[Federal Register Volume 66, Number 238 (Tuesday, December 11, 2001)]
[Notices]
[Pages 64039-64041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30452]


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ENVIRONMENTAL PROTECTION AGENCY

[AD-FRL-7115-2]


Notice of Deficiency for Clean Air Act Operating Permit Program 
in Indiana

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of deficiency.

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SUMMARY: Pursuant to its authority at 40 CFR 70.10, EPA is publishing 
this Notice of Deficiency (NOD) for the State of Indiana's Clean Air 
Act title V operating permit program. The NOD is based upon EPA's 
finding that several state requirements do not meet the minimum federal 
requirements of 40 CFR part 70 and the Act for program approval. 
Publication of this document is a prerequisite for withdrawal of 
Indiana's title V program approval, but EPA is not withdrawing the 
program through this action.

EFFECTIVE DATE: November 30, 2001. Because this NOD is an adjudication 
and not a final rule, the Administrative Procedure Act's 30-day 
deferral of the effective date of a rule does not apply.

FOR FURTHER INFORMATION CONTACT: Sam Portanova, EPA Region 5 (AR-18J), 
77 W. Jackson Boulevard, Chicago, Illinois 60604, Telephone Number: 
(312) 886-3189, E-mail Address: [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    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). Sierra Club and the New York Public Interest 
Research Group challenged the action. In settling the litigation, EPA 
agreed to publish a document in the Federal Register, giving the public 
the opportunity to identify and bring to EPA's attention alleged 
deficiencies in title V programs. EPA published that document on 
December 11, 2000. 65 FR 77376.
    As stated in the Federal Register document published on December 
11, 2000 (65 FR 77376), EPA is responding by December 1, 2001 to timely 
public comments on programs that have obtained interim approval; and by 
April 1, 2002 to timely comments on fully approved programs. The EPA is 
publishing a NOD if the Agency determines that a deficiency exists, and 
is notifying the commenter in writing to explain the reasons for 
determining that other issues do not constitute a deficiency in the 
Indiana title V program. The EPA received two timely comment letters 
pertaining to the Indiana title V program. In reviewing the commenters' 
concerns, EPA determined that one commenter did identify deficiencies 
in Indiana's title V operating permit program.

II. Description of Action

    EPA recognizes that the Indiana Department of Environmental 
Management (IDEM) has made an expeditious effort to correct the 
regulatory deficiencies identified by the commenter. These Indiana 
regulatory revisions, however, will not become effective until after 
December 1, 2001. Therefore, the EPA is publishing a NOD for Indiana's 
Clean Air Act (Act) title V program. This document is being published 
to satisfy 40 CFR 70.10(b)(1), which provides that EPA shall publish in 
the Federal Register a notice of any determination that a state's title 
V permitting program no longer complies with the requirements of 40 CFR 
part 70 and the Act. The deficiencies being noticed are listed below. 
Because of IDEM's efforts to address these deficiencies as 
expeditiously as possible, EPA expects these regulatory deficiencies to 
be corrected by March 2002.
    Under EPA's permitting regulations, citizens may, at any time, 
petition EPA regarding alleged deficiencies in state title V operating 
permitting programs. In addition, EPA may identify deficiencies on its 
own. If, in the future, EPA agrees with a new citizen petition or 
otherwise identifies deficiencies, EPA may issue a new NOD.

1. Permit Shield

    Under the Indiana title V program, minor permit modifications, 
which are not subject to public review, qualify for a title V permit 
shield. This is not consistent with 40 CFR 70.7(e)(2)(vi), which 
provides that ``the permit shield under 70.6(f) of this part may not 
extend to minor permit modifications.'' During EPA's original review of 
Indiana's title V program, which resulted in granting interim approval 
on November 14, 1995, the Indiana regulations required minor 
modifications to be subject to public review equivalent to that 
required by 40 CFR 70.6, 70.7 and 70.8, and allowed such modifications 
to qualify for a permit shield. In reviewing that original regulation, 
EPA determined that the permit shield was acceptable in this situation 
because of the availability of public review. Subsequent to the 
November 14, 1995, interim approval, Indiana modified its regulations 
to remove the public notice requirement from the minor modification 
provision. However, the state did not remove the permit shield 
provision. Because Indiana's rules allow for a permit shield for these 
minor modifications, the state's program does not meet the program 
approval requirements of title V and 40 CFR part 70. Indiana is in the 
process of correcting this provision to re-instate the public review 
requirements for minor modifications. Indiana will revise 326 IAC 2-7-
12(b)(4) of the state regulations to require that minor permit 
modifications go through public review.

[[Page 64040]]

2. Compliance Certification With Alternative or Streamlined Limits

    Indiana rule 326 IAC 2-7-4(c)) allows sources to certify compliance 
with alternative or streamlined requirements instead of original 
applicable requirements. For the initial compliance certifications 
submitted with permit applications, part 70 does not allow sources to 
certify compliance with alternative or streamlined requirements instead 
of the applicable requirements. EPA's March 5, 1996, memorandum 
entitled ``White Paper Number 2 for Improved Implementation of the Part 
70 Operating Permits Program'' states that a permitting authority may 
combine underlying applicable requirements into one streamlined permit 
term provided that the source's compliance with the streamlined term 
guarantees that the source is also in compliance with all underlying 
applicable requirements. Indiana's regulations currently only require 
sources to certify compliance with streamlined terms. Indiana must 
revise its regulations to further require sources to certify compliance 
with the underlying applicable requirements. We encourage states to use 
EPA guidance documents in implementing the title V program. When 
applying those guidance documents, however, a state must assure that 
its program is consistent with 40 CFR part 70.
    Because Indiana's rules allow for compliance certification with 
alternative or streamlined limits, the state's program does not meet 
the program approval requirements of title V and 40 CFR part 70. 
Indiana is in the process of correcting this rule provision. Indiana 
will remove language from 326 IAC 2-7-4(c) which allows compliance 
certification with alternative or streamlined limits.

3. Supersession

    Indiana's construction permits expire upon issuance of a valid 
title V permit; therefore, the construction permit conditions do not 
exist independently of title V permits. Permit conditions in previously 
issued permits must exist independently of title V permits. Allowing 
the basis for these conditions to expire could cause Indiana to lose 
the authority to include such conditions in renewed title V permits. 
Because Indiana's rules do not assure that construction permit 
conditions exist independently of title V permits, the state's program 
does not meet the program approval requirements of title V and 40 CFR 
part 70. Indiana is in the process of revising 326 IAC 2-1.1-9.5 which 
will address this deficiency by stating that any condition identified 
as having been established in a permit issued pursuant to a State 
Implementation Plan-approved permit program will remain in effect even 
if the original construction permit expires.

4. Operating Parameter Exceedances

    Indiana rule 326 IAC 2-7-5(1)(E) considers an exceedance of a 
permit limit and the corresponding operating parameter as only one 
violation. This rule provision restricts the state's enforcement 
authority to restrain or enjoin and to assess a civil penalty for the 
violation of any permit condition as required by 40 CFR 70.11. 
Therefore, Indiana's program does not meet the program requirements of 
title V and 40 CFR part 70. Indiana is in the process of correcting 
this rule provision. Indiana will remove this language from its rules 
by deleting paragraph 326 IAC 2-7-5(1)(E).

5. Startup, Shutdown, and Malfunction Exceedances

    Indiana rule 326 IAC 2-7-5(1)(F) allows the state to address 
emission limit exceedances for startups, shutdowns, and malfunctions on 
a case-by-case basis in title V permits. This allows the permitting 
authority to establish through the title V permitting process limits 
which exceed applicable requirements. Because title V does not give 
permitting authorities the authority to establish new emission limits, 
Indiana's program does not meet the program approval requirements of 
title V and 40 CFR part 70. Indiana is in the process of correcting 
this rule provision. Indiana will remove this language from its rules 
by deleting paragraph 326 IAC 2-7-5(1)(F).

6. Emission Levels

a. Sulfur Dioxide, Nitrogen Oxides, Carbon Monoxide, Volatile Organic 
Compounds, and Lead Exemption Levels
    Indiana rule 326 IAC 2-1.1-3(d) allows the state to exempt from the 
title V minor or significant modification requirements sulfur dioxide, 
nitrogen oxides ( NOX), and volatile organic compound (VOC) 
emission increases of up to 10 tons per year and carbon monoxide 
emission increases of up to 25 tons per year. In addition, 326 IAC 2-
1.1-3(g) allows the state to exempt from the title V minor or 
significant modification requirements lead emissions increases of up to 
5 tons per year. Because 40 CFR 70.6(e) does not allow the permitting 
authority to create exemptions from the permit modification 
requirements, Indiana's program does not meet the program approval 
requirements of title V and 40 CFR part 70. Indiana is in the process 
of correcting this deficiency. Indiana will remove language from 326 
IAC 2-1.1-3(d) and 326 IAC 2-1.1-3(g) which apply these provisions to 
title V sources and title V modifications.
b. NOX and VOC Insignificant Activity Threshold
    The definition of insignificant activity in the Indiana rule (326 
IAC 2-7-1(21)(A)) does not include specific insignificant activity 
threshold levels for NOX and VOC. The rule refers to the 
limits in 326 IAC 2-1.1-3(d)(1) to establish the insignificant activity 
threshold levels for these two pollutants. The threshold levels in this 
provision are 10 tons per year for both NOX and VOC. EPA 
considers this an unacceptably high threshold for insignificant 
activities and, as a result, Indiana's program does not meet the 
program approval requirements of title V and 40 CFR part 70. Indiana is 
in the process of correcting this deficiency. Indiana will revise 326 
IAC 2-7-1(21)(A) to establish a VOC insignificant activity threshold of 
3 pounds per hour or 15 pounds per day and a NOX 
insignificant activity threshold of 5 pounds per hour or 25 pounds per 
day. These threshold levels will be equivalent to the VOC and 
NOX thresholds that EPA approved as part of Indiana's 
original title V program.

7. Conclusion

    Title V provides for the approval of state programs for the 
issuance of operating permits that incorporate the applicable 
requirements of the Act. To receive title V program approval, a state 
permitting authority must submit a program to EPA that meets certain 
minimum criteria, and EPA must disapprove a program that fails, or 
withdraw an approved program that subsequently fails, to meet these 
criteria. 40 CFR 70.4(k) and 70.10(b) and (c) provide that EPA may 
withdraw a part 70 program approval, in whole or in part, whenever the 
approved program no longer complies with the requirements of part 70 
and the permitting authority fails to take corrective action. 40 CFR 
70.10(c)(1)(i) lists a number of potential bases for program 
withdrawal, including failure of the permitting authority's legal 
authority to meet the requirements of 40 CFR part 70.
    40 CFR 70.10(b), which sets forth the procedures for program 
withdrawal, requires as a prerequisite to withdrawal that EPA 
Administrator notify the permitting authority of any finding of 
deficiency by publishing a document in

[[Page 64041]]

the Federal Register. Today's document satisfies this requirement and 
constitutes a finding of deficiency. According to 40 CFR 70.10(b)(2), 
if Indiana has not taken ``significant action to assure adequate 
administration and enforcement of the program'' within 90 days after 
publication of this notice of deficiency, EPA may withdraw the state 
program, apply any of the sanctions specified in section 179(b) of the 
Act, or promulgate, administer, and enforce a federal title V program. 
40 CFR 70.10(b)(3) provides that, if a state hasn't corrected the 
deficiency within 18 months after the date of the finding of deficiency 
and issuance of the NOD, EPA will apply the sanctions under section 
179(b) of the Act, in accordance with section 179(a) of the Act. In 
addition, 40 CFR 70.10(b)(4) provides that, if the state hasn't 
corrected the deficiency within 18 months after the date of the finding 
of deficiency, EPA will promulgate, administer and enforce a whole or 
partial program within 2 years of the date of the finding. The 
sanctions will go into effect unless the state has corrected this 
deficiency within 18 months after signature of this document.
    Since Indiana has made an expeditious effort to correct the 
deficiencies outlined in this document and has significantly completed 
the rulemaking process to correct these deficiencies, EPA considers the 
state to already have taken significant action to assure adequate 
administration and enforcement of the program. In fact, EPA expects 
Indiana's corrections to the deficiencies outlined in this document to 
be completed and in effect within 90 days after publication of this 
notice of deficiency.

III. EPA Responses to Citizen Comments

    As discussed above, EPA is responding in writing to all timely 
comments that citizens submitted pursuant to the settlement agreement. 
For all comments not resulting in a NOD, EPA will explain the reasons 
why EPA found that a NOD was not warranted. EPA Region 5 will also post 
its response letters on the Internet at http://yosemite.epa.gov/r5/ardcorre.nsf/Title+V+Program+Comments. EPA Region 5 includes the states 
of Michigan, Minnesota, Illinois, Indiana, Ohio, and Wisconsin.

IV. Administrative Requirements

    Under section 307(b)(1) of the Act, petitions for judicial review 
of today's action may be filed in the United States Court of Appeals 
for the appropriate circuit within 60 days of December 11, 2001.

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

    Dated: November 30, 2001.
Thomas V. Skinner,
Regional Administrator, Region 5.
[FR Doc. 01-30452 Filed 12-6-01; 3:44 pm]
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