May 16, 1995


MEMORANDUM


SUBJECT:	 Potential to Emit for MACT Standards -- Guidance on


Timing Issues 


FROM:	 John S. Seitz, Director


Office of Air Quality Planning and Standards (MD-10)


TO:	 Linda Murphy, Region I


Conrad Simon, Region II


Thomas Maslany, Region III


Winston Smith, Region IV


David Kee, Region V


Stanley Meiberg, Region VI


William Spratlin, Region VII


Patricia Hull, Region VIII


David Howekamp, Region IX


Jim McCormick, Region X


Section 112 of the Clean Air Act distinguishes between major


sources and area sources of hazardous air pollutants. Although


maximum achievable control technology (MACT) is required for all


major sources of hazardous air pollutants, lesser controls or no


controls may be required of area sources in a particular


industry. In addition, whether a facility is a major or area


source of hazardous air pollutants may affect the applicability


of other CAA requirements -- such as when or whether the facility


is required to obtain a Title V operating permit.


The purpose of this memo is to clarify when a major source


of hazardous air pollutants can become an area source -- by


obtaining federally enforceable limits on its potential to emit -


- rather than comply with major source requirements. Timing


questions are important to address now because several MACT


standards have been promulgated and because an increasing number


of sources are nearing deadlines for submitting Title V operating


permit applications. The EPA recently provided guidance on how

facilities can obtain federally enforceable limits on their


potential to emit hazardous and criteria air pollutants in a


January 25, 1995, memo from me to you.

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STATUTORY AND REGULATORY BACKGROUND 


Section 112 of the Act defines a "major source" as "any


stationary source or group of stationary sources located within a


contiguous area and under common control that emits or has the


potential to emit considering controls, in the aggregate, 10 tons


per year or more of any hazardous air pollutant or 25 tons per


year or more of any combination of hazardous air pollutants..." 


The term "potential to emit" is defined in the section 112


general provisions (40 CFR Part 63.2) as “ the maximum capacity


of a stationary source to emit a pollutant under its physical or


operational design,” considering controls and limitations that


are federally enforceable. This definition is consistent with


definitions in regulations for the new source review and Title V


permit programs.


SCOPE OF TODAY'S GUIDANCE


EPA has received a number of requests for clarification


concerning when facilities may limit their potential to emit to


avoid applicability of major source requirements of promulgated


MACT standards. Most of these issues are not explicitly


addressed by the section 112 general provisions nor by MACT


standards themselves. Therefore, EPA is providing this guidance


for MACT standards based on the Agency's interpretation of the


relevant statutory language.


Today's guidance addresses three issues:


! By what date must a facility limit its potential to emit if 

it wishes to avoid major source requirements of a MACT 

standard? 

! Is a facility that is required to comply with a MACT 

standard permanently subject to that standard? 

! In the case of facilities with two or more sources in 

different source categories: If such a facility is a major 

source for purposes of one MACT standard, is the facility 

necessarily a major source for purposes of subsequently 

promulgated MACT standards? 

EPA plans to follow this guidance memorandum with rulemaking


actions to address these issues. The Agency intends to include


provisions on potential to emit timing in future MACT rules and


amendments to the section 112 general provisions. The EPA


believes that the structure of section 112 strongly suggests


certain outer limits for when a source may avoid a standard


through a limit on its potential to emit. However, EPA also

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believes the statute may be flexible enough to allow the Agency 

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to reach different results through rulemaking. In forthcoming


rulemaking, EPA will be considering alternative approaches that


could garner additional environmental benefits and provide


additional flexibility to small sources.


TIMING FOR OBTAINING POTENTIAL TO EMIT RESTRICTIONS:


GUIDANCE FOR PROMULGATED STANDARDS


Existing sources


Today's guidance clarifies that facilities may switch to


area source status at any time until the "first compliance date"


of the standard. The "first compliance date" is defined as the


first date a source must comply with an emission limitation or


other substantive regulatory requirement (i.e., leak detection


and repair programs, work practice measures, housekeeping


measures, etc..., but not a notice requirement) in the applicable


MACT standard. By that date, to avoid being in violation, a


major source must either comply with the standard, or obtain and


comply with federally enforceable limits ensuring that actual and


potential emissions are below major source thresholds. 


The Act does not directly address a deadline for a source to


avoid requirements applicable to major sources through a


reduction of potential to emit. However, a result that is 


consistent with the language and structure of the Act is that


sources should not be allowed to avoid compliance with a standard


after the compliance date, even through a reduction in potential


to emit. In the absence of a rulemaking record supporting a


different result, EPA believes that once a source is required to


install controls or take other measures to comply with a MACT


standard, it should not be able to substitute different controls


or measures that happen to bring the source below major source


levels. 


Moreover, while some standards have multiple, staggered


compliance dates, these requirements are intended to function in


an integrated manner to meet the statutory goals for that source


category. For such a standard, the relevant date for purposes of


this policy is the first substantive compliance date. While the


Act may permit exceptions to these general rules, any such


exceptions will need to be developed through rulemaking.


Some have read the Act to require an even earlier deadline,


namely, the date of standard promulgation. EPA believes this


result is not as strongly compelled by the statute. It is


reasonable to presume that Congress intended a source to have


some opportunity to avoid a standard by becoming an area source


once it has been identified as subject in a promulgated standard. 

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The compliance date deadline approach would give small


emitters (i.e. facilities with actual emissions below the major


threshold) time to limit their potential emissions rather than


comply with major source requirements. Under this approach, a


facility will have the same amount of time to comply whether it


chooses to meet the standard or limit its potential to emit. 


This compliance date approach for existing sources is also


reasonable because it recognizes the circumstances that exist


regarding MACT standards issued to date. States are in the


process of developing additional mechanisms that can provide


federally enforceable limits to sources. In addition, EPA rules


have not previously specified when facilities may switch from


major to area-source status to avoid MACT applicability. It


would be inequitable to hold sources to a promulgation date


deadline absent clear advance notice to sources of the full


significance of that date. Although the Act gives EPA discretion


to designate a deadline earlier than the first compliance date,


this is most appropriately done through rulemaking in a manner


that gives adequate notice to the regulated community. By


contrast, any source should presume that the compliance date is


the final date to establish its status as an area source, at


least for purposes of that standard.


For clarity, the Agency wishes to note that as long as a


facility does not qualify for treatment as an area source, the


facility must comply with any applicable major source requirement


under the Clean Air Act. Facilities in need to comply with


additional limits to qualify as area sources will need to plan


ahead to obtain the limits before compliance deadlines for major


source requirements. Facilities should consult with State and


local air agencies concerning the timing of any necessary


submittal.


New sources


Section 112 requires new sources to comply with a MACT


standard upon startup or no later than the promulgation date of


the standard, whichever is later. As a legal matter, to avoid


being in violation, a "potential" major source must either comply


with MACT or obtain and comply with federally enforceable limits


by this statutory deadline.


Therefore, the Agency advises that any new facility that


would be a major source in the absence of federally enforceable


limits must obtain and comply with such limits no later than the


promulgation date of the standard or the date of startup of the


source, whichever is later. For the same reasons articulated


below with regard to existing sources, a new source that is major

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at the time of promulgation or startup will remain major for


purposes of that standard. 

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Once In, Always In Interpretation


EPA is today clarifying that facilities that are major


sources for HAPs on the "first compliance date" are required to


comply permanently with the MACT standard to ensure that maximum


achievable reductions in toxic emissions are achieved and


maintained.


EPA believes that this once in, always in policy follows


most naturally from the language and structure of the statute. 


In many cases, application of MACT will reduce a major emitter's


emissions to levels substantially below the major thresholds. 


Without a once in, always in policy, these facilities could


"backslide" from MACT control levels by obtaining potential-to-


emit limits, escaping applicability of the MACT standard, and


increasing emissions to the major-source threshold (10/25 tons


per year). Thus, the maximum achievable emissions reductions


that Congress mandated for major sources would not be achieved. 


A once in, always in policy ensures that MACT emissions


reductions are permanent, and that the health and environmental


protection provided by MACT standards is not undermined. 


Example: A facility has potential emissions of 100


tons/year. After compliance with the applicable MACT


standard, which requires a 99 percent emissions reduction,


the facility's total potential emissions would be 1


ton/year. Under today's guidance, that facility could not


subsequently operate with emissions exceeding the maximum


achievable control technology emission level. The facility


could not escape continued applicability of the MACT


standard by obtaining "area source" status through


limitations on emissions up to the 10/25 ton per year major


source thresholds.


Additionally, the Act requires all major sources to obtain a


Part 70 operating permit. Section 501(2) provides that any


source that is major under section 112 will also be major under


title V. It follows that a source that is major for purposes of


any MACT standard will be subject to title V as a major source.


As clarification, most MACT standards explicitly require


operating permits for major sources. However, this principle


applies regardless of whether it is specified in the particular


standard. Therefore, a source required to comply with MACT


requirements applicable to major sources will also be required to


obtain a Part 70 permit for that MACT requirement.


APPLICABILITY OF MULTIPLE MACT STANDARDS TO A SINGLE FACILITY


A facility that is subject to a MACT standard is not

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necessarily a major source for future MACT standards. For


example, if after compliance with a MACT standard, a source's


potential to emit is less than the 10/25 tons per year


applicability level, the EPA will consider the facility an area


source for purposes of a subsequent standard.


EXAMPLE: A facility has degreasing operations which emit 30


tons per year of HAP. The same facility also has the


potential to emit 5 tons/year of HAP from the coating of


miscellaneous metal parts. After complying with the


Halogenated Solvent Cleaning MACT, the maximum potential


emissions from degreasing operations is 3 tons per year. 


The total federally enforceable potential emissions from


this facility would now be 8 tons per year which meets the


definition for an "area source." Therefore, this facility


would not be subject to the major source requirements of the


future miscellaneous metal parts MACT standard. 


It should be noted that EPA has authority to require


additional reductions in toxic emissions from sources that avoid


MACT requirements through reductions in potential to emit. 


Section 112(f), the residual risk program, requires EPA to


evaluate the risk and to promulgate additional standards for each


category or subcategory of major sources, and allows EPA


discretion to do the same for area sources, where there is not an


ample margin of safety to protect public health within 8 years


after promulgation of the MACT standard. The EPA will consider


whether residual risk standards are appropriate for sources


complying with MACT standards or potential to emit limits. 


In addition, EPA is committed to implementation of the urban


area source program as required in Section 112(c)(3) of the CAA. 


This program requires EPA to issue air toxics standards for area


sources representing 90 percent of the area source emissions of


the 30 hazardous air pollutants that present the greatest threat


to public health in the largest number of urban areas. Together,


the Residual Risk Standards and the Urban Area Source Standards


ensure protection of public health beyond that achieved by


implementation of the MACT standards for major sources.