[Federal Register Volume 60, Number 169 (Thursday, August 31, 1995)]
[Proposed Rules]
[Pages 45530-45571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21300]



      

[[Page 45529]]

_______________________________________________________________________

Part II





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 51 et al.



Operating Permits Program and Federal Operating Permits Program; 
Proposed Rule

  Federal Register / Vol. 60, No. 169 / Thursday, August 31, 1995 / 
Proposed Rules  

[[Page 45530]]


ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 70, and 71

[FRL-5285-9]
RIN 2060-AF70


Operating Permits Program and Federal Operating Permits Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The EPA is today proposing new streamlined procedures for 
revising stationary source operating permits issued by State and local 
permitting authorities or EPA under title V of the Clean Air Act (Act). 
This proposal is a supplement to actions published in the Federal 
Register on August 29, 1994 and on April 27, 1995 as they relate to 
permit revisions. In addition, today's action proposes changes to the 
certification that responsible officials of permitted sources are 
required to submit and the emergency defense available for violations 
of permit terms. It also clarifies the application of title I and title 
V permitting requirements to non-major research and development (R&D) 
facilities that are located with sources that are major under the Act. 
Finally, it proposes to revise the procedural requirements applicable 
to minor new source review (NSR) permitting under title I of the Act to 
clarify the flexibility States possess in providing adequate process 
for minor NSR actions.
    Several concerns over complexity and burden of the previously 
proposed permit revision system were raised in response to these 
actions. As a result, the Agency today is proposing to establish a 
system for revising operating permits that is simpler, more flexible, 
and easier to implement than that proposed in the prior notices.
    Implementation of today's proposal would benefit the environment 
primarily through enhanced implementation of, and compliance with, air 
quality control requirements. The extent of benefit would be nationwide 
and could potentially include all requirements of the Act applicable to 
part 70 sources.

DATES: Comments on the proposed regulatory changes must be received by 
October 30, 1995. Comments on the revised Information Collection 
Request (ICR) for the revised part 70 must be received by October 30, 
1995.

ADDRESSES: Comments on the proposed revisions to 40 CFR part 70 must be 
mailed (in duplicate if possible) to: EPA Air Docket (LE-131), Attn: 
Docket No. A-93-50, room M-1500, Waterside Mall, 401 M Street SW, 
Washington, DC 20460. Comments regarding the 40 CFR part 71 Federal 
operating permits program must be mailed to the same address, Attn: 
Docket No. A-93-51. Please identify comments as pertaining to today's 
proposal by date and FR cite. Comments on the draft ICR for the revised 
part 70 are to be submitted as per instructions in Section VI. E., 
Paperwork Reduction Act, of this preamble.
    Docket: Supporting information used in developing the proposed 
regulatory revisions to part 70 and part 71 are contained in Docket 
Nos. A-93-50 and A-93-51 respectively, at the preceding address. This 
docket is available for public inspection and copying between 8:30 a.m. 
and 3:30 p.m. Monday through Friday. A reasonable fee may be charged 
for copying.

FOR FURTHER INFORMATION CONTACT: Regarding proposed revisions to parts 
51 and 70, Michael Trutna (919/541-5345), Ray Vogel (919/541-3153), or 
Roger Powell (919/541-5331), mail drop 12, United States Environmental 
Protection Agency, Office of Air Quality Planning and Standards, 
Information Transfer and Program Integration Division, Research 
Triangle Park, North Carolina 27711. Regarding proposed revisions to 
part 71, Candace Carraway (919/541-3189) or Kirt Cox (919/541-5399) at 
the same address.

SUPPLEMENTARY INFORMATION: Today's proposal reflects the principles 
articulated in the President's and the Vice President's March 16, 1995 
report, ``Reinventing Environmental Regulation.'' That report 
establishes as goals for environmental regulation building partnerships 
between EPA and State and local agencies, minimizing costs, providing 
flexibility in implementing programs, tailoring solutions to the 
problem, and shifting responsibilities to State and local agencies. The 
Agency believes that today's proposal meets the goals of the report.

Public Comments

    If possible, comments should be sent in both paper and computerized 
form. Two paper copies of each set of comments are requested. Comments 
generated on computer should also be sent on an IBM-compatible, 3\1/2\-
inch diskette and clearly labeled. Please identify comments as 
pertaining to today's proposal by date and FR cite.

Table of Contents

    The contents of today's preamble are in the following format:

I. Background
    A. Operating Permit Revision System
    B. Proposed Permit Revision System
    C. Other Proposed Revisions in Today's Notice
    D. Environmental Benefits
    E. August 1994 Proposed Revisions
II. Alternative Proposal for Part 70 Permit Revision System
    A. Overview
    B. When is a Permit Revision Required
    C. Automatic Incorporation for Changes Subject to State Review 
Programs
    D. Incorporation of Changes Not Subject to State Review Programs
    E. Opportunity for EPA to Object and Permit Shield
    F. Flexible Permits
    G. Title I Modifications
    H. EPA Issuance of PSD Permits
    I. Rulemaking Under Section 302(j)
    J. Revisions to Sec. 51.161
    K. Incorporation of MACT Standards
    L. Clarification for Section 112(r)
    M. Solicitation of Input
III. Part 70 Program Revisions
IV. Proposal for the Federal Operating Permits Program
    A. Overview
    B. Changes Subject to State Review Programs
    C. Changes Not Subject to State Review Programs
    D. Combination Changes
    E. Opportunity for EPA to Object and Permit Shield
    F. Other Part 71 Changes
V. Other Changes and Clarifications
    A. Rationale for Proposed Exemption for Non-major R&D Activities
    B. Emergency Defense
    C. Certification Language
    D. Provisions Related to Tribal Programs
VI. Administrative Requirements
    A. Public Hearing
    B. Docket
    C. Office of Management and Budget Review
    D. Regulatory Flexibility Act Compliance
    E. Paperwork Reduction Act
    F. Unfunded Mandates

I. Background

A. Operating Permits Regulations

    Title V requires that EPA develop regulations which set minimum 
standards for State operating permits programs. Those regulations, 
codified in part 70 of chapter I of title 40 of the Code of Federal 
Regulations, were originally promulgated on July 21, 1992 (57 FR 
32250). On August 29, 1994, EPA proposed a number of revisions to the 
part 70 regulations as a result of negotiations with litigants who 
petitioned for review of part 70 after its promulgation. The August 
1994 proposal included new provisions governing permit revision 
processes. Today's proposal supplements that part of the August 1994 
proposal and defines a simpler approach to revising permits designed to 
build upon existing State permitting programs. 

[[Page 45531]]

    Title V also requires that States submit their operating permit 
programs for EPA approval and that EPA promulgate and administer a 
Federal operating permits program for States that have not obtained EPA 
approval by November 15, 1995. The EPA's proposed regulations, to be 
codified at part 71, for the Federal operating permits program were 
published on April 27, 1995 (60 FR 20804). In large part the proposed 
regulations were modeled on the original part 70. However, the permit 
revision procedures for proposed part 71 were based on the August 1994 
proposal for part 70 permit revisions. Today EPA is proposing an 
alternative permit revision process for part 71 that is based on 
today's proposal for part 70 permit revision procedures.
B. Proposed Permit Revision System

    The August 1994 notice proposed to revise Sec. 70.7 of part 70 to 
set out a four-track system for revising operating permits. Comments 
received at the October 19, 1994 public hearing and comments submitted 
to the docket indicate that the proposed four-track system was widely 
perceived as too complicated, prescriptive, and disruptive to existing 
State programs. In response to those concerns, EPA sought further input 
from representatives of State and local permitting agencies, industry, 
and environmental groups to learn more directly of their implementation 
concerns. The EPA received thoughtful ideas from these groups about how 
the process for permit revisions might be accomplished in a more 
streamlined fashion. The docket for today's action contains some 
specific alternative permit revision approaches recommended by these 
commenters.
    Representatives of the various groups were in general agreement on 
a number of issues. First, any permit revision system would need to be 
far simpler to implement than that laid out in the August 1994 
proposal. Second, it should be as streamlined and expeditious as 
possible so as not to impede unduly a source's ability to respond to 
changes in market conditions. Third, it should provide public process 
commensurate with the environmental significance of the change. Fourth, 
for changes subject to a State preconstruction review program 
established pursuant to the Act (e.g., NSR), public, affected State, 
and EPA review of the more environmentally significant changes should 
occur during the underlying process, instead of a subsequent part 70 
permit revision process. Finally, the process should maximize State and 
local agency flexibility.
    As discussed in Section II of this preamble, today's alternative 
proposal satisfies all of these criteria by building on underlying 
State review programs. After considering comments received on today's 
proposal, EPA intends to promulgate final rules regarding permit 
revisions along with the other issues addressed in the August 1994 and 
April 1995 proposals.

C. Other Proposed Revisions in Today's Notice

    Today's notice also proposes additional rule revisions to address 
other issues raised by litigants in their petitions for review of part 
70. These issues involve the current rule's provisions regarding 
responsible official certifications, the emergency defense for 
violations of some types of permit terms, section 302(j) rulemaking 
regarding inclusion of fugitive emissions in the definition of major 
source, and the definition of title I modification. It also proposes to 
clarify the public review requirements of title I and title V 
applicable to minor NSR permits and their subsequent incorporation into 
part 70 permits. The EPA currently expects to complete rulemaking on 
these issues at the same time it takes final action on the other issues 
addressed in the August 1994 proposal. Proposed actions regarding 
responsible official certifications, the emergency defense, and the 
definitions of major source and title I modification are also included 
in today's notice with respect to the part 71 Federal operating permits 
program provisions.
    Finally, in today's notice EPA is clarifying that non-major R&D 
activities located with a source that is major under sections 112 or 
302(j) of the Act or parts C or D of title I of the Act need not be 
considered part of that major source. Depending on the extent to which 
a non-major R&D facility contributes to the activity of the major 
source, the R&D facility need not be subject to permitting under title 
I or title V.
    A number of revisions to the definitions in Sec. 70.2 are included 
in today's notice to be consistent with the proposed revisions. Other 
definitions are proposed to be added where needed for clarity.

D. Environmental Benefits

    The operating permits program provides a uniform vehicle for State 
and local agencies to administer other titles of the Act; not only the 
requirements for attainment and maintenance of the national ambient air 
quality standards (NAAQS) but of other provisions such as those to 
protect the public from harmful effects of HAPs. It is through an 
efficient permit program that many of the environmental benefits of 
these programs are realized.
    Part 70 helps achieve these benefits by giving company officials 
the opportunity to be fully knowledgeable about their compliance 
obligations and creates strong incentives for assuring that compliance 
is maintained. This will in turn result in improved air quality for the 
public, and States will not have to adopt new regulations to meet air 
quality standards to make up for noncompliance with existing rules. In 
the process of developing permit applications for part 70 programs, 
companies have discovered new uncontrolled emission points or air 
pollution requirements that applied to them but of which they were not 
previously aware. As a result, these facilities are taking steps to 
comply with those requirements. The vast majority of businesses in this 
country want to comply with environmental regulations. The part 70 
program clarifies their obligations while avoiding possibly costly 
litigation.
    Implementation of today's proposal will facilitate accomplishing 
the described environmental benefits. The proposed revisions would 
focus public and EPA review on, and ensure that resources will be 
targeted to reviewing, changes with the most environmentally 
significant impacts. In addition, the proposed streamlined permit 
revision system assures that permits are speedily revised to include 
all Act obligations for a source while avoiding unnecessary procedural 
delays and opportunity costs. This will assure certainty of compliance 
obligations for all parties.
    Implementation of today's proposal also will help achieve 
environmental benefits through its requirements for flexible permits. 
In particular, the flexible permit provisions of today's proposal would 
allow more options for sources in designing their title V permits to 
meet environmental obligations. This increased flexibility would allow 
sources to rely on emissions trading to meet pollution control 
requirements and to use pollution prevention approaches which can 
achieve additional emissions reductions.

E. August 1994 Proposed Revisions

    The August 1994 proposal is not being withdrawn, but is instead 
being supplemented by today's proposal. Today's proposal primarily 
addresses provisions in Sec. 70.7 for revising permits, which was also 
the primary focus of the August 1994 notice. There were, however, many 
proposed revisions to 

[[Page 45532]]
part 70 in the August 1994 notice that addressed other portions of part 
70. These proposed changes, which are described in the next several 
paragraphs, are still being considered for promulgation after review of 
comments. The period of comment has closed for the August 1994 notice; 
however, EPA will consider additional comments on any of the August 
1994 proposed provisions to the extent they would be affected by the 
proposed revisions in today's notice.
    In Sec. 70.2, revisions were proposed in the August 1994 notice for 
the definitions of ``Applicable requirement,'' ``Major source,'' 
``Potential to emit,'' and ``Responsible official.'' The notice 
proposed new definitions for ``Major NSR'' and ``Minor NSR'' and 
proposed to delete the definition of ``Section 502(b)(10) changes.'' 
Proposed revisions to Sec. 70.3 would exempt sources from part 70 
applicability if they were subject solely because of being major for a 
section 112(r)-only pollutant and would add to the list of sources 
subject to part 70 those sources subject to parts C and D of the Act.
    Proposed revisions to Sec. 70.4 included consolidating provisions 
for program modification in paragraph (i)(1), changing the maximum 
period for judicial review from 90 days to 125 days, changing the time 
period for acting on early reductions permits from 9 to 12 months, 
revising the interim approval criteria for part 70 programs, and adding 
a provision that EPA can continue to issue phase II acid rain permits.
    For Sec. 70.5, the August 1994 proposal included provisions for 
deleting the 12-month deferral for permit application submittals except 
for new major sources, provisions for flexibility in submitting acid 
rain permit applications, clarification of the information needed for a 
permit application to be deemed complete, clarification that emissions 
may not be discounted when determining major source status, and 
addition of the requirement for applications to identify units eligible 
for emissions trading.
    Section 70.6 was proposed to be revised to add provisions for 
defining ``prompt'' with respect to reporting deviations from the 
permit and for defining ``upset conditions'' and to require weekly 
reporting if the source switched to a new alternative scenario unless 
the type of monitoring indicated the switch.
    Changes proposed to Sec. 70.7 other than for permit revisions 
included provisions for accommodating changes that occur during permit 
issuance, changing the time period for acting on early reductions 
permits from 9 months to 12 months, and adding a provision for 
notifying the public of sources covered under general permits.
    Section 70.8 was proposed to be revised to include a provision that 
the public would be notified of the end of EPA's 45-day review period. 
A clarification was proposed for Sec. 70.9 that periodic updates of the 
permit fee demonstration were necessary as required by EPA. Section 
70.10 was proposed to be revised to specify the application of 
sanctions for failure to submit a program or obtain program approval 
and operation of a Federal program. Finally, Sec. 70.11 was proposed to 
be revised to allow mental state to be considered for penalties 
assessed above $10,000.

II. Alternative Proposal for Part 70 Permit Revision System

A. Overview

    Pursuant to the Act, States have adopted programs for reviewing and 
potentially regulating the air quality impacts of constructing or 
modifying sources of air pollution (e.g., NSR). States will also adopt 
programs for reviewing changes to sources of toxic air emissions prior 
to their operation under certain circumstances. (For the sake of 
brevity, these programs will be generally referred to as ``State review 
programs.'' 1)

    \1\ By using the term ``State review programs,'' however, EPA 
does not mean to imply that such programs necessarily subject all 
changes governed by the program to prior permitting authority review 
and approval. As discussed later in this notice, at least several 
existing State review programs do not require such review for some 
categories of changes but instead subject those changes to general 
rules or permits. To make this type of change for purposes of the 
State review program, a source need not obtain affirmative 
permitting authority review and approval but need only comply with 
the applicable requirement set forth in the general rule or permit.
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    Today's proposal for revising part 70 permits builds on these State 
review programs by providing for automatic incorporation into part 70 
permits of all changes subject to those programs. It makes use of the 
procedural requirements already applicable to those programs to provide 
adequate public review of the part 70 permit revisions occasioned by 
those changes. For the more environmentally significant changes 
reviewed by State programs, the public, affected States, and EPA would 
have a 30-day review opportunity during the State review process. For 
all other changes subject to a State review program, States would have 
broad discretion to use procedures that are commensurate with the 
environmental significance of the change. De minimis changes (as 
defined by the State and approved by EPA in the State's part 70 
program) could be processed without public, affected State, or EPA 
review. Further, changes subject to an applicable requirement that do 
not conflict with existing permit terms could generally be made 
immediately upon notice of the change by the source.
    Since most State preconstruction review programs govern nearly all 
source changes requiring a part 70 permit revision, EPA expects the 
vast majority of changes would qualify for this automatic incorporation 
process. However, for changes that are not subject to a State review 
program, the proposal would provide for a separate part 70 process. The 
more significant changes of this type would get public process 
consistent with the procedures required for initial permit issuance. 
For other changes, States would have discretion to devise procedures 
that match the amount and timing of public process to the environmental 
significance of the change. Changes that a State defines and EPA 
approves as de minimis could be processed without public, affected 
State, or EPA review. Indeed, certain changes that render a source 
subject to a newly applicable requirement could be incorporated into 
the part 70 permit by means of a notice submitted by the permittee, so 
long as the change did not conflict with existing permit terms and no 
source-specific determinations need be made in applying the requirement 
to the source. States would have to provide for periodic notification 
to the public of all part 70 permit revisions and for public access to 
decisions.
    The Agency's opportunity to object to a permit revision would 
generally be limited to the relatively small group of more 
environmentally significant changes. Even for these changes, EPA would 
be required to object before the State took final action on the 
proposed change for all defects that are reasonably apparent at that 
time. For de minimis changes, EPA would waive its opportunity to object 
until permit renewal. For all other less environmentally significant 
changes, EPA would waive its opportunity to object for a 5-year period 
after approval of a program except in response to a citizen's 
meritorious petition where the error in the permit revision would have 
a significant adverse environmental effect. During this 5-year period, 
EPA would audit State program implementation to ascertain whether its 
waiver of its review should be suspended or extended for one or more 
States. 

[[Page 45533]]

    The fundamental premise of this proposal is that the section 
502(b)(6) requirement for adequate, streamlined, and reasonable permit 
revision procedures is best met by building on State review programs 
established pursuant to the Act. The Federal regulations governing 
these underlying State programs address most of the procedural 
requirements of title V. For example, Federal NSR regulations generally 
address the need for, and extent of, opportunities for public 
participation in NSR permitting (Secs. 51.160-161). (The EPA is also 
proposing revisions to its NSR regulations to clarify the extent of 
States' discretion in providing public process for minor NSR permit 
actions.) Section 502(b)(6) does not require more public process than 
the regulations governing these programs require. To the extent a State 
program meets the requirements of applicable Federal regulations, the 
public procedures afforded by the State program are sufficient for 
title V purposes as well.
    In those few instances where the applicable Federal regulations or 
the State programs themselves do not address title V requirements (such 
as those in Sec. 70.6 requiring sufficient permit conditions to assure 
compliance with all applicable requirements), States would have to 
augment either their underlying program or their part 70 program so as 
to avoid the need for a part 70 revision process subsequent to the 
State review process. By building on State review programs in this way, 
title V permit revision procedures would be more streamlined than those 
afforded by the current part 70 rule and at the same time provide 
public review of the more significant changes prior to the change being 
made, when public comments can have the most effect. Only where a 
change is not subject to a State review program would the proposal call 
for a separate title V process to be provided.
    Another central tenet of today's proposal is that EPA should not 
prescribe for State part 70 programs detailed revision procedures for 
all or even most potential source changes. As a result of States' 
differing circumstances, State air programs vary widely in scope and 
the type and stringency of controls they impose. The diversity of State 
requirements is not susceptible to precise or simple categorization, so 
nationally prescribed procedures run the risk of being complicated and/
or ill-suited to at least some types of changes. The Agency therefore 
believes that States should be afforded broad discretion to determine 
permit revision procedures, including the amount and timing of public 
review, for all but the most significant changes.
    While today's proposal does specify minimum requirements for permit 
revision procedures, it also provides that States may obtain part 70 
program approval by adopting substantially equivalent alternative 
procedures. States would thus have additional flexibility to craft 
procedures that vary somewhat from the specified minima but that 
achieve substantially equivalent results.

B. When Is a Permit Revision Required

    As a starting point, it is necessary to know when a permit revision 
is needed. In the August 1994 notice, EPA proposed to amend the 
regulations to make clear that permit revisions are needed for changes 
that (1) cannot be operated without violating the existing part 70 
permit or (2) render the source newly subject to an applicable 
requirement. Today's proposal maintains that approach to defining when 
a permit revision is needed.
    The Agency would like to reiterate that the applicable requirements 
resulting from minor or major NSR are the terms and conditions of an 
NSR permit. Simply triggering NSR at a source with an existing part 70 
permit does not in and of itself require a part 70 permit revision. A 
part 70 permit revision would be necessary only to add any new or 
different NSR permit terms that result from the review and any 
additional provisions to assure compliance with them.
    Even changes that would result in application of a minor NSR or 
other requirement might not require a permit revision to the extent the 
permit has been crafted to accommodate the change. For example, a State 
may create an ``advance'' NSR provision or include a minor NSR standard 
exemption in a source's part 70 permit. Both of these provisions would 
define the minor NSR requirement applicable to a particular change or 
changes such that the source could undertake the changes without an 
approval process, provided that the terms of the advance NSR provisions 
were met. In essence, the change would already be authorized by the 
permit as long as it met the requirements (including any necessary 
conditions) already in the permit. A change meeting these conditions, 
therefore, would not trigger a part 70 permit revision unless the 
change contravened a permit term or triggered some other applicable 
requirement not provided for in the permit.
    As another example, if a source installs a piece of equipment that 
is subject to a reasonably available control technology (RACT) 
requirement, the installation would not require a permit revision if 
the RACT requirement was already adequately described in the permit. A 
permit revision would be needed only if the installation would 
contravene the permit or trigger some other applicable requirement not 
addressed by the permit. The source would, however, likely need to 
provide notice to the permitting authority describing the equipment 
being installed and the applicable requirement to which it is subject.
    The August 1994 notice proposed to narrow, but not eliminate, the 
current rule's ``off-permit'' provisions. Under those provisions, a 
change that a source can operate without violating its permit but that 
renders the source newly subject to an applicable requirement may be 
incorporated into the part 70 permit after the change is operated, if 
the State's program provides the off-permit mechanism. Today's 
proposal, however, would require a permit revision by the time the 
change is operated. Since under today's proposal all changes that 
undergo a State review program would be immediately incorporated into 
the part 70 permit on completion of that review, the need for the off-
permit mechanism would be substantially reduced. For changes that do 
not undergo such review but are subject to applicable requirements the 
terms of which do not vary from source to source, today's proposal 
would allow the source to revise the permit, and thus operate the 
change, upon notifying the permitting authority, provided the change 
can be operated without violating any existing permit terms. (See 
Section II. D. of this preamble, Incorporation of Changes Not Subject 
to State Review Programs.) Today's proposed approach would thus ensure 
that the part 70 permit is a contemporaneous and comprehensive summary 
of all applicable Act requirements, an approach most consistent with 
the statutory purposes of title V and favored by many State permitting 
authorities. Consequently, EPA is proposing to eliminate the off-permit 
provision of the current rule if it adopts today's proposed permit 
revision system.
    At the same time, the Agency is interested in receiving comment on 
whether changes that are expressly exempted from minor NSR but are 
nevertheless subject to an applicable requirement such as new source 
performance standards (NSPS) or RACT should be allowed to remain off-
permit until permit renewal. As explained elsewhere in today's notice, 
EPA is proposing a streamlined means of incorporating such requirements 
into 

[[Page 45534]]
permits that would maintain the comprehensiveness of the permit. The 
Agency solicits comment on whether its proposed revision procedures 
appropriately balance the need for source flexibility and a 
comprehensive permit with regard to these changes or whether these 
changes should only be incorporated into the permit at permit renewal.
    It is worth pointing out that today's notice also supplements the 
August 1994 notice's proposed revisions of the part 70 regulations 
implementing section 502(b)(10) of the Act. Under the August 1994 
proposal, part 70 would implement section 502(b)(10) by providing for 
the establishment of emissions caps in part 70 permits and for 
emissions trading under such caps. Today's notice provides a further 
explanation in Secs. 70.2 and 70.4 of the utility of emissions caps and 
how such caps may be implemented. It further proposes regulatory 
changes to codify relevant definitions and program elements.

C. Automatic Incorporation for Changes Subject to State Review Programs

1. Scope
    As indicated above, today's proposal would establish two basic 
categories of changes for permit revision purposes. The first category 
would include all changes that are subject to State review programs 
established pursuant to the Act. These changes would be automatically 
incorporated into a part 70 permit upon completion of that review or, 
where the State review program does not require prior permitting 
authority review and approval, upon submission by the source of a 
notice describing the change and identifying the requirement applicable 
to the change. The second category would include all other changes that 
require a permit revision, and States would have broad discretion to 
design a part 70 permit review process for these changes.
    Under today's proposal, the first category of changes would include 
all changes that are subject to major or minor NSR or regulations 
implementing section 112(g) and changes that entail a source-specific 
revision of the State's implementation plan (SIP). The process afforded 
by these State review programs would (1) have to include an adequate 
opportunity for public participation and affected State and EPA review, 
and (2) have to define revisions needed to the part 70 permit as a 
result of the change.
    Under some State minor NSR programs, not all changes subject to 
minor NSR requirements get case-by-case permitting authority review and 
approval. Instead, some types of changes are subject to general rules, 
and the source may make such a change without prior permitting 
authority approval so long as it complies with the applicable 
requirements. These changes would be included in the first category 
even though they individually do not receive affirmative permitting 
authority review and approval. In the case of such changes, the State 
has determined that particular categories of changes do not require 
case-by-case review and may be adequately controlled by application of 
general requirements. (Changes subject to general rules are typically 
changes that occur frequently enough and are defined and understood 
well enough that a generic approach to their control is both efficient 
and effective.) Presumably there would also be no need for permitting 
authority review upon incorporation of the change into the part 70 
permit, unless the change would require revision of an existing part 70 
permit term. The Agency thus believes that part 70 permits may be 
revised to reflect such changes by means of a notice submitted by the 
source describing the change and the Act requirements newly applicable 
to the source as a result of the change, provided the change can be 
made without violating an existing part 70 permit term. As explained 
further below, a permit revision made in this way (i.e., without prior 
permitting authority review and approval) would not shield a source 
against enforcement action for failing to comply with the requirements 
actually applicable to change.
    As also described in more detail below, what constitutes an 
adequate opportunity for public participation and affected State and 
EPA review would vary with the environmental significance of the 
change. Briefly, for the more environmentally significant changes, the 
full process required by the Federal regulations applicable to the 
State review program would be required. For instance, for changes 
subject to major NSR, a 30-day prior public comment period would be 
required (Secs. 51.160-166). For less environmentally significant 
changes, States would have discretion to vary the amount and timing of 
public process provided with the environmental significance of the 
change. The State could exempt those de minimis categories of changes 
subject to minor NSR from prior public, affected State, and EPA review 
altogether based on its determination approved by EPA that subjecting 
such changes to review would yield a gain of trivial or no value 
(Alabama Power Co. v. Costle, 626 F. 2d 323 (D.C.Cir. 1979).2 As 
EPA is making clear in today's proposed revisions to the regulations 
governing NSR, States already have discretion to provide public review 
for minor NSR actions commensurate with the environmental impact of the 
change, including exempting de minimis changes from public process 
entirely.

    \2\ Use of the term ``de minimis'' should not be confused with 
use of that term in the August 1994 notice proposing a permit 
revision system that included a track entitled ``de minimis permit 
revisions.'' Today's proposal would replace the permit revision 
system proposed in the August 1994 notice and use the term ``de 
minimis'' only to describe changes at sources that meet the de 
minimis criteria set forth in the Alabama Power case.
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    Process aside, part 70 includes permit content requirements not all 
of which are necessarily addressed by current State programs. To gain 
part 70 program approval, States would have to impose these 
requirements pursuant to State regulations governing either the 
underlying program(s) or the part 70 program.
    Changes subject to a State review program may affect a part 70 
permit limit not governed by the review program or render a source 
subject to Act requirements in addition to those imposed by the review 
program itself. For example, a change subject to minor NSR may also 
render the source subject to a maximum achievable control technology 
(MACT) standard. For such ``combination changes'' the question arises 
as to what revision process applies. With the exception of establishing 
new monitoring approaches, the general rule would be that a combination 
change (i.e., a change that renders a source subject to two or more 
applicable requirements, not all of which are imposed pursuant to a 
State review program) can be processed together using the automatic 
incorporation process, provided the change receives public or EPA 
review in the State process as appropriate for the different applicable 
requirements triggered. For example, where an emissions increase is 
subject to minor NSR and section 112(j) of the Act, the change could be 
processed using the State's minor NSR program, but the process provided 
would have to meet the procedural requirements applicable to section 
112(j) determinations. As explained in Section II. D. of this preamble 
regarding changes not reviewed under a State review program, section 
112(j) determinations would be included in the category of more 
environmentally significant changes and would thus be subject to a 
required 30-

[[Page 45535]]
day opportunity for prior public, affected State, and EPA review.
    Under today's proposal, a change would be included in the first 
category of changes and be automatically incorporated into a part 70 
permit if it is subject to a State review program. Several groups have 
suggested that RACT and MACT requirements that do not entail source-
specific determinations be eligible for automatic incorporation even if 
the change triggering the RACT or MACT requirement is not subject to a 
State review program. The EPA agrees with the basic premise of this 
suggestion that incorporation of such requirements into part 70 permits 
warrants little or no review, provided they do not conflict with any 
existing part 70 permit term. Where RACT and MACT are so specifically 
defined that little or no judgement need be exercised in applying the 
requirement to the source, there is little to be gained from reviewing 
the source's judgement that the requirement applies. Instead, it should 
be enough for the source to submit a notice to the permitting authority 
upon making the change stating that the source is consequently subject 
to the MACT or RACT requirement and that the notice is attached to the 
source's permit. Under such a process, the source would not be shielded 
from enforcement action if it were mistaken as to the scope or nature 
of the Act requirements applicable to the change.
    The EPA is proposing that such requirements, when triggered by a 
change that is not subject to a State review program, be included in 
the second category of changes but nevertheless get the benefit of an 
automatic incorporation process (see Section II. D. of this preamble). 
Eligible requirements would be those that do not require interpretation 
as to applicability and do not require creation of source-specific 
permit terms or conditions. The justification for automatic 
incorporation of these types of requirements is that their application 
is so straightforward that little is to be gained from additional 
process.
    The EPA is proposing to place these requirements in the second 
category. However, the Agency is not now in a position to say that no 
RACT or MACT requirement warrants additional process or to catalog 
which requirements warrant additional process and which do not. While 
most RACT requirements and some MACT requirements now appear candidates 
for automatic incorporation, a determination would have to be made for 
specific requirements whether further process is warranted. In the case 
of MACT, EPA could make that determination when it issues new MACT 
standards, and as the Agency indicated in the August 1994 proposal, 
MACT compliance schedules could be automatically incorporated into a 
permit. As for RACT and other SIP requirements, States are in the best 
position to judge whether specific requirements are appropriate for 
automatic incorporation. States could make such judgments for SIP-based 
requirements and provide for automatic incorporation of those it deemed 
appropriate, as well as for those MACT requirements that EPA has 
determined are eligible for automatic incorporation.
    To the extent they must be incorporated into part 70 permits at 
all, title VI requirements (relating to stratospheric ozone protection) 
may also be candidates for automatic incorporation where they entail 
few if any source-specific determinations. The Agency solicits comment 
on what title VI requirements would be appropriately processed in this 
way.
2. Automatic Incorporation Process
    For changes that are reviewed by a State review program, the 
permitting authority would automatically incorporate the change into 
the part 70 permit immediately on completion of the review. The 
permitting authority could accomplish this by simply attaching the 
results of the review to the part 70 permit. The source could operate 
the change upon completion of the review process. For changes regulated 
by a State review program through a general rule, the source would 
submit a notice describing the change and the applicable requirements 
that attach as a result of the change. As part of the notice, the 
source would have to certify that it could operate the change without 
violating any existing permit terms and supply any additional permit 
terms required by part 70 (i.e., periodic reporting requirements). The 
source could operate the change upon submitting the notice.
    Preconstruction permits in many cases impose new applicable 
requirements or alter existing ones. These new or altered requirements 
and other terms and conditions of the new preconstruction permit would 
be applicable requirements for incorporation into the part 70 permit. 
Any existing terms and conditions of the part 70 permit that no longer 
applied or were revised as a result of the preconstruction permitting 
action would need to be either replaced by the new terms and 
conditions, declared no longer applicable, or revised as part of the 
permit issued pursuant to preconstruction review. The permitting 
authority would then attach this permit upon issuance to the part 70 
permit.
    Under the proposed system, it would be important for the permitting 
authority to identify during the preconstruction review process which 
terms of the existing part 70 permit would be changed or eliminated 
because they would no longer be relevant. For instance, during 
consideration of a minor NSR permit for a replacement emissions unit, 
the public notice would need to include information about any part 70 
permit terms affected by the change. The permitting authority would 
also have to specify in the final NSR action which terms and conditions 
of the operating permit were being revised by the automatic 
incorporation process. One way for the permitting authority to do this 
would be to prepare an attachment to the permit identifying which terms 
of the part 70 permit were replaced or revised.
    The mechanism for automatically incorporating a change would also 
have to ensure that the part 70 permit content requirements of 
Secs. 70.6(a) and (c) of the current rule are addressed. Many of these 
requirements could be included in the original part 70 permit as 
boilerplate conditions, so as to cover any subsequent permit revisions. 
Requirements relating to reporting, annual certification, and 
inspection and entry should translate well to boilerplate conditions. 
Since new requirements established in a prior review could be attached 
to the part 70 permit, the original part 70 permit would have to ensure 
that the boilerplate conditions applied to any new requirements 
attached to the permit as well. On the other hand, some requirements 
are often created or revised on a unit-by-unit basis. In such cases, 
these requirements would have to be explicitly addressed by the State 
pursuant to its review program. The permitting authority would also 
have to approve as part of that review the adequacy of any associated 
changes to previously approved conditions.
    Under a unitary permit program permitting authorities need not 
attach new or different applicable requirements to the permit, provided 
the unitary permit has already incorporated them and contains 
sufficient terms or conditions to assure compliance with any new or 
different applicable requirements consistent with Sec. 70.6. For 
purposes of part 70, a unitary permit means a single permit which 
contains all terms and conditions needed to meet the requirements of 
part 70 and the requirements of major or 

[[Page 45536]]
minor NSR or actions requiring review under regulations implementing 
section 112(g) of the Act.
3. Criteria for State Review Programs
    Background. As noted earlier, State review programs are generally 
governed by Federal regulations. These regulations address procedural 
requirements, including the provision of an opportunity for public 
participation. In the case of major NSR, EPA believes that all State 
programs meet the applicable Federal procedural requirements, which 
call for prior public notice and a 30-day public comment period. 
Regulations governing section 112(g) are not yet final, but States will 
presumably establish programs that comply with the requirements of 
those regulations.
    Under the applicable Federal regulations, States have broad 
discretion to determine the scope of their minor NSR programs as needed 
to attain and maintain the national ambient air quality standards. 
Indeed, States may exempt categories of changes from minor NSR 
altogether on de minimis grounds (i.e., the change is trivial in size 
and of no importance in safeguarding ambient standards). States have 
exercised this discretion to subject some or many, but generally not 
all, minor source changes to their minor NSR programs. The EPA does not 
intend to revisit the scope of State minor NSR programs as part of the 
review process for approving State part 70 programs.
    Just as States may exclude some categories of sources or changes 
from minor NSR, they have also exempted at least some from public 
procedures. The EPA recognizes that States may also structure their 
minor NSR program to limit the public process afforded during 
preconstruction review consistent with the environmental significance 
of the change. Elsewhere in today's notice, EPA is proposing to revise 
the Federal regulations governing minor NSR at Sec. 51.161 to clarify 
the scope of State discretion in affording public process for minor NSR 
actions.
    As discussed in the August 1994 preamble (59 FR 44478-79), the 
circumstances surrounding some of the exemptions from public process in 
minor NSR programs may have changed since they were adopted and thus 
the basis for these exemptions warrant review. The EPA, however, 
believes that the majority of State minor NSR programs generally afford 
adequate public process for the less environmentally significant 
changes, as EPA is proposing to define them in today's notice, for both 
title I and title V purposes. Indeed, EPA is proposing to revise 
Sec. 51.161 to make clear the considerable flexibility States have to 
fashion public participation requirements to the environmental 
significance of changes subject to minor NSR. The Agency also believes 
that States are in the best position to make an initial assessment of 
the continuing adequacy of their procedures. As further explained 
subsequently in this preamble, if a State's procedures should be found 
in need of some changes, the changes could be accomplished through 
revisions of either the State's minor NSR program or its part 70 
program. States would thus have flexibility to make changes in the 
context they found most appropriate.
    Beyond public process requirements, State programs do not 
necessarily address all of part 70's permit content requirements, since 
some of those requirements are not found in the Federal regulations 
governing the State preconstruction programs. Thus, for States to 
provide automatic incorporation for changes that undergo a State review 
program, States may need to revise their regulations governing either 
their part 70 program or preconstruction review programs, to ensure 
that all of part 70's permit content requirements are addressed.
    More Environmentally Significant Changes Reviewed by States. For 
purposes of establishing the adequacy of a State review program, 
today's proposal would divide changes subject to such review into two 
categories, those that are more environmentally significant and those 
that are less environmentally significant. The Agency proposes to 
include in the category of changes that are more environmentally 
significant the following:
     Any change subject to major NSR;
     Any physical change or change in the method of operation 
of a part 70 source associated with a project where the prospective 
emissions increases from such changes, considered by themselves, would 
be a significant emissions increase of any pollutant subject to 
regulation under part C or D of the Act;
     Any change subject to review as a modification under the 
regulations implementing section 112(g) of the Act; and
     Any other change determined by the permitting authority to 
have a similarly significant environmental impact.
    The Agency has identified the types of changes listed above as 
being more environmentally significant because they either have been 
specifically identified in the Act for preconstruction or pre-operation 
review (i.e., major NSR under parts C and D or prior review under 
section 112(g) of the Act) or involve difficult judgments which affect 
whether construction activity would be subject to one or more of the 
reviews prescribed by Congress (i.e., minor NSR governing net-outs).
    While all major NSR actions have been included in the category of 
more environmentally significant changes, EPA recognizes that in an 
extreme ozone nonattainment area any change at a major stationary 
source which results in any increase in emissions of nitrogen oxides 
(NOx) or volatile organic compounds (VOC) from a discrete 
operation, unit, or other pollutant emitting activity is a modification 
subject to major NSR. In the South Coast Air Quality Management 
District (SCAQMD) of California, the only extreme ozone nonattainment 
area, potentially several hundred, if not several thousand, major 
modifications can occur each year under applicable definitions of major 
source (10 tons per year (tpy)) and major modification (any increase, 
as described above). As a comparison, in most areas of the country, a 
major modification does not occur unless there is an increase of 40 tpy 
or more of VOC.
    Today's proposal would require that all changes in the more 
environmentally significant category meet the full public process 
requirements specified by the Federal regulations governing the 
underlying State review program. Thus, for all major NSR changes, 
including major modifications, the State permitting authority would 
have to provide (as is currently required) prior public notice and a 
30-day public comment period. The Agency is concerned, however, that 
full NSR procedures may be unworkable for extreme ozone nonattainment 
areas in light of the ``any increase'' threshold for triggering major 
NSR for modifications in those areas. Some relief from the full NSR 
procedural requirements may thus be appropriate for smaller major NSR 
actions in extreme nonattainment areas. The Agency is considering a 
proposal to revise the Federal major NSR requirements to allow States 
to devise more streamlined public procedures for smaller actions in 
extreme ozone nonattainment areas, and it solicits comment on whether 
and how to provide such relief.
    The Agency is proposing to include one category of minor NSR 
changes, i.e., certain net outs, in the more environmentally 
significant category. Net-outs are minor NSR actions which allow a 
source to avoid major NSR where the prospective emissions increases 
from changes associated with 

[[Page 45537]]
a project considered by themselves would require major NSR except that 
the source makes a contemporaneous emissions decrease at the same site 
sufficient to keep the net increase below the major NSR applicability 
threshold. Netting transactions often involve some of the most 
complicated analyses undertaken by permitting authorities. They are 
also among the most important minor NSR decisions permitting 
authorities make, since they shield changes which significantly 
increase emissions from the control requirements of major NSR. The EPA 
is concerned about the number of net-outs that might be subject to 
today's proposal and the possible burden of requiring 30-day public 
review. The Agency solicits information from States on the number of 
net-outs that would fall within the proposed category of net-outs and 
the relative difficulty and complexity these net-out determinations 
would typically require. The EPA is also interested in learning from 
the experience of States and industry as to what percentage of net-outs 
involve a project where the prospective emissions increase from a 
single physical change or change in the method of operation is greater 
than the significance levels (as opposed to projects comprised of small 
changes that individually do not exceed the significance level but do 
exceed the levels when summed).
    In including net-out transactions in the more environmentally 
significant category, EPA proposes to cover those changes where 
emissions increases from changes associated with a project, considered 
by themselves, would exceed major source thresholds or modification 
levels before including decreases at the source. In a moderate ozone 
nonattainment area, for example, where the major modification threshold 
is 40 tpy for VOC, a 50 tpy VOC increase that is offset by an 11 tpy 
decrease (net 39 tpy increase) would be classified as a more 
environmentally significant change, but a 35 tpy increase would not. In 
keeping with section 182(c)(6) of the Act, the definition of covered 
net outs would also include individual changes whose emission increases 
exceed cumulative major NSR applicability thresholds (e.g., 25 tpy over 
5 years in severe and serious ozone nonattainment areas).
    The Agency considered including in the category of more 
environmentally significant changes minor NSR limits that a source 
undertakes to keep its potential emissions below major NSR thresholds. 
These limits on emissions which create so-called ``synthetic minor'' 
sources or modifications account for many minor NSR permit actions, and 
play a critical role in shielding large sources or source modifications 
from major NSR.
    The types of controls used to establish synthetic minors vary 
widely among States and sources. Many are straightforward in terms of 
the limit's effect on emissions and its enforceability. However, others 
are unique to a source and involve assessments of source-specific 
operational limits. Synthetic minor controls also vary in terms of 
their net effect on a source's emissions.
    The Agency has decided not to propose inclusion of synthetic minor 
actions in the category of more environmentally significant changes, 
largely because of the difficulty of formulating a national definition 
of those synthetic minors that merit full public review procedures. 
Instead, it is proposing to include all synthetic minors in the less 
environmentally significant category of changes that undergo prior 
review. As subsequently explained in more detail, States have broad 
discretion to fashion revision procedures for this category that match 
public process to the environmental significance of the change. In 
light of the potential environmental significance of synthetic minor 
controls, however, EPA expects each State to identify the more 
significant types of synthetic minor actions it issues and afford these 
a substantial opportunity for public and affected State review prior to 
the State's final action in the minor NSR process.
    Several factors would be relevant in identifying the more 
significant synthetic minors. One is the size of the source or 
modification before the synthetic minor control is applied. In some 
cases, the source or modification far exceeds the applicable major NSR 
threshold without the control. Another is the use of synthetic minor 
controls to reduce a source's emissions to just below the applicable 
major NSR threshold. In these cases, the control leaves little margin 
for error. A third factor to consider is whether the synthetic minor 
control entails the application of technology or other control measures 
whose effect on emissions is not well or easily established. In these 
situations, the permitting authority is required to exercise 
considerable judgment in determining the efficacy of the control. 
Depending on a State's situation and experience, synthetic minor 
actions meeting any one of these criteria may warrant providing prior 
public review. Where an action meets more than one of the criteria, 
e.g., where the source without controls is very large and the effect of 
proposed controls is not well established, an increased opportunity for 
prior public review and comment may be in order.
    Finally, EPA is proposing that States have discretion to designate 
other types of actions for inclusion in the more environmentally 
significant category. As explained earlier, minor NSR controls vary by 
State in scope, type, stringency, and significance, and States may thus 
find it appropriate to include other types of minor NSR actions in the 
more environmentally significant category.
    Adequate Review for the More Environmentally Significant Changes. 
For the more environmentally significant changes, permitting actions by 
a State would have to follow the full public procedures required by 
existing regulations (or in the case of section 112(g) of the Act, 
those defined in EPA's final implementing regulations) with respect to 
public (including affected States) and EPA notice and opportunity to 
comment. (As discussed earlier, for smaller major NSR changes in 
extreme ozone nonattainment areas, EPA is considering the need to 
revise the Federal NSR regulations to provide for less than full 
process for such changes.) In the case of minor NSR, the Agency is 
today proposing changes to the Federal regulations governing that 
program to clarify States' discretion in affording adequate public 
process. For net-outs, the only category of minor NSR changes that 
would be included in the more environmentally significant category, the 
proposed revisions of Sec. 51.161 would clarify that such actions are 
subject to the full procedures set forth in the existing regulations.
    The public process requirements for the more environmentally 
significant changes would include prior notice and a 30-day opportunity 
to comment on the permitting authority's proposed action on the 
source's application for the change. Affected States and EPA would also 
have to be notified and afforded the same opportunity to comment. 
Because the State review process would have to address any part 70 
permit revision, the public notice of the change would have to contain 
draft part 70 permit terms as needed to revise the existing part 70 
permit and to meet the part 70 permit content requirements of 
Secs. 70.6(a) and (c).
    Finally, EPA recognizes that in some situations part 70 permit 
terms based on decisions made in the preconstruction review process may 
require revision before the source can operate the change. In many of 
these instances, such changes arise from a shakedown period which the 
source undergoes prior to full scale operation. The Agency believes 
that, in general, shakedown changes are 

[[Page 45538]]
being adequately addressed in the day-to-day implementation of State 
NSR programs, and that the State procedures afforded these changes 
should typically suffice for part 70 permit revision purposes. As with 
the change before shakedown, EPA would expect States to match the type 
and amount of additional review to the significance of the shakedown 
change. Only where a second major NSR process is necessary to review 
the change (i.e., the change would involve substantially new emissions 
or represent a fundamental departure from the previously approved 
project) would a full opportunity for public, affected State, and EPA 
review of the change be required.
    Less Environmentally Significant Changes Subject to a State Review 
Program. All changes that are subject to a State review program other 
than those designated more environmentally significant would be 
included in a second (``less environmentally significant'') category. 
The changes in this second category would range from significant 
synthetic minor actions that shield sources from major NSR requirements 
to changes with minimal environmental impact. States would have the 
flexibility to vary the process provided for the changes in this second 
category with the relative environmental significance of the change. A 
State may designate certain categories of minor NSR changes, subject to 
EPA approval, as de minimis based upon its determination approved by 
EPA that meets the test prescribed by the Alabama Power case. For 
changes that fall in these de minimis categories, the State may forego 
prior public, affected State, or EPA review altogether.
    As noted previously, most States already exempt at least some minor 
NSR actions from public process. In evaluating what changes may be 
considered de minimis, many factors are potentially relevant and will 
vary to some extent with States' varying situations. The scope of the 
de minimis category is properly determined on a State-by-State basis as 
permitting authorities develop program revisions to meet the revised 
part 70 requirements. In determining the coverage of the de minimis 
category, the State should examine the relevant factors in the context 
of the State's situation, subject its proposed findings to public 
review, and base its final determination on the relevant record. The 
State may accomplish this as part of the rulemaking to revise its 
program to conform with EPA's revised part 70 rule or in a separate 
rulemaking.
    The most important factor for States to consider in identifying de 
minimis changes is the air quality in an area. Changes that are 
important in a nonattainment area may be of considerably less interest 
to the public (or EPA) in an attainment area. Due to differences in the 
nature of the air quality problems in different nonattainment areas, 
the need for or appropriateness of EPA and public involvement may also 
vary.
    Another important factor is the emissions impact of the types of 
changes being considered for the de minimis category. In this context, 
the size of any emissions increase and the type of emissions involved 
are relevant. Smaller increases of relatively less harmful pollutants 
are more likely candidates for de minimis categorization.
    Also relevant is the nature of applicable controls. Changes which 
are typically addressed by the application of well established control 
technology are not likely to require public scrutiny. Registration 
requirements pursuant to which sources must report, but not necessarily 
mitigate, emission increases below a specified threshold would in many 
States warrant an exemption from public review. On the other hand, 
public review may be appropriate for changes which require unfamiliar 
control technologies or source-specific determinations of control 
levels.
    A State's prior experience with public interest in permitting 
decisions for particular types of changes is another factor the State 
may weigh. A State which does not now provide public notice and 
opportunity to comment on permit revisions for many or all changes 
could not use the lack of past public involvement in the permitting 
actions for those changes to establish a lack of public interest in 
them. On the other hand, if a State's experience shows the public does 
not comment or express interest in certain types of changes, the State 
could well conclude that such changes are de minimis. The public's 
response to the State's rulemaking to determine the scope of the de 
minimis category is similarly pertinent. The general compliance status 
of sources in the relevant jurisdiction may also suggest that more or 
less public oversight of permitting actions would be appropriate.
    The factors described above are not mutually exclusive; for 
example, the size, complexity, and track record of particular types of 
changes, when considered together, may establish that de minimis 
categorization is or is not appropriate. The Agency further recognizes 
that other factors may also be relevant, and solicits comment on 
whether other circumstances should also be considered by States in 
determining the scope of the de minimis category.
    In view of the nature and number of the factors described above, 
EPA anticipates that States' determination of de minimis changes will 
justifiably differ, even to a significant extent. In States with 
relatively extensive minor NSR programs, EPA would expect that the de 
minimis category could be established such that the majority of changes 
would be processed as de minimis but the bulk of total emission 
increases governed by minor NSR would be subject to public review. This 
is because, in the case of extensive programs, many or even most minor 
NSR changes typically involve very small emissions increases. The 
Agency is aware of one State, for example, in which 90 per cent of 
minor NSR changes involve emissions units of less than 5 tpy, and those 
changes together account for only about 10 per cent of total emissions 
increases governed by the program. In this State, defining a de minimis 
category at or below 5 tpy would mean that only 10 per cent of the 
changes by number would go through public and affected State review, 
but that review would cover 90 per cent of total emissions increases. 
Such an approach would be acceptable under today's proposal and would 
be an appropriate way to minimize the burden of the permitting program 
on sources and permitting authorities without compromising citizens' 
opportunity to participate in decisionmaking regarding the bulk of 
emissions increases.
    By providing the above example, EPA does not mean to suggest that 
States need conduct the type of analysis described to determine an 
appropriate de minimis category. It is merely one example of an 
acceptable approach to defining de minimis changes. The Agency expects 
States to consider their particular situations and make determinations 
that are appropriate for their situations, in light of the relevant 
factors. In States with less extensive minor NSR programs and less 
significant air quality problems, for example, de minimis changes might 
be appropriately defined to include changes that increase emissions by 
as much as 25 tons. The Agency believes States are in the best position 
to weigh the relevant factors in determining what changes may be exempt 
from public review. A de minimis change category developed based on the 
factors discussed above would be granted substantial deference in EPA's 
review of States' part 70 program revisions.
    Adequate Process for Less Environmentally Significant Changes. 

[[Page 45539]]
    For minor NSR actions not in the more environmentally significant 
category, States would have considerable discretion to match the amount 
and timing of process to the environmental significance of the change. 
In reviewing State programs, EPA would recognize States' need for 
flexibility in devising procedures that take into account the relevant 
factors for a particular State, including existing air quality levels 
and the scope and complexity of its minor NSR controls. States would 
have to afford an adequate opportunity for public participation for all 
changes other than de minimis changes, but could use various methods 
including prior or after-the-fact notice and comment periods, batch 
processing, and the use of general permits or permits by rule. For the 
least significant changes, States could provide little public process 
beyond a notice in some manner to the public, which could be after the 
change occurred. Notice could be given by means other than newspapers 
where alternative methods, such as State registers or computer bulletin 
boards, are generally accessible by interested persons. States should 
require prior notice and comment where actions involve larger emissions 
that warrant greater scrutiny because of their environmental 
significance, although comment periods need not be 30 days where a 
shorter period such as 15 days or less would likely be sufficient in 
view of the significance or complexity of the change.
    All minor NSR actions (including those de minimis changes exempted 
from public and EPA review) would have to be reviewed by the permitting 
authority to assure that the change met all applicable requirements and 
the part 70 permit requirements of Secs. 70.6(a) and (c). In 
particular, changes to monitoring methods in part 70 permits would have 
to be specifically approved by the permitting authority as adequate for 
determining compliance with applicable requirements and part 70 permit 
terms prior to revising the permit.
    Program Revisions for NSR Changes. States could revise their 
regulations as needed to provide for adequate review of minor NSR 
changes in two ways: (1) Revise their minor NSR regulations as 
necessary to meet the requirements outlined above, or (2) revise their 
part 70 program regulations to provide that those requirements be met 
in the context of the NSR review process. Either approach would ensure 
that adequate process is provided, so a State may be given the 
flexibility to decide which approach would be most suitable for it.
    Comparison of Proposed Approach and Current Part 70 for Minor NSR 
Changes. Before describing the proposed approach for changes not 
subject to a State review program, the Agency would like to compare its 
treatment under today's proposal of minor NSR changes to what is 
currently required under part 70. The minor NSR process is the origin 
of the vast majority of changes occurring at part 70 sources which 
cause the need for a part 70 permit revision. It is therefore helpful 
to compare these two regulatory approaches to understand the relative 
effectiveness of the proposal in accomplishing streamlining. This 
discussion addresses, in order, minor NSR changes that would be 
considered more environmentally significant, synthetic minors, other 
minor NSR changes that conflict with the part 70 permit, and finally 
other minor NSR changes that do not conflict with the part 70 permit.
    For minor NSR changes which would be classified as more 
environmentally significant changes under today's proposal (i.e., major 
net-outs), both the current and proposed part 70 would subject the 
change to a full public and EPA review process involving a 30-day 
public comment period. Today's proposal, however, would impose this 
requirement in conjunction with the otherwise occurring State minor NSR 
process. This is a much faster and more efficient process than under 
the current part 70 where the sequential significant permit 
modification process would be imposed (possibly for up to 18 months) 
after the NSR process has been completed (unless the State chooses to 
enhance its minor NSR process) 3.

    \3\ Where a part 70 permit revision is needed, part 70 currently 
allows the State to enhance its minor NSR process with additional 
substance (e.g., other requirements where applicable and part 70 
duties to certify compliance and report every 6 months) and process 
(e.g., additional EPA and public review as necessary to meet 
Sec. 70.7(e)) to meet the part 70 permit revision requirements and 
thus revise the part 70 permit concurrent with the NSR process. This 
optional ``enhanced NSR'' approach closely resembles the approach in 
today's proposal for the required integration of part 70 review with 
the minor or major NSR process (as applicable).
    Whereas part 70 imposes the significant permit modification process 
for synthetic minors, these would be considered in the less 
environmentally significant category and subject under today's proposal 
to a more streamlined combined process matched to the environmental 
significance of the changes. In addition to shortening greatly the time 
to complete permit revisions via combination of the part 70 process 
with other State review processes, today's proposal would also limit 
EPA's review role for less environmentally significant changes during 
the first 5 years after program approval. This would add greater 
certainty to the critical initial implementation of the program.
    Other types of minor NSR changes that conflict with the terms of 
the part 70 permit would be required to be adopted as a permit revision 
before operation under both today's proposal and the current part 70. 
Under today's proposal, EPA expects States to treat these either as de 
minimis, for which no public or EPA review would be required, or as 
being within the category of less environmentally significant changes 
for which process would be matched to environmental significance of the 
change. For the least significant of these changes (other than de 
minimis), States could provide little public process beyond a notice in 
some manner to the public, which could be after the change occurred. 
The only EPA review for any of the less environmentally significant 
changes over the first 5 years after program approval would be in the 
event of a citizen petition. Under the current part 70, most of these 
changes, (including those considered de minimis under today's 
proposal), would be processed as minor permit modifications. For minor 
permit modifications, even though the change may be made immediately 
upon sending a notice to the permitting authority and there is no 
public review, the uncertainty resulting from EPA's 45-day review 
period and possible objection after-the-fact is a significant concern 
to sources making changes under this process. Thus, under today's 
proposal, a key benefit for these changes is the 5-year waiver of EPA's 
objection (except in response to citizen's petitions) and the exclusion 
of public, affected State, and EPA review for de minimis changes.
    Today's proposal does not differentiate between those minor NSR 
changes that conflict with the terms of the part 70 permit and those 
that do not. The current part 70 does allow States to make this 
distinction. Specifically, source changes reviewed under minor NSR that 
do not conflict with the terms of an existing part 70 permit may be 
treated under the current part 70 as off-permit, meaning the terms and 
conditions of any resulting minor NSR permits need not be incorporated 
into the part 70 permit until renewal. For changes that qualify for 
off-permit treatment, the source must provide contemporaneous notice to 
both EPA and the permitting authority. This notice requirement is in 
addition to the review process required under the 

[[Page 45540]]
State's minor NSR program. The requirements of Sec. 70.6 would of 
course not attach until the off-permit change is incorporated into the 
part 70 permit at renewal. A change that is not off-permit (either 
because it conflicts with the existing part 70 permit or because the 
State has chosen not to allow for off-permit) and that is neither a 
net-out nor a synthetic minor could be treated as a minor permit 
modification.

D. Incorporation of Changes Not Subject to State Review Programs

    The EPA expects that the great majority of changes requiring a part 
70 permit revision would qualify for automatic incorporation because 
they are subject to a State program such as minor NSR. However, for 
changes that are not subject to such review, States would have to 
provide for a revision process at the part 70 permitting stage. 
Depending on the scope of the State's minor NSR program, such 
processing would be needed for changes that trigger RACT, MACT, or 
other applicable Act requirements but not minor NSR, or for changes to 
terms that were established only through the part 70 permit process. As 
for changes that are subject to State review programs as previously 
described, full public, affected State, and EPA review would be 
required only for the more environmentally significant of these 
changes. For less environmentally significant changes that are not 
subject to State review programs, States could develop revision 
procedures that match the process to the environmental significance of 
the change.
    More Environmentally Significant Changes Not Subject to State 
Review Programs. Under today's proposal, opportunity for public, 
affected State, and EPA review equivalent to that provided for permit 
issuance or renewal must be afforded for the more environmentally 
significant changes before the part 70 permit is revised and the change 
is operated. For changes that are not subject to State review programs, 
EPA proposes to define the more environmentally significant category as 
including the establishment or revision of the following:

    (1) MACT determinations made under section 112(j) of the Act;
    (2) Alternative emission limits to meet section 112(i)(5) of the 
Act (early reductions);
    (3) Alternative limits established pursuant to 
Sec. 70.6(a)(1)(iii) including any to implement RACT as authorized 
by the SIP or any substitute section 112 standards established 
pursuant to a program approved by EPA under section 112(l) of the 
Act;
    (4) New or alternative monitoring methods that have not been 
authorized for adequacy under major or minor NSR or under 
regulations implementing section 112(g) of the Act;
    (5) (Establishment only) Emissions limits restricting the 
potential to emit (PTE) of an entire source, including the 
establishment of any plantwide applicability limit (PAL) for 
defining applicability of NSR or of regulations implementing section 
112(g) of the Act.

    In revising part 70 permits to establish or change (except for PTE 
limits) any of the above permit conditions, the State's part 70 program 
would have to provide public, affected State, and EPA process focused 
on the change equivalent to that afforded for initial permit issuance. 
The permitting authority would also have to design and implement this 
process so as to complete review of the majority of these types of 
permit revisions within 6 months of receipt of an application for such 
a revision. The requested change could only be made as allowed by the 
underlying applicable requirement(s). The EPA is proposing to reduce 
the processing time for the majority of these changes from the 9-month 
period specified in the current rule to 6 months to promote necessary 
streamlining and to minimize undue delays. The Agency, however, 
solicits comment on the feasibility of a 6-month turn-around time and 
on other time periods which might better accomplish these objectives.
    The proposed list of the more environmentally significant changes 
not otherwise subject to State review focusses the most extensive 
review procedures on a relatively manageable number of changes that 
involve actions that have, or potentially have, the greatest 
environmental consequences. Congress clearly intended that the limits 
associated with section 112(j) MACT decisions and early reductions be 
determined in the context of the title V program. Section 112(j) 
targets implementation after the effective date of the title V program, 
requires applicable sources to file a permit application, and requires 
the MACT limit be placed in a title V permit. Similarly, Congress in 
section 112(i)(5) required the title V permitting authority to 
establish in a title V permit an enforceable emissions limitation for 
hazardous air pollutants (HAPs) reflecting the early reduction which 
qualifies the source for an alternative emission limitation exemption 
from MACT.
    The EPA is also proposing to include in the more environmentally 
significant list alternative emission limits as authorized by an 
approved SIP or program under section 112(l) of the Act. Limits such as 
alternative RACT or MACT are analogous to the two preceding types of 
limits identified by Congress for title V implementation. Accordingly, 
they warrant extensive review to assure that general criteria contained 
in a SIP or a plan approved pursuant to section 112(l) of the Act are 
applied in a reasonable and enforceable fashion to a particular source 
change. Moreover, as explained subsequently, EPA's objection 
opportunity under today's proposal would fully extend only to the more 
environmentally significant categories of changes. Since under section 
110 of the Act EPA must be able to object to alternative SIP limits for 
them to qualify as such, it is important to include alternative SIP 
limits in the more environmentally significant category of changes. The 
EPA solicits comment on whether full public, affected State, and EPA 
review are necessary for alternative MACT standards established under a 
section 112(l) program or whether a lesser degree of public, affected 
State, and EPA review would be adequate.
    The establishment of limits on the PTE for an entire source or 
plantwide emissions caps (see below) also warrants a similarly high 
level of review. Development of such limits involves a comprehensive 
review of a source's emissions to restrict a source's emissions to 
below major source thresholds. Because of the extensive nature of these 
reviews, the Agency believes that a 30-day public review period is 
warranted for establishing such caps. While proposing these actions as 
being more environmentally significant, the Agency does solicit comment 
as to whether the establishment of (as well as revisions to) PTE limits 
can be classified as less environmentally significant, particularly for 
limits related to the applicability of minor NSR.
    Finally, the Agency believes that changes involving shifts to new 
or alternative monitoring approaches not otherwise matched to the 
source (e.g., through a prior review) can often have potentially large 
environmental impacts, because a new or different monitoring regime 
could inadvertently allow emissions to increase without causing a 
violation of the applicable requirements. The process reserved for more 
environmentally significant changes is appropriate to safeguard the 
integrity of the compliance conditions of the permit unless another 
prior review serves this function (e.g., major or minor NSR under 
today's proposal). Permitting authorities could approve such changes 
only where the new or alternative monitoring or recordkeeping method 
was determined adequate to assure 

[[Page 45541]]
compliance with the applicable requirement.
    The EPA solicits comment on whether any other changes not subject 
to State review programs should be designated for inclusion in the more 
environmentally significant category.
    Other Changes Not Subject to State Review Programs. For all other 
categories of changes for which a part 70 permit revision is required 
but that are not otherwise subject to State review, a State could 
develop a process that matches the review to the environmental 
significance of the change. These categories of changes include, but 
are not limited to:

    (1) Revisions to emission limits restricting the PTE of an 
entire source or any emissions unit, including any PALs for defining 
applicability of NSR, or of regulations implementing section 112(g) 
of the Act;
    (2) Restrictions on the PTE of any emissions unit;
    (3) Unique limits designed to meet an applicable requirement;
    (4) New alternative operating scenarios;
    (5) Changes within the same monitoring method, or ``intra-
monitoring changes;''
    (6) Incorporation of MACT compliance details, including 
applicability and compliance parameter level decisions; and
    (7) Emissions averaging restrictions made pursuant to a standard 
under section 112(d) of the Act.

    For these changes, States again might use various methods to 
provide adequate public participation, including prior or after-the-
fact notice and comment periods. As noted earlier, sources often take 
limits on the PTE of an entire source to avoid being subject to more 
stringent requirements that otherwise apply. Sources even more 
frequently take limits on an emissions unit at the source to keep the 
unit below major modification thresholds. Revising plantwide caps or 
establishing or revising PTE limits for an emissions unit involve 
making judgments regarding the sufficiency and practical enforceability 
of a limit on maximum allowable emissions which, if exceeded, would 
trigger the applicability of more environmentally significant 
requirements. For this reason and as with significant synthetic minor 
NSR actions, EPA would expect States to provide relatively more public 
process for significant changes to PTE limits or caps. It would make 
little sense to require full process to establish such plantwide limits 
or caps if they could be revised with little or no process. Also, the 
relative environmental significance of MACT applicability and 
compliance parameter decisions can vary with the particular MACT 
standard involved. The EPA, in promulgating individual MACT standards, 
will provide guidance whenever it believes States should provide public 
or EPA review during the permit process.
    For those categories of changes that are determined by the 
permitting authority to be de minimis, States may incorporate these 
changes into part 70 permits without prior review by the public, 
affected States, or EPA or an opportunity for EPA objection or for 
citizens to petition EPA to object. The previously described 
considerations relevant to identifying de minimis changes subject to 
State review programs are also relevant in determining that categories 
of changes not otherwise subject to State review are de minimis. States 
could also exempt from public and EPA review on de minimis grounds 
changes that qualify for administrative amendment treatment under 
section 70.7(d) of the current part 70 rule. These include changes 
which correct typographical errors, require more frequent monitoring or 
reporting by the permittee, or alter ownership or operational control 
of a source. The State would also identify other inconsequential 
changes as de minimis and submit a list of those changes to EPA when 
submitting part 70 program revisions for approval. Either the permittee 
or the permitting authority could initiate the incorporation of any 
such change into the permit by issuing a notice describing what 
information in the part 70 permit is affected and sending the notice to 
the permitting authority or the permittee as appropriate. The notice 
would identify the terms of the existing part 70 permit being changed 
and any new terms needed to meet part 70 permit content requirements. 
The notice would revise the permit upon its mailing by the source to 
the permitting authority through certified mail. No affirmative 
authorization by the permitting authority would be required if the 
permittee initiates the change.
    Under today's proposal, the State part 70 program could also 
provide that changes need not undergo State, EPA, or public review 
before they are incorporated into the part 70 permit, provided that (1) 
they can be operated in compliance with all applicable requirements and 
the federally-enforceable terms of the existing part 70 permit, and (2) 
the applicable requirements they trigger do not entail source-specific 
determinations in applying the requirement to the source.
    As previously noted, many minor NSR programs exempt from minor NSR 
altogether changes that do not increase emissions above a certain 
amount, or that are of a particular type or category. These changes may 
nonetheless still be subject to applicable requirements such as NSPS or 
SIP requirements. A small storage tank, for example, may be exempt from 
NSR in certain States, but still may be subject to RACT or NSPS 
requirements.
    To the extent these changes do not conflict with the part 70 permit 
and do not trigger requirements that entail source-specific tailoring, 
EPA is proposing that they may be exempt from any additional public, 
affected State, or EPA review in the part 70 process. The State part 70 
program could provide that the source may operate the change upon 
submitting a notice, provided that the change can be operated in 
compliance with the existing part 70 permit. In the notice, the source 
would describe the change, describe any new permit terms needed to 
assure compliance with all applicable requirements and relevant part 70 
requirements, and certify that the change is eligible for this process. 
The part 70 permit would be revised upon mailing of the notice by the 
source to the permitting authority by certified mail. No permit shield 
would attach to changes so incorporated into permits, since not even 
the permitting authority would have reviewed whether the source 
correctly identified all of the Act requirements applicable to the 
change.

E. Opportunity for EPA to Object and Permit Shield

    Under section 505 of the Act, the Administrator is to receive and 
review copies of permit applications, including applications for permit 
revisions, and to object to the issuance of any permit which contains 
provisions that are determined by the Administrator as not in 
compliance with the applicable requirements of the Act, including title 
V requirements. If the Administrator does not object to a permit within 
the 45-day review period specified by the statute, any person may 
petition the Administrator to do so within 60 days of the expiration of 
the 45-day review period. Under the Act, the Administrator may waive 
the requirements for receipt and review of permits for any category of 
sources covered by the part 70 program other than major sources.
    In fulfilling its review role with respect to permit revisions, EPA 
will consider whether (1) all applicable requirements and part 70 
requirements to which the source is subject as a result of the change 
are contained in the permit revision, (2) the new or revised permit 
terms and conditions are enforceable as a practical matter, and (3) 
significant procedural requirements relating to adequate public 
participation 

[[Page 45542]]
and development of a supporting record have been met.
    At the same time, EPA wants to minimize the potential for Agency 
review to lengthen unduly the permit revision process. The Agency is 
thus proposing to limit its review and objection opportunity in several 
ways that will focus EPA's limited resources on providing a timely 
reaction to the more environmentally significant permit revisions.
    First, for the more environmentally significant changes (including 
those that are subject to a State review program and those that are 
not), EPA is proposing that the Agency would be required prior to the 
permitting authority taking final action on the change to raise any 
objections to the proposed change for any defect that was reasonably 
apparent during the public review period. Failure by the Agency to 
raise a timely objection would bar it from objecting to issuance of the 
permit revision, except in response to a citizen's petition under 
section 505(c). The Agency could still reopen the permit for cause 
under section 505(e) of the Act and Sec. 70.7(g) of the current rule.
    Second, changes which the State proposed and EPA approved as de 
minimis under the Alabama Power test would not be subject to any EPA 
review or objection opportunity or citizen petition opportunity prior 
to renewal of the part 70 permit. Changes which meet the Alabama Power 
de minimis test are by definition environmentally insignificant, and 
EPA is therefore proposing to exercise its inherent administrative 
authority to exempt such changes from the public, affected State, and 
EPA review and objection opportunities that otherwise apply prior to 
permit renewal. To the extent de minimis changes are improperly made or 
incorporated into the permit, corrections can be made by reopening the 
permit or when the permit is renewed with little or no cost to the 
environment, provided the changes are in fact de minimis.
    Third, for the less environmentally significant changes that do not 
qualify as de minimis, EPA is proposing to limit its review and 
objection opportunities for at least the first 5 years following 
program approval. For such changes, EPA would object to a change only 
in response to a citizen's meritorious petition under section 505(c) 
where the permit revision at issue would likely lead to significant 
adverse environmental consequences. During the 5-year period, the 
Agency would rely on consultation with State officials and audits of 
State programs to assist and monitor implementation of the permit 
revision process with respect to changes in the less environmentally 
significant category. Depending on what the audits reveal, the Agency 
would revise as appropriate the time period or scope of the above-
described limit on its objection authority. The EPA contemplates 
extending the waiver in States where the audit reveals no significant 
problems due to the waiver, and reinstating the objection opportunity 
in States where the audit shows otherwise.
    For changes in the more environmentally significant category, EPA 
would maintain its full authority to review and object to permits on 
its own and in response to a citizen's petition. While the Agency does 
not plan to routinely review all or even most of these changes, EPA 
believes it should retain its authority to do so in light of the 
potentially large emission increases such changes entail.
    The Agency believes today's proposed approach to exercising its 
review and objection authority would facilitate efficient 
implementation of the proposed changes to the part 70 permit revision 
process. Other aspects of today's proposal would improve the integrity 
of part 70 permit revisions by ensuring public participation 
commensurate with the environmental significance of the change and 
public access to all permit revision decisions. To the extent that 
potential public involvement increases, there is less need for regular 
EPA oversight. The Agency also recognizes that the first years of 
implementing any new or revised program are the most challenging. 
States will need time and flexibility to work through the many new 
issues that will inevitably arise as they begin to implement a revised 
permit revision system. States are more apt to seek out EPA's help in 
addressing difficult issues of first impression if EPA is in the role 
of colleague rather than overseer.
    Beyond that, EPA's own resources are limited. The Agency believes 
that its resources would be best used to focus on the more 
environmentally significant changes and to assist and audit States' 
implementation of their programs. The Agency could, as an exercise of 
its enforcement discretion, simply refrain from objecting to less 
environmentally significant changes. The Agency believes, however, that 
to realize the full benefits of its proposed approach to exercising its 
objection authority, a regulatory limit is necessary. Regulations 
specifying EPA's role in the permit revision process would best inform 
the public, States, and sources as to what to expect and allow them to 
plan accordingly. Particularly in the first critical years of program 
implementation, a regulatory limit would provide an important measure 
of certainty and stability at a time when all affected groups are 
learning the new system.
    The EPA is proposing a limit on its authority that would coincide 
with States' early efforts to implement the revised program. The limit 
on its authority would start upon approval of each revised State 
program that implements these revisions to part 70 and would continue 
for 5 years.
    During the 5-year period, EPA would work with States to facilitate 
a smooth transition to the revised program. Once State program 
revisions were up and running, the Agency would also conduct audits to 
determine States' performance in meeting minimum program requirements. 
In conducting its audits, EPA would make use of the applications for 
permit revisions that States are required by section 505(a) of the Act 
and Sec. 70.8 of the current rule to send to EPA. Based on the results 
of these audits, EPA would decide whether to revise the regulations to 
suspend or extend the limit on its objection authority for particular 
States or States in general.
    An important safeguard in EPA's proposed approach is the ability of 
citizens to petition the Agency to object to a permit revision under 
section 505(c). If a citizen's petition brings to EPA's attention a 
permit revision that allegedly fails to fully or accurately incorporate 
all applicable requirements, including title V requirements, or for 
which required opportunities for public review were not provided, the 
Agency would review the revision for possible objection. Where its 
review revealed an environmentally significant error in the permit 
revision, EPA would object. For instance, an EPA objection would be 
warranted in the case of a permit revision that purported to establish 
or revise limits on a source's potential to emit to avoid application 
of major NSR if the permit revision would in fact allow increases above 
major NSR thresholds. On the other hand, errors that did not have an 
adverse environmental effect would not warrant an EPA objection. 
Correction of such errors could await permit renewal with little or no 
cost to the environment and with significant potential savings to the 
source.
    As a further safeguard, a permit shield would not be available for 
permit revisions to incorporate changes in the less environmentally 
significant category unless they were revised and approved by EPA in 
response to a 

[[Page 45543]]
citizen's petition. In other words, if EPA were to find that a source 
was not complying with an Act requirement that became applicable to the 
source as a result of such a change, the Agency could take enforcement 
action against the source for its non-compliance. The chance that a 
permit revision would somehow incorrectly incorporate applicable 
requirements due to a lack of EPA review would thus be offset by the 
prospect of EPA enforcement of underlying applicable requirements.
    In summary, EPA believes that the benefits of limiting its 
objection authority with respect to the less environmentally 
significant changes outweigh the potential risk of the limitations, 
particularly in view of citizens' petition opportunity. The Agency 
solicits comment on its proposed limitations and on its legal authority 
to establish them.
    Several parties have asked EPA to clarify how it would implement 
EPA's objection opportunity for changes that have previously undergone 
major NSR or minor NSR where a citizen petitions for an EPA objection 
and the alleged error would have a significant environmental affect. 
Section 505(b) of the Act provides for an objection if the permit 
``contains provisions . . . not in compliance with the applicable 
requirements of this Act, including the requirements of an applicable 
implementation plan.'' To assure that the permit contains provisions 
that are in compliance with all applicable requirements of the Act, 
including SIP requirements, EPA would review a change resulting from a 
NSR action to see if the terms of the NSR permit were properly 
incorporated into the part 70 permit, if the terms are enforceable, and 
if the applicable substantive and procedural requirements for public 
review and development of supporting documentation were followed. For 
major NSR, EPA would review the process followed by the permitting 
authority in determining best available control technology (BACT) or 
lowest achievable emission rate (LAER) to assure that the required SIP 
procedures (including public participation opportunities) were 
substantially met 4 and that any determination by the permitting 
authority was properly supported, described in enforceable terms, and 
consistent with all applicable requirements.

    \4\ The Agency would only object to a part 70 permit for 
procedural errors where EPA determined that the process required by 
the SIP was not followed and, as a result, ``the errors were so 
serious and related to matters of such central relevance to the rule 
that there is a substantial likelihood that the [permit] would have 
been significantly changed if such errors had not been made.'' This 
is the same standard courts are to apply in reviewing Agency 
procedural mistakes under the Act (see section 307(d)(8) of the 
Act).
---------------------------------------------------------------------------

    The EPA's purpose in reviewing whether an NSR action was consistent 
with all applicable requirements would be to assure that any BACT 
requirements were at least as stringent as any other applicable 
requirements such as an NSPS and that any minimum control requirements 
specifically articulated in the SIP were met. The EPA would not second-
guess case-by-case technology determinations that meet the minimum 
criteria set forth above. For more environmentally significant changes 
subject to minor NSR, EPA would also examine the calculations used to 
base any decision that minor rather than major NSR was applicable to 
the change.
    At the discretion of the permitting authority, the permit shield 
would be available for changes in the more environmentally significant 
category, in view of the public, affected State, and EPA review 
opportunities provided for those changes. For all other changes, the 
permit shield would be available only for terms that are reviewed, 
revised, or added by EPA in response to a citizen's petition.
    For permit revisions other than those for de minimis changes, 
citizens would have 60 days after the expiration of any EPA opportunity 
to object, or from the time the permitting authority notified the 
public as to its approval of the permit revision, to petition the 
Administrator to make such objection. As in the current part 70, any 
petition would (1) have to be based only on objections to the permit 
which were raised with reasonable specificity during any prior 
opportunity for public comment (unless the petitioner demonstrates that 
it was impractical to raise such objections at that time); (2) have to 
be based on germane and non-frivolous grounds; and (3) have to raise 
issues related to the incorporation of or correctness of applicable 
requirements, enforceability, or procedural requirements concerning 
public review consistent with EPA's ability to object.
    The EPA would like to avoid unnecessary petitions wherever 
possible. Accordingly, the Agency suggests that concerned citizens work 
with EPA early on in the process to resolve as many concerns as 
possible before they rise to the level of a formal petition.
    The Agency is aware of industry concerns that uncertainty is 
created by allowing citizens to petition EPA to object to less 
environmentally significant changes. Because such changes by their 
nature are less environmentally significant, industry has suggested 
that the opportunity for citizens' petitions be postponed until permit 
renewal. The EPA believes that such postponement conflicts with the 
explicit provisions of section 505(b)(2). Moreover, as explained 
previously, at least some type of changes in the less environmentally 
significant category have large potential environmental consequences 
because they shield a source from more stringent environmental 
controls. The Agency has attempted to address industry concerns by 
allowing States to notify the public of permit revisions on a batched 
basis where sources must make changes frequently (see following Section 
II. F. Flexible Permits). The EPA also solicits comment on whether 
there is a legal basis for postponing the opportunity for citizen 
petitions on less environmentally significant changes until permit 
renewal.

F. Flexible Permits

    Aside from providing streamlined permit revision procedures, a 
permit system can promote source flexibility by providing opportunities 
to design a permit which will minimize the need for permit revisions. 
Many ways have been identified to achieve this, including use of worst 
case limits and alternative scenarios (56 FR 21748-49, May 10, 1991). 
In addition, as the July 21, 1992 preamble to the final part 70 
rulemaking stated, there are no limitations on changes which do not 
trigger any applicable requirements and which are not prohibited or 
addressed by the permit.
    Section 502(b)(10) of the Act requires States to design their title 
V programs to allow changes to be made at a source without revising the 
source's title V permit so long as the change does not exceed the 
emissions allowable under the permit and does not constitute a 
``modification under any provision of [title I of the Act].'' The 
current rule implements section 502(b)(10) by providing sources with a 
potential means of establishing emissions caps in part 70 permits. Caps 
may be designed such that changes can be made at a source without 
triggering reviews which can produce additional applicable requirements 
(e.g., NSR or section 112(g) requirements), and thus the need for a 
permit revision, provided emissions do not exceed the cap. The current 
rule further provides that sources granted such a cap may comply with 
the cap through emissions trading as provided by the terms of the cap.
    As discussed in the August 1994 proposal, EPA believes that the 
flexibility afforded by section 502(b)(10) 

[[Page 45544]]
is a mandatory minimum element of State permit programs. In that 
notice, the Agency proposed to revise the current rule to require 
States to establish a cap in a source's permit at the source's request, 
so long as the source proposed a cap that met the terms of section 
502(b)(10) (as well as the enforceability requirements set forth in 
Sec. 70.6). In addition, the Agency proposal would require the permit 
applicant to include in its application proposed replicable procedures 
and permit terms that ensure the emissions cap is enforceable and 
trades pursuant to it are quantifiable and enforceable. Any permit 
terms and conditions establishing such a cap or allowing such trading 
could be established only in a full permit issuance process. The 
permitting authority would not be required to include in the cap or 
emissions trading provisions any emissions units where the permitting 
authority determined that the emissions were not quantifiable or where 
it determined that there were no replicable procedures or practical 
means to enforce the emissions trades. The permit shield described in 
Sec. 70.6(f) could extend to terms and conditions that allowed such 
increases and decreases in emissions.
    As discussed in the July 1992 preamble (57 FR 32267-8) and in the 
August 1994 preamble (59 FR 44471-2), EPA encourages the development of 
trading provisions in part 70 permits consistent with section 
502(b)(10). As allowed in the SIP, the Agency believes that an 
important option for flexibility can be established through part 70 
trading conditions which are specific enough so that any source 
authorized to use them has a clear method of demonstrating compliance 
through the trading program without the need for a permit revision. As 
described in more detail in the July 1992 preamble, the trading 
procedures approved into the SIP must assure that each trade is 
quantifiable, accountable, enforceable, and based on replicable 
procedures and meets the underlying requirements. One example of the 
type of trading program which could provide such flexibility is the 
open market trading system proposed on August 3, 1995 (60 FR 39668). 
Under this approach, EPA intends to allow sources to engage in trading 
of ``discrete emissions reductions'' to achieve compliance with those 
applicable requirements authorized for such compliance in the SIP and 
in the permit. Another example would be the ``emissions budget'' 
program, such as the acid rain program for sulfur dioxide, under which 
sources can use allowances to meet the underlying requirements. It is 
currently envisioned that the part 70 permit need only contain a 
generic trading provision requiring that sufficient discrete emissions 
reductions be held to meet those applicable requirements which are open 
for trading. Permit revisions would not be needed to implement any 
trades, but the trading rule may mandate that the part 70 permit 
contain certain reporting and recordkeeping obligations to assure the 
integrity of the trades themselves.
    Another option for flexibility described in the August 1994 
proposal allows the part 70 permit to contain ``advance NSR'' 
provisions to the extent compatible with State NSR requirements. Such 
advance NSR provisions provide for including the result of the 
preconstruction review process up front in the operating permit, 
including any part 70 permit terms needed to address such future 
change(s). Such a provision, however, must be compatible with the 
constraints of the applicable requirements (e.g., limits on the term of 
a BACT determination) and be developed with its implications of those 
requirements in mind (e.g., possible consumption of the PSD increment). 
Many States should immediately be able to rely on this provision to 
avoid the need for a separate NSR permit or an operating permit 
revision to be issued when the source actually makes the change. Even 
where the issuance of a preconstruction permit is required, the need 
for a part 70 permit revision can still be avoided unless the NSR 
process results in new or different terms that must be placed in the 
part 70 permit.
    Several questions have arisen regarding the practicality of such 
caps and advance NSR provisions. Concerns have been raised that these 
opportunities would be severely limited by section 502(b)(10) of the 
Act. While allowing certain changes at a source to occur without a 
permit revision, this provision excludes title I modifications from 
this relief and subjects eligible changes to a 7-day advance 
notification requirement.
    The EPA believes that section 502(b)(10) was enacted by Congress to 
provide additional flexibility to sources and not to restrict any 
flexibility that already may be available under the regulations 
governing applicable requirements. For example, section 502(b)(10) 
would not preclude the incorporation into a part 70 permit of an NSR 
permit which defines how future changes at a source could occur in a 
manner that would meet the relevant NSR requirement. The part 70 permit 
itself may also define the scope of future NSR obligations for the 
source so long as this is allowed under the State's permitting program. 
No NSR requirements are circumvented under such an approach. Rather, 
compliance is determined beforehand so that the source may operate the 
pre-approved change without first obtaining a permit revision. The 
source would effectively have a blueprint analogous to a type of 
alternative scenario under which to operate if any of the pre-approved 
NSR changes were to occur.
    The exact design of an emissions cap to meet Sec. 70.4(b)(12)(i) of 
the August 1994 proposal and section 502(b)(10) will depend on the 
nature of the prospective source operation and the scope of the 
relevant applicable requirements, including the State's NSR programs 
and of regulations implementing section 112(g). For example, in one 
State it may be possible to define a PAL (or series of PALs) which 
defines when such requirements would be triggered. In other situations 
(e.g., where minor NSR applies and requires a case-by-case technology 
review whenever new capacity would be established), the PAL or series 
of PALs would need to be coupled with an advance NSR provision to 
address all NSR situations including those requiring an advance 
technology review of any changes for which pre-authorization was sought 
under the PAL.
    Concerns have been raised that the 7-day advance notice provision 
of section 502(b)(10) could hinder a source's ability to respond 
quickly to changing market conditions by making changes already 
authorized under a cap. The Agency believes that the section 502(b)(10) 
notification requirement can be met by a generic notice describing a 
class of trades authorized by the permit and the source's intent to 
engage in such trades during a specified period of time. This notice 
must be sent at least 7 days prior to initiating trading of emissions 
under the cap, which incidentally could require notification during 
permit issuance where a facility intends to trade as soon as it 
receives its permit.
    Concerns have also been raised that caps created pursuant to the 
regulations at Sec. 70.4(b)(12) implementing section 502(b)(10) would 
be severely limited if the Agency were to interpret the title I 
modification limitation in 502(b)(10) to include changes subject to 
minor NSR. As discussed in the next section of this preamble, (see 
Section II. G. Title I Modifications), the Agency is proposing to add 
regulatory language that defines the scope of title I modification to 
clearly exclude modifications subject to States' minor NSR programs. 
This action 

[[Page 45545]]
would directly resolve these concerns. Thus, under today's proposal, 
this definition of title I modification will enhance the ability of 
sources to design emissions cap permits pursuant to section 502(b)(10).
    To promote greater certainty in implementing caps under section 
502(b)(10), the Agency proposes to codify into the part 70 regulations 
the previous clarifications regarding emissions caps and advance NSR 
provisions. Under today's proposal, EPA would build upon its August 
1994 proposal by defining in Sec. 70.2 advance NSR, alternative 
scenarios, emissions cap permits, and PALs. The Agency further proposes 
to add to Sec. 70.4(b)(3) the obligation to issue emissions cap permits 
pursuant to Sec. 70.4(b)(12)(i) (regarding the mandatory nature of 
emissions caps) as the Agency proposed to revise it in the August 1994 
proposal. This would require a permitting authority to accept 
enforceable permit conditions proposed by a part 70 source that (1) 
establish limits that keep the source from being subject to 
requirements that apply above the limit and (2) assure compliance with 
requirements applicable to future operations in which the source may 
engage so as to avoid permit revisions. These conditions would be 
established during permit issuance or permit revision procedures for 
the more environmentally significant changes.
    To illustrate the type of flexibility that is available using a 
part 70 created cap incorporating advance NSR, the Agency refers 
readers to a draft permit providing a plant-wide emission limit for a 
semiconductor facility. A copy of this permit is available in the 
docket for this rulemaking. This permit, when final, will include terms 
that allow the source to undertake process changes without a permit 
revision by combining an emissions cap on HAPs that renders the source 
a synthetic minor and an emissions cap on criteria pollutants with an 
advance NSR provision authorizing certain types of changes involving 
VOCs and specific exemptions for insignificant activities and 
emissions. Under this draft permit, the source's routine changes will 
not trigger a part 70 permit revision obligation so long as: (1) Each 
change complies with applicable RACT and SIP requirements; (2) each 
change triggers no newly applicable requirement; and (3) total 
emissions do not exceed an aggregate emission limit for VOCs. This 
permit also incorporates additional conditions for pollution prevention 
planning, reporting, and training to assure compliance with the 
emissions cap. The final permit will also contain monitoring and other 
conditions sufficient to demonstrate compliance with the VOC emission 
limit.
    While this permit is not yet final, EPA considers the basic 
approach used in this permit as acceptable and appropriate under part 
70 and anticipates that it will serve as a useful model which offers 
operational flexibility in an environmentally protective framework. 
When a final decision is made on the specific permit, it will be placed 
in the docket for today's rulemaking.
    The EPA encourages the use of the approach employed in the draft 
permit by permitting authorities seeking to minimize administrative 
burdens and maximize the flexibility of regulated facilities, 
particularly those which make frequent process changes that have a 
relatively small impact on emissions. The EPA does note, however, that 
the terms and conditions needed to meet minor NSR in advance may well 
vary from State to State. In particular, States with case-by-case 
control requirements approved as part of their minor NSR programs may 
require more specific conditions to allow sources to qualify for 
advance NSR. The EPA solicits comment on the acceptability and 
effectiveness of this approach.
    Concerns have also been raised regarding the vast quantity of 
trivial changes that can occur each year at certain sources, including 
those in the electronics sector. These changes are peripheral to the 
core processes of a source and often do not affect emissions. In these 
cases, other types of advance NSR conditions are potentially useful. In 
particular, the part 70 permit can define in advance a list of 
activities which the permitting authority acknowledges are not physical 
changes or changes in the method of operation and therefore do not 
trigger minor NSR. Such changes when they subsequently occur would not 
precipitate the need for a part 70 permit revision, since they would 
not trigger minor NSR. The list of these activities developed by the 
Oregon Department of Environmental Quality which EPA has placed in the 
docket serves as an example of what might be defined in individual 
permits.
    Finally, the Agency would like to clarify that NSR registration 
provisions under an EPA-approved minor NSR program that only require 
reporting of changes in emissions levels, provided total emissions stay 
below certain prescribed limits, could often be treated in the part 70 
permit as a generic requirement which requires any necessary reporting 
or notification by the source to the permitting authority but does not 
require a revision to the permit. Alternatively, implementation of such 
NSR registration rules would be eligible for permit revision by source 
notice (see the previous discussion, Other Changes Not Otherwise 
Reviewed by States) where the applicable requirement itself allows for 
updating the permit through a notification procedure. Where neither of 
these approaches to SIP-required NSR registration can be implemented 
(e.g., State requires individual permit revisions for each 
transaction), the Agency solicits comment on the ability to allow 
permitting authorities to collect and batch process changes over a 
month's time period and conduct one part 70 permit revision at that 
time. This option would be available only for those changes that were 
defined by the program as being individually eligible for this 
treatment and that did not conflict with the part 70 permit.

G. Title I Modifications

    The meaning of the section 502(b)(10) limitation, ``modifications 
under any provision of title I,'' has been disputed since the rule's 
promulgation. In its proposed rule to revise the criteria for granting 
State programs interim approval (59 FR 44572 (August 29, 1994)), EPA 
proposed that the phrase ``modifications under any provision of title 
I'' would include not only changes subject to the major NSR 
requirements of parts C and D of title I but also those subject to 
minor NSR programs established by the States pursuant to section 
110(a)(2)(C), which is also in title I. Based on that reading, EPA in 
August 1994 proposed in part to interpret the title I modification 
language of the current rule (which is found in the provisions 
governing minor permit modification procedures and off-permit as well 
as those implementing section 502(b)(10)) to include minor as well as 
major NSR.
    In response to the August 1994 proposal, EPA received many comments 
from industry and States strongly contending that the proper 
interpretation of the title I modification limitation of the current 
rule should be read to exclude minor NSR. These commenters noted that 
EPA had itself effectively defined the term to exclude minor NSR in the 
preamble to the May 1991 proposed rule (56 FR 21746-47 and footnote 6). 
They argued that commenters on the May 1991 proposed rule relied on 
that definition, that EPA did not change the definition in promulgating 
the final rule in July 1992, and therefore that EPA was not free to 
change its interpretation without undertaking further rulemaking. Many 
comments also pointed out that EPA's 

[[Page 45546]]
August 1994 proposal to include minor NSR in the scope of title I 
modifications would have the effect of greatly reducing, and in some 
cases virtually eliminating, the relief that Congress sought to provide 
sources under section 502(b)(10) (i.e., to avoid permit revisions for 
changes that do not increase allowable emissions and are not title I 
modifications).
    Most small changes at sources, if they are subject to any Act 
requirements, are subject to minor NSR. Conversely, if they are not 
subject to minor NSR, they are generally not subject to any other Act 
requirements. Since changes that are not subject to any Act requirement 
and not otherwise barred by the permit may be made without revising the 
permit, limiting the scope of section 502(b)(10) to changes that are 
not subject to either minor or major NSR or section 112(g) would limit 
the relief provided by that section to a relatively small number of 
changes in most States. Only changes below the threshold for minor NSR 
set by the State would be eligible as a section 502(b)(10) change. In 
States with extensive minor NSR programs (e.g., those with low 
thresholds or those where any increase in emissions is considered a 
modification and therefore subject to minor NSR), virtually no changes 
would be eligible for section 502(b)(10) treatment. Depending on the 
State, interpreting title I modifications to include minor NSR would 
thus mean that few if any source changes could be accomplished under 
section 502(b)(10), and would thereby frustrate Congress's intent in 
enacting section 502(b)(10) to minimize the need for a permit revision.
    Many commenters to the August 1994 proposal suggested that in using 
the phrase ``a modification under any provision'' of title I Congress 
was referring to those modifications which title I itself defines, 
generally by means of an emissions level above which specified control 
requirements apply. Parts C and D of title I and section 112(g) all 
specifically define the term ``modification'' for purposes of those 
provisions. By contrast, section 110(a)(2)(C), the basis for State 
minor NSR programs, does not define the term ``modification.'' What 
constitutes a modification for minor NSR purposes is a matter for each 
State to decide in fashioning its minor NSR program, and under the 
statute and applicable regulations, States have broad authority to 
determine the scope of their minor NSR programs. Many commenters 
contended that Congress, by limiting the scope of section 502(b)(10) to 
changes that are not title I modifications, intended to establish size 
thresholds for those changes that could be made using the flexibility 
afforded by that section and that the intended size thresholds are 
those contained in the provisions of title I itself.
    The EPA believes that the term title I modification should be read 
in the context of section 502(b)(10) as not including minor NSR. While 
the statutory term, ``modifications under any provision of title I,'' 
is arguably broad on its face, giving the term its broadest meaning 
would largely (and in the case of some States, almost entirely) 
frustrate Congress' clear intent that sources be afforded flexibility 
under States' title V programs to make some changes that do not require 
a permit revision. As commenters noted, virtually no changes would be 
eligible for section 502(b)(10) treatment in States with extensive 
minor NSR programs if EPA adopted the broadest interpretation.
    The House Report on the Clean Air Act Amendments of 1990 indicates 
that the drafters of title V were interested in establishing minimum 
criteria for State programs to afford some measure of national 
uniformity in title V permitting. H.R. Report 101-490, 103 Cong., 1st 
Sess., p 343. Those minimum criteria are spelled out in section 502(b), 
including in section 502(b)(10). In light of the legislative history, 
EPA believes that it would be inappropriate to define the title I 
modification limitation on the flexibility afforded by section 
502(b)(10) in a way that could and does vary widely, depending on the 
scope of a State's minor NSR program. The obvious sizing purpose of the 
title I modification limitation also strongly suggests that Congress 
had in mind the thresholds it established elsewhere in title I, not the 
thresholds that States are free to set in fashioning their minor NSR 
programs.
    To interpret the title I modification limitation to include minor 
NSR might also have the counterproductive effect of creating an 
incentive for States to scale back the scope of their minor NSR 
programs. If title I modification were interpreted to include minor 
NSR, States interested in allowing their sources to take more advantage 
of the flexibility offered by section 502(b)(10) might find it 
necessary to narrow the scope of their minor NSR programs (e.g., set 
higher threshold levels) so that more changes would escape being 
classified a title I modification. But the 1990 Amendments to the Act 
are Congress' testament that more, not less, needs to be done to clean 
up the nation's air. States with extensive minor NSR programs are 
generally those States which face the stiffest challenge in meeting and 
maintaining national air quality standards. It would be 
counterproductive if States were pressured to cut back their air 
pollution control programs for new or modified sources to take 
advantage of title V permitting flexibility when those programs are 
needed more than ever to achieve clean air.
    As previously noted, the issue of the proper interpretation of the 
term title I modification is also relevant to the scope of the current 
rule's minor permit modification provisions. Those provisions allow any 
change that meets specified criteria, including not being ``a 
modification under any provision of title I,'' to be incorporated into 
a title V permit using streamlined procedures which do not include an 
opportunity for public participation. In the case of these provisions, 
the title I modification criterion is not derived from the statute but 
was promulgated by EPA as a means of sizing changes eligible for minor 
permit modification procedures. Here, too, the phrase used by the 
Agency to describe the limitation is broad on its face. However, EPA 
acknowledges that it effectively characterized the scope of that term 
in its explanation in the May 1991 proposed rulemaking preamble and 
that States and sources have relied on that explanation. The Agency 
thus believes that the term should be interpreted in that manner for 
purposes of the current rule.
    Today's notice is a proposal, and EPA thus intends to codify in 
regulatory language the interpretation of title I modification 
described above at the same time it takes final action on the other 
issues it is addressing in this and the August 29th proposal to revise 
the part 70 rule. As indicated above, the Agency believes that the term 
title I modification as it appears in section 502(b)(10) and the 
current rule should be read to exclude changes subject to minor NSR. 
Consequently, EPA intends to promulgate the regulatory language 
defining title I modification as proposed in the August 1994 Federal 
Register, except that the definition would not include the reference to 
section 110(a)(2) of the Act.

H. EPA Issuance of PSD Permits

    Under today's proposal, the permitting authority would be required 
to revise immediately the part 70 permit upon issuance of a PSD permit 
to accomplish the streamlining intended for changes with prior process. 
In States that do not have a PSD program approved into the SIP, 
however, the previous discussion regarding the automatic incorporation 
into part 70 permits of changes with State review 

[[Page 45547]]
requires clarification in States without approved PSD programs, several 
situations are possible: (1) EPA issues the PSD permit as the issuing 
agency, (2) EPA signs the PSD permit in a PSD program partially 
delegated to the State, or (3) the State issues the permit acting as 
EPA's agent under a fully delegated, but not SIP-approved, PSD program.
    A State with an approved part 70 program should always be able to 
enforce a PSD permit that is attached to a part 70 permit (even if the 
EPA issues the PSD permit). Where the PSD permit does not meet the 
requirements of part 70, the State may need to create a separate part 
70 permit revision (EPA cannot revise the part 70 permit because it is 
not the part 70 permitting authority) to supply the terms necessary to 
meet the requirements of Secs. 70.6(a) and (c). Other applicable 
requirements (e.g., MACT standards) that apply to the source but that 
are not included in the PSD permit would need to be included as well in 
the part 70 permit revision. Close coordination between the State and 
EPA could allow the part 70 permit revision and the PSD permit to be 
issued using the same public and EPA review process, if that is 
desired. Once the PSD permit is issued by EPA and the supplemental part 
70 revision is completed by the State, the State would automatically 
incorporate both the PSD permit and the part 70 permit revision into 
the existing part 70 permit by attaching them to the existing part 70 
permit.
    In the case where the State permitting authority must also issue 
its own preconstruction approval under minor NSR (e.g., to cover 
additional pollutants and/or requirements) before construction of a PSD 
source or modification can proceed, the permitting authority would have 
to develop any additional part 70 permit terms to meet part 70 and 
place these into the minor NSR permit. Most often, the minor NSR permit 
should also contain the provisions of the part 70 revision (previously 
described). Upon issuance, the State NSR permit could be automatically 
incorporated along with any independent PSD permit into the existing 
part 70 permit although the incorporation of these documents does not 
necessarily have to occur simultaneously.
    The Agency solicits comment on this approach to accomplishing 
streamlined permit revisions for incorporation of PSD permits. In 
particular, EPA solicits comment on whether permitting authorities 
which do not have adequate authority to issue PSD permits directly 
should be afforded additional time to incorporate those permits 
satisfactorily into relevant part 70 permits.
I. Rulemaking Under Section 302(j)

    The current definition of major source in part 70 requires sources 
to count fugitive emissions in determining major source status for PSD 
and nonattainment NSR purposes when the source category is subject to a 
standard promulgated under section 111 or 112 of the Act, regardless of 
when the standard was established. As discussed in the August 1994 
proposal notice, EPA agrees that it did not follow the procedural steps 
necessary under section 302(j) to expand the scope of source categories 
in the current part 70 regulations for which fugitives must be counted 
in making NSR major source determinations (59 FR 44514). In that 
notice, EPA proposed to change paragraph (2)(xxvii) of the definition 
of major source such that only a source belonging to a source category 
subject to a section 111 or 112 standard promulgated as of August 7, 
1980 would be required to count fugitive emissions of the pollutant 
regulated by that standard in determining if it were major for NSR 
purposes. The EPA no longer believes that revising this category as was 
proposed is the appropriate approach. Rather, EPA believes that this 
paragraph needs to be revised to allow for future affirmative actions 
under section 302(j) to avoid the need for subsequent revisions to 
State part 70 programs and to be consistent with the NSR program.
    In a notice of proposed rulemaking to revise NSR regulations 
implementing parts C and D of title I of the Act that will be published 
in the near future, the Agency will solicit comment on amending the 
listed source categories for which fugitive emissions must be counted 
in determining whether a source is major. This rulemaking action is 
being taken to satisfy the requirements of section 302(j) which 
requires that fugitive emissions be included in major source 
determinations only ``. . . as determined by rule by the 
Administrator.''
    Under EPA's longstanding interpretation, section 302(j) involves a 
two-step rulemaking process. The EPA will propose to list a source 
category if emissions from that category have a potential for 
significant air quality deterioration, and will make a final listing 
unless commenters demonstrate that the social and economic costs of 
regulation would be unreasonable in comparison to the benefits (see 
e.g., 49 FR 43202, 43208 (1984)). The EPA's interpretation has been 
upheld on judicial review (NRDC v. EPA, 937 F.2d 641, 643 (D.C. Cir. 
1991)).
    Because EPA will be undertaking the future section 302(j) 
rulemaking, EPA no longer believes that it would be appropriate for 
parts 70 and 71 to definitely refer to the August 7, 1980 date provided 
in the August 1994 part 70 proposal and the April 1995 part 71 
proposal. Until EPA promulgates this future section 302(j) rulemaking, 
EPA believes that fugitives should not be counted for source categories 
subject to section 111 or 112 standards promulgated after August 7, 
1980. Consequently, to facilitate ongoing consistency with whatever 
affirmative section 302(j) determination the Administrator has made at 
any point in time, EPA proposes to revise parts 70 and 71 to require 
that fugitive emissions be included for source categories subject to 
standards promulgated under sections 111 or 112 for which the 
Administrator has made an affirmative determination under section 
302(j).
    The result of this approach would be that source categories 
currently subject to section 111 or 112 standards promulgated after 
August 7, 1980 would not have to count fugitives unless and until EPA 
completes this section 302(j) rulemaking to require that fugitives for 
these source categories be counted. Moreover, once this section 302(j) 
rulemaking has been completed, this approach would result in fugitive 
emissions from any source categories listed through a section 302(j) 
determination being counted for purposes of the title V definition of 
major source as well.
    Finally, when new section 111 or 112 standards are promulgated and 
contain affirmative section 302(j) determinations, those determinations 
would carry over for purposes of title V. This approach would 
ultimately avoid any need to revise parts 70 and 71 every time a new 
section 302(j) rulemaking is conducted and would relieve State and 
local agencies from having to submit revised part 70 programs for EPA 
approval solely because the Administrator has made an affirmative 
section 302(j) determination. The EPA solicits comment on this 
approach.
    In addition, EPA is proposing to delete the language in paragraph 
(2)(xxvii) of the major source definition in the current part 70 
regulations, the August 1994 part 70 proposal, and the April 1995 part 
71 proposal which reads: ``. . . but only with respect to those air 
pollutants that have been regulated for that category; . . .'' The EPA 
believes that this revision is necessary to make the parts 70 and 71 
definitions of major source consistent 

[[Page 45548]]
with the definitions of major source in parts 51 and 52. While the 
corresponding language in the NSR rules would require that sources in 
these categories consider fugitive emissions of all air pollutants in 
determining whether they are major, the current part 70 regulations, 
the August 1994 part 70 proposal, and the April 1995 part 71 proposal 
would exclude emissions not directly regulated by the 111 or 112 
standard for that category. This could result in sources being major 
for purposes of NSR, but not being major for purposes of title V. This 
is inconsistent with the section 501(2) definition of major source 
which requires any stationary source to be considered major under title 
V if it is a major source under section 112 or a major stationary 
source under section 302 or part D of title I.
    Finally, EPA proposes to modify paragraph (2)(viii) of the major 
source definition in the current part 70 regulations, the August 1994 
part 70 proposal, and the April 1995 part 71 proposal which reads: 
``Municipal incinerators capable of charging more than 250 tons of 
refuse per day; . . .'' This paragraph needs to be modified to read: 
``Municipal incinerators (or combinations thereof) capable of charging 
more than 50 tons of refuse per day; . . .'' This correction needs to 
be made to be consistent with the NSPS for incinerators promulgated at 
Sec. 60.50 in 1977 and which applies to incinerators with a charge rate 
of more than 50 tons per day. This proposed revision is also consistent 
with the list of major stationary sources in section 169(1) of the Act.
    The EPA proposes to clarify that, for municipal incinerators, the 
capacity threshold for tons of refuse fired per day is for the 
combination of all municipal incinerator units at a source. For 
example, a municipal incinerator source which has two incinerator 
units, each unit capable of firing 40 tons of refuse per day, has a 
total firing capability at the source of 80 tons of refuse per day, 
which is more than the 50 tons per day capacity threshold.

J. Revisions to Section 51.161

    Several States have asked whether the public participation 
requirements for minor NSR as codified at Secs. 51.160-161 would also 
meet the title V public participation requirements set forth in today's 
proposal. For the reasons subsequently described, EPA believes that 
they would. Today's proposed part 70 permit revision procedures are 
intended to meet the requirements of section 502(b)(6) of the Act that 
such procedures be adequate, streamlined, and reasonable. The proposal 
presumes that the public participation process required for specified 
types of minor NSR changes by the regulations governing those changes 
is sufficient for title V purposes as well.
    Application of public participation procedures to new and modified 
sources under minor NSR programs must be consistent with the statutory 
and regulatory purposes of those programs, and EPA believes that 
tailoring this application to the environmental significance of new or 
modified sources on a categorical or individual basis is consistent 
with these purposes. To demonstrate this, the purposes of minor NSR 
programs are set forth below, followed by a discussion of the tailoring 
issue.
    Section 110(a)(2)(C) of the Act requires every SIP to ``include a 
program for the . . . regulation of the modification and construction 
of any stationary source within the areas covered by the plan as 
necessary to assure that national ambient air quality standards are 
achieved.'' The EPA's regulations now codified at Secs. 51.160-164 have 
since the early 1970s required a NSR program, and one is included in 
every SIP. This requirement predates and is separate from the 
requirement also set forth in section 110(a)(2)(C) (as well as 
Secs. 165(a)(1) and 172(a)(5)) that States have ``major'' NSR 
permitting programs under part C (PSD) and part D (nonattainment NSR) 
of title I.
    In their early years, the original NSR programs served primarily as 
a means to insure that new source growth would be consistent with 
maintenance of the NAAQS. In response to a lawsuit challenging the 
adequacy of the original round of SIP's approved by EPA in 1972, EPA 
determined that the original NSR program and other SIP measures were 
inadequate to maintain air quality. Consequently, EPA expanded the NSR 
regulations in 1973 to require public participation and to require that 
States explain the basis for any exemptions from the program (38 FR 
15834, 15836 (1973) (citing NRDC v. EPA, No. 72-1522 (D.C. Cir.)); 38 
FR 6279 (1973)). The 1973 regulations are substantively unchanged 
today. They do not on their face distinguish between major and minor 
sources, nor did the Clean Air Act prior to 1977.
    With the adoption in the 1977 Amendments of parts C and D 
applicable to ``major'' new and modified sources, Congress created 
significant economic incentives for sources to take steps to be 
classified as minor and therefore avoid these more stringent major 
source requirements. Consequently, after 1977, a principal focus of 
States' pre-existing (now referred to as ``minor'') NSR programs became 
the use of limitations on hours of operation and rates of production, 
short-term emission limits, and (following the decision in Alabama 
Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979)) pollution control 
equipment that restricted sources' potential to emit to levels below 
applicable major source thresholds. Different terms are used to 
describe the various forms that these restrictions can take.\15\ Since 
by definition a major new or modified source that fails to undergo NSR 
under part C or D would threaten the achievement of air quality goals, 
a ``necessary'' purpose of minor NSR programs that are used as a 
federally-enforceable mechanism to avoid major status is that they 
function in a way that reasonably assures that synthetic minor sources 
and netting transactions will in fact restrict potential to emit to 
minor source levels.

    \15\ The term ``synthetic minor'' is generally used to describe 
such restrictions taken at a new source or at a new or modified 
emissions unit at an existing source to avoid major source status. 
``Net out'' is the term used at a modified source when the 
restrictions are adopted at a unit or units other than the one(s) 
undertaking the change(s) that trigger the applicability review such 
that emissions reductions at the restricted units offset emissions 
increases at the new or modified units and the net emissions 
increase remains below the levels at which PSD or major NSR applies. 
A ``plantwide applicability limit'' or ``PAL'' is a form of net out 
whereby a range of future changes at a source is determined 
beforehand not to result in a net emissions increase, such that 
these changes may occur without triggering major NSR requirements if 
they are otherwise consistent with the requirements of section 
110(a)(2)(C).
---------------------------------------------------------------------------

    Section 51.160(e) requires States in their NSR programs to identify 
types and sizes of facilities, buildings, structures, or installations 
which will be subject to preconstruction review, and requires the State 
to discuss in its SIP submission the basis for that determination of 
the program scope. States may exempt from minor NSR those changes that 
are not environmentally significant, consistent with the de minimis 
exemption criteria set forth in Alabama Power. Given their 
environmental significance, however, EPA believes that it is unlikely 
that synthetic minor sources and netting transactions could qualify as 
de minimis changes. Since States may exempt de minimis changes from 
minor NSR altogether, it follows that they may provide a partial or 
full exemption from the full public process requirements of 
Sec. 51.160(e), consistent with the environmental significance of the 
change.
    As previously explained, the statutory purposes of section 
502(b)(6) are met 

[[Page 45549]]
with respect to changes reviewed by State programs governed by Federal 
regulations by compliance with the procedural requirements set forth in 
those regulations. For minor NSR, that means compliance with the 
regulations at Secs. 51.160-161. For the reasons stated above, EPA 
believes that the NSR regulations allow the tailoring of public 
participation process as envisioned by today's proposal for less 
environmentally significant changes, consistent with de minimis 
exemption criteria. Thus, procedural requirements for less 
environmentally significant changes can be the same for minor NSR and 
part 70 programs, allowing their consolidation. Of course, tailoring of 
process under either program must be reasonable and adequate for the 
purpose of the program.
    To codify these understandings, EPA proposes to revise Sec. 51.161 
to reserve its current 30-day public notice and comment requirements 
for any construction or modification that is subject to major NSR or 
section 112(g) and for any minor NSR action (including establishment of 
a PAL) that would allow a part 70 source to net out of major NSR. A new 
paragraph (c) consistent with Sec. 70.7(e)(2)(vi) is proposed at 
Sec. 51.161 to clarify that, for other minor NSR transactions at part 
70 sources, the permitting authority may match the public participation 
process to the environmental significance of the changes.
    As discussed earlier in this notice, certain minor NSR actions are 
more environmentally significant because they allow a part 70 source to 
net-out of major NSR controls. They thus warrant a 30-day prior 
opportunity for public comment. Other minor NSR actions create 
synthetic minor sources or modifications which also have the effect of 
shielding the source or modification from major NSR controls. Actions 
creating synthetic minors can be environmentally significant, and 
States must consider the factors discussed earlier in identifying those 
types of synthetic minors that present greater risks of potentially 
allowing emission increases in excess of major source or modification 
thresholds. For these actions, a substantial opportunity for prior 
public participation is warranted. Other types of synthetic minors may 
be relatively less significant and a lesser degree of public 
participation would be acceptable. The permitting authority may also 
designate certain categories of changes, subject to EPA approval, as de 
minimis based upon its determination approved by EPA that meets the 
test prescribed by the Alabama power case. For these categories of 
changes, the State may forego altogether prior review by the public and 
EPA.
    Paragraph (d) of Sec. 51.161 is proposed to require availability of 
the public notice, rather than copies, to be provided to EPA and 
affected States. This change is intended to allow the permitting 
authority the opportunity to provide the required information through 
other avenues such as computer bulletin boards instead of solely by 
hard copy.
    A new Sec. 51.161(e) would be added to confirm that a State could, 
as needed to meet the public participation requirements for minor NSR 
changes at part 70 sources, either revise its NSR or part 70 program to 
include those provisions.
    In addition, today's proposal would delete an obsolete 
grandfathering provision at Sec. 51.161(c) applicable in limited 
circumstances. It enabled States to adopt a comment period shorter than 
would otherwise be required to be consistent with requirements in State 
programs for acting on requests for permission to construct. That 
provision was adopted in 1973 to avoid undue disruption to existing 
State programs. The EPA is not aware of any State program that 
currently falls within the scope of the grandfathering provision. 
Beyond that, given the changed purposes of minor NSR programs since 
that time and the flexibility under today's proposal to enable States 
to match public process with environmental significance, including the 
use of public comment periods less than 30 days where appropriate, EPA 
believes it is no longer necessary or appropriate to retain this 
grandfathering provision.
    Finally, a new Sec. 51.160(e) clarifies that all of the terms used 
in Secs. 51.160-164 have the same meaning as provided elsewhere in 
subpart I of part 51, or in the Act. None of the terms in these 
sections have meanings different from those used in other sections of 
the NSR regulations or in the Act, and it is simpler to clarify this 
through a single cross-referencing provision rather than to repeat 
those terms here.

K. Incorporation of MACT Standards

    The EPA proposed in the August 1994 notice to allow States to 
incorporate MACT standards into operating permits using a 2-step 
process. The first step provided for administrative incorporation of 
certain conditions into the permit at the time a source submits the 
initial notification that it is subject to the MACT standard. These 
conditions would outline the steps which the source would take to 
demonstrate compliance with the MACT standard. In the case of newly 
issued MACT standards, this first step would be in lieu of the 
reopening procedures otherwise applicable, which require full public 
and EPA review. The second step would require use of the proposed minor 
permit revision procedures to define final compliance parameter limits 
and unit applicability decisions, unless the source chose options such 
as emissions averaging, in which case significant permit revision 
procedures would be required.
    Today's proposal would provide an analogous system but would afford 
States more discretion in providing adequate process for the second 
step of MACT incorporation. The first step of incorporating the MACT 
compliance plan could occur upon the permitting authority's receipt of 
a notice from the source that the source is subject to the MACT 
standard. The second step of defining source-specific compliance 
details would occur through the permit revision process for changes 
that do not undergo a State review program. As described previously, 
States would have broad discretion to determine the process for such 
changes which do not meet the proposed definition of more 
environmentally significant changes. The EPA is proposing not to 
include decisions regarding MACT compliance terms in the more 
environmentally significant category; States would thus have 
flexibility in providing process for these determinations in 
conjunction with State review programs, if the State so desires.
    At the same time, as the author of MACT standards, EPA is in a 
particularly good position to judge the extent to which it would be 
appropriate to provide for public participation in decisionmaking about 
particular MACT compliance terms. The Agency thus expects to provide 
guidance to States in this regard, probably in the context of 
promulgating the MACT standards themselves. As a general matter, 
though, States should provide more public process for decisions 
regarding MACT compliance terms that entail the exercise of substantial 
discretion or judgment by the permitting authority or that could have a 
large impact on allowable emissions. Emissions averaging customized to 
the source, for example, should be subject to a substantial opportunity 
for prior public review.
    It should be noted that not all MACT standards will require a two-
step process for incorporating them into part 70 permits. As explained 
earlier in this notice, for MACT standards whose application does not 
vary from source to source in any significant way, the State 

[[Page 45550]]
may provide for incorporation without any permitting authority or 
public review.
    If EPA adopts this proposed approach in the final part 70 rule, 
States will be faced with a transition period during which State rules 
adopted pursuant to the current EPA rule require reopening using the 
same process as required for issuance of the initial permit. At this 
same time, the State would be in the process of developing and 
submitting for EPA approval a revision to their part 70 program 
responding to the revised EPA rule which would allow for a more 
streamlined process. Some States have requested EPA to allow States to 
use the more streamlined 2-step process for incorporating MACT 
standards during this transition period.
    In response, EPA solicits comment on whether permits could be 
issued containing standard conditions pertaining to specific MACT 
standards in such a way as to avoid the first step of reopening. Under 
this approach, a permit issued prior to promulgation of a MACT standard 
would contain the conditions which outline the steps a source must take 
to demonstrate compliance (i.e., step one conditions) with the MACT 
standard promulgated subsequently. That is, analogous to the first of 
the two steps proposed on August 29, 1994 for incorporating MACT 
standards, the requisite compliance schedule would be initially 
established in the permit.
    The EPA recognizes that for this approach to work, a minimum amount 
of information would need to be known at the time of permit issuance. 
Enough information would need to be known to satisfy the requirements 
of Sec. 70.7(e)(5) of the August 1994 proposal. Those requirements 
include a statement of whether the section 112 requirement is an 
applicable requirement, a schedule of compliance, a requirement to 
submit reports required under the standard, and a requirement to apply 
for a subsequent permit revision by the deadline for the compliance 
statement under the MACT standard. To the extent these permit 
conditions can be expressed as standard conditions (e.g., ``compliance 
shall be achieved no later than 3 years after promulgation of the 
section 112 standard''), this approach may eliminate the need to revise 
the permit before the second step in the proposed MACT incorporation 
process. The EPA solicits comments, especially from States, as to 
whether such an approach would be effective in addressing their 
transition concerns and how it could best be implemented. In addition, 
the Agency solicits comment on the legal ability for States to issue 
such standard conditions before undergoing a rule adoption and/or 
delegation process to acquire any necessary additional legal authority.

L. Clarification for Section 112(r)

    On March 13, 1995, EPA published a supplemental proposal on the 
requirements of section 112(r) of the Act, including how these 
requirements would be implemented in title V permits. In part, the 
proposal set forth standard part 70 permit conditions concerning the 
development and implementation of the risk management plan required 
under section 112(r)(7). The EPA indicated in the March 13 notice that 
permits issued with such conditions would satisfy the part 70 
requirement to ``assure compliance'' with all applicable requirements.
    During development of that proposal, several States commented that 
EPA should propose a narrower definition of the term ``applicable 
requirement'' in part 70. This suggestion was intended to reduce 
potential liabilities of permitting authorities and sources that might 
result from a more expansive reading of part 70 to require more with 
respect to permit content than that required under proposed 40 CFR part 
68 to implement section 112(r).
    In considering these comments, EPA recognizes the need to clarify 
part 70 to limit the potential for reading in unintended requirements. 
The Agency therefore proposes to add a paragraph (iv) to 
Sec. 70.6(a)(1), which would state: ``(W)ith respect to applicable 
requirements under section 112(r)(7) of the Act, the inclusion of 
permit conditions in accordance with regulations promulgated under 
section 112(r) shall satisfy the requirements of paragraph (a)(1) of 
this section.'' This would clarify that permits containing the standard 
permit conditions that EPA expects to promulgate under part 68 would be 
considered in compliance with the requirements of Sec. 70.6(a)(1), and 
that no other obligations on the source or the permitting authority 
with respect to requirements of 112(r) are to be implied from this 
language of part 70.
    The August 1994 proposal responded to various concerns over the 
relevance of section 112(r) to the part 70 program by proposing a 
change to Sec. 70.3(a). That proposal would have provided that a source 
would be exempted from the requirement to obtain a part 70 permit if it 
would be classified as major solely on the basis of its emissions of a 
section 112(r) pollutant. Based on the public comment and further 
analysis of this issue, EPA is today proposing a revision to the 
definition of ``regulated air pollutant'' contained in Sec. 70.2 that 
deletes being listed pursuant to section 112(r) as a criterion for 
conferring the status of regulated air pollutant. This action should be 
more effective in meeting the goals of the proposal, while being more 
consistent with the general applicability structure of title V.
    Because of its central role in Act implementation, the title V 
program addresses a wide range of air pollutants regulated by the 
programs within the Act. For example, in rewriting section 112, the 
1990 Act amendments assign the title V permit program a key 
implementation role. Accordingly, the definition of regulated air 
pollutant, which governs some core program functions such as which 
pollutant emissions are addressed by the permit application, is an 
important one. With these goals in mind, EPA promulgated a definition 
of regulated air pollutant that encompassed all pollutants regulated 
under section 112, including substances listed pursuant to section 
112(r).
    The section 112(r) program governs the prevention of accidental 
releases, and had no predecessor in the Act. Although this program does 
not expressly apply to the routine emissions of air pollutants, EPA 
elected not to prejudge its relevance to air quality management issues. 
Accordingly, EPA promulgated a definition of regulated air pollutant 
that included the substances listed pursuant to section 112(r)(3). It 
should be noted that section 112(r)(3), in mandating that EPA develop 
this list of substances, specified several compounds for inclusion on 
this list. Most of these substances are pollutants that could be of 
concern to air quality management programs at some time and several of 
them are also classified as HAPs pursuant to section 112(b).
    Since that time, EPA has proceeded with developing the section 
112(r) program requirements, such as the risk management plan 
provisions of section 112(r)(7). The EPA has also promulgated a 
considerable list of substances pursuant to section 112(r)(3), 
including the explosive substances listed by the Department of 
Transportation as Division 1.1 in 49 CFR 172.101. Although this list 
includes a wide range of substances, some of which might eventually be 
addressed by air pollution control requirements, the list contains many 
other substances. Examples of the latter group include dynamite and 
nuclear warheads; substances of obvious interest to the risk management 
program, but equally obviously not an aspect of air quality management 
programs. The development of the section 112(r) risk management program 
confirms that the focus of this program is not the regulation of 
``emissions'' of 

[[Page 45551]]
``air pollutants'' and that its requirements, although important to 
public safety, are not significantly relevant to the broader issues of 
air quality management.
    Some significant benefits arise from today's action. Because the 
section 112(r) pollutants at issue are generally not subject to air 
pollution control program requirements, there is only limited expertise 
available for evaluating their emissions from industrial facilities. 
Several parties have expressed concern that it would be quite 
difficult, technically, for businesses to meet the part 70 requirement 
that permit applicants describe their emissions of the section 112(r) 
pollutants. As a result of today's proposal, permit applicants would no 
longer be required to consider the broad class of substances listed 
pursuant to section 112(r) in preparing their emissions estimations. It 
should also be noted that this action is consistent with the section 
112(r)(7)(f) provision that sources not be made subject to the 
requirement to apply for a part 70 permit solely because they are 
subject to section 112(r).
    The following points should be understood in implementing this 
provision. First, it must be stressed that this action would solely 
address how part 70 requirements are implemented; it would in no way 
affect section 112(r) program provisions or the fact that section 
112(r) is an applicable requirement of the Act for part 70 purposes. 
Second, because today's action means that the listing of a substance 
pursuant to section 112(r) would no longer have any relevance to the 
definition of regulated air pollutant, it should be clear that the 
inclusion of a pollutant on the section 112(r) list in no way affects 
the status of a pollutant that is classified as a regulated air 
pollutant because of its regulation pursuant to other programs. 
Finally, today's action does not affect the approvability or continuing 
adequacy of State part 70 permit fee programs.

M. Solicitation of Input

    The Agency solicits comment on all aspects of today's proposal to 
accomplish permit revisions in a streamlined and more efficient manner. 
It is also interested in receiving comment on the final structure of 
the regulatory revisions and how they might be improved and/or how 
States might develop substantially equivalent provisions.

III. Part 70 Program Revisions

    Title V and the current rule require States and local agencies to 
submit operating permit programs for EPA approval by November 15, 1993. 
This deadline has not changed and is not affected by the Agency's 
proposals to revise part 70. Most States and local agencies have 
submitted programs for approval, and EPA has proposed or taken final 
action on many of them. Until EPA promulgates final part 70 revisions, 
State program development and EPA approval will continue to be governed 
by the current rule. States that have yet to submit a program or 
receive program approval should thus be aware that their programs will 
be judged against the current rule until the revised rule is in place. 
As EPA explained in the August 1994 proposal, the Agency intends to 
provide a transition period following the promulgation of the part 70 
revisions during which States may choose which rule EPA is to apply in 
reviewing the State program, the originally promulgated rule or the 
rule as revised.
    Once EPA promulgates final part 70 revisions, States that receive 
program approval under the originally promulgated rule will be required 
to revise their programs as needed to comply with the revised rule. 
Under the current rule, States have at least 180 days from EPA's 
promulgation to make conforming changes to their programs or as much as 
2 years if State legislation is needed to authorize the changes. At the 
same time, many State programs are being approved on an interim basis 
under the current rule. Title V and the current rule authorize EPA to 
grant a State program interim approval if it largely, but not entirely, 
meets the requirements for full approval. Under the statute and rule, 
however, States receiving interim approval must revise their programs 
as needed in time to gain full approval within 2 years of receiving 
interim approval. Consequently, States that receive interim approval 
may be faced with having to undertake two rounds of program revisions, 
the first to gain full approval and the second to comply with a revised 
part 70.
    Depending on when it receives interim approval and when EPA 
promulgates final part 70 revisions, a State may be able to revise its 
program by means of a single rulemaking in the time frames allowed by 
the current rule. The Agency is very concerned, however, that the 
timing of these events for many and even most States will not be so 
fortuitous, consigning States to multiple rounds of rulemaking. More 
generally, EPA wants to minimize the potential disruption to State 
programs that rule revisions cause. The Agency is thus proposing to 
provide more time for States to submit program revisions. The Agency is 
also interested in extending the time period under which States may 
operate programs that have received interim approval to enable all 
States to revise their part 70 programs once instead of twice.
    As noted above, the current rule calls for State program revisions 
in response to EPA rule revisions within specified time frames that 
vary according to whether State legislation is required. The Agency 
then has up to 1 year to approve States' submissions. The August 1994 
notice proposed to revise Sec. 70.4(i) of the current rule to specify 
that States would have 12 months to revise their programs if regulatory 
changes were needed. It further proposed to allow the Administrator to 
vary the time period provided for State program revisions as the 
Administrator deemed appropriate (proposed Sec. 70.4(i)(1)(iv)).
    The Agency is today proposing to exercise its discretion under 
proposed Sec. 70.4(i)(1)(iv) to provide States 2 years to submit 
program revisions in response to the proposed part 70 revisions, 
regardless of whether State regulatory or legislative changes are 
required. The Agency believes this would be an appropriate exercise of 
its discretion in light of the fact that these part 70 revisions will 
be promulgated in the beginning years of most State part 70 programs. 
In these early years, the demands on States will be particularly heavy. 
The statute and regulations require States to complete the task of 
issuing permits to all sources subject to the program within 3 years of 
program approval. At the same time, States will have to address the 
many implementation issues that invariably arise when a new program is 
inaugurated. In light of the challenges States already face, EPA 
believes it is only fair and appropriate to provide them with 2 full 
years to submit program revisions.
    The Agency further recognizes the possibility that some States may 
find it difficult to make all of the changes required by the part 70 
revisions within the 2-year time period. In particular, today's 
proposal calls for States to rely on State preconstruction permitting 
programs to provide public review and certain permit content provisions 
for purposes of part 70. To the extent that these State review programs 
require supplementation to account for title V process and permit 
content requirements, EPA would allow States to revise either their 
part 70 regulations or the regulations governing their underlying 
programs. The Agency is aware, however, that supplementing the process 
of existing State programs may 

[[Page 45552]]
pose additional implementation issues. To minimize any disruption of 
underlying State programs EPA is proposing to amend the current rule at 
Sec. 70.4(d)(3)(iv) to allow the Agency to grant interim approval to 
State program submittals even if they do not meet the public 
participation requirements of the revised rule with respect to changes 
processed pursuant to State review programs.
    States receiving interim approval would have an additional 2 years 
to make the changes needed to gain full EPA approval of their programs. 
In total, States would have up to 5 years from promulgation of the 
final part 70 revisions to put in place any additional procedures in 
conjunction with State review programs as needed to gain full approval 
of their part 70 programs (i.e., 2 years to submit program revisions 
sufficient to gain interim approval, 1 year for EPA to grant interim 
approval, and 2 years to gain full approval).
    As previously noted, many States will have received interim 
approval of their part 70 programs under the current rule by the time 
these revisions are promulgated. The EPA is concerned about the 
potentially adverse effects of the part 70 revisions on these States, 
particularly those which submitted their part 70 programs by, or close 
to, the statutory submittal date (November 15, 1993) and therefore 
received the earliest interim approvals for their programs. Under the 
current rule, States granted interim approval for their programs must 
submit program revisions necessary to receive full approval at least 6 
months prior to expiration of the interim approval. Under section 
502(g), an interim approval can be granted for a period not to exceed 2 
years and cannot be extended.
    States which received the earliest interim approval may have less 
than 1 year after promulgation of the final part 70 revisions to 
develop and submit combined program revisions addressing both the 
deficiencies which caused interim approval as well as EPA's revisions 
to part 70. Many States have indicated that it would be extremely 
burdensome to undertake multiple program revisions, especially where 
legislative action would be necessary. Moreover, States might well be 
compelled to do multiple corrections for the same area of deficiency, 
once to correct the problem for which they received interim approval 
under the current part 70 and again to correct it in accordance with 
the revisions to part 70. This would be a seemingly pointless diversion 
of resources which are otherwise critically needed to issue permits 
under the approved program in such States. In addition, it would be 
confusing to permitting authorities, sources, and others involved in 
the implementation of the part 70 program to deal with ``moving 
targets.''
    One approach for providing relief would be to require States to 
correct program deficiencies identified in the interim approval under 
the current part 70 only in those areas which are not proposed to be 
revised. That is, EPA would not require program revisions in areas of 
deficiency affected by the part 70 revisions, but would require them on 
the timeframe provided to respond to the part 70 revisions. This would 
provide relief by reducing the scope of the corrective actions needed 
by the State in response to EPA's interim approval actions. The relief, 
however, would be only partial to the extent that there are significant 
program deficiencies that are not affected by the part 70 revisions.
    Instead, EPA believes that States with early interim approvals 
should be allowed more time to submit program correction revisions 
needed to receive full approval, regardless of what program provisions 
were determined to be deficient in the interim approval notice. That 
is, these States should be allowed to delay the submittal of any 
program revisions to address program deficiencies previously listed in 
their notice of interim approval until the deadline to submit other 
changes required by the proposed revisions to part 70. To accommodate 
this extension of the period to submit program revisions to address 
interim approval deficiencies, the duration of the interim approval 
granted to these States should be extended as necessary.
    The Agency believes that such a policy is necessary to avoid 
penalizing those States which submitted their part 70 program on a more 
timely basis, while rewarding States with late submittals who would 
have considerably more time to synchronize their future program 
revisions. In light of the inequities which would result, the Agency 
believes that providing such a transition period is appropriate. The 
Agency solicits comment on the appropriate legal basis for granting 
such relief.

IV. Proposal for the Federal Operating Permits Program

A. Overview

    In today's notice, EPA proposes a new system for part 71 for 
revising permits which is modeled after the system proposed today for 
part 70 permit revisions. This action is intended to supplement the 
April 27, 1995 proposal on part 71 regulations in this regard. Although 
proposed regulations to implement the new system have not been 
developed, EPA proposes to promulgate regulations to finalize the part 
71 rulemaking that are consistent with the concepts and procedures 
discussed in today's proposal. The Agency believes that the subsequent 
discussion in today's preamble describes the new system with sufficient 
detail to allow the public to understand and offer informed comments on 
the proposal.
    To the extent possible, EPA intends to model part 71 permit 
revision procedures after those proposed for part 70 to ensure that 
sources are not faced with substantially different programs when EPA, 
as opposed to a State, is the permitting authority. Since most part 71 
programs are likely to be of limited duration, consistency with part 70 
will enable smooth transition between Federal and State programs, 
encourage States to take delegation of administration of part 71 
programs, help States that have not obtained part 70 approval to phase 
into the title V program, promote uniformity in public and affected 
State participation, and provide greater certainty and consistency for 
sources.
    Following proposed part 70, today's part 71 proposal would 
establish two basic categories of changes for permit revision purposes. 
The first category would include all changes that are subject to State 
review programs established pursuant to the Act which review the change 
for title V purposes as well. Qualifying changes would be automatically 
incorporated into a title V permit (i.e., a part 70 or part 71 permit, 
as applicable) under a part 71 program upon completion of that review. 
The second category would include all other changes that are not 
subject to State review programs, and today's proposal describes a part 
71 permit review process for these changes.
B. Changes Subject to State Review Programs

    Applicability. As in the case of the part 70 program, today's 
proposal notice for revising part 71 permits builds on existing State 
review programs to provide for automatic incorporation into part 71 
permits for all changes subject to the State review program which are 
also evaluated for title V purposes in this review. There are two 
criteria for a change to qualify. The first is that the State 
permitting authority must have reviewed the change and provided an 
adequate opportunity for public participation and affected State and 
EPA review commensurate with the 

[[Page 45553]]
environmental significance of the change (see footnote number 1). For 
the more environmentally significant changes as defined under proposed 
part 70 (i.e., major NSR, 112(g), and net-outs) a 30-day prior public 
comment period and a 45-day opportunity for EPA review and objection 
must be required in the State review process for it to qualify. If a 
State review program did not provide a 30-day public review period or 
an adequate EPA review opportunity for these changes, EPA (or the 
delegate agency) would provide them as needed in a part 71 process as 
the part 71 permitting authority before issuing the part 71 permit.
    Under part 70, EPA would give a State discretion, for the less 
environmentally significant changes, to match the amount of public 
review to the environmental significance of the change. Under today's 
proposal for part 71, EPA would accept the amount and timing of public 
process under the State's current NSR program, at least during the 
first 5 years following the effective date of a part 71 program in a 
State. The EPA expects no part 71 programs for States to last for more 
than this time duration. This approach is consistent with EPA's 
approach for reviewing minor NSR programs set forth in today's part 70 
proposal. Under part 70, a State would be given interim approval even 
if its program did not meet the public participation requirements of 
the proposed part 70 for changes subject to State review programs (see 
section III of today's preamble).
    The second criterion for inclusion in the first category requires 
that the change subject to the State review process would need to 
address the permit content requirements of proposed Sec. 71.6. The EPA 
believes that many of these requirements could be included in the 
original title V permit as boilerplate or standard conditions, and 
would not require much additional effort to address part 71 permit 
content requirements for subsequent permit revisions. For example, the 
existing title V permit would already contain requirements regarding 
permit fees, periodic reporting, annual certification, and inspection 
and entry. If the existing title V permit ensures that these 
boilerplate conditions apply to the requirements attached to the permit 
(e.g., the revised NSR permit or 112(g) determination), it would not be 
necessary to revisit these requirements when the title V permit is 
revised.
    Consistent with these criteria, the first category of changes would 
include changes that are subject to major or minor NSR or regulations 
implementing section 112(g) and changes that entail a source-specific 
revision of the SIP.
    The Agency is also proposing that certain changes subject to a 
State review program could qualify even though they do not receive 
prior permitting authority review and approval. Under some State minor 
NSR programs, for examle, not all changes subject to minor NSR 
requirements get case-by-case State review and approval. Instead, some 
types of changes are subject to general rules, and the source may make 
such a change without prior State approval so long as it complies with 
the applicable requirements (i.e., the general rules). These changes 
would still be included in the first category.
    As set forth under proposed Sec. 70.7(e)(2)(viii), EPA is proposing 
that such requirements, when triggered by a change that is subject to 
specified requirements, but is not required to receive affirmative 
State approval under the State's review program, be included in the 
first category (i.e., changes subject to a State review program) for 
part 71 purposes and get the benefit of an automatic incorporation 
process (see Section II. C. of this preamble). Eligible requirements 
would be those that do not conflict with the existing title V permit, 
do not require interpretation as to applicability, and do not require 
creation of source-specific permit terms or conditions. These would 
include general rules or general permits. The justification for 
automatic incorporation of these types of requirements is the same as 
under part 70 (i.e., their application is so straightforward that 
little is to be gained from additional process).
    Any change which was subject to a State review process which was 
inadequate from a title V standpoint must be processed as a minor or 
significant permit revision (see discussion below), depending on the 
environmental significance of the change. More environmentally 
significant changes require the significant permit revision process 
while less environmentally significant changes could be processed as 
minor permit revisions. The Agency, however, is concerned that parts of 
the prior State review process in some circumstances might 
unnecessarily be repeated under such an approach and solicits comment 
on how the part 71 permit revision process might be authorized to add 
only the elements missing from the State review process, rather than 
repeat all the elements of the prior State review process.
    Automatic Incorporation Process. All changes that are subject to a 
qualifying State review program (except for those qualifying under a 
general rule approach), the part 71 permitting authority (either EPA or 
the delegate agency) would automatically incorporate the change into 
the title V permit immediately on completion of the State review 
process. The source could operate the change upon completion of the 
State review process and the automatic incorporation. As proposed today 
for part 70, EPA would similarly waive for part 71 purposes its 
objection opportunity for less environmentally significant changes 
subject to State review programs for at least 5 years.
    To accomplish the permit revision, the permitting authority would 
not generate a new permit but would attach the document from the State 
review process, such as the revised NSR permit or the 112(g) MACT 
determination, to the existing title V permit. This process could be 
used provided all of the applicable requirements triggered by the 
change were addressed in the document attached to the permit.
    For part 71, the permitting authority would use the same procedure 
for incorporating the results of the State review process into the 
title V permit as States would use under today's proposal for part 70. 
Since a new title V permit would not be issued under this process, the 
permitting authority would prepare an errata sheet identifying which 
terms of the title V permit were being replaced by which terms of the 
State permit or which terms were being removed as no longer relevant.
    Where the change involved adding new applicable requirements to the 
title V permit, but did not require changing existing terms or 
conditions of the permit, the permit revision would be accomplished by 
attaching to a source's title V permit a copy of the State 
preconstruction permit or section 112(g) determination or the 
documentation containing the new requirement and permit terms that 
reflect the change.
    Process for Incorporating Changes Subject to General Rules. As in 
the case of proposed part 70, for changes regulated by a State review 
program through a general rule, the source would submit a notice 
describing the change and the applicable requirements that attach as a 
result of the change. As part of the notice, the source would have to 
certify that it could operate the change without violating any existing 
permit terms and supply any additional permit terms required by title V 
(i.e., periodic reporting requirements). The title V permit would be 
revised and the source could operate the change upon submitting the 
notice. 

[[Page 45554]]


C. Changes Not Subject to State Review Programs

    Under today's proposal, the second basic category of changes for 
permit revision purposes includes all changes not subject to adequate 
State review programs.
    Notice-and-Go. Part 71 would follow part 70 in proposing that 
changes that render a source subject to a newly applicable requirement 
but that are not subject to a State review program could be 
incorporated into the title V permit by means of a notice submitted by 
the permittee, provided that the change would not conflict with 
existing permit terms and no source-specific determination would need 
to be made in applying the requirement to the source. The justification 
for automatic incorporation of such revisions is the same as for part 
70. The new applicable requirements to which these changes are subject 
should not require any interpretation regarding the applicability of 
the new requirements, or any case-by-case determination of source-
specific permit terms or conditions. When EPA implements a part 71 
program in a State, it will work with the State to determine which 
requirements for which changes can qualify for the notice-and-go 
procedure. For each such State, EPA will publish an informational 
notice that communicates to the regulated community and the general 
public the outcome of the EPA/State discussions. During implementation 
of the part 71 program, as States would do for part 70, EPA would 
provide quarterly notification to the public of such permit revisions 
and would provide a file accessible to the public containing 
information about the revisions.
    In light of the general eligibility criteria described above, the 
EPA expects that many types of changes could be eligible for 
incorporation into the title V permit by means of a notice. 
Applicability of most NSPS and national emission standards for 
hazardous air pollutants (NESHAP) requirements, such as the application 
of a numerical emission limit to a boiler, would be straightforward and 
thus would be eligible. Many straightforward SIP requirements, such as 
source category-specific RACT requirements, would be eligible. 
Generically applicable requirements (e.g., those that apply identically 
to all units at a source such as opacity limits), would also be 
eligible for incorporation via this process, although a permit revision 
may not be necessary at all to apply such a requirement if such 
requirements are already addressed in the source's permit and apply 
prospectively to all future changes that would be subject to the 
requirement. The EPA may also determine that certain MACT standards are 
eligible for this process if they do not require the establishment of 
source-specific requirements (e.g., emissions averaging or setting of 
compliance parameters). Incorporation of MACT compliance schedules 
would also be eligible.
    Finally, as provided in part 70, part 71 would provide that the 
source may operate the change upon mailing a notice, provided that the 
change can be operated in compliance with the existing title V permit. 
In the notice, the source would describe the change, describe any new 
permit terms needed to assure compliance with all applicable 
requirements and relevant part 71 requirements, and certify that the 
change is eligible for this process. The title V permit would be 
revised upon mailing of the notice to EPA.
    Similarly, EPA would adopt provisions like that in proposed 
Secs. 70.7(f)(2)(v)(A)(1)-(5) and (B). Thus, part 71 would provide that 
the source may operate certain administrative changes upon mailing a 
notice, provided that the change can be operated in compliance with the 
existing title V permit. These changes described in proposed 
Secs. 70.7(f)(2)(v)(A)(1)-(5) include correcting typographical errors, 
allowing for certain changes in ownership or operational control of a 
source, and making minor administrative changes. The proposed 
procedures of Sec. 70.7(f)(2)(v)(B) would also be used in part 71 
allowing either the permitting authority or the source to revise the 
title V permit by issuing a notice.
    Significant Permit Revisions. Changes not subject to State review 
programs and that are more environmentally significant as defined under 
Sec. 70.7(f)(1) of today's part 70 proposal would be processed as 
significant permit revisions. The significant permit revision process 
would also be used if a more environmentally significant change subject 
to a State review program was not eligible for automatic incorporation 
(i.e., the change had not previously been subject to an adequate 
opportunity for public comment and a public hearing, affected State 
review, and EPA review or the part 71 permit content requirements had 
not been adequately addressed by a State review program).
    The significant permit revision process would utilize the same 
procedures as required for initial permit issuance, i.e., an 
opportunity for public comment and a public hearing, review by affected 
States, and review by EPA (for delegated programs). Under part 71, a 
majority of these significant permit revisions would be completed 
within 6 months. The EPA expects that if the change had undergone a 
State review process that provided adequate input from the public, 
affected States, and EPA with respect to preconstruction requirements, 
but the preconstruction permit failed to appropriately address part 71 
content requirements, then the permitting authority could in several 
instances process the part 71 permit revision in a much shorter 
timeframe than 6 months.
    Part 71 Process for Other Less Environmentally Significant Changes. 
The EPA is not today proposing any specific part 71 permit revision 
process for less environmentally significant changes (as defined in 
today's proposed part 70) which do not qualify for notice-and-go 
treatment. The types of changes which represent this group are defined 
in proposed Sec. 70.7(f)(1)(ii). With the possible exception of intra-
monitoring approach changes, EPA does not expect the number of changes 
from this group to be significant, particularly in light of frequent 
options to combine such changes (see following discussion). The Agency, 
however, does solicit comment on the need to provide for a more 
expeditious permit revision procedure than the significant permit 
revision process to address less environmentally significant changes 
which do not qualify for notice-and-go or automatic incorporation. 
Where commenters do believe such a need exists, EPA solicits their 
suggestions for designing any appropriate change to the proposed permit 
revision system for part 71.

D. Combination Changes

    ``Combination changes'' under part 71 would be handled the same way 
as EPA proposes to handle them for part 70 (see proposed 
Sec. 70.7(f)(3)). The general rule would be that a combination change 
can be processed using the process for automatic incorporation of 
changes subject to State review programs, provided the change receives 
any necessary public, affected State, and EPA review in the State 
review process and address all part 71 permit content requirements. For 
example, where an emissions increase is subject to minor NSR, but the 
source also wants to incorporate a PAL into the title V permit, the 
change could be automatically incorporated into the title V permit 
after undergoing review under the State's minor NSR program, provided 
the State review process meets the procedural requirements applicable 

[[Page 45555]]
to the establishment of a PAL (i.e., a 30-day opportunity for prior 
public, affected State, and EPA review). This review may be provided on 
a permit-by-permit basis. In addition, where a State takes delegation 
of a part 71 program, it could process minor NSR changes and section 
112(g) or (j) actions as combination changes. The Agency believes this 
is appropriate because upon delegation of a part 71 program, delegate 
States should also be able to receive delegation to implement sections 
112(g) and (j), provided they have adequate authority under State law 
to do so.
E. Opportunity for EPA to Object and Permit Shield

    The opportunity for EPA review of proposed title V permit revisions 
and the corresponding availability of the permit shield will vary with 
the part 71 permit revision procedure employed and will partially 
depend on whether EPA or the State is the part 71 permitting authority. 
In general, the permit shield may be granted by the part 71 permitting 
authority if the permit revision is approved pursuant to a process 
which affords an adequate opportunity for public and affected State 
review and for EPA to object to the issuance of the permit revision. 
The scope of EPA's review where provided would be the same as under 
today's proposal for part 70, i.e., such review would extend to whether 
the appropriate procedures were followed with respect to the State 
review process determination or delegate agency permitting decision 
(including requirements for public participation opportunities), 
whether the decision is properly supported, and whether the terms of 
the permit are enforceable and consistent with all applicable 
requirements.
    Delegated Programs. For changes not subject to an adequate State 
review program which must be processed as either significant or minor 
permit revisions, EPA proposes to continue the requirement in 
Sec. 71.10 of the April 27, 1995 notice that EPA be given a 45-day 
opportunity to object before issuance of the part 71 permit revision. 
Since both the proposed significant permit revision and the minor 
permit revision procedures contain adequate public participation and 
EPA review requirements, EPA believes that the part 71 permitting 
authority may in such cases grant a permit shield to apply to the 
changes. On the other hand, changes which qualify for a ``notice and 
go'' process would not contain review procedures sufficient to warrant 
the availability of the permit shield prior to permit renewal, at which 
point adequate public and EPA review opportunities would be provided 
for such changes.
    More environmentally significant changes which are subject to a 
State review program which reviews these changes for title V purposes 
as well could be awarded the permit shield upon their automatic 
incorporation into the title V permit. As previously mentioned, EPA and 
the public must have been provided their review opportunity to review 
the adequacy of the change (including adequacy for title V purposes) in 
the State review process. For less environmentally significant changes 
subject to a State review program, EPA would depart from its April 27, 
1995 proposal and follow today's proposed revisions for part 70 by not 
including an EPA review and objection opportunity for at least the 
first 5 years of the part 71 program for a particular State. 
Consequently, no permit shield would be available for the automatic 
incorporation of these changes. However, the part 71 permitting 
authority could at the source's request process the change as a minor 
permit revision, thus subjecting the change to public and EPA review, 
in order to establish a shield.
    Non-Delegated Programs. For all changes not subject to a State 
review program and therefore processed by EPA under the minor or 
significant permit revision procedures, the Agency would have the 
option of granting the permit shield. Again, changes subject to a 
notice and go process with its abbreviated review procedures would not 
afford EPA the opportunity to grant a permit shield.
    For changes subject to an adequate State review program which also 
reviews the changes for title V purposes, the preceding discussion 
regarding the availability of the permit shield under delegated part 71 
programs would also apply (i.e., the permit shield is available for 
more environmentally significant changes). Where granted, EPA would 
incorporate the permit shield upon the automatic incorporation of the 
State review document addressing the approved change.
    The EPA solicits comment on whether the revision processes outlined 
above are adequate and generally compatible with proposed part 70 and 
existing State permit revision procedures.
F. Other Part 71 Changes

    For purposes of the part 71 program, EPA proposes to follow the 
approach of today's proposal for part 70 with respect to the definition 
of major source. For example, part 71 would take the same approach as 
part 70 with respect to non-major R&D activities at major sources (see 
discussion in Section V. A. of this preamble). The EPA believes that it 
is important to use a consistent definition of ``major source'' to 
assure that R&D facilities are not faced with substantially different 
applicability requirements when EPA is the permitting authority. The 
EPA also proposes for part 71 that the definition of ``major source'' 
would require that fugitive emissions be included in determining major 
source applicability consistent with the definition proposed today for 
part 70.
    Also for purposes of part 71, EPA proposes to provide an emergency 
defense for exceedances of technology-based limits established in title 
V permits as described in Section V. B. of this preamble, but does not 
intend to expand the concept of emergency defense to include start-up, 
shut-down, and preventive maintenance conditions. The EPA solicits 
comment on the proper scope of the affirmative defense provided by part 
71. Also, EPA solicits comment on whether part 71 should authorize 
permitting authorities to grant a source temporary authorization to 
make a change without revising the permit, as needed to protect public 
health or welfare in emergencies, and whether part 71 should adopt the 
same approach as part 70 adopts regarding the scope, terms, and 
procedural safeguards for such authorization. Finally, EPA proposes to 
adopt for the part 71 program the standard certification language that 
is proposed for part 70 (discussed in Section V. C. of this preamble) 
to be used by responsible officials. The Agency believes that the same 
standard for preparing certifications should apply to the part 70 and 
part 71 programs.
    With respect to the treatment of section 112(r) pollutants, part 71 
would follow today's proposal for part 70. Accordingly, the definition 
of ``regulated air pollutant'' would be revised to delete the reference 
to section 112(r). Further, EPA would add a paragraph analogous to 
proposed Sec. 70.6(a)(1)(iv) to clarify that part 71 permits containing 
the standard permit conditions that EPA expects to promulgate under 
part 68 would be considered in compliance with the requirement that 
permits contain terms that assure compliance with all applicable 
requirements. In addition, consistent with EPA's current interpretation 
of title I modification, (discussed at length in Section II. H. of this 
preamble), EPA intends to promulgate the definition of title I 
modification as proposed in the April 27, 1995 Federal Register except 
that the definition would not include the 

[[Page 45556]]
reference to section 110(a)(2) of the Act. This would result in changes 
that are processed through State minor NSR programs being excluded from 
the definition.
    Also, EPA proposes that part 71 follow today's proposal for part 70 
with respect to EPA's interpretation of section 502(b)(10) of the Act, 
as discussed in Section II. G. of this preamble. Thus, all permitting 
authorities, including EPA under part 71 programs, would be subject to 
the same requirement to issue permits containing emissions caps under 
which sources could trade certain emissions increases and decreases 
without seeking permit revisions, consistent with applicable 
requirements. Therefore, EPA proposes to incorporate the changes 
proposed today to Sec. 70.4(b)(12)(i) into the corresponding section of 
part 71 on operational flexibility, proposed Sec. 71.6(p)(1). The EPA 
further proposes to adopt definitions for part 71 that are consistent 
with the definitions contained in proposed Sec. 70.2 with respect to 
the following terms: Advance NSR, alternative scenarios, emissions cap 
permit, plantwide applicability limit, and State review program.
    In addition, EPA today proposes three changes to EPA's prior 
proposal relating to permit fees under the part 71 program. First, EPA 
proposes that delegation agreements be required to include a condition 
that the delegate agency have sufficient resources to administer the 
part 71 program. Initially, EPA believed that it would be required to 
provide funds to delegate agencies to enable them to carry out the 
responsibilities outlined in the delegation agreements. This remains 
the case in many States, and for those States, the delegation agreement 
would acknowledge that EPA would impose fees on permitted sources 
sufficient to cover program costs. However, EPA has become aware that 
there are several States that have authority under existing State law 
to charge permit fees that EPA believes may be sufficient to fund a 
part 71 program. In the context of delegating part 71 administration to 
any specific State, EPA intends to assess the adequacy of the State's 
existing fee authority to determine whether it is sufficient to cover 
costs of running a part 71 program. If the delegate agency has adequate 
fee revenue from sources subject to title V to fund a fully-delegated 
part 71 program, EPA would grant delegation and would thereafter incur 
no program costs. However, EPA's decision to delegate and its 
assessment of the State's fee authority would in no way constitute EPA 
approval of the State's fee structure for purposes of part 70, or in 
any way prejudge EPA's evaluation of a State's submitted part 70 
program. To provide sources in such States with relief from part 71 fee 
requirements, EPA proposes to revise Sec. 71.9(c)(2) to provide that 
when EPA has fully delegated a part 71 program to a State that had 
adequate fee authority to receive delegation and EPA incurs no program 
costs to administer the program, sources would not be subject to the 
fee requirements of part 71. In situations where sources are already 
paying fees to the delegate agency that are adequate to fund the part 
71 program, EPA believes that it would be inequitable to require 
sources to pay fees to EPA as well.
    When a State seeks delegation of only a portion of the part 71 
program, sources would not be relieved from the part 71 fee 
requirements because EPA would incur some costs in administering the 
portion of the program that was not delegated. In such a case, EPA 
would determine whether the fee structures provided in proposed 
Secs. 71.9(c)(1)-(4) would reflect the costs of administering the part 
71 program. If not, EPA would need to set appropriate fees through a 
separate rulemaking, as per proposed Sec. 71.9(c)(7).
    Second, the EPA proposes to eliminate the $3 per ton surcharge for 
delegated and contractor administered programs from the fee formula in 
proposed Sec. 71.9(c)(3) because EPA believes that for purposes of 
title V permit fees, the cost of EPA's oversight of State-administered 
programs should be treated the same regardless of whether the program 
has been delegated under part 71 or approved under part 70. The EPA's 
oversight costs of State part 70 programs are not covered by State 
permit fees and are not passed along to industry. The part 71 rule as 
proposed today would treat EPA oversight costs in delegated part 71 and 
approved part 70 programs consistently. For similar reasons, the cost 
of preparing guidance for the part 71 program would be deleted from the 
list of activities that comprise ``program costs'' in proposed 
Sec. 71.9(b).
    Third, EPA proposes to reduce the per ton fee amount in proposed 
Sec. 71.9(c)(1) and Sec. 71.9(c)(3) from $45 to $38, to reflect EPA's 
lower program costs resulting from the streamlined permit revision 
procedures proposed today. The data supporting the lower estimate of 
program costs are contained in a document entitled ``Supplement to the 
Federal Operating Permits Program Fees and Cost Analysis'' which is 
contained in the docket for this rulemaking.
    The EPA solicits comments on whether the approach taken in the fee 
provisions proposed today is appropriate and would result in adequate 
revenue being generated to offset program costs, and whether, in 
general, the fee provisions of proposed part 71 could be structured in 
a manner that more closely reflects the true costs of administering the 
part 71 program.
V. Other Changes and Clarifications

A. Rationale for Proposed Exemption for Non-Major R&D Activities

    The Agency is today clarifying the reasoning behind its July 21, 
1992 preamble discussion regarding R&D activities, and is proposing 
changes to the definition of ``major source'' in part 70 that better 
reflect this intent. As explained below, States have flexibility under 
part 70 regarding whether to consider R&D operations as part of the 
source with which it is sited for purposes of determining whether a 
major source is present.
    The part 70 major source definition requires aggregation of ``all 
of the pollutant-emitting activities which belong to the same 
industrial grouping, are located on one or more contiguous or adjacent 
properties, and are under the control of the same person (or persons 
under common control).'' Following NSR/PSD precedent, EPA chose the 
major (2-digit) Standard Industrial Classification (SIC) code 
categories established by the U.S. Department of Commerce to delineate 
an ``industrial grouping.''
    In response to comments requesting exemption of R&D activities from 
title V, EPA stated in the preamble to the final part 70 rule that, 
``in many cases States will have the flexibility to treat an R&D 
facility * * * as though it were a separate source, and [the R&D 
facility] would then be required to have a title V permit only if the 
R&D facility itself would be a major source'' (57 FR 32264 and 32269, 
July 21, 1992). Read consistently with the ``major source'' definition 
in the rule, however, this statement could be read as meaning that 
separate source treatment would occur only in situations where the R&D 
portion of a source has its own two-digit SIC code and is not a support 
facility.
    In light of the uncertain meaning of the July 21, 1992 preamble 
statement, industry representatives have continued to express concerns 
over the permitting of R&D operations. The EPA recognizes that R&D 
operations typically entail the use of small quantities of chemicals 
6 

[[Page 45557]]
manipulated and released in a highly variable manner, and that these 
attributes are present at R&D operations to a degree that distinguishes 
them from other source categories. The EPA further recognizes that, 
because of these unique combinations of attributes, bringing collocated 
non-major R&D facilities into part 70 permitting could potentially lead 
to difficult exercises in emissions estimating and tracking and impose 
additional monitoring and recordkeeping requirements (where the R&D 
operation is subject to an Act requirement).

    \6\ For example, a relatively very large R&D facility employing 
3,000 people in a 2 million square foot complex was comprehensively 
tested for its air emissions. Approximately 40 stacks fed by 600 
laboratories involving potentially over a thousand operations were 
sampled for a 6 to 8 hour duration over a 2 day period. Results of 
subsequent analyses showed that even if this level of operation as 
tested were maintained day and night for an entire year the 
predicted actual emissions of all VOC compounds would be less than 
12 tpy.
---------------------------------------------------------------------------

    In response to these continuing concerns, EPA is today offering a 
more detailed explanation of the SIC code approach as it affects R&D 
operations. In addition, EPA is proposing revisions to the part 70 
major source definition to resolve any ambiguities that may derive from 
the SIC code manual, and to ensure that the same result obtains for 
purposes of section 112 if the changes to the major source definition 
proposed on August 29, 1994 are carried to finality. The EPA recognizes 
that parallel rule revisions would be required for part 63 (the section 
112 General Provisions) and parts 51 and 52 (NSR and PSD). These other 
rules would be revised through a separate rulemaking action.
    At the time of the July 1992 promulgation, EPA believed that R&D 
was not specifically addressed by the SIC code manual in any way. It 
would have followed that the question of whether and how R&D should be 
considered part of a source would be answered in light of the rules 
traditionally applied to determine the extent to which activities at a 
site are functionally integrated.
    In general, to be considered a functional part of an industrial 
activity, a facility must contribute to that activity in a material, 
rather than merely conceptual, manner. The EPA believes that operations 
as proposed for definition in Sec. 70.2 do not contribute to the 
product or service rendered at an industrial site in any relevant 
sense. By definition, the product of an R&D operation is information 
potentially useful to create a new industrial process or to improve the 
process ongoing at the facility, but not to directly support the 
process in which the industrial activity is currently engaged or 
capable of engaging in any significant commercial fashion. It follows 
that R&D would not be considered part of the industrial activity with 
which it is located, despite its location, and must therefore be 
treated as if it were a separate source belonging to a separate 2-digit 
SIC code.
    Under the Agency's support facility test, even where neighboring, 
commonly controlled sources have different 2-digit SIC codes, they 
should be aggregated to determine whether a major source is present if 
the output of one is more than 50 per cent devoted to support of 
another. However, EPA believes that R&D operations should not generally 
be considered support facilities, since the ``support'' provided is 
directed towards development of new processes or products and not to 
current production.
    The limits of this interpretation should be self-evident. To the 
extent an activity bears some resemblance to R&D but in fact 
contributes to the ongoing product produced or service rendered at a 
facility in a more than de minimis manner, those activities should be 
considered part of the source. Pilot plants often present instances of 
activities that are conducted on a trial basis, but which are 
nevertheless dedicated to producing a product for commerce to a more 
than de minimis extent, and so would not be considered R&D. The EPA has 
spoken directly to the types of processes that qualify as R&D in the 
context of certain section 112 MACT standards. These descriptive 
statements address the question of whether R&D should be included in 
particular MACT source categories, rather than major source 
applicability, and so are not relevant to the principles discussed in 
this notice.
    Since the July 1992 promulgation, EPA has learned that the SIC code 
manual itself presents an obstacle to this interpretation, because it 
provides that R&D should generally be grouped with the four-digit code 
activity with which it is most closely associated. Because this 
contrasts with EPA's understanding at the time of promulgation of part 
70, EPA believes it appropriate to continue to implement the current 
rule to allow for separate consideration of R&D as described above. At 
the same time, EPA is today proposing to revise the major source 
definition to clarify that R&D should be treated as having its own 
industrial grouping for purposes of the title I and section 302(j) 
elements of the major source definition.
    A parallel rule revision is also being proposed for the section 112 
element. This is because the August 1994 proposal would change the part 
70 definition to conform to the section 112 General Provisions, which 
do not use the SIC code approach to source aggregation. Today's notice 
proposes to establish a narrow exception for R&D facilities. Because 
the major source definitions used under title V must be consistent with 
other Act programs, EPA plans to follow this revision to part 70 with 
conforming revisions to the major source definition in the section 112 
General Provisions and other section 112 rules. In addition, a new 
definition for ``research and development activities'' is proposed for 
Sec. 70.2.
    The EPA's authority for this part 70 revision is the same as that 
which supported its adoption of the 2-digit SIC code limitation in 
parts C and D of title I and thus in title V. As EPA stated in its 1980 
promulgation of PSD regulations, the 2-digit SIC code grouping embodies 
a common sense notion of a ``plant'' that is appropriate for the PSD 
program (45 FR 52694 (August 7, 1980)). For title I and section 302(j) 
purposes, the establishment of a separate industrial grouping for R&D 
simply represents a further refinement to that common sense approach.
    The EPA chose not to adopt the SIC code approach in the section 112 
context because it concluded that a definition that encompassed the 
entire contiguous commonly owned facility would be more consistent with 
the overall intent of section 112. However, the statutory language of 
section 112(a)(1), which refers to ``any stationary source or group of 
stationary sources'' (emphasis added), leaves EPA discretion to 
separate out discrete groups of stationary sources that are located 
together only for administrative convenience, rather than because they 
contribute to other activities at the site. That this same language 
appears in the various nonattainment ``major source'' definitions added 
by the 1990 Act Amendments, where EPA's historical practice has been to 
allow disaggregation by major industrial grouping, further supports 
this interpretation. The EPA now believes that a disaggregation of R&D 
operations makes sense in the context of section 112, as well as title 
I and thus in title V, because (1) they are operations which by 
definition could stand alone, but which are located with other sources 
primarily for administrative convenience, and (2) the inherent 
changeability of these operations.
    The reasonableness of this separate treatment is further supported 
by section 112(c)(7), which states that, for section 112 purposes, 
``the Administrator shall establish a separate category covering 
research or laboratory facilities, as necessary to assure the equitable 
treatment of such facilities.'' Although this provision addresses 

[[Page 45558]]
source categorization for promulgation of standards rather than 
applicability, it clearly evidences a concern that R&D operations not 
be grouped with other types of operations in a way that overlooks the 
particular challenges associated with their regulation.
    The EPA wishes to emphasize that R&D operations present a unique 
case under section 112. As noted above, EPA, after studying the matter, 
has concluded that R&D is unique in terms of the variability and 
unpredictability of processes. Also, as previously discussed, R&D 
operations are inherently divorced from the primary activity at a 
facility. While other types of activities may or may not support the 
primary activity depending upon the configuration at a particular site, 
R&D activities categorically do not (except, as the definition would 
provide, in a de minimis manner).
    Today's notice does not define the term ``de minimis'' as used in 
the definition of R&D. The EPA solicits comment on whether it should 
attempt to further define de minimis in the final rule, and if so, what 
criteria would be appropriate. For instance, de minimis might be 
defined in absolute terms, in terms of the amount of the R&D product 
that is offered to the industrial activity relative to the total 
product from the R&D operation, or in terms of the amount of support 
from the R&D operation relative to the magnitude of that activity.
    The EPA also solicits comment on whether the special treatment 
afforded by this proposal should be extended to laboratory activities 
that are not R&D. The proposal would exclude such laboratory 
activities. The reasoning is that other laboratory activities fall 
outside of the rationale supporting special treatment, since they are 
likely to be more predictable in their operations and to be 
functionally integrated with on-site industrial activities. The Agency 
solicits comment on whether there are other categories of laboratory 
activities for which this is typically not the case.
    As noted above, several States interpreted the July 1992 preamble 
discussion of R&D activities as authorizing the creation of a separate 
applicability category for R&D, apart from the 2-digit SIC code 
approach. Most of these provisions have been identified as grounds for 
interim approval. The EPA notes that while these programs aim for a 
similar result, they are not uniform in their specifics. For instance, 
definitions of R&D may differ from EPA's definition or may be absent 
altogether. For this reason, EPA is not today commenting on whether the 
clarification in today's notice merits a change in the approval status 
of any of these programs, but instead plans to address this on a case-
by-case basis.
    Notwithstanding the preceding approach which provides for separate 
treatment of the majority of R&D activities, two issues remain related 
to when such R&D activities would independently be considered to be 
major under part 70. Specifically, one issue concerns the effect of a 
facility that supports the R&D activity on the status of the R&D 
activity and the other issue concerns how the PTE for R&D activities is 
to be determined.
    Industry has expressed concern about a stand-alone R&D activity 
(i.e., not located with a manufacturing facility) which is supported by 
another activity (e.g., a boiler) which on its own may exceed major 
source thresholds. This issue is not addressed by placing the R&D 
activity in a separate SIC category, which would only cause the R&D 
activity to be treated separately. The boiler would be considered part 
of the stand-alone R&D activity if it was functionally integrated with 
the R&D activity. The R&D activity together with the boiler would then 
be considered major. Industry has recommended that boilers and other 
support facilities not be considered part of an R&D activity.
    The EPA recognizes that disparate treatment may result if an R&D 
activity at a major manufacturing facility would be considered separate 
and non-major, while another R&D activity of the same size standing 
alone would be considered a major source only because of its support 
facilities. The Agency, therefore, believes an R&D activity should be 
considered separate from major support facilities just as it would be 
separate from a major manufacturing source, and solicits comment on 
whether it should provide an exemption from major source determination 
rules in the case of facilities that support R&D activities. The EPA, 
however, recognizes the potential for this approach to apply in many 
other circumstances with a possible erosion of the concept of a source 
as the sum of functionally integrated parts, a result the Agency does 
not support. The Agency therefore suggests commenters provide rationale 
as to how the approach can be limited to R&D activities.
    As noted, a source must calculate PTE from an R&D operation to 
determine whether it is major. In light of the previously mentioned 
difficulty of performing emission calculations, and the data gathered 
by EPA to date (discussed in footnote 6 above), which indicates that 
even large R&D facilities tend to have very low actual emissions, EPA 
considers it of little benefit to require R&D facilities to go through 
extensive efforts in calculating PTE. Permitting authorities will bear 
primary responsibility for determining the PTE of individual R&D 
facilities, and EPA intends to generally defer to these judgments. 
Given the small likelihood that any R&D operation will be major, EPA 
believes permitting authorities should accept methods of calculating 
PTE from R&D operations that are not unduly burdensome on the source.
    Some have claimed that deriving a numerical PTE calculation from an 
R&D activity is simply not possible, because experiments are typically 
performed only once or a few times, meaning that past emissions are at 
best a poor indicator of the future. The EPA is unsure whether this 
renders PTE calculations strictly impossible, but acknowledges a high 
degree of difficulty. The EPA believes R&D may present a case suitable 
for a de minimis exception from the statutory requirement to calculate 
PTE, because emissions are so low as to yield a gain of trivial or no 
value compared to the difficulty associated with their measurement. 
Comment is solicited on whether such an exception would be appropriate, 
and more generally on the availability of cost-effective means of 
calculating PTE from R&D activities.

B. Emergency Defense

    Section 70.6(g) sets forth the terms of an emergency defense that 
States may include in part 70 permits at their discretion. It is 
available for violations of technology-based emission limits that are 
unavoidably caused by ``any situation arising from sudden and 
reasonably unforeseeable events beyond the control of the source, 
including acts of God. . . .''
    In the preamble to the final rule, EPA explained that it modeled 
the part 70 defense after the NPDES permit upset provision at 40 CFR 
122.41. The NPDES provision was promulgated in response to several 
cases under the Clean Water Act (CWA) that held that EPA must provide 
an upset defense for technology-based effluent limits to take account 
of the fact that even properly operated technology can unexpectedly 
fail (Marathon Oil v. EPA, 564 F.2d 1253 (9th Cir. 1977)). The Agency 
extended the reasoning of these cases to technology-based air pollution 
control standards in promulgating an emergency defense in part 70. At 
the same time, EPA noted that other courts had ruled that EPA was not 
required to provide such a defense but could instead rely on the 
exercise of 

[[Page 45559]]
enforcement discretion to address violations caused by emergencies.
    The part 70 emergency defense was challenged by State and local 
government, environmental group, and industry petitioners in CAIP v. 
EPA. The governmental and environmental petitioners were concerned that 
the rule required States to provide the defense, despite the existence 
of potentially different State defenses. They also questioned EPA's 
legal authority to promulgate an across-the-board defense for 
violations of limits that may have been set in a manner that took into 
account the possibility of emergencies or upsets. Industry, on the 
other hand, objected to the narrowness of the defense and urged that 
the defense be made available for violations that may occur as a result 
of plant start-up, shut-down, malfunction, or preventative maintenance. 
Some industry petitioners also urged EPA to make the defense available 
to violations of limits based in whole or in part on health protection.
    At the outset, EPA wants to make clear that the part 70 rule does 
not require that States adopt the emergency defense. A State may 
include such a defense in its part 70 program to the extent it finds 
appropriate, although it may not adopt an emergency defense less 
stringent than that set forth at section 70.6(g). As noted above, the 
part 70 defense is modeled on the NPDES upset provision, which States 
may omit if they desire to establish a more stringent water pollution 
control program than federal law requires (40 CFR Sec. 123.25(a)(12); 
Sierra Club v. Union Oil Co. of California, 813 F.2d 1480, 1484 (9th 
Cir. 1987)). Like the CWA, the Act in sections 116 and 506(a) 
authorizes States to establish additional or more stringent air 
pollution control or permitting requirements. Consistent with that, 
States may decide to provide an emergency defense that is narrower in 
scope or more stringent in application than Sec. 70.6(g) or no defense 
at all. Consistent with Sec. 70.11(b), States may also provide for any 
affirmative defense that would be available in an enforcement action 
brought pursuant to section 113 of the Act.
    The Agency has reviewed the legal basis for the Sec. 70.6(g) 
defense. As noted above, the relevant CWA case law is split. While 
Marathon Oil and several other courts have required EPA to provide an 
upset defense, either through a permit program or in the underlying 
substantive requirement, to address the fallibility of technology, 
other courts have not out of concern that such a defense was 
inconsistent with Congress' intent that technology-based effluent 
limits force technological development and that enforcement of such 
limits be ``swift and direct'' (Corn Refiners Ass'n, Inc. v. Costle, 
594 F.2d 1223, 1226 (8th Cir. 1979), Weyerhaeuser Co. v. Costle, 590 
F.2d 1011, 1057 (D.C. Cir. 1978)). Other courts have ruled that no 
upset provision is required or appropriate where EPA took the 
fallibility of technology into account in setting the technology-based 
standard for which an upset defense was sought (CPC Int'l, Inc. v. 
Train, 540 F.2d 1329, 1336-38 (8th Cir. 1976), American Petroleum Inst. 
v. EPA, 540 F.2d 1023, 1035-36 (10th Cir. 1976)). These cases counsel 
caution in the application of a uniform emergency defense to standards 
which were previously established under several different Act 
provisions. To determine the extent to which the part 70 defense may be 
appropriately applied, it is necessary to examine the basis and terms 
of the different Act technology-based standards to which it would 
apply.7

    \7\ By technology-based standards, EPA means those standards the 
stringency of which are based on determinations of what is 
technologically feasible, considering relevant factors. The fact 
that technology-based standards contribute to the attainment of the 
health-based NAAQS or help protect public health from toxic air 
pollutants does not change their character as technology-based 
standards.
---------------------------------------------------------------------------

    New source performance standards are established by EPA under 
section 111 of the Act based on the best system of emission reduction, 
considering costs and other relevant factors, that has been adequately 
demonstrated. The regulations that generally govern the implementation 
of NSPS provide that exceedances of NSPS during periods of start-up, 
shut-down, and malfunction are not violations of the applicable limit 
unless otherwise specified in the applicable standard 8 
(Sec. 60.8(c)). In other words, sources are not obligated to meet NSPS 
when starting up, shutting down, or experiencing malfunctions except to 
the extent EPA has required otherwise in setting a particular NSPS. 
There is thus no need for an affirmative defense for exceedances that 
occur under those circumstances. The NSPS general provisions do not 
address the availability of a defense for violations caused by 
emergencies, as defined in part 70, and the Agency has relied on 
enforcement discretion to address such situations.

    \8\ Certain NSPS, such as Part 60 Subpart D (electric utility 
steam generating units), apply during any period of operation.
---------------------------------------------------------------------------

    National emission standards for hazardous air pollutants were 
established by EPA under section 112 of the Act prior to the 1990 Act 
amendments. Section 112 prior to the 1990 amendments required EPA to 
set NESHAP at the level which provides an ample margin of safety to 
protect the public health from the HAP being regulated. In promulgating 
NESHAP, EPA did not provide for affirmative defenses, since the 
standards were formulated largely without regard to the limits of 
technology. The Agency did not extend the part 70 emergency defense to 
NESHAP for the same reason.
    The 1990 amendments to the Act changed the basis for setting 
standards for HAPs. Section 112 now requires the Agency to promulgate 
standards for more than 180 HAPs based on the maximum achievable 
control technology, taking into account costs and other relevant 
factors. The Agency has promulgated general provisions governing 
implementation of the so-called MACT standards, and those provisions, 
like the NSPS general provisions, do not require sources to comply with 
MACT standards when starting up or shutting down or when malfunctions 
occur (40 CFR 63.6(f)). Like NSPS, there is thus no need for a defense 
for exceedances that occur under those circumstances. Again like the 
NSPS regulations, the MACT general provisions do not address the 
availability of a defense for violations of MACT standards that occur 
as a result of an emergency.
    States also establish technology-based limits pursuant to their 
SIP's, including those set pursuant to major and minor NSR programs. 
Many States' SIP's provide an affirmative defense for violations of SIP 
technology-based limits. The EPA has approved these where consistent 
with its 1983 SIP policy. The terms of these defenses vary somewhat 
with the State, but they are generally available for violations that 
occur as a result of malfunctions, and, for certain types of limits, 
for start-up and shut-down as well. In any event, States may be 
presumed to set technology-based limits with any approved SIP defenses 
in mind.
    The foregoing description of the Act's major technology-based 
standards raises several questions about the appropriateness and terms 
of any part 70 defense. First, since at least most of these standards 
provide either an exemption from compliance or an affirmative defense 
for exceedances caused by start-up, shut-down, and malfunction 
conditions, a part 70 defense covering these conditions would be 
largely redundant. Second, to the extent that some NSPS or MACT 
standards do not provide relief for these conditions, it is because EPA 
has made a decision not to provide it (in the case of health-based 
standards) or, in case of many technology-based limits, because 

[[Page 45560]]
EPA has taken account of the failures of technology in setting the 
numerical emissions limit. Similarly, to the extent a technology-based 
limit established by a State does not provide an affirmative defense 
for start-up, shut-down, or malfunctions, it may be because the State 
judged that such a defense was unnecessary or unwise. Under these 
circumstances, it would appear inappropriate for the Agency to allow a 
generic emergency defense because it could have the effect of 
decreasing the stringency of the previously established standard or 
undercutting a technology-forcing or enforcement strategy undertaken by 
the Agency or a State in establishing the standard.
    As EPA has previously explained, the primary purpose of title V is 
to create for each covered source a permit that documents in one place 
all the Act requirements that apply to the source. Title V itself does 
not authorize changes to requirements established pursuant to other Act 
provisions. Section 504 requires that permits contain provisions as 
needed to assure the enforceability of the limits codified in the 
permit, but that does not authorize changes in the stringency of those 
limits. In keeping with the codification purpose of title V, EPA 
believes that its authority under title V to provide for affirmative 
defenses for violations of permit terms is limited. Where the 
rulemaking establishing a limit addresses the need for and terms of any 
affirmative defense, there is no basis for providing additional or 
different defenses under title V.
    While the foregoing description of technology-based standards 
indicates there is little or no basis for providing a start-up, shut-
down, preventative maintenance, or malfunction defense, the question 
still remains whether part 70 can and should provide an emergency 
defense. As noted above, the NSPS and MACT general provisions and 
apparently most SIP's do not provide an emergency defense per se. It is 
not entirely clear why that is the case. Most likely, prosecutorial 
discretion was considered an adequate and even preferable mechanism for 
addressing violations caused by emergencies. Several CWA cases also 
suggest that upset or emergency defenses could be unnecessary where 
standards were set taking into account the possibility of emergencies 
and could have the effect of slowing the development of technology or 
making enforcement slower and less sure.
    The EPA is reluctant to retain a generally applicable emergency 
defense without completing further review of the appropriateness of 
such a defense for the different Federal technology-based standards in 
light of the concerns with such a defense raised in the CWA cases. A 
review of the bases for setting these standards is necessary to ensure 
that the standards do not already take into account the possibility of 
emergencies. Beyond that, EPA wants to further consider the 
consequences of such a defense on the different types of federal 
technology-based standards for technology-forcing and enforcement.
    For similar reasons, EPA also is concerned about establishing a 
generic emergency defense that would apply to State-established limits. 
The appropriateness of providing a defense is best judged by a State in 
light of its standard-setting methodologies and environmental and 
enforcement goals. As currently provided in Sec. 70.6(g)(5), the 
emergency defense is in addition to any defense provided for in an 
applicable requirement. This includes any defense appropriately 
provided for in a technology-based SIP limit. Beyond that, an EPA 
decision not to retain an emergency defense in part 70 would not 
preclude a State from adopting a defense in its SIP for technology-
based SIP limits consistent with its standard-setting methodologies. 
The SIP-based defense could then be referenced in the State's part 70 
permits as appropriate.
    The EPA has not reached a firm conclusion on whether to limit the 
availability of the emergency defense to part 70-only provisions. The 
Agency solicits comment on whether such a limitation is appropriate in 
light of EPA's goal of providing States flexibility in implementing 
their part 70 programs. The EPA's final decision on this issue will be 
based on the record developed through this proposal.
    It may nevertheless be appropriate for EPA to provide relief under 
title V authority for exceedances of technology-based limits uniquely 
established in part 70 permits. Part 70 permitting will be the forum 
for establishing limits pursuant to section 112(j) and 112(i)(5); 
alternative limits pursuant to Sec. 70.6(a)(1)(iii), including any 
substitute section 112 standards set under a program approved by EPA 
under section 112(l); and limits to a source's potential to emit for 
purposes of avoiding otherwise applicable Act requirements. Of these, 
at least section 112(j) limits will, and alternative limits under 
Sec. 70.6.(a)(l)(iii) and section 112(l) programs may, be technology-
based. The EPA believes that in setting technology-based limits as part 
of title V permitting, States should have discretion to afford sources 
relief from exceedances that may occur as a result of start up, shut 
down, and malfunctions as appropriate in view of the state's standard-
setting methodology.
    The EPA is considering using the start-up, shut-down, malfunction 
provisions of the MACT general provisions as the model for a part 70 
counterpart. As noted earlier, the MACT (and NSPS) general provisions 
provide that those standards need not be met during periods of start-
up, shut-down, and malfunction, as opposed to providing a defense to 
violations of the standards under those conditions. While EPA does not 
believe an outright exemption such as this would be appropriate in part 
70, the Agency solicits comment on whether part 70 should authorize 
States to provide an affirmative defense for compliance with part 70-
only technology-based limits under start-up, shut-down, and malfunction 
conditions. The EPA believes it appropriate to condition the 
availability of such relief on the submittal of and adherence to a plan 
like that required in Sec. 63.6(e)(3), establishing a protocol for the 
source during those periods.
    The Agency also believes that States should have discretion to 
provide an emergency defense for violations of part 70-only technology-
based limits similar to that set forth in the current rule. Suggestions 
have been made that the Agency adopt a definition of emergency 
identical to that of ``upset'' under the NPDES regulations 
(Sec. 122.41(n)). The Agency notes that the current rule's definition 
of emergency was drafted to avoid any implication that emergencies 
could include start-up, shut-down, and preventative maintenance 
conditions. Since EPA is considering addressing those conditions with 
an exemption from compliance as described above, it is inclined to 
retain the current rule's definition of ``emergency.'' The Agency 
solicits comment on the advantages and disadvantages of a uniform 
definition of upset or emergency across the water and air permitting 
programs.
    Several States have also raised the question of whether part 70 
should authorize permitting authorities to grant a source temporary 
authorization to make a change without revising permits as needed to 
protect public health or welfare in emergencies, such as natural 
disasters. The South Coast [California] Air Quality Management District 
(SCAQMD) has pointed out that local governments operating essential 
public services have had to respond to emergencies such as earthquakes, 
fires, and civil disturbances in ways that applicable permit terms 
might not have allowed. The State of New York has similarly noted 
instances when sources 

[[Page 45561]]
have needed to make changes on short notice to respond to emergencies 
such as severe winter storms. Both jurisdictions have available as a 
matter of State law a mechanism for granting sources temporary 
authorizations to make changes without revising the source's permit 
under specified circumstances and in accordance with prescribed 
procedures. See SCAQMD's breakdown rule (Rule 430) and State law 
provisions regarding variances (Health & Saf. Code 42350-42364, 
particularly Sec. 42352), and New York's regulations at Title 6, 
Section 621.12.
    The Agency solicits comment on the need for a part 70 provision 
authorizing States to provide the kind of emergency authorizations 
described above. States could rely on the exercise of enforcement 
discretion to avoid penalizing sources for permit violations incurred 
as a result of State-sanctioned actions taken to safeguard the public 
from serious harm in times of emergencies. However, under title V and 
part 70, citizens may bring enforcement actions for violations of 
permit terms. While it would seem doubtful that anyone would seek to 
prosecute a violation caused by a source's actions to respond to a 
public health crisis, States and sources may well prefer that sources 
be relieved from the risk of liability under such circumstances.
    The Agency also solicits comment on the proper scope and terms of 
any such authorization provision. The SCAQMD has limited its concerns 
to essential public services operated by local governments, while New 
York's regulations authorize changes at sources regardless of whether 
they are publicly or privately owned. For New York the only essential 
criterion is whether the change is needed to respond to an emergency, 
which its regulations define as ``an event which presents an immediate 
threat to life, health, property, or natural resources.'' New York's 
regulations also limit the duration of such authorizations to at most 
two 30-day terms.
    Procedural safeguards are important to the exercise of any such 
authority. New York's regulations require prior notification of a 
change by the source requesting emergency authorization unless prior 
notification is not possible. The regulations also require that the 
State permitting authority, prior to issuing an emergency authority, 
make a finding of an emergency, stating why immediate action is needed 
and the consequences if the action is not immediately taken. The 
permitting authority must also determine that the change is being made 
in a manner that will cause the least change, modification, or adverse 
impact to life, health, property, or natural resources. The permitting 
authority is authorized to attach such conditions to the authorization 
as it deems appropriate. If the permitting authority finds that the 
change is no longer immediately necessary to protect life, health, 
property, or natural resources, it may issue an order requiring the 
source to immediately cease the action it has taken pursuant to the 
emergency authorization.
    New York's regulations provide one potential model for a part 70 
provision authorizing States to provide emergency authorizations. The 
extent of New York's procedural safeguards, however, may well be linked 
to the relatively broad scope of its emergency authorization, which, as 
noted earlier, extends to private as well as public sources and broadly 
defines emergency. More narrowly tailored emergency provisions would 
presumably require fewer procedural safeguards. The Agency requests 
that commenters addressing the proper scope of an emergency 
authorization also consider what procedural safeguards would be 
appropriate in light of the suggested scope. The Agency believes that 
providing after-the-fact public notification of changes made pursuant 
to an emergency authorization provision would be appropriate.

C. Certification Language

    Section 70.5(d) of the current rule requires that any part 70 
application form, report, or compliance certification contain a 
certification by a responsible official of the truth, accuracy, and 
completeness of the submission. It further requires that any 
certification required under part 70 state that, ``based on information 
and belief formed after reasonable inquiry, the statements and 
information in the document are true, accurate, and complete.'' The 
text of Sec. 70.5(d) was adopted unchanged from the proposal. In the 
preamble to the proposed rule, EPA explained that the required 
statement regarding the truth, accuracy, and completeness of the 
submission was modeled after Rule 11 of the Federal Rules of Civil 
Procedure. Rule 11 provides that by presenting pleadings, motions, or 
other documents to Federal courts, a lawyer ``is certifying that to the 
best of the person's knowledge, information, and belief, formed after 
an inquiry reasonable under the circumstances'' that the documents are 
not presented for an improper purpose (e.g., to harass or cause delay); 
the claims made are warranted by existing law or by a non-frivolous 
argument for the extension, modification, or reversal of established 
law or the establishment of new law; and that allegations or factual 
contentions have or are likely to have reasonable evidentiary support.
    Among the issues raised by several State and local governments in 
their petitions for review of part 70 was the appropriateness of the 
certification language adopted by EPA. The governmental petitioners 
were concerned that EPA was requiring certification language different 
from that required by the National Pollutant Discharge Elimination 
System (NPDES) under the CWA. The NPDES regulations at Sec. 122.22(d) 
require the following certification language:

    I certify under penalty of law that this document and all 
attachments were prepared under my direction or supervision in 
accordance with a system designed to assure that qualified personnel 
properly gather and evaluate the information submitted. Based on my 
inquiry of the person or persons who manage the system, or those 
persons directly responsible for gathering the information, the 
information submitted is, to the best of my knowledge and belief, 
true, accurate, and complete. I am aware that there are significant 
penalties for submitting false information, including the 
possibility of fine and imprisonment for knowing violations.

    In light of the NPDES certification language, State and local 
government petitioners read the part 70 certification language as 
potentially establishing a less rigorous standard for the inquiries on 
which certifications were to be based, and they believed their reading 
was confirmed by EPA's reference to Rule 11 as the model for the part 
70 language. Beyond that, they noted that the meaning of the NPDES 
language had been well established over the years of its use, and were 
concerned that the meaning of the different part 70 language would not 
be clear until it had been decided by the courts. The State and local 
petitioners therefore suggested that EPA revise its part 70 
certification to be identical to the NPDES certification language.
    The Agency agrees that Rule 11 is not an appropriate analog to the 
certification requirements of a permitting program. Rule 11 effectively 
requires lawyers to make a reasonable inquiry into the relevant facts 
and law so they may assess whether the claims or arguments they raise 
in court have a reasonable chance of success. Since courts' 
interpretation of the law can evolve as a result of a compelling 
factual case or argument, Rule 11 accords lawyers wide latitude in 
bringing cases. By contrast, an inquiry into the truth, accuracy, and 
completeness of a factual 

[[Page 45562]]
submission should typically be a more straightforward exercise. The 
official signing the certification is being asked to take reasonable 
steps to ensure that what he or she signs is true, accurate, and 
complete, not whether it provides a sufficient basis for a court to 
decide a question of law in the official's favor. The Agency thus no 
longer believes that the part 70 certification language should be 
modeled on Rule 11.
    In place of the current rule's certification language, EPA proposes 
to require the certification language found in the acid rain rule 
promulgated under title IV of the Act at 40 CFR 72.21(b)(2) and in the 
proposed enhanced monitoring rule at 58 FR 54689, col. 1 (proposed 
Sec. 64.5(c)). Those provisions provide in relevant part:

    The responsible official shall certify, by his or her signature, 
the following statement: ``I certify under penalty of law that I 
above personally examined, and am familiar with, the statements and 
information submitted in this document and all of its attachments. 
Based on my inquiry of those individuals with primary responsibility 
for obtaining the information, I certify that the statements and 
information are to the best of my knowledge and belief true, 
accurate, and complete. I am aware that there are significant 
penalties for submitting false statements and information or 
omitting required statement and information, including the 
possibility of fine or imprisonment.''

    This language is modeled on the NPDES language quoted above, but 
does not expressly require that there be a system designed to assure 
that qualified personnel properly gather and evaluate the submitted 
information. The Agency believes it is not necessary to include that 
express requirement, since EPA expects that certifying officials will 
establish such systems where needed to assure the adequacy and 
reasonableness of their inquiry. In addition, there is an economy in 
requiring use of the same certification language in the three Act 
programs. As the State and local petitioners pointed out, differences 
in language imply differences in meaning. The Agency has no reason to 
think that a different standard for preparing certifications should 
apply to the part 70 program than applies in the acid rain program. It 
thus proposes to adopt for the part 70 program the language now found 
in the acid rain rule.

D. Provisions Related to Tribal Programs

    On August 25, 1994 (59 FR 43956), EPA proposed regulations 
specifying those provisions of the Act for which it is appropriate to 
treat Indian Tribes as States. Therein (59 FR 43971-72) EPA described 
expectations for Tribal programs in implementing various aspects of the 
part 70 program and how they might differ from those expected for State 
part 70 programs. Today's proposal contains part 70 rule changes needed 
to conform part 70 to the August 25 proposal.
    The reader should refer to the August 25, 1994 proposal for a more 
detailed description of the part 70 regulatory revisions proposed today 
to address Tribal programs (59 FR 43966-68, 43970-72, 43980-82). The 
EPA has received many comments on the August 25, 1994 proposed rules 
and EPA may make changes to the proposal that in turn necessitate 
conforming changes to the part 70 revisions proposed today. In today's 
action, EPA solicits comment on the limited issue of whether EPA has 
accurately proposed to implement the changes to part 70 previously 
described in the August 25, 1994 proposal. Comments addressing whether 
and how EPA should allow Indian Tribes to administer part 70 programs 
are outside the scope of today's action and should have been submitted 
in response to EPA's August 25, 1994 proposal.

VI. Administrative Requirements

A. Public Hearing

    No public hearing will be held to discuss this supplemental 
proposal unless a hearing is requested in writing and sufficient reason 
for a hearing is included in the written request. The EPA has already 
engaged all interested groups in extensive public discussions on these 
topics and hopes to expedite the issuance of final regulatory 
revisions. If a public hearing is held, it will take place on the last 
day of the comment period. Persons wishing to attend a hearing, if 
held, should call (919) 541-5281 to determine if a hearing will be held 
and to obtain the time and location. Persons wishing to request a 
public hearing must submit a written request to EPA during the first 15 
days of the comment period at the address given in the ADDRESSES 
section of this preamble.

B. Docket

    The docket for this regulatory action pertaining to part 71 is A-
93-50. For actions pertaining to part 71, the docket is A-93-51. 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 so 
that they can effectively participate in the rulemaking process, and 
(2) to serve as the record in case of judicial review (except for 
interagency review materials) (307(d)(7)(A)). The dockets for today's 
notice are available for public inspection at EPA's Air Docket, which 
is listed under the ADDRESSES section of this notice.

C. Office of Management and Budget (OMB) Review

    Under Executive Order 12866 (E.O. 12866) (58 FR 51735 (October 4, 
1993)), section 4(c), EPA is required for significant regulatory 
actions to prepare an assessment of the potential costs and benefits 
(referred to as a Regulatory Impact Analysis (RIA)) of the regulatory 
action. Sections 3(f)(1-4) of E.O. 12866 define ``significant'' 
regulatory actions as those that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities,9 or the principles set forth 
in E.O. 12866.

    \9\ These priorities include economic growth while maintaining 
environmental quality, provide opportunities for domestic and 
international competitiveness, mitigate the impact of regulations on 
the innovation and dissemination of environmental technologies, and 
empower minority and poor communities in accordance with the 
Administration's primary goal for environmental equity.
---------------------------------------------------------------------------

    Pursuant to the terms of Executive Order 12866, OMB and EPA 
consider this and other actions related to part 70 and part 71 permit 
revisions a ``significant regulatory action'' within the meaning of the 
Executive Order. The EPA has submitted this supplemental rulemaking 
proposal to OMB for review. Changes made in response to OMB suggestions 
or recommendations will be documented in the public record. Any written 
comments from OMB to EPA, and any EPA responses to those comments, will 
be included in Docket A-93-50 for part 70 changes and Docket A-93-51 
for part 71 actions.
    To facilitate OMB review of the August 1994 proposed rulemaking, 
EPA prepared an analysis showing the marginal impacts of the proposed 
revisions to part 70. That analysis would also bound the costs 
associated with the supplemental proposal 

[[Page 45563]]
contained herein. As stated in the August 1994 notice, the Agency is 
also in the process of updating the current ICR for part 70 which will 
be a comprehensive analysis of the final revised part 70. A draft of 
that revised ICR is in docket A-93-50. As noted under the DATES section 
of this notice, there is a 60-day comment period for the draft ICR.
    After review of the current RIA for part 70, (EPA-450/2-91-011), 
the Agency has determined that the effect of the changes to part 70 
which would result from today's action will be less than both the 
current RIA and the estimate provided for the August 1994 proposal. The 
estimates of the savings beyond the costs projected for the August 1994 
proposal and the current rule are provided in the unfunded mandates 
section (Section V. F.) of this preamble. The final estimate would 
ultimately depend in part on how States would use the additional 
flexibility provided to them in today's proposal. However, considerable 
savings will occur as the State merges its preconstruction review 
program to also meet part 70 requirements. This will allow subsequent 
permit revisions needed to incorporate such changes to occur 
administratively instead of through the more costly de minimis, minor, 
or even significant permit revision tracks described in the August 1994 
proposal. Analogous processes will be used under a part 71 program. 
Savings will depend on its duration and how the Agency will work with 
States to implement any Federal permit program that is required.

D. Regulatory Flexibility Act Compliance

    Under the Regulatory Flexibility Act, whenever an Agency publishes 
any proposed or final rule in the Federal Register, it must prepare a 
Regulatory Flexibility Analysis (RFA) that describes the impact of the 
rule on small entities (i.e., small businesses, organizations, and 
governmental jurisdictions).
    The EPA has established guidelines which require an RFA to 
accompany a rulemaking package. For any rule subject to the Regulatory 
Flexibility Act, the Agency's new policy requires a regulatory 
flexibility analysis if the rule will have any economic impact, however 
small, on any small entities that are subject to the rule, even though 
the Agency may not be legally required to do so.
    A regulatory flexibility screening analysis of the impacts of the 
original part 70 rules revealed that the original rule did not have a 
significant and disproportionate adverse impact on small entities. The 
resulting administrative costs of the August 1994 proposal and of 
today's supplemental proposal for both part 70 and part 71 affect 
larger part 70 sources which are not typically believed to be small 
business entities. Consequently, the Administrator certifies that the 
proposed revisions to part 70 and part 71 will not have a significant 
and disproportionate impact on small entities. The EPA, however, 
solicits any information or data which might affect these proposed 
certifications. The EPA will reexamine this issue and perform any 
subsequent analysis deemed necessary. Any subsequent analysis will be 
available in the respective dockets for part 70 and part 71 and will be 
taken into account before promulgation.

E. Paperwork Reduction Act

    The ICR requirements for the part 70 regulations were submitted for 
approval to OMB under the Paperwork Reduction Act, 44 U.S.C. 3501 et 
seq. The ICR was prepared by EPA in association with the promulgation 
of part 70 and a copy may be obtained from Sandy Farmer, Information 
Policy Branch (mail code 2136), U.S. Environmental Protection Agency, 
401 M St. S.W., Washington D.C. 20460, (202) 260-2740.
    The screening analysis for the revisions to part 70 indicates a 
need to revise the current burden estimate and, in addition, the 
current ICR is due to be updated since it was only for a period of 3 
years after promulgation of part 70. However, EPA is preparing an ICR 
for the entire part 70 rule to reflect part 70 at the time the proposed 
revisions to part 70 are promulgated. This ICR will supersede or 
replace the update of the original part 70 ICR upon promulgation of the 
revisions to part 70. The draft ICR for the proposed part 71 rule will 
be amended as necessary upon promulgation of the part 71 rule. The 
draft ICR for the revised part 70 is in docket A-93-50 and subject to a 
60-day comment period.
    Send comments regarding the burden estimate in the draft ICR or any 
other aspect of this collection of information, including suggestions 
for reducing this burden by [60 DAYS AFTER PUBLICATION] to: Chief, 
Information Policy Branch (2136), U.S. Environmental Protection Agency, 
401 M Street, S.W., Washington, D.C. 20460; and to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Washington, D.C. 20503, marked ``Attention: Desk Officer for EPA.'' The 
final rule revisions will respond to any OMB or public comments on the 
information collection requirements contained in this proposal.

F. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded 
Mandates Act'') (signed into law on March 22, 1995) requires that the 
Agency prepare a budgetary impact statement before promulgating a rule 
that includes a Federal mandate that may result in expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year.
    Section 203 of the Unfunded Mandates Act provides that if any small 
governments may be significantly or uniquely impacted by the rule, the 
agency must establish a plan for obtaining input from and informing, 
educating, and advising any such potentially affected small 
governments.
    Under section 205 of the Unfunded Mandates Act, the Agency must 
identify and consider a reasonable number of regulatory alternatives 
before promulgating a rule for which a budgetary impact statement must 
be prepared. The Agency must select from those alternatives the least 
costly, most cost-effective, or least burdensome alternative for State, 
local, and tribal governments and the private sector, that achieves the 
objectives of the rule, unless the Agency explains why this alternative 
is not selected or unless the selection of this alternative is 
inconsistent with law.
    The costs of implementing the system for revising operating permits 
in today's proposal were estimated to determine the burden on 
permitting authorities and industry of complying with the requirements. 
Since the regulatory revisions to part 70 would replace requirements 
now in place, however, the actual impact of promulgating today's 
proposed revisions should be viewed in terms of the difference in costs 
of implementing the current part 70 vs. the proposed requirements.
    Costs were estimated in terms of the administrative burden on 
permitting authorities, EPA, and permitted sources. Administrative cost 
includes a range of costs which cover the source's preparing an 
application through EPA's and the permitting authority's effort to 
complete the process. The administrative costs of implementing today's 
proposed revisions to part 70 are estimated to be approximately $33 
million per year. In comparison, EPA estimates the administrative costs 
associated with implementing the current part 70 permit revision system 
to be approximately $118 million per year in administrative burden. The 
actual impact of 

[[Page 45564]]
implementing the proposed permit revision system in today's notice, 
therefore, represents a reduction in costs of 72 per cent over 
implementing the current part 70.
    Today's proposal would reduce the overall explicit costs associated 
with the part 70 permitting program by 16 per cent from $526 million to 
$441 million annually. This reduction in explicit costs does not 
represent the complete universe of changes to the 1992 ICR. These 
changes, together with additional changes to the part 70 rule proposed 
in August 1994 and other more recent information received from the 
initial implementation of part 70, will be incorporated into the ICR 
update for part 70 due in October 1995.
    The ICR for the proposed part 71 incorporated the basic approach 
proposed today for part 71 permit revisions. In this document EPA 
estimated that the total direct cost of part 71 implementation to the 
private sector would be no more than $72 million in any one year. The 
estimate of direct costs to industry includes the costs that are over 
and above costs industry would have incurred by complying with State 
operating permits programs mandated by the Act, for which part 71 
programs are substitutes. The specific cost of permit revisions would 
be only a small percent of this amount.
    The Agency concludes that since the proposed revisions to part 70 
would result in reductions in costs over implementation of the current 
part 70, and since the proposal for part 71 would result in a total 
cost to industry of no more than $72 million in any one year, the 
requirement for a budgetary impact statement does not apply. As a 
result of extensive public comment on the August 1994 proposal, the 
Agency considered alternatives for a permit revision system and 
selected an approach that provides a streamlined and flexible system 
that is the most cost-effective and least burdensome while continuing 
to meet the requirements of title V. Because small governments will not 
be significantly or uniquely affected by this rule, other than to 
reduce costs of operating permit programs they have opted to 
administer, the Agency is not required to develop a plan with regard to 
small governments.

List of Subjects

40 CFR Part 51

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Intergovernmental relations.

40 CFR Parts 70 and 71

    Air pollution control, Prevention of significant deterioration, New 
source review, Fugitive emissions, Particulate matter, Volatile organic 
compounds, Nitrogen dioxide, Carbon monoxide, Hydrocarbons, Lead, 
Operating permits.

    Dated: August 22, 1995.
Carol M. Browner,
Administrator.

    For the reasons set out in the preamble, title 40, chapter I of the 
Code of Federal Regulations is proposed to be amended as set forth 
below.

PART 51--REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF 
IMPLEMENTATION PLANS

    1. The authority citation for part 51 continues to read as follows:

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

    2. Section 51.160 is amended by adding a new paragraph (g) to read 
as follows:


Sec. 51.160  Legally enforceable procedures.

* * * * *
    (g) All terms used in Secs. 51.160 and 51.164 of this part shall 
have the same meaning as set forth elsewhere in relevant sections of 
subpart I of this part, or in the Act, as appropriate.
    3. Section 51.161 is amended by adding the words ``an adequate'' 
between the words ``provide'' and ``opportunity'' in the first sentence 
of paragraph (a); by revising paragraphs (b), (c) and (d); and by 
adding a new paragraph (e) to read as follows:


Sec. 51.161  Public availability of information.

* * * * *
    (b) The following requirements shall apply for purposes of 
paragraph (a) of this section.
    (1) Opportunity for public comment as defined in paragraph (b)(2) 
of this section shall be provided for:
    (i) The construction or modification of any stationary source that 
is subject to permitting requirements as a major source or major 
modification under part C or part D of title I; and
    (ii) Any physical change or change in the method of operation of a 
part 70 source associated with a project where the prospective 
emissions increases from such changes, considered by themselves, would 
be a significant emissions increase of any pollutant subject to 
regulation under part C or D of the Act.
    (2) The opportunity for public comment shall include, as a minimum:
    (i) Availability for public inspection in at least one location in 
the area affected of the information submitted by the owner or operator 
and of the State or local agency's analysis of the effect on air 
quality;
    (ii) A 30-day period for submittal of public comment; and
    (iii) A notice in the affected area specifying the location of the 
relevant source information.
    (c) For other construction or modification activities subject to 
this section, but not subject to paragraph (b) of this section, the 
program may vary the procedures for, and timing of, public review in 
light of the environmental significance of the activity. The permitting 
authority may designate, subject to EPA approval under this paragraph 
or in the State's part 70 program, certain categories of changes as 
being de minimis. For such de minimis changes, the State may forego 
altogether review by the public.
    (d) Availability of the notice required by paragraph (b) of this 
section must also be provided to the Administrator through the 
appropriate Regional Office, and to all other State and local air 
pollution control agencies having jurisdiction in the region in which 
such new or modified installation will be located. The notice also must 
be provided to any other agency in the region having responsibility for 
implementing the procedures required under this subpart.
    (e) Notwithstanding the preceding paragraphs in this section, for 
changes constituting modification activities at part 70 sources subject 
to Sec. 51.160 of this part, the requirements of paragraph (a) of this 
section shall be considered to be met for the change if the part 70 
permit for the source is subjected to revision procedures approved by 
EPA as meeting the public participation requirements of 40 CFR 70.7(e) 
for the change.

PART 70--STATE OPERATING PERMIT PROGRAMS

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

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

    2. Section 70.2 is amended as follows:
    a. Adding the words ``except that research and development 
activities shall be treated as belonging to a separate industrial 
grouping'' at the end of the last sentence in the first paragraph of 
the definition of ``Major source;''
    b. Removing the definitions of ``Draft permit'', ``Part 70 program 
or State program'', ``Proposed Permit'', and adding definitions for 
``Draft permit or draft permit revision'', ``Part 70 program, State 
program or program'', 

[[Page 45565]]
``Proposed permit or proposed permit revision; revising paragraphs (1), 
(2)(viii), and (2)(xxvii) of the definition of ``Major source;'' and 
the introductory text of paragraph (5) of the definition of ``Regulated 
air pollutant;'' and
    c. Adding definitions of ``Advance NSR,'' ``Alternative operating 
scenarios,'' ``Emissions Cap permit,'' ``Eligible Indian Tribe,'' 
``Indian Tribe,'' ``Plantwide applicability limit (PAL),'' ``Research 
and development activities,'' ``State review program,'' and ``Title I 
modification'' in alphabetical order.


Sec. 70.2  Definitions.

* * * * *
    Advance NSR means terms or conditions in a part 70 permit setting 
forth requirements applicable to new units or modifications under 
applicable major or minor NSR programs or regulations implementing 
section 112(g) of the Act, so that such changes may be operated without 
having to obtain a part 70 permit revision.
* * * * *
    Alternative operating scenarios means terms or conditions in a part 
70 permit which assure compliance with different modes of operation for 
which a different applicable requirement applies and for which the 
source is designed to accommodate.
* * * * *
    Draft permit or draft permit revision means the version of the 
permit or permit revision for which the permitting authority offers 
public participation as provided under Sec. 70.7 of this part.
* * * * *
    Eligible Indian Tribe means an Indian Tribe that EPA has determined 
to meet the requirements of section 301(d)(2) of the Act or 40 CFR part 
49. [NOTE 40 CFR part 49 are proposed regulations (59 FR 43956 (August 
25, 1994))]
    Emissions Cap permit means a part 70 permit that contains one or 
more federally-enforceable emissions limitations that meets the 
requirement for permit content contained in Sec. 70.4(b)(12) of this 
part, including a PAL and/or an advance NSR condition.
* * * * *
    Indian Tribe has the meaning defined in section 302(r) of the Act.
    Major source * * *
    (1) * * *
    (i) For pollutants other than radionuclides, any stationary source 
or group of stationary sources located within a contiguous area and 
under common control that emits or has the potential to emit, in the 
aggregate, 10 tons per year (tpy) or more of any hazardous air 
pollutant (HAP) (including any fugitive emissions of such pollutant) 
which has been listed pursuant to section 112(b) of the Act, 25 tpy or 
more of any combination of such hazardous air pollutants (including any 
fugitive emissions of such pollutants), or such lesser quantity as the 
Administrator may establish by rule. Notwithstanding the preceding 
sentence:
    (A) Emissions from any oil or gas exploration or production well 
(with its associated equipment) and emissions from any pipeline 
compressor or pump station shall not be aggregated with emissions from 
other similar units, whether or not such units are in a contiguous area 
or under common control, to determine whether such units or stations 
are major sources; and
    (B) Research and development activities may be considered 
separately for purposes of determining whether a major source is 
present, and need not be aggregated with collocated stationary sources 
unless the research and development activities contribute to the 
product produced or service rendered by the collocated sources in a 
more than de minimis manner; or
    (ii) For radionuclides, ``major source'' shall have the meaning 
specified by the Administrator by rule.
    (2) * * *
    (viii) Municipal incinerators (or combinations thereof) capable of 
charging more than 50 tons of refuse per day;
* * * * *
    (xxvii) Any other stationary source category regulated under 
section 111 or 112 of the Act and for which the Administrator has made 
an affirmative determination under section 302(j) of the Act.''
* * * * *
    Part 70 program, State program, or program means a program approved 
by the Administrator under this part.
* * * * *
    Plantwide applicability limit (PAL) means a federally-enforceable 
emissions limitation established for a source to limit its potential to 
emit for a particular pollutant to a level at or below which a 
particular applicable requirement would not apply.
* * * * *
    Proposed permit or proposed permit revision means the version of a 
permit or permit revision that the permitting authority proposes to 
issue and forwards to the Administrator for review in compliance with 
Sec. 70.8 of this part.
* * * * *
    Regulated air pollutant * * *
    (5) Any pollutant subject to a standard promulgated under section 
112 or other requirements established under section 112 of the Act, 
including sections 112(g) and (j) of the Act, including the following:
* * * * *
    Research and development activities means activities conducted to 
test more efficient production processes or methods for preventing or 
reducing adverse environmental impacts, provided that the activities do 
not include the production of an intermediate or final product for sale 
or exchange for commercial profit, and activities conducted at a 
research or laboratory facility that is operated under the close 
supervision of technically trained personnel the primary purpose of 
which is to conduct research and development into new processes and 
products and that is not engaged in the manufacture of products for 
sale or exchange for commercial profit, except in a de minimis manner.
* * * * *
    State review program means a program established under section 
112(g) of the Act, parts C and D of the Act (i.e., major NSR), or 
section 110(a)(2)(C) of the Act (i.e., minor NSR) and any other State 
program approved by EPA as such. A State review program need not entail 
review and approval of all source changes subject to the program, but 
may regulate categories of source changes by means of general rules or 
general permits as appropriate.
* * * * *
    Title I modification or modification under any provision of title I 
of the Act means any modification under parts C and D of title I or 
sections 111(a)(4), 112(a)(5), or 112(g) of the Act; under regulations 
promulgated by EPA thereunder or in Sec. 61.07 of part 61 of this 
chapter; or under State regulations approved by EPA to meet such 
requirements.
* * * * *
    3. Section 70.4 is amended us follows:
    a. Revising the heading;
    b. Adding introductory text after the heading;
    c. Revising paragraphs (b) introductory text, (b)(3) introductory 
text, (b)(3)(x), (b)(6), (b)(11)(ii), (b)(12)(i), (d)(1), (d)(3)(iv), 
(e) introductory text, (e)(1), and (e)(2);
    d. Adding a new paragraph (b)(3)(xiv);
    e. Adding to the end of paragraph (a) the following sentence, 
``Indian Tribes are not required to submit part 70 programs to EPA for 
approval, but may elect to do so.'';
    f. Adding the phrase ``, Tribal,'' after the words ``copies of all 
applicable State'' in the first sentence of paragraph (b)(2); 

[[Page 45566]]

    g. Adding the words ``or tribal'' after the words ``judicial review 
in State'' in the first and second sentences of paragraph (b)(3)(xi);
    h. Adding the words ``Except for Tribal programs'' to the beginning 
of the first sentence in paragraph (b)(12);
    i. Removing paragraphs (b)(12)(iii), (b)(14), and (b)(15); and
    j. Redesignating paragraph (b)(16) as (b)(14).


Sec. 70.4  State and Tribal program submittals and transition.

    Eligible Indian Tribes may administer programs meeting the 
requirements of this section. Unless otherwise indicated, references to 
``States'' and ``Governors'' in this section shall include, as 
appropriate, ``Tribal programs,'' ``Indian Tribes,'' and ``Indian 
governing bodies.''
* * * * *
    (b) Elements of the initial program submission.
    Any State or Indian Tribe that seeks to administer a program under 
this part shall submit to the Administrator a letter of submittal from 
the Governor or his or her designee or from the governing body of an 
Indian Tribe requesting EPA approval of the program and at least three 
copies of a program submission. The submission shall contain the 
following:
* * * * *
    (3) A legal opinion from the Attorney General for the State, the 
Tribal attorney, or the attorney for those State, Tribal, local, or 
interstate air pollution control agencies that have independent legal 
counsel, stating that the laws of the State, locality, Indian Tribe, or 
interstate compact provide adequate authority to carry out all aspects 
of the program. This statement shall include citations to the specific 
statutes, administrative regulations, and, where appropriate, judicial 
decisions that demonstrate adequate authority. State statutes and 
regulations cited by the State Attorney General, Tribal attorney, or 
independent legal counsel shall be in the form of lawfully adopted 
State or Tribal statutes and regulations at the time the statement is 
signed and shall be fully effective by the time the program is 
approved. To qualify as ``independent legal counsel,'' the attorney 
signing the statement required by this section shall have full 
authority to independently represent the State or Tribal agency in 
court on all matters pertaining to the State or Tribal program. The 
legal opinion shall also include a demonstration of adequate legal 
authority to carry out the requirements of this part, including 
authority to carry out each of the following:
* * * * *
    (x) Provide an opportunity for judicial review in State or Tribal 
court of the final permit action by the applicant, any person who 
participated in the public participation process provided pursuant to 
Sec. 70.7 and any other person who could obtain judicial review of such 
actions under State or Tribal laws.
* * * * *
    (xiv) Issue emissions cap permits pursuant to paragraph (b)(12)(i) 
of this section including advance NSR conditions consistent with all 
applicable requirements.
* * * * *
    (6) A showing of adequate authority and procedures to determine 
within 60 days of receipt whether applications (including renewal 
applications) are complete, to request such other information as needed 
to process the application, and to take final action on complete 
applications within 18 months of the date of their submittal, except 
for initial permit applications, for which the permitting authority may 
take up to 3 years, or up to 5 years for Tribal programs, from the 
effective date of the program to take final action on the application, 
as provided for in the transition plan.
* * * * *
    (11) * * *
    (ii) Final action shall be taken on at least one-third of such 
applications annually over a period not to exceed 3 years after such 
effective date, except for Tribal programs for which the transition 
period will be for a period agreed upon jointly by the Tribe and the 
appropriate EPA Regional Office not to exceed 5 years;
* * * * *
    (12) * * *
    (i) Trading under permitted emissions caps. The program shall 
require the permitting authority to include in a permit an emissions 
cap, pursuant to a request submitted by the applicant, consistent with 
any specific emissions limits or restrictions otherwise required in the 
permit by any applicable requirements, and permit terms and conditions 
for emissions trading solely for the purposes of complying with that 
cap, provided that the permitting authority finds that the request 
contains adequate terms and conditions, including all terms required 
under Secs. 70.6(a) and (c) of this part, to determine compliance with 
the cap and with any emissions trading provisions. The permit shall 
also contain terms and conditions to assure compliance with all 
applicable requirements. The permit applicant shall include in its 
application proposed replicable procedures and permit terms that ensure 
the emissions cap is enforceable and trades pursuant to it are 
quantifiable and enforceable. Any permit terms and conditions 
establishing such a cap or allowing such trading may be established 
only in procedures for permit issuance, renewal, or permit revision 
pursuant to Sec. 70.7(e)(2)(vi). The permitting authority shall not be 
required to include in the cap or emissions trading provisions any 
emissions units where the permitting authority determines that the 
emissions are not quantifiable or where it determines that there are no 
replicable procedures or practical means to enforce the emissions 
trades.
    (A) Under this paragraph (b)(12)(i) of this section, the written 
notification required by paragraph (b)(12) of this section shall state 
when the change will occur and shall describe how increases and 
decreases in emissions will comply with the terms and conditions of the 
permit. The written notification requirement for the first and all 
subsequent changes may be met by submitting a single notice at least 7 
days in advance of the first change allowed by the terms of the 
emissions cap permit.
    (B) The permit shield described in Sec. 70.6(f) of this part may 
extend to terms and conditions that allow such increases and decreases 
in emissions.
* * * * *
    (d) Interim approval. (1) If a program (including a partial permit 
program but not including Tribal programs) submitted under this part 
substantially meets the requirements of this part, but is not fully 
approvable, the Administrator may by rule grant the program interim 
approval.
* * * * *
    (3) * * *
    (iv) Public participation. The program must provide for adequate 
public notice of and an opportunity for public participation on draft 
permits, reopenings for cause, and revisions as required by Sec. 70.7 
of this part, except for:
    (A) Modifications qualifying for minor permit modification 
procedures under Sec. 70.7(e) of this part as promulgated July 21, 
1992; and
    (B) Permit revisions to incorporate changes subject to minor NSR 
processed under Sec. 70.7(e)(2) of this part as promulgated [date of 
final rulemaking].
    (e) EPA review of permit program submittals. Within 1 year after 
receiving a program submittal, the Administrator shall approve or 
disapprove the program, in whole or in part, by publishing a notice in 
the Federal Register, except that no Tribal program 

[[Page 45567]]
will be disapproved. Prior to such notice, the Administrator shall 
provide an opportunity for public comment on such approval or 
disapproval. Any EPA action disapproving a program, in whole or in 
part, shall include a statement of the revisions or modifications 
necessary to obtain full approval. The Administrator shall approve 
State programs and programs to be administered by eligible Indian 
Tribes that conform to the requirements of this part.
    (1) Within 60 days of receipt by EPA of a State program submission, 
EPA will notify the State or Indian Tribe whether its submission is 
complete enough to warrant review by EPA for either full, partial, or 
interim approval, except that no Tribal program will be considered for 
interim approval. If EPA finds that a State's or Indian Tribe's 
submission is complete, the 1-year review period (i.e., the period of 
time allotted for formal EPA review of a proposed State or Tribal 
program) shall be deemed to have begun on the date of receipt of the 
State's or Indian Tribe's submission. If EPA finds that a State's or 
Indian Tribe's submission is incomplete, the 1-year review period shall 
not begin until all the necessary information is received by EPA.
    (2) If the State's or Indian Tribe's submission is materially 
changed during the 1-year review period, the Administrator may extend 
the review period for no more than 1 year following receipt of the 
revised submission.
* * * * *
    3. Section 70.5 is amended by adding the following language to the 
end of paragraph (d) to read as follows:


Sec. 70.5  Permit applications.

* * * * *
    (d) * * * The responsible official shall certify, by his or her 
signature, the following statement: ``I certify under penalty of law 
that I above personally examined, and am familiar with, the statements 
and information submitted in this document and all of its attachments. 
Based on my inquiry of those individuals with primary responsibility 
for obtaining the information, I certify that the statements and 
information are to the best of my knowledge and belief true, accurate, 
and complete. I am aware that there are significant penalties for 
submitting false statements and information or omitting required 
statement and information, including the possibility of fine or 
imprisonment.''
    4. Section 70.6 is amended by adding a new paragraph (a)(1)(iv); by 
adding the words ``Except for Tribal programs'' to the beginning of the 
first sentence in paragraphs (a)(8), (a)(9), and (a)(10); and by 
revising paragraph (g)(2) to read as follows:


Sec. 70.6  Permit content.

    (a) * * *
    (1) * * *
    (iv) With respect to applicable requirements under section 
112(r)(7) of the Act, the inclusion of permit conditions in accordance 
with regulations promulgated under section 112(r) shall satisfy the 
requirements of paragraph (a)(1) of this section.
* * * * *
    (g) * * *
    (2) A State may provide for an affirmative defense available in an 
action brought for noncompliance with technology-based emissions 
limitations established only in the part 70 permit. Such an affirmative 
defense may be available only if the conditions of paragraph (g)(3) of 
this section are met.
* * * * *
    5. Section 70.7 is amended by redesignating paragraphs (f), (g), 
and (h) as paragraphs (i), (j), and (k) respectively; revising 
paragraphs (d) and (e); and adding new paragraphs (f), (g), and (h) to 
read as follows:


Sec. 70.7  Permit issuance, renewal, reopenings, and revisions.

* * * * *
    (d) General Requirements for Permit Revisions.
    (1) Changes requiring permit revision. Changes at a source 
requiring a revision of a part 70 permit are those that:
    (i) Could not be operated without violating an existing permit 
term; or
    (ii) Render the source subject to an applicable requirement to 
which the source has not been previously subject.
    (2) Program provisions. The program shall provide for adequate, 
streamlined, and reasonable procedures for expeditiously processing 
permit revisions. The State or Indian Tribe may meet this obligation by 
adopting the procedures set forth in paragraphs (e) and (f) of this 
section or ones that are approved by EPA as substantially equivalent.
    (3) Exemption for acid rain. A permit revision for purposes of the 
acid rain portion of the permit shall be governed by regulations 
promulgated under title IV of the Act.
    (4) Public notice and access. For all part 70 permit revisions for 
which an opportunity for public comment is not provided prior to the 
change, the program shall provide in a general manner for periodic 
notification to the public on at least a quarterly basis and for public 
access to the records regarding such revisions.
    (e) Permit revisions for changes subject to a State review program. 
(1) Applicability. The following changes shall be incorporated into 
part 70 permits using the permit revision procedures set forth in 
paragraph (e)(2) of this section as changes with prior review.
    (i) More environmentally significant changes subject to a State 
review program. The more environmentally significant changes subject to 
a State review program shall be defined in the program and shall 
include at a minimum the following:
    (A) Any change subject to major NSR;
    (B) Any physical change or change in the method of operation of a 
part 70 source associated with a project where the prospective 
emissions increases from such changes, considered by themselves, would 
be a significant emissions increase of any pollutant subject to 
regulation under part C or D of the Act;
    (C) Any change subject to prior public and EPA review under 
regulations implementing section 112(g) of the Act; and
    (D) Any other category of changes subject to prior public and EPA 
review the permitting authority determines in its program to have a 
similarly significant environmental impact.
    (ii) Less environmentally significant changes subject to a State 
review program. Less environmentally significant changes in this 
category include all changes subject to the State's minor NSR program 
(established pursuant to 40 CFR 51.160), except for those changes 
described in paragraph (e)(1)(i)(B) of this section, all source-
specific SIP revisions, and any other changes approved by EPA in the 
program as such.
    (2) Procedures. The program shall provide that for each change 
subject to a State review program:
    (i) In the context of the State review program, an adequate 
opportunity is afforded for review by the public, EPA, and affected 
States of any revisions to the part 70 permit.
    (ii) Except as provided in paragraph (e)(2)(viii) of this section, 
a document or combination of documents is issued by the permitting 
authority that describes any new or different applicable requirement(s) 
to which the change is subject and any resulting changes or additions 
to existing part 70 permit terms necessary to meet the permit content 
requirements of Secs. 70.6(a) and (c) of this part.
    (iii) The permitting authority shall revise the part 70 permit upon 
issuance of any document described in paragraph (e)(2)(ii) of this 
section or receipt of any 

[[Page 45568]]
notice described in paragraph (e)(2)(viii) of this section by 
immediately attaching the document to the part 70 permit. Such document 
may be any preconstruction permit under minor or major NSR, any source 
specific SIP revision, or any action subject to prior public and EPA 
review taken under regulations implementing section 112 (g) of the Act.
    (iv) The provisions of paragraph (e)(2)(iii) of this section do not 
apply with respect to a unitary permit program provided the unitary 
permit has already incorporated all new or different applicable 
requirements and contains sufficient terms or conditions to meet the 
permit content requirements of Secs. 70.6(a) and (c) of this part. For 
purposes of this part, a unitary permit means a single permit which 
contains all terms and conditions needed to meet the requirements of 
part 70 and the requirements of major or minor NSR or regulations 
implementing section 112(g) of the Act.
    (v) Except as provided by paragraph (e)(2)(viii) of this section, 
the source may not operate a change until the permitting authority has 
revised the part 70 permit or issued a unitary permit, as applicable.
    (vi) For the more environmentally significant changes subject to a 
State review program, the program shall ensure that:
    (A) The public, EPA, and affected States receive notice of, and 
opportunity to comment on, the part 70 permit revision consistent with 
the provisions setting forth prior review to which the change is 
subject; and
    (B) The opportunity for comment extends to the draft part 70 permit 
terms as needed to revise existing part 70 permit terms and to meet the 
permit content requirements of Secs. 70.6(a) and (c) of this part.
    (vii) For less environmentally significant changes described under 
paragraph (e)(1)(ii) of this section, and for the purpose of 
determining adequate opportunity for review for the purpose of 
paragraph (e)(2)(i) of this section with respect to such changes, the 
program may vary the procedures for, and timing of, public, EPA, and 
affected State review in light of the environmental significance of the 
change. The permitting authority may designate in its program certain 
categories of changes, subject to EPA approval, as de minimis changes. 
The permitting authority may postpone until renewal of the affected 
part 70 permit review by the public, EPA, and affected States for such 
de minimis changes.
    (viii) For those changes which a State review program allows a 
source to make in accordance with specified requirements without 
obtaining prior permitting authority review and approval, the source 
shall submit to the permitting authority upon operating the change a 
notice describing the change and setting forth the applicable 
requirement(s) to which the change is subject and the part 70 permit 
terms required by Secs. 70.6 (a) and (c) of this part. The notice shall 
also state that the source upon making the change will meet all 
applicable requirements and that the relevant requirements of part 70 
have been met. Upon submitting the notice, the source shall attach a 
copy of it to its part 70 permit. This action shall revise the permit 
to the extent that operation of the change does not conflict with any 
existing permit term. Where a conflict exists, the source may not 
revise its permit pursuant to this provision and may not operate the 
change until its permit is revised.
    (3) Program provisions. The program may provide for changes that 
are reviewed under a State review program to be processed under the 
procedures in paragraph (e)(2) of this section pursuant to regulations 
implementing either title V or title I of the Act provided that any 
procedures under title V are concurrent with any procedures under title 
I.
    (f) Permit revisions for changes not subject to a State review 
program. (1) Applicability. Changes not otherwise reviewed by a State 
shall be incorporated into part 70 permits using the permit revision 
procedures set forth in paragraph (f)(2) of this section.
    (i) More environmentally significant changes not subject to a State 
review program. The more environmentally significant changes in this 
category shall be defined in the program and shall include at a minimum 
the establishment or revision of the following if they are not 
otherwise reviewed by the State.
    (A) MACT determinations made under regulations implementing section 
112(j) of the Act;
    (B) Alternative emission limits established under regulations 
implementing section 112(i)(5) of the Act;
    (C) Alternative requirements established under Sec. 70.6(a)(1)(iii) 
of this part or under substitute section 112 standards established 
pursuant to a program approved by EPA for such purpose under section 
112(l) of the Act;
    (D) (Establishment only) restrictions on the potential to emit of 
an entire source including those for the purpose of establishing minor 
source status under title I of the Act; and
    (E) Changes involving new or alternative monitoring methods that 
have not been authorized as adequate for measuring compliance under 
major or minor NSR, under regulations implementing section 112(g) of 
the Act, or under any other equivalent procedures.
    (ii) Less environmentally significant changes not subject to a 
State review program. Less environmentally significant changes in this 
category are those approved by EPA in the program as such and include 
as a minimum the establishment or revision of the following if they are 
not subject to a State review program.
    (A) Alternative operating scenarios;
    (B) Monitoring terms not made or addressed in association with the 
processing of changes pursuant to paragraph (e) of this section; and
    (C) (Revision only) restrictions on the potential to emit of an 
entire source including those for the purpose of establishing minor 
source status under title I of the Act; and
    (D) Emissions averaging restrictions to meet a standard set under 
section 112(d) of the Act.
    (2) Procedures. For changes described in paragraph (f)(1) of this 
section, the program shall provide that for each change not subject to 
a State review program:
    (i) An adequate opportunity occurs for review by the public, EPA, 
and affected States to address the change and any associated revisions 
to the source's part 70 permit.
    (ii) The terms of the permit revision will be sufficient to assure 
compliance with all applicable requirements and the permit content 
requirements of Secs. 70.6 (a) and (c) of this part.
    (iii) Unless specified otherwise in this paragraph, the source may 
not operate the change until the permitting authority has revised the 
part 70 permit.
    (iv) The more environmentally significant changes described in 
paragraph (f)(1)(i) of this section shall be reviewed pursuant to 
procedural requirements applicable to initial permit issuance in 
paragraph (a)(1) of this section, except that the permitting authority 
shall complete review of the majority of these changes within 6 months 
after receipt of a complete application.
    (v) For other changes described in paragraph (f)(1)(ii) of this 
section, and for the purpose of determining adequate opportunity for 
review for the purpose of paragraph (f)(2)(i) of this section with 
respect to such changes, the program may vary the procedures for, and 
the timing of, public, EPA, and affected State review in light of the 
environmental significance of the change. 

[[Page 45569]]

    (A) The permitting authority may postpone until renewal of the 
affected part 70 permit review by the public, EPA, and affected States 
for changes that are approved by EPA in its part 70 program as being de 
minimis. The following changes may be incorporated into permits using 
the procedures in paragraph (f)(2)(v)(B) of this section:
    (1) Correcting typographical errors;
    (2) Making minor administrative changes, such as a change in the 
name, address, or phone number of any person identified in the permit;
    (3) Requiring more frequent monitoring, recordkeeping, or reporting 
by the permittee;
    (4) Allowing for a change in ownership or operational control of a 
source where the permitting authority determines that no other change 
in the permit is necessary, provided that a written agreement 
containing a specific date for transfer of permitting responsibility, 
coverage, and liability between the current and new permittee has been 
submitted to the permitting authority;
    (5) Incorporating a compliance schedule from an applicable 
requirement with a future compliance date promulgated after permit 
issuance; or
    (6) Incorporating any other type of change which the State 
determines, and the Administrator approves, as de minimis.
    (B) For changes described in paragraph (f)(2)(v)(A) of this 
section, the permittee or the permitting authority may initiate the 
administrative incorporation into the permit by issuing a notice 
describing what information in the part 70 permit is affected by such a 
change and sending the notice to the permitting authority or the 
permittee as appropriate.
    (1) Where the source issues a notice, the permit shall be revised 
upon mailing of the notice by the source to the permitting authority by 
certified mail.
    (2) Where the permitting authority issues a notice, the permit 
shall be revised upon its attachment to the permit.
    (3) The program may provide that changes described in paragraph 
(f)(2)(v)(A) of this section may be implemented prior to issuance of 
the notice or revision of the part 70 permit.
    (C) For changes which trigger a new or different applicable 
requirement but which a source can make without obtaining permitting 
authority approval, the program shall provide that:
    (1) The source shall submit to the permitting authority upon 
operating the change a notice that:
    (A) Describes the change;
    (B) Sets forth the applicable requirement(s) to which the change is 
subject;
    (C) Sets forth the part 70 permit terms necessary to meet the 
permit content requirements of Secs. 70.6 (a) and (c) of this part; and
    (D) States that the source upon making the change will meet all 
applicable requirements and that the relevant requirements of part 70 
have been met;
    (2) The source's mailing of the notice by certified mail to the 
permitting authority shall revise the permit, provided that operation 
of the change does not conflict with any existing permit term. Where a 
conflict exists, the permitting authority shall not revise the permit 
pursuant to this provision and the source shall not operate the change 
until its permit is revised pursuant to applicable procedures in 
paragraph (f) of this section.
    (3) Combination changes. Notwithstanding the provisions of 
paragraph (f)(2) of this section, changes described in paragraph (f)(1) 
of this section may be combined with changes described in paragraph 
(e)(1) of this section and processed using the procedures of paragraph 
(e)(2) of this section, provided the procedures to which the changes 
under paragraph (f)(1) of this section would have been subject under 
paragraph (f)(2) of this section are provided in procedures pursuant to 
paragraph (e)(2) of this section.
    (g) Permit shield. The permit shield under Sec. 70.6(f) of this 
part may be granted by the permitting authority prior to permit renewal 
only for:
    (1) Any change defined pursuant to paragraph (e)(1)(i) or (f)(1)(i) 
of this section;
    (2) Any change to which the Administrator has objected as a result 
of a petition filed under Sec. 70.8(d) of this part, except that the 
permit shield may be granted only to permit terms that are revised or 
added as a result of EPA's objection; and
    (3) Any change defined pursuant to paragraph (e)(1)(ii) or 
(f)(1)(ii) of this section for which public and EPA review has 
occurred.
    6. Section 70.8 is amended by revising the title; by revising 
paragraphs (a)(1), (b), (c)(1), (c)(2), (c)(3)(iii), and (d); by adding 
introductory text to paragraph (c); by adding new paragraphs (c)(5) and 
(c)(6); and by revising the first sentence in paragraph (e) to read as 
follows:


Sec. 70.8  Permit review by EPA, affected States, and Indian Tribes.

    (a) Transmission of information to the Administrator.
    (1)(i) For permits and permit renewals, the part 70 program shall 
require that the permitting authority provide to the Administrator a 
copy of each permit application, each proposed permit, and each final 
part 70 permit.
    (ii) For permit revisions for changes that are subject to a State 
review program and that meet the definition of more environmentally 
significant changes under Sec. 70.7(e)(1)(i) of this part, the part 70 
program shall require that the permitting authority provide to the 
Administrator a copy of each application submitted for purposes of the 
State review program and each proposed and final action under the State 
review program (including revisions to the part 70 permit).
    (iii) For permit revisions for changes that are not subject to a 
State review program and that meet the definition of more 
environmentally significant under Sec. 70.7(f)(1)(i) of this part, the 
part 70 program shall require that the permitting authority provide to 
the Administrator a copy of each permit revision application, and each 
proposed and final permit revision.
    (iv) For permit revisions that are defined as de minimis under the 
part 70 program and approved by EPA under Sec. 70.7 of this part, no 
permit applications or permit revisions are required to be submitted to 
the Administrator.
    (v) For all permit revisions other than those referred to in 
paragraphs (a)(1) (ii) through (iv) of this section, the part 70 
program shall require that the permitting authority provide to the 
Administrator a copy of each relevant permit application or summary 
thereof, and a copy of each final part 70 permit revision.
    (vi) For any permit or permit revision, upon agreement with the 
Administrator, the permitting authority may submit to the Administrator 
an application summary form and any relevant portion of the application 
and compliance plan, in place of the complete application and 
compliance plan. To the extent practicable, information submitted to 
the Administrator shall be provided in computer readable format 
compatible with EPA's national database management system.
* * * * *
    (b) Review by affected States.
    Eligible Indian Tribes may be considered affected States under this 
paragraph. Indian Tribes are not required to submit a part 70 program 
for the limited purpose of being considered an affected State under 
this paragraph.
    (1) For purposes of paragraph (b) of this section, an Indian Tribe 
will be 

[[Page 45570]]
considered an affected State if it administers a tribal program and 
otherwise meets the definition of ``affected State'' set forth in 
Sec. 70.2 of this part.
    (2) The permit program shall provide that the permitting authority 
give notice of each draft permit or draft permit revision (including 
any proposed action pursuant to a prior State review program, as 
relevant) to any affected State on or before the time that the 
permitting authority provides this notice to the public under Sec. 70.7 
of this part. Where Sec. 70.7 does not require prior public notice of a 
permit revision, the permitting authority shall give notice of the 
final permit revision on or before the time that the permitting 
authority provides this notice to the public under Sec. 70.7.
    (3) The permit program shall provide that the permitting authority, 
as part of the submittal of any proposed permit or proposed permit 
revision to the Administrator, shall notify the Administrator and any 
affected State in writing of any refusal by the permitting authority to 
accept all recommendations for the proposed permit that the affected 
State submitted during the public and affected State review period. The 
notice shall include the permitting authority's reasons for not 
accepting any such recommendation. The permitting authority is not 
required to accept recommendations that are not based on applicable 
requirements or the requirements of this part.
    (c) EPA objection. For purposes of State programs approved under 
part 70 as promulgated on July 21, 1992, paragraph (c) of this section 
as promulgated on July 21, 1992 shall apply. For purposes of State 
programs approved under part 70 as revised on [date of final 
rulemaking], paragraph (c) of this section as promulgated on [date of 
final rulemaking] shall apply.
    (1) Except as provided by paragraphs (c)(5) and (6) of this 
section, the Administrator will object to the issuance of any proposed 
permit or any permit revision determined by the Administrator not to be 
in compliance with applicable requirements or requirements under this 
part. No permit or permit revision for which an application must be 
transmitted to the Administrator under paragraph (a) of this section 
shall be issued if the Administrator objects to its issuance in writing 
during the 45-day period following:
    (i) In the case of initial permit issuance, permit renewals, and 
permit revisions for changes as defined under Sec. 70.7(f)(1)(i) of 
this part, receipt of the proposed permit or proposed permit revision 
and all necessary supporting information; or
    (ii) In the case of permit revisions for changes as defined under 
Sec. 70.7(e)(1)(i) of this part, the beginning of the public comment 
period for such revisions (although the Administrator may object within 
45 days of receipt of the final permit revision for defects that were 
not reasonably apparent in the draft permit submitted for public 
review).
    (2) Any EPA objection under this section shall include a statement 
of the Administrator's reasons for objection and a description of the 
terms and conditions that the permit must include to respond to the 
objections. The Administrator will provide the permittee a copy of the 
objection.
    (3) * * *
    (iii) Process the permit or permit revision under the procedures 
approved to meet Sec. 70.7 of this part.
* * * * *
    (5) For 5 years following approval of the part 70 program 
implementing this paragraph, the Administrator shall not object to a 
permit revision for a change as defined under Secs. 70.7 (e)(1)(ii) or 
(f)(1)(ii) of this part except where it is in response to a petition 
filed pursuant to paragraph (d) of this section, and the permit 
revision contains an error that would, either alone or in combination 
with other similar permit revisions likely to be issued, likely have a 
significant adverse environmental effect. A permit revision would be 
deemed to have a significant adverse environmental impact if it were 
employed as a device to limit potential to emit below major source or 
major modification thresholds (as set forth in title I of the Act) but 
in the Administrator's judgment would allow increases above those 
thresholds.
    (6) The Administrator shall not object to any permit revision for a 
change approved by EPA in a part 70 program as de minimis.
    (d) Public petitions to the Administrator. (1) The program shall 
provide that, if the Administrator does not object in writing by the 
expiration of the applicable 45-day review period specified in 
paragraph (c) of this section, any person may petition the 
Administrator to make such objection within 60 days after the 
expiration of the applicable review period, or, for all permit 
revisions for changes as defined under Secs. 70.7(e)(1)(ii) or 
(f)(1)(ii) of this part (other than for de minimis changes as defined 
by the part 70 program and approved by EPA under Sec. 70.7 of this 
part), within 60 days of the date the public is notified of the 
revision of the part 70 permit. The program shall also provide that the 
public have access to information concerning the beginning and 
expiration of EPA's 45-day review period as required for permit 
issuance, revisions, reopenings, and renewals pursuant to Sec. 70.7 of 
this part.
    (2) Any petition shall be based only on objections to the permit 
that were raised with reasonable specificity during any public comment 
period provided for in Sec. 70.7 of this part, unless the petitioner 
demonstrates that it was impracticable to raise such objections within 
such period, no public comment period was provided, or the grounds for 
such objection arose after such period.
    (3) If the Administrator objects to the permit as a result of a 
petition filed under this paragraph, the permitting authority shall not 
issue the permit until EPA's objection has been resolved, except that a 
petition for review does not stay the effectiveness of a permit or its 
requirements if the permit was issued after the end of the 45-day 
review period specified in paragraph (c) of this section and prior to 
an EPA objection.
    (4) If the permitting authority has issued a permit pursuant to the 
procedures in Secs. 70.7(e)(1)(ii) or (f)(1)(ii) of this part prior to 
receipt of an EPA objection under this paragraph, the Administrator 
will modify, terminate, or revoke such permit, and shall do so 
consistent with the procedures in Secs. 70.7(e)(2) or (f)(2) of this 
part as appropriate except in unusual circumstances, and the permitting 
authority may thereafter issue only a revised permit that satisfies 
EPA's objection. In any case, the source will not be in violation of 
the requirement to have submitted a timely and complete application.
    (e) Prohibition on default issuance. Consistent with 
Sec. 70.4(b)(3)(ix) of this part, for the purposes of Federal law and 
title V of the Act, no State program may provide that a part 70 permit 
or a part 70 permit revision for a change as defined under 
Secs. 70.7(e)(1)(i) or 70.7(f)(1)(i) will issue until affected States 
and EPA have had an opportunity to review the permit or permit revision 
as required under this section. * * *
    8. Section 70.10 is amended by adding a new paragraph (a)(3) and by 
revising paragraphs (b)(1) and (c)(1) to read as follows:


Sec. 70.10  Federal oversight and sanctions.

    (a) * * *
    (3) The requirements of paragraphs (a)(1) and (a)(2) of this 
section shall not apply to Indian Tribes and Tribal programs.
    (b) * * *
    (1) Whenever the Administrator makes a determination that a 
permitting 

[[Page 45571]]
authority is not adequately administering or enforcing a part 70 
program, including a Tribal program, or any portion thereof, the 
Administrator will notify the permitting authority of the determination 
and the reasons therefore. The Administrator will publish such notice 
in the Federal Register.
* * * * *
    (c) Criteria for withdrawal of State or Tribal programs. (1) The 
Administrator may withdraw program approval in whole or in part 
whenever the approved program no longer complies with the requirements 
of this part and the permitting authority fails to take corrective 
action. Such circumstances, in whole or in part, include any of the 
following:
* * * * *
    9. Section 70.11 is amended by revising the introductory text to 
read as follows:


Sec. 70.11  Requirements for enforcement authority.

    Except for Tribal programs, with respect to criminal enforcement 
matters only, under which the Tribe shall enter into a formal 
Memorandum of Agreement with EPA to provide for the timely referral of 
criminal enforcement matters to the appropriate EPA Regional 
Administrator, all programs to be approved under this part must contain 
the following provisions:
* * * * *
[FR Doc. 95-21300 Filed 8-30-95; 8:45 am]
BILLING CODE 6560-50-P