August 27, 1996



MEMORANDUM

SUBJECT:  Extension of January 25, 1995 Potential to Emit 
          Transition Policy

FROM:     John S. Seitz, Director
          Office of Air Quality Planning and Standards (MD-10)
          
          Robert I. Van Heuvelen, Director
          Office of Regulatory Enforcement (2241A)
          
TO:       See Addressees


     This memorandum extends the Environmental Protection
Agency's (EPA) January 25, 1995, transition policy for potential
to emit (PTE) limits relative to maximum achievable control
technology (MACT) standards issued under section 112 of the Clean
Air Act.  In addition, this memorandum discusses the implications
of a recent court decision relative to the title V operating
permits program.

Background

     Many MACT standards apply only to major sources, that is,
those with a PTE greater than a given level.  A source's PTE,
that is, the amount the source could possibly emit, is affected
by its maximum physical capacity to operate and emit and by
enforceable limits.  The current definition of PTE for the MACT
program, which is contained in 40 CFR part 63, subpart A,
requires that limits affecting a source's PTE must be enforceable
by the EPA and citizens in order to be taken into account in the
PTE calculation.  These regulations are currently under review,
and the EPA is engaged in a rulemaking process to amend the
current requirements.  The EPA is currently reviewing information
resulting from a stakeholder process that was designed to explore
options related to this rulemaking.  Further information on
options being considered is contained in Attachment 1, which is a
stakeholder discussion paper of January 31, 1996.  
The Current Transition Policy

     In a policy memorandum of January 25, 1995, the EPA
announced a transition policy.  This transition policy was to
alleviate concerns that sources may face gaps in the ability to
acquire federally-enforceable PTE limits because of delays in
State adoption or EPA approval of programs or in their
implementation.  In order to ensure that such gaps would not
create adverse consequences for States or for sources, the EPA
provided that for a 2-year period extending from January 1995 to
January 1997 (for sources lacking federally-enforceable
limitations), State and local air regulators have the option of
treating the following types of sources as non-major:

     (1) sources who maintain adequate records to demonstrate
that actual emissions are less than 50 percent of the major
source threshold, and

     (2) sources emitting between 50-100 percent of the
threshold, but holding State-enforceable limits that are
enforceable as a practical matter.

The National Mining Decision

     In the National Mining court decision (National Mining
Association v. EPA, 59 F.3d 1351 (D.C. Cir. 1995), the court
addressed hazardous air pollutant programs under section 112. 
The court found that EPA had not adequately explained why only
federally-enforceable measures should be considered as limits on
a source's PTE.  Accordingly, the court remanded the section 112
General Provisions regulation (40 CFR part 63, subpart A) to EPA
for further proceedings.  Notably, in National Mining the court
required the EPA to reconsider the Federal enforceability
requirement, but did not vacate the requirement.  As a result,
the requirement for Federal enforceability is still in effect.

Extension of Transition Policy

     It is unlikely at this time that on-going efforts to amend
the PTE requirements in the MACT standard General Provisions, to
address the National Mining decision, will be completed before
January 1997.  These rule amendments will affect any Federal
enforceability requirements that may apply in the future for PTE
limits under the MACT program.  As a result, it is likely that
after January 25, 1997, there will continue to be uncertainty
with respect to the Federal enforceability of limits, and thus
the basis for the January 25, 1995, transition policy will continue to be valid.  The EPA is, therefore, extending the
transition period for the MACT program for an additional 18-month
period (January 25, 1997 to July 31, 1998).

Implications of Recent Court Decision for the Title V Program

     In Clean Air Implementation Project vs. EPA, No. 96-1224
(D.C. Cir. June 28, 1996), the court remanded and vacated the
requirement for Federal enforceability for PTE limits under 
part 70.  Because the court vacated this requirement, the term
"federally enforceable" in section 70.2 should now be read to
mean "federally enforceable or legally and practicably
enforceable by a State or local air pollution control agency"
pending any additional rulemaking by the EPA.

     The EPA interprets the court order vacating the part 70
definition as not affecting any requirement for Federal
enforceability in existing State rules and programs, that is,
whether Federal enforceability is required as a matter of State
law.  Pending the outcome of the current rulemaking effort, the
EPA believes that States are not likely to pursue submittals for
program revisions.  There may, therefore, be States wishing to
continue to observe the transition policy.  Accordingly, the EPA
is extending the transition policy as it relates to title V
permitting for an additional 18 months (January 25, 1997 through
July 31, 1998).
 
Implications for New Source Review

     Neither the January 25, 1995, transition policy, the
National Mining Association court decision, nor the Clean Air
Implementation Project court decision impact the New Source
Review (NSR) and prevention of significant deterioration (PSD)
programs.  The EPA's current policy with respect to PTE issues
related to the NSR and PSD programs remains as described in the
January 22, 1996, policy memorandum, "Release of Interim Policy
on Federal Enforceability of Limitations on Potential to Emit,"
which is included as Attachment 2.

Distribution/Further Information

     We are asking Regional Offices to send this memorandum to
States within their jurisdiction.  Questions concerning specific
issues and cases should be directed to the appropriate Regional
Office.  The Regional Office staff may contact Timothy Smith of
the Integrated Implementation Group at 919-541-4718;
Adan Schwartz of the Office of General Counsel at 202-260-7632;
or Charlie Garlow of the Office of Regulatory Enforcement at
202-564-1088.  The document is also available on the technology
transfer network (TTN) bulletin board, under "Clean Air Act,
Title V, Policy Guidance Memos." (Readers unfamiliar with this
bulletin board may obtain access by calling the TTN help line at
919-541-5384).

Attachments

Addressees:
Director, Office of Ecosystem Protection, Region I 
Director, Division of Environmental Planning and Protection,
  Region II
Director, Air, Radiation, and Toxics Division, Region III
Director, Air, Pesticides, and Toxics Management Division, Region IV
Director, Air and Radiation Division, Region V 
Director, Multimedia Planning and Permitting Division, Region VI
Director, Air, RCRA, and TSCA Division, Region VII
  Assistant Regional Administrator, Office of Pollution Prevention,
  State, and Tribal Assistance, Region VIII
Director, Air and Toxics Division, Region IX 
Director, Office of Air, Region X 
Regional Counsels, Regions I-X
Director, Office of Environmental Stewardship, Region I
Director, Division of Enforcement and Compliance Assurance,
  Region II
Director, Enforcement Coordination Office, Region III
Director, Compliance Assurance and Enforcement Division, Region VI
Director, Enforcement Coordination Office, Region VII
Assistant Regional Administrator, Office of Enforcement, Compliance
  and Environmental Justice, Region VIII
Enforcement Coordinator, Office of Regional Enforcement 
  Coordination, Region IX

cc:  C. Garlow, 2242A
     J. Ketcham-Colwill, 6103
     A. Schwartz, 2344
     T. Smith, MD-12