[Federal Register Volume 61, Number 250 (Friday, December 27, 1996)]
[Rules and Regulations]
[Pages 68384-68404]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32236]


      

[[Page 68383]]

_______________________________________________________________________

Part III





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 63



Hazardous Air Pollutants: Regulations Governing Constructed or 
Reconstructed Major Sources; Final Rule

  Federal Register / Vol. 61, No. 250 / Friday, December 27, 1996 / 
Rules and Regulations  

[[Page 68384]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 63

[FRL-5667-8]
RIN 2060-AD06


Hazardous Air Pollutants: Regulations Governing Constructed or 
Reconstructed Major Sources

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The EPA is promulgating regulations implementing certain 
provisions in section 112(g) of the Clean Air Act as amended in 1990 
(1990 Amendments). Section 112(g) applies to the owner or operator of a 
constructed, reconstructed, or modified major source of hazardous air 
pollutants (HAP). After the effective date of this rule, all owners or 
operators of major sources that are constructed or reconstructed will 
be required to install maximum achievable control technology (MACT) 
(unless specifically exempted), provided they are located in a State 
with an approved title V permit program. This rule establishes 
requirements and procedures for the owners or operators to follow to 
comply with section 112(g). This rule also contains guidance for 
permitting authorities in implementing section 112(g). When no 
applicable Federal emission limitation has been promulgated, the Clean 
Air Act (Act) requires the permitting authority (generally a State or 
local agency responsible for the program) to determine a MACT emission 
limitation on a case-by-case basis. This rule assures that effective 
pollution controls will be required for new major sources of air toxics 
during the period before EPA can establish a national MACT standard for 
a particular industry. This rule establishes procedures for making such 
determinations. This rule does not require new source MACT for 
modifications to existing sources.

EFFECTIVE DATE: The rule announced herein takes effect on January 27, 
1997.

ADDRESSES: Supporting information used in developing the proposed and 
final rules are contained in Docket No. A-91-64. The docket is 
available for public inspection and copying from 8:00 to 4:00 p.m., 
Monday through Friday, except legal holidays, at the EPA's Air Docket 
Section, Waterside Mall, Room M1500, U.S. Environmental Protection 
Agency, 401 M Street, South West, Washington, DC 20460. A reasonable 
fee may be charged for copying. This rule is also available on the 
Office of Air Quality Planning and Standards (OAQPS) electronic 
bulletin board, the Technology Transfer Network (TTN), under Clean Air 
Act, Title III, Recently Signed Rules. For information on how to access 
the TTN, please call (919) 541-5384 between the hours of 1:00 and 5:00 
p.m. eastern standard time. This rule is also listed on the EPA web 
site address, ``http://www.epa.gov/oar''.

FOR FURTHER INFORMATION CONTACT: Dr. Gerri Pomerantz, telephone (919) 
541-2317, Mr. Andy Smith, telephone (919) 541-5398, or Ms. Kathy 
Kaufman, telephone (919) 541-0102, Information Transfer and Program 
Integration Division (MD-12), OAQPS, US EPA, Research Triangle Park, 
NC, 27711.

SUPPLEMENTARY INFORMATION: The information presented in this preamble 
is organized as follows:

I. Purpose and Summary of Final Rule
    A. Purpose of this Rule
    B. Summary of this Rule
II. Background
    A. The 1990 Amendments: Section 112
    B. The 1990 Amendments: Provisions for Constructed and 
Reconstructed Major Sources of HAP
    C. Streamlined Nature of this Rule
III. Summary and Rationale for Secs. 63.40 Through 63.44 of this 
Rule
    A. Section 63.40 Applicability
    B. Section 63.41 Definitions
    C. Section 63.42 Program Requirements Governing Construction or 
Reconstruction of Major Sources
    D. Section 63.43 MACT Determinations for Constructed and 
Reconstructed Major Sources
    E. Section 63.44 Requirements for Process or Production Units 
Subject to a Subsequently Promulgated MACT Standard or MACT 
Requirement
IV. Discussion of the Relationship of the Requirements of this Rule 
to Other Requirements of the Act.
    A. Relationship of Section 112(g) Implementation to Title V 
Program Approval
    B. Relationship to Section 112(l) Delegation Process
    C. Section 112(i)(5) Early Reductions Program
    D. Subpart A ``General Provisions''
V. Administrative Requirements
    A. Executive Order 12866
    B. Regulatory Flexibility Act
    C. Paperwork Reduction Act
    D. Unfunded Mandates Reform Act
    E. Submission to Congress and the General Accounting Office

    This preamble provides an overview of the requirements of the 
regulation being promulgated and a detailed discussion of the changes 
made from both the proposed and draft final regulations.
    Section I of the preamble provides an overview of the requirements 
of the regulations being promulgated.
    Section II provides background on section 112(g) in the context of 
the 1990 Amendments.
    Section III provides a detailed discussion of the requirements of 
this rule, including significant comments as well as significant 
changes made since the proposal and/or draft final rule.
    Section IV of the preamble discusses the relationship between the 
requirements of this rule and other important Act implementation 
activities.
    Section V demonstrates that this rule is consistent with a number 
of Federal administrative requirements.
    This preamble makes use of the term ``State,'' usually meaning the 
State air pollution control agency which would be the permitting 
authority implementing title V of the Act (i.e., 40 CFR Part 70) and 
the section 112(g) program. The reader should assume that use of the 
term ``State'' also applies, as defined in section 302(d) of the Act, 
to the District of Columbia and territories of the United States, and 
may also include reference to a local air pollution control agency. In 
some cases, the term ``permitting authority'' is used and can refer to 
both State agencies and to local agencies (when the local agency 
directly makes the determinations or assists the State in making the 
determinations). The term ``permitting authority'' may also apply to 
the EPA, where the EPA is responsible for the program.

I. Purpose and Summary of Final Rule

A. Purpose of This Rule

    The 1990 Amendments require the EPA to issue emissions standards 
for all major sources of 188 listed HAP (also known as air toxics). 
These pollutants are known or suspected of causing cancer, nervous 
system damage, birth defects or other serious health effects. On July 
16, 1992, the EPA published an initial list of source categories for 
which air toxics emission standards are to be promulgated. By November 
2000, EPA must develop for all these categories rules that require the 
maximum achievable reduction in emissions, considering cost and other 
factors. These rules are generally known as ``maximum achievable 
control technology'' (MACT) standards.
    In developing the 1990 Amendments, Congress recognized that the EPA 
could not immediately issue MACT standards for all industries, and that 
as a result there was a potential for significant new sources of toxic 
air emissions to remain uncontrolled for some time. Congress also 
recognized that, in general, it is most cost-effective to design and 
add new air pollution controls at the time

[[Page 68385]]

when facilities are being built or significantly rebuilt.
    As a result, section 112(g) of the Act requires MACT-level control 
of air toxics when a new major source of HAP is constructed or 
reconstructed. The permitting authority must determine MACT for the 
facility on a case-by-case basis when EPA has not yet issued a relevant 
MACT standard. This gap-filling program assures Americans in every 
State that effective pollution controls will be required for new major 
sources of air toxics during the period before EPA can establish a 
national MACT standard for a particular industry.
    Section 112(g) also requires MACT-level control when major sources 
are modified. For reasons explained later in this preamble, this rule 
does not implement the modifications provision of section 112(g).

B. Summary of This Rule

1. What Sources Must Comply With 112(g)?
    This rule implements section 112(g)(2)(B) of the Act by adding new 
regulatory sections to 40 CFR Part 63, subpart B. The new sections 
appear as Secs. 63.40 through 63.44 of subpart B. These sections impose 
new control requirements on ``constructed'' and ``reconstructed'' major 
sources of HAP. (The definition of ``major source'' can be found in 
section 112(a) of the Act and 40 CFR Part 63 subpart A).
    This rule does not apply to any source already covered by a MACT 
standard under section 112(d) of the Act. Therefore, sources already 
covered by a MACT standard under section 112(d) will not be required to 
undergo a review process under section 112(g). (Any section 112(g) 
review process already underway when a section 112(d) MACT standard is 
promulgated should be terminated.) This change was made to the final 
rule in response to comments that indicated that section 112(g) review 
would be inappropriate once a MACT standard was promulgated. For those 
sources not yet subject to section 112(d), section 112(g) applies to 
either (i) a major source constructed on a greenfield site, or to (ii) 
a new or reconstructed ``process or production unit'' at an existing 
plant site, provided that the ``process or production unit'' emits 
hazardous air pollutants in amounts that exceed the major source 
threshold. A new process or production unit at an existing major source 
must itself be inherently major-emitting; the EPA does not intend that 
a new process or production unit causing increased emissions at another 
unit downstream be covered by this rule. The definitions of ``construct 
a major source,'' ``reconstruct a major source,'' and ``process or 
production unit'' are set forth in section 63.41 of this rule and 
discussed in detail in section III.B. below.
2. What Must a Source Do To Comply With Section 112(g)?
    If equipment additions or overhauls meet the definition of 
``construct a major source'' or ``reconstruct a major source,'' then 
the owner or operator must demonstrate to the permitting authority that 
emissions will be controlled to a level consistent with the ``new 
source MACT'' definition in section 112(d)(3) of the Act. A MACT 
determination under section 112(g) is referred to as ``case-by-case'' 
MACT. The requirements and procedures for case-by-case MACT 
determinations are contained in section 63.43 of this rule.
    If an owner or operator wishes to construct or reconstruct a major 
source, then prior to construction or reconstruction, the owner or 
operator must apply to the state or local title V permitting authority 
for a case-by-case MACT determination under section 112(g). The 
application can take different administrative forms, at the permitting 
authority's discretion, but must contain basic information about the 
source and its potential emissions. The application must also specify 
the emission controls that will ensure that new source MACT will be 
met. The permitting authority must review and approve (or disapprove) 
the application, and provide an opportunity for public comment on the 
determination.
3. When Will Section 112(g) Be Effective?
    Section 112(g) will be effective in a State or local jurisdiction 
on the date that the permitting authority, under title V of the Act, 
places its implementing program for section 112(g) into effect. 
Permitting authorities have up to 18 months from the date of 
publication of this rule in the Federal Register to initiate 
implementing programs. After the 18-month transition period, if a State 
or local permitting authority is unable to initiate a section 112(g) 
program to implement this rule, there are two options for obtaining a 
MACT approval: either (1) the EPA will issue section 112(g) 
determinations for up to 1 year; or (2) the permitting authority will 
make section 112(g) determinations according to procedures specified in 
section 63.43 of this rule, and issue a Notice of MACT Approval that 
will become final and legally enforceable after the EPA concurs in 
writing with the permitting authority's determination. Requirements for 
permitting authorities are contained in section 63.42 of this rule.
    To place its implementing program into effect, the chief executive 
officer of the State or local jurisdiction must certify to the EPA that 
its program meets all the requirements set forth in this rule, and 
publish a notice stating that the program has been adopted and 
specifying its effective date. The program need not be officially 
reviewed or approved by the EPA.
4. Do Section 112(g)-regulated Sources Have To Comply With Subsequent 
MACT Standards?
    Once a section 112(d) MACT standard is issued for a source 
category, the source must comply with it by the designated deadline. A 
major source regulated under section 112(g) may be granted up to 8 
years extra time to comply with a subsequently-promulgated MACT 
standard under section 112(d). The EPA may specify, in the MACT 
standard, the length of the extension. If the EPA does not so specify, 
then the permitting authority may grant such extensions on a case-by-
case basis. The EPA believes that in many cases the section 112(g) 
determination will be equivalent to MACT under section 112(d) or 
section 112(j), but that this determination should be made on a case-
by-case basis under section 112(d) or section (j).
    Regulated entities. Entities potentially regulated by this action 
are those which are major sources of HAP under section 112 of the 1990 
Amendments. Regulated categories and entities include:

------------------------------------------------------------------------
                                                Examples of regulated   
                 Category                             entities          
------------------------------------------------------------------------
Industry..................................  Industries that use or      
                                             manufacture chemicals      
                                             listed under section 112.  
Federal Government........................  Federal agencies which      
                                             handle chemicals listed    
                                             under section 112.         
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists the types of entities that EPA is now aware 
could potentially be regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
your facility is regulated by this action, you should carefully examine 
the applicability criteria of this rule. If you have questions 
regarding the applicability of this action to a

[[Page 68386]]

particular entity, contact your state or local air permitting 
authority.

II. Background

A. The 1990 Amendments: Section 112 and Section 307

    The 1990 Amendments [Pub. L. 101-549] contain major changes to 
section 112 of the Act, pertaining to the control of HAP emissions. 
Section 112(b) includes a HAP list that is composed of 189 chemicals, 
including 172 specific chemicals and 17 compound classes. Section 
112(c) requires publication of a list of source categories of major 
sources emitting these HAP, and of area sources that warrant 
regulation. Section 112(d) requires promulgation of emission standards 
for each listed source category according to a schedule set forth in 
section 112(e).
    Under section 307(b)(1) of the Clean Air Act, judicial review of 
this final action is available only by filing a petition for review in 
the United States Court of Appeals for the District of Columbia Circuit 
within 60 days of publication of this rule in the Federal Register. 
Under section 307(b)(2) of the Act, the provisions which are the 
subject of today's rule will not be subject to judicial review in any 
civil or criminal proceedings for enforcement.

B. The 1990 Amendments. Provisions for Constructed, Reconstructed and 
Modified Major Sources of HAP

    The amendments to section 112 include a new section 112(g). This 
section is entitled ``Modifications,'' but it contains control 
technology requirements for constructed and reconstructed major sources 
as well as major source modifications. For reasons discussed below, 
this rule addresses only requirements for constructed and reconstructed 
major sources.
1. Statutory Requirements for Constructed and Reconstructed Major 
Sources
    Section 112(g)(2)(B) contains requirements for constructed and 
reconstructed major sources, as follows:

    After the effective date of a permit program under title V in 
any State, no person may construct or reconstruct any major source 
of hazardous air pollutants, unless the Administrator (or the State) 
determines that the maximum achievable control technology emission 
limitation under this section for new sources will be met. Such 
determination shall be made on a case-by-case basis where no 
applicable emission limitations have been established by the 
Administrator.

    This section mandates a more stringent minimum level of control for 
``constructed'' and ``reconstructed'' major sources than for 
``modified'' sources. In addition, this section mandates the setting of 
a case-by-case emission limitation based on a technology determination 
for major sources that are constructed or reconstructed after the 
effective date of a title V permit program.

C. Streamlined Nature of This Rule

    Section 112(g) is primarily a transitional program designed to 
operate until MACT standards issued under section 112(d) are in effect 
for all categories of major sources of HAP. To date, the EPA has issued 
21 MACT standards covering 46 categories of major sources of HAP 
emissions, and has proposed five additional MACT standards covering 
five source categories. The EPA is currently developing all of the MACT 
standards that are due to be completed in 1997, as well as several of 
the standards due to be completed in 2000.
    Because of the transitional nature of section 112(g), the EPA has 
concluded that the greatest benefits to be derived from section 112(g) 
would be from the control of major source construction and 
reconstruction in the period before MACT standards go into effect. 
Therefore, the EPA has determined that this rule will implement only 
that portion of section 112(g) which requires new source MACT 
determinations for constructed and reconstructed major sources, and 
will not implement that portion which requires existing source MACT 
determinations for modifications of existing sources.
    The EPA's decision to implement only the construction and 
reconstruction provisions of section 112(g) is premised in part on the 
Agency's ability to issue the remaining MACT standards under section 
112(d) in a timely way, and also in part on the assumption that where 
there are existing State air toxics programs that address 
modifications, they will continue to operate as they do currently. If 
there were substantial delays in issuance of MACT standards, or radical 
changes to existing State programs, increased exposure to emissions 
from unregulated sources of HAP could occur and threaten public health 
and the environment. If such delays were to occur, the EPA would 
reconsider whether to issue a regulation to cover modifications under 
section 112(g).

III. Summary and Rationale for Subsection 63.40 Through 63.44 of This 
Rule

    This section of the preamble provides a detailed discussion of the 
provisions of this rule. It is organized by each topic area in 
subsection 63.40 through 63.44 of subpart B, and contains a detailed 
discussion of the principal regulatory issues and changes made in the 
final rule, particularly in response to public comments. It also 
discusses some comments that did not result in regulatory changes.

A. Section 63.40  Applicability

    Section 63.40 describes the timing of the requirements of this rule 
and the sources to which section 112(g) applies.
1. Section 63.40(a) Subpart B Applicability
    Section 63.40(a) of this rule indicates that the intent of the rule 
is to implement section 112(g)(2)(B) of the Act.
2. Section 63.40(b) Overall Requirements
    Section 63.40(b) of this rule indicates the overall applicability 
of section 112(g) to the owner or operator who constructs or 
reconstructs a major source of HAP after the ``effective date of 
section 112(g)(2)(b) and the effective date of a title V program'' in 
each State. This rule contains an exemption for sources specifically 
exempted by promulgated standards in other subparts of 40 CFR 63. The 
EPA believes that this exemption is consistent with ``MACT'' because a 
MACT evaluation was made in establishing the exemption.
    In addition, there will be instances in which a ``presumptive 
MACT'' determination has been made for a source category. A presumptive 
MACT determination is a preliminary MACT determination made by the EPA, 
in consultation with States and other stakeholders, after data on a 
source category's emissions and controls have been collected and 
analyzed, but before a final MACT standard has been promulgated. The 
``presumptive MACT'' determination is intended as preliminary guidance 
for States and sources. The EPA believes that the presumptive MACT 
determination would thus serve as the best information available on the 
eventual MACT standard. Therefore the EPA recommends to sources and 
States that applications for section 112(g) determinations use as 
guidance any presumptive MACT determinations. Presumptive MACT 
determinations can be found on the TTN (referenced above) under Clean 
Air Act, Title III, Policy and Guidance or at the EPA web site address 
``http://www.epa.gov/oar''.
    It should be noted that there may be source categories which have 
not yet been listed on the source category list for standards. The 
language of section 112(g)(2)(B) of the Act reads: ``no person

[[Page 68387]]

may construct or reconstruct any major source of hazardous air 
pollutants'' without a case-by-case MACT determination, and makes no 
mention of whether or not the source is in a listed category. (In fact, 
the EPA is required to list these categories as it becomes aware of 
them.) Therefore, the EPA believes that section 112(g) does apply to 
any major source which is not yet in a listed category.
    (a) Effective date. Many commenters noted inconsistencies in the 
provisions of the draft final rule pertaining to the effective date of 
section 112(g), which in different sections referred both to the 
adoption of a section 112(g) program in a State or local jurisdiction 
by the responsible permitting authority and to the effective date of a 
title V permit program in a State. The EPA agrees with the commenters 
that these provisions were confusing and inconsistent. Sections 63.41 
and 63.42(a) of this rule make it clear that section 112(g)(2)(B) will 
take effect in a State or local jurisdiction only after the permitting 
authority has been afforded an opportunity to adopt a program to 
implement this provision. The effective date of section 112(g)(2)(B) in 
a given State or local jurisdiction will be the date on which the 
permitting authority places its implementing program into effect or the 
date which is 18 months after the date of publication of this rule in 
the Federal Register, whichever is earlier. This affords those 
permitting authorities which are prepared to implement section 
112(g)(2)(B) quickly an opportunity to do so, but also recognizes that 
some State permitting authorities will need additional time to take the 
necessary steps to plan for and adopt a satisfactory program.
    The meaning of ``effective date of a title V permit program'' is 
indicated in the final regulations for implementation of title V of the 
Act, which are contained in 40 CFR Parts 70 and 71, and which were 
published on July 21, 1992 (57 FR 32250) and July 1, 1996 (61 FR 
34202), respectively. Under these regulations, States were required to 
submit a permit program for review by the EPA on or before November 15, 
1993. The EPA was required to approve or disapprove the permit program 
within 1 year after receiving the submittal. The EPA's title V program 
approval date is termed the ``effective date.''
    The effective date of title V permit programs is defined in section 
502(h) of the Act, which says:

    The effective date of a permit program, or partial or interim 
program, approved under . . . [title V] . . . shall be the effective 
date of approval by the Administrator. The effective date of a 
permit program, promulgated by the Administrator shall be the date 
of promulgation.

    This definition is incorporated into the operating permit 
regulations as 40 CFR 70.4(g).
    If a project does not receive its air quality construction permits 
before the effective date of section 112(g), then this rule will be 
applicable. The EPA requested comment on other alternatives, such as 
grandfathering projects for which a complete application has been 
submitted to the permitting authority, or grandfathering projects from 
the date of ``onsite fabrication, erection, or installation.'' Some 
commenters agreed with the EPA's current approach; however, many 
commenters supported grandfathering projects that had applied for, but 
not yet received, a permit. The EPA believes the chosen approach 
reflects the best option for ensuring adequate controls on sources 
seeking to add new equipment, while grandfathering sources which have 
already made significant investments in equipment. This approach 
assures that if prior to the permit issuance, new approaches to control 
HAP emissions are considered appropriate, the source will apply the 
latest control technology. This approach is also most consistent with 
current Federal policy in the prevention of significant deterioration 
program (PSD), in which sources with an approved permit are 
grandfathered when the attainment status of the region changes. In the 
new source review (NSR) program as well, while sources with a complete 
application which might otherwise be considered major modifications are 
grandfathered, these modifications do not escape review; they are 
treated as minor modifications instead.
    (b) Major Source. Section 112(g) applies only to major sources as 
defined in section 112(a)(1) of the Act. This definition, from 40 CFR 
63, subpart A, (the general provisions of part 63), is as follows:

    The term `major source' means any stationary source or group of 
stationary sources located within a contiguous area and under common 
control that emits or has the potential to emit considering 
controls, in the aggregate, 10 tons per year or more of any 
hazardous air pollutant or 25 tons per year or more of any 
combination of hazardous air pollutants.

    The definition also allows the EPA to establish a lesser quantity 
than 10 or 25 tons to define ``major source'' with respect to 
particular HAP where warranted on the basis of potency, persistence, 
and other factors. To date, no such lesser quantities have been 
established.
    As a result of this definition, the section 112(g) requirements do 
not apply if the total emissions from an entire ``contiguous area under 
common control'' (in general, the entire plant site) do not exceed the 
major source level.
    An important element of the major source definition is the term 
``potential to emit.'' ``Potential to emit'' is based on the source's 
capability to emit HAP considering enforceable limitations. Such 
limitations include restrictions on capacity, restrictions on the types 
of materials used, emission limitations, and other types of 
restrictions. A definition of ``potential to emit'' is contained in 40 
CFR 63, subpart A (General Provisions), as well as in further guidance 
provided by the EPA available on the Technology Transfer Network 
(referenced above), under Clean Air Act, Title III, Policy and 
Guidance, as well as on the EPA web site address (also reference 
above).
3. Section 63.40(c) Exclusion for Steam Generating Units
    Section 63.40(c) of this rule clarifies that electric utility steam 
generating units are not yet subject to the requirements of section 
112(g).
    Section 112(n)(1) requires the EPA to perform a study of the 
hazards to public health associated with HAP emissions from electric 
utility steam generating units. This paragraph states that:

    The Administrator shall regulate electric utility steam 
generating units under this section, if the Administrator finds such 
regulation is appropriate and necessary after considering the 
results of the study required by this paragraph. (emphasis added)

    The EPA reads the phrase ``under this section'' as a broad 
exemption from regulation under section 112, including section 112(g), 
pending the results of the utility health hazards study.
4. Section 63.40(d) Relationship to State and Local Requirements
    Most state and local regulatory agencies maintain regulatory 
programs that involve toxic air pollutant reviews for constructed and 
reconstructed sources. Section 63.40(d) clarifies that the requirements 
of section 112(g) do not supersede any requirements of these programs 
that are more stringent than this rule. Any such State requirements 
which are more stringent than the requirements of this rule would not 
be federally enforceable under section 112(g).
5. Section 63.40(e) Source Categories Deleted
    This rule provides an exclusion for sources in source categories 
which have

[[Page 68388]]

been deleted by the EPA from the source category list for standards [57 
FR 31576, July 16, 1992]. These sources are excluded because for any 
such category the EPA will have determined, in lieu of making a MACT 
determination, that MACT should not apply.
6. Section 63.40(f)--Research and Development Facilities
    This rule also provides an exclusion for research and development 
facilities that meet the specific definition in section 63.41. The 
proposed rule requested comment on whether to provide this exclusion, 
and the EPA received significant comment in favor of providing it, 
based on the potential resource burden of reviewing operations which by 
design change frequently and do not produce a product for commercial 
use. The title V operating permit program has issued a policy 
memorandum aimed at reducing the permit requirements for such 
facilities. In the interest of consistency with previous exclusions for 
research and development activities and its anticipated use in the 
title V program, this rule adopts the definition of research and 
development facilities provided in section 112(c)(7) of the Act.

B. Section 63.41  Definitions

1. Terms Defined in the General Provisions
    A number of terms used in the rule have already been defined for 
all of 40 CFR Part 63 by the General Provisions contained in subpart A. 
Readers interested in the definitions and rationale for those terms 
should refer to subpart A. Relevant terms defined in the General 
Provisions include:

--Act
--Approved permit program
--Capital expenditure
--Federally enforceable
--Hazardous air pollutant
--Major source
--Permit program
--Potential to emit
--Relevant standard
--Title V permit

    In the definition of Construct a Major Source, the threshold level 
for a major source is a source which emits or has the potential to emit 
(PTE) 10 tons/year of any HAP or 25 tons/year of any combination of 
HAP. The PTE means the maximum capacity of a source to emit any air 
pollutant under its physical and operation design. A source's PTE may 
also take into account enforceable requirements for air pollution 
control equipment, and enforceable restrictions on operation such as 
maximum hours of operation or types of materials consumed.1
---------------------------------------------------------------------------

    \1\ Currently, there is a requirement in the general provisions 
to part 63 that PTE limits must be federally enforceable in order to 
be credited. In a 1995 court case (National Mining v. EPA, 59 F. 3d 
1351, D.C. Cir. 1995), the court required EPA to reconsider this 
requirement. The EPA is currently developing rulemaking amendments 
that will address the concerns raised by the court. It is expected 
that these rulemaking amendments will be finalized in mid-1998.
    The EPA believes that virtually all of the new constructed or 
reconstructed sources with a possibility of triggering section 
112(g) requirements, and requiring emission limitations in order to 
avoid section 112(g), will need to obtain a preconstruction minor 
NSR permit from a State and local air quality agency. Because those 
minor NSR permits are federally enforceable, the practical 
implications of the above-mentioned PTE rulemaking may not be as 
pronounced for section 112(g) as for other requirements of part 63.
    There may be a few situations where a source seeks to attain 
``synthetic area'' status for section 112(g) for a new greenfield 
site, or seeks PTE limits to ensure that a newly constructed source 
avoids becoming a 10-ton ``affected source'' under section 112(g), 
and the limitation issued by a State program is not federally 
enforceable. For example, a State's air toxics preconstruction 
permitting program that creates limits for non-VOC HAP's such as 
methylene chloride may not in some circumstances yield federally 
enforceable limits. For any such circumstances that arise before EPA 
issues its rulemaking amendments addressing the National Mining 
decision, the EPA will accept, for purposes of section 112(g), 
limitations that are practicably enforceable by a State and local 
air pollution control agency.
---------------------------------------------------------------------------

    This means that if a source keeps its emissions below the threshold 
limits for a major source through enforceable limits, it will not meet 
the definition of ``Construct a Major Source'' under section 112(g), 
and thus will not have to apply new source MACT. For example, if a 
plant to be constructed will have uncontrolled emissions of a HAP of 40 
tons/year, it would normally be subject to new source MACT under 
section 112(g). The owners are, however, able to install emission 
controls achieving a 75 percent reduction in emissions of the HAP in 
question. By imposing on themselves this control system and making 
their emissions limit and operating conditions enforceable, as a 
practical matter they can keep their PTE below the major source 
threshold of 10 tons/year. Such a source would not be subject to 
section 112(g), even if the 75 percent emissions reduction did not 
achieve a ``new source MACT'' level of control.
2. Terms Related to Construction and Reconstruction
    The following terms are included in section 63.41:

--Construct A Major Source
--Reconstruct A Major Source
-- Greenfield Site

    The definition of ``construct a major source'' in this rule refers 
to two types of sources. The first is any ``major-emitting'' 
construction at a greenfield site (i.e., construction which emits or 
has the potential to emit HAP in amounts that would make it a major 
source). The other is any construction of a new ``process or production 
unit'' at an existing site where the process or production unit is 
itself major-emitting. (The definition of ``process or production 
unit'' is discussed below in this section.)
    It should be noted that a major source ``construction'' or 
``reconstruction'' project may require more than one MACT 
determination. As outlined in paragraph (3) of the definition, the EPA 
believes that MACT determinations consistent with section 112(d) of the 
Act may not include combinations of emission points involving more than 
one category on a published list of source categories (57 FR 31576). 
For example, most types of combustion sources appear as individually 
listed categories. As a result, a ``construction'' or 
``reconstruction'' involving boilers and other process equipment must 
make a separate MACT determination for the boilers.
    In response to EPA's request for comments on the exclusion from 
section 112(g) for major sources that use existing emission controls, 
several issues were raised. Most industry commenters supported the 
exclusion, but favored broadening it and wanted the rule to state 
clearly that the decision for what constitutes the best control 
technology is left to the discretion of the permitting authority. 
Industry supported replacing the phrase ``control equipment'' with 
``control technology'' to cover pollution prevention approaches. 
Environmental groups and several States opposed this exclusion. They 
felt the use of the phrase ``one of the best control technologies'' was 
too open to interpretation and could be abused. These commenters cited 
the following concerns: the statute requires MACT or its equivalent, 
the technology determination should be based on recent standards (not 
standards used when the controls were originally constructed), all 
significant HAP should be controlled by the existing controls, and 
public review and comment should be required of the permitting 
authority's decision. Several States indicated that review of 
applications for this exclusion would be too resource intensive for 
their staffs.
    The EPA agrees with the comment that the phrase ``one of the best 
control technologies'' is too ambiguous and open to varied 
interpretation. Nevertheless, the EPA recognizes that many sources will 
have previously

[[Page 68389]]

installed controls at the plant site, and that such controls may be 
sufficient for case-by-case MACT when new process or production units 
are added to them. It is our intent to provide flexibility to the 
permitting authority in making case-by-case MACT determinations, but 
believe we are obligated to provide guidance as to how those 
determinations are evaluated. Consequently, the final rule clarifies 
the criteria that must be met for a new major process or production 
unit to qualify for this exemption from section 112(g) review.
    The definition of ``construct a major source'' excludes such 
process or production units, provided the controls meet six specific 
criteria.
    One criterion is that all HAP that would otherwise be controlled by 
a case-by-case MACT determination are controlled by the existing 
technology. For example, if a source has previously installed controls 
designed for total volatile organic compounds (which may also be HAP), 
those controls must achieve a MACT level of control for all of the HAP 
in the emission stream that would normally be expected to be controlled 
by a MACT determination. (For example, a MACT standard might reasonably 
be expected to address all the HAP emitted in a stream except for those 
emitted in trace amounts.) In addition, the control efficiency of the 
equipment for HAP prior to addition of the new process or production 
unit must be maintained after addition of the new equipment.
    The definition also requires either that the previously installed 
control technology has been reviewed and approved within the last 5 
years under another air quality program that requires best available 
control technology (BACT), lowest achievable emission rate (LAER), or 
State-level toxics BACT (T-BACT) or MACT. Alternatively, the permitting 
authority may determine that the previously installed control 
technology is equivalent to what would be currently required by another 
similar air quality program. Use of the exclusion must be documented in 
the title V permit at the time of permit issuance or renewal. These 
requirements provide a safeguard that the new process or production 
unit will be adequately controlled, even if it does not undergo section 
112(g) review.
    In addition, an opportunity is required for public review of the 
permitting authority's decision to allow use of this exclusion. If any 
commenter questions the permitting authority's view that previously 
installed controls are adequate for section 112(g) purposes, then the 
permitting authority must explain its decision in response to those 
comments. In general, the EPA believes that controls that were 
constructed in accordance with an earlier determination could be 
adequate; however, such previously installed controls may not be 
adequate if that same determination, made currently, would be 
significantly different. For example, a BACT determination made in 1992 
could be significantly different from a determination made in 1997 on 
similar equipment if advances in control technology have occurred 
during that time.
    Finally, the EPA generally does not view this ``good controls'' 
exclusion under section 112(g) as satisfying MACT for new sources under 
section 112(d) or section (j). As such, sources subject to later MACT 
determinations pursuant to section 112(d) or section 112(j) may have 
additional compliance requirements placed upon them.
3. Terms Related to MACT
    Definitions for the following terms related to levels of control 
technology are included in section 63.41 of this rule:

--Available information
--MACT
--Control Technology
--MACT Emission Limitation for New Sources

    The basis for the MACT definitions is statutory language contained 
in section 112(d) of the Act. The term ``MACT'' appears only in section 
112(g) of the Act, and does not appear elsewhere in section 112. There 
is, however, considerable legislative history indicating that this term 
refers to the level of control required by section 112(d) emission 
standards. The term ``MACT'' was used in this context in the House 
Bill, H. R. 3030. For purposes of the definitions in this rule, the EPA 
assumes that MACT is a reference to the ``maximum degree of reduction 
in emissions'' language contained in section 112(d)(3).
    The term ``available information'' is used to define the extent of 
review for permitting authorities and applicants for case-by-case MACT 
determinations. This rule defines ``available information'' to include 
information made available by the EPA in the process of setting 
emission standards, including but not limited to MACT standards. The 
EPA intends that information made publicly available in background or 
other documents in the process of developing a ``presumptive MACT'' for 
a source category should be considered ``available information.'' In 
this rule, information is considered to be ``available'' if it is 
available as of the permitting authority's final determination, i.e., 
the date the permitting authority makes the final determination after 
receiving all comments. Some commenters argued that information should 
only be considered ``available'' if it has been available as of the 
date of application for a MACT determination. The EPA believes, 
however, that new information presented during a public comment period 
should be considered in the MACT determination. The issue of 
``available information'' is discussed in more detail in section 
III.D.3. below.
4. Terms Affecting Extent of Coverage by MACT
    The following terms are used to describe equipment subject to a 
MACT determination:

--Affected source
--List of source categories
--Process or production unit

    As explained above, the EPA believes that Congress did not intend 
section 112(g)(2)(B) to be so limited in scope that it would apply only 
to construction or reconstruction of entire facilities, and that this 
section was also intended to apply to construction of new process or 
production units and reconstruction of existing process or production 
units at existing facilities. Accordingly, it is necessary for EPA to 
decide what types of new equipment constitute the unit to be controlled 
under section 112(g).
    A number of commenters expressed concerns regarding the exclusion 
for an ``integral component of a process or production unit,'' in the 
draft final rule, which required that the component be an ``essential 
part'' of a larger process or production unit. The nature of the 
comments made it clear that this definition was subject to greatly 
differing interpretations. Many commenters stated that the definition 
was too narrow, while some argued that it could be construed so broadly 
that no new equipment would qualify. Several commenters who believed 
the proposed definition of ``integral component'' to be too narrow 
suggested that EPA use alternative criteria such as ``functions as a 
part of'' or ``integrated with'' a larger process or production unit 
instead. The EPA believes the concept of a functional relationship to 
be a useful one, but by itself this concept is susceptible to an unduly 
broad interpretation.
    The EPA is concerned about the varying interpretations given to 
this term by the commenters. Therefore, instead of defining the 
equipment which should be excluded from section 112(g), the EPA has 
chosen to define the

[[Page 68390]]

equipment to which section 112(g) should apply controls. This rule 
applies section 112(g) to equipment which meets the definition of a 
``process or production unit.''
    The definition of ``process or production unit'' requires that the 
unit to which section 112(g) applies should be ``any collection of 
structures and/or equipment that processes, assembles, applies, or 
otherwise uses material inputs to produce an intermediate or final 
product,'' and notes that the process or production unit may be a part 
of a facility which contains several such units. By requiring that the 
unit produce a product, the EPA intends section 112(g) to apply to 
units which are discrete, not units which are just one essential part 
of a larger function. The EPA also intends that the requirement that 
the unit produce a product be read to include those units whose product 
is energy, such as boilers.
    At the same time, some commenters suggested that an entire plant 
site should generally be considered the unit to which section 112(g) 
applies, an interpretation which the EPA does not share. Therefore, by 
specifying that the process or production unit may be a part of a 
facility, the EPA intends that the definition be interpreted to cover a 
process line or production operation within a facility.
    The draft final rule contained separate definitions of ``process'' 
and ``production unit.'' Under the draft language, storage tanks would 
have been considered processes or production units in some situations. 
Because the final rule consolidates the two definitions, the EPA has 
changed the definition of process or production unit to include the 
storage of materials, where storage is the primary function of the 
facility (e.g., tank farms), as a process or production unit. These 
issues are discussed and illustrated further in section III.D. below.
5. Electric Utility Steam Generating Unit
    The definition of electric utility steam generating unit in the 
proposed rule is taken directly from section 112(a) of the Act.

C. Section 63.42 Program Requirements Governing Construction or 
Reconstruction of Major Sources

    Several commenters expressed concerns regarding the provision in 
the draft final rule under which section 112(g) would have taken effect 
immediately upon promulgation of this rule in those States which have 
already developed section 112(g) programs. Some of these commenters 
noted that it is illogical to assume that a program adopted by a State 
in advance of issuance of this rule will meet its requirements, and 
that States should be required to evaluate their programs for 
conformity to this rule before they take effect. The EPA agrees with 
this comment, and has therefore required that each permitting authority 
certify that its implementing program is in conformity with the 
provisions of this rule as part of its adoption of a program.
    Some commenters requested that EPA provide a fuller description of 
the steps by which a permitting authority can adopt a section 112(g) 
program. Other commenters argued that a program should not take effect 
without some sort of notice to affected facilities. The EPA agrees with 
these comments and has therefore also required that a permitting 
authority establish in advance an effective date for its program, and 
publish notice of the adoption of the program prior to that effective 
date.
    One commenter argued that section 112(g) programs adopted by a 
State permitting authority cannot take effect unless they are expressly 
approved by EPA, either as part of a title V program or as a delegation 
of authority to the State under section 112(l). The commenter argued 
that EPA must also afford an opportunity for public comment prior to 
any such approval. The EPA does not agree with the position expressed 
by this commenter.
    The EPA interprets section 112(g) as assigning to the permitting 
authority for each State, whether it be the State or the EPA Regional 
Office acting on behalf of the Administrator, the responsibility for 
making section 112(g) determinations. This construction of section 
112(g) is implicit in the language which makes the applicability of the 
prohibitions in section 112(g)(2)(B) contingent on the effective date 
of a title V permit program in each State. Moreover, the EPA has 
previously taken steps to effectuate this construction of the Act. Each 
State which received approval to operate a title V permit program was 
required to state that it had the requisite authority to implement 
section 112(g). While an individual State (or the EPA Regional Office 
if it is the permitting authority under title V) is not in a position 
to adopt a section 112(g) program which satisfies Federal requirements 
for such programs until after EPA has issued its general guidance 
concerning the nature of these requirements, there is no indication in 
the language of section 112(g) that EPA must then ``delegate'' to each 
State the authority already assigned it by the statute itself.
    The EPA believes that it would be permissible for EPA to require 
that State section 112(g) programs be approved by the EPA before they 
could take effect, but does not intend to do so. The EPA acknowledges 
that the difficulties it has encountered in devising guidance on 
implementation of section 112(g) which is both effective and 
practicable have resulted in unfortunate delays in implementation, and 
that EPA must necessarily afford State permitting authorities some 
additional time after issuance of this rule to plan for and adopt their 
implementing programs. However, inclusion of additional EPA comment and 
review procedures which are not mandatory would only serve to further 
delay implementation of this provision, thereby undermining the 
congressional intent.
    Section 63.42(c) says that no person may ``begin actual 
construction or reconstruction'' of a major source unless a case-by-
case MACT determination has been made. The EPA intends that the phrase 
``begin actual construction or reconstruction'' have the same meaning 
as the phrase ``begin actual construction'' in 40 CFR 51 and 52 [the 
NSR and PSD programs], i.e. initiation of physical onsite construction 
activities as set forth in those programs.
    If a facility which wishes to undertake construction or 
reconstruction of a major source after the effective date of section 
112(g)(2)(B) in a State or local jurisdiction is unable to obtain the 
case-by-case MACT determination required by that provision, this could 
prevent the facility from proceeding with construction or 
reconstruction. Although the potential for constraints on construction 
or reconstruction when no section 112(g) program is in place is 
inherent in the structure of the statute itself, the EPA has included 
in the final rule two provisions which are intended to avert such a 
result in the event that a State permitting authority is unable to 
adopt a section 112(g) program in a timely manner.
    First, in those instances where a State has not adopted a section 
112(g) program within 18 months but concludes that it can still make 
the required case-by-case MACT determinations, the State may elect to 
make such determinations subject to written concurrence by the EPA 
Regional Office. Upon written concurrence by the EPA, the MACT 
determination will become final and federally enforceable. Second, in 
those instances where a State has not adopted a section 112(g) program 
within 18 months and concludes that it is unable to make case-by-case 
MACT determinations in the absence of such a program, the State may 
request that the EPA Regional Office implement a transitional section 
112(g) program for a

[[Page 68391]]

period not to exceed 1 year. Although it is clear that failure to adopt 
a section 112(g) program would constitute a material deficiency in a 
State's title V permitting program, the EPA would prefer to afford 
those States who have encountered practical difficulties in timely 
adoption of a section 112(g) program additional time rather than 
immediately applying the sanctions and remedies set forth in section 
502(i).
    Industry commenters have expressed concern that individual States 
might use adoption of a section 112(g) program to ``federalize'' 
elements of existing State air toxics programs which are not required 
to implement section 112(g) with respect to construction or 
reconstruction of major sources. Conversely, some States have expressed 
concern that adoption of a section 112(g) program might operate to 
preempt other existing provisions in State air toxics programs which 
are not required to implement section 112(g). The EPA does not intend 
or support either of these results. The program adopted by each State 
to implement section 112(g) will be intrinsically less extensive in its 
scope than many existing State air toxics programs. When this is the 
case, the section 112(g) program should not be treated as either 
subsuming or superseding extraneous State program elements. 
Accordingly, the EPA has included in the final rule explicit language 
making it clear that nothing in the section 112(g) rule can be 
construed to require compliance with State program elements not 
intended to implement section 112(g) with respect to construction or 
reconstruction of major sources, and nothing in the rule can be 
construed to preclude enforcement of such State program elements under 
any other provision of applicable law. State permitting authorities may 
examine their existing State air toxics programs to determine if they 
contain the requirements of this rule. If so, a permitting authority 
may use its existing air toxics program as a vehicle for implementing 
section 112(g) requirements.

D. Section 63.43 MACT Determinations for Constructed and Reconstructed 
Major Sources

    Section 63.43 (in combination with a number of definitions 
contained in section 63.41) contains the requirements for constructed 
and reconstructed major sources described in section 112(g)(2)(B) of 
the Act. Equipment affected by this section must comply with a ``new 
source MACT'' level of control.
Applicability
    1. ``Greenfield'' Facilities. The most straightforward case for 
section 112(g) is for a new plant site emitting (or having the PTE) 
more than major amounts of HAP (that is, 10 tons/yr of one HAP, 25 
tons/yr of multiple HAP, or amounts that exceed any lesser quantity 
cutoffs that may be established under subpart C of part 63). The EPA 
believes that the statute clearly requires such a new plant site to be 
treated as a ``constructed major source'' subject to a ``new source 
MACT'' level of control.
    2. Addition of Equipment at an Existing Plant Site. This rule 
treats addition of a new ``process or production unit'' as 
construction, as discussed above, and requires application of new 
source MACT to that process or production unit. This ensures that new 
major-emitting process or production units (that is, those emitting 
more than 10 tons/year of a HAP, or 25 tons/year from all HAP, or 
amounts exceeding a lesser quantity cutoff), which generally would 
represent sizeable investments, will be built with state-of-the art 
control technology. It is generally recognized that it is more 
straightforward to build such a level of control technology into the 
original design, and that it is difficult or sometimes even impossible 
to retrofit such controls at a later date. A fundamental goal of many 
EPA programs, such as the new source performance standards program 
under section 111 of the Act and the effluent guidelines program under 
the Clean Water Act, is to achieve long-term reductions in emissions by 
requiring ``best'' controls as old production operations are replaced 
with new operations. In addition, this requirement prevents inequities 
in the implementation of the 112(g) program, because a new process or 
production unit at an existing plant would be subject to the same 
standard as a ``greenfield'' plant site with identical equipment. If 
this rule only covered greenfield sites, as some commenters suggested, 
then that same new process or production unit would not be controlled 
at all under section 112(g).
    The guidance in this preamble is designed to help the permitting 
authority determine whether a new major addition constitutes a process 
or production unit. The EPA is providing the following examples to 
illustrate its intent for applicability of section 112(g). The 
rationale for each case is explained based on the definition of a 
process or production unit.
    Because this rule is generic to all industries, the definition of 
``process or production unit'' and the use of the terms ``intermediate 
or final product'' in this rule are necessarily generic. As a result, 
in applying this definition to individual plant sites, permitting 
authorities will need to exercise their reasonable judgment in 
determining the ``collection of structures and/or equipment that * * * 
produce(s) an intermediate or final product.'' The following discussion 
and examples provide guidance on factors and considerations that EPA 
believes are appropriate in making this judgment. None of the factors 
or considerations by itself should be considered absolute in 
determining applicability, but these should be weighed by the 
permitting authority in reaching a decision.
    In applying the definition of ``process or production unit'' to a 
facility, a key question is: What are the intermediate or final 
products? There is no intention for this rule to impart any regulatory 
significance to informal uses of the term ``intermediate.'' The 
examples below illustrate EPA's intent for a variety of industries.
    A second question is: Do the new equipment and/or structures 
constitute a collection of equipment and/or structures that produces 
such a product? The EPA believes that an appropriate factor for the 
permitting authority to consider is the extent to which the new 
equipment and structures are discrete--in other words, whether as a 
technical matter the new equipment and structures can produce an 
intermediate or final product independently, in substantial degree, 
from the existing equipment or structures. If so, this would tend to 
support a judgment by the permitting authority that the new equipment 
and structures constitute a process or production unit. If not, this 
would support the opposite conclusion. The EPA notes that in making 
this judgment concerning ``discreteness,'' one relevant consideration 
is whether the types of new equipment and structures in question are 
reasonably controlled independently.
    In many cases it will be easy to discern whether changes at a plant 
site will constitute construction or reconstruction of a ``process or 
production unit.'' For example, if a new unit is added to an existing 
plant site, and that type of unit is often built alone at a greenfield 
site, the logical conclusion is that the new unit is a process or 
production unit. Also, if minor changes are being made to existing 
equipment, it should be clear that no process or production unit is 
being constructed or reconstructed. Of course, there is no need to 
define the ``process or production unit'' at all

[[Page 68392]]

unless the structures and/or equipment being constructed at an existing 
plant site have the potential to emit major amounts of HAP.
    The following sample applicability determinations provide further 
guidance in judging when a source is subject to section 112(g) 
requirements:
    Example 1. At a plant which manufactures fiberglass reinforced 
plastic boats, the owners wish to add more spray guns to an existing 
fabrication line to supplement the existing spray guns in laminating 
a particular model of boat hulls. The new spray guns will have a PTE 
greater than 10 tons/year of a HAP.
    In this example, EPA views the fiberglass hull of a boat as an 
intermediate product in the manufacture of the final product (i.e., the 
boat with deck, trim, paint, engine, etc.) The collection of structures 
and/or equipment needed to manufacture the intermediate product, in 
this case, includes the existing spray guns and other operations in the 
building (e.g., the lamination operation and other supporting 
equipment) that typically are found in the production of boats. Because 
the newly added spray guns in and of themselves do not produce the 
intermediate product, the EPA does not view the additional spray guns 
for lamination as a process or production unit that is subject to 
review under section 112(g).

    Example 2. Using Example 1, assume that the owner adds more 
spray guns to laminate a second model of boat hulls. The room is 
large enough to accommodate two lamination processes at the same 
time. The new spray guns have a PTE greater than 10 TPY.
    The same rationale used in Example 1 applies here. The 
collection of equipment needed to produce the boat hull includes the 
lamination process as well as the gel coat process. Because the 
addition of the second lamination process does not produce an 
intermediate product, if no additional laminating or other essential 
equipment were added, it would not be subject to review under 
section 112(g).
    Example 3. Using Example 2, a gel coat spray booth and 
supporting equipment needed to manufacture the boat hulls are added 
in addition to the spray guns.
    The process or production unit in this example is the set of 
equipment that consists of the gel coat spray booths, the spray gun, 
and the supporting equipment. This new set of equipment can 
reasonably operate alone and produce an intermediate product. 
Consequently, all sources of HAP in this set of equipment, which 
includes the gel coat spray booth and the spray guns in the 
laminating room, are subject to review under section 112(g).
    Example 4. An aluminum reduction plant has several potlines 
which manufacture aluminum. Each potline consists of between 100 and 
200 electrolytic reduction cells or ``pots'' that are connected 
together in series electrically to complete a circuit. Each pot 
produces molten aluminum. The company wishes to add more pots on 
each line. The additional pots will result in a major increase in 
emissions.

    Although each individual pot contributes to the production of the 
aluminum, the separate pots are not considered to be discrete process 
or production units in that they cannot operate independently. In 
addition, it does not make sense from an engineering standpoint to 
apply new source MACT only to the additional pots. The best time to 
apply new source MACT is when constructing an entirely new potline. The 
EPA does not view each separate pot as a process or production unit and 
thus the individual pots are not subject to review under section 
112(g). The EPA sees the pots within the potline as being both 
functionally and physically interconnected and unable to function 
alone. Thus, EPA does not consider the pots as discrete process or 
production units.

    Example 5. Using Example 4, assume the aluminum production 
facility adds a new potline which is a major source of HAP.

    The EPA considers the entire potline as the collection of 
structures and equipment that produces an intermediate product (i.e., 
molten aluminum). Since it fits within the definition of a process or 
production unit, the potline is subject to review under 112(g). Also, 
note that the potline is an example of a process or production unit 
that is part of a larger production unit, the aluminum production 
plant.

    Example 6. At an automobile assembly paint shop, three coating 
steps, primer, surfacer, and top coat, are used to paint the 
automobile body. Another parallel topcoat step is added to the 
existing topcoat step. Both top coat steps then feed back into a 
bake oven. The new top coat step will be a major source of HAP.

    The new parallel topcoat step is not subject to review under 
section 112(g). The intermediate product in this case is the painted 
automobile body. The top coating step cannot take place without the 
preceding primer and surfacer steps and the supporting infrastructure. 
Additionally, the intermediate product cannot be completed without the 
bake oven step. Consequently, the topcoat by itself is not a discrete 
process as it is only one step in a series of steps necessary to 
produce an intermediate or final product. (Although unlikely, if an 
existing automobile assembly plant were to build a second paint shop, 
this should be reviewed under section 112(g).)
    3. Reconstruction. Section 112(g) continues the concept of 
``reconstruction'' contained in past regulatory programs. The concept 
of reconstruction is intended to prevent the circumvention of ``new 
source'' requirements by completely overhauling existing equipment. 
Current air pollutant emission standards under previous requirements of 
the Act treat replacement of components as a reconstruction if the 
replacement represents more than 50 percent of the capital cost of the 
new unit.
    For section 112(g), the requirements apply to the reconstruction of 
a ``major source,'' and this rule defines ``reconstruct a major 
source'' as the replacement of components at a major source such that 
the replacement exceeds 50 percent of the capital cost of either an 
entirely new major source, or of a comparable process or production 
unit where the process or production unit, if newly constructed, would 
have been considered a constructed major source under this rule. (For 
the sake of clarity, the EPA has deleted that portion of the 
reconstruction definition in the draft rule that referred to a ``group 
of process or production units'' being reconstructed, so that the 
definitions of both construction and reconstruction would refer to the 
same units).
MACT Determinations
    Section 63.43 reflects the statutory requirement that an owner or 
operator who proposes to ``construct or reconstruct'' a major source 
must obtain a determination from the ``permitting authority'' that the 
``MACT emission limitation for new sources'' will be met. The 
``permitting authority'' is defined as the agency responsible for the 
title V permit program. Further discussion of this issue, and of other 
issues related to implementation of section 112(g), is contained in 
section IV of this preamble.
    This section of the preamble discusses the procedures for making 
these MACT determinations. These procedures include technical review 
procedures needed to establish a MACT emission limitation and a 
corresponding MACT control technology, and, (where appropriate), 
administrative procedures for submitting and reviewing applications for 
MACT determinations. In this rule, the overall process for MACT 
determinations is outlined in Sec. 63.43.
    1. Overall Process for MACT Determinations. Where no MACT standard 
under section 112(d) has been promulgated, section 112(g) requires a 
case-by-case determination of the MACT emission limitation. This 
``determination'' can take any of three

[[Page 68393]]

forms, as described below and in Sec. 63.43(c) of this rule. Under any 
approach, the process for review is conceptually similar.
    The process begins with a MACT analysis by the owner and operator. 
This MACT analysis must be consistent with general principles described 
in Sec. 63.43(d). The owner or operator provides an application for a 
MACT determination to the permitting authority. Requirements for the 
contents of this application are listed in Sec. 63.43(e). Commenters 
indicated that the source cannot certify that the control technology 
meets MACT because the permitting authority has not yet made the MACT 
determination. The EPA agrees with these commenters and has therefore 
eliminated the requirement from Sec. 63.43(e)(2) of the draft final 
rule for a responsible official to certify that the control technology 
meets the requirements of section 112(g) of the Act. (The EPA wishes to 
clarify that the requirement in Sec. 63.43(e)(2)(vi) to list emission 
rates is intended as background information to enable the permitting 
authority to identify the pollutants requiring MACT controls. The EPA 
recognizes that there is often a significant effort required to obtain 
precise estimates of HAP emission rates and speciations. The EPA does 
not intend in this paragraph to require a greater level of detail than 
is necessary for evaluating applicability and emission control issues.)
    This application for a MACT determination is then reviewed by the 
permitting authority according to one of the following procedures (at 
the permitting authority's discretion): (1) the permitting authority's 
own review procedures (so long as they provide for public participation 
in the determination), (2) the administrative procedures outlined in 40 
CFR part 70 or part 71, or (3) the administrative procedures described 
in Sec. 63.43, paragraphs (f), (g), and (h). If approvable, the 
permitting authority will then either: (1) issue approval under its own 
procedures, (2) revise the part 70 or part 71 permit, or (3) issue a 
Notice of MACT Approval. Regardless of which review procedure is used, 
the provisions of section 63.43, paragraphs (j), (k), (l), and (m) 
apply.
    Section 63.43(c)(3) of this rule provides that a source may seek 
approval of case-by-case MACT determinations for new alternate 
operating scenarios (that were not incorporated in a State permit) when 
obtaining its title V permit. As a result, the source would have met 
the requirements of section 112(g) at the time of permit approval, and 
thus would be free to activate any such alternative operating scenario 
in the future without having to undergo any further section 112(g) 
review.
    Where EPA determines that the MACT determination made by the 
permitting authority fails to meet any of the requirements of 
Sec. 63.43, EPA may take one of two actions to address the deficient 
MACT determination. (a) Where the MACT determination is made part of a 
source's part 70 permit, EPA may veto issuance of the permit in 
accordance with the provisions of 40 CFR 70.8(c). The EPA may also use 
the veto process outlined in 40 CFR 70.8(c) where the State has 
``enhanced'' its section 112(g) process to incorporate the part 70 
procedures.
    (b) Where the MACT determination is made before the source obtains 
or revises its part 70 permit, either through a Notice of MACT Approval 
or the permitting authority's own procedures, EPA may exercise its 
authority under section 113(a)(5) of the Act to prohibit construction, 
issue an administrative penalty order, or bring a civil action against 
the source upon finding that the State has not acted in compliance with 
any requirement or prohibition relating to the construction or 
reconstruction of new sources.
    Many commenters have expressed opposition to the provision in the 
draft final rule which provides that an owner or operator shall be 
deemed to be in compliance with section 112(g)(2)(B) only to the extent 
that the constructed or reconstructed major source is in compliance 
with the terms and conditions of the MACT determination. The commenters 
contend that this provision would operate to treat sources that are 
temporarily in violation of the terms of a MACT determination the same 
as sources who completely ignore section 112(g)(2)(B) and proceed to 
construct or reconstruct without obtaining a MACT determination. One 
commenter even argues expansively that this proposed provision would 
operate to subject the violator to penalties for the entire period 
since the original construction or reconstruction, rather than only for 
the period of the violation itself.
    It was not the intent of EPA, nor would it be appropriate, to 
transform prior compliance into a violation based on the occurrence of 
subsequent violations. The EPA has clarified the language of the 
provision to assure that any violation of the terms and conditions in a 
MACT determination will be construed as a violation of section 
112(g)(2)(B) only for that period that the owner or operator is 
actually in violation of such terms or conditions.
    In general, the commenters assume that the MACT determinations made 
by a State will themselves be automatically federally enforceable, 
regardless of whether they have been incorporated in a title V 
operating permit for the facility. One commenter expressly invoked the 
language of section 113 by referring to a MACT determination as a 
``permit,'' while another argued to the contrary that Federal 
enforceability is not mandatory for MACT determinations under section 
112(g). The EPA agrees that MACT determinations made pursuant to the 
authority conferred on a State by section 112(g) should be construed as 
federally enforceable actions, regardless of whether their terms have 
been incorporated into a title V operating permit. The EPA notes that a 
significant period may elapse between the time a facility first obtains 
a MACT determination and the subsequent issuance of a title V operating 
permit for that facility. The MACT determinations in this interim 
period are federally enforceable.
    Congress clearly intended that the EPA should be able to enforce 
the requirement for sources to apply MACT prior to construction or 
reconstruction of a major source. If a facility obtains a MACT 
determination but does not adhere to its terms and conditions, then 
that facility should not be shielded from Federal enforcement. The 
provision in the final rule which makes failure to adhere to the 
requirements in the MACT determination a violation of section 
112(g)(2)(B) itself, but only for the period that the facility is 
actually violating those requirements, is reasonable. It provides 
additional assurance that no facility will be able to avoid Federal 
enforcement based on a contention that the MACT determination has not 
yet been incorporated into a title V operating permit and should not be 
deemed directly enforceable.
    2. Requirement for Preconstruction Determination. Section 63.43 
requires the MACT determination before construction or reconstruction 
of the major source. The requirement is based upon the language in 
section 112(g)(2)(B) requiring that the Administrator (or the State) 
determine that MACT ``will be met.'' The EPA believes that the future 
tense suggests an up-front determination.
    In addition, the EPA believes that there are substantial 
implementation disadvantages for any program that would allow equipment 
to be constructed before a determination is made. The EPA's past 
experience in enforcing air quality regulations suggests strongly that 
it would be very

[[Page 68394]]

difficult to require substantial changes in the design of equipment 
once it is in place. The EPA feels that fairness or equity arguments, 
based on investments already made and the costs of retrofit and 
shutdown, could be made by a source seeking to begin operation under 
these circumstances.
    3. General Principles for MACT Determinations. Section 63.43(d) 
reviews a number of general principles that govern MACT determinations 
under this rule. As required by section 112(g)(2)(B), this rule 
requires a case-by-case determination by the permitting authority that 
the technology selected by the owner or operator is consistent with 
what would have been required under section 112(d) of the Act. For 
constructed and reconstructed major sources, the minimum requirement 
for a case-by-case MACT determination, consistent with section 112(d), 
is the level of control that is achieved in practice by the best 
controlled similar source. The definition of MACT for new source MACT 
in this rule does not require consideration of sources outside the U.S. 
However, sources and permitting authorities are expected to consider 
controls on sources across the U.S., as opposed to considering just 
those controls used on sources in a particular State.
    In determining the appropriate level of control, this rule requires 
consideration of ``available information.'' In some instances, such 
information sources are readily apparent. For example, if a Federal 
MACT standard has been proposed, but not yet promulgated, the EPA 
expects that a MACT determination will strongly consider that proposal. 
(Other information may be available in some cases, for example, based 
upon public comment on the MACT proposal, but such data would need to 
be adequate to refute the finding in the proposal). In other cases, the 
EPA will have generated background documents summarizing MACT findings 
which should be readily available.
    In some cases, during the course of developing the MACT standard 
the EPA will decide upon and make publicly available a ``presumptive 
MACT'' emission limitation that anticipates what the ultimate MACT 
determination will be. The EPA may do this before a proposed MACT 
standard has been published in the Federal Register for a source 
category. If so, sources and States should use such a ``presumptive 
MACT'' emission limitation as guidance in making case-by-case MACT 
determinations, because these determinations would be the best 
available information on the eventual MACT emission limitation.
    The most recent performance standards for existing control 
technologies must be met. These include standards for BACT, LAER, or 
State T-BACT established within the last 5 years. The EPA plans to 
develop guidance for performance standards for 10-year MACT categories. 
Any relevant performance standards established in this guidance should 
be used once it is available. Determinations by the permitting 
authority on the adequacy of equivalent controls should be evaluated by 
the most recent performance standards available at the time of 
construction. As indicated in the draft final rule, the resulting level 
of control must at least meet that provided by the control technology 
prior to the inclusion of additional sources.
    In addition, the EPA currently maintains a number of data bases 
that may be useful as a resource for information on available control 
technologies. The EPA has also designed a data management system that 
will support case-by-case MACT determinations. This data base is called 
the MACT data base. The EPA is developing guidance documents on how to 
use the MACT data base. Section 63.43(m) requires States to report all 
case-by-case MACT determinations to the MACT data base.
    Finally, it should be noted that the final rule changes the term 
``control equipment'' to ``controls'' to include any pollution 
prevention strategy that effectively limits emissions and is federally 
enforceable.
    4. General Issues with Regard to MACT Determinations. For 
constructed and reconstructed major sources, section 112(g) of the Act 
requires an emission limitation consistent with a ``new source MACT'' 
level of control. The Act states:

    The maximum degree of reduction that is deemed achievable for 
new sources in a category or subcategory shall not be less stringent 
than the emission control that is achieved in practice by the best 
controlled similar source, as defined by the Administrator.

    For the purposes of section 112(g), two criteria should be used to 
determine if a source is similar: (1) whether the two sources have 
similar emission types, and (2) whether the sources can be controlled 
with the same type of control technology. The EPA can classify the 
emission source as one of five different types. They are as follows:
    Process vent or stack discharges--the direct or indirect discharge 
of an organic liquid, gas, fume, or particulate by mechanical or 
process-related means. Examples would be emission discharges from 
columns and receiving tanks from distillation, fractionation, thin-film 
evaporation, solvent condensers, incinerators, flares, and closed-
looped biological treatment units.
    Equipment leaks--fugitive emissions from the following types of 
equipment: valves, pumps, compressors, pressure valves and lines, 
flanges, agitators, sampling connection systems, and valve connectors.
    Evaporation and breathing losses--emissions from storage or 
accumulation of product or waste material; for example: stationary and 
mobile tanks, containers, landfills, and surface impoundments, and 
pilings of material or waste.
    Transfer losses--emission of an organic liquid, gas, fume, vapor or 
particulate resulting from the agitation of material during transfer or 
the material from one unit to another. Examples of such activities are 
filling of mobile tanks, dumping of coke into coke quench cars, 
transfer of coal from bunker into larry car, emptying of baghouse 
hoppers, and sludge transfer.
    Operational losses--emissions resulting from the process operation 
which would result in fugitive emissions if uncontrolled by hoods or 
vacuum vent, or other vent systems. Examples of operation losses are 
emission resulting from spray coating booths, dip-coating tanks, 
quenching towers, lubricating stations, flash-off areas, or grinding 
and crushing operations.
    These five types of emission sources can serve as a general guide 
in identifying available control options while also considering the 
concentration and the type of constituents of a gas stream. However, 
while two pieces of apparatus can be classified within the same 
emission source type, this does not automatically mean that the 
emission points can be controlled using the same type of control 
technology. For instance, storage tanks and landfills are both listed 
in the evaporation and breathing losses classification, but it is 
unlikely that a storage tank and landfill would be controlled with the 
same technology.
    The EPA believes that because the Act specifically indicates that 
existing source MACT should be determined from within the source 
category and does not make this distinction for new source MACT, that 
Congress intends for transfer technologies to be considered when 
establishing the minimum criteria for new sources. EPA believes that 
the use of the word ``similar'' provides support for this 
interpretation. The EPA believes that Congress could have

[[Page 68395]]

explicitly restricted the minimum level of control for new sources, but 
did not. The use of the term ``best controlled similar source'' rather 
than ``best controlled source within the source category'' suggests 
that the intent is to consider transfer technologies when appropriate.
    Some commenters expressed concern that the EPA's definition of 
``similar source'' could be interpreted too broadly. The EPA believes 
that the practical use and effectiveness of any transfer technology 
should be generally comparable across emission units. While the 
particular pollutants emitted need not be the same, the following 
factors may be considered: the volume and concentration of emissions, 
the type of emissions, the similarity of emission points, and the cost 
and effectiveness of controls for one source category relative to the 
cost and effectiveness of those controls for the other source category, 
as well as other operating conditions. The uninstalled cost of controls 
should not be a factor in determining similarity across emission units. 
What should be a factor is the uninstalled cost of controls plus the 
costs associated with installation and operation of those controls. 
Therefore, whenever costs are quantified, such costs should include the 
purchase price of controls plus the costs associated with installation 
and operation of those controls for the source in question. In 
addition, the EPA recognizes that control efficiencies across similar 
sources may be different. The permitting authority is expected to use 
its judgement in determining when operating conditions are comparable 
across emission units.
    Another general problem that must be addressed in determining the 
MACT, is the identification of the universe of equipment that must be 
considered for control. When the notice of initial list of categories 
of sources under section 112(c)(1) of the Act was published (57 FR 
31576), the EPA listed broad categories of major and area sources 
rather than narrowly defined categories. The EPA chose to establish 
broad source categories at the time the source category list was 
developed because there was too little information to identify 
technically distinct groupings within these broad categories. During 
the standard-setting process, EPA may find it appropriate to further 
subcategorize to distinguish among classes, types and sizes of sources.
    In making case-by-case MACT determinations, the EPA believes that 
permitting authorities may find it necessary to subcategorize 
particular source categories into technically distinct groupings. This 
rule allows permitting authorities to subcategorize, at their 
discretion, on a case-by-case basis, giving permitting authorities the 
greatest flexibility in case-by-case MACT determinations. In their 
comments, some permitting authorities indicated that reviewing agencies 
may not have the resources to address this subcategorization issue. The 
EPA recognizes that allowing permitting authorities discretion to 
subcategorize or not subcategorize may lead to some national 
inconsistency in implementation for source categories for which the EPA 
has not yet established a presumptive MACT, or has not yet collected 
enough information on the source category to establish subcategories. 
To limit inconsistencies, the EPA strongly encourages those States 
which have collected information on particular source categories to 
share that information with other States through the MACT data base.
    In the proposed rule, EPA also sought comment on the criteria for 
which subcategorization would be allowed. Possible criteria can include 
technically distinct processes or operations (including differences 
between batch and continuous operation), fundamental differences in 
emission characteristics or control device applicability, differences 
in safety considerations, and the appropriate consideration of 
opportunities for pollution prevention. Most commenters supported 
allowing sources and/or States the discretion to subcategorize on a 
case-by-case basis. The EPA has not subcategorized source categories in 
this rule because it is most feasible to do so on a case-by-case basis.
    5. Application for a MACT Determination. Section 63.43(e) of this 
rule describes the information the owner or operator is required to 
provide with an application for a MACT determination or in a title V 
permit application for which a MACT determination is requested. These 
information requirements are designed to identify the equipment to be 
controlled, and to demonstrate that the selected control technology for 
those units is consistent with or exceeds the requirements of the 
statute.
    6. Review Process. Analysis of the relationship of section 112(g) 
to the operating permits program. This rule, in section 63.43, 
paragraphs (f), (g), (h), and (i), establishes an administrative 
process for reviewing a request by an owner or operator for a MACT 
determination. As discussed previously, the EPA believes that section 
112(g) of the Act requires such a determination to be made before 
constructing or reconstructing a major source.
    There will be cases when the title V permit process will be used 
for section 112(g) reviews, and there will be cases when it will not be 
used and MACT determinations will be incorporated into the permit after 
commencement of operation. Section 63.43(c) of this rule states that 
when the title V procedures are used, this process would be sufficient. 
When the title V process does not occur until after construction or 
reconstruction of a major source requiring a case-by-case MACT 
determination, this rule requires that the owner or operator follow 
either of the other two administrative review processes described in 
Sec. 63.43. Where the change that is subject to section 112(g) review 
is addressed or prohibited by an existing title V permit, the change 
would of course need to be processed as a revision to the title V 
operating permit prior to commencing operation.
    Regardless of the timing for incorporation of section 112(g) 
determinations into the operating permit, there are certain 40 CFR Part 
70 requirements that apply. The title V permit must be revised or 
issued according to procedures set forth in part 70, and must 
incorporate the compliance provisions of part 70. If, during the EPA's 
review of the section 112(g) determination, it becomes apparent that 
the determination is not in compliance with the Act, then EPA must 
object to the issuance or revision of that permit.
    These requirements are obviously satisfied either if part 70 
requires revision to an existing title V permit prior to operation, or 
if the permitting authority otherwise requires incorporation into a 
title V permit as a step in the section 112(g) determination process. 
However, even where there is no formal incorporation into a title V 
permit prior to operation, subsequent title V review may effectively be 
avoided if the State's section 112(g) process is ``enhanced'' to 
include the required title V procedures, thereby allowing for later 
incorporation into the title V permit by administrative amendment.
    7. Streamlined Administrative Process. Section 63.43, paragraphs 
(f), (g), and (h) of this rule establish an administrative review 
process for case-by-case MACT determinations for permitting authorities 
to use at their discretion. The process begins with a 45-day 
completeness determination. (In this rule the EPA suggests a 
completeness determination of 45 days, and a public review period of 30 
days, in order to be consistent with the time periods set forth in part 
70 for a permit application, so that a permitting

[[Page 68396]]

authority can easily combine these processes). Once a complete 
application is received, approval or an intent to disapprove the 
application is required. If an intent to disapprove is issued, the 
owner or operator is given the opportunity to provide further 
information. The proposed decision to either approve or disapprove the 
application is then subject to public review. This rule provides for 
public review through issuance of a notice containing all the relevant 
background information about the application and allows 30 days for the 
public to comment on whether the application should or should not be 
granted. To expedite approval of noncontroversial case-by-case MACT 
determinations, this rule allows such determinations to become final 
following the close of the comment period if no adverse comments have 
been received. If adverse comments are received, a final notice 
addressing the comments must be published either approving or 
disapproving the application.
    8. Notice of MACT Approval or similar document. The end result of 
the administrative review process is a determination set forth in a 
State permit or other document issued by the permitting authority. 
Necessary elements of this document are set forth in section 63.43(g) 
of this rule. This document should contain the emission limitations, 
notification, operating and maintenance, performance testing, 
monitoring, reporting, record keeping and any other requirements needed 
to ensure that the case-by-case MACT emission limitation will be met.
    The Notice of MACT Approval or other document serves to provide a 
mechanism for Federal enforceability of these conditions in the interim 
time period between initial operation of the constructed or 
reconstructed major source and the time the conditions are added to the 
title V permit. The EPA has added a provision under which a Notice of 
MACT Approval would expire if construction does not begin within 18 
months from the issuance of the notice. Such an 18-month expiration 
period is included in criteria pollutant preconstruction review 
programs.
    9. Compliance. Section 63.43(k) requires the permitting authority 
to establish compliance dates for MACT. For constructed and 
reconstructed major sources subject to a ``new source MACT'' level of 
control, compliance upon startup is required. Some commenters requested 
that compliance be required by the date 180 days after startup to allow 
for a ``shakedown'' period for controls. However, sources subject to 
this rule are also subject to the relevant requirements of subpart A of 
this part (the general provisions for part 63), including compliance 
requirements. Since subpart A does not require the first performance 
test until 180 days after startup, the EPA believes that a 
``shakedown'' period for controls is already accounted for through 
subpart A.
    To ensure Federal enforceability, section 63.43(l) of this rule 
requires that the Notice of MACT Approval or other such document 
contain, at a minimum, monitoring, record keeping and reporting 
requirements sufficient to document the source's compliance. Because 
major sources obtaining MACT determinations will incorporate that 
determination into a title V permit, this rule includes a requirement 
that the monitoring, record keeping, and reporting requirements 
required for a case-by-case MACT determination be consistent with the 
compliance requirements contained in part 70.
    In addition to part 70 compliance requirements, additional 
requirements may need to be considered at the time of the MACT 
determination. Under section 114(a)(3) of the Act, EPA regulations for 
major sources must assure that owners or operators are accountable for 
their emissions and compliance status on a continuous basis. In this 
way, the EPA is assured that the emissions reductions intended by 
regulations are in fact achieved. Some commenters noted that monitoring 
requirements were not consistent with the requirements being developed 
for the Compliance Assurance Monitoring (CAM) rulemaking. However, the 
CAM rule does not apply to new standards promulgated currently under 
section 112. A new program, such as section 112(g), should apply 
monitoring as directed by section 114(a)(3) of the Act.
    It is important to distinguish between continuous compliance and 
continuous monitoring. Under section 112 of the Act, to demonstrate 
continuous compliance, a source may not be required to record emissions 
data on a continuous, instantaneous basis such as with a continuous 
emission monitor. Depending on the type of standard, regular parameter 
monitoring, equipment inspections, and/or maintenance of raw material 
records, etc., may be sufficient to demonstrate continuous compliance. 
For all standards, monitoring frequency must be based on the averaging 
time of the applicable limitation or standard, and the likely 
variability of potential emissions from a particular emissions unit. If 
the potential variability is high, monitoring must be done frequently. 
If the potential variability is low, monitoring may be conducted less 
frequently at regular intervals.
    Where the Notice of MACT Approval or other such document fails to 
meet any requirement of section 63.43, EPA may exercise its authority 
under section 113(a)(5) of the 1990 Amendments to prohibit construction 
or reconstruction, issue an administrative penalty order or bring a 
civil action against the source upon finding that the State has not 
acted in compliance with any requirement or prohibition relating to the 
construction or reconstruction of new sources.
    10. Reporting to National Data Base. Section 63.43(m) requires 
permitting authorities to provide EPA with information on all case-by-
case MACT determinations issued under this subpart. The intent of this 
paragraph is to use EPA's MACT data base to store data on well-
controlled sources and on previous MACT determinations to help 
facilitate the MACT determination process.

E. Section 63.44 Requirements for Process or Production Units Subject 
to a Subsequently Promulgated MACT Standard or MACT Requirement

    The EPA anticipates that new source MACT requirements adopted with 
respect to construction or reconstruction of a particular source under 
section 112(g)(2)(B) will normally be at least as stringent as any 
subsequent requirements for existing sources adopted as part of a MACT 
standard issued under section 112(d). However, should a subsequently 
promulgated MACT standard impose more stringent requirements, the EPA 
believes that it may be appropriate in some instances for the EPA to 
establish a later compliance date for those sources which have acted in 
reliance on a prior case-by-case MACT determination. This rule 
expressly provides that the EPA may establish separate compliance dates 
for facilities which have notified EPA of such determinations in a 
timely manner. Specifically, the EPA may establish, in the MACT 
standard, a later compliance date for those sources which have received 
a final and legally effective MACT determination pursuant to section 
112(g), and have provided the EPA with data on their section 112(g) 
control determination by the end of the public comment period on the 
subsequent Federal standard.
    In those instances where the subsequent MACT standard does not 
establish a compliance date for sources subject to a prior case-by-case 
MACT determination, this rule authorizes the permitting authority to 
grant up to 8 years of additional time for the affected

[[Page 68397]]

source to comply with the subsequent MACT standard. The EPA has 
previously explained that the structure of section 112 as a whole 
supports such a construction of section 112(g), and a source may also 
be afforded up to 8 years to comply with a MACT standard in instances 
where a prior emission limitation has been established by permit under 
section 112(j).
    This provision is a modified form of the provision that appeared in 
the original proposed rule. The original provision has been modified in 
two respects. First, commenters indicated that inequities might result 
from the fact that the original provision stated that the revised 
compliance date should not be more than 8 years after a standard 
promulgated under section 112(d), or 8 years after the date by which 
the source must comply with the MACT determination under section 
112(g), whichever is earlier. For example, if a standard under section 
112(d) is promulgated 7 years after a source's compliance date under 
section 112(g), the source might only have one year to comply with the 
standard under section 112(d). Therefore the EPA has removed this 
condition, and allowed the extension to be counted from the section 
112(d) compliance date in all cases.
    Second, commenters noted that the EPA had required, in 
Sec. 63.44(a), that a source must comply with a relevant section 112(d) 
standard if it has not yet obtained a ``final and legally effective 
MACT determination'' under section 112(g) before promulgation of the 
relevant section 112(d) standard. However, the EPA had required, in 
Sec. 63.44(b), that the source must have ``commenced construction'' in 
order to be eligible for a compliance extension under section 112(d). 
In order to eliminate this inconsistency, the EPA has changed section 
63.44(b) to require that the source must have obtained a ``final and 
legally effective MACT determination'' in order to be eligible for a 
compliance extension under section 112(d).
    Several industry commenters felt that section 112(g) compliance 
should constitute compliance with subsequent MACT standards. The EPA is 
currently evaluating this issue in the context of setting policy for 
section 112(d) and section 112(j) standards. The EPA believes that in 
most cases the section 112(g) determination will be equivalent to MACT, 
but that this decision should be made on a case-by-case basis in the 
context of a determination under section 112(d) or section 112(j).
    Several commenters requested EPA to clarify whether a source which 
met a new source section 112(g) MACT determination would be considered 
to be a new or existing source under a subsequent section 112(d) 
standard. According to section 112(a)(4) of the Act, if the source 
begins construction before the section 112(d) standard is proposed, 
then it is considered an existing source under a section 112(d) MACT 
standard. Sources constructed after a section 112(d) standard is 
proposed are treated as new sources under section 112(d). This applies 
as well to sources that have met new source MACT under section 112(g).

IV. Discussion of the Relationship of the Requirements of This Rule to 
Other Requirements of the Act

    The previous sections of this preamble discuss the requirements of 
this rule in defining the requirements of section 112(g) of the Act as 
it relates to constructed or reconstructed major sources of HAP. In 
addition, there are a number of issues concerning the relationship 
between the requirements of section 112(g) and other requirements of 
the Act that are relevant to the implementation of the requirements of 
this rule. These issues are important in defining the overall 
responsibilities of States and the EPA in carrying out the requirements 
of section 112(g), and in understanding how section 112(g) requirements 
relate to other important requirements of the Act. The purpose of this 
section of the preamble is to present a number of regulatory and 
statutory interpretations related to these implementation issues.

A. Relationship of Section 112(g) Implementation to Title V Program 
Approval

    Title V of the Act and the part 70 regulations provide that a State 
seeking to obtain or retain approval of a title V program must have 
authority to assure compliance with all applicable requirements through 
the title V permit (section 502(b)(5)(A); 40 CFR 70.4(b)(3)(i)). The 
preamble to the operating permits rule explains that, in the context of 
section 112, the permitting authority must have authority to develop 
and enforce case-by-case MACT determinations under section 112(g).
    This rule and preamble language represent what EPA considers to be 
the most natural reading of section 112(g). The EPA reads the reference 
in section 112(g)(2) to case-by-case determinations made by ``the 
Administrator (or the State)'' to mean that these determinations must 
be made by the title V permitting authority. This reading is consistent 
with the reference in section 112(g)(2) to the effective date of the 
title V program as the date on which the requirements of section 112(g) 
become applicable, and with the title V requirement that major sources 
of HAP submit applications for title V permits regardless of whether 
they are subject to a MACT standard. It is also consistent with the 
reference in section 112(j) to ``the Administrator (or the State)'' as 
the entity that must make case-by-case determinations of MACT and issue 
permits incorporating these determinations.

B. Relationship to the Section 112(l) Delegation Process

    Under section 112(l) of the Act, States have the option of 
developing and submitting to the Administrator a program for 
implementing the requirements of section 112. The EPA promulgated a 
rule for the implementation of section 112(l) on November 26, 1993 (58 
FR 62262). This rulemaking added sections 63.90 through 63.96 to 40 CFR 
63.
    During the mid to late 1980's, most States adopted regulations or 
procedures to review toxic air pollutant emissions from new (and 
modified) sources. In some cases, these programs already regulate all 
of the equipment covered by section 112(g). It is the EPA's view that 
the Act directly confers on the permitting authority the obligation to 
implement section 112(g) and to adopt a program which conforms to the 
requirements of this rule. Therefore, the permitting authority need not 
apply for approval under section 112(l) in order to use its own program 
to implement section 112(g). A State need simply certify that their 
State program meets the requirements of section 112(g), and notify the 
EPA to that effect. (For further discussion of this issue see section 
III.C., above.)

C. Section 112(i)(5)  Early Reductions Program

    Section 112(i)(5) allows owners and operators, that provide early 
reductions in HAP emissions, to be granted a 6-year extension of any 
compliance date for emission standards issued under section 112(d). In 
order to participate in the section 112(i)(5) program, the owner or 
operator defines a ``source'' at a plant-site for which a 90 or 95 
percent reduction in emissions can be accomplished before the proposal 
date of the emission standard. There are a few items of clarification 
on the relationship between the section 112(i)(5) requirements and 
section 112(g).
    First, the extension granted by section 112(i)(5) applies only to 
that equipment incorporated within the ``source'' for

[[Page 68398]]

which the 90 or 95 percent reduction was accomplished. Other equipment 
at a plant-site not included within that ``source'' definition are 
subject to section 112(g) requirements if they make changes that would 
be considered to be construction or reconstruction of a major source 
under this rule.
    On the other hand, equipment within the ``source'' definition for 
which there is an approved early reductions submittal are not subject 
to further control technology requirements under section 112(g). 
Section 112(g) requires case-by-case MACT where no ``applicable 
emission limitation'' exist. The ``alternative emission limitation'' 
under section 112(i)(5) should be considered an ``applicable emissions 
limitation'' for purposes of section 112(g), such that compliance with 
such alternative emissions limitation shields a source from having to 
comply with section 112(g).

D. Subpart A ``General Provisions''

    The EPA has promulgated ``general provisions'' to the MACT program 
as subpart A to 40 CFR 63. These general provisions contain a number of 
definitions and provisions that generally affect the subparts of part 
63 that follow, including subpart B discussed here. In general, the 
relevant requirements of subpart A apply to sources subject to case-by-
case MACT determinations under this rule. For example, requirements for 
monitoring, record keeping, and reporting established in subpart A 
apply to a section 112(g) source which uses the control equipment at 
which such requirements are directed. It should be noted, however, that 
specific preconstruction review requirements in subpart A apply only to 
standards promulgated under section 112(d), section 112(f), or section 
112(h) of the Act--not to section 112(g), which establishes its own 
requirements. This is set out in section 112(i) of the Act, from which 
subpart A draws its authority to require preconstruction review.

V. Administrative Requirements

A. Executive Order 12866

    Under Executive Order 12866, (58 FR 51,735 (October 4, 1993)) the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:

    (1) have an annual effect on the economy of $100 million or more 
or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.

    Although this rule will not have an annual effect on the economy of 
$100 million or more, and therefore is not economically significant, 
EPA has determined that this rule is a ``significant regulatory 
action'' because it contains novel policy issues. This action was 
submitted to the Office of Management and Budget (OMB) for review as 
required by Executive Order 12866. Any written comments from OMB and 
any EPA response to OMB comments are in the public docket.

B. Regulatory Flexibility

    The EPA considered the impact of this rule on small entities. In 
general, the EPA believes that very few small entities will actually be 
affected by the rule. Estimating the number of small entities that may 
be affected, however, is difficult due to the large number of 
industries potentially affected, and the need to predict the frequency 
of what is generally a fairly uncommon event, a small entity making an 
expansion which is itself a major source. In examining the potential 
impact on small entities, the EPA took into account the factors listed 
in the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., for conducting 
a final regulatory flexibility analysis.
    The approach chosen in this final rule is a less burdensome option 
for small entities than the approach contained in the proposed rule. 
The proposed rule to implement section 112(g) contained requirements 
for modifications, as noted above. These requirements would have 
required control on many smaller equipment changes at industrial 
facilities. The EPA has chosen instead only to implement section 
112(g)(2)(B) at this time (and not all of section 112(g)). By doing so, 
this rule eliminates much of the complexity inherent in the portion of 
section 112(g) which covers modifications to existing sources. It 
should be noted that some commenters requested that the EPA restrict 
section 112(g) requirements even further, to just covering construction 
of new ``greenfield'' facilities or reconstruction of entire 
plantsites. The EPA rejected this approach because the EPA believes it 
makes sense to control major sources at the time of construction when 
they are most cost-effective to control, whether or not they are 
constructed at existing plantsites.

C. Paperwork Reduction Act

    The information collection requirements in this proposal have been 
submitted for approval to OMB under the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq. An information collection request (ICR) document 
has been prepared by the EPA (ICR No. 1658.01) and a copy may be 
obtained from Sandy Farmer, Information Policy Branch (2136), U.S. 
Environmental Protection Agency, 401 M Street, South West, Washington, 
DC 20460, or by calling (202) 260-2740.
    The EPA prepared estimates of the average annual burden hours 
needed to collect and prepare information required under section 
112(g). The burden estimates presented below are an accumulation of the 
estimated annual burden hours that would be experienced by industry 
respondents, State and local agencies, and EPA under the various 
regulatory scenarios. The approximate annual burden-hours that would be 
required would peak in 1999 at 167,134 hours, and reduce to 23,218 by 
2003.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may

[[Page 68399]]

significantly or uniquely affect small governments, including tribal 
governments, it must have developed under section 203 of the UMRA a 
small government agency plan. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    The EPA has determined that this rule does not contain a Federal 
mandate that may result in expenditures of $100 million or more for 
State, local, and tribal governments, in the aggregate, or the private 
sector in any one year. EPA has also determined that this rule contains 
no regulatory requirements that might significantly or uniquely affect 
small governments. This determination was made based on the analyses 
conducted for the proposal RIA.

E. Submission to Congress and the General Accounting Office

    Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business 
Regulatory Enforcement Fairness Act of 1996, EPA submitted a report 
containing this rule and other required information to the U.S. Senate, 
the U.S. House of Representatives and the Comptroller General of the 
General Accounting Office prior to publication of the rule in today's 
Federal Register. This rule is not a ``major rule'' as defined by 5 
U.S.C. 804(2).
    The statutory authority for this rule is provided by sections 101, 
112, 114, 116, and 301 of the Clean Air Act as amended; 42 U.S.C. 7401, 
7412, 7414, 7416, and 7601.

List of Subjects in 40 CFR Part 63

    Environmental protection, Administrative practices and procedures, 
Air pollution control, Hazardous substances, Intergovernmental 
relations, Reporting and recordkeeping requirements.

    Dated: December 13, 1996.
Carol M. Browner,
Administrator.
    For the reasons set out in the preamble, part 63 of chapter I of 
title 40 of the Code of Federal Regulations is amended as follows:
    1. The authority citation for part 63 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart B--Requirements for Control Technology

    Determinations for Major Sources In Accordance with Clean Air Act 
Sections, Section 112(g) and 112(j).
    2. Part 63 is amended by adding new Secs. 63.40 through 63.44 to 
subpart B to read as follows:


Sec. 63.40  Applicability of Secs. 63.40 through 63.44

    (a) Applicability. The requirements of Secs. 63.40 through 63.44 of 
this subpart carry out section 112(g)(2)(B) of the 1990 Amendments.
    (b) Overall requirements. The requirements of Secs. 63.40 through 
63.44 of this subpart apply to any owner or operator who constructs or 
reconstructs a major source of hazardous air pollutants after the 
effective date of section 112(g)(2)(B) (as defined in Sec. 63.41) and 
the effective date of a title V permit program in the State or local 
jurisdiction in which the major source is (or would be) located unless 
the major source in question has been specifically regulated or 
exempted from regulation under a standard issued pursuant to section 
112(d), section 112(h), or section 112(j) and incorporated in another 
subpart of part 63, or the owner or operator of such major source has 
received all necessary air quality permits for such construction or 
reconstruction project before the effective date of section 
112(g)(2)(B).
    (c) Exclusion for electric utility steam generating units. The 
requirements of this subpart do not apply to electric utility steam 
generating units unless and until such time as these units are added to 
the source category list pursuant to section 112(c)(5) of the Act.
    (d) Relationship to State and local requirements. Nothing in this 
subpart shall prevent a State or local agency from imposing more 
stringent requirements than those contained in this subpart.
    (e) Exclusion for stationary sources in deleted source categories. 
The requirements of this subpart do not apply to stationary sources 
that are within a source category that has been deleted from the source 
category list pursuant to section 112(c)(9) of the Act.
    (f) Exclusion for research and development activities. The 
requirements of this subpart do not apply to research and development 
activities, as defined in Sec. 63.41.


Sec. 63.41  Definitions.

    Terms used in this subpart that are not defined in this section 
have the meaning given to them in the Act and in subpart A.
    Affected source means the stationary source or group of stationary 
sources which, when fabricated (on site), erected, or installed meets 
the definition of ``construct a major source'' or the definition of 
``reconstruct a major source'' contained in this section.
    Affected States are all States:
    (1) Whose air quality may be affected and that are contiguous to 
the State in which a MACT determination is made in accordance with this 
subpart; or
    (2) Whose air quality may be affected and that are within 50 miles 
of the major source for which a MACT determination is made in 
accordance with this subpart.
    Available information means, for purposes of identifying control 
technology options for the affected source, information contained in 
the following information sources as of the date of approval of the 
MACT determination by the permitting authority:
    (1) A relevant proposed regulation, including all supporting 
information;
    (2) Background information documents for a draft or proposed 
regulation;
    (3) Data and information available for the Control Technology 
Center developed pursuant to section 113 of the Act;
    (4) Data and information contained in the Aerometric Informational 
Retrieval System including information in the MACT data base;
    (5) Any additional information that can be expeditiously provided 
by the Administrator; and
    (6) For the purpose of determinations by the permitting authority, 
any additional information provided by the applicant or others, and any 
additional information considered available by the permitting 
authority.
    Construct a major source means:
    (1) To fabricate, erect, or install at any greenfield site a 
stationary source or group of stationary sources which is located 
within a contiguous area and under common control and which emits or 
has the potential to emit 10 tons per year of any HAP's or 25 tons per 
year of any combination of HAP, or
    (2) To fabricate, erect, or install at any developed site a new 
process or production unit which in and of itself emits or has the 
potential to emit 10 tons per year of any HAP or 25 tons per year of 
any combination of HAP, unless the process or production unit satisfies 
criteria in paragraphs (2) (i) through (vi) of this definition.
    (i) All HAP emitted by the process or production unit that would 
otherwise be controlled under the requirements of this subpart will be 
controlled by

[[Page 68400]]

emission control equipment which was previously installed at the same 
site as the process or production unit;
    (ii) (A) The permitting authority has determined within a period of 
5 years prior to the fabrication, erection, or installation of the 
process or production unit that the existing emission control equipment 
represented best available control technology (BACT), lowest achievable 
emission rate (LAER) under 40 CFR part 51 or 52, toxics--best available 
control technology (T-BACT), or MACT based on State air toxic rules for 
the category of pollutants which includes those HAP's to be emitted by 
the process or production unit; or
    (B) The permitting authority determines that the control of HAP 
emissions provided by the existing equipment will be equivalent to that 
level of control currently achieved by other well-controlled similar 
sources (i.e., equivalent to the level of control that would be 
provided by a current BACT, LAER, T-BACT, or State air toxic rule MACT 
determination);
    (iii) The permitting authority determines that the percent control 
efficiency for emissions of HAP from all sources to be controlled by 
the existing control equipment will be equivalent to the percent 
control efficiency provided by the control equipment prior to the 
inclusion of the new process or production unit;
    (iv) The permitting authority has provided notice and an 
opportunity for public comment concerning its determination that 
criteria in paragraphs (2)(i), (2)(ii), and (2)(iii) of this definition 
apply and concerning the continued adequacy of any prior LAER, BATC, T-
BACT, or State air toxic rule MACT determination;
    (v) If any commenter has asserted that a prior LAER, BACT, T-BACT, 
or State air toxic rule MACT determination is no longer adequate, the 
permitting authority has determined that the level of control required 
by that prior determination remains adequate; and
    (vi) Any emission limitations, work practice requirements, or other 
terms and conditions upon which the above determinations by the 
permitting authority are applicable requirements under section 504(a) 
and either have been incorporated into any existing title V permit for 
the affected facility or will be incorporated into such permit upon 
issuance.
    Control technology means measures, processes, methods, systems, or 
techniques to limit the emission of hazardous air pollutants through 
process changes, substitution of materials or other modifications;
    (1) Reduce the quantity of, or eliminate emissions of, such 
pollutants through process changes, substitution of materials or other 
modifications;
    (2) Enclose systems or processes to eliminate emissions;
    (3) Collect, capture or treat such pollutants when released from a 
process, stack, storage or fugitive emissions point;
    (4) Are design, equipment, work practice, or operational standards 
(including requirements for operator training or certification) as 
provided in 42 U.S.C. 7412(h); or
    (5) Are a combination of paragraphs (1) through (4) of this 
definition.
    Effective date of section 112(g)(2)(B) in a State or local 
jurisdiction means the effective date specified by the permitting 
authority at the time the permitting authority adopts a program to 
implement section 112(g) with respect to construction or reconstruction 
or major sources of HAP, or June 29, 1998 whichever is earlier.
    Electric utility steam generating unit means any fossil fuel fired 
combustion unit of more than 25 megawatts that serves a generator that 
produces electricity for sale. A unit that co-generates steam and 
electricity and supplies more than one-third of its potential electric 
output capacity and more than 25 megawatts electric output to any 
utility power distribution system for sale shall be considered an 
electric utility steam generating unit.
    Greenfield suite means a contiguous area under common control that 
is an undeveloped site.
    List of Source Categories means the Source Category List required 
by section 112(c) of the Act.
    Maximum achievable control technology (MACT) emission limitation 
for new sources means the emission limitation which is not less 
stringent that the emission limitation achieved in practice by the best 
controlled similar source, and which reflects the maximum degree of 
deduction in emissions that the permitting authority, taking into 
consideration the cost of achieving such emission reduction, and any 
non-air quality health and environmental impacts and energy 
requirements, determines is achievable by the constructed or 
reconstructed major source.
    Notice of MACT Approval means a document issued by a permitting 
authority containing all federally enforceable conditions necessary to 
enforce the application and operation of MACT or other control 
technologies such that the MACT emission limitation is met.
    Permitting authority means the permitting authority as defined in 
part 70 or 71 of this chapter.
    Process or production unit means any collection of structures and/
or equipment, that processes assembles, applies, or otherwise uses 
material inputs to produce or store an intermediate or final product. A 
single facility may contain more than one process or production unit.
    Reconstruct a major source means the replacement of components at 
an existing process or production unit that in and of itself emits or 
has that potential to emit 10 tons per year of any HAP or 25 tons per 
year of any combination of HAP, whenever:
    (1) The fixed capital cost of the new components exceeds 50 percent 
of the fixed capital cost that would be required to construct a 
comparable process or production unit; and
    (2) It is technically and economically feasible for the 
reconstructed major source to meet the applicable maximum achievable 
control technology emission limitation for new sources established 
under this subpart.
    Research and development activities means activities conducted at a 
research or laboratory facility whose primary purpose is to conduct 
research and development into new processes and products, where such 
source is operated under the close supervision of technically trained 
personnel and is not engaged in the manufacture of products for sale or 
exchange for commercial profit, except in a de minimis manner.
    Similar source means a stationary source or process that has 
comparable emissions and is structurally similar in design and capacity 
to a constructed or reconstructed major source such that the source 
could be controlled using the same control technology.


Sec. 63.42  Program requirements governing construction or 
reconstruction of major sources.

    (a) Adoption of program. Each permitting authority shall review its 
existing programs, procedures, and criteria for preconstruction review 
for conformity to the requirements established by Secs. 63.40 through 
63.44, shall make any additions and revisions to its existing programs, 
procedures, and criteria that the permitting authority deems necessary 
to properly effectuate Secs. 63.40 through 63.44, and shall adopt a 
program to implement section 112(g) with respect to construction or 
reconstruction of major sources of HAP. As part of the adoption by the 
permitting authority of a program to implement section 112(g) with 
respect to construction or reconstruction of

[[Page 68401]]

major sources of HAP, the chief executive officer of the permitting 
authority shall certify that the program satisfies all applicable 
requirements established by Secs. 63.40 through 63.44, and shall 
specify an effective date for that program which is not later than June 
29, 1998. Prior to the specified effective date, the permitting 
authority shall publish a notice stating that the permitting authority 
has adopted a program to implement section 112(g) with respect to 
construction or reconstruction of major sources of HAP and stating the 
effective date, and shall provide a written description of the program 
to the Administrator through the appropriate EPA Regional Office. 
Nothing in this section shall be construed either:
    (1) To require that any owner or operator of a stationary source 
comply with any requirement adopted by the permitting authority which 
is not intended to implement section 112(g) with respect to 
construction or reconstruction of major sources of HAP; or
    (2) To preclude the permitting authority from enforcing any 
requirements not intended to implement section 112(g) with respect to 
construction or reconstruction of major sources of HAP under any other 
provision of applicable law.
    (b) Failure to adopt program. In the event that the permitting 
authority fails to adopt a program to implement section 112(g) with 
respect to construction or reconstruction of major sources of HAP with 
an effective date on or before June 29, 1998, and the permitting 
authority concludes that it is able to make case-by-case MACT 
determinations which conform to the provisions of Sec. 63.43 in the 
absence of such a program, the permitting authority may elect to make 
such determinations. However, in those instances where the permitting 
authority elects to make case-by-case MACT determinations in the 
absence of a program to implement section 112(g) with respects to 
construction or reconstruction of major sources of HAP, no such case-
by-case MACT determinations shall take effect until after it has been 
submitted by the permitting authority in writing to the appropriate EPA 
Regional Office and the EPA Regional Office has concurred in writing 
that the case-by-case MACT determination by the permitting authority is 
in conformity with all requirements established by Secs. 63.40 through 
63.44. In the event that the permitting authority fails to adopt a 
program to implement section 112(g) with respect to construction or 
reconstruction of major sources of HAP with an effective date on or 
before June 29, 1998, and the permitting authority concludes that it is 
unable to make case-by-case MACT determinations in the absence of such 
a program, the permitting authority may request that the EPA Regional 
Office adopt and implement a transitional program to implement section 
112(g) with respect to construction or reconstruction of major sources 
of HAP in the affected State of local jurisdiction while the permitting 
authority completes development and adoption of a section 112(g) 
program. Any such transitional section 112(g) program adopted by the 
EPA Regional Office shall conform to all requirements established by 
Secs. 63.40 through 63.44, and shall remain in effect for no more than 
1 year. Continued failure by the permitting authority to adopt a 
program to implement section 112(g) with respect to construction or 
reconstruction of major sources of HAP shall be construed as a failure 
by the permitting authority to adequately administer and enforce its 
title V permitting program and shall constitute cause by EPA to apply 
the sanctions and remedies set forth in the Clean Air Act section 
502(I).
    (c) Prohibition. After the effective date of section 112(g)(2)(B) 
(as defined in Sec. 63.41) in a State or local jurisdiction and the 
effective date of the title V permit program applicable to that State 
or local jurisdiction, no person may begin actual construction or 
reconstruction of a major source of HAP in such State or local 
jurisdiction unless:
    (1) The major source in question has been specifically regulated or 
exempted from regulation under a standard issued pursuant to section 
112(d), section 112(h) or section 112(j) in part 63, and the owner and 
operator has fully complied with all procedures and requirements for 
preconstruction review established by that standard, including any 
applicable requirements set forth in subpart A of this part 63; or
    (2) The permitting authority has made a final and effective case-
by-case determination pursuant to the provisions of Sec. 63.43 such 
that emissions from the constructed or reconstructed major source will 
be controlled to a level no less stringent than the maximum achievable 
control technology emission limitation for new sources.


Sec. 63.43  Maximum achievable control technology (MACT) determinations 
for constructed and reconstructed major sources.

    (a) Applicability. The requirements of this section apply to an 
owner or operator who constructs or reconstructs a major source of HAP 
subject to a case-by-case determination of maximum achievable control 
technology pursuant to Sec. 63.42(c).
    (b) Requirements for constructed and reconstructed major sources. 
When a case-by-case determination of MACT is required by Sec. 63.42(c), 
the owner and operator shall obtain from the permitting authority an 
approved MACT determination according to one of the review options 
contained in paragraph (c) of this section.
    (c) Review options. (1) When the permitting authority requires the 
owner or operator to obtain, or revise, a permit issued pursuant to 
title V of the Act before construction or reconstruction of the major 
source, or when the permitting authority allows the owner or operator 
at its discretion to obtain or revise such a permit before construction 
or reconstruction, and the owner or operator elects that option, the 
owner or operator shall follow the administrative procedures in the 
program approved under title V of the Act (or in other regulations 
issued pursuant to title V of the Act, where applicable).
    (2) When an owner or operator is not required to obtain or revise a 
title V permit (or other permit issued pursuant to title V of the Act) 
before construction or reconstruction, the owner or operator (unless 
the owner or operator voluntarily follows the process to obtain a title 
V permit) shall either, at the discretion of the permitting authority:
    (i) Apply for and obtain a Notice of MACT Approval according to the 
procedures outlined in paragraphs (f) through (h) of this section; or
    (ii) Apply for a MACT determination under any other administrative 
procedures for preconstruction review and approval established by the 
permitting authority for a State or local jurisdiction which provide 
for public participation in the determination, and ensure that no 
person may begin actual construction or reconstruction of a major 
source in that State or local jurisdiction unless the permitting 
authority determines that the MACT emission limitation for new sources 
will be met.
    (3) When applying for a permit pursuant to title V of the Act, an 
owner or operator may request approval of case-by-case MACT 
determinations for alternative operating scenarios. Approval of such 
determinations satisfies the requirements of section 112(g) of each 
such scenario.
    (4) Regardless of the review process, the MACT emission limitation 
and requirements established shall be effective as required by 
paragraph (j) of

[[Page 68402]]

this section, consistent with the principles established in paragraph 
(d) of this section, and supported by the information listed in 
paragraph (e) of this section. The owner or operator shall comply with 
the requirements in paragraphs (k) and (l) of this section, and with 
all applicable requirements in subpart A of this part.
    (d) Principles of MACT determinations. The following general 
principles shall govern preparation by the owner or operator of each 
permit application or other application requiring a case-by-case MACT 
determination concerning construction or reconstruction of a major 
source, and all subsequent review of and actions taken concerning such 
an application by the permitting authority:
    (1) The MACT emission limitation or MACT requirements recommended 
by the applicant and approved by the permitting authority shall not be 
less stringent than the emission control which is achieved in practice 
by the best controlled similar source, as determined by the permitting 
authority.
    (2) Based upon available information, as defined in this subpart, 
the MACT emission limitation and control technology (including any 
requirements under paragraph (d)(3) of this section) recommended by the 
applicant and approved by the permitting authority shall achieve the 
maximum degree of reduction in emissions of HAP which can be achieved 
by utilizing those control technologies that can be identified from the 
available information, taking into consideration the costs of achieving 
such emission reduction and any non-air quality health and 
environmental impacts and energy requirements associated with the 
emission reduction.
    (3) The applicant may recommend a specific design, equipment, work 
practice, or operational standard, or a combination thereof, and the 
permitting authority may approve such a standard if the permitting 
authority specifically determines that it is not feasible to prescribe 
or enforce an emission limitation under the criteria set forth in 
section 112(h)(2) of the Act.
    (4) If the Administrator has either proposed a relevant emission 
standard pursuant to section 112(d) or section 112(h) of the Act or 
adopted a presumptive MACT determination for the source category which 
includes the constructed or reconstructed major source, then the MACT 
requirements applied to the constructed or reconstructed major source 
shall have considered those MACT emission limitations and requirements 
of the proposed standard or presumptive MACT determination.
    (e) Application requirements for a case-by-case MACT determination. 
(1) An application for a MACT determination (whether a permit 
application under title V of the Act, an application for a Notice of 
MACT Approval, or other document specified by the permitting authority 
under paragraph (c)(2)(ii) of this section) shall specify a control 
technology selected by the owner or operator that, if properly operated 
and maintained, will meet the MACT emission limitation or standard as 
determined according to the principles set forth in paragraph (d) of 
this section.
    (2) In each instance where a constructed or reconstructed major 
source would require additional control technology or a change in 
control technology, the application for a MACT determination shall 
contain the following information:
    (i) The name and address (physical location) of the major source to 
be constructed or reconstructed;
    (ii) A brief description of the major source to be constructed or 
reconstructed and identification of any listed source category or 
categories in which it is included;
    (iii) The expected commencement date for the construction or 
reconstruction of the major source;
    (iv) The expected completion date for construction or 
reconstruction of the major source;
    (v) the anticipated date of start-up for the constructed or 
reconstructed major source;
    (vi) The HAP emitted by the constructed or reconstructed major 
source, and the estimated emission rate for each such HAP, to the 
extent this information is needed by the permitting authority to 
determine MACT;
    (vii) Any federally enforceable emission limitations applicable to 
the constructed or reconstructed major source;
    (viii) The maximum and expected utilization of capacity of the 
constructed or reconstructed major source, and the associated 
uncontrolled emission rates for that source, to the extent this 
information is needed by the permitting authority to determine MACT;
    (ix) The controlled emissions for the constructed or reconstructed 
major source in tons/yr at expected and maximum utilization of 
capacity, to the extent this information is needed by the permitting 
authority to determine MACT;
    (x) A recommended emission limitation for the constructed or 
reconstructed major source consistent with the principles set forth in 
paragraph (d) of this section;
    (xi) The selected control technology to meet the recommended MACT 
emission limitation, including technical information on the design, 
operation, size, estimated control efficiency of the control technology 
(and the manufacturer's name, address, telephone number, and relevant 
specifications and drawings, if requested by the permitting authority);
    (xii) Supporting documentation including identification of 
alternative control technologies considered by the applicant to meet 
the emission limitation, and analysis of cost and non-air quality 
health environmental impacts or energy requirements for the selected 
control technology; and
    (xiii) Any other relevant information required pursuant to subpart 
A.
    (3) In each instance where the owner or operator contends that a 
constructed or reconstructed major source will be in compliance, upon 
startup, with case-by-case MACT under this subpart without a change in 
control technology, the application for a MACT determination shall 
contain the following information:
    (i) The information described in paragraphs (e)(2)(i) through 
(e)(2)(x) of this section; and
    (ii) Documentation of the control technology in place.
    (f) Administrative procedures for review of the Notice of MACT 
Approval. (1) The permitting authority will notify the owner or 
operator in writing, within 45 days from the date the application is 
first received, as to whether the application for a MACT determination 
is complete or whether additional information is required.
    (2) The permitting authority will initially approve the recommended 
MACT emission limitation and other terms set forth in the application, 
or the permitting authority will notify the owner or operator in 
writing of its intent to disapprove the application, within 30 calendar 
days after the owner or operator is notified in writing that the 
application is complete.
    (3) The owner or operator may present, in writing, within 60 
calendar days after receipt of notice of the permitting authority's 
intent to disapprove the application, additional information or 
arguments pertaining to, or amendments to, the application for 
consideration by the permitting authority before it decides whether to 
finally disapprove the application.
    (4) The permitting authority will either initially approve or issue 
a final disapproval of the application within 90 days after it notifies 
the owner or operator of an intent to disapprove or

[[Page 68403]]

within 30 days after the date additional information is received from 
the owner or operator; whichever is earlier.
    (5) A final determination by the permitting authority to disapprove 
any application will be in writing and will specify the grounds on 
which the disapproval is based. If any application is finally 
disapproved, the owner or operator may submit a subsequent application 
concerning construction or reconstruction of the same major source, 
provided that the subsequent application has been amended in response 
to the stated grounds for the prior disapproval.
    (6) An initial decision to approve an application for a MACT 
determination will be set forth in the Notice of MACT Approval as 
described in paragraph (g) of this section.
    (g) Notice of MACT Approval. (1) The Notice of MACT Approval will 
contain a MACT emission limitation (or a MACT work practice standard if 
the permitting authority determines it is not feasible to prescribe or 
enforce an emission standard) to control the emissions of HAP. The MACT 
emission limitation or standard will be determined by the permitting 
authority and will conform to the principles set forth in paragraph (d) 
of this section.
    (2) The Notice of MACT Approval will specify any notification, 
operation and maintenance, performance testing, monitoring, reporting 
and record keeping requirements. The Notice of MACT Approval shall 
include:
    (i) In addition to the MACT emission limitation or MACT work 
practice standard established under this subpart, additional emission 
limits, production limits, operational limits or other terms and 
conditions necessary to ensure Federal enforceability of the MACT 
emission limitation;
    (ii) Compliance certifications, testing, monitoring, reporting and 
record keeping requirements that are consistent with the requirements 
of Sec. 70.6(c) of this chapter;
    (iii) In accordance with section 114(a)(3) of the Act, monitoring 
shall be capable of demonstrating continuous compliance during the 
applicable reporting period. Such monitoring data shall be of 
sufficient quality to be used as a basis for enforcing all applicable 
requirements established under this subpart, including emission 
limitations;
    (iv) A statement requiring the owner or operator to comply with all 
applicable requirements contained in subpart A of this part;
    (3) All provisions contained in the Notice of MACT Approval shall 
be federally enforceable upon the effective date of issuance of such 
notice, as provided by paragraph (j) of this section.
    (4) The Notice of MACT Approval shall expire if construction or 
reconstruction has not commenced within 18 months of issuance, unless 
the permitting authority has granted an extension which shall not 
exceed an additional 12 months.
    (h) Opportunity for public comment on the Notice of MACT Approval. 
(1) The permitting authority will provide opportunity for public 
comment on the Notice of MACT Approval, including, at a minimum:
    (i) Availability for public inspection in at least one location in 
the area affected of the information submitted by the owner or operator 
and of the permitting authority's initial decision to approve the 
application;
    (ii) A 30-day period for submittal of public comment; and
    (iii) A notice by prominent advertisement in the area affected of 
the location of the source information and initial decision specified 
in paragraph (h)(1)(i) of this section.
    (2) At the discretion of the permitting authority, the Notice of 
MACT Approval setting forth the initial decision to approve the 
application may become final automatically at the end of the comment 
period if no adverse comments are received. If adverse comments are 
received, the permitting authority shall have 30 days after the end of 
the comment period to make any necessary revisions in its analysis and 
decide whether to finally approve the application.
    (i) EPA notification. The permitting authority shall send a copy of 
the final Notice of MACT Approval, notice of approval of a title V 
permit application incorporating a MACT determination (in those 
instances where the owner or operator either is required or elects to 
obtain such a permit before construction or reconstruction), or other 
notice of approval issued pursuant to paragraph (c)(2)(ii) of this 
section to the Administrator through the appropriate Regional Office, 
and to all other State and local air pollution control agencies having 
jurisdiction in affected States.
    (j) Effective date. The effective date of a MACT determination 
shall be the date the Notice of MACT Approval becomes final, the date 
of issuance of a title V permit incorporating a MACT determination (in 
those instances where the owner or operator either is required or 
elects to obtain such a permit before construction or reconstruction), 
or the date any other notice of approval issued pursuant to paragraph 
(c)(2)(ii) of this section becomes final.
    (k) Compliance date. On and after the date of start-up, a 
constructed or reconstructed major source which is subject to the 
requirements of this subpart shall be in compliance with all applicable 
requirements specified in the MACT determination.
    (l) Compliance with MACT determinations. (1) An owner or operator 
of a constructed or reconstructed major source that is subject to a 
MACT determination shall comply with all requirements in the final 
Notice of MACT Approval, the title V permit (in those instances where 
the owner or operator either is required or elects to obtain such a 
permit before construction or reconstruction), or any other final 
notice of approval issued pursuant to paragraph (c)(2)(ii) of this 
section, including but not limited to any MACT emission limitation or 
MACT work practice standard, and any notification, operation and 
maintenance, performance testing, monitoring, reporting, and 
recordkeeping requirements.
    (2) An owner or operator of a constructed or reconstructed major 
source which has obtained a MACT determination shall be deemed to be in 
compliance with section 112(g)(2)(B) of the Act only to the extent that 
the constructed or reconstructed major source is in compliance with all 
requirements set forth in the final Notice of MACT Approval, the title 
V permit (in those instances where the owner or operator either is 
required or elects to obtain such a permit before construction or 
reconstruction), or any other final notice of approval issued pursuant 
to paragraph (c)(2)(ii) of this section. Any violation of such 
requirements by the owner or operator shall be deemed by the permitting 
authority and by EPA to be a violation of the prohibition on 
construction or reconstruction in section 112(g)(2)(B) for whatever 
period the owner or operator is determined to be in violation of such 
requirements, and shall subject the owner or operator to appropriate 
enforcement action under the Act.
    (m) Reporting to the Administrator. Within 60 days of the issuance 
of a final Notice of MACT Approval, a title V permit incorporating a 
MACT determination (in those instances where the owner or operator 
either is required or elects to obtain such a permit before 
construction or reconstruction), or any other final notice of approval 
issued pursuant to paragraph (c)(2)(ii) of this section, the permitting 
authority shall provide a copy of such notice to the Administrator, and 
shall provide a summary in a compatible electronic

[[Page 68404]]

format for inclusion in the MACT data base.


Sec. 63.44  Requirements for constructed or reconstructed major sources 
subject to a subsequently promulgated MACT standard or MACT 
requirement.

    (a) if the Administrator promulgates an emission standard under 
section 112(d) or section 112(h) of the Act or the permitting authority 
issues a determination under section 112(j) of the Act that is 
applicable to a stationary source or group of sources which would be 
deemed to be a constructed or reconstructed major source under this 
subpart before the date that the owner or operator has obtained a final 
and legally effective MACT determination under any of the review 
options available pursuant to Sec. 63.43, the owner or operator of the 
source(s) shall comply with the promulgated standard or determination 
rather than any MACT determination under section 112(g) by the 
permitting authority, and the owner or operator shall comply with the 
promulgated standard by the compliance date in the promulgated 
standard.
    (b) If the Administrator promulgates an emission standard under 
section 112(d) or section 112(h) of the Act or the permitting authority 
makes a determination under section 112(j) of the Act that is 
applicable to a stationary source or group of sources which was deemed 
to be a constructed or reconstructed major source under this subpart 
and has been subject to a prior case-by-case MACT determination 
pursuant to Sec. 63.43, and the owner and operator obtained a final and 
legally effective case-by-case MACT determination prior to the 
promulgation date of such emission standard, then the permitting 
authority shall (if the initial title V permit has not yet been issued) 
issue an initial operating permit which incorporates the emission 
standard or determination, or shall (if the initial title V permit has 
been issued) revise the operating permit according to the reopening 
procedures in 40 CFR part 70 or part 71, whichever is relevant, to 
incorporate the emission standard or determination.
    (1) The EPA may include in the emission standard established under 
section 112(d) or section 112(h) of the Act a specific compliance date 
for those sources which have obtained a final and legally effective 
MACT determination under this subpart and which have submitted the 
information required by Sec. 63.43 to the EPA before the close of the 
public comment period for the standard established under section 112(d) 
of the Act. Such date shall assure that the owner or operator shall 
comply with the promulgated standard as expeditiously as practicable, 
but not longer than 8 years after such standard is promulgated. In that 
event, the permitting authority shall incorporate the applicable 
compliance date in the title V operating permit.
    (2) If no compliance date has been established in the promulgated 
112(d) or 112(h) standard or section 112(j) determination, for those 
sources which have obtained a final and legally effective MACT 
determination under this subpart, then the permitting authority shall 
establish a compliance date in the permit that assures that the owner 
or operator shall comply with the promulgated standard or determination 
as expeditiously as practicable, but not longer than 8 years after such 
standard is promulgated or a section 112(j) determination is made.
    (c) Notwithstanding the requirements of paragraphs (a) and (b) of 
this section, if the Administrator promulgates an emission standard 
under section 112(d) or section 112(h) of the Act or the permitting 
authority issues a determination under section 112(j) of the Act that 
is applicable to a stationary source or group of sources which was 
deemed to be a constructed or reconstructed major source under this 
subpart and which is the subject of a prior case-by-case MACT 
determination pursuant to Sec. 63.43, and the level of control required 
by the emission standard issued under section 112(d) or section 112(h) 
or the determination issued under section 112(j) is less stringent than 
the level of control required by any emission limitation or standard in 
the prior MACT determination, the permitting authority is not required 
to incorporate any less stringent terms of the promulgated standard in 
the title V operating permit applicable to such source(s) and may in 
its discretion consider any more stringent provisions of the prior MACT 
determination to be applicable legal requirements when issuing or 
revising such an operating permit.

[FR Doc. 96-32236 Filed 12-26-96; 8:45 am]
BILLING CODE 6560-50-P