March 15, 1994


MEMORANDUM

SUBJECT:  Sanctions Policy for State Title V
          Operating Permits Programs 

FROM:     John S. Seitz, Director /s/
          Office of Air Quality Planning and Standards (MD-10)

TO:       Director, Air, Pesticides and Toxics 
            Management Division, Regions I and IV
          Director, Air and Waste Management Division,
            Region II
          Director, Air, Radiation and Toxics Division,
            Region III
          Director, Air and Radiation Division,
            Region V
          Director, Air, Pesticides and Toxics Division,
            Region VI
          Director, Air and Toxics Division, 
            Regions VII, VIII, IX, and X


This memorandum describes the Environmental Protection Agency's (EPA's) policy for
applying sanctions when States fail to submit required title V operating permits programs or
when EPA disapproves submitted programs.  It does not address EPA's sanctions policy in
the event of inadequate implementation of a State program.

Summary
               
     Under today's policy, if a State fails to submit a program by the November 15, 1993
due date or if EPA determines that a submittal is not complete, the 18-month period that must
expire before EPA is required to apply mandatory sanctions would start on the date the
submittal was due.  If the State submitted a complete program before the 18-month period
expires, the State would avoid sanctions.  If the State submitted a complete program after
expiration of the period, EPA would lift any sanctions already imposed for nonsubmittal.  If
EPA disapproves a State-submitted program, the 18-month period would begin at the date of
disapproval.  If the 18-month period expires without EPA taking final action to approve a
subsequent submittal, EPA must impose mandatory sanctions, which would remain in place
until EPA approves a subsequent submittal.

     States were required to submit operating permits programs meeting the requirements
of title V and part 70 regulations by November 15, 1993.  If a State fails to submit such a
program or EPA disapproves a program, the Act requires EPA to impose one of the
sanctions specified in section 179(b) of the Act (i.e., 2-to-1 offsets or highway funding
restrictions).  These mandatory sanctions are required 18 months after a failure to submit
unless the State submits a complete program before expiration of the 18-month period. 
Sanctions must also be put in place 18 months after EPA disapproves a State submittal, unless
prior to expiration of the 18-month period the State submits and EPA approves a revised
State program.  If the State has not come into compliance within 6 months after EPA applies
the first sanction, a second sanction is required.

     The Act gives EPA discretionary authority to impose sanctions before the 18-month
period expires.  The EPA would anticipate using discretionary sanctions only in those cases
where State inaction warrants their use.  The Act also requires EPA to implement a Federal
operating permits program by November 15, 1995 in States without approved part 70
programs.

                        Completeness Determination

     Part 70 requires EPA to determine whether a program submittal is complete within 60
days of receipt.  The 18-month period will only begin if the submittal is late or incomplete. 
To find a submittal incomplete, EPA would have to determine that the submittal failed to
address all of the elements required in section 70.4(b) for complete program submittals. 
These items are summarized in Attachment A (Program Completeness Checklist).  Examples
of these include:  a) evidence that the regulations comprising the program have been adopted
through proper State procedures, b) a requirement to make the permit and application
available to the public, and c) a fee demonstration. 

     A submittal that addresses each of the elements of section 70.4(b), even if it does so
inadequately, may still be found to be complete.  A submittal that fails to address each of the
elements, however, cannot be found complete.  

                      Sanctions for Failure to Submit

     Where EPA finds that a State has failed to submit any program or has a submitted an
incomplete one, the 18-month period for mandatory sanctions would start automatically from
the November 15, 1993 due date.  It would stop if the State submitted a complete program
before the 18-month period expired (i.e., May 15, 1995).  If a submittal is received just prior
to the expiration of the 18-month period, and EPA has not determined whether it is complete
by that date, the Agency would not impose sanctions unless it determines in the subsequent
60-day period that the submittal is incomplete.  

     If a State submitted a complete program after the expiration of the 18-month period,
EPA would discontinue any action to impose sanctions and would lift any sanctions already
imposed.  The Act provides that if EPA imposes mandatory sanctions, they must remain in
place until the Agency determines the State has come into compliance.  Once a State's
submittal has been found to be complete, the State would be in compliance with the
requirement to submit a complete program.  The EPA's approval of the program is not
necessary to stop sanctions in these cases.

Effect of Interim Approvals on Sanctions

     The EPA may grant interim approval for up to 2 years to States whose programs
"substantially meet" the requirements of part 70, but are not fully approvable.  Title V
provides that during the interim approval period, EPA's authority to impose sanctions and the
duty to promulgate a Federal permits program for the State are suspended.  

     Once EPA has granted interim approval to a program, the State is required to submit
a corrective program for full approval 6 months before the end of the interim approval
period.  If the State fails to submit a complete program for full approval by that date, EPA
would start an 18-month mandatory sanctions clock at that time.  While part 70 does not
clearly provide that the sanctions period would start for a failure to submit a corrective
program, EPA intends to propose to revise the part 70 rule in the future to clarify the linkage
between the starting of the clock and this required submittal.  If the 18-month period expires
without State submittal of a complete program requesting full approval, EPA would impose
mandatory sanctions at that time.

     If, after granting a State interim approval, EPA subsequently disapproves a State's
corrective program, EPA would begin an 18-month mandatory sanctions period in
conjunction with the final disapproval.  EPA would not impose sanctions if the State submits
and EPA fully approves a corrective program before that 18-month period expires.  If,
however, the 18-month period expires before final EPA approval, EPA would impose a
mandatory sanction at 18 months.  This sanction would remain in place until EPA takes final
action to approve the subsequent submittal.  

     Regions should consider taking measures to expedite review of corrective submittals
for interim programs to avoid both the unnecessary application of sanctions and
implementation of a Federal permit program.  One way to expedite review is for Regions to
work closely with States as they develop their corrective programs so that quick action may
be taken to propose approval once a program is submitted.  Another way is for the Regions
to process the proposed action in parallel with the State's final adoption of its program, if the
Region has received a draft version of the corrective program and is confident that the
program will not change in any significant way before final State action.

     In very limited circumstances, Regions could consider coupling a notice proposing or
granting interim approval with a proposal to approve the State's anticipated corrective
submittal.  This approach should be used only in cases where the corrective action is quite
specific, such as deletion of an unapprovable program element or establishment of a simple,
precisely-specified program element.  The proposals would set forth the express corrections
necessary for full approval.  Approval or disapproval of the corrective submittal would
depend on whether the State's corrective submittal matched the corrections identified in the
notice.  Under this approach, the public would have an opportunity to comment on the
anticipated corrections during the interim approval process.  This would allow Regions to
proceed directly to final approval following receipt of the State submittal, provided the
corrective submittal substantively complies with the corrections specified in the earlier notice. 
If a State's corrective submittal fails to match the anticipated corrections and is otherwise
unacceptable, the Region could proceed directly to final disapproval and start an 18-month
mandatory sanctions period from the date of disapproval.  If the submittal was acceptable, but
was not what was identified in the proposal, the Region could proceed to propose approval of
the submittal.  If the State failed to submit anything at all, the 18-month period would start at
the due date for the corrective submittal.    

                     Sanctions for Program Disapproval

     If EPA disapproves a State's title V program, the 18-month period for mandatory
sanctions would start at the date of final disapproval.  Sanctions would be imposed 18 months
after final disapproval of a State program, unless EPA has approved a program prior to
expiration of the 18-month period.  Sanctions would remain in place until EPA fully approves
a subsequent submittal.  However, unlike title I, where EPA must fully approve a program
to lift sanctions, under title V, interim approval of a program can also lift sanctions.    
     As indicated above, granting interim approval suspends EPA's duty to impose
sanctions and to promulgate a Federal program for the State during the interim approval
period.  If EPA grants interim approval before expiration of the 18-month period, no
sanctions would be imposed and the 18-month sanctions period is no longer applicable.  If the
18-month period had expired and sanctions were imposed, EPA's grant of interim approval
would lift the sanctions.  As described above, if a State then failed to submit a corrective
program within 18 months after the interim approval, the Agency would start an 18-month
period for mandatory sanctions.  In addition, if EPA disapproved a submitted corrective
program, it would start an 18-month period for mandatory sanctions on the date of
disapproval.  Failure to approve a full program by the end of the interim approval would also
trigger EPA's duty to impose the Federal permits program. 
     
                             Partial Approvals

     While the Act suspends EPA's authority to impose sanctions during an interim
approval period, no such suspension occurs where State programs receive partial approval. 
Under part 70, partial programs are geographically-limited programs that cover only part of a
State.  Where a State program consists of an aggregate of partial programs, and one or more
of the partial programs fails to be submitted or approved, EPA would apply sanctions only in
those areas that failed (or for which the State failed) to submit an approvable program or in
areas that submitted programs that EPA disapproved.  This would not prevent EPA from
imposing sanctions in appropriate circumstances on the entire State where all partial programs
in a State are inadequate due to a common failure (e.g., inadequate legislation).  

                            National Rulemaking

     As part of the implementation of this policy, EPA intends to propose a national rule in
late summer 1994 and promulgate it before May 15, 1995.  This rule would implement the
provisions outlined in this policy.  It would also select the order in which sanctions would
apply, provide for automatic imposition of sanctions where warranted according to the
deadlines under the Act, and indicate which States had failed to submit complete programs as
of the time of the notice.  Sanctions would be promulgated at part 52, similar to the approach
taken in the proposed rulemaking for title I sanctions.  The rule would describe the process
by which EPA would consult with the Secretary of the Department of Transportation prior to
imposing the highway sanction.  

     The national rule would select the first sanction to apply as required by section 179(a)
of the Act.  In States with designated nonattainment areas, EPA intends to propose that the
offset sanction would apply first.  In States without designated nonattainment areas, the
highway sanction would be the only sanction available and would apply at the end of the 18-
month period.  [Under title V, EPA may apply the offset sanction only in designated
nonattainment areas.]  The proposed national rule would provide for the imposition of only
one mandatory sanction at the expiration of the 18-month period.  If the deficiency has not
been corrected within 6 months thereafter, the proposal would provide that the second
sanction would be imposed as required by section 179(a), except in States with no designated
nonattainment areas where the offset sanction cannot be imposed.

     A chronological description of the process by which sanctions would be imposed is
contained in Attachment B.  Also,  flow charts which lay out the process for submittals,
approvals and disapprovals, and interim approval actions are provided in Attachment C.

     I trust that this guidance will be useful.  If you have any questions, please contact Ray
Vogel or Rich Damberg, Permits Programs Branch, at (919) 541-3153 and (919) 541-5592,
respectively, or Mike Thrift, Office of General Counsel, at (202) 260-7709.  

3 Attachments


      

             OPERATING PERMITS PROGRAM COMPLETENESS CHECKLIST

                             December 15, 1993

     The attached operating permits program completeness checklist is a tool for
determining if a program submitted by a permitting authority is complete enough to warrant
review by EPA for either full, partial, or interim approval.  Section 70.4(a) of EPA's Part 70
regulations requires the submittal of operating permits programs, and section 70.4(b)
stipulates what a program must contain.  Section 70.4(e)(1) provides 60 days for EPA to
determine if the program submittal is complete enough to warrant review by EPA for
approval.  If EPA finds a program submission complete, the 1-year period for EPA review of
the submission shall be deemed to have begun on the date of receipt of the submission.  The
EPA may find that a program submittal is incomplete, in which case the 1-year period for
program review does not begin until all the necessary information is received by EPA. 
Moreover, if EPA finds a submission to be incomplete, the 18-month mandatory sanctions
clock established in section 70.10(a) will have started as of the required submittal date for
failure to submit a complete program.

     This checklist is only for use in determining if the program submittal is complete
enough to warrant EPA review and for allowing processing of the submittal to proceed.  The
review for program submittal completeness is not intended to address the approvability of the
program or any program element.  Judgment as to the adequacy of any program element
must still be made during the succeeding determination of program approvability.

     The program should be reviewed for completeness to ascertain whether there is
sufficient information available for each program element to be able to determine whether the
element is approvable or not.  In those instances when a program element clearly should be
in a regulatory provision, a determination of program submittal incompleteness is warranted
if any such element is not regulatory or provided for in underlying statutes that can be
directly implemented by the permitting authority.  Finally, if any element is not addressed at
all in the program submittal, the program would be incomplete with respect to that element.

     The attached checklist restructures the section 70.4(b) requirements for program
content into a more usable format by grouping similar program elements such as relevant
program documentation or enforcement provisions.  The organization of this checklist follows
the organization of the larger program review checklist which was made available on August
5, 1993.
December 15, 1993
                            OPERATING PERMITS PROGRAM COMPLETENESS CHECKLIST


Yes/No    Comments/Action Required
______    ________________________
PROGRAM SUBMITTAL ELEMENTS.  Does the operating permits program address the
following elements?  NOTE:  This checklist is appropriate for application to a local
agency permitting program covering the area of jurisdiction of the local agency.  In
such case, the term "State" should be read to mean the local government or
permitting agency, as appropriate.
[    ]_________________________________
_________________________________
_________________________________I.   A letter from the Governor, or his or her designee, requesting EPA approval of
     the program.  [70.4(b)]  NOTE:  For a local program, the Governor could
     designate a local government official as having authority to submit the local
     program to EPA for approval.
[    ]_________________________________
_________________________________
_________________________________II.  A program description describing how the permitting authority intends to carry
     out its responsibilities under the Part 70 regulations.  [70.4(b)(1)]
[    ]_________________________________
_________________________________
_________________________________III. The permitting regulations and available evidence of their procedurally complete
     and correct adoption; copies of all relevant enabling legislation or regulations
     including those governing administrative procedures that either authorize the
     Part 70 program or restrict its implementation; and any criteria used to
     determine insignificant activities or emissions levels.  [70.4(b)(2)]  NOTE: 
     Criteria may be nonregulatory but activities or levels must be specified by
     regulation.
IV.  The Attorney General's legal opinion that addresses each of the following
     required program aspects:  [70.4(b)(3)]
[    ]_________________________________
_________________________________
_________________________________     A.   Issue permits that include all applicable requirements and the
          requirements of the Part 70 regulations and assure compliance with all
          those requirements.  [70.4(b)(3)(i) and (v)]
[    ]_________________________________
_________________________________
_________________________________     B.   Incorporate monitoring, recordkeeping, reporting, and compliance
          certification requirements into permits.  [70.4(b)(3)(ii)]
[    ]_________________________________
_________________________________
_________________________________     C.   Issue permits for a fixed term.  [70.4(b)(3)(iii) and (iv)]
[    ]_________________________________
_________________________________
_________________________________     D.   Terminate, modify, or revoke and reissue permits for cause. 
          [70.4(b)(3)(vi)]
[    ]_________________________________
_________________________________
_________________________________     E.   Enforce permits, permit fee requirements, and the requirement to obtain
          a permit.  [70.4(b)(3)(vii)]
[    ]_________________________________
_________________________________
_________________________________     F.   Make permit, permit application, compliance plan, and monitoring and
          compliance certification information available to the public. 
          [70.4(b)(3)(viii)]
[    ]_________________________________
_________________________________
_________________________________      G.  Not issue a permit if EPA objects.  [70.4(b)(3)(ix)]
[    ]_________________________________
_________________________________
_________________________________     H.   Provisions for opportunity for judicial review in State court of final
          permit actions.
[    ]_________________________________
_________________________________
_________________________________     I.   The authority of the permitting authority is not used to modify the acid
          rain program requirements.  [70.4(b)(3)(xiii)]




V.   Relevant program documentation including the following:
[    ]_________________________________
_________________________________
_________________________________     A.   Copies of permit forms, application forms, and reporting forms to be
          used in the operating permits program.  [70.4(b)(4)(i)]
[    ]_________________________________
_________________________________
_________________________________     B.   Any relevant guidance to assist in implementing the program. 
          [70.4(b)(4)(ii)]
[    ]_________________________________
_________________________________
_________________________________     C.   A showing that addresses the adequacy of personnel and funding to
          administer the program.  [70.4(b)(8)]
[    ]_________________________________
_________________________________
_________________________________     D.   A transition plan for issuing the initial permits during the first 3 years
          after program approval.  [70.4(b)(11)]
VI.  Provisions contained in regulations for implementing the operating permits
     program, including the following:  NOTE:  These provisions could be in
     underlying statutes if the statutes can be directly enforced by the permitting
     authority.
[    ]_________________________________
_________________________________
_________________________________     A.   Provisions for continuing permits or permit terms if a timely and
          complete application is submitted, but action is not taken on renewal
          prior to permit expiration.  [70.4(b)(10)]
[    ]_________________________________
_________________________________
_________________________________     B.   Provisions for action on permit applications.  [70.4(b)(6)]
[    ]_________________________________
_________________________________
_________________________________     C.   Provisions for permit content including all applicable requirements, a
          fixed term, monitoring and related recordkeeping and reporting
          requirements, and source compliance requirements.  [70.4(b)(16)]


[    ]_________________________________
_________________________________
_________________________________     D.   Operational flexibility provisions.  [70.4(b)(12)]
[    ]_________________________________
_________________________________
_________________________________     E.   Provisions for permit issuance, renewals, reopenings, and revisions,
          including public, EPA, and affected State review to be accomplished in
          an expeditious manner.  [70.4(b)(13) and (16)]
[    ]_________________________________
_________________________________
_________________________________     F.   If the permitting authority allows off-permit changes, provisions assuring
          compliance with sections 70.4(b)(14) and (15). [70.4(b)(14) and (15)]
[    ]_________________________________
_________________________________
_________________________________VII. A demonstration that required permit fees are sufficient to cover the cost of the
     permit program.  [70.4(b)(7)]
[    ]_________________________________
_________________________________
_________________________________VIII.     Enforcement provisions, including the following:

     A.   A complete description of the compliance tracking and enforcement
          program including criteria for monitoring source compliance. 
          [70.4(b)(4)(ii) and (5)]

     B.   A commitment to submit enforcement information annually to EPA. 
          [70.4(b)(9)]

     C.   Regulatory provisions for enforcement authority covering the program
          enforcement elements in section 70.11.  [70.4(b)(3)(vii)]
IX.  Provisions to implement applicable requirements from portions of the Act other
     than Title V.  [70.4(b)(3)(i) and (v)]
[    ]_________________________________
_________________________________
_________________________________     A.   Provisions (which could include a commitment for future action)
          implementing the Acid Rain requirements of Title IV of the Act.

[    ]_________________________________
_________________________________
_________________________________     B.   Provisions (which could include a commitment for future action) to
          assure compliance with all existing and future applicable requirements
          of section 112 of the Act.
[    ]_________________________________
_________________________________
_________________________________     C.   Provisions (which could include a commitment for future action) to
          implement the enhanced monitoring requirements of section 114(a)(3)
          [and section 504(b)] of the Act. 
Attachment B
                                    
                     Process for Imposing Sanctions 


     The process by which sanctions would be imposed for
nonsubmittals (including incomplete submittals) and disapprovals
is described below.  

     Completeness of submittals should be determined by EPA's
Regional Offices within 60 days of receipt.  If a submittal is
found to be complete, the Region should notify the State of that
finding and that the 1-year EPA processing period has begun.  If
a submittal is found to be incomplete, the Region should send a
letter to the State notifying it that the submittal is not
complete and identifying the elements the State needs to submit
to make the submittal complete.  In addition, the incompleteness
letter should make the following points:

    The 18-month mandatory sanctions period began on November
     15, 1993, but will stop when EPA receives a submittal that
     it finds to be complete.

    EPA intends to propose mandatory sanctions for States
     without complete programs in its national rulemaking
     projected for late summer 1994.  If a complete submittal is
     received before publication in the Federal Register of that
     proposal, EPA would not propose sanctions for that State.
 
    A complete submittal is needed early to minimize the chance
     of EPA implementing a Federal program in November 1995.  If
     a complete submittal is still not received by EPA by May 15,
     1995, the Agency would impose mandatory sanctions as
     provided for in the final national rule.  Before publishing
     the final rule, EPA would take public comment into
     consideration.  

     By late summer of 1994, EPA would propose the national rule,
selecting the order in which mandatory sanctions would be
applied; identifying the States to which sanctions would apply if
no complete submittal is received by May 15, 1995; and proposing
how EPA intends to decide other related issues.  By May 15, 1995,
EPA would promulgate the national rule, and on that date the
selected sanction would apply automatically where warranted.  By
November 15, 1995, a second mandatory sanction would apply 
automatically in the subject areas as provided for in the 
national rule if the State had still failed to submit a complete
program.  In addition, Regional Offices must promulgate, 
implement, and enforce a Federal operating permits program by
this date in areas where EPA has not approved a program.  For
interim approvals, sanctions for nonsubmittal would apply
automatically as provided for in the national rule in any State
that failed to submit a complete corrective program within 18
months after the due date for the corrective program. 
     In cases of program disapproval, Regions should notify
States that the 18-month mandatory sanction period started on the
date of disapproval.  This notification could occur in the final
notice promulgating disapproval of the program.  At the end of
the 18-month period, if EPA has not approved a subsequent State
submittal, EPA would impose mandatory sanctions as provided for
in the national rule.  Alternatively, Regions could provide for a
different order of sanctions in the proposal and final notices
disapproving the State program.