[Federal Register Volume 62, Number 7 (Friday, January 10, 1997)]
[Rules and Regulations]
[Pages 1387-1399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-643]


=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[MI001; FRL-5674-1]


Clean Air Act Final Interim Approval of the Operating Permits 
Program; Michigan

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final interim approval.

-----------------------------------------------------------------------

SUMMARY: The EPA is promulgating interim approval of the operating 
permits program submitted by the State of Michigan for the purpose of 
complying with Federal requirements for an approvable State program to 
issue operating permits to all major stationary sources, and to certain 
other sources.

EFFECTIVE DATE: February 10, 1997.

ADDRESSES: Copies of the State's submittal and other supporting 
information used in developing the final interim approval are available 
for inspection during normal business hours at the following location: 
EPA Region 5, Air and Radiation Division (AR-18J), 77 West Jackson 
Boulevard, Chicago, Illinois 60604.

FOR FURTHER INFORMATION CONTACT: Beth Valenziano, Permits and Grants 
Section (AR-18J), EPA, 77 West Jackson Boulevard, Chicago, Illinois 
60604, (312) 886-2703. E-mail address: <a href="/cdn-cgi/l/email-protection#e89e89848d869281898687c68a8d9c80a88d988985898184c68d9889c68f879e"><span class="__cf_email__" data-cfemail="5f293e333a3125363e3130713d3a2b371f3a2f3e323e3633713a2f3e71383029">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

    Title V of the Clean Air Act Amendments of 1990 (title V), and the 
implementing regulations at 40 Code of Federal Regulations (CFR) part 
70 require that States develop and submit operating permits programs to 
EPA by November 15, 1993, and that EPA act to approve or disapprove 
each program within 1 year after receiving the submittal. The EPA's 
program review occurs pursuant to section 502 of the Clean Air Act 
(Act) and the part 70 regulations, which together outline criteria for 
approval or disapproval. Where a program substantially, but not fully, 
meets the requirements of part 70, EPA may grant the program interim 
approval for a period of up to 2 years. If EPA has not fully approved a 
program by 2 years after the November 15, 1993 date, or by the 
expiration of the interim approval period, it must establish and 
implement a Federal program.
    On June 24, 1996, EPA proposed interim approval of the operating 
permits program for the State of Michigan. See 61 FR 32391. The EPA 
received public comment from five organizations on the proposal and 
compiled a Technical Support Document (TSD) responding to the comments 
and briefly describing and clarifying aspects of the operating permits 
program. In this document EPA is taking final action to promulgate 
interim approval of the operating permits program for the State of 
Michigan.

II. Final Action and Implications

A. Analysis of State Submission and Response to Public Comments

    The EPA received comments on a total of 12 topics from five 
organizations. The EPA's response to these comments as developed for 
the response to comments TSD is included in this section.
1. Indian Country
    The EPA proposed that the interim approval of Michigan's operating 
permits program shall not extend to any sources of air pollution on 
Indian lands, including lands within the exterior boundaries of any 
Indian reservation in the State of Michigan. MDEQ commented that 
Michigan's part 70 authority should extend to some lands within the 
exterior boundaries of Indian reservations, and identifies a specific

[[Page 1388]]

source on an Indian reservation that the State believes is within its 
jurisdiction. MDEQ states that it intends to develop legal arguments to 
support its determination that lands within the exterior boundaries of 
reservations that have been sold for non-tribal uses are within the 
State's jurisdiction. MDEQ also states that it expects such sources to 
submit operating permit applications in accordance with the State 
regulations.
    Because Michigan has not demonstrated the legal authority to 
regulate sources in Indian country, including sources on non-Indian 
owned fee lands within the exterior boundaries of Indian reservations, 
the final interim approval of Michigan's part 70 program does not 
extend to such sources. However, EPA will carefully consider any 
evaluation Michigan submits in the future regarding State authority 
over such sources. The EPA retains the authority to issue part 71 
permits to all sources in Indian country until such time as EPA 
approves a part 70 program. Part 71 application submittal deadlines for 
Indian country are established in 40 CFR 71.4(b) and 40 CFR 71.5(a)(1), 
and will be no later than November 15, 1998. Any sources located in 
Indian country required to submit applications earlier than this date 
will be notified in accordance with the requirements of part 71. The 
EPA takes no position on the State seeking voluntary compliance with 
State permitting requirements in Indian country.
2. Delegation of State Program to Local Governments
    The proposed interim approval of Michigan's part 70 program 
confirmed the State's authority to delegate the program to certain 
county governments, such as Wayne County. MDEQ asked EPA to clarify 
whether a delegation would require a part 70 program revision, and what 
the timing and content of any required program revision would be.
    Title V of the Act and the part 70 regulations specify the elements 
of a State operating permits program. In addition to the criteria for 
the permits themselves, these elements address various program 
infrastructure and administration issues. Examples include the adequacy 
of the agency's legal authorities and staffing. Thus, the delegation of 
the program authorities to another agency would by its nature entail 
revision of the State's part 70 program.
    40 CFR 70.4(i) requires that program revisions be approved by EPA 
before they become finally effective. However, EPA is developing a 
program revision process that will meet the requirements of 40 CFR 
70.4(i) while also providing continuity as States modify and update 
their programs. Although the details of this process have yet to be 
established, this process will focus on ongoing cooperation between the 
State and EPA, with real-time evaluation of program revision efforts. 
The EPA will work with Michigan as this process is developed so that 
any program revision, including any delegation of the State program to 
a local agency, can take advantage of this approach.
    The content of a revised part 70 program submittal to EPA would 
depend on the nature and scope of the actual delegation. The 
information provided to EPA should address the changes and additions 
that the delegation makes to the program that has already been approved 
by EPA. The State should review the program submittal requirements in 
40 CFR 70.4 and determine what elements are necessary to address the 
delegation. For example, the submittal of State regulations would not 
be necessary if they are not revised; however, the adoption of any 
local regulations necessary for the delegation should be included in 
the submittal. Similarly, a revised legal opinion from the Attorney 
General would likely be needed to verify that the local agency has the 
authority to carry out its part 70 program responsibilities established 
by the delegation. The EPA will provide Michigan additional guidance as 
necessary to address the program revision requirements for any 
particular State delegation to a local agency.
3. Definition of Potential to Emit
    As a condition of full approval, EPA proposed that Michigan must 
revise its definition of ``potential to emit'' to require that limits 
on potential to emit be federally enforceable. Two commenters noted 
that a recent court case (Clean Air Implementation Project v. EPA, no. 
96-1224 (D.C. Cir. June 28, 1996)) vacated the federally enforceable 
requirement from the 40 CFR 70.2 definition of potential to emit. Both 
commenters stated that this issue should be removed from Michigan's 
list of interim approval issues. The EPA agrees with the commenters, 
and has removed this issue as a condition of full approval. The EPA 
intends to develop a rulemaking to address the enforceability 
requirements on potential to emit limits for the title V program, the 
New Source Review program, and the section 112 toxics program.
4. Research and Development (R&D) Activities
    In the proposed interim approval of Michigan's part 70 program, EPA 
acknowledged the State's regulatory provision that allows R&D 
activities on the same contiguous site as manufacturing activities to 
be treated as a separate source for purposes of determining operating 
permit program applicability. Although EPA believes that R&D should be 
treated as having its own industrial grouping for purposes of 
determining major source status, EPA stated in the Michigan proposal 
that separate treatment will not exempt R&D facilities in all cases. 
This is because some R&D activities may be individually major, or 
because they may be a support facility that makes significant 
contributions to the product of a collocated major facility. One 
commenter noted the R&D discussions in the part 70 supplemental 
proposal preamble (60 FR 45556-45558), and asked EPA to clarify whether 
EPA maintains its position in the supplemental proposal regarding the 
applicability of the support facility test in the R&D context.
    As discussed in the supplemental proposal preamble, EPA believes 
that R&D activities should not generally be considered support 
facilities to collocated industrial facilities, since the support 
provided is directed towards development of new processes or products 
and not to current production. However, if an activity does contribute 
to the ongoing product produced or service rendered at a facility in 
more than a de minimis manner, those activities should be considered 
part of the source for applicability purposes.
5. Exemptions From Major Source Determinations
    The EPA proposed as a condition of full approval that Michigan must 
remove its exemptions of certain small activities from determining 
major source status. Two commenters objected to this interim approval 
issue. One commenter stated that there is no express regulatory 
requirement mandating that insignificant activities be considered in 
major source determinations under title V. The commenter also believes 
the inclusion of such activities is inconsistent with EPA's July 10, 
1995 guidance memorandum entitled ``White Paper for Streamlined 
Development of Part 70 Permit Applications''.
    Neither the applicability requirements in 40 CFR 70.3 nor the 
``major source'' definition in 40 CFR 70.2 provide any exemptions for 
insignificant activities in determining major source status. The

[[Page 1389]]

concept of insignificant activities originates under 40 CFR 70.5(c), 
and only establishes reduced title V permit application requirements 
for activities defined as insignificant. 40 CFR 70.5(c) does not modify 
the title V applicability provisions, and specifically states that ``an 
application may not omit information needed to determine the 
applicability of, or to impose, any applicable requirement.'' In 
addition, the White Paper provides guidance on the permit application 
requirements for insignificant activities; it does not address major 
source applicability considerations.
    One commenter expressed concern that counting insignificant 
activities in major source determinations would be very burdensome. The 
commenter was also concerned that the use of engineering judgement in 
determining emissions from insignificant activities does not provide 
sources sufficient certainty and protection from lawsuits. The EPA does 
not agree that the calculation of emissions from insignificant 
activities need be a burdensome and resource intensive task. As 
discussed in the proposed interim approval of Michigan's part 70 
program, EPA expects that such emissions would only be examined in 
those cases where the insignificant activity emissions might impact 
whether the source is major. In addition, sources and permitting 
authorities have significant discretion in determining the rigor of 
analysis necessary for calculating insignificant activity emissions. 
Such analysis may not even need to be performed on a source by source 
basis, and could instead establish a general emission level for a 
particular insignificant activity that can be used for all sources. For 
example, a permitting authority could determine that sources may assume 
1,000 pounds of emissions from a particular insignificant activity. 
With respect to the commenter's concerns about protection from 
lawsuits, EPA sees no distinction between the emissions calculations 
for significant activities and insignificant activities. For example, a 
source with a potential to emit that is just under a title V 
applicability threshold should do what is necessary to ensure that the 
source indeed is not subject to the operating permits program, as 
additional emissions from either significant or insignificant 
activities could make the source major.
    Another commenter stated that Michigan's rule is consistent with 
the actual application of major source determinations made throughout 
the country, and commented that other States are not including 
insignificant activities in determining applicability. The commenter 
also stated that there is no EPA guidance for determining emissions 
from such activities. The EPA is unaware of any other approved part 70 
program that has regulatory exclusions for insignificant activities in 
determining a source's potential to emit. If EPA determines that a 
State's part 70 program is not being administered in accordance with 
part 70, EPA has the authority under 40 CFR 70.10 to require the State 
to correct the deficiencies. In addition, EPA has the authority to 
pursue enforcement actions against sources for violations of the Act, 
including the requirement to obtain a title V permit. With respect to 
the lack of EPA guidance for determining insignificant activity 
emissions, EPA generally issues emissions factor guidance on a source 
category basis. The EPA will consider developing guidance for any 
particular insignificant activities of concern that are not addressed 
in current guidance.
6. Certification of Compliance
    The EPA proposed a condition for full approval requiring Michigan 
to adopt statutory or regulatory authority that ensures permit 
applications include a certification of compliance and a statement of 
the methods used for determining compliance. MDEQ commented that it 
will work with EPA to resolve this issue during the interim approval 
period. The EPA also agrees to work with MDEQ to resolve this issue, 
and would like to clarify that this is a condition of full approval 
because it is not clear that the underlying State requirements legally 
obligate sources to include the compliance certification requirements 
in their permit applications.<SUP>1
---------------------------------------------------------------------------

    \1\ Despite this regulatory deficiency, the State application 
forms do include the compliance certification requirements.
---------------------------------------------------------------------------

    Another commenter commented that Michigan's program does require 
applications to include compliance certifications, and states that this 
issue should be deleted. The following analysis addresses the 
commenter's arguments.
    40 CFR 70.5(c)(9)(i) and (iv) require permit applications to 
include a statement of compliance for all applicable requirements. This 
statement must be certified by a responsible official in accordance 
with 40 CFR 70.5(d). Although Michigan's statute and regulations 
require applications to include a certification by a responsible 
official, they do not require applications to include a certified 
statement of compliance for all applicable requirements.
    40 CFR 70.5(c)(9)(ii) requires the compliance certification to 
include a statement of the methods used for determining compliance. 
Although section 324.5507(1)(f)(ix) of Michigan's Natural Resources and 
Environmental Protection Act (NREPA) requires applications to include 
proposed compliance method information, the State provision does not 
associate this compliance method information to compliance 
certification requirements. The compliance certification provisions 
must therefore include a statement of the methods used for determining 
compliance. Of course, this does not preclude Michigan from expanding 
the scope of its current application requirement to serve this purpose 
if the State provides a means by which a source can certify that it 
made its compliance determination using its proposed compliance 
determination method.
    40 CFR 70.5(c)(9)(iii) requires applications to include a schedule 
for submission of compliance certifications at least annually or more 
frequently if specified by the underlying requirement or the permitting 
authority. The EPA agrees that section 324.5507(1)(d) of NREPA 
satisfies this requirement and is clarifying in the final condition of 
full approval that this provision is not an issue.
7. Definition of Emergency
    The EPA proposed as a condition of full approval that Michigan 
revise its definition of emergency in section 324.5527(1) of NREPA to 
ensure that the State's definition is not broader than that provided by 
40 CFR 70.6(g)(1). Two commenters disagreed with this condition of full 
approval. Both commenters stated that the Michigan definition is not 
broader, and only clarifies what could be considered ``sudden and 
reasonably unforeseeable events''. The EPA has reevaluated this issue 
and agrees with the commenters that the State definition of emergency 
meets the requirements of 40 CFR 70.6(g).
    The additional language in the State definition of emergency 
includes the following as events that could be considered an emergency: 
``war, strike, riot, catastrophe, or other condition as to which 
negligence on the part of the person was not the proximate cause''. 
These situations are eligible for the affirmative defense only if they 
meet all the provisions of 40 CFR 70.6(g). Specifically, such events 
must arise from sudden and reasonably unforeseeable events beyond the 
control

[[Page 1390]]

of the source; require immediate corrective action to restore normal 
operation; and not include noncompliance to the extent caused by 
improperly designed equipment, lack of preventative maintenance, 
careless or improper operation, or operator error. Further, the 
emergency defense only applies to exceedances of technology based 
emission limitations that are due to unavoidable increases in emissions 
attributable to the emergency. These provisions are important 
qualifications, because the specific State examples would not qualify 
as emergencies in all situations. For example, exceedances at a source 
due to increased production would not qualify as an emergency even if 
the increase is due to additional demand caused by a strike at another 
source. Similarly, an exceedance at the source involved in a strike may 
not qualify as an emergency if the strike was not reasonably 
unforeseeable, or if the exceedance was not an unavoidable increase 
attributable to the strike. The EPA believes that the additional 
Michigan events are properly qualified because the State definition 
includes all of the requirements of 40 CFR 70.6(g). Therefore, EPA is 
removing this issue as a condition of full approval.
8. Source Category Limited Interim Approval
    In its program submittal, the State of Michigan requested source 
category limited (SCL) interim approval of its 4 year permit issuance 
schedule. In the proposed interim approval notice for Michigan, EPA 
acknowledged Michigan's 4 year schedule as part of the State's permit 
fee sufficiency demonstration. However, EPA could only propose in the 
alternative the State's request for SCL interim approval because 
Michigan's regulations currently require a 3 year permit issuance 
schedule. MDEQ requested that EPA clarify the State's obligations for 
submitting a program revision once the 4 year schedule is incorporated 
into the State's regulations.
    The EPA proposed SCL interim approval in the alternative so that a 
program revision would have been unnecessary if Michigan had been able 
to finalize and submit its rule revisions prior to this final action on 
Michigan's part 70 program. Because the State has not yet submitted the 
regulatory revision that would change the State permit issuance 
schedule from 3 to 4 years, this final action on Michigan's part 70 
program fully approves the 3 year schedule contained in the current 
State regulations.
    Once Michigan finalizes its 4 year issuance schedule, the State 
will be obligated to submit a part 70 program revision to EPA for SCL 
interim approval. Although 40 CFR 70.4(i) requires that program 
revisions be approved by EPA before they become finally effective, EPA 
expects that it will be able to quickly process Michigan's request for 
SCL interim approval. If the final 4 year schedule is identical to the 
draft rule that EPA proposed for SCL interim approval, EPA will be able 
to finalize SCL interim approval without having to repropose the 
action. If there are changes to the schedule, EPA would still be able 
to expedite the SCL interim approval through a direct final action. As 
discussed above in section II.A.2., EPA is also developing a program 
revision process that may help expedite the program revision process 
for this situation.
9. Startup, Shutdown, and Malfunction (SSM) Provisions
    The EPA proposed as a condition of full approval that Michigan 
revise its SSM provisions to be consistent with the emergency defense 
provisions in 40 CFR 70.6(g), or adopt an enforcement discretion 
approach consistent with the Act. Two commenters expressed concern with 
this interim approval issue. MDEQ disagreed that the SSM rules affect 
the State's ability to enforce the requirements of title V, but agreed 
to work with EPA to address the issue during the interim approval 
period. The EPA believes it is important that MDEQ and EPA work 
together during the interim approval period, and commits to working 
with MDEQ to address this and other interim approval issues.
    Another commenter stated that EPA's consideration of Michigan's SSM 
rules is too inflexible, as the SSM rules provide an affirmative 
defense only in narrowly defined and highly prescriptive circumstances. 
The commenter also believes that EPA overlooked the potential for 
environmental benefits resulting from the SSM requirements to use good 
air pollution control practices and implement preventative maintenance 
and malfunction abatement plans. Irrespective of the control and work 
practice provisions that Michigan's SSM rules require for sources to be 
eligible for the affirmative defense, EPA has no authority under its 
part 70 rules to approve an affirmative defense that is less stringent 
than that contained in 40 CFR 70.6(g). The commenter extolled the 
benefits of the safeguards contained in Michigan's SSM rules, but did 
not offer anything to counter EPA's finding that these rules are 
broader than 40 CFR 70.6(g) and are therefore inconsistent with the 
federal rule. As discussed in the Michigan proposal, however, EPA could 
also consider an enforcement discretion approach as a means for 
resolving this interim approval issue. Such an approach would allow 
Michigan to retain the specific SSM provisions that may provide 
environmental benefit.
    The EPA would also like to clarify that the Michigan SSM 
regulations do not affect EPA's enforcement capabilities under the Act 
during the two year interim approval period. The EPA reserves the right 
to pursue enforcement of applicable requirements, in accordance with 
EPA's enforcement discretion policy, notwithstanding the existence of 
the State's SSM regulations. Similarly, the Michigan rules do not 
affect citizen suit rights under section 304 of the Act. The interim 
approval of Michigan's part 70 program establishes the mechanism for 
the State to issue federally enforceable part 70 permits; EPA will 
continue to implement the operating permits program in accordance with 
Title V of the Act and the implementing Federal regulations.
10. Environmental Audit Privilege and Immunity Law
    The EPA proposed several conditions for full approval based on the 
enforcement deficiencies created by Michigan's Environmental Audit 
Privilege and Immunity Law (audit law), part 148 of NREPA. Four 
commenters disagreed with EPA's position that Michigan's audit law 
adversely affects Michigan's ability to comply with the enforcement 
requirements of part 70.<SUP>2
---------------------------------------------------------------------------

    \2\ One commenter also submitted comments on a fifth commenter's 
behalf.
---------------------------------------------------------------------------

    MDEQ generally commented that Michigan's law does not affect the 
State's ability to enforce the requirements of title V. The Michigan 
State Senator sponsoring the bill that became Michigan's audit law also 
commented that the law does not adversely affect Michigan's authority 
to assure compliance with and enforce permits. Both commenters stated 
that regulated entities remain fully liable for any damages they cause, 
and self reporting data, agency inspections, and other information 
required by law is not privileged and remains available to the State 
and the public. However, both commenters supported the interim approval 
of Michigan's part 70 program, as it will allow the program to be 
implemented while EPA and MDEQ resolve these issues during the interim 
approval period.
    For the reasons outlined in the Michigan proposal and as further 
discussed below, EPA remains

[[Page 1391]]

concerned that Michigan's audit law affects the State's ability to meet 
the enforcement requirements of part 70. The EPA recognizes that 
Michigan may have a different interpretation of the provisions in the 
audit law, and has provided as an alternative condition for full 
approval that the State need only submit a revised title V Attorney 
General's opinion that addresses EPA's concerns and certifies that 
Michigan's operating permits program meets the part 70 requirements in 
light of the audit law. The EPA believes that a new Attorney General's 
opinion would be appropriate, as the Attorney General's opinion in the 
original program submittal to EPA was developed prior to the passage of 
the State audit law. The EPA appreciates Michigan's willingness to work 
with EPA during the interim approval period to resolve these issues.
    The EPA also received extensive adverse comments from two law firms 
that represent nationwide trade organizations and industries. The 
following subsections address the issues raised by these 
commenters.<SUP>3
---------------------------------------------------------------------------

    \3\ These commenters also commented on various EPA documents, 
including the memorandum entitled ``Effect of Audit Immunity/
Privilege Laws on States' Ability to Enforce Title V Requirements'', 
April 5, 1996, and the policy entitled ``Incentives for Self-
Policing: Discovery, Disclosure, Correction and Prevention of 
Violations'', December 22, 1995. These comments are addressed to the 
extent that they are relevant to EPA's action on Michigan's title V 
operating permits program.
---------------------------------------------------------------------------

    a. Effect of the Michigan audit law on Michigan's enforcement 
authority.
    The commenters stated that nothing in the Act or part 70 prohibits 
a State from establishing a new protection for audits, expanding 
existing privileges, providing an additional affirmative defense, or 
determining that criminal or civil prosecution is inappropriate in 
certain defined situations, such as those specified in the Michigan 
audit law.
    The EPA disagrees. Section 502(b)(5)(E) of the Act lays out the 
minimum enforcement authorities which Congress required a State to have 
in order to secure Federal approval to implement and enforce a title V 
operating permits program. That section requires, as a condition of 
Federal approval, that a State have adequate authority to issue permits 
and assure compliance; to terminate or revoke such permits for cause; 
and to enforce permits, permit fee requirements and the requirement to 
obtain a permit, including authority to recover civil penalties in a 
maximum amount of not less than $10,000 per day for each violation and 
to provide appropriate criminal penalties. The part 70 implementing 
regulations, at 40 CFR 70.11, elaborate upon those authorities. Part 70 
requires a State to have authority to issue emergency orders and seek 
injunctive relief (40 CFR 70.11(a) (1) and (2)), to assess civil and 
criminal penalties in a maximum amount of not less than $10,000 per day 
per violation (40 CFR 70.11(a)(3)), and to assess appropriate penalties 
(40 CFR 70.11(c)). Although neither title V nor part 70 expressly 
prohibits State audit privilege and/or immunity laws, the analysis in 
the proposed interim approval of Michigan's program shows how EPA 
believes the Michigan audit law interferes with Michigan's general 
enforcement authority and its civil penalty authority as required in 
title V and the part 70 implementing regulations so as to preclude full 
approval of Michigan's operating permits program.<SUP>4 For example, as 
EPA explained in the Michigan proposal, the immunity provisions of the 
Michigan audit law alter and in fact eliminate the State's authority to 
recover any civil penalties under the circumstances identified in the 
State law. See 61 FR 32394-32395. Moreover, the privilege provisions of 
the Michigan audit law prevent the State from obtaining potentially 
important information on whether a civil or criminal violation occurred 
or has been corrected. If the State, by virtue of such laws, surrenders 
its ability to thoroughly investigate potential violations or its 
discretion to assess appropriate penalties in the face of violations, 
then the State's fundamental enforcement authority is significantly 
compromised. The EPA believes that this is the case with the Michigan 
audit law.
---------------------------------------------------------------------------

    \4\ In addition, part 70 does not provide for any affirmative 
defenses beyond that provided by the emergency defense provisions in 
40 CFR 70.6(g). See subpart II.A.9. of this notice regarding 
Michigan's affirmative defense for startups, shutdowns, and 
malfunctions.
---------------------------------------------------------------------------

    In a similar vein, the commenters argue that the State of Michigan 
has the general authorities enumerated in section 502(b)(5)(E) and 40 
CFR 70.11 to enforce permits, permit fee requirements and the 
requirement to obtain a permit and to recover civil and criminal 
penalties in a maximum amount of not less than $10,000 per day of 
violation, and that nothing in the text of section 502(b)(5)(E) of the 
Act or the part 70 regulations authorizes EPA to consider the effect of 
State laws of general applicability on a State's title V civil and 
criminal enforcement authorities. The commenters further argue that the 
logical corollary of EPA's proposed action with respect to the Michigan 
audit law is that every State procedural and evidentiary rule must be 
evaluated and amended whenever EPA believes that it could in some 
fashion, directly or indirectly, interfere with environmental 
enforcement.
    Laws of general applicability are an appropriate subject for EPA 
review as is evident from the language of the part 70 regulations 
themselves. The regulations require that a State applying for a title V 
operating permits program include copies of ``all applicable State or 
local statutes and regulations including those governing State 
administrative procedures that either authorize the part 70 program or 
restrict its implementation.'' 40 CFR 70.4(b)(2) (emphasis added). The 
regulations also require a legal opinion from the State Attorney 
General asserting that the laws of the State provide adequate authority 
to carry out ``all aspects of the program.'' 40 CFR 70.4(b)(3). It is 
certainly EPA's expectation that, in issuing such a legal opinion, the 
Attorney General is certifying that no State laws, even laws of general 
applicability or laws of evidence, interfere with the State's authority 
to administer and enforce the title V program. See 59 FR 47105, 47108 
(September 14, 1994) (requiring Oregon to revise or clarify meaning of 
criminal statute appearing to limit criminal liability of corporations 
as a condition of full title V approval); 59 FR 61820, 61825 (December 
2, 1994) (accepting Oregon Attorney General's opinion regarding effect 
of statute).<SUP>5
---------------------------------------------------------------------------

    \5\ One commenter argues that section 116 of the Act bars EPA 
from seeking to preempt State audit privilege and/or immunity laws. 
Section 116 states that, subject to limited exceptions, nothing in 
the Act shall preclude or deny the right of any State to adopt or 
enforce emissions standards or limitations or requirements 
respecting the control or abatement of air pollution ``except where 
such emission standard or limitation is less stringent than required 
by the Clean Air Act.'' Such an interpretation would mean that EPA 
had no authority to disapprove any State enforcement provisions as a 
condition of title V approval. Section 502(b)(5)(E), which requires 
EPA to promulgate minimum enforcement authorities required for 
approval of a State title V program, clearly belies such an 
argument.
---------------------------------------------------------------------------

    Both commenters also argued that the Michigan audit law does not 
interfere with the enforcement requirements of title V because it is 
qualified in a number of important respects. The commenters note that 
the Michigan audit law does not offer protection from disclosure for 
information obtained by observation, sampling, or monitoring by any 
regulatory agency; machinery and equipment maintenance records; 
information legally obtained independent of the environmental audit; 
and information required by law to be collected, developed, reported or 
otherwise made available to a government agency. See section

[[Page 1392]]

14802(3), part 148 of NREPA. The commenters state that the privilege is 
further limited because it only applies to an environmental audit 
report as defined in the Michigan audit law. In addition, the 
commenters state that the immunity provisions in the Michigan audit law 
are limited by the provisions in section 14809 of NREPA, which, among 
other things, require the source to promptly disclose violations, make 
a good faith effort to achieve compliance, pursue compliance with due 
diligence, and promptly correct the noncompliance.
    The EPA noted in the proposed interim approval of Michigan's 
program that, although the Michigan audit law appears to contain 
several exemptions from the otherwise broad scope of the privilege 
protection, EPA is unable to determine the extent to which the 
exemptions limit the application of the privilege. In other words, the 
extent to which evidence of violations of title V permits and permit 
program requirements would be exempted from the privilege provisions of 
the Michigan audit law is not clear. For example, the Michigan audit 
law appears to provide privilege protection for a source that 
determines through an environmental audit that it is operating without 
a title V permit. This violation appears eligible for the privilege 
because part 70 does not have any source notification requirements 
prior to the submittal of the permit application that would exclude 
this violation from the privilege provisions. The EPA does not agree 
with the commenters' assertion that the privilege is further limited by 
the definition of an environmental audit report. The Michigan audit law 
broadly defines such a report to include any documents created as a 
result of an environmental audit, such as supporting information and 
implementation plans that address correcting violations and improving 
current compliance. In addition, the Michigan audit law's exemptions 
from privilege protection do not appear to apply to the penalty 
immunity in section 14809, part 148 of NREPA. Therefore, it appears 
that any violation discovered during an environmental audit, regardless 
of whether it is eligible for the privilege, is eligible for the 
immunity as provided in section 14809. Despite the limitations on the 
scope of the State's immunity provisions imposed by the requirement 
that disclosure be ``voluntary'', EPA believes that application of the 
immunity provisions is so broad that it potentially could apply to any 
title V violation. Because the privilege and immunity exemptions could 
apply to title V requirements, EPA must therefore infer that there 
could be violations at a title V source discovered through an 
environmental audit that would be entitled to the privilege or immunity 
provided by the Michigan audit law. The EPA again notes that Michigan 
may have a different interpretation of its audit law, in which case an 
Attorney General's opinion may help to resolve these interim approval 
issues.
    The commenters also take issue with EPA's interpretation of the 
title V and part 70 requirements for enforcement authority, as 
evidenced in the April 5, 1996 memorandum entitled ``Effect of Audit 
Immunity/Privilege Laws on States' Ability to Enforce Title V 
Requirements'' (hereinafter, the ``April 5 Title V Memorandum'') and 
the proposed interim approval of Michigan's part 70 program. The 
commenters argue that EPA's interpretation and application of the title 
V enforcement requirements improperly interferes with the States' role 
as independent sovereigns, improperly divests States of their primary 
responsibility for implementing and enforcing the Act, and conflicts 
with the Clinton Administration's stated policy to allow States to 
experiment with alternative approaches to achieve environmental 
protection. The commenters further argue that the determination of the 
Michigan legislature that criminal or civil penalties are inappropriate 
under the circumstances set forth in the Michigan audit law is within 
the statutory boundaries and flexibility provided by the Act. The 
commenters continue that the immunity provisions of the Michigan audit 
law reflect the Michigan legislature's judgment as to the 
``appropriate'' penalty for companies that voluntarily disclose and 
correct instances of environmental noncompliance and reflect a 
reasonable allocation of the State's enforcement resources.
    The EPA agrees that, in enacting the Act, Congress believed that 
States and local governments should have the primary responsibility for 
controlling air pollution at its source. See Section 101(a)(3) of the 
Act. The EPA also agrees with the commenters that the States are to be 
given broad flexibility to select alternative means to achieve the 
minimum Federal requirements established in the Act by Congress and by 
EPA in the part 70 regulations, and fully supports State 
experimentation to achieve greater compliance with environmental laws. 
Such flexibility and experimentation, however, must be, as the 
commenters acknowledge, within the bounds of the statutes enacted by 
Congress and the implementing regulations promulgated by EPA. It cannot 
cancel out the requirement that States must meet some minimum Federal 
requirements as a condition of Federal approval of their programs.
    In the case of the operating permits program, those minimum Federal 
requirements are set forth in title V and the part 70 regulations. It 
is these requirements that EPA is insisting that the State of Michigan 
meet as a condition of full approval of its title V program. In short, 
EPA does not believe that the Michigan title V program is within the 
statutory boundaries established by Congress or the flexibility 
provided by the Act because the Michigan audit law would limit the 
enforcement authority Congress and EPA required States to have as a 
condition of Federal approval.
    Moreover, the commenters' argument that the Michigan audit law 
governs areas of law traditionally committed to States in their role as 
independent sovereigns--if taken to its logical conclusion--would mean 
that a State could not be required to have any civil or criminal 
penalty authority to get approval for a title V program. It is an 
argument that goes to the validity of section 502(b)(5)(E) and 40 CFR 
70.11 themselves and therefore is untimely in this context. As stated 
above, Congress through title V, and EPA through the part 70 
implementing regulations, required States to satisfy certain minimum 
requirements for enforcement authority as a condition of Federal 
approval of a Clean Air Act operating permits program. By conditioning 
full approval of the Michigan title V program on changes to the 
Michigan audit law or a demonstration by the State satisfactory to EPA 
that the Michigan audit law does not interfere with the enforcement 
requirements of title V, EPA is simply seeking to assure that Michigan 
has the required enforcement authorities before receiving Federal 
approval of its program. Cf. Commonwealth of Virginia v. Browner, 80 
F.3d 869, 880 (4th Cir. 1996) (in rejecting Virginia's argument that 
requiring the State to change its judicial standing rules as a 
condition of title V approval violated State's sovereignty, the Court 
stated: ``Even assuming arguendo the accuracy of Virginia's assertion 
that its standing rules are within the core of its sovereignty, we find 
no constitutional violation because federal law 'may, indeed, be 
designed to induce state action in areas that would otherwise be beyond 
Congress' regulatory authority.''' citing FERC v. Mississippi, 456 U.S. 
742, 766 (1982)).

[[Page 1393]]

    The commenters also assert that EPA's use of its title V program 
approval authority to ``force'' States to modify their audit privilege 
and/or immunity legislation is contrary to Congress' general expression 
of intent against the automatic use of audit reports for enforcement of 
the Act, as expressed in the Joint Explanatory Statement of the 
Conference Committee Report for the 1990 Amendments. S. Conf. Rep. 101-
952, 101st Cong. 2d Sess. 335, 348 (Oct. 26, 1990), reprinted in 
Legislative History at 941-42, 955, 1798. The commenters further assert 
that Michigan's decision to provide qualified audit immunity is 
consistent with that Congressional intent.
    As an initial matter, EPA disagrees that it is using the title V 
approval process to ``force'' States to modify their audit legislation. 
Instead, as stated above, EPA is simply analyzing to what extent the 
audit privilege and/or immunity laws of a particular State compromise 
the enforcement authorities required by Congress in title V and 
interpreted by EPA through the part 70 regulations, as a condition of 
Federal approval of the State's operating permits program.
    With respect to the issue of Congress' intent, the language from 
the Conference Report cited by the commenters does not clearly express 
a desire that audit reports not be used for enforcement of the Act 
requirements. Rather, the text expresses some general support for the 
concept of auditing and a desire that the criminal penalties of section 
113(c) ``should not be applied in a situation where a person, acting in 
good faith, promptly reports the results of an audit and promptly acts 
to correct any deviation. Knowledge gained by an individual solely in 
conducting an audit or while attempting to correct deficiencies 
identified in an audit or the audit report should not ordinarily form 
the basis for intent which results in criminal penalties.'' (emphasis 
added). The legislative history merely indicates that the circumstances 
involving violations discovered through an audit report and voluntarily 
disclosed by the company will generally not meet the requirements for 
criminal liability. Importantly, Congress did not in any way suggest 
that a company which self-disclosed violations discovered through an 
environmental audit should be immune from civil penalties. In any case, 
when Congress amended the Act in 1990, there were no audit privilege 
and/or immunity laws on the books in any State. Any legislative history 
on auditing and enforcement from that period must be read in light of 
that reality. EPA does not believe Congress intended that the growth of 
environmental auditing--in itself a laudable goal fully supported by 
EPA--comes at the expense of the enforcement of environmental laws. 
<SUP>6 If Congress had wished to give special status to self-disclosed 
violations detected during an environmental compliance audit or to 
prohibit the use for general enforcement purposes of audits conducted 
under the Act and EPA approved programs, Congress could have done so in 
the language of the 1990 amendments. If anything, the legislative 
history of the Act is evidence of Congress' intent that such incentives 
for audits should be a basis for the exercise of prosecutorial 
discretion, and not a legislative grant of immunity or protection from 
disclosure.
---------------------------------------------------------------------------

    \6\ That distinction is also reflected in EPA's Self-Disclosure 
policy, which offers significant incentives for businesses to audit 
and self-disclose violations, while at the same time retaining 
safeguards to ensure the protection of public health and the 
environment.
---------------------------------------------------------------------------

    The commenters also argue that Congress intended to vest the States 
with discretion in enforcing title V permit requirements and that the 
part 70 regulations merely provide that penalties assessed under a 
title V program must be ``appropriate'' to the violation. Nothing 
requires a State to obtain a penalty for every violation or prohibits a 
State from rewarding good actors who identify, disclose and correct 
violations, the commenters continue.
    The EPA agrees that a State is not required to collect a penalty 
for every violation or is precluded from using its discretion to reward 
companies that conduct environmental audits and disclose and correct 
any violations discovered through such an audit. The EPA disagrees, 
however, that the only inquiry for title V approval is whether a State 
has authority to assess ``appropriate'' penalties. The part 70 
regulations first state that civil and criminal fines must be 
recoverable ``in a maximum amount of not less than $10,000 per day per 
violation.'' 40 CFR 70.11(a)(3)(i)-(iii) (emphasis added). <SUP>7 
Section 70.11(c) then provides that ``[a] civil penalty or criminal 
fine assessed, sought, or agreed upon by the permitting authority under 
paragraph (a)(3) of this section shall be appropriate to the 
violation.'' (emphasis added). By interpreting title V and part 70 to 
require only that States have authority to assess ``appropriate'' 
penalties, the commenters are reading out of the regulations the 
independent requirement that States have the authority to assess civil 
and criminal penalties of an amount not less than $10,000 per day per 
violation. Read together, 40 CFR 70.11(a)(3) and 70.11(c) require that 
a State have authority to assess a civil or criminal penalty of up to 
$10,000 per day per violation and that, in addition, the penalty 
assessed in any particular case be ``appropriate'' to the violation at 
issue. Thus, EPA agrees with the commenters that it is within 
Michigan's discretion not to impose the statutory maximum penalty for 
violations as to which a lesser penalty is appropriate or to determine 
that criminal or civil prosecution is inappropriate under the facts and 
circumstances of a particular case so long as the State has the 
authority to assess penalties for each day of violation. The 
legislative history cited by the commenters in support of their 
position is, in fact, consistent with EPA's position on this issue. See 
Legislative History at 5815 (``states are not going to be required to 
impose these minimum fines of $10,000 for permit violations. Instead, 
the bill is revised to make clear that states shall ensure that they 
have the authority to impose this. It is not mandated, it is 
authority.'') (emphasis added).
---------------------------------------------------------------------------

    \7\ One commenter appears to assert that a State need only have 
the authority to assess ``appropriate'' criminal penalties. In doing 
so, the commenter ignores the clear language of the part 70 
regulations. Section 502(b)(5)(E) requires States to 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.'' In promulgating part 70, EPA determined that to provide 
``appropriate criminal penalties'' for purposes of title V approval, 
a State must have authority to issue criminal penalties in a maximum 
amount of not less than $10,000 per day per violation. See 40 CFR 
70.11(a)(3)(ii) and (iii). If the commenter believes that the 
enforcement authorities enumerated in the part 70 regulations, 
including the requirement for criminal penalty authority of up to 
$10,000 per day per violation, are excessive or in any way 
inconsistent with the statutory authorities, the commenter should 
have challenged the part 70 regulations at the time of promulgation 
in 1992.
---------------------------------------------------------------------------

    Several commenters stated that section 113(e) of the Act only sets 
forth penalty factors that EPA or a Federal court must consider in 
imposing civil penalties for noncompliance with the Act, that section 
113(e) has no bearing on EPA's authority to approve or disapprove State 
title V programs, and that nothing in section 113, title V or part 70 
authorizes EPA to condition approval of a State's title V permit 
program on the State's ability to consider penalty factors comparable 
to those set out in section 113(e). The commenters further assert that, 
although section 113(e) is inapplicable, section 113(a) authorizes EPA 
in certain defined circumstances to take appropriate action, namely, 
filing an action against a facility where EPA believes the State's 
response was inadequate. This back-up

[[Page 1394]]

authority, and not wholesale invalidation of a State's title V permits 
program, the commenters continue, is EPA's tool for ensuring to its own 
satisfaction that State audit legislation does not allow egregious Act 
violations to go unsanctioned. In any event, one commenter asserts that 
the Michigan audit law does take into account a violator's full 
compliance history in establishing the disclosure and immunity 
provisions.
    The EPA agrees that the purpose of section 113(e) is, as the 
commenters assert, to set forth factors which EPA and the Federal 
courts must consider in assessing civil penalties under the Act. The 
EPA believes, however, that the section 113(e) factors can also serve 
as guidance in determining what civil penalty authority is minimally 
necessary in a State title V program.
    In order for a State to have the authority to assess penalties that 
are ``appropriate'' to the violation in any particular case as required 
by 40 CFR 70.11(c), a State must have, in addition to the authority to 
assess a penalty of at least $10,000 per day per violation, the 
authority to consider mitigating or aggravating factors. In enacting 
section 113(e), Congress set forth factors it believed EPA and Federal 
judicial and administrative courts should consider in determining an 
appropriate penalty under the specific facts and circumstances before 
it. Although EPA believes that the factors enumerated by Congress in 
section 113(e) are the most fundamental, EPA believes that States may 
consider other factors as well. To the extent that a State has 
surrendered its ability to consider factors such as those set forth in 
section 113(e), EPA believes that a State does not have adequate 
authority, on a case-by-case basis, to collect penalties that are 
``appropriate'' to the violation, as required by 40 CFR 70.11(c).
    Industry commenters argue that since the section 113(e) factors do 
not apply to State programs, it must follow that Congress did not 
prescribe factors a State must apply in assessing ``appropriate'' 
penalties under title V, and that a State must therefore be given full 
approval as long as it possesses ``appropriate'' enforcement authority. 
As explained above, the question for EPA at the program approval stage 
is not how the State will exercise its enforcement discretion to assess 
penalties in any particular case. Rather, it is whether the State has 
sufficient authority to assess appropriate penalties in every case. 
Before granting full approval to a title V program, EPA must ensure, 
first, that the State has the general authority to assess penalties up 
to the amounts specified in section 70.11. The EPA must also ensure 
that the State has authority to consider factors, similar to those in 
section 113(e), such that the penalty actually assessed in any case may 
be appropriate to the violation. Because the immunity provisions of the 
Michigan audit law preclude the State from considering the factors set 
forth in section 113(e) or any other factors in determining an 
``appropriate'' penalty in cases in which the source has disclosed and 
corrected violations discovered in an environmental audit, EPA believes 
that Michigan lacks this authority. The EPA also disagrees with the 
commenters' assertion that EPA's sole remedy where EPA believes a State 
does not have adequate enforcement authority is to take its own 
enforcement actions to address violations in that State. Although EPA 
does file Federal actions where the State fails to take enforcement 
action or where State action is inadequate to address a particular 
violation, before approving a State title V program EPA must also 
ensure that the State has demonstrated the capacity to administer and 
fully enforce the program as required by law and regulation. If Federal 
action were the only remedy for situations in which a State does not 
possess adequate enforcement authority, there would have been no need 
for Congress to direct EPA to promulgate rules setting forth minimum 
enforcement requirements for Federal approval of a State operating 
permits program. See 59 FR 61825 (rejecting similar comment in acting 
on Oregon's title V program).
    Finally, regardless of one commenter's assertion that the Michigan 
audit law does take into account a violator's full compliance history 
in establishing the disclosure and immunity provisions, it is EPA's 
position that the Michigan audit law nonetheless prevents consideration 
of other critical factors in determining appropriate civil penalties, 
including but not limited to serious harm or risk of harm to the public 
or the environment, and substantial economic benefit to the violator. 
To the extent the Michigan audit law prevents consideration of 
mitigating or aggravating factors, EPA believes that Michigan has 
surrendered its authority to assess appropriate penalties as required 
by section 502(b)(5)(E) of the Act and 40 CFR 70.11.
    The commenters stated that EPA's approach on State audit privilege 
and/or immunity laws is bad policy and not supported by empirical 
evidence. The commenters expressed strong support for environmental 
auditing as a means of obtaining compliance with increasingly complex 
environmental requirements. These commenters argue that EPA's reaction 
against such audit statutes is a ``knee-jerk'' reaction that ignores 
the potentially huge benefits that these laws offer. EPA has wrongly 
concluded, the commenters continue, that the existence of a limited and 
qualified affirmative defense to penalties for violations discovered 
through environmental audits and protection for information in audit 
reports weakens Michigan's authority to enforce the law or to ensure 
compliance, and that the evidence to date in other States with such 
laws shows in fact that audit privilege and/or immunity legislation 
encourages self-correction and increased compliance. At the same time, 
the commenters argue, EPA has not cited to any specific instance in 
which the Michigan audit law or some other State audit privilege and/or 
immunity law has compromised or inhibited enforcement of the Act or a 
title V permit program.
    The EPA has expressed strong support for incentives which encourage 
responsible companies to audit to prevent noncompliance and to disclose 
and correct any violations that do occur. See, e.g., EPA's Self-
Disclosure Policy. The issue involved in this Federal Register action, 
however, is not whether environmental auditing is good or bad policy. 
Rather, the issue is whether the Michigan audit law, in offering 
privilege and immunity to companies conducting environmental audits, so 
deprives the State of its authority to take enforcement action for 
violations of title V requirements such that the State does not have 
the necessary authority required for full title V approval.
    Moreover, EPA believes that it is premature at this point to expect 
significant empirical evidence to document whether environmental audit 
privilege and/or immunity laws enhance or impede environmental 
compliance. Most of the State audit statutes are little more than one 
year old and only a few States have issued permits under approved title 
V programs. In any event, EPA is aware of several on-going 
environmental enforcement actions in certain States with audit 
privilege and/or immunity laws in which the audit privilege appears to 
be interfering with prosecutors' efforts to obtain and utilize certain 
evidence. <SUP>8
---------------------------------------------------------------------------

    \8\ The confidentiality prerequisites that attach to all on-
going enforcement actions, however, prevent the Agency from 
revealing additional details at this time.

---------------------------------------------------------------------------

[[Page 1395]]

    The commenters go on to argue that the reasoning set forth in the 
April 5 Title V Memorandum and the proposed interim approval of 
Michigan's program could have far-reaching and unintended effects on 
the relationship between EPA and States in the implementation of the 
Act and other environmental laws such as approvals of State 
Implementation Plans and State programs under the Clean Water Act and 
Resource Conservation and Recovery Act.
    The EPA agrees that the rationale behind the April 5 Title V 
Memorandum and EPA's action on the Michigan title V program has 
implications for other Federal programs delegated to the States. 
Because of that, the Agency has for some months been analyzing the 
effects of State audit privilege and/or immunity laws on enforcement 
authorities under the Clean Water Act, the Resource Conservation and 
Recovery Act, and other statutes. The rationale behind the April 5 
Title V Memorandum and EPA's action on the Michigan title V program as 
it relates to the Michigan audit law, however, is dictated not by 
political or policy considerations, but rather by statutes and 
regulations that were finalized after public notice and comment.
    The commenters also stated that EPA's proposed interim approval of 
Michigan's program based on the Michigan audit law is inconsistent with 
existing EPA and Department of Justice (DOJ) enforcement policies, 
which reflect the appropriateness of limiting enforcement discretion. 
The commenters point to ``Factors in Decisions on Criminal Prosecutions 
for Environmental Violations in the Context of Significant Voluntary 
Compliance or Disclosure Efforts by the Violator,'' DOJ, July 1, 1991; 
``The Exercise of Investigative Discretion'', EPA, January 12, 1994; 
``Policy on Flexible State Enforcement Responses to Small Community 
Violations'' EPA, November 1995 (``EPA Policy on Small Communities''); 
``Policy on Compliance Incentives for Small Businesses,'' EPA, May 
1996; and EPA's Self-Disclosure Policy.
    There is an important distinction between the policies cited by the 
commenters, which adopt an ``enforcement discretion'' approach, and the 
Michigan audit law.<SUP>9 The EPA and DOJ have announced policies 
guiding the exercise of their enforcement discretion under certain 
narrowly defined circumstances, while preserving the underlying 
statutory and regulatory authority.<SUP>10 State audit privilege and/or 
immunity laws, such as the Michigan audit law, by contrast, constrain 
enforcement discretion as a matter of law, impermissibly surrendering 
the underlying statutory and regulatory enforcement authorities 
required for Federal approval of the State programs.
---------------------------------------------------------------------------

    \9\ In addition, the criminal enforcement policies noted by the 
commenters are irrelevant, as Michigan's audit law does not create 
deficiencies in the State's part 70 criminal enforcement penalty 
authority.
    \10\ Although the EPA Policy on Small Communities does encourage 
States to provide small communities an incentive to request 
compliance assistance by waiving all or part of a penalty under 
certain circumstances, it does not provide an unqualified waiver of 
civil penalties. The policy directs States to assess a small 
community's good faith and compliance status before granting any 
relief from penalties and identifies a number of factors that a 
State should consider in determining whether relief from civil 
penalties is appropriate in the particular circumstances. In 
addition, EPA's Policy on Small Communities directs a State to 
consider the seriousness of the violation. See EPA's Policy on Small 
Community Violations, page 4. Although the policy does not direct 
the State to consider economic benefit in determining the 
appropriate enforcement response, the policy is available only to 
those small communities that are financially unable to satisfy all 
applicable environmental mandates without the State's compliance 
assistance.
---------------------------------------------------------------------------

    Both commenters stated that EPA's proposed action on the Michigan 
program is inconsistent with several previous title V approvals where 
audit privilege and/or immunity legislation has not posed a bar to full 
approval. As examples of previous title V approvals which the 
commenters believe are inconsistent with EPA's proposed action on the 
Michigan program, as it relates to the Michigan audit law, the 
commenters cite to EPA's action on the Oregon, Kansas and Colorado 
title V programs. Relying on the recent Ninth Circuit decision in 
Western States Petroleum Association v. EPA, 87 F.3d 280 (9th Cir 1996) 
(``WSPA''), the commenters state that, where EPA is departing from a 
prior course of action, more is required of the Agency than conclusory 
statements concerning the potential impact of the Michigan audit law on 
the State's title V enforcement authority. Instead, the commenters 
argue that EPA must provide a basis for deviating from its earlier 
approaches in Oregon, Kansas and Colorado.
    As an initial matter, EPA notes its action on Michigan's title V 
program is consistent with its action on the Texas title V program, 61 
FR 32693, 32696-32699 (June 25, 1996) (final interim approval), and the 
Idaho title V program, 61 FR 64622-64635 (December 6, 1996) (final 
interim approval). Moreover, EPA has notified the States of Ohio, 
Arizona, and Florida that audit privilege and/or immunity laws that 
these States have enacted or are contemplating enacting could interfere 
with the enforcement requirements of title V and part 70.
    With respect to the three programs cited by the commenters as 
inconsistent with EPA's proposed action on the Michigan program, EPA is 
still in the process of reviewing the audit privilege and/or immunity 
statutes in Oregon, Kansas and Colorado and their effects on the title 
V enforcement requirements in those States in order to determine 
whether EPA acted inconsistently in approving those programs. If EPA 
determines that it acted inconsistently, EPA intends to take 
appropriate action to follow the WSPA Court's mandate that EPA act 
consistently or explain any departures.
    Finally, one commenter challenges the April 5 Title V Memorandum 
itself arguing that the guidance document imposes requirements on EPA 
approval of a State operating permits program in addition to those 
required by section 502(b)(5)(E) of the Act and the part 70 rules. 
Because the April 5 Title V Memorandum sets additional substantive and 
binding standards for approval of State title V operating permits 
programs not included in the part 70 regulations, the commenter 
continues, the guidance is a rule disguised as guidance and must be 
promulgated in accordance with the Administrative Procedures Act. This 
requires, among other things, public notice and comment.
    The EPA disagrees. The April 5 Title V Memorandum does not, as the 
commenters assert, ``purport to change fundamentally the requirements 
in section 70.11 by adding provisions that (1) effectively prohibit a 
state from adopting an audit protection or immunity law and (2) impose 
at least four new penalty criteria.'' Rather, the guidance simply 
recounts and reiterates existing statutory and regulatory requirements 
for enforcement authority under the title V program and shows how audit 
privilege and/or immunity laws may prevent a State from meeting those 
requirements. It creates no new ``substantive and binding standards'' 
for approval of title V programs, and therefore is not subject to 
notice and comment rulemaking of the Administrative Procedures 
Act.<SUP>11

[[Page 1396]]

Moreover, in explaining why the Michigan audit law precludes full 
approval, EPA is relying on the requirements of title V and part 70 
themselves, and not the April 5 Title V Memorandum. Finally, EPA's 
application of the title V and part 70 enforcement requirements to the 
specific circumstances before EPA in the case of the Michigan audit law 
is subject to notice and comment rulemaking.<SUP>12
---------------------------------------------------------------------------

    \11\ One commenter also stated that EPA expressly recognized in 
its earlier approval of the Oregon title V program that EPA would 
have to use rulemaking to modify its part 70 rules before EPA could 
prohibit States from adopting audit privilege and/or immunity laws. 
The commenter misstates the Agency's position. As an initial matter, 
the Oregon audit statute, Oregon Revised Statute 468.963, contains 
only an audit privilege and does not contain an immunity provision. 
In proposing interim approval of the Oregon title V program, EPA 
stated it was in the process of developing a national position 
regarding EPA approval of environmental programs in States which 
have environmental audit privileges, and that therefore, it proposed 
to take no action on the Oregon audit provision in the context of 
the Oregon title V approval. EPA noted, moreover, that it might 
consider such a privilege grounds for withdrawing program approval 
under 40 CFR 70.10(c) in the future if EPA later determined that the 
Oregon audit provision interfered with Oregon's enforcement 
responsibilities under title V and part 70. 59 FR 47105, 47106 
(September 14, 1994). During the public comment period on EPA's 
proposal, one commenter stated that EPA's suggestion that a State 
audit privilege could be grounds for interim approval or withdrawal 
was bad policy and that Oregon's audit privilege statute was 
consistent with the Act. In addition to responding to the merits of 
the comment, EPA stated that the commenter's concerns were premature 
because, as the commenter acknowledged, EPA had not proposed to take 
any action on Oregon's environmental audit privilege statute in the 
context of final interim approval of the Oregon program. EPA further 
stated that any such concerns about EPA's position on the Oregon 
audit privilege statute would be properly made if EPA later proposed 
to withdraw Oregon's title V approval based on Oregon's audit 
privilege or if EPA ``revised part 70 to prohibit environmental 
audit provisions such as Oregon's.'' 59 61820, 61824 (December 2, 
1994). EPA did not say in that Federal Register notice that a 
rulemaking would be required in order for the Agency to disapprove a 
title V program in a State with an environmental audit privilege 
and/or immunity statute.
    \12\ EPA also disagrees with one commenter's assertion that the 
Congressional review provisions of Subtitle E of the Small Business 
Regulatory Enforcement Fairness Act of 1996, P.L. 104-121 (SBREFA), 
requires EPA to submit the April 5 Title V Guidance Memorandum to 
Congress. EPA does not believe that April 5 Title V Memorandum is 
subject to Congressional review under SBREFA because it is not a 
rule and it does not substantially affect the rights or obligations 
of a nonagency party. Even if the Memorandum were subject to review, 
EPA has not relied on that Memorandum as a basis for this action. 
Therefore, any procedural defect with respect to the April 5 Title V 
Memorandum would be irrelevant to the legal sufficiency of this 
action.
---------------------------------------------------------------------------

    b. Additional concerns regarding the effect of the privilege 
provisions of the Michigan audit law on the State's enforcement 
authority. Both commenters disagreed with EPA's position that the 
Michigan audit law contains a privilege for environmental audit reports 
which impermissibly interferes with the enforcement requirements of 
title V and part 70. The commenters note that the Michigan audit law 
does not prohibit the State from gaining access to underlying data not 
prepared for or during the audit. One commenter states that EPA is 
directly linking title V enforcement authority to State evidentiary 
rules, and that every State procedural and evidentiary rule must 
therefore be evaluated and amended whenever it interferes with 
environmental enforcement. The commenters continue that EPA has singled 
out audit privilege laws while not taking issue with State attorney-
client privilege provisions.
    As discussed in the proposed interim approval of Michigan's part 70 
program, EPA believes that the Michigan audit law prevents the State 
from requiring an owner or operator to produce an environmental audit 
report under the State's general information gathering authority. 
Although a source must voluntarily disclose the relevant portions of 
the audit report in order to obtain immunity from civil penalties, an 
owner or operator can hold as privileged audit reports containing 
information on violations in the hopes that the violations will not 
otherwise come to the attention of the State agency. Further, a source 
can rely on the privilege provisions to avoid disclosing criminal 
violations, as the Michigan audit law does not provide immunity for 
disclosed criminal violations (other than for negligent acts or 
omissions). Similarly, a facility could elect to disclose the fact of a 
violation under the immunity provisions, but not the related evidence 
of whether the violation was knowing or intentional. Although EPA 
agrees that the Michigan audit law does not preclude access to 
information that is not part of an environmental audit report, EPA 
remains concerned that the data that led the source to conduct the 
environmental audit may by itself be insufficient to demonstrate either 
compliance or noncompliance with an applicable requirement. 
Furthermore, there may not be any documented information or event which 
caused a source to conduct an environmental audit. In such a situation, 
all information regarding a potential violation would exist only in the 
environmental audit report. The EPA therefore believes that the 
Michigan audit law so interferes with the State's information gathering 
authority as to prevent the State from obtaining appropriate civil and 
criminal penalties and assuring compliance with the Act, as required by 
section 502(b)(5)(E) of the Act and 40 CFR 70.11.
    As discussed previously in this notice, EPA agrees with the 
commenters that State procedural and evidentiary rules are an 
appropriate subject for EPA review, as provided by 40 CFR 70.4(b)(2) 
and 40 CFR 70.4(b)(3). However, EPA does not agree with the commenters 
that the attorney-client privilege and the privilege provisions in the 
Michigan audit law are analogous. The attorney-client privilege merely 
prevents an attorney from revealing information disclosed by a client 
in a confidential communication made for the purpose of obtaining legal 
advice. It does not preclude the enforcement authority from obtaining 
the information from the source by any legal means. On the other hand, 
the privilege created by the Michigan audit law completely prevents an 
enforcement authority from obtaining any information labeled as an 
environmental audit report.
    One commenter also stated that adequate title V enforcement 
authority cannot depend on access to voluntarily prepared audit 
reports. If such were the case, the commenter reasoned, State 
regulators would necessarily lack adequate enforcement authority over 
those entities that do not conduct audits voluntarily.
    The EPA agrees that access to voluntarily prepared audit reports is 
not per se a prerequisite for adequate enforcement authority for title 
V approval. However, such access is important if the report exists and 
it contains information on violations or whether violations have been 
promptly corrected. The lack of such access can adversely affect the 
adequacy of enforcement authority.
    One commenter also stated that State audit protection legislation 
does not inhibit whistle blowers but instead merely prohibits 
unauthorized disclosure of an audit report because whistle blowers are 
free to disclose any ``non audit'' information to support their 
allegations without fear of violating the laws.
    As an initial matter, EPA notes that this concern is irrelevant in 
EPA's action on Michigan's title V program. To EPA's knowledge, neither 
the Michigan audit law nor any other provision of Michigan law 
specifically restricts the information that a whistle blower may 
disclose to a State agency, and EPA therefore did not raise this as a 
concern in proposing action on Michigan's title V program.
    The commenter appears to be responding to an issue discussed in the 
April 5 Title V Memorandum. In that memorandum, EPA expressed concern 
with State audit privilege and/or immunity statutes that impose special 
sanctions upon persons who disclose privileged information. See April 5 
Title V Memorandum, pp. 5-6. Although irrelevant to action on 
Michigan's title V program, EPA believes, as stated in the guidance, 
that the Act provision

[[Page 1397]]

which gives explicit protection to whistle blowers makes no 
distinctions with respect to the source of the information relied upon 
by the whistle blower. The EPA believes that it is inconsistent with 
section 322 of the Act for States to remove audit reports from the 
universe of information which employees may rely upon in reporting 
violations to local or State authorities.
    c. Summary. The EPA continues to believe that the privilege and 
immunity provisions of the Michigan audit law impermissibly interfere 
with the enforcement authorities required for full title V approval. 
Accordingly, Michigan must narrow the applicability of the privilege 
provided in section 14802, part 148 of NREPA, and narrow the 
applicability of the immunity provided by section 14809, part 148 of 
NREPA, to ensure that the State title V program has the authority to: 
assure compliance with part 70 permits and the requirements of the 
operating permits program [40 CFR 70.4(b)(3)(i)]; enforce permits and 
the requirement to obtain a permit [40 CFR 70.4(b)(3)(vii)]; and meet 
the general enforcement authority requirements of 40 CFR 70.11(a) and 
(c), as addressed above. In addition, the State must submit a revised 
title V Attorney General's opinion that addresses EPA's concerns in 
subpart II.A.10. above and in subpart II.A.2.i. of the proposed interim 
approval of Michigan's program [61 FR 32391-32398], in which the 
Attorney General certifies that the revised part 148 does not affect 
Michigan's ability to meet the enforcement requirements of 40 CFR 
70.4(b)(3)(i), 40 CFR 70.4(b)(3)(vii), 40 CFR 70.11(a), and 40 CFR 
70.11(c).
    Alternatively, the State may submit a revised title V Attorney 
General's opinion certifying that the current part 148 does not affect 
the enforcement requirements of 40 CFR 70.4(b)(3)(i), 40 CFR 
70.4(b)(3)(vii), 40 CFR 70.11(a), and 40 CFR 70.11(c). Such an opinion 
must also specifically address why EPA's interim approval provision 
requiring revisions to the currently enacted law is not valid. Finally, 
Michigan must also submit a supplemental Attorney General's opinion 
certifying that all other title V authorities that may be affected by 
part 148 are met, including but not limited to: Michigan's authority to 
bring suit to restrain any person from engaging in any activity in 
violation of a permit that is presenting an imminent and substantial 
endangerment [40 CFR 70.11(a)(1)]; Michigan's authority to seek 
injunctive relief to enjoin any violation of any program requirement, 
including permit conditions [40 CFR 70.11(a)(2)]; Michigan's authority 
to recover criminal fines [40 CFR 70.11(a)(3)(ii) and (iii), and 40 CFR 
70.11(c)]; and the requirement that the burden of proof for 
establishing civil and criminal violations is no greater than the 
burden of proof required under the Act [40 CFR 70.11(b)]. The 
supplemental Attorney General's opinion must specifically address these 
requirements in light of the provisions contained in the State's audit 
law. Although EPA does not believe that the Michigan audit law affects 
any title V requirements other than the ones specifically identified in 
this action, a supplemental Attorney General's opinion is appropriate 
because Michigan's current part 70 Attorney General's opinion was 
written before the existence of the Michigan audit law.
11. Additional State Comments
    MDEQ noted that it is pursuing changes to Michigan's operating 
permit regulations to address the interim approval issues pertaining to 
the definition of ``schedule of compliance'', the definition of 
``stationary source'', and the applicability requirements for nonmajor 
solid waste incineration units. The EPA has reviewed Michigan's 
proposed rules revision package, and submitted comments to MDEQ during 
the package's public comment period.
    MDEQ also acknowledged the condition for full approval that 
requires removal of section 5534 of NREPA. MDEQ agrees to pursue an 
amendment to NREPA to remove section 5534.

B. Final Action

1. Interim Approval
    The EPA is promulgating interim approval of the Michigan operating 
permits program received by EPA on May 16, 1995, July 20, 1995, October 
6, 1995, November 7, 1995, and January 8, 1996. The scope of Michigan's 
part 70 program approved in this notice applies to all part 70 sources 
within Michigan, except for any sources of air pollution in Indian 
country. The State must make the following changes to receive full 
approval:
    a. Revise the definition of ``schedule of compliance'' in R 
336.1119(a) to provide that the schedule of compliance for sources that 
are not in compliance shall resemble and be at least as stringent as 
that contained in any judicial consent decree or administrative order 
to which the source is subject. This provision is required by 40 CFR 
70.5(c)(8)(iii)(C).
    b. Revise the definition of ``stationary source'' in R 336.1119(q) 
to provide that the definition includes all of the process and process 
equipment which are located at one or more contiguous or adjacent 
properties. The emphasized phrase is not currently included in the 
State regulation. This provision is required in the definition of 
``major source'' in 40 CFR 70.2.
    c. Revise R 336.1211(1) to provide that nonmajor solid waste 
incineration units required to obtain a permit pursuant to section 
129(e) of the Act are subject to the title V permits program. The 
permitting deferral for nonmajor section 111 sources in 40 CFR 70.3(b) 
does not apply to solid waste incineration units required to obtain a 
permit pursuant to section 129(e) of the Act.
    d. Revise R 336.1212(1) to delete the exemption of certain 
activities from determining major source status. Part 70 and other 
relevant Act programs do not provide for such exemptions from major 
source determinations. This interim approval issue does not apply to 
the State's use of R 336.1212(1) as an insignificant activities list 
pursuant to 40 CFR 70.5(c).
    e. Revise the State statutes or regulations, as appropriate, to 
require that permit applications include a certification of compliance 
with all applicable requirements and a statement of the methods used 
for determining compliance, as specified in 40 CFR 70.5(c)(9) (i), 
(ii), and (iv).
    f. Remove the provisions of section 324.5534 of NREPA, which 
provide for exemptions from penalties or fines for violations caused by 
an act of God, war, strike, riot, catastrophe, or other condition as to 
which negligence or willful misconduct was not the proximate cause. 
Title V does not provide for such broad penalty and fine exemptions.
    g. Revise R 336.1913 and R 336.1914 to be consistent with the 
affirmative defense provisions in 40 CFR 70.6(g). Alternatively, adopt 
an enforcement discretion approach consistent with the Act. These State 
regulations provide an affirmative defense that is broader than that 
provided by 40 CFR 70.6(g). They are also inconsistent with agency 
enforcement discretion permissible under the Act. These regulations, 
therefore, affect the State's ability to enforce permits and assure 
compliance with all applicable requirements and the requirements of 
part 70 [40 CFR 70.4(b)(3)(i) and 70.4(b)(3)(vii)]. For the same 
reasons, they also affect the State's general enforcement authority 
under 40 CFR 70.11.
    h. Address all of the following issues relating to the State's 
audit privilege and immunity law, part 148 of NREPA. These conditions 
are proposed interim approval issues to the extent that they affect the 
State's title V operating

[[Page 1398]]

permits program and the requirements of part 70.
    i. Narrow the applicability of the privilege provided in section 
14802, part 148 of NREPA, and narrow the applicability of the immunity 
provided by section 14809, part 148 of NREPA, to ensure that the State 
title V program has the authority to: assure compliance with part 70 
permits and the requirements of the operating permits program [40 CFR 
70.4(b)(3)(i)]; enforce permits and the requirement to obtain a permit 
[40 CFR 70.4(b)(3)(vii)]; and meet the general enforcement authority 
requirements of 40 CFR 70.11 (a) and (c) as addressed in subpart 
II.A.10. of this notice.
    ii. Submit a revised title V Attorney General's opinion that 
addresses EPA's concerns in subpart II.A.10. above and in subpart 
II.A.2.i. of the proposed interim approval of Michigan's program [61 FR 
32391-32398], and certifies that the revised part 148 does not affect 
Michigan's ability to meet the enforcement requirements of 40 CFR 
70.4(b)(3)(i), 40 CFR 70.4(b)(3)(vii), 40 CFR 70.11(a), and 40 CFR 
70.11(c).
    iii. In lieu of subparts i. and ii. above, submit a revised title V 
Attorney General's opinion certifying that the current part 148 does 
not affect the enforcement requirements of 40 CFR 70.4(b)(3)(i), 40 CFR 
70.4(b)(3)(vii), 40 CFR 70.11(a), and 40 CFR 70.11(c). The Attorney 
General's opinion must also specifically address why EPA's interim 
approval provision requiring revisions to the currently enacted law is 
not valid.
    iv. Submit a supplemental Attorney General's opinion certifying 
that all other title V authorities that may be affected by part 148 are 
met, including but not limited to: Michigan's authority to bring suit 
to restrain any person from engaging in any activity in violation of a 
permit that is presenting an imminent and substantial endangerment [40 
CFR 70.11(a)(1)]; Michigan's authority to seek injunctive relief to 
enjoin any violation of any program requirement, including permit 
conditions [40 CFR 70.11(a)(2)]; Michigan's authority to recover 
criminal fines [40 CFR 70.11(a)(3) (ii) and (iii), and 40 CFR 
70.11(c)]; and the requirement that the burden of proof for 
establishing civil and criminal violations is no greater than the 
burden of proof required under the Act [40 CFR 70.11(b)]. The 
supplemental Attorney General's opinion must specifically address these 
requirements in light of the provisions contained in the State's 
privilege and immunity law.
    This interim approval extends until February 10, 1999. During this 
interim approval period, Michigan is protected from sanctions for 
failure to have a program, and EPA is not obligated to promulgate, 
administer, and enforce a Federal operating permits program for the 
State. Permits issued under a program with interim approval have full 
standing with respect to part 70, and the 1-year time period for 
submittal of permit applications by subject sources begins upon the 
effective date of this interim approval, as does the 3-year time period 
for processing the initial permit applications.
    If the State of Michigan fails to submit a complete corrective 
program for full approval by August 10, 1998, EPA will start an 18-
month clock for mandatory sanctions. If the State of Michigan then 
fails to submit a corrective program that EPA finds complete before the 
expiration of that 18-month period, EPA will be required to apply one 
of the sanctions in section 179(b) of the Act, which will remain in 
effect until EPA determines that Michigan has corrected the deficiency 
by submitting a complete corrective program. Moreover, if the 
Administrator finds a lack of good faith on the part of the State of 
Michigan, both sanctions under section 179(b) will apply after the 
expiration of the 18-month period until the Administrator determines 
that Michigan has come into compliance. In any case, if, 6 months after 
application of the first sanction, Michigan still has not submitted a 
corrective program that EPA has found complete, a second sanction will 
be required.
    If EPA disapproves the State of Michigan's complete corrective 
program, EPA will be required to apply one of the section 179(b) 
sanctions on the date 18 months after the effective date of the 
disapproval, unless prior to that date Michigan has submitted a revised 
program and EPA has determined that it corrected the deficiencies that 
prompted the disapproval. Moreover, if the Administrator finds a lack 
of good faith on the part of Michigan, both sanctions under section 
179(b) shall apply after the expiration of the 18-month period until 
the Administrator determines that the State has come into compliance. 
In all cases, if, 6 months after EPA applies the first sanction, 
Michigan has not submitted a revised program that EPA has determined 
corrects the deficiencies, a second sanction is required.
    In addition, discretionary sanctions may be applied where warranted 
any time after the expiration of an interim approval period if the 
State has not timely submitted a complete corrective program or EPA has 
disapproved its submitted corrective program. Moreover, if EPA has not 
granted full approval to Michigan's program by the expiration of this 
interim approval because that expiration occurs after November 15, 
1995, EPA must promulgate, administer and enforce a Federal permits 
program for the State of Michigan upon expiration of interim approval.
2. Other Actions
    Requirements for approval, specified in 40 CFR 70.4(b), encompass 
section 112(l)(5) requirements for approval of a program for delegation 
of section 112 standards as promulgated by EPA as they apply to part 70 
sources. Section 112(l)(5) requires that the State's program contain 
adequate authorities, adequate resources for implementation, and an 
expeditious compliance schedule, which are also requirements under part 
70. Therefore, EPA is promulgating approval under section 112(l)(5) and 
40 CFR part 63.91 of the State's program for receiving delegation of 
section 112 standards that are unchanged from Federal standards as 
promulgated. This program for delegations only applies to sources 
covered by the part 70 program.
    The EPA is also promulgating approval of Michigan's preconstruction 
permitting program found in Part 2 of Michigan's Air Pollution Control 
Rules (R 336.1201-336.1299) under the authority of title V and part 70 
solely for the purpose of implementing section 112(g) to the extent 
necessary during the transition period between promulgation of the 
Federal section 112(g) rule and adoption of any necessary State rules 
to implement EPA's section 112(g) regulations. However, since the 
approval is for the single purpose of providing a mechanism to 
implement section 112(g) during the transition period, the approval 
itself will be without effect if EPA decides in the final section 
112(g) rule that sources are not subject to the requirements of the 
rule until State regulations are adopted. Although section 112(l) 
generally provides authority for approval of State air programs to 
implement section 112(g), title V and section 112(g) provide authority 
for this limited approval because of the direct linkage between the 
implementation of section 112(g) and title V. The scope of this 
approval is narrowly limited to section 112(g) and does not confer or 
imply approval for purposes of any other provision under the Act, for 
example, section 110. The duration of this approval is limited to 18 
months following promulgation by EPA of section 112(g) regulations, to 
provide Michigan adequate time for the State to

[[Page 1399]]

adopt regulations consistent with the Federal requirements.

III. Administrative Requirements

A. Official File

    Copies of the State's submittal and other information relied upon 
for the final interim approval, including public comments on the 
proposal received and reviewed by EPA, are maintained in the official 
file at the EPA Regional Office. The file is an organized and complete 
record of all the information submitted to, or otherwise considered by, 
EPA in the development of this final interim approval. The official 
file is available for public inspection at the location listed under 
the ADDRESSES section of this document.

B. Executive Order 12866

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

C. Regulatory Flexibility Act

    The EPA's actions under section 502 of the Act do not create any 
new requirements, but simply address operating permits programs 
submitted to satisfy the requirements of 40 CFR part 70. Because this 
action does not impose any new requirements, it does not have a 
significant impact on a substantial number of small entities.

D. Unfunded Mandates Reform Act of 1995

    Under section 202 of the Unfunded Mandates Reform Act of 1995, 
signed into law on March 22, 1995, EPA must prepare a budgetary impact 
statement to accompany any proposed or final rule that includes a 
Federal mandate that may result in estimated costs to State, local, or 
tribal governments in the aggregate, or to the private sector, of $100 
million or more. Under section 205, EPA must select the most cost 
effective and least burdensome alternative that achieves the objectives 
of the rule and is consistent with statutory requirements. Section 203 
requires EPA to establish a plan for informing and advising any small 
governments that may be significantly or uniquely impacted by the rule. 
EPA has determined that the final interim approval action promulgated 
today does not include a Federal mandate that may result in estimated 
costs of $100 million or more to State, local, or tribal governments in 
the aggregate, or to the private sector. This Federal action approves 
pre-existing requirements under State or local law, and imposes no new 
Federal requirements. Accordingly, no additional costs to State, local, 
or tribal governments, or to the private sector, result from this 
action.
    Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business 
Regulatory Enforcement Fairness Act of 1996, EPA submitted a report 
containing this rule and other required information to the U.S. Senate, 
the U.S. House of Representatives and the Comptroller General of the 
General Accounting Office prior to publication of the rule in today's 
Federal Register. This rule is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

List of Subjects in 40 CFR Part 70

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

    Dated: December 27, 1996.
Valdas V. Adamkus,
Regional Administrator.

    Part 70, title 40 of the Code of Federal Regulations is amended as 
follows:

PART 70--[AMENDED]

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

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

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

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

* * * * *

Michigan

    (a) Department of Environmental Quality: received on May 16, 
1995, July 20, 1995, October 6, 1995, November 7, 1995, and January 
8, 1996; interim approval effective on February 10, 1997; interim 
approval expires February 10, 1999.
    (b) (Reserved)
* * * * *
[FR Doc. 97-643 Filed 1-9-97; 8:45 am]
BILLING CODE 6560-50-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>