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OAR Box 1875 

Prepped by Ollie Stewart 

Document Number: 

80) ll-F-27 

Docket Number: 

A-90-19 

Printed 12/1/200811:12:49 AM Sheet 80 of 86 
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A-90-19 

ll-F-27 

Notes (attached) from 10/21/92 conversation between A. Eckert, 

EPA:OGC and D. Rivkin, Office of the Vice President, Council on 

Economic Competitiveness. Alan Eckert's notes from the telephone 

conversation were made on a typed version of the markup discussed 

during the October 20, 1992 telephone conversation with D. Rivkin 

(Item No. II-F-26) . Subject: Draft language for complementary 

legal theory. 

1992 

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

soliciting comment on a broader averaging/ochame [prepooalj, 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 

broader averaging scheme differ appreciably from those implicated 

toy thejmore narrow averaging proposal, EPA believes that a 

separate discussion of the former is warranted. CL-, 

The broad averaging alternative /[proposal])relies upon a 

legal theory which would permit compliance witn the HON MACT 

standard (or, for that matter, 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-cotvered processing units. 

This alternative would differentiate between the term 

"sourde 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 maxim of statutory construction that the use of different 

words toy Congress in two different subsections is not accidental 

and rejflects well thought-out Congressional intent. [cite 

Sutherland]. Specifically, for purposes of establishing 

emissions standards under subsection 112(d), Congress expected 

EPA to identify specific production lines, pieces of equipment, 

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

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

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

is the average emission limitation achieved by the best 

performing 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 

jhiphjngf arhioyo ^ompii«nce is a "major source" which 

encompasses an entire plant^C^cite^-^Fhis reading is supported by 

the fact that the definitions or—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, 

.imitation, or regulation promulgated under this [112] section 

axid applicable to a source" describes all of the existing MACJ. 

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

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

subcategory" (i.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. £fie 56 FR 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, [cite Chevron], EPA 

solicits comment on the legal authority to adopt this approach, 

and also requests comment on implementation considerations. 

lirnder 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 tliem, 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 t:o 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 I 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 

stand4rd. 

! 

As 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 idust 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 

EPA-approved compliance routine. EPA solicits comment also on 

how it: would verify the baseline for unregulated emission points, 

and hdw it would structure the averaging compliance process to 

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assure the standard as a whole remains enforceable. One 

possibility to consider would be to use the average emissions 

from such emission points over some representative time period as 

their ibaselines. 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 

leaksjare not included because: (1) the negotiated standard does 

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

method currently existsjfto verify performance. Under this 

alternative, EPA would ^Bxpeditiouslyfrf'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-sd>CMl emission points that might be included in broader 

averages. 

Under 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 any 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 mACT standard. When they become subject to a MACT standard, 

the fiiture value of reductions at those emission points would be 

governed by the emission standards required by the new MACT. 

Stated differently, the offsets available from such points would 

have to be recomputed using the new baseline established for 

them, i 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. 

EPA believes that the broad averaging scheme, described 

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

wouldjenable sources to achieve the same environmental gains, as 

underjthe more narrow averaging proposal, but at significantly 

reduced costs. Second, establishing MACT standards with a 

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

for future standards being tighter than would have been the case 

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if the emission points outside of the already covered MACT 

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

EPA brieves that the utilization of the broad averaging scheme 

may result in the discovery of emission points within facilities 

that otherwise might have been overlooked by EPA and state 

regulators. 

Several factors must be considered in implementing this 

alternative approach. First, the averaging approach allows 

inclusion of points that will be regulated by subsequent MACT 

standards. In calculating residual risk under section 112(f), 

should all points in the initial average be included in one risk 

calculation even though some of those points will not be subject 

to the standards under 112(d) until a later date? 

Second, it would require a determination of the 

permissibility of allowing averages to emit a different 

combination 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^addrops hew to trado these 

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