[Federal Register Volume 85, Number 224 (Thursday, November 19, 2020)]
[Rules and Regulations]
[Pages 73854-73922]
[FR Doc No: 2020-22044]

Vol. 85

Thursday,

No. 224

November 19, 2020

Part II

Environmental Protection Agency

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40 CFR Part 63

Reclassification of Major Sources as Area Sources Under Section 112 of
the Clean Air Act; Final Rule

Federal Register / Vol. 85, No. 224 / Thursday, November 19, 2020 /
Rules and Regulations

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 63

[EPA-HQ-OAR-2019-0282; FRL-10014-50-OAR]
RIN 2060-AM75

Reclassification of Major Sources as Area Sources Under Section
112 of the Clean Air Act

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This rule finalizes amendments to the General Provisions that
apply to National Emission Standards for Hazardous Air Pollutants
(NESHAP). These amendments implement the plain language reading of the
``major source'' and ``area source'' definitions of section 112 of the
Clean Air Act (CAA) and provide that a major source can be reclassified
to area source status at any time upon reducing its potential to emit
(PTE) hazardous air pollutants (HAP) to below the major source
thresholds (MST) of 10 tons per year (tpy) of any single HAP and 25 tpy
of any combination of HAP. This rule also finalizes amendments to
clarify the compliance dates, notification, and recordkeeping
requirements that apply to sources choosing to reclassify to area
source status and to sources that revert back to major source status,
including a requirement for electronic notification.

DATES: This final rule is effective on January 19, 2021.

ADDRESSES: The Environmental Protection Agency (EPA) has established a
docket for this action under Docket ID No. EPA-HQ-OAR-2019-0282. All
documents in the docket are listed on the https://www.regulations.gov/
website. Although listed, some information is not publicly available,
e.g., Confidential Business Information or other information whose
disclosure is restricted by statute. Certain other material, such as
copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available electronically through https://www.regulations.gov/. Out of an abundance of caution for members of the
public and our staff, the EPA Docket Center and Reading Room was closed
to the public, with limited exceptions, to reduce the risk of
transmitting COVID-19. Our Docket Center staff will continue to provide
remote customer service via email, phone, and webform. For further
information and updates on EPA Docket Center services and the current
status, please visit us online at https://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: For questions about this final rule,
contact Ms. Elineth Torres, Sector Policies and Programs Division
(D205-02), Office of Air Quality Planning and Standards, U.S.
Environmental Protection Agency, Research Triangle Park, North Carolina
27711; telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>;
and email address<EMAIL_ADDRESS>Questions concerning
specific reclassifications should be directed to the appropriate
Regional office.

SUPPLEMENTARY INFORMATION:
    Preamble acronyms and abbreviations. We use multiple acronyms and
terms in this preamble. While this list may not be exhaustive, to ease
the reading of this preamble and for reference purposes, the EPA
defines the following terms and acronyms here:

CAA Clean Air Act
CEDRI Compliance and Emissions Data Reporting Interface
CFR Code of Federal Regulations
D.C. Cir. the United States Court of Appeals for the District of
Columbia Circuit
EAV equivalent annualized value
EIA economic impact analysis
EPA Environmental Protection Agency
FIP Federal Implementation Plan
HAP hazardous air pollutant(s)
MACT maximum achievable control technology
MM2A Major MACT to Area
MRR monitoring, recordkeeping, and reporting
MST major source thresholds
NESHAP national emission standards for hazardous air pollutants
NMA National Mining Association
NSPS new source performance standards
NSR New Source Review
NTTAA National Technology Transfer and Advancement Act
OIAI Once In, Always In
OMB Office of Management and Budget
PRA Paperwork Reduction Act
PSD prevention of significant deterioration
PTE potential to emit
PV present value
RTO regenerative thermal oxidizers
RFA Regulatory Flexibility Act
RIA Regulatory Impact Analysis
RTR residual risk and technology review
SIP State Implementation Plan
TIP Tribal Implementation Plan
TSM technical support memorandum
tpy tons per year
UMRA Unfunded Mandates Reform Act
VOC volatile organic compound(s)

    Background information. On July 26, 2019, the EPA proposed
revisions to the General Provisions that apply to the NESHAP to
implement the plain language reading of the ``major source'' and ``area
source'' definitions of CAA section 112 and provide that a major source
can be reclassified to area source status at any time upon limiting its
potential to emit HAP to below the MST of 10 tpy of any single HAP and
25 tpy of any combination of HAP (also referred to herein as Major
Maximum Achievable Control Technology (MACT) to Area or ``MM2A
proposal'') (see 84 FR 36304). In this rule, we are taking final action
on some of the amendments as proposed, and we are taking final action
on other amendments as modified based on the public comments to clarify
the requirements that apply to sources choosing to reclassify to area
source status at any time, including reclassification that occurs after
the first substantive compliance date of applicable major source NESHAP
requirements and the requirements that apply to sources that reclassify
from major to area source status and then revert back to their previous
major source status. Regarding the proposed amendments to the PTE
definition, we are not finalizing the definition of ``legally and
practicably enforceable'' PTE limits or the effectiveness criteria for
those limits in this action. We are, however, promulgating a
ministerial amendment to the regulatory definition of ``potential to
emit'' in the interim. We are also finalizing revisions to the General
Provisions tables and initial notification requirements within most
NESHAP subparts to account for the regulatory provisions we are
finalizing in this rule. We summarize some of the more significant
public comments we received regarding the proposed rule and provide our
responses to those comments in this preamble. A summary of all other
public comments on the proposal and the EPA's responses to those
comments is available in the Response to Comments document available in
the docket No. EPA-HQ-OAR-2019-0282. A ``track changes'' version of the
regulatory language that incorporates the changes finalized in this
rule is also available in the docket.
    Organization of this document. The information in this preamble is
organized as follows:

I. Executive Summary
    A. Purpose of the Regulatory Action
    B. Summary of the Major Provisions of the Regulatory Action
    C. Impacts of the Final Regulatory Action
II. General Information
    A. Does this rule apply to me?
    B. Where can I get a copy of this document and other related
information?
    C. Judicial Review and Administrative Reconsideration
III. Background
IV. Statutory Authority
V. Summary of Final Amendments
    A. Final Amendments to 40 CFR Part 63, Subpart A: General
Provisions

    B. Amendments to Individual NESHAP General Provisions
Applicability Tables
    C. Amendments to Individual NESHAP
VI. Other Considerations
    A. PTE Determination
    B. Reclassification Process and Permitting
VII. Interim Ministerial Revision of 40 CFR Part 63 PTE Definition
VIII. Summary of Cost, Environmental, and Economic Impacts
    A. Analytical Scenarios
    B. Cost Analysis
    C. Environmental Analysis
    D. Economic Analysis
IX. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulations and Regulatory Review
    B. Executive Order 13771: Reducing Regulation and Controlling
Regulatory Costs
    C. Paperwork Reduction Act (PRA)
    D. Regulatory Flexibility Act (RFA)
    E. Unfunded Mandates Reform Act (UMRA)
    F. Executive Order 13132: Federalism
    G. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    H. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
    I. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    J. National Technology Transfer and Advancement Act (NTTAA)
    K. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    L. Determination Under CAA Section 307(d)
    M. Congress Review Act (CRA)

I. Executive Summary

A. Purpose of the Regulatory Action

    In this final rule (also referred to herein as ``final MM2A rule''
or final rule), the EPA is finalizing amendments to the General
Provisions of the NESHAP regulations in 40 CFR part 63, subpart A to
implement the plain language reading of the ``major source'' and ``area
source'' statutory definitions of section 112 of the CAA and provide
that a major source can be reclassified to area source status at any
time upon reducing its emissions and PTE, as defined in 40 CFR 63.2, to
below the MST of 10 tpy of any single HAP and 25 tpy of any combination
of HAP. Prior to proposing these amendments, the EPA reviewed the
statutory provisions that govern when a major source can reclassify to
area source status, including after being subject to major source
requirements under section 112 of the CAA (also referred to herein as
``CAA section 112 requirements'' or ``requirements''). After further
review of CAA section 112 provisions and public comments received on
the MM2A proposal, the EPA is finalizing its conclusion that the
statutory definitions of major source and area source contain no
language fixing a source's status at any particular point in time and
contain no language suggesting a cutoff date after which the source's
status cannot change. Accordingly, the Agency is finalizing its reading
that a major source may be reclassified as an area source at any time
upon reducing its HAP emissions and PTE below the applicable CAA
section 112 MST. Thus, major sources that reclassify to area source
status at any time, including after the first substantive compliance
date of an applicable major NESHAP, will no longer be subject to CAA
section 112 major source NESHAP requirements and will be subject to any
applicable area source NESHAP requirements. A full discussion of the
statutory authority for this final MM2A rule can be found in section IV
of this preamble.

B. Summary of the Major Provisions of the Regulatory Action

    The EPA is finalizing amendments to the General Provisions of the
NESHAP regulations in 40 CFR part 63, subpart A to clarify the
requirements that apply to sources choosing to reclassify to area
source status at any time, including after being subject to major
source requirements under section 112 of the CAA. The EPA is finalizing
amendments to the applicability section found in 40 CFR 63.1 by adding
a new paragraph (c)(6). This paragraph specifies that a major source
may become an area source at any time upon reducing its emissions of
and PTE HAP, as defined in this subpart, to below the major source
thresholds established in 40 CFR 63.2.
    The EPA is finalizing in 40 CFR 63.1(c)(6) that a major source
reclassifying to area source status remains subject to any applicable
major source NESHAP requirements until the reclassification becomes
effective. After the reclassification becomes effective, the source is
subject to any applicable area source NESHAP requirements in 40 CFR
part 63. For sources that reclassify from major to area source status
and then revert back to their previous major source status, the EPA is
also finalizing in 40 CFR 63.1(c)(6) that the source becomes subject to
the applicable major source NESHAP requirements of 40 CFR part 63
immediately upon becoming a major source again. The EPA is finalizing
in 40 CFR 63.1(c)(6) regulatory text to address the interaction of the
reclassification of sources with enforcement actions arising from
violations that occurred before reclassification. Specifically, we are
finalizing that the reclassification of a source does not affect the
source's liability or any enforcement investigations or enforcement
actions for a source's past conduct that occurred prior to the source's
reclassification.
    To ensure that all sources that reclassify notify the EPA, the EPA
is finalizing amendments clarifying the existing notification
requirements in 40 CFR 63.9(b) and (j). With these amendments, the
notification requirements of 40 CFR 63.9 will cover not only cases
where a source switches from major to area source status, but also
cases where an area source reverts to major source status. A source
that reclassifies in either direction must notify the EPA of any
changes in the applicability of the standards that the source was
subject to per the notification requirements of 40 CFR 63.9(j). The EPA
is also finalizing amendments to the notification requirements in 40
CFR 63.9(b) and (j) to require in certain circumstances that the
notification be submitted electronically through the Compliance and
Emissions Data Reporting Interface (CEDRI). The final rule amends the
General Provisions to add 40 CFR 63.9(k) to include the CEDRI
submission procedures. The EPA is finalizing amendments to remove the
time limit for record retention in 40 CFR 63.10(b)(3) so sources that
obtain enforceable PTE limits after the effective date of this final
rule are required to keep the applicability determination records as
long as they rely on the PTE limits to be area sources. The EPA is also
finalizing amendments to 40 CFR 63.12(c) to clarify that a source may
not be exempted from electronic reporting requirements. Further, the
EPA is finalizing amendments to 40 CFR 63.13 to clarify that when
required by this part, or at the request of the EPA Regional office,
submitting a report or notification to CEDRI fulfills the obligation to
report to the EPA Regional office.
    This final action includes amendments to the General Provisions
applicability tables contained within most subparts of 40 CFR part 63
to add a reference to the new provision in 63.1(c)(6) discussed above.
We are also finalizing revisions to several NESHAP subparts by removing
the date limitation after which a major source cannot become an area
source. The provisions amended are: 40 CFR part 63, subpart HH at
63.760(a)(1); 40 CFR 63, subpart HHH at 63.1270(a); 40 CFR part 63,
subpart QQQ at 63.1441; 40 CFR part 63, subpart QQQQQ at 63.9485; 40
CFR

part 63, subpart RRRRR at 63.9581; and Table 2 of 40 CFR part 63,
subpart WWWW. The final rule also includes amendments to the initial
notification requirements of most NESHAP subparts because the date that
was specified in the regulations has passed.
    The EPA is still considering the proposed effectiveness criteria
for HAP PTE limits and the proposed changes to the definition of
``potential to emit'' in 40 CFR 63.2 and is not taking any final action
on those aspects of the proposed rule at this time. Thus, this final
rule does not include responses to comments on proposed effectiveness
criteria for PTE limits or comments related to the proposed changes to
the PTE definition. The EPA is still reviewing comments received and
will respond to them in a subsequent action. In the meantime, while we
continue to consider what final action to take on the proposed
amendments, the EPA is making an interim ministerial revision to the
PTE definition to address the court decision in National Mining
Association (NMA) v. EPA, 59 F.3d 1351, 1363-1365 (D.C. Cir. 1995).
Specifically, this revision removes the word ``federally'' from the
phrase ``federally enforceable'' in the PTE definition. This interim
ministerial revision is also consistent with the EPA's long-standing
policy \1\ that allows for any physical or operational limitation on
the capacity of the stationary source to emit a pollutant to be treated
as part of the source's design if the limitation or the effect it would
have on emissions is, first, either federally enforceable or legally
enforceable by a state or local permitting authority and, second,
practicably enforceable.
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    \1\ See January 25, 1995, memorandum titled ``Options for
Limiting the Potential to Emit (PTE) of a Stationary Source Under
Section 112 and Title V of the Clean Air Act (Act)'' and December
20, 1999, memorandum titled ``Third Extension of January 25, 1995
Potential to Emit Transition Policy.'' Available at https://www.epa.gov/guidance/guidance-documents-managed-office-air-and-radiation and in the docket of this rule.
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C. Impacts of the Final Regulatory Action

    The final rule does not require any source to reclassify to area
source status. An evaluation of the potential to reclassify from major
source to area source status involves many source-specific
considerations. Each source will assess its own circumstances to
determine whether it is feasible and advantageous to undergo the
reclassification process. The unique nature of each source's decision
process makes it difficult for the EPA to determine the number and type
of sources that may choose to reclassify under this rule. Because of
this, the EPA is limited to presenting illustrative analyses concerning
the impacts of this final rule. The illustrative assessment of impacts
includes the potential net cost savings and potential emissions changes
that may result from this final action. The illustrative impacts are
estimated for the three analytical scenarios established for the rule
and are estimated in relation to a baseline in which sources remain
subject to major source NESHAP requirements after the first substantive
compliance date of such standards. The potential impacts presented in
the preamble reflect the results of the illustrative analysis of the
primary scenario, which, for analytical purposes, is defined as
including those facilities whose actual emissions are below 75 percent
of the MST (i.e., 7.5 tpy for a single HAP and 18.75 tpy for all HAP).
This scenario is further described in section VIII of this preamble, in
the technical support memorandums (TSM),\2\ and the Regulatory Impact
Analysis (RIA) that is available in the docket for this action. The
memorandums and RIA also present an analysis of two alternative
scenarios to provide a range of estimated potential cost impacts.\3\
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    \2\ See ``Documentation of the Data for Analytical Evaluations
and Summary of Industries Potentially Impacted by the Final Rule
titled Reclassification of Major Sources as Area Sources Under
Section 112 of the Clean Air Act,'' and ``Analysis of Illustrative
125% Scenario for MM2A Final--Potential Cost Impacts from HAP Major
Sources Reducing Emissions as part of Reclassifying to HAP Area
Sources.''
    \3\ Alternative scenario 1 analyzes those facilities whose
actual emissions are below 50 percent of the MST (5 tpy for a single
HAP and 12.5 tpy for all HAP). Alternative scenario 2 analyzes that
sources below 125 percent of the MST (12.5 tpy for a single HAP and
31.25 tpy for all HAP). Discussions of these scenarios and results
can be found in the RIA for this final action.
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    The EPA estimates that this final action may result in substantial
annual cost savings of $90.6 million (2017$) based on illustrative
estimates of its potential reduction in administrative burden if
sources reclassify to area source status.\4\ The voluntary actions
taken by sources to reclassify will be carried out over a period of
time, but once a source reclassifies, the cost savings will accrue for
as long as the source continues to operate as an area source. While
cost savings will accrue for the life of the facility, we present a 5-
year outlook of potential cost savings from this action to provide
insight into the cost distribution over time. Results are also
presented as the present value (PV) and equivalent annualized value
(EAV) of the cost savings of the final MM2A rule in 2017 dollars. The
PV is the one-time value of a stream of impacts over time, discounted
to the current (or nearly current) day. The EAV is a measure of the
annual cost that is calculated consistent with the PV. The illustrative
cost savings of the final MM2A rule in 2017 dollars are presented in
detail later in section VIII of this preamble and in the RIA.
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    \4\ Annual cost savings reflect impacts in Year 2 of the
reclassification process for all sources that choose to reclassify
under the primary scenario. All cost savings are net of any
additional permitting and recordkeeping costs to state regulatory
agencies and sources. These annual cost savings are those for 2025
and subsequent years.
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    Table 1 presents a summary of key results from the RIA for the
final MM2A rule. This table presents the PV and EAV, estimated in 2017
dollars using discount rates of 7 and 3 percent and discounted to 2020,
of the illustrative net cost savings of the final MM2A rule. The EAV
estimates are consistent with the PV and reflect the illustrative total
net cost savings of the rule from 2021, the first year after rule
promulgation, and subsequent years.

                       Table 1--Illustrative Net Cost Savings Incremental to the Baseline
                                [(Including following years) (Billions 2017$) *]
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                                                          7 Percent                         3 Percent
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                                                                  Equivalent                        Equivalent
                                               Present value      annualized     Present value      annualized
                                                                    value                             value
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Potential Net Cost Savings..................           $0.86             0.07            $1.50             0.08
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* The overall analytic timeline begins in 2021 and continues thereafter for an indefinite period. The cost
  savings in 2016 dollars and discounted to 2016, as defined as a present value, are $0.654 billion at 7 percent
  and $1.13 billion at 3 percent. As equivalent annualized values, the cost savings are $52 million at 7 percent
  and $58 million at 3 percent.

    Impacts in Table 1 reflect the potential impacts of the final MM2A
rule for the year in which all reclassifications are expected to have
taken place (2025) and beyond.
    To assess the potential changes in emissions that may result from
the reclassification of major sources to area sources under this rule,
we reviewed the permits and other information from 69 sources that have
reclassified since January 2018, consistent with the EPA's plain
language reading of the CAA section 112 definitions of ``major'' and
``area'' source, and also performed an illustrative analysis of 72
source categories in detail. Because we do not have information on the
major sources that may choose to reclassify to area source status in
the future and the enforceable conditions they will take in order to
reclassify, we are not able to provide an assessment of the emissions
impacts for actual reclassifications beyond the 69 sources that have
already reclassified.\5\ Therefore, we conducted a detailed
illustrative analysis of 72 source categories to provide a broad
characterization of the potential changes in emissions for all NESHAP
source categories that could be impacted by this action. The assessment
of the 69 reclassifications shows that 68 facilities have requirements
in their operating permits that would continue to implement the
compliance methods used to comply with the major source NESHAP
requirements and prevent emissions increases. However, the EPA found
that one of the 69 reclassified sources will not continue to employ the
same compliance methods that it used to meet the major source NESHAP
and thus it may increase its emissions. For the illustrative analysis
of emissions impacts conducted, we find that 65 source categories in
the major source NESHAP program will either not be impacted or will not
increase emissions as a result of the rule. Based on the broad
assumptions applied in the analysis, we found a potential for emissions
increases for some facilities in seven source categories. While a
majority of facilities are not anticipated to change emissions,
approximately 3.1 percent of the facilities in the MM2A database that
we were able to analyze could increase emissions if sources: (1)
Voluntarily opt to reclassify and (2) were allowed to reduce operation
of adjustable add-on controls. We also found a potential for emissions
decreases in cases where sources choose to reduce emissions from above
the MST to below the MST to reclassify. The facilities that we were
able to assess for emission increases and decreases are located across
the United States (i.e., in more than 10 states and in every region of
the United States) and are not clustered in close proximity to each
other. Further discussion of the impacts of the final rule are
presented in section VIII of this preamble and presented in detail in
the technical support memorandums, titled Documentation of the
Emissions Analysis for the Final Rule ``Reclassification of Major
Sources as Area Sources Under Section 112 of the Clean Air Act'' and
the Analysis of the Illustrative 125% Scenario for MM2A Rule--Potential
Cost Impacts from HAP Major Sources Reducing Emissions as part of
Reclassifying to HAP Area Sources, and the RIA for the final rule, all
of which are available in the docket for this action.
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    \5\ Of the 69 sources, 68 have already reclassified and one was
undergoing the process of reclassification.
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II. General Information

A. Does this rule apply to me?

    Categories and entities potentially impacted by this rule include
sources subject to NESHAP requirements under section 112 of the CAA.
    The final amendments are applicable to sources that reclassify from
major source to area source status under section 112 of the CAA and
sources that revert from their reclassified area source status to their
previous major source status.
    Federal, state, local, and tribal governments may be affected by
this rule if they own or operate sources that choose to request
reclassification from major source status to area source status or if
reclassified sources choose to revert to their previous major source
status at some time in the future. The EPA is the permitting authority
for issuing, rescinding, and amending permits for sources that request
reclassification in Indian country, with four exceptions.\6\ State,
local, or tribal regulatory authorities \7\ may receive requests to
issue new permits or make changes to existing permits for sources in
their jurisdiction to address reclassification-related activities
(e.g., title V, synthetic minor permits, establishing limits on a
source's PTE).
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    \6\ Two tribes have approved title V programs or delegation of
40 CFR part 71. The tribes may have sources that request to no
longer be covered by title V. Neither of these two tribes have
approved minor source permitting programs but may in the future. In
the meantime, the tribes will need to coordinate with the EPA, who
is the permitting authority in Indian country for these requests. In
addition, two other tribes have approved Tribal Implementation Plans
(TIPs) authorizing the issuance of minor source permits. Only one of
these tribes has a major source that would be eligible to request
reclassification. If that source requests a new permit, the tribe
may issue the minor source permit, but the EPA would need to be made
aware of the request, as the EPA is the permitting authority for
title V.
    \7\ The term regulatory authority is intended to be inclusive of
the federal, state, tribal, or local air pollution control agency
with authority to process reclassification requests and issuance of
enforceable PTE limits.
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B. Where can I get a copy of this document and other related
information?

    In addition to being available in the docket, an electronic copy of
the final MM2A rule is available on the internet. Following signature
by the EPA Administrator, the EPA will post a copy of this final action
at https://www.epa.gov/stationary-sources-air-pollution/reclassification-major-sources-area-sources-under-section-112-clean.
Following publication in the Federal Register, the EPA will post the
Federal Register version and key technical documents at this same
website.
    A redline version of the regulatory language that incorporates the
amendments finalized in this rule is available in the docket for this
action (Docket ID No. EPA-HQ-OAR-2019-0282).

C. Judicial Review and Administrative Reconsideration

    Under CAA section 307(b)(1), judicial review of this final rule is
available only by filing a petition for review in the United States
Court of Appeals for the District of Columbia Circuit (DCCir.) by
January 19, 2021. Under CAA section 307(b)(2), the requirements
established by this final rule may not be challenged separately in any
civil or criminal proceedings brought by the EPA to enforce the
requirements.
    Section 307(d)(7)(B) of the CAA further provides that only an
objection to a rule or procedure that was raised with reasonable
specificity during the period for public comment (including any public
hearing) may be raised during judicial review. This section also
provides a mechanism for the EPA to reconsider the rule if the person
raising an objection can demonstrate to the Administrator that it was
impracticable to raise such objection within the period for public
comment or if the grounds for such objection arose after the period for
public comment (but within the time specified for judicial review) and
if such objection is of central relevance to the outcome of the rule.
Any person seeking to make such a demonstration should submit a
Petition for Reconsideration to the Office of the Administrator, U.S.
EPA, Room 3000, WJC South Building,

1200 Pennsylvania Ave. NW, Washington, DC 20460, with a copy to both
the person(s) listed in the preceding FOR FURTHER INFORMATION CONTACT
section, and the Associate General Counsel for the Air and Radiation
Law Office, Office of General Counsel (Mail Code 2344A), U.S. EPA, 1200
Pennsylvania Ave. NW, Washington, DC 20460.

III. Background

    Shortly after the EPA began implementing individual NESHAP
resulting from the 1990 CAA Amendments, the Agency received multiple
requests to clarify when a major source of HAP could avoid CAA section
112 requirements applicable to major sources by taking enforceable
limits on its PTE below the major source thresholds. In response, the
EPA issued, on May 16, 1995, a memorandum from John Seitz, Director of
the Office of Air Quality Planning and Standards, to the EPA Regional
Air Division Directors (the May 1995 Seitz Memorandum).\8\ The May 1995
Seitz Memorandum provided guidance on three timing issues related to
avoidance of CAA section 112 requirements for major sources:
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    \8\ See ``Potential to Emit for MACT Standards-Guidance on
Timing Issues.'' From John Seitz, Director, Office of Air Quality
Planning and Standards, to the EPA Regional Air Division Directors.
May 16, 1995, https://www.epa.gov/sites/production/files/2018-02/documents/pteguid.pdf. Also available in the docket of this rule.
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     ``By what date must a facility limit its PTE if it wishes
to avoid major source requirements of a MACT standard?''
     ``Is a facility that is required to comply with a MACT
standard permanently subject to that standard?''
    ``In the case of facilities with two or more sources in
different source categories: If such a facility is a major source for
purposes of one MACT standard, is the facility necessarily a major
source for purposes of subsequently promulgated MACT standards?''
    In the May 1995 Seitz Memorandum, the EPA stated its interpretation
of the relevant statutory language that facilities that are major
sources of HAP may switch to area source status at any time until the
``first compliance date'' of the standard.\9\ Under this
interpretation, facilities that are major sources on the first
substantive compliance date of an applicable major source NESHAP were
required to comply permanently with that major source standard even if
the source was subsequently to become an area source by limiting its
PTE. This position was commonly referred to as the ``Once In, Always
In'' (OIAI) policy. The May 1995 Seitz Memorandum provided that a
source that is major for one NESHAP would not be considered major for a
subsequent NESHAP if the source's potential to emit HAP emissions was
reduced to below major source levels by complying with the first major
source NESHAP. In the May 1995 Seitz Memorandum, the EPA set forth
transitional policy guidance that was intended to remain in effect only
until the Agency proposed and promulgated amendments to the 40 CFR part
63 General Provisions.
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    \9\ The ``first substantive compliance date'' is defined as the
first date a source must comply with an emissions limitation or
other substantive regulatory requirement (i.e., leak detection and
repair programs, work practice measures, etc . . . , but not a
notice requirement) in the applicable standard.
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    After issuing the May 1995 Seitz Memorandum, the EPA twice proposed
regulatory amendments that would have altered the OIAI policy. In 2003,
the EPA proposed amendments that focused on HAP emissions reductions
resulting from pollution prevention (P2) activities. Apart from certain
provisions associated with the EPA's National Environmental Performance
Track Program--a national voluntary program designed to recognize and
encourage top environmental performers whose program participants go
beyond compliance with regulatory requirements to attain levels of
environmental performance that benefit people, communities, and the
environment--that proposal was never finalized. See 68 FR 26249 (May
15, 2003); 69 FR 21737 (April 22, 2004). In 2007, the EPA issued a
proposed rule to replace the OIAI policy set forth in the May 1995
Seitz Memorandum. See 72 FR 69 (January 3, 2007). In that proposal, the
EPA reviewed the provisions in CAA section 112 relevant to the OIAI
policy interpretation, applicable regulatory language, stakeholder
concerns, and potential implications. Id. at 71-74. Based on that
review, the EPA proposed an interpretation of the relevant statutory
language that a major source that is subject to a major source NESHAP
would no longer be subject to that major source standard if the source
were to become an area source through enforceable limitations on its
PTE HAP emissions. Id. at 72-73. Under the 2007 proposal, major sources
could take such limits on their PTE and obtain ``area source'' status
at any time and would not be limited to doing so only before the
``first substantive compliance date,'' as the OIAI policy provided. Id.
at 70. The EPA did not take final action on this 2007 proposal.
    In 2017, the EPA received public comments pursuant to Executive
Order 13777, Enforcing the Regulatory Reform Agenda (February 24,
2017), and the Presidential Memorandum on Streamlining Permitting and
Reducing Regulatory Burdens for Domestic Manufacturing (January 24,
2017) supporting the withdrawal of the OIAI policy.\10\ Per these
comments, the OIAI policy imposed an artificial time limit on major
sources obtaining area source status not found in the definitions of
``major source'' and ``area source'' in CAA sections 112(a)(1) and (2).
Commenters further stated that the temporal limitation imposed by the
OIAI policy was inconsistent with the CAA and created an arbitrary date
by which sources must determine whether their HAP PTE will exceed
either of the major source thresholds.
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    \10\ See Executive Order 13777 at 82 FR 12285 (February 24,
2017) and request for comment at 82 FR 17793 (April 13, 2017),
Docket ID No. EPA-HQ-OAR-2017-0190. See Presidential Memorandum at
82 FR 8667 (January 24, 2017) and request for information at 82 FR
12786 (March 7, 2017), Docket ID No. DOC-2017-0001.
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    On January 25, 2018, the EPA issued a guidance memorandum from
William L. Wehrum, Assistant Administrator of the Office of Air and
Radiation, to the EPA Regional Air Division Directors titled
``Reclassification of Major Sources as Area Sources Under Section 112
of the Clean Air Act'' (MM2A Memorandum).\11\ The MM2A Memorandum
discussed the statutory provisions that govern when a source subject to
major source NESHAP requirements under section 112 of the CAA may be
reclassified as an area source and thereby avoid being subject
thereafter to major source NESHAP requirements and other requirements
applicable to major sources under CAA section 112. In the MM2A
Memorandum, the EPA discussed the plain language of CAA section 112(a)
stating Congress's definitions of ``major source'' and ``area source''
and determined that the OIAI policy articulated in the 1995 Seitz
Memorandum was contrary to the plain language of the CAA and,
therefore, must be withdrawn. In the MM2A Memorandum, the EPA announced
the future publication of a proposed rule to receive input from the
public on adding regulatory text consistent with the plain reading of
the statute as described in the MM2A Memorandum.
---------------------------------------------------------------------------

    \11\ See notice of issuance of this guidance memorandum at 83 FR
5543 (February 8, 2018).
---------------------------------------------------------------------------

    On July 26, 2019, the EPA proposed regulatory text to implement the
plain

language reading of the statute as discussed in the MM2A Memorandum.
See 84 FR 36304. The 2019 MM2A proposal superseded and replaced the
2007 proposal. See 72 FR 69 (January 3, 2007). The EPA solicited
comment on all aspects of the MM2A proposal, including the EPA's
position that the withdrawal of the OIAI policy and the proposed
approach gives proper effect to the statutory definitions of ``major
source'' and ``area source'' in CAA section 112(a) and is consistent
with the plain language and structure of the CAA as well as the impacts
of the proposal on costs, benefits, and emissions impacts. Publication
of the MM2A proposal in the Federal Register opened comment on the
proposal for an initial 60-day public comment period. The EPA held a
public hearing on August 15, 2019, in Washington, DC. In response to
requests for an extension of the comment period, the EPA reopened the
public comment period for an additional 30 days through November 1,
2019. The EPA received more than 16,000 comments on the MM2A proposal.
After review and consideration of public comments, the EPA is
finalizing the implementation of the plain language reading of the
definitions of major source and area source under CAA section 112. Per
CAA section 307(d)(6)(B), the EPA is providing a response to the to the
most significant comments received on the MM2A proposal in this
preamble, and responses to the other comments in the Response to
Comments document available in the docket.

IV. Statutory Authority

    As discussed in the preamble of the MM2A proposal at 84 FR 36304,
36309-36313 (July 26, 2019), CAA section 112 distinguishes between
major and area sources of HAP emissions. Indeed, the very first
provisions in CAA section 112 are the major source definition in CAA
section 112(a)(1) and area source definition in CAA section 112(a)(2))
that create the major/area distinction. Major sources emit more HAP
than area sources and, generally, different requirements apply to major
sources and area sources. For some section 112 source categories, the
EPA has promulgated requirements for only major sources, and HAP
emissions from area sources are not regulated under the NESHAP program.
    Whether a source is a ``major source'' or an ``area source''
depends on the amount of HAP emitted by the source based on its actual
and potential emissions. Congress defined ``major source'' to mean a
source that emits or has the potential to emit at or above either of
the statutory thresholds of 10 tpy of any one HAP or 25 tpy of total
HAP. CAA section 112(a)(1). An ``area source'' is defined as any source
of HAP that is not a major source. CAA section 112(a)(2). If a source
does not emit or does not have the potential to emit at or above either
of the major source thresholds, then it is an ``area source.'' The
statutory definitions of ``major source'' and ``area source'' do not
contain any language that fixes a source's status as a major source or
area source at any particular point in time, nor do they otherwise
contain any language suggesting that there is a cutoff date after which
a source's status cannot change.
    Congress did, however, create a distinction based on timing in CAA
section 112 in defining and creating provisions related to ``new
sources'' and ``existing sources.'' Specifically, Congress defined
``new source'' to mean a source that is constructed or reconstructed
after the EPA first proposes regulations covering the source. CAA
section 112(a)(4). An ``existing source'' is defined as any source
other than a new source. CAA section 112(a)(10). A source will be
subject to different requirements depending on whether it is a new
source or an existing source. See, e.g., CAA section 112(d)(3)
(identifying different minimum levels of stringency (known as ``MACT
floors'') for new and existing sources).
    The emissions-based distinction (arising from the definitions of
major source and area source) and the timing-based distinction (arising
from the definitions of new source and existing source) are
independent, and neither is tied to the other. For example, the
statutory definition of ``major source'' does not provide that major
source status is determined based on a source's emissions or PTE as of
the date that the EPA first proposes regulations applicable to that
source or any other point in time. As noted above, the plain language
of the ``major source'' and ``area source'' definitions create a
distinction that is based solely on amount of emissions and PTE, and
not timing. Similarly, with respect to the timing-based distinction, a
source is a ``new source'' or an ``existing source'' based entirely on
the timing of its construction or reconstruction and without
consideration of its actual emissions or PTE. The contrast between the
temporal distinction in the contrasting definitions of existing and new
sources on the one hand, and the absence of any temporal dimension to
the contrasting definitions of major and area sources on the other, is
further evidence that Congress did not intend to place a temporal
limitation on a source's ability to be classified as an area source
(including a source's ability to be classified as an area source
through the permitting authority's ``considering controls'' that may
have been imposed after the source was initially classified as major).
    Notwithstanding the independence of the two distinctions that the
statute created based on amount of emissions and timing (and without
addressing that independence or otherwise addressing the plain language
of the statutory definitions of ``major source'' and ``area source''),
the EPA issued the May 1995 Seitz Memorandum, which set forth the OIAI
policy. Under the OIAI policy, a source's status as a major source for
the purpose of applying a specific major source MACT standard issued
under the requirements of CAA section 112 was deemed to be unalterably
fixed on the first substantive compliance date of the specific
applicable major source requirements. Thus, a source that was a major
source on that first compliance date would continue to be subject to
the major source requirements for that specific NESHAP even if the
source reduced its emissions of and PTE HAP to below the statutory
thresholds in the definition of ``major source,'' and, thus, fell
within the definition of ``area source.''
    On January 25, 2018, the EPA issued the MM2A Memorandum. The MM2A
Memorandum discussed the statutory definitions of ``major source'' and
``area source'' and explained that the OIAI policy articulated in the
May 1995 Seitz Memorandum was contrary to the plain language of the
CAA, and, therefore, must be withdrawn.
    As discussed above, Congress expressly defined the terms ``major
source'' and ``area source'' in CAA section 112(a) in unambiguous
language. Nonetheless, under the OIAI policy, a source that reduced its
emissions of and PTE HAP to below the statutory thresholds for major
source status after the relevant compliance date would continue to be
subject to the requirements applicable to major sources. This policy
was applied notwithstanding that the statutory definitions of ``major
source'' and ``area source'' lack any reference to the compliance date
of major source requirements or any other text that indicates a time
limit for changing between major source status and area source status.
In short, Congress placed no temporal limitations on the determination
of whether a source emits or has the potential to emit HAP in
sufficient quantity to be a major source

under CAA section 112. Because the OIAI policy imposed such a temporal
limitation (before the ``first compliance date''), the EPA had no
authority for the OIAI policy under the plain language of the CAA.
Under the plain language of the statute, a major source that takes
enforceable limits on its PTE to bring its HAP emissions below the CAA
section 112 major source thresholds, no matter when it may choose to do
so, becomes an area source under Congress's definition in CAA section
112(a)(2). In this final action, we are implementing the plain language
of CAA section 112 and making clear that such a source can reclassify
to area source status at any time, and after reclassification, will no
longer be subject to the CAA section 112 requirements applicable to the
source as a major source under CAA section 112--so long as the source's
actual and PTE HAP emissions remain below the CAA section 112
thresholds--and will instead be subject to any applicable area source
requirements.
    A discussion of the statutory definitions of ``new source'' and
``existing source'' in CAA section 112(a)(4) and (10) further
demonstrates that the OIAI policy was inconsistent with the language of
the statute. As discussed above, the major source/area source
distinction and the new source/existing source distinction are two
separate and independent features of the statute. Significantly, the
statutory definitions of ``new source'' and ``existing source'' dictate
that the new source/existing source distinction is determined by when a
source commences construction or reconstruction and says nothing about
the source's volume of emissions. No one can reasonably suggest that
this silence concerning volume of emissions indicates that Congress
intended to give the EPA the discretion to conclude that sources should
be classified as new or existing based, in part, on how much they emit.
For example, if the EPA were to say that a source is only a new source
if it both (1) commences construction after regulations are first
proposed (as stated in CAA section 112(a)(4)), and (2) emits more than
20 tpy of any single HAP (which is not stated anywhere in the statute),
that second element would be contrary to the plain language of the
statute. Similarly, the OIAI policy of considering timing as part of
the major source/area source distinction is contrary to the plain
language of the statute, because it interjects timing into the major/
area distinction when Congress provided that such distinction would be
based only on the source's actual and potential emissions. In short,
Congress's creation of the timing distinction in the new source and
existing source definitions shows that Congress was explicit when it
wanted to classify sources based on timing, and it did not do so in
creating the major/area source distinction.
    Some commenters have argued that the EPA's plain language reading
cannot be correct in light of various provisions in CAA section 112.
The EPA has considered these comments and concluded that the EPA's
plain language reading is the correct reading, for the reasons
discussed below, in the Response to Comments document and elsewhere in
the record.
    CAA section 112(i)(3)(A)--Some commenters assert that the EPA's
plain language reading of the definitions of ``major source'' and
``area source'' is contradicted by CAA section 112(i)(3)(A).
Specifically, they contend that the first phrase in CAA section
112(i)(3)(A) precludes a major source from reclassifying to area source
status after the source has become subject to a major source standard
and that this statutory text compels the OIAI policy. The EPA disagrees
with this contention. The first phrase in CAA section 112(i)(3)(A)
states: ``After the effective date of any emissions standard,
limitation or regulation promulgated under this section and applicable
to a source, no person may operate such source in violation of such
standard, limitation or regulation . . . .'' As discussed in the
proposal (84 FR 36311), the EPA reads this phrase to have the same
meaning as similar ``effective date'' provisions in the CAA, such as
CAA section 111(e), notwithstanding that CAA section 112(i)(3)(A) has
somewhat different phrasing. In short, this text simply provides that,
after the effective date of a CAA section 112 rule, sources to which a
standard is applicable must comply with that standard. This text is not
reasonably read to say that, once a standard is applicable to a source,
that standard continues to be applicable to the source for all time,
even if the source's potential to emit changes such that it no longer
meets the applicability criteria for the standard. Such a reading would
produce some results that are clearly incorrect. For example, if the
first phrase in CAA section 112(i)(3)(A) were read to say that a
source's applicable requirements are determined at the point in time
that a source first becomes subject to CAA section 112 requirements,
then an area source would continue to be subject to area source
requirements even if that source increased its potential to emit above
either of the major source thresholds. Such a result would be contrary
to the EPA regulations, which provide that an area source that
increases its emissions or PTE above the MST becomes subject to the
applicable major source requirements. 40 CFR 63.6(a)(2), 63.6(b)(7),
63.6(c)(5).
    Further, reliance on CAA 112(i)(3)(A) to argue against the EPA's
plain language reading and for a return to the OIAI policy ignores that
the ``effective date'' of a CAA section 112 standard is not the same as
the ``compliance date.'' CAA section 112(i)(3)(A) expressly provides
that the EPA may set the ``compliance date'' for existing sources up to
3 years after the ``effective date.'' Similarly, CAA section 112(i)(5)
(which is applicable in certain circumstances for sources that make
early reductions in HAP emissions) provides for a delayed compliance
date that will be after the effective date. This is significant because
the cutoff deadline for reclassification that the commenters say is
required under CAA section 112(i)(3)(A) is not the effective date.
Under the OIAI policy, the cutoff date for reclassification was the
first substantive compliance date, which (as just discussed) is clearly
distinguished from the effective date in CAA section 112(i)(3)(A) in
the statute. Thus, commenters' reading of CAA section 112(i)(3)(A)
would not only be contrary to the EPA's plain language reading but
would also be contrary to the OIAI policy under which sources could
reclassify after the effective date as long as they did so before the
first substantive compliance date.
    In sum, the EPA has concluded that the CAA section 112 definitions
of ``major source'' and ``area source'' and the ``effective date''
provision in CAA section 112(i)(3)(A) are properly read together to say
that sources must comply with the applicable requirements corresponding
to their major source or area source status, and that if this status
changes, then the source becomes subject to the requirements
corresponding to its status after the change.
    CAA sections 112(c)(3) and (6)--Some commenters argue that CAA
sections 112(c)(3) and (6) reflect a Congressional intent that sources
be subject to continuous, permanent compliance with major source
standards and that these provisions are, therefore, inconsistent with
the EPA's plain language reading. But there is no inconsistency here.
Those provisions required the EPA to ensure that sources accounting for
90 percent of the emissions of specific pollutants were listed and
regulated by November 2000. The premise of the commenters' argument
based on CAA

sections 112(c)(3) and (6) is that these provisions do not simply
require the EPA to list and regulate sufficient source categories to
meet the 90-percent requirement at a given point in time; rather, they
require that the EPA's regulations ensure that 90 percent of emissions
are subject to regulation on an ongoing basis. This is not a reasonable
reading of CAA sections 112(c)(3) and (6) because, as explained in
greater detail in the proposed rule preamble at 84 FR 36311, the
requirements of the statute and subsequent standards will result in the
emissions from the listed source categories falling below the 90-
percent threshold once those source categories are regulated. If
commenters' interpretation were correct, CAA sections 112(c)(3) and (6)
would create a never-ending cycle of listing and regulation in order to
achieve an unattainable goal of ensuring that 90 percent of emissions
are regulated. See 84 FR 36311.
    In response to the EPA's discussion in the proposed rule preamble,
commenters have stated that the statutory text in CAA sections
112(c)(3) and (6) is properly read not to focus on the source
categories that those provisions require to be listed but on the
individual sources that are within those categories--specifically, that
these provisions require the EPA to regulate the sources that produced
those emissions. But if the listing and regulation required pursuant to
CAA sections (c)(3) and (6) were read to apply to the sources that
produced the emissions as of the time of the listing of the categories,
then that would mean that new sources within the listed source
categories would not be regulated. The EPA does not think this is a
reasonable reading of those provisions. Instead, the proper reading of
these provisions is that the EPA is to list and regulate source
categories, and then a source is regulated pursuant to the standard
applicable to a given source category to the extent that, and as long
as, the source remains within the source category. Thus, under a proper
reading of CAA sections 112(c)(3) and (6), those provisions do not
prevent reclassification, so there is no conflict between the EPA's
plain language reading of CAA sections 112(a)(1)-(2) and the
requirements of CAA sections 112(c)(3) and (6).
    CAA section 112(f)(2)--Commenters also point to CAA section
112(f)(2) (commonly referred to as the residual risk provision) and
contend that the EPA's plain language reading allows reclassified
sources to avoid the review required under that provision. But this
argument fails to refute the discussion that the EPA provided in the
proposed rule preamble (at 84 FR 36311-36312). First, as a general
matter, Congress in CAA section 112 plainly distinguished between major
sources emitting above the MST and area sources emitting below the MST
and subjected them to different requirements. Second, with regard to
CAA section 112(f), CAA section 112(f)(5) contains an express exemption
from the CAA section (f)(2) review for area sources, and there is no
statutory basis or logical reason for treating an area source
differently just because it is a former major source. For these
reasons, CAA section 112(f) is not inconsistent with the EPA's plain
language reading.
    CAA section 112(d)--Some commenters have pointed to the
requirements of CAA section 112(d) as requiring sources that are at any
point subjected to major source standards must continue to be subject
to major source standards permanently. These commenters have argued
that the EPA's plain language reading undermines the emissions
reductions required by these CAA section 112 standards. Section
112(d)--and in particular, sections 112(d)(2) and (3) of the CAA--
addresses how the EPA sets MACT standards for major sources (based on
the maximum degree of emissions reduction the EPA determines is
achievable, which may be a complete prohibition on emissions). But the
question of what standard is applicable to major sources in a source
category--whether MACT floor standards or otherwise--logically cannot
determine which sources are major sources . Instead, the text and
structure of CAA section 112 demonstrate that whether a source is
classified as a major source or an area source is the threshold
question under CAA section 112, and what requirements apply to the
source flows from how the source is classified, with major sources and
area sources facing significantly different regulation.
    As noted above, the very first provisions in CAA section 112 are
the major source definition in CAA section 112(a)(1) and area source
definition in CAA section 112(a)(2) that create the major/area
distinction. Following from this threshold distinction, CAA section 112
treats major sources and area sources differently in fundamental ways.
To state a few examples that illustrate this:
    (1) The EPA must list all categories of major sources of HAP
pursuant to CAA section 112(c)(1), but only has to list categories of
area sources representing 90 percent of HAP under CAA section
112(c)(3). This distinction is then carried over to what sources are
regulated, as provided in CAA section 112(d)(1), which provides that
the EPA will regulate those categories listed under CAA section 112(c).
    (2) Major sources are subject to MACT standards under CAA section
112(d)(2) and (3), but area sources may be subject to generally
available control technology (GACT) standards under CAA section
112(d)(5).
    (3) Area source categories and subcategories listed under CAA
section 112(c)(3) and for which standards are set under CAA section
112(d)(5) are not subject to residual risk review under CAA section
112(f)(2), pursuant to CAA section 112(f)(5).
    In short, to the extent that major sources become area sources by
reducing their emissions of and PTE HAP below the MST, and, thus, are
no longer subject to major source requirements, that is not a
``loophole'' or an ``end-run'' around the major source requirements.
That is simply the result of the provisions and structure of CAA
section 112 that Congress enacted and reflects the fundamental
distinction between how CAA section 112 addresses major sources and
area sources.
    Further, allowing a major source to take a PTE limit below the
major source threshold and thereby avoid having to comply with major
source requirements is not a new concept under MM2A. Indeed, that is
precisely what happened under the OIAI policy. The only change under
MM2A is one of timing. Under the OIAI policy, major sources could
reclassify if they took the PTE limit before the first substantive
compliance date. Under MM2A, sources can reclassify at any time.
Nothing in the statute says, and there is no logical reason why, a
major source that could reclassify to area source status on the day
before its first substantive compliance date (as allowed under the OIAI
policy) is foreclosed from doing so on the day after its first
substantive compliance date.
    Similarly, having a source reclassify after the first substantive
compliance date is not a new concept under MM2A. During the time that
the OIAI policy was in effect, area sources were reclassified to major
source status at any time that they increased emissions or their PTE
above the major source threshold, even if the increase occurred after
the first substantive compliance date under the applicable area source
rule.
    For these reasons, the EPA concludes that the standard-setting
provisions in CAA sections 112(d)(2) and (3) do not contradict the
plain language of the major source and area source definitions

on the issue of whether a source can reclassify at any time.
    Parties opposed to the EPA's plain language reading also suggest
that the EPA's reading is inconsistent with the purpose and provisions
of CAA section 112 because it will lead major sources that reclassify
to area source status to increase their emissions above what they could
emit if they continued to be major sources. The EPA disagrees with the
suggestion that a source's reclassification from major source to area
source will necessarily lead to an increase in emissions from the
source above what would have been allowed to emit under the major
source standard. As discussed in section VIII of the preamble, there
are a number of reasons why reclassified sources are generally not
expected to increase their emissions. The EPA's analysis of the sources
that have reclassified to date and sources that might reclassify from
various source categories shows that in 68 out of 69 operating permits
for sources that have already reclassified to area source status since
January 2018, sources achieved and maintain area source status by
operating the emission controls or continuing to implement the
practices they used to comply with the major source NESHAP
requirements. However, the EPA found that one of the 69 reclassified
sources will not continue to employ the same compliance method that it
used to meet the major source standard, and thus may increase its
emissions. In addition to this review of actual reclassification
actions since January 2018, the EPA also prepared an illustrative
analysis for 72 source categories in the major source NESHAP program
(114 total) to evaluate the potential emissions impacts. After
considering the information and data available for the illustrative
emissions analysis, we found that 65 source categories will not change
emissions as a result of the rule. For the other seven, there was a
potential for (but not a certainty of) emissions increases based on
conservative assumptions that are likely to overstate the change in
emissions at some facilities. Sources in these in seven source
categories assessed in the primary scenario could increase emissions if
those facilities (1) opted to reclassify and (2) were permitted to
change the operation of adjustable add-on controls. Further details of
this illustrative analysis and the results are provided below in
section VIII.
    Further, allowing major sources to reclassify to area source status
after the first substantive compliance date may create an incentive for
sources to evaluate their operations and consider changes that can
further reduce their HAP emissions to below the MST if the source views
those changes as an opportunity to reduce costs of production, increase
productivity, or reduce the costs of complying with major source NESHAP
requirements. For example, sources using surface coatings may see the
opportunity to become an area source as an extra incentive to invest in
the development of new low- or no-HAP content coatings, inks, and
binders. Similarly, sources with boilers and engines may benefit from
replacing old boilers and engines with new, more efficient, and clean
technologies. Such a replacement not only could help a source reduce
HAP to below the MST but could also reduce fuel use and associated
costs. To assess the opportunity for such emission decreases, we looked
at an alternative scenario and determined that some sources operating
between 75 and 125 percent of the MST could decrease emissions if those
sources were to reclassify. Further details of this illustrative
analysis and the results are provided below in section VIII.
    In the MM2A proposal, the EPA took comment on whether it can and
should promulgate regulatory provisions that would prevent a source
that has reclassified from major to area source status from increasing
emissions above what the source was allowed to emit when it was a major
source. See 84 FR 36312-36313. Upon further consideration of this issue
and the comments received, the EPA has concluded that the plain
language of CAA section 112 precludes the promulgation of such
provisions. As discussed above, the plain language of CAA section 112
provides that a source is an area source if its emissions and PTE are
below the thresholds of 10 tpy of any one HAP and 25 tpy of any
combination of HAP. Just as there is nothing in the statutory
definitions in CAA sections 112(a)(1) and (2) or elsewhere in CAA
section 112 that sets, or gives the EPA the authority to set, a cut-off
date after which a major source cannot classify to area source status,
there is nothing in CAA section 112 that imposes, or gives the EPA the
authority to impose, a requirement that a source can only be an area
source if it limits its emissions to some level below the MST. Congress
clearly identified the thresholds of 10 tpy of any one HAP and 25 tpy
of all combined HAP as the dividing line between major source status
and area source status. The EPA cannot impose a different dividing line
from what Congress wrote into CAA section 112. See Utility Air
Regulatory Group v. EPA, 573 U.S. 302, 325-326 (2014) (where Congress
created precise numerical thresholds in the statute, the EPA's
rewriting of the statutory thresholds is impermissible).
    Further, even if there were some ambiguity in the text and
structure of CAA section 112 that gave the EPA the discretion to impose
such a requirement, the EPA's conclusion in light of both the statute
and policy considerations is that such a requirement should not be
imposed. As discussed above, whether a source is classified as a major
source or an area source is the threshold question under CAA section
112, and what requirements apply to the source flows from how the
source is classified, with major sources and area sources facing
significantly different statutory requirements. If the EPA were to
mandate that a reclassified area source maintain its emissions below
the level that the source was subject to as a major source, that would
be contrary to the fundamental structure that Congress created in CAA
section 112. Further, as discussed below in section VIII, even in the
absence of any provisions preventing emissions above what a
reclassified source was allowed to emit as a major source, most sources
are not expected to increase emissions and those that do would have
only modest increases. Thus, as a matter of policy judgment, the EPA
would not interpret any ambiguity in the statute to allow the
imposition of a new limit on reclassified area sources more stringent
than the limit applied to other area sources.
    For these reasons, the EPA is not promulgating provisions that
would prevent a source that has reclassified from major to area source
status from increasing emissions above what the source was allowed to
emit when it was a major source.

V. Summary of Final Amendments

    To implement the plain language reading of the statute as discussed
in section IV above, the EPA is finalizing amendments to the General
Provisions of 40 CFR part 63, subpart A. The EPA is also finalizing
amendments to the General Provisions tables contained within most
subparts of 40 CFR part 63 to account for the regulatory provisions we
are finalizing in the General Provisions of 40 CFR part 63, subpart A.
Finally, the EPA is finalizing changes to several individual NESHAP
intended to remove rule-specific OIAI provisions. For all comments not
discussed in this preamble, comment summaries and the EPA's responses
can be found in the Response to Comments document available in the
docket.

A. Final Amendments to 40 CFR Part 63, Subpart A: General Provisions

1. Applicability
    The EPA is finalizing amendments to the applicability section of
the General Provisions of 40 CFR part 63.1 by adding a new provision 40
CFR 63.1(c)(6) to implement the plain language reading of the ``major
source'' and ``area source'' statutory definitions of section 112 of
the CAA and provide that a major source can be reclassified to area
source status at any time upon reducing its actual emissions of and
potential to emit HAP to below the MST of 10 tpy of any single HAP and
25 tpy of any combination of HAP. At proposal, this new applicability
provision also included regulatory language addressing the compliance
date with applicable NESHAP requirements for reclassification and
interactions with enforcement actions. We received comments on all
aspects of the new applicability provision. Below we discuss each
aspect of the proposed MM2A applicability provision and what we are
finalizing after considering public comments.
a. Reclassification Provision
    The EPA proposed to amend 40 CFR 63.1 by adding a new paragraph
(c)(6). As proposed, this paragraph specifies that a major source can
become an area source at any time by limiting its PTE HAP to below the
major source thresholds established in 40 CFR 63.2, provided certain
conditions are met. We received comments in support of and against the
proposed text in 40 CFR 63.1(c)(6) and comments requesting changes to
or clarification on the proposed provision. Comments against the
proposed reclassification provision based on the statutory text or
other legal issues (such as legal comments opposing the EPA's plain
language reading of CAA section 112 definitions of major and area
sources allowing sources to reclassify at any time) are addressed in
section IV of this preamble and in the Response to Comments document
available in the docket. The comments requesting changes to or
clarification on the new provision are summarized below.
    Some commenters recommended that the EPA add language to the new
provision in 40 CFR 63.1(c)(6) to specify that the provision applies to
sources that reclassify to area source status after being subject to
major source NESHAP requirements. The EPA disagrees that the language
only applies to reclassification by a major source after the source has
been subject to major source NESHAP requirements. The regulatory
language in this provision implements the EPA's plain language reading
of the definition of major and area sources in section 112 of the CAA,
as discussed in length in section IV of this preamble, allowing sources
to reclassify at any time. This provision allows for reclassification
to area source status regardless of whether the reclassification occurs
before or after the first substantive compliance date of a major source
NESHAP.
    Other commenters stated that the proposed provision in 40 CFR
63.1(c)(6) could be read to require all types of sources to obtain PTE
limits in order to be reclassified to area source status. These
commenters stated that this could be problematic for sources that were
major at the first substantive compliance date of a particular NESHAP
but are no longer within the definition of ``major source'' at the time
of reclassification because the source's emissions of and PTE HAP are
below the MST even in the absence of a governmental restriction on
emissions in a PTE limit. The EPA agrees with the commenters that the
language in the proposed provision can be clarified and has amended the
language of 40 CFR 63.1(c)(6) in the final rule to read: ``A major
source may become an area source at any time upon reducing its
emissions of and potential to emit (PTE) hazardous air pollutants, as
defined in this subpart, to below the major source thresholds
established in 40 CFR 63.2, subject to the provisions in paragraphs
(c)(6)(i) and (ii) of this section.'' The provisions in 40 CFR
63.1(c)(6)(i) and (ii) as finalized in this action are discussed later
in this preamble.
    In the final regulatory language of 40 CFR 63.1(c)(6), the EPA
replaced the phrase ``limiting its potential to emit (PTE) hazardous
air pollutants . . .'' with the phrase ``reducing its emissions of and
potential to emit (PTE) hazardous air pollutants . . .''. This updated
language removes the ambiguity in the proposed language and makes it
clear that PTE limits would be needed for area source reclassification
for sources with PTE HAP at or above the MST. In contrast, consistent
with the statutory definitions of ``major source'' and ``area source''
and the regulatory definition of PTE in 40 CFR 63.2, so called ``true''
area sources,\12\ which in this preamble means sources that do not have
the capacity to emit HAP at major source levels under their physical
and operational design (even if the source owner and regulatory agency
disregard any enforceable limitations), are not within the definition
of ``major source.'' These ``true'' area sources do not need to obtain
enforceable PTE limits to be reclassified to area source status.
Accordingly, sources that have permanently removed equipment, changed
their processes, or by other means currently do not have a maximum
capacity to emit HAP at major source levels are ``true'' area sources
(i.e., enforceable limits are not needed on the source's physical or
operational design to restrict the source's PTE HAP below MST) and do
not need to adopt PTE limits to be reclassified. Any source that adopts
a physical or operational limit on its maximum capacity to emit
(including requirements for the use of air pollution control equipment
or restrictions on the hours of operations or on the type or amount of
material combusted, stored, or processed) to limit its PTE HAP below
the MST is not a true area source. These are often referred to as
``synthetic'' area sources.\13\
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    \12\ This preamble follows the convention about the meaning of
these terms adopted in an EPA memorandum titled ``Potential to Emit
(PTE) Guidance for Specific Source Categories'' (April 14, 1998),
available at https://www.epa.gov/sites/production/files/2015-07/documents/lowmarch.pdf.
    \13\ We note that in the Oil and Natural Gas Federal
Implementation Plan (O&NG FIP) in Indian County, ``true area
sources'' include the reductions due to compliance with various
NESHAP and new source performance standards (NSPS) standards, which
are applicable requirements of the O&NG FIP. True minor sources in
the oil and natural gas production and natural gas processing
segments of the oil and natural gas sector are required to comply
with the O&NG FIP instead of obtaining a source-specific minor
source permit, unless a source chooses to opt out of the FIP and to
obtain a source-specific minor New Source Review (NSR) permit
instead under the ``Federal Minor New Source Review (NSR) Program in
Indian Country.'' See FIP for True Minor Sources in Indian Country
in the Oil and Natural Gas Production and Natural Gas Processing
Segments of the Oil and Natural Gas Sector. 81 FR 35944 (June 3,
2016).
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    Relatedly, commenters claimed that the MM2A proposal did not appear
to explain that the definition of ``potential to emit'' does not
require enforceable limitations for restrictions on HAP emissions that
are inherent in the physical or operational design of the production
process. Note that the EPA recognizes that, on a case-by-case basis, a
situation may warrant an assessment of whether a given device or
strategy should be considered as air pollution control equipment or as
an inherent part of the process.\14\ That said, the final rule is not
revising the EPA's view on how to determine ``the maximum capacity of a
stationary source to emit a pollutant under its physical and
operational design.'' Sources with questions about the proper way to
determine PTE HAP or whether they should obtain PTE limits for
reclassification to area source

status are encouraged to consult applicable permitting program
regulations and work with their corresponding regulatory authorities on
a determination that considers their situation. See also, 40 CFR
63.10(b)(3), which explains in detail the analysis and contents of the
records to be kept for applicability determinations made by a source
for purposes of 40 CFR part 63.
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    \14\ See https://www.epa.gov/sites/production/files/2015-07/documents/readymix2.pdf.
---------------------------------------------------------------------------

    Multiple commenters objected to the EPA's proposed viewpoint that a
major source that had been complying with a NESHAP as of the first
substantive compliance date of the standard, but reduced its PTE HAP
below the MST by complying with non-section 112 CAA requirements, would
be required to obtain HAP PTE limits to ensure that HAP emissions
remain below the MST. These commenters argued the EPA should make clear
in the final rule that a limitation on another pollutant or parameter
can be recognized as a limitation on the source's potential to emit HAP
if the limitation on the other pollutant emissions or parameter
results, as a practical matter, in a restriction on the source's HAP
emissions. The commenters noted that limits that qualify to reduce a
source's PTE HAP emissions do not need to be ``HAP PTE limits,'' i.e.,
a requirement need not place limits directly on a HAP to have the
effect of limiting a HAP. The commenters cited as example that volatile
organic compound (VOC) limits could reduce HAP emissions and further
stated that the EPA provided no explanation why requiring the source to
obtain HAP PTE limits is essential to ensure that the area source's HAP
emissions are effectively limited. The EPA recognizes that the proposal
may have caused confusion about whether the EPA recognizes HAP
reductions due to surrogate criteria pollutant controls for purposes of
reclassifying to area source status.\15\ That said, the EPA has
concluded that it does not need to revise the regulatory text to make
this specific point because the definition of PTE (as revised in this
final rule) allows for the effect of such limitations to count toward
limiting the PTE HAP. A source relying on the effect of non-HAP
enforceable limitation to constrain its PTE HAP below the MST may need
to show the regulatory authority processing the reclassification the
effect of such limitation on the source's PTE HAP to confirm that such
source has a PTE HAP that allows it to reclassify to area source
status.\16\ As explained before, the determination of a source's PTE
HAP under the PTE definition in 40 CFR 63.2 requires consideration of
any enforceable controls, including ``nested'' HAP usage limits in
permits intended as enforceable VOC limits, and other enforceable non-
HAP limitations within a permit that have the effect of reducing HAP
emissions. To the extent that a source's PTE considering controls
exceeds the MST, a source would need to obtain enforceable limitations
constraining its PTE HAP below the MST in order to be reclassified to
area source status. Finally, the revised language in 40 CFR 63.1(c)(6)
that now states ``reducing emissions and its potential to emit (PTE)
hazardous air pollutants . . .'' (as opposed to the proposed language
stating ``limiting its potential to emit (PTE) hazardous air pollutants
. . .'') supports the EPA's conclusion that the PTE regulatory
definition means that enforceable limits on other pollutants can have
the effect of reducing PTE HAP and can be the basis for
reclassification. See also 40 CFR 63.10(b)(3) about the analysis and
record contents.
---------------------------------------------------------------------------

    \15\ See, e.g., January 25, 1995, memorandum titled ``Options
for Limiting the Potential to Emit (PTE) of a Stationary Source
Under Section 112 and Title V of the Clean Air Act (Act),'' also,
memorandum, ``Crediting of Maximum Achievable Control Technology
(MACT) Emission Reductions for New Source Review (NSR) Netting and
Offsets,'' available at https://www.epa.gov/sites/production/files/2015-07/documents/netnoff.pdf. See, also, 81 FR 35944, explaining
that HAP compliance reductions of volatile organic HAP to meet MACT
may also result in emissions reductions of VOC.
    \16\ The EPA expects that state and local and tribal agencies
will exercise care when drafting enforceable permit conditions in
the situation where the ``effect'' of criteria pollutant limits will
not be straight forward. See January 25, 1995, memorandum titled
``Options for Limiting the Potential to Emit (PTE) of a Stationary
Source Under Section 112 and Title V of the Clean Air Act (Act).''
---------------------------------------------------------------------------

    Finally, some commenters asked the EPA to clarify what requirements
apply to sources that reclassified before the effective date of this
rule. These commenters asked the EPA to state in the final rule that
sources that reclassified to area source status prior to the MM2A final
rule would not be required to undertake any additional actions. To the
extent that sources have reclassified before the effective date of this
final rule, their ability to reclassify is governed by the plain
language reading of the statute. We discuss the notification and
recordkeeping requirements for sources that reclassified before the
effective date of this final rule later in this preamble. In contrast,
sources that reclassify after the effective date of this final rule are
governed by the plain language reading of the statute and by the
provisions being finalized in this final rule. In either case, a
reclassification is not a safe harbor for the source if the limits
taken do not effectively limit the HAP emissions and the source emits
HAP in excess of the MST.
b. Compliance Dates for Applicable Standards
    In the proposed language of 40 CFR 63.1(c)(6), the EPA included
regulatory text addressing applicability of standards and other
requirements under 40 CFR part 63 for sources that reclassify to area
source status, including dates for compliance with standards and
notifications requirements. Because sources must comply with
requirements corresponding to their status, the proposed provision in
40 CFR 63.1(c)(6) specified, ``Until the PTE limitations become
effective, the source remains subject to major source requirements.
After the PTE limitations become effective, the source is subject to
any applicable requirements for area sources.'' In response to comments
and to clarify the requirements associated with applicability of NESHAP
requirements and the compliance dates for sources reclassifying to area
source status, both before and after compliance with applicable major
source NESHAP requirements, and for reclassified area sources that
subsequently become major sources again, the EPA is consolidating these
requirements in the final regulatory text at 40 CFR 63.1(c)(6)(i). The
final provision also addresses the notification requirements for these
sources. We discuss notification requirements below in section V.A.2 of
the preamble.
    The final regulatory text in 40 CFR 63.1(c)(6)(i)(A) addresses the
applicability of standards and compliance dates for sources
reclassifying to area source status either before or after being
subject to major source requirements under 40 CFR part 63. The final
regulatory text in 40 CFR 63.1(c)(6)(i)(B) addresses the applicability
of standards and compliance dates for reclassified area sources that
subsequently become major sources again. These final provisions are
discussed below.
    In this final rule, the EPA is updating the regulatory language in
40 CFR 63.1(c)(6)(i)(A) to include the applicability of standards and
compliance dates for sources reclassifying to area source status. The
final amended text in 40 CFR 63.1(c)(6)(i)(A) reads as follows: ``A
major source reclassifying to area source status under this part
remains subject to any applicable major source requirements established
under this part until the reclassification becomes

effective. After the reclassification becomes effective, the source
must comply with any applicable area source requirements established
under this part immediately, provided the compliance date for the area
source requirements has passed. The owner or operator of a major source
that becomes an area source subject to newly applicable area source
requirements under this part must comply with the initial notification
pursuant to Sec.  63.9(b). The owner or operator of a reclassified
source must also provide to the Administrator notification of the
change in the information already provided under Sec.  63.9(b) per
Sec.  63.9(j).''
    As stated in this provision, sources remain subject to any
applicable major source requirements under 40 CFR part 63 ``until the
reclassification becomes effective'' instead of the proposed language
``until the PTE limitations become effective.'' In the MM2A proposal,
the EPA explained that reclassification to area source status is a
voluntary action on the part of a source, and sources are required to
apply with their corresponding regulatory authority and follow the
corresponding authority's procedures to be reclassified to area source
status. This includes sources that, at the time of reclassification,
are no longer within the definition of ``major source'' because they
are true area sources (as described above in the preamble), because
they had already obtained PTE limits below the MST, or due to other
enforceable compliance obligations under a permit, permit by rule, or
State Implementation Plan (SIP). As explained elsewhere in this
preamble, such sources are area sources under the CAA section 112
definition, but as a result of our previous policy they may continue to
have enforceable permit conditions, including major source NESHAP
requirements, for example, until their title V permit is revised or
revoked in agreement with their permitting authority procedures.
    Because reclassification to area source status currently occurs
under a regulatory authority's area or minor source program, the
reclassification of a source to area source status is effective when
the corresponding regulatory authority grants a source's request to be
considered an area source via a permit registration, permit by rule,
applicability determination, etc. (As explained in this preamble, 40
CFR part 63 separately requires notification of the applicability of a
standard and recordkeeping of information on the applicability
determination decision.) We expect that the process for sources to
reclassify to area source status for HAP will rely on existing programs
(e.g., minor source programs, title V permitting procedures, and/or
approved programs for issuing PTE limits under CAA section 112(l)).
Consistent with how regulation of area sources is currently implemented
under CAA programs, the EPA expects that determinations of area source
status or major source status, as requested by a source for
reclassification, will occur in a single action or concurrently with
permitting actions needed to reconcile the revised requirements for the
source under the newly acquired status or as appropriate for permit
closure or revocation. (A permitting authority program may have
simpler, less burdensome processes for specific groups of sources.) The
language finalized about the effective date of reclassification
equitably considers the current implementation mechanisms and sources
situation.
    As proposed, the regulatory language in 40 CFR 63.1(c)(6)(i) stated
that ``[a] major source that becomes an area source must meet all
applicable area source requirements promulgated under this part
immediately upon becoming an area source, provided the first
substantive compliance date for the area source standard has passed, .
. .'' Some commenters requested that the EPA include language in the
final rule providing that sources reclassifying to area source status
may meet the major source NESHAP requirements as a means of complying
with newly applicable area source NESHAP requirements. The EPA is not
including such language in the final rule. Any source that reclassifies
to area source status is no longer subject to major source NESHAP
requirements and is subject to area source NESHAP requirements instead.
That said, the area source is not precluded from streamlining the
applicable area source NESHAP requirements with permit terms from a
previously applicable major source NESHAP standard if compliance with
applicable area source NESHAP requirements is assured. Because the
reclassification to area source status is a voluntary action on the
part of the source, the source must evaluate the area source NESHAP
requirements that will become applicable to the source at the time of
the reclassification to area source status and be in a position to meet
such requirements at the time it reclassifies.
    In the regulatory language of 40 CFR 63.1(c)(6)(i)(A), the EPA is
finalizing the proposed immediate compliance rule for major sources
that reclassify to area source status. These sources will be subject to
applicable area source NESHAP requirements in 40 CFR part 63
immediately upon reclassification to area source status, provided the
compliance date for the area source requirements has passed. In the
MM2A proposal, the EPA proposed to allow for additional time for
compliance with applicable area source NESHAP requirements for
particular situations. For reclassifications from major source to area
source status, the EPA proposed that additional time (not to exceed 3
years) may be granted by the EPA (or a delegated authority) in a
compliance schedule where an area source standard would apply to an
existing source upon reclassification and different emission points
would need controls or different emission controls would be necessary
to comply with the area source standard or other physical changes would
be needed to comply with the standard.
    The EPA received many comments on the proposed immediate compliance
rule, compliance extension provisions, and the process for obtaining a
compliance extension. Some commenters agreed with the proposed
immediate compliance rule for sources that reclassify to area source
status, while others opposed the immediate compliance rule if the EPA
did not include provisions to obtain a compliance extension. Commenters
supporting the immediate compliance rule without compliance extension
provisions argued that sources should be aware of applicable
requirements and plan for timely compliance at the time they request
reclassification. These commenters opposed the proposed compliance
extension provision, noting that any provision to allow compliance at
periods later than 3 years from a standard's effective date was
unlawful and unnecessary. The commenters argued that CAA section
112(i)(3)(A) requires that compliance must be within 3 years of the
effective date of the standard; furthermore, CAA section 112(i)(3)(A)
requires compliance ``as expeditiously as practicable.'' The commenters
argued that just because physical changes may be required for a source
to comply with newly applicable area source NESHAP requirements, it
does not mean that compliance cannot be achieved immediately upon
reclassification. The commenters emphasized that CAA section 112(i)(3)
is clear on the compliance schedule for existing sources; that the
schedule is determined by the effective date of any emission standard,
limitation, or regulation promulgated under CAA section 112; and that
compliance has to be as expeditious as practicable, but in no event
later than 3 years after the

effective date of such standard. On the other hand, some commenters
stated that there may be a short period of time when a stationary
source needs to discontinue compliance with a major source NESHAP
requirement before complying with the area source NESHAP requirements
to conduct testing and verify monitoring protocols or to physically
install emission controls. These commenters argued that the rule should
recognize the need for such exceptions to the requirement to comply
immediately with the area source NESHAP requirements and that the
regulatory authority must be able to consider all the relevant factors
in allowing for a compliance extension. While the commenters stated
that a stationary source would want an exception to discontinue
compliance with major source NESHAP requirements for a short period of
time in order to come into compliance with the new area source NESHAP
requirements to which they will be subject immediately after
reclassification, the commenters did not provide supporting evidence or
concrete examples showing that there are real situations where such
compliance exception is needed.
    The EPA agrees with the commenters that the statutory language in
CAA section 112(i)(3)(A) precludes the compliance extension as
proposed. For this reason, the EPA is not finalizing the proposed
compliance extension for sources reclassifying to area source status.
If a source reclassifies to area source status in a source category for
which there are applicable area source NESHAP requirements, and the
effective date of such requirements has passed, the source must comply
immediately upon reclassification. If the compliance date of the
applicable area source NESHAP requirements is in the future, the source
must comply by the future compliance date specified in the individual
subpart. Because reclassification is a voluntary action on the part of
the source, the immediate compliance requirement does not represent a
compliance issue because a source could delay their reclassification
until such time as they are able and equipped to meet the applicable
area source NESHAP requirements.
    In the MM2A proposal, the EPA included in the proposed provision at
40 CFR 63.1(c)(6)(ii) regulatory language addressing the compliance
schedule for sources that reclassify between major and area source
status more than once. The EPA proposed that ``A major source subject
to standards under part 63 that subsequently becomes an area source,
and then later becomes a major source again by increasing its emissions
to at or above the major source thresholds, must comply with the
previous applicable major source requirements of this part immediately
upon becoming a major source again . . .'' The EPA also proposed a
compliance extension provision for these sources: If the previously
applicable standard has been revised since the source was last subject
to the standard and, in order to comply, the source must undergo a
physical change, install additional emission controls, and/or implement
new control measures, the source will have up to the same amount of
time to comply as the amount of time allowed for existing sources
subject to the revised standard. The EPA received multiple comments on
the proposed compliance schedule and compliance extension provision for
reclassified area sources reverting to major source status.
    Some commenters argued that there was no need for the EPA to
address compliance timelines in the context of the MM2A rulemaking for
sources that reclassify to area source status and then revert back to
major source status. These commenters noted that the existing General
Provisions in 40 CFR 63.6(c)(5) already include compliance dates for
area sources that become major sources, and that by including
compliance dates within the provision in 40 CFR 63.1(c)(6), the EPA was
creating disparate compliance schedule requirements. Several other
commenters agreed with the proposed immediate compliance rule for area
sources reverting to major source status, stating that sources should
be aware of applicable requirements and plan for timely compliance at
the time they request reclassification. These commenters opposed the
proposed compliance extension provision, noting that any provision to
allow compliance at periods later than 3 years from a standard's
effective date is unlawful and unnecessary. The commenters argued that
CAA section 112(i)(3)(A) requires that compliance must be within 3
years of the effective date of the standard. In addition, the
commenters pointed out that CAA section 112(i)(3)(A) does not allow
additional time for a source that reverts to major source status when
the applicable major source NESHAP has increased in stringency; thus,
there is no reason for the proposed extension. The commenters noted
that CAA section 112(g)(2) requires that any entity that modifies or
constructs a major source first secure a determination that applicable
maximum-achievable standards will be met. The commenters argued that
any source that proposes to increase its emissions to exceed the MST
should be required to plan sufficiently to comply with the applicable
major source NESHAP requirements before it increases its emissions.
These commenters stressed that it would be inappropriate to allow
stationary sources to prolong compliance with applicable standards, and
that allowing sources additional time for compliance could incentivize
sources to continually shift stationary source applicability status to
avoid complying with applicable NESHAP requirements. These commenters
objected to any compliance extension, stating that any extension or
consideration of special conditions would remove the protections in
existing rules, allowing the public and environment to be exposed to
increased HAP emissions.
    Other commenters argued that the proposed immediate compliance
provisions for sources that revert back to their previous major source
status are onerous and seem to be designed to discourage sources from
opting to become area sources. These commenters supported the proposed
compliance extension provisions but noted that there is no
justification to conditioning any extension to the immediate compliance
requirement for these sources on an intervening change to the major
source standard. They argued that this appeared to be a backdoor
attempt to force sources opting to become area sources to continue
using major NESHAP add-on controls in case they might need to become a
major source again, and that this is something for which the EPA lacks
authority. Some commenters supported the immediate compliance rule if
appropriate exceptions are made in the final rule and it includes a
reasonable process for requesting an extension. The commenters
recommended that the compliance extensions be left to the air pollution
control agencies and that the EPA should not try to define what changes
would be eligible for a longer compliance period, thus, eliminating
unnecessary EPA oversight of the process for area sources and
simplifying the procedures for acquiring additional compliance time.
Finally, the commenters stated that a source that once was a major
source may, for example, maintain its area source status for 20 years
before seeking to become a major source again; for this source, many
things may have changed while it was an area source, including process
changes that render the previous compliance approach inapplicable or

require the source to comply in different ways.
    The EPA agrees with the commenters that stated that the statutory
language in CAA section 112(i)(3)(A) is properly read to preclude the
proposed compliance extension for sources that revert back to their
previous major source status and are subject to major source
requirements for which the compliance date of such requirements has
passed. These sources must comply with the major source requirements
immediately, even if faced with the circumstances listed in the
proposal (needing to ``undergo a physical change, install additional
emissions controls and/or implement new control measures'' in order to
meet the applicable NESHAP requirements). In the circumstance where a
source is reverting back to major source status for which there are
applicable major source NESHAP requirements and the compliance date of
such requirements at the time of reclassification is still in the
future, the source needs to comply with such requirements by the future
compliance date specified in the individual subpart. In sum, a source
should not reclassify (in either direction) until it is ready to meet
the requirements that are imposed by the new classification.
    For the reasons explained above, the final regulatory text included
in 40 CFR 63.1(c)(6)(i)(B) addresses the applicability of standards and
compliance dates for reclassified area sources that subsequently become
major sources again. In this provision, the EPA is finalizing the
proposed immediate compliance rule for area sources that become major
sources again, if they were previously major sources under 40 CFR part
63. The EPA has amended the language to read as follows: ``An area
source that previously was a major source under this part and that
becomes a major source again must comply with the applicable major
source requirements established under this part immediately upon
becoming a major source again, provided the compliance date for the
major source requirements has passed, notwithstanding any other
provision within the applicable subparts. The owner or operator of a
source that becomes a major source again must comply with the initial
notification pursuant to Sec.  63.9(b). The owner or operator must also
provide to the Administrator any change in the information already
provided under Sec.  63.9(b) per Sec.  63.9(j).'' This updated final
provision in 40 CFR 63.1(c)(6)(i)(B) for reclassified area sources that
subsequently become major sources again covers both situations of
sources that reclassify back to major source status: (1) Major sources
that reclassify to area source status prior to being subject to major
NESHAP requirements (including sources that reclassified under the OIAI
policy) and then return to major source status and (2) major sources
that reclassify to area source status after being subject to major
NESHAP requirements and then return to major source status. On the
other hand, the compliance dates for area sources that never operated
as major sources previously (including sources constructed with
enforceable controls or other type of enforceable PTE limits) but that
increase emissions or PTE and become major sources for the first time
are governed by the provisions in the individual NESHAP (which are not
being amended in this rule) and not the provisions applicable to
reclassified area sources that return to major source status that are
being finalized in this action. The EPA is also finalizing amendments
to 40 CFR 63.6(c)(1) to account for the immediate compliance rule as
included in the final revisions to 40 CFR 63.1(c)(6)(i)(A) and (B) as
discussed above.
    Finally, while some commenters requested assurance that if sources
revert back to their previous major source status, sources will not be
considered new sources, others argued the EPA should expressly provide
that relaxation or elimination of a PTE limit that results in the
source becoming a major source requires that the source comply with CAA
section 112 NESHAP requirements for a new source. These commenters
asserted that as a result of a loophole in the existing 40 CFR part 63
regulations, some sources and states are currently under the impression
that a source can have its original PTE limit taken at the time of
construction relaxed or eliminated without triggering the requirement
to comply with major source NESHAP requirements that would have
otherwise applied to the source when it was built. This confusion could
have arisen from the text in 40 CFR 63.6(c)(5) stating that ``the owner
or operator of an area source that increases its emissions of (or its
potential to emit) hazardous air pollutants such that the source
becomes a major source shall be subject to relevant standards for
existing sources.'' As explained in section IV of this preamble, the
CAA section 112 definitions of ``new source'' and ``existing source''
dictate that the new source/existing source distinction is determined
by when the affected source commences construction or reconstruction
with respect to the date of proposal of the standard and say nothing
about the source's volume of emissions. For this reason, the EPA
disagrees that a source reclassifying to major source status after
having previously been subject to the major source standards would
necessarily be classified as an existing source. The EPA also disagrees
with commenters that a reclassifying source would necessarily be a new
source for purposes of determining which standard applies. Whether an
affected source is new or existing for purposes of compliance with an
applicable NESHAP is dictated by when the source commenced construction
or reconstruction in relation to when the applicable NESHAP was
proposed and not whether the status of the source is major or area.
    Moreover, the regulatory text at 40 CFR 63.6(c)--Compliance dates
for existing sources--applies only to ``existing sources.'' Therefore,
the regulatory language at 40 CFR 63.6(c)(5) states that ``the owner or
operator of an [existing] area source that increases its emissions . .
. shall be subject to relevant standards for existing sources.'' The
intent of 40 CFR 63.6(b)(7) and (c)(5) was further explained in the
preamble for the March 23, 2001, rule that proposed revisions to 40 CFR
63.6(b)(7) and (c)(5) (66 FR 16328),\17\ ``[w]e are proposing to revise
63.6(b)(7) and (c)(5) to require new source MACT only on affected
sources that commenced construction or reconstruction after the
proposal date of the NESHAP . . . Affected sources at former area
sources that become major that have not constructed or reconstructed
after the proposal date of the NESHAP (emphasis added) would be subject
only to existing source MACT . . . .'' Again, each NESHAP provides the
dates that determine whether a source is a new source or an existing
source. A source's status of new or existing is determined by dates
given in each individual NESHAP, and that does not change when a source
reclassifies. If a major source reclassifies to area source status
after being subject to new major source NESHAP requirements and then
returns back to major source status, the sources that were originally
subject to new source requirements would once again be subject to new
source requirements. In light of these comments, the EPA is including
in the final rule amendments to 40 CFR 63.6(b)(7) and (c)(5) to reflect
the new or existing status of sources that become major sources as
being determined by

the dates provided in the applicable subparts and to also reflect the
immediate compliance rule as finalized in 40 CFR 63.1(c)(6)(i)(B) for
reclassified area sources that revert back to major source status. The
amendments to 40 CFR 63.6(b)(7) read as follows: ``When an area source
increases its emissions of (or its potential to emit) hazardous air
pollutants such that the source becomes a major source, the portion of
the facility that meets the definition of a new affected source must
comply with all requirements of that standard applicable to new
sources. The source owner or operator must comply with the relevant
standard upon startup.'' The amendments to 40 CFR 63.6(c)(5) read as
follows: ``Except as provided in paragraph (b)(7) of this section, the
owner or operator of an area source that increases its emissions of (or
its potential to emit) hazardous air pollutants such that the source
becomes a major source and meets the definition of an existing source
in the applicable major source standard shall be subject to relevant
standards for existing sources. Except as provided in Sec.
63.1(c)(6)(i)(B), such sources must comply by the date specified in the
standards for existing area sources that become major sources. If no
such compliance date is specified in the standards, the source shall
have a period of time to comply with the relevant emission standard
that is equivalent to the compliance period specified in the relevant
standard for existing sources in existence at the time the standard
becomes effective.''
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    \17\ These provisions were finalized on April 5, 2002 (See 67 FR
16582).
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c. Reclassifications and Enforcement Actions
    In the MM2A proposal, the EPA included regulatory language in the
MM2A applicability provision in 40 CFR 63.1(c) to address the
interaction of the reclassification of sources and potential
enforcement actions. Specifically, we noted reclassification of a
source from major to area source status would not absolve a source of
prior liability for noncompliance. Although sources that are the
subject of an investigation or enforcement action may still seek area
source status for purposes of future applicability, such sources remain
liable for any previous or pending violations of the CAA that occurred
prior to the reclassification. Enforcement of major source requirements
could include penalties, mitigation for illegal emissions, and/or other
remedies to address noncompliance. Accordingly, a source cannot use its
new area source status as a defense for major source NESHAP violations
that occurred prior to its reclassification. Similarly, becoming a
major source does not absolve a source subject to an enforcement action
or investigation for area source violations from the consequences of
any actions occurring when the source was an area source.
    Multiple commenters agreed with the premise that a major source
that reclassifies should not be absolved from potential enforcement
actions that occurred prior to the reclassification. However, some
commenters argued that if a major source is rightfully an area source
at the time of an alleged violation, then the source should not be
subject to enforcement as a major source. Other commenters argued that
it is also appropriate for the EPA to consider the misclassification of
a major source instead of the appropriate area source classification,
and the requirements for major sources versus area sources, and to
examine a past violation to determine if the source actually violated
the requirements of the classification under which the firm should have
been registered.
    One commenter recommended that the EPA add language to 40 CFR
63.1(c)(6) that would allow for modification of an enforcement order
affecting a reclassified source if the enforcement order was based on
the enforcement authority's finding that the source was a major source
or based on the application of the OIAI policy. The commenter argued
that the EPA's proposed new language in 40 CFR 63.1(c)(6) would leave
unclear whether it is the EPA's intent that: (1) Such a source can
never apply to the enforcement authority for relief from such
obligations (which often include obligations imposed pursuant to a
court's equity jurisdiction or that otherwise fall outside the universe
of obligations specified in the NESHAP) in exchange for accepting
restrictions on its PTE in order to become a synthetic HAP area source;
or (2) the enforcement authority can never enter into a modification of
the order, settlement, or decree that grants such relief. The commenter
argued that this lack of clarity could result in foreclosure of such
relief in future proceedings that are informed by the final rules,
depending on the EPA's posture at the time and the deference that is
sometimes given to agencies' interpretations of their own regulations.
    The commenter argued that because the EPA has withdrawn the OIAI
policy on the grounds that it was inconsistent with ``the plain
language reading of the `major source' and `area source' definitions of
section 112'' of the CAA, then it stands to reason that: (1) No
historical application of the OIAI policy in the formulation of
enforcement orders and negotiation of settlement agreements and consent
decrees was ever lawful or appropriate; and (2) orders, agreements, and
decrees that were imposed or negotiated based materially on the OIAI
policy ought to be subject to retroactive review, on a case-by-case
basis and subject to the needs of the particular case, upon application
by the respondent for a modification of the instrument. Finally, a
commenter argued that the EPA should explicitly state in its
regulations that the consequence of violating PTE limitations is the
requirement to comply with the applicable major source NESHAP
requirements--in addition to an appropriate penalty for violating the
PTE limitations.
    In the MM2A proposal, the EPA included regulatory language in the
proposed MM2A applicability provision in 40 CFR 63.1(c)(6) stating that
reclassification from major source to area source does not affect a
source's liability or any enforcement investigations or enforcement
actions for a source's past conduct or violations of major source
requirements that occurred prior to the effective date of the source's
enforceable limitations (i.e., the reclassification). This rule
revision underscores the importance of a source's PTE in determining
NESHAP, 40 CFR part 63, applicability. The plain language reading of
the definitions of ``major'' and ``area'' source in section 112 of the
CAA as explained in the 2018 MM2A Memorandum and implemented through
this rulemaking does not change the Agency's position that a source may
take enforceable production and/or operational limits to effectively
constrain its PTE and, thereby, avoid applicability. Rather, it
eliminates the timing constraint imposed by the OIAI policy as to when
a source may take such limits to avoid applicability. If, before taking
such limits to avoid applicability, a source emitted a single HAP in an
amount of 10 tpy or greater, or emitted any collection of HAP in an
amount of 25 tpy or greater, or it is determined that the source has
(or had) a PTE that meets or exceeds these amounts, the source would be
considered a major source and subject to the requirements of 40 CFR
part 63 (as applicable) up and until the effectiveness of the limits.
The same holds true after taking such limits to avoid applicability.
That is, even after taking such limits, if a source emits a single HAP
in an amount of 10 tpy or greater, or emits any collection of HAP in an
amount of 25 tpy or greater, or it is determined that the source has
(or

had) a PTE that meets or exceeds these amounts, the source would be
considered a major source and subject to the requirements of 40 CFR
part 63 (as applicable). Now, as before, any time a source operates as
a major source, it must meet the applicable major source requirements
in 40 CFR part 63. Neither this rule, nor the 2018 MM2A Memorandum,
intends to allow a source that emits (or has the PTE) greater than the
MST to avoid compliance with applicable requirements for major sources.
Any source that operates without complying with the applicable
requirements is subject to enforcement. The revision proposed at 40 CFR
63.1(c)(6) underscores the EPA's position that unless, and until, a
source has enforceable production and/or operational limits that
effectively limit a source's PTE (and are not just chimeras that do not
really restrain an operator from emitting pollution in amounts equal to
or exceeding the major source thresholds), the source is a major source
and must comply with the major source requirements (as applicable). The
D.C. Cir. said as much in its review of the 2018 MM2A Memorandum,
California Communities Against Toxics, et al. v. EPA, 934 F.3d. 627,
638-639 (D.C. Cir. 2019), (``Major sources must obtain a permit in
order to operate, and unless and until that permit is amended or set
aside, the stringent requirements set forth therein must be complied
with while that equipment is operational. The [MM2A Memorandum]itself
does not revoke or amend a single permit.'')
    Any order, settlement, or decree (collectively, agreements) issued
or entered into addressing a source's compliance with the requirements
of NESHAP, 40 CFR part 63, is not affected by this rule or the 2018
MM2A Memorandum. Those agreements were entered into based on the
specifics of each case. Reopening or modification of settlements
approved by, or orders issued by, federal courts is governed by the
Federal Rules of Civil Procedure (F. R. Civ. P. Rule 60). Nothing in
this final rule is intended to suggest that any of the prerequisites
for reopening any judicial or administrative settlement or modifying a
prior order of a court (including orders approving settlements) have
been met. There is no additional clarification needed regarding these
authorities. While the OIAI policy may have informed the contours of
those agreements, it did not (and, in fact, could not) change the
statutory basis for those enforcement actions. These agreements reflect
a mutual understanding of the parties that settlement is in the
interest of all involved after taking into account the legal and
factual circumstances at the time of the settlement. Accordingly, the
EPA is finalizing the regulatory language in 40 CFR 63.1(c)(6)(ii)
addressing the interaction of the reclassification of sources with
enforcement actions as proposed.
d. Reclassifications and Operation of Add-On Pollution Control
Equipment
    After the issuance of the MM2A Memorandum, some stakeholders were
concerned that if sources were to reclassify to area source status,
they could stop using the add-on emission control equipment or emission
reduction practices implemented for major source NESHAP compliance or
no longer maintain the same level of control efficiency as before. At
proposal, the EPA requested comments on whether facility owners or
operators of sources that reclassify will cease to properly operate
their add-on control devices where the operation of the add-on control
device is needed to restrict the PTE and appropriate monitoring,
recordkeeping, and reporting (MRR) are established as enforceable
conditions.
    In the proposal, the EPA explained that a source seeking
reclassification because it has reduced its HAP emissions to below the
MST through use of add-on control devices or emission reduction
practices implemented for compliance with major source NESHAP
requirements will need to demonstrate to the regulatory authority
issuing the PTE limits the degree to which the add-on control devices
and emission reduction practices are needed to restrict the source's
PTE. In the absence of the applicability of the major source NESHAP
requirements, if the source relies on its existing NESHAP add-on
control devices and/or emission reduction practices to limit its HAP
PTE below the MST, the use of these control devices and/or emission
reduction practices must be made enforceable under a permitting
authority's legal mechanism. Alternatively, if a source intends to stop
using the add-on control device equipment or emission reduction
practices used to comply with a previously applicable major source
NESHAP requirement, the source must demonstrate that other physical
controls or operational limits that the source adopts will restrict the
source's actual emissions and maximum capacity to emit HAP below the
MST and that these limits are or can be made enforceable to ensure that
the source will not emit or have the potential to emit HAP at or above
the MST.
    Some commenters argued that there is no reason to believe that
facility owners or operators would cease to properly operate their add-
on control devices where the operation of the control is needed to
restrict the PTE and appropriate MRR are established as enforceable
conditions. Similarly, some commenters asserted that sources that
achieve area source status through compliance with MACT have
significant disincentives to alter their control measures to increase
emissions thereafter. They argued that HAP emissions control devices
are not designed to achieve partial emissions reductions; rather, they
are designed to reduce emissions by a specified efficiency rate and a
source that already has invested in controls for the purpose of major
source MACT compliance is unlikely to cease using them or remove them
in favor of less-effective measures to limit its HAP emissions--
especially if the source's reclassification to area source status is
contingent upon compliance with an enforceable PTE limit.
    On the other hand, other commenters expressed concern with the EPA
statement in the proposal saying that ``it has no reason to believe,
and does not anticipate'' that sources will cease operating their
control devices and hence increase emissions as a result of the MM2A
action. One commenter argued that the EPA has collected insufficient
data and included no explanation to support what the commenter called
an ``economically irrational conclusion.'' The commenter argued that
the EPA has not acknowledged the financial incentives to reduce usage
of expensive control devices.
    Commenters arguing that sources will reduce control device
operation and emission monitoring if the major source NESHAP
requirements no longer apply stated the EPA must include in the final
rule conditions requiring the continued use of add-on controls and
conditions ensuring that monitoring and parametric limits are adequate
to meet the required destruction efficiencies needed for sources to
constrain their PTE and emissions at area source levels. These
commenters argued that without such requirements, sources that
reclassify are likely to operate the control device only part of the
year. They claim sources will make cost-saving business decisions to
turn off controls for several months a year or use less-effective
controls to remain just below the MST. Some commenters summarized, as
an example, the information collected by the EPA to justify the
monitoring requirements for flares in the NESHAP

for Petroleum Refineries and described how, without rigorous
monitoring, flare efficiency could be highly variable and substantially
lower than 98 percent. The commenters also argued that the EPA cannot
assume that other control devices, such as fabric filter baghouses and
electrostatic precipitators, would be as effective once the major
source NESHAP operating limits or monitoring requirements no longer
apply. The commenters argued that the EPA must require the facility to
periodically perform source tests to verify that the restriction
actually correlates with emissions that are below the MST. The
commenters further argued that without requirements ensuring proper
operation, maintenance, and monitoring of add-on controls, sources will
stop consistently operating the control devices that limit the release
of HAP and allow the sources to reclassify to area source status.
    The EPA sees these comments as pertaining to the proposed
effectiveness criteria of PTE limits. In particular, the EPA may
consider provisions concerning the operation and monitoring of add-on
controls in the context of the criteria for ensuring that a PTE limit
used to reclassify from major source to area source status is
practicably enforceable. As discussed later in section VII of the
preamble, the EPA is not taking action on the proposed amendments to 40
CFR 63.2 at this time and is continuing to consider the comments
received on this aspect of the MM2A proposal. The EPA intends to take
final action on this aspect of the MM2A proposal in a separate final
action at a later date.
2. 40 CFR 63.9 Notification Requirements
    In the MM2A proposal, the EPA included language in the
reclassification provision in 40 CFR 63.1(c)(6) specifying that sources
reclassifying must comply with the notification requirements of 40 CFR
63.9(b) and (j). The EPA also proposed to clarify the notification
requirements for sources reclassifying by amending 40 CFR 63.9(b) so
that an owner or operator of a facility must notify the Administrator