On October 1, 2020, the U.S. Environmental Protection Agency (EPA) issued a prepublication version of a final rule under the Clean Air Act that will allow major sources of hazardous air pollutants (HAP) to reclassify as area sources if the source reduces its potential to emit HAPs below the major source threshold (10 tons per year of any single HAP or 25 tons per year of any combination of HAPs). EPA had previously applied a “once in, always in” interpretation through a May 1995 policy memorandum issued by John Seitz, then-Director of EPA’s Office of Air Quality Planning and Standards. Under that policy, a facility designated as a major source on the first substantive compliance date of an applicable major source National Emission Standards for Hazardous Air Pollutants rule had to retain its major source status regardless of whether the source subsequently reduced its potential to emit below major source thresholds. But on January 25, 2018, EPA withdrew the May 1995 policy, laying the groundwork for EPA’s action here.
In justifying the change, EPA relies on the plain language of section 112 of the Clean Air Act, which it asserts does not fix a source’s status at any point in time. EPA estimates the action will result in over $90 million in annual cost savings due to reduced monitoring and reporting costs and concludes that the action will incentivize sources to reduce emissions to qualify for area-source status. Conversely, critics argue the action will lead to increased emissions, asserting that current major sources will keep emissions just below major-source thresholds to avoid more stringent major-source requirements that would reduce emissions even further. These critics are expected to challenge the final rule in court: California and environmental groups previously challenged EPA’s January 2018 action withdrawing the 1995 policy, but in an August 2019 ruling the U.S. Court of Appeals for the D.C. Circuit dismissed that challenge, finding that the policy change was not final agency action subject to judicial review.