Reclassification of Major Sources as Area Sources Under Section 112 of the Clean Air Act

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 63

[EPA-HQ-OAR-2019-0282; FRL-10014-50-OAR]

RIN 2060-AM75

Reclassification of Major Sources as Area Sources Under Section 112 of the Clean Air Act

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

This rule finalizes amendments to the General Provisions that apply to National Emission Standards for Hazardous Air Pollutants (NESHAP). These amendments implement the plain language reading of the “major source” and “area source” definitions of section 112 of the Clean Air Act (CAA) and provide that a major source can be reclassified to area source status at any time upon reducing its potential to emit (PTE) hazardous air pollutants (HAP) to below the major source thresholds (MST) of 10 tons per year (tpy) of any single HAP and 25 tpy of any combination of HAP. This rule also finalizes amendments to clarify the compliance dates, notification, and recordkeeping requirements that apply to sources choosing to reclassify to area source status and to sources that revert back to major source status, including a requirement for electronic notification.

DATES:

This final rule is effective on January 19, 2021.

ADDRESSES:

The Environmental Protection Agency (EPA) has established a docket for this action under Docket ID No. EPA-HQ-OAR-2019-0282. All documents in the docket are listed on the

https://www.regulations.gov/

website. Although listed, some information is not publicly available,

e.g.,

Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available electronically through

https://www.regulations.gov/.

Out of an abundance of caution for members of the public and our staff, the EPA Docket Center and Reading Room was closed to the public, with limited exceptions, to reduce the risk of transmitting COVID-19. Our Docket Center staff will continue to provide remote customer service via email, phone, and webform. For further information and updates on EPA Docket Center services and the current status, please visit us online at

https://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT:

For questions about this final rule, contact Ms. Elineth Torres, Sector Policies and Programs Division (D205-02), Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711; telephone number: (919) 541-4347; fax number: (919) 541-4991; and email address:

torres.elineth@epa.gov.

Questions concerning specific reclassifications should be directed to the appropriate Regional office.

SUPPLEMENTARY INFORMATION:

Preamble acronyms and abbreviations.

We use multiple acronyms and terms in this preamble. While this list may not be exhaustive, to ease the reading of this preamble and for reference purposes, the EPA defines the following terms and acronyms here:

CAA Clean Air Act

CEDRI Compliance and Emissions Data Reporting Interface

CFR Code of Federal Regulations

D.C. Cir. the United States Court of Appeals for the District of Columbia Circuit

EAV equivalent annualized value

EIA economic impact analysis

EPA Environmental Protection Agency

FIP Federal Implementation Plan

HAP hazardous air pollutant(s)

MACT maximum achievable control technology

MM2A Major MACT to Area

MRR monitoring, recordkeeping, and reporting

MST major source thresholds

NESHAP national emission standards for hazardous air pollutants

NMA National Mining Association

NSPS new source performance standards

NSR New Source Review

NTTAA National Technology Transfer and Advancement Act

OIAI Once In, Always In

OMB Office of Management and Budget

PRA Paperwork Reduction Act

PSD prevention of significant deterioration

PTE potential to emit

PV present value

RTO regenerative thermal oxidizers

RFA Regulatory Flexibility Act

RIA Regulatory Impact Analysis

RTR residual risk and technology review

SIP State Implementation Plan

TIP Tribal Implementation Plan

TSM technical support memorandum

tpy tons per year

UMRA Unfunded Mandates Reform Act

VOC volatile organic compound(s)

Background information.

On July 26, 2019, the EPA proposed revisions to the General Provisions that apply to the NESHAP to implement the plain language reading of the “major source” and “area source” definitions of CAA section 112 and provide that a major source can be reclassified to area source status at any time upon limiting its potential to emit HAP to below the MST of 10 tpy of any single HAP and 25 tpy of any combination of HAP (also referred to herein as Major Maximum Achievable Control Technology (MACT) to Area or “MM2A proposal”) (see 84 FR 36304). In this rule, we are taking final action on some of the amendments as proposed, and we are taking final action on other amendments as modified based on the public comments to clarify the requirements that apply to sources choosing to reclassify to area source status at any time, including reclassification that occurs after the first substantive compliance date of applicable major source NESHAP requirements and the requirements that apply to sources that reclassify from major to area source status and then revert back to their previous major source status. Regarding the proposed amendments to the PTE definition, we are not finalizing the definition of “legally and practicably enforceable” PTE limits or the effectiveness criteria for those limits in this action. We are, however, promulgating a ministerial amendment to the regulatory definition of “potential to emit” in the interim. We are also finalizing revisions to the General Provisions tables and initial notification requirements within most NESHAP subparts to account for the regulatory provisions we are finalizing in this rule. We summarize some of the more significant public comments we received regarding the proposed rule and provide our responses to those comments in this preamble. A summary of all other public comments on the proposal and the EPA's responses to those comments is available in the Response to Comments document available in the docket No. EPA-HQ-OAR-2019-0282. A “track changes” version of the regulatory language that incorporates the changes finalized in this rule is also available in the docket.

Organization of this document.

The information in this preamble is organized as follows:

I. Executive Summary

A. Purpose of the Regulatory Action

B. Summary of the Major Provisions of the Regulatory Action

C. Impacts of the Final Regulatory Action

II. General Information

A. Does this rule apply to me?

B. Where can I get a copy of this document and other related information?

C. Judicial Review and Administrative Reconsideration

III. Background

IV. Statutory Authority

V. Summary of Final Amendments

A. Final Amendments to 40 CFR Part 63, Subpart A: General Provisions

B. Amendments to Individual NESHAP General Provisions Applicability Tables

C. Amendments to Individual NESHAP

VI. Other Considerations

A. PTE Determination

B. Reclassification Process and Permitting

VII. Interim Ministerial Revision of 40 CFR Part 63 PTE Definition

VIII. Summary of Cost, Environmental, and Economic Impacts

A. Analytical Scenarios

B. Cost Analysis

C. Environmental Analysis

D. Economic Analysis

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulations and Regulatory Review

B. Executive Order 13771: Reducing Regulation and Controlling Regulatory Costs

C. Paperwork Reduction Act (PRA)

D. Regulatory Flexibility Act (RFA)

E. Unfunded Mandates Reform Act (UMRA)

F. Executive Order 13132: Federalism

G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

H. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks

I. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

J. National Technology Transfer and Advancement Act (NTTAA)

K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

L. Determination Under CAA Section 307(d)

M. Congress Review Act (CRA)

I. Executive Summary

A. Purpose of the Regulatory Action

In this final rule (also referred to herein as “final MM2A rule” or final rule), the EPA is finalizing amendments to the General Provisions of the NESHAP regulations in 40 CFR part 63, subpart A to implement the plain language reading of the “major source” and “area source” statutory definitions of section 112 of the CAA and provide that a major source can be reclassified to area source status at any time upon reducing its emissions and PTE, as defined in 40 CFR 63.2, to below the MST of 10 tpy of any single HAP and 25 tpy of any combination of HAP. Prior to proposing these amendments, the EPA reviewed the statutory provisions that govern when a major source can reclassify to area source status, including after being subject to major source requirements under section 112 of the CAA (also referred to herein as “CAA section 112 requirements” or “requirements”). After further review of CAA section 112 provisions and public comments received on the MM2A proposal, the EPA is finalizing its conclusion that the statutory definitions of major source and area source contain no language fixing a source's status at any particular point in time and contain no language suggesting a cutoff date after which the source's status cannot change. Accordingly, the Agency is finalizing its reading that a major source may be reclassified as an area source at any time upon reducing its HAP emissions and PTE below the applicable CAA section 112 MST. Thus, major sources that reclassify to area source status at any time, including after the first substantive compliance date of an applicable major NESHAP, will no longer be subject to CAA section 112 major source NESHAP requirements and will be subject to any applicable area source NESHAP requirements. A full discussion of the statutory authority for this final MM2A rule can be found in section IV of this preamble.

B. Summary of the Major Provisions of the Regulatory Action

The EPA is finalizing amendments to the General Provisions of the NESHAP regulations in 40 CFR part 63, subpart A to clarify the requirements that apply to sources choosing to reclassify to area source status at any time, including after being subject to major source requirements under section 112 of the CAA. The EPA is finalizing amendments to the applicability section found in 40 CFR 63.1 by adding a new paragraph (c)(6). This paragraph specifies that a major source may become an area source at any time upon reducing its emissions of and PTE HAP, as defined in this subpart, to below the major source thresholds established in 40 CFR 63.2.

The EPA is finalizing in 40 CFR 63.1(c)(6) that a major source reclassifying to area source status remains subject to any applicable major source NESHAP requirements until the reclassification becomes effective. After the reclassification becomes effective, the source is subject to any applicable area source NESHAP requirements in 40 CFR part 63. For sources that reclassify from major to area source status and then revert back to their previous major source status, the EPA is also finalizing in 40 CFR 63.1(c)(6) that the source becomes subject to the applicable major source NESHAP requirements of 40 CFR part 63 immediately upon becoming a major source again. The EPA is finalizing in 40 CFR 63.1(c)(6) regulatory text to address the interaction of the reclassification of sources with enforcement actions arising from violations that occurred before reclassification. Specifically, we are finalizing that the reclassification of a source does not affect the source's liability or any enforcement investigations or enforcement actions for a source's past conduct that occurred prior to the source's reclassification.

To ensure that all sources that reclassify notify the EPA, the EPA is finalizing amendments clarifying the existing notification requirements in 40 CFR 63.9(b) and (j). With these amendments, the notification requirements of 40 CFR 63.9 will cover not only cases where a source switches from major to area source status, but also cases where an area source reverts to major source status. A source that reclassifies in either direction must notify the EPA of any changes in the applicability of the standards that the source was subject to per the notification requirements of 40 CFR 63.9(j). The EPA is also finalizing amendments to the notification requirements in 40 CFR 63.9(b) and (j) to require in certain circumstances that the notification be submitted electronically through the Compliance and Emissions Data Reporting Interface (CEDRI). The final rule amends the General Provisions to add 40 CFR 63.9(k) to include the CEDRI submission procedures. The EPA is finalizing amendments to remove the time limit for record retention in 40 CFR 63.10(b)(3) so sources that obtain enforceable PTE limits after the effective date of this final rule are required to keep the applicability determination records as long as they rely on the PTE limits to be area sources. The EPA is also finalizing amendments to 40 CFR 63.12(c) to clarify that a source may not be exempted from electronic reporting requirements. Further, the EPA is finalizing amendments to 40 CFR 63.13 to clarify that when required by this part, or at the request of the EPA Regional office, submitting a report or notification to CEDRI fulfills the obligation to report to the EPA Regional office.

This final action includes amendments to the General Provisions applicability tables contained within most subparts of 40 CFR part 63 to add a reference to the new provision in 63.1(c)(6) discussed above. We are also finalizing revisions to several NESHAP subparts by removing the date limitation after which a major source cannot become an area source. The provisions amended are: 40 CFR part 63, subpart HH at 63.760(a)(1); 40 CFR 63, subpart HHH at 63.1270(a); 40 CFR part 63, subpart QQQ at 63.1441; 40 CFR part 63, subpart QQQQQ at 63.9485; 40 CFR

part 63, subpart RRRRR at 63.9581; and Table 2 of 40 CFR part 63, subpart WWWW. The final rule also includes amendments to the initial notification requirements of most NESHAP subparts because the date that was specified in the regulations has passed.

The EPA is still considering the proposed effectiveness criteria for HAP PTE limits and the proposed changes to the definition of “potential to emit” in 40 CFR 63.2 and is not taking any final action on those aspects of the proposed rule at this time. Thus, this final rule does not include responses to comments on proposed effectiveness criteria for PTE limits or comments related to the proposed changes to the PTE definition. The EPA is still reviewing comments received and will respond to them in a subsequent action. In the meantime, while we continue to consider what final action to take on the proposed amendments, the EPA is making an interim ministerial revision to the PTE definition to address the court decision in

National Mining Association (NMA)

v.

EPA,

59 F.3d 1351, 1363-1365 (D.C. Cir. 1995). Specifically, this revision removes the word “federally” from the phrase “federally enforceable” in the PTE definition. This interim ministerial revision is also consistent with the EPA's long-standing policy

1

that allows for any physical or operational limitation on the capacity of the stationary source to emit a pollutant to be treated as part of the source's design if the limitation or the effect it would have on emissions is, first, either federally enforceable or legally enforceable by a state or local permitting authority and, second, practicably enforceable.

1

See January 25, 1995, memorandum titled “

Options for Limiting the Potential to Emit (PTE) of a Stationary Source Under Section 112 and Title V of the Clean Air Act (Act)

” and December 20, 1999, memorandum titled “

Third Extension of January 25, 1995 Potential to Emit Transition Policy.

” Available at

https://www.epa.gov/guidance/guidance-documents-managed-office-air-and-radiation

and in the docket of this rule.

C. Impacts of the Final Regulatory Action

The final rule does not require any source to reclassify to area source status. An evaluation of the potential to reclassify from major source to area source status involves many source-specific considerations. Each source will assess its own circumstances to determine whether it is feasible and advantageous to undergo the reclassification process. The unique nature of each source's decision process makes it difficult for the EPA to determine the number and type of sources that may choose to reclassify under this rule. Because of this, the EPA is limited to presenting illustrative analyses concerning the impacts of this final rule. The illustrative assessment of impacts includes the potential net cost savings and potential emissions changes that may result from this final action. The illustrative impacts are estimated for the three analytical scenarios established for the rule and are estimated in relation to a baseline in which sources remain subject to major source NESHAP requirements after the first substantive compliance date of such standards. The potential impacts presented in the preamble reflect the results of the illustrative analysis of the primary scenario, which, for analytical purposes, is defined as including those facilities whose actual emissions are below 75 percent of the MST (

i.e.,

7.5 tpy for a single HAP and 18.75 tpy for all HAP). This scenario is further described in section VIII of this preamble, in the technical support memorandums (TSM),

2

and the Regulatory Impact Analysis (RIA) that is available in the docket for this action. The memorandums and RIA also present an analysis of two alternative scenarios to provide a range of estimated potential cost impacts.

3

2

See “

Documentation of the Data for Analytical Evaluations and Summary of Industries Potentially Impacted by the Final Rule titled Reclassification of Major Sources as Area Sources Under Section 112 of the Clean Air Act,

” and “

Analysis of Illustrative 125% Scenario for MM2A Final—Potential Cost Impacts from HAP Major Sources Reducing Emissions as part of Reclassifying to HAP Area Sources.

”

3

Alternative scenario 1 analyzes those facilities whose actual emissions are below 50 percent of the MST (5 tpy for a single HAP and 12.5 tpy for all HAP). Alternative scenario 2 analyzes that sources below 125 percent of the MST (12.5 tpy for a single HAP and 31.25 tpy for all HAP). Discussions of these scenarios and results can be found in the RIA for this final action.

The EPA estimates that this final action may result in substantial annual cost savings of $90.6 million (2017$) based on illustrative estimates of its potential reduction in administrative burden if sources reclassify to area source status.

4

The voluntary actions taken by sources to reclassify will be carried out over a period of time, but once a source reclassifies, the cost savings will accrue for as long as the source continues to operate as an area source. While cost savings will accrue for the life of the facility, we present a 5-year outlook of potential cost savings from this action to provide insight into the cost distribution over time. Results are also presented as the present value (PV) and equivalent annualized value (EAV) of the cost savings of the final MM2A rule in 2017 dollars. The PV is the one-time value of a stream of impacts over time, discounted to the current (or nearly current) day. The EAV is a measure of the annual cost that is calculated consistent with the PV. The illustrative cost savings of the final MM2A rule in 2017 dollars are presented in detail later in section VIII of this preamble and in the RIA.

4

Annual cost savings reflect impacts in Year 2 of the reclassification process for all sources that choose to reclassify under the primary scenario. All cost savings are net of any additional permitting and recordkeeping costs to state regulatory agencies and sources. These annual cost savings are those for 2025 and subsequent years.

Table 1 presents a summary of key results from the RIA for the final MM2A rule. This table presents the PV and EAV, estimated in 2017 dollars using discount rates of 7 and 3 percent and discounted to 2020, of the illustrative net cost savings of the final MM2A rule. The EAV estimates are consistent with the PV and reflect the illustrative total net cost savings of the rule from 2021, the first year after rule promulgation, and subsequent years.

Table 1—Illustrative Net Cost Savings Incremental to the Baseline

[(Including following years) (Billions 2017$) *]

7 Percent

Present value

Equivalent annualized value

3 Percent

Present value

Equivalent annualized value

Potential Net Cost Savings

$0.86

0.07

$1.50

0.08

* The overall analytic timeline begins in 2021 and continues thereafter for an indefinite period. The cost savings in 2016 dollars and discounted to 2016, as defined as a present value, are $0.654 billion at 7 percent and $1.13 billion at 3 percent. As equivalent annualized values, the cost savings are $52 million at 7 percent and $58 million at 3 percent.

Impacts in Table 1 reflect the potential impacts of the final MM2A rule for the year in which all reclassifications are expected to have taken place (2025) and beyond.

To assess the potential changes in emissions that may result from the reclassification of major sources to area sources under this rule, we reviewed the permits and other information from 69 sources that have reclassified since January 2018, consistent with the EPA's plain language reading of the CAA section 112 definitions of “major” and “area” source, and also performed an illustrative analysis of 72 source categories in detail. Because we do not have information on the major sources that may choose to reclassify to area source status in the future and the enforceable conditions they will take in order to reclassify, we are not able to provide an assessment of the emissions impacts for actual reclassifications beyond the 69 sources that have already reclassified.

5

Therefore, we conducted a detailed illustrative analysis of 72 source categories to provide a broad characterization of the potential changes in emissions for all NESHAP source categories that could be impacted by this action. The assessment of the 69 reclassifications shows that 68 facilities have requirements in their operating permits that would continue to implement the compliance methods used to comply with the major source NESHAP requirements and prevent emissions increases. However, the EPA found that one of the 69 reclassified sources will not continue to employ the same compliance methods that it used to meet the major source NESHAP and thus it may increase its emissions. For the illustrative analysis of emissions impacts conducted, we find that 65 source categories in the major source NESHAP program will either not be impacted or will not increase emissions as a result of the rule. Based on the broad assumptions applied in the analysis, we found a potential for emissions increases for some facilities in seven source categories. While a majority of facilities are not anticipated to change emissions, approximately 3.1 percent of the facilities in the MM2A database that we were able to analyze could increase emissions if sources: (1) Voluntarily opt to reclassify and (2) were allowed to reduce operation of adjustable add-on controls. We also found a potential for emissions decreases in cases where sources choose to reduce emissions from above the MST to below the MST to reclassify. The facilities that we were able to assess for emission increases and decreases are located across the United States (

i.e.,

in more than 10 states and in every region of the United States) and are not clustered in close proximity to each other. Further discussion of the impacts of the final rule are presented in section VIII of this preamble and presented in detail in the technical support memorandums, titled

Documentation of the Emissions Analysis for the Final Rule “Reclassification of Major Sources as Area Sources Under Section 112 of the Clean Air Act”

and the

Analysis of the Illustrative 125% Scenario for MM2A Rule—Potential Cost Impacts from HAP Major Sources Reducing Emissions as part of Reclassifying to HAP Area Sources,

and the RIA for the final rule, all of which are available in the docket for this action.

5

Of the 69 sources, 68 have already reclassified and one was undergoing the process of reclassification.

II. General Information

A. Does this rule apply to me?

Categories and entities potentially impacted by this rule include sources subject to NESHAP requirements under section 112 of the CAA.

The final amendments are applicable to sources that reclassify from major source to area source status under section 112 of the CAA and sources that revert from their reclassified area source status to their previous major source status.

Federal, state, local, and tribal governments may be affected by this rule if they own or operate sources that choose to request reclassification from major source status to area source status or if reclassified sources choose to revert to their previous major source status at some time in the future. The EPA is the permitting authority for issuing, rescinding, and amending permits for sources that request reclassification in Indian country, with four exceptions.

6

State, local, or tribal regulatory authorities

7

may receive requests to issue new permits or make changes to existing permits for sources in their jurisdiction to address reclassification-related activities (

e.g.,

title V, synthetic minor permits, establishing limits on a source's PTE).

6

Two tribes have approved title V programs or delegation of 40 CFR part 71. The tribes may have sources that request to no longer be covered by title V. Neither of these two tribes have approved minor source permitting programs but may in the future. In the meantime, the tribes will need to coordinate with the EPA, who is the permitting authority in Indian country for these requests. In addition, two other tribes have approved Tribal Implementation Plans (TIPs) authorizing the issuance of minor source permits. Only one of these tribes has a major source that would be eligible to request reclassification. If that source requests a new permit, the tribe may issue the minor source permit, but the EPA would need to be made aware of the request, as the EPA is the permitting authority for title V.

7

The term regulatory authority is intended to be inclusive of the federal, state, tribal, or local air pollution control agency with authority to process reclassification requests and issuance of enforceable PTE limits.

B. Where can I get a copy of this document and other related information?

In addition to being available in the docket, an electronic copy of the final MM2A rule is available on the internet. Following signature by the EPA Administrator, the EPA will post a copy of this final action at

https://www.epa.gov/stationary-sources-air-pollution/reclassification-major-sources-area-sources-under-section-112-clean

. Following publication in the

Federal Register

, the EPA will post the

Federal Register

version and key technical documents at this same website.

A redline version of the regulatory language that incorporates the amendments finalized in this rule is available in the docket for this action (Docket ID No. EPA-HQ-OAR-2019-0282).

C. Judicial Review and Administrative Reconsideration

Under CAA section 307(b)(1), judicial review of this final rule is available only by filing a petition for review in the United States Court of Appeals for the District of Columbia Circuit (DCCir.) by January 19, 2021. Under CAA section 307(b)(2), the requirements established by this final rule may not be challenged separately in any civil or criminal proceedings brought by the EPA to enforce the requirements.

Section 307(d)(7)(B) of the CAA further provides that only an objection to a rule or procedure that was raised with reasonable specificity during the period for public comment (including any public hearing) may be raised during judicial review. This section also provides a mechanism for the EPA to reconsider the rule if the person raising an objection can demonstrate to the Administrator that it was impracticable to raise such objection within the period for public comment or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule. Any person seeking to make such a demonstration should submit a Petition for Reconsideration to the Office of the Administrator, U.S. EPA, Room 3000, WJC South Building,

1200 Pennsylvania Ave. NW, Washington, DC 20460, with a copy to both the person(s) listed in the preceding

FOR FURTHER INFORMATION CONTACT

section, and the Associate General Counsel for the Air and Radiation Law Office, Office of General Counsel (Mail Code 2344A), U.S. EPA, 1200 Pennsylvania Ave. NW, Washington, DC 20460.

III. Background

Shortly after the EPA began implementing individual NESHAP resulting from the 1990 CAA Amendments, the Agency received multiple requests to clarify when a major source of HAP could avoid CAA section 112 requirements applicable to major sources by taking enforceable limits on its PTE below the major source thresholds. In response, the EPA issued, on May 16, 1995, a memorandum from John Seitz, Director of the Office of Air Quality Planning and Standards, to the EPA Regional Air Division Directors (the May 1995 Seitz Memorandum).

8

The May 1995 Seitz Memorandum provided guidance on three timing issues related to avoidance of CAA section 112 requirements for major sources:

8

See “

Potential to Emit for MACT Standards-Guidance on Timing Issues

.” From John Seitz, Director, Office of Air Quality Planning and Standards, to the EPA Regional Air Division Directors. May 16, 1995,

https://www.epa.gov/sites/production/files/2018-02/documents/pteguid.pdf

. Also available in the docket of this rule.

• “By what date must a facility limit its PTE 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?”

In the May 1995 Seitz Memorandum, the EPA stated its interpretation of the relevant statutory language that facilities that are major sources of HAP may switch to area source status at any time until the “first compliance date” of the standard.

9

Under this interpretation, facilities that are major sources on the first substantive compliance date of an applicable major source NESHAP were required to comply permanently with that major source standard even if the source was subsequently to become an area source by limiting its PTE. This position was commonly referred to as the “Once In, Always In” (OIAI) policy. The May 1995 Seitz Memorandum provided that a source that is major for one NESHAP would not be considered major for a subsequent NESHAP if the source's potential to emit HAP emissions was reduced to below major source levels by complying with the first major source NESHAP. In the May 1995 Seitz Memorandum, the EPA set forth transitional policy guidance that was intended to remain in effect only until the Agency proposed and promulgated amendments to the 40 CFR part 63 General Provisions.

9

The “first substantive compliance date” is defined as the first date a source must comply with an emissions limitation or other substantive regulatory requirement (

i.e.,

leak detection and repair programs, work practice measures, etc . . . , but not a notice requirement) in the applicable standard.

After issuing the May 1995 Seitz Memorandum, the EPA twice proposed regulatory amendments that would have altered the OIAI policy. In 2003, the EPA proposed amendments that focused on HAP emissions reductions resulting from pollution prevention (P2) activities. Apart from certain provisions associated with the EPA's National Environmental Performance Track Program—a national voluntary program designed to recognize and encourage top environmental performers whose program participants go beyond compliance with regulatory requirements to attain levels of environmental performance that benefit people, communities, and the environment—that proposal was never finalized. See 68 FR 26249 (May 15, 2003); 69 FR 21737 (April 22, 2004). In 2007, the EPA issued a proposed rule to replace the OIAI policy set forth in the May 1995 Seitz Memorandum. See 72 FR 69 (January 3, 2007). In that proposal, the EPA reviewed the provisions in CAA section 112 relevant to the OIAI policy interpretation, applicable regulatory language, stakeholder concerns, and potential implications.

Id.

at 71-74. Based on that review, the EPA proposed an interpretation of the relevant statutory language that a major source that is subject to a major source NESHAP would no longer be subject to that major source standard if the source were to become an area source through enforceable limitations on its PTE HAP emissions.

Id.

at 72-73. Under the 2007 proposal, major sources could take such limits on their PTE and obtain “area source” status at any time and would not be limited to doing so only before the “first substantive compliance date,” as the OIAI policy provided.

Id.

at 70. The EPA did not take final action on this 2007 proposal.

In 2017, the EPA received public comments pursuant to Executive Order 13777, Enforcing the Regulatory Reform Agenda (February 24, 2017), and the Presidential Memorandum on Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing (January 24, 2017) supporting the withdrawal of the OIAI policy.

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Per these comments, the OIAI policy imposed an artificial time limit on major sources obtaining area source status not found in the definitions of “major source” and “area source” in CAA sections 112(a)(1) and (2). Commenters further stated that the temporal limitation imposed by the OIAI policy was inconsistent with the CAA and created an arbitrary date by which sources must determine whether their HAP PTE will exceed either of the major source thresholds.

10

See Executive Order 13777 at 82 FR 12285 (February 24, 2017) and request for comment at 82 FR 17793 (April 13, 2017), Docket ID No. EPA-HQ-OAR-2017-0190. See Presidential Memorandum at 82 FR 8667 (January 24, 2017) and request for information at 82 FR 12786 (March 7, 2017), Docket ID No. DOC-2017-0001.

On January 25, 2018, the EPA issued a guidance memorandum from William L. Wehrum, Assistant Administrator of the Office of Air and Radiation, to the EPA Regional Air Division Directors titled “

Reclassification of Major Sources as Area Sources Under Section 112 of the Clean Air Act

” (MM2A Memorandum).

11

The MM2A Memorandum discussed the statutory provisions that govern when a source subject to major source NESHAP requirements under section 112 of the CAA may be reclassified as an area source and thereby avoid being subject thereafter to major source NESHAP requirements and other requirements applicable to major sources under CAA section 112. In the MM2A Memorandum, the EPA discussed the plain language of CAA section 112(a) stating Congress's definitions of “major source” and “area source” and determined that the OIAI policy articulated in the 1995 Seitz Memorandum was contrary to the plain language of the CAA and, therefore, must be withdrawn. In the MM2A Memorandum, the EPA announced the future publication of a proposed rule to receive input from the public on adding regulatory text consistent with the plain reading of the statute as described in the MM2A Memorandum.

11

See notice of issuance of this guidance memorandum at 83 FR 5543 (February 8, 2018).

On July 26, 2019, the EPA proposed regulatory text to implement the plain

language reading of the statute as discussed in the MM2A Memorandum. See 84 FR 36304. The 2019 MM2A proposal superseded and replaced the 2007 proposal. See 72 FR 69 (January 3, 2007). The EPA solicited comment on all aspects of the MM2A proposal, including the EPA's position that the withdrawal of the OIAI policy and the proposed approach gives proper effect to the statutory definitions of “major source” and “area source” in CAA section 112(a) and is consistent with the plain language and structure of the CAA as well as the impacts of the proposal on costs, benefits, and emissions impacts. Publication of the MM2A proposal in the

Federal Register

opened comment on the proposal for an initial 60-day public comment period. The EPA held a public hearing on August 15, 2019, in Washington, DC. In response to requests for an extension of the comment period, the EPA reopened the public comment period for an additional 30 days through November 1, 2019. The EPA received more than 16,000 comments on the MM2A proposal. After review and consideration of public comments, the EPA is finalizing the implementation of the plain language reading of the definitions of major source and area source under CAA section 112. Per CAA section 307(d)(6)(B), the EPA is providing a response to the to the most significant comments received on the MM2A proposal in this preamble, and responses to the other comments in the Response to Comments document available in the docket.

IV. Statutory Authority

As discussed in the preamble of the MM2A proposal at 84 FR 36304, 36309-36313 (July 26, 2019), CAA section 112 distinguishes between major and area sources of HAP emissions. Indeed, the very first provisions in CAA section 112 are the major source definition in CAA section 112(a)(1) and area source definition in CAA section 112(a)(2)) that create the major/area distinction. Major sources emit more HAP than area sources and, generally, different requirements apply to major sources and area sources. For some section 112 source categories, the EPA has promulgated requirements for only major sources, and HAP emissions from area sources are not regulated under the NESHAP program.

Whether a source is a “major source” or an “area source” depends on the amount of HAP emitted by the source based on its actual and potential emissions. Congress defined “major source” to mean a source that emits or has the potential to emit at or above either of the statutory thresholds of 10 tpy of any one HAP or 25 tpy of total HAP. CAA section 112(a)(1). An “area source” is defined as any source of HAP that is not a major source. CAA section 112(a)(2). If a source does not emit or does not have the potential to emit at or above either of the major source thresholds, then it is an “area source.” The statutory definitions of “major source” and “area source” do not contain any language that fixes a source's status as a major source or area source at any particular point in time, nor do they otherwise contain any language suggesting that there is a cutoff date after which a source's status cannot change.

Congress did, however, create a distinction based on timing in CAA section 112 in defining and creating provisions related to “new sources” and “existing sources.” Specifically, Congress defined “new source” to mean a source that is constructed or reconstructed after the EPA first proposes regulations covering the source. CAA section 112(a)(4). An “existing source” is defined as any source other than a new source. CAA section 112(a)(10). A source will be subject to different requirements depending on whether it is a new source or an existing source. See,

e.g.,

CAA section 112(d)(3) (identifying different minimum levels of stringency (known as “MACT floors”) for new and existing sources).

The emissions-based distinction (arising from the definitions of major source and area source) and the timing-based distinction (arising from the definitions of new source and existing source) are independent, and neither is tied to the other. For example, the statutory definition of “major source” does not provide that major source status is determined based on a source's emissions or PTE as of the date that the EPA first proposes regulations applicable to that source or any other point in time. As noted above, the plain language of the “major source” and “area source” definitions create a distinction that is based solely on amount of emissions and PTE, and not timing. Similarly, with respect to the timing-based distinction, a source is a “new source” or an “existing source” based entirely on the timing of its construction or reconstruction and without consideration of its actual emissions or PTE. The contrast between the temporal distinction in the contrasting definitions of existing and new sources on the one hand, and the absence of any temporal dimension to the contrasting definitions of major and area sources on the other, is further evidence that Congress did not intend to place a temporal limitation on a source's ability to be classified as an area source (including a source's ability to be classified as an area source through the permitting authority's “considering controls” that may have been imposed after the source was initially classified as major).

Notwithstanding the independence of the two distinctions that the statute created based on amount of emissions and timing (and without addressing that independence or otherwise addressing the plain language of the statutory definitions of “major source” and “area source”), the EPA issued the May 1995 Seitz Memorandum, which set forth the OIAI policy. Under the OIAI policy, a source's status as a major source for the purpose of applying a specific major source MACT standard issued under the requirements of CAA section 112 was deemed to be unalterably fixed on the first substantive compliance date of the specific applicable major source requirements. Thus, a source that was a major source on that first compliance date would continue to be subject to the major source requirements for that specific NESHAP even if the source reduced its emissions of and PTE HAP to below the statutory thresholds in the definition of “major source,” and, thus, fell within the definition of “area source.”

On January 25, 2018, the EPA issued the MM2A Memorandum. The MM2A Memorandum discussed the statutory definitions of “major source” and “area source” and explained that the OIAI policy articulated in the May 1995 Seitz Memorandum was contrary to the plain language of the CAA, and, therefore, must be withdrawn.

As discussed above, Congress expressly defined the terms “major source” and “area source” in CAA section 112(a) in unambiguous language. Nonetheless, under the OIAI policy, a source that reduced its emissions of and PTE HAP to below the statutory thresholds for major source status after the relevant compliance date would continue to be subject to the requirements applicable to major sources. This policy was applied notwithstanding that the statutory definitions of “major source” and “area source” lack any reference to the compliance date of major source requirements or any other text that indicates a time limit for changing between major source status and area source status. In short, Congress placed no temporal limitations on the determination of whether a source emits or has the potential to emit HAP in sufficient quantity to be a major source

under CAA section 112. Because the OIAI policy imposed such a temporal limitation (before the “first compliance date”), the EPA had no authority for the OIAI policy under the plain language of the CAA. Under the plain language of the statute, a major source that takes enforceable limits on its PTE to bring its HAP emissions below the CAA section 112 major source thresholds, no matter when it may choose to do so, becomes an area source under Congress's definition in CAA section 112(a)(2). In this final action, we are implementing the plain language of CAA section 112 and 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.

A discussion of the statutory definitions of “new source” and “existing source” in CAA section 112(a)(4) and (10) further demonstrates that the OIAI policy was inconsistent with the language of the statute. As discussed above, the major source/area source distinction and the new source/existing source distinction are two separate and independent features of the statute. Significantly, the statutory definitions of “new source” and “existing source” dictate that the new source/existing source distinction is determined by when a source commences construction or reconstruction and says nothing about the source's volume of emissions. No one can reasonably suggest that this silence concerning volume of emissions indicates that Congress intended to give the EPA the discretion to conclude that sources should be classified as new or existing based, in part, on how much they emit. For example, if the EPA were to say that a source is only a new source if it both (1) commences construction after regulations are first proposed (as stated in CAA section 112(a)(4)), and (2) emits more than 20 tpy of any single HAP (which is not stated anywhere in the statute), that second element would be contrary to the plain language of the statute. Similarly, the OIAI policy of considering timing as part of the major source/area source distinction is contrary to the plain language of the statute, because it interjects timing into the major/area distinction when Congress provided that such distinction would be based only on the source's actual and potential emissions. In short, Congress's creation of the timing distinction in the new source and existing source definitions shows that Congress was explicit when it wanted to classify sources based on timing, and it did not do so in creating the major/area source distinction.

Some commenters have argued that the EPA's plain language reading cannot be correct in light of various provisions in CAA section 112. The EPA has considered these comments and concluded that the EPA's plain language reading is the correct reading, for the reasons discussed below, in the Response to Comments document and elsewhere in the record.

CAA section 112(i)(3)(A)—Some commenters assert that the EPA's plain language reading of the definitions of “major source” and “area source” is contradicted by CAA section 112(i)(3)(A). Specifically, they contend that the first phrase in CAA section 112(i)(3)(A) precludes a major source from reclassifying to area source status after the source has become subject to a major source standard and that this statutory text compels the OIAI policy. The EPA disagrees with this contention. The first phrase in CAA section 112(i)(3)(A) states: “After the effective date of any emissions standard, limitation or regulation promulgated under this section and applicable to a source, no person may operate such source in violation of such standard, limitation or regulation . . . .” As discussed in the proposal (84 FR 36311), the EPA reads this phrase to have the same meaning as similar “effective date” provisions in the CAA, such as CAA section 111(e), notwithstanding that CAA section 112(i)(3)(A) has somewhat different phrasing. In short, this text simply provides that, after the effective date of a CAA section 112 rule, sources to which a standard is applicable must comply with that standard. This text is not reasonably read to say that, once a standard is applicable to a source, that standard continues to be applicable to the source for all time, even if the source's potential to emit changes such that it no longer meets the applicability criteria for the standard. Such a reading would produce some results that are clearly incorrect. For example, if the first phrase in CAA section 112(i)(3)(A) were read to say that a source's applicable requirements are determined at the point in time that a source first becomes subject to CAA section 112 requirements, then an area source would continue to be subject to area source requirements even if that source increased its potential to emit above either of the major source thresholds. Such a result would be contrary to the EPA regulations, which provide that an area source that increases its emissions or PTE above the MST becomes subject to the applicable major source requirements. 40 CFR 63.6(a)(2), 63.6(b)(7), 63.6(c)(5).

Further, reliance on CAA 112(i)(3)(A) to argue against the EPA's plain language reading and for a return to the OIAI policy ignores that the “effective date” of a CAA section 112 standard is not the same as the “compliance date.” CAA section 112(i)(3)(A) expressly provides that the EPA may set the “compliance date” for existing sources up to 3 years after the “effective date.” Similarly, CAA section 112(i)(5) (which is applicable in certain circumstances for sources that make early reductions in HAP emissions) provides for a delayed compliance date that will be after the effective date. This is significant because the cutoff deadline for reclassification that the commenters say is required under CAA section 112(i)(3)(A) is not the effective date. Under the OIAI policy, the cutoff date for reclassification was the first substantive compliance date, which (as just discussed) is clearly distinguished from the effective date in CAA section 112(i)(3)(A) in the statute. Thus, commenters' reading of CAA section 112(i)(3)(A) would not only be contrary to the EPA's plain language reading but would also be contrary to the OIAI policy under which sources could reclassify after the effective date as long as they did so before the first substantive compliance date.

In sum, the EPA has concluded that the CAA section 112 definitions of “major source” and “area source” and the “effective date” provision in CAA section 112(i)(3)(A) are properly read together to say that sources must comply with the applicable requirements corresponding to their major source or area source status, and that if this status changes, then the source becomes subject to the requirements corresponding to its status after the change.

CAA sections 112(c)(3) and (6)—Some commenters argue that CAA sections 112(c)(3) and (6) reflect a Congressional intent that sources be subject to continuous, permanent compliance with major source standards and that these provisions are, therefore, inconsistent with the EPA's plain language reading. But there is no inconsistency here. Those provisions required the EPA to ensure that sources accounting for 90 percent of the emissions of specific pollutants were listed and regulated by November 2000. The premise of the commenters' argument based on CAA

sections 112(c)(3) and (6) is that these provisions do not simply require the EPA to list and regulate sufficient source categories to meet the 90-percent requirement at a given point in time; rather, they require that the EPA's regulations ensure that 90 percent of emissions are subject to regulation on an ongoing basis. This is not a reasonable reading of CAA sections 112(c)(3) and (6) because, as explained in greater detail in the proposed rule preamble at 84 FR 36311, the requirements of the statute and subsequent standards will result in the emissions from the listed source categories falling below the 90-percent threshold once those source categories are regulated. If commenters' interpretation were correct, CAA sections 112(c)(3) and (6) would create a never-ending cycle of listing and regulation in order to achieve an unattainable goal of ensuring that 90 percent of emissions are regulated. See 84 FR 36311.

In response to the EPA's discussion in the proposed rule preamble, commenters have stated that the statutory text in CAA sections 112(c)(3) and (6) is properly read not to focus on the source categories that those provisions require to be listed but on the individual sources that are within those categories—specifically, that these provisions require the EPA to regulate the sources that produced those emissions. But if the listing and regulation required pursuant to CAA sections (c)(3) and (6) were read to apply to the sources that produced the emissions as of the time of the listing of the categories, then that would mean that new sources within the listed source categories would not be regulated. The EPA does not think this is a reasonable reading of those provisions. Instead, the proper reading of these provisions is that the EPA is to list and regulate source categories, and then a source is regulated pursuant to the standard applicable to a given source category to the extent that, and as long as, the source remains within the source category. Thus, under a proper reading of CAA sections 112(c)(3) and (6), those provisions do not prevent reclassification, so there is no conflict between the EPA's plain language reading of CAA sections 112(a)(1)-(2) and the requirements of CAA sections 112(c)(3) and (6).

CAA section 112(f)(2)—Commenters also point to CAA section 112(f)(2) (commonly referred to as the residual risk provision) and contend that the EPA's plain language reading allows reclassified sources to avoid the review required under that provision. But this argument fails to refute the discussion that the EPA provided in the proposed rule preamble (at 84 FR 36311-36312). First, as a general matter, Congress in CAA section 112 plainly distinguished between major sources emitting above the MST and area sources emitting below the MST and subjected them to different requirements. Second, with regard to CAA section 112(f), CAA section 112(f)(5) contains an express exemption from the CAA section (f)(2) review for area sources, and there is no statutory basis or logical reason for treating an area source differently just because it is a former major source. For these reasons, CAA section 112(f) is not inconsistent with the EPA's plain language reading.

CAA section 112(d)—Some commenters have pointed to the requirements of CAA section 112(d) as requiring sources that are at any point subjected to major source standards must continue to be subject to major source standards permanently. These commenters have argued that the EPA's plain language reading undermines the emissions reductions required by these CAA section 112 standards. Section 112(d)—and in particular, sections 112(d)(2) and (3) of the CAA—addresses how the EPA sets MACT standards for major sources (based on the maximum degree of emissions reduction the EPA determines is achievable, which may be a complete prohibition on emissions). But the question of what standard is applicable to major sources in a source category—whether MACT floor standards or otherwise—logically cannot determine which sources are major sources . Instead, the text and structure of CAA section 112 demonstrate that whether a source is classified as a major source or an area source is the threshold question under CAA section 112, and what requirements apply to the source flows from how the source is classified, with major sources and area sources facing significantly different regulation.

As noted above, the very first provisions in CAA section 112 are the major source definition in CAA section 112(a)(1) and area source definition in CAA section 112(a)(2) that create the major/area distinction. Following from this threshold distinction, CAA section 112 treats major sources and area sources differently in fundamental ways. To state a few examples that illustrate this:

(1) The EPA must list all categories of major sources of HAP pursuant to CAA section 112(c)(1), but only has to list categories of area sources representing 90 percent of HAP under CAA section 112(c)(3). This distinction is then carried over to what sources are regulated, as provided in CAA section 112(d)(1), which provides that the EPA will regulate those categories listed under CAA section 112(c).

(2) Major sources are subject to MACT standards under CAA section 112(d)(2) and (3), but area sources may be subject to generally available control technology (GACT) standards under CAA section 112(d)(5).

(3) Area source categories and subcategories listed under CAA section 112(c)(3) and for which standards are set under CAA section 112(d)(5) are not subject to residual risk review under CAA section 112(f)(2), pursuant to CAA section 112(f)(5).

In short, to the extent that major sources become area sources by reducing their emissions of and PTE HAP below the MST, and, thus, are no longer subject to major source requirements, that is not a “loophole” or an “end-run” around the major source requirements. That is simply the result of the provisions and structure of CAA section 112 that Congress enacted and reflects the fundamental distinction between how CAA section 112 addresses major sources and area sources.

Further, allowing a major source to take a PTE limit below the major source threshold and thereby avoid having to comply with major source requirements is not a new concept under MM2A. Indeed, that is precisely what happened under the OIAI policy. The only change under MM2A is one of timing. Under the OIAI policy, major sources could reclassify if they took the PTE limit before the first substantive compliance date. Under MM2A, sources can reclassify at any time. Nothing in the statute says, and there is no logical reason why, a major source that could reclassify to area source status on the day before its first substantive compliance date (as allowed under the OIAI policy) is foreclosed from doing so on the day after its first substantive compliance date.

Similarly, having a source reclassify after the first substantive compliance date is not a new concept under MM2A. During the time that the OIAI policy was in effect, area sources were reclassified to major source status at any time that they increased emissions or their PTE above the major source threshold, even if the increase occurred after the first substantive compliance date under the applicable area source rule.

For these reasons, the EPA concludes that the standard-setting provisions in CAA sections 112(d)(2) and (3) do not contradict the plain language of the major source and area source definitions

on the issue of whether a source can reclassify at any time.

Parties opposed to the EPA's plain language reading also suggest that the EPA's reading is inconsistent with the purpose and provisions of CAA section 112 because it will lead major sources that reclassify to area source status to increase their emissions above what they could emit if they continued to be major sources. The EPA disagrees with the suggestion that a source's reclassification from major source to area source will necessarily lead to an increase in emissions from the source above what would have been allowed to emit under the major source standard. As discussed in section VIII of the preamble, there are a number of reasons why reclassified sources are generally not expected to increase their emissions. The EPA's analysis of the sources that have reclassified to date and sources that might reclassify from various source categories shows that in 68 out of 69 operating permits for sources that have already reclassified to area source status since January 2018, sources achieved and maintain area source status by operating the emission controls or continuing to implement the practices they used to comply with the major source NESHAP requirements. However, the EPA found that one of the 69 reclassified sources will not continue to employ the same compliance method that it used to meet the major source standard, and thus may increase its emissions. In addition to this review of actual reclassification actions since January 2018, the EPA also prepared an illustrative analysis for 72 source categories in the major source NESHAP program (114 total) to evaluate the potential emissions impacts. After considering the information and data available for the illustrative emissions analysis, we found that 65 source categories will not change emissions as a result of the rule. For the other seven, there was a potential for (but not a certainty of) emissions increases based on conservative assumptions that are likely to overstate the change in emissions at some facilities. Sources in these in seven source categories assessed in the primary scenario could increase emissions if those facilities (1) opted to reclassify and (2) were permitted to change the operation of adjustable add-on controls. Further details of this illustrative analysis and the results are provided below in section VIII.

Further, allowing major sources to reclassify to area source status after the first substantive compliance date may create an incentive for sources to evaluate their operations and consider changes that can further reduce their HAP emissions to below the MST if the source views those changes as an opportunity to reduce costs of production, increase productivity, or reduce the costs of complying with major source NESHAP requirements. For example, sources using surface coatings may see the opportunity to become an area source as an extra incentive to invest in the development of new low- or no-HAP content coatings, inks, and binders. Similarly, sources with boilers and engines may benefit from replacing old boilers and engines with new, more efficient, and clean technologies. Such a replacement not only could help a source reduce HAP to below the MST but could also reduce fuel use and associated costs. To assess the opportunity for such emission decreases, we looked at an alternative scenario and determined that some sources operating between 75 and 125 percent of the MST could decrease emissions if those sources were to reclassify. Further details of this illustrative analysis and the results are provided below in section VIII.

In the MM2A proposal, the EPA took comment on whether it can and should promulgate regulatory provisions that would prevent a source that has reclassified from major to area source status from increasing emissions above what the source was allowed to emit when it was a major source. See 84 FR 36312-36313. Upon further consideration of this issue and the comments received, the EPA has concluded that the plain language of CAA section 112 precludes the promulgation of such provisions. As discussed above, the plain language of CAA section 112 provides that a source is an area source if its emissions and PTE are below the thresholds of 10 tpy of any one HAP and 25 tpy of any combination of HAP. Just as there is nothing in the statutory definitions in CAA sections 112(a)(1) and (2) or elsewhere in CAA section 112 that sets, or gives the EPA the authority to set, a cut-off date after which a major source cannot classify to area source status, there is nothing in CAA section 112 that imposes, or gives the EPA the authority to impose, a requirement that a source can only be an area source if it limits its emissions to some level below the MST. Congress clearly identified the thresholds of 10 tpy of any one HAP and 25 tpy of all combined HAP as the dividing line between major source status and area source status. The EPA cannot impose a different dividing line from what Congress wrote into CAA section 112. See

Utility Air Regulatory Group

v.

EPA,

573 U.S. 302, 325-326 (2014) (where Congress created precise numerical thresholds in the statute, the EPA's rewriting of the statutory thresholds is impermissible).

Further, even if there were some ambiguity in the text and structure of CAA section 112 that gave the EPA the discretion to impose such a requirement, the EPA's conclusion in light of both the statute and policy considerations is that such a requirement should not be imposed. As discussed above, whether a source is classified as a major source or an area source is the threshold question under CAA section 112, and what requirements apply to the source flows from how the source is classified, with major sources and area sources facing significantly different statutory requirements. If the EPA were to mandate that a reclassified area source maintain its emissions below the level that the source was subject to as a major source, that would be contrary to the fundamental structure that Congress created in CAA section 112. Further, as discussed below in section VIII, even in the absence of any provisions preventing emissions above what a reclassified source was allowed to emit as a major source, most sources are not expected to increase emissions and those that do would have only modest increases. Thus, as a matter of policy judgment, the EPA would not interpret any ambiguity in the statute to allow the imposition of a new limit on reclassified area sources more stringent than the limit applied to other area sources.

For these reasons, the EPA is not promulgating provisions that would prevent a source that has reclassified from major to area source status from increasing emissions above what the source was allowed to emit when it was a major source.

V. Summary of Final Amendments

To implement the plain language reading of the statute as discussed in section IV above, the EPA is finalizing amendments to the General Provisions of 40 CFR part 63, subpart A. The EPA is also finalizing amendments to the General Provisions tables contained within most subparts of 40 CFR part 63 to account for the regulatory provisions we are finalizing in the General Provisions of 40 CFR part 63, subpart A. Finally, the EPA is finalizing changes to several individual NESHAP intended to remove rule-specific OIAI provisions. For all comments not discussed in this preamble, comment summaries and the EPA's responses can be found in the Response to Comments document available in the docket.

A. Final Amendments to 40 CFR Part 63, Subpart A: General Provisions

1. Applicability

The EPA is finalizing amendments to the applicability section of the General Provisions of 40 CFR part 63.1 by adding a new provision 40 CFR 63.1(c)(6) to implement the plain language reading of the “major source” and “area source” statutory definitions of section 112 of the CAA and provide that a major source can be reclassified to area source status at any time upon reducing its actual emissions of and potential to emit HAP to below the MST of 10 tpy of any single HAP and 25 tpy of any combination of HAP. At proposal, this new applicability provision also included regulatory language addressing the compliance date with applicable NESHAP requirements for reclassification and interactions with enforcement actions. We received comments on all aspects of the new applicability provision. Below we discuss each aspect of the proposed MM2A applicability provision and what we are finalizing after considering public comments.

a. Reclassification Provision

The EPA proposed to amend 40 CFR 63.1 by adding a new paragraph (c)(6). As proposed, this paragraph specifies that a major source can become an area source at any time by limiting its PTE HAP to below the major source thresholds established in 40 CFR 63.2, provided certain conditions are met. We received comments in support of and against the proposed text in 40 CFR 63.1(c)(6) and comments requesting changes to or clarification on the proposed provision. Comments against the proposed reclassification provision based on the statutory text or other legal issues (such as legal comments opposing the EPA's plain language reading of CAA section 112 definitions of major and area sources allowing sources to reclassify at any time) are addressed in section IV of this preamble and in the Response to Comments document available in the docket. The comments requesting changes to or clarification on the new provision are summarized below.

Some commenters recommended that the EPA add language to the new provision in 40 CFR 63.1(c)(6) to specify that the provision applies to sources that reclassify to area source status after being subject to major source NESHAP requirements. The EPA disagrees that the language only applies to reclassification by a major source after the source has been subject to major source NESHAP requirements. The regulatory language in this provision implements the EPA's plain language reading of the definition of major and area sources in section 112 of the CAA, as discussed in length in section IV of this preamble, allowing sources to reclassify at any time. This provision allows for reclassification to area source status regardless of whether the reclassification occurs before or after the first substantive compliance date of a major source NESHAP.

Other commenters stated that the proposed provision in 40 CFR 63.1(c)(6) could be read to require all types of sources to obtain PTE limits in order to be reclassified to area source status. These commenters stated that this could be problematic for sources that were major at the first substantive compliance date of a particular NESHAP but are no longer within the definition of “major source” at the time of reclassification because the source's emissions of and PTE HAP are below the MST even in the absence of a governmental restriction on emissions in a PTE limit. The EPA agrees with the commenters that the language in the proposed provision can be clarified and has amended the language of 40 CFR 63.1(c)(6) in the final rule to read: “A major source may become an area source at any time upon reducing its emissions of and potential to emit (PTE) hazardous air pollutants, as defined in this subpart, to below the major source thresholds established in 40 CFR 63.2, subject to the provisions in paragraphs (c)(6)(i) and (ii) of this section.” The provisions in 40 CFR 63.1(c)(6)(i) and (ii) as finalized in this action are discussed later in this preamble.

In the final regulatory language of 40 CFR 63.1(c)(6), the EPA replaced the phrase “limiting its potential to emit (PTE) hazardous air pollutants . . .” with the phrase “reducing its emissions of and potential to emit (PTE) hazardous air pollutants . . .”. This updated language removes the ambiguity in the proposed language and makes it clear that PTE limits would be needed for area source reclassification for sources with PTE HAP at or above the MST. In contrast, consistent with the statutory definitions of “major source” and “area source” and the regulatory definition of PTE in 40 CFR 63.2, so called “true” area sources,

12

which in this preamble means sources that do not have the capacity to emit HAP at major source levels under their physical and operational design (even if the source owner and regulatory agency disregard any enforceable limitations), are not within the definition of “major source.” These “true” area sources do not need to obtain enforceable PTE limits to be reclassified to area source status. Accordingly, sources that have permanently removed equipment, changed their processes, or by other means currently do not have a maximum capacity to emit HAP at major source levels are “true” area sources (

i.e.,

enforceable limits are not needed on the source's physical or operational design to restrict the source's PTE HAP below MST) and do not need to adopt PTE limits to be reclassified. Any source that adopts a physical or operational limit on its maximum capacity to emit (including requirements for the use of air pollution control equipment or restrictions on the hours of operations or on the type or amount of material combusted, stored, or processed) to limit its PTE HAP below the MST is not a true area source. These are often referred to as “synthetic” area sources.

13

12

This preamble follows the convention about the meaning of these terms adopted in an EPA memorandum titled “

Potential to Emit (PTE) Guidance for Specific Source Categories

” (April 14, 1998), available at

https://www.epa.gov/sites/production/files/2015-07/documents/lowmarch.pdf.

13

We note that in the Oil and Natural Gas Federal Implementation Plan (O&NG FIP) in Indian County, “true area sources” include the reductions due to compliance with various NESHAP and new source performance standards (NSPS) standards, which are applicable requirements of the O&NG FIP. True minor sources in the oil and natural gas production and natural gas processing segments of the oil and natural gas sector are required to comply with the O&NG FIP instead of obtaining a source-specific minor source permit, unless a source chooses to opt out of the FIP and to obtain a source-specific minor New Source Review (NSR) permit instead under the “Federal Minor New Source Review (NSR) Program in Indian Country.” See FIP for True Minor Sources in Indian Country in the Oil and Natural Gas Production and Natural Gas Processing Segments of the Oil and Natural Gas Sector. 81 FR 35944 (June 3, 2016).

Relatedly, commenters claimed that the MM2A proposal did not appear to explain that the definition of “potential to emit” does not require enforceable limitations for restrictions on HAP emissions that are inherent in the physical or operational design of the production process. Note that the EPA recognizes that, on a case-by-case basis, a situation may warrant an assessment of whether a given device or strategy should be considered as air pollution control equipment or as an inherent part of the process.

14

That said, the final rule is not revising the EPA's view on how to determine “the maximum capacity of a stationary source to emit a pollutant under its physical and operational design.” Sources with questions about the proper way to determine PTE HAP or whether they should obtain PTE limits for reclassification to area source

status are encouraged to consult applicable permitting program regulations and work with their corresponding regulatory authorities on a determination that considers their situation. See also, 40 CFR 63.10(b)(3), which explains in detail the analysis and contents of the records to be kept for applicability determinations made by a source for purposes of 40 CFR part 63.

14

See

https://www.epa.gov/sites/production/files/2015-07/documents/readymix2.pdf.

Multiple commenters objected to the EPA's proposed viewpoint that a major source that had been complying with a NESHAP as of the first substantive compliance date of the standard, but reduced its PTE HAP below the MST by complying with non-section 112 CAA requirements, would be required to obtain HAP PTE limits to ensure that HAP emissions remain below the MST. These commenters argued the EPA should make clear in the final rule that a limitation on another pollutant or parameter can be recognized as a limitation on the source's potential to emit HAP if the limitation on the other pollutant emissions or parameter results, as a practical matter, in a restriction on the source's HAP emissions. The commenters noted that limits that qualify to reduce a source's PTE HAP emissions do not need to be “HAP PTE limits,”

i.e.,

a requirement need not place limits directly on a HAP to have the effect of limiting a HAP. The commenters cited as example that volatile organic compound (VOC) limits could reduce HAP emissions and further stated that the EPA provided no explanation why requiring the source to obtain HAP PTE limits is essential to ensure that the area source's HAP emissions are effectively limited. The EPA recognizes that the proposal may have caused confusion about whether the EPA recognizes HAP reductions due to surrogate criteria pollutant controls for purposes of reclassifying to area source status.

15

That said, the EPA has concluded that it does not need to revise the regulatory text to make this specific point because the definition of PTE (as revised in this final rule) allows for the effect of such limitations to count toward limiting the PTE HAP. A source relying on the effect of non-HAP enforceable limitation to constrain its PTE HAP below the MST may need to show the regulatory authority processing the reclassification the effect of such limitation on the source's PTE HAP to confirm that such source has a PTE HAP that allows it to reclassify to area source status.

16

As explained before, the determination of a source's PTE HAP under the PTE definition in 40 CFR 63.2 requires consideration of any enforceable controls, including “nested” HAP usage limits in permits intended as enforceable VOC limits, and other enforceable non-HAP limitations within a permit that have the effect of reducing HAP emissions. To the extent that a source's PTE considering controls exceeds the MST, a source would need to obtain enforceable limitations constraining its PTE HAP below the MST in order to be reclassified to area source status. Finally, the revised language in 40 CFR 63.1(c)(6) that now states “reducing emissions and its potential to emit (PTE) hazardous air pollutants . . .” (as opposed to the proposed language stating “limiting its potential to emit (PTE) hazardous air pollutants . . .”) supports the EPA's conclusion that the PTE regulatory definition means that enforceable limits on other pollutants can have the effect of reducing PTE HAP and can be the basis for reclassification. See also 40 CFR 63.10(b)(3) about the analysis and record contents.

15

See,

e.g.,

January 25, 1995, memorandum titled “

Options for Limiting the Potential to Emit (PTE) of a Stationary Source Under Section 112 and Title V of the Clean Air Act (Act),

” also, memorandum, “

Crediting of Maximum Achievable Control Technology (MACT) Emission Reductions for New Source Review (NSR) Netting and Offsets,

” available at

https://www.epa.gov/sites/production/files/2015-07/documents/netnoff.pdf. See,

also, 81 FR 35944, explaining that HAP compliance reductions of volatile organic HAP to meet MACT may also result in emissions reductions of VOC.

16

The EPA expects that state and local and tribal agencies will exercise care when drafting enforceable permit conditions in the situation where the “effect” of criteria pollutant limits will not be straight forward. See January 25, 1995, memorandum titled “

Options for Limiting the Potential to Emit (PTE) of a Stationary Source Under Section 112 and Title V of the Clean Air Act (Act).

”

Finally, some commenters asked the EPA to clarify what requirements apply to sources that reclassified before the effective date of this rule. These commenters asked the EPA to state in the final rule that sources that reclassified to area source status prior to the MM2A final rule would not be required to undertake any additional actions. To the extent that sources have reclassified before the effective date of this final rule, their ability to reclassify is governed by the plain language reading of the statute. We discuss the notification and recordkeeping requirements for sources that reclassified before the effective date of this final rule later in this preamble. In contrast, sources that reclassify after the effective date of this final rule are governed by the plain language reading of the statute and by the provisions being finalized in this final rule. In either case, a reclassification is not a safe harbor for the source if the limits taken do not effectively limit the HAP emissions and the source emits HAP in excess of the MST.

b. Compliance Dates for Applicable Standards

In the proposed language of 40 CFR 63.1(c)(6), the EPA included regulatory text addressing applicability of standards and other requirements under 40 CFR part 63 for sources that reclassify to area source status, including dates for compliance with standards and notifications requirements. Because sources must comply with requirements corresponding to their status, the proposed provision in 40 CFR 63.1(c)(6) specified, “Until the PTE limitations become effective, the source remains subject to major source requirements. After the PTE limitations become effective, the source is subject to any applicable requirements for area sources.” In response to comments and to clarify the requirements associated with applicability of NESHAP requirements and the compliance dates for sources reclassifying to area source status, both before and after compliance with applicable major source NESHAP requirements, and for reclassified area sources that subsequently become major sources again, the EPA is consolidating these requirements in the final regulatory text at 40 CFR 63.1(c)(6)(i). The final provision also addresses the notification requirements for these sources. We discuss notification requirements below in section V.A.2 of the preamble.

The final regulatory text in 40 CFR 63.1(c)(6)(i)(A) addresses the applicability of standards and compliance dates for sources reclassifying to area source status either before or after being subject to major source requirements under 40 CFR part 63. The final regulatory text in 40 CFR 63.1(c)(6)(i)(B) addresses the applicability of standards and compliance dates for reclassified area sources that subsequently become major sources again. These final provisions are discussed below.

In this final rule, the EPA is updating the regulatory language in 40 CFR 63.1(c)(6)(i)(A) to include the applicability of standards and compliance dates for sources reclassifying to area source status. The final amended text in 40 CFR 63.1(c)(6)(i)(A) reads as follows: “A major source reclassifying to area source status under this part remains subject to any applicable major source requirements established under this part until the reclassification becomes

effective. After the reclassification becomes effective, the source must comply with any applicable area source requirements established under this part immediately, provided the compliance date for the area source requirements has passed. The owner or operator of a major source that becomes an area source subject to newly applicable area source requirements under this part must comply with the initial notification pursuant to § 63.9(b). The owner or operator of a reclassified source must also provide to the Administrator notification of the change in the information already provided under § 63.9(b) per § 63.9(j).”

As stated in this provision, sources remain subject to any applicable major source requirements under 40 CFR part 63 “until the reclassification becomes effective” instead of the proposed language “until the PTE limitations become effective.” In the MM2A proposal, the EPA explained that reclassification to area source status is a voluntary action on the part of a source, and sources are required to apply with their corresponding regulatory authority and follow the corresponding authority's procedures to be reclassified to area source status. This includes sources that, at the time of reclassification, are no longer within the definition of “major source” because they are true area sources (as described above in the preamble), because they had already obtained PTE limits below the MST, or due to other enforceable compliance obligations under a permit, permit by rule, or State Implementation Plan (SIP). As explained elsewhere in this preamble, such sources are area sources under the CAA section 112 definition, but as a result of our previous policy they may continue to have enforceable permit conditions, including major source NESHAP requirements, for example, until their title V permit is revised or revoked in agreement with their permitting authority procedures.

Because reclassification to area source status currently occurs under a regulatory authority's area or minor source program, the reclassification of a source to area source status is effective when the corresponding regulatory authority grants a source's request to be considered an area source via a permit registration, permit by rule, applicability determination, etc. (As explained in this preamble, 40 CFR part 63 separately requires notification of the applicability of a standard and recordkeeping of information on the applicability determination decision.) We expect that the process for sources to reclassify to area source status for HAP will rely on existing programs (

e.g.,

minor source programs, title V permitting procedures, and/or approved programs for issuing PTE limits under CAA section 112(l)). Consistent with how regulation of area sources is currently implemented under CAA programs, the EPA expects that determinations of area source status or major source status, as requested by a source for reclassification, will occur in a single action or concurrently with permitting actions needed to reconcile the revised requirements for the source under the newly acquired status or as appropriate for permit closure or revocation. (A permitting authority program may have simpler, less burdensome processes for specific groups of sources.) The language finalized about the effective date of reclassification equitably considers the current implementation mechanisms and sources situation.

As proposed, the regulatory language in 40 CFR 63.1(c)(6)(i) stated that “[a] major source that becomes an area source must meet all applicable area source requirements promulgated under this part immediately upon becoming an area source, provided the first substantive compliance date for the area source standard has passed, . . .” Some commenters requested that the EPA include language in the final rule providing that sources reclassifying to area source status may meet the major source NESHAP requirements as a means of complying with newly applicable area source NESHAP requirements. The EPA is not including such language in the final rule. Any source that reclassifies to area source status is no longer subject to major source NESHAP requirements and is subject to area source NESHAP requirements instead. That said, the area source is not precluded from streamlining the applicable area source NESHAP requirements with permit terms from a previously applicable major source NESHAP standard if compliance with applicable area source NESHAP requirements is assured. Because the reclassification to area source status is a voluntary action on the part of the source, the source must evaluate the area source NESHAP requirements that will become applicable to the source at the time of the reclassification to area source status and be in a position to meet such requirements at the time it reclassifies.

In the regulatory language of 40 CFR 63.1(c)(6)(i)(A), the EPA is finalizing the proposed immediate compliance rule for major sources that reclassify to area source status. These sources will be subject to applicable area source NESHAP requirements in 40 CFR part 63 immediately upon reclassification to area source status, provided the compliance date for the area source requirements has passed. In the MM2A proposal, the EPA proposed to allow for additional time for compliance with applicable area source NESHAP requirements for particular situations. For reclassifications from major source to area source status, the EPA proposed that additional time (not to exceed 3 years) may be granted by the EPA (or a delegated authority) in a compliance schedule where an area source standard would apply to an existing source upon reclassification and different emission points would need controls or different emission controls would be necessary to comply with the area source standard or other physical changes would be needed to comply with the standard.

The EPA received many comments on the proposed immediate compliance rule, compliance extension provisions, and the process for obtaining a compliance extension. Some commenters agreed with the proposed immediate compliance rule for sources that reclassify to area source status, while others opposed the immediate compliance rule if the EPA did not include provisions to obtain a compliance extension. Commenters supporting the immediate compliance rule without compliance extension provisions argued that sources should be aware of applicable requirements and plan for timely compliance at the time they request reclassification. These commenters opposed the proposed compliance extension provision, noting that any provision to allow compliance at periods later than 3 years from a standard's effective date was unlawful and unnecessary. The commenters argued that CAA section 112(i)(3)(A) requires that compliance must be within 3 years of the effective date of the standard; furthermore, CAA section 112(i)(3)(A) requires compliance “as expeditiously as practicable.” The commenters argued that just because physical changes may be required for a source to comply with newly applicable area source NESHAP requirements, it does not mean that compliance cannot be achieved immediately upon reclassification. The commenters emphasized that CAA section 112(i)(3) is clear on the compliance schedule for existing sources; that the schedule is determined by the effective date of any emission standard, limitation, or regulation promulgated under CAA section 112; and that compliance has to be as expeditious as practicable, but in no event later than 3 years after the

effective date of such standard. On the other hand, some commenters stated that there may be a short period of time when a stationary source needs to discontinue compliance with a major source NESHAP requirement before complying with the area source NESHAP requirements to conduct testing and verify monitoring protocols or to physically install emission controls. These commenters argued that the rule should recognize the need for such exceptions to the requirement to comply immediately with the area source NESHAP requirements and that the regulatory authority must be able to consider all the relevant factors in allowing for a compliance extension. While the commenters stated that a stationary source would want an exception to discontinue compliance with major source NESHAP requirements for a short period of time in order to come into compliance with the new area source NESHAP requirements to which they will be subject immediately after reclassification, the commenters did not provide supporting evidence or concrete examples showing that there are real situations where such compliance exception is needed.

The EPA agrees with the commenters that the statutory language in CAA section 112(i)(3)(A) precludes the compliance extension as proposed. For this reason, the EPA is not finalizing the proposed compliance extension for sources reclassifying to area source status. If a source reclassifies to area source status in a source category for which there are applicable area source NESHAP requirements, and the effective date of such requirements has passed, the source must comply immediately upon reclassification. If the compliance date of the applicable area source NESHAP requirements is in the future, the source must comply by the future compliance date specified in the individual subpart. Because reclassification is a voluntary action on the part of the source, the immediate compliance requirement does not represent a compliance issue because a source could delay their reclassification until such time as they are able and equipped to meet the applicable area source NESHAP requirements.

In the MM2A proposal, the EPA included in the proposed provision at 40 CFR 63.1(c)(6)(ii) regulatory language addressing the compliance schedule for sources that reclassify between major and area source status more than once. The EPA proposed that “A major source subject to standards under part 63 that subsequently becomes an area source, and then later becomes a major source again by increasing its emissions to at or above the major source thresholds, must comply with the previous applicable major source requirements of this part immediately upon becoming a major source again . . .” The EPA also proposed a compliance extension provision for these sources: If the previously applicable standard has been revised since the source was last subject to the standard and, in order to comply, the source must undergo a physical change, install additional emission controls, and/or implement new control measures, the source will have up to the same amount of time to comply as the amount of time allowed for existing sources subject to the revised standard. The EPA received multiple comments on the proposed compliance schedule and compliance extension provision for reclassified area sources reverting to major source status.

Some commenters argued that there was no need for the EPA to address compliance timelines in the context of the MM2A rulemaking for sources that reclassify to area source status and then revert back to major source status. These commenters noted that the existing General Provisions in 40 CFR 63.6(c)(5) already include compliance dates for area sources that become major sources, and that by including compliance dates within the provision in 40 CFR 63.1(c)(6), the EPA was creating disparate compliance schedule requirements. Several other commenters agreed with the proposed immediate compliance rule for area sources reverting to major source status, stating that sources should be aware of applicable requirements and plan for timely compliance at the time they request reclassification. These commenters opposed the proposed compliance extension provision, noting that any provision to allow compliance at periods later than 3 years from a standard's effective date is unlawful and unnecessary. The commenters argued that CAA section 112(i)(3)(A) requires that compliance must be within 3 years of the effective date of the standard. In addition, the commenters pointed out that CAA section 112(i)(3)(A) does not allow additional time for a source that reverts to major source status when the applicable major source NESHAP has increased in stringency; thus, there is no reason for the proposed extension. The commenters noted that CAA section 112(g)(2) requires that any entity that modifies or constructs a major source first secure a determination that applicable maximum-achievable standards will be met. The commenters argued that any source that proposes to increase its emissions to exceed the MST should be required to plan sufficiently to comply with the applicable major source NESHAP requirements before it increases its emissions. These commenters stressed that it would be inappropriate to allow stationary sources to prolong compliance with applicable standards, and that allowing sources additional time for compliance could incentivize sources to continually shift stationary source applicability status to avoid complying with applicable NESHAP requirements. These commenters objected to any compliance extension, stating that any extension or consideration of special conditions would remove the protections in existing rules, allowing the public and environment to be exposed to increased HAP emissions.

Other commenters argued that the proposed immediate compliance provisions for sources that revert back to their previous major source status are onerous and seem to be designed to discourage sources from opting to become area sources. These commenters supported the proposed compliance extension provisions but noted that there is no justification to conditioning any extension to the immediate compliance requirement for these sources on an intervening change to the major source standard. They argued that this appeared to be a backdoor attempt to force sources opting to become area sources to continue using major NESHAP add-on controls in case they might need to become a major source again, and that this is something for which the EPA lacks authority. Some commenters supported the immediate compliance rule if appropriate exceptions are made in the final rule and it includes a reasonable process for requesting an extension. The commenters recommended that the compliance extensions be left to the air pollution control agencies and that the EPA should not try to define what changes would be eligible for a longer compliance period, thus, eliminating unnecessary EPA oversight of the process for area sources and simplifying the procedures for acquiring additional compliance time. Finally, the commenters stated that a source that once was a major source may, for example, maintain its area source status for 20 years before seeking to become a major source again; for this source, many things may have changed while it was an area source, including process changes that render the previous compliance approach inapplicable or

require the source to comply in different ways.

The EPA agrees with the commenters that stated that the statutory language in CAA section 112(i)(3)(A) is properly read to preclude the proposed compliance extension for sources that revert back to their previous major source status and are subject to major source requirements for which the compliance date of such requirements has passed. These sources must comply with the major source requirements immediately, even if faced with the circumstances listed in the proposal (needing to “undergo a physical change, install additional emissions controls and/or implement new control measures” in order to meet the applicable NESHAP requirements). In the circumstance where a source is reverting back to major source status for which there are applicable major source NESHAP requirements and the compliance date of such requirements at the time of reclassification is still in the future, the source needs to comply with such requirements by the future compliance date specified in the individual subpart. In sum, a source should not reclassify (in either direction) until it is ready to meet the requirements that are imposed by the new classification.

For the reasons explained above, the final regulatory text included in 40 CFR 63.1(c)(6)(i)(B) addresses the applicability of standards and compliance dates for reclassified area sources that subsequently become major sources again. In this provision, the EPA is finalizing the proposed immediate compliance rule for area sources that become major sources again, if they were previously major sources under 40 CFR part 63. The EPA has amended the language to read as follows: “An area source that previously was a major source under this part and that becomes a major source again must comply with the applicable major source requirements established under this part immediately upon becoming a major source again, provided the compliance date for the major source requirements has passed, notwithstanding any other provision within the applicable subparts. The owner or operator of a source that becomes a major source again must comply with the initial notification pursuant to § 63.9(b). The owner or operator must also provide to the Administrator any change in the information already provided under § 63.9(b) per § 63.9(j).” This updated final provision in 40 CFR 63.1(c)(6)(i)(B) for reclassified area sources that subsequently become major sources again covers both situations of sources that reclassify back to major source status: (1) Major sources that reclassify to area source status prior to being subject to major NESHAP requirements (including sources that reclassified under the OIAI policy) and then return to major source status and (2) major sources that reclassify to area source status after being subject to major NESHAP requirements and then return to major source status. On the other hand, the compliance dates for area sources that never operated as major sources previously (including sources constructed with enforceable controls or other type of enforceable PTE limits) but that increase emissions or PTE and become major sources for the first time are governed by the provisions in the individual NESHAP (which are not being amended in this rule) and not the provisions applicable to reclassified area sources that return to major source status that are being finalized in this action. The EPA is also finalizing amendments to 40 CFR 63.6(c)(1) to account for the immediate compliance rule as included in the final revisions to 40 CFR 63.1(c)(6)(i)(A) and (B) as discussed above.

Finally, while some commenters requested assurance that if sources revert back to their previous major source status, sources will not be considered new sources, others argued the EPA should expressly provide that relaxation or elimination of a PTE limit that results in the source becoming a major source requires that the source comply with CAA section 112 NESHAP requirements for a new source. These commenters asserted that as a result of a loophole in the existing 40 CFR part 63 regulations, some sources and states are currently under the impression that a source can have its original PTE limit taken at the time of construction relaxed or eliminated without triggering the requirement to comply with major source NESHAP requirements that would have otherwise applied to the source when it was built. This confusion could have arisen from the text in 40 CFR 63.6(c)(5) stating that “the owner or operator of an area source that increases its emissions of (or its potential to emit) hazardous air pollutants such that the source becomes a major source shall be subject to relevant standards for existing sources.” As explained in section IV of this preamble, the CAA section 112 definitions of “new source” and “existing source” dictate that the new source/existing source distinction is determined by when the affected source commences construction or reconstruction with respect to the date of proposal of the standard and say nothing about the source's volume of emissions. For this reason, the EPA disagrees that a source reclassifying to major source status after having previously been subject to the major source standards would necessarily be classified as an existing source. The EPA also disagrees with commenters that a reclassifying source would necessarily be a new source for purposes of determining which standard applies. Whether an affected source is new or existing for purposes of compliance with an applicable NESHAP is dictated by when the source commenced construction or reconstruction in relation to when the applicable NESHAP was proposed and not whether the status of the source is major or area.

Moreover, the regulatory text at 40 CFR 63.6(c)—Compliance dates for existing sources—applies only to “existing sources.” Therefore, the regulatory language at 40 CFR 63.6(c)(5) states that “the owner or operator of an [existing] area source that increases its emissions . . . shall be subject to relevant standards for existing sources.” The intent of 40 CFR 63.6(b)(7) and (c)(5) was further explained in the preamble for the March 23, 2001, rule that proposed revisions to 40 CFR 63.6(b)(7) and (c)(5) (66 FR 16328),

17

“[w]e are proposing to revise 63.6(b)(7) and (c)(5) to require new source MACT only on affected sources that commenced construction or reconstruction after the proposal date of the NESHAP . . . Affected sources at former area sources that become major that have not constructed or reconstructed

after the proposal date of the NESHAP

(emphasis added) would be subject only to existing source MACT . . . .” Again, each NESHAP provides the dates that determine whether a source is a new source or an existing source. A source's status of new or existing is determined by dates given in each individual NESHAP, and that does not change when a source reclassifies. If a major source reclassifies to area source status after being subject to new major source NESHAP requirements and then returns back to major source status, the sources that were originally subject to new source requirements would once again be subject to new source requirements. In light of these comments, the EPA is including in the final rule amendments to 40 CFR 63.6(b)(7) and (c)(5) to reflect the new or existing status of sources that become major sources as being determined by

the dates provided in the applicable subparts and to also reflect the immediate compliance rule as finalized in 40 CFR 63.1(c)(6)(i)(B) for reclassified area sources that revert back to major source status. The amendments to 40 CFR 63.6(b)(7) read as follows: “When an area source increases its emissions of (or its potential to emit) hazardous air pollutants such that the source becomes a major source, the portion of the facility that meets the definition of a new affected source must comply with all requirements of that standard applicable to new sources. The source owner or operator must comply with the relevant standard upon startup.” The amendments to 40 CFR 63.6(c)(5) read as follows: “Except as provided in paragraph (b)(7) of this section, the owner or operator of an area source that increases its emissions of (or its potential to emit) hazardous air pollutants such that the source becomes a major source and meets the definition of an existing source in the applicable major source standard shall be subject to relevant standards for existing sources. Except as provided in § 63.1(c)(6)(i)(B), such sources must comply by the date specified in the standards for existing area sources that become major sources. If no such compliance date is specified in the standards, the source shall have a period of time to comply with the relevant emission standard that is equivalent to the compliance period specified in the relevant standard for existing sources in existence at the time the standard becomes effective.”

17

These provisions were finalized on April 5, 2002 (See 67 FR 16582).

c. Reclassifications and Enforcement Actions

In the MM2A proposal, the EPA included regulatory language in the MM2A applicability provision in 40 CFR 63.1(c) to address the interaction of the reclassification of sources and potential enforcement actions. Specifically, we noted reclassification of a source from major to area source status would not absolve a source of prior liability for noncompliance. Although sources that are the subject of an investigation or enforcement action may still seek area source status for purposes of future applicability, such sources remain liable for any previous or pending violations of the CAA that occurred prior to the reclassification. Enforcement of major source requirements could include penalties, mitigation for illegal emissions, and/or other remedies to address noncompliance. Accordingly, a source cannot use its new area source status as a defense for major source NESHAP violations that occurred prior to its reclassification. Similarly, becoming a major source does not absolve a source subject to an enforcement action or investigation for area source violations from the consequences of any actions occurring when the source was an area source.

Multiple commenters agreed with the premise that a major source that reclassifies should not be absolved from potential enforcement actions that occurred prior to the reclassification. However, some commenters argued that if a major source is rightfully an area source at the time of an alleged violation, then the source should not be subject to enforcement as a major source. Other commenters argued that it is also appropriate for the EPA to consider the misclassification of a major source instead of the appropriate area source classification, and the requirements for major sources versus area sources, and to examine a past violation to determine if the source actually violated the requirements of the classification under which the firm should have been registered.

One commenter recommended that the EPA add language to 40 CFR 63.1(c)(6) that would allow for modification of an enforcement order affecting a reclassified source if the enforcement order was based on the enforcement authority's finding that the source was a major source or based on the application of the OIAI policy. The commenter argued that the EPA's proposed new language in 40 CFR 63.1(c)(6) would leave unclear whether it is the EPA's intent that: (1) Such a source can never apply to the enforcement authority for relief from such obligations (which often include obligations imposed pursuant to a court's equity jurisdiction or that otherwise fall outside the universe of obligations specified in the NESHAP) in exchange for accepting restrictions on its PTE in order to become a synthetic HAP area source; or (2) the enforcement authority can never enter into a modification of the order, settlement, or decree that grants such relief. The commenter argued that this lack of clarity could result in foreclosure of such relief in future proceedings that are informed by the final rules, depending on the EPA's posture at the time and the deference that is sometimes given to agencies' interpretations of their own regulations.

The commenter argued that because the EPA has withdrawn the OIAI policy on the grounds that it was inconsistent with “the plain language reading of the `major source' and `area source' definitions of section 112” of the CAA, then it stands to reason that: (1) No historical application of the OIAI policy in the formulation of enforcement orders and negotiation of settlement agreements and consent decrees was ever lawful or appropriate; and (2) orders, agreements, and decrees that were imposed or negotiated based materially on the OIAI policy ought to be subject to retroactive review, on a case-by-case basis and subject to the needs of the particular case, upon application by the respondent for a modification of the instrument. Finally, a commenter argued that the EPA should explicitly state in its regulations that the consequence of violating PTE limitations is the requirement to comply with the applicable major source NESHAP requirements—in addition to an appropriate penalty for violating the PTE limitations.

In the MM2A proposal, the EPA included regulatory language in the proposed MM2A applicability provision in 40 CFR 63.1(c)(6) stating that reclassification from major source to area source does not affect a source's liability or any enforcement investigations or enforcement actions for a source's past conduct or violations of major source requirements that occurred prior to the effective date of the source's enforceable limitations (

i.e.,

the reclassification). This rule revision underscores the importance of a source's PTE in determining NESHAP, 40 CFR part 63, applicability. The plain language reading of the definitions of “major” and “area” source in section 112 of the CAA as explained in the 2018 MM2A Memorandum and implemented through this rulemaking does not change the Agency's position that a source may take enforceable production and/or operational limits to effectively constrain its PTE and, thereby, avoid applicability. Rather, it eliminates the timing constraint imposed by the OIAI policy as to when a source may take such limits to avoid applicability. If, before taking such limits to avoid applicability, a source emitted a single HAP in an amount of 10 tpy or greater, or emitted any collection of HAP in an amount of 25 tpy or greater, or it is determined that the source has (or had) a PTE that meets or exceeds these amounts, the source would be considered a major source and subject to the requirements of 40 CFR part 63 (as applicable) up and until the effectiveness of the limits. The same holds true after taking such limits to avoid applicability. That is, even after taking such limits, if a source emits a single HAP in an amount of 10 tpy or greater, or emits any collection of HAP in an amount of 25 tpy or greater, or it is determined that the source has (or

had) a PTE that meets or exceeds these amounts, the source would be considered a major source and subject to the requirements of 40 CFR part 63 (as applicable). Now, as before, any time a source operates as a major source, it must meet the applicable major source requirements in 40 CFR part 63. Neither this rule, nor the 2018 MM2A Memorandum, intends to allow a source that emits (or has the PTE) greater than the MST to avoid compliance with applicable requirements for major sources. Any source that operates without complying with the applicable requirements is subject to enforcement. The revision proposed at 40 CFR 63.1(c)(6) underscores the EPA's position that unless, and until, a source has enforceable production and/or operational limits that effectively limit a source's PTE (and are not just chimeras that do not really restrain an operator from emitting pollution in amounts equal to or exceeding the major source thresholds), the source is a major source and must comply with the major source requirements (as applicable). The D.C. Cir. said as much in its review of the 2018 MM2A Memorandum,

California Communities Against Toxics, et al.

v.

EPA,

934 F.3d. 627, 638-639 (D.C. Cir. 2019), (“Major sources must obtain a permit in order to operate, and unless and until that permit is amended or set aside, the stringent requirements set forth therein must be complied with while that equipment is operational. The [MM2A Memorandum]itself does not revoke or amend a single permit.”)

Any order, settlement, or decree (collectively, agreements) issued or entered into addressing a source's compliance with the requirements of NESHAP, 40 CFR part 63, is not affected by this rule or the 2018 MM2A Memorandum. Those agreements were entered into based on the specifics of each case. Reopening or modification of settlements approved by, or orders issued by, federal courts is governed by the Federal Rules of Civil Procedure (F. R. Civ. P. Rule 60). Nothing in this final rule is intended to suggest that any of the prerequisites for reopening any judicial or administrative settlement or modifying a prior order of a court (including orders approving settlements) have been met. There is no additional clarification needed regarding these authorities. While the OIAI policy may have informed the contours of those agreements, it did not (and, in fact, could not) change the statutory basis for those enforcement actions. These agreements reflect a mutual understanding of the parties that settlement is in the interest of all involved after taking into account the legal and factual circumstances at the time of the settlement. Accordingly, the EPA is finalizing the regulatory language in 40 CFR 63.1(c)(6)(ii) addressing the interaction of the reclassification of sources with enforcement actions as proposed.

d. Reclassifications and Operation of Add-On Pollution Control Equipment

After the issuance of the MM2A Memorandum, some stakeholders were concerned that if sources were to reclassify to area source status, they could stop using the add-on emission control equipment or emission reduction practices implemented for major source NESHAP compliance or no longer maintain the same level of control efficiency as before. At proposal, the EPA requested comments on whether facility owners or operators of sources that reclassify will cease to properly operate their add-on control devices where the operation of the add-on control device is needed to restrict the PTE and appropriate monitoring, recordkeeping, and reporting (MRR) are established as enforceable conditions.

In the proposal, the EPA explained that a source seeking reclassification because it has reduced its HAP emissions to below the MST through use of add-on control devices or emission reduction practices implemented for compliance with major source NESHAP requirements will need to demonstrate to the regulatory authority issuing the PTE limits the degree to which the add-on control devices and emission reduction practices are needed to restrict the source's PTE. In the absence of the applicability of the major source NESHAP requirements, if the source relies on its existing NESHAP add-on control devices and/or emission reduction practices to limit its HAP PTE below the MST, the use of these control devices and/or emission reduction practices must be made enforceable under a permitting authority's legal mechanism. Alternatively, if a source intends to stop using the add-on control device equipment or emission reduction practices used to comply with a previously applicable major source NESHAP requirement, the source must demonstrate that other physical controls or operational limits that the source adopts will restrict the source's actual emissions and maximum capacity to emit HAP below the MST and that these limits are or can be made enforceable to ensure that the source will not emit or have the potential to emit HAP at or above the MST.

Some commenters argued that there is no reason to believe that facility owners or operators would cease to properly operate their add-on control devices where the operation of the control is needed to restrict the PTE and appropriate MRR are established as enforceable conditions. Similarly, some commenters asserted that sources that achieve area source status through compliance with MACT have significant disincentives to alter their control measures to increase emissions thereafter. They argued that HAP emissions control devices are not designed to achieve partial emissions reductions; rather, they are designed to reduce emissions by a specified efficiency rate and a source that already has invested in controls for the purpose of major source MACT compliance is unlikely to cease using them or remove them in favor of less-effective measures to limit its HAP emissions—especially if the source's reclassification to area source status is contingent upon compliance with an enforceable PTE limit.

On the other hand, other commenters expressed concern with the EPA statement in the proposal saying that “it has no reason to believe, and does not anticipate” that sources will cease operating their control devices and hence increase emissions as a result of the MM2A action. One commenter argued that the EPA has collected insufficient data and included no explanation to support what the commenter called an “economically irrational conclusion.” The commenter argued that the EPA has not acknowledged the financial incentives to reduce usage of expensive control devices.

Commenters arguing that sources will reduce control device operation and emission monitoring if the major source NESHAP requirements no longer apply stated the EPA must include in the final rule conditions requiring the continued use of add-on controls and conditions ensuring that monitoring and parametric limits are adequate to meet the required destruction efficiencies needed for sources to constrain their PTE and emissions at area source levels. These commenters argued that without such requirements, sources that reclassify are likely to operate the control device only part of the year. They claim sources will make cost-saving business decisions to turn off controls for several months a year or use less-effective controls to remain just below the MST. Some commenters summarized, as an example, the information collected by the EPA to justify the monitoring requirements for flares in the NESHAP

for Petroleum Refineries and described how, without rigorous monitoring, flare efficiency could be highly variable and substantially lower than 98 percent. The commenters also argued that the EPA cannot assume that other control devices, such as fabric filter baghouses and electrostatic precipitators, would be as effective once the major source NESHAP operating limits or monitoring requirements no longer apply. The commenters argued that the EPA must require the facility to periodically perform source tests to verify that the restriction actually correlates with emissions that are below the MST. The commenters further argued that without requirements ensuring proper operation, maintenance, and monitoring of add-on controls, sources will stop consistently operating the control devices that limit the release of HAP and allow the sources to reclassify to area source status.

The EPA sees these comments as pertaining to the proposed effectiveness criteria of PTE limits. In particular, the EPA may consider provisions concerning the operation and monitoring of add-on controls in the context of the criteria for ensuring that a PTE limit used to reclassify from major source to area source status is practicably enforceable. As discussed later in section VII of the preamble, the EPA is not taking action on the proposed amendments to 40 CFR 63.2 at this time and is continuing to consider the comments received on this aspect of the MM2A proposal. The EPA intends to take final action on this aspect of the MM2A proposal in a separate final action at a later date.

2. 40 CFR 63.9 Notification Requirements

In the MM2A proposal, the EPA included language in the reclassification provision in 40 CFR 63.1(c)(6) specifying that sources reclassifying must comply with the notification requirements of 40 CFR 63.9(b) and (j). The EPA also proposed to clarify the notification requirements for sources reclassifying by amending 40 CFR 63.9(b) so that an owner or operator of a facility must notify the Administrator of any standards to which it becomes subject. The proposed amendment covers situations where a source reclassifies from major to area source status and where a source reclassifies from major to area and subsequently reverts back to major source status. The EPA also proposed to clarify that a source that reclassifies must notify the EPA of any changes in the applicability of the standards to which the source was subject per the notification requirements of 40 CFR 63.9(j).

Most of the commenters supported the proposed amendments to the notification provisions in 40 CFR 63.9(b) and (j), but a few disagreed that the established General Provisions require notification when going from being subject to not being subject. Other commenters requested that the EPA reduce the number of duplicative notifications and simplify the regulatory authorities that must review 40 CFR 63.9(j). Other commenters requested clarification between notification provisions within individual NESHAP that allow for 120 days for notification versus the 15-day notification in the General Provisions in 40 CFR 63.9(b) and (j). These commenters asked the EPA to clarify the differences between these requirements, harmonize the reporting requirements, and minimize duplicative requirements. The EPA disagrees that the General Provisions do not require a notification when a source is no longer subject to a standard. The provisions of 40 CFR 63.9(j) are applicable to a change in information already provided. The change in a source's status from major to area (or vice versa) is a change in the information provided that determined the initial status of the source as subject to the major or area source standards. This is different from the initial notification required by 40 CFR 63.9(b), as that provides the relevant information to the Administrator of the newly governed provisions and is required to be submitted, per 40 CFR 63.9(b)(2), no later than 120 days after the source becomes subject. The notification of a change in information already required within 15 days is a result of the previously applicable standard. There are cases for which there is no applicable area source standard; the notification required by 40 CFR 63.9(j) is the only notification that would be submitted in those cases. These requirements in two provisions do not require harmonizing, as they are due to different NESHAP subparts being applicable and are not duplicative.

The EPA is finalizing the reclassification provision in 40 CFR 63.1(c)(6) notification requirements as proposed for both major sources that reclassify to area source status and area sources that revert back to major source status. The EPA is also finalizing the proposed amendments to 40 CFR 63.9(b) so that an owner or operator of a facility must notify the Administrator of any standards to which it becomes subject. Further, for clarity, the EPA has finalized at 40 CFR 63.9(j)(i)-(iv) the data elements that a reclassifying source must provide in the notification of a “change in information already provided” required under 40 CFR 63.9(j). Finally, the EPA is clarifying that the notification requirement of 40 CFR 63.9(j) is an existing requirement. Thus, the EPA requires any source that reclassified after January 2018 (issuance of the 2018 MM2A Memorandum) and before the effective date of this final rule that has not yet provided the notification of a change in information per 40 CFR 63.9(j) to provide such notification within 15 calendar days after the effective date of this final rule.

For the notification requirements in 40 CFR 63.9(b) and (j), the EPA also proposed to require sources that reclassify to submit the notification electronically through CEDRI. The EPA proposed amending the General Provisions to add 40 CFR 63.9(k) to include the CEDRI submission procedures. Several commenters support using CEDRI for notification of status changes. Some commenters requested the EPA to clarify that the new requirements in 40 CFR 63.9(k) only apply when a facility is reclassifying from a major source to an area source or from an area source to a major source, so regulatory authorities could not conclude that all notifications or reports should be done using CEDRI. Some commenters strongly supported the Agency providing this information to the public. While the EPA agrees that the provisions of 40 CFR 63.9(k) only apply when specifically directed there from another provision, as stated in 40 CFR 63.9(k), “[i]f you are required to submit notifications or reports

following the procedures specified in this paragraph (k),

” (emphasis added), we do not believe that further clarification within the regulatory language is necessary. We are finalizing this provision as proposed requiring sources that reclassify to submit the notification electronically through CEDRI. Additionally, the EPA has clarified that sources that reclassify between January 25, 2018, and the effective date of this final rule also must submit the notification through CEDRI. The EPA acknowledges the support for the public availability of the notifications and notes that the submitted notifications, along with any other notifications and reports submitted through CEDRI, become available to the public through the WebFIRE database (

https://www.epa.gov/electronic-reporting-air-emissions/webfire

) after time for review and approval by the regulatory agencies.

Multiple commenters recommended that the EPA should clarify CEDRI reporting. One commenter indicated that notification is not delegable and

needs to adjust the language in 40 CFR 63.13 that requires submittal of information to Regional offices at specific addresses. The commenter pointed out that the proposed CEDRI reporting makes this requirement excessive and the regulatory text should be fixed to remedy the requirement of reporting in triplicate (Regional offices, CEDRI, Administrator/state). The commenter noted that the last sentence of 40 CFR 63.12(c) does not address this issue and should be deleted/altered to avoid reporting in triplicate. Another commenter indicated that a separate notification to state agencies should be sent directly to the permitting agency. The commenter requested that the following paragraph be added to 40 CFR 63.9(k):

“If a state or local permitting agency has received delegation for a Part 63 standard that requires you to submit notifications or reports and that permitting agency requires, by way of statute, rule, policy, guidance, permit, or other mechanism, that such notifications or reports must be submitted also to the permitting agency, then such notifications and reports must be submitted to the permitting agency as well as to CEDRI.”

The EPA agrees with the commenters that the language at 40 CFR 63.13 and 63.12(c) was not clear that submission to CEDRI, when required by regulation, fulfills the obligation of submittal to the EPA Regional office. Therefore, the EPA is finalizing at 40 CFR 63.13 a clarifying statement that when required by 40 CFR part 63, the submission of a report or notification to CEDRI fulfills the obligation of reporting to the EPA Regional office. The EPA does not agree that additional language to reflect that reporting to a delegated agency is required in addition to reporting to CEDRI, as that is implicit in 40 CFR 63.12(c), which requires that all information required to be submitted to the EPA be submitted to the delegated authority. The manner of submission is at the discretion of the delegated authority, but the reports and notifications that are required to be submitted to the EPA electronically through CEDRI must be delivered to the EPA through CEDRI. However, delegated authorities have the discretion to consider the submission to CEDRI as meeting the requirement to submit the report to them.

In the MM2A proposal, the EPA identified two broad circumstances in which extensions of the timeframe for electronic submittal may be provided. In both circumstances, the decision to accept the claim of needing additional time to submit is within the discretion of the Administrator, and submittal should occur as soon as possible. The EPA provided these potential extensions to protect owners or operators from noncompliance in cases where they cannot successfully submit a notification by the submittal deadline for reasons outside of their control. The situation where an extension may be warranted due to outages of the EPA's Central Data Exchange or CEDRI that preclude an owner or operator from accessing the system and submitting a required notification is addressed in 40 CFR 63.9(k)(1). The situation where an extension may be warranted due to a

force majeure

event, which is defined as an event that will be or has been caused by circumstances beyond the control of the affected facility, its contractors, or any entity controlled by the affected facility that prevents an owner or operator from complying with the requirement to submit electronically as required by this rule, is addressed in 40 CFR 63.9(k)(2). Examples of such events are acts of nature, acts of war or terrorism, or equipment failure or safety hazards beyond the control of the facility. Finally, the EPA also proposed to amend 40 CFR 63.12(c) to specify that a delegated authority may not exempt sources from reporting electronically to the EPA when stipulated by this part.

One commenter recommended that the CEDRI late-notification language in proposed 40 CFR 63.9(k)(1) and (2) should be stricken because air pollution control agencies already have experience in using enforcement discretion for addressing late notifications and that discretion should not be codified or limited by regulation. The commenter also argued that the full range of circumstances that could legitimately cause a late notification cannot be covered by the regulation, and the discretion to grant an extension should not be solely within the discretion of the Administrator. Another commenter did not support the proposed additional requirements detailing when late notifications are forgiven for a

force majeure

event or federal EPA computer glitch but not in other meritorious situations. Another commenter suggested that time extensions for electronic reporting should be allowed for circumstances other than CEDRI outage and

force majeure

events, which allow for other situation-specific reasons that may impact the reasonable ability of a facility to achieve timely electronic reporting.

The EPA disagrees with the commenter that the reporting extension allowance for

force majeure

and CEDRI outage should be stricken. Granting an extension is at the discretion of the Administrator, which is defined in 40 CFR 63.2 to be “the Administrator of the United States Environmental Protection Agency or his or her authorized representative (

e.g.,

a State that has been delegated authority to implement the provisions of this part).” The extension provision does not remove the authority of an air pollution control agency to grant an extension for those subparts for which they have been delegated authority. Further, the EPA disagrees with the commenters that other situations that are not included in these provisions are excluded from obtaining an extension to their reporting deadline. The extension provisions as proposed and finalized are limited to those circumstances out of control of the facility and provide clear direction on the process for requesting an extension. Facilities may still engage with the Administrator on any delays in submittal not specifically covered under the CEDRI outage or

force majeure

provisions. After consideration of public comments, the EPA is finalizing the extension provisions as proposed.

The electronic submittal of the notifications addressed in this rulemaking will increase the usefulness of the notification; is in keeping with current trends in data availability and transparency; will further assist in the protection of public health and the environment; will improve compliance by facilitating the ability of delegated state, local, tribal, and territorial air agencies and the EPA to assess and determine compliance and the applicability of major and area source standards to a facility; and will ultimately reduce burden on regulated facilities, delegated air agencies, and the EPA. Electronic submittal also eliminates paper-based, manual processes, thereby saving time and resources and providing data quickly and accurately to the affected facilities, air agencies, the EPA, and the public. Moreover, electronic reporting is consistent with the EPA's plan

18

to implement Executive Order 13563 and is in keeping with the EPA's Agency-wide policy

19

developed in response to the White House's Digital Government Strategy.

20

For more information on the

benefits of electronic reporting, see the memorandum, “

Electronic Reporting Requirements for New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAP) Rules,

” available in Docket ID No. EPA-HQ-OAR-2019-0282.

18

The EPA's “

Final Plan for Periodic Retrospective Reviews,

” August 2011. Available at:

https://www.regulations.gov/document?D=EPA-HQ-OA-2011-0156-0154.

19

“

E-Reporting Policy Statement for EPA Regulations,

” September 2013. Available at:

https://www.epa.gov/sites/production/files/2016-03/documents/epa-ereporting-policy-statement-2013-09-30.pdf.

20

“

Digital Government: Building a 21st Century Platform to Better Serve the American People,

” May 2012. Available at:

https://

obamawhitehouse.archives.gov/sites/default/files/omb/egov/digital-government/digital-government.html.

3. 40 CFR 63.10 Recordkeeping and Reporting Requirements

In the MM2A proposal, the EPA proposed to amend the recordkeeping requirements for applicability determinations in 40 CFR 63.10(b)(3) by adding text to clarify that this requirement applies to an owner or operator with an existing or new stationary source that is in a source category regulated by a standard established pursuant to CAA section 112 but that is not subject to the relevant standard because of enforceable limitations on the source's PTE. Specifically, the EPA proposed removing the time limit for record retention in 40 CFR 63.10(b)(3) and requiring that the records be maintained until the source becomes an affected major source subject to major source requirements under 40 CFR part 63.

Many commenters supported the proposed amendment to remove the time limit for record retention such that sources that obtain new enforceable PTE limits are required to keep the required record of the applicability determinations for as long as the source continues to be an area source based on PTE limitations. While many commenters agreed with the removal of time limit in 40 CFR 63.10(b)(3), some commenters argued that major sources that reclassify to area sources should not be subject to additional recordkeeping requirements that do not apply to other area sources. These commenters argued that the EPA should not revise the 5-year record requirement for the applicability determinations because the EPA has not provided a proper justification for adding this requirement for “reclassified” area sources. The commenter noted that the EPA has not described any issue with respect to compliance of PTE limits and emission-standard applicability that arose from the existing 5-year recordkeeping requirement, nor has the EPA explained why area source recordkeeping requirements should differ based on temporal considerations. The commenters noted that title V major sources are subject to a 5-year records requirement for all applicability determinations used to support identification of applicable requirements and application of the title V permit shield, and this is consistent with the statute of limitations that generally allows only a 5-year period to enforce against alleged violations. The commenter argued that the EPA has not explained why area sources should be subject to more stringent recordkeeping requirements. These commenters stated that the change in the requirement would impose a burden on the facility without additional environmental protection, because 5 years is sufficient time considering that sources still need to report annually that they are in compliance. Some commenters also noted that if the EPA or an air pollution control agency has reason to doubt any source's exempt status, they can take action under CAA sections 113 and 114 or state/local/tribal “Open Records” analogs to obtain the necessary information.

The EPA disagrees that the extended recordkeeping requirement as proposed applies disproportionately to reclassifying area sources or has any temporal consideration. The requirement to retain the applicability determination applies to all area sources that require an enforceable limitation on the source's potential to emit to not be subject to a relevant standard or other requirement established pursuant to CAA section 112. The requirement for an applicability determination is only relevant to these sources; the applicability determination itself, rather than the recordkeeping requirement, is the determining factor. The extension of the recordkeeping requirement is in the best interest of the source relying on an applicability determination to avoid CAA section 112 major source requirements, as many sources will rely on such determination for an extended period of time that can last beyond the 5 years. The EPA disagrees with the commenters that the revised record retention requirements are unnecessary due to annual reporting requirements. While many sources may have annual or semiannual reporting requirements after reclassifying into an area source rule, there are some major source NESHAP that do not have a corresponding area source standard. For these sources, the retention of the applicability determination enables the source to easily demonstrate that the major source standard does not apply without the potential additional burden of re-creating the applicability determination. The EPA agrees with the commenter that the EPA under CAA sections 113 or 114, and air pollution control agencies under their analogs, have the authority to request the necessary information; however, the retention of the applicability determination while the source continues to be an area source based upon that PTE limit and applicability determination provides a lesser burden to facilities compared to potentially re-creating the applicability determination. For the reasons presented above, the EPA is finalizing removing the time limit for record retention in 40 CFR 63.10(b)(3) and requiring that the records be maintained for as long as the source continues to be an area source based on PTE limitations.

Other commenters requested clarification as to whether the amended recordkeeping requirement applies to sources that became area sources prior to the first substantive compliance date of a NESHAP standard or that reclassified after the 2018 MM2A Memorandum. In the preamble of the MM2A proposal, the EPA stated that this amendment was directed to sources that obtain new enforceable PTE limits. The EPA agrees that the proposed language was unclear as to the applicability of the recordkeeping provisions on sources with applicability determinations preceding the date of proposal. We have amended the regulatory text in 40 CFR 63.10(b)(3) clarifying that the owner or operator must keep a record of the applicability determination on site at the source for a period of 5 years or until the source changes its operation to become an affected source subject to the relevant standard or other requirement established under this part, whichever comes first if the determination is made prior to January 19, 2021. For a determination made on or after January 19, 2021, the owner or operator must keep a record of the applicability determination until the source changes its operations to become an affected source subject to the relevant standard or other requirement established under this part. The EPA does, however, strongly recommend that all facilities retain their applicability determination for the time that the source continues to be an area source based upon that PTE limit and such applicability determination.

In addition to the removal of the time limit for record retention, the proposal amended the text that describes the record of the applicability determination. In particular, the proposal clarified that the record must include an “emissions” analysis (or other information) that demonstrates the owner or operator's conclusion that the source is not subject to major source requirements. The analysis (or other

information) must be sufficiently detailed to allow the Administrator to make an “applicability” finding for the source with regard to the relevant standard or other requirements.

With regard to the analysis for applicability determinations, some commenters expressed concern with the language that the applicability determinations “should be performed in accordance with EPA guidance materials.” The commenters stated that the language is vague and could create binding requirements that are not legislative rules and have not gone through required notice‐and‐comment rulemaking. The commenter suggested that the EPA should indicate that this is a recommendation rather than a requirement by stating: “EPA recommends that the analysis be performed in accordance with EPA guidance materials . . . .” The EPA disagrees that further clarification is necessary regarding the use of guidance documents in this context, as the use of EPA guidance materials was an element of the existing provisions of 40 CFR 63.10(b)(3). However, to avoid creating the impression of additional requirements being imposed due to the proposed edits to the language, the EPA is retaining the sentence of 40 CFR 63.10(b)(3), which states: “If relevant, the analysis should be performed in accordance with EPA guidance materials published to assist sources in making applicability determinations under CAA section 112, if any,” as currently exists in the existing provision without finalizing the changes proposed to it.

The commenters also suggested that the EPA clarify the applicability determination analysis for specific situations, and others advised that additional guidance could be incorporated into the regulation or the preamble to the final rule to recognize that sources often need to use best engineering judgment to estimate emissions from minor sources when assessing the PTE of a whole facility. The commenters then recommended that the EPA indicate that the level of detail and precision for potential to emit calculations can be lower for operations that contribute a relatively small amount to total facility HAP emissions. The wording in the proposed amendments are intended to clarify and to promote better understanding of the current recordkeeping requirements. The EPA did not propose a new view on how to estimate PTE and, relatedly, on how to do major source applicability determinations. In section VII of this preamble, we include references to our PTE guidance that may be of help to parties with questions about the EPA's views on these issues.

The EPA also proposed to amend the recordkeeping requirements for records submitted through CEDRI by adding 40 CFR 63.10(g) to clarify that the records submitted through CEDRI may be maintained in electronic format. As proposed, this provision does not remove the requirement for facilities to make records, data, and reports available upon request by a delegated air agency or the EPA. We are not finalizing the proposed addition of 40 CFR 63.10(g) because the provision is redundant with 40 CFR 63.10(b)(1), which allows for storage of records on computer.

B. Amendments to Individual NESHAP General Provisions Applicability Tables

The EPA proposed to amend the General Provisions applicability tables contained within most subparts of 40 CFR part 63 to add a reference to a new reclassification provision contained in 40 CFR 63.1(c)(6) discussed in the section V.A of this preamble and add a reference to reflect the proposed CEDRI submission procedures of 40 CFR 63.9(k) discussed above in section V.A of this preamble. We are finalizing the amendments to the General Provisions applicability tables as proposed. Additionally, the EPA identified four subparts containing the General Provision applicability requirements which did not properly reference the notification provisions. These subparts are 40 CFR part 63 subparts G, H, II, and YY. Accordingly, we are also finalizing revisions to these applicability requirements of 40 CFR part 63 subparts G, H, II, and YY to account for the final amendments to the General Provisions as described above in section V.A.

C. Amendments to Individual NESHAP

At proposal, the EPA identified one general category of regulatory provisions in several NESHAP subparts that reflect the 1995 OIAI policy that requires revision pursuant to this action. This category of provisions addresses the date by which a major source can become an area source. We proposed to revise the following provisions: 40 CFR part 63, subpart QQQ at 63.1441; 40 CFR part 63, subpart QQQQQ at 63.9485; 40 CFR part 63, subpart RRRRR at 63.9581; and Table 2 of 40 CFR part 63, subpart WWWW. We solicited comment on whether there are any other regulatory provisions in any of the individual subparts that include OIAI provisions that should be revised pursuant to this action. The EPA received comments regarding multiple provisions in 40 CFR part 63, subpart F at 63.100(b)(4); subpart I at 63.190(b)(7); subpart HH at 63.760(a)(1); and subpart HHH at 63.1270. The EPA reviewed the provisions raised by commenters in these subparts and is including in this final rule revisions to the provisions in subpart HH at 63.760(a)(1) and subpart HHH at 63.1270(a). The EPA is not making changes with respect to the identified provisions in subparts F and I at 63.100(b)(4) and 63.190(b)(7). The EPA sees these provisions as expired exclusion provisions, not OIAI provisions, that do not prevent a source from reclassifying to area source status.

At proposal, we also identified several area source NESHAP containing notification provisions (

i.e.,

initial notification) applicable to existing sources for which the dates have passed. We proposed to amend the following area source NESHAP that contain notification requirements for existing sources with specific deadlines that are in the past: 40 CFR part 63, subpart HHHHHH at 63.11175; 40 CFR part 63, subpart XXXXXX at 63.11519; 40 CFR part 63, subpart YYYYYY at 63.11529; 40 CFR part 63, subpart AAAAAAA at 63.11564; 40 CFR part 63, subpart BBBBBBB at 63.11585; 40 CFR part 63, subpart CCCCCCC at 63.11603. Consistent with other area source NESHAP notification requirements, we proposed that, for an existing source that reclassifies from major to area source status, the notification shall be submitted no later than 120 calendar days after the source becomes subject to the relevant area source NESHAP requirements. Regarding whether there are any other individual subparts that would warrant modification because initial notification requirements are in the past, commenters pointed at the initial notification requirements in many of the major source NESHAP subparts. They stated that if an area source were to revert back to major source status, these initial notification requirements would have been in the past. The EPA reviewed the initial notification provisions of all NESHAP subparts and is including in this final rule amendments to the initial notification requirements within most NESHAP subparts to include additional language so that the notification shall be submitted no later than 120 calendar days after the source becomes subject to the relevant NESHAP requirements. The EPA is amending the initial notification requirements in the following subparts: 40 CFR part 63, subpart G at 63.151(b)(2) (i), (ii) and (ii); subpart H at 63.182(b)(2)(i), (ii), and (iii); subpart L at 63.311(a); subpart M at 63.324(g); subpart N at 63.347(c)(1); subpart Q at

63.405(a)(1) and (2); subpart S at 63.455(a); subpart T at 63.468(a), (b), (c), and (d); subpart Y at 63.567(b)(2) and (3); subpart DD at 63.697(a)(1); subpart EE Table 1; subpart HH at 63.77(c)(1); subpart JJ Table 1; subpart KK at 63.830(b)(1)(i), subpart CCC at 63.1163(a)(3); subpart PPP at 63.1434(d) and (e), and at 63.1439(e)(3)(ii)(B) and (C); subpart QQQ at 63.1454(b); subpart UUU at 63.1574(b); subpart VVV at 63.1591(a)(1) and (2); subpart DDDD at 63.2280(b); subpart EEEE at 63.2382(b)(1) and (2); subpart FFFF at 63.2515(b); subpart GGGG at 63.2860(a); subpart IIII at 63.3110(b); subpart JJJJ at 63.3400(b)(1); subpart KKKK at 63.3510(b); subpart MMMM at 63.3910(b); subpart NNNN at 63.4110(a)(1); subpart OOOO at 63.4310(b); subpart PPPP at 63.4510(b); subpart QQQQ at 63.4710(b); subpart RRRR at 63.4910(b); subpart SSSS at 63.5180(b)(1); subpart TTTT at 63.5415(b); subpart UUUU, Table 7; subpart XXXX at 63.6009(b); subpart YYYY at 63.6145(b); subpart ZZZZ at 63.6645(b) and (d), subpart AAAAA at 63.7130(b) and (c); subpart BBBBB at 63.7189(b); subpart CCCCC at 63.7340; subpart DDDDD at 63.7545(b) and (c), subpart EEEEE at 63.7750(b); subpart FFFFF at 63.7840(b); subpart GGGGG at 63.7950(b) and (c); subpart HHHHH at 63.8070(b)(1); subpart IIIII at 63.8252(b); subpart JJJJJ, Table 8; subpart KKKKK, Table 9; subpart LLLLL at 63.8692(b), subpart MMMMM at 63.8816(b); subpart NNNNN at 63.9045(b), subpart PPPPP at 63.9345(b)(1); subpart QQQQQ at 63.9535(c); subpart RRRRR at 63.9640(b); subpart SSSSS at 63.9812(b); subpart TTTTT at 63.9930(b); subpart BBBBBB at 63.11086(e) and Table 3; subpart CCCCCC at 63.11124(a)(1), (b)(1), and Table 3; subpart HHHHHH at 63.11175(a); subpart PPPPPP at 63.11425(b) and (c); subpart QQQQQQ at 63.11432(b) and (c); subpart RRRRRR at 63.11441(a); subpart TTTTTT at 63.11469(a); subpart WWWWWW at 63.11509(a)(3); subpart XXXXXX at 63.11519(a)(1); subpart YYYYYY at 63.11529 (a); subpart AAAAAAA at 63.11564(a)(2); subpart BBBBBBB at 63.11585(b)(1); and subpart CCCCCCC at 63.11603(a)(1).

VI. Other Considerations

A. PTE Determination

In the MM2A proposal, the EPA included a background discussion associated with the HAP PTE determination. The discussion was intended to provide context for evaluating whether the EPA should include in the General Provisions to 40 CFR part 63 certain elements of the Federal Minor New Source Review Program in Indian Country, which included application content requirements in those rules as well as the proposed hierarchy of acceptable data and methods a source seeking reclassification would use to calculate and determine the source PTE. We received many comments regarding PTE determinations, including suggestions for clarification on how to do these calculations, which are already addressed in guidance. See section VII of this preamble for additional information regarding implementation of PTE limits and the EPA guidance addressing related topics. Importantly, at this time, the EPA is not taking final action on whether to include in the General Provisions a hierarchy of data and methods for calculating PTE. The EPA will continue to evaluate whether there is a need to issue guidance or rulemaking for such hierarchy and methods in the future.

In the MM2A proposal, the EPA requested comments on whether it would be appropriate to include in the General Provisions of 40 CFR part 63 the minimum requirements for the information that a major source of HAP must submit to its regulatory authority when seeking to obtain PTE limitations to reclassify as area sources under section 112 of the CAA, similar to the information included in a synthetic minor source permit application under Tribal Minor New Source Review. Most of the industry and state commenters asserted that regulatory authorities should retain authority to determine what a major source must submit to reclassify. They argued that these requirements already exist in federal, state, and local rules, and asking state and local governments to add new regulatory requirements onto programs that already provide for the creation and enforcement of synthetic minor limits would be an unnecessarily burdensome administrative resource drain. The EPA agrees with commenters that the addition of minimum requirements for the information that a major source of HAP must submit to its regulatory authority when seeking to obtain PTE limitations to reclassify as area sources under section 112 of the CAA ignores that permitting authorities already have permit application requirements under their programs. Also, the EPA has reconsidered that permit application requirements for PTE programs would be more appropriate under 40 CFR part 63, subpart E and is not including such requirements in the final rule. See section VII of this preamble. This position does not, however, alter how the EPA will apply the policy that the Agency has been following since 1995, which allows for any physical or operational limitation on the capacity of the stationary source to emit a pollutant (such as air pollution control equipment and restrictions on hours of operation or on the type or amount of material combusted, stored, or processed), to be treated as part of its design if the limitation or the effect it would have on emissions is federally enforceable or legally enforceable by a state or local permitting authority and practicably enforceable.

B. Reclassification Process and Permitting

The proposal addressed questions from sources and permitting authorities regarding permit process, mechanisms, and the requirements for reclassifying to area source status for 40 CFR part 70 sources. These questions were brought to our attention per our request in the MM2A Memorandum about specific situations that may need to be considered at proposal. The purpose of the discussion was to inform stakeholders about our expectations on how the reclassification process will work in those specific circumstances. The EPA did not propose changes to any of the rules for the permitting programs or to their interpretation. Below, we clarify the related proposal preamble discussion, since it may have introduced ambiguity about our interpretation of the regulations.

Stakeholders asked the EPA to clarify whether a reclassified source continues to have an obligation to comply with the major source requirements in their title V permit that were included solely to comply with the OIAI policy. These scenarios consisted of sources that no longer have the maximum capacity to emit HAP in amounts that exceed major source thresholds because of physical or operational limitations but whose title V permit still includes major source NESHAP requirements. (Often, the operational limitations are enforceable limitations the source has taken to avoid major source requirements in the future, in agreement with the OIAI policy.) The proposal's preamble acknowledged that in that case the source is an area source under the CAA section 112 definition, but it still must comply with its title V permit terms and conditions until the permit is revised or revoked in agreement with the title V permitting authority that issued the permit. The proposal's preamble advised that sources must follow the permitting authority's procedures for permit modification or closure. We continue to stand by our view that the permitting

authority will be in the best position to help a source decide on the appropriate procedures under the specific program rules to reconcile permitting obligations.

The preamble illustrated, with examples, how situations may differ and that we expect those differences to require different procedures. The proposal concluded that in a hypothetical situation when the major source NESHAP permit terms are relied upon to demonstrate compliance with some other applicable requirement (

e.g.,

in the case of streamlining the permit conditions), concurrently with their removal, the permitting authority may need to reevaluate the MRR for applicable requirements remaining in the permit and that the regulations in 40 CFR part 71 would require a significant modification to add these requirements to a title V permit. With regard to this advice, commenters argued that the EPA misspoke in the proposal as to the appropriate process for 40 CFR part 71 sources. The commenters argued that revising the 40 CFR part 71 permit to reflect a change in applicable requirements may not always require a significant modification to a title V permit, and the EPA provided no explanation in the proposal for this cursory conclusion relative to 40 CFR part 71. The EPA first clarifies that the explanation in the proposal about the procedures that apply to the changes in the scenarios presented reflect the EPA's current view regarding the 40 CFR part 71 permitting authority for a general case and does not imply that a particular situation may not merit a different treatment based on the facts and the 40 CFR part 71 regulation

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