[Federal Register Volume 59, Number 176 (Tuesday, September 13, 1994)]
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From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 94-22582]

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[Federal Register: September 13, 1994]


40 CFR Part 70



Operating Permit Program: Proposed Interim Approval; Minnesota 
Pollution Control Agency

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed interim approval.


SUMMARY: The EPA proposes interim approval of the Operating Permit 
Program submitted by the Minnesota Pollution Control Agency (MPCA) for 
the purpose of complying with Federal requirements which mandate that 
States develop, and submit to EPA, programs for issuing operating 
permits to all major stationary sources, and to certain other sources.
DATES: Comments on this proposed action must be received in writing by 
October 13, 1994.

ADDRESSES: Comments should be addressed to Rachel Rineheart (AE-17J) at 
the Region 5 address indicated.
    Copies of the State's submittal and other supporting information 
used in developing the proposed rule are available for inspection 
during normal business hours at the following location: U.S. 
Environmental Protection Agency, Region 5, Air Enforcement Branch (AE-
17J), 77 West Jackson Boulevard, Chicago, Illinois 60604.
    Please contact Rachel Rineheart at (312) 886-7017 to arrange a time 
if inspection of the submittal is desired.

FOR FURTHER INFORMATION CONTACT: Rachel Rineheart, U.S. Environmental 
Protection Agency, Region 5, Air Enforcement Branch (AE-17J), 77 West 
Jackson Boulevard, Chicago, Illinois 60604, (312) 886-7017.


I. Background and Purpose

A. Introduction

    As required under title V of the Clean Air Act (``the Act'') as 
amended (1990), EPA has promulgated rules which define the minimum 
elements of an approvable State operating permit program and the 
corresponding standards and procedures by which the EPA will approve, 
oversee, and withdraw approval of State operating permit programs (see 
57 FR 32250 (July 21, 1992)). These rules are codified at 40 Code of 
Federal Regulations (CFR) part 70. Title V requires States to develop, 
and submit to EPA, programs for issuing these operating permits to all 
major stationary sources and to certain other sources.
    The Act requires that States develop and submit these 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 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 end of an interim 
program, it must establish and implement a Federal program.

B. Scope

    MPCA's permitting rule, Minnesota Rules, Chapter 7007, combines the 
State's preconstruction and operating permit programs into a single 
permitting program. This approval is limited solely to Minnesota's part 
70 operating permit program submittal of November, 15, 1993. This is 
not a rulemaking under section 110 of the Act. The State has submitted 
a separate request for approval of this rule as a preconstruction 
permitting program and a federally enforceable state operating permit 
program as a revision to the State Implementation Plan.
    Minnesota's submittal includes a statement that the program will be 
enforceable in the entire State of Minnesota except Indian tribal 
lands. Because MPCA has not demonstrated, consistent with applicable 
principles of Indian law and Federal Indian policies, legal authority 
to regulate sources on tribal lands, the proposed interim approval of 
Minnesota's operating permits program will not extend to lands within 
the exterior boundaries of any Indian reservation in the State of 
Minnesota.1 Title V sources located within the exterior boundaries 
of Indian reservations in Minnesota will be subject to either the 
Federal operating permits program, to be promulgated at 40 CFR part 71, 
or to a tribal operating permits program approved pursuant to title V 
and the regulations that will be promulgated under section 301(d) of 
the Act. The section 301(d) regulations will authorize EPA to treat 
tribes in the same manner as States for appropriate Act 

    \1\This is not a determination that MPCA could not possibly 
demonstrate jurisdiction over sources within the exterior boundaries 
of Indian reservations in Minnesota. However, no such showing has 
been made.
    \2\Tribes may also have inherent sovereign authority to regulate 
air pollutants from sources on tribal lands.

II. Proposed Action and Implications

A. Analysis of State Submission

    1. Support Materials
    Charles W. Williams, Commissioner, MPCA, submitted Minnesota's part 
70 Operating Permit Rule on November 15, 1993, requesting source 
category-limited interim approval of the State's program. The 
Commissioner of MPCA has the authority to submit this rule on behalf of 
the Governor of Minnesota under Minnesota Statutes section 116.03, 
subdivision 3. The submittal contained all required elements under 40 
CFR 70.4, including a description of Minnesota's operating permit 
program, permitting program documentation, and the Attorney General's 
legal opinion that the laws of the State of Minnesota provide adequate 
authority to carry out all aspects of the program required by the Clean 
Air Act.
2. Regulations and Program Implementation
    The Minnesota permitting regulations (Minnesota Rules, Chapter 
7007) substantially meet the requirements of 40 CFR 70.4, 70.5, and 
70.6 with respect to permit content including operational flexibility; 
40 CFR 70.7 and 70.8 with respect to permit processing requirements 
(including public participation and minor permit modifications); and 40 
CFR 70.11 with respect to requirements for enforcement authority. The 
Minnesota permitting regulations meet the requirements of 40 CFR 70.2 
and 70.3 with respect to applicability and 40 CFR 70.5 with respect to 
criteria which define insignificant activities and complete application 
    Minnesota Rules 7007.0100, subpart 26 defines ``Title I 
modification'' as ``any change that constitutes a modification under 
any provision of [T]itle I of the Act.'' In addition, Minnesota's rule 
specifically includes major modifications under parts C and D of title 
I, modifications subject to a New Source Performance Standard, and 
modifications subject to a National Emission standard for Hazardous Air 
Pollutants (NESHAPs) or any other rules adopted by the Administrator 
under section 112 of the Act. Commissioner Charles Williams states in 
his April 19, 1994, letter that Minnesota interprets its definition to 
include modifications made pursuant to a preconstruction permitting 
program approved into the State Implementation Plan under section 
110(a)(2)(C) of the Act. The EPA is soliciting comment, as part of the 
proposal to revise part 70, on the proper definition of ``Title I 
modifications.'' However, EPA believes that Minnesota's definition, in 
light of this clarification, would be consistent with any definition of 
``Title I modifications'' EPA may adopt.
    For further discussion on the State's regulations, please refer to 
the Technical Support Document accompanying this approval. The program 
submittal meets the program requirements of title V and 40 CFR part 70 
except as discussing in II.B of this document.
3. Permit Fee Demonstration
    Minnesota's fee collection rule, Minnesota Rules 7002.0035, sets 
the minimum amount of funding the State receives from title V sources 
by multiplying the number of tons of regulated pollutants listed in the 
most recent available emissions inventory, with a maximum of 4,000 tons 
per pollutant per facility, by $25 + the Consumer Price Index (CPI) per 
ton. However, the current definition of regulated pollutant in MPCA's 
fee rule (Minnesota Rules 7007.0015, subpart 4) does not include 
particulate matter greater than 10 microns in diameter, total reduced 
sulfur, hydrogen chloride, or sulfuric acid mist, all of which are 
included in the Federal definition. MPCA intends to remedy this 
discrepancy in a rulemaking scheduled for 1994. When this discrepancy 
has been corrected, MPCA's fee rule will set the minimum funding the 
State will receive at the presumptive minimum. However, during the 
first year after interim approval is granted, the fees that the State 
of Minnesota will be collecting, which has already been established 
through the State's regulations, will result in collection of a dollar 
per ton amount less than the presumptive minimum.
    Minnesota will collect $6,558,000 in emission fees for the first 
year of its program, and has demonstrated that the fees collected will 
be sufficient to run the program for the first year. However, the fee 
demonstration in Minnesota's submittal does not contain all information 
required by 40 CFR 70.9. Specifically, Minnesota's fee demonstration 
does not contain an estimate of permit program costs for the first four 
years after program approval. Therefore, the State's fee demonstration 
may only be given an interim approval.
    In order for the State to receive full approval of it's program, 
the State must either change its definition of regulated air pollutant 
in its fee rule to include all pollutants included in the Federal 
definition, or it must submit a four year projection of costs and fees 
to be collected that demonstrates that the State will collect fees in 
an amount sufficient to run its program.
4. Provisions Implementing the Requirements of Other Titles of the Act
    a. Authority and/or Commitments for Section 112 Implementation. 
Minnesota has demonstrated in its title V program submittal adequate 
legal authority to implement and enforce all section 112 requirements 
through the title V permit. This legal authority is contained in 
Minnesota's enabling legislation and in regulatory provisions defining 
``applicable requirements'' and stating that the permit must 
incorporate all applicable requirements. EPA has determined that this 
legal authority is sufficient to allow Minnesota to issue permits that 
assure compliance with all section 112 requirements.
    EPA is interpreting the above legal authority to mean that 
Minnesota is able to implement and enforce all section 112 
requirements. For further rationale on this interpretation, please 
refer to the Technical Support Document accompanying this rulemaking 
and the April 13, 1993, guidance memorandum titled ``Title V Program 
Approval Criteria for section 112 Activities,'' signed by John Seitz.
    b. Implementation of 112(g) Upon Program Approval. As a condition 
of approval of the part 70 program, Minnesota is required to implement 
section 112(g) of the Act from the date of approval of the part 70 
program. Imposition of case-by-case determinations of Maximum 
Achievable Control Technology (MACT) or offsets under section 112(g) 
will require the use of a mechanism for establishing federally 
enforceable restrictions on a source-specific basis. The EPA is 
proposing to approve Minnesota's preconstruction permitting program 
found in Minnesota Rules Chapter 7007 under the authority of title V 
and part 70 solely for the purpose of implementing section 112(g) 
during the transition period between title V approval and adoption of a 
State rule implementing EPA's section 112(g) regulations. EPA believes 
this approval is necessary so that Minnesota has a mechanism in place 
to establish federally enforceable restrictions for section 112(g) 
purposes from the date of part 70 approval. Although section 112(l) 
generally provides authority for approval of State air toxics programs, 
title V and section 112(g) provide authority for this limited approval 
because of the direct linkage between 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. If Minnesota does not 
wish to implement section 112(g) through its preconstruction permit 
program and can demonstrate that an alternative means of implementing 
section 112(g) exists, the EPA may, in the final action approving 
Minnesota's part 70 program, approve the alternative instead.
    This approval is for an interim period only, until such time as the 
State adopts rules implementing regulations promulgated by EPA to 
implement section 112(g). Accordingly, EPA is proposing to limit the 
duration of this approval to a reasonable time following promulgation 
of section 112(g) regulations so that Minnesota, acting expeditiously, 
will be able to adopt regulations consistent with the section 112(g) 
regulations. The EPA is proposing here to limit the duration of this 
approval to 18 months following promulgation by EPA of section 112(g) 
regulations. Comment is solicited on whether 18 months is an 
appropriate period considering Minnesota's procedures for adoption of 
    c. Program for Delegation of Section 112 Standards as Promulgated. 
Requirements for approval, specified in 40 CFR 70.4(b), encompass 
section 112(l)(5) approval 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, the EPA is also proposing to grant approval 
under section 112(l)(5) and 40 CFR 63.91 of Minnesota's program for 
receiving delegation of section 112 standards that are unchanged from 
the Federal standards as promulgated. Minnesota has informed EPA that 
it intends to accept delegation of section 112 standards through 
automatic delegation. The details of this delegation mechanism will be 
set forth in a Memorandum of Agreement between Minnesota and EPA, 
expected to be completed prior to approval of Minnesota's section 
112(l) program for delegation of unchanged Federal standards. This 
program applies to both existing and future standards, but is limited 
to sources that will obtain part 70 permits.
    d. Title IV. Minnesota's program contains adequate authority to 
issue permits which reflect the requirements of title IV and its 
implementing regulations. In addition, Minnesota's submittal contains a 
commitment to revise its regulations as necessary to accommodate 
Federal revisions and additions to title IV and the Acid Rain 
regulations once they are promulgated.

B. Options for Approval/Disapproval and Implications

    The EPA is proposing to grant interim approval to the operating 
permit program submitted by Minnesota on November 15, 1993. If this 
approval is promulgated, the State must make the following changes to 
receive full approval:

1. Remove from the State's legislation Minnesota Statutes section 
609.671, subdivision 14 which provides an exemption from criminal 
prosecution for sources which give notice of a violation and take 
reasonable steps to remedy the violation.
2. Revise Minnesota Rules 7007.0800, Subpart 6 to clearly state that 
all part 70 sources must submit semi-annual reports.
3. Revise Minnesota Rules 7007.1400 to be consistent with the 
requirements of 40 CFR 70.7(d). Minnesota Rules 7007.1400 provides 
that the administrative amendment procedure may be used to ``clarify 
a permit term.'' This ambiguous provision is not consistent with the 
requirements of 40 CFR 70.7(d) and could be interpreted broadly 
enough to allow changes to a permit which should be handled through 
the permit modification procedures.
4. Revise Minnesota Rules 7007.0800, Subpart 16 to require that the 
permit terms included in 40 CFR 70.6(a) be expressly stated in part 
70 permits. Minnesota Rules 7007.0800, Subpart 16 allows permit 
terms which are required by 40 CFR 70.6(a) to be included in the 
permit by reference to the state regulation. Failure to have these 
provisions expressly stated in the permit may create difficulties in 
enforcing those terms and may make it difficult for citizens to 
understand what provisions apply to a source.
5. Revise the definition of regulated pollutant at Minnesota Rules 
7002.0035 to include any ``regulated pollutant for presumptive fee 
calculation'' as defined at 40 CFR 70.2, or submit a detailed fee 
demonstration containing all required elements under 40 CFR 70.9.
6. Revise Minn. Rules 7007.0750, subpart 2.C to require the 
permitting authority to take action on minor and moderate permit 
amendments within 90 days of receipt of a complete application.

This interim approval, which may not be renewed, extends for a period 
of up to 2 years. During the interim approval period, the State is 
protected from sanctions for failure to have a program, and EPA is not 
obligated to promulgate a Federal permit program in 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 interim approval, as does 
the 3-year time period for processing the initial permit applications.
    Minnesota has requested Source Category-Limited (SCL) interim 
approval of its part 70 operating permit program. Although the State 
would be required to issue permits within 3 years to all sources 
subject to the program that obtains interim approval, some sources 
would not be subject to the requirement to obtain a permit until full 
approval is granted. Part 70 sources which are not addressed until full 
approval are also subject to the 3-year time period for processing 
initial permit applications. The 3-year period for these sources would 
begin on the date full approval of the State's program is granted. 
Therefore, initial permitting of all part 70 sources might not be 
completed until 5 years after interim approval is granted.
    Minnesota has presented the following as compelling reasons for why 
SCL interim approval should be granted in the November 15, 1993, 

1. Minnesota does not have nonattainment areas for ozone. 
Consequently, Minnesota has not adopted Volatile Organic Compound 
(VOC) Reasonably Available Control Technology rules, nor does it 
have its own State air toxics rules. Therefore, MPCA and the 
facilities regulated by the air toxics program are not familiar with 
and have not implemented measures to control VOC emissions. MPCA 
staff and the regulated community will need additional time to catch 
up with other States in becoming familiar with control techniques 
and to identify and contact VOC/toxic sources.
2. Minnesota has a variety of large, complex sources which require 
extensive amounts of time to permit. The time spent issuing permits 
to these sources will take considerable time away from issuing 
permits to other sources, making it impossible given MPCA's resource 
constraints for MPCA to issue permits to all part 70 sources within 
3 years.
3. MPCA expects to lose a portion of its experienced permitting 
engineers to private industry when facilities are required to submit 
permit applications. The time which is necessary to train new staff 
as this occurs will increase the amount of time needed to issue a 
4. Although MPCA has almost doubled its staff since January of 1992 
in anticipation of the workload associated with title V, the 
workload will surpass available resources. MPCA intends to request 
additional funding during the 1995 legislative session; however, 
MPCA will still be unable to take final action on all applications 
within 3 years.

EPA believes Minnesota has presented compelling reasons for a SCL 
interim approval.
    The EPA believes that a program granted SCL interim approval must 
apply to at least 60 percent of all part 70 sources, which are 
responsible for at least 80 percent of the aggregate emissions from all 
part 70 sources. The EPA requires a demonstration that these criteria 
are met when a significant percentage of sources or aggregate emissions 
are excluded from the interim program. The Minnesota submittal which 
included a schedule for permitting part 70 sources which would permit 
60.71 percent of part 70 sources emitting 81.35 percent of aggregate 
emissions from part 70 sources within 3 years of program approval met 
the criteria.d.
    EPA believes that SCL interim approval is warranted for Minnesota's 
program. For further discussion on EPA's determination, see the 
Technical Support Document accompanying this approval.

III. Administrative Requirements

A. Request for Public Comments

    The EPA is requesting comments on all aspects of this proposed 
rule. 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 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 October 13, 1994.

B. Executive Order 12866

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

C. Regulatory Flexibility Act

    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA 
must prepare a regulatory flexibility analysisassessing the impact of 
any proposed or final rule on small entities. 5 U.S.C. 603 and 604. 
Alternatively, EPA may certify that the rule will not have a 
significant impact on a substantial number of small entities. Small 
entities include small businesses, small not-for-profit enterprises, 
and government entities with jurisdiction over populations of less than 
    Interim approvals under section 502 of the Act do not create any 
new requirements, but simply approve requirements that the State is 
already imposing. Therefore, because the Federal approval of a State 
operating permit program does not impose any new requirements, I 
certify that it does not have a significant impact on any small 
entities affected. Moreover, due to the nature of the Federal-state 
relationship under the Act, preparation of a regulatory flexibility 
analysis would constitute Federal inquiry into the economic 
reasonableness of state action. The Act forbids EPA to base its actions 
concerning operating permit programs on such grounds. Union Electric 
Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.Ct 1976); 42 U.S.C. 
    If the interim approval is converted to a disapproval, it will not 
affect any existing state requirements applicable to small entities. 
Federal disapproval of the State submittal does not affect its state-
enforceability. Moreover, EPA's disapproval of the submittal does not 
impose a new Federal requirement. Therefore, EPA certifies that this 
disapproval action does not have a significant impact on a substantial 
number of small entities because it does not remove existing state 
requirements nor does it substitute a new Federal requirement.

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: August 31, 1994.
Valdas V. Adamkus,
Regional Administrator.
[FR Doc. 94-22582 Filed 9-12-94; 8:45 am]