Seyfarth Synopsis: In another example of business-friendly regulatory agency actions, the U.S. Environmental Protection Agency has just rescinded the “Seitz Memo” associated with the “Once In, Always In” policy affecting the classification of certain major sources of hazardous air pollutants under section 112 of the Clean Air Act. Memorandum: Reclassification of Major Sources as Area Sources under Section 112 of the Clean Air Act, William L. Wehrum, Assistant Administrator, Office of Air and Radiation, U.S. Environmental Protection Agency (January 25, 2018) (Reclassification Memo).

As noted by Bill Wehrum, Assistant Administrator of EPA’s Office of Air and Radiation, this action “will reduce regulatory burden for industries and the states, while continuing to ensure stringent and effective controls on hazardous air pollutants.”

Under the Clean Air Act, a “major source” is a source that emits, or has the potential to emit, 10 tons per year of a single hazardous air pollutant (“HAP”) or 25 tons per year of a combination of HAPs. An “area source” is any stationary source that is not a “major source.” Major sources are subject to different requirements than area sources, including major source MACT standards that can be complex and expensive for industry. For this reason, historically, sources have tried to limit their HAP emissions to avoid being characterized as a major source.

To provide guidance to companies struggling to meet deadlines to prove they were not a major source, in 1995, the Agency published its “Potential to Emit for MACT Standards – Guidance on Timing Issues” (Seitz Memo), which publicized an Agency policy commonly known as “Once In, Always In” (the “OIAI policy”). The OIAI policy provides that facilities subject to major source standards as of the compliance date were permanently locked in to the major source standard, and could never “go back” to being regulated as a non-major or area source.

The OIAI policy was viewed by industry as unfair for a number of reasons, including that the policy was a disincentive to reduce HAP emissions; even if a major source facility reduced emissions to non-major source levels, the facility was still subject to often onerous major source requirements, so there was no incentive to reduce HAP emissions to non-major source levels. Further, if a company failed to notify U.S. EPA by the applicable MACT standard compliance date that it was not a major source, U.S. EPA used the OIAI policy to regulate that facility forever as a major source, even if HAP emissions were well below major source levels.

The January 2018 Reclassification Memo withdraws the old OIAI policy, effective immediately. U.S. EPA determined that the OIAI policy articulated in the Seitz Memo is contrary to the plain language of the CAA and thus, under the Reclassification Memo, major sources can at any time choose to limit emissions and obtain “area source” status. This change in regulatory policy will allow previously categorized a major sources of HAP emissions to become area sources at any time by limiting their potential to emit HAPs under the major source thresholds.

For the regulated community, what this means is that if a major source takes an enforceable limit on its potential to emit, and takes measures to bring its HAP emissions below the applicable threshold, it may become an area source. That source, now having area source status, will not be subject to requirements applicable to the source as a major source under CAA section 112, including, in particular, major source MACT standards that are often very burdensome. In terms of controls, monitoring, and recordkeeping and reporting, it is hoped this significant change in policy will now incentivize facilities to undertake HAP emission reduction projects to become a non-major source, which will in turn reduce air pollution.