UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 
          Office of Air Quality Planning and Standards
          Research Triangle Park, North Carolina 27711


                           SEP 18 1992

                           MEMORANDUM

SUBJECT:       Limitation of Potential to Emit withRespect to
               Title V Applicability Thresholds

FROM:          John Calcagni, Director
               Air Quality Management Division (MD-15)

TO:            William A. Spratlin, Director
               Air and Toxics Division, Region VII


     This is to acknowledge receipt of your August 6,1992
memorandum to John Seitz requesting guidance with respect to a
State's ability to utilize a Title V permit, or other
federally-enforceable means, to limit the potential to emit for
various purposes.

     Before addressing your specific questions, some background
review will be helpful.  We recognize that sources may wish to
limit their potential to emit by accepting voluntary limits to
avoid being subject to more stringent requirements.  The voluntary
limit must be federally enforceable.  This is indicated in the
definition of "potential to emit" contained in 40 CFR 70.2.  There
are several mechanisms that will allow sources to adopt
federally-enforceable restrictions on their potential to emit.  The
preamble discussion on voluntary limits in the Part 70 rule for
operating permits programs is a useful summary of these approaches
(see 57 FR 32250, 32279, July 21, 1992).

     A source that emits criteria pollutants may be subject to a
federally-enforceable restriction on its potential to emit either
under an existing State preconstruction review or a non-Title V
State operating permits program that has been approved into a State
implementation plan (SIP).  These options were discussed in the
preamble to the final rule: Requirements for the Preparation,
Adoption, and Submittal of Implementation Plans; Approval and
Promulgation of Implementation Plans, 54 FR 27274, June 28, 1989. 
Although we do not have extensive experience with implementing this
rule, we believe the preamble and rule adequately describe the
process States and sources would use to limit potential to emit. 
A source using this approach to take federally-enforceable
conditions so as to not be "major" for Title V purposes would not
have to obtain a Title V permit

                                2

(assuming, of course, that the State Title V program does not
otherwise apply to the source).  It, therefore, would not have to
meet Title V permit requirements.

     For sources emitting hazardous air pollutants listed in
section 112(b), the Agency is also considering allowing States to
use programs approved under section 112(1) as a means of developing
federally-enforceable limits on the potential to emit, if such an
approach is legally permissible.  Implementation of this concept
will require the resolution of many issues and will be addressed in
forthcoming guidance issued pursuant to section 112.

     It is also possible to limit a source's potential to emit
through the Title V permitting process.  Indeed, Wayne Leidwanger
and Josh Tapp of your staff indicated that Nebraska wishes to use
Title V permits to create various, federally-enforceable emissions
limitations.  This can be done in a number of ways.

     Some sources may be issued a general permit under the Part 70
operating permits program for the purpose of avoiding
classification as a major source.  If a source above a certain
emissions level is subject to more stringent requirements, in some
situations a general permit may be developed to contain a principal
requirement that would limit a source's potential to emit to below
that level of emissions (see 57 FR at 32278).  This approach can be
used for either criteria or hazardous air pollutants.  The primary
advantage of a general permit is that it involves streamlined
procedures for processing.

     If a general permit is not used, a source could obtain the
standard Title V permit.  However, we believe this approach would
involve additional effort for the source and for the permitting
authority.  Because the source would be subject to the full
source-specified permit issuance process, it would be required to
individually develop the periodic monitoring, reporting, and
compliance certification aspects required of all Title V permitted
sources.  Although more burdensome for the source, the State may
wish to take advantage of these procedural requirements to assure
that the federally-enforceable conditions are being adhered to.

     Because Title V permitting is likely to be more procedurally
rigorous than the other approaches, Title V is probably not the
preferred option for the State to use.  In other words, we believe
it would be more complicated for a State or source to use a Title
V permit to avoid being considered a major source for Title V
purposes.  We believe the other options mentioned above (e.g.,
construction permits or operating permits programs that have been
approved into a SIP) accomplish the goal in a more straightforward
manner.  We are, however, continually investigating approaches to
developing federally-enforceable


                                3

limits on potential to emit, and we will inform you of any
additional options.

     Concerning the permit fee issue you raised, it is important to
realize that States have considerable flexibility in determining
which sources must pay permit fees as long as they maintain fee
programs that result in the collection, in the aggregate, of
sufficient funds to pay for all permit program costs.  It is not
necessary for all permitted sources to be charged a permit fee. 
Similarly, it is also not necessary for States to charge a permit
fee based on potential to emit, but they may.

     If you have any further questions, please contact Gwen
Holfield of my staff at (919) 541-2343.

cc:       J. Seitz
          L. Wegman
          B. Jordan
          T. Williamson
          M. Winer
          Division Director, Regions I-VI and VIII-X