MEMORANDUM

SUBJECT:  Title V Program Approval Criteria for Section 112
          Activities

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

TO:       Director, Air Division, Regions I-X


     Under title V of the Clean Air Act (Act) and its
implementing regulations published at 40 CFR part 70, States are
required to submit operating permits programs to the
Environmental Protection Agency (EPA) by November 15, 1993. 
Section 112 of the Act (hazardous air pollutants) contains
several types of applicable requirements which are intended to be
carried out by States as a precondition of their title V program
approval.  While the broad authority contained in most States
enabling legislation should support the mandated program for
section 112, States may find it necessary to take certain interim
steps in order to incorporate section 112 requirements into title
V permits.  Although ongoing EPA rulemakings related to section
112 may ultimately affect the final response to such questions,
several Regions and States have asked for guidance now to direct
the development of title V operating permits programs submittals. 
This memorandum, with its attachment, is intended to respond to
these requests based on the part 70 regulations and the general
structure and requirements of section 112.  However, the policies
set out in this memorandum and its attachment are intended solely
as guidance, do not represent final Agency action, and cannot be
relied upon to create any rights enforceable by any party.

     This memorandum defines current Agency policy for evaluating
part 70 submittals with respect to section 112 requirements. 
Under this guidance, in order to obtain a full approval from EPA,
the part 70 submittal needs to contain authority and/or
commitments to assure the compliance of part 70 permits issued by
the State, or by independent permitting authorities therein, with
all applicable section 112 requirements.  Specifically, the
Attorney General's statement should certify that the State has
authority to issue part 70 permits that assure compliance with
all currently applicable requirements (including section 112 of
the Act), and that the State will expeditiously adopt any new
authority needed to implement future EPA section 112
requirements.  Where general statutory authority to issue permits
implementing section 112 is present, but the Attorney General is
unable to certify explicit legal authority to carry out specific
section 112 requirements at the time of program submittal, the
Governor may instead submit commitments to adopt and implement
additional regulations as needed to issue permits that implement
applicable section 112 requirements.  The EPA will rely on these
commitments in granting part 70 program approvals provided that
the underlying legislative authority would not prevent a State
from meeting the commitments.

     As for part 70 program revisions, no formal amendment to the
initial title V program should typically be needed with respect
to section 112 requirements taking effect after the effective
date of the program.  The State's up-front commitment and
demonstrations (i.e., legal authorities and mechanisms to adopt
additional section 112 requirements) coupled with EPA's ability
to review individual permits and to audit part 70 programs
periodically should provide reasonable assurance of adequate
State implementation.  

     The EPA will make reasonable efforts to communicate to
States when additional legal, technical, and financial resources
may be necessary to implement new section 112 requirements as
they become applicable.  The State, however, remains responsible
for maintaining and enhancing as necessary its authority to
implement section 112, including any new regulations.  In light
of the demonstrations and/or commitments required for part 70
approval, the EPA will presume that a State's request for
approval of its operating permits program will be an implicit
request under section 112(l) for delegation of authority to
implement federally-promulgated section 112 requirements in the
same form in which EPA issues them.  In lieu of this arrangement,
States can opt to establish specific delegations where needed. 
In the latter case, States should revise the implementation
agreement with a schedule for the timely adoption of all EPA
requirements promulgated after the time of program submittal.

     Under the above approaches, there should be few concerns
which would require the process in 40 CFR 70.4(i) to revise the
part 70 program.  This process involves public participation and
publication in the Federal Register.  An example of where this
process might be needed would be a pattern of proposed permits
which fail to assure compliance with a certain section 112
requirements due to a lack of State authority.  In such a case a
part 70 program revision may well be needed.  The EPA will be
prepared to veto any permit that does not assure compliance with
the Act and part 70, as required in section 70.8(c) and call for
appropriate correction to the State program. 

     The attached information summarizes the guidance for Regions
to follow when reviewing State title V submittals for specific
section 112 concerns.  The attachment also provides, where
indicated, the "current best advice" with respect to certain
future section 112 rulemakings as they may affect title V
programs.  Please note that States are responsible for
implementing all applicable requirements of section 112,
including making and enforcing the case-by-case maximum
achievable control technology decisions under sections 112(i)(5),
112(g) and (j), as well as making any offset determinations
required under section 112(g).  The attachment also summarizes
EPA's position regarding fee demonstrations and interim approvals
for section 112 activities.

     I trust this guidance will be useful.  If you have any
questions, please contact Karen Blanchard at (919) 541-5503 on
section 112 concerns, Michael Trutna at (919) 541-5345 on how
title V interfaces with section 112 requirements, and Kirt Cox at
(919) 541-5399 on general approval criteria for title V programs.

Attachment

cc:  J. Beale, OPAR
     K. Berry, AQMD 
     E. Davies, OSWER
     A. Eckert, OGC 
     E. Gilberg, OE
     B. Jordan, ESD 
     J. Rasnic, SSCD
     L. Wegman, OAQPS
                ATTACHMENT - TITLE V APPROVAL CRITERIA FOR
                          SECTION 112 ACTIVITIES

     The following information summarizes the Environmental
Protection Agency's (EPA's) guidance for evaluating title V
program submittals due on or before November 15, 1993 as well as
EPA's current best advice regarding future rulemakings under
section 112 in relation to title V programs.  The result of
granting approval under title V is important because it confers
responsibility on the State for implementing all section 112 
requirements.  Citations are to the regulations published at 40
CFR part 70.

SCOPE OF THE PROGRAM

     States must issue part 70 permits to all major sources of
hazardous air pollutants (HAP's) regardless of whether there is
any section 112 standard or requirement which currently applies
to such sources (section 70.3(a)).  A source meets the definition
of "major" in section 70.2 if its potential to emit is 10 tons
per year (tpy) or more of any pollutant listed in section 112(b),
or 25 tpy or more for a combination of these pollutants.  A
source that reduces its potential to emit HAP's below the major
source threshold would eliminate the need to obtain a part 70
permit and to comply with section 112 requirements that apply
only to major sources.  Future EPA rulemakings may identify
additional means beyond those identified in the proposed part 70
regulations (see 56 FR 21725 which identifies several mechanisms,
including SIP limits and permit conditions taken under EPA
approved new source review  and operating permits programs) for
sources to reduce their potential to emit HAP's.

     Under the final title V regulations, States may grant a
temporary exemption to nonmajor part 70 sources (other than acid
rain-affected sources and municipal waste incinerators) from the
requirement to obtain a part 70 permit, including any nonmajor
sources subject to section 112 standards in existence on July 21,
1992.  The Agency intends to propose through rulemaking within 4
years of the first EPA-approved permit program whether to
continue some exemption opportunity for these sources.  The need
to permit additional nonmajor sources which become subject to
section 112 standards promulgated after the final part 70
regulations will be determined at the time a new standard is
promulgated.  In addition, EPA may at a later date establish
lesser quantity emission rates for some or all HAP's under
section 112(a) which increase the number of major sources which
are required to have part 70 permits.

LEGAL AUTHORITY

     Under this guidance, in order to obtain a full approval from
EPA, the part 70 submittal needs to contain authority and/or
commitments to assure the compliance of part 70 permits issued by
the State, or by independent permitting authorities therein, with
all applicable section 112 requirements.  Specifically, the
Attorney General's statement should certify that the State has
authority to issue part 70 permits that assure compliance with
all currently applicable requirements (including section 112 of
the Act), and that the State will expeditiously adopt any new
authority needed to implement future EPA section 112
requirements.  Where general statutory authority to issue permits
implementing section 112 is present, but the Attorney General is
unable to certify explicit legal authority to carry out specific
existing section 112 requirements at the time of program
submittal, the Governor in the part 70 program submittal may
instead submit commitments to adopt and implement additional
regulations as needed to issue permits that implement section 112
requirements.  The EPA will rely on these commitments in granting
part 70 program approvals, provided that the underlying
legislative authority would not prevent a State from meeting the
commitments.

     The approach with regard to part 70 approvals should
minimize the need for part 70 program revisions.  Part 70 merely
requires States to have authority to incorporate applicable
requirements into part 70 permits, and to issue permits that
assure compliance with those applicable requirements.  Part 70
does not, however, dictate or restrict the legal mechanisms by
which States may accomplish this result.  The availability of
particular mechanisms will likely be determined by the legal
regime of the individual State.  A State may, by virtue of its
own legal regime, be required to seek formal delegations from EPA
for each section 112 requirement before it can incorporate those
requirements into permits (this mechanism reflects the historical
practice in many States that have chosen to implement and enforce
section 112 standards).  Where the State does make use of
recurring delegations from EPA in order to meet the part 70
requirement, these delegations will not in the normal course
require a concomitant revision to the part 70 program.

     States may alternatively possess mechanisms to satisfy this
part 70 requirement that do not involve separate delegations from
EPA for each section 112 requirement.  For instance, State law
may allow incorporation of a Federal standard directly into the
part 70 permit without any interim steps to adopt the standard as
State law or to seek formal delegation of that standard from EPA. 
The EPA would also consider this approach sufficient to meet the
ongoing part 70 obligation for States to have adequate authority
to implement through permits the applicable requirements of
section 112.    

     Delegation agreements for all section 112 requirements can
also be established on an automatic basis at the time of part 70
program approval.  This approach can greatly improve the
efficiency of program transfer.  Accordingly, EPA will presume
that in light of the required demonstration and/or commitments
required for part 70 approval, a State will automatically
implement each new requirement unless the State advises EPA to
the contrary.  The EPA may request a review of individual State
actions to ensure that the needed legal authority and/or
technical capabilities are in place at the State level in time
for their use in the part 70 permit process.  Such evaluations
should be limited to the exceptional case where EPA has strong
reasons to believe that legal and/or resource problems exist.  In
lieu of general or automatic delegation arrangements, the State
could opt to meet its obligations under part 70 by establishing a
delegation agreement for each specific source category as
discussed above.


SECTION 112(d),(f),AND (h) - EPA EMISSIONS STANDARDS  

     All National Emission Standard for Hazardous Air Pollutants
(NESHAP) standards, maximum achievable control technology (MACT)
standards, and residual risk standards must be incorporated and
implemented within the part 70 permit.  When required under
specific standards, generally available control technology (GACT)
standards must also be implemented within the part 70 permit.  As
described above, States are charged with acquiring all necessary
legal authorities in order to guarantee this result and
identifying a mechanism that ensures the timely acquisition of
authority for future EPA standards.  Under the part 70 rules,
States must specifically agree:  (1) not to issue any permit [or
permit revision addressing any emissions unit subject to a newly
promulgated section 112 standard] unless it would assure
compliance with all applicable section 112 standards [section
70.6(a)(1)], and (2) to reopen part 70 permits which have 3 or
more years remaining before their expiration date to incorporate
any newly promulgated standard [section 70.7(f)(1)(i)].  The
implementation agreement should be revised to contain specific
milestones for timely State acquisition of any needed authority
or capability to implement standards to prevent any unreasonable
delay in permit issuance (i.e., in no event longer than 18 months
after receipt of a complete application for any permit action).

GENERAL PROVISIONS

     The implementation of all current NESHAP standards and
future MACT (and residual risk) standards includes the
implementation of any "general provisions" that EPA develops for
these standards.  Initial title V approval must assure that
States will carry out these provisions as in effect at the time
of any permit issuance or revision.  States should be aware that
EPA will soon be preparing revisions to the general provisions
and that they may have to update their implementation authorities
in accordance with EPA's rulemaking.

     Revisions to the general provisions will contain (as do the
existing general provisions) compliance-related requirements that
supplement the compliance requirements specified in individual
standards.  These general provisions will also establish
definitions and administrative procedures to make applicability
determinations, grant compliance extensions, and perform
preconstruction review and approval for new and reconstructed
sources to assure compliance with applicable, promulgated
standards, among other functions.  Future EPA rulemakings may
supplement the general provisions for new section 112 standards
and programs by further clarifying how and when sources may limit
their potential to emit toxic pollutants below major source
threshold levels.


SECTION 112 (g) - CASE-BY-CASE MACT FOR MODIFIED/CONSTRUCTED AND
RECONSTRUCTED MAJOR TOXIC SOURCES
     
     The EPA anticipates that section 112(g) will involve a
preconstruction review program with the subsequent incorporation
of its results into the part 70 permit.  The EPA expects States
to implement this program fully.  Therefore, in order to obtain
approval of a title V program, a State must commit to have
authority to make all required section 112(g) determinations as
well as subsequently to incorporate them into the part 70 permit. 

     In addition, the State must, on the effective date of the
program, be able to implement section 112(g) in accordance with
EPA regulations.  If EPA's rulemaking to implement section 112(g)
is not then final, the State must still implement section 112(g)
since this program is triggered by the effective date of the part
70 program.  In such cases, EPA expects to work closely with the
State in making required section 112(g) determinations, including
providing to the State the use of centralized EPA data bases and
exploring with the State the possible use of general permits to
establish a presumptive MACT for certain qualifying source
categories.


SECTION 112 (i)(5) - EARLY REDUCTIONS

     Each State must have adequate legal authority upon the
effective date of its part 70 program to carry out EPA's final
rule to implement section 112(i)(5) within the part 70 program. 
Section 112(i)(5) requires that States implement fully the
requirements of the provision as part of its title V program.  In
the absence of an approval of a more stringent program under
section 112(l), in designing federally enforceable permit
conditions under the early reductions program, States may be more
stringent only to the extent that requiring a greater than 90
percent emissions reduction for organic HAP's or 95 percent
emissions reduction for particulate matter HAP's.  The State may
also opt to take temporary delegation of EPA's program for
permitting sources that have entered into enforceable commitments
under section 112(i)(5), if such a program is promulgated prior
to the effective date of the part 70 program.


SECTION 112(j) - CASE-BY-CASE MACT HAMMER

     Section 112(j) requires that the permitting authority
perform case-by-case MACT determinations in the context of
issuing title V permits to categories of sources for which EPA
has failed to meet by more than 18 months the regulatory schedule
established under section 112(e).  Therefore, to obtain approval
of a part 70 program, States must first have authority upon
submittal of their part 70 program to require applications from
sources subject to section 112(j) within 18 months after a missed
deadline.  A commitment is also needed from each State that it
will obtain sufficient legal authority in a timely manner to make
any required section 112(j) case-by-case determination and to
incorporate it into a part 70 permit.  Specific legal authority
to implement and enforce limits as needed can be obtained on a
source category basis for those sources and pollutants which are
subject to the section 112(j) hammer requirement before permit
issuance is required of the State under part 70.  A revision to
the part 70 program would not be necessary, provided that the
State has made the general commitment to issue permits which
assure compliance with section 112 and any implementing
regulations.  States can, of course, also meet their part 70
responsibility by adopting a general legal authority to establish
case-by-case MACT consistent with any final EPA rulemaking
setting for the requirements of section 112(j).  


SECTION 112(l) - STATE AIR TOXICS PROGRAMS

     The applicable requirements, including those of section 112,
must each be included in part 70 permits and enforced (as
necessary) by the State.  States are free under sections 116,
506(a), and 112(d)(7) to be more stringent than Federal
requirements as a matter of State law.  However, any additional
State restrictions will in general be identified in the part 70
permit as not being federally enforceable [section 70.6(b)(2)]. 
Future rulemaking under section 112(l) could allow States to
establish alternative terms in the part 70 permit which would be
no less stringent than the corresponding requirement in section
112 and, once approved, would be federally enforceable in lieu of
the section 112 requirement.

     Future guidance to implement section 112(l) will provide
additional insight into the available options for delegation of
section 112 standards, including where the State proposes to
implement the Federal standards exactly as promulgated by EPA
(see previous discussion in Legal Authority).


SECTION 112(r) - ACCIDENTAL RELEASE PLANS
 
     States must demonstrate adequate legal authority to assure
compliance with the applicable requirements of section 112(r) for
any source subject to part 70.  In order to qualify for full
approval of their part 70 submittal with respect to section
112(r), a State must have legal authority sufficient to:  (1)
determine whether a part 70 source is obligated to register and
submit a risk management plan; (2) secure verification from part
70 sources that any required submittal was prepared and submitted
to appropriate authorities (permit authority, EPA, and/or another
State authority); (3) obtain annual certifications from these
sources as to whether their risk management plans are being
properly implemented;  and (4) include the obligation to submit
such a plan in accordance with a compliance schedule in the part
70 permit for any source failing to make its required plan
submittal. 

     States can opt to implement more of this program through
part 70 permits, but States are not encouraged to put the actual
plan in the part 70 permit.  In its demonstration of adequate
resources, a State must account for the costs associated with the
requirements listed above.  The costs incurred from any other
permit review and subsequent oversight of these plans that is
accomplished within the permit program must also be addressed.  

RESOURCE ADEQUACY

     A State's submittal must contain demonstrations that
adequate resources will be available to implement its part 70
program [section 70.4(b)(8)].  In general, section 112
requirements, to the extent they are carried out through title V
permiting, must be supported by title V permit fees.  These
requirements would include activities related to determinations,
incorporation and implementation of any standards under section
112(d), (f) and (h), and case-by-case MACT requirements under
sections 112(g) and 112(j), and oversight of accidental release
plans (to the extent required in the permit).  The test for
initial approval of a part 70 program is that sufficient fees
must be collected to cover the costs of program implementation,
including all section 112 requirements (section 70.9(b)).  The
EPA in reviewing a State's permit fee program submittal will
generally presume that it is adequate if the State would collect
in aggregate, revenues greater than the $25/tpy (1989 basis)
presumptive fee schedule.  After the program is launched,
adjustments to any approved fee schedule can be required by EPA
if poor implementation is linked to inadequate resources.

     Some States may, instead of relying on the presumptive
approach, opt to make a detailed showing that the indirect and
direct costs of their permits program will be offset from fee
revenues.  Other States may be required to do so if compelling
evidence exists that the presumptive fee schedule is inadequate
(i.e., prediction of actual program costs are higher than the
revenue programs which would be obtained using the presumptive
fee schedules).  In addition, a detailed demonstration would be
required where a State is trying to demonstrate the adequacy of a
fee schedule which is less than the presumptive one.  States, in
making detailed fee demonstrations, should be aware of the
additional complexity associated with toxics programs.  For
example, development of emissions estimates, measurement
strategies, and control technologies is much more contaminant
specific.  For further discussion, please contact Karen Blanchard
at (919) 541-5503.  



INTERIM APPROVAL

     Other issues dealing with title V program approval concern
when and how the concept of interim approval would be
appropriate.  Under part 70, the State may be able to defer
applicability of the part 70 program to certain source categories
and obtain interim approval.  However, the EPA views the source
category-limited option as a grant of extraordinary relief
available only for States that substantially meet the source
coverage requirements of part 70 but that, for compelling
reasons, fall short of the source coverage necessary for full
approval.  All permits that are issued within the interim program
must address all applicable requirements, including all section
112 requirements [section 70.4(d)] [but not title VI
requirements] that apply to sources subject to the interim
program.  Therefore, a source must be totally exempted from title
V coverage under an interim program to avoid incorporation of
section 112 requirements into a title V permit. 
(Notwithstanding, any exempted source would remain subject to
applicable MACT and NESHAP standards.)  Of course, this could
occur only the extent that the interim program nevertheless
"substantially meets" the source coverage requirements of part
70.

     Another issue related to interim approval concerns the
trigger for making section 112(g) determinations.  Section 112(g)
provides that such determinations must be made for source
modifications upon the effective date of a title V program,
including interim programs.  States should assume, in the case of
interim programs, that the section 112(g) responsibility is
triggered for only those sources covered by the interim approval. 
This is consistent with the obligation of only sources covered by
the interim program to submit applications.  However, EPA will
not grant interim approval where the proposed program would fail
to cover certain major source categories solely on the grounds
that applying section 112(g) to these sources would be too
burdensome.