SETTLEMENT COMMUNICATION

March 23, 2010

Memorandum

To: Paul Versace, EPA/OGC

Randy McDonald, EPA/OAQPS

Marcia Mia, EPA/OECA 

Cc: Laurel Bedig, DOJ

From: Jamie Conrad, SOCMA

Leslie Hulse, ACC

Re: CMAS Reconsideration Petition ­­ Followup from our 2/25 Conversation

Thank you for joining the conference call of SOCMA’s Environment Committee and 

ACC on February 25 to talk about some of the issues raised in ACC and SOCMA’s 

joint reconsideration petition.  We are writing to provide you with the additional 

information and views that we promised then to send you.

This memorandum has several attachments, including a Powerpoint presentation.  

The memo explains those slides succinctly, but we would be happy to walk you 

through them orally if that would be helpful, either in a meeting or on another 

conference call. 

We trust the following will assist EPA in deciding whether to grant our petition.  If 

you have any additional questions or would like any additional information about 

the issues discussed here or the other issues raised in our petition, please contact 

one of us.  We can be reached at 202‐822‐1970 (Jamie) or 703‐741‐5165 (Leslie).  

Of course, our associations have other individual and joint concerns about the CMAS 

rule not addressed in the petition (e.g., SSM), and we would also like to discuss how 

EPA and DOJ would like to proceed in discussing possible resolutions of those 

issues.  

I. Family of Materials

Our petition asked EPA to either (i) interpret the rule so that the “family of 

materials” (FOM) concept does not operate to draw into regulation equipment that 

is not used to process a Table 1 HAP, or (ii) propose to delete that phrase from the 

rule.  In our conversation , you asked us to provide some practical examples of how 
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the FOM concept captures processes and equipment that are not properly subject to 

the rule.

Attachment A is a Powerpoint presentation that responds to EPA’s request.  It 

presents five examples that show how the FOM concept operates to bring both 

equipment and entire CMPUs into the CMAS rule that are not properly subject to it.  

It also illustrates the many baffling interpretive questions that the FOM concept 

unnecessarily creates.

Slide 1 shows five different CMPUs (A‐E) that exist at a single batch process facility.  

These CMPUs all share at least one common piece of equipment (Reactor 1).  Each of 

these CMPUs uses different raw materials to produce different intermediates, which 

in all cases but E are then isolated in drums.  The resulting isolated intermediate of 

each CMPU A‐D is used as a raw material for the next step, culminating in product E, 

an active pharmaceutical ingredient.

Only CMPU A uses a Table 1 HAP, and is thus covered by the CMAS rule.  Because the 

definition of “chemical manufacturing process” speaks of equipment used to 

produce “a product or isolated intermediate,” one would ordinarily expect that 

CMPUs B‐E would not be covered by the rule.  Note that CMPUs C, D & E employ 

equipment not even used in CMPU A (Reactor 9, Centrifuge 1 and Distillation 

Column 1).  However, if isolated intermediates A‐D and product E were regarded as 

belonging to the same FOM, then all these CMPUs would seem to be regulated by 

CMAS – even though none of them ever contain or produce a Table 1 HAP.

Slide 2 presents another example using the same equipment as CMPU E on Slide 1.  

In this example, CMPUs A and B both use that equipment, and the same raw material 

X, but use different solvents and produce different products (Z and W) with similar 

end uses but different applications.  CMPU A makes a byproduct that is a Table 1 

HAP.  CMPU B does not involve any Table 1 HAPs.  Indeed, it does not use HAPs at all 

except for cleaning.  Again, CMPU B would seem to be unregulated by CMAS, but for 

the (uncertain) prospect that products Z and W may be deemed to be in the same 

FOM.

Slide 3 illustrates the two processes discussed in Slide 2.

Slide 4 shows a single reactor that is used to make a variety of specialty polyolefins.  

It can produce differing products depending, among other things, on whether the 

process uses Solvent A (which gives rise to Table 1 HAPs) or Solvent B (which does 

not).  The various polyolefins have different emissions profiles.  Ordinarily, CMPU A 

would clearly be regulated under CMAS and CMPU B would not, but for the question 

of whether the two products are in the same FOM.
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Slide 5 illustrates the difficulty of applying the FOM concept to pharmaceutical 

products, given that (i) some CMAS processes would be covered by the Phrma MACT 

rule if they were located at major HAP sources, but (ii) the FOM concept is not used 

in that rule.  In this example, the same CMPU is used to make two different 

pharmaceuticals that (i) have different pharmacological properties, (ii) are used to 

treat different conditions or diseases, or (iii) both, and (iv) are regulated as distinct 

products and processes by the FDA.  Yet they may be quite similar chemically, 

including potentially being isomers of each other.  Pharma A is produced using a 

Table 1 HAP (methylene chloride); Phrma B is not.  How would a source determine 

if these two products were in the same FOM?

Slide 6 is a self‐explanatory text slide that further illustrates the tension between 

the rule’s delineation of processes by isolation of intermediates and the FOM 

concept.

ACC and SOCMA understand that we encouraged EPA to incorporate the CMPU 

concept into the CMAS rule and that we pointed to the MON as precedent.  However, 

neither association mentioned bringing the FOM concept along.  To the contrary, 

ACC’s comments provided a definition of CMPU, modeled on the MON definition, 

that specifically omitted the words “family of materials.”  See Attachment B at 14‐15.  

Had EPA used this proposed definition the issue addressed here would not have 

arisen.

The CMAS rule’s reference to Table 1 HAPs in Section 63.11494(a), combined with 

the “isolated intermediate” concept in the definition of “chemical manufacturing 

process,” provides a convenient and bright line that clearly delineates which CMPUs 

should be regulated and which should not be.  The FOM concept adds nothing to this 

construct except to confuse it.  The issue of circumvention that evidently drove the 

use of the concept in the MON does not arise in the CMAS rule due to the Table 1 

HAP language: either a Table 1 HAP is present as stated in the rule, or it is not.

ACC and SOCMA have not yet been able to formulate an interpretation of FOM that 

would keep it from doing this, but are open to discussing such an interpretation.  

Our preference, though, is that EPA propose deleting the concept from the rule.

II. Research & Development

Batch and specialty chemical facilities are often hired by larger companies (e.g., 

pharmaceutical companies) as contract manufacturers to make product ingredients 

(e.g., active pharmaceutical ingredients).  Oftentimes the smaller companies are paid 

to conduct process development activities that unquestionably would be considered 

“research and development” if the larger company conducted them itself.  However, 

there is some question whether the smaller company’s activities are covered by the 

exemption contained in CAA Section 112(c)(7) due to the fact that the smaller 
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company is paid by the larger company to do them – albeit usually on a 

demonstration basis, not a per‐kilo basis.  As a result, SOCMA’s comments on the 

proposed rule asked EPA to interpret CAA Section 112(c)(7)’s definition of 

“research or laboratory facilities” to include activities conducted by a source using 

equipment and operating conditions that would be considered “research” or 

“laboratory” activities if engaged in by a single company.  EPA did not respond to 

this request in the final rule or the Response to Comments document.

In our February 25 call, we discussed what sort of dividing line would be optimal to 

distinguish between a contract manufacturer’s “research and development” 

activities and its subsequent “commercial” manufacturing.  ACC and SOCMA have 

discussed this issue and offer the following:

• Government­regulated products.  In any case where a regulatory agency 

oversees the sale of the product, the dividing line should be the date the

agency approved sale of the product.  Thus, FDA approval of a drug would 

mark the beginning of commercial manufacture of an active ingredient for 

that drug.  Similarly, EPA approval to sell a pesticide would mark the 

beginning of commercial production of an ingredient of that pesticide.

This dividing line best implements Section 112(c)(7)’s use of the phrase “for 

commercial sale in commerce.”  42 U.S.C. § 7412(c)(7).  It is a canon of 

statutory interpretation that statutes should be interpreted so as to give each 

word some meaning, rather than in a fashion that makes any word 

redundant.  Thus, in this case, the phrase “in commerce” should be read to 

mean something beyond “for commercial sale.”  ACC and SOCMA believe that 

“in commerce” is most properly viewed as meaning “to the general public,” so 

that a sale between two parties to a contract, while arguably “commercial,” 

would not be a sale “in commerce,” even if a particular transaction between 

those parties was based on a per kilo price.1  Sale “in commerce” would not 

occur until the product was “commercialized”; i.e., sold to the general public.

The burden would be on the contract manufacturing company to monitor the 

decisionmaking process of the regulatory agency and to comply with the 

CMAS rule as of the approval date.

• Other cases.  In a case where no agency regulates sale of the downstream 

product, the dividing line between “research and development” and 

“commercial production” would be at the same point as if a single company 

                                                        1 While contract manufacturers doing process development work are typically paid 

on a batch or “per demonstration” basis, sometimes a contract manufacturer will 

sell its counterparty some supplemental quantities of a product being demonstrated 

on a kilo basis for clinical trial or other purposes. 
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performed all the activities involved, rather than contracting some of them 

out.

Finally, during the February 25 call we also agreed to supply EPA with a citation to 

the FDA’s “Current Good Manufacturing Practices” (CGMP) rules, which a contract 

manufacturer making an ingredient for a drug is required to follow.  Attachment C,

the comments of PhRMA on the proposed CMAS rule, discusses the FDA CGMPs at 

pages 11‐12 and 21.  These comments explain how the CGMPs provide assurance 

that air emissions are minimized through requirements for mechanical integrity, 

leak detection and repair, preventive maintenance, housekeeping and equipment 

closure.  It also notes that the Pharma MACT rule specifically approves them as a 

compliance alternative to its cooling tower leak detection requirements.

III. No Openings

On our February 25 call, Paul asked whether ACC or SOCMA would have any 

problems with Section 63.11495(a)(1) if EPA interpreted it to apply to equipment 

only “when in use” or “during operation,” two phrases contained in the proposed 

version of that provision.  See 73 Fed. Reg. 58377 (Oct. 6, 2008).  ACC and SOCMA 

said we would not.  We also discussed the possibility of the current requirement 

being interpreted to apply only when equipment is “empty,” and spent some time 

talking about ways in which that concept could be operationalized.  We offered to 

think more about these issues and get back to EPA.

Having done that, ACC and SOCMA are firmly of the view that the only practicable

solution to the problems with the “no openings” requirement is for EPA to interpret 

it to apply as proposed, i.e., only when the equipment in question is “in use” or 

“during [its] operation.”  These are simple concepts that can be easily applied.  EPA 

should be able to say that this interpretation was clearly the intent of the proposal 

and that the final rule’s omission of the quoted terms had not been intended to 

change that limitation.

In doing so, EPA would need to address the fact that the CMAS definition of 

“chemical manufacturing process” includes “[r]outine cleaning operations.”  See 

Section 63.11502(b).  Obviously, the “no openings” prohibition cannot be complied 

with during cleaning operations, and so EPA would need to clarify that “in use” or

“during operation” does not include cleaning operations. 2

                                                        2 We recognize that the inclusion of routine cleaning operations resulted from EPA’s 

derivation of the “chemical manufacturing process” definition from the cognate 

term in the MON (see 40 C.F.R. § 63.2550(b), definition of “miscellaneous chemical 

manufacturing process”).  However, the MON does not a comparable “no openings” 

prohibition, and thus the problem addressed here does not arise there.
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By contrast, ACC and SOCMA have concluded that any attempt to define “empty” is 

doomed to the interpretive philosophical quandaries that afflict RCRA’s definition of 

“empty.”  Such a definition is also likely to be difficult to enforce in practice, given 

the difficulties of measuring residuals in process tanks.  Finally, as we discussed 

during our call, the inclusion of routine cleaning operations in the definition of 

“chemical manufacturing process” means that the use of a Table 1 HAP like 

methylene chloride to clean a tank would take it out of the “empty” category and 

trigger the “no openings” restriction, further complicating the compliance problem.

As a result, ACC and SOCMA urge EPA to announce that it interprets Section 

63.11495(a)(1) to apply to equipment only “when in use” or “during operation,” in 

either case excluding cleaning operations.  If EPA concludes that it needs to change 

the wording of the rule itself, we urge EPA to seek comments on that proposal.

IV. De Minimis Exemption

During our February 25 call, ACC and SOCMA noted that we had proposed different 

“de minimis” thresholds, and said that we would attempt to find a common position.  

Having discussed the issue, ACC and SOCMA agree that EPA should seek comment 

on a proposal that the CMAS rule would apply only to facilities, otherwise subject to 

the rule, that:

• emit greater than 2,000 lb/yr actual, controlled emissions of aggregate Table 

1 HAPs; or

• manufacture, process or use more than 25,000 lb/yr aggregate Table 1 HAPs.

We believe, and our comments would seek to demonstrate, that this figure would 

exempt a number of very low‐emitting facilities, for whom the costs of compliance 

may be highest on a unit of emissions basis, but would not significantly affect the 

overall volume of emissions captured by the rule. 

* * *

Thank you for your consideration of the foregoing.  We would be happy to provide 

further explanation of these issues, or the other issues raised in the petition, if EPA 

would find that helpful in deciding whether to grant the petition.