[Federal Register Volume 60, Number 187 (Wednesday, September 27, 1995)]
[Rules and Regulations]
[Pages 49775-49778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23963]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52

[KY-087-1-6957a; FRL-5290-5]


Approval and Promulgation of Implementation Plans; Kentucky

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is approving a revision to the Kentucky State 
Implementation Plan (SIP) to incorporate new permitting regulations and 
to allow the Commonwealth of Kentucky to issue Federally enforceable 
state operating permits (FESOP). This revision consists of Sections 1 
through 7 of the State Rules in 401 KAR 50:035, entitled ``Permits.'' 
On December 29, 1994, the Commonwealth of Kentucky through the Kentucky 
Natural Resources and Environmental Protection Cabinet (NREPC), 
submitted a SIP revision which updates the procedural rules governing 
the issuance of air permits in Kentucky and fulfills the requirements 
necessary for a state FESOP program to become Federally enforceable. In 
order to extend the Federal enforceability of Kentucky's FESOP program 
to hazardous air pollutants (HAPs), EPA is also approving Kentucky's 
FESOP program pursuant to section 112 of the Clean Air Act as amended 
in 1990 (CAA) so that Kentucky may issue Federally enforceable 
operating permits for HAPs.

DATES: This final rule is effective November 27, 1995 unless adverse or 
critical comments are received by October 27, 1995. If the effective 
date is delayed, timely notice will be published in the Federal 
Register.

ADDRESSES: Written comments should be addressed to Yolanda Adams, at 
the EPA Regional Office listed below. Copies of the documents relative 
to this action are available for public inspection during normal 
business hours at the following locations. The interested persons 
wanting to examine these documents should make an appointment with the 
appropriate office at least 24 hours before the visiting day.

Air and Radiation Docket and Information Center (Air Docket 6102), U.S. 
Environmental Protection Agency, 401 M Street, SW., Washington, DC 
20460.
Environmental Protection Agency, Region 4 Air Programs Branch, 345 
Courtland Street, NE., Atlanta, Georgia 30365.
Division for Air Quality, Department for Environmental Protection, 
Natural Resources and Environmental Protection Cabinet, 803 Schenkel 
Lane, Frankfort, Kentucky 40601.

FOR FURTHER INFORMATION CONTACT: Yolanda Adams, Air Programs Branch, 
Air, Pesticides & Toxics Management Division, Region 4 Environmental 
Protection Agency, 345 Courtland Street, NE., Atlanta, Georgia 30365. 
The telephone number is 404/347-3555 x4149. Reference file KY087-01-
6957.

SUPPLEMENTARY INFORMATION:

I. Summary of State Submittal

    On December 29, 1994, the Commonwealth of Kentucky through the 
NREPC submitted revised air permitting rules for approval as part of 
the SIP. These rules represent Kentucky's consolidated permitting 
regulations, which include provisions for operating permits for major 
sources pursuant to title V of the CAA, construction permits for major 
new sources and major source modifications pursuant to Parts C and D of 
title I, and operating and construction permits for minor sources and 
minor modifications pursuant to State law. Thus, this submittal 
complements Kentucky's submittal seeking EPA approval of the same 
regulations as satisfying title V requirements. Separate rulemaking is 
being conducted with respect to whether these regulations satisfy title 
V requirements.
    Kentucky's December 29, 1994, submittal does not seek to satisfy 
any specific mandate under the Clean Air Act. As noted above, a 
separate submittal seeks to satisfy the requirements of title V. 
Instead, Kentucky's submittal of December 29, 1994, seeks approval of 
updated State permitting regulations which have superseded previously 
approved regulations. Kentucky intended with this submittal: (1) to 
provide a mechanism for intermediate size sources to obtain Federally 
enforceable limitations to become ``synthetic minor sources,'' and (2) 
to update the Federally approved regulations to reflect the updated 
State permitting regulations. Each of these purposes requires 
evaluation under different criteria. These purposes and the associated 
EPA criteria for approval are discussed individually in subsequent 
sections.

A. Federally Enforceable Limitations on Potential To Emit

    The first purpose of Kentucky's submittal was to provide a 
mechanism for intermediate size sources to obtain Federally enforceable 
limitations such that the sources' potential to emit would be below the 
size thresholds at which major source permits are required. This 
mechanism involves FESOPs incorporating the relevant limitations. 
Kentucky is requesting this authority with respect to HAPs as well as 
criteria pollutants. This voluntary SIP revision allows EPA and 
citizens under the CAA to enforce the terms and conditions of 
Kentucky's FESOP program. Operating permits that are issued under the 
Kentucky FESOP program after approval into the State SIP and under 
section 112(l) will provide Federally enforceable limits on an air 
pollution source's potential to emit. Limiting of a source's potential 
to emit through Federally enforceable operating permits can affect the 
applicability of Federal regulations such as title V operating permits, 
New Source Review (NSR) preconstruction permits, Prevention of 
Significant Deterioration (PSD) preconstruction permits for criteria 
pollutants, and Federal air toxics requirements under section 112 of 
the CAA.
    Criteria for EPA approval of FESOP programs are specified in a 
Federal Register document entitled, 

[[Page 49776]]
``Requirements for the preparation, adoption, and submittal of 
implementation plans; air quality, new source review; final rules.'' 
(see 54 FR 22274, June 28, 1989). In this document, EPA listed five 
criteria that must be met for a State's minor source operating permit 
program to be Federally enforceable and, therefore, approvable into the 
SIP. Kentucky's SIP revision satisfies the five criteria for Federal 
enforceability of the State's FESOP program.
    The first criterion for a state's operating permit program to be 
Federally enforceable is EPA's approval of the permit program into the 
SIP. On December 29, 1994, the Commonwealth of Kentucky submitted 
through the DEP a SIP revision designed to meet the five criteria for 
Federal enforceability. Today's action will approve these regulations 
into the Kentucky SIP, and therefore satisfy the first criterion for 
Federal enforceability.
    The second criterion for a state's operating permit program to be 
Federally enforceable is that the regulations approved into the SIP 
must impose a legal obligation that operating permit holders adhere to 
the terms and limitations of such permits. Kentucky's program meets 
this criterion in Rule 401 KAR 50:035, section 4(1)(f)1., by requiring 
the permittee to comply with all conditions of the permit. The rule 
further states that ``Noncompliance shall be a violation of this 
administrative regulation and, for Federally enforceable permits, is 
also a violation of 42 U.S.C 7401 through 7671q (the Act) and is 
grounds for an enforcement action, including but not limited to the 
termination, revocation and reissuance, or revision of a permit, or 
denial of a permit application.'' Hence, the second criterion for 
Federal enforceability is satisfied.
    The third criterion for a state's operating permit program to be 
Federally enforceable is that the state operating permit program must 
require all emissions limitations, controls, and other requirements 
imposed by permits to be at least as stringent as any other applicable 
limitations and requirements contained in the SIP or enforceable under 
the SIP, and the program may not issue permits that waive, or make less 
stringent, any limitations or requirements contained in or issued 
pursuant to the SIP, or that are otherwise ``Federally enforceable'' 
(e.g., standards established under sections 111 and 112 of the CAA). 
Kentucky's Rule 401 KAR 50:035, section 4(1)(a) explicitly requires 
that issued permits include emission limitations and standards, 
including operational requirements and limitations, that assure 
compliance with all applicable requirements. The rule further states 
that Kentucky will not issue permits that waive, or make less 
stringent, any limitation or requirements contained in or issued 
pursuant to the SIP or that are otherwise Federally enforceable. 
Therefore, this section of Kentucky's permits rule satisfies the third 
criterion for Federal enforceability.
    The fourth criterion for a state's operating permit program to be 
Federally enforceable is that limitations, controls, and requirements 
in the operating permits be permanent, quantifiable, and otherwise 
enforceable as a practical matter. With respect to this criterion, 
enforceability is essentially provided on a permit-by-permit basis, 
particularly by writing practical and quantitative enforcement 
procedures into each permit. EPA will review the enforceability of 
permits using the policy memorandum entitled ``Options for Limiting the 
Potential to Emit (PTE) of a Stationary Source Under Section 112 and 
title V of the Clean Air Act (Act),'' dated January 25, 1995, which 
describes the types of limitations that reduce potential to emit in a 
Federally enforceable manner. Nevertheless, enforceability also 
requires proper permit program design. Kentucky's regulations (e.g., 
Rule 401 KAR 50:035, section 4(1)(a) quoted above) provide for fully 
enforceable limitations. Concerning permanence, permit conditions have 
the duration provided for under title V (i.e., the conditions expire 
with permit expiration but are typically renewed with permit 
reissuance). Consequently, Kentucky's rules provide for the degree of 
permanence necessary for enforcement of the applicable provisions, and 
more generally provide that the permit limitations will be fully 
enforceable.
    The fifth criterion for a state's operating permit program to be 
Federally enforceable is providing EPA and the public with timely 
notice of the proposal and issuance of such permits, and providing EPA, 
on a timely basis, with a copy of each proposed (or draft) and final 
permit intended to be Federally enforceable. This process must also 
provide for an opportunity for public comment on the permit 
applications prior to issuance of the final permit. Kentucky's Rule 401 
KAR 50:035, section 7 entitled ``Procedures for Public Participation'' 
contains explicit requirements for public notice and review of proposed 
permitting actions. Subsection (1) requires that public notice of the 
opportunity to comment be provided for the following permit actions: 
(a) Issuance of a draft permit; (b) Intended denial of a permit 
application; (c) Issuance of a draft significant permit revision; (d) 
Issuance of a draft general permit; (e) Issuance of a permit renewal; 
and (f) Scheduling of a public hearing. Subsection (6) states that a 
minimum of 30 days will be provided for public comment on all permit 
proceedings. In addition, subsection (7) provides the opportunity for a 
public hearing on any permit action where the DEP believes there is 
sufficient interest. EPA notes that any permit which has not gone 
through an opportunity for public comment and EPA review under the 
Kentucky FESOP program will not be Federally enforceable.
    In addition to requesting approval into the SIP, Kentucky has also 
requested approval of its FESOP program under section 112(l) of the Act 
for the purpose of creating Federally enforceable limitations on the 
potential to emit of HAPs through the issuance of Federally enforceable 
state operating permits. Approval under section 112(l) is necessary 
because the proposed SIP approval discussed above only extends to the 
control of criteria pollutants.
    EPA believes that the five criteria for Federal enforceability, are 
also appropriate for evaluating and approving FESOP programs under 
section 112(l). The June 28, 1989, Federal Register document did not 
specifically address HAPs because it was written prior to the 1990 
amendments to section 112, not because it establishes requirements 
unique to criteria pollutants.
    In addition to meeting the criteria in the June 28, 1989, document, 
a FESOP program that addresses HAPs must meet the statutory criteria 
for approval under section 112(l)(5). Section 112(l) allows EPA to 
approve a program only if it: (1) contains adequate authority to assure 
compliance with any section 112 standards or requirements; (2) provides 
for adequate resources; (3) provides for an expeditious schedule for 
assuring compliance with section 112 requirements; and (4) is otherwise 
likely to satisfy the objectives of the CAA. The January 25, 1995, 
memorandum cited above, provides further discussion of these criteria 
and of the extent to which limits on criteria pollutants such as 
volatile organic compounds and particulate matter may be considered to 
limit sources' potential to emit HAPs.
    EPA plans to codify the approval criteria for programs limiting the 
potential to emit HAPs, such as FESOP programs, through amendments to 
Subpart E of Part 63, the regulations promulgated to implement section 

[[Page 49777]]
112(l) of the CAA. (See 58 FR 62262, November 26, 1993). EPA 
anticipates that these regulatory criteria, as they apply to FESOP 
programs, will mirror those set forth in the June 28, 1989, Federal 
Register document. The EPA also anticipates that since FESOP programs 
approved pursuant to section 112(l) prior to the planned Subpart E 
revisions will have been approved as meeting these criteria, further 
approval actions for those programs will not be necessary.
    EPA has authority under section 112(l) to approve programs to limit 
the potential to emit HAPs directly under section 112(l) prior to the 
Subpart E revisions. Section 112(l)(5) requires the EPA to disapprove 
programs that are inconsistent with guidance required to be issued 
under section 112(l)(2). This might be read to suggest that the 
``guidance'' referred to in section 112(l)(2) was intended to be a 
binding rule. Even under this interpretation, EPA does not believe that 
section 112(l) requires this rulemaking to be comprehensive. That is to 
say, it need not address every possible instance of approval under 
section 112(l). EPA has already issued regulations under section 112(l) 
that would satisfy any section 112(l)(2) requirement for rulemaking. 
Given the severe timing problems posed by impending deadlines set forth 
in ``maximum achievable control technology'' (MACT) emission standards 
under section 112 and for submittal of title V permit applications, EPA 
believes it is reasonable to read section 112(l) to allow for approval 
of programs to limit potential to emit prior to promulgation of a rule 
specifically addressing this issue. Therefore, EPA is approving 
Kentucky's FESOP program so that Kentucky may begin to issue Federally 
enforceable operating permits as soon as possible.
    Regarding the statutory criteria of section 112(l)(5) referred to 
above, EPA believes Kentucky's FESOP program contains adequate 
authority to assure compliance with section 112 requirements because 
the third criterion of the June 28, 1989, Federal Register document is 
met. That is to say, Kentucky's program does not allow for the waiver 
of any section 112 requirements. Sources that become minor through a 
permit issued pursuant to this program would still be required to meet 
the section 112 requirements applicable to non-major sources.
    Regarding the requirement for adequate resources, EPA believes 
Kentucky has demonstrated that it will provide adequate resources to 
support the FESOP program. EPA expects that resources will continue to 
be adequate to administer that portion of the State's minor source 
operating permit program under which Federally enforceable operating 
permits will be issued since Kentucky has administered a minor source 
operating permit program for several years. EPA will monitor Kentucky's 
implementation of its FESOP program to ensure that adequate resources 
are in fact available. EPA also believes that Kentucky's FESOP program 
provides for an expeditious schedule to assure compliance with section 
112 requirements. This program will be used to allow a source to 
establish a voluntary limit on potential to emit to avoid being subject 
to a CAA requirement applicable on a particular date. Nothing in 
Kentucky's FESOP program would allow a source to avoid or delay 
compliance with a CAA requirement if it fails to obtain an appropriate 
Federally enforceable limit by the relevant deadline. Finally, EPA 
believes Kentucky's program is consistent with the intent of section 
112 and the CAA for states to provide a mechanism through which sources 
may avoid classification as major sources by obtaining Federally 
enforceable limits on potential to emit.
    Eligibility for Federally enforceable permits extends not only to 
permits issued after the effective date of this rule, but also to 
permits issued under the State's current rule prior to the effective 
date of today's rulemaking. If the State followed its own regulation, 
each issued permit that established a title I condition (e.g. for a 
source to have minor source potential to emit) was subject to public 
notice and prior EPA review. Therefore, EPA will consider all such 
operating permits which were issued in a manner consistent with both 
the State regulations and the five criteria as federally enforceable 
upon the effective date of this action provided that any permits that 
the State wishes to make federally enforceable are submitted to EPA and 
accompanied by documentation that the procedures approved today have 
been followed. EPA will expeditiously review any individual permits so 
submitted to ensure their conformity with the program requirements.
    With Kentucky's addition of these provisions and EPA's approval of 
this revision to the SIP, Kentucky's FESOP program satisfies the 
criteria described in the June 28, 1989, Federal Register document.

B. Review of Updated New Source Review Requirements

    The second purpose of Kentucky's submittal was to update the 
Federally approved regulations to reflect the updated State permitting 
regulations. In adopting a single set of air permitting regulations for 
both construction permits and operating permits, the State updated 
numerous new source review provisions in conjunction with its adoption 
of title V regulations. These rules specify which sources must have 
title V permits (namely major sources), which sources must have State 
minor source permits, and which minor sources do not need a permit. 
Additional rules specify requirements for minor sources, which are 
substantially equivalent to the title V operating permit requirements 
in 40 CFR Part 70. These requirements include application procedures, 
permit content, permit processing procedures, permit revision 
procedures, criteria for treating activities as insignificant, Federal 
enforceability, and coverage by a permit shield.
    Numerous provisions governing major source new source review in 
Kentucky are unaffected by the State's submittal. Kentucky's rules, 
codified at 401 KAR 51:017 and 401 KAR 51:052, continue to provide 
substantive requirements for prevention of significant deterioration 
(i.e., major new source review in attainment areas) and major new 
source review in nonattainment areas.

II. Final Action

    In this action, EPA is approving Kentucky's air permitting 
regulations as submitted on December 29, 1994. Furthermore, EPA 
concludes that Kentucky's purposes in submitting these regulations have 
been fulfilled. First, Kentucky has satisfied the criteria for issuing 
Federally enforceable state operating permits. Second, these new 
permitting regulations continue to satisfy relevant new source review 
requirements.
    EPA is publishing this action without prior proposal because the 
Agency views this as a noncontroversial amendment and anticipates no 
adverse comments. However, in a separate document in this Federal 
Register publication, EPA is proposing to approve the SIP revision 
should adverse or critical comments be filed. This action will be 
effective November 27, 1995 unless, by October 27, 1995, adverse or 
critical comments are received. If EPA receives such comments, this 
action will be withdrawn before the effective date by publishing a 
subsequent document that will withdraw the final action. All public 
comments received will then be addressed in a subsequent final rule 
based on this action serving as a proposed rule. EPA will not institute 
a second comment period on this action. 

[[Page 49778]]
Any parties interested in commenting on this action should do so at 
this time. If no such comments are received, the public is advised that 
this action will be effective November 27, 1995.
    The Agency has reviewed this request for revision of the Federally-
approved SIP for conformance with the provisions of the 1990 Clean Air 
Act Amendments enacted on November 15, 1990. EPA has determined that 
this action conforms with those requirements.
    This action has been classified as a Table 3 action for signature 
by the Regional Administration under the procedures published in the 
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a 
July 10, 1995, memorandum from Mary Nichols, Assistant Administrator 
for Air and Radiation. The office of Management and Budget (OMB) has 
exempted this regulatory action from review under Executive Order 
12866.
    Under section 307(b)(1) of the CAA, 42 U.S.C. 7607(b)(1), petitions 
for judicial review of this action must be filed in the United States 
Court of Appeals for the appropriate circuit by November 27, 1995. 
Filing a petition for reconsideration by the Administrator of this 
final rule does not affect the finality of this rule for purposes of 
judicial review nor does it extend the time within which a petition for 
judicial review may be filed, and shall not postpone the effectiveness 
of such rule or action. This action may not be challenged later in 
proceedings to enforce its requirements. (See section 307(b)(2) of the 
CAA, 42 U.S.C. 7607(b)(2).)
    Nothing in this action shall be construed as permitting or allowing 
or establishing a precedent for any future request for a revision to 
any SIP. Each request for revision to the SIP shall be considered 
separately in light of specific technical, economic, and environmental 
factors and in relation to relevant statutory and regulatory 
requirements.
    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA 
must prepare a regulatory flexibility analysis assessing the impact of 
any proposed or final rule on small entities. 5 U.S.C. 603 and 604. 
Alternatively, EPA may certify that the rule will not have a 
significant impact on a substantial number of small entities. Small 
entities include small businesses, small not-for-profit enterprises, 
and government entities with jurisdiction over populations of less than 
50,000.
    Under Sections 202, 203, and 205 of the Unfunded Mandates Reform 
Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22, 
1995, EPA must undertake various actions in association with proposed 
or final rules that include a Federal mandate that may result in 
estimated costs of $100 million or more to the private sector, or to 
State, local, or tribal governments in the aggregate.
    Through submission of this state implementation plan or plan 
revision, the State has elected to adopt the program provided for under 
Section 110 of the Clean Air Act. These rules may bind the State 
government to perform certain actions and also require the private 
sector to perform certain duties. To the extent that the rules being 
approved by this action would impose no new requirements, such sources 
are already subject to these regulations under State law. Accordingly, 
no additional costs to the State government, or to the private sector, 
result from this action. EPA has also determined that this final action 
does not include a mandate that may result in estimated costs of $100 
million or more to the State government in the aggregate or to the 
private sector.
    SIP approvals under section 110 and subchapter I, part D of the CAA 
do not create any new requirements, but simply approve requirements 
that the State is already imposing. Therefore, because the Federal SIP-
approval does not impose any new requirements, I certify that it does 
not have a significant impact on any small entities affected. Moreover, 
due to the nature of the Federal-state relationship under the CAA, 
preparation of a regulatory flexibility analysis would constitute 
Federal inquiry into the economic reasonableness of state action. The 
CAA forbids EPA to base its actions concerning SIPs on such grounds. 
Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.Ct. 1976); 
42 U.S.C. 7410(a)(2).

List of Subjects in 40 CFR Part 52

    Air pollution control, Carbon monoxide, Hydrocarbons, Incorporation 
by reference, Intergovernmental relations, Lead, Nitrogen dioxide, 
Ozone, Particulate matter, Sulfur oxides.

    Dated: August 23, 1995.
Patrick M. Tobin,
Acting Regional Administrator.

    Part 52 of chapter I, title 40, Code of Federal Regulations, is 
amended as follows:

PART 52--[AMENDED]

    1. The authority citation for part 52 continues to read as follows:

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

Subpart S--Kentucky

    2. Section 52.920 is amended by adding paragraph (c)(81) to read as 
follows:


Sec. 52.920  Identification of plan.

* * * * *
    (c) * * *
    (81) Revisions to air permit rules submitted by the Kentucky 
Natural Resources and Environmental Protection Cabinet on December 29, 
1994.
    (i) Incorporation by reference. Revised Rule 401 KAR 50:035, 
``Permits'', Sections 1 through 7, effective September 28, 1994.
    (ii) Other material. None.

[FR Doc. 95-23963 Filed 9-26-95; 8:45 am]
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