Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1387

Continued Need for Rule

ATF continues to believe that these

regulations help to avoid accidental

explosions on the premises of special

fireworks plants.

Nature of Complaints Received

ATF has received no complaints

about the regulating from members of

the fireworks industry, and believe the

regulations should remain in place.

Complexity of the Rule

The requirements were determined to

be the minimum necessary to improve

the safe storage of special fireworks.

Conflicting, Duplicative or Overlapping

Federal Rules

None of the requirements of the

regulation conflict, duplicate, or overlap

other Federal rules.

Changes in Area Affected by Rule

The Regulatory Flexibility Act

requires an agency to review all affected

rules within ten years of the publication

of the final rule. This is the first such

review of final rule, T.D. ATF–293,

since the effective date of March 7,

1990. ATF is unaware of any changes in

the fireworks industry having a

significant impact on the effectiveness

of these regulations.

Public Participation

One of ATF’s primary missions is

protection of the public. To successfully

accomplish this goal, we are requesting

comments on the following questions

concerning the amended regulations

stemming from T.D. ATF–293:

(1) Have any of the changes in the

regulations issued in T.D. ATF–293

caused any unnecessary burdens on

business activities or practices?

(2) How could the existing regulations

be altered to assure the same security,

protection, and traceability of explosive

materials, while further reducing

expenses to industry members?

(3) Are there any areas of the

explosives regulations which need

strengthening? Are there any areas of

the amendments contained in T.D.

ATF–293 that need more stringent

regulation?

(4) Are there any areas contained in

the regulations issued in T.D. ATF–293

that need to be relaxed, rethought, or

rewritten?

(5) Have there been any changes in

the industry which would necessitate

changes in these regulations?

Written comments must be received

within the 90-day comment period. ATF

will not recognize any material as

confidential. Any materials submitted

may be disclosed to the public. Any

material which the transmitter considers

to be confidential or inappropriate for

disclosure should not be included in the

suggestion. The name of the person

submitting the suggestion is not exempt

from disclosure.

Drafting Information

The author of this document is Mark

D. Waller, Firearms and Explosives

Regulatory Division, Bureau of Alcohol,

Tobacco and Firearms.

List of Subjects in 27 CFR Part 55

Administrative practice and

procedure, Authority delegations,

Customs duties and inspection,

Explosives, Hazardous materials,

Imports, Penalties, Reporting and

recordkeeping requirements, Safety,

Security measures, Seizures and

forfeitures, Transportation, and

Warehouses.

Signed: November 27, 1996.

John W. Magaw,

Director.

Approved: December 16, 1996.

John P. Simpson,

Deputy Assistant Secretary, Regulatory, Tariff

and Trade Enforcement.

[FR Doc. 97–593 Filed 1–9–97; 8:45 am]

BILLING CODE 4810–31–U

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:

valenziano.beth@epamail.epa.gov.

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
1388 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

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
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1389

1 Despite this regulatory deficiency, the State

application forms do include the compliance

certification requirements.

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.1

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
1390 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

2One commenter also submitted comments on a

fifth commenter’s behalf.

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 70.2

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
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1391

3These 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.

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.

5One 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.

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.3

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.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.

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).5

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
1392 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

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)).
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1393

6That distinction is also reflected in EPA’s SelfDisclosure 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.

7One 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.

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 selfdisclosed 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. 6 If Congress had

wished to give special status to selfdisclosed 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.

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). 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).

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
1394 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

8The confidentiality prerequisites that attach to

all on-going enforcement actions, however, prevent

the Agency from revealing additional details at this

time.

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. 8
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1395

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.

10Although 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.

11One 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

Continued

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.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.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.

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.11
1396 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

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.

12EPA 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.

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.12

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
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 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
1398 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

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
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 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

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Administration for Children and

Families

45 CFR Part 1311

RIN 0970–AB56

Head Start Program

AGENCY: Administration on Children,

Youth and Families (ACYF),

Administration for Children and

Families (ACF), Health and Human

Services (HHS).

ACTION: Final rule.

SUMMARY: The Administration on

Children, Youth and Families is issuing

this final rule to implement a new

statutory provision authorizing the

Secretary to create a Head Start Fellows

Program for staff in local Head Start

programs or other individuals working

in the field of child development, child

care, early childhood education, health,

and family services.

EFFECTIVE DATE: February 10, 1997.

FOR FURTHER INFORMATION CONTACT:

Dennis Gray, Head Start Bureau,

Administration on Children, Youth and

Families, P.O. Box 1182, Washington,

D.C. 20013; (202) 205–8404.

SUPPLEMENTARY INFORMATION:

I. Program Purpose

Public Law 103–252, the Human

Services Amendments of 1994,

amended the Head Start Act to

authorize the creation of a Head Start

Fellows Program (HSFP), which will

support professional development of

individuals working in Head Start or

related programs.

The Head Start Bureau is pleased with

the opportunity to develop the HSFP.

The Bureau anticipates that the HSFP

will provide Head Start Fellows with a

unique opportunity to be exposed to

activities, issues, resources, and new

approaches through placements that

will include national and regional Head

Start offices, academia, and other public

or private nonprofit entities and

organizations concerned with services

to children and families. The Head Start

Bureau will benefit from the valuable

perspectives brought by the Fellows

currently working in Head Start and

other programs across America to the

national policy making process.

II. Summary of the Final Rule

The authority for this final rule is

section 1150 of Public Law 103–252, the

Human Services Amendments of 1994

(the Act) which added section 648A(d)

to the Head Start Act (42 U.S.C. 9843).

Section 648A(d) authorizes the

Secretary to establish a program of Head

Start Fellowships. Section 648A(d)(6)

authorizes the Secretary to make

expenditures not to exceed $1,000,000

for any fiscal year for stipends and other

reasonable expenses for the Fellows

Program. Additional authority is found

in section 648A(d)(8), which mandates

that the Secretary promulgate

regulations to carry out section 648A(d).

The Act specifies:

• To whom Fellowships may be

competitively awarded;