[Federal Register Volume 65, Number 235 (Wednesday, December 6, 2000)]
[Notices]
[Pages 76230-76231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31051]



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ENVIRONMENTAL PROTECTION AGENCY

[AD-FRL-6912-5]


Notice of Deficiency for Clean Air Act Operating Permits Program; 
Commonwealth of Kentucky

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of deficiency.

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SUMMARY: Pursuant to its authority at 40 CFR 70.4(i)(1) and 
70.10(b)(1), EPA is publishing this Notice of Deficiency for the 
Commonwealth of Kentucky's Clean Air Act Title V Operating Permits 
Program. The Notice of Deficiency is based upon EPA's finding that the 
Commonwealth's audit privilege and immunity law, KRS 224.01-040, unduly 
restricts Kentucky's ability to adequately administer and enforce the 
criminal enforcement, civil penalty and public access provisions of its 
Title V program, which has previously been granted interim approval 
status. Therefore, Kentucky's Title V program no longer meets minimum 
federal requirements for program approval. Publication of this notice 
is a prerequisite for withdrawal of Kentucky's Title V program 
approval, but does not effect such a withdrawal. Withdrawal of interim 
program approval, if necessary, will be accomplished through subsequent 
rulemaking.

FOR FURTHER INFORMATION CONTACT: Kim Pierce, Title V Program Manager, 
Air, Pesticides & Toxics Management Division, U.S. Environmental 
Protection Agency Region 4, 61 Forsyth Street S.W., Atlanta, Georgia 
30303-8909, (404) 562-9124.

SUPPLEMENTARY INFORMATION:

I. Description of Action

    EPA is publishing a Notice of Deficiency for the Clean Air Act (CAA 
or Act) Title V program of the Commonwealth of Kentucky, which was 
granted interim approval on December 14, 1995. This document is being 
published to satisfy 40 CFR 70.4(i)(1) and 70.10(b)(1), which provide 
that EPA shall publish in the Federal Register a notice of any 
determination that a Title V permitting authority is not adequately 
administering or enforcing a 40 CFR part 70 program. The deficiency 
being noticed relates to Kentucky's audit privilege and immunity law, 
KRS 224.01-040, which places undue restrictions on the Commonwealth's 
ability to adequately administer and enforce its Title V program. 
Because of restrictions contained within Kentucky's audit privilege and 
immunity law, the Natural Resources and Environmental Protection 
Cabinet (Cabinet) may, in some circumstances, be unable to: (1) Seek 
criminal remedies, including fines, (2) recover civil penalties for any 
violation, and (3) make available to the public all materials available 
to the Commonwealth that are relevant to a permit decision. Therefore, 
Kentucky's legal authority no longer meets the requirements of the 
Title V program and 40 CFR part 70.
    Title V of the Act 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. These criteria include requirements that the state permitting 
authority have authority to ``assure compliance by all sources required 
to have a permit under this subchapter with each applicable standard, 
regulation or requirement under this chapter.'' CAA 502(b)(5)(A). In 
addition, the state permitting authority must have authority ``to 
recover civil penalties in a maximum amount of not less than $10,000 
per day for each violation, and provide appropriate criminal 
penalties.'' CAA 502(b)(5)(E). The state permitting authority must also 
have authority ``to make available to the public any permit 
application, compliance plan, permit, and monitoring or compliance 
report under section 7661b(e) of this title, subject to the provisions 
of section 7414(c) of this title.'' CAA 502(b)(8). These requirements 
are echoed in the operating permit program approval regulations 
promulgated at 40 CFR part 70. See 40 CFR 70.4(b)(3)(i), 
70.4(b)(3)(viii), 70.8(h)(2), and 70.11(a)-(b).
    EPA interprets section 502(b)(5)(E) of the CAA to mean that to have 
adequate criminal enforcement authority, criminal fines must be 
recoverable against any person: (1) Who knowingly violates any 
applicable Title V requirement, any Title V permit condition, or any 
Title V fee or filing requirement; (2) against any person who knowingly 
makes any false material statement, representation, or certification in 
any Title V form, notice, or report required by a Title V permit; and 
(3) who knowingly renders inaccurate any required Title V monitoring 
device or method. 40 CFR 70.11(a)(3)(ii) and (iii). The Kentucky audit 
privilege and immunity law provides that an environmental audit report 
shall be privileged and shall not be admissible as evidence in any 
legal action in any civil, criminal, or administrative proceeding. KRS 
224.01-040(3). To meet the requirements of an approvable part 70 
program and the requirements of 40 CFR 70.11(a)(3)(ii) and (iii), 
Kentucky law must allow Cabinet officials an unfettered right to access 
evidence in criminal proceedings and to use evidence of criminal 
conduct contained in an audit to assess criminal fines and remedies. In 
addition, requirements contained in the Kentucky audit privilege and 
immunity law such as the private hearing prior to the use of an audit 
report and the need to establish probable cause with an independent 
source may significantly impede criminal investigations and 
prosecutions and further render Kentucky's criminal enforcement 
authority inadequate (letter dated January 12, 1998 from John H. 
Hankinson, Jr., Regional Administrator, EPA Region 4 to James E. 
Bickford, Secretary, Natural Resources and Environmental Protection 
Cabinet, Commonwealth of Kentucky). Because of these provisions in KRS 
224.01-040, Kentucky no longer meets the requirements for Title V 
program approval. To have an approvable Title V program, any Kentucky 
audit privilege and immunity law must make the privilege outlined in 
the current law inapplicable to criminal proceedings and also must 
provide unfettered access to information in criminal proceedings.
    EPA also interprets section 502(b)(5)(E) of the CAA to mean that to 
have adequate civil penalty authority, Kentucky must retain full 
authority to assess civil penalties for any violation, including 
violations of (1) Any applicable requirement; (2) any permit condition; 
(3) any fee or filing requirement; (4) any duty to allow or carry out 
inspection, entry, or monitoring activities; and (5) any regulation or 
orders issued by the Commonwealth. 40 CFR 70.11(a)(3)(i). Kentucky's 
audit privilege and immunity law provides immunity from all civil 
penalties if certain conditions are met. However, to meet the 
requirements of an approvable part 70 program and the requirements of 
40 CFR 70.11(a)(3)(i), Kentucky must retain the ability to collect 
penalties based on economic gain from noncompliance when it is 
significant (letter dated July 12, 1996 from John H. Hankinson, Jr., 
Regional Administrator, EPA Region 4 to James E. Bickford, Secretary, 
Natural Resources and Environmental

[[Page 76231]]

Protection Cabinet, Commonwealth of Kentucky). The concept of economic 
benefit relates to any economic gain a violator may have realized as a 
result of noncompliance regardless of when these gains occur. Although 
correspondence from Kentucky to EPA addresses the benefit that might 
accrue after discovery and disclosure (letter dated February 12, 1997 
from James E. Bickford, Secretary, Natural Resources and Environmental 
Protection Cabinet, Commonwealth of Kentucky to John H. Hankinson, Jr., 
Regional Administrator, EPA Region 4), the relevant time frame for 
determining economic benefit is the entire period of noncompliance 
including prior to discovery and disclosure (e.g., facility operates 
for two years without installing required air emissions control 
equipment). Because KRS 224.01-040 precludes the Cabinet from recouping 
economic benefit when the conditions of KRS 224.01-040 are met, 
Kentucky lacks the legal authority to recover a penalty for ``every 
violation'' and therefore no longer meets the requirements for Title V 
program approval. In subsequent correspondence between Kentucky and 
EPA, including a letter dated March 27, 1997 from Glenda J. Curry, 
General Counsel, Natural Resources and Environmental Protection 
Cabinet, Commonwealth of Kentucky to John H. Hankinson, Jr., Regional 
Administrator, EPA Region 4; and a letter dated January 12, 1998 from 
John H. Hankinson, Jr., Regional Administrator, EPA Region 4 to James 
E. Bickford, Secretary, Natural Resources and Environmental Protection 
Cabinet, Commonwealth of Kentucky, these issues were discussed and EPA 
urged Kentucky to remedy them. To date, Kentucky has not effected these 
changes. To have an approvable Title V program, any Kentucky audit 
privilege and immunity law must restore full civil penalty authority to 
the Title V program by allowing for the collection of civil penalties 
where violations result in significant economic benefit to the violator 
as a consequence of its noncompliance with Title V.
    EPA interprets section 502(b)(8) of the CAA to mean that to have 
adequate public access authority, Kentucky must assure that the public 
have access to certain information, including copies of the permit 
draft, the application, all relevant supporting materials, including 
those set forth in 40 CFR 70.4(b)(3)(viii), and all other materials 
available to the permitting authority that are relevant to the permit 
decision. Kentucky's audit privilege and immunity law provides that 
documents, communications, data, reports, or other information required 
to be collected, developed, maintained, reported, or made available to 
a regulatory agency pursuant to this law or any other Federal, state or 
local law shall not be privileged. KRS 224.01-040(6). This language 
potentially limits public access to information and renders Kentucky's 
legal authority to ensure public access to certain information 
inadequate. Therefore Kentucky no longer meets the requirements for 
Title V program approval. To meet the requirements of an approvable 
part 70 program and the requirements of 40 CFR 70.4(b)(3)(viii) and 40 
CFR 70.8(h)(2), any Kentucky audit privilege and immunity law must 
provide that documents, communications, data, reports, or other 
information required to be collected, developed, maintained, reported, 
or made available to a regulatory agency or any other person shall not 
be privileged. This issue was discussed in a letter, dated January 12, 
1998 from John H. Hankinson, Jr., Regional Administrator, EPA Region 4 
to James E. Bickford, Secretary, Natural Resources and Environmental 
Protection Cabinet, Commonwealth of Kentucky, and EPA urged Kentucky in 
that letter to correct it. To date, Kentucky has not effected these 
changes. To have an approvable Title V program any Kentucky audit 
privilege and immunity law must provide the public with access to 
information available to the Commonwealth that is relevant to a Title V 
permit decision.
    40 CFR 70.4(k), 70.10(b) and 70.10(c) provide that EPA may withdraw 
a 40 CFR part 70 program approval, in whole or in part, whenever the 
permitting authority's legal authority no longer meets the requirements 
of Part 70 and the permitting authority fails to take corrective 
action. 40 CFR 70.10(b) sets forth the procedures for program 
withdrawal, and requires as a prerequisite to withdrawal that the 
permitting authority be notified of any finding of deficiency by the 
Administrator and that the document be published in the Federal 
Register. Today's document satisfies this requirement and constitutes a 
finding of program deficiency. If Kentucky has not taken significant 
action to assure adequate administration and enforcement of the program 
within 90 days after publication of this notice of deficiency, and has 
not corrected the above-identified deficiencies by June 2, 2001, then 
EPA will take action to withdraw Kentucky's Title V program approval, 
and may apply any of the sanctions specified in section 179(b) of the 
Act. 40 CFR 70.4(k) and 70.10(b)(2)-(4).
    This notice of deficiency is not itself a proposal to withdraw 
Kentucky's Title V program approval. Consistent with 40 CFR 
70.10(b)(2), EPA will wait 90 days to determine whether the 
Commonwealth has taken significant action to correct the above-
identified deficiencies. Consistent with 40 CFR 70.4(i)(1) and 
70.10(b)(4), EPA will wait until June 2, 2001 to determine whether 
Kentucky has corrected the deficiencies. Any proposal to withdraw 
approval of Kentucky's Title V program will occur after June 2, 2001.

II. Administrative Requirements

    As noted above, publication of this Notice of Deficiency does not 
effect a withdrawal of the Commonwealth of Kentucky's Title V program. 
Program withdrawal, if necessary, will be accomplished through a 
subsequent notice-and-comment rulemaking. This action does not: (1) 
Impose any enforceable duty or contain any unfunded mandate as 
described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-
4); (2) require prior consultation with State, local, and tribal 
government officials as specified by Executive Order 12875 (58 FR 
58093, October 28, 1993) or Executive Order 13084 (63 FR 27655, May 10, 
1998); or (3) involve special consideration of environmental justice 
related issues as required by Executive Order 12898 (59 FR 7629, 
February 16, 1994). The Office of Management and Budget has exempted 
this action from review under Executive Order 12866 (58 FR 51735, 
October 4, 1993). Because this action is not subject to notice-and-
comment requirements under the Administrative Procedure Act or any 
other statute, it is not subject to the regulatory flexibility 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
    Furthermore, this action does not contain any information 
collections subject to Office of Management and Budget approval under 
the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). And because this 
action is a Notice of Deficiency and does not constitute a rule, 
Executive Order 13045: Protection of Children from Environmental Health 
Risks and Safety Risks does not apply. For the same reason, Executive 
Order 13132: Federalism and section 112(d) of the National Technology 
Transfer Advancement Act of 1995 do not apply.

    Dated: November 29, 2000.
A. Stanley Meiburg,
Acting Regional Administrator, Region 4.
[FR Doc. 00-31051 Filed 12-05-00; 8:45 am]
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