November 2, 1994





Mr. Jason Grumet
Executive Director, Northeast States
  for Coordinated Air Use Management
129 Portland Street
Boston, Massachusetts  02114

Dear Mr. Grumet:

     This is in response to Mr. Michael Bradley's March 22, 1994
letter to Mary Nichols seeking clarification of the Federal
enforceability of State's existing minor new source review (NSR)
programs. It is my understanding that some of the NESCAUM States
are interested in using their existing minor NSR programs to
limit a source's potential to emit so as to allow sources to
legally avoid being considered a major source for title V
purposes. 

     In my November 3, 1993 memorandum entitled "Approaches to
Creating Federally-Enforceable Emission Limits," I described
approaches that States could use to limit a source's potential to
emit for title V purposes.   While a number of approaches are
acceptable, the Environmental Protection Agency (EPA) has
promoted the use of State operating permits programs approved
under sections 110 and 112(l), pursuant to the criteria set forth
in the June 28, 1989 Federal Register.  Among other things, these
criteria include an opportunity for public and EPA review and
require that permit conditions be practically enforceable. 
Several States have followed EPA's recommendation and have either
adopted these requirements or are in the process of doing so.

      The Agency recognizes the use of other approaches as well. 
In response to your question, EPA's position is that minor NSR
permits issued under programs that have already been approved
into the State implementation plan (SIP) are federally
enforceable.  Thus, EPA allows the use of federally-enforceable
minor NSR permits to limit a source's potential to emit provided
that the scope of a State's program allows for this and that the
minor NSR permits are in fact enforceable as a practical matter. 

     Because minor NSR programs are essentially preconstruction
review programs for new sources and modifications to existing
sources, minor NSR programs can generally be used to limit a                                 2

source's potential emissions when such limits are taken in
conjunction with a preconstruction permit action.  In addition,
please note that the term "modification" generally encompasses
both physical changes and changes in the method of operation at
an existing source (see Clean Air Act section 111(a)(4)).  Thus,
the scope of some, though not all, minor NSR programs is broad
enough to be used to also limit a source's potential to emit for
nonconstruction-related events.  This occurs where the
modification component of State programs extends to both physical
changes and changes in the method of operation.  In these cases,
where a voluntary reduction in the method of operation (e.g.,
limit in hours of operation or production rate) by itself is
considered a modification for minor NSR permitting, a source may
reduce its hours of operation or production rate and make such a
change federally enforceable through limits in its minor NSR
permit.  

     Some States' minor NSR programs are written so as to
preclude a source from limiting its potential to emit absent an
increase in emissions.  There may be other limitations on the
scope of these programs as well.  Since there is considerable
variation among State minor NSR programs, a review of any
individual State program would be necessary to determine its
ability to limit a source's potential to emit.  It may be
beneficial for States to contact the appropriate EPA Regional
Office if there are questions about the scope of the SIP-approved
minor NSR program.

     Minor NSR programs have generally been used in the past to
limit a source's potential to emit for criteria pollutants. 
There is a growing need for sources to limit their potential to
emit for toxic pollutants as well.  The EPA is currently
considering ways in which a State may limit the potential to emit
of toxic pollutants, including possible uses of existing minor
NSR programs. I plan to keep you and others aware of our efforts
in this regard.

     You should also be aware that a recent court ruling has
called into question the Federal enforceability of a State minor
NSR permit that does not meet the public participation
requirements of current EPA regulations despite SIP approval of
the State's program [see United States v. Marine Shale
Processors, No. 90-1240 (E.D. La.) (bench ruling), June 15,
1994].  In that case involving extensive alleged violations of
the permit terms, the court held that EPA could not enforce the
terms of the minor NSR permit.  The court subsequently ruled that
the company could not rely on the permit to limit its potential
to emit, and thus was liable for having failed to obtain a major                                 3

NSR permit.  The outcome of this case suggests that States should
proceed cautiously in relying on minor NSR programs to limit
potential to emit where the program does not actually provide
public participation.

     In summary, EPA has provided guidance on approaches that are
available to limit a source's potential to emit.  The Agency
recommends approaches that meet the criteria set forth in the
June 28, 1989 Federal Register.  Many States are taking action to
adopt such programs.  With respect to minor NSR permits, EPA
believes that permits conditions issued in accordance with
existing State minor NSR programs that have been approved into
the SIP, and which are enforceable as a practical matter, are
federally enforceable and can be used to limit potential to emit. 
Caution is advised, however, with respect to permits that do not
meet procedural requirements.  These programs are primarily
preconstruction review programs although in many cases they can
also limit a source's potential to emit in conjunction with
operational changes.  

     As you have noted, title V issues are complicated and
resource intensive.  In order for the title V program to be
successfully implemented, it is important that States and EPA 
work cooperatively in developing operating permits programs. 
Your comments and recommendations on program development issues
are welcome.  

     We appreciate this opportunity to be of service and trust
that this information will be helpful to you.

                                   Sincerely,

                                        /s/

                                   John S. Seitz            
                                     Director
                           Office of Air Quality Planning
                                   and Standards

cc:  Air Division Director, Regions I-X

bcc:  Air Branch Chief, Regions I-X
      OAQPS Division Directors