[Federal Register Volume 66, Number 203 (Friday, October 19, 2001)]
[Proposed Rules]
[Pages 53167-53170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26418]



[[Page 53167]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[CA051-OPP; FRL-7087-2]


Clean Air Act Proposed Full Approval of Operating Permit Program; 
Sacramento Metropolitan Air Quality Management District, California

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to fully approve Rule 207 (Title V--Federal 
Operating Permit Program) and the District requirements for permit 
applications (``List and Criteria'') which are part of the operating 
permit program of the Sacramento Metropolitan Air Quality Management 
District (``Sacramento'' or ``District''). The District operating 
permit program was submitted in response to the directive in the 1990 
Clean Air Act (CAA) Amendments that permitting authorities develop, and 
submit to EPA, programs for issuing operating permits to all major 
stationary sources and to certain other sources within the permitting 
authorities' jurisdictions. EPA granted interim approval to the 
District operating permit program on August 4, 1995, but listed certain 
deficiencies in the program preventing full approval. The District has 
revised Rule 207 and the ``List and Criteria'' to correct the 
deficiencies of the interim approval and this action proposes full 
approval of those revisions.

DATES: Comments on this proposed rule must be received in writing by 
November 19, 2001.

ADDRESSES: Written comments on this action should be addressed to 
Gerardo Rios, Chief, Permits Office, Air Division (AIR-3), EPA Region 
IX, 75 Hawthorne Street, San Francisco, California, 94105 (Attention: 
Mark Sims). You can inspect copies of the Sacramento submittals, and 
other supporting documentation relevant to this action, during normal 
business hours at Air Division, EPA Region 9, 75 Hawthorne Street, San 
Francisco, California, 94105. You may also see copies of the District's 
submitted operating permit program at the following locations: 
California Air Resources Board, Stationary Source Division, Rule 
Evaluation Section, 1001 ``I'' Street, Sacramento, CA 95814.
    The Sacramento Air Quality Management District, 777 12th Street, 
3rd Floor, Sacramento, California, 95814-1908.
    An electronic copy of Sacramento's operating permit program (rules 
201, 207, and List and Criteria) may be available via the Internet at 
http://www.arb.ca.gov/drdb/sac/cur.htm. However, the versions of 
District rule 207 and the List and Criteria at the above internet 
address may be different from the versions submitted to EPA for 
approval. Readers are cautioned to verify that the adoption date of 
rule 207 and the List and Criteria listed is the same date as the rule 
207 and List and Criteria submitted to EPA for approval. The official 
submittal is available only at the three addresses listed above.

FOR FURTHER INFORMATION CONTACT: Mark Sims, EPA Region IX, Permits 
Office (AIR-3), U.S. Environmental Protection Agency, Region IX, (415) 
744-1229 or [email protected].

SUPPLEMENTARY INFORMATION: This section provides additional information 
by addressing the following questions:

What is the operating permit program?
What is being addressed in this document?
Are there other issues with the program?
What are the program changes that EPA is approving?
What is involved in this proposed action?

What Is the Operating Permit Program?

    Title V of the CAA Amendments of 1990 required all state and local 
permitting authorities to develop operating permit programs that met 
certain federal criteria. In implementing the operating permit 
programs, the permitting authorities require certain sources of air 
pollution to obtain permits that contain all applicable requirements 
under the CAA. A goal of the operating permit program is to improve 
compliance by issuing each source a permit that consolidates all of the 
applicable CAA requirements into a federally enforceable document. By 
consolidating all of the applicable requirements for a facility, the 
source, the public, and the permitting authorities can more easily 
determine what CAA requirements apply and how compliance with those 
requirements is determined.
    Sources required to obtain an operating permit under this program 
include ``major'' sources of air pollution and certain other sources 
specified in the CAA or in EPA's implementing regulations. For example, 
all sources regulated under the acid rain program, regardless of size, 
must obtain permits. Examples of major sources include those that have 
the potential to emit 100 tons per year or more of volatile organic 
compounds, carbon monoxide, lead, sulfur dioxide, nitrogen oxides ( 
NOX), or particulate matter (PM10); those that 
emit 10 tons per year of any single hazardous air pollutant 
(specifically listed under the CAA); or those that emit 25 tons per 
year or more of a combination of hazardous air pollutants (HAPs). In 
areas that are not meeting the National Ambient Air Quality Standards 
for ozone, carbon monoxide, or particulate matter, major sources are 
defined by the gravity of the nonattainment classification. For 
example, in ozone nonattainment areas classified as ``severe,'' major 
sources include those with the potential of emitting 25 tons per year 
or more of volatile organic compounds or nitrogen oxides. EPA has 
classified the Sacramento Metropolitan Area as a severe nonattainment 
area for ozone (40 CFR 81.305).

What Is Being Addressed in This Document?

    The California Air Resources Board submitted an administratively 
complete permitting program on behalf of the District on August 1, 
1994. Because the District's operating permit program substantially, 
but not fully, met the criteria outlined in the implementing 
regulations codified at 40 Code of Federal Regulations (CFR) part 70, 
EPA granted interim approval of the program, and conditioned full 
approval on the District revising its program to correct the 
deficiencies. Thus, EPA granted interim approval to the District's 
program in a rulemaking published on August 4, 1995 (60 FR 39862). The 
interim approval notice described the program deficiencies and 
revisions that had to be made in order for the District program to 
receive full approval. Since that time, the District has revised and 
the California Air Resources Board, on behalf of the District, has 
submitted a revision to the District's operating permit program by 
letter dated June 1, 2001. This Federal Register document describes the 
changes that have been made to the Sacramento operating permit program 
as submitted on June 1, 2001, and the basis for EPA proposing full 
approval of the program.

Are There Other Issues With the Program?

    On May 22, 2000, EPA promulgated a rulemaking that extended the 
interim approval period of 86 operating permits programs until December 
1, 2001 (65 FR 32035). The action was subsequently challenged by the 
Sierra Club and the New York Public Interest Research Group (NYPIRG). 
In settling the litigation, EPA agreed to publish a document in the 
Federal Register that would alert the public that they may identify and 
bring to EPA's attention alleged programmatic and/or

[[Page 53168]]

implementation deficiencies in Title V programs and that EPA would 
respond to their allegations within specified time periods if the 
comments were made within 90 days of publication of the Federal 
Register document.
    EPA received a comment letter from one organization on what they 
believe to be deficiencies with respect to Title V programs in 
California. EPA takes no action on those comments in today's action and 
will respond to them by December 1, 2001. As stated in the Federal 
Register document published on December 11, 2000, (65 FR 77376) EPA 
will respond by December 1, 2001 to timely public comments on programs 
that have obtained interim approval; and EPA will respond by April 1, 
2002 to timely comments on fully approved programs. We will publish a 
notice of deficiency (NOD) when we determine that a deficiency exists, 
or we will notify the commenter in writing to explain our reasons for 
not making a finding of deficiency. A NOD will not necessarily be 
limited to deficiencies identified by citizens and may include any 
deficiencies that we have identified through our program oversight.

What Are the Program Changes That EPA Is Approving?

    As discussed in the August 4, 1995 (60 FR 39862) rulemaking, full 
approval of the Sacramento operating permit program was made contingent 
upon satisfaction of the following conditions:
    Issue (1): One of EPA's conditions for full title V program 
approval was the California Legislature's revision of the Health and 
Safety Code to eliminate the provision that exempts ``any equipment 
used in agricultural operations in the growing of crops or the raising 
of fowl or animals'' from the requirement to obtain a permit. See 
California Health and Safety Code section 42310(e). Even though the 
local Districts have, in many cases, removed the title V exemption for 
agricultural sources from their own rules, the Health and Safety Code 
has not been revised to eliminate this provision.
    In evaluating the impact of the Health and Safety Code exemption, 
EPA believes there are a couple of key factors to consider. First, many 
post-harvest activities are not covered by the exemption and, thus, are 
still subject to title V permitting. For example, according to the 
California Air Resources Board (CARB), the Health and Safety Code 
exemption does not include activities such as milling and crushing, or 
canning or cotton ginning operations. Activities such as these are 
subject to review under the State's title V programs. See letter from 
Michael P. Kenny, Executive Officer, California Air Resources Board, to 
Jack Broadbent, Director, Air Division, U.S. EPA Region 9, dated 
September 19, 2001. In addition, since the granting of interim 
approval, the EPA has discovered that, in general, there is not a 
reliable or complete inventory of emissions associated with 
agricultural operations in California that are subject to the 
exemption. Although further research on this issue is needed, many 
sources with activities covered by the exemption may not have emission 
levels that would subject them to title V, and the State and/or 
individual Districts may be able to demonstrate that none of the 
sources that are exempt under the State law are subject to title V.
    Based, in part, on these factors, EPA has tentatively concluded 
that requiring the immediate commencement of title V permitting of the 
limited types of agricultural activities presently subject to the 
exemption, without a better understanding of the sources and their 
emissions, would not be an appropriate utilization of limited local, 
state and federal resources. As a result, despite the State of 
California's failure to eliminate the agricultural permitting 
exemption, EPA is proposing to grant full approval to local Air 
District operating permit programs and allow a deferral of title V 
permitting of agricultural operations involved in the growing of crops 
or the raising of fowl or animals for a further brief period, not to 
exceed three years. During the deferral period, we expect to develop 
the program infrastructure and experience necessary for effective 
implementation of the title V permitting program to this limited 
category of sources.
    EPA believes it is appropriate to defer permitting for this limited 
category of agricultural sources because the currently available 
techniques for determining emissions inventories and for monitoring 
emissions (e.g., from irrigation pumps and feeding operations) are 
problematic and will be dramatically enhanced by several efforts 
currently being undertaken with the cooperation and participation of 
the operators and agricultural organizations, as well as EPA, other 
federal agencies, and the State and local air pollution agencies. For 
example, the National Academy of Sciences is undertaking a study 
addressing emissions from animal feeding operations. Their report is 
due next year. In addition, EPA's Office of Air and Radiation is 
working with the U.S. Department of Agriculture to better address the 
impact of agricultural operations on air quality. We consider the 
effort to evaluate the existing science, improve on assessment tools, 
collect additional data, remove any remaining legal obstacles, and 
issue any necessary guidance within the three year deferral time frame 
to be ambitious. We welcome comments on other areas that might also 
warrant study, as well as ways that this work might be done more 
quickly.
    During the interim deferral period, EPA will continue to work with 
the agricultural industry and our state and federal regulatory partners 
to pursue, wherever possible, voluntary emission reduction strategies. 
At the end of this period, EPA will, taking into consideration the 
results of these studies, make a determination as to how the title V 
operating permit program will be implemented for any potential major 
agricultural stationary sources.
    Issue (2): The District was required to revise its insignificant 
activities permit exemption list or submit information or criteria 
justifying these exemptions. (40 CFR 70.5(c)).
    Rule or Program Change: The District corrected this deficiency by 
revising its List and Criteria to incorporate the insignificant 
activities developed by the EPA-ARB-CAPCOA Insignificant Activities 
Workgroup. The District included justifications for each of the 
identified activities. The District also revised the List and Criteria 
in order to clarify that insignificant emission units are not exempt 
from Title V.
    Issue (3): The District's limits on operational flexibility were 
not as explicitly restrictive as the limits contained in 40 CFR 
70.4(b)(12) concerning Title I modifications.
    Rule or Program Change: The District corrected this deficiency by 
revising Rule 207, section 308.3.b., to not allow owners and operators 
to make operational changes that are significant Title V permit or 
Title I modifications.
    Issue (4): The District was required to change its rule to adopt 
appropriate permit issuance deadlines for sources that were initially 
deferred from the program due to their actual emissions but did not 
obtain federally enforceable limits on their potential to emit.
    Rule or Program Change: The District corrected this deficiency by 
revising Rule 207, section 301.1, to require owners and operators of 
stationary sources with a potential to emit at or above major source 
trigger levels but with actual emissions below levels stated in section 
301 to submit complete Title V permit applications by no later than 
June 30, 2001.
    Issue (5): The District was required to add emissions trading 
provisions to the rule consistent with 40 CFR 70.6(a)(10). The permit 
content section of the rule

[[Page 53169]]

must allow provisions for trading within the facility where an 
applicable requirement provides for trading increases and decreases 
without case-by-case approval.
    Rule or Program Change: The District did not make any rule changes 
to address this deficiency. However, the District believes that Rule 
207 contains the necessary language to ensure permits will include 
terms and conditions to allow emissions trading without case-by-case 
approval if allowed by an applicable requirement. EPA now agrees that 
Rule 207 contains language consistent with 40 CFR 70.6(a)(10). See Rule 
207, section 308.
    Issue (6): The District rule was to explicitly require that the 
permit include fugitive emissions in the same manner as stack emissions 
(40 CFR 70.3(d)).
    Rule or Program Change: The District corrected this deficiency by 
revising Rule 207, section 305.1, to require that fugitive emissions 
shall be included in the Title V permit in the same manner as stack 
emissions. The District also revised its List and Criteria to require 
sources to characterize fugitive emissions in the Title V permit 
application.
    Issue (7): The District rule was required to state that the 
District will provide public notice by means other than newspaper 
notice and a mailing list when necessary to ensure that adequate notice 
is given (40 CFR 70.7(h)).
    Rule or Program Change: The District corrected this deficiency by 
revising Rule 207, section 403.1, to match the language in 40 CFR 
70.7(h). The rule now requires for public notice that notice also be 
given by other means such as the District Website, community groups, 
and public meetings when necessary to ensure that adequate notice is 
given.

What Is Involved in This Proposed Action?

    Sacramento has corrected the deficiencies cited in the interim 
approval on August 4, 1995 (60 FR 39862), and EPA proposes full 
approval the Sacramento operating permit program Rule 207. Sacramento 
made two additional changes to Rule 207 that were not necessary to 
correct interim approval issues. EPA is acting to approve a rule change 
concerning potential to emit and is not acting on a rule change 
concerning the effective date of the rule.
    EPA proposes to approve a revision to the Rule 207, Section 226, 
definition of ``potential to emit.'' The District revised the 
definition of potential to emit to state that limitations on the 
physical or operational design capacity, including emissions control 
devices and limitations on hours of operation, may be considered only 
if such limitations are federally enforceable or legally and 
practicably enforceable by the District (emphasis added). This change 
is consistent with litigation affecting EPA's consideration of the 
potential to emit issue. In Clean Air Implementation Project v. EPA, 
No. 96-1224 (D.C. Cir. June 28, 1996), the court remanded and vacated 
the requirement for federal enforceability for potential to emit limits 
under part 70. Even though part 70 has not been revised it should be 
read to mean, ``federally enforceable or legally and practicably 
enforceable by a state or local air pollution control agency.'' \1\
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    \1\ See also, National Mining Association (NMA) v. EPA, 59 F. 3d 
1351 (D.C. Cir. July 21, 1995) (Title III) and Chemical 
Manufacturing Ass'n (CMA) v. EPA, No. 89-1514 (D.C. Cir. Sept. 15, 
1995) (Title I).
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    EPA proposes to approve this revision because Sacramento's rule is 
consistent with the current meaning of potential to emit at 40 CFR 
70.2. EPA has issued several guidance memoranda that discuss how the 
court rulings affect the definition of potential to emit under CAA 
section 112, New Source Review (NSR) and Prevention of Significant 
Deterioration (PSD) programs, and title V.\2\ In particular, the 
memoranda reiterate the Agency's earlier requirements for practicable 
enforceability for purposes of effectively limiting a source's 
potential to emit.\3\ For example, practicable enforceability for a 
source-specific permit means that the permit's provisions must, at a 
minimum: (1) Be technically accurate and identify which portions of the 
source are subject to the limitation; (2) specify the time period for 
the limitation (hourly, daily, monthly, and annual limits such as 
rolling annual limits); (3) be independently enforceable and describe 
the method to determine compliance including appropriate monitoring, 
recordkeeping and reporting; (4) be permanent; and (5) include a legal 
obligation to comply with the limit.
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    \2\ See, e.g., January 22, 1996, Memorandum entitled, ``Release 
of Interim Policy on Federal Enforceability of Limitations on 
Potential to Emit'' from John Seitz, Director, OAQPS and Robert I. 
Van Heuvelen, Director, Office of Regulatory Enforcement to EPA 
Regional Offices; January 31, 1996 paper to the Members of the 
Subcommittee on Permit, New Source Review and Toxics Integration 
from Steve Herman, OECA, and Mary Nichols, Assistant Administrator 
of Air and Radiation; and the August 27, 1996 Memorandum entitled, 
``Extension of January 25, 1995 Potential to Emit Transition 
Policy'' from John Seitz, Director, OAQPS and Robert Van Heuvelen, 
Director, Office of Regulatory Enforcement.
    \3\ See, e.g., June 13, 1989 Memorandum entitled, ``Guidance on 
Limiting Potential to Emit in new Source Permitting, from Terrell F. 
Hunt, Associate Enforcement Counsel, OECA, and John Seitz, Director, 
OAQPS, to EPA Regional Offices. This guidance is still the most 
comprehensive statement from EPA on this subject. Further guidance 
was provided on January 25, 1995 in a 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),'' from 
John Seitz, Director, OAQPS and Robert I. Van Heuvelen, director, 
ORE to Regional Air Directors. Also please refer to the EPA Region 7 
database at http://www.epa.gov/region07/programs/artd/air/policy/policy.htm for more information.
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    EPA will rely on Sacramento implementing this new definition in a 
manner that is consistent with the court's decisions and EPA policies. 
In addition, EPA wants to be certain that absent federal and citizen's 
enforceability, Sacramento's enforcement program still provides 
sufficient incentive for sources to comply with permit limits. This 
proposal provides notice to Sacramento on our expectations for ensuring 
the permit limits they impose are enforceable as a practical matter 
(i.e., practicably enforceable) and that its enforcement program will 
still provide sufficient compliance incentive. In the future, if 
Sacramento does not implement the new definition consistent with our 
guidance, and/or has not established a sufficient compliance incentive 
absent Federal and citizen's enforceability, EPA could find that the 
District has failed to administer or enforce its program and may take 
action to notify the District of such a finding as authorized by 40 CFR 
70.10(b)(1).
    Sacramento deleted the effective date provision of Rule 207 which 
stated that the rule becomes effective on the date it is approved by 
EPA. EPA is currently evaluating the approvability of this change to 
Rule 207. Because EPA has not yet determined whether this change is 
approvable under the requirements of 40 CFR part 70, and since this 
change was not required by EPA for Sacramento to receive full program 
approval, EPA is taking no action on this change at this time.

Request for Public Comment

    EPA requests comments on the program revisions discussed in this 
proposed action. Copies of the Sacramento submittal and other 
supporting documentation used in developing the proposed full approval 
are contained in docket files maintained at the EPA Region IX office. 
The docket is an organized and complete file of all the information 
submitted to, or otherwise considered by, EPA in the development of 
this proposed full approval. The primary purposes of the

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docket are: (1) To allow interested parties a means to identify and 
locate documents so that they can effectively participate in the 
approval process, and (2) to serve as the record in case of judicial 
review. EPA will consider any comments received in writing by November 
19, 2001.

Administrative Requirements

    Under Executive Order 12866, ``Regulatory Planning and Review'' (58 
FR 51735, October 4, 1993), this proposed action is not a ``significant 
regulatory action'' and therefore is not subject to review by the 
Office of Management and Budget. Under the Regulatory Flexibility Act 
(5 U.S.C. 601 et seq.) the Administrator certifies that this proposed 
rule will not have a significant economic impact on a substantial 
number of small entities because it merely approves State law as 
meeting federal requirements and imposes no additional requirements 
beyond those imposed by State law. This rule does not contain any 
unfunded mandates and does not significantly or uniquely affect small 
governments, as described in the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4), because it proposes to approve pre-existing 
requirements under State law and does not impose any additional 
enforceable duties beyond that required by State law. This rule also 
does not have tribal implications because it will not have a 
substantial direct effect on one or more Indian tribes, on the 
relationship between the Federal Government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian tribes, as specified by Executive Order 13175, 
``Consultation and Coordination with Indian Tribal Governments'' (65 FR 
67249, November 9, 2000). This rule also does not have Federalism 
implications because it will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in Executive Order 13132, 
``Federalism'' (64 FR 43255, August 10, 1999). The rule merely proposes 
to approve existing requirements under State law, and does not alter 
the relationship or the distribution of power and responsibilities 
between the State and the Federal government established in the Clean 
Air Act. This proposed rule also is not subject to Executive Order 
13045, ``Protection of Children from Environmental Health Risks and 
Safety Risks'' (62 FR 19885, April 23, 1997) or Executive Order 13211, 
``Actions Concerning Regulations That Significantly Affect Energy 
Supply, Distribution, or Use'' (66 FR 28355 on May 22, 2001), because 
it is not a significantly regulatory action under Executive Order 
12866. This action will not impose any collection of information 
subject to provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et 
seq., other than those previously approved and assigned OMB control 
number 2060-0243. For additional information concerning these 
requirements, see 40 CFR part 70. An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.
    In reviewing State operating permit programs submitted pursuant to 
Title V of the Clean Air Act, EPA will approve State programs provided 
that they meet the requirements of the Clean Air Act and EPA's 
regulations codified at 40 CFR part 70. In this context, in the absence 
of a prior existing requirement for the State to use voluntary 
consensus standards (VCS), EPA has no authority to disapprove a State 
operating permit program for failure to use VCS. It would thus be 
inconsistent with applicable law for EPA, when it reviews an operating 
permit program, to use VCS in place of a State program that otherwise 
satisfies the provisions of the Clean Air Act. Thus, the requirements 
of section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (15 U.S.C. 272 note) do not apply.

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 11, 2001.
Laura Yoshii,
Acting Regional Administrator, Region IX.
[FR Doc. 01-26418 Filed 10-18-01; 8:45 am]
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