EPA'S MINOR SOURCE PROGRAM IN INDIAN COUNTRY

• Jurisdiction: United States

Air Quality Challenges Facing the Natural Resources Industry in the Western United States
(Nov 2007)
CHAPTER 4A
EPA'S MINOR SOURCE PROGRAM IN INDIAN COUNTRY
William C. Scott
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
Albuquerque, New Mexico

I. Introduction:

On August 21, 2006, the United State Environmental Protection Agency ("EPA") issued a notice of proposed rule making entitled "Review of New Sources and Modifications in Indian Country."¹ In that notice, EPA proposed to promulgate a Federal Implementation Plan ("FIP") covering certain emission sources in "Indian country" nationwide. Comments on the proposed rule were initially due by January 19, 2007. EPA subsequently reopened the public comment period through March 20, 2007.² As of the time this paper was submitted for publication, EPA had not finalized the proposed FIP.

In the notice of proposed rulemaking, EPA announced that it was proposing a nationwide FIP to fill a regulatory gap for sources located in Indian country. The proposed FIP would establish two distinct regulatory programs -- one for minor stationary sources and minor modification throughout Indian country and one for new major sources and major modifications to major sources located in portions of Indian country that have been designated non-attainment.

This paper begins with a brief review of the statutory and regulatory background to the proposed FIP. The paper then discusses jurisdictional and enforcement issues under the proposed FIP. Next, the paper outlines the significant elements of the proposed new source review ("NSR") program for minor sources and minor modifications. Finally, the paper reviews the essential elements of the proposed NSR program for new major sources and major modifications of sources in areas of Indian country that have been designated as non-attainment.

II. Statutory and Regulatory Background:

Under the federal Clean Air Act ("CAA"), the EPA promulgates National Ambient Air Quality Standards ("NAAQS"), and each State is required to develop and submit to EPA for approval a State Implementation Plan ("SIP") that provides for the attainment and maintenance of those standards.³ If a state fails to submit a SIP for approval, or the submitted SIP either fails to satisfy the CAA's minimum criteria or the EPA Administrator disapproves the submitted SIP in whole or in part, then the CAA directs the Administrator to promulgate a FIP.⁴

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In 1990, Congress amended the CAA to allow the EPA Administrator to treat qualifying Indian tribes the same as states for purposes of the CAA and to allow tribes to submit a tribal implementation plan ("TIP").⁵ Pursuant to those amendments, EPA is authorized to treat a tribe as a state for purposes of the CAA only if:

(A) the Indian tribe has a governing body carrying out substantial governmental duties and powers;

(B) the functions to be exercised by the Indian tribe pertain to the management and protection of air resources within the exterior boundaries of the reservation or other areas within the tribes jurisdiction; and

(C) the Indian tribe is reasonably capable, in the judgment of the Administrator, of carrying out the functions to be exercised in the manner consistent with the terms and purposes of this Act and the applicable regulations. ⁶

With respect to the development and submission of TIPs, the 1990 amendments declared that

[i]f an Indian tribe submits an implementation plan to the Administrator pursuant to §7601(d) of this title, the plan shall be reviewed in accordance with the provisions for review set forth in this section for State plans, except as otherwise provided by regulation promulgated pursuant to § 7601(d)(2) of this title. When such plan becomes effective in accordance with the regulations promulgated under § 7601(d) of this title, the plan shall become applicable to all areas (except as expressly provided otherwise in the plan) located within the exterior boundaries of the reservation, notwithstanding the issuance of any patent and including rights-of-way running through the reservation.⁷

While the 1990 Amendments authorized tribes to develop TIPs and to receive delegation of air program authority, tribes thus far generally have not elected not to take those steps. For example, no tribe is currently administering an EPA-approved PSD program. As a result, EPA acts as the PSD permitting authority for PSD sources in Indian country. There is no current federal program broadly implementing either non-attainment new source review permitting for major sources located in Indian country or minor source permitting in Indian country.⁸ EPA has thus proposed the FIP to address those gaps in regulatory coverage.

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In its August 21, 2006 notice of proposed rule making, EPA declared that there is a regulatory gap in Indian county and that EPA therefore proposes to implement a nationwide FIP.⁹ The proposed FIP would include "two basic air quality regulations for the protection of communities in Indian country."¹⁰ The first rule would apply to minor stationary sources and minor modifications at major stationary sources in Indian country. The second rule would apply to all new major stationary sources and major modifications located in areas of Indian country that are designated as not attaining the National Ambient Air Quality Standards.¹¹ EPA declared that the proposed FIP's purpose

is to ensure that air resources in Indian country will be protected in a manner intended by the Act as amended in 1990 by establishing a permitting program for stationary sources in Indian country. Currently in Indian country, there is no permitting mechanism for new or modified minor sources; minor modifications at major sources; or new major stationary sources or major modifications of regulated NSR pollutants in nonattainment areas. In addition, there is no minor source permitting mechanism for major stationary sources looking to voluntarily limit emissions to become synthetic minor sources or for approving case-by-case maximum achievable control technology ("MACT") determinations. Today's proposed rules will fill this regulatory gap and provide regulatory certainty to allow for environmentally sound economic growth in Indian county. By establishing this FIP for Indian county, we will provide more consistency with the requirements and programs of the States and thus create a more level regulatory playing field for owners and operators within and outside of Indian county.¹²

EPA emphasized, however, that even if it were to adopt a Federal program that applies in Indian country, the tribes may still develop Tribal Implementation Plans (TIPs) "to implement these programs. If a tribe develops a TIP to implement NSR, the TIP, once it is approved, will replace the Federal program as the requirement for that area of Indian country and the tribe will become the reviewing authority."¹³

III. Potential Jurisdictional Issues:

In the preamble to the proposed FIP, EPA declared that both the minor source and major source programs "would apply throughout Indian country, except where we explicitly approve an implementation plan for such programs."¹⁴ Thus, EPA intends the FIP, if adopted, to apply

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everywhere in Indian country "including off-Reservation trust land, new reservations, or new lands placed into trust."¹⁵ In connection with the proposed FIP, however, EPA has not made any determination as to the specific boundaries of areas outside of recognized reservation boundaries that would constitute "Indian country" and thus be subject to the FIP. EPA's position concerning its authority to promulgate a FIP applicable throughout Indian country and potential issues concerning application of such a FIP to off-reservation areas are discussed below.

A. EPA's Explanation of Jurisdiction and Legal Authority:

In explaining the basis for its authority to implement the proposed FIP, EPA began by noting that while "many States have developed regulatory programs for minor sources, those programs do not apply in Indian country."¹⁶ EPA elaborated on that position, noting that it believes

that in the context of programs under the Act, States generally lack the authority to regulate air quality in Indian country. . . . We make clear today that we interpret past approvals and delegations of NSR programs as not extending to Indian country unless the State has made an explicit demonstration of jurisdiction over Indian country, and we have explicitly approved or delegated the State's program for such area. This is consistent with Congress' requirement that we approve State and tribal programs only where there is a demonstration of adequate authority. . . . Since States generally lack the authority to regulate air resources in Indian country, we do not believe it would be appropriate for us to approve State programs under the Act as covering Indian country where there has not been an explicit demonstration of adequate jurisdiction and where we have not explicitly indicated our intent to approve the State program for an area of Indian county. In State NSR program approvals and delegations we generally were not faced with State assertions of authority to regulate sources in Indian country. However, to the extent States or others may have interpreted our past approvals or delegations that were not based on explicit demonstrations of adequate authority and did not explicitly grant approval in Indian country, as approval to operate NSR programs in Indian country, we wish to clarify any such misunderstanding.¹⁷

Having thus concluded that State NSR programs are not applicable in Indian country absent express EPA approval and delegation, EPA then noted that most tribes have not developed minor or major NSR programs for incorporation into TIPs. EPA thus determined that it is necessary for it to promulgate the proposed FIP to fill a regulatory gap.

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EPA determined that, in the absence of...