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OAR Box 1875 

Prepped by Ollie Stewart 

Document Number: 

82) ll-F-29 

Docket Number: 

A-90-19 

Printed 12/1/200811:12:49 AM Sheet 82 of 86 
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A-90-19 

ll-F-29 

DATE: October 22, 1992 (a.m.) 

SUBJECT: Revised Language for Complementary Legal Theory 

FROM: Alan Eckert, EPA/OGC 

TO: David Rivkin, Office of the Vice President 

Council on Economic Competitiveness 

See attached. 
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SPPc +e. k.ijt'u/O 

October 22, 1992 O- -Y\ 

EPA's proposed rule allows an averaging approach for HONcovered portions of a plant. see pp. . EPA is also 

soliciting comment on a broader averaging alternative, as set 

forth below. Significantly, this latter averaging scheme is not 

being proposed as an alternative to the averaging approach, 

described above. Rather, the two approaches are entirely 

complementary. However, because the legal issues posed by the 

broadejf averaging scheme differ appreciably from those implicated 

by the more narrow averaging proposal, EPA believes that a 

separate discussion of the former is warranted. 

The broad averaging alternative relies upon a legal theory 

which vtauld permit compliance with the HON MACT standard (or, for 

that metter, with any other MACT standard to be developed by EPA) 

by averaging emissions from points located anywhere within an 

entire contiguous facility, which contains HON-covered processing 

units. 

This alternative would differentiate between the term 

"source in a category or subcategory," used in Section 112(d), 

and the term "source," used in section 112(i). To begin with, it 

is a mdxim of statutory construction that the use of different 

words ty Congress in two different subsections is not accidental 

and reflects well thought-out Congressional intent. [cite 

Sutherland]. Specifically, for purposes of establishing 

emissicns standards under subsection 112(d), Congress expected 

EPA to identify specific production lines, pieces of equipment, 

etc., located within major stationary sources or area sources, 

and to treat them as sources only for the purposes of subsections 

112(d)(3)(A) and (B), i.e.. for the purposes of determining what 

is the average emission limitation achieved by the best 

perfoming twelve percent of existing sources or average emission 

limitation achieved by the five best performing sources. Since 

the term source was used in subsection 112(d) for a distinct and 

unique purpose, the relevant statutory language contains a 

qualifying set of words - "in a category or subcategory" -

appended to the word "source." 

Significantly, in subsection 112(i), the relevant statutory 

language contains the term "source" — a fact that would allow 

EPA to conclude, for purposes of subsection 112(i), that a source 

which must achieve compliance is a "major source" which 

encompasses an entire plant. See, e.g., Chevron. U.S.A. Inc.. v. 

NRDC. 467 U.S. 837(1984). This reading is supported by the fact 

that tne definitions of statutory terms, set forth in subsection 

112(a), contain the traditional definitions of such terms as 

"major source," stationary source," etc. under this 

construction, the statutory language "any emissions standard, 

limitat)ion, or regulation promulgated under this [112] section 

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and applicable to a source" describes all of the existing MACT 

standards, established under subsection 112(d), and applicable to 

a source, which contains within it "sources in a category or 

subcategory" fi.e.. production lines, pieces of equipment, etc.) 

covered by such MACT standards. 

EPA also notes that, in its "early reductions" rule, it 

adopted a plant-wide definition of source. See 56 PR 27342 (June 

13, 1^91) —a n early indication that the agency believed that an 

entire contiguous facility could be considered to be a source for 

purposes of qualifying>for a 6 year extension of the MACT 

compliance deadlines. EPA is mindful of the fact that it has 

traditionally enjoyed wide latitude in coming up with diverse 

definitions of the term "source," depending on what regulatory 

objectives were implicated, and EPA's considerable discretion in 

this area has been affirmed by the courts. Chevron U.S.A. Inc.. 

v, NRIJ>C, 467 U.S. 837 (1984). EPA solicits comment on the legal 

authority to adopt this approach, and also requests comment on 

implementation considerations. 

Under the broader averaging approach, EPA would make no 

changes in the way it has identified categories and subcategories 

of sources in the HON and devised appropriate emission standards 

for them, nor in the way it would prescribe future emission 

standards for other emission categories or subcategories. For 

compliance purposes, however, if an owner or operator does not 

wish to control a particular HON-covered emission point to the 

level that would result in compliance with the relevant HON 

emission standard, the extra emissions from that point could be 

offset by emissions reductions greater than what is required by 

any standard then in effect under Section 112 at one or more 

other emission points within the entire stationary source. In 

addition, emissions averaging would be allowed across all the 

emission points within the entire plant, including the SOCMI 

source category as well as points not yet covered by any MACT 

standard. 

-=is such, emissions from process vents, wastewater 

operations, storage vessels and transfer operations could be 

averaged among themselves or with other emission points within 

the entire stationary source, in order to provide as much 

flexibility as possible. However, a distinction would be made 

between emission points physically similar to emission points 

covered under the HON or any other MACT and all other emission 

points. For the former, to participate in the averaging scheme, 

they must comply with whatever compliance routines have been 

established under the SOCMI HON or other relevant MACT. For the 

latter, to participate in averaging, the source must petition EPA 

to establish an appropriate compliance routine. To be sure, once 

EPA establishes such a compliance routine for any new type of 

emission point, all similar emission points located within any 

sources can participate in the averaging, so long as they use the 

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EPA-approved compliance routine. EPA solicits comment also on 

how it would verify the baseline for unregulated emission points, 

and h<j>w it would structure the averaging compliance process to 

assure the standard as a whole remains enforceable. One 

possibility to consider would be to use the average emissions 

from _buch emission points over some representative time period as 

their I baselines. Comment is also specifically requested on legal 

authority for, and policy implications of, including new and 

existing sources in the same average. 

While equipment leaks are included in SOCMI sources, they 

cannot: at this time be included in emissions averages. Equipment 

leaks are not included because: (l) the negotiated standard does 

not require any fixed performance level; and (2) no practical 

metho<i currently exists to verify performance. Under this 

alternative, EPA would expeditiously develop methods to assign 

allowable emission levels to particular leak points or groups of 

leak points, and would similarly develop methods for calculating 

emissions from emission points not regulated, by the HON. The 

Administrator seeks comment on means to verify and document the 

emission performance levels achieved for situations where 

equipment leaks are included in an average. Commenters should 

include a description of the compliance verification procedure 

that would be used and what data needs to be supplied to support 

the suggested system. Comments are also requested on types of 

non-SOCMI emission points that might be included in broader 

averages. 

I, Jnder the broader approach, emission reductions from 

emission points not covered by the HON would be usable to 

generate credits, subject to the previously discussed limitations 

and aijiy limitations added in any other MACT standard applicable 

to the relevant emission points. Credits could be generated at 

any time from non-HON emission points until they become subject 

to a ijlACT standard. When they become subject to a MACT standard, 

the future value of reductions at those emission points would be 

governed by the emission standards required by the new MACT. 

Statei differently, the offsets available from such points would 

have tLo be recomputed using the new baseline established for 

them.! Each future MACT standard must contain a floor 

calculation. To the extent that points covered by these later 

standards have already been controlled for purposes of 

participating in an averaging scheme, that relates to the 

compliance with an earlier standard, the floor for the later 

standard may be more—stringent. As future MACT standards are 

adopted, EPA would attempt to maximize averaging opportunities 

and therefore minimize compliance delays and costs. 

ripA believes that the broad averaging scheme, described 

above, provides significant policy benefits. To begin with, it 

would enable sources to achieve the same environmental gains, as 

under the more narrow averaging proposal, but at significantly 

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reduced costs. Second, establishing MACT standards with a 

facility-wide averaging program could result in the MACT "floor" 

for fiiture standards being tighter than would have been the case 

if the emission points outside of the already covered MACT 

categories would have stayed uncontrolled. Last, but not least, 

EPA be'lieves that the utilization of the broad averaging scheme 

may re1 suit in the discovery of emission points within facilities 

that otherwise might have been overlooked by EPA and state 

regulators. . 

A factor that must be considered in implementing this 

approach is that it would require a determination of the 

permissibility of allowing averages to emit a different 

combiriation of pollutants than sources that meet MACT without 

averaging. This concern is already being evaluated for VOC HAPs 

in the SOCMI source category. The alternative approach might 

further complicate this issue by adding dissimilar categories 

(e.g., industrial cooling towers) emitting dissimilar pollutants 

(e.g., chromium). since the HON currently addresses only organic 

HAPs, significant changes would be necessary to accommodate nonvoc HAP controls. To be sure, this concern could be resolved by 

limiting trading under the broad averaging proposal to only 

organic HAPs already covered by a MACT standard, but emitted 

anywhere within the fenceline. As nonorganic HAPs become covered 

by subsequent MACT standards EPA will develop averaging regimes 

covering such pollutants. 

The following language will be added to the preamble, but 

not included in the discussion of the broader averaging approach: 

Another issue that comes up in the context of the HON 

relates to calculation of residual risk under section 112(f). 

Should residual risk be calculated on a plantwide basis, on a 

source category basis, or on the basis of the combination of 

emission points used for compliance with the emissions average? 

Alternatively, is there some other reasonable alternative to 

calculation of residual risk? 

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