U.S. EPA Proposes Changes to Rules on Reclassification of Major Sources

The Clean Air Act (CAA) defines a major source of hazardous air pollutant (HAP) emissions as one that has the potential to emit (PTE) 10 tons per year (tpy) or more of any single HAP or 25 tpy or more of any combination of HAPs. Major sources of HAPs are subject to Maximum Achievable Control Technology (MACT) standards in 40 CFR Part 63. In a 1995 memo, the U.S. Environmental Protection Agency (EPA) established a policy that major sources could not reduce emissions and reclassify as area sources to avoid coverage under a 40 CFR Part 63 MACT standard after the first substantive compliance date of that standard. This policy was known as “Once In, Always In” and was implemented to eliminate “backsliding” and to ensure that the maximum achievable emissions reductions that Congress mandated for major sources would be achieved.  A 2018 memo reversed that policy and a rulemaking that amended Part 63 to allow reclassification was finalized in 2020. However, U.S. EPA was required to review that rulemaking and is now proposing changes.

There are two primary components to the September 27, 2023 proposal. First, U.S. EPA is clarifying that the effective date of reclassification from major to area is the date of submittal of the required electronic notification to U.S. EPA through the Compliance and Emissions Data Reporting Interface (CEDRI). Second, U.S. EPA is affirming that sources deciding to reclassify from major to area source status must accept effective, federally enforceable PTE limits and is also proposing to establish additional criteria for those limits. Specifically, they are proposing a new paragraph at 40 CFR 63.1(c)(6)(iv) that requires any federally enforceable HAP PTE limitations taken by a major source to reclassify as an area source to include one or a combination of the following control methods:

1. Continue to employ the emission control methods required under the major source MACT, including monitoring, recordkeeping, and reporting;
2. Use the control methods prescribed for reclassification under a specific MACT standard; or
3. Use emissions controls that the permitting authority has reviewed and approved as ensuring that the emissions of HAPs from units or activities previously covered will not increase above the emissions standard or a level that was acceptable under the major source MACT at the time of reclassification.

U.S. EPA is taking comment on whether to apply these criteria to any source that reclassified since January 25, 2018 (the date of the memo that rescinded the Once In, Always In policy) and how much time to give those sources to modify their permit. Their stated purpose for these new criteria is to “ensure that the opportunity for sources to reclassify from major to area for purposes of CAA section 112 does not undermine the emissions reductions intended by that program.” Opponents of the rescission of the Once In, Always In policy have claimed that a source with HAP emissions of much less than the major source thresholds under the applicable MACT standards could increase its emissions to 9.9 tpy of a single HAP and 24.9 tpy of all HAPs if it were to reclassify. Essentially, U.S. EPA is proposing to continue to allow major HAP sources to reclassify as area sources, with the stipulation that they comply with the MACT requirements that they sought to avoid and that do not apply to area sources.  EPA appears to be attempting to reinstate the Once In, Always In policy in practice without directly saying as much.

The proposed restrictions contradict the 2020 rule that U.S. EPA said implemented the plain CAA language reading of the definitions of major source and area source. Those definitions do not contain any language that “fixes” a source’s status as a major source or area source in any point in time or contain language suggesting that there is a “cutoff date” after which a source’s status cannot change. In the preamble to the 2020 rule, U.S. EPA also confirmed that they were “making clear that such a source can reclassify to area source status at any time, and after reclassification, will no longer be subject to the CAA section 112 requirements applicable to the source as a major source under CAA section 112 – so long as the source’s actual and PTE HAP emissions remain below the CAA section 112 thresholds – and will instead be subject to any applicable area source requirements.”

It remains to be seen whether the proposed language will be finalized, but any changes to the current regulations are sure to be controversial. Comments on the proposal are due November 13, 2023. Contact Amy Marshall at 984-777-3073 with any questions or if you would like assistance preparing comments on this proposal.