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Final Rulemaking to Address Reclassification of HAP Major Sources as Area Sources

Posted: October 7th, 2020

Authors: Amy M. 

The U.S. Environmental Protection Agency (U.S. EPA) has finalized its July 26, 2019 proposal to revise the 40 CFR Part 63, Subpart A General Provisions to include requirements for facilities that want to reclassify from a major source of hazardous air pollutants (HAP) to an area source.  This rulemaking follows a January 25, 2018 U.S. EPA memorandum titled “Reclassification of Major Sources and Area Sources Under Section 112 of the Clean Air Act.”  With the memo and rulemaking, U.S. EPA has formally reversed its longstanding “Once In, Always In” (OIAI) policy and coined a new acronym: Major Maximum Achievable Control Technology (MACT) to Area (MM2A). The rule should be published in the Federal Register soon.

The former OIAI policy was set out in a 1995 John Seitz memo and stated that a major source of HAP had only until the first substantive compliance date of an applicable MACT standard to reclassify as an area source.  After that time, once a MACT standard applied to a facility, it always applied.  Even if a facility was subsequently determined to be an area source, it could only avoid MACT compliance obligations under future major source rules.  The current administration determined that the OIAI policy is not consistent with a plain reading of the Clean Air Act because the definitions of major source and area source lack any reference to the compliance date of major source requirements and there is no other text that indicates a time limit for changing between major and area source status.  The January 2018 memo repealed the policy and U.S. EPA has now codified procedures for reclassifying from major source to area source (and vice versa) in the 40 CFR Part 63 General Provisions.  Formally codifying the change in policy ensures that it will be implemented consistently by state and local agencies.

The following changes are being finalized:

  • U.S. EPA is adding a new paragraph §63.1(c)(6) that states a major source can become an area source at any time by reducing its emissions of, and potential to emit (PTE), HAP to below the major source thresholds.
  • Until the reclassification to area source status becomes effective (e.g., is included in a revised air permit), the source remains subject to the major source requirements. After the reclassification becomes effective, the source is subject to any applicable 40 CFR Part 63 area source requirements, including any requirement to make an initial notification.
  • A major source that becomes an area source must meet applicable 40 CFR Part 63 area source requirements immediately (provided the first substantive compliance date for area sources has passed).
  • A major source that becomes an area source and then later becomes a major source again must comply with applicable major source MACT requirements immediately (including any necessary updates to an initial notification).
  • Reclassification does not absolve a source subject to enforcement action or investigation of any compliance obligations.
  • Sources that obtain enforceable PTE limits in order to reclassify are required to keep the applicability determination records as long as they rely on the PTE limits to be area sources.
  • Sources that reclassify in either direction must notify U.S. EPA electronically via the Compliance and Emissions Data Reporting Interface (CEDRI) after the effective date of the rule. Note that this requirement applies to any source that has reclassified since January 25, 2018.
  • U.S. EPA is amending §63.13 to clarify that when Part 63 requires submittal of a report or notification to CEDRI the obligation to report to the U.S. EPA Regional office is fulfilled.

U.S. EPA is also proposing to revise individual subparts under 40 CFR Part 63 that currently specify dates that would conflict with the MM2A revisions and to include new citations in each rule’s general provisions applicability table.

U.S. EPA had proposed to require limitations on PTE to be legally and practicably enforceable and add definitions of those terms at §63.2.  However, they received significant comments on these proposed changes and are still considering them.  U.S. EPA is making a “ministerial” change to the definition of PTE at §63.2 by removing the word “federally” to address the outcome of a court decision that required U.S. EPA to explain why PTE limits must be federally enforceable.  Permitting agencies and facilities should continue to rely on the historical U.S. EPA guidance relating to PTE and PTE limits.

The policy change and rulemaking are meant to provide a mechanism for sources to reduce their regulatory burden and an incentive for facilities to implement pollution prevention measures or enhanced air pollution control technologies in order to reduce emissions to below major source levels. U.S. EPA anticipates facilities will investigate reformulation of materials to contain less HAPs and more efficient, cleaner technologies and estimates the final rule will result in annual cost savings of $90 million.  ALL4 recently assisted a facility with reclassification as they reconfigured their operations and significantly reduced emissions.  The revised Title V permit has resulted in reduced regulatory burden (we eliminated requirements for three major source MACT standards) and we also took the opportunity to update and streamline the facility’s air permit compliance tools.

The rule is simply removing the timing requirement of the OIAI policy, under which sources could only reclassify if they took a PTE limit prior to the compliance date of the MACT standard. U.S. EPA reviewed permits for 69 major sources that have reclassified as area sources as a result of the change in policy and determined that 68 of the facilities would continue to employ the same compliance methods used to comply with the major source MACT rules, preventing emissions increases.  U.S. EPA did not finalize any regulatory language that would prohibit an increase in emissions, however.  They estimate that 7,187 facilities are subject to major source MACT rules.

Although reclassification can potentially provide a significant reduction in regulatory burden, as you are considering the implications of reclassification, keep in mind that there could be other requirements that become applicable when a major source MACT standard no longer applies.  These could include area source standards under 40 CFR Part 63 or state air toxics rules.  You should also consider the potential for future expansion or contraction of the facility and the implications of a requirement to immediately comply with the relevant 40 CFR Part 63 standard upon the effective date of reclassification.  U.S. EPA did not finalize language allowing for any amount of time to come into compliance with either area or major source MACT requirements, so you should not reclassify until you are ready to comply with the requirements imposed by the reclassification.  Finally, you should consider whether accepting HAP PTE limits in your permit will result in requirements for additional monitoring, testing, and recordkeeping to demonstrate that emissions remain below the major source thresholds.  Conducting a site-specific analysis, developing a compliance strategy, and obtaining the requisite air permit revision will take time.  The pros and cons of major versus area source status should be carefully considered, but can result in a reduction in burden and present a good opportunity to streamline compliance requirements and tools.  Contact your ALL4 project manager or Amy Marshall with questions or for assistance with strategizing and permitting.  If you have already reclassified since January 25, 2018, take note of the new requirement to submit a notification in CEDRI after the rule is published in the Federal Register.


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