[Federal Register Volume 60, Number 219 (Tuesday, November 14, 1995)]
[Rules and Regulations]
[Pages 57188-57191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28067]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70

[IN001; FRL-5331-2]


Clean Air Act Final Interim Approval of Operating Permits 
Program; Indiana

AGENCY: Environmental Protection Agency (USEPA).

ACTION: Final interim approval.

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SUMMARY: The USEPA is promulgating an interim approval of the operating 
permits program submitted by Indiana for the purpose of complying with 
Federal requirements which mandate that States develop, and submit to 
USEPA, programs for issuing operating permits to all major stationary 
sources, and to certain other sources.

EFFECTIVE DATE: The effective date of this action is December 14, 1995.

ADDRESSES: Copies of the State's submittal and other supporting 
information used in developing the final interim approval are available 
for inspection during normal business hours at the following location: 
USEPA Region 5, 77 West Jackson Boulevard, AR-18J, Chicago, Illinois, 
60604. Please contact Sam Portanova at (312) 886-3189 to arrange a time 
if inspection of the submittal is desired.

FOR FURTHER INFORMATION CONTACT: Sam Portanova, AR-18J, 77 West Jackson 
Boulevard, Chicago, Illinois, 60604, (312) 886-3189.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

    As required under Title V of the Clean Air Act (``the Act'') as 
amended (1990), USEPA has promulgated regulations which define the 
minimum elements of an approvable State operating permits program and 
the corresponding standards and procedures by which the USEPA will 
approve, oversee, and withdraw approval of State operating permits 
programs (see 57 FR 32250 (July 21, 1992)). These regulations are 
codified at 40 Code of Federal Regulations (CFR) part 70. Title V 
requires States to develop, and submit to USEPA, programs for issuing 
these operating permits to all major stationary sources and to certain 
other sources.
    The Act requires that States develop and submit these programs to 
USEPA by November 15, 1993, and that USEPA act to approve or disapprove 
each program within 1 year after receiving the submittal. 40 CFR 
70.4(e)(2), however, allows the Administrator to extend the review 
period of a State's submittal if the State's submission is materially 
altered during the 1-year review period. This additional review period 
may not extend beyond 1 year following receipt of the revised 
submission.
    The USEPA's program review occurs pursuant to section 502 of the 
Act and the part 70 regulations, which together outline criteria for 
approval or disapproval. Where a program substantially, but not fully, 
meets the requirements of part 70, USEPA may grant the program interim 
approval for a period of up to 2 years. If USEPA has not fully approved 
a program by 2 years after the November 15, 1993, date, or by the end 
of an interim program, it must establish and implement a Federal 
program.
    On May 22, 1995, USEPA proposed an interim approval of the 
operating permits program for Indiana (see 60 FR 27064) and received 
public comments on the proposal. In this document, USEPA is taking 
final action to promulgate an interim approval of the operating permits 
program for Indiana.

II. Final Action and Implications

A. Analysis of State Submission

    The USEPA is promulgating an interim approval of the operating 
permits program submitted by Indiana on August 10, 1994. Indiana's 
program substantially meets the requirements of part 70; however, 
certain issues must be addressed in the State's submittal before USEPA 
can grant full approval.
    For more detailed information on the analysis of the State's 
submission, please refer to the May 22, 1995, proposed interim approval 
of the Indiana Title V program (see 60 FR 27064) and the technical 
support document (TSD) included with the docket of the proposed interim 
approval.
1. Regulations and Program Implementation
    a. Applicability.  The Indiana program meets the requirements of 40 
CFR 70.2 and 70.3 for applicability in 326 IAC 2-7-2. Please refer to 
the proposed interim approval and the TSD included with the docket of 
the proposed interim approval for more information regarding the 
language in 326 IAC 2-7-2.
    b. Permit Applications. A deficiency in the State's permit 
application requirements exists concerning insignificant activities, 
which are defined in 326 IAC 2-7-1(20). In the Indiana program, the 
insignificant activity threshold level for sulfur dioxide (SO2) is 
10 pounds per hour (lb/hr) or 50 pounds per day (lb/day) and the 
insignificant activity threshold level for hazardous air pollutants 
(HAP) is 4 tons per year (tpy) for one HAP or 10 tpy of any combination 
of HAPs. USEPA 

[[Page 57189]]
proposed interim approval for these threshold levels in the May 22, 
1995, Federal Register.
    USEPA is promulgating interim approval to the SO2 and HAP 
insignificant activity levels and promulgating full approval to the 
volatile organic compounds, particulate matter, carbon monoxide, 
nitrogen oxides, and lead insignificant activity levels. The rationale 
for the interim approval status is provided in the proposed interim 
approval and the TSD included with the docket of the proposed interim 
approval.
    c. Permit issuance, renewal, reopenings and revisions. The Indiana 
program meets the requirements of 40 CFR 70.7 and 70.8 for permit 
issuance, renewal, reopenings, and public participation and the 
requirements of 40 CFR 70.4(b)(12) for operational flexibility. Please 
refer to the proposed interim approval and the TSD included with the 
docket of the proposed interim approval for more information regarding 
the language in 326 IAC 2-7-11 for administrative permit amendments.
    In the May 22, 1995, notice, USEPA proposed interim approval with 
respect to the State's threshold levels for group processing of permits 
(326 IAC 2-7-12(c)). In that notice, USEPA stated that Indiana 
program's threshold level for minor permit modification (MPM) group 
processing eligibility was not as stringent as the part 70 threshold 
level. To obtain full approval, USEPA stated that Indiana must 
establish a group processing threshold consistent with 40 CFR 
70.7(e)(3)(i), or demonstrate that an alternative threshold would 
alleviate severe administrative burden and result in trivial 
environmental impact. The May 22, 1995, notice stated that ``if EPA's 
concerns are addressed by a change in the State's final regulations or 
by a State demonstration before final action on this notice, then EPA 
can fully approve the State's group processing threshold levels.''
    In an August 30, 1995, letter to USEPA, Indiana submitted a 
demonstration that an alternative threshold would alleviate severe 
administrative burden and would result in trivial environmental impact. 
In this letter, Indiana noted that its Title V regulation requires the 
State to provide public participation for all MPMs, including group 
processing MPMs. Since part 70 does not require public participation 
for MPMs, the State requirement is more stringent and will require 
public participation for many more permit modifications than the 
Federal rule requires. Indiana's group processing threshold level will 
allow the State to consolidate more of its MPM public notice and 
comment periods. Although staff review of modifications as individuals 
or as a group may not significantly differ, the administrative savings 
incurred by the State to provide public notice of these permits on an 
individual basis would be significant. Under its current permit 
programs, the State processes approximately 115-125 permit exemptions 
per year based on the stated group processing thresholds; and the State 
estimates that a majority of these might have to undergo individual 
processing under a part 70 threshold.
    With regard to environmental impact, the State's letter also notes 
that under its program, more modifications than required by part 70 
would be subject to permitting authority review and public notice. The 
level and result of permitting authority review should not be impacted 
by individual or group processing. In fact, since group processing 
actions must be completed within 180 days as opposed to 90 days, there 
may be opportunity for greater review and consideration. In addition, 
increased opportunity for public comment, whether as individual or 
group modifications, could result in enhanced environmental benefits, 
but at the very least will not directly result in adverse environmental 
impacts. Based on these considerations, USEPA believes the State has 
met the required justification for a different group processing 
threshold and is promulgating full approval for the Indiana MPM group 
processing threshold levels.
2. Provisions Implementing the Requirements of Other Titles of the Act
    a. Authority and/or Commitments for Section 112 Implementation. 
Indiana has demonstrated in its Title V program submittal adequate 
legal authority to implement and enforce all section 112 requirements 
through Title V permits. This legal authority is contained in Indiana's 
enabling legislation and in regulatory provisions defining ``applicable 
requirements'' and stating that the permit must incorporate all 
applicable requirements. USEPA has determined that this legal authority 
is sufficient to allow Indiana to issue permits that assure compliance 
with all section 112 requirements.
    The USEPA is accepting the above legal authority as an adequate 
demonstration that Indiana is able to carry out all section 112 
activities relative to Title V sources. For further rationale on this 
interpretation, please refer to the proposed interim approval, the TSD 
accompanying the proposed interim approval, and the April 13, 1993, 
guidance memorandum titled ``Title V Program Approval Criteria for 
section 112 activities,'' signed by John Seitz, Director of the Office 
of Air Quality Planning and Standards.
    b. Implementation of Section 112(g) Upon Program Approval. As a 
condition of approval of the Title V program, Indiana is required to 
implement section 112(g) of the Act. Indiana has promulgated a ``MACT 
Rule'' in 326 IAC 2-1-3.3. The purpose of this regulation is to provide 
Indiana the necessary mechanism to implement section 112(g).
    According to the Federal Register interpretive notice published on 
February 14, 1995 (60 FR 8333), the requirements of section 112(g) will 
not become effective until after USEPA has promulgated a regulation 
addressing that provision. The Federal Register notice sets forth in 
detail the rationale for this interpretation. At the time of Indiana's 
program submittal and USEPA's subsequent review period, USEPA had not 
promulgated a federal regulation containing the specific requirements 
of section 112(g).
    The section 112(g) interpretive notice explains that USEPA is still 
considering whether the effective date of section 112(g) should be 
delayed beyond the date of promulgation of the Federal regulation so as 
to allow States time to adopt regulations implementing the Federal 
regulation, and that USEPA will provide for any such additional delay 
in the final section 112(g) rulemaking. Unless and until USEPA provides 
for such an additional postponement of section 112(g), Indiana must be 
able to implement section 112(g) during the period between promulgation 
of the Federal section 112(g) regulation and adoption of implementing 
State regulations. Imposition of case-by-case determinations of maximum 
achievable control technology (MACT) or offsets under section 112(g) 
will require the use of a mechanism for establishing federally 
enforceable restrictions on a source-specific basis.
    For this reason, USEPA is promulgating approval of Indiana's MACT 
regulation (326 IAC 2-1-3.3) under the authority of Title V and part 70 
solely for the purpose of implementing section 112(g) during the 
transition period between promulgation of the section 112(g) regulation 
and adoption by Indiana of regulations implementing the provisions of 
section 112(g). However, since the approval is for the single purpose 
of providing a mechanism to implement section 112(g) during the 
transition period, the approval itself will be without effect if USEPA 
decides in the final section 112(g) regulation that sources are not 

[[Page 57190]]
subject to the requirements of the regulation until State regulations 
are adopted. The USEPA is limiting the duration of this proposal to 18 
months following promulgation by USEPA of the section 112(g) 
regulation. Once promulgated by USEPA, the 112(g) regulation will serve 
as the mechanism for establishing federally enforceable case-by-case 
MACT emission limits for HAPs. USEPA is interpreting Indiana's legal 
authority and commitment (Enclosure H, page 33 of the Indiana program 
submittal) to mean that, upon promulgation of the section 112(g) 
regulation, the State will expeditiously adopt regulations consistent 
with the provisions of 112(g).
    Although section 112(l) generally provides authority for approval 
of State air toxics programs, Title V and section 112(g) provide 
authority for this limited approval because of the direct linkage 
between implementation of section 112(g) and Title V. The scope of this 
approval is narrowly limited to section 112(g) and does not confer or 
imply approval for purposes of section 110 or any other provision under 
the Act.
    c. Program for Delegation of Section 112 Standards as Promulgated. 
The requirements for a Title V program approval, specified in 40 CFR 
70.4(b), also encompass section 112(l)(5) requirements for approval of 
a State program for delegation of section 112 standards as promulgated 
by USEPA as they apply to part 70 sources. Section 112(l)(5) requires 
that the State's program contain adequate authorities, adequate 
resources for implementation, and an expeditious compliance schedule, 
which are also requirements under part 70. Therefore, the USEPA is 
promulgating approval, under section 112(l)(5) and 40 CFR 63.91, of 
Indiana's program for receiving delegation of section 112 standards 
that are unchanged from the Federal standards as promulgated. This 
program approval applies to both existing and future standards, but is 
limited to sources covered by the part 70 program.
    Indiana has informed USEPA that it intends to accept delegation of 
section 112 standards through rule adoption. The details of this 
delegation mechanism will be set forth in a Memorandum of Agreement 
between Indiana and USEPA expected to be completed prior to approval of 
Indiana's section 112(l) program for delegations.
    d. Limiting HAP Emissions Through a Federally Enforceable State 
Operating Permit (FESOP) Program. On August 18, 1995, USEPA published a 
Federal Register notice promulgating a direct-final approval of the 
Indiana FESOP regulation which would establish federally enforceable 
limits on sources' potential to emit. If USEPA does not receive any 
comments on this notice by September 18, 1995, the approval will become 
effective on October 17, 1995, and Indiana will have the ability to 
place federally enforceable limits on HAPs in addition to criteria 
pollutants through a FESOP permit. The federal enforceability of HAP 
limits in a FESOP permit is addressed in the August 18, 1995, Federal 
Register notice.
    e. Title IV. Indiana's program contains adequate authority to issue 
permits which reflect the requirements of Title IV and its implementing 
regulations. 326 IAC 21-1-1 incorporates by reference 40 CFR part 72, 
75, 76, 77, and 78. Indiana's program submittal contains a commitment 
to revise its regulations as necessary to accommodate federal revisions 
and additions to Title IV and the Acid Rain regulations once they are 
promulgated.

B. Response to Public Comments

    The USEPA received comments from two parties. The USEPA's responses 
to these comments are summarized in this section.
1. Comment by Mobil Oil Company
    Mobil Oil Company commented that it supports the proposed interim 
approval of the Indiana Title V program. Mobil, however, urges USEPA to 
expeditiously approve a federally enforceable state operating permit 
(FESOP) program for the State of Indiana so that sources will have a 
federally enforceable mechanism to limit potential to emit so as to 
stay below the Title V threshold level.
    USEPA agrees that a FESOP program may provide a useful mechanism 
for reducing the permitting burden on sources that can limit potential 
to emit to below the Title V threshold level. Indiana has submitted a 
FESOP program to USEPA as a proposed revision to the State 
implementation plan and USEPA has published a direct-final approval 
notice for the Indiana FESOP program in the August 18, 1995, Federal 
Register.
2. Comment by Eli Lilly and Company
    Eli Lilly and Company (Lilly) commented that it supports the 
proposed interim approval of the Indiana Title V program. Lilly, 
however, commented on a definition that was not addressed in the 
proposed interim approval. Lilly wants USEPA to clarify that the 
definitions of ``Title I modification'' and ``case-by-case 
determination of an emission limit or other standard,'' as used in 326 
IAC 2-7, do not include minor new source review (NSR) requirements. 
This is commonly known as the ``narrow definition of a Title I 
modification.'' Such a definition would allow minor NSR modifications 
to be processed through the minor permit modification (MPM) procedure 
of 326 IAC 2-7-12 or the operational flexibility procedures of 326 IAC 
2-7-20.
    In an August 29, 1995, letter to USEPA, Indiana has stated that, it 
developed the State Title V regulation to allow flexibility in this 
definition. Indiana also stated that it did not indicate at any time 
during the regulation development process that it would include minor 
NSR modifications as ``Title I modifications.'' The August 29, 1995, 
letter states that, since the use of the narrow definition of ``Title I 
modification'' is not a USEPA interim approval issue and USEPA stated 
in a June 20, 1995, letter that it plans to adopt the narrow definition 
in upcoming supplemental rulemaking, Indiana will be employing the 
narrow definition in the implementation of its Title V program. 
Consistent with actions taken on other Title V programs, USEPA is 
accepting Indiana's intention to use the narrow definition of ``Title I 
modification'' and is not identifying this interpretation as an interim 
approval issue in this notice.

C. Options for Approval/Disapproval and Implications

    The USEPA is promulgating an interim approval to the operating 
permits program submitted by Indiana on August 10, 1994. The State must 
make the following changes to receive full approval: The State must 
amend its insignificant activities levels for SO2 and HAPs to 
levels which assure that large sources are included in Title V review. 
Indiana's program is not fully approvable because of this deficiency. 
The program, however, substantially meets the requirements of part 70 
because Indiana's regulations and legislation comply with all other 
part 70 requirements.

D. Federal Oversight and Sanctions

    This interim approval, which may not be renewed, extends for a 
period of up to 2 years from the effective date of this promulgation. 
During the interim approval period, the State is protected from 
sanctions for failure to have a program, and USEPA is not obligated to 
promulgate a Federal permits program in the State. Permits issued under 
a program with interim approval have full standing with respect to part 
70, and the 1-year time period for submittal of permit applications by 
subject sources begins upon interim approval, as does 

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the 3-year time period for processing the initial permit applications. 
Because the interim approval automatically expires 2 years after 
promulgation of a final interim approval, the State may submit its 
interim corrections at any time. However, the State may not submit its 
corrections any later than 18 months after promulgation of final 
interim approval. The USEPA will then have 6 months to promulgate a 
final action.
    Following final interim approval, if the State failed to submit a 
complete corrective program for full approval by 6 months before 
expiration of the interim approval, USEPA would start an 18-month clock 
for the mandatory imposition of section 179(b) sanctions. Section 
179(b) of the Act mandates the impositions of the following sanctions: 
(1) 2 to 1 emission offsets for new construction in nonattainment areas 
and (2) restriction on federal funding of highway projects.
    If the State then failed to submit a corrective program that USEPA 
found complete before the expiration of that 18-month period, USEPA 
would be required to apply the emission offset sanction, which would 
remain in effect until USEPA determined that the State had submitted a 
complete corrective program. Moreover, if the Administrator found a 
lack of good faith on the part of the State, both sanctions under 
section 179(b) would apply after the expiration of the 18-month period 
until the Administrator determined that the State had come into 
compliance. In any case, if, 6 months after the application of the 
first sanction, the State still had not submitted a corrective program 
that USEPA found complete, the highway sanction would be required.
    If, following final interim approval, USEPA were to disapprove the 
State's complete corrective program, USEPA would be required to apply 
the emission offset sanction on the date 18 months after the effective 
date of the disapproval, unless, prior to that date, the State had 
submitted a revised program and USEPA had determined that it corrected 
the deficiencies that prompted the disapproval. Moreover, if the 
Administrator found a lack of good faith on the part of the State, both 
sanctions under section 179(b) would apply after the expiration of the 
18-month period until the Administrator determined that the State had 
come into compliance. In all cases, if, 6 months after USEPA applied 
the first sanction, the State had not submitted a revised program that 
USEPA had determined corrected the deficiencies that prompted 
disapproval, the highway sanction would be required.
    In addition, discretionary sanctions may be applied where warranted 
any time after the end of an interim approval period if a State has not 
timely submitted a complete corrective program or USEPA had disapproved 
a submitted corrective program. Moreover, if USEPA has not granted full 
approval to a State program by the expiration of an interim approval 
USEPA must promulgate, administer and enforce a Federal permits program 
for that State upon interim approval expiration.

III. Administrative Requirements

A. Executive Order 12866

    The Office of Management and Budget has exempted this action from 
Executive Order 12866 review.

B. Regulatory Flexibility Act

    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., USEPA 
must prepare a regulatory flexibility analysis assessing the impact of 
any proposed or final regulation on small entities. 5 U.S.C. sections 
603 and 604. Alternatively, USEPA may certify that the regulation 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.
    Operating permits program approvals under section 502 of the Act do 
not create any new requirements, but simply approve requirements that 
the State is already imposing. Therefore, because the federal operating 
permits program 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 Act, preparation of a regulatory flexibility 
analysis would constitute federal inquiry into the economic 
reasonableness of State action. The Act forbids USEPA to base its 
actions concerning operating permits programs 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).

C. Unfunded Mandates

    Under Section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, USEPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a Federal mandate that may result in estimated 
costs to State, local, or tribunal governments in the aggregate, or to 
the private sector, of $100 million or more. In such cases, under 
Section 205, USEPA must select the most cost-effective and least 
burdensome alternative that achieves the objectives of the rule and is 
consistent with statutory requirements. Also in such cases, Section 203 
requires USEPA to establish a plan for informing and advising any small 
governments that may be significantly or uniquely impacted by the rule.

    USEPA has determined that the final approval action promulgated 
today does not include a Federal mandate that may result in estimated 
costs of $100 million or more to either State, local, or tribal 
governments in the aggregate, or to the private sector.

List of Subjects in 40 CFR Part 70

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Intergovernmental relations, Operating permits, 
Reporting and recordkeeping requirements.

    Dated: October 27, 1995.

Valdas V. Adamkus,

Regional Administrator.

    40 CFR part 70 is amended as follows:

PART 70--[AMENDED]

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

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

    2. Appendix A to part 70 is amended by adding the entry for Indiana 
in alphabetical order to read as follows:

Appendix A to Part 70--Approval Status of State and Local Operating 
Permits Programs

* * * * *

    Indiana

    (a) The Indiana Department of Environmental Management: 
submitted on August 10, 1994; interim approval effective on November 
14, 1995; interim approval expires November 14, 1997.

    (b) (Reserved)

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[FR Doc. 95-28067 Filed 11-13-95; 8:45 am]

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