10- 9-02 ; 2 :43pM ;

s°tED 314 r~u ,

. Ref 8P-AR Board of Environmental Review P.O . Box 200901 Helena, Montana 59620-0901 Dear Board Members: 

## OCT -9ME

The purpose of this letter is to provide EPA's comments on the revisions to the State's rule "Permit, Construction andOperation ofAir Contaminant Sources," codified in ARM Title 17, chapter 8, subchapter 7 and other rules being revised to conform to the revised subchapter 7. We understand that the Boardwill be considering these revisions, including the adoption of new Rules I through XVIII, at the Board's October 10, 2002 public hearing . The enclosure to this letter includes our comments on the rule changes identified in the MARNotice No. 17-165, 15- 8/15/02. The CleanAirAct (Act) establishes ashared responsibility between EPAand States to protect air quality. States adopt rules to protect air quality, including the National AmbientAir Quality Standards (NAAQS), and we approve the rules into the State Implementation Plan (SIP) ifthey meet the Act's requirements. The enclosed comments identify provisions in the New Rules that we believe we cannot propose to approve into the SIP. In most cases we have attempted to identify how a rule might be revised so that we could propose to approve it into the SIP. Additionally, our comments identify editorial corrections. Ifyou have questions about these comments or if you want to discuss these issues in further detail, please feel free to contact me at (303) 312-6005, or have your staff contact Laurie Ostrand at (303) 312-6437. ;3033126064 7t 2/ 35



### UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 8 999 18"" STREET - SUITE 300 DENVER, CO 80202-2466 Phone 800-227-8917 http:1lwww

.epa .govlregion08

Enclosures cc: John Wardell, 8M0 Don Vidrine, MDEQ10- 9-02 ; 2 :43PM ; ;3033728064 7A 3/ 35'

Enclosure A . SIPApprovability Comments (1) New Rule XI - We have had, andcontinue to have, a concern that the permitting rule only provides for a 15 daypublic review ofpreliminary determinations on permits. As we have indicated before, we believe this timeframe is too short for the public and EPAto provide comments, particularly for complex permitting actions. Given these concerns, and the discussion below, we believe it is in the State's best interest to revise the public comment period to 30 . days. Since we previously approved the 15-day comment period, it may be helpful if we describe the basis for our current concerns. We originally approved the 15-day comment period into the SIP over 20 years ago. Although our regulations normally require that SIPs include a 30- day comment period for permit actions, our rules also allowed us the discretion to approve a shorter comment period where existing State regulations already included a comment period less than 30 days. See 40 CFR51,161(b) and (c). We exercised this discretion in approving Montana's ,15-day comment period. However, in the interveningyears this shortened comment period has caused us problems on a number of occasions. We have found it difficult to supply adequate reviewand comment to the State on preliminary permit determinations, particularly when complex issues have been involved or when we have had misunderstandings with the State. Given our own difficulties, we have also questioned whether this abbreviated comment period would provide an adequate opportunity for comment to other affected States andfederal agencies andthe public. Thus, when the Board proposed revisions to the permitting rules on February 14, 2002, we took the opportunity to express our concerns regarding the 15-day comment period and ask that it be lengthened to 30 days. See ourApril 2, 2002 letter . Theproposed revisions- do not address our concerns, and thus, we are reiterating our request. As you are probably aware, we also recently received a petition fromEnvironmental Defense and Land and Water Fund ofthe Rockies that, among other things, alleges that the 15- daycomment period is inadequate anddemands tl4t EPAissue a SIPcall requiring the State to revise the comment period to at least 30days. We have made no decision yet regarding this request for a SIP call or anyother aspect of the petition. We intend to complete a thorough' evaluation of the issues raised by the petitioners over the coming weeks, butyour current rulemaking offers the opportunity to resolve one ofthe petitioners' concerns, and our coincident concern, in the near term . We think such a resolution would be beneficial to all involved. Incidentally, we are under the impression that the 15-day comment period maybe considered necessary dueto the Montana statutory and regulatory requirement that a final decision be made within 60 days ofreceipt of acomplete permit application. On the one hand we do not believe this time constraint should dictate the length ofpublic comment period; it is essential that adequate opportunity for public comment be provided regardless of State-imposed deadlines on permit issuance. On the other hand, as we have considered this matter, we have begunto question whether 60 days is an adequate amount of time to issue complex permitting actions. EPA's rules only require that a preliminary determination on a PSDpermit be issued10- 9-02 ; 2 :43PM ; ;3033126064 YR 4/ 35

within one year after receipt of a complete permit application (see 40 CFR51 .166(q)), and our experience indicates that permit applications often raise complex issues that require significantly more than 60days to adequately address. We recognize that a change to the 60-day period may require legislative action, butwe thought it best to raise the issue now so that we can beginto explore the issue more fully and determine whether a change should be pursued. (2) We believe the New Rules -donot clearly.indicate how they applyto major source permitting. Because ofthis, we believe we could not proposeto approve several definitions and provisions of the New Rules, mentioned below, because these defiinitions and provisions would be inconsistent with requirements for major source permitting. We believe we could propose to approvethese definitions and provisions ifthey were revised to indicate that they do not apply to sources subject to subchapters 8, 9or 10. We suggest subchapter 7 be amended to provide this clarification

. (a) New .Rule II(14) - definition of "Routine maintenance, repair, or replacement ." For major source permitting we seethe determination ofroutine maintenance, repair, or replacement as a case specific process and one that cannot be generally defined . Based on our past determinations, routine activity has a narrow scope andshould generally be applied only to actions that are regular, customary, repetitious, and undertaken as standard practice to maintain afacility in-its present condition. The determination ofwhether a proposed modification is "routine" is a case-specific determination whichtakes into ' consideration the nature, extent, puzrpose, :ffequency and cost ofthe work, as well as any other relevant factors. See Memo fromDon R . Clay, Acting Assistant Administrator for Air and Radiation, to DavidA . Kee, Director, Airand Radiation Division, Region V, September 9, 1988, enclosed. We believe that the State's proposed definition for "routine maintenance, repair, or replacement" does not assure that all appropriate factors are considered in determining whether or not a proposed project is considered to be routine maintenance, repair or replacement and, subsequently, is exempt frompermitting requirements for modifications. . (b) New Rule II(2) - definition of "Construct" or "construction.''This definition includes the phrase "a reasonable period of time for startup and shakedown." Because ofthis phrase, New

Rule II(2) is not consistent with the same term used in major source permitting. See ARM

17.8 .801(10), ARM

17.8.901(6) and 40 CFR51 .166(b)(8) . (c) New

Rule TV(1)(f) - general exclusion for emergency equipment installed in industrial or commercial facilities. Since there are no restrictions, on the size, emissions, or duration oftime emergency equipment may be used, emergency equipment excluded frompermitting in Subchapter 7 maybe a major source and subject to major source permitting. (d) New

Rules VII(2) and XIII(2) - These-provisions allow for a 5 year extension of a specified effective date in a permit or a 3 year upper limit on the expiration date of a permit for not constructing or installing, respectively. The Federal PSD requirements in 310- 9-02 ; 2 :43PM ; " ;3033126064 tA 5/ 35

40 CPR52.21(r)(2) specify that a PSDpermit will expire after 18 months if construction is not commenced within 18 months. (3) New Rule V- exclusion from permitting for de minimis changes. We are concerned that the rule could allow

sources to violate major and minor source preconstruction permitting , requirements, as well as the State Implementation Plan. We identified these concerns in prior correspondence! We believewe cannot propose to approve New Rule Vunless changes are made andadditional infornmation identified below is provided. New

Rules (II)(8), (X)(1) and XV(1)(b) also refer to New Rule V .' We believe we also cannot propose to, approve New Rules (Ii)(8), (X)(1) and XV(1)(b) unless the changes identified below are made to New

Rule V. (a) Change New

Rule V(1)(a) to read: (a) Construction or changed conditions of operation at afacility forwhich a Montanaair quality permit has been issued that do not increase the facility's potential to emit by more that 5 +5tons peryear~of any pollutant.- except. x2 tons per year of lead, except :" . . (b) Change New

Rule V(1)(a)(i) to read: (i) any construction or changed conditions of operation at a facility that wouldviolate any condition in any statute, the facility's existing Montana air quality permit, or anyapplicable rule contained in this chapter., or the State Implementation Plan (SIP) ~is prohibited, except as allowed in (2) ; (c) Change New

Rule V(1)(d) to read: (d) If a notice is required under (1)(b), theowner or .operatar shall submit thefollowing information to the department in writing at least 10 days priorto

. construction staitup-oruse ofthe proposed de minimis change or as soon as reasonably practicable in the event ofan unanticipated circumstance causing the de minimis change: - . (d) Change New

Rule V(2) to read: (2) AMontana air quality permit may be amended pursuant to [NEW

RULE XV], for changes made under (1)(a)(i) that would otherwise violate an existing condition in the permit. Conditions in the permit concerning emission limits or production limits in lieu of emission limits control equipment specifications, operation procedures, or testing, monitoring, record keeping, or reporting requirements may be modified ifthe modification does iiot violate any statute, rule, or the state implementation plan, or-BACT/LAER requirements for major or minor sources.

'On February 12, 1999 we sent a letter to Don Vidrine and on April I and May 13, 1999 we sent letters to the Montana. Board of Environmental Review expressing concerns with the De Minimis Rule . Copies ofthese letters are enclosed. 'The value of "x" should be at some level below the significance level oflead for major stationary sources, i .e., 0 .6 tons per year.10- 9-02 ; 2 :43PM ; ;3033126064 YA 6/ 3s

(e) Finally, pursuant to 40 CFR51 .160(e), the State should also submit information regarding the basis for the exemption, and demonstrate that compliance with the NAAQS vvill not be compromised under this rule. (4) New Rule VII(5) - "state-only" conditions in a MontanaAir Quality Permits. Currently, terms and conditions set forth in permits issued under aSIP-approved permit program (e.g., permits issued under subchapter 7) are federally enforceable. Before we could propose to approve a provision that changes the SIP-approved permit program to allow for inclusion of permit terms that are non-federally enforceable a justification as to why certain provisions do not warrantfederal (and citizen) review and enforceability would need to be submitted with the rule revision. Additionally, the State should demonstrate in the submittal that the proposed State-only terms will not hamper the ability of the State to enforce the SIP approved aspects ofthe NSR permits. We question what types of provisions in these particular permits the State would consider as not federally enforceable. Without more details on how this particular program change would be implemented so as to ensure continued compliance with all provisions in the SIP, we have potential backsliding concerns (section 110(1) ofthe Act) with this provision. (5) New Rule III (subsections (2)-(5)) allows certain construction activities prior to receiving a permit . Based on EPA's existing rules and policies, we do not believe we could propose to approve New

Rule IIT (subsections (2)-(5)) as written . Specifically, we believe these provisions are inconsistent with section 110(a)(2)(C) ofthe,CleanAir Act and 40 CFR51 .160, including 40, CFR51 .160(b), which requires States have legally enforceable procedures to prevent. construction or modification ofa source if it would violate anySIP control strategies or interfere with attainment or maintenance ofthe NAAQS. ' We were provided a table entitled "States Allowing Pre-Permit Construction." The table identifies several states with rules that allegedly allow pre-permit construction activities . After examining the rules from the other States identified in the table, we do not believe the table supports New

Rule III, subsections (2)-(5), as a SIP-approvable rule. Three of the states (Idaho, Michigan and Utah) require administrative approval by the State before construction can begin (Idaho's DEQissues written approval to the source that makes potential to emit limits requested by the source enforceable, Michigan's Commission may grant a waiver fromthe construction permit prior to full construction approval, and Utah's executive secretary,issues an "approval order" (a permit) prior to construction) . Minnesota's rule only applies to "de m ;*, ;* ; s" permit modifications (the rule includes pollutant thresholds for the criteria pollutants), and New Jersey's rule only allows pre-construction if not prohibited by Federal Law (N .J . Admin. Code 7 :27- 223(oo)(2)) . Oklahoma's rule pertains to major source operating permits (Title V) . The Oklahoma rules contain numerous restrictions and limitations to ensure the minor permit modifications do not violate any SIP control strategies or interfere with attainment or maintenance of the NAAQS (OAC 252:100-8-7.2(b)(1)(A)(I)(I-V) . Regarding.the North Dakota rule cited, we plan to research its implications.10- 9-02 ; 2 :43PM ; ;3033126064 0 7/ 35

(6) New Rule XIVallows.the stateto "revoke a permit or anyportionofapermit upon written request ofthe permittee, or for violation of any requirement. . ." We are concerned that applicable provisions may be inadvertently revokedat the request of the permittee. We believe we could proposeto approve the rule if it were revised to indicate that permittee initiated revocations may be approved provided that the provisions revoked are not applicable requirements ofsubchapters 7,8,9or10

. (7) New Rule XVI(3) - allows a permit transfer of ownership and/or location to be deemed approved ifthe department does not approve, conditionallyapprove or deny a permit transfer within 30days of receipt of a notice ofintent. We are concerned that asource may inappropriately locate in an area and jeopardize attainment of the NAAQS. Thepermit transfer may be deemed appioved ifthe department does not actwithin 30days. We believe we could propose to approve New Rule XVT(3) ifit were revised to read: " . . .the transfer is deemed approved, except for transfers of locations to areas where a source could cause or contribute to violations oftheNAA4S_." (8) Several provisions of the New Rules appear t(>be a relaxation ofthe existing rules in the SIP. Before we could propose to approve these revisions the State will need to submit an analysis showingthat the relaxations will not interfere with attainment and reasonable further progress, or any other applicable requirement of the Clean Air Act (Act) . See section 110(1) ofthe Act. Specifically: (a) In New

Rule II(1), the definition ofBest Available Control Technology (BACT), the State proposes to change "shall" to "may." This change is inconsistent with the federal definition of BACT (40 CFR51 .166(b)(12)) . Onepotential wayto address this concern is to revise New

Rule II(1) to indicate that it does not apply to major source permitting. (b) New Rule III(1)(b) requires a permit for "asphalt concrete plants, mineral crushers; ; and mineral screens that have the potential to emit more than 15 tons per year of any airborne pollutant, other than lead, that is regulated under this chapter." The existing ARM 17.8.705(1)(o) requires a permit for these same sources with a potential to emit more than S tons peryear. We believe replacing a rule that requires sources emitting more than 5 tons peryear to obtain a permit with a rule that requires permitting for sources emitting more than 15 tons peryear is a relaxation ofthe existing SIP. (9) New

Rule I1(6) - definition of "Facility." We are concerned that the phrase "that contributes or would contribute to air pollution" may notbe as restrictive as the phrase "that emits or has the potential to emit air pollution." We are concerned that someone may emit air pollution but believe they do not contribute to air pollution. Therefore, we believe the phrase "that contributes or would contribute to air pollution" should be replaced with "that emits or has the potential to emit air pollution." (10) New

Rule XV allows administrative amendments to permits. New Rule (1)(b) allows amendrnents to permits so long as there is no increase in emissions. We are concerned that even10- 9-02 ; 2 :43PM ; ;3033i26064

though there may not be any increase in emissions some permit amendments should receive public review

. With respect to administrative amendments that do not impact the emission limit, we believe our concern could be addressed andwe could propose to approve this provision, if it were revised to indicate that "The department may amend a Montana air quality permit, or any portion of a permit, provided the amendment does notviolate any requirement of an app icable

. statute. rule or State Implementation Plan or effect the enforceability of an emissions limit, for the following reasons :" Changes that could effect the enforceability of an emissions limit include, for example, changes in testing and-monitoring methods, frequency oftesting, and reporting requirements . However, wewant to clarify public review requirements for administrative amendments for changes in operation that result in decreases in emissions. We believe that any amendment to decrease an emissions limit, for example, to create asynthetic minor or to avoid other requirements, should go through public review for the limit to be federally enforceable. We understand that the DEQmaybe using the administrative amendment provisions to decrease emission limits. Ifthis is the case, in addition to the changes mentioned above, additional changes should be made to the rule-to ensure that decreases in emission limits go through public reviewand thus become federally enforceable. B . Editorial Comments 1 . New Rule II(8)(a) and (c), we believe the reference to New Rule IV-should be to New Rule V . 2 . New Rule I1(8)(b), we believe the reference to New Rule II should be to New Rule IIl . 3 . New Rule IV(1)0), we believe the reference to ARM 17 .8.110(7) should be changed to ARM 17.8 .110(7) through (9). 4 . ARM 17.8.110(9), we believe the reference to (7)(a) should be changed to (7)(a) and (b). 5 . ARM 17. 8.818 and 17.8 .1004, we believe the references to New Rule IV should be changed to New Rule IV and V

. 6 . ARM 17.8.1004, there are two references to ARM 17.8.710 being removed from this rule. We believe one ofthe references to ARM 17.8.710 should be~revised to ARM 17.8.720.Ref: 81 .1-AR UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 6 999 18?" STREET - SUITE 300 DENVER, CO 80202-2466 Phone 

## 800-227-8917 RECEIVED http :Ilwww

.epa .govlregion08 Board of Environmental RcvieNN, P.O . Box 200901 . Helena, Montana 59620-0901 Dear Board Members: 

## APR - 2 2002 

# APR 09 2002 BOARDOF ENVIRONMENiAL REVIEW

The purpose of this letter is to provide EPA's comments on the revisions to the State's rule "Permit, Construction and Operation of Air Contaminant Sources," codified in ARM Title 17, chapter 8, subchapter 7. We understand that the Board will be considering these revisions, including the adoption of new Rules I through XVII, at the Board's March 27. 2002 public hearing. The enclosure to this letter includes our specific comments on tile rule changes identified in the MAR Notice No. 17-156, 3-2/14102. Our comments are arranged so that we first identify those provisions of subchapter 7 that appear to have SIP approvability issues. We later identify other provisions where 'Ne reconvrnend changes to a rule, for example, to make it clearer or more complete . The SIP approvability issues are discussed in detail in the enclosure and pertain to the following: definitions; an earlier submitted De Minimis rule ; State-only conditions in construction permits; general exclusion for emergency equipment ; exemption for drilling rig stationary engines, availability of material for . public comment ; extensions in permit conditions or long expiration dates for construction permits ; revocation of parts of a permit ; transfer of a permit ; and relaxations to existing rules. If you have questions about these comments or if you want to discuss these issues in further detail, please feel free to contact me at (303) 312-6005, or have your staff contact Laurie Ostrand at (303) 312-6437 .

Enclosures cc: John Wardell . 8M0 Don Vidrinc, MDLQ

1"4) Printed on Recycled PaperEnclosure

(A) Provisions of the NewRule Nre believe Nve cannot approve or cannot I ;uaratntce Ivc will approve for reasons identified beloW : (1) New

Rule 1(14) - dclinition of"Routinc maintenance, repair, or replacement" : [a'A does not have a definition for "routine maintenance. repair, or replacement" in our regulations. Rather, we see the determination of such an activity as a case specific process and one that cannot be generally defined. Based on our past determinations, routine activity has a narrowscope and should generally be applied only to actions that are regular, customary, repetitious, and undertaken as standard practice to maintain a facility in its present condition. The determination of whether a proposed modification !s "routine" is a case-specific determination which takes into consideration the nature, extent, purpose, frequency and cost of the work, as well as any other relevant factors . See Memo from Don R . Clay, Acting Assistant Administrator for Air and Radiation, to David A

. Kee, Director, Air and Radiation Division, Region V, September 9, 1988, enclosed . We believe that the State's proposed definition for "routine maintenance. repair . or replacement" does not assure that all appropriate factors are considered in determining whether or not a proposed project is considered to be routine maintenance, repair or replacement and, subsequently. is exempt frompermitting requirements for modifications. For these reasons. Nve believe we cannot approve this definition as a SIP revisions. We believe the State should remove the definition and rely on case-by-case determinations . (2) New

Rule IV replaces earlier De Minimis Rule provisions the State adopted and submitted to EPA. We have not acted on the earlier De Minimis Rules provision. On February 12, 1999 we sent a letter to Don Vidrine and on April 1 and May 13, 1999 we sent letters to the Montana Board of Environmental Review expressing concerns with the De Minimis Rule. New Rule IV has not been revised to address our earlier concerns . Our earlier concerns still stand . We cannot guarantee that we will be able to approve the NewRule IV. Copies of the three referenced letters are enclosed. Other provisions of the New Rule refer to NewRule IV, For the same reasons mentioned above, we cannot guarantee we will be able to approve portions of other provisions that reference New

Rule IV. See New

Rules (1)(8) (i .e,, reference to New Rule IV in definition of modify), (IX)(8) (i .e ., reference to "except as specifically provided in this subchapter"), and XIV(1)(b) (i .e ., provisions that allowadministrative amendments for changes in operation that result in emission increases and that meet the criteria of NewRule IV(1)(a)) . (3) New Rule VI(5) is a new

provision which allows the State to specify "state-only" conditions

. in a Montana Air Quality Permit which would not be considered federally enforceable conditions. While it may be acceptable to include "state-only" provisions in Title V permits, all terms and conditions set forth in permits issued under a SIP-approved permit program(c .g ., permits issued under subchapter 7) are federally enforceable. If the State is proposing to change its SIP-approved permit programto allow for inclusion of permit terms that are non-federally enforceable (including terms in minor NSR, major nonElltainnlent NSR, IISD, and federal]), enforceable state operating permits (1:(:SOPs) issued pursuant to SIP-apprcmvcd operating permit prot;rarns), a .justiiication as to why certain provisions do not warrant federal (and citizen) reviewand enforrrtlbility wOuld rlrrLl Ici lie tilll)llllllcd wilh the rule revision . We question whal types of

provisions in thcsc particular permits (lie State would considcr as not fcdcrally cnliorceublc. VVithout more drtails oil how this parlicular programchange would be inlplenic:ntcd so as to ensure continued compliance with all provisions in the Sill . we have potential backsliding concerns (section I 10(I) of tile Act) with this provision and we believe we cannot approve such a change. (4) New

Rule lIl(1)(f) - general exclusion for emergency equipment installed in industrial or commercial facilities . We believe we cannot approve a provision that provides an exclusion for emergency equipment at such facilities. A source would need to get a permit for ally such equipment . Under extenuating circumstances, enforcement discretion may be cmployed by the State/CPA/public ifjustified but, in general, the facility should have preplanned emergency backup and that equipment should have an appropriate permit . (5) New

Rule lIl(1)(i) - We question ]lowthe State will assure that a de minimis level of 100 tons per year for drilling rig stationary engines and turbines will not cause or contribute to violations of the NAAQS per 40 CFR 51 .160(a)(2) . We also question how this exemption will assure compliance with any applicable MACT requirements. If the source is a new major source. then the case-by-case MACT (required by CAA I l 2(g)) would apply. Also, tile source may be subject to the (upcoming) MACT requirements for Combustion Turbines or the (upcoming) requirements for Reciprocal Internal Combustion Engines. Because of these concerns, we believe we cannot approve this rule. (6) New Rule X(4)(a) - EPA rules require that opportunity for public comment shall include, as a minimum, "availability for public inspection in at least one location in the area affected of the information submitted by the owner of operator and of the State or local agency's analysis of the effect on air quality." (40 CFR 51 .161 (b)(1)) . We believe we cannot approve this provision unless New

Rule X(4)(a) also requires that a copy of the application and tile Department's analysis of the application be made available for public inspection in the air quality control region where the source or stack is located, as is currently required in ARM 17.8.720(2)(c)(i) . (7) New

Rules VI(2) and XI1(2) - These provisions allow for a 5 year extension of a specified effective date in a permit or a 3 year upper limit on the expiration date of a permit . respectively. The upper limits in both cases are too long and the provisions in VI(2) and XII(2) appear to conflict with each other. We believe the State should require that the source update its BACT determination. air quality analysis and any netting analysis before extensions are granted and construction begins. The Federal PSD requirements in 40 CFR 52.21(r)(2) specify that a PSD permit will expire after 18 months. We believe we cannot approve this provision unless the rule requires an updated BACT determination, air quality analysis and netting analysis after 18 months and before the permit expires or (lie extension is granted . (See EPA's phased construction requirements in 40 CFIZ 51 .166(j)(4)) . (8) New

Rule X1II allows the state to "revoke a permit or urtphnrliun nfupermit upon written request uf tlle pcrmittee, or for violation of any requirement . . ." We question ]lowthe Department%A-ill evaluate a rcqucst Froma hermittre to revoke part of a permit . For example, can a hcrnlittce

request revocation of ccrtain rnonitoring or rccordkeching rcquiremernts that are used for compliance demonstration? \\'ilhuut sOmc more dclinite critcria for what type orparlial revocations would be acceptable so as to ensure that all applicable requirements are met, we cannot guarantee that we would approve such a provision. Additionally, we believe that these partial revocations would not be minor administrative changes and would need to go through public reviewas we)) . (9) New Rule XV(3) adds a new provision that allows a permit transfer to be deemed approved if the department does not approve, conditionally approve or deny a permit transfer within 30 days of receipt of a notice of intent . ~ Forty CPR 51 .160(b) requires the State to make an affirmative decision on whether or not to issue a permit (or in this case on whether or not to approve a permit transfer) . \\'e believe the newprovisions added in New Rule XV(3) are not consistent with 40 CFR 51 .160(b) and we believe we cannot approve them . (10) In several provisions ofthe New Rules appear to be a relaxation of the existing rules in the SIP. We believe we cannot approve such revisions unless the State can demonstrate that such revisions are not inconsistent with section 1 10(l) of the Act. Specifically : (a) several places the New Rule indicates that something "may" be done or required whereas the existing rules indicates "shall ." We believe replacing "shall" with "may" is a relaxation of the existing rule. See New Rules I(1), IX(3), Xll(2) . (b) New Rule 11(1)(b) requires a permit for "asphalt concrete plants, mineral crushers, and mineral screens that have the potential to emit more than 1 5 tons per year of any airborne pollutant, other than lead, that is regulated under this chapter ." The existing ARM 17 .8 .705(l)(o) requires a permit for these same sources with a potential to emit more than 5 1ons peryear- . We believe replacing a rule that requires sources emitting more than 5 tons per year to obtain a permit \ti~ith a rule that requires permitting for sources emitting more than 15 tons per year is a relaxation of the existing SIP, (c) New Rule 11(1)(d) indicates that a facility installed before November 23, 1968 and that modifies after that date does not need to receive an air quality permit if the modification does not increase the potential emissions by more . than 25 tons per year of an), regulated air pollutant . We find this rule confusing because New Rule 1V only excuses modifications frompermitting if the potential emission increases are less than 15 tons per year (although, as noted below, we previously identified concerns with NewRule IV) . Additionally, we do not find that the existing permitting rules contain provisions similar to NewRule I1(1)(d) . Therefore, we believe NewRule I1( I )(d) is a relaxation of the existing SIP. (d) Ne~~~ Rule 111(1)(g) - general exclusion for activities or cquipmcnt associated \vitlh (lie construction. maintenance, or use of roads except emitting units for which a permit is required under NewRule Il( I )(b) or (c) . ']'his provision is similar to the existing rule atARM 17.8.705(1)(i) . I Irrwcvrr. i1 appears that NewRule 111(1)(fi) is a rclcrxatiun of what is rcquircd in ARM17.8 .705( 00) . B . Other General Concerns and Recommendations for Changes to the NewRule (1) New Rule X - We have had, and continue to have, a concern that the permitting rule only provides for a 15 day public reviewof preliminary dctermiriations on permits . We believe this timeframe is too short for the public and EPA to provide comments. Because the 15-day public reviewtimeframe starts when the preliminary determination on a permit is mailed . and it usually takes a week for us to receive the proposed permit, we often have only a week or less to reviewa draft permit and submit comments to the Department . We assume other members of the public must also experience a time crunch when reviewing draft permits. Forty CFR51 .161(b)(2) indicates that opportunity for public comment shall include, as a minimum, "a 30-day period for submittal of public cornments." We have contemplated issuing a SIP Call to the State to require the public comment period on permits be extended to 30-days. We believe the State should revise its rules now to lengthen the public comments period to 30- days. (2) In general, it is not clear howNew Rules 1 through XVII integrate vdth the other applicable permitting requirements in subchapters 8 (Prevention of Significant Deterioration of Air Quality), 9 (Permit Requirements for Major Stationary Sources or Major Modifications Locating Within Nonattainment Areas) and 10 (Preconstruction Permit Requirements for Major Stationary Sources or Major Modifications Locating Within Attainment or Unclassified Areas) . 1t is our understanding that the requirements in newRules I through XVII would apply to all sources needing a permit, in addition to any applicable requirements in subchapters 8, 9, and 10, however that is not explicitly clear . It appears that the provision in the existing ARM 17 .8.704(l), which explains the intent ofsubchapter 7, is not reflected anywhere in the new rules . We believe the New Rules should make it explicit that (lie requirements in subchapters 8. 9, and 10 for major sources apply in addition to the requirements in new .Rules I through XVII . (3) Currently, other subchapters in ARM Title 17, refer to the existing codification of subchapter 7. These other subchapters will need to be revised to reference the new codification of subchapter 7. (4) New

Rule 1(1) - definition of "Best Available Control Technology (BACT)" : For consistency and clarity, we, believe the term"emitting unit or modification" should be replaced with the term"newor modified emitting unit ." as defined in NewRule 1(11) . (5) New

Rule 1(2) - definition of "Construct" or "construction" : Including a "reasonable period of time for startup and shakedown" is not consistent with the definition of"Construction" in ARM17.9 .801 (10) . ARM17.8.901(6) and 40 CT-R 51 .IG6(b)(8) . Since the dcf-Initions ill this subchaptcr apply to till sources. including those subject to the permitting requirements in subchapters 8 and 9, we bclicve the definitions in this section should be consistent with the 5dcfinition in subchapters 8 and 9 and shOuld not include startup and shakedown.

(6) NewRule 1(4) - definition U1~"1.'.Illlttlnb' unit" : In order to cover both newand modified unit%, we believe the definition should include "any equipment that emits or has ihelwtenflal to emit ." . EPA also believes the definition should specify "any regulated pollutant under the C7cun AilAct" for clarity. (7) New Rule I(6) - definition of "I'acility" : Tile phrase '*that contributes or would contribute to air pollution" in this definition is vague. We believe the phrase "that enlits or has the potential to emit any air pollutant subject to regulation under the Clean Air Act" is more clear and consistent with other defined terms in this subchapter . (8) New

Rule III(] )(k) - This exemption is redundant since the definition of "inodify" includes an exemption for routine maintenance, repair or replacement . We believe this exemption should be deleted. (9) New

Rule VI(1) - We believe the last sentence should also reference conditions necessary to assure compliance with the Federal Clean Air Act . (10) We do not see where ARM 17 .8.710(5) has been addressed in the New Rules. We believe that this provision should be included in New Rule V1 . (11) New

Rule VII(l)(b) - A reference to ARM Title 17, chapter 8, subchapter 10 ' (Preconstruction Permit Requirements for Major Stationary Sources or Major Modifications Locating Within Attainment or Unclassified Areas), in addition to subchapter 9, should also be included in this provision. (12) Like the existing codification (ARM17.8.733), New Rule XIVonly allows the permittee, and not the public nor EPA, the ability to challenge the permit amendments issued by tile Department . We believe the rule should be revised to allowEPA and the public the ability to request a hearing before the Board. (13) New

Rule XV(l )(c)(i) should also reference the Federal Clean Air Act. (14) Nevv Rule XV(l)(d) should also reference ARM Title 17, chapter 8, subchapter 8 . C . Provisions Historically Not Submitted as SIP Revisions The State has historically not submitted some rule provisions as SIP revisions. We are assuming the State intends to keep the following provisions as State-only provisions and are therefore not providing comments on them : New Rule XVI(1)(6) (ARM17.8.702(1)(f)) . New Rule XVII (ARM17.8 .706(5)) . and New Rule 1(10) . 610- 9-02 ; 2 :43PAA ; ;3o33126064 # 21/ 35



### UNITED STATES ENVIRONMENTAL PROTECTION AGENCY ' REGION 8' 99918T"STREET

- 'SUITE 500

. ' DENVER, CO 80102-2466 

## Ref 8P-AR ' FEB 1 2 f999 DonVidrine, Chief Air andWaste Management Bureau Department ofEnvironmental Quality P.O, Box 200901 ' Helena, Montana 59620-0901 Dear Don : The purpose ofthis letter is to provideEPA's cornments on the State's "de minimis rule," codified in Sections 17 .8.705 and 17.8.733 ofthe Administrative Rules ofMontana (AR1VI) . We understand that the State is planning to publish a notice for revisions to this rule within the next week and to conduct the public hearing on these rules changes before the Montana Board of Health and Environmental Sciences at its March 24, 1999 meeting. EPAprovided comments on the State's initial de minimis rule in a letter dated July 25, .1996, in which EPA expressed some concerns about the types ofchanges at existing sources the State was exempting fromState and public review

. In the draft revisions to its de minimis rule, it appears that the State is expanding on the exemptions from new source review(NSR) permitting requirements while, at the same time, adding some safeguards to the process. Background -New

Source Review

Requirements andA!o_wableg&e_mLtions ;~7~ ]~*i-Montana,'4j"* ~ erofSA b t tis NSRprograms to exempt certain minor modifications- at eidsting sources either from public reviewand comment (or to providefor less than a 30-day public comment period) or fromNSR reviewaltogether as-Montana is proposing. EPArealizes there arevarious reasons for thesetypes ofprogram

revisions, the -most pressing ofwhich seems to be the additional permitting requirements .of~e.g.art

. .70 operati,pg pern~r~t pyog~tn, ._Qn t1~,e_othvr.hand .}t.h_.re_Wa iqgWatory

. .. ' . . and statutory mandate for minor NSRprograms, and EPAneeds to ensure that anyrevisions to: State's NSRprograms do not compromise those Federal requirements. In addition, there has, been a rising concernwith fauhy implementatian ofthe prevention ofsignificant deterioratioin . (PSD) and nonattainment NSRpermitting progranps, especially in determining applicability of. major source/major rnodifcation permitting requirements. Reducing the scope ofchanges that .are reviewed by permitting agencies under minor NSRprograms may add to this problem . . EPA's regulations regarding niinor NSRprograms are found at 40 CFR 51 .160-164 and were promulgated pursuant to section 110(a)(2)(C) ofthe Clea3z Air Act (Act) . The regulations require that State Implementation Plans (SIPs) include measures to determine whether the construction or modification of afacility, building, structure, or installation will result in a violation of the applicable portions ofthe State's control strategy or interferewith attainment or maintenance ofthe national ambient air quality standards (NAAQS) in the State or in a neighboring State. The State must be able to prevent construction or modification in such cases. .10- 9-02 ; 2 :43PM ; . ;3033126064 # 22/ 35

(See 40 CFR51 .160(a) and .(b) .) Thus, in reviewingany exemptions to a State's minor NSR

. program, EPAmust be assured that the exemptions would not interferewith the basic requirement to ensure that new and modified sources do notcauseor contribute to aviolation of the NAAQS or violate the SIP . In addition, 40 CFR51 .161 requires that States' NSRprograms provide for opportunity for public reviewand comment on the information submitted by the owners and operators and the State's analysis ofthe effect ofthe proposed construction or modification on air quality . Currently, these Federal regulations do not providefor exemptions fromthe public participation requirements. Astrict reading of EPA's regulations would require that all sources subject to a State's permitting requirements also be subject to these public participation requirements. . OnAugust 31, 1995, EPAproposed revisions to the requirements in 40 CFR51 .161 in . conjunction with proposing revisions to 40 CFRpart 70 (see 60 FR 45530-71) . Specifically, EPA proposed to allow

States' NSRprograms to vary the public review procedures and faring for some construction or modification activities in light ofthe environmental significance ofthe activity ('mcluding foregoing public review altogether for some changes that have been approved by EPA- as "deminimis") . However, EPA's proposed rules provide that States' NSRprograms must meet the public participation requirements of40 CFR51 :161(bx2) forall new major stationary sources or major modifications subject to PSDor nonattainment NSRpermitting . requirements, as well as for anyphysical change or change in the method of operation ofa part 70 source wherethe prospective emissions increases.fromsuch change would be a significant emissions increase ofanypollutant subject to regulation under part Cor Dofthe Act (i .e., for cbangesat sources that are "netting out"ofmajor modification review) . The:~ F~ariibieoftlii5~ o .osec~~~rvie .couta'vns~EPA's~most reeet~ , . . ., p . . Pr p. p~ . . . . .

. purposes ofthe mirior NSRprogram, the process for exemptizng sources from review,~ and~the : types ofmodifications that could un,dergo less thin fiill public participation requirements. In that ' notice, EPAdiscussed how, under 40 CFR51 .160(e), States canrestrict the scope of facilities, buildings, structures, Dr-installations that are subject to- .review, although the SIP must~discuss the

. .,basis for such decision. .EPAstated that States mayexempt fromminor NSRthose changes that . : are not environmentally significant, consistent with the ~de.minimis exemption criteria-setforth in AlabarnaPawer Co

. v ~Costle, 636 F.2d 323, 360-361, 405 (D .C . Cir. 1979) . "EPAalso discussed thetypes of sources and modifications EPAwould not likely consider as de minimis. Those included synthetic minor sources and netting transactions (i_e., when a source proposing a modification obtains "internal offsets" such that its net emissions increase is 'less than the major . modification significance levels) . In both ofthese permitting situations, the source is trying to obtain Federally enforceable limitations on its emissions. ~ Thus, whenever a source is trying to obtain Federally enforceable limits, EPA's position is that those emission limitations must go through at least some level ofpublic participation. In the August 31, 1995 preamble, EPA stated . that since States can exempt de minimis changes fromminor NSR altogether, it follows that States may provide a full or partial exemption fromthe public participation requirements of 40 CFR 51 .161, consistent with the environmental significance ofthe change. Consequently, EPA . r~)'5 .~. . .io- 9-02 ; 2 :43PM ; ;3033726064 0 23/ 3s

proposed revisions to 40 CFR51 .161 as discussed above to, provide for full or partial exemptions frompublic participation. . Reviewofthe Proposed Revisions to Montana's De 1Vhniznis Rule ' In reviewing the proposed revisions to Montana's de minimis rule against the criteria discussed above, EPAhas identified several concerns about the State's exemptions from its NSR program As discussed in greater detail in the enclosure to this letter, it appears that the State may be exempting certain actions frompermitting requirements that EPAwould not consider to be de minimis,such as netting actions. Further, EPAis concerned that thede minimis exemptions as written could compromise adequate implementation ofthe State's major source permitting programs. In addition, EPAquestions.whether the State's de. minimis rule will adequately ensure that niodified sources don't cause or contribute to a violation ofthe NA .AQS or interferewith the control strategy.

sources is especially concerned about the impact these exemptions could have on theState's plans to bring areas in violation ofthe NAAQS into attainment. Finally, EPAhas

, . major concerns about the provision that allows changes to emission limits or production limits established ~ preconstruction permits without~going throughfull NSRpermitting procedures ('including public review and comment) . . In these proposed revisionsto the de nunimis rule, the State has added a provision requiring advance notification to the Statewhen a source is proposing certain de minimis modifications. We believethis is an essential requirement and should be required for all physical changes or changes in operation that are not already allowed in the permit or covered under existing StatelFederal malfunction, startup, shutdown, or other excess emission reporting requirements. Such notice should be required at least ten days in advance ofbeginning actual

, construction on the modification (rather than in advance ofstartup ofthe modification), so that .k_>. .}A1ie~State, :Cias'~he.°abilto'preventthi,,=oiistr.~ ~ ctir~itar~tnddr~caxioit'ofa'u'rirL~iftF1t°iic~ieasi :` emissions would cause or~contrnbute to a violation ofthe NAAQS or interferewith the SIP, or if . : the modification would be subject to major modification perrnitting requirements: We also ' believe the State should have either an approval role or veto authority to ensure that. a modification that should not be considered- de minimis does go throughfiill State and public review (m .case the State has not identified ail ofthe potential -circumstances-in its iule when~a

. permit modification mightwarrant more detailed review) . . ,Such advance notification would help

. to ensure that this rule does not conflict with the majorsource permitting,requirements and the requirements ofthe minor source ,program to be able to prevent constiuction or modification o£a source ifit :would cause or contribute to aviolation ofthd NAAQS or interferewith the control strategy(although, as detailed in the enclosure" ,'-this would not address all ofEPA's concerns with this rule) . . EPAhas explained in detail our concerns with the proposed de minimis rule in the enclosure and, where possible, we have suggested revisions that might address our concerns. If the State plans to move forward to revise the de minimis exemptions fromits NSRpermitting requirements, then we strongly recommend that the State consider the issues raised in this letter to ensure protection ofthe integrity ofthe State's major source permitting programs and its plan10- 9-02 ; 2 :43PM ; ;3033726064 tP 24/ 35

.0r, to attain and maintain the NAAQS. When this revision is subrnitted as a SIPsubmittal, the State must explainthe basis for these exemptions, pursuant to 40 CFR51 .160(e), including why.the State believes the mandates ofthe Act regarding major source permitting and NAAQS ' compliance will not be compromised under the State's de minimis rule. ' Ifyou have anyquestions about this letter or the enclosure or ifyou want to discuss these issues in further detail, please feel free to contact me at (303) 312-6005, or have your-staff contact Vicki Stamper at (303) 312-6445.

Enclosure cc: Bob R

.aiscli, planning, prevention, andAssistance Division, MT DEQ Dave Slemp, Air andWaste Management Bureau, MT DEQ

. . r . " . . . .10- 9-02 ; 2 :43PM ; ;3033126064 # 25/ 35

Enclosure EPAhas the following comments on the State' .5 proposed revisions to its de minimis rules in ARM 17.8.705 and 17.8.733: . . 1) As a preliminary matter, EPA .has concerns about the modification size cutoff (IS tons per yeai (tpy)) thafthe State proposes as de minimis. Fifteen tpy represents the major modification significance level~for one criteria pollutant (PM-10) and exceeds thesignificance level for another criteriapollutant (lead) as well as for several non-criteria, pollutants. It also exceeds the major source threshold for hazardous air pollutants (HAPs) . It is thus not de minunis in the sense of having trivial environmental effect. EPAhas agreed in the context ofpart 70 operating permit programs that certain activities with emissions of 5 tpy or less may be considered "insignificant ." However, EPAnever before denoted emissions increases as high as 15 tpy as de minimis. EPA requests that the State provide an explanation ofwhy it believes emission increases as high as 15 tpy should be considered as having trivial environmental effect. 2) In ARM

17.8.705(1)(q), the Stateis proposing to exempt routine maintenance, repair, and replacement ofequipment fromthe requirement to obtain a preconstruction permit. This exemption for routine replacement in the definition of"major modification" has often been misinterpreted. For example, asource could replace a piece ofequipinent with a more efficient piece ofequipment that could allow the source to increase production abovewhat it was physically capable of achieving before the replacement and thus increase emissions. Such a "debottlenecking", action would not be considered routine replacement and should be reviewed forits impact on the NAAQS and the State's control strategy, as well .as for its applicability to major source permitting requirements. Thus, whileEPAgenerally does not believe a permit is .~ tiecessat~foriouti~iejilaeemetit ; :EF~L-do"es-believe~~that-some:ad.~rance-ievieyv~Qf#h~p~ac .~ed' =action should occur by the State to ensure that the activity is "routine." Therefore, EPA . ' recommends that the State delete routine replacernent from ARM 17.8.705(1)(q) and addit as a~ subset ofARM

17.8.705(1)(r), so it will be subject to the advance notification requirements of

. ARM 17.8.705(1)(r)(ii) . . . . . . . . 3) EPAbplieves that advance notice to the State ofthe changeswhic~li a source is.blaiming as , de minimis is essential to ensure that modifications which should otherwise trigger~new source reviewpermitting are not exempt fromreview . 'However, EPA does not believe 10 days be.fare startup or use ofthe change is adequate advance notice. First, the State~riceds to be ableto prohibit construction of a new or modified unit ifthe modification to the source would cause or contribute to a violation ofthe NAAQ$ or interfere with the control strategy, or ifthe modification is subject to PSDor nonattainment NSRpermitting . If a source has already begun construction on an emissions unit by the time the State is notified ofthe source's planned modification, then the State would not be able to meet the requirements of 40 CFR51 .160(b) if the State determines that the modification could cause or contribute to a violation ofthe NAAQS. Also, if the modification =were subject to PSDor nonattainment NSRpermitting requirements but no one realized it until the State reviewed the changes, then the source would be in violation of . .t,~70- 9-02 ; 2=43PM ; ;3033126064 # 26/ 35

the major source permitting requirements for commencing construction prior to obtaining the appropriate permit . EPAand States have historically found that it is much more difficult to~ ensure compliance with major source technology requirements such as best available control technology (BACT) ifthe source has already commenced construction andbuilt up equity in the design ofthe modification. Thus, EPAbelieves the State must'require notification at least ten days in advance ofbeginning actual constiuction on a modification to asource. _ In ARM 17.8.705(1)(r)('rii), the State has listed some types ofactivities that can be exempt fromadvance notification requirements, including the addition, modification, or replacement of pumps, valves, flanges, and similar e4nissions sources. EPAwonders whethersome ofthese activities would fall under the routine repair and maintenance exemption in ARM 17.8 .705(1)(q) . - In any case, EPAbelieves the State should require advance notification for any type of replacement or addition ofequipment, because thesetypes ofactivities could result in an increase in emissions. '

~ The State has also exempted fromadvance notification day-to-day fluctuations occurring as the result ofasource's design or permitted operations including startup and shutdown. EPA is confused as towhythese activities are listed here. Day-to-day fluctuations would not normally be treated as a modification subject to ~preconstruction permitting. However, excess emissions that occur during day-to-day operation, including those dueto startup, shutdown, and malfunctioin, are required to be reported to the State in accordance with the applicable State or Federal (e.g., New

Source Performance Standard (NSPS)) requirements. Thus, EPAbelieves this provisionin ARM

17.8.705(1)(r)('lii)(A) should be deleted, as it is confusing and potentially could allow sources to not report their excess emissions. . . . .

,.-~~ . ~: :-~ ;r-EFAabotwtsuders-;if<

.'ten-dag~s'nd~~ei~otice:a~ill~always bli~adequati~fovtiteStato .-tci~ determine if a modification to a source shouldbe-subject to permitting requirements, -especially . considering the limited information requested from the source in ARM

17.8 .705(I)(r)(W) . EPA - believes the rule should bewritten to give the State the authority to request fizrther information or . 'have additional time before the modification cangoforward .

, Further, the State's proposed de minimis pale does not ~ppear to give the State the .authority to -prevent a modification frombeing exempted as de minimis. . In otherwords, the State should have the authority to require a pernut for a modification even if it appears to meet all of , the criteria ofthe State's de minimis rule: . T'here may be many situations where the State will want or need to use this authority, such as in response to significant public interest or in the event that the State's de miniinis regulation may not explicitly exclude all ofthe modifications that' . should NOT be exempt from permitting requirements. . Last, in ARM,17.8

.705(1)(r)(iv), regarding the notification required to the State "in the event of an unanticipated circumstance causing the'de minimis change," the proposed rule specifies that the State should be notified as soon as "reasonably practicable?' These types of changes would likely be due to malfunctions, which should be covered under the State's ,10- 9-02 ; 2 :43PM ; ;3033728064 # 27/ 35

malfunction-regulations. In other situations, EPAbelieves the State should have a deadline for reporting these types of changes, such as "as soon as reasonably practicable but no later than five days after beginning actual construction on the de mininiis change."

.., ..

: . 4) EPA

.has major concerns .with the implementation ofthe de minimis rule for sources located in or impacting nonattainnient areas (or areaswhich aresubject to an EPASIPcall, such as Billings or Kalispell) which are proposing to increase emissions ofthe pollutant ofconcern . When the State adopts an attainment plan for such an area, that plan is based on presumed emissions fromall existing sources in the area. Anymodification*which allows an increase in emissions from an existing source couldjeopardize the State's plan for attaining the NAAQS. . It is not clear that ARM 17.8.705(2)would effectively prohibit a modification that would interferewith the State's attainment plan for an area. While the second sentence ofARM 16 .8.705(2) allows certain types ofpermit conditions to be changed only if such change doesn't violate the SIP, this would presumably not include changes at sources Which.were modeled at' a certain level ofemissions in the attainment demonstration butwhich aren't subject to any specific condition ofthe SIP

. Further, the third sentence ofARM 17.8_705(2) allows emission limits or production limits to be changed, and it appears that such changes are allowed even ifthose limits are specified in any statute, rule, or the~SIP. Thus, unless the State canadequately demonstrate to EPA's satisfaction that this de minimis rule won't interferewith the State's attainment plans for areas that arc violating the NA .AQS, EPAdoes not believe the State should be allowed to exclude such modifications frompermitting requirements. . 5) The wording ofthe de rninvnis exemption is inconsistent with the implementation ofmajor source permitting requirements and, thus;'cotild be misleading-to the regulated community and ; biild~tesiili'in~'Faiulty,imp!'eittentatinii=bftlie<:m1~j'd7r'soui:.i ;e~estnitt~g"~ii°~gc~n5s, " ~ Spcdiifi wh~ji

` . " ~

, ,t requa rements, epernuttmg agency generally compares the actuai emissions ofa proposed new or modified unit before the modification to the future potential emissions from the new or ' modified unit(s) :zfter the change. (See definitions of "net emissions increase"_at 40 CFR . , 51 .166(b)(3)~and 40 CFR51 .166(b)(2I)(rv) in the definition of"actual erttigsions;' -aswell as page A-41-in the Octobec 1990 NSR Workshop Manual) . However, in the de~minimis~dkeirrption, the ~ State is comparingpotential emissions befoie the change to potential emissions .after the change. . . Using a different test for the exemption could lead to misinterpretation of the major source ' peraitting requirements in subchapters 8, 9, and 10 ofthe State's regulations. Thus. .to avoid ' conl'usion and misinterpretation, it would be more appropriate to exempt sources by-comparing actual emissions before the modification to potential emissions after the modification, simila'r to the current Federal major source permitting requirements.

th ' a major source undergoing.a modification is reviewed for applicability to major~souice permitting '

6) In ARM

17.8.705(1)(r)(i)(E), the State provides for modifications to be considered de minimi s based on "netting out of review" - i .e., considering emissions reductions that are made Federally enforceablewhen determining the potential to emit of a modified source. As discussed in the cover letter to this enclosure, EPA stated in its August 31, 1995 proposed rulemaldng that10- 9-02 ; 2 :43PM ; ;3033126064 # 28/ 35

it would not consider netting transactions to be de minimis (see 60FR 45548) . EPAwas specifically referring to netting transactions at existing major sources which are proposing to exempt a significant modification from major source permitting requirements by"netting out of review . However, EPAhas also taken the position that, to be-considered Federally enforceable, limitations on emissions or a source's potential to emit must gothrough at least some level of public participation

. In addition, as discussed on page A36of EPA's October 1990NSR Workshop Manual, when anyemissions decrease is claimed, then all source-wide creditable and contemporaneous increases and decreases must be included in determining a source's net emissions increase. Montana's de minimis rule does not require this. Such a modification in whichthe source is netting out ofreview cannot be exempt from

preconstruction permitting requirements as de minimis. . ' 7) EPAis concerned that the de minimis rule could allow a source to violate the SIP, which . result is inconsistent with the requirements of40 CFR 51 .160(a) and (b) . 'Specifically, in the list of exceptions to the de minimis modifications in ARM 17.8.705(1)(r)(i)(A)-(E), the State has not excluded changes that would violate the SIP. TD address. this deficiency, a provision should be added under ARM

17.8 .705(1)(r)(i) to state that any construction or changed conditions of operation at a facility that would violate any requirement ofthe SIP is prolubited.~ The State cannot allow

a source to violate the SIP or change any requirement~ofthe SIPthrough a preconstruction permit. This includes changes to the SIP compliance-determining methods, reporting requirements, etc. A change in a SIP requirement generally must be accomplished through revision to the SIP and approval by EPA ©

' 8) Similarly, the State cannot allow a source to make significant changes in the terms ofits . PSDpermit, nqnattainment NSRpermit,_,orits, part 70 :permit, without undergoingState and - : .; '.. .1996~retle,rtsfi'theYor"

:gin` .atib~itiCb'i~"oftFte ., _ de .miiiimis rule. The State has proposed to add a piovision in ARM 17.8 .705(2) stating that conditions in the permit regarding control equipment specifications, operational procedures, or testing, monitoring, recordkeeping, and reporting maybe modified ifthe modification does not. violate any statute, rule, or the SIP . This may have been added to address our concerns about-the

. . original de minirnis rule. :-However, the Federal .regulations and statute do not addresswhether- .. . . States can administratively change.the conditions ofissued PSDor nonattainment NSR~etnzits ~,. . .' .(i .e., the processfor revising those permit terms is not-identified in the Federal rules) . It has been ~ " . EPA's policy that only insignificant changes to term in PSD or nonattaimnent NSRpermits:.can

.. . be made administratively, and that any other changes must ~undergo full State and public/EPA . review . Such is also the case with part 70 sources, as is stated in 40~CFR70:7(e)(4) . In addition, ~ ' the State cannot revise design equipment, work practice, and operational standards, or approve alternative test methods for sources subject to Federal NSPS or National Emission Standards for Hazardous Air Pollutants (NESfIAPs) without receiving prior EPAapproval . 9) As discussed above, the State is proposing to add a provision in ARM 17.8.705(2) stating that conditions in the permit establishing emission limits, or production liriiits in lieu of emission limits, may be changed or added if requested by the applicant . The previously adopted version of10- 9-02 ; 2 :43PM ; ;3033126064 0 29/ 35

this rule did not allow

the State to process modifications at existing sources as de miniznis, ifthe change wouldviolate any emission or production limit in a permit . Now, the State is broadly expanding the scope ofchanges that could be considered de minimis. Further, under the State's proposed rule, the changes in emission or,production limits are not excluded frombeing considered de minimis even ifthose emission limits stem from Federal or State statute or regulation or the SIP

. EPAcannot envision any acceptable circumstance for changing an emission limit or production limit established in a preconstruction permit through an administrative process without full State, EPA,,and public review . Such limitationswould generally have been derived from BACT or Lowest Achievable Emission Rate (LAER) requirements for major sources, a requirement of theSIP, a Federal regulation (suchas NSPS, a limit on a source's potential to emit (i .e., ~a synthetic minor Emit), or a BACT limit imposed by the State on a natural minor source. EPAdoes not find it appropriate to revise any ofthese types of limits without goingthrough a fu11 permit revision with public participation ; some ofthese changes may also require appioval from EPA (such as a change in a SIP or NSPS limit) . Ifa situation arises where a. source is requesting avery minor change in a BACT Emit, the State should contact EPAto determinewhether afull permit revision would . .be required. In anycase, EPAcannot approve a provision that allows a source undergoing a physical change or change in the method ofoperationwhichwould cause it toviolate its permitted emission or production limit to revise its emissions or production limits without goingthroughfull preconstruction permitting review(including public participation) . Please note that, under 40 CFR51 .166(r)(2), ifa source or modification becomes a major source or major modification solely byvirtue of a relaxation ofanyenforceable limitation on the capacity ofthe source to emit a pollutant (such as a limitation on operating hours or production rate), ..then that source must meet all ofthe znajor source-permitting "uirernents -as though . , . . .. . , '~; .~'cbiiim°u~t~=1~i~-'ri`oir ~cb3ti ~ '~ . . y~et rrieadedoi~=.~h~'soutce: ; :Tlie~proaiision=afARM17 S:~.OS' , , , also conflict with

. this requirement. ~ : ' 10) In ARM

17.8.705(1)(r)(1)(D), the State should add at the end ofthis provision "or under subchapters 8,~ 9, or 10." Ifa source is attempting to split up a major modification into several minor modifications; it is probably to avoid permitting under the major soui'cepernutting requirerinents: - : ' . _ . _ . . . -10- 9-02 ; 2 :43PMp ;3033126064 tt 30/ 35 C C p,/C~/L

Ref 8P-AR 

### UNITED STATES ENVIRONMENTAL PROTECTION AGENCY ' REGION B 99918TmsTREET - sL11TE soo

, DENVER, CO 80202-2466- ,foe Gerbase, Chairperson Board of Environmental Review P.O . Box 200901 Helena, Montana 59620-0901 

## APR I

Re: EPA's Review

of Montana's De Minimis Rule and its Proposed Revisions Dear Mr. Gerbase

: We are providing comments on the revisions proposed to the State's "de nunitnis" rule in Sections

. 17.9.'705 and 17.8.733 ofthe Administrative Rules ofMontana (ARNf) . This rule allows existing air pollution sources,to make certain modificationsvvtthout having to obtain a . preconstruction permit. We are concerned that the .rule could allow

sources to .violate both major and minor source preconstruction permitting req*ements, as well as the State Implementation Plan (SIP) : These deficiencies could prevent us fromapproving the revised rule. Following are EPA's recommendations for improving this rule. We discuss our concerns in detail further below . How could the Board of Environmental Review significantly _improve the de minimis rule?

.. You could adopt several changes to.the, de minimis:rule~in this rulemaldng_that would help to~a'ssuY .ethat>sousees'dorn~it~viplate;fede=at :per,nuttici- .- eqiiizemes ~oi~he:~T~PLiwIiei~~aiiiiin~-d~ .' .. . . ., . . . ..,. . . .. . . . . . . . 'iniiiimis exemptic~ns

. `Wliile EPAcannot guarantee that thete chaiiges would~iesotve allof QuT ~ issueg, these changes would greatly strengthen the State's de ~minirnis rule: 1 . In ARM

17.8.705(1)(r)(iv), require the advance,notice to be submitted " it least ten days prior .to ,omtnencing construction on the proposed de minimis change." ~T}he rule should also provide for the State to request further information froma source,*aiid to prevent construction on a change while the State is determining whether ~a change is de minimis. In ARM .17.8.705(lxr)(i)(E), revise the latter halfofthis sentence to :deletethe phrase " . . .unless such reductioins"are made federally enforceable." 3. In ARM

17:8 .705(2), revise the last sentence ofthis provision to read "Conditions in the permit establishing emission limits, or production limits in lieu of emission limits, may not be changed or added under (1)(r) ." 4. Add a statement in ARM 17.8.705(1)(r)(i) that "Sources in nonattainment areas or areas subject to a SIP call that are proposingto increase emissions of the nonattainment/SIP call pollutant are not de miniunis and must meet all preconstruction permitting requirements."10- 9-02 ; 2 :43PM ; . ;3033126064 # 31/ 35

Add a new

section 17.8.705(1)(r)(1)(F) to state that "any construction or changed conditions that would violate a requirement ofthe SIPare prohibited." What are EPA's concerns with the de minimis rule? 'The de minimis rule could allow sources to violate maior sourcepermitting requirements " State reviewofthe de minimis change ten days prior'to souice operation (as provided 'for " " in ARM

17.8 .705(1)(r)(iv)) is too late, in most cases, to meet the requirements ofour = " regulations. An owner or operator of a source-may think a chaiige qualifies as de mini~,i s~ but the-State may find that the change requires a major preconstruction source permit. . Thus, notice ofde minimis modifications must be sent to the State prior to source ' construction. The State must be able to request .,mlore informationor prevent construction on a change while the State is determiningwhefilier a change is de rninimis. Ifa source is proposing a significant emissions increase,and wants credit for emission - decreases that have occurred, that source must obtain a preconstruction pezmit that meets 'all public participation requirements to make these reductions federally~enforceable. In ' " addition, EPA's ma,jor,~ource pei~nnitting regulations require all source-wide credftable creasbs ~ai~d'itecreas~s~thaE liave occur,ied in the lastfive'yea~s'to be include'd iit .' ~i- .In determining the net emissions increase. The pravision.in ARM 17.8.705(1)(r)01(E) does not meet these requirements. Such "netting actions" should not be exempt as de miniunis.

. The de rninitnis exemptions are based on a different comparison of.emissions than under hY L , : :~the ~risourcepetmittina r "e' " uirem ts '".This ~could'result ~in fau "'iiii ' major source permitting rules generally require comparison ofactual,emissions before the potential to emit ofasource befor,e amod~ .catioin to the 1Sotential .t"o emit of-that source after a modification to determine ifthe increase is less t3ian the 15 tpy threshold. The 'fW .A :' .s7i "" :rl . : ~(M P+~ ~

;cti~~

.. . .. . . . "" , "

. . . i ." . ' . . . . . . " ~ . The!de miriiiriis rule coul'd,allowsources to violate the SIP or interfere with aft-aiiament

.

. The third sentence ofARM 17.8 .705(2) allows emission liunits to be changed through an administrative process. . It does not state that such limits can't be changed ifthose liinits . : are specified in the SIP

. In addition, whilethe SIP's control strategy inay"'not specify an emission limit for a source, that source may have been modeled at a certain level of emissions in the attainment demonstration for an area. Ifthe State allows such sources to increase emissions, it couldjeopardize an area's attainment strategy. In the list of exemptions fromde minimis changes in ARM 17.8.705(1)(r)(i)(A)-(E), the State has not exempted changes whichwould violate the SIP . Under the Clean Air Act,10- 9-02 ; 2 :43PM ; ;3033126064 ' tP 32/ 35

0

0 the State can't change SIP emission limits or other requirements, such as compliance determining methods, without adopting a SIP revision and receiving approval fromEPA The 15 tpy, de minimis level is the same as or greater than the major modification significance level for two criteria pollutants - PM 10 and lead. Thus, it is difficult to consider this level as having trivial environmental effect. Under the part 70operating permit program, EPAhas allowed activities with emissions ofup to 5 tpy to be considered 'insignificant. The State must explain why it believes increases as high as 15 tpy are considered to have trivial environmental effect when this is submitted as a SIP revision. .Alternatively, the State could reduce the de minimis threshold in ARM 17.8.705(1)(r)(i) . The de minimis rule could allowsources to violate preconstruction Qermit process requirements. The Board proposes to add a provision to ARM 17.8 .705(2) stating that conditions in the permit establishing emission limits, or production limits in lieu ofemission Iinnmits, may be changed or added ifrequested by the applicant. The State is now broadly expanding the scope ofthis rule, because such changes were prohibited under the previous de mirumis rule. Further, the proposed rule does not prohibit chaftges in emission limits that stem from .Federal or State statutelregulation or fromthe SIP. EPAcannot envision any acceptable circumstance for implementing this provision. Revisions .to an emission or production limit-previously established in a permit must go through a full permit revision, including State, EPA, and public review . . In addition, a source can't violate a SIP emission limit without the State adopting ~a SIP revision and receiving EPAapproval . EPA's regulatjons for mino,rsouree,perniitting grogtams=at40-CFR51,160(b) require the J~ =St~F~tv :~r~veriti'Clie :cotistruction~oi :inodi#ication vf a'source 'ifsi~c}~'sou~e:vvouldcausd. - - or contribute toaviolation ofthe NAAQS or interfere with the .control strategy. Thus; notice of de minimis modifications must be sent to the State prior to source construction. We seixt -comments on these rule revisions- to -the Department ofEnviionniental Quality on February . :12,1999, and we discussed the_ comments in a conference call ~oin March 22, 1999 . This letter summarizes the most significant issues ofour Fel5 :riuary letter. We encourage youto adopt our recornmended revisions to help ensure this rule does not allow modified, sources to violate Federal or State requirements. Ifyou have any questions on this letter, please feel free to contact 'rrie at (303) 312-6005, or contactVicki Stamper ofmy staff at (303) 312- .6445:- -awl10- 9-02 ; 2 :43PM ; ;3033126064 7A 33/ 35

cc: Don Vidrine, Air andWaste Management Bureau, MT DEQ ' Bob Ra.isch, Air and Waste Management Bureau, MT DEQ10- 9-02 ; 2 :43PM ; ;3033126064 # 34/ 35

. 

### .UNITED STATES EhMRONMENTAL PROTECTl~N AGENCY REGION 81 999 i8T" sTREET - SuRE so0 pEKVER, CO 80202-2466 http:llwww

.epa :gov/region08 

## MAY I 9 1999 Ref . 8P-AR Tim Wheeiis, Hearing Officer ' Montana Board ofEnvironmental Review P .O . Box 200901 Helena, Montana 59620-0901 'Dear Mr. Wheelis: Re: Proposed Revisions to Montana's De Minimis Rule - I am writing to fotlowup on myApril- 1 ; 1999 letter to Joe Gerbase;in which.we provided . " comments and

:reconunendations for improvement on the proposed revisions to . Montaiia's de .. . . rninimis rule in Sections 17.8.705 and 17.8 :733 ofthe Administrative Rules"o£Montana (ARM): ~hraugh discussions with you andthe Departmesit-ofEnvironmental Quality (DEQ, we . . , understand thatanost ofour comments. are outside the scope ofthe public notice. In fact, we understand-that the Board'inairrly'has the option to either -adopt the,rule changes as proposed or not adopt any revisions to the de minimis rule . 7n addition, the DEQhas informed u's ofother " . provisions in the State's permitting- reguiations that .may addiess .sorne ~dfotlcs-coiicems :with the de . minimis .rule. Based on these discussions, we,wanf to infonn you:and the BooaFd;of Environmental " , .. ._... . , .

o tlie ~ a. o~~ 'oof e-.re. ~is a: o " ever~` -1 ;U P .~ . ~Ba~r~ .? .~'~-,, ;l:h visio ~to~~~~ '~

. . ,., , .. . . . . . _ _ " ~t' . , .. . -~.. . ~ ~~ . . ~ we'canriot-giuarantee approval of'this rule, as discued below . ~ . . . . ~ , . - : :~" .~ . ~ Y~ . . . . ' . . . ss The proposed revision to the de miniuYris rule that requires advance notification to the DEQ prior to .startup or use ofa de minimis change greatlystrengthetisI-he.pre-existing rule, as the.pre-exi5ti,n

.g rule does not require any advance notification to the -3~EQ . `T1iis change is p 'that theDEQ can " deterzziine whether amodificatiori>a~;a ~sour~eistrulyde minimis necessary so rior to *the source maicingthe change. We stili"believe that this notification should occur at least IO' days prior to commencing construction (or prior to beginning oh-site activities for a change in ,the .method ofoperation), sothat the~State will be able to prevent construction or modification of ` a source tbat"should be subject to majorsource permitting requlcemeiits,°or "that would cause eiv" : : contribute to a violation ofthe National Ambient Air Quality Standards (NAAQS) or the State's control strategy. However, given that you believe this change is outside the scope ofthe public notice, we support the Board adopting this change to the de mirnimis rule as proposed rather than not adopting the revisions at all . While we have been discussing this rule revision with our Headquarters' offices and some ofthe regions, we have not yet been able to determine whether the issue ofthe timing of the notification to DEQwill be an issue for approvability. Neither EPA's regulations or policy address these types of de minimis~exemptions from minor source permitting programs, and we10- 9-02 ; 2 :43PM ; ;3033126064 7p 35% 35

~ need to evaluate the impacts that such exemptions could have on CleanAir Act requirements. In addition, because this de minirnis rule will be a relaxation ofthe existing EPA-approved SIP (which does not provide for any de minimis exemptions from permitting requirements), the DEQ will need to submit information explaining the basis for these exemptions pursuant to 40 CFR 51 .160(e) and demonstrating that compIiance with the NAAQSwill not be compromised under. this rule. Thus, while we support the changes to the de tninimis rule because they strengthen the rule, we cannot at this time guarantee acceptance when this rule is submitted to us as a State Implementation Plan (SIP) revision. Once thecomplete SIP revision package is submitted to us, we will fully consider the State's response to our comments and discuss the rule with our Headquarters Offices. Ifyou have any questions on this letter, please contact me at (303) 312-6005 or Vicki Stamper ofmy staffat (303) 3~12-6445_ . ..

cc: . ~= Montana Board~ofEnvirontnwital Revieww'

Mcintana DEQ,' .

, nt

. >~ . . . .r