Notice of Deficiency for Clean Air Operating Permits Program; Maricopa County, AZ, 32243-32247 [05-10995]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 70, Number 105 (Thursday, June 2, 2005)]
[Rules and Regulations]
[Pages 32243-32247]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-10995]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 70

[AZ-ND-127; FRL-7919-5]


Notice of Deficiency for Clean Air Operating Permits Program; 
Maricopa County, AZ

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of deficiency.

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SUMMARY: Pursuant to its authority under section 502(i) of the Clean 
Air Act, EPA is publishing this notice of deficiency for the Clean Air 
Act title V operating permits program of Maricopa County, Arizona. The 
notice of deficiency is based upon EPA's finding that Maricopa County's 
title V program does not comply with the requirements of the Clean Air 
Act or with the implementing regulations of the Operating Permit 
Program in two respects: permit fees and permit processing. With 
respect to permit fees, specific deficiencies include the following: 
Maricopa County has failed to demonstrate that its title V program 
requires owners or operators of Operating Permit Program sources to pay 
fees that are sufficient to cover the costs of the County's title V 
program, and has failed to adequately ensure that its title V program 
funds are used solely for title V permit program costs; and Maricopa 
County's fee rule and the implementation of this rule have contributed 
to delay in issuance of initial title V permits. With respect to permit 
processing, specific deficiencies include the following: Maricopa 
County has issued title V permits that do not assure compliance with 
all applicable requirements; Maricopa County's processing of permit 
revisions is deficient; and Maricopa County has not demonstrated that 
it is providing sufficient staffing. Publication of this action is a 
prerequisite for withdrawal of Maricopa County's title V program 
approval, but does not effect such withdrawal.

EFFECTIVE DATE: May 17, 2005. Because this Notice of Deficiency is an 
adjudication and not a final rule, the Administrative Procedure Act's 
30-day deferral of the effective date of a rule does not apply.

FOR FURTHER INFORMATION CONTACT: Gerardo Rios, EPA, Region 9, Air 
Division (AIR-3), 75 Hawthorne Street, San Francisco, CA 94105, (415) 
972-3974, or r9airpermits@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Description of Action
III. Federal Oversight and Sanctions
IV. Administrative Requirements

I. Background

    The Clean Air Act (CAA or Act) requires all State and local 
permitting authorities to develop operating permits programs that meet 
the requirements of title V of the Act, 42 U.S.C. 7661-7661f, and its 
implementing regulations, 40 CFR part 70. On November 15, 1993, the 
Arizona Department of Environmental Quality (ADEQ) submitted, on behalf 
of Maricopa County, a proposed title V program to the Administrator for 
approval. Maricopa County's title V program was granted final interim 
approval by EPA on November 29, 1996 and was granted full approval on 
November 30, 2001.
    In March 2002, the Office of Inspector General (OIG) issued a 
report on the progress of title V permit issuance based on its 
evaluation of several selected state and local air pollution control 
agencies. In response to OIG's recommendations, EPA made a commitment 
in July 2002 to conduct comprehensive title V program evaluations 
throughout the nation. EPA Region 9 began its program evaluations in 
2003, with Maricopa County Environmental Services Department (MCESD) as 
the second permitting agency on its program evaluation schedule. Region 
9 informed MCESD of the start of the title V program evaluation in a 
letter, dated May 27, 2004, in which Region 9 also expressed existing 
concerns about MCESD's implementation of its title V permitting 
program. Over the next several months of EPA's title V program 
evaluation, Region 9 learned more details of MCESD's implementation 
practices and procedures, including many instances

[[Page 32244]]

in which MCESD failed to meet the requirements of title V of the Act 
and 40 CFR part 70.
    Section 503(c) of the Act requires permitting authorities to act on 
all initial permit applications within three years of program approval, 
which would have been November 29, 1999 for Maricopa County. In a 
January 28, 2002 letter to EPA, MCESD stated that it had issued sixteen 
of its fifty-six initial title V permits. MCESD committed to issue its 
remaining forty initial permits by December 1, 2003, completing ten 
permits every six months. MCESD failed to meet each six month milestone 
for permit issuance as well as the December 1, 2003 deadline for all 
initial permits. As of April 15, 2005, MCESD still has not completed 
issuance of all initial title V permits and has a backlog of title V 
renewal permits as well.
    For full details of EPA Region 9's findings, please see the report, 
``Maricopa County Environmental Services Department Title V Operating 
Permit Program Evaluation,'' which is available at https://www.epa.gov/
region09/air/titlevevals.html.
    Maricopa County has recently initiated a number of changes to its 
title V program. One significant change has been the formation of a new 
Air Quality Department (AQD), separate from MCESD, within the Regional 
Development Services group of Maricopa County. This reorganization 
should allow Maricopa County to focus its resources on air quality in 
an area that has increasingly complex air permitting issues and, thus, 
requires a more concentrated effort. Though Maricopa County has 
initiated many improvements to its title V program since the start of 
EPA's program evaluation, EPA believes a NOD is necessary in light of 
the existing issues, and to ensure that those issues are adequately 
addressed going forward.

II. Description of Action

    EPA is publishing a notice of deficiency for the Clean Air Act 
title V operating permits program for Maricopa County, Arizona. This 
document is being published pursuant to 40 CFR 70.10(b)(1), which 
provides that EPA shall publish in the Federal Register a notice of any 
determination that a title V permitting authority is not adequately 
administering or enforcing its title V operating permits program. The 
deficiencies being noticed today are in two main categories of (1) 
permit fees and (2) permit processing. The specific deficiencies are 
described more fully below.

A. Permit Fees

1. Maricopa County Has Not Demonstrated That It Collects Fees 
Sufficient To Fund Its Permit Program, Nor That It Uses Fees Solely for 
Program Costs
    Pursuant to 42 U.S.C. 7661a(b)(3) and 40 CFR 70.9(a), a permitting 
authority's title V program must require that the owners or operators 
of part 70 sources pay annual fees, or the equivalent over some other 
period, that are sufficient to cover the permit program costs, and the 
permitting authority must ensure that any fee collected be used solely 
for title V permit program costs. Although 42 U.S.C. 7661a(b)(3) and 40 
CFR 70.9(b) require that a permitting authority's title V permit 
program include a fee schedule that results in the collection of 
sufficient fees to cover all title V permit program costs, permitting 
authorities have flexibility in developing the components of that fee 
schedule. See 40 CFR 70.9(b)(3).
    a. Maricopa County has not demonstrated that its revised fee rule 
meets the requirements of title V and part 70.
    Maricopa County's fee rule, as included in the County's 1993 
initial title V program submittal, had an annual emissions-based fee 
which met the presumptive minimum prescribed in 40 CFR 70.9(b)(2)(i) 
for existing sources, in addition to an annual ``processing and 
inspection'' fee. Maricopa County later revised its fee rule in 1998, 
2000, 2003, and 2004. Currently, permit fees are imposed based on a 
combination of an application fee, hourly-based processing fee, annual 
administrative fee, and annual emissions-based fee. The emissions-based 
fee is less than EPA's presumptive minimum. Since other components of 
the permit fees are not assessed on a per-ton basis, it is difficult to 
determine if the aggregate of the fees meets EPA's presumptive minimum. 
Maricopa County has never submitted any of its fee rule revisions to 
EPA as a program revision submittal or provided a demonstration to EPA, 
based on the current fee rule, that it collects title V fees sufficient 
to cover the title V permit program costs and that title V fees 
collected are used solely for title V permit program costs.
    b. A clear accounting of costs is necessary
    Maricopa County is not able to demonstrate that title V permit fees 
collected are sufficient to fund its title V program and that title V 
permit fees are used solely for title V program costs, because it does 
not have a clear accounting of costs incurred under title V (separate 
from costs incurred under other non-title V programs). Maricopa County 
is able to account for title V revenues quite accurately because 
payment of permit fees by each applicant is recorded in the permitting 
agency's Environmental Management System database. However, Maricopa 
County has more difficulty tracking title V costs.
    Maricopa County maintains a single account for title V fees, non-
title V fees, and enforcement penalties. Both title V and non-title V 
costs are paid from this account. Maricopa County title V permitting 
staff are required to log in the number of hours spent preparing title 
V permits. However, Maricopa County does not maintain an accounting of 
total salary costs for title V activities, nor has Maricopa County kept 
an accounting of other actual costs of the title V program such as 
training, equipment, and travel.
    Maricopa County has provided EPA with workload assessments that 
project future costs by estimating an average number of hours required 
to write a permit in each source category (e.g., cement plants, 
compressor stations, lime plants, landfills) and an average number of 
permits issued per source category. Maricopa County's projections also 
use averages of salaries for a category of an entire group such as 
``technical'' staff of the title V permitting group.
    While this broad approach could be considered adequate for the 
purpose of projecting future costs, Maricopa County should be able to 
provide a more accurate, detailed accounting of actual title V 
revenues, costs, and expenditures to demonstrate that title V fees are 
not being directed to do non-title V work. For an accounting of costs, 
a direct approach, based on employee-specific salaries and the number 
of hours logged for title V activities for each employee would be more 
accurate.
    Because Maricopa County has not instituted a system that provides a 
clear accounting of costs incurred for title V activities (separate 
from non-title V activities), it has been unable to detail its permit 
program costs and demonstrate that its title V revenues cover those 
program costs. Maricopa County has also been unable to demonstrate that 
title V revenues are used solely for title V program costs.
    EPA would consider correction of this deficiency to include 
submittal of a demonstration that Maricopa County has the systematic 
ability to provide a detailed accounting of title V program costs 
separately from other program costs. This accounting should also 
provide a clear demonstration that total title V revenues are 
sufficient to fund total title V costs. The accounting

[[Page 32245]]

should also clearly show that title V revenues are used solely for 
title V costs.
2. Maricopa County's Fee Rule and the Implementation of This Rule Have 
Contributed to the Delay in Issuance of Initial Title V Permits
    Maricopa County's fee rule, Rule 280, prevents the permitting 
authority from issuing a final initial title V permit, permit revision, 
or renewal permit if the source has not paid the balance of fees due. 
MCESD's Rule 280 section 301.1 states, ``Before issuance of a permit to 
construct and operate a source, an applicant shall pay to the Control 
Officer a fee billed by the Control Officer representing the total 
actual cost of reviewing and acting upon the application minus any 
application fee remitted.'' Maricopa County has encountered problems 
with issuing permits when sources refuse to pay their permit fee 
balances because they are dissatisfied with their proposed permits. It 
would appear that existing sources retain the initial application 
shield granted upon submittal of a complete application; thus, these 
sources can continue to operate without a title V operating permit. The 
problem is further exacerbated by the fact that Maricopa County has not 
enforced against those sources that refused to pay fees.
    The end result is that issuance of certain title V permits can be 
delayed if sources refuse to pay fees, and the delay may extend until 
Maricopa County revises the permit conditions in question. The rule 
could cause similar problems during permit renewal. This situation is 
inconsistent with Maricopa County's obligation under the Act to have 
sufficient authority to issue permits and assure compliance with each 
applicable requirement, as well as its obligation to take final action 
on complete applications in a timely fashion, as specified in part 70.
    EPA would consider correction of this deficiency to include a 
revision to Rule 280 and submittal of a standard set of policies and 
procedures. The rule revision should eliminate the possibility that a 
source could prevent Maricopa County from issuing a final permit by 
withholding fees. The standard set of policies and procedures would 
provide a procedure for addressing non-payment of permit fees through 
enforcement, collection activities, or other means.\1\
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    \1\ It may be worth noting that if EPA takes over a fee program, 
EPA is required by the Act to charge a penalty of 50% of the fee 
amount, plus interest, on any unpaid permit fees. See 42 U.S.C. 
7661a(b)(3)(C)(ii); 40 CFR 71.9(l)(2).
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B. Permit Processing

1. Maricopa County Has Issued Title V Permits That Do Not Assure 
Compliance With All Applicable Requirements
    Maricopa County issues combined preconstruction/operating permits, 
with the intention of meeting both the new source review (NSR) 
requirements contained in Maricopa County's approved State 
Implementation Plan (SIP) and the part 70 requirements contained in 
Maricopa County's approved title V program. Maricopa County's approved 
title V program contains Rule 200, which establishes permit 
requirements and describes the different types of permits, and Rule 
210, which establishes the requirements for title V permitting in 
particular. Maricopa County's SIP, approved by EPA, contains rules for 
implementing its NSR program (both major and minor). In particular, SIP 
Rule 20 establishes the requirement for sources to obtain installation 
(preconstruction) permits for all new and modified sources, and SIP 
Rule 21 establishes the procedures for obtaining an installation 
permit.
    Pursuant to 40 CFR 70.7(a)(1)(iv), title V permits must assure 
compliance with all applicable requirements, including NSR 
requirements. Maricopa County has, at times, implemented the title V 
rule, Rule 210, without proper consideration of the requirements of the 
NSR SIP Rule 20, resulting in the submittal to EPA of title V permits 
that do not contain all applicable requirements.
    Sections 403 and 403.2 of Rule 210 allow title V sources to make 
certain changes without a permit revision if specific conditions are 
met.\2\ SIP Rule 20, however, does not contain a similar exemption from 
installation permitting requirements. Specifically, SIP Rule 20 
requires that ``any person erecting, installing, replacing, or making a 
major alteration to any machine, equipment, incinerator, device or 
other article which may cause or contribute to air pollution or the use 
of which may eliminate or reduce or control the emission of air 
pollutants, shall first obtain an Installation Permit from the Control 
Officer.''
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    \2\ These conditions, as listed in Maricopa County's Rule 210 
Section 403.1, include the following: that the changes are not title 
I modifications, do not exceed emissions allowable under the permit, 
meet the criteria for processing as a minor title V permit revision, 
and do not violate applicable requirements.
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    Permitting authorities may issue combined NSR/title V permits. 
However, a source may not avoid a requirement to obtain a 
preconstruction permit by relying on the operational flexibility 
provisions of a title V permit.\3\ Maricopa County's practice typically 
follows only the requirements of Rule 210 Section 403 without proper 
implementation of SIP Rule 20.
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    \3\ In addition, NSR permit conditions do not expire, so 
permitting authorities must ensure that NSR conditions remain in 
effect even after the expiration of a title V permit that 
incorporates the conditions.
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    EPA would consider correction of this deficiency to include 
submittal of an implementation guidance document that ensures that 
Maricopa County's title V permits assure compliance with all applicable 
requirements, including SIP-approved NSR requirements. An 
implementation guidance document might include the following elements: 
(1) An explanation that Maricopa County's title V rules may not be used 
to avoid obtaining an otherwise-required preconstruction permit; (2) a 
demonstration that Maricopa County's title V permits assure compliance 
with SIP-approved preconstruction requirements; (3) a plan for 
evaluating applications and issuing permit revisions that include all 
applicable requirements, including any applicable preconstruction 
review requirements; (4) any necessary revisions to Maricopa's standard 
application form to ensure that pre-construction review requirements 
are addressed; and (5) guidance to affected sources advising them of 
Maricopa's new procedures for issuing preconstruction and operating 
permit revisions for title V sources, including the requirement to 
ensure that all preconstruction review required under the SIP occurs. 
Maricopa County might also consider rule changes that assure that all 
facility changes comply with preconstruction review requirements under 
the SIP.
2. Maricopa County's Processing of Permit Revisions Is Deficient
    a. Incorrect processing of significant revisions as minor revisions
    EPA has found that Maricopa County does not take adequate steps to 
ensure that significant permit revisions are not incorrectly processed 
as minor permit revisions. A change that requires a significant permit 
revision may not be implemented before the permit revision is subject 
to public notice and comment, approved by the permitting authority, and 
reviewed by EPA. Maricopa County's incorrect processing of significant 
revisions has allowed sources to bypass these requirements. Maricopa's 
Rule 210 Section 405.1 specifies the criteria by which changes

[[Page 32246]]

at a source can be processed as a minor revision.\4\
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    \4\ See Finding 5.5 of EPA's program evaluation report for 
specific examples.
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    b. Incorrect administrative processing of minor revisions
    Maricopa County typically has not issued a separate revised permit 
document or technical support document when processing its minor permit 
revisions. EPA has found many minor permit revisions that do not 
contain any revision to the title V permit but, instead, the 
permittee's application is signed by an MCESD permit engineer and 
initialed by the title V supervisor. This application then serves as 
the permit revision.
    The signed application does not contain an engineering analysis or 
revised permit conditions to support the application approval. This 
practice of issuing the signed permit application instead of a revised 
permit document compromises the enforceability of Maricopa County's 
permits.
    This practice is also inconsistent with 40 CFR part 70, which 
requires the permitting authority to issue a revised permit and 
statement of basis. See 40 CFR 70.7(a)(1) and 70.7(a)(5).\5\
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    \5\ In addition, Maricopa County has made it a practice to have 
the permit engineer sign the minor permit revision application. 
Authorizations to approve minor permit revisions have not been 
delegated to the permit engineer from the Director. Thus, Maricopa 
County has not been following the proper administrative procedures 
for issuance of minor permit revisions.
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    c. Policies and procedures on permit revisions
    In order to address parts 2.a. and b. of the deficiency above, EPA 
would consider correction of the deficiency to include development and 
submittal of a standard set of policies and procedures on permit 
revision procedures for title V sources. EPA envisions that such a 
document would include the following elements: (1) Criteria for 
determining if a proposed revision is significant, minor or 
administrative; (2) procedures for developing appropriate permit 
conditions and statements of basis for significant and minor permit 
revisions; and (3) Maricopa's permit processing procedures from receipt 
of application to permit issuance.
3. Maricopa County Has Not Demonstrated That It Is Providing Sufficient 
Staffing
    Section 502(b) of the Act, 42 U.S.C. 7661a(b), and 40 CFR 70.4 
provide that a permitting authority must have adequate personnel to 
ensure that the permitting authority can carry out implementation of 
its title V program. As noted above, Maricopa County has experienced a 
significant delay in issuing initial title V permits. In addition, 
Maricopa County has had problems with the quality of the title V 
permits issued, specifically, ensuring that the permit assures 
compliance with all applicable requirements.
    In 1993, Maricopa County submitted a workload assessment (WLA) with 
its title V program submittal. In the WLA, Maricopa County projected 
the number of hours required for each task of implementing its title V 
program, the corresponding number of full-time employees (FTE) 
required, and the corresponding costs based on salary averages. In 
2003, Maricopa County updated its WLA to provide a basis for a change 
to its fee structure and fee amounts. The 2003 WLA found that the 1993 
WLA had underestimated the initial assumptions for title V program 
implementation. As far as staffing needs, the 2003 WLA increased FTE 
projections, compared to 1993 projections, for all sections or groups. 
In particular, the 1993 WLA projected a need for 7 FTE ``air quality 
engineers'' in permitting and 26 total FTEs in the Permits & Compliance 
Section (these two functions were in one section at the time). The 2003 
WLA projected a need for 21.3 FTEs for the Permits Section alone.\6\ 
The 2003 WLA also stated that the Permits Section had, at that time, 13 
FTEs and that, at this staffing level, ``the Section struggles to meet 
permit issuance timelines, keep up with rule revisions * * * and to 
implement community outreach.''
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    \6\ Out of the 21.3 FTEs, Maricopa County categorized 16.5 of 
these FTEs as ``technical.'' Since Maricopa County labeled another 
category as ``manager,'' EPA is inferring that the ``technical'' 
category includes only technical staff-level employees and does not 
include managers.
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    Maricopa County appears to acknowledge a history of being 
understaffed. The 2003 WLA states, when referring to the 1993 FTE 
projections, that Maricopa County was not able ``to fill all the 
positions because of high turnover and inability to find qualified 
applicants.'' In addition, Maricopa County has left the position of 
Permits Section Manager vacant for many years. As of the beginning of 
April 2005, the Permits Section has 9 permitting staffpersons, at least 
11 FTEs short of its own projected need for ``technical'' staff. 
Maricopa County failed to meet all of its deadlines for issuing initial 
title V permits and, as of April 15, 2005, still has not issued all 
initial title V permits. In its 2003 WLA, Maricopa County admitted that 
it is understaffed and cannot meet permit issuance deadlines.
    EPA would consider correction of this deficiency to include 
submittal to EPA of a strategy that Maricopa County will implement to 
hire and retain adequate staffing to successfully implement its title V 
program. The strategy could be based either on the 2003 WLA or an 
updated WLA, should include milestones with corresponding dates, and 
should describe contingency options to fill positions if Maricopa 
County is unable to meet these milestones.

C. Significant Action and Correction of Deficiencies

    EPA would consider significant action within 90 days after the date 
of the NOD to be submittal of a workplan containing associated 
milestones for resolution of each deficiency, for review and approval 
by EPA. The workplan should clearly describe Maricopa County's proposed 
correction for each deficiency and a completion date no later than 18 
months after the date of the NOD. The milestones in the workplan should 
include not only the completion of the resolution of each deficiency 
but also intermediate steps and corresponding dates.
    Each subsection of this notice which contains a description of a 
deficiency also contains a suggested correction of the deficiency. EPA 
will also consider alternative resolutions proposed by Maricopa County 
to correct deficiencies. These alternative resolutions should be 
described in the workplan for the significant action submittal. After 
Maricopa County's submittal of the workplan, EPA intends to have an 
active role in tracking Maricopa County's progress towards correcting 
the deficiencies identified in this notice within the specified 
timeframes.

III. Federal Oversight and Sanctions

    Part 70 provides that EPA may withdraw a part 70 program approval, 
in whole or in part, whenever the approved program no longer complies 
with the requirements of part 70 and the permitting authority fails to 
take corrective action. 40 CFR 70.10(c)(1). This section goes on to 
list a number of potential bases for program withdrawal, including 
inadequate fee collection and failure to comply with the requirements 
of part 70 in administering the program. 40 CFR 70.10(b) sets forth the 
procedures for withdrawal of program approval, and requires as a 
prerequisite to withdrawal that the permitting authority be notified of 
any finding of deficiency by the Administrator and that the notice be 
published in the Federal Register. Today's notice satisfies this 
requirement and constitutes a finding of program deficiency. If the 
permitting authority

[[Page 32247]]

has not taken ``significant action to assure adequate administration 
and enforcement of the program'' within 90 days after the date of a 
notice of deficiency, EPA may withdraw approval of the permitting 
authority's program, apply either of the sanctions specified in section 
179(b) of the Act, or promulgate, administer, and enforce a Federal 
title V program. 40 CFR 70.10(b)(2). Section 70.10(b)(3) provides that 
if a permitting authority has not corrected the deficiency within 18 
months of the finding of deficiency, EPA will apply the sanctions under 
section 179(b) of the Act, in accordance with section 179(a) of the 
Act.\7\ In addition, section 70.10(b)(4) provides that, if the 
permitting authority has not corrected the deficiency within 18 months 
after the date of notice of deficiency, EPA must promulgate, 
administer, and enforce a whole or partial program within 2 years of 
the date of the finding.
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    \7\ Section 179(a) provides that unless such deficiency has been 
corrected within 18 months after the finding, one of the sanctions 
in section 179(b) of the Act shall apply as selected by the 
Administrator. If the Administrator has selected one of the 
sanctions and the deficiency has not been corrected within 6 months 
thereafter, then sanctions under both sections 179(b)(1) and 
179(b)(2) shall apply until the Administrator determines that the 
permitting authority has come into compliance.
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    This document is not a proposal to withdraw approval of Maricopa 
County's title V program. Consistent with 40 CFR 70.10(b)(2), EPA will 
wait at least 90 days before determining whether Maricopa County has 
taken significant action to correct the deficiencies outlined in this 
notice.

IV. Administrative Requirements

    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of today's action may be filed in the United States 
Court of Appeals for the appropriate circuit within 60 days of June 2, 
2005.

List of Subjects in 40 CFR Part 70

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Incorporation by reference, Intergovernmental 
relations, Operating permits, Reporting and recordkeeping requirements.

    Dated: May 17, 2005.
Wayne Nastri,
Regional Administrator, Region 9.
[FR Doc. 05-10995 Filed 6-1-05; 8:45 am]
BILLING CODE 6560-50-P