[Federal Register Volume 61, Number 20 (Tuesday, January 30, 1996)]
[Proposed Rules]
[Pages 2983-2990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1712]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70
[NJ001; FRL-5403-8]
Clean Air Act Proposed Interim Approval of Operating Permit
Program; New Jersey
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed interim approval.
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SUMMARY: EPA proposes source category-limited interim approval of the
operating permit program submitted by the State of New Jersey 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
February 29, 1996.
ADDRESSES: Written comments on this action should be addressed to
Steven C. Riva, Chief, Permitting/Toxics Supports Section, Air
Compliance Branch, at the EPA Region 2 office listed below. Copies of
New Jersey's submittal and other supporting information used in
developing the proposed interim approval are available for inspection
during normal business hours at the following location: U.S.
Environmental Protection Agency, Region 2, 290 Broadway, 21st Floor,
New York, NY 10007-1866.
FOR FURTHER INFORMATION CONTACT: Ms. Suilin Chan, Air and Waste
Management Division, U.S. Environmental Protection Agency, Region 2,
290 Broadway, 21st Floor, New York, NY 10007-1866, (212) 637-4019.
SUPPLEMENTARY INFORMATION:
I. Background and Purpose
A. Introduction
As required under title V of the Clean Air Act (``the Act'') as
amended by the 1990 Clean Air Act Amendments, EPA promulgated rules on
July 21, 1992 (57 FR 32250), that define the minimum elements of an
approvable state operating permit program and the corresponding
standards and procedures by which EPA will approve, oversee, and
withdraw approval of state operating permit programs. These rules are
codified at 40 Code of Federal Regulations (CFR) Part 70. Title V and
Part 70 require that states develop, and submit to EPA, programs for
issuing operating permits to all major stationary sources and to
certain other sources.
The Act requires states to develop and submit these programs to EPA
by November 15, 1993, and EPA to approve or disapprove such program
within one year after receiving the complete submittal. If the State's
submission is materially changed during the one-year review period, 40
CFR Sec. 70.4(e)(2) allows EPA to extend the review period for no more
than one year following receipt of the additional materials. EPA
reviews state operating permit programs pursuant to section 502 of the
Act and 40 CFR Part 70, which together outline the 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 two years. Additionally, where a state
can demonstrate to the satisfaction of EPA that reasons exist to
justify granting a source category-limited interim approval, EPA may so
exercise its authority. A program with a source category-limited
interim approval is one that substantially meets the requirements of
Part 70 and that applies to at least 60% of all affected sources which
account for 80% of the total emissions within the state. 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 operating
permit program for that state.
EPA received New Jersey's title V operating permit program
submittal initially on November 19, 1993. However, EPA found that
submittal to be incomplete. In a February 4, 1994 letter to the New
Jersey Department of Environmental Protection (NJDEP), EPA informed New
Jersey of the incompleteness determination and listed the deficiencies
that must be corrected. EPA received New Jersey's
[[Page 2984]]
August 10th, 1995, revised program submittal on August 21, 1995 which
EPA determined to be complete on September 5, 1995.
B. Federal Oversight and Sanctions
Following the granting of final interim approval, if New Jersey
failed to submit a complete corrected program for full approval by the
date six months before expiration of the interim approval or if EPA
disapproved New Jersey's corrected program submittal, EPA would start
an 18-month clock for mandatory sanctions in either situation. If and
when the 18 months expire and New Jersey fails to submit a complete
corrected program to address the deficiencies identified in the interim
approval or identified in the disapproval, whichever the case may be,
EPA would be required to apply one of the sanctions in section 179(b)
of the Act. In either case, the sanction would remain in effect until
EPA determines that New Jersey had corrected the deficiencies that
triggered the mandatory sanctions clock. If six months after
application of the first sanction, New Jersey still had not submitted
the requisite complete program, a second sanction would be applied.
Moreover, if the Administrator found a lack of good faith on the Part
of New Jersey, both sanctions under section 179(b) would apply after
the expiration of the 18-month period until the Administrator
determines that New Jersey had come into compliance.
In addition, discretionary sanctions may be applied where warranted
any time after an interim approval expires and a state has failed to
submit a timely and complete corrected program or EPA has disapproved a
corrected program. Moreover, if a state does not have in place an
approved full program by the expiration date of its interim approval or
an approved program by the time the federal operating permit program,
to be codified at 40 CFR Part 71, is promulgated, EPA is mandated to
administer and enforce the federal program for that state.
II. Proposed Action and Implications
EPA has concluded that the operating permit program submitted by
New Jersey substantially meets the requirements of title V and Part 70.
Based upon EPA's review of New Jersey's request for source category-
limited interim approval and the substantiation submitted thereto and
of New Jersey's operating permit program in its entirety, EPA proposes
to grant source category-limited interim approval to the New Jersey
program. For detailed information on the analysis of the State's
submission, please refer to the Technical Support Document (TSD)
contained in the docket at the address noted above.
A. Analysis of State Submission
1. Support Materials
Pursuant to section 502(d) of the Act, each state must develop and
submit to the Administrator an operating permit program under state or
local law or under an interstate compact meeting the requirements of
title V of the Act. On November 19, 1993, EPA received the title V
operating permit program submitted by the State of New Jersey and
supplemental information submitted on August 10, 1995, and August 28,
1995. The New Jersey Department of Environmental Protection (NJDEP)
requested, under the signature of the New Jersey Governor's designee,
Commissioner Robert C. Shinn Jr. of the NJDEP, a source category-
limited interim approval of New Jersey's operating permit program with
full authority to administer the program in all areas of the State of
New Jersey.
The following documents which were submitted by the State of New
Jersey in support of its request for a source category-limited interim
approval have been reviewed by EPA and have been found to substantially
meet the Part 70 requirements.
1. Pursuant to 40 CFR Sec. 70.4(b)(1), a complete program
description is presented under Chapter 3 of Volume I providing detailed
discussions on how the state intends to carry out its title V
responsibilities.
2. Pursuant to 40 CFR Sec. 70.4(b)(2), the regulations that
comprise the permitting program is submitted under Appendix A of Volume
II and copies of all applicable state or local statutes and regulations
are included in Appendix C of Volume II.
3. Pursuant to 40 CFR Sec. 70.4(b)(3), a legal opinion from the
State Attorney General is presented in Appendix B of Volume II. New
Jersey has demonstrated that the NJDEP has adequate authority to carry
out all aspects of New Jersey's operating permit program.
4. Pursuant to 40 CFR Sec. 70.4(b)(4), copies of the permit
application forms and relevant guidance that will assist in the State's
implementation of the operating permit program are presented in
Appendices F and G of Volume II. No permit form has been submitted by
New Jersey since each permit will be issued with conditions specific to
the source's operation. The contents of an operating permit is listed
in N.J.A.C. 7:27-22.16.
5. Pursuant to 40 CFR Sec. 70.4(b)(5), a complete description of
the State's compliance tracking and enforcement program is presented in
Chapter 6 of Volume I. This document describes how New Jersey will use
its data management system (AIMS) to track and report enforcement
activities. It also reaffirms New Jersey's commitment to continue to
follow air enforcement strategies stipulated in previous enforcement
agreements it has entered with the EPA.
6. Pursuant to 40 CFR Sec. 70.4(b)(6) and Sec. 70.4(b)(8), a
description of the state permit procedures and a statement on adequate
personnel and funding is presented in Chapter 4 of Volume I. This
chapter describes how the permit application reviews will be
coordinated with the other offices with NJDEP and what the duties of
the agency personnel will be for implementing the program.
7. Pursuant to 40 CFR Sec. 70.4(b)(7), a fee demonstration and a
workload analysis are presented in Appendices D and E of Volume II. New
Jersey adopted the presumptive minimum fee of $25 per ton of pollutant
per year (adjusted by the Consumer Price Index based on the 1989 value)
and is presumed to have adequate funding for the development and
implementation of its operating permit program.
8. Pursuant to 40 CFR Sec. 70.4(b)(9), New Jersey committed to
provide quarterly reports on enforcement activities via its data
management system as discussed in Chapter 5 of Volume I.
9. Pursuant to 40 CFR Sec. 70.4(b)(11), a transition plan is
presented in Chapter 2 of Volume I describing the application submittal
schedule and the permitting timeframe for the initial permits. Also
discussed in this chapter is New Jersey's rationale for requesting
source category-limited interim approval. New Jersey has demonstrated
in this chapter that its operating permit program will meet the 60/80
percent tests which require that the interim program applies to at
least 60% of the total number of Part 70-affected sources in New Jersey
and that these sources account for at least 80% of the total emissions.
2. Regulations and Program Implementation
The State of New Jersey adopted regulations in Subchapter 22 of
Chapter 27 of the New Jersey Administrative Code (N.J.A.C. 7:27-22) for
the implementation of the requirements of 40 CFR Part 70. This rule,
which was initially adopted on October 3, 1994, was re-proposed with
changes and adopted in August 10, 1995. There is sufficient evidence
such as responses to comments showing that the rule adoptions were
procedurally correct as required by 40 CFR Sec. 70.4(b)(2). The New
Jersey operating permit rule which
[[Page 2985]]
contains the lists of exempt activities, insignificant operations, and
two tables of excluded emissions are included in Appendix A of Volume
II. The other applicable state statutes and regulations are included in
Appendix C of Volume II. Based on EPA's review, none of the applicable
state statutes or regulations restricts implementation of the New
Jersey operating permit program. New Jersey's rule meets the main
requirements of Part 70 as described below:
a. Applicability (40 CFR Sec. 70.2 and Sec. 70.3):
(1) New Jersey's rule requires facilities with the potential-to-
emit of any pollutants at major source threshold levels to obtain
operating permits. Facilities subject to requirements that are not
listed in N.J.A.C. 7:27-22.2(a) will not be subject to the New Jersey
operating permit program (i.e., non-major sources subject to Sec. 111
or Sec. 112 of the Act (NSPS or NESHAP)). New Jersey has elected to
defer these non-major sources until EPA completes rulemaking with
respect to future applicability. This is consistent with 40 CFR
Sec. 70.3(b)(1). However, 40 CFR Sec. 70.3(b)(2) states that non-major
sources subject to standards promulgated after July 21, 1992 are
required to obtain an operating permit unless the standard itself
contains specific language that would exempt them from Part 70
requirements. EPA interprets this Part 70 provision to mean that if the
standard were promulgated without the exemption clause, a Part 70
exemption for non-major sources is assumed not to exist and all sources
covered under that standard are required to obtain an operating permit.
Although New Jersey's rule in N.J.A.C. 7:27-22.2(b) alludes to an EPA
rulemaking as the triggering factor for title V applicability to non-
major sources, it does provide NJDEP with the necessary regulatory
authority to permit under Part 70 those non-major sources that are not
exempt from post-1992 standards based on its reference to 40 CFR
Sec. 70.3(b)(2). Therefore, EPA does not find this to be a problem for
granting interim approval. In addition, section 22.5(i) of New Jersey's
rule provides the mechanism under which non-major sources would be
required to submit an application. To ensure that national consistency
is maintained in the implementation of 40 CFR Sec. 70.3(b)(2), EPA will
require New Jersey to submit a commitment in the corrected program
asserting that New Jersey will require non-major sources subject to
section 111 and 112 standards promulgated after July 21, 1992 to apply
for an operating permit as required by the Administrator. Applications
from these sources should be submitted in accordance with the schedule
specified in the standard and/or rulemaking. This commitment must be
submitted in order to receive full program approval.
(2) New Jersey's rule excludes activities such as office equipment,
water storage tanks, and other minimally emitting facilities from the
operating permit application. The entire list of exempt activities is
included in the definition section of the New Jersey rule (N.J.A.C.
7:27-22.1). Since these facilities either do not emit any air
pollutants or are not part of a source's production process, EPA finds
it appropriate to exclude them from the operating permit application.
EPA believes exclusion of the listed activities from the application is
highly unlikely to interfere with determining applicability of or
imposing any applicable requirements. In addition, N.J.A.C. 7:27-
22.6(f)(5) requires that permit applications contain all information
needed to determine the applicability of or to impose any applicable
requirement. Therefore, EPA proposes to approve the list of exempt
activity as defined in N.J.A.C. 7:27-22.1 from New Jersey's operating
permit program. This list may be expanded with prior EPA input and
approval during the state rulemaking process for the rule revision
consistent with 40 CFR Sec. 70.4(i).
(3) Consistent with the Part 70 regulations, New Jersey's rule
requires inclusion of fugitive emissions only if the source belongs to
one of the 27 source categories listed in 40 CFR Sec. 70.2.
(4) New Jersey's rule at N.J.A.C 7:27-22.2 did not include the
``support facility test'' as an additional criterion for separating the
R & D facility from the primary source operation. EPA does not find
this to be an issue for program approval since New Jersey's R&D
definition requires that the R&D facility not be ``engaged in the
manufacture of products for commercial sale, except in a de minimis
manner''. However, it is EPA's understanding of New Jersey's intention
that if the R&D facility is not connected to the manufacturing process
except in a de minimis capacity that the R&D facility would not be a
support facility to the manufacturing process. Thus, if the R&D
facility is contributing to the manufacturing process in a material,
rather than de minimis capacity, it would be a support facility to the
manufacturing process. Under the support facility test, co-located and
commonly owned sources would be considered one source (and therefore
their emissions aggregated) if the output of one is more than 50
percent devoted to support the other.
(5) New Jersey's rule at N.J.A.C.7:27-22.2(d) allows sources with
equipment that can be operated in both R&D and manufacturing modes to
segregate emissions attributable to the R&D operation from the source's
potential to emit when determining whether the source is major. In many
cases, the segregation could result in separating a facility into a
minor facility and a R&D facility which would render the source as a
whole not subject to Part 70. In order for the entire facility to be
excluded from the Part 70 requirements, federally enforceable permit
conditions must be obtained by the source. As in other synthetic minor
situations, New Jersey plans to use its SIP-approved new source review
preconstruction permit program to provide the federally enforceable
permit limitations necessary to cap source emissions at below the title
V major source threshold levels. New Jersey provided a supplement to
the August 10, 1995 title V operating permit program which describes in
detail how these sources will be capped out of the New Jersey operating
permit program. Based upon EPA's review, the mechanism to be used by
New Jersey to limit emissions from such ``dual equipment'' is federally
and practicably enforceable and is sufficient to prevent Part 70
circumvention.
The ``dual equipment'' type sources are subject to federally
enforceable NSR requirements if the source (and its associated process
units) meets the criteria set out in the NSR regulations of New
Jersey's rule (N.J.A.C. 7:27-8). Most of these types of sources become
subject to New Jersey's NSR requirements because they process more than
50 pounds per hour of all materials combined with the exclusion of air
and water. The permit issued to such sources is called a ``Dual
Permit'' which consists of two sections, one specific to the R&D
operation and the other to the manufacturing operation. The permit also
contains common emission caps for each pollutant with recordkeeping
requirements to monitor when the emission limits will be reached. When
the emission limits are reached, the source is required to cease
operation of all equipment or process covered under the permit or apply
for a permit revision to raise the emission limits, at which time
additional requirements such as installation of the state-of-the-art
controls may be required. Although it has the legal authority to do so,
NJDEP has not issued a dual permit that covers the entire facility. It
is EPA's belief that in situations where the facility has the
flexibility to change operation at will,
[[Page 2986]]
facility-wide emission caps or summation of individual permits at a
source is essential to prevent circumvention of the Part 70
regulations.
b. Permit Application (40 CFR Sec. 70.5):
(1) Consistent with EPA's policy as discussed in the July 10th,
1995 ``White Paper for Streamlined Development of Part 70 Permit
Applications'', New Jersey's rule streamlines the application
requirements for emitting activities that meet the definition of
insignificant source operations. Such emitting activities or units are
not required to be listed individually on the application; they may be
listed by source type. On the application, an estimate of the total
emissions from all of the insignificant source operations shall be
listed for each criteria pollutant with the applicable requirements
which generally apply to them. The list of insignificant source
operations which EPA hereby approves is defined in N.J.A.C. 7:27-22.1.
This list may be changed with prior EPA input and approval during the
state rulemaking process for the rule revision consistent with 40 CFR
Sec. 70.4(i).
(2) New Jersey's rule also provides for some streamlining for
significant source operations that have extremely small emissions. For
emitting activities or units that meet the definition of significant
source operations and have emission rates that are less than those
listed in Tables A and B of Appendix I of New Jersey's operating permit
rule, their emissions are only required to be listed as ``de minimis''.
The emissions levels listed under these tables are so small that EPA
does not have any objections to requiring a listing of these emission
units without their specific emission rates.
c. Permit Content (40 CFR Sec. 70.6):
(1) Part 70 requires prompt reporting of deviations from the permit
requirements. 40 CFR Sec. 70.6(a)(3)(iii)(B) requires the permitting
authority to define ``prompt'' in relation to the degree and type of
deviation likely to occur and the applicable requirements. Where
``prompt'' is defined in the individual permit but not in the program
regulations, EPA may veto permits that do not contain sufficiently
prompt reporting of deviations. The State of New Jersey has defined
``prompt'' in its regulations at N.J.A.C. 7:27-22.19 in the manner
discussed below. Immediate reporting on the NJDEP hotline is required
if the air contaminants are released in a quantity or concentration
which poses a potential threat to public health, welfare or the
environment. Where the air contaminants are released in a quantity or
concentration which poses no potential threat to public health,
welfare, or the environment but the permittee intends to assert an
affirmative defense for the deviation, the instance must be reported
within 2 days. Deviations that were discovered during source emissions
testing must be reported in 30 days as part of the testing report.
Other reporting obligations required by the permit including deviations
recorded by the emissions monitors are to be submitted semi-annually.
EPA finds New Jersey's definition of ``prompt'' reporting of deviations
as delineated above to be inadequate. In order for EPA to consider this
definition adequate for protecting public health and safety, New Jersey
must add a provision requiring reporting of deviations within 10 days
where the air contaminants are released in a quantity or concentration
that pose no potential threat to public health, welfare, or the
environment and the permittee does not intend to assert affirmative
defense for the deviation.
(2) Alternative operating scenarios may be made part of the initial
permit or added via a significant modification, a minor modification or
a 7-day notice change. Sources that are allowed to operate under
different scenarios are required to operate within the range or limit
specified for each operating parameter in the approved operating
scenario. The New Jersey rule (N.J.A.C. 7:27-22.27(a)(2)) allows the
addition of new alternative operating scenarios to an existing
operating permit via a 7-day notice change provided the emission limit
for the source operation included in the scenario does not exceed the
maximum allowable emission limits in the existing permit. Another
provision in N.J.A.C. 7:27-22.22(b)(5) disallows Title I modifications
from being incorporated into the existing permit via the 7-day notice
procedure. These two provisions in effect assure that a new NSR permit
could not be added to the existing permit through the 7-day notice
procedure by calling it an alternative operating scenario bypassing the
minor or significant permit modification procedures. In addition,
N.J.A.C. 7:27-22.26(b) rules out the possibility that a source might
try to incorporate a MACT standard into the existing permit via a 7-day
notice change by calling it an alternative operating scenario. Based on
EPA's review of the New Jersey rule, the alternative operating scenario
provisions are consistent with 40 CFR Sec. 70.6(a)(9).
(3) New Jersey's Act permits an affirmative defense for start-ups,
shut-downs, equipment maintenance and malfunctions. New Jersey's
legislation (N.J.S.A. 26:2C-19.1 and 19.2) allows such a defense and
sections 22.3(nn) and 22.16(l) of the rule discuss when it can be used.
The Part 70 regulations allows an affirmative defense in emergency
situations only and do not extend this defense to start-ups, shut-
downs, equipment maintenance or malfunctions per se. Because start-up,
shut-down, and malfunction events will not always qualify as an
``emergency,'' as defined in part 70, NJ's rule and legislation are
inconsistent with 40 CFR Sec. 70.6(g). EPA finds this to be an
impediment to full program approval. In addition, both NJ's legislation
and rule are also inconsistent with 40 CFR Sec. 70.6(g) because they do
not limit the application of the affirmative defense to technology-
based emission limits. 40 CFR Sec. 70.6(g) provides that the emergency
affirmative defense is only applicable to technology-based emission
limits and not health-based emission limits. Therefore, EPA has
determined that the NJ legislation as stated in N.J.S.A. 26:2C-19.1 and
19.2 and/or the NJ rule provisions on affirmative defenses as stated in
N.J.A.C. 7:27-22.3(nn) and 22.16(l) must be revised to clarify its law
to conform with 40 CFR Sec. 70.6(g).
d. Public Participation (40 CFR Sec. 70.7): Consistent with the
Part 70 regulations, the public will be provided with notice of, and an
opportunity to comment on, draft permits related to initial permit
issuance, permit renewals, and significant modifications (N.J.A.C.
7:27-22.11).
e. Permit Modification (40 CFR 70.7):
(1) New Jersey's rule provides the following mechanism for
modifying an operating permit: administrative amendments, changes to
insignificant source operations (these are similar to Part 70's off-
permit changes), 7-day notice changes, minor modifications, and
significant modifications. Each of these procedures requires a
different level of review/processing time to complete. Public review is
required for significant modifications but is discretionary for minor
modifications. No public review is afforded within the other types of
permit modification procedures. The criteria for determining the proper
procedure for a modification are addressed in the specific sections of
the New Jersey rule for each type of modification (N.J.A.C. 7:27-22.20,
22.21, 22.22, 22.23, and 22.24). These procedures are consistent with
the requirements of 40 CFR 70.7 and the provisions of 40 CFR
70.4(b)(12) and 40 CFR 70.4(b)(14).
(2) Under New Jersey's administrative amendment procedure (N.J.A.C.
7:27-22.20(b)(7)), provisions of a
[[Page 2987]]
preconstruction permit may be incorporated into the operating permit if
the preconstruction permit was issued through public participation
requirements substantially equivalent to those for operating permits as
stipulated in N.J.A.C. 7:27-22.11 (public comment) and 22.12 (EPA
comment). As written, New Jersey's rule is inconsistent with 40 CFR
Sec. 70.7(d)(1)(v). Instead of requiring the preconstruction permit to
have gone through procedures of N.J.A.C. 7:27-22.11 and 22.12, it only
requires the permit to have undergone procedures that are
``substantially equivalent.'' This might allow New Jersey to decide
what ``substantially equivalent'' means on a case by case basis. This
discretion is not contemplated by 40 CFR Sec. 70.7(d)(1)(v). In fact,
it expressly contravenes the language of that section, which says that
the preconstruction review ``program'' can be substantially equivalent.
In other words, incorporation by administrative amendment can occur
even if the procedures of the NSR program do not match part 70 exactly,
if they are nevertheless approved by EPA as being substantially
equivalent. Therefore, in order to receive full program approval, New
Jersey must either:
i. Specify in Sec. 7:27-22.20(b)(7) the procedures under which
preconstruction permits must have been issued (Secs. 70.7 and .8) and
permit content (Sec. 70.6) requirements the permit must meet in order
to be eligible for incorporation by administrative amendment, or
ii. Codify those procedural and permit content requirements into
the preconstruction review regulations and obtain EPA's approval of
those regulations.
(3) One characteristic of New Jersey's minor and significant
modification procedures, which is not prohibited or required by the
Part 70 regulations, is the integration of the preconstruction permit
review process with the operating permit review. For significant
modifications, draft permits covering respectively, the preconstruction
and operating permit requirements will be issued for public review at
the same time. At the conclusion of the public comment period, the
final preconstruction approval will be issued to the applicant and the
proposed operating permit will be submitted to EPA for a 45-day review.
For minor modifications, public review is not required but the EPA and
affected states will have 45 days to object to the proposed minor
modification. If no objection is received, New Jersey will issue the
preconstruction approval and the revised portion of the operating
permit in final.
f. EPA oversight (40 CFR Sec. 70.8): Each permit, renewal, and
minor or significant modification is subject to EPA review/veto prior
to issuance. New Jersey's rule states that if NJDEP fails to revise a
permit based on an EPA objection or if EPA objects (in response to a
public petition) to the proposed permit after final permit issuance,
EPA would take action to issue the revised permit or re-issue the
permits under federal operating permit regulations to be promulgated at
40 CFR Part 71. In these situations, before EPA takes any action
pursuant to the Part 71 regulations, NJDEP must take action to withdraw
approval of the operating permit upon receipt of EPA's veto. EPA will
then revise and re-issue such permits in accordance with 40 CFR Part
71.
g. Enforcement authority (40 CFR Sec. 70.11): New Jersey's Air
Pollution Control Act provides NJDEP with adequate enforcement
authority and penalties for civil and criminal violations of permits
and rules. Penalties may be assessed in the maximum amount of $10,000
per day per violation. This also covers violations associated with the
applicant's failure to pay the required fees.
h. Initial application submittal and issuance (40 CFR
Sec. 70.4(b)(11) (i) and (ii): While 40 CFR 70 requires all
applications to be submitted within the first 12 months after state
program approval, New Jersey has divided its subject sources into seven
groups in an effort to maintain a smooth phase-in at the beginning of a
new program. With an interim program approval, New Jersey is required
to receive, during the first year, applications from 60% of the sources
subject to the interim program. Permits for these sources will be
issued one-third (of the 60%) each year during the first three years of
program approval. The remaining 40% of the subject sources will submit
applications during the first year of full program approval. The
permits for these source will be issued one-third (of the 40%) each
year during the initial three years after full approval. Based on Table
2-3 of page 2-8 of Chapter 2, New Jersey would have received four
``waves'' of applications from subject sources by November 15, 1996.
This would cover 57.2 percent of all sources as opposed to 60%. To
ensure that the 60% is met, New Jersey encouraged early submission of
applications in February 1995 (6 months prior to program submittal).
Also, since New Jersey's interim approval will not take place until at
least February 1996, two months into the fifth waves of application
submittal, it is certain that New Jersey would have received 60% of all
applications by February 1997. As such, EPA does not consider this to
be an issue for program approval.
3. Permit Fee Demonstration
New Jersey's title V fee program consists of four types of fees
which includes an emissions based fee, an initial application fee,
permit modification fee, and a surcharge for rebuilding the
infrastructure of its Air Programs. New Jersey has adopted the
presumptive minimum of $25 per ton per year (to be adjusted by the
consumer price index annually) as its emissions based fee.
It should be noted, however that the actual appropriation for the
New Jersey program has been limited by the fee legislation to $9.51
million dollars per year from the collected fees. EPA acknowledges that
the program costs and fee revenue figures submitted in New Jersey's fee
demonstration are only projections based on New Jersey's current
experience with similar permitting programs. A more accurate assessment
of the actual program costs will not be possible until the state has
had the opportunity to implement the program. Therefore, EPA is
requiring New Jersey to re-submit a more refined fee demonstration that
assures sufficient funding for the operating permit program prior to
EPA granting full approval. Should the revised fee demonstration show
that the $9.51 million dollar funding level is insufficient, New Jersey
must correct the deficiency prior to submitting the corrected program.
New Jersey is aware of the need to revisit the fee demonstration and
has committed to re-evaluate the fee program during the interim
approval period and take all necessary steps to ensure sufficient
funding for the operating permit program.
With respect to New Jersey's intention to use fees collected in
excess of $9.51 million in reengineering NJDEP's Air Program, EPA does
not find that to be a problem for interim approval for two reasons.
First of all, based on the restricted use of the ``Air Surcharge
Reengineering Fund'' as stipulated in New Jersey's legislation, the
``excess title V fees are not used for activities that are totally
unrelated to title V. EPA has thoroughly reviewed the activities listed
in the legislation that are earmarked for the ``Air Surcharge
Reengineering Fund'' and found them to be related to the development
and maintenance of the infrastructure for implementing New Jersey's
operating permit program. The costs associated with those activities
are indirect costs to
[[Page 2988]]
the title V program. Therefore, EPA finds it acceptable for New Jersey
to use ``excess'' title V fees to fund those activities. In addition,
this is consistent with guidance issued by EPA on August 4, 1993 and
July 21, 1994, which stated that ``Title V does not limit a
jurisdiction's discretion to collect fees pursuant to independent state
authority beyond the minimum amount required by Title V''. These
guidance documents clearly allow a state to charge fees in excess of
that which are needed to run the operating permit program.
EPA also notes that New Jersey requires fee payments from all title
V affected sources including title IV Phase I units. There is one Phase
I unit in the State of New Jersey. The Part 70 regulation (40 CFR
Sec. 70.9(b)(4)) states that ``during the years 1995 through 1999
inclusive, no fee for purposes of title V shall be required to be paid
with respect to emissions from any affected unit under section 404 of
the Act''. This Part 70 provision, however, does not restrict the state
from collecting title V fees from Phase I units based on emissions that
occurred prior to January 1, 1995 or after December 31, 1999. It also
does not restrict a state from collecting non-title V related emissions
based fee or non-emission based title V related fees from these units.
Therefore, in this notice, EPA is proposing to grant interim approval
to New Jersey's fee program. New Jersey may assess fees from any title
IV Phase I units provided these fees are not used for purposes of title
V.
4. Provisions Implementing the Requirements of Other Titles of the Act
a. Authority for Section 112 Implementation
New Jersey has demonstrated in its program submittal adequate legal
authority to implement and enforce all section 112 requirements through
its title V operating permit program. The implementing rule which is
found in N.J.A.C. 7:27-22 includes section 112 requirements in the
definition of applicable federal requirements with which all subject
sources must comply. New Jersey has sufficient legislative and
regulatory authorities to issue permits that assure compliance with the
following section 112 requirements:
i. Early reductions: N.J.A.C 7:27-22.34 authorizes New Jersey to
allow sources that achieved sufficient early reductions of hazardous
air pollutants (HAP) emissions to delay compliance with the MACT or
GACT standard for six years from the original compliance date if all of
the conditions of the operating permit are met and the reductions are
maintained throughout the six-year period.
ii. Case-by-case MACT determinations: In the event that no
applicable emissions limitations have been established by the
Administrator, N.J.A.C. 7:27-22.26 allows New Jersey to make case-by-
case MACT determinations as required under section 112 (g) and (j) of
the Act.
iii. Implementation of section 112(r): N.J.A.C 7:27-22.9 requires
applicants submitting an initial operating permit application to
include in its proposed compliance plan a statement certifying that the
permittee will ensure the compliance of the facility with the
accidental release provisions at 42 U.S.C. 7412(r). Annual
certification of compliance with each applicable requirement that
pertains to the facility is required under N.J.A.C. 7:27-22.19.
b. Implementation of Section 112(g) Upon Program Approval
Case-by-case MACT determinations: In the event that no applicable
emissions limitations for the hazardous air pollutants have been
established by the Administrator, NJDEP will make case-by case Maximum
Achievable Control Technology (MACT) determinations as required under
Sections 112(j) and (g) of the Act. The EPA issued an interpretive
notice on February 14, 1995 (60 FR 8333), which outlines EPA's revised
interpretation of 112(g) applicability. The notice postpones the
effective date of 112(g) until after EPA has promulgated a rule
addressing that provision. The notice sets forth in detail the
rationale for the revised interpretation.
The Section 112(g) interpretive notice explains that EPA is still
considering whether the effective date of Section 112(g) should be
delayed beyond the date of promulgation of the Federal rule so as to
allow states time to adopt rules implementing the Federal rule, and
that EPA will provide for any such additional delay in the final
Section 112(g) rulemaking. NJDEP has provided broad language in its
regulation that will allow the implementation of 112(g) immediately
after EPA promulgates its rule. The permitting mechanism to be used by
the state of New Jersey to implement these requirements during the
period before EPA promulgates the final federal rule and after New
Jersey's title V program becomes effective is the State's
preconstruction process (as stated in N.J.A.C. 7:27-22.33). In the
event that EPA's final rulemaking under Sec. 112(g) requires changes in
New Jersey's operating permit rule/program to assure compliance with
federal requirements, New Jersey has committed to making all necessary
changes in a timely manner.
In this notice, EPA proposes to approve New Jersey's
preconstruction review program found in N.J.S.A.26:2C-1 et. seq. under
the authority of title V and Part 70 solely for the purpose of
implementing section 112(g) of the Act. However, this approval does not
have any effect on previous actions taken by EPA on the New Jersey
preconstruction review program found in N.J.S.A.26:2C-1 et. seq. Also,
this approval will be without effect if EPA decides in the final
section 112(g) rule that sources are not subject to the requirements of
the rule until State regulations are adopted. The duration of this
approval is limited to 18 months following promulgation by EPA of the
section 112(g) rule to provide adequate time for the State to adopt
regulations consistent with the federal requirements.
c. Program for Delegation of Section 112 Standards as Promulgated
Section 112(l): Requirements for approval specified in 40 CFR
Sec. 70.4(b), encompass Section 112(l)(5) approval requirements for
delegation of Section 112 standards as they apply to Part 70 sources.
Section 112(l)(5) requires that the state's program contain adequate
authorities, adequate resources for implementation, an expeditious
compliance schedule, and adequate enforcement ability, which are also
requirements under Part 70. In a letter dated November 15, 1995, from
William O'Sullivan, Administrator of the Air Quality Permitting Program
of the NJDEP requested delegation through 112(l) of all existing 112
standards for Part 70 sources and infrastructure programs. With respect
to future section 112 standards, NJDEP intends to review every standard
within 45 days of receiving notice from EPA and determine whether to
accept the delegation of a standard on a case-by-case basis. In this
letter, NJDEP demonstrated that it has sufficient legal authorities,
adequate resources, capability for automatic delegation of future
standards, and adequate enforcement ability for implementation of
Section 112 of the Act for Part 70 sources. Therefore, the EPA is
proposing to grant approval under Section 112(l)(5) and 40 CFR Part
63.91 to New Jersey for its program mechanism for receiving delegation
of all existing and future 112(d) standards for Part 70 sources.
d. Commitment To Implement Title IV of the Act
As stated in N.J.A.C. 7:27-22.29, the state of New Jersey has
already adopted
[[Page 2989]]
and incorporated by reference the provisions of 40 CFR Part 72, and any
subsequent amendments thereto, for purposes of implementing an acid
rain program that meets the requirements of title IV of the Act. It
further stated that if provisions or requirements of 40 CFR Part 72
conflict with or are not included in New Jersey's rule that the Part 72
provision and requirements shall apply and take precedence.
B. Proposed Actions
EPA proposes source category-limited interim approval of the
operating permit program initially submitted by the state of New Jersey
on November 15, 1993, and revised on August 10, 1995. Under this
approval, New Jersey may collect fees from any title IV Phase I
facilities, provided that these are not used to meet the presumptive
title V fee level for the interim program.
In accordance with 40 CFR Sec. 70.4(b), this approval encompasses
EPA's approval under section 112(l)(5) and 40 CFR Sec. 63.91 to the
state of New Jersey for its program mechanism for receiving delegation
of all existing and future section 112(d) standards for all Part 70
sources. In order to receive full program approval, the State of New
Jersey must submit a corrected program that addresses the following
deficiencies six months before expiration of the interim approval:
1. Deferral of Non-Major Sources
As a condition for full program approval, New Jersey must submit a
commitment in the corrected program asserting that New Jersey will
require non-major sources subject to Sec. 111 or Sec. 112 standards
promulgated after July 21, 1992 to apply for an operating permit under
New Jersey's full program unless EPA exempts such sources in future
rulemaking or promulgation of future requirements. Applications from
these sources should be submitted in accordance with the schedule found
under N.J.A.C. 7:27-22.5(i).
2. Definition of Prompt Reporting of Deviations
In order to receive full program approval, the reporting
requirement in N.J.A.C. 7:27-22.19 must be revised to ensure adequate
protection of public health and safety. New Jersey must add a provision
requiring reporting of deviations within 10 days if the air
contaminants are released in a quantity or concentration that poses no
potential threat to public health, welfare, or the environment and the
permittee does not intend to assert an affirmative defense for the
deviation.
3. Affirmative Defense
In order to receive full program approval, the New Jersey
legislation as stated in N.J.S.A. 26:2C-19.1 and 19.2 and/or the New
Jersey rule provisions on affirmative defenses as stated in N.J.A.C.
7:27-22.3(nn) and 22.16(l) must be revised to clarify its law to
conform with 40 CFR Sec. 70.6(g).
4. Administrative Amendments
In order to receive full program approval, New Jersey must revise
its operating permit rule to ensure that the administrative amendment
procedure is properly used for incorporating preconstruction permits
into the operating permit. Specifically, New Jersey must either:
i. Specify in Sec. 7:27-22.20(b)(7) the procedures under which
preconstruction permits must have been issued (Secs. 70.7 and .8) and
permit content (Sec. 70.6) requirements the permit must meet in order
to be eligible for incorporation by administrative amendment, or
ii. Codify those procedural and permit content requirements into
the preconstruction review regulations and obtain EPA's approval of
those regulations. the following changes must be made to N.J.A.C. 7:27-
22.20(b)(7)(i) and (ii):
5. Permit Fees
In order to receive full program approval, New Jersey must submit a
revised fee demonstration showing that $9.51 million is adequate to
administer the operating permit program during the initial four years
of full program implementation. Should the cap of $9.51 million fall
short of the actual program costs, New Jersey must take all necessary
actions (including legislative changes) to correct the problem prior to
submitting the corrected program.
C. Options for Approval/Disapproval and Implications
This interim approval, which may not be renewed, extends for a
period of up to two years. During the interim approval period, New
Jersey is protected from sanctions for failure to have a program, and
EPA is not obligated to promulgate a federal operating permit program
in the State. 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.
The scope of New Jersey's Part 70 program that EPA proposes to
grant interim approval in this notice would apply to all Part 70
sources as listed in New Jersey's operating permit rule (N.J.A.C. 7:27-
22.5) and transition plan.
As discussed above in section II.A.4.c., EPA also proposes to grant
approval under section 112(l)(5) and 40 CFR 63.91 to New Jersey's
program for receiving delegation of section 112 standards that are
unchanged from federal standards as promulgated. In addition, EPA
proposes to delegate existing standards under 40 CFR Parts 61 and 63.
III. Administrative Requirements
A. Request for Public Comments
EPA requests comments on all aspects of this proposed interim
approval. Copies of the State's submittal and other information relied
upon for the proposed interim approval are contained in docket number
NJ-95-01 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. EPA will
consider any comments received by February 29, 1996.
B. Executive Order 12866
The Office of Management and Budget has exempted this action from
Executive Order 12866 review.
C. Regulatory Flexibility Act
EPA's actions under section 502 of the Act do not create any new
requirements, but simply address operating permit programs submitted to
satisfy the requirements of 40 CFR Part 70. Because this action does
not impose any new requirements, it does not have a significant impact
on a substantial number of small entities.
D. Unfunded Mandates Act
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 rule that includes a federal mandate that may result in estimated
costs to State, local, or tribal governments in the aggregate; or to
the private sector, of $100 million or more. Under section 205, EPA
must select the most cost effective and least burdensome
[[Page 2990]]
alternative that achieves the objectives of the rule and is consistent
with statutory requirements. Section 203 requires EPA to establish a
plan for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
EPA has determined that the proposed approval action promulgated
today does not include a federal mandate that may result in estimated
costs of $100 million or more to either State, local, or tribal
governments in the aggregate, or to the private sector. This federal
action approves pre-existing requirements under State or local law, and
imposes no new federal requirements. Accordingly, no additional costs
to State, local, or tribal governments, or to the private sector,
result from this action.
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: December 18, 1996.
Jeanne M. Fox,
Regional Administrator.
[FR Doc. 96-1712 Filed 1-29-96; 8:45 am]
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