November 3, 1993



MEMORANDUM

SUBJECT:  Approaches to Creating Federally-Enforceable
          Emissions Limits

FROM:     John S. Seitz, Director
          Office of Air Quality Planning and Standards (MD-10)

TO:       Director, Air, Pesticides and Toxics 
            Management Division, Regions I and IV
          Director, Air and Waste Management Division,
            Region II
          Director, Air, Radiation and Toxics Division,
            Region III
          Director, Air and Radiation Division,
            Region V
          Director, Air, Pesticides and Toxics Division,
            Region VI
          Director, Air and Toxics Division, 
            Regions VII, VIII, IX, and X


     The new operating permits program under title V of the Clean
Air Act (Act), combined with the additional and lower thresholds
for "major" sources also provided by the 1990 Amendments to the
Act, has led to greatly increased interest by State and local air
pollution control agencies, as well as sources, in obtaining
federally-enforceable limits on source potential to emit air
pollutants.  Such limits entitle sources to be considered "minor"
for the purposes of title V permitting and various other
requirements of the Act.  Numerous parties have identified this
as a high priority concern potentially involving thousands of
sources in each of the larger States.

     The issue of creating federally-enforceable emissions limits
has broad implications throughout air programs.  Although many of
the issues mentioned above have arisen in the context of the
title V permits program, the same issues exist for other
programs, including those under section 112 of the Act.  As
discussed below, traditional approaches to creating federally-
enforceable emissions limits may be unnecessarily burdensome and
time-consuming for certain types and sizes of sources.  In
addition, they have been of limited usefulness with respect to
creating such limits for emissions of hazardous air pollutants
(HAP's).   

     The purpose of this memorandum is to respond to these needs
by announcing the availability of two further approaches to
creating federally-enforceable emissions limits:  the extension
of existing criteria pollutant program mechanisms for HAP program
purposes, and the creation of certain classes of standardized
emissions limits by rule.  We believe that these options are
responsive to emerging air program implementation issues and
provide a reasonable balance between the need for administrative
streamlining and the need for emissions limits that are
technically sound and enforceable.

Background

     Various regulatory options already exist for the creation of
federally-enforceable limits on potential to emit.  These were
summarized in a September 18, 1992 memorandum from John Calcagni,
Director, Air Quality Management Division.  That memorandum
identified the five regulatory mechanisms generally seen as
available.  These are:  State major and minor new source review
(NSR) permits [if the NSR program has been approved into the
State implementation plan (SIP) and meets certain procedural
requirements]; operating permits based on programs approved into
the SIP pursuant to the criteria in the June 28, 1989 Federal
Register (54 FR 27274); and title V permits (including general
permits).  Also available are SIP limits for individual sources
and limits for HAP's created through a State program approved
pursuant to section 112(l) of the Act.

     Regional Office and State air program officials realize that
these five options are generally workable, but feel that the
programs emerging from the 1990 Amendments present certain
further needs that are not well met.  They note that NSR is not
always available, title V permitting can be more rigorous than
appropriate for those sources that are in fact quite small, and
that general permits have limitations in their usefulness.  The
use of State operating permits approved into the SIP pursuant to
the June 28, 1989 Federal Register is generally considered to be
a promising option for some of these transactions; however, these
programs do not regulate toxics directly.
  
State Operating Permits for Both Criteria Pollutants
and HAP's

     As indicated above, State operating permits issued by
programs approved into the SIP pursuant to the process provided
in the June 28, 1989 Federal Register are recognized as federally
enforceable.  This is a useful option, but has historically been
viewed as limited in its ability to directly create emissions
limits for HAP's because of the SIP focus on criteria pollutants.

     Since that option was created, however, section 112 of the
Act has been rewritten, creating significant new regulatory
requirements and conferring additional responsibilities and
authorities upon the Environmental Protection Agency (EPA) and
the States.  Section 112 now mandates a wide range of activities:
source-specific preconstruction reviews, areawide approaches to
controlling risk, provisions for permitting pursuant to the 
title V permitting program, and State program provisions in
section 112(l) that are similar to aspects of the SIP program.  A
result of these changes is that implementation of toxics programs
will entail the use of many of the same administrative mechanisms
as have been in use for the criteria pollutant programs.

     Upon further analysis of these new program mandates and
corresponding authorities, EPA concludes that section 112 of the
Act, including section 112(l), authorizes it to recognize these
same State operating permits programs for the creation of
federally-enforceable emissions limits in support of the
implementation of section 112.  Congress recognized, and
longstanding State practice confirms, that operating permits 
are core-implementing mechanisms for air quality program
requirements.  This was EPA's basis for concluding that 
section 110 of the Act authorizes the recognition and approval
into the SIP of operating permits pursuant to the June 28, 1989
promulgation, even though section 110 did not expressly provide
for such a program.  Similarly, broad provision of section 112(l)
for "a program for the implementation and enforcement . . . of
emission standards and other requirements for air pollutants
subject to this section" provides a sound basis for EPA
recognition of State operating permits for implementation and
enforcement of section 112 requirements in the same manner
as these permitting processes were recognized pursuant to 
section 110.

     In implementing this authority to approve State operating
permits programs pursuant to section 112, it should be noted that
the specific criteria for what constitutes a federally-
enforceable permit are also the same as for the existing SIP
programs.  The June 28, 1989 Federal Register essentially
addressed in a generic sense the core criteria for creating
federally-enforceable emissions limits in operating permits: 
appropriate procedural mechanisms, including public notice and
opportunity for comment, statutory authority for EPA approval of
the State program, and enforceability as a practical matter.  The
EPA did this in the context of SIP development, not because these
criteria are specific to the SIP, but because section 110 of the
Act was seen as our only certain statutory basis for this prior
to the 1990 Amendments.  Based on the discussion above, States
can extend or develop State operating permits programs for toxics
pursuant to the criteria set forth in the June 28, 1989 Federal
Register.  The EPA is also evaluating analogous opportunities to
enhance State NSR programs to address toxics and will address
this in future guidance.

     This is a significant opportunity to limit directly the
emissions of HAP's.  It also offers the advantage of the
administrative efficiencies that arise from using existing
administrative mechanisms, as opposed to creating additional
ones.

     States are encouraged to consult with EPA Regional Offices
to discuss the details of adapting their current programs to
carry out these additional functions.  The EPA will consider
State permitting programs meeting the criteria in the June 28,
1989 Federal Register as being approvable for HAP program
functions as well.  States may submit their programs for
implementing this process with their part 70 program submittals,
or at such other time as they choose.  The EPA has various
options for administratively recognizing these State program
submittals.  The EPA plans initially to review these State
programs as SIP review actions, but with official recognition
pursuant to authorities in both sections 110 and 112.  Once
rulemaking pursuant to section 112(l) of the Act is completed,
EPA expects to use the process developed in that rule for
approving State programs for HAP's.  The section 112(l) process
may be especially useful prior to EPA approval and implementation
of the State title V programs.  The reader may wish to refer to
the process for certain section 112(l) approvals proposed on May
19, 1993 (58 FR 29296) (see section 63.91).

     The General Provisions (40 CFR part 63) establish the
applicability framework for the implementation of section 112. 
In the final rule, EPA will indicate that State operating permits
programs which meet the procedural requirements of the June 28,
1989 Federal Register can be used to develop federally-
enforceable emissions limits for HAP's, thereby limiting a
source's potential to emit.  In addition, after we gain
implementation experience, EPA will be evaluating the usefulness
of further rulemaking to define more specific criteria by which
this process may be used in the implementation of programs under
section 112 of the Act.  Any such rulemaking could similarly be
incorporated into the General Provisions in part 63.

State-Standardized Processes Created by Rule to Establish
Source-Specific, Federally-Enforceable Emissions Limits

     State air program officials have highlighted specific types
of sources that are of particular administrative concern because
of their nature and number.  These include sources whose
emissions are primarily volatile organic compounds (VOC) arising
from use of solvents or coatings, such as automobile body shops. 
Another example is fuel-burning sources that have low actual
emissions because of limited hours of operation, but with the
potential to emit sulfur dioxide in amounts sufficient to cause
them to be classified as major sources. 

     The EPA recognizes that emissions limitations for some
processes can be created through standardized protocols.  For
example, limitations on potential to emit could be established
for certain VOC sources on the basis of limits on solvent use,
backed up by recordkeeping and by periodic reporting.  Similarly,
limitations on sulfur dioxide emissions could be based on
specified sulfur content of fuel and the source's obligation to
limit usage to certain maximum amounts.  Limits on hours of
operation may be acceptable for certain others sources, such as
standby boilers.  In all cases, of course, the technical
requirements would need to be supported by sufficient compliance
procedures, especially monitoring and reporting, to be considered
enforceable.

     The EPA concludes that such protocols could be relied on to
create federally-enforceable limitations on potential to emit if
adopted through rulemaking and approved by EPA.  Although such an
approach is appropriate for only a limited number of source
categories, these categories include large numbers of sources,
such as dry cleaners, auto body shops, gas stations, printers,
and surface coaters.  If such standardized control protocols are
sufficiently reliable and replicable, EPA and the public need not
be involved in their application to individual sources, as long
as the protocols themselves have been subject to notice and
opportunity to comment and have been approved by EPA into the
SIP.

     To further illustrate this concept and to provide
implementation support to the States, EPA has recently released
guidance on one important way of using this process.  This
document, entitled "Guidance for State Rules for Optional
Federally-Enforceable Emissions Limits Based on Volatile Organic
Compound Use," was issued by D. Kent Berry, Acting Director, Air
Quality Management Division, on October 15, 1993.  It describes
approvable processes by which States can create federally-
enforceable emissions limits for VOC for large numbers of sources
in a variety of source categories.

     States have flexibility in their choice of administrative
process for implementation.  In some cases, it may be adequate
for a State to apply these limits to individual sources through a
registration process rather than a permit.  A source could simply
submit a certification to the State committing to comply with the
terms of an approved protocol.  Violations of these
certifications would constitute SIP violations, in the case of
protocols approved into the SIP, and be subject to the same
enforcement mechanisms as apply in the case of any other SIP
violation.  Such violations would, of course, also subject the
source to enforcement for failure to comply with the requirements
that apply to major sources, such as the requirement to obtain a
title V permit or comply with various requirements of section 112
of the Act.

     Some States have also indicated an interest in more
expansive approaches to implementing this concept, such as making
presumptive determinations of control equipment efficiency with
respect to particular types of sources and pollutants.  While
such approaches are more complicated and present greater numbers
of concerns in the EPA review process, they offer real potential
if properly crafted.  The EPA will evaluate State proposals and
approve them if they are technically sound and enforceable as a
practical matter.

     States may elect to use this approach to create federally-
enforceable emissions limits for sources of HAP's as well.  Based
on the same authorities in section 112 of the Act, as cited above
in the case of operating permits, EPA can officially recognize
such State program submittals.  As with the operating permits
option discussed in the preceding section, EPA plans initially to
review these activities as SIP revisions, but with approval
pursuant to both sections 110 and 112 of the Act, and approve
them through the section 112(l) process when that rule is final.

Implementation Guidance

     As indicated above, the creation of federally-enforceable
limits on a source's potential to emit involves the
identification of the procedural mechanisms for these efforts,
including the statutory basis for their approval by EPA, and the
technical criteria necessary for their implementation.  Today's
guidance primarily addresses the procedural mechanisms available
and the statutory basis for EPA approval.

     The EPA will be providing further information with respect
to the implementation of these concepts.  As described above, the
first portion of this guidance, addressing limits on VOC
emissions, was issued on October 15, 1993.  My office is
currently working with Regional Offices and certain States in
order to assist in the development of program options under
consideration by those States.  We will provide technical and
regulatory support to other State programs and will make the
results of these efforts publicly available through the Office of
Air Quality Planning and Standards (OAQPS) Technology Transfer
Network bulletin board. 
 
     We will provide further support through the release of a
document entitled "Enforceability Requirements for Limiting
Potential to Emit Through SIP Rules and General Permits," which
is currently undergoing final review within EPA.  In addition,
EPA will be highlighting options for use of existing technical
guidance with respect to creating sound and enforceable emissions
limits.  An important example of such guidance is the EPA "Blue
Book," which has been in use by States for the past 5 years as
part of their VOC control programs. 

     States are encouraged to discuss program needs with their
EPA Regional Offices.  The OAQPS will work with them in
addressing approvals.  As indicated, additional technical
guidance for implementing these approaches is underway and will
be made publicly available soon.  For further information, please
call Kirt Cox at (919) 541-5399.

cc:  Air Branch Chief, Regions I-X      
     Regional Counsel, Regions I-X
     OAQPS Division Directors
     A. Eckert
     M. Winer
     A. Schwartz    
     E. Hoerath