Approval and Promulgation of Air Quality Implementation Plans; Virginia; New Source Review in Nonattainment Areas

A. Background

On March 23, 1998 (63 FR 13811), EPA published a notice of proposed rulemaking (NPR) for the Commonwealth of Virginia. The NPR proposed limited approval of revisions to Virginia's NSR regulations (Section 120-08-03). No comments were received on the NPR.

B. Summary of the SIP Revision

Virginia submitted the formal SIP revision on November 9, 1992. The significant changes to Section 120-08-03 are summarized below: Section 120-08-03 A--Applicability (amended)--Virginia has modified this subsection by including a provision to deter a company from constructing or modifying a facility in increments to avoid permit requirements. Section 120-08-03 B--Definitions (amended)--Virginia has modified many of the definitions found in this subsection. Key changes were made to the following terms: ``Allowable Emissions'', ``Building, structure facility or installation'', ``Federally enforceable'', ``Major Modification'', ``Major Stationary Source'', ``Net emissions increase'', ``Nonattainment pollutant'', ``Potential to Emit'', ``Reconstruction'', and ``Significant''. Section 120-08-03 C--General (amended)--Virginia modified the general subsection by adding a provision stating that it may combine in one permit the requirements for emissions units subject to more than one of Virginia's regulatory requirements applicable to permitting, and that Virginia may also require a combined application for such emissions units. The permitting requirements for which such combined permits and applications may be required include those of Virginia's NSR regulation for sources locating in nonattainment areas and those of two other Virginia regulations, entitled, ``Permits--New and Modified Sources,'' and ``Permits--Major Stationary Sources and Major Modifications Locating in Prevention of Significant Deterioration Areas.'' Section 120-08-03 D--Applications (amended)--Virginia modified the applications subsection by revising its specification of the scope of permit applications. Virginia also added provisions defining who must sign permit applications and requiring the signer to certify that ``the information submitted is, to the best of my knowledge and belief, true, accurate, and complete.'' Section 120-08-03 F--Standards/Conditions for Granting Permits (amended)--Virginia made several changes in the standards and conditions subsection, which establishes the requirements which must be met before a permit can be issued. Section 120-08-03 G--Action on Permit application (amended)-- Virginia amended this subsection to specify that Virginia must notify applicants in writing of deficiencies in their permit applications. Virginia also deleted certain public participation provisions from this section which it now includes in a separate section of the regulation; and revised its description of permit processing steps by including in the description a reference to public participation requirements found elsewhere in the regulation. Section 120-08-03 H--Public Participation (added)--Virginia added a new subsection detailing public participation requirements. This subsection requires the applicant to provide the public with notice of its application for a permit and then, within 30 to 60 days, to provide a public briefing. In addition, the subsection provides that Virginia must provide a public comment period of at least 30 days, and hold a public hearing, before it makes a decision on a permit application. Section 120-08-03 I--Compliance Determination verification by Performance Testing (amended, formerly designated as Section 120-08-03 H, this section replaces the original Section 120-08-03 I, which was deleted)--Virginia modified this subsection by specifying that source owners are responsible for conducting tests if any such tests are required. Section 120-08-03 J--Application Review and Analysis (formerly designated as Section 120-08-03 K, this section replaces the original Section 120-08-03 J, which was deleted)--Virginia made no changes to this subsection. Section 120-08-03 K--Circumvention (formerly designated as Section 120-08-03 L)--Virginia made no changes to this subsection. Section 120-08-03 L--Interstate Pollution Abatement (formerly designated as Section 120-08-03 M)--Virginia made no changes to this subsection. Section 120-08-03 M--Offsets (amended, formerly designated as Section 120-08-03 N)--Virginia allows the crediting of emission reductions resulting from shutting down an existing source or curtailing production or operating hours below baseline levels if the shutdown or curtailment is in effect, if it occurred on or after January 1, 1991, and if it is permanent, quantifiable, and federally and state enforceable. Virginia requires that the increased emissions of the air pollutant(s) from the new or modified source must be offset by an equal or greater reduction in the actual emissions of such air pollutant(s) from the same or other sources. Virginia allows reductions to be credited only if they are not otherwise required by its regulations. Virginia does allow incidental emission reductions to be credited, provided they are not required by regulation and meet certain other requirements. In this section Virginia also includes a special provision allowing increases in emissions from rocket engine and motor firing to be offset by alternative or innovative means. Section 120-08-03 N--De minimis increases and stationary source modification alternatives for ozone nonattainment areas classified as serious or severe (added)--Virginia specifies in this new subsection that VOC emissions increases resulting from modifications at sources in serious or severe ozone nonattainment areas cannot be considered de minimis unless the increase in net emissions does not exceed 25 TPY when aggregated with all other net increases in emissions from the source over any period of 5 consecutive calendar years which includes the calendar year in which such increase occurred. Section 120-08-03 Q--Reactivation and Permanent shutdown (added) Virginia specifies in this new subsection that a source which is reopened after having been determined to be shutdown must obtain a permit. Virginia also sets forth criteria by which sources are formally determined to be shutdown. Section 120-08-03 R--Transfer of Permits (added)--Virginia establishes in

this new subsection provisions pertaining to transfer of permits. Section 120-08-03 S--Permit Invalidation, Revocation, and Enforcement (added)--Virginia sets forth in this new subsection the conditions under which owners of sources subject to permitting requirements may be subject to enforcement action and when permits may be invalidated or revoked. Section 120-08-03 T--Existence of Permit No Defense (added)-- Virginia specifies in this new subsection that the existence of a permit under this section shall not constitute a defense to a violation of the Virginia Air Pollution Control Law or these regulations and shall not relieve any owner of the responsibility to comply with any applicable regulations, laws, ordinances and orders of the governmental entities having jurisdiction.

C. EPA's Evaluation of the SIP Revision

EPA has determined that the amendments to Virginia's NSR regulations are consistent with the CAA and currently promulgated federal NSR regulations with one exception. Virginia's NSR regulation allows persons who intend to build or modify a major source in a nonattainment area to take credit for emission reductions obtained from shutdowns or curtailments of production or operating hours which took place prior to the source's application for a new source review permit (prior to shutdown or curtailment credits) even if EPA has not yet approved an attainment plan for the nonattainment area. The shutdown may not predate the design year of the required attainment plan. Although EPA's existing regulations do not allow for this, EPA proposed revisions to its NSR and PSD regulations on July 23, 1996, which proposes an option which is consistent with Virginia's revised regulation. Based on this fact, as well as the fact that the revisions strengthen Virginia's SIP, EPA is granting limited approval of these regulatory revisions. EPA has provided a more detailed analysis on this issue in the March 23, 1998 NPR referenced above. In 1995, Virginia adopted legislation that provides, 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 Law, Va. Code Sec. 10.1- 1198, provides a privilege that protects from disclosure documents and information about the content of those documents that are the product of a voluntary environmental assessment. The Privilege Law does not extend to documents or information (1) that are 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. On January 12, 1997, the Commonwealth of Virginia Office of the Attorney General provided a legal opinion that states that the Privilege law, Va. Code Sec. 10.1-1198, precludes granting a privilege to documents and information ``required by law,'' including documents and information ``required by federal law to maintain program delegation, authorization or approval,'' since Virginia must ``enforce federally authorized environmental programs in a manner that is no less stringent than their federal counterparts * * *.'' The opinion concludes that ``[r]egarding Sec. 10.1-1198, therefore, documents or other information needed for civil or criminal enforcement under one of these programs could not be privileged because such documents and information are essential to pursuing enforcement in a manner required by federal law to maintain program delegation, authorization or approval.'' 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 Attorney General's January 12, 1997 opinion states that the quoted language renders this statute inapplicable to enforcement of any federally authorized programs, since ``no immunity could be afforded from administrative, civil, or criminal penalties because granting such immunity would not be consistent with federal law, which is one of the criteria for immunity.'' Therefore, EPA has determined that Virginia's Privilege and Immunity statutes will not preclude the Commonwealth from enforcing its NSR program consistent with the federal requirements. In any event, because EPA has also determined that a state audit privilege and immunity law can affect only state enforcement and cannot have any impact on federal enforcement authorities, EPA may at any time invoke its authority under the Clean Air Act, including, for example, sections 113, 167, 205, 211 or 213, to enforce the requirements or prohibitions of the state plan, independently of any state enforcement effort. In addition, citizen enforcement under section 304 of the Clean Air Act is likewise unaffected by this, or any, state audit privilege or immunity law. Other specific requirements of Virginia's revisions and the rationale for EPA's proposed action are explained in the NPR and will not be restated here. No public comments were received on the NPR.

II. Final Action

EPA is granting limited approval of amendments to 120-08-03. ``Permits--major stationary sources and major modifications locating in nonattainment areas' submitted by the Commonwealth of Virginia on November 9, 1992.

III. Administrative Requirements

A. Executive Orders 12866

The Office of Management and Budget (OMB) has exempted this regulatory action from review under E.O. 12866, entitled ``Regulatory Planning and Review.''

B. Executive Order 12875

Under E.O. 12875, EPA may not issue a regulation that is not required by statute and that creates a mandate upon a state, local, or tribal government, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by those governments. If EPA complies by consulting, E.O. requires EPA to provide to the Office of Management and Budget a description of the extent of EPA's prior consultation with representatives of affected state, local, and tribal governments, the nature of their concerns, copies of written communications from the governments, and a statement supporting the need to issue the regulation. In addition, E.O. 12875 requires EPA to develop an effective process permitting elected officials and other representatives of

state, local, and tribal governments ``to provide meaningful and timely input in the development of regulatory proposals containing significant unfunded mandates.'' Today's rule does not create a mandate on state, local or tribal governments. The rule does not impose any enforceable duties on these entities. Accordingly, the requirements of section 1(a) of E.O. 12875 do not apply to this rule.

C. Executive Order 13045

E.O. 13045, entitled ``Protection of Children from Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997), applies to any rule that the EPA determines (1) is ``economically significant,'' as defined under E.O. 12866, and (2) the environmental health or safety risk addressed by the rule has a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. This final rule is not subject to E.O. 13045 because it is not an economically significant regulatory action as defined by E.O. 12866, and it does not address an environmental health or safety risk that would have a disproportionate effect on children.

D. Executive Order 13084

Under E.O. 13084, EPA may not issue a regulation that is not required by statute, that significantly affects or uniquely affects the communities of Indian tribal governments, and that imposes substantial direct compliance costs on those communities, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by the tribal governments. If EPA complies by consulting, Executive Order 13084 requires EPA to provide to the Office of Management and Budget, in a separately identified section of the preamble to the rule, a description of the extent of EPA's prior consultation with representatives of affected tribal governments, a summary of the nature of their concerns, and a statement supporting the need to issue the regulation. In addition, Executive Order 13084 requires EPA to develop an effective process permitting elected and other representatives of Indian tribal governments ``to provide meaningful and timely input in the development of regulatory policies on matters that significantly or uniquely affect their communities.'' Today's rule does not significantly or uniquely affect the communities of Indian tribal governments. This action does not involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of section 3(b) of E.O. 13084 do not apply to this rule.

E. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. This final rule will not have a significant impact on a substantial number of small entities because SIP approvals under sections 110 and 301, and subchapter I, part D of the CAA do not create any new requirements but simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval 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 Clean Air Act, preparation of a flexibility analysis would constitute Federal inquiry into the economic reasonableness of state action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

F. Unfunded 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 rule that includes a Federal mandate that may result in estimated annual costs to State, local, or tribal governments in the aggregate; or to private sector, of $100 million or more. Under Section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule. EPA has determined that the approval action promulgated does not include a Federal mandate that may result in estimated annual 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 requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

G. Submission to Congress and the Comptroller General

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. This rule is not a ``major rule'' as defined by 5 U.S.C. 804(2).

H. Petitions for Judicial Review

Under section 307(b)(1) of the CAA, petitions for judicial review of this action granting limited approval of Virginia's NSR regulations must be filed in the United States Court of Appeals for the appropriate circuit by November 22, 1999. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Hydrocarbons, Incorporation by reference, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements.

Dated: September 3, 1999. W. Michael McCabe, Regional Administrator, Region III. 40 CFR part 52 is amended as follows:

PART 52--[AMENDED]

1. The authority citation for part 52 continues to read as follows:

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

Subpart VV--Virginia

2. Section 52.2420 is amended by adding paragraph (c)(129) to read as follows:

Sec. 52.2420 Identification of plan.

* * * * * (c) * * * (129 ) Revisions to the Virginia Regulations pertaining to permit requirements for new and modified stationary sources locating in nonattainment areas mandated under Title I, Sections 171-173 and 182 of the Clean Air Act submitted on November 9, 1992, by the Commonwealth of Virginia: (i) Incorporation by reference. (A) Letter of November 9, 1992, from the Commonwealth of Virginia, Department of Air Pollution Control transmitting revisions to the Virginia Regulations pertaining to permit requirements for new and modified stationary sources locating in nonattainment areas. (B) Commonwealth of Virginia State Air Pollution Control Board Regulations for the Control and Abatement of Air Pollution, Permits for Stationary Sources, Section 120-08-03. ``Permits--Major Stationary Sources and Major Modifications Locating in Nonattainment Areas''. (Effective January 1, 1993).

(ii) Additional materials--The remainder of the November 2, 1992 submittal pertaining to Regulation 120-08-03.

[FR Doc. 99-24454 Filed 9-20-99; 8:45 am] BILLING CODE 6560-50-P