MEMORANDUM

SUBJECT:  Update to Sanctions Policy for State Title V Operating
          Permits Programs

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

TO:       See Addressees


     The EPA has received inquiries regarding the extent to which
the views discussed in my March 15, 1994 memorandum entitled
"Sanctions Policy for State Title V Operating Permits Programs"
continue to reflect EPA's current policy for applying sanctions
under title V of the Clean Air Act.  This memorandum updates that
memorandum and clarifies EPA's policy.

     The EPA expects to publish a notice of proposed rulemaking
in the very near future selecting the order of sanctions to be
applied under title V.  While the rulemaking will establish
definitively how title V sanctions will apply, EPA believes it is
necessary in the interim to update the positions discussed in my
March 15, 1994 memorandum, so that EPA Regions are informed as to
the Agency's most recent thinking with respect to how the sanc-
tions process should work under title V.  Under today's clarified
policy, the sanctions policy under title V would largely follow
the approach under title I of the Act (see 59 FR 39832 (August 4,
1994), to be codified at 40 CFR 52.31), except where title V
would require a different result.  This memorandum describes four
policy clarifications:  (1) the sanctions clock for failure to
submit a title V program does not stop until EPA finds a
submittal complete; (2) following program disapprovals, the
application of sanctions would be deferred if EPA proposed
approval and issued an interim final determination that the State
had corrected the deficiency before the 18-month clock expired;
(3) for areas that fail to submit partial programs, EPA will
apply sanctions in areas that had failed to submit "complete"
programs, rather than "approvable" programs; and (4) the
application of the highway sanction is limited to designated
nonattainment areas.

Sanctions for Failure to Submit

     In finalizing the title I sanctions rule, EPA provided that
in order to avoid the duty to apply sanctions following a finding
of a State's failure to submit a SIP, EPA must affirmatively
determine that the State had corrected the deficiency and find
the SIP submission complete before the sanctions clock expires. 
Under title V, EPA would follow this same approach, and today's
memorandum clarifies this by providing that in order to avoid
application of sanctions for failure to submit a complete
operating permit program, EPA would have to find the State's
title V submission complete before expiration of the 18-month
clock.

Sanctions for Program Disapproval

     In finalizing the title I sanctions rule, EPA provided that
while final SIP approval is required to permanently stop a sanc-
tions clock or permanently lift already applied sanctions, the
application of sanctions could be deferred or stayed upon EPA
proposed approval of a State's SIP and EPA issuance of an interim
final determination that the State has corrected the deficiency. 
Any deferral or stay would elapse upon either a proposed or final
reversal of EPA's proposed SIP approval.  Under title V, EPA
would follow this same approach, and today's memorandum clarifies
this by providing that following EPA disapprovals under title V,
the application of sanctions would be deferred if EPA proposed
approval of the State's program and issued an interim final
determination that the State had corrected the deficiency before
the 18-month clock expired, and already applied sanctions would
be stayed upon such action.  Also, the deferral or stay would
elapse if EPA's proposed approval is subsequently reversed by a
proposed or final disapproval.  This approach would apply both in
situations following disapprovals of initial State programs and
in situations following disapprovals of corrective programs, such
as a corrective program submitted to cure deficiencies in a
program that had received interim approval.  Consistent with the
final title I sanctions rule, this approach would also be used
following EPA determinations that a State was not adequately
administering and enforcing its approved program.

Partial Approvals

     The March 15, 1994 memorandum contained a discussion of the
application of sanctions in situations where EPA had granted
geographically limited partial approval to programs within a
State.  That discussion included an unintended mistaken statement
that where a State program consists of an aggregate of partial
programs and one or more of the partial programs fails to be
submitted, EPA would apply sanctions only in the areas that had
failed to submit an "approvable" program.  However, to be
consistent with the rest of the Agency's policy regarding the
starting and stopping of sanctions clocks following a State's
failure to submit, the memorandum should have provided that EPA
would apply sanctions only in the areas that had failed to submit
complete programs, rather than "approvable" ones.

     The EPA did not intend for the March 15, 1994 memorandum to
appear to set a higher threshold for avoiding sanctions when an
area within a State fails to submit its partial program.  Today's
memorandum clarifies that in order to avoid application of
sanctions for an area's failure to submit a partial program, EPA
would only have to find the area's subsequent submission com-
plete.  If EPA disapproved an area's partial program, however, in
order to avoid application of sanctions, EPA would have to
propose approval of the area's submission and issue an interim
final determination that the area had corrected the deficiency,
as discussed above.

Scope of Application of Sanctions

     The March 15, 1994 memorandum indicated that in States
without designated nonattainment areas, the Federal highway fund
sanction of CAA section 179(b)(1) would apply.  However, as
explained in the final title I sanctions rule, EPA believes that
the applicability of the highway sanction under section 179(a) is
limited to nonattainment areas, since section 179(b)(1) defines
the highway sanction as being "applicable to a nonattainment
area."  The EPA believes that under title V, the highway sanction
could also be applied only in nonattainment areas.  This is
because title V provides that section 179(b) sanctions applied
for title V failures shall be applied in the same manner and
subject to the same conditions as sanctions applied under section
179(a).  States without designated nonattainment areas would thus
not be at risk of becoming subject to section 179(b) sanctions
under title V.  This approach may appear at odds with the
provisions in title V requiring EPA to apply sanctions following
title V failures. Nevertheless, EPA believes a straightforward
reading of the language of the Act compels this result.  More-
over, title V failures in States without nonattainment areas
would not go unaddressed as a result of this approach, as EPA
would be required to administer and enforce a Federal title V
program in any State that did not receive program approval or
that failed to implement its approved program.

     I hope that this updated and clarified guidance will be
useful in assessing how sanctions would be applied under title V. 
If you have any questions, please contact Scott Voorhees,
Operating Permits Group, at (919) 541-5348, or Mike Thrift,
Office of General Counsel, at (202) 260-7709.

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