For Hazardous Air Pollutant Sources, “Once In” No Longer Means “Always In”

On November 19, 2020, the United States Environmental Protection Agency (EPA) published a final rule in the Federal Register formally jettisoning the Agency’s long-standing “Once In, Always In” (OIAI) policy that had applied to major sources of hazardous air pollutants (HAPs) for approximately 25 years. Under the OIAI policy, sources that were subject to major source emission standards for HAPs could not change their status with regard to those standards even if their emissions were well below applicability thresholds. In 2018, EPA revisited and revised this policy to allow sources to limit their emissions and avoid compliance with major source HAP requirements at any time. This rulemaking codifies this policy change, but it does not fully address how sources demonstrate that reclassification is appropriate or the standards that must be met following reclassification. We expect this rulemaking, which becomes effective on January 19, 2021, to be challenged and potentially reconsidered by the Biden Administration.

Background

Section 112 of the Clean Air Act (CAA) regulates HAP emissions from stationary sources. Under §112, sources with the potential to emit (PTE) 10 tons of a single HAP, or 25 tons of a combination of HAPs annually, are considered major sources and are subject to stringent emission limitations known as Maximum Achievable Control Technology (MACT) standards. All other sources are classified as area sources. Some area sources are also subject to MACT standards, but those standards are generally less stringent than major source MACT requirements.

The application of MACT standards can result in a significant reduction in HAP emissions and, in some cases, can reduce HAP emissions below the major source applicability thresholds that necessitated compliance with the MACT standards in the first place. The purpose of the OIAI policy was to address those sources for whom compliance with MACT standards resulted in emission reductions below major source thresholds. Under this policy, major sources of HAP could switch to area source status by accepting enforceable limits on HAP emissions until the first compliance date for that MACT standard, but once the first compliance date passed for a major HAP source, the source must permanently comply with the relevant MACT standard even if it would qualify as an area source for standards that became applicable in the future.

This policy essentially prevented backsliding from stringent HAP emission limitations, but the policy was not based on the plain language of the CAA and, for that reason, in January 2018 EPA issued a memorandum rescinding the OIAI policy. In this memorandum from January 25, 2018, EPA found that the OIAI Policy was inconsistent with the plain language of the CAA because it set a temporal limitation on when a source could become an area source. EPA’s current position is that a major source can become an area source at any time by limiting its PTE.

Since January 25, 2018, EPA has been implementing its revised interpretation of §112 of the CAA. EPA also commenced rulemaking to codify this interpretation. The result is the final MACT Major to Area Source Rule (MM2A Rule).

MM2A Rule

The MM2A Rule amends the general provisions of the National Emission Standards for Hazardous Air Pollutants (NESHAP) regulations in 40 C.F.R. Part 63, Subpart A to implement EPA’s updated “plain language” reading of the definitions of “major source” and “area source” in §112 of the CAA and to expressly provide that a major source can limit its PTE at any time, become an area source, and cease complying with a previously applicable major source MACT standard.

The final regulation assumes that sources seeking reclassification from major source to area source status will work with their permitting authority using state permitting, registration or applicability determination programs to finalize the reclassification. Upon reclassification, sources are required to notify EPA in accordance with the provisions of 40 C.F.R. Part 63, Subpart A.

To the extent that a source relies on enforceable limitations or other exclusions to avoid applicability with major source MACT requirements, the source must prepare and maintain an applicability determination. This determination must include an emission analysis or other information demonstrating its area source status. The regulation, however, does not specify how the analysis is to be completed other than to state that, if applicable, the analysis should be performed consistent with the requirements of relevant regulations and EPA guidance.

The final MM2A Rule also fails to address the nature of the enforceable conditions required to ensure compliance with area source emission limits. In the proposed MM2A rule, EPA proposed that PTE limitations must be “legally and practicably enforceable,” and the proposed rule spelled out what would be required to meet this requirement. Under the proposal, sources would have been required to accept legally binding, technically accurate limits on each HAP emission source and to monitor emissions from all HAP sources on a pollutant-by-pollutant basis. EPA did not finalize these proposed provisions because the Agency is still reviewing the comments received. In the interim, EPA made a ministerial change to the definition of PTE to specify that PTE limitations need only to be enforceable—not federally enforceable. Given this lack of specificity, sources that reclassify under the final rule may face uncertainty as to whether limitations accepted by state permitting agencies are sufficient to document area source status in future. If HAP emissions are not fully quantified in a permit, registration, or applicability determination, there could be enforcement risk for the source.

When EPA issued its guidance rescinding the OIAI policy in January 2018, it was promptly challenged. Similarly, this rule will be challenged, and its future is unclear given the change in administration. Accordingly, major MACT sources that would like to reclassify as area sources should move forward cautiously with an understanding that the EPA regulation may be rescinded or revised.

If you have any questions concerning the MM2A Rule or the regulation of HAP emissions under the CAA, please do not hesitate to contact your Quarles & Brady attorney or:

• Cynthia A. Faur: (312) 715-2609 / cynthia.faur@quarles.com