The 1990 Amendments to the Clean Air Act (CAA), including the title V operating permits program, have made source status as a "major source" of considerably greater relevance to facilities that emit regulated pollutants. The 1990 Clean Air Act Amendments significantly lowered the threshold for being classified as a major source. The lower major source thresholds now included in the CAA have made an unprecedented number of sources "major sources." Many of these sources are emitting air pollutants in amounts less than the major thresholds but are major due to their "potential to emit" hazardous air pollutants. Many of these major sources are in fact rather small. Examples include auto body shops, dry cleaners, printers, and surface coaters.

Section 112 of the Clean Air Act defines a "major source" as 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 term "area source" means any stationary source of hazardous air pollutants that is not a major source. The term "potential to emit" is defined in the section 112 general provisions (40 CFR Part 63.2) as the maximum capacity of a stationary source to emit a pollutant under its physical or operational design, considering controls and limitations that are federally enforceable.

Although maximum achievable control technology (MACT) is required for all major sources of hazardous air pollutants, lesser controls or no controls may be required of area sources in a particular industry. In addition, whether a facility is a major or area source of hazardous air pollutants may affect the applicability of other CAA requirements. For example, the CAA requires all major sources to obtain a Part 70 operating permit. Section 501(2) provides that any source that is major under section 112 will also be major under title V. Therefore, a source that is major for purposes of any MACT standard will be subject to title V as a major source. Most MACT standards explicitly require operating permits for major sources. However, this principle applies regardless of whether it is specified in the particular standard. Therefore, a source required to comply with MACT requirements applicable to major sources will also be required to obtain a Part 70 permit for that MACT requirement.

Under the 1990 Clean Air Act, U.S. EPA must enact regulations establishing emission standards for categories and subcategories of sources as expeditiously as practicable. Pursuant to Section 112(e)(1)(E), emission standards for one half of all categories and subcategories must be in place and enforceable by November 15, 1997, and emission standards for all categories and subcategories must be in place and enforceable by November 15, 2000. Until U.S. EPA promulgates a particular industry's emission standards, a window of opportunity exists for facilities within the industry to modify operations so as not to be regulated as a major source, according to U.S. EPA.

Although certain environmental advocacy groups interpret the statute differently, U.S. EPA believes that it was the intent of Congress not to designate a source as either a major source or an area source until after U.S. EPA's emission standards for any particular industry are finalized. Therefore, if you own or operate a facility which has the potential to emit more than the threshold amount of hazardous air pollutants, your facility may be able to avoid the major source designation and all of the regulatory red tape associated with the designation if you can change your operations so as to eliminate your potential to emit the threshold amount of a hazardous air pollutant before U.S. EPA promulgates a rule affecting your particular industry.

For example, suppose you own a metal finishing business, and like every other person in the metal finishing business, you would like your facility to avoid being classified as a major source. However, your facility has degreasing operations that emit 30 tons per year of volatile organic chemicals (VOCs) which the CAA designates as hazardous air pollutants under Section 112(b)(1). Your facility also emits a maximum of 5 tons per year of VOCs from the coating of miscellaneous metal parts. Since you emit more than 25 tons per year of hazardous air pollutants, your facility will be classified as a major source under the CAA and you will be required to comply with the U.S. EPA's MACT requirements for your industry unless you can find a way to avoid being classified as a major source.

You have decided to implement controls on your degreasing operation that will reduce your emissions from the degreasing operations to 3 tons per year. After your operating changes, the total federally enforceable potential emissions from your facility would now be 8 tons per year which falls below the threshold for being characterized as a major source. Based on your reduced emissions, you can avoid major source designation under the CAA.

This interpretation is found in U.S. EPA's May 16, 1995, Guidance Document titled "Potential to Emit for MACT Standards -- Guidance on Timing Issues." Under U.S. EPA's guidance document, a source that would otherwise be a major source subject to MACT requirements may switch to area source status at any time until the "first compliance date" of the standard. The "first compliance date" is defined as the first date a source must comply with an emission limitation or other substantive regulatory requirement (e.g., leak detection and repair programs, work practice measures, housekeeping measures, etc. . . , but not a notice requirement) in the applicable MACT standard. To avoid being classified as a major source, a facility can avoid MACT requirements by showing that its potential emissions are below major source thresholds. Therefore, the facility in the example above would not be subject to the major source requirements of the miscellaneous metal parts MACT standard provided the plant made its modifications before the enforceability of the MACT standard for the particular industry.

However, if your facility is not under the major source threshold on the date required for compliance with MACT requirements for your industry, according to U.S. EPA, your facility is eternally destined to be a major source. This is true even though you make major modifications to your facility to reduce its potential to emit hazardous air pollutants below the major source threshold. U.S. EPA refers to this as its "once in, always in" policy. U.S. EPA believes that after requiring a source to install controls or take other measures to comply with a MACT standard, the facility should not be able to substitute different controls or measures that happen to bring the facility below major source levels. According to U.S. EPA, a once in, always in policy ensures that reduced emissions from MACT controls are permanent, and that the environmental protection provided by MACT standards is not undermined.

If a source is fortunate enough to avoid being classified as a major source, there is still no guarantee that U.S. EPA will not require some form of control technology in the future. Section 112(f), the residual risk program, allows U.S. EPA discretion within 8 years after promulgation of the MACT standard to evaluate the risk to human health and the environment from any category or subcategory. If U.S. EPA believes there is not an ample margin of safety to protect public health, U.S. EPA will promulgate additional standards for area sources within the category or subcategory to be regulated.

My advice to clients who will be classified as a major source when U.S. EPA establishes MACT for the client's particular industry is to evaluate operations, to change processes, and/or to implement federally enforceable controls on the facility's potential to emit that puts the facility below the major source threshold immediately. Any facility that waits and is categorized as a major source, according to U.S. EPA's guidance documents, will always be a major source subject to MACT requirements, and subject to all of the licensing requirements of section 112 and title V. U.S. EPA has written several guidance documents on how a facility can avoid being categorized as a major source. For more information, consult U.S. EPA's Guidance for State Rules for Optional Federally Enforceable Emissions Limits Based on Volatile Organic Compound Use dated October 15, 1993, Options for Limiting the Potential to EMIT (PTE) of a Stationary Source Under Section 112 and Title V of the Clean Air Act dated January 25, 1995, and Potential to Emit for MACT Standards -- Guidance on Timing Issues dated May 16, 1995.

You are the Plant Manager for Coaters, Inc., an Ohio Corporation. Founded in 1963, your company prepares and coats a variety industrial equipment for its customers. Your operation uses different preparation techniques before coating depending on the particular coating application. Some equipment is sand blasted before coating, others are prepared with a solvent preparation, and still others are chemically prepared with an alkaline cleaning before coating. Your solvent preparation line requires an air permit for the discharge of volatile organic chemicals. Because your facility is in an ozone non-attainment area, your emission limits on the volatile organic chemicals are very strict. Operating at full production, your facility's air pollution control equipment is unable to keep your facility's emissions within the allowable limits issued by Ohio EPA to your company. You have decided to upgrade your facility to allow you to increase production while simultaneously reducing the total amount of volatile organic emissions from your facility. To you, this appears to be a win-win situation -- your company can increase its production by adding a new production facility while keeping EPA happy by decreasing the volatile organic emissions from the plant by upgrading the pollution control equipment.

You begin ordering equipment for your new air pollution control equipment and your new line of production. You determine where to place the equipment in your existing plant, and you have construction drawings prepared. Since you are going to be reducing the amount of volatile organic chemicals released from your facility while simultaneously increasing the production of your plant, you see no reason to bother EPA regarding the new equipment you are installing.

Soon, construction equipment begins arriving. Your old air pollution control equipment is dismantled, and sent off for scrap. Footers for the new production equipment are dug, and concrete is poured. All seems to be going smoothly when a state EPA inspector shows up unexpectedly at your facility. He asks what you are constructing, and you proudly explain the new production line and emissions control system that you are installing. You explain that the new system will allow you to increase production while simultaneously reducing air emissions. You also explain that your production will be shut down until the new system is installed since the old air pollution control system had to be dismantled before the installation of the new system.

The inspector asks to see your "Permit to Install," otherwise known as a PTI, for the new production system. With a confused look, you ask the inspector to explain his concern. You are not building a new plant, nor are you going to increase pollution. You are simply adding production capacity and updating the pollution control equipment required to operate your current production. At this point, the inspector states that he will have someone from enforcement contact you regarding the need for a PTI.

Nervous about your conversation with the inspector, you contact an environmental attorney to ask about the need for a PTI. Your attorney explains that the law in Ohio states:

"[N]o person shall cause, permit, or allow the installation of a new source or air pollutants . . . or cause, permit, or allow the modification of an air contaminant source . . . without first obtaining a permit to install from [Ohio EPA]" Ohio Admin. Code § 3745-31-02(A).

Your attorney explains that since your installation of the new production line will result in the "modification of an air contaminant source," Ohio EPA requires that you obtain a PTI prior to construction. Pursuant to a 1989 Internal Memorandum on PTI applications, for a new facility, Ohio EPA expects a company to obtain a PTI prior to "when the entity begins pouring concrete for the foundations for the structure." For an existing facility that is expanding, the entity must have a PTI from Ohio EPA prior to "when the entity starts pouring concrete for the foundation for the building expansion or for the foundation for any new equipment." To add equipment to an existing facility, an entity must have a PTI prior to "when the entity receives new equipment at the facility." Your attorney explains that your project involves the addition of equipment to an existing facility. Therefore, you would either need the PTI before receiving the equipment on site, or before pouring the footers for the foundation of the equipment, depending on whether Ohio EPA views your project as a physical addition to the plant, or a simple addition of equipment. To be safe, your attorney advises you that a PTI should be in hand before either pouring footers or bringing the equipment on site.

You ask your attorney how long it will take to push through the necessary paperwork for a PTI. Your attorney explains that the agency has 60 days to do a completeness review after Ohio EPA receives the application. Then, if Ohio EPA believes that your source is of such significance that public comments are required, you should allow at least an additional 6 to 8 months. You feel a sudden sickness in your stomach. Your plant is shut down, you have contractors on site with heavy equipment waiting to begin installing what you thought would be a benefit to the environment, and Ohio EPA may refuse to allow you to continue construction because you failed to realize that a PTI was necessary before construction began. You realize that this mistake could put you out of business, or at a minimum cost you a lot of money while your facility is shut down waiting for the necessary paperwork to be approved. To make things worse, your attorney explains that since you are requesting a PTI after construction began, the permit application fee charged by Ohio EPA is automatically doubled.

You explain to your attorney that you could easily be out of business if you cannot continue with construction. Under the circumstances, your attorney believes that you may qualify for a "Temporary Exemption" from the PTI requirements. Your attorney explains that Ohio Revised Code Section 3704.03(W) provides for exemptions from the requirements of a PTI where

"the applicant demonstrates that the source will be installed to comply with all applicable emission limits and will not adversely affect public health or safety or the environment and if [Ohio EPA] determines that such an action will avoid an unreasonable hardship on the owner or operator of the source."

You have to show Ohio EPA two things to receive a temporary exemption. First, you have to show that your new facility will comply with all the pollution control laws, and second, you have to prove that you will be "caught between a rock and a hard place" if you do not receive a temporary exemption. After some research, your attorney advises you that Ohio EPA has issued temporary exemptions from PTI requirements where people would be laid off if construction could not continue, or a company would go out of business if construction could not continue.

Your attorney explains that your situation would warrant a temporary exemption from Ohio EPA's PTI requirements to allow you to go forward with construction. Your new facility, even with its increased production capability will be in compliance with all environmental laws and will be emitting less volatile organic chemicals after the construction is complete. Your attorney places a few phone calls to Ohio EPA, and documents in writing with Ohio EPA your predicament. After assuring Ohio EPA that your new facility will comply with all environmental laws, you receive a temporary exemption from the PTI requirements. However, your attorney explains that you must still apply for a PTI while construction proceeds, and he reminds you that the application fee will be doubled.

You are forever grateful. Construction can proceed while your PTI application is pending. Your attorney then mentions that you should submit you application for a "Permit to Operate," otherwise known as a PTO, at the same time as the PTI application. You smile at your attorney and explain that you already have a PTO. Your attorney smiles nervously and says, "Not for your new system you don't." You suddenly realize, you have even more paperwork to do.

My advice to clients is not to be caught between a rock and hard place. Be aware of the PTI and PTO requirements before you begin construction. Ohio EPA has built into its regulations some leniency so that even if you forget the PTI application, you may get a temporary exemption. However, each state is different, and there is no guarantee that your construction will be allowed to proceed without the proper permits. Once your construction starts, knowingly proceeding without the proper permits puts you at risk that the project may never be allowed to operate, and puts you at risk for knowingly violating an environmental law -- a criminal offense.

You are the owner of a widget assembly plant called Nopaint Inc. Your facility exists in Ohio, but does business with manufacturers all over the United States. Your plant receives premanufactured parts from around the country and assembles the parts into a product ready for market. Your company is registered with Ohio EPA as a small quantity generator of hazardous waste, but requires no air permits or water permits for its production of assembled products.

Recently, a potential client contacts your company and asks you to be a subcontractor for him on a special government project. Your potential client wants you to assemble a special widget for him. However, the first step in the assembly of this particular widget requires that a part of the widget be painted. As a government subcontractor, your potential client explains that you must certify that your facility will be in compliance with all environmental laws. Your potential client explains that he has been looking for an assembler that can certify that its facility will comply with all applicable air pollution control laws and applicable air permit requirements during the painting and assembly. The potential client explains that three other companies have turned away the project in other states because none had an air permit that would have covered this project even though it requires the application of less than five gallons of paint per day. Provided that you can paint one small piece of the widget before it is assembled, you get the contract for assembling it.

The prospects of obtaining this contract are very exciting. Unfortunately, you do not have a coating applicator or an air permit. However, before telling the potential client that you too cannot take the job, you ask him to allow you to call him back after evaluating the capability of your facility. You call a supplier of coating applicator equipment and determine that the mechanical equipment necessary for doing the job is not that expensive, is immediately available, and can be constructed at your facility within a week. If you can get an air permit for the coating applicator, you are in business with this potential client. Your next step is to determine how difficult it will be to comply with Ohio's air pollution control laws and obtain an air permit in Ohio.

You call the Ohio Environmental Protection Agency and ask the person to whom you are transferred how difficult it will be to obtain an air permit. The person at Ohio EPA is very helpful, but not very encouraging. First, you will need a permit to install pursuant to section 3745-31-02 of the Ohio Administrative Code. According to Ohio EPA, you must obtain the permit to install before you can begin construction. The application for a permit to install can take several months for approval. You must also apply for and obtain a permit to operate pursuant to the requirements of section 3745-35-02 of the Ohio Administrative Code. The person from Ohio EPA asks if you would like to have an application for a permit to install and an application for a permit to operate sent to you so that the process can begin. You decline the offer knowing that your potential client cannot wait for months while Ohio EPA processes your requested air permits. You decide instead to call an environmental attorney to see if he has any ideas on how to speed the permit process along.

Your initial conversation with the attorney revolves around how to get an air permit from Ohio EPA on a "fast track" before you lose your potential client. Your attorney informs you of the same thing that the Ohio EPA representative stated. You will need several months to get a permit from the regulators, especially with the amount of work created for Ohio EPA by the new Title V program. Your attorney asks you if you are sure that you need an air permit. You respond that you assumed every painting operation in Ohio needed an air permit.

Surprisingly, your attorney informs you that this is not necessarily the case. Your attorney asks you to send him the Material Safety Data Sheet (MSDS) for the type of paint you will use. You immediately obtain a copy of the MSDS and fax it to your attorney. Using the MSDS, your attorney compares your proposed discharge to the air permit exemptions in the Ohio Revised Code and the Ohio Administrative Code. After checking on the status of the law, and verifying the amount of chemicals that will be released from the amount of paint you will be using every day, your attorney calls you back with good news. Ohio EPA will not require a permit to install for your new source of air pollution since it meets certain criteria found in the Ohio Administrative Code. Section 3745-15-03(kk) of the Ohio Administrative Code states that a permit to install is not needed for . . .

Coating applicators with properly designed and operated particulate control devices and venting systems that employ less than five gallons of only air-dried coating material in any one day provided that the applicators are:

(i) Not located in a nonattainment area for ozone,

(ii) Not subject to limits specified in or specifically exempted from rule 3745-21-09 of the Administrative Code,

(iii) Not subject to federal standards of performance for new stationary sources; and

(iv) Not located at a facility with actual emissions of twenty-five or more tons of volatile organic materials per year and are not subject to a standard under Title III of the Clean Air Act.

Since your facility does not exist in one of Ohio's ozone nonattainment areas, does not fall under any of the other exceptions, and will apply less than five gallons of paint per day, your attorney informs you that you need not obtain a permit to install. This is great news, but you still have the problem of obtaining a permit to operate an air contaminant source.

Your attorney explains that this also will not be a problem. The Legislature in Ohio provided an exemption for certain sources that are simply too small to require that the source obtain an air permit. Section 3704.011 of the Ohio Revised Code states that an "air contaminant source is exempt from this chapter and rules adopted under it if the emissions of particulate matter, nitrogen oxides, organic compounds, sulfur dioxide, carbon monoxide, lead, or any other air contaminant from that source do not exceed ten pounds per day . . . ." While there are exceptions to the exemption, your attorney informs you that your proposed coating applicator definitely will not need an air permit under Ohio's regulatory program. However, your attorney cautions you that because the coating applicator that you wish to install has the "potential to emit," as defined at 3745-15-05(A)(6) of the Ohio Administrative Code, more than ten pounds per day of air pollutants, you must maintain certain records for the exemption to be valid. Pursuant to Ohio Revised Code § 3704.011(C), you must "maintain records that are adequate to demonstrate that actual emissions have not exceeded ten pounds per day." Under Ohio's "De Minimis" air contaminant source exemption rule found in the Ohio Administrative Code at Section 3745-15-05(E), the owner or operator of the source must:

. . . maintain records that show that emissions of any air contaminant from the source did not exceed ten pounds per day on each day the source emitted air contaminants, and that the source in any one year did not emit more than one ton of hazardous air pollutants as defined in division (1) of section 3704.03 Of the Revised Code, and that the emissions from the source, in combination with similar air contaminant sources at the same facility, did not result in potential emissions of any air contaminant from the facility in excess of twenty-five tons during the preceding calendar year. All the following information, if applicable, shall be adequate to make that demonstration:

(1) A narrative description of how the emissions from the source were determined and maintained at or below the daily exemption level, and, for emissions of hazardous air pollutants, at or below the annual exemption level;

(2) A description of the air pollution control equipment used on the source and a statement that the source is not capable of operating without that pollution control equipment functioning;

(3) If air pollution control equipment is used, a copy of any report of the results of any emission test that was conducted following Ohio EPA approved methods, if applicable, or any other emission evaluation;

(4) A description of all production constraints required for the source to comply with the exemption levels;

(5) Records of actual operations that demonstrate that the daily and annual emissions from the source were maintained at or below the exemption level by the use of the necessary production constraints or pollution control equipment;

(6) A list of all similar sources at the same facility and a statement for each such source of the annual potential emissions. Compliance with paragraph (C)(4) of this rule shall be demonstrated; and

(7) A summation of the total emissions from each exempt or similar source, a summation of stated potential emissions from all sources identified in paragraph (E)(6) of this rule, and a certification under oath that the applicable exemption levels were complied with.

You must maintain these records for at least two years, and you must produce the records upon demand, if requested by a representative from Ohio EPA. While these requirements appear somewhat overwhelming, your attorney explains that it is quite simple to be in compliance with the record keeping requirements.

You are amazed that Ohio has made it relatively simple for you to operate a small painting operation. You immediately call the potential client and inform him that you can perform the painting as part of the assembly project. You also inform him that you will be in compliance with Ohio's air pollution control laws and permitting program.

My advice to clients with small operations is to read and to understand the laws and regulations before jumping to any conclusions about the need for a permit. In this example, the owner undertook an investigation of Ohio's air permit laws, and from that investigation was able to obtain new business because he learned that he could legally operate without an air permit. Many states have exempted small operations from the requirements of obtaining air permits under certain conditions. Understanding the regulations helps your business stay out of trouble with the regulators. Like the owner in this example learned, it can also increase your profitability by allowing you to accept projects that you might otherwise refuse.