santa Barbara must revise 
1303.F.d to require submittal of notice of emergency to the permitting 
authority within 2 working days of the time when emission limitations 
were exceeded due to the emergency, to be consistent with 
Sec. 70.6(g)(3)(iv) and in order to maintain the affirmative defense of 
emergency. Prior to amending the rule, Santa Barbara should insure that 
sources are aware that this 2 day notice is necessary in order to 
maintain the affirmative defense. This could be accomplished by 
including a permit condition in all permits issued that requires notice 
of emergency to be submitted within 2 days.
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 Santa 
Barbara on November 15, 1993. In order for this program to receive full 
approval (and to avoid a disapproval upon the expiration of this 
interim approval), the California 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 Santa Barbara can receive full program approval. For 
additional information, please refer to the TSD, which contains a 
detailed analysis of Santa Barbara'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 revised interpretation postpones the effective date of 
section 112(g) until after EPA has promulgated a rule addressing that 
provision. 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), Santa Barbara 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 Santa 
Barbara'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 Santa Barbara 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. 

[[Page 35544]]

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 Santa Barbara'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, Santa Barbara 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 Santa Barbara and EPA, expected to be completed prior 
to approval of Santa Barbara'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 August 9, 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, Hazardous substances, Intergovernmental 
relations, Operating permits, Reporting and recordkeeping requirements.

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

    Dated: June 30, 1995.
Felicia Marcus,
Regional Administrator.
[FR Doc. 95-16827 Filed 7-7-95; 8:45 am]
BILLING CODE 6560-50-P