[Federal Register Volume 62, Number 52 (Tuesday, March 18, 1997)]
[Proposed Rules]
[Pages 12778-12787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6826]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AD-FRL-5710-8]


Clean Air Act Interim Approval of Operating Permits Program; 
Commonwealth of Virginia

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.

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SUMMARY: EPA proposes interim approval of the Commonwealth of 
Virginia's Operating Permits Program, which Virginia submitted in 
response to Federal statutory and regulatory directives that States 
adopt programs providing for the issuance of operating permits to all 
major stationary sources and to certain other sources. EPA is proposing 
interim approval of Virginia's submittal because Virginia's program 
substantially meets the requirements for approval set forth at 40 Code 
of Federal Regulations (CFR) Part 70, but still requires some revisions 
to fully meet those requirements. The required revisions which Virginia 
will have to make before EPA could grant full approval are discussed in 
this notice.

DATES: Comments on this proposed action must be received in writing by 
April 17, 1997. Comments should be addressed to the contact indicated 
below.

ADDRESSES: Copies of the State's submittal and other supporting 
information used in developing the proposed interim approval are 
available for inspection during normal business hours at the following 
locations: (1) U.S. EPA Region III; Air, Radiation, & Toxics Division; 
841 Chestnut Building; Philadelphia, PA 19107, and (2) Virginia 
Department of Environmental Quality; 629 East Main Street, Richmond, 
Virginia 23219.

FOR FURTHER INFORMATION CONTACT: Ray Chalmers, 3AT23; U.S. EPA Region 
III; Air, Radiation, & Toxics Division; 841 Chestnut Building; 
Philadelphia, PA 19107. (215) 566-2061.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Submittal and Review Requirements

    As required under Title V of the 1990 Clean Air Act Amendments 
(sections 501-507 of the Clean Air Act (CAA)), EPA has promulgated 
rules which define the minimum elements of an approvable State 
operating permits program and the corresponding standards and 
procedures by which the EPA will approve, oversee, and withdraw 
approval of State operating permits programs (see 57 FR 32250 (July 21, 
1992)). These rules are codified at 40 Code of Federal Regulations 
(CFR) Part 70. Title V directs States to develop, and submit to EPA, 
programs for issuing these operating permits to all major stationary 
sources and to certain other sources.
    The CAA directs States to develop and submit these programs to EPA 
by November 15, 1993, and requires EPA to approve or disapprove each 
program within one year after receiving the submittal. The EPA's 
program review occurs pursuant to section 502 of the CAA and the part 
70 regulations, which together outline criteria for approval or 
disapproval. Where a program substantially, but not fully, meets the 
requirements of section 502 of the CAA and 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 November 15, 1995, or by the end of an 
interim program, it must establish and implement a Federal program.
    Due in part to pending litigation over several aspects of the Part 
70 rule promulgated on July 21, 1992, Part 70 is in the process of 
being revised. When the final revisions to Part 70 are promulgated, the 
requirements of the revised Part 70 will redefine EPA's criteria for 
the minimum elements of an approvable State operating permits program 
and the corresponding standards and procedures by which EPA will review 
State operating permits program submittals. Until the date on which the 
revisions to Part 70 are promulgated, the currently effective July 21, 
1992, version of Part 70 shall be used as the basis for EPA review.

B. Federal Oversight and Potential Sanctions

    If EPA were to finalize this proposed interim approval, it would 
extend for two years following the effective date of the final interim 
approval. During the interim approval period, Virginia would be 
protected from sanctions, and EPA would not be obligated to promulgate, 
administer and enforce a Federal permits program for the Commonwealth. 
Permits issued under a program with interim approval have full standing 
with respect to part 70, and the one year time period for submittal of 
permit applications by subject sources begins upon the effective date 
of interim approval, as does the three year time period for processing 
the initial permit applications.
    Following final interim approval, if Virginia failed to submit a 
complete

[[Page 12779]]

corrective program for full approval by the date six months before 
expiration of the interim approval, EPA would be required to start an 
18 month clock for mandatory sanctions. If Virginia then failed to 
submit a corrective program that EPA found complete before the 
expiration of the 18 month period, EPA would be required to apply one 
of the sanctions in section 179(b) of the CAA, which would remain in 
effect until EPA determined that Virginia had remedied the deficiency 
by submitting a complete corrective program. Moreover, if the 
Administrator found a lack of good faith on the part of Virginia, both 
sanctions under section 179(b) would be required to apply after the 
expiration of the 18 month period until the Administrator determined 
that Virginia had come into compliance. In any case, if, six months 
after application of the first sanction, Virginia still had not 
submitted a corrective program that EPA found complete, a second 
sanction would be required.
    If, following final interim approval, EPA were to disapprove 
Virginia's complete corrective program, EPA would 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 Virginia 
had submitted a revised program and EPA had determined that it 
corrected the deficiencies that prompted the disapproval. Moreover, if 
the Administrator found a lack of good faith on the part of Virginia, 
both sanctions under section 179(b) would be required to apply after 
the expiration of the 18 month period until the Administrator 
determined that Virginia had come into compliance. In all cases, if, 
six months after EPA applied the first sanction, Virginia had not 
submitted a revised program that EPA had determined corrected the 
deficiencies that prompted disapproval, a second sanction would be 
required.
    In addition, discretionary sanctions may be applied where warranted 
any time after the end of an interim approval period if Virginia has 
not timely submitted a complete corrective program or EPA has 
disapproved a submitted corrective program. Moreover, if EPA has not 
granted full approval to Virginia's program by the expiration of the 
interim approval, EPA must promulgate, administer and enforce a Federal 
permits program for Virginia after the interim approval expires.

II. Description of Virginia's Submittal

    Virginia submitted an operating permits program to EPA on November 
12, 1993, pursuant to the requirements of Title V. The submittal 
included regulations, an Attorney General's opinion, a program 
description, permitting program documentation, and other required 
elements. On January 14, 1994, Virginia submitted a supplemental letter 
pertaining to enhanced monitoring. EPA disapproved that submittal in a 
Federal Register notice published on December 5, 1994 (59 FR 62324).
    EPA disapproved the submittal because it did not provide citizens 
with adequate judicial standing to challenge permits, did not prevent 
the default issuance of permits, did not contain regulations which were 
still in effect, did not cover the proper universe of sources, did not 
ensure that permits would include all applicable requirements, and did 
not correctly delineate permit provisions enforceable only by Virginia. 
In addition, EPA identified numerous other deficiencies that Virginia 
would need to correct to meet the federal requirements for a fully 
approvable program, although these other deficiencies were not bases 
for the disapproval action. These other issues were what EPA calls 
``interim approval issues''--deficiencies that would prevent granting 
full approval to the State's program, but that leave the program 
qualified for interim approval because they don't cause it to fail to 
``substantially meet'' the requirements of the CAA.
    On January 9, 1995, Virginia submitted revised regulations and a 
revised Attorney General's opinion as amendments to its original 
program, and asked that EPA approve the revised program. On January 17, 
1995, Virginia submitted an additional copy of the revised regulations 
(the version published in the Virginia Register). Finally, on May 17, 
1995, Virginia again amended its program by submitting revised 
statutory language and an amended Attorney General's opinion. The 
revisions addressed many of the disapproval bases and other 
deficiencies EPA had previously identified. However, Virginia did not 
submit revised judicial standing provisions. Virginia did not revise 
these provisions because it believed its judicial standing provisions 
were adequate and had sued EPA to contest EPA's conclusion that they 
were not.
    EPA proposed disapproval of Virginia's revised submittal in a 
Federal Register notice published on September 19, 1995 (60 FR 48435). 
EPA proposed disapproval because Virginia still did not provide 
citizens with adequate judicial standing to challenge permits, because 
Virginia did not assure that all sources required by the CAA to obtain 
Title V permits would be required to obtain such permits, and because 
Virginia did not adequately provide for collection of Title V program 
fees. EPA also identified as interim approval issues the fact that 
Virginia had defined units as ``insignificant'' at far higher emissions 
levels than those which EPA considered ``sound,'' as well as certain 
other provisions pertaining to insignificant activities.
    On November 8, 1995, Virginia submitted revised Title V operating 
permit regulations to EPA, which the Commonwealth asserted corrected 
the major regulatory problems which EPA had identified in Virginia's 
previous submittals, and again asked that EPA approve the State's 
program. However, these were emergency regulations in effect for only 
one year, and Virginia had taken no action to revise its judicial 
standing provisions to give all affected citizens the right to 
challenge in Virginia's courts operating permits issued by Virginia. 
Moreover, Virginia had not corrected provisions pertaining to 
insignificant activities which EPA had identified as raising interim 
approval issues. On September 10 and 12, 1996, Virginia again submitted 
to EPA revised Title V program regulations, this time regulations which 
had been permanently adopted, and once more asked that EPA approve the 
State's Title V program. However, Virginia had still not revised its 
judicial standing provisions and had still not corrected provisions 
pertaining to insignificant activities. Since Virginia's November, 1995 
and September, 1996 submittals did not properly address previously 
identified deficiencies, EPA did not propose to take action on these 
submittals when EPA initially received them.
    Virginia has since appropriately revised its judicial standing 
provisions. After the Fourth Circuit Court of Appeals affirmed EPA's 
disapproval of Virginia's program, 80 F.3d 869 (1996), Virginia 
appealed its case to the U.S. Supreme Court. On January 21, 1997, the 
Supreme Court decided not to hear Virginia's case. Virginia had 
prepared for the possibility that the Courts might not rule in the 
Commonwealth's favor by passing a revised judicial standing law, 
acceptable to EPA, which would go into effect should the Courts not 
find for Virginia.
    On February 6, 1997, Virginia submitted to EPA an Attorney 
General's opinion affirming that Virginia's acceptable judicial 
standing law would be in effect as of February 15, 1997 as a result of 
the U.S. Supreme Court's January 21, 1997 denial of Virginia's 
petition. The Attorney General's

[[Page 12780]]

opinion also addressed several other remaining legal issues. In 
addition, on February 27, 1997, Virginia's Department of Environmental 
Quality (VADEQ) agreed to commit to recommending revisions to 
regulatory requirements and also agreed to make certain interpretations 
of existing regulatory requirements. These agreements are discussed 
below when relevant.
    As a result of these recent revisions, EPA has determined that 
Virginia's Title V submittal now substantially meets the requirements 
for approval set forth at 40 CFR part 70, and EPA is therefore 
proposing interim approval of Virginia's submittal. The portions of the 
submittal for which EPA is proposing interim approval consist of the 
operating permit and operating permit fee regulations submitted on 
September 10, 1996, the acid rain operating permit regulations 
submitted on September 12, 1996, and other non-regulatory 
documentation. EPA cannot propose full approval because Virginia must 
still address certain ``interim approval issues,'' as discussed below. 
Concurrently with this proposed interim approval, EPA is withdrawing 
the proposal to disapprove Virginia's submittal which EPA published in 
the Federal Register on September 19, 1995.

III. Analysis of Virginia's Submittal

    This section focuses on how Virginia has corrected the program 
deficiencies which EPA identified in Virginia's program in the proposed 
disapproval notice which EPA published at 60 FR 48435 on September 19, 
1995, and on certain other important deficiencies which Virginia must 
still address before EPA can fully approve the Commonwealth's program. 
Virginia's full program submittal, EPA's Technical Support Document 
(TSD), which provides additional analysis of Virginia's submittal, and 
other relevant materials are available as part of the public docket.
    Virginia's Title V operating permit program submittal 
substantially, but not fully, meets the requirements of the CAA and of 
the implementing regulations at 40 CFR Part 70. Virginia has 
substantially corrected the deficiencies which had earlier caused EPA 
to disapprove and to propose to disapprove Virginia's programs. The 
deficiencies which EPA identified as bases for disapproval when it 
published its September 19, 1995, Federal Register notice proposing 
disapproval of Virginia's program were that Virginia's Title V program 
submittal: (1) Did not provide all citizens with adequate judicial 
standing to challenge State permits; (2) did not assure that all 
sources required by the CAA to obtain Title V permits would be required 
to obtain such permits; and (3) did not contain an adequate provision 
for collection of Title V program fees. EPA discusses below the changes 
Virginia made in its Title V submittal to correct these deficiencies. 
EPA also identified other deficiencies during its previous review, 
which it identified as interim approval issues. Virginia has already 
corrected some of these deficiencies. Discussed below are changes which 
Virginia made which adequately address some of these previously 
identified deficiencies, as well as certain additional changes which 
Virginia must still make before EPA could grant full approval to 
Virginia's program.

A. Deficiencies Corrected

1. Virginia's Judicial Standing Provisions
    A major reason for EPA's disapproval and its proposal to disapprove 
Virginia's earlier Title V operating permit program submittals was that 
Virginia's law did not provide interested parties with adequate 
standing to obtain judicial review in State court of final Title V 
permit decisions. Virginia's judicial standing law restricted the right 
to judicial review to those who had suffered an actual or imminent 
injury which was an invasion of ``an immediate, pecuniary and 
substantial interest which is concrete and particularized.'' EPA, and 
the U.S. Court of Appeals for the 4th Circuit, concluded that 
Virginia's requirement that a petitioner had to demonstrate a 
``pecuniary'' interest was too restrictive to be approved under Title 
V. See 80 F.3rd 869 (4th Cir., 1996).
    After EPA's position was upheld by the Fourth Circuit Court of 
Appeals, Virginia appealed the case to the U.S. Supreme Court. On 
January 21, 1997, the Supreme Court declined to hear Virginia's case. 
To be prepared should EPA's position that Virginia's judicial standing 
provisions were deficient be upheld by the Courts, Virginia had adopted 
revised and acceptable judicial standing provisions, at sections 10.1-
1318, 10.1-1457, and 62.1-44.29 of the Code of Virginia, but specified 
that the revised provisions would become effective only if Virginia's 
suit against EPA was unsuccessful.
    The Supreme Court's refusal to take Virginia's appeal has caused 
Virginia's revised judicial standing provisions to become effective, 
and Virginia's standing provisions are now fully acceptable. Virginia's 
revised standing law now provides judicial standing to any person who 
``meets the standard for judicial review of a case or controversy 
pursuant to Article III of the United States Constitution.'' It further 
provides that ``a person shall be deemed to meet such standard if (i) 
such person has suffered an actual or imminent injury which is an 
invasion of a legally protected interest and which is concrete and 
particularized; (ii) such injury is fairly traceable to the decision of 
the Board and not the result of the independent action of some third 
party not before the court; and (iii) such injury will likely be 
redressed by a favorable decision by the court.'' This new standard is 
consistent with the standard for Article III standing articulated by 
the Supreme Court in Lujan v. Defenders of Wildlife, 112 S. Ct. 2130 
(1992). Consequently, EPA has determined that Virginia's standing 
provisions meet the requirements of CAA section 502(b)(6) and 40 CFR 
70.4(b)(3).
2. Applicability Under the Operating Permits Program
    In the original disapproval of Virginia's program, EPA identified 
as a basis for disapproval Virginia's failure to require issuance of 
permits to the proper universe of sources required by part 70. See 59 
FR 62325. In addition, in its September 19, 1995, Federal Register 
notice proposing disapproval of Virginia's previous operating permit 
program submittal, EPA again cited the fact that the submittal did not 
ensure the applicability of the Title V operating permit program to all 
sources required to be subject to the program under 40 CFR 70.3 as a 
reason for disapproving the submittal.
    This was because in the applicability sections of the earlier 
version of its regulations (which were designated as sections 120-08-
0501 and 120-08-0601) Virginia should have listed all of the CAA 
requirements which trigger Title V applicability, as they are set forth 
at 40 CFR 70.3. Instead of meeting this requirement by listing federal 
CAA section 111 and 112 requirements, Virginia inappropriately listed 
certain of its own air pollution control regulations, into which it had 
incorporated federal CAA section 111 and 112 requirements. In the 
revised regulations it submitted to EPA in September 1996, Virginia 
correctly cited federal CAA section 111 and 112 requirements in the 
applicability sections of its regulations (now designated as sections 9 
VAC 5-80-50 and 9 VAC 5-80-310), thus correcting this deficiency. As 
discussed later in this notice, Virginia's regulations regarding 
applicability

[[Page 12781]]

continue to present a minor facial inconsistency with part 70, which 
EPA does not view as an impediment to future full approval of the 
Commonwealth's program.
3. Permit Fee Demonstration
    In its September 19, 1995, Federal Register notice EPA cited the 
inadequacy of the permit fee provisions in Virginia's submittal as 
another reason for proposing disapproval of the submittal. The 
deficiency in the fee provision was that Virginia had not set a minimum 
fee amount of $25 per ton of emissions, to be adjusted for consumer 
price inflation (CPI) using a 1989 base year. Virginia revised its 
regulations to correct this deficiency.
    In its prior notice EPA also identified as a concern a statutory 
limit on the amount of fees which the Commonwealth can collect. This 
statutory limit, which is found in the Virginia Air Pollution Control 
Law at Sec. 10.1-1322 B, appears to create a cap of $25 per ton of 
emissions, to be adjusted for inflation using a 1990 base year. EPA 
stated that the statute should be revised to specify a base year of 
1989. EPA believed that unless Virginia made this change the 
Commonwealth would not be able to collect the full fee amount specified 
by its regulations because of the statutory cap.
    Virginia did not change this statutory provision. However, 
Virginia's Attorney General provided an assurance that this cap would 
not interfere with the State's ability to collect the full amount of 
required fees. Virginia's Attorney General stated that: ``Virginia Code 
Sec. 10.1-1322(B) provides that the annual permit fees `shall be 
adjusted annually by the Consumer Price Index as described in Sec. 502 
of the federal Clean Air Act.' '' Since Code Sec. 10.1-1322(B) 
references Sec. 502 and Sec. 502 provides that adjustment shall be made 
using 1989 as the base year, the CPI adjustment required by Code 
Sec. 10.1-1322(B) also employs a 1989 base year. The reference in Code 
Sec. 10.1-1322(B) to a 1990 base year does not pertain to the CPI 
adjustment, but refers instead to the year in which the initial $ 25 
per ton charge applies. In keeping with the requirements of section 502 
of the CAA as interpreted by EPA and for this purpose only, the year 
1990 runs from September 1, 1989 through August 31, 1990.'' See 
Supplement to January 6, 1995 Attorney General's Opinion dated February 
6, 1997. Because the fee cap as adjusted by the CPI under the Virginia 
fee statute is in fact the same as the amount as the fee assessed under 
the Virginia regulations (i.e., the calculation begins at $25 per ton 
and is adjusted by changes in the CPI since 1989), EPA is satisfied 
that Virginia will be able to assess fees which meet the presumptive 
minimum required under Title V.
4. Other Deficiencies Corrected
    In its September 19, 1995, Federal Register notice EPA cited 
several other deficiencies in the insignificant activities provisions 
in Virginia's submittal which would prevent EPA from being able to 
grant full approval to the program. Virginia corrected some but not all 
of these deficiencies. In this section EPA discusses the deficiencies 
which Virginia corrected.
    In its previous proposed disapproval notice, EPA expressed concern 
regarding the fact that Virginia had defined as insignificant all 
emissions units with uncontrolled emissions of less than 10 tons per 
year of nitrogen dioxide, sulfur dioxide, and total suspended 
particulates or particulate matter (PM10), less than seven tons per 
year of volatile organic compounds, and less than 100 tons per year of 
carbon monoxide (CO). EPA noted that it considered these levels too 
high. Virginia responded to EPA's concerns by changing its 
insignificant activity provisions to define units as insignificant 
which had uncontrolled emissions of less than 5 tons per year (TPY) of 
nitrogen dioxide, sulfur dioxide, total suspended particulates or 
particulate matter (PM10), and volatile organic compounds. EPA 
considers the exemption level of less than 5 TPY of uncontrolled 
emissions of these pollutants to be acceptable. Virginia did not change 
its specification that units with uncontrolled CO emissions of less 
than 100 TPY are insignificant. For the reasons discussed in the 
September 19, 1995 Federal Register notice, EPA continues to regard 
this as a deficiency which must be corrected before EPA could grant 
full approval to Virginia's program. This deficiency is discussed 
further below in the section entitled Remaining Deficiencies.
    EPA was also concerned by the fact that under Virginia's previous 
rules a determination of whether or not a source is subject to the 
operating permit program could be made without taking into account 
emissions from units considered to be insignificant. If the total 
emissions from units subject to Title V requirements were just below 
the levels which would trigger Title V program applicability, failure 
to take into account additional emissions from units which are exempt 
could result in a source avoiding Title V requirements to which it 
should have been subject. Virginia corrected this deficiency by stating 
in Rule 8-5 at 9 VAC 5-80-90, and in Rule 8-7 at 9 VAC 5-80-440, that 
``the emissions from any emissions unit shall be included in the permit 
application if the omission of those emissions units from the 
application would interfere with the determination of the applicability 
of this rule, the determination or imposition of any applicable 
requirement, or the calculation of permit fees,'' and by including a 
similar statement in Article 4 at 9 VAC 5-80-710. Thus, EPA has 
determined that Virginia has sufficiently corrected this prior 
deficiency, and the Commonwealth need take no further action with 
respect to it before EPA could grant full approval to Virginia's 
program.
    In addition, EPA was concerned by the fact that in Appendix W of 
the Commonwealth's prior regulations (since redesignated as Article 4) 
Virginia had defined as insignificant all pollutant emission units with 
emissions less than the section 112(g) de minimis levels set forth at 
40 CFR 63.44 or the accidental release threshold levels set forth at 40 
CFR 68.130. See 9 VAC 5-80-720 B 6. EPA noted that these levels were 
appropriate in many cases, but were too high in others. Virginia 
adequately addressed this concern by adding the qualifier ``or 1000 
pounds per year, whichever is less'' to the statement at 9 VAC 5-80-720 
B 6.
    Furthermore, while not a concern for purposes of program approval, 
EPA notes that the references to emission units with emissions at or 
below the section 112(g) de minimis levels established in 40 CFR 63.44 
now have no meaning. See 9 VAC 5-80-720 B 5 and B 6. Virginia 
apparently assumed when it prepared its regulation that EPA would 
finalize the referenced list. However, EPA did not finalize this list 
and there are now no emissions levels ``in 40 CFR 63.44.'' As a result, 
emission units emitting hazardous air pollutants which are not 112(r) 
pollutants need to be fully described in application forms. This fact 
reduces the universe of units which can be considered insignificant 
under Virginia's regulations, but this is not a concern with respect to 
EPA's decision to approve or disapprove Virginia's program, because 
part 70 does not require States to define any particular units as 
insignificant.
    Finally, EPA also expressed concern with the fact that in its prior 
program Virginia had inappropriately included ``comfort air 
conditioning'' and ``refrigeration systems,'' which are subject to 
stratospheric ozone protection requirements, in the listing of 
insignificant activities found in Article 4. Virginia removed these 
items from

[[Page 12782]]

the list. Thus, this previous deficiency has been fully corrected.

B. Remaining Deficiencies (Interim Approval Issues)

    As noted above, in its December 5, 1994 and September 19, 1995, 
Federal Register notices EPA cited several other deficiencies in the 
insignificant activities provisions in Virginia's submittal as another 
impediment to granting full approval of the submittal. EPA stated that 
Virginia would have to correct these deficiencies before EPA could 
fully approve the Commonwealth's program. In this section EPA addresses 
one insignificant activity related deficiency which Virginia did not 
correct in its revised program, and several additional insignificant 
activity related deficiencies which EPA has identified in reviewing the 
Commonwealth's new program since publishing the September 1995 proposed 
disapproval notice.
1. Units Emitting Up To 100 TPY of CO Inappropriately Considered to be 
Insignificant
    EPA remains concerned that Virginia continues to define any 
emission unit emitting less than 100 TPY of carbon monoxide (CO) as 
insignificant. As EPA stated in its September, 1995 proposed 
disapproval notice, and as discussed previously in this notice, EPA has 
determined that the 100 TPY emissions level is far too high. The 
Director of the VADEQ has recently informed EPA that VADEQ will seek to 
change this regulation to correct this problem. (See letter from VADEQ 
Director dated February 27, 1997.) Virginia must complete this 
correction before EPA can fully approve Virginia's program.
    EPA does not consider this deficiency to be an impediment to 
interim approval. Virginia has identified a specific provision in its 
regulations that requires sources to provide emissions information in 
permit applications if the omission of that information ``would 
interfere with the determination of the applicability of the State's 
Title V program, the determination or imposition of any applicable 
requirement, or the calculation of fees.'' 9 VAC 5-80-90. See also 9 
VAC 5-80-710 4. In addition, the majority of sources in Virginia which 
have units emitting CO are not subject to applicable requirements for 
CO. Sources that are subject to CO-related requirements are likely to 
be subject to federal standards, such as new source performance 
standards (NSPS), for those units, and should be aware of the specific 
CO-related requirements applicable to them. Thus, in the interim period 
before Virginia revises its regulations, EPA believes that the 
potential for confusion caused by Virginia's 100 TPY CO threshold 
should be minimized, provided the Commonwealth takes care to monitor 
source compliance with applicable requirements. EPA therefore does not 
believe it would be reasonable to disapprove Virginia's program due to 
this deficiency. EPA's treatment of Virginia's high CO threshold is 
consistent with how EPA has addressed similar problems in other States.
2. Applications Not Required to Include Sufficient Information To 
Identify All Applicable Requirements for Emission Units Deemed 
Insignificant
    In connection with its review of Virginia's inappropriate 
designation of units emitting up to 100 TPY of CO as insignificant EPA 
carefully reviewed Virginia's ``gatekeeper'' provisions to determine 
whether or not they might substantially address the concerns this 
inappropriate designation had raised. ``Gatekeeper'' provisions are 
meant to assure that all applicable requirements for units designated 
as insignificant are included in both applications and permits, thereby 
enabling permitting authorities, reviewing members of the public, 
affected States, and EPA to adequately assess source compliance with 
all applicable requirements. During the course of its review EPA 
identified several deficiencies with these ``gatekeeper'' provisions.
    Virginia's regulations at 9 VAC 5-80-90 D 1 now require emissions 
information to be included in permit applications, even for 
insignificant activities, ``if the omission of these emissions units 
from the application would interfere with the determination of the 
applicability of this rule, the determination or imposition of any 
applicable requirement, or the calculation of permit fees.'' However, 
with respect to including all applicable requirements in applications, 
EPA notes that Virginia has inappropriately included a provision in the 
applicability section of Rule 8-5, at 9 VAC 5-80-50 F, which states 
that ``[t]he provisions of 9 VAC 5-80-90 concerning application 
requirements shall not apply to insignificant activities designated in 
9 VAC 5-80-720 with the exception of the requirements of 9 VAC 5-80-90 
D 1 and 9 VAC 5-80-710,'' and that it has included a similar provision 
in the applicability section of Rule 8-7, at 9 VAC 5-80-360 E. As a 
result of these provisions, sources are required to provide only 
emissions information for insignificant activities, but not any 
additional information, such as that required by 9 VAC 5-80-90 D.2, E., 
or F. (which require all information necessary to determine applicable 
requirements), which might be required to identify applicable 
requirements when emissions information alone is not sufficient. Since 
many applicable requirements under the CAA, particularly those relating 
to 112(d) standards for hazardous air pollutants, could not be 
identified solely by emissions information, EPA does not believe that 
Virginia's existing ``gatekeeper'' provision fully meets the 
requirements of Title V. Specifically, 40 CFR 70.5(c) provides that 
applications ``may not omit information needed to determine the 
applicability of, or to impose, any applicable requirement, or to 
evaluate the fee amount required under the schedule approved pursuant 
to Sec. 70.9 of this part.'' (emphasis added). Before EPA can fully 
approve Virginia's program Virginia must assure that the requirements 
of Sec. 70.5(c) will be met by appropriately revising the provisions at 
9 VAC 5-80-50 F and 9 VAC 5-80-360 E.
    VADEQ agrees that permit applications must include all information 
required to identify applicable requirements, and has agreed to seek 
revisions to Virginia's regulations in the future to ensure that 
sources provide such information. In addition, VADEQ has stated that 
``[u]nder the provisions of 9 VAC 5-80-90 E 1, the Board (Virginia's 
Air Pollution Control Board) will require that permit applications 
contain a citation and description of all applicable requirements 
including those covering activities deemed insignificant under 9 VAC 5 
Chapter 80, Article 4.'' (See letter from VADEQ Director dated February 
27, 1997.) In light of this, EPA has determined that Virginia's program 
substantially meets the requirements of Title V with respect to this 
issue and that it is appropriate to grant interim approval of 
Virginia's program. This is consistent with how EPA has treated similar 
deficiencies in other States.
3. Permits Not Required To Include Applicable Requirements for Emission 
Units Deemed Insignificant
    With respect to including all applicable requirements in permits, 
Virginia Rule 8-5 contains an inappropriate provision at 9 VAC 5-80-110 
which states that ``For major sources subject to this rule, the board 
shall include in the permit all applicable requirements for all 
emission units in the major source except those deemed insignificant in 
Article 4 (9 VAC 5-80-710 et. seq.) of this part.'' Virginia's Rule 8-7 
(the acid rain

[[Page 12783]]

regulation) essentially repeats this deficiency at 9 VAC 5-80-490.A.1. 
These provisions in Rules 8-5 and 8-7 are inadequate because they 
contain the qualification ``except those deemed insignificant in 
Article 4 * * *'' EPA cannot fully approve Virginia's program until 
Virginia removes these qualifications.
    VADEQ agrees that the change EPA calls for above is required and 
has committed to seek this change. In addition, VADEQ has stated that 
``In addition to the provisions of 9 VAC 110 A 1, the Board will also 
include in the permit those applicable requirements covering activities 
deemed insignificant under 9 VAC 5 Chapter 80, Article 4.'' (See letter 
from VADEQ Director dated February 27, 1997.) Finally, Virginia's 
regulations elsewhere suggest that the Commonwealth's program 
inadvertently contains the deficiencies identified at 9 VAC 5-80-110 
A.1 and 5-80-490 A.1. This is suggested by the fact that 9 VAC 5-80-110 
B.1, 5-80-150 A.4, 5-80-490 B.1 and 5-80-510 B 4 require that permits 
``specify and reference applicable emission limitations and standards, 
including those [* * *] that assure compliance with all applicable 
requirements'' and that permits may be issued only if ``the conditions 
of the permit provide for compliance with all applicable 
requirements.'' In light of this, EPA has determined that Virginia's 
program substantially meets the requirements of Title V with respect to 
this issue and that it is appropriate to grant interim approval of 
Virginia's program. EPA's treatment of this issue is consistent with 
how it has been treated in other States.
4. Emergency or Standby Compressors, Pumps, and/or Generators 
Inappropriately Defined as Insignificant
    EPA also notes that under 9 VAC 5-80-720 C 4 Virginia designates as 
insignificant emissions units ``Internal combustion powered compressors 
and pumps used for emergency replacement or standby service, operating 
at 500 hours per year or less, as follows'' and then goes on to cite 
emergency generators of various horsepower ratings, depending on 
whether or not the generators are gasoline, diesel, or natural gas 
powered. EPA believes that 9 VAC 5-80-720 C 4 is confusing in that 
Virginia first defines emergency or standby compressors or pumps as 
insignificant, and then further qualifies the units considered 
insignificant by discussing various sizes of emergency generators. 
VADEQ has agreed to seek to clarify this provision in the revised 
regulations Virginia will be submitting in the future. In the interim, 
VADEQ has explained to EPA that ``With regard to the provisions of 9 
VAC 5-80-720 C 4 regarding the designation of certain internal 
combustion powered compressors and pumps as insignificant emissions 
units, the exemption levels (expressed in horsepower) for the emergency 
generators refer to the size of the engines that provide the power to 
the compressors and pumps.'' (See letter from VADEQ Director dated 
February 27, 1997.)
    EPA notes that engines of the sizes designated will likely be large 
enough to trigger certain NSPS standards, e.g., 40 CFR part 60, Subpart 
Dc--Standards of Performance for Small Industrial-Commercial-
Institutional Steam Generating Units, or GG--Standards of Performance 
for Stationary Gas Turbines, or be major sources in and of themselves. 
EPA believes that to avoid confusion any list of insignificant 
activities should not contain items which may clearly be subject to 
applicable requirements. Accordingly, before EPA can grant full 
approval to the Commonwealth's program, Virginia must not only clarify 
its insignificant activity provision for emergency pumps, compressors, 
or generators, but must also reduce the horsepower size designations 
sufficiently to exclude any unit which would likely trigger an 
applicable requirement or emit pollutants in major amounts. It is 
important to note that the major source thresholds for air pollutants 
will vary depending on nonattainment designations in the Commonwealth. 
For example, given that there is a serious ozone nonattainment area in 
northern Virginia, the State's insignificant activities will be judged 
relative to the major source thresholds of 50 tons/year for volatile 
organic compounds and nitrogen oxides.
    EPA took a similar position in its notice giving final interim 
approval to Tennessee's program. See 61 FR 39335 (July 29, 1996). In 
that notice EPA stated that ``insignificant activities lists should 
avoid the potential for confusion created when an activity that is 
plainly subject to an applicable requirement is included.'' 61 FR 
39337. EPA required, as an interim approval item, that Tennessee 
address EPA's concerns regarding the potential for confusion which 
arose because certain activities and emission units were listed as 
insignificant which could also be subject to applicable requirements. 
EPA took similar positions when it proposed approval of West Virginia's 
program at 60 FR 44799 (August 29, 1995), and then approved that 
program at 60 FR 57352 (November 15, 1995), and when it proposed 
approval of Florida's program at 60 FR 32292 (June 21, 1995), and then 
approved that program at 60 FR 49343 (September 25, 1995).
5. ``Off-Permit Changes'' Defined as Including Changes Subject to 
Requirements Under Title IV
    In addition to the acid rain regulatory provisions cited above that 
track flaws in Virginia's main Title V rule, EPA is concerned with two 
other provisions in the Commonwealth's regulations relating to acid 
rain requirements. Currently, EPA's Part 70 rule allows sources to make 
certain so-called ``off-permit'' changes that are not addressed or 
prohibited by the permit without obtaining a permit revision. See 40 
CFR 70.4(b)(14). However, this flexibility does not extend to changes 
that are modifications under Title I of the CAA or those that are 
subject to any of the acid rain requirements under Title IV of the CAA. 
40 CFR 70.4(b)(15). Regarding acid rain requirements, EPA stated in its 
preamble to the final part 70 rule that ``the allowance trading system 
provided for in Title IV will not be feasible unless there is an 
accurate accounting of each source's obligations thereunder in the 
Title V permit.'' 57 FR 32250, 32270 (July 21, 1992). Virginia's 
regulations allowing ``off permit'' changes at 9 VAC 5-80-280.C and 5-
80-680.C fail to exclude from eligibility changes that are subject to 
requirements under Title IV. For the reasons discussed in the preamble 
to the final part 70 rule, EPA has determined that it cannot grant full 
approval to Virginia's program until Virginia revises its regulations 
to correctly exclude Title IV changes from off-permit eligibility. In 
the meantime, EPA does not view this deficiency as preventing 
Virginia's program from substantially meeting the requirements of Title 
V. Thus, the Commonwealth's program is still eligible for interim 
approval.
6. Affirmative Defense Provisions Deficient
    Part 70 provides that a source may qualify for an affirmative 
defense for noncompliance with a technology based emission limitation 
in ``emergency'' situations if certain conditions are met. Section 
70.6(g)(1) defines what kind of situations may qualify as 
``emergencies,'' and Sec. 70.6(g)(3) provides, in part, that the 
affirmative defense of emergency shall be demonstrated through properly 
signed, contemporaneous operating logs, or other relevant evidence 
that, ``(iv) the permittee submitted notice of the emergency to the 
permitting authority within 2 working days of the time when emission 
limitations were exceeded due

[[Page 12784]]

to the emergency.'' Section 70.6(g)(3) further provides that this 
notice would satisfy the requirement for ``prompt'' reporting of 
deviations required by Sec. 70.6(a)(3)(iii)(B).
    In its program Virginia uses the term ``malfunction'' instead of 
emergency. Virginia's definition of this term is consistent with how 
EPA defines ``emergency.'' However, Virginia's operating permit 
regulations at 9 VAC 5-80-250.B.4 and 5-80-650 provide in part that 
``[f]or malfunctions that occurred for one hour or more, the permittee 
submitted to the board by the deadlines established in B.4.a and B.4.b. 
a notice and a written statement containing a description of the 
malfunction, any steps taken to mitigate emissions, and corrective 
actions taken. The notice fulfills the requirement of 9 VAC 5-80-110 
F.2.b. to report promptly deviations from permit requirements.'' 
(emphasis added)
    Virginia allows sources to claim the affirmative defense for 
malfunctions which last less than one hour even when the source does 
not notify the Commonwealth of the malfunction. Thus, Virginia's 
affirmative defense provision is less stringent than that required 
under Sec. 70.6(g), and sources may be able to shield themselves from 
liability beyond what is allowed under part 70. EPA cannot grant full 
approval to Virginia's program until Virginia revises its regulations 
to correct this deficiency. However, EPA does not view this deficiency 
as preventing Virginia's program from substantially meeting the 
requirements of Title V, since it is of limited scope and Virginia's 
regulations otherwise comport with Sec. 70.6(g). Thus, the 
Commonwealth's program is still eligible for interim approval.

C. Other EPA Comments

1. Acid Rain Provisions
    Virginia submitted Rule 8-7 to require operating permits for 
sources subject to acid rain emission reduction requirements or 
limitations. Except for the deficiencies discussed elsewhere in today's 
notice, EPA has determined that Virginia's Rule 8-7 for acid rain 
sources is acceptable.
2. Authority and Commitments for Section 112 Implementation
    Section 112 of the CAA requires EPA to control hazardous air 
pollutant emissions from various categories of sources by establishing 
maximum achievable control technology (MACT) standards. Upon request, 
EPA delegates the authority to implement and enforce section 112 
requirements to State and local agencies. Virginia requested that EPA 
grant Virginia ``delegation of authority upon approval of the operating 
permit program for all Section 112 programs except Section 112(r), 
prevention of accidental releases.'' (See the VADEQ Director's 11/12/93 
letter submitting Virginia's initial request for approval of its Title 
V program.) Virginia demonstrated that it has in Va. Code Sec. 10.1-
1322.A. and Rule 8-5 the broad legal authority to incorporate into 
permits and to enforce applicable CAA section 112 requirements. 
Virginia supplemented its broad legal authority with a commitment to 
``develop the state regulatory provisions as necessary to carry out 
these programs and the responsibilities under the delegation after 
approval of the operating permit program and EPA has issued the 
prerequisite guidance for development of these Title III programs.'' 
(See the VADEQ Director's 11/12/93 letter submitting Virginia's initial 
request for approval of its Title V program.) (Note: States must meet 
their responsibilities under the CAA and part 70 without respect to 
whether or not EPA has issued ``guidance.'' Nevertheless, EPA's view is 
that it has issued sufficient guidance to enable States to develop all 
necessary regulatory provisions pertaining to section 112 requirements 
(formerly referred to as Title III requirements). With respect to CAA 
section 112(r), Virginia has the authority under section 9 VAC 5-80-90 
1C to require that an applicant state that the source has complied with 
CAA section section 112(r) or state in the compliance plan that the 
source intends to comply and has set a schedule to do so.
    When EPA has not promulgated an applicable Federal MACT emission 
limitation, section 112(g) of the Clean Air Act requires the Title V 
permitting authority (generally a State or local agency responsible for 
the program) to determine a MACT emission limitation on a case by case 
basis. On December 27, 1996, EPA promulgated regulations at 40 CFR part 
63 (61 FR 68384, December 27, 1996) (the 112(g) MACT rule) implementing 
certain provisions in section 112(g). The 112(g) MACT rule assures that 
owners or operators of a newly constructed, reconstructed, or modified 
major sources of hazardous air pollutants (HAP)(unless they are 
specifically exempted) will be required to install effective pollution 
controls during the period before EPA can establish a national MACT 
standard for a particular industry, provided they are located in a 
State with an approved Title V permit program. The rule does not 
require new source MACT for modifications to existing sources.
    The 112(g) MACT rule establishes requirements and procedures for 
owners or operators to follow to comply with section 112(g), and 
contains guidance for permitting authorities in implementing 112(g). 
Section 112(g) will be in effect in a State or local jurisdiction on 
the date that the permitting authority, under Title V, places its 
implementing program for section 112(g) into effect. Permitting 
authorities have up to 18 months from the December 27, 1996, date of 
publication of the 112(g) rule to initiate implementing programs. After 
the 18 month transition period, if a State or local permitting 
authority is unable to initiate a section 112(g) program, there are two 
options for obtaining a MACT approval: Either (1) the EPA will issue 
112(g) determinations for up to one year; or (2) the permitting 
authority will make 112(g) determinations according to procedures 
specified at 40 CFR 63.43, and will issue a notice of MACT approval 
that will become final and legally enforceable after the EPA concurs in 
writing with the permitting authority's determination. Requirements for 
permitting authorities are found at 40 CFR 63.42.
    To place its 112(g) implementing program into effect, the chief 
executive officer of the State or local jurisdiction must certify to 
EPA that its program meets all the requirements set forth in the 112(g) 
rule, and publish a notice stating that the program has been adopted 
and specifying its effective date. The program need not be officially 
reviewed or approved by EPA.
3. Deferral of Area Sources
    Virginia's regulations continue to present a minor facial 
inconsistency with part 70's applicability requirements with respect to 
permitting of area sources which EPA wishes to clarify in advance. In 
Virginia Rule 8-5, 9 VAC 5-80-50 D.1 provides that area sources subject 
to requirements promulgated under section 111 or 112 of the CAA are 
deferred from the obligation to obtain permits, and that the ``decision 
to require a permit for these sources shall be made at the time that a 
new standard is promulgated and shall be incorporated into [Virginia's 
regulations] along with the listing of the new standard.''
    EPA's regulations at 40 CFR 70.3(b)(2) provide that the decision to 
exempt area sources that become subject to section 111 or 112 standards 
adopted after July 21, 1992, will be made when such standards are 
promulgated. EPA interprets this language to mean that unless the new 
standard explicitly exempts area sources from Title V

[[Page 12785]]

applicability, these area sources remain subject to the permitting 
requirement of CAA section 502(a) and are required to obtain permits.
    EPA was initially concerned that owners and operators of these area 
sources might, based on Virginia's regulations, mistakenly believe they 
are not required to obtain permits either because: (1) EPA may have not 
made an explicit decision whether to exempt them in setting the 
relevant standard, thus resulting in no ``decision'' to require them to 
obtain a permit being incorporated into Virginia's regulations at the 
time the standard is incorporated; or (2) Virginia may have not yet 
incorporated into its regulations the relevant standard, and its 
associated implicit or explicit decision whether to exempt area 
sources. Regarding the first possible reason, EPA believes that 
Virginia's regulations can be reasonably interpreted to properly 
require such sources to obtain permits, if Virginia's incorporation of 
relevant sections 111 and 112 standards is treated as having 
incorporated both any explicit decisions to exempt sources from 
permitting and any explicit or implicit decisions by EPA to subject 
them to the permitting requirement. The VADEQ has committed to EPA that 
``In cases where EPA has promulgated a standard under section 111 or 
section 112 after July 21, 1992 and failed to declare whether or not 
the facility or source category covered by the standard is subject to 
the Title V program or not, the Board in making decisions under 9 VAC 
5-80-90 D shall presume that the facility or source category is subject 
to the Title V program.'' (See letter from the Director of the VADEQ 
dated February 27, 1997.) Regarding the second possible area of 
confusion, Virginia's provision does not require area sources to obtain 
permits, even if EPA has explicitly stated in the substantive section 
111 or section 112 rulemaking that they must, unless and until Virginia 
incorporates the underlying standard into its regulations. Thus, if 
Virginia does not incorporate the substantive federal rules into its 
regulations, the requirement for these sources to obtain a permit is 
not triggered under Virginia's program. The Commonwealth has 
incorporated all relevant sections 111 and 112 standards to date, 
including any that extend the permitting requirement to area sources. 
Thus, the potential for confusion exists only with respect to section 
111 or section 112 standards EPA promulgates in the future. EPA notes 
that Virginia has procedures for prompt incorporation of new federal 
standards. Since EPA has no reason to believe that the Commonwealth 
will not continue to timely incorporate these standards as they become 
promulgated, Virginia's regulations do not in the Agency's view present 
an impediment to full approval regarding this issue. EPA will, of 
course, in conducting its oversight of Virginia's implementation of the 
program, watch for any indication that delayed incorporation of 
substantive standards results in area sources not getting permitted in 
a timely manner.
4. Audit Immunity and Privilege Law
    Among other minimum elements required for approval of a State 
operating permits program, the CAA includes the requirement that the 
permitting authority has adequate authority to assure that sources 
comply with all applicable CAA requirements as well as authority to 
enforce permits through recovery of certain civil penalties and 
appropriate criminal penalties. Sections 502(b)(5) (A) and (E) of the 
CAA. In addition, Part 70 explicitly requires States to have certain 
enforcement authorities, including authority to seek injunctive relief 
to enjoin a violation, to bring suit to restrain violations imposing an 
imminent and substantial endangerment to public health or welfare, and 
to recover appropriate criminal and civil penalties. 40 CFR 70.11. 
Moreover, section 113(e) of the CAA sets forth penalty factors for EPA 
or a court to consider for assessing penalties for civil and criminal 
violations of Title V permits. EPA is concerned about the potential 
impact of some State privilege and immunity laws on the ability of such 
States to enforce federal requirements, including those under Title V 
of the CAA.
    Virginia has adopted legislation that would provide, subject to 
certain conditions, for an environmental assessment (audit) 
``privilege'' for voluntary compliance evaluations performed by a 
regulated entity. The legislation further addresses the relative burden 
of proof for parties either asserting the privilege or seeking 
disclosure of documents for which the privilege is claimed. Virginia's 
legislation also provides, subject to certain conditions, for a penalty 
waiver for violations of environmental laws when a regulated entity 
discovers such violations pursuant to a voluntary compliance evaluation 
and voluntarily discloses such violations to the Commonwealth and takes 
prompt and appropriate measures to remedy the violations.
    Virginia's Voluntary Environmental Assessment Privilege, Code 
Sec. 10.1-1198, provides a privilege that protects from disclosure 
documents <SUP>1 and information about the content of those documents 
that are the product of a voluntary environmental assessment. The 
privilege does not extend to documents or information that are: (1) 
Generated or developed before the commencement of a voluntary 
environmental assessment; (2) that are prepared independently of the 
assessment process; (3) that demonstrate a clear, imminent and 
substantial danger to the public health or environment; or (4) that are 
required by law. Particularly since documents required by Title V of 
the Act and by part 70 are documents ``required by law,'' EPA 
interprets the Commonwealth's privilege as not extending to Title V 
required documents. Virginia's Office of the Attorney General has 
submitted a legal opinion which supports EPA's understanding that the 
Commonwealth's Title V program requirements for compliance monitoring, 
reporting of violations, record keeping, and compliance certification, 
together render the privilege inapplicable to compliance evaluations, 
at a Title V source, of the Commonwealth's Title V requirements.
---------------------------------------------------------------------------

    \1\ Document is defined to include ``field notes, records of 
observations, findings, opinions, suggestions, conclusions, drafts, 
memoranda, drawings, photographs, videotape, computer-generated or 
electronically recorded information, maps, charts, graphs and 
surveys.'' Va. Code Sec. 10.1-1198.A.
---------------------------------------------------------------------------

    Virginia's immunity law, Va. Code Sec. 10.1-1199, provides that 
``[t]o the extent consistent with requirements imposed by federal 
law,'' any person making a voluntary disclosure of information to a 
state agency regarding a violation of an environmental statute, 
regulation, permit, or administrative order is granted immunity from 
administrative or civil penalty.
    The Office of the Attorney General's legal opinion states that the 
phrase ``to the extent consistent with requirements imposed by federal 
law'' renders this statute inapplicable to Title V enforcement. No 
person can claim or be accorded immunity from any enforcement action 
that involves the Commonwealth's Title V program because to do so would 
be inconsistent with the requirements of Title V of the federal Clean 
Air Act. Thus, the statute by its terms cannot apply to sources 
operating under a Title V permit.'' Thus, EPA is not listing any 
conditions on Virginia's Title V program approval for this issue 
because the legislation will not preclude the Commonwealth from 
enforcing its Title V permit program consistent with the CAA's 
requirements.

[[Page 12786]]

5. Variance Provision
    While not an issue for purposes of program approval, it should be 
noted that Virginia has the authority to issue a variance from 
requirements imposed by Virginia law. The variance provision at Va. 
Code Sec. 10.1-1307.C. empowers the Air Pollution Control Board, after 
a public hearing, to grant a local variance from any regulation adopted 
by the board. EPA regards this provision as wholly external to the 
program submitted for approval under Part 70, and consequently is 
proposing to take no action on this provision of Virginia law. EPA has 
no authority to approve provisions of State law, such as the variance 
provision referred to, which are inconsistent with the CAA. EPA does 
not recognize the ability of a permitting authority to grant relief 
from the duty to comply with a federally enforceable permit, except 
where such relief is consistent with the applicable requirements of the 
CAA and is granted through procedures allowed by Part 70. EPA reserves 
the right to enforce the terms of the permit where the permitting 
authority purports to grant relief from the duty to comply with a 
permit in a manner inconsistent with the CAA and Part 70 procedures.
6. Permit Fee Changes
    EPA notes that Virginia Rule 8-6 includes a provision, at 9 VAC 5-
80-40 D. and E., which allows Virginia to assess a fee of less than $25 
per ton (1989 dollars) adjusted for inflation, if Virginia determines 
that it would collect more money than required to fund its Title V 
program if it assessed the full $25 per ton fee (1989 dollars), 
adjusted for inflation. If Virginia chooses in the future to collect a 
fee of less than $25 (1989 dollars), adjusted for inflation, its fee 
assessment would no longer meet the requirement for presumed adequacy 
under 40 CFR 70.9. Accordingly, Virginia would trigger the requirements 
under 40 CFR 70.9(b)(5) that it provide EPA with a detailed accounting 
that its fee schedule meets the requirements of 40 CFR 70.9(b)(1).
    Before the Commonwealth assesses a fee lower than the presumptive 
minimum of $25 per ton (1989 dollars), adjusted for inflation, it must 
obtain EPA approval of such a fee. EPA would approve such a fee if 
Virginia submitted a detailed accounting showing that the fee would 
result in the collection of sufficient funds to run a fully adequate 
Title V program. This requirement for EPA approval of any fee lower 
than the presumptive minimum is consistent with the requirements of 40 
CFR 70.9, and is implied by 9 VAC 5-80-40 D., which states that ``Any 
adjustments made to the annual permit program fee shall be made within 
the constraints of 40 CFR 70.9.''
7. Title I Modifications
    The EPA proposed to define ``Title I modification'' in the August 
31, 1995 Operating Permits Program and Federal Operating Permits 
Program proposed rule. The EPA proposed to define Title I modification 
to mean any modification under part C and D of Title I or sections 
111(a)(4), 112(a)(5), or 112(g) of the Act and regulations promulgated 
pursuant to Sec. 61.07 of part 61. If the definition of ``Title I 
modification'' is finalized as proposed in the August 31, 1995, 
proposed rule, the State's definition would be consistent with part 70. 
If the definition of ``Title I modification'' is changed from that 
proposed in the August 31, 1995, proposed rule to include minor new 
source review changes, the Commonwealth will need to revise its permit 
regulation to be consistent with part 70.

IV. Proposed Aaction

    EPA is proposing to grant interim approval to the operating permits 
program submitted by Virginia, and is soliciting public comment on 
whether or not such approval is appropriate. The portions of the 
submittal for which EPA is proposing interim approval consist of the 
operating permit and operating permit fee regulations submitted on 
September 10, 1996, the acid rain operating permit regulations 
submitted on September 12, 1996, and other non-regulatory 
documentation. If EPA does grant such approval, Virginia will be 
required to correct all of the remaining deficiencies in its program 
which are discussed earlier in this notice before EPA could grant full 
approval to Virginia's program. The interim approval, which would not 
be renewable, would extend for a period of two years. During the 
interim approval period Virginia would be protected from sanctions for 
failure to have a program, and EPA would not be obligated to promulgate 
a Federal permits program in the Commonwealth. Permits issued under a 
program with interim approval have full standing with respect to Part 
70, and the one year time period for submittal of permit applications 
by subject sources begins upon interim approval, as does the three year 
time period for processing the initial permit applications.
    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 also proposing to grant approval under section 
112(l)(5) and 40 CFR 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.

V. Sanctions Stayed

    Pursuant to section 502(d)(2)(A) of the CAA, EPA may, at its 
discretion, apply any of the sanctions in section 179(b) at any time 
following the effective date of a final disapproval. The available 
sanctions include a prohibition on the approval by the Secretary of 
Transportation of certain highway projects or the awarding of certain 
federal highway funding, and a requirement that new or modified 
stationary sources or emissions units for which a permit is required 
under Part D of Title I of the CAA achieve an emissions reductions-to-
increases ratio of at least 2-to-1. In addition, EPA is required by 
section 502(d)(2)(B) of the CAA to apply one of the sanctions in 
section 179(b), as selected by the Administrator, on the date 18 months 
after the effective date of a final disapproval, unless prior to that 
date the State had submitted a revised operating permits program and 
EPA had determined that it corrected the deficiencies that prompted the 
final disapproval. Moreover, if the Administrator finds a lack of good 
faith on the part of the State, both sanctions are to apply after the 
expiration of the 18-month period until the Administrator determines 
that the State has come into compliance. In all cases, if, six months 
after EPA applies the first sanction, the State has not submitted a 
revised program that EPA has determined corrects the disapproved 
program's deficiencies, a second sanction is required. Finally, if EPA 
has not granted full approval to the State's program by November 15, 
1995, and the State's program at that point does not have interim 
approval status, EPA must promulgate, administer and enforce a Federal 
permits program for the State on that date.
    EPA first disapproved Virginia's operating permits program in a 
Federal Register notice published on December 5, 1994, which became 
effective on January 5, 1995. As a result, EPA's authority to apply 
discretionary

[[Page 12787]]

sanctions to Virginia arose on January 5, 1995, and the 18-month period 
before which EPA is required to apply sanctions also began on that 
date. EPA was required to apply the first sanction on July 5, 1996 and 
the second sanction on January 5, 1997, unless by those dates EPA had 
determined that Virginia had corrected each of the deficiencies that 
prompted EPA's original disapproval. EPA interprets the CAA to require 
the Administrator to select by rulemaking which sanction to apply 
first, before mandatory sanctions may actually be imposed. These 
sanctions have not been applied in Virginia because EPA has not yet 
published such a rule covering deficiencies under Title V.
    EPA's sanctions policy for applying sanctions for State Title V 
Operating Permits Program largely follows the approach under Title I of 
the Act (see 40 CFR 52.31, 59 FR 39832 (August 4, 1994). Update to 
Sanctions Policy for State Title V Operating Permits Programs, John S. 
Seitz, Director Office of Air Quality Planning and Standards, (March 
28, 1995).
    Based on this proposed approval of the Virginia Title V operating 
permits program, EPA is making an interim final determination by this 
action that the Commonwealth has corrected the deficiencies prompting 
the original disapproval of the Virginia Title V operating permits 
program. EPA has determined that it is more likely than not that the 
Commonwealth has corrected the deficiencies that prompted the original 
disapproval of the Virginia operating permits program. This interim 
final determination will stay the implementation of sanctions unless 
and until either this proposed approval is finalized or is withdrawn.
    Although this action regarding sanctions is effective upon 
publication, EPA will take comment on this interim final determination 
as well as on EPA's proposed interim approval of the Commonwealth's 
submittal. EPA will publish a final notice taking into consideration 
any comments received on EPA's proposed action and this interim final 
action. EPA has determined that it is appropriate to give immediate 
effect to this interim final determination that Virginia has corrected 
its prior disapproval deficiencies because it would not be in the 
public interest to leave Virginia vulnerable to sanctions pending 
finalization of the proposed approval. See, e.g., 59 FR 39832, 39838 
and 39849-50 (August 4, 1994).
    Today EPA is also providing the public with an opportunity to 
comment on this interim final determination. If, based on any comments 
on this action and any comments on EPA's proposed interim approval of 
Virginia's Title V submittal, EPA determines that the Virginia's Title 
V submittal is not approvable and this final action was inappropriate, 
EPA will take further action to disapprove the Title V submittal. If 
EPA's proposed approval of the Virginia Title V submittal is reversed, 
then Virginia would remain vulnerable to sanctions under section 
502(d)(2)(A) of the CAA.

VI. Administrative Requirements

A. Request for Public Comments

    The EPA is requesting comments on this proposed interim approval. 
Copies of the State's submittal and other information relied upon for 
the proposed interim approval are contained in a docket maintained at 
the EPA Regional Office. The docket is an organized and complete file 
of all the information submitted to, or otherwise considered by, EPA in 
the development of this proposed interim approval. The principal 
purposes of the docket are: (1) To allow interested parties a means to 
identify and locate documents so that they can effectively participate 
in the approval process; and (2) to serve as the record in case of 
judicial review. The EPA will consider any comments received by April 
17, 1997.

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 CAA 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 significantly 
impact a substantial number of small entities.

D. Federal Mandates

    Under Section 202 of the Unfunded Mandates Reform Act of 1995 
(''Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final action 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 consider 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. This Federal 
action proposes to approve Virginia's pre-existing Title V program, and 
imposes no new Federal requirements. Accordingly, this action would not 
impose a federal mandate which would result in additional costs for 
State, local, or tribal governments, or for the private sector.

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.

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

    Dated: March 7, 1997.
W. Michael McCabe,
Regional Administrator,
Region III.
[FR Doc. 97-6826 Filed 3-17-97; 8:45 am]
BILLING CODE 6560-50-P