80_FR_56760 80 FR 56579 - Source Determination for Certain Emission Units in the Oil and Natural Gas Sector

80 FR 56579 - Source Determination for Certain Emission Units in the Oil and Natural Gas Sector

ENVIRONMENTAL PROTECTION AGENCY

Federal Register Volume 80, Issue 181 (September 18, 2015)

Page Range56579-56592
FR Document2015-21026

The U.S. Environmental Protection Agency (EPA) is proposing to clarify the term ``adjacent'' in the definitions of: ``building, structure, facility or installation'' used to determine the ``stationary source'' for purposes of the Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR) programs and ``major source'' in the title V program as applied to the oil and natural gas sector. The EPA has previously issued guidance on how to assess ``adjacency'' for this industry, but the use of the guidance has been challenged, resulting in uncertainty for the regulated community and for permitting authorities. The EPA is proposing to clarify how properties in the oil and natural gas sector are determined to be adjacent in order to assist permitting authorities and permit applicants in making consistent source determinations for this sector. In this action, the EPA is proposing two options for determining whether two or more properties in the oil and natural gas sector are ``adjacent'' for purposes of defining the ``stationary source'' in the PSD and NNSR programs, and ``major source'' for the title V program (referred to collectively as ``source''). The preferred option would define ``adjacent'' for the oil and natural gas sector in terms of proximity. The EPA is co-proposing and taking comment on an alternative option to define ``adjacent'' in terms of proximity or functional interrelatedness.

Federal Register, Volume 80 Issue 181 (Friday, September 18, 2015)
[Federal Register Volume 80, Number 181 (Friday, September 18, 2015)]
[Proposed Rules]
[Pages 56579-56592]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-21026]



Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / 
Proposed Rules

[[Page 56579]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 49, 51, 52, et al.

[EPA-HQ-OAR-2013-0685; FRL-9931-97-OAR]
RIN 2060-AS06


Source Determination for Certain Emission Units in the Oil and 
Natural Gas Sector

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The U.S. Environmental Protection Agency (EPA) is proposing to 
clarify the term ``adjacent'' in the definitions of: ``building, 
structure, facility or installation'' used to determine the 
``stationary source'' for purposes of the Prevention of Significant 
Deterioration (PSD) and Nonattainment New Source Review (NNSR) programs 
and ``major source'' in the title V program as applied to the oil and 
natural gas sector. The EPA has previously issued guidance on how to 
assess ``adjacency'' for this industry, but the use of the guidance has 
been challenged, resulting in uncertainty for the regulated community 
and for permitting authorities. The EPA is proposing to clarify how 
properties in the oil and natural gas sector are determined to be 
adjacent in order to assist permitting authorities and permit 
applicants in making consistent source determinations for this sector. 
In this action, the EPA is proposing two options for determining 
whether two or more properties in the oil and natural gas sector are 
``adjacent'' for purposes of defining the ``stationary source'' in the 
PSD and NNSR programs, and ``major source'' for the title V program 
(referred to collectively as ``source''). The preferred option would 
define ``adjacent'' for the oil and natural gas sector in terms of 
proximity. The EPA is co-proposing and taking comment on an alternative 
option to define ``adjacent'' in terms of proximity or functional 
interrelatedness.

DATES: Comments. Comments must be received on or before November 17, 
2015.
    Public Hearing. The EPA will hold public hearings on the proposal. 
Details will be announced in a separate document.

ADDRESSES: Comments. Submit your comments, identified by Docket ID No. 
EPA-HQ-OAR-2013-0685, to the Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting 
comments. Once submitted, comments cannot be edited or withdrawn. The 
EPA may publish any comment received to its public docket. Do not 
submit electronically any information you consider to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. If you need to include CBI as part of your 
comment, please visit http://www.epa.gov/dockets/comments.html for 
instructions. Multimedia submissions (audio, video, etc.) must be 
accompanied by a written comment. The written comment is considered the 
official comment and should include discussion of all points you wish 
to make. For additional submission methods, the full EPA public comment 
policy, and general guidance on making effective comments, please visit 
http://www.epa.gov/dockets/comments.html. For additional instructions 
on submitting comments, go to the SUPPLEMENTARY INFORMATION section of 
this document.

FOR FURTHER INFORMATION CONTACT: For further general information on 
this rulemaking, contact Ms. Cheryl Vetter, Office of Air Quality 
Planning and Standards (C504-03), U.S. Environmental Protection Agency, 
by phone at (919) 541-4391, or by email at vetter.cheryl@epa.gov.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this proposal apply to me?

    Entities potentially affected directly by this proposal include 
owners and operators of sources of new and modified oil and gas sector 
operations. Such entities are expected to be in the groups indicated 
below. In addition, state, local and tribal governments may be affected 
by the rule if they update state rules to adopt these changes.
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    \1\ North American Industry Classification System (NAICS).

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            Industry group                       NAICS Code\1\
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Oil and Gas Extraction...............  21111.
Crude Petroleum and Natural Gas        211111.
 Extraction.
Natural Gas Liquid Extraction........  211112.
Drilling Oil and Gas Wells...........  213111.
Support Activities for Oil and Gas...  213112.
Natural Gas Distribution.............  221210.
Pipeline Distribution of Crude Oil...  486110.
Pipeline Distribution of Natural Gas.  486210.
Federal Government...................  May Be Affected.
State/Local/Tribal Government........  May Be Affected.
------------------------------------------------------------------------

B. What should I consider as I prepare my comments for the EPA?

    When submitting comments, remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

[[Page 56580]]

C. Where can I get a copy of this document and other related 
information?

    In addition to being available in the docket, an electronic copy of 
this action will be posted at http://www.epa.gov/airquality/oilandgas/actions.html.

D. How is this document organized?

    The information presented in this document is organized as follows:

I. General Information
    A. Does this proposal apply to me?
    B. What should I consider as I prepare my comments for the EPA?
    C. Where can I get a copy of this document and other related 
information?
    D. How is this document organized?
II. Statutory, Regulatory and Policy Background for Proposal
    A. Statutory and Regulatory Background
    B. How has the EPA applied the statutory and regulatory 
definitions?
    C. Oil and Natural Gas Sector
    D. What are the air emissions resulting from the oil and natural 
gas sector?
    E. How does the EPA regulate air emissions from the oil and 
natural gas sector?
    F. How has the EPA defined the source for the oil and natural 
gas sector previously?
    G. What approaches has the EPA taken recently regarding 
implementation of NSR and title V permitting for oil and natural gas 
sector sources?
    H. What is the purpose of this proposed action?
    I. Policy Discussion
    J. Why is the EPA proposing this action at this time?
    K. What is the effect of this proposed rulemaking on other 
industries?
    L. What is the effect of this proposed rulemaking on permitting 
authorities?
III. What are the options that the EPA is considering?
    A. Define Source Based on Proximity (Similar to the NESHAP)
    B. Define Source To Include Exclusively Functionally 
Interrelated Equipment
    C. Impacts of the Options on Air Permitting
    D. Proposal is Limited to Onshore Oil and Gas Operations
IV. Environmental Justice Considerations
V. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Determination Under Section 307(d)
    Statutory Authority

 II. Statutory, Regulatory and Policy Background for Proposal

A. Statutory and Regulatory Background

    The major New Source Review (NSR) programs found in parts C and D 
of Title I of the Clean Air Act (CAA or Act) are preconstruction review 
and permitting programs that apply to new and modified major stationary 
sources of air pollutants subject to regulation under the Act. In areas 
where air quality does not meet the primary or secondary National 
Ambient Air Quality Standards (NAAQS) for a given pollutant and in the 
ozone transport region (OTR), which includes states in the Northeast 
and Mid-Atlantic regions, the program is implemented under part D of 
title I of the Act. This is called the ``nonattainment'' NSR (NNSR) 
program. In areas that meet the NAAQS, or ``attainment'' areas, or 
where we \2\ cannot determine whether those standards are met, or 
``unclassifiable'' areas, the requirements under part C of title I of 
the Act apply. This program is called the PSD program. The regulations 
for these two NSR programs are found in 40 CFR 51.165, 51.166, 52.21, 
52.24 and part 51, appendix S.
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    \2\ In this preamble, the term ``we'' and ``our'' refers to the 
EPA.
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    The NSR permitting programs are primarily implemented by state and 
local permitting authorities either through programs in their approved 
State Implementation Plans (SIPs) or through delegation of the federal 
program by the EPA. The EPA implements the federal PSD program and the 
NNSR program directly in reservation areas of Indian country and non-
reservation areas of Indian country over which a tribe or the EPA has 
demonstrated that a tribe has jurisdiction, unless a tribe has 
developed a Tribal Implementation Plan (TIP). The EPA may also 
implement the federal PSD program directly in areas where the state or 
local area has not developed a SIP-approved program or has not 
requested delegation of the program by the EPA. States are also 
required to have legally enforceable procedures that will allow them to 
prevent the construction or modification of a source that will 
interfere with attainment or maintenance of a NAAQS. In addition to the 
major source permitting programs, this is typically accomplished 
through a state or local ``minor'' new source permitting program. The 
EPA implements a minor source permitting program in all reservation 
areas of Indian country, unless a tribe has developed a TIP and in any 
non-reservation areas of Indian country for which a tribe, or the EPA 
acting in the tribe's place, has demonstrated that the tribe has 
jurisdiction.
    The NSR program applies to new and modified stationary sources of 
emissions. The CAA generally defines the term ``stationary source'' as 
``any source of an air pollutant'' except those emissions from certain 
mobile sources or engines under CAA section 216 [CAA section 302(z)]. 
The Act also defines some other terms that form the basis of specific 
NSR programs. So, for example, the PSD program requires a 
preconstruction permit for any ``major emitting facility'' constructed 
after a particular date [CAA section 164(a)], and defines a ``major 
emitting facility'' as a ``stationary source'' emitting or with the 
potential to emit more than a certain amount of air pollutants [CAA 
section 169(1)].
    Adhering to the statutory language in CAA section 111(a)(3), we 
have defined the term ``stationary source'' to mean ``any building, 
structure, facility, or installation which emits or may emit a 
regulated NSR pollutant'' [40 CFR 52.21(b)(5); 40 CFR 51.165(a)(1)(i); 
40 CFR 51.166(b)(5)]. We have then further defined the four statutory 
terms ``building, structure, facility, or installation'' collectively 
in our NSR regulations to mean ``all of the pollutant-emitting 
activities which belong to the same industrial grouping, are located on 
one or more contiguous or adjacent properties, and are under the 
control of the same person (or persons under common control),'' where 
the ``same industrial grouping'' refers to the two-digit Standard 
Industrial Classification code [40 CFR 52.21(b)(6); 40 CFR 
51.165(a)(1)(ii); 40 CFR 51.166(b)(6)].\3\ These three regulatory 
factors: (1) Same industrial grouping; (2) location on contiguous or 
adjacent properties; and (3) under the control of the same person or 
persons must be evaluated on a case-by-case basis for each permitting 
decision.
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    \3\ The four-digit SIC code was the only code system in use at 
the time our rules were developed. This classification system has 
since been replaced by the six-digit NAICS, which was developed with 
Canada and Mexico, and is used for classifying North American 
businesses. While the SIC codes are no longer updated, the United 
States Department of Labor's Occupational Safety and Health 
Administration still maintains the list of SIC codes for reference.
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    In addition to the pre-construction permitting requirements of the 
NSR

[[Page 56581]]

program, title V of the CAA also requires a ``major source'' to obtain 
an operating permit, known as a title V permit [CAA section 501(2); CAA 
502]. The title V definition of major source refers to the definitions 
in other sections of the Act, including the definition of major source 
for hazardous air pollutants (CAA section 112), the general CAA 
definition of major stationary source (CAA section 302) and the 
definition of major stationary source under the NNSR program. Each of 
these programs set different numerical emissions thresholds at which 
permitting requirements apply, which then become the basis for the 
major source determination in the title V program.
    Our operating permit regulations define major source as ``any 
stationary source (or group of stationary sources that are located on 
one or more contiguous or adjacent properties, and are under common 
control of the same person (or persons under common control)) belonging 
to a single major industrial grouping . . .'' (40 CFR 70.2, 71.2). As 
in the NSR programs, we have defined industrial grouping to refer to 
the two-digit SIC code (40 CFR 70.2, 71.2). Many state and local 
permitting authorities have approved title V permitting programs that 
have adopted similar definitions.

B. How has the EPA applied the statutory and regulatory definitions?

    Source owner/operators and permitting authorities assess the three 
regulatory factors--same industrial grouping, location on contiguous or 
adjacent property, and under common control--on a case-by-case basis to 
determine which pollutant-emitting activities should be included as 
part of a single source when determining applicability of the NSR and 
title V permitting requirements. In the original promulgation and later 
application of these three factors, we have been mindful of the 
direction the D.C. Circuit Court of Appeals provided that the 
``source'' for permitting purposes should comport with the ``common 
sense notion of a plant'' (45 FR 52694, August 7, 1980 citing Alabama 
Power v. Costle). In the Alabama Power decision, the Court said that 
EPA cannot treat contiguous and commonly owned units as a single source 
unless they ``fit within the four statutory terms . . .'' (i.e., the 
terms building, structure, facility and installation). The Court said 
that we should ``. . . provide for the aggregation, where appropriate, 
of industrial activities according to considerations such as proximity 
and ownership.'' Alabama Power Co. v. Costle, 636 F. 2d 323, 397 (D.C. 
Cir. 1979). Examples of the case-by-case determinations made by the 
EPA, or by permitting authorities with the EPA's input, applying these 
principles over several decades of NSR permitting are available at 
http://www.epa.gov/region07/air/nsr/nsrindex.htm.
    The EPA later promulgated the title V major source definition found 
at 40 CFR 70.2 (57 FR 32250, July 21, 1992) and 71.2 (61 FR 34202, 
34210, July 1, 1996). Not only were these definitions consistent with 
each other, but EPA was also clear that the language and application of 
the title V definition was to be consistent with the language and 
application of the PSD definition contained in section 52.21 (61 FR 
34210, July 1, 1996). Examples of case-by-case source determinations 
made by the EPA, or by permitting authorities with the EPA's input, 
that apply the title V definitions are available at http://www.epa.gov/region7/air/title5/t5index.htm.
    Reviewing both the NSR and title V guidance regarding source 
determinations, it is clear that we have used the term ``contiguous or 
adjacent'' to mean that the land associated with the source (i.e., 
building, structure, facility or installation) is connected to (i.e., 
contiguous) or nearby (i.e., adjacent) another source. In response to 
the Alabama Power decision, the EPA promulgated the 1980 PSD rule, 
including the definitions used to determine the scope of the source for 
permitting purposes (45 FR 52676, August 7, 1980). We explained that 
the 3-part test (same industrial grouping, location on contiguous or 
adjacent property, and under common control) would comply with the 
court decision by reasonably comporting with the purposes of the PSD 
program, approximating the common sense notion of a plant, and avoiding 
aggregating pollutant-emitting activities that would not fit within the 
ordinary meaning of building, structure, facility or installation (45 
FR at 52694, August 7, 1980). In so doing, we considered but chose not 
to add a fourth factor or ``functional interrelationship'' test to the 
criteria for defining a source, as at that time, we believed that such 
a test would ``embroil[] the Agency in numerous fine-grained analyses'' 
(45 FR 52695, August 7, 1980). In the same rulemaking, we said that we 
did not intend ``source'' to include activities that are many miles 
apart along something like a pipeline or transmission line as a single 
source, but also noted that we were ``unable to say precisely at this 
point how far apart activities must be in order to be treated 
separately'' (45 FR 52695, August 7, 1980).
    Even though our regulations use the term ``adjacent,'' they do not 
define ``adjacent.'' Similarly, even though the EPA's historic 
interpretation is that ``adjacent'' means ``nearby,'' neither our 
regulations nor our historic interpretations set a specific distance 
that we would consider ``nearby.'' Over the years, the EPA has 
considered both the distance between two or more sources and whether 
they share an operational dependence or functional interrelatedness to 
determine whether they are ``adjacent.'' Even though our regulations do 
not explicitly define ``adjacent,'' we have provided policy 
interpretations of ``adjacency'' over time in the context of individual 
permitting actions many times because we were asked by permitting 
authorities to advise them on how to define a source within a specific 
permitting action. As is the case for most permitting-related 
decisions, these determinations were made on a case-by-case basis, 
considering the specific facts in each instance. In many of these cases 
and as explained in the examples below, we cited the principle of the 
``common sense notion of a plant'' in making a determination regarding 
the scope of the source.
    In one example, we determined that two aluminum smelting operations 
within the same SIC code (3334), located approximately 3.4 miles apart 
and commonly owned by Alcoa, should be considered a single source for 
purposes of NSR applicability. Alcoa requested confirmation of this 
single source determination after it purchased one of the plants from 
another company, allowing both operations to share common control and 
management as well as a single SIC code. The EPA determined that the 
two operations should be considered adjacent because of the shared 
materials and personnel and the company's assertion that the two plants 
would be operated as one facility.\4\
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    \4\ Riva, Steven C. ``Alcoa Messena Modernization Project and 
Request for a Single Source Determination.'' March 9, 2009. EPA 
Region 7 Air Program New Source Review Program Policy & Guidance 
Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/alcoany.pdf and in the docket for this rulemaking.
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    In one case specific to the oil and natural gas sector, the EPA 
determined, in a letter issued by EPA Region 5 to Summit Petroleum 
Corporation, that an oil and gas sweetening plant and approximately 100 
oil and gas wells located within the boundaries of the Saginaw Chippewa 
Band's Isabella Reservation in Michigan were a single

[[Page 56582]]

major source for purposes of the title V operating permit program.\5\ 
The EPA based its decision on its evaluation that the sweetening plant 
and wells share the same two-digit SIC code and are under common 
control (Summit Corporation). In addition, the EPA concluded that the 
plant and the wells were adjacent and, thus, a single source given 
their proximity and exclusive interdependence as demonstrated by the 
following facts: All of the wells are located within an 8-mile radius 
of the sweetening plant; all are connected by a dedicated system of 
pipes; and all oil and gas from the wells must be processed through the 
sweetening plant before it can be marketed. That determination was 
later challenged and overturned, as will be discussed later in this 
notice.
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    \5\ Newton, Cheryl. ``Summit Petroleum Corporation Single Source 
Determination.'' October 18, 2010. EPA Region 7 Air Program New 
Source Review Program Policy & Guidance Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/singler5.pdf and in the docket 
for this rulemaking.
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    Finally, in another example involving the oil and natural gas 
sector, the EPA determined that two natural gas compressor stations 
(Florida River and Wolf Point) and the numerous well sites owned or 
operated by BP and located within the Northern San Juan Basin should 
not be considered a single stationary source. In that situation, unlike 
the Summit Petroleum case discussed previously, there was no dedicated 
interrelationship between the wells and the compressor stations that 
would indicate that they should be treated as a single ``plant.'' Gas 
from the individual wells could flow to the two BP compressor stations, 
or other compressor stations. Gas production from BP's wells would not 
have to stop if one or both of the BP compressor stations were shut 
down. Additionally, the gathering pipeline between the wells and the 
stations co-mingled gas from operators other than BP and the compressor 
stations likewise accepted gas from other operators. The EPA's 
determination that this complex, dynamic system did not resemble a 
``common sense notion of a plant'' was also challenged, and was 
settled.\6\
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    \6\ Videtich, Callie. ``BP American Production Company's Florida 
River Compression Facility Single Source Determination.'' October 
18, 2010. EPA Region 7 Air Program New Source Review Program Policy 
& Guidance Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/singler8.pdf and in the docket for this rulemaking. The 
Environmental Appeals Board (EAB) docket for CAA Appeal No. 10-04 is 
available at http://yosemite.epa.gov/oa/EAB_Web_Docket.nsf/77355bee1a56a5aa8525711400542d23/2c6cf712eac2d7b38525788b00545227!OpenDocument&Highlight=2,CAA,10-04. 
The petition for review by the EAB, EPA Region 8's response, and the 
reply by petitioner are available in the docket for this rulemaking.
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    In each of these examples, the EPA based its opinion on an analysis 
of the specific facts in the individual case. We have not established a 
``bright-line'' distance beyond which we would always consider 
operations to be separate sources. Neither have we established a 
distance within which we would always consider operations to be one 
source. We have also not established that certain operations must 
always (or never) be considered together for permitting purposes.

C. Oil and Natural Gas Sector

    The United States Census Bureau's North American Industry 
Classification System (NAICS) describes the Oil and Gas Extraction 
industry (NAICS Code 2111) as including activities such as 
``exploration for crude petroleum and natural gas; drilling, 
completing, and equipping wells; operation of separators, emulsion 
breakers, de-silting equipment, and field gathering lines for crude 
petroleum and natural gas; and all other activities in the preparation 
of oil and gas up to the point of shipment from the producing 
property.'' \7\ This definition includes activities such as natural gas 
processing and liquids extraction, and sulfur recovery from natural 
gas. Pipeline transmission and distribution of oil and natural gas, and 
storage of natural gas are included in NAICS subsector 486 Pipeline 
Transportation.
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    \7\ U.S. Department of Commerce, United States Census Bureau, 
North American Industry Classification System, 2012 NAICS 
Definition, Sector 21--Mining, Quarrying, and Oil and Gas 
Extraction, 21111 Oil and Gas Extraction http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=21111&search=2012 accessed 12/03/2013.
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    The EPA has previously described in the preamble to its proposed 
New Source Performance Standard (NSPS) for the oil and natural gas 
sector that this sector includes operations in the extraction and 
production of oil and natural gas, and the processing, transmission and 
distribution of natural gas. For oil, we described the sector as 
including ``all operations from the well to the point of custody 
transfer at a petroleum refinery.'' For natural gas, we described it as 
including all operations from the well to the customer (76 FR 52738, 
52744, August 20, 2011).
    For purposes of this proposed action, we are primarily interested 
in the first two of these: Oil and natural gas production, and natural 
gas processing, or what may be referred to in the industry as 
``upstream'' and ``midstream'' operations. For reasons that will be 
explained later in this notice, we do not intend to apply the proposed 
clarification to operations that take place offshore. Onshore 
production operations include ``the wells and all related processes 
used in the extraction, production, recovery, lifting, stabilization, 
separation, or treating of oil and/or natural gas (including 
condensate). Production components may include, but are not limited to, 
wells and related casing head, tubing head and ``Christmas tree'' 
piping, as well as pumps, compressors, heater treaters, separators, 
storage vessels, pneumatic devices and dehydrators. Production 
operations also include the well drilling, completion and workover 
processes, and include all the portable non-self-propelled apparatus 
associated with those operations. Production sites include not only the 
``pads'' where the wells are located, but also include standalone sites 
where oil, condensate, produced water and gas from several wells may be 
separated, stored and treated. The production sector also includes the 
low pressure, small diameter, gathering pipelines and related 
components that collect and transport the oil, gas and other materials 
and wastes from the wells to the refineries or natural gas processing 
plants (76 FR 52744, August 20, 2011).
    Natural gas processing operations are aimed at removing impurities 
and other by-products from the extracted gas. Natural gas consists 
primarily of methane. It may also contain water vapor, hydrogen sulfide 
(H2S), carbon dioxide (CO2), helium, nitrogen and 
other compounds. It commonly exists in mixtures with other 
hydrocarbons, referred to as natural gas liquids (NGL). Natural gas 
must be processed to remove these other compounds and gases before the 
gas is considered pipeline quality suitable for transmission and 
distribution. Natural gas processing removes and recovers the liquids, 
and non-methane gases, all or some of which may be sold.

 D. What are the air emissions resulting from the oil and natural gas 
sector?

    Emissions from the oil and natural gas sector include volatile 
organic compounds (VOC), greenhouse gases (including methane), 
H2S, sulfur dioxide (SO2), carbon monoxide (CO) 
and nitrogen oxides (NOX). VOCs, including some hazardous 
air pollutants (HAP), are generally emitted during well completions, 
from equipment leaks and from storage tanks. Emissions of the 
greenhouse gas methane may also come from these sources while emissions 
of the greenhouse gas CO2 come primarily from combustion 
sources, such as flares, engines and compressors. Emissions of

[[Page 56583]]

NOX and CO are also a result of these combustion operations. 
Emissions of sulfur compounds come from production and processing 
operations that treat ``sour gas,'' that is, natural gas with an 
H2S content of greater than 0.25 gr/100 scf.

E. How does the EPA regulate air emissions from the oil and natural gas 
sector?

    In addition to the source-specific permitting required by the NSR 
and title V programs, air emissions from the oil and natural gas sector 
are also regulated through other CAA-based rules. The EPA first listed 
crude oil and natural gas production for NSPS development in 1979 (44 
FR 49222, August 21, 1979). An NSPS, 40 CFR part 60, subpart KKK, was 
promulgated in 1985 that addressed VOC emissions from leaking 
components at onshore natural gas processing facilities (50 FR 26122, 
June 24, 1985). A second NSPS, regulating SO2 emissions from 
natural gas processing plants, 40 CFR part 60, subpart LLL, was 
promulgated in 1985 (50 FR 40158, October 1, 1985). In 2012, the EPA 
finalized revisions to these NSPS and established standards in 40 CFR 
part 60, subpart OOOO, limiting VOC emissions from gas wells, 
centrifugal compressors, reciprocating compressors, pneumatic 
controllers and storage vessels (77 FR 49490, August 16, 2012). In 2013 
and 2014, the EPA made certain amendments to the 2012 NSPS standards in 
order to improve implementation of the standards (78 FR 58416, 
September 23, 2013 and 79 FR 79018, December 31, 2014). Separately, the 
EPA is proposing to expand the NSPS (subpart OOOO) to regulate several 
additional categories of emitting equipment in this sector.
    The EPA has also regulated emissions of HAP from certain oil and 
natural gas sector processes through use of National Emissions 
Standards for Hazardous Air Pollutants (NESHAP), specifically the Oil 
and Natural Gas Production NESHAP (40 CFR part 63, subpart HH) and 
Natural Gas Transmission and Storage NESHAP (40 CFR part 63, subpart 
HHH). These regulations were first promulgated in 1999 (64 FR 32610, 
June 17, 1999) and were amended in 2012 (77 FR 49490, August 16, 2012).

F. How has the EPA defined the source for the oil and natural gas 
sector previously?

    As discussed in the previous section, selected equipment and 
emitting activities involved in oil and gas production are regulated 
under both the NSPS and NESHAP programs. The NSPS and NESHAP focus on 
technology-based standards for industrial source categories, and do not 
approach the regulation of stationary sources in the same way as 
required for NSR permitting.
    The definition of a major source in the NESHAP program is similar 
to, but distinguishable from, the definition of stationary source used 
in the NSR permitting programs. The NESHAP program defines a major 
source as a stationary source or a group of stationary sources ``within 
a contiguous area'' (40 CFR 63.2). This ``major source'' definition 
differs from the definition of stationary source used in the NSR 
permitting programs because it does not include ``adjacent properties'' 
[e.g., 40 CFR 52.21(b)(5)]. A major source under CAA section 112 is 
further defined as any stationary source or group of stationary sources 
``that emits or has the potential to emit considering controls, in the 
aggregate 10 tons per year (tpy) or more of any HAP or 25 tpy or more 
of any combination of HAP.'' [CAA section 112(a)(1)]. An area source of 
HAP is one that is not a major source of HAP.
    When Congress revised CAA section 112 in 1990, however, it included 
a specific provision discussing how oil and gas wells and pipeline 
facilities were to be treated with respect to regulating emissions of 
HAP [CAA section 112(n)(4)(A)]. This section provides that 
``notwithstanding'' the definitions of major source in section 112, the 
emissions from any oil or gas exploration or production well (with its 
associated equipment) and emissions from any pipeline compressor or 
pump station ``shall not be aggregated with emissions from other 
similar units'' to determine whether the units or stations are major 
sources. Congress specified this whether the units are in a contiguous 
area or under common control. In the case of any oil or gas exploration 
or production well (with its associated equipment), such emissions 
``shall not be aggregated for any purpose under this section.''
    In the NESHAP for Oil and Natural Gas Production Facilities, the 
EPA defines the affected source consistent with this requirement of the 
Act, including which associated equipment should be part of the 
facility, which associated equipment could potentially be aggregated, 
and which cannot be aggregated as per CAA section 112(n)(4)(A) [40 CFR 
63.760(b)]. The EPA defines this associated equipment to include 
``equipment associated with an oil or natural gas exploration or 
production well, and includes all equipment from the wellbore to the 
point of custody transfer'' (40 CFR 63.761). The EPA defines the 
facility for purposes of the NESHAP to mean ``the grouping of equipment 
where hydrocarbon liquids are processed, upgraded (i.e., remove 
impurities or other constituents to meet contract specifications), or 
stored prior to the point of custody transfer'' or where natural gas is 
``processed, upgraded, or stored'' prior to natural gas transmission 
and storage. For the purpose of the NESHAP major source determination, 
facility (including a building, structure, or installation) means oil 
and natural gas production and processing equipment that is located 
within the boundaries of an individual surface site as defined in the 
NESHAP (40 CFR 63.761).
    Furthermore, the EPA defines surface site as ``any combination of 
one or more graded pad sites, gravel pad sites, foundations, platforms, 
or the immediate physical location upon which equipment is physically 
affixed'' (40 CFR 63.761). The effect of these definitions is to define 
the affected facility based on the emissions from equipment and 
activities that are in close proximity to each other. The EPA stated 
that its intent in defining affected facility in this way was both to 
comply with the specific language in CAA section 112(n)(4), and to 
reduce the burden on owners and operators in making source 
determinations. The EPA stated at that time its belief that it was not 
reasonable to aggregate emissions from surface sites that are located 
on the same lease, but are at great distances from each other, even 
though they would be under common control (64 FR 32618, June 17, 1999).

G. What approaches has the EPA taken recently regarding implementation 
of NSR and title V permitting for oil and natural gas sector sources?

    As was the case with other industry categories, the EPA initially 
approached permitting decisions in the oil and natural gas sector on a 
case-by-case basis without any specific guidance until 2007. At that 
time, because of an increase in oil and gas development, and an 
increase in permit activity, the EPA issued the first guidance document 
specific to this industry. The EPA built on the idea of using the 
surface site, as defined in 40 CFR 63.761, and the proximity of surface 
sites to each other in permitting guidance, when it issued a guidance 
document titled ``Source Determinations for Oil and Gas Industries'' in 
2007.\8\ This 2007 memo is

[[Page 56584]]

relevant to our proposed action because it acknowledged that source 
determinations within the oil and gas industry may not be as 
straightforward as those within other regulated industries. We note 
that even in cases that clearly meet the tests of same SIC code and 
common control, the nature of oil and gas exploration and production 
operations may require a detailed evaluation to determine whether 
sources are on contiguous or adjacent properties. Production fields, 
even if under the control of a single operator, may cover large areas. 
Unlike many other industries, however, the expanse of land on which 
these commonly-controlled operations are located is frequently not 
owned or controlled by the owner/operator of the oil and gas activity. 
Instead, the producers may control only the surface area that holds the 
well and associated production equipment.
---------------------------------------------------------------------------

    \8\ Wehrum, William. ``Source Determinations for Oil and Gas 
Industries.'' January 12, 2007. EPA Region 7 Air Program New Source 
Review Program Policy & Guidance Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/oilgas.pdf and in the docket 
for this rulemaking.
---------------------------------------------------------------------------

    As discussed earlier in this notice, EPA has previously said that 
it would not consider all facilities along a pipeline to be one source. 
The 2007 memo built upon that idea to conclude that, for the oil and 
gas production industry, ``we do not believe determining whether two 
activities are operationally dependent drives the determination as to 
whether two properties are contiguous or adjacent, because it would 
embroil the Agency in precisely the fine-grained analysis we intended 
to avoid and would potentially lead to results which do not adhere to 
the common sense notion of a plant.'' Thus, the 2007 memo acknowledged 
that permitting authorities may consider proximity, and not operational 
dependence, as the most informative factor in determining the scope of 
a source, and recommended the approach used in CAA section 112 and the 
NESHAP for Oil and Natural Gas Production Facilities (the ``surface 
site'') as the starting point for determining the boundaries of the 
source for NSR and title V. Beyond the surface site, the memo 
recommends that permitting authorities consider aggregating multiple 
surface sites if they are in close proximity, i.e., physically adjacent 
or separated by no more than a short distance. However, consistent with 
the EPA's overall permitting practice, the 2007 memo concluded that the 
decision of whether a permitting authority should aggregate two or more 
pollutant-emitting activities into a single source for permitting 
remains a case-by-case decision taking into consideration the factors 
relevant to the specific case.
    In 2009, the EPA withdrew the 2007 memo.\9\ In doing so, we 
reinstated the use of the fundamental criteria for making source 
determinations for the oil and natural gas sector based on the use of 
the three factors contained in our regulations; same SIC code, common 
control, and location on contiguous or adjacent property. This fact-
specific examination is consistent with the EPA's historical practice 
in other industries, and is in contrast to the simplified approach of 
relying principally on proximity that was the focus of the 2007 
memorandum. From 2009 forward, the EPA recommended that permitting 
authorities conduct each source determination based on a case-by-case 
evaluation of the emissions activities at each building, structure, 
facility or installation. The 2009 memo acknowledged that proximity 
might well serve as the overwhelming factor in a permitting authority's 
source determination decision, but the conclusion could only be 
justified after examining all relevant factors, consistent with 
regulatory requirements and historical practice.
---------------------------------------------------------------------------

    \9\ McCarthy, Gina. ``Withdrawal of William Wehrum's January 12 
2007 Issued Guidance Memo `Source Determinations for Oil and Gas 
Industries'.'' September 22, 2009. EPA Region 7 Air Program New 
Source Review Program Policy & Guidance Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/oilgaswithdrawal.pdf and in 
the docket for this rulemaking.
---------------------------------------------------------------------------

    The EPA has had direct experience as the permitting authority in 
making source determinations for onshore oil and gas operations in 
Indian country. The 2010 permit for compressor stations located on the 
Southern Ute Indian Reservation (Florida River and Wolf Point) and the 
Summit Petroleum permits are two examples discussed in detail 
previously. In these cases, the EPA conducted a fact-specific 
examination of the three factors in determining which emitting 
activities should be included in title V permits. In both of these 
cases, the source determinations were challenged.
    The EPA was challenged on its source determinations for the Florida 
River permit by WildEarth Guardians. They challenged the EPA's decision 
not to aggregate certain wells into a single source in the title V 
permit renewal. EPA entered into a settlement agreement with the 
petitioner and agreed to undertake a ``pilot'' program to gather 
additional information ``for the purpose of studying, improving and 
streamlining oil and gas source determinations in new or renewal Title 
V permits.'' \10\ The EPA has collected data from several permit 
applicants, but has not yet issued permits based on that data, due to 
uncertainties created by court decisions discussed later in this 
proposal.
---------------------------------------------------------------------------

    \10\ U.S. Environmental Protection Agency. February 20, 2012. 
Motion for Dismissal. In re: BP America Production Company, Florida 
River Compression Facility, Permit No. V-SU-0022-05.00. Available at 
http://yosemite.epa.gov/oa/EAB_Web_Docket.nsf/(Filings)/
E340610E897366E1852579AB005443C4/$File/
Motion%20for%20Dismissal...41.pdf and in the docket for this 
rulemaking.
---------------------------------------------------------------------------

    In the case of Summit Petroleum's operations in Rosemont, Michigan, 
also discussed previously, the EPA determined in 2010 that the 
company's gas sweetening facility and associated wells were under 
common control and in the same major industrial grouping. In addition, 
the EPA determined that they were adjacent because of the functional 
interrelatedness of the operations. The EPA determined that the source 
must get a title V operating permit.
    Summit appealed that determination to the United States Court of 
Appeals for the Sixth Circuit, which issued a decision that overturned 
the EPA's title V applicability determination. Summit Petroleum Corp. 
v. U.S. Environmental Protection Agency, 690 F.3d 733 (6th Cir. 2012). 
In the decision, the Court said that the EPA's use of interrelatedness 
in determining whether sources were ``adjacent'' is unreasonable and 
contrary to the plain meaning of the term as currently used in EPA's 
regulations. The two judges in the majority found that the term 
``adjacent'' was unambiguous and its plain meaning related only to 
physical proximity, and thus could not include consideration of 
functional interrelatedness. The EPA sought rehearing of the Court's 
decision, but that request was denied.
    In a memorandum, EPA Headquarters then instructed its Regional Air 
Directors that the agency intended to apply the outcome of the Sixth 
Circuit decision only in the states under the jurisdiction of the Sixth 
Circuit and that we would continue to make stationary source 
determinations for title V and PSD permitting consistent with the 
agency's long-standing interpretations of its regulations in the rest 
of the country.\11\
---------------------------------------------------------------------------

    \11\ Page, Stephen. ``Applicability of the Summit Decision to 
EPA Title V and NSR Source Determinations.'' December 21, 2012. EPA 
Region 7 Air Program New Source Review Program Policy & Guidance 
Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/inter2012.pdf and in the docket for this rulemaking.
---------------------------------------------------------------------------

    The EPA's guidance memo to its regional offices was challenged by 
the National Environmental Development Association's Clean Air Project 
(NEDA/CAP) in the D.C. Circuit Court of

[[Page 56585]]

Appeals. National Environmental Development Association's Clean Air 
Project v. Environmental Protection Agency, 752 F.3d 999 (D.C. Cir. 
2014). NEDA/CAP alleged that the memorandum violated the EPA's Regional 
Consistency regulations by establishing inconsistent permit criteria in 
different parts of the country. The D.C. Circuit agreed and held that 
the memo conflicted with EPA regulations that promote uniform national 
regulatory policies. 752 F.3d at 1009 (discussing 40 CFR part 56). In 
essence, the Court found that EPA bound itself to consistency with the 
Summit decision through its own regulations. In issuing the decision, 
the D.C. Circuit indicated that the EPA could have avoided a conflict 
between its December 2012 memo and the Regional Consistency regulations 
by revising the source determination regulations to explicitly require 
consideration of functional interrelatedness.

H. What is the purpose of this proposed action?

    The purpose of this action is to request comment on the best 
approach to define ``adjacent'' for the onshore oil and natural gas 
sector.\12\ We believe it is important to address this industry 
separately because permitting decisions are difficult and time-
consuming. Providing this guidance will promote a consistent regulatory 
treatment for this industry. In addition, this industry continues to 
grow at a rapid pace, and the sheer number of determinations that need 
to be made heightens the need for guidance in the near term.
---------------------------------------------------------------------------

    \12\ We note that the EPA Administrator signed a separate 
proposal on August 5, 2015 to amend the Regional Consistency 
Regulations to address consistency issues resulting from judicial 
decisions. See Environmental Protection Agency, RIN 2060-AS53 
available at http://www.epa.gov/nsr/actions.html.
---------------------------------------------------------------------------

    We also believe it is important to address this issue through a 
rulemaking. The oil and gas source determination guidance provided by 
the EPA on two separate occasions, in 2007 and 2009, was issued in the 
form of a memo, with no opportunity for public notice and comment. 
Then, as discussed above, the subsequent onshore oil and gas permitting 
decisions made by EPA were challenged, and both guidance memos were 
referenced or relied upon by the parties in those challenges. The EPA 
is interested in addressing any uncertainty by providing additional 
clarity through rulemaking and seeking comment on the best approach for 
defining the term ``adjacent'' specific to the onshore oil and natural 
gas sector.

I. Policy Discussion

    An important consideration in deciding how to define the stationary 
source for oil and gas operations is the environmental protection that 
is achieved by aggregating multiple pollutant-emitting activities into 
a single source. Under the PSD and NNSR programs, new major sources or 
major modifications at major sources for a given pollutant are subject 
to either Best Available Control Technology (BACT) or Lowest Achievable 
Emissions Reduction (LAER) controls, depending on the air quality 
designation status for that pollutant of the area in which the source 
is located. These controls may be more stringent than controls required 
at minor sources. Because major source BACT or LAER controls may be 
continually improving, permitting authorities must assess and sources 
must install the best technology at the time a permit is issued, 
instead of what was the best the last time an NSPS or NESHAP was 
updated. Therefore, these case-by-case controls required for major 
sources or major modifications at major sources are often more 
stringent than controls required under NSPS or NESHAP, if those 
standards have not been recently updated, because control technology 
tends to improve over time.
    In addition, if the source is or will be located in an area that is 
designated nonattainment, emissions reductions, known as offsets, may 
be required in higher ratios to compensate for the proposed emissions 
increase. Therefore, aggregating activities into major sources may 
result in more oil and gas sources being subject to greater control 
under LAER, in addition to having to obtain offsets, resulting in 
greater environmental protection.
    Aggregating facilities is also more likely to result in sources 
being subject to operating permitting requirements under title V of the 
Act. While this does not result in any additional control requirements, 
it may result in additional monitoring and reporting requirements that 
provide more information on the operation of the source to the 
regulators and interested citizens. The title V permitting process 
includes opportunities for public participation, EPA oversight, and 
citizens' rights to petition the EPA to object to permits. These 
opportunities exist at both the initial permit issuance, and at permit 
renewal, which occurs every 5 years. The title V process provides more 
opportunities for public participation than minor source permitting, 
which generally includes public participation only at the time of 
initial construction or modification, and under processes that vary 
according to the permitting authority.
    Aggregating activities may also provide facility owners/operators 
with greater flexibility to modify operations without triggering 
additional permitting requirements. A source consisting of multiple 
emitting activities may be able to ``net out'' of further PSD or NNSR 
permit review by reducing emissions in one part of a source in order 
that emissions at another part of the source may increase. This allows 
sources to avoid additional permitting requirements for modifications 
to an existing facility under PSD and NNSR by taking credit for 
reductions that have already occurred within the facility. A smaller 
source offers less opportunity to ``net out'' because there are fewer 
emitting activities that can be reduced if a modification results in an 
increase. Finally, netting is usually not available under minor NSR 
programs, so smaller minor sources would likely not be able to take 
advantage of netting to avoid minor NSR permitting requirements.
    Another approach to achieving environmental protection is to 
require controls by direct federal regulation through the NSPS or 
NESHAP programs. The NSPS program results in significant control and is 
applicable to new, modified and reconstructed sources. The NSPS also 
includes monitoring and recordkeeping requirements. The NESHAP program 
also results in significant control of HAP, many of which are also 
VOCs, and is applied to both new and existing sources. Each of the 
emissions standards established pursuant to these programs must be 
reviewed and revised, if necessary, at least every eight years to take 
into account developments in practices, processes and control 
technologies. These standards apply to affected facilities independent 
of the need for an NSR permit. Separately, the EPA is proposing 
revisions to 40 CFR part 60, subpart OOOO, the NSPS for the oil and 
natural gas sector.
    Additional controls may be required for sources located in 
nonattainment areas, including minor sources, through a SIP, or through 
a Federal Implementation Plan (FIP) in areas where EPA is the 
regulatory authority, such as in certain areas of Indian country. The 
CAA requires implementation of reasonable available control technology 
(RACT) for major sources in moderate and above ozone nonattainment 
areas and in the Ozone Transport Region (OTR). The EPA develops Control 
Techniques Guidelines (CTGs) to inform a state's RACT determinations. 
Separately, the

[[Page 56586]]

EPA is proposing a CTG for the oil and natural gas sector.
    All of these programs (NSPS, NESHAP, RACT and state SIP/EPA FIP 
requirements) typically apply to emitting equipment, irrespective of 
the total emissions of the source at which the equipment is located, 
although there may be thresholds for individual types of equipment. An 
advantage of applying environmental control through these programs is 
that the administrative burden of applying for, obtaining, and 
maintaining major source permits can be reduced for sources because 
these limitations establish enforceable limits on the sources' 
potential to emit, and can keep a source from being considered major. 
The burden of reviewing and issuing major source permits is likewise 
reduced for permitting authorities.
    The biggest advantage to sources, particularly in this industry, is 
that controlling emissions through NSPS, NESHAP or emission control 
standards imposed by states through their SIPs does not require case-
by-case pre-approval as do the controls determined through major source 
permitting. This provides greater certainty to the source owners and 
operators without the delays associated with such permitting. 
Communities can also be certain of the controls sources are required to 
install and operate because the sources do not have the opportunity to 
``net out'' of controls through a permitting process. Compliance and 
enforcement are also enhanced because the control, monitoring and 
recordkeeping requirements are consistent for each type of equipment 
and do not differ from site to site, or in the case of federal 
controls, state to state.
    For the oil and gas industry, where source owners/operators must 
obtain the right to drill in a particular location and only hold those 
rights for a limited period of time, the ability to proceed quickly is 
important. For communities and air regulators, the ability to protect 
air quality and public health is important. A major source permit 
typically takes a year or more to process. If there is uncertainty 
about what should be included as part of that permitted source, the 
time to issue a permit can take longer. We believe that the most 
important result of a major or minor permit for all stakeholders, 
including the regulated industry, the community in which the source is 
located, and the permitting authority, is the requirement to install 
control technology to minimize air emissions and protect public health 
and the environment. We think that providing clarity about the scope of 
the source through this rule, and the emissions control requirements 
associated with other rules being proposed by the EPA serves the 
interests of all stakeholders.

J. Why is the EPA proposing this action at this time?

    One reason for taking this action is to resolve the uncertainty 
that the litigation over the Summit Petroleum source determination and 
resulting guidance has created for both permitting authorities and for 
owners/operators of regulated sources. Another reason is to develop a 
coordinated approach to regulating emissions from oil and gas sources 
under the variety of regulatory mechanisms available to state and 
federal regulatory agencies. There has been an increase in oil and gas 
production resulting from the rise in use of unconventional methods of 
extraction (e.g., the use of hydraulic fracturing), and this production 
is taking place in more areas and at a faster pace than in the recent 
past. We believe this justifies a new look at the best way to regulate 
and permit these operations. In separate notices, the EPA is proposing 
to require additional controls for the emissions from the oil and 
natural gas sector. Those requirements include additional requirements 
for new sources under the NSPS, requirements for minor sources at oil 
and gas operations in Indian country, and a CTG that will inform RACT 
determinations for existing major VOC sources located in moderate or 
above ozone nonattainment areas and in the OTR.
    We believe that the additional emissions controls required for new 
sources under the revised NSPS makes it less likely that major source 
permitting would result in substantial additional pollution control. In 
commenting on this proposal, commenters are encouraged to consider how 
emission controls being proposed in separate EPA notices may impact the 
preferred option in this proposal.

K. What is the effect of this proposed rulemaking on other industries?

    At this time, the EPA is proposing to clarify the definition of 
``adjacent'' used to determine the source to be permitted within the 
PSD, NNSR and title V programs as it applies to the oil and natural gas 
sector for the reasons discussed earlier in this proposal. The EPA 
believes that the unique characteristics of this industry--such as the 
underground mineral rights versus surface land ownership, widespread 
operations and interconnectedness via pipeline, etc.--warrant an 
industry-specific definition that will streamline the assessment of 
which operations should be considered to be on contiguous or adjacent 
properties. For other industries, we continue to believe that a case-
by-case assessment of the three factors remains the appropriate method 
of making source determinations. For these industries, as discussed 
previously, we believe it is generally less difficult to determine the 
scope of the source, because the operations already take place at 
facilities that more clearly match the common sense notion of a plant.

L. What is the effect of this proposed rulemaking on permitting 
authorities?

    We are proposing to make changes to both the PSD and NNSR programs 
in this rulemaking. We believe that it may be possible for some states 
to interpret their existing state rules consistent with this rulemaking 
(when final) and may not need to revise SIPs to incorporate these 
changes. However, we intend to encourage states to revise their SIPs to 
adopt these changes, when final. Similarly, states would be expected to 
make conforming changes to their operating permit programs. While we 
are proposing changes to both the federal programs and the requirements 
for state programs, we invite comment on whether states should be 
required to adopt these changes.

III. What are the options that the EPA is considering?

    In this proposal, the EPA is proposing and requesting comment on 
two options for clarifying the definition used to determine the source 
to be permitted within the NSR and title V programs as it applies to 
the oil and natural gas sector. As we stated before, any determination 
of the scope of a source requires a fact-specific inquiry into each of 
the three regulatory factors, i.e., whether emitting activities share 
the same SIC code, are under common control, and are contiguous or 
adjacent. We are not proposing to change or take comment on this 
inquiry or the three factors. However, in this notice, the EPA is 
taking comment on how the term ``adjacent'' in the third factor should 
be applied specifically to emission units in the oil and natural gas 
sector.

A. Define Source Based on Proximity (Similar to the NESHAP)

    Under the first, and currently preferred, option for which the EPA 
is taking comment, the EPA proposes to define ``adjacent'' such that 
the source is similar to that in the NESHAP for this industry, Subpart 
HH, National Emissions Standards for Hazardous Air Pollutants From Oil 
and Natural Gas Production Facilities (40 CFR 63.760). Under this 
option, the ``source'' for oil

[[Page 56587]]

and natural gas sector activities is presumed to be limited to the 
emitting activities at the surface site, and other emitting activities 
will be considered ``adjacent'' if they are proximate. Thus, under this 
first option, two or more surface sites must be considered as a single 
source if they share the same SIC code, are under common control, and 
are contiguous or are located within a short distance of one another.
    We prefer this option because we believe that a definition that 
centers on a surface site is familiar to the industry and the 
regulators because of the current NESHAP requirements, so it will 
streamline permitting. We also believe that a definition focused on a 
surface site most closely represents the common sense notion of a plant 
for this industry category. Surface sites that are not in close 
proximity to one another may be on a separate lease which may not align 
with the common sense notion of a single plant. In addition, we believe 
that this definition is consistent with Congress' intent, at least as 
they expressed it with regard to HAPs, as discussed previously.
    Under this option, as we are proposing it, the source owner/
operator would not be required, and would not be allowed, to include 
additional emitting activities in a permit beyond those in the source 
as defined. This could mean that an owner/operator must obtain more 
individual construction permits and possibly more operating permits. 
However, these would be more likely to be minor source permits. If 
finalized, owner/operators could lose the benefits of being able to net 
emissions over a larger source, which could be a disadvantage, 
particularly for sources in nonattainment areas. We request comment on 
this more limited concept of source for this industry, specifically 
whether limiting the scope of the source in this way provides 
sufficient guidance for sources and permitting authorities to permit 
these sources in a consistent and efficient manner.
    In addition, we request comment on whether it is appropriate to 
establish a specific distance within which to consider multiple surface 
sites as a single source, and if so, what that distance should be. Some 
states, such as Texas, Oklahoma, Louisiana and Pennsylvania, have 
issued guidance that presumes that operations within \1/4\ mile should 
be considered a single source. We believe that it will be helpful to 
prescribe a distance in this rule, given that this question has 
generated significant confusion and uncertainty in the past. The EPA is 
proposing to adopt a distance of \1/4\ mile but is asking for comment 
on whether another distance, such as \1/2\ mile, is an appropriate 
distance to consider for defining a single source even if on separate 
surface sites (i.e., operations beyond that distance would not be 
considered for aggregation).
    Louisiana's guidance further specifies that facilities should not 
be ``daisy-chained'' together to establish a single contiguous 
source.\13\ A series of emission units are ``daisy-chained'' when each 
individual unit is located within the specified ``contiguous or 
adjacent'' distance from the next unit, but where the last unit is 
separated from the first unit by a much larger distance. We request 
comment on whether the EPA should make a similar distinction if we 
adopt this proximity-focused source definition. Louisiana's guidance 
goes on to specify that the geographic center of the site's emissions 
defines the center for purposes of establishing the \1/4\ mile distance 
used to determine the boundary of the single source. We request comment 
on whether the center or some other feature, such as the boundary of 
the surface site, is more appropriate to use as the starting point of 
the measurement radius when determining the source.
---------------------------------------------------------------------------

    \13\ Louisiana Department of Environmental Quality. 
Interpretation of Contiguous for Oil & Gas Production Facilities. 
http://www.deq.louisiana.gov/portal/DIVISIONS/AirPermitsEngineeringandPlanning/AirPermitsProceduresandGuidance/ContiguityandOilandGasProduction.aspx. March 2015.
---------------------------------------------------------------------------

    We also request comment on whether there are instances where 
setting such a bright-line distance could increase or limit permitting 
authority oversight of these sources because they would be more likely 
to be subject to minor source permitting. We also request comment on 
whether the potentially smaller scope of each source could result in an 
unacceptable permitting burden (by creating a larger number of smaller 
sources) on the regulated community or on permitting authorities.
    While the EPA does not expect there would be adverse air quality 
impacts as a result of this approach, we are interested in whether 
there might be any environmental effect, including effects on NAAQS 
compliance from this approach, with either benefit or harm resulting. 
Finally, we request comment on whether there are circumstances in which 
an owner/operator would prefer to combine surface sites or other 
operations that are beyond the presumptive distance, e.g., \1/4\ mile, 
and seek a PSD or NNSR permit, and whether the EPA should preserve this 
option. If so, should the option to seek a major source permit be 
limited to the owner or operator's discretion, or should a permitting 
authority be able to make this determination, and under what 
circumstances?

B. Define Source To Include Exclusively Functionally Interrelated 
Equipment

    Under the second option, the EPA proposes to define the ``source'' 
for the oil and natural gas sector to include all of the interrelated 
equipment that is under common control, is in the two-digit SIC (Code 
13 Oil and Gas Extraction), and is on contiguous or adjacent property, 
where the EPA would presume that equipment in an oil and gas field is 
``adjacent'' if it is proximate, or if it is exclusively functionally 
interrelated. Exclusive functional interrelatedness might be shown by 
connection via a pipeline or other means, because of the physical 
connection between the equipment. Other examples of factors that could 
be assessed to determine interrelatedness include exclusive delivery of 
product from one group of equipment to the other via truck or train and 
facts such as whether one group of equipment would be able to operate 
if the other group of equipment was not operating. The EPA and states 
would make a determination of adjacency based on a consideration of the 
interrelatedness of emitting activities in addition to the distance 
between them. So, for the oil and natural gas sector, pollutant-
emitting activities will be considered adjacent if one of the following 
circumstances apply: (1) The pollutant-emitting activities are 
separated by a distance of \1/4\ mile or more and there is an exclusive 
functional interrelatedness; or (2) the pollutant-emitting activities 
are separated by a distance of less than \1/4\ mile.
    The consideration of interrelatedness is consistent with the EPA's 
current and historical practice for other industries and its 
longstanding practice for oil and natural gas sector activities. The 
EPA is requesting comment on this approach to better understand the 
perspective of various stakeholders. What are the advantages and 
disadvantages to this approach? Are there characteristics related to 
the oil and natural gas sector that would make this approach more or 
less difficult to implement than the preferred alternative, such as 
need to examine various interrelatedness criteria or the 
interconnectedness of the operations through pipelines? Should the EPA 
further define exclusive functional interrelatedness for this sector to 
provide additional clarity to regulators and the regulated community? 
For example, should the

[[Page 56588]]

EPA limit exclusive functional interrelatedness for this sector to 
emitting equipment that is configured in a ``hub and spoke'' model, 
where oil or gas produced from one or more wells has a dedicated flow 
(via a pipeline or other delivery method) to only one possible 
downstream point for further compression, processing or storage? Are 
there other configurations specific to this industry that the EPA 
should consider to be exclusively functionally interrelated?
    In addition, is there any environmental benefit or harm that might 
result from this approach? For example, could this approach create a 
disincentive to building pipelines, and what would be the environmental 
effect of those decisions? Finally, the EPA requests comment on whether 
there is a specific distance beyond which sources in the oil and gas 
industry should not be considered interrelated, even if interconnected 
by pipeline.

C. Impacts of the Options on Air Permitting

    The EPA expects that the combined effect of all the rules being 
proposed, including the proposed changes to the NSPS, the proposed rule 
for oil and gas sources in Indian country, and the CTG, will be to 
reduce the number of major oil and gas sources, even if we finalize 
Option 2. The proposed rules add requirements for enforceable controls, 
thereby decreasing potential emissions and making it less likely that 
major source permitting will be required. This is because a source's 
potential emissions are determined after taking into account controls 
that are enforceable as a practical matter, such as those required in 
the NSPS and a SIP adopting the CTG.
    The two options presented in this rule differ primarily in the 
permitting burden placed on sources and permitting authorities. In the 
EPA's experience, it takes significantly longer to apply for and review 
a PSD application than it does to apply for and review a minor NSR 
permit. Option 1 can be expected to result in fewer major sources than 
Option 2, but more minor sources. Option 2 can be expected to result in 
more major sources, as some otherwise minor sources could be combined 
into a smaller number of major sources.
    Because the EPA would benefit from public comment on all of these 
issues, the EPA is co-proposing these two approaches and, following 
review of public comments on the issues raised by each approach, 
anticipates adopting one of the approaches in the final rule. We 
welcome comments on these two discrete options, or some combination of 
these, and other options for determining the source for permitting oil 
and natural gas sector operations.

D. Proposal is Limited to Onshore Oil and Gas Operations

    The EPA is proposing to limit this rulemaking to onshore oil and 
gas operations for a number of reasons. First, the CAA already contains 
a specific definition of ``outer continental shelf source'' which 
includes any ``equipment activity, or facility which emits or has the 
potential to emit any air pollutant'' specifically including ``platform 
and drill ship exploration, construction, development, production, 
processing, and transportation.'' In addition, ``emissions from any 
vessel servicing or associated with an outer continental shelf (OCS) 
source, including emissions while at the OCS source or en route to or 
from the OCS source within 25 miles of the OCS source'' must be 
included when determining the OCS source [CAA section 328(a)(4)(C)]. In 
our permitting experience, these OCS sources are more likely than 
onshore operations to be stand-alone major PSD sources. The EPA has 
issued permits for exploration rigs to operate as portable PSD sources, 
allowing them to operate in a number of locations under one permit. We 
believe that this current approach provides sufficient streamlining for 
both sources and permitting authorities and propose to continue the 
existing case-by-case approach for offshore sources.

IV. Environmental Justice Considerations

    This proposal is intended to clarify the definition of adjacent 
used to determine the source to be permitted within the existing PSD, 
NNSR and title V programs as it applies to the oil and natural gas 
sector. This clarification will assist permitting authorities and 
permit applicants in making source determinations for the oil and gas 
industry and is not intended to result in less environmental protection 
for human health and the environment. It is being proposed as a part of 
a comprehensive strategy to reduce emissions from the oil and natural 
gas production sector which includes new (or lower) emission standards 
or requirements for a number of types of emitting equipment. It, 
therefore, is not expected to have a disproportionately high and 
adverse human health or environmental effects on minority populations 
or low-income populations. However, the permitting process, 
particularly under the major source programs, NSR and title V, may 
provide opportunities for public participation at individual sources 
that may be of interest to minority or low-income populations.

V. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This proposed action is a significant regulatory action that was 
submitted to the Office of Management and Budget (OMB) for review 
because it raises novel legal and policy issues arising out of the 
President's priorities. Any changes made in response to OMB 
recommendations have been documented in the docket.

B. Paperwork Reduction Act

    This proposed action would not impose any new information 
collection burden. However, the OMB has previously approved the 
information collection requirements contained in the existing 
regulations for PSD (40 CFR 52.21) and title V (40 CFR parts 70 and 71) 
under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et 
seq and has assigned OMB control numbers 2060-0003, 2060-0336 and 2060-
0243. The OMB control numbers for the EPA's regulations in 40 CFR are 
listed in 40 CFR part 9. Instead of new information collection burdens, 
this proposed action proposes proffers options that clarify the 
existing permitting requirements applicable to new and modified oil and 
natural gas sector sources. This proposed action is not likely to 
increase the burden associated with permitting, and may reduce it.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any regulation subject 
to notice and comment rulemaking requirements under the Administrative 
Procedures Act or any other statute unless the agency certifies the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations and small governmental jurisdictions.
    For purposes of assessing the impacts of this proposed rule on 
small entities, small entity is defined as: (1) A small business as 
defined in the Small Business Administration's (SBA) regulations at 13 
CFR 121.201; (2) a small governmental jurisdiction that is a government 
of a city, county, town,

[[Page 56589]]

school district or special district with a population of less than 
50,000; and (3) a small organization that is any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field.
    After considering the economic impacts of this proposed rule on 
small entities, I certify that this proposed action will not have a 
significant economic impact on a substantial number of small entities. 
In making this determination, the impact of concern is any significant 
adverse economic impact on small entities. An agency may certify that a 
rule will not have a significant economic impact on a substantial 
number of small entities if the rule relieves regulatory burden, has no 
net burden or otherwise has a positive economic effect on the small 
entities subject to the rule. Entities potentially affected directly by 
this proposal include sources in the oil and natural gas sector. We 
intend with this proposal to clarify the existing requirements for 
permitting new and existing sources in the oil and natural gas sector. 
We believe that any option finalized after notice and comment 
rulemaking will not increase, and may decrease, the administrative 
burden for permitting these sources, including those that may be small 
entities. We have, therefore, concluded that this proposed action will 
have no net regulatory burden for all directly regulated small 
entities.
    We continue to be interested in the potential impacts of the 
proposed rule on small entities and welcome comments on issues related 
to such impacts.

D. Unfunded Mandates Reform Act

    This proposed action does not contain an unfunded mandate of $100 
million or more as described in the Unfunded Mandates Reform Act of 
1995 (UMRA), 2 U.S.C. 1531-1538, and does not significantly or uniquely 
affect small governments. This action imposes no enforceable duty on 
any state, local or tribal governments or the private sector. The CAA 
imposes the obligation for private sector sources to obtain permits 
prior to construction. Many states and some local governments choose to 
implement those requirements. In other areas, the EPA implements those 
requirements. In this proposal, the EPA is taking comment on the most 
appropriate way to implement those requirements for an industry 
category. Therefore, this proposed action is not subject to the 
requirements of sections 202, 203 and 205 of the UMRA.

E. Executive Order 13132: Federalism

    This proposed action does not have federalism implications. It will 
not have substantial direct effects on the states, on the relationship 
between the national government and the states, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. The requirement to obtain 
permits for new major sources is imposed by the CAA. This proposed 
rule, if made final, would interpret those requirements as they apply 
to the oil and natural gas sector. Thus, Executive Order 13132 does not 
apply to these proposed regulation revisions.
    In the spirit of Executive Order 13132 and consistent with the EPA 
policy to promote communications between the EPA and state and local 
governments, the EPA specifically solicits comments on this proposed 
action from state and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications as specified in 
Executive Order 13175. It would not have a substantial direct effect on 
one or more Indian tribes, since no tribe has developed a TIP that 
allows it to issue NSR permits. Furthermore, these proposed regulation 
revisions do not affect the relationship or distribution of power and 
responsibilities between the federal government and Indian tribes. The 
CAA and the Tribal Air Rule establish the relationship of the federal 
government and tribes in developing plans to implement NSR permitting, 
and this proposal does nothing to modify that relationship. Thus, 
Executive Order 13175 does not apply to this action.
    The EPA has concluded that this action will not have tribal 
implications because it doesn't impose a significant cost to tribal 
governments. However, there are significant tribal interests because of 
the growth of the oil and gas production industry in Indian country. 
Although Executive Order 13175 does not apply to this action, the EPA 
has offered consultation to tribal officials in developing this action. 
Meeting summaries will be included in the docket for this rulemaking.
    The EPA specifically solicits additional comment on this proposed 
action from tribal officials.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    The EPA interprets EO 13045 as applying only to those regulatory 
actions that concern environmental health or safety risks that the EPA 
has reason to believe may disproportionately affect children. This 
action is not subject to EO 13045 because it is not intended to 
establish an environmental standard intended to mitigate health or 
safety risks. The proposal requests comments on the appropriate 
definition of a source as it applies to one source category for 
purposes of permitting under the requirements of the CAA.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This proposed action is not a ``significant energy action'' because 
it is not likely to have a significant adverse effect on the supply, 
distribution or use of energy. We believe this action is not likely to 
have any adverse energy effects because it will not increase, and may 
decrease, the permitting burden on owners and operators of sources in 
the oil and natural gas sector.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 
note) directs the EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures and business practices) that are developed or 
adopted by voluntary consensus standards bodies. NTTAA directs the EPA 
to provide Congress, through OMB, explanations when the agency decides 
not to use available and applicable voluntary consensus standards.
    This proposed rulemaking does not involve technical standards. 
Therefore, the EPA is not considering the use of any voluntary 
consensus standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    The EPA believes the human health or environmental risk addressed 
by this proposed action will not have disproportionately high and 
adverse human health or environmental effects on minority, low-income 
populations or indigenous populations. The proposal requests comment on 
the appropriate definition of the source as it applies to one industry 
category for purposes of

[[Page 56590]]

permitting under the CAA. As such, it does not adversely affect the 
health or safety of minority or low-income populations. The results of 
this evaluation are contained in Section IV of this preamble.

K. Determination Under Section 307(d)

    Pursuant to sections 307(d)(1)(J) and 307(d)(1)(V) of the CAA, the 
Administrator determines that this action is subject to the provisions 
of section 307(d). Under section 307(d)(1)(J), the provisions of 
section 307(d) apply to revisions to regulations relating to PSD. Under 
section 307(d)(1)(V), the provisions of section 307(d) apply to ``such 
other actions as the Administrator may determine.''

Statutory Authority

    The statutory authority for this action is provided by sections 
101; 111; 114; 116, 160-165, 169, 173, 301, 302, 501 and 502 of the 
CAA, as amended (42 U.S.C. 7401; 42 U.S.C. 7411; 42 U.S.C. 7414; 42 
U.S.C. 7416; 7470-7475, 7479, 7503, 7601, 7602, 7661, and 7662.

List of Subjects

40 CFR Part 51

    Environmental protection, Air pollution control, Construction 
permit, Intergovernmental relations, Major source, Oil and gas.

40 CFR Part 52

    Environmental protection, Air pollution control, Construction 
permit, Incorporation by reference, Intergovernmental relations, Major 
source, Oil and gas.

40 CFR Part 70

    Environmental protection, Air pollution control, Intergovernmental 
relations, Major source, Oil and gas, Operating permit.

40 CFR Part 71

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Intergovernmental relations, Major source, 
Operating permit.

    Dated: August 18, 2015.
Gina McCarthy,
Administrator.
    For the reasons stated in the preamble, Title 40, Chapter I of the 
Code of Federal Regulations is proposed to be amended as follows:

PART 51--REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF 
IMPLEMENTATION PLANS

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

0
2. In Sec.  51.165, revise paragraph (a)(1)(ii) to read as follows:


Sec.  51.165  Permit requirements.

    (a) * * *
    (1) * * *

 [PROPOSED REGULATORY TEXT FOR OPTION 1]

    (ii) (A) Building, structure, facility, or installation means all 
of the pollutant-emitting activities which belong to the same 
industrial grouping, are located on one or more contiguous or adjacent 
properties, and are under the control of the same person (or persons 
under common control). Pollutant emitting activities shall be 
considered as part of the same industrial grouping if they belong to 
the same Major Group (i.e., which have the same two-digit code) as 
described in the Standard Industrial Classification Manual, 1972, as 
amended by the 1977 Supplement (U.S. Government Printing Office stock 
numbers 4101-0065 and 003-005-00176-0, respectively).
    (B) Notwithstanding the provisions of paragraph (a)(1)(ii)(A) of 
this section, building, structure, facility, or installation means, for 
onshore activities under SIC Major Group 13: Oil and Gas Extraction, 
all of the pollutant-emitting activities included in Major Group 13 
that are located on one or more contiguous or adjacent properties, and 
are under the control of the same person (or persons under common 
control). Pollutant emitting activities shall be considered adjacent if 
they are located on the same surface site, or on surface sites that are 
located within \1/4\ mile of one another, where a surface site has the 
same meaning as in 40 CFR 63.761.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

    (ii) (A) Building, structure, facility, or installation means all 
of the pollutant-emitting activities which belong to the same 
industrial grouping, are located on one or more contiguous or adjacent 
properties, and are under the control of the same person (or persons 
under common control). Pollutant emitting activities shall be 
considered as part of the same industrial grouping if they belong to 
the same Major Group (i.e., which have the same two-digit code) as 
described in the Standard Industrial Classification Manual, 1972, as 
amended by the 1977 Supplement (U.S. Government Printing Office stock 
numbers 4101-0065 and 003-005-00176-0, respectively).
    (B) Notwithstanding the provisions of paragraph (a)(1)(ii)(A) of 
this section, building, structure, facility, or installation means, for 
onshore activities in SIC Major Group 13: Oil and Gas Extraction, all 
of the pollutant-emitting activities included in Major Group 13, are 
located on one or more contiguous or adjacent properties, and are under 
the control of the same person (or persons under common control). 
Pollutant-emitting activities shall be considered adjacent if one of 
the following circumstances apply:
    (1) The pollutant-emitting activities are separated by a distance 
of \1/4\ mile or more and there is an exclusive functional 
interrelatedness; or
    (2) The pollutant-emitting activities are separated by a distance 
of less than \1/4\ mile.
* * * * *
0
3. In Sec.  51.166, revise paragraph (b)(6) to read as follows:


Sec.  51.166  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *

 [PROPOSED REGULATORY TEXT FOR OPTION 1]

    (6)(i) Building, structure, facility, or installation means all of 
the pollutant-emitting activities which belong to the same industrial 
grouping, are located on one or more contiguous or adjacent properties, 
and are under the control of the same person (or persons under common 
control) except the activities of any vessel. Pollutant-emitting 
activities shall be considered as part of the same industrial grouping 
if they belong to the same Major Group (i.e., which have the same two-
digit code) as described in the Standard Industrial Classification 
Manual, 1972, as amended by the 1977 Supplement (U.S. Government 
Printing Office stock numbers 4101-0066 and 003-005-00176-0, 
respectively).
    (ii) Notwithstanding the provisions of paragraph (b)(6)(i) of this 
section, building, structure, facility, or installation means, for 
onshore activities under SIC Major Group 13: Oil and Gas Extraction, 
all of the pollutant-emitting activities included in Major Group 13 
that are located on one or more contiguous or adjacent properties, and 
are under the control of the same person (or persons under common 
control). Pollutant emitting activities shall be considered adjacent if 
they are

[[Page 56591]]

located on the same surface site, or on surface sites that are located 
within \1/4\ mile of one another, where a surface site has the same 
meaning as in 40 CFR 63.761.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

    (6)(i) Building, structure, facility, or installation means all of 
the pollutant-emitting activities which belong to the same industrial 
grouping, are located on one or more contiguous or adjacent properties, 
and are under the control of the same person (or persons under common 
control) except the activities of any vessel. Pollutant-emitting 
activities shall be considered as part of the same industrial grouping 
if they belong to the same Major Group (i.e., which have the same two-
digit code) as described in the Standard Industrial Classification 
Manual, 1972, as amended by the 1977 Supplement (U.S. Government 
Printing Office stock numbers 4101-0066 and 003-005-00176-0, 
respectively).
    (ii) Notwithstanding the provisions of paragraph (b)(6)(i) of this 
section, building, structure, facility, or installation means, for 
onshore activities in SIC Major Group 13: Oil and Gas Extraction, all 
of the pollutant-emitting activities included in Major Group 13, are 
located on one or more contiguous or adjacent properties, and are under 
the control of the same person (or persons under common control). 
Pollutant-emitting activities shall be considered adjacent if one of 
the following circumstances apply:
    (A) The pollutant-emitting activities are separated by a distance 
of \1/4\ mile or more and there is an exclusive functional 
interrelatedness; or
    (B) The pollutant-emitting activities are separated by a distance 
of less than \1/4\ mile.
* * * * *
0
4. In appendix S to part 51, revise section A.2. to read as follows:

APPENDIX S TO PART 51--EMISSION OFFSET INTERPRETATIVE RULING

* * * * *

II. Initial Screening Analyses and Determination of Applicable 
Requirements

    A. * * *

[PROPOSED REGULATORY TEXT FOR OPTION 1]

    2. (i) Building, structure, facility or installation means all 
of the pollutant-emitting activities which belong to the same 
industrial grouping, are located on one or more contiguous or 
adjacent properties, and are under the control of the same person 
(or persons under common control) except the activities of any 
vessel. Pollutant-emitting activities shall be considered as part of 
the same industrial grouping if they belong to the same ``Major 
Group'' (i.e., which have the same two digit code) as described in 
the Standard Industrial Classification Manual, 1972, as amended by 
the 1977 Supplement (U.S. Government Printing Office stock numbers 
4101-0066 and 003-005-00176-0, respectively).
    (ii) Notwithstanding the provisions of paragraph II.2.(i) of 
this appendix, building, structure, facility or installation means, 
for onshore activities under SIC Major Group 13: Oil and Gas 
Extraction, all of the pollutant-emitting activities included in 
Major Group 13 that are located on one or more contiguous or 
adjacent properties, and are under the control of the same person 
(or persons under common control). Pollutant emitting activities 
shall be considered adjacent if they are located on the same surface 
site, or on surface sites that are located within \1/4\ mile of one 
another, where a surface site has the same meaning as in 40 CFR 
63.761.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

    2. (i) Building, structure, facility or installation means all 
of the pollutant-emitting activities which belong to the same 
industrial grouping, are located on one or more contiguous or 
adjacent properties, and are under the control of the same person 
(or persons under common control) except the activities of any 
vessel. Pollutant-emitting activities shall be considered as part of 
the same industrial grouping if they belong to the same ``Major 
Group'' (i.e., which have the same two digit code) as described in 
the Standard Industrial Classification Manual, 1972, as amended by 
the 1977 Supplement (U.S. Government Printing Office stock numbers 
4101-0066 and 003-005-00176-0, respectively).
    (ii) Notwithstanding the provisions of paragraph II.2.(i) of 
this appendix, building, structure, facility or installation means, 
for onshore activities in SIC Major Group 13: Oil and Gas 
Extraction, all of the pollutant-emitting activities included in 
Major Group 13, are located on one or more contiguous or adjacent 
properties, and are under the control of the same person (or persons 
under common control). Pollutant-emitting activities shall be 
considered adjacent if one of the following circumstances apply:
    (A) The pollutant-emitting activities are separated by a 
distance of \1/4\ mile or more and there is an exclusive functional 
interrelatedness; or
    (B) The pollutant-emitting activities are separated by a 
distance of less than \1/4\ mile.
* * * * *

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
5. The authority citation for part 52 continues to read as follows:

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

0
6. In Sec.  52.21, revise paragraph (b)(6) to read as follows:


Sec.  52.21  Prevention of significant deterioration of air quality.

* * * * *
    (b)* * *

[PROPOSED REGULATORY TEXT FOR OPTION 1]

    (6)(i) Building, structure, facility, or installation means all of 
the pollutant-emitting activities which belong to the same industrial 
grouping, are located on one or more contiguous or adjacent properties, 
and are under the control of the same person (or persons under common 
control) except the activities of any vessel. Pollutant-emitting 
activities shall be considered as part of the same industrial grouping 
if they belong to the same ``Major Group'' (i.e., which have the same 
first two digit code) as described in the Standard Industrial 
Classification Manual, 1972, as amended by the 1977 Supplement (U.S. 
Government Printing Office stock numbers 4101-0066 and 003-005-00716-0, 
respectively.
    (ii) Notwithstanding the provisions of paragraph (b)(6)(i) of this 
section, building, structure, facility, or installation means, for 
onshore activities under SIC Major Group 13: Oil and Gas Extraction, 
all of the pollutant-emitting activities included in Major Group 13 
that are located on one or more contiguous or adjacent properties, and 
are under the control of the same person (or persons under common 
control). Pollutant emitting activities shall be considered adjacent if 
they are located on the same surface site, or on surface sites that are 
located within \1/4\ mile of one another, where a surface site has the 
same meaning as in 40 CFR 63.761.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

    (6)(i) Building, structure, facility, or installation means all of 
the pollutant-emitting activities which belong to the same industrial 
grouping, are located on one or more contiguous or adjacent properties, 
and are under the control of the same person (or persons under common 
control) except the activities of any vessel. Pollutant-emitting 
activities shall be considered as part of the same industrial grouping 
if they belong to the same ``Major Group'' (i.e., which have the same 
first two digit code) as described in the Standard Industrial 
Classification Manual, 1972, as amended by the 1977 Supplement (U.S. 
Government Printing Office stock numbers 4101-0066 and 003-005-00716-0, 
respectively.
    (ii) Notwithstanding the provisions of paragraph (b)(6)(i) of this 
section, building, structure, facility, or installation means, for 
onshore activities in SIC Major Group 13: Oil and Gas Extraction, all 
of the pollutant-

[[Page 56592]]

emitting activities included in Major Group 13, are located on one or 
more contiguous or adjacent properties, and are under the control of 
the same person (or persons under common control). Pollutant-emitting 
activities shall be considered adjacent if one of the following 
circumstances apply:
    (A) The pollutant-emitting activities are separated by a distance 
of \1/4\ mile or more and there is an exclusive functional 
interrelatedness; or
    (B) The pollutant-emitting activities are separated by a distance 
of less than \1/4\ mile.
* * * * *

PART 70--STATE OPERATING PERMIT PROGRAMS

0
7. The authority citation for part 70 continues to read as follows:

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

0
8. In Sec.  70.2, revise the undesignated text of the definition for 
``Major source'' to read as follows:


Sec.  70.2  Definitions.

 [PROPOSED REGULATORY TEXT FOR OPTION 1]

* * * * *
    Major source means any stationary source (or any group of 
stationary sources that are located on one or more continuous or 
adjacent properties, and are under common control of the same person 
(or persons under common control)) belonging to a single major 
industrial grouping and that are described in paragraph (1), (2), or 
(3) of this definition. For the purposes of defining ``major source,'' 
a stationary source or group of stationary sources shall be considered 
part of a single industrial grouping if all of the pollutant emitting 
activities at such source or group of sources on contiguous or adjacent 
properties belong to the same Major Group (i.e., all have the same two-
digit code) as described in the Standard Industrial Classification 
Manual, 1987. For onshore activities belonging to SIC Major Group 13: 
Oil and Gas Extraction, pollutant emitting activities shall be 
considered adjacent if they are located on the same surface site, or 
are on surface sites that are located within \1/4\ mile of one another, 
where a surface site has the same meaning as in 40 CFR 63.761.
* * * * *
0
9. In Sec.  70.2, revise the undesignated text, and paragraphs 1 and 2 
of the definition for ``Major source'' to read as follows:


Sec.  70.2  Definitions.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

* * * * *
    Major source means any stationary source (or any group of 
stationary sources that are located on one or more continuous or 
adjacent properties, and are under common control of the same person 
(or persons under common control)) belonging to a single major 
industrial grouping and that are described in paragraph (1), (2), or 
(3) of this definition. For the purposes of defining ``major source,'' 
a stationary source or group of stationary sources shall be considered 
part of a single industrial grouping if all of the pollutant emitting 
activities at such source or group of sources on contiguous or adjacent 
properties belong to the same Major Group (i.e., all have the same two-
digit code) as described in the Standard Industrial Classification 
Manual, 1987. For onshore activities belonging to SIC Major Group 13: 
Oil and Gas Extraction, pollutant emitting activities shall be 
considered adjacent if one of the following circumstances apply:
    (1) The pollutant-emitting activities are separated by a distance 
of \1/4\ mile or more and there is an exclusive functional 
interrelatedness; or
    (2) The pollutant-emitting activities are separated by a distance 
of less than \1/4\ mile.
* * * * *

PART 71--FEDERAL OPERATING PERMIT PROGRAMS

0
10. The authority citation for part 71 continues to read as follows:

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

Subpart A--Operating Permits

0
11. In Sec.  71.2, revise the undesignated text of the definition for 
``Major sources'' to read as follows:


Sec.  71.2  Definitions.

[PROPOSED REGULATORY TEXT FOR OPTION 1]

* * * * *
    Major source means any stationary source (or any group of 
stationary sources that are located on one or more contiguous or 
adjacent properties, and are under common control of the same person 
(or persons under common control)), belonging to a single major 
industrial grouping and that are described in paragraph (1), (2), or 
(3) of this definition. For the purposes of defining ``major source,'' 
a stationary source or group of stationary sources shall be considered 
part of a single industrial grouping if all of the pollutant emitting 
activities at such source or group of sources on contiguous or adjacent 
properties belong to the same Major Group (i.e., all have the same two-
digit code) as described in the Standard Industrial Classification 
Manual, 1987. For onshore activities belonging to SIC Major Group 13: 
Oil and Gas Extraction, pollutant emitting activities shall be 
considered adjacent if they are located on the same surface site, or 
are on surface sites that are located within \1/4\ mile of one another, 
where a surface site has the same meaning as in 40 CFR 63.761.
* * * * *
0
12. In Sec.  71.2, revise the undesignated text, and paragraphs 1 and 2 
of the definition for ``Major sources'' to read as follows:


Sec.  71.2  Definitions.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

* * * * *
    Major source means any stationary source (or any group of 
stationary sources that are located on one or more contiguous or 
adjacent properties, and are under common control of the same person 
(or persons under common control)), belonging to a single major 
industrial grouping and that are described in paragraph (1), (2), or 
(3) of this definition. For the purposes of defining ``major source,'' 
a stationary source or group of stationary sources shall be considered 
part of a single industrial grouping if all of the pollutant emitting 
activities at such source or group of sources on contiguous or adjacent 
properties belong to the same Major Group (i.e., all have the same two-
digit code) as described in the Standard Industrial Classification 
Manual, 1987. For onshore activities belonging to SIC Major Group 13: 
Oil and Gas Extraction, pollutant emitting activities shall be 
considered adjacent if one of the following circumstances apply:
    (1) The pollutant-emitting activities are separated by a distance 
of \1/4\ mile or more and there is an exclusive functional 
interrelatedness; or
    (2) The pollutant-emitting activities are separated by a distance 
of less than \1/4\ mile.
* * * * *
[FR Doc. 2015-21026 Filed 9-17-15; 8:45 am]
BILLING CODE 6560-50-P



                                                                                  Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules                                                                                     56579

                                                     ENVIRONMENTAL PROTECTION                                                 determinations for this sector. In this                                  your comment, please visit http://
                                                     AGENCY                                                                   action, the EPA is proposing two                                         www.epa.gov/dockets/comments.html
                                                                                                                              options for determining whether two or                                   for instructions. Multimedia
                                                     40 CFR Parts 49, 51, 52, et al.                                          more properties in the oil and natural                                   submissions (audio, video, etc.) must be
                                                     [EPA–HQ–OAR–2013–0685; FRL–9931–97–                                      gas sector are ‘‘adjacent’’ for purposes of                              accompanied by a written comment.
                                                     OAR]                                                                     defining the ‘‘stationary source’’ in the                                The written comment is considered the
                                                                                                                              PSD and NNSR programs, and ‘‘major                                       official comment and should include
                                                     RIN 2060–AS06                                                            source’’ for the title V program (referred                               discussion of all points you wish to
                                                                                                                              to collectively as ‘‘source’’). The                                      make. For additional submission
                                                     Source Determination for Certain
                                                                                                                              preferred option would define                                            methods, the full EPA public comment
                                                     Emission Units in the Oil and Natural
                                                                                                                              ‘‘adjacent’’ for the oil and natural gas                                 policy, and general guidance on making
                                                     Gas Sector
                                                                                                                              sector in terms of proximity. The EPA                                    effective comments, please visit http://
                                                     AGENCY:  Environmental Protection                                        is co-proposing and taking comment on                                    www.epa.gov/dockets/comments.html.
                                                     Agency (EPA).                                                            an alternative option to define                                          For additional instructions on
                                                     ACTION: Proposed rule.                                                   ‘‘adjacent’’ in terms of proximity or                                    submitting comments, go to the
                                                                                                                              functional interrelatedness.                                             SUPPLEMENTARY INFORMATION section of
                                                     SUMMARY:    The U.S. Environmental                                       DATES: Comments. Comments must be                                        this document.
                                                     Protection Agency (EPA) is proposing to                                  received on or before November 17,                                       FOR FURTHER INFORMATION CONTACT: For
                                                     clarify the term ‘‘adjacent’’ in the                                     2015.                                                                    further general information on this
                                                     definitions of: ‘‘building, structure,                                                                                                            rulemaking, contact Ms. Cheryl Vetter,
                                                                                                                                 Public Hearing. The EPA will hold
                                                     facility or installation’’ used to                                                                                                                Office of Air Quality Planning and
                                                                                                                              public hearings on the proposal. Details
                                                     determine the ‘‘stationary source’’ for                                                                                                           Standards (C504–03), U.S.
                                                                                                                              will be announced in a separate
                                                     purposes of the Prevention of                                                                                                                     Environmental Protection Agency, by
                                                                                                                              document.
                                                     Significant Deterioration (PSD) and                                                                                                               phone at (919) 541-4391, or by email at
                                                     Nonattainment New Source Review                                          ADDRESSES:   Comments. Submit your                                       vetter.cheryl@epa.gov.
                                                     (NNSR) programs and ‘‘major source’’ in                                  comments, identified by Docket ID No.
                                                                                                                                                                                                       SUPPLEMENTARY INFORMATION:
                                                     the title V program as applied to the oil                                EPA–HQ–OAR–2013–0685, to the
                                                     and natural gas sector. The EPA has                                      Federal eRulemaking Portal: http://                                      I. General Information
                                                     previously issued guidance on how to                                     www.regulations.gov. Follow the online
                                                     assess ‘‘adjacency’’ for this industry, but                              instructions for submitting comments.                                    A. Does this proposal apply to me?
                                                     the use of the guidance has been                                         Once submitted, comments cannot be                                         Entities potentially affected directly
                                                     challenged, resulting in uncertainty for                                 edited or withdrawn. The EPA may                                         by this proposal include owners and
                                                     the regulated community and for                                          publish any comment received to its                                      operators of sources of new and
                                                     permitting authorities. The EPA is                                       public docket. Do not submit                                             modified oil and gas sector operations.
                                                     proposing to clarify how properties in                                   electronically any information you                                       Such entities are expected to be in the
                                                     the oil and natural gas sector are                                       consider to be Confidential Business                                     groups indicated below. In addition,
                                                     determined to be adjacent in order to                                    Information (CBI) or other information                                   state, local and tribal governments may
                                                     assist permitting authorities and permit                                 whose disclosure is restricted by statute.                               be affected by the rule if they update
                                                     applicants in making consistent source                                   If you need to include CBI as part of                                    state rules to adopt these changes.

                                                                                                                                    Industry group                                                                                              NAICS Code1

                                                     Oil and Gas Extraction ..............................................................................................................................................................   21111.
                                                     Crude Petroleum and Natural Gas Extraction ..........................................................................................................................                   211111.
                                                     Natural Gas Liquid Extraction ...................................................................................................................................................       211112.
                                                     Drilling Oil and Gas Wells .........................................................................................................................................................    213111.
                                                     Support Activities for Oil and Gas .............................................................................................................................................        213112.
                                                     Natural Gas Distribution ............................................................................................................................................................   221210.
                                                     Pipeline Distribution of Crude Oil ..............................................................................................................................................       486110.
                                                     Pipeline Distribution of Natural Gas ..........................................................................................................................................         486210.
                                                     Federal Government ..................................................................................................................................................................   May Be Affected.
                                                     State/Local/Tribal Government ..................................................................................................................................................        May Be Affected.



                                                     B. What should I consider as I prepare                                   Code of Federal Regulations (CFR) part                                      • Provide specific examples to
                                                     my comments for the EPA?                                                 or section number.                                                       illustrate your concerns, and suggest
                                                                                                                                 • Explain why you agree or disagree;                                  alternatives.
                                                       When submitting comments,
                                                     remember to:
                                                                                                                              suggest alternatives and substitute                                         • Explain your views as clearly as
                                                                                                                              language for your requested changes.                                     possible, avoiding the use of profanity
                                                       • Identify the rulemaking by docket                                       • Describe any assumptions and                                        or personal threats.
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                                                     number and other identifying                                             provide any technical information and/
                                                     information (subject heading, Federal                                                                                                                • Make sure to submit your
                                                                                                                              or data that you used.
                                                     Register date and page number).                                                                                                                   comments by the comment period
                                                                                                                                 • If you estimate potential costs or                                  deadline identified.
                                                       • Follow directions—The agency may                                     burdens, explain how you arrived at
                                                     ask you to respond to specific questions                                 your estimate in sufficient detail to
                                                     or organize comments by referencing a                                    allow for it to be reproduced.


                                                       1 North American Industry Classification System

                                                     (NAICS).


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                                                     56580                 Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules

                                                     C. Where can I get a copy of this                         J. Executive Order 12898: Federal Actions                ‘‘minor’’ new source permitting
                                                     document and other related                                   To Address Environmental Justice in                   program. The EPA implements a minor
                                                     information?                                                 Minority Populations and Low-Income                   source permitting program in all
                                                                                                                  Populations
                                                       In addition to being available in the                                                                            reservation areas of Indian country,
                                                                                                               K. Determination Under Section 307(d)
                                                     docket, an electronic copy of this action                 Statutory Authority                                      unless a tribe has developed a TIP and
                                                     will be posted at http://www.epa.gov/                                                                              in any non-reservation areas of Indian
                                                                                                             II. Statutory, Regulatory and Policy                       country for which a tribe, or the EPA
                                                     airquality/oilandgas/actions.html.
                                                                                                             Background for Proposal                                    acting in the tribe’s place, has
                                                     D. How is this document organized?                      A. Statutory and Regulatory Background                     demonstrated that the tribe has
                                                       The information presented in this                                                                                jurisdiction.
                                                                                                                The major New Source Review (NSR)                          The NSR program applies to new and
                                                     document is organized as follows:                       programs found in parts C and D of Title                   modified stationary sources of
                                                     I. General Information                                  I of the Clean Air Act (CAA or Act) are                    emissions. The CAA generally defines
                                                        A. Does this proposal apply to me?                   preconstruction review and permitting
                                                        B. What should I consider as I prepare my
                                                                                                                                                                        the term ‘‘stationary source’’ as ‘‘any
                                                                                                             programs that apply to new and                             source of an air pollutant’’ except those
                                                           comments for the EPA?
                                                                                                             modified major stationary sources of air                   emissions from certain mobile sources
                                                        C. Where can I get a copy of this document
                                                           and other related information?                    pollutants subject to regulation under                     or engines under CAA section 216 [CAA
                                                        D. How is this document organized?                   the Act. In areas where air quality does                   section 302(z)]. The Act also defines
                                                     II. Statutory, Regulatory and Policy                    not meet the primary or secondary                          some other terms that form the basis of
                                                           Background for Proposal                           National Ambient Air Quality Standards                     specific NSR programs. So, for example,
                                                        A. Statutory and Regulatory Background               (NAAQS) for a given pollutant and in                       the PSD program requires a
                                                        B. How has the EPA applied the statutory             the ozone transport region (OTR), which                    preconstruction permit for any ‘‘major
                                                           and regulatory definitions?                       includes states in the Northeast and                       emitting facility’’ constructed after a
                                                        C. Oil and Natural Gas Sector                        Mid-Atlantic regions, the program is
                                                        D. What are the air emissions resulting
                                                                                                                                                                        particular date [CAA section 164(a)],
                                                                                                             implemented under part D of title I of                     and defines a ‘‘major emitting facility’’
                                                           from the oil and natural gas sector?
                                                        E. How does the EPA regulate air emissions           the Act. This is called the                                as a ‘‘stationary source’’ emitting or with
                                                           from the oil and natural gas sector?              ‘‘nonattainment’’ NSR (NNSR) program.                      the potential to emit more than a certain
                                                        F. How has the EPA defined the source for            In areas that meet the NAAQS, or                           amount of air pollutants [CAA section
                                                           the oil and natural gas sector previously?        ‘‘attainment’’ areas, or where we 2                        169(1)].
                                                        G. What approaches has the EPA taken                 cannot determine whether those                                Adhering to the statutory language in
                                                           recently regarding implementation of              standards are met, or ‘‘unclassifiable’’                   CAA section 111(a)(3), we have defined
                                                           NSR and title V permitting for oil and            areas, the requirements under part C of                    the term ‘‘stationary source’’ to mean
                                                           natural gas sector sources?                       title I of the Act apply. This program is                  ‘‘any building, structure, facility, or
                                                        H. What is the purpose of this proposed
                                                                                                             called the PSD program. The regulations                    installation which emits or may emit a
                                                           action?
                                                        I. Policy Discussion                                 for these two NSR programs are found                       regulated NSR pollutant’’ [40 CFR
                                                        J. Why is the EPA proposing this action at           in 40 CFR 51.165, 51.166, 52.21, 52.24                     52.21(b)(5); 40 CFR 51.165(a)(1)(i); 40
                                                           this time?                                        and part 51, appendix S.                                   CFR 51.166(b)(5)]. We have then further
                                                        K. What is the effect of this proposed                  The NSR permitting programs are                         defined the four statutory terms
                                                           rulemaking on other industries?                   primarily implemented by state and                         ‘‘building, structure, facility, or
                                                        L. What is the effect of this proposed               local permitting authorities either                        installation’’ collectively in our NSR
                                                           rulemaking on permitting authorities?             through programs in their approved                         regulations to mean ‘‘all of the
                                                     III. What are the options that the EPA is               State Implementation Plans (SIPs) or                       pollutant-emitting activities which
                                                           considering?                                      through delegation of the federal                          belong to the same industrial grouping,
                                                        A. Define Source Based on Proximity
                                                                                                             program by the EPA. The EPA                                are located on one or more contiguous
                                                           (Similar to the NESHAP)
                                                        B. Define Source To Include Exclusively              implements the federal PSD program                         or adjacent properties, and are under the
                                                           Functionally Interrelated Equipment               and the NNSR program directly in                           control of the same person (or persons
                                                        C. Impacts of the Options on Air Permitting          reservation areas of Indian country and                    under common control),’’ where the
                                                        D. Proposal is Limited to Onshore Oil and            non-reservation areas of Indian country                    ‘‘same industrial grouping’’ refers to the
                                                           Gas Operations                                    over which a tribe or the EPA has                          two-digit Standard Industrial
                                                     IV. Environmental Justice Considerations                demonstrated that a tribe has                              Classification code [40 CFR 52.21(b)(6);
                                                     V. Statutory and Executive Order Reviews                jurisdiction, unless a tribe has                           40 CFR 51.165(a)(1)(ii); 40 CFR
                                                        A. Executive Order 12866: Regulatory                 developed a Tribal Implementation Plan                     51.166(b)(6)].3 These three regulatory
                                                           Planning and Review and Executive                                                                            factors: (1) Same industrial grouping; (2)
                                                                                                             (TIP). The EPA may also implement the
                                                           Order 13563: Improving Regulation and
                                                                                                             federal PSD program directly in areas                      location on contiguous or adjacent
                                                           Regulatory Review
                                                        B. Paperwork Reduction Act                           where the state or local area has not                      properties; and (3) under the control of
                                                        C. Regulatory Flexibility Act                        developed a SIP-approved program or                        the same person or persons must be
                                                        D. Unfunded Mandates Reform Act                      has not requested delegation of the                        evaluated on a case-by-case basis for
                                                        E. Executive Order 13132: Federalism                 program by the EPA. States are also                        each permitting decision.
                                                        F. Executive Order 13175: Consultation               required to have legally enforceable                          In addition to the pre-construction
                                                           and Coordination With Indian Tribal               procedures that will allow them to                         permitting requirements of the NSR
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                                                           Governments                                       prevent the construction or modification
                                                        G. Executive Order 13045: Protection of                                                                           3 The four-digit SIC code was the only code
                                                                                                             of a source that will interfere with
                                                           Children From Environmental Health                                                                           system in use at the time our rules were developed.
                                                           and Safety Risks                                  attainment or maintenance of a NAAQS.                      This classification system has since been replaced
                                                        H. Executive Order 13211: Actions                    In addition to the major source                            by the six-digit NAICS, which was developed with
                                                           Concerning Regulations That                       permitting programs, this is typically                     Canada and Mexico, and is used for classifying
                                                                                                                                                                        North American businesses. While the SIC codes
                                                           Significantly Affect Energy Supply,               accomplished through a state or local                      are no longer updated, the United States
                                                           Distribution, or Use                                                                                         Department of Labor’s Occupational Safety and
                                                        I. National Technology Transfer and                    2 In this preamble, the term ‘‘we’’ and ‘‘our’’ refers   Health Administration still maintains the list of SIC
                                                           Advancement Act                                   to the EPA.                                                codes for reference.



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                                                                           Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules                                                56581

                                                     program, title V of the CAA also                        Costle, 636 F. 2d 323, 397 (D.C. Cir.                 separately’’ (45 FR 52695, August 7,
                                                     requires a ‘‘major source’’ to obtain an                1979). Examples of the case-by-case                   1980).
                                                     operating permit, known as a title V                    determinations made by the EPA, or by                    Even though our regulations use the
                                                     permit [CAA section 501(2); CAA 502].                   permitting authorities with the EPA’s                 term ‘‘adjacent,’’ they do not define
                                                     The title V definition of major source                  input, applying these principles over                 ‘‘adjacent.’’ Similarly, even though the
                                                     refers to the definitions in other sections             several decades of NSR permitting are                 EPA’s historic interpretation is that
                                                     of the Act, including the definition of                 available at http://www.epa.gov/                      ‘‘adjacent’’ means ‘‘nearby,’’ neither our
                                                     major source for hazardous air                          region07/air/nsr/nsrindex.htm.                        regulations nor our historic
                                                     pollutants (CAA section 112), the                          The EPA later promulgated the title V              interpretations set a specific distance
                                                     general CAA definition of major                         major source definition found at 40 CFR               that we would consider ‘‘nearby.’’ Over
                                                     stationary source (CAA section 302) and                 70.2 (57 FR 32250, July 21, 1992) and                 the years, the EPA has considered both
                                                     the definition of major stationary source               71.2 (61 FR 34202, 34210, July 1, 1996).              the distance between two or more
                                                     under the NNSR program. Each of these                   Not only were these definitions                       sources and whether they share an
                                                     programs set different numerical                        consistent with each other, but EPA was               operational dependence or functional
                                                     emissions thresholds at which                           also clear that the language and                      interrelatedness to determine whether
                                                     permitting requirements apply, which                    application of the title V definition was             they are ‘‘adjacent.’’ Even though our
                                                     then become the basis for the major                     to be consistent with the language and                regulations do not explicitly define
                                                     source determination in the title V                     application of the PSD definition                     ‘‘adjacent,’’ we have provided policy
                                                     program.                                                contained in section 52.21 (61 FR                     interpretations of ‘‘adjacency’’ over time
                                                       Our operating permit regulations                      34210, July 1, 1996). Examples of case-               in the context of individual permitting
                                                     define major source as ‘‘any stationary                 by-case source determinations made by                 actions many times because we were
                                                     source (or group of stationary sources                  the EPA, or by permitting authorities                 asked by permitting authorities to
                                                     that are located on one or more                         with the EPA’s input, that apply the title            advise them on how to define a source
                                                     contiguous or adjacent properties, and                  V definitions are available at http://                within a specific permitting action. As
                                                     are under common control of the same                    www.epa.gov/region7/air/title5/                       is the case for most permitting-related
                                                     person (or persons under common                         t5index.htm.                                          decisions, these determinations were
                                                     control)) belonging to a single major                      Reviewing both the NSR and title V                 made on a case-by-case basis,
                                                     industrial grouping . . .’’ (40 CFR 70.2,               guidance regarding source                             considering the specific facts in each
                                                     71.2). As in the NSR programs, we have                  determinations, it is clear that we have              instance. In many of these cases and as
                                                     defined industrial grouping to refer to                 used the term ‘‘contiguous or adjacent’’              explained in the examples below, we
                                                     the two-digit SIC code (40 CFR 70.2,                    to mean that the land associated with                 cited the principle of the ‘‘common
                                                     71.2). Many state and local permitting                  the source (i.e., building, structure,                sense notion of a plant’’ in making a
                                                     authorities have approved title V                       facility or installation) is connected to             determination regarding the scope of the
                                                     permitting programs that have adopted                   (i.e., contiguous) or nearby (i.e.,                   source.
                                                     similar definitions.                                    adjacent) another source. In response to                 In one example, we determined that
                                                                                                             the Alabama Power decision, the EPA                   two aluminum smelting operations
                                                     B. How has the EPA applied the                          promulgated the 1980 PSD rule,                        within the same SIC code (3334),
                                                     statutory and regulatory definitions?                   including the definitions used to                     located approximately 3.4 miles apart
                                                        Source owner/operators and                           determine the scope of the source for                 and commonly owned by Alcoa, should
                                                     permitting authorities assess the three                 permitting purposes (45 FR 52676,                     be considered a single source for
                                                     regulatory factors—same industrial                      August 7, 1980). We explained that the                purposes of NSR applicability. Alcoa
                                                     grouping, location on contiguous or                     3-part test (same industrial grouping,                requested confirmation of this single
                                                     adjacent property, and under common                     location on contiguous or adjacent                    source determination after it purchased
                                                     control—on a case-by-case basis to                      property, and under common control)                   one of the plants from another company,
                                                     determine which pollutant-emitting                      would comply with the court decision                  allowing both operations to share
                                                     activities should be included as part of                by reasonably comporting with the                     common control and management as
                                                     a single source when determining                        purposes of the PSD program,                          well as a single SIC code. The EPA
                                                     applicability of the NSR and title V                    approximating the common sense                        determined that the two operations
                                                     permitting requirements. In the original                notion of a plant, and avoiding                       should be considered adjacent because
                                                     promulgation and later application of                   aggregating pollutant-emitting activities             of the shared materials and personnel
                                                     these three factors, we have been                       that would not fit within the ordinary                and the company’s assertion that the
                                                     mindful of the direction the D.C. Circuit               meaning of building, structure, facility              two plants would be operated as one
                                                     Court of Appeals provided that the                      or installation (45 FR at 52694, August               facility.4
                                                     ‘‘source’’ for permitting purposes should               7, 1980). In so doing, we considered but                 In one case specific to the oil and
                                                     comport with the ‘‘common sense                         chose not to add a fourth factor or                   natural gas sector, the EPA determined,
                                                     notion of a plant’’ (45 FR 52694, August                ‘‘functional interrelationship’’ test to the          in a letter issued by EPA Region 5 to
                                                     7, 1980 citing Alabama Power v. Costle).                criteria for defining a source, as at that            Summit Petroleum Corporation, that an
                                                     In the Alabama Power decision, the                      time, we believed that such a test would              oil and gas sweetening plant and
                                                     Court said that EPA cannot treat                        ‘‘embroil[] the Agency in numerous                    approximately 100 oil and gas wells
                                                     contiguous and commonly owned units                     fine-grained analyses’’ (45 FR 52695,                 located within the boundaries of the
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                                                     as a single source unless they ‘‘fit within             August 7, 1980). In the same                          Saginaw Chippewa Band’s Isabella
                                                     the four statutory terms . . .’’ (i.e., the             rulemaking, we said that we did not                   Reservation in Michigan were a single
                                                     terms building, structure, facility and                 intend ‘‘source’’ to include activities
                                                     installation). The Court said that we                   that are many miles apart along                         4 Riva, Steven C. ‘‘Alcoa Messena Modernization

                                                     should ‘‘. . . provide for the                          something like a pipeline or                          Project and Request for a Single Source
                                                     aggregation, where appropriate, of                      transmission line as a single source, but             Determination.’’ March 9, 2009. EPA Region 7 Air
                                                                                                                                                                   Program New Source Review Program Policy &
                                                     industrial activities according to                      also noted that we were ‘‘unable to say               Guidance Index available at http://www.epa.gov/
                                                     considerations such as proximity and                    precisely at this point how far apart                 region07/air/nsr/nsrmemos/alcoany.pdf and in the
                                                     ownership.’’ Alabama Power Co. v.                       activities must be in order to be treated             docket for this rulemaking.



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                                                     56582                 Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules

                                                     major source for purposes of the title V                  In each of these examples, the EPA                  notice, we do not intend to apply the
                                                     operating permit program.5 The EPA                      based its opinion on an analysis of the               proposed clarification to operations that
                                                     based its decision on its evaluation that               specific facts in the individual case. We             take place offshore. Onshore production
                                                     the sweetening plant and wells share                    have not established a ‘‘bright-line’’                operations include ‘‘the wells and all
                                                     the same two-digit SIC code and are                     distance beyond which we would                        related processes used in the extraction,
                                                     under common control (Summit                            always consider operations to be                      production, recovery, lifting,
                                                     Corporation). In addition, the EPA                      separate sources. Neither have we                     stabilization, separation, or treating of
                                                     concluded that the plant and the wells                  established a distance within which we                oil and/or natural gas (including
                                                     were adjacent and, thus, a single source                would always consider operations to be                condensate). Production components
                                                     given their proximity and exclusive                     one source. We have also not                          may include, but are not limited to,
                                                     interdependence as demonstrated by the                  established that certain operations must              wells and related casing head, tubing
                                                     following facts: All of the wells are                   always (or never) be considered together              head and ‘‘Christmas tree’’ piping, as
                                                     located within an 8-mile radius of the                  for permitting purposes.                              well as pumps, compressors, heater
                                                     sweetening plant; all are connected by                                                                        treaters, separators, storage vessels,
                                                                                                             C. Oil and Natural Gas Sector
                                                     a dedicated system of pipes; and all oil                                                                      pneumatic devices and dehydrators.
                                                     and gas from the wells must be                             The United States Census Bureau’s                  Production operations also include the
                                                     processed through the sweetening plant                  North American Industry Classification                well drilling, completion and workover
                                                     before it can be marketed. That                         System (NAICS) describes the Oil and                  processes, and include all the portable
                                                     determination was later challenged and                  Gas Extraction industry (NAICS Code                   non-self-propelled apparatus associated
                                                     overturned, as will be discussed later in               2111) as including activities such as                 with those operations. Production sites
                                                     this notice.                                            ‘‘exploration for crude petroleum and                 include not only the ‘‘pads’’ where the
                                                        Finally, in another example involving                natural gas; drilling, completing, and                wells are located, but also include
                                                     the oil and natural gas sector, the EPA                 equipping wells; operation of                         standalone sites where oil, condensate,
                                                     determined that two natural gas                         separators, emulsion breakers, de-silting             produced water and gas from several
                                                     compressor stations (Florida River and                  equipment, and field gathering lines for              wells may be separated, stored and
                                                     Wolf Point) and the numerous well sites                 crude petroleum and natural gas; and all              treated. The production sector also
                                                     owned or operated by BP and located                     other activities in the preparation of oil            includes the low pressure, small
                                                     within the Northern San Juan Basin                      and gas up to the point of shipment                   diameter, gathering pipelines and
                                                     should not be considered a single                       from the producing property.’’ 7 This                 related components that collect and
                                                                                                             definition includes activities such as                transport the oil, gas and other materials
                                                     stationary source. In that situation,
                                                                                                             natural gas processing and liquids                    and wastes from the wells to the
                                                     unlike the Summit Petroleum case
                                                                                                             extraction, and sulfur recovery from                  refineries or natural gas processing
                                                     discussed previously, there was no
                                                                                                             natural gas. Pipeline transmission and                plants (76 FR 52744, August 20, 2011).
                                                     dedicated interrelationship between the
                                                                                                             distribution of oil and natural gas, and                 Natural gas processing operations are
                                                     wells and the compressor stations that
                                                                                                             storage of natural gas are included in                aimed at removing impurities and other
                                                     would indicate that they should be
                                                                                                             NAICS subsector 486 Pipeline                          by-products from the extracted gas.
                                                     treated as a single ‘‘plant.’’ Gas from the
                                                                                                             Transportation.                                       Natural gas consists primarily of
                                                     individual wells could flow to the two                     The EPA has previously described in
                                                     BP compressor stations, or other                                                                              methane. It may also contain water
                                                                                                             the preamble to its proposed New                      vapor, hydrogen sulfide (H2S), carbon
                                                     compressor stations. Gas production                     Source Performance Standard (NSPS)                    dioxide (CO2), helium, nitrogen and
                                                     from BP’s wells would not have to stop                  for the oil and natural gas sector that               other compounds. It commonly exists in
                                                     if one or both of the BP compressor                     this sector includes operations in the                mixtures with other hydrocarbons,
                                                     stations were shut down. Additionally,                  extraction and production of oil and                  referred to as natural gas liquids (NGL).
                                                     the gathering pipeline between the wells                natural gas, and the processing,                      Natural gas must be processed to
                                                     and the stations co-mingled gas from                    transmission and distribution of natural              remove these other compounds and
                                                     operators other than BP and the                         gas. For oil, we described the sector as              gases before the gas is considered
                                                     compressor stations likewise accepted                   including ‘‘all operations from the well              pipeline quality suitable for
                                                     gas from other operators. The EPA’s                     to the point of custody transfer at a                 transmission and distribution. Natural
                                                     determination that this complex,                        petroleum refinery.’’ For natural gas, we             gas processing removes and recovers the
                                                     dynamic system did not resemble a                       described it as including all operations              liquids, and non-methane gases, all or
                                                     ‘‘common sense notion of a plant’’ was                  from the well to the customer (76 FR                  some of which may be sold.
                                                     also challenged, and was settled.6                      52738, 52744, August 20, 2011).
                                                                                                                For purposes of this proposed action,              D. What are the air emissions resulting
                                                       5 Newton,   Cheryl. ‘‘Summit Petroleum                we are primarily interested in the first              from the oil and natural gas sector?
                                                     Corporation Single Source Determination.’’ October
                                                     18, 2010. EPA Region 7 Air Program New Source           two of these: Oil and natural gas                        Emissions from the oil and natural gas
                                                     Review Program Policy & Guidance Index available        production, and natural gas processing,               sector include volatile organic
                                                     at http://www.epa.gov/region07/air/nsr/nsrmemos/        or what may be referred to in the                     compounds (VOC), greenhouse gases
                                                     singler5.pdf and in the docket for this rulemaking.     industry as ‘‘upstream’’ and                          (including methane), H2S, sulfur
                                                        6 Videtich, Callie. ‘‘BP American Production
                                                                                                             ‘‘midstream’’ operations. For reasons                 dioxide (SO2), carbon monoxide (CO)
                                                     Company’s Florida River Compression Facility
                                                     Single Source Determination.’’ October 18, 2010.        that will be explained later in this                  and nitrogen oxides (NOX). VOCs,
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                                                     EPA Region 7 Air Program New Source Review                                                                    including some hazardous air pollutants
                                                     Program Policy & Guidance Index available at            petitioner are available in the docket for this       (HAP), are generally emitted during well
                                                     http://www.epa.gov/region07/air/nsr/nsrmemos/           rulemaking.
                                                     singler8.pdf and in the docket for this rulemaking.       7 U.S. Department of Commerce, United States
                                                                                                                                                                   completions, from equipment leaks and
                                                     The Environmental Appeals Board (EAB) docket for        Census Bureau, North American Industry                from storage tanks. Emissions of the
                                                     CAA Appeal No. 10–04 is available at http://            Classification System, 2012 NAICS Definition,         greenhouse gas methane may also come
                                                     yosemite.epa.gov/oa/EAB_Web_Docket.nsf/                 Sector 21—Mining, Quarrying, and Oil and Gas          from these sources while emissions of
                                                     77355bee1a56a5aa8525711400542d23/2c6cf712eac            Extraction, 21111 Oil and Gas Extraction http://
                                                     2d7b38525788b00545227!OpenDocument&High                 www.census.gov/cgi-bin/sssd/naics/
                                                                                                                                                                   the greenhouse gas CO2 come primarily
                                                     light=2,CAA,10-04. The petition for review by the       naicsrch?code=21111&search=2012 accessed 12/          from combustion sources, such as flares,
                                                     EAB, EPA Region 8’s response, and the reply by          03/2013.                                              engines and compressors. Emissions of


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                                                                           Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules                                               56583

                                                     NOX and CO are also a result of these                   technology-based standards for                        63.761). The EPA defines the facility for
                                                     combustion operations. Emissions of                     industrial source categories, and do not              purposes of the NESHAP to mean ‘‘the
                                                     sulfur compounds come from                              approach the regulation of stationary                 grouping of equipment where
                                                     production and processing operations                    sources in the same way as required for               hydrocarbon liquids are processed,
                                                     that treat ‘‘sour gas,’’ that is, natural gas           NSR permitting.                                       upgraded (i.e., remove impurities or
                                                     with an H2S content of greater than 0.25                   The definition of a major source in the            other constituents to meet contract
                                                     gr/100 scf.                                             NESHAP program is similar to, but                     specifications), or stored prior to the
                                                                                                             distinguishable from, the definition of               point of custody transfer’’ or where
                                                     E. How does the EPA regulate air                        stationary source used in the NSR
                                                     emissions from the oil and natural gas                                                                        natural gas is ‘‘processed, upgraded, or
                                                                                                             permitting programs. The NESHAP                       stored’’ prior to natural gas transmission
                                                     sector?                                                 program defines a major source as a                   and storage. For the purpose of the
                                                        In addition to the source-specific                   stationary source or a group of                       NESHAP major source determination,
                                                     permitting required by the NSR and title                stationary sources ‘‘within a contiguous              facility (including a building, structure,
                                                     V programs, air emissions from the oil                  area’’ (40 CFR 63.2). This ‘‘major                    or installation) means oil and natural
                                                     and natural gas sector are also regulated               source’’ definition differs from the                  gas production and processing
                                                     through other CAA-based rules. The                      definition of stationary source used in               equipment that is located within the
                                                     EPA first listed crude oil and natural gas              the NSR permitting programs because it                boundaries of an individual surface site
                                                     production for NSPS development in                      does not include ‘‘adjacent properties’’              as defined in the NESHAP (40 CFR
                                                     1979 (44 FR 49222, August 21, 1979).                    [e.g., 40 CFR 52.21(b)(5)]. A major                   63.761).
                                                     An NSPS, 40 CFR part 60, subpart KKK,                   source under CAA section 112 is further                  Furthermore, the EPA defines surface
                                                     was promulgated in 1985 that addressed                  defined as any stationary source or                   site as ‘‘any combination of one or more
                                                     VOC emissions from leaking                              group of stationary sources ‘‘that emits              graded pad sites, gravel pad sites,
                                                     components at onshore natural gas                       or has the potential to emit considering              foundations, platforms, or the
                                                     processing facilities (50 FR 26122, June                controls, in the aggregate 10 tons per                immediate physical location upon
                                                     24, 1985). A second NSPS, regulating                    year (tpy) or more of any HAP or 25 tpy               which equipment is physically affixed’’
                                                     SO2 emissions from natural gas                          or more of any combination of HAP.’’                  (40 CFR 63.761). The effect of these
                                                     processing plants, 40 CFR part 60,                      [CAA section 112(a)(1)]. An area source               definitions is to define the affected
                                                     subpart LLL, was promulgated in 1985                    of HAP is one that is not a major source              facility based on the emissions from
                                                     (50 FR 40158, October 1, 1985). In 2012,                of HAP.                                               equipment and activities that are in
                                                     the EPA finalized revisions to these                       When Congress revised CAA section                  close proximity to each other. The EPA
                                                     NSPS and established standards in 40                    112 in 1990, however, it included a                   stated that its intent in defining affected
                                                     CFR part 60, subpart OOOO, limiting                     specific provision discussing how oil                 facility in this way was both to comply
                                                     VOC emissions from gas wells,                           and gas wells and pipeline facilities                 with the specific language in CAA
                                                     centrifugal compressors, reciprocating                  were to be treated with respect to                    section 112(n)(4), and to reduce the
                                                     compressors, pneumatic controllers and                  regulating emissions of HAP [CAA                      burden on owners and operators in
                                                     storage vessels (77 FR 49490, August 16,                section 112(n)(4)(A)]. This section                   making source determinations. The EPA
                                                     2012). In 2013 and 2014, the EPA made                   provides that ‘‘notwithstanding’’ the                 stated at that time its belief that it was
                                                     certain amendments to the 2012 NSPS                     definitions of major source in section                not reasonable to aggregate emissions
                                                     standards in order to improve                           112, the emissions from any oil or gas                from surface sites that are located on the
                                                     implementation of the standards (78 FR                  exploration or production well (with its              same lease, but are at great distances
                                                     58416, September 23, 2013 and 79 FR                     associated equipment) and emissions                   from each other, even though they
                                                     79018, December 31, 2014). Separately,                  from any pipeline compressor or pump                  would be under common control (64 FR
                                                     the EPA is proposing to expand the                      station ‘‘shall not be aggregated with
                                                                                                                                                                   32618, June 17, 1999).
                                                     NSPS (subpart OOOO) to regulate                         emissions from other similar units’’ to
                                                     several additional categories of emitting               determine whether the units or stations               G. What approaches has the EPA taken
                                                     equipment in this sector.                               are major sources. Congress specified                 recently regarding implementation of
                                                        The EPA has also regulated emissions                 this whether the units are in a                       NSR and title V permitting for oil and
                                                     of HAP from certain oil and natural gas                 contiguous area or under common                       natural gas sector sources?
                                                     sector processes through use of National                control. In the case of any oil or gas                  As was the case with other industry
                                                     Emissions Standards for Hazardous Air                   exploration or production well (with its              categories, the EPA initially approached
                                                     Pollutants (NESHAP), specifically the                   associated equipment), such emissions                 permitting decisions in the oil and
                                                     Oil and Natural Gas Production                          ‘‘shall not be aggregated for any purpose             natural gas sector on a case-by-case
                                                     NESHAP (40 CFR part 63, subpart HH)                     under this section.’’                                 basis without any specific guidance
                                                     and Natural Gas Transmission and                           In the NESHAP for Oil and Natural                  until 2007. At that time, because of an
                                                     Storage NESHAP (40 CFR part 63,                         Gas Production Facilities, the EPA                    increase in oil and gas development,
                                                     subpart HHH). These regulations were                    defines the affected source consistent
                                                                                                                                                                   and an increase in permit activity, the
                                                     first promulgated in 1999 (64 FR 32610,                 with this requirement of the Act,
                                                                                                                                                                   EPA issued the first guidance document
                                                     June 17, 1999) and were amended in                      including which associated equipment
                                                                                                                                                                   specific to this industry. The EPA built
                                                     2012 (77 FR 49490, August 16, 2012).                    should be part of the facility, which
                                                                                                                                                                   on the idea of using the surface site, as
                                                                                                             associated equipment could potentially
                                                     F. How has the EPA defined the source                                                                         defined in 40 CFR 63.761, and the
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                                                                                                             be aggregated, and which cannot be
                                                     for the oil and natural gas sector                                                                            proximity of surface sites to each other
                                                                                                             aggregated as per CAA section
                                                     previously?                                                                                                   in permitting guidance, when it issued
                                                                                                             112(n)(4)(A) [40 CFR 63.760(b)]. The
                                                                                                                                                                   a guidance document titled ‘‘Source
                                                       As discussed in the previous section,                 EPA defines this associated equipment
                                                                                                                                                                   Determinations for Oil and Gas
                                                     selected equipment and emitting                         to include ‘‘equipment associated with
                                                                                                                                                                   Industries’’ in 2007.8 This 2007 memo is
                                                     activities involved in oil and gas                      an oil or natural gas exploration or
                                                     production are regulated under both the                 production well, and includes all                       8 Wehrum, William. ‘‘Source Determinations for
                                                     NSPS and NESHAP programs. The                           equipment from the wellbore to the                    Oil and Gas Industries.’’ January 12, 2007. EPA
                                                     NSPS and NESHAP focus on                                point of custody transfer’’ (40 CFR                                                            Continued




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                                                     56584                 Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules

                                                     relevant to our proposed action because                 decision taking into consideration the                  EPA has collected data from several
                                                     it acknowledged that source                             factors relevant to the specific case.                  permit applicants, but has not yet issued
                                                     determinations within the oil and gas                     In 2009, the EPA withdrew the 2007                    permits based on that data, due to
                                                     industry may not be as straightforward                  memo.9 In doing so, we reinstated the                   uncertainties created by court decisions
                                                     as those within other regulated                         use of the fundamental criteria for                     discussed later in this proposal.
                                                     industries. We note that even in cases                  making source determinations for the oil                   In the case of Summit Petroleum’s
                                                     that clearly meet the tests of same SIC                 and natural gas sector based on the use                 operations in Rosemont, Michigan, also
                                                     code and common control, the nature of                  of the three factors contained in our                   discussed previously, the EPA
                                                     oil and gas exploration and production                  regulations; same SIC code, common                      determined in 2010 that the company’s
                                                     operations may require a detailed                       control, and location on contiguous or                  gas sweetening facility and associated
                                                     evaluation to determine whether                         adjacent property. This fact-specific                   wells were under common control and
                                                     sources are on contiguous or adjacent                   examination is consistent with the                      in the same major industrial grouping.
                                                     properties. Production fields, even if                  EPA’s historical practice in other                      In addition, the EPA determined that
                                                     under the control of a single operator,                 industries, and is in contrast to the                   they were adjacent because of the
                                                     may cover large areas. Unlike many                      simplified approach of relying                          functional interrelatedness of the
                                                     other industries, however, the expanse                  principally on proximity that was the                   operations. The EPA determined that
                                                     of land on which these commonly-                        focus of the 2007 memorandum. From                      the source must get a title V operating
                                                     controlled operations are located is                    2009 forward, the EPA recommended                       permit.
                                                     frequently not owned or controlled by                   that permitting authorities conduct each                   Summit appealed that determination
                                                     the owner/operator of the oil and gas                   source determination based on a case-                   to the United States Court of Appeals for
                                                     activity. Instead, the producers may                    by-case evaluation of the emissions                     the Sixth Circuit, which issued a
                                                     control only the surface area that holds                activities at each building, structure,                 decision that overturned the EPA’s title
                                                     the well and associated production                      facility or installation. The 2009 memo                 V applicability determination. Summit
                                                     equipment.                                              acknowledged that proximity might                       Petroleum Corp. v. U.S. Environmental
                                                        As discussed earlier in this notice,                 well serve as the overwhelming factor in                Protection Agency, 690 F.3d 733 (6th
                                                     EPA has previously said that it would                   a permitting authority’s source                         Cir. 2012). In the decision, the Court
                                                     not consider all facilities along a                     determination decision, but the                         said that the EPA’s use of
                                                     pipeline to be one source. The 2007                     conclusion could only be justified after                interrelatedness in determining whether
                                                     memo built upon that idea to conclude                   examining all relevant factors,                         sources were ‘‘adjacent’’ is unreasonable
                                                     that, for the oil and gas production                    consistent with regulatory requirements                 and contrary to the plain meaning of the
                                                     industry, ‘‘we do not believe                           and historical practice.                                term as currently used in EPA’s
                                                     determining whether two activities are                    The EPA has had direct experience as                  regulations. The two judges in the
                                                     operationally dependent drives the                      the permitting authority in making                      majority found that the term ‘‘adjacent’’
                                                     determination as to whether two                         source determinations for onshore oil                   was unambiguous and its plain meaning
                                                     properties are contiguous or adjacent,                  and gas operations in Indian country.                   related only to physical proximity, and
                                                     because it would embroil the Agency in                  The 2010 permit for compressor stations                 thus could not include consideration of
                                                     precisely the fine-grained analysis we                  located on the Southern Ute Indian                      functional interrelatedness. The EPA
                                                     intended to avoid and would potentially                 Reservation (Florida River and Wolf                     sought rehearing of the Court’s decision,
                                                     lead to results which do not adhere to                  Point) and the Summit Petroleum                         but that request was denied.
                                                     the common sense notion of a plant.’’                   permits are two examples discussed in                      In a memorandum, EPA Headquarters
                                                     Thus, the 2007 memo acknowledged                        detail previously. In these cases, the                  then instructed its Regional Air
                                                     that permitting authorities may consider                EPA conducted a fact-specific                           Directors that the agency intended to
                                                     proximity, and not operational                          examination of the three factors in                     apply the outcome of the Sixth Circuit
                                                     dependence, as the most informative                     determining which emitting activities                   decision only in the states under the
                                                     factor in determining the scope of a                    should be included in title V permits. In               jurisdiction of the Sixth Circuit and that
                                                     source, and recommended the approach                    both of these cases, the source                         we would continue to make stationary
                                                     used in CAA section 112 and the                         determinations were challenged.                         source determinations for title V and
                                                                                                               The EPA was challenged on its source
                                                     NESHAP for Oil and Natural Gas                                                                                  PSD permitting consistent with the
                                                                                                             determinations for the Florida River
                                                     Production Facilities (the ‘‘surface site’’)                                                                    agency’s long-standing interpretations of
                                                                                                             permit by WildEarth Guardians. They
                                                     as the starting point for determining the                                                                       its regulations in the rest of the
                                                                                                             challenged the EPA’s decision not to
                                                     boundaries of the source for NSR and                                                                            country.11
                                                                                                             aggregate certain wells into a single
                                                     title V. Beyond the surface site, the                                                                              The EPA’s guidance memo to its
                                                                                                             source in the title V permit renewal.
                                                     memo recommends that permitting                                                                                 regional offices was challenged by the
                                                                                                             EPA entered into a settlement agreement
                                                     authorities consider aggregating                                                                                National Environmental Development
                                                                                                             with the petitioner and agreed to
                                                     multiple surface sites if they are in close                                                                     Association’s Clean Air Project (NEDA/
                                                                                                             undertake a ‘‘pilot’’ program to gather
                                                     proximity, i.e., physically adjacent or                                                                         CAP) in the D.C. Circuit Court of
                                                                                                             additional information ‘‘for the purpose
                                                     separated by no more than a short                       of studying, improving and streamlining
                                                     distance. However, consistent with the                                                                          America Production Company, Florida River
                                                                                                             oil and gas source determinations in                    Compression Facility, Permit No. V–SU–0022–
                                                     EPA’s overall permitting practice, the                  new or renewal Title V permits.’’ 10 The                05.00. Available at http://yosemite.epa.gov/oa/
                                                     2007 memo concluded that the decision
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                                                                                                                                                                     EAB_Web_Docket.nsf/(Filings)/
                                                     of whether a permitting authority                         9 McCarthy, Gina. ‘‘Withdrawal of William             E340610E897366E1852579AB005443C4/$File/
                                                     should aggregate two or more pollutant-                 Wehrum’s January 12 2007 Issued Guidance Memo           Motion%20for%20Dismissal...41.pdf and in the
                                                                                                             ‘Source Determinations for Oil and Gas Industries’.’’   docket for this rulemaking.
                                                     emitting activities into a single source                                                                          11 Page, Stephen. ‘‘Applicability of the Summit
                                                                                                             September 22, 2009. EPA Region 7 Air Program
                                                     for permitting remains a case-by-case                   New Source Review Program Policy & Guidance             Decision to EPA Title V and NSR Source
                                                                                                             Index available at http://www.epa.gov/region07/air/     Determinations.’’ December 21, 2012. EPA Region 7
                                                     Region 7 Air Program New Source Review Program          nsr/nsrmemos/oilgaswithdrawal.pdf and in the            Air Program New Source Review Program Policy &
                                                     Policy & Guidance Index available at http://            docket for this rulemaking.                             Guidance Index available at http://www.epa.gov/
                                                     www.epa.gov/region07/air/nsr/nsrmemos/oilgas.pdf          10 U.S. Environmental Protection Agency.              region07/air/nsr/nsrmemos/inter2012.pdf and in
                                                     and in the docket for this rulemaking.                  February 20, 2012. Motion for Dismissal. In re: BP      the docket for this rulemaking.



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                                                                           Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules                                         56585

                                                     Appeals. National Environmental                         I. Policy Discussion                                  that vary according to the permitting
                                                     Development Association’s Clean Air                        An important consideration in                      authority.
                                                     Project v. Environmental Protection                     deciding how to define the stationary                    Aggregating activities may also
                                                     Agency, 752 F.3d 999 (D.C. Cir. 2014).                  source for oil and gas operations is the              provide facility owners/operators with
                                                     NEDA/CAP alleged that the                               environmental protection that is                      greater flexibility to modify operations
                                                     memorandum violated the EPA’s                           achieved by aggregating multiple                      without triggering additional permitting
                                                     Regional Consistency regulations by                     pollutant-emitting activities into a                  requirements. A source consisting of
                                                     establishing inconsistent permit criteria               single source. Under the PSD and NNSR                 multiple emitting activities may be able
                                                     in different parts of the country. The                  programs, new major sources or major                  to ‘‘net out’’ of further PSD or NNSR
                                                     D.C. Circuit agreed and held that the                   modifications at major sources for a                  permit review by reducing emissions in
                                                     memo conflicted with EPA regulations                    given pollutant are subject to either Best            one part of a source in order that
                                                     that promote uniform national                           Available Control Technology (BACT)                   emissions at another part of the source
                                                     regulatory policies. 752 F.3d at 1009                   or Lowest Achievable Emissions                        may increase. This allows sources to
                                                     (discussing 40 CFR part 56). In essence,                Reduction (LAER) controls, depending                  avoid additional permitting
                                                     the Court found that EPA bound itself                   on the air quality designation status for             requirements for modifications to an
                                                     to consistency with the Summit                          that pollutant of the area in which the               existing facility under PSD and NNSR
                                                     decision through its own regulations. In                source is located. These controls may be              by taking credit for reductions that have
                                                     issuing the decision, the D.C. Circuit                  more stringent than controls required at              already occurred within the facility. A
                                                     indicated that the EPA could have                       minor sources. Because major source                   smaller source offers less opportunity to
                                                     avoided a conflict between its December                 BACT or LAER controls may be                          ‘‘net out’’ because there are fewer
                                                     2012 memo and the Regional                              continually improving, permitting                     emitting activities that can be reduced if
                                                     Consistency regulations by revising the                 authorities must assess and sources                   a modification results in an increase.
                                                     source determination regulations to                     must install the best technology at the               Finally, netting is usually not available
                                                     explicitly require consideration of                     time a permit is issued, instead of what              under minor NSR programs, so smaller
                                                     functional interrelatedness.                            was the best the last time an NSPS or                 minor sources would likely not be able
                                                     H. What is the purpose of this proposed                 NESHAP was updated. Therefore, these                  to take advantage of netting to avoid
                                                     action?                                                 case-by-case controls required for major              minor NSR permitting requirements.
                                                                                                             sources or major modifications at major                  Another approach to achieving
                                                        The purpose of this action is to                     sources are often more stringent than                 environmental protection is to require
                                                     request comment on the best approach                    controls required under NSPS or                       controls by direct federal regulation
                                                     to define ‘‘adjacent’’ for the onshore oil              NESHAP, if those standards have not                   through the NSPS or NESHAP
                                                     and natural gas sector.12 We believe it                 been recently updated, because control                programs. The NSPS program results in
                                                     is important to address this industry                   technology tends to improve over time.                significant control and is applicable to
                                                     separately because permitting decisions                    In addition, if the source is or will be           new, modified and reconstructed
                                                     are difficult and time-consuming.                       located in an area that is designated                 sources. The NSPS also includes
                                                     Providing this guidance will promote a                  nonattainment, emissions reductions,                  monitoring and recordkeeping
                                                     consistent regulatory treatment for this                known as offsets, may be required in                  requirements. The NESHAP program
                                                     industry. In addition, this industry                    higher ratios to compensate for the                   also results in significant control of
                                                     continues to grow at a rapid pace, and                  proposed emissions increase. Therefore,               HAP, many of which are also VOCs, and
                                                     the sheer number of determinations that                 aggregating activities into major sources             is applied to both new and existing
                                                     need to be made heightens the need for                  may result in more oil and gas sources                sources. Each of the emissions standards
                                                     guidance in the near term.                              being subject to greater control under                established pursuant to these programs
                                                        We also believe it is important to                   LAER, in addition to having to obtain                 must be reviewed and revised, if
                                                     address this issue through a rulemaking.                offsets, resulting in greater                         necessary, at least every eight years to
                                                     The oil and gas source determination                    environmental protection.                             take into account developments in
                                                     guidance provided by the EPA on two                        Aggregating facilities is also more                practices, processes and control
                                                     separate occasions, in 2007 and 2009,                   likely to result in sources being subject             technologies. These standards apply to
                                                     was issued in the form of a memo, with                  to operating permitting requirements                  affected facilities independent of the
                                                     no opportunity for public notice and                    under title V of the Act. While this does             need for an NSR permit. Separately, the
                                                     comment. Then, as discussed above, the                  not result in any additional control                  EPA is proposing revisions to 40 CFR
                                                     subsequent onshore oil and gas                          requirements, it may result in additional             part 60, subpart OOOO, the NSPS for
                                                     permitting decisions made by EPA were                   monitoring and reporting requirements                 the oil and natural gas sector.
                                                     challenged, and both guidance memos                     that provide more information on the                     Additional controls may be required
                                                     were referenced or relied upon by the                   operation of the source to the regulators             for sources located in nonattainment
                                                     parties in those challenges. The EPA is                 and interested citizens. The title V                  areas, including minor sources, through
                                                     interested in addressing any uncertainty                permitting process includes                           a SIP, or through a Federal
                                                     by providing additional clarity through                 opportunities for public participation,               Implementation Plan (FIP) in areas
                                                     rulemaking and seeking comment on the                   EPA oversight, and citizens’ rights to                where EPA is the regulatory authority,
                                                     best approach for defining the term                     petition the EPA to object to permits.                such as in certain areas of Indian
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                                                     ‘‘adjacent’’ specific to the onshore oil                These opportunities exist at both the                 country. The CAA requires
                                                     and natural gas sector.                                 initial permit issuance, and at permit                implementation of reasonable available
                                                                                                             renewal, which occurs every 5 years.                  control technology (RACT) for major
                                                       12 We note that the EPA Administrator signed a        The title V process provides more                     sources in moderate and above ozone
                                                     separate proposal on August 5, 2015 to amend the        opportunities for public participation                nonattainment areas and in the Ozone
                                                     Regional Consistency Regulations to address             than minor source permitting, which                   Transport Region (OTR). The EPA
                                                     consistency issues resulting from judicial decisions.
                                                     See Environmental Protection Agency, RIN 2060–
                                                                                                             generally includes public participation               develops Control Techniques
                                                     AS53 available at http://www.epa.gov/nsr/               only at the time of initial construction              Guidelines (CTGs) to inform a state’s
                                                     actions.html.                                           or modification, and under processes                  RACT determinations. Separately, the


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                                                     56586                 Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules

                                                     EPA is proposing a CTG for the oil and                  control requirements associated with                  contiguous or adjacent properties. For
                                                     natural gas sector.                                     other rules being proposed by the EPA                 other industries, we continue to believe
                                                        All of these programs (NSPS,                         serves the interests of all stakeholders.             that a case-by-case assessment of the
                                                     NESHAP, RACT and state SIP/EPA FIP                                                                            three factors remains the appropriate
                                                     requirements) typically apply to                        J. Why is the EPA proposing this action
                                                                                                                                                                   method of making source
                                                     emitting equipment, irrespective of the                 at this time?
                                                                                                                                                                   determinations. For these industries, as
                                                     total emissions of the source at which                     One reason for taking this action is to            discussed previously, we believe it is
                                                     the equipment is located, although there                resolve the uncertainty that the                      generally less difficult to determine the
                                                     may be thresholds for individual types                  litigation over the Summit Petroleum                  scope of the source, because the
                                                     of equipment. An advantage of applying                  source determination and resulting                    operations already take place at
                                                     environmental control through these                     guidance has created for both permitting              facilities that more clearly match the
                                                     programs is that the administrative                     authorities and for owners/operators of               common sense notion of a plant.
                                                     burden of applying for, obtaining, and                  regulated sources. Another reason is to
                                                     maintaining major source permits can                    develop a coordinated approach to                     L. What is the effect of this proposed
                                                     be reduced for sources because these                    regulating emissions from oil and gas                 rulemaking on permitting authorities?
                                                     limitations establish enforceable limits                sources under the variety of regulatory                  We are proposing to make changes to
                                                     on the sources’ potential to emit, and                  mechanisms available to state and                     both the PSD and NNSR programs in
                                                     can keep a source from being considered                 federal regulatory agencies. There has                this rulemaking. We believe that it may
                                                     major. The burden of reviewing and                      been an increase in oil and gas                       be possible for some states to interpret
                                                     issuing major source permits is likewise                production resulting from the rise in use             their existing state rules consistent with
                                                     reduced for permitting authorities.                     of unconventional methods of extraction               this rulemaking (when final) and may
                                                        The biggest advantage to sources,                    (e.g., the use of hydraulic fracturing),              not need to revise SIPs to incorporate
                                                     particularly in this industry, is that                  and this production is taking place in                these changes. However, we intend to
                                                     controlling emissions through NSPS,                     more areas and at a faster pace than in               encourage states to revise their SIPs to
                                                     NESHAP or emission control standards                    the recent past. We believe this justifies            adopt these changes, when final.
                                                     imposed by states through their SIPs                    a new look at the best way to regulate                Similarly, states would be expected to
                                                     does not require case-by-case pre-                      and permit these operations. In separate              make conforming changes to their
                                                     approval as do the controls determined                  notices, the EPA is proposing to require              operating permit programs. While we
                                                     through major source permitting. This                   additional controls for the emissions                 are proposing changes to both the
                                                     provides greater certainty to the source                from the oil and natural gas sector.                  federal programs and the requirements
                                                     owners and operators without the                        Those requirements include additional                 for state programs, we invite comment
                                                     delays associated with such permitting.                 requirements for new sources under the                on whether states should be required to
                                                     Communities can also be certain of the                  NSPS, requirements for minor sources at               adopt these changes.
                                                     controls sources are required to install                oil and gas operations in Indian country,
                                                     and operate because the sources do not                  and a CTG that will inform RACT                       III. What are the options that the EPA
                                                     have the opportunity to ‘‘net out’’ of                  determinations for existing major VOC                 is considering?
                                                     controls through a permitting process.                  sources located in moderate or above                     In this proposal, the EPA is proposing
                                                     Compliance and enforcement are also                     ozone nonattainment areas and in the                  and requesting comment on two options
                                                     enhanced because the control,                           OTR.                                                  for clarifying the definition used to
                                                     monitoring and recordkeeping                               We believe that the additional                     determine the source to be permitted
                                                     requirements are consistent for each                    emissions controls required for new                   within the NSR and title V programs as
                                                     type of equipment and do not differ                     sources under the revised NSPS makes                  it applies to the oil and natural gas
                                                     from site to site, or in the case of federal            it less likely that major source                      sector. As we stated before, any
                                                     controls, state to state.                               permitting would result in substantial                determination of the scope of a source
                                                        For the oil and gas industry, where                  additional pollution control. In                      requires a fact-specific inquiry into each
                                                     source owners/operators must obtain                     commenting on this proposal,                          of the three regulatory factors, i.e.,
                                                     the right to drill in a particular location             commenters are encouraged to consider                 whether emitting activities share the
                                                     and only hold those rights for a limited                how emission controls being proposed                  same SIC code, are under common
                                                     period of time, the ability to proceed                  in separate EPA notices may impact the                control, and are contiguous or adjacent.
                                                     quickly is important. For communities                   preferred option in this proposal.                    We are not proposing to change or take
                                                     and air regulators, the ability to protect                                                                    comment on this inquiry or the three
                                                     air quality and public health is                        K. What is the effect of this proposed
                                                                                                                                                                   factors. However, in this notice, the EPA
                                                     important. A major source permit                        rulemaking on other industries?
                                                                                                                                                                   is taking comment on how the term
                                                     typically takes a year or more to process.                At this time, the EPA is proposing to               ‘‘adjacent’’ in the third factor should be
                                                     If there is uncertainty about what                      clarify the definition of ‘‘adjacent’’ used           applied specifically to emission units in
                                                     should be included as part of that                      to determine the source to be permitted               the oil and natural gas sector.
                                                     permitted source, the time to issue a                   within the PSD, NNSR and title V
                                                     permit can take longer. We believe that                 programs as it applies to the oil and                 A. Define Source Based on Proximity
                                                     the most important result of a major or                 natural gas sector for the reasons                    (Similar to the NESHAP)
                                                     minor permit for all stakeholders,                      discussed earlier in this proposal. The                  Under the first, and currently
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                                                     including the regulated industry, the                   EPA believes that the unique                          preferred, option for which the EPA is
                                                     community in which the source is                        characteristics of this industry—such as              taking comment, the EPA proposes to
                                                     located, and the permitting authority, is               the underground mineral rights versus                 define ‘‘adjacent’’ such that the source
                                                     the requirement to install control                      surface land ownership, widespread                    is similar to that in the NESHAP for this
                                                     technology to minimize air emissions                    operations and interconnectedness via                 industry, Subpart HH, National
                                                     and protect public health and the                       pipeline, etc.—warrant an industry-                   Emissions Standards for Hazardous Air
                                                     environment. We think that providing                    specific definition that will streamline              Pollutants From Oil and Natural Gas
                                                     clarity about the scope of the source                   the assessment of which operations                    Production Facilities (40 CFR 63.760).
                                                     through this rule, and the emissions                    should be considered to be on                         Under this option, the ‘‘source’’ for oil


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                                                                           Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules                                           56587

                                                     and natural gas sector activities is                    comment on whether another distance,                  a major source permit be limited to the
                                                     presumed to be limited to the emitting                  such as 1⁄2 mile, is an appropriate                   owner or operator’s discretion, or
                                                     activities at the surface site, and other               distance to consider for defining a single            should a permitting authority be able to
                                                     emitting activities will be considered                  source even if on separate surface sites              make this determination, and under
                                                     ‘‘adjacent’’ if they are proximate. Thus,               (i.e., operations beyond that distance                what circumstances?
                                                     under this first option, two or more                    would not be considered for
                                                                                                                                                                   B. Define Source To Include Exclusively
                                                     surface sites must be considered as a                   aggregation).
                                                                                                                Louisiana’s guidance further specifies             Functionally Interrelated Equipment
                                                     single source if they share the same SIC
                                                     code, are under common control, and                     that facilities should not be ‘‘daisy-                   Under the second option, the EPA
                                                     are contiguous or are located within a                  chained’’ together to establish a single              proposes to define the ‘‘source’’ for the
                                                     short distance of one another.                          contiguous source.13 A series of                      oil and natural gas sector to include all
                                                        We prefer this option because we                     emission units are ‘‘daisy-chained’’                  of the interrelated equipment that is
                                                     believe that a definition that centers on               when each individual unit is located                  under common control, is in the two-
                                                     a surface site is familiar to the industry              within the specified ‘‘contiguous or                  digit SIC (Code 13 Oil and Gas
                                                     and the regulators because of the current               adjacent’’ distance from the next unit,               Extraction), and is on contiguous or
                                                     NESHAP requirements, so it will                         but where the last unit is separated from             adjacent property, where the EPA would
                                                     streamline permitting. We also believe                  the first unit by a much larger distance.             presume that equipment in an oil and
                                                     that a definition focused on a surface                  We request comment on whether the                     gas field is ‘‘adjacent’’ if it is proximate,
                                                     site most closely represents the common                 EPA should make a similar distinction                 or if it is exclusively functionally
                                                     sense notion of a plant for this industry               if we adopt this proximity-focused                    interrelated. Exclusive functional
                                                     category. Surface sites that are not in                 source definition. Louisiana’s guidance               interrelatedness might be shown by
                                                     close proximity to one another may be                   goes on to specify that the geographic                connection via a pipeline or other
                                                     on a separate lease which may not align                 center of the site’s emissions defines the            means, because of the physical
                                                     with the common sense notion of a                       center for purposes of establishing the               connection between the equipment.
                                                     single plant. In addition, we believe that              1⁄4 mile distance used to determine the               Other examples of factors that could be
                                                     this definition is consistent with                      boundary of the single source. We                     assessed to determine interrelatedness
                                                     Congress’ intent, at least as they                      request comment on whether the center                 include exclusive delivery of product
                                                     expressed it with regard to HAPs, as                    or some other feature, such as the                    from one group of equipment to the
                                                     discussed previously.                                   boundary of the surface site, is more                 other via truck or train and facts such
                                                        Under this option, as we are                         appropriate to use as the starting point              as whether one group of equipment
                                                     proposing it, the source owner/operator                 of the measurement radius when                        would be able to operate if the other
                                                     would not be required, and would not                    determining the source.                               group of equipment was not operating.
                                                     be allowed, to include additional                          We also request comment on whether                 The EPA and states would make a
                                                     emitting activities in a permit beyond                  there are instances where setting such a              determination of adjacency based on a
                                                     those in the source as defined. This                    bright-line distance could increase or                consideration of the interrelatedness of
                                                     could mean that an owner/operator                       limit permitting authority oversight of               emitting activities in addition to the
                                                     must obtain more individual                             these sources because they would be                   distance between them. So, for the oil
                                                     construction permits and possibly more                  more likely to be subject to minor                    and natural gas sector, pollutant-
                                                     operating permits. However, these                       source permitting. We also request                    emitting activities will be considered
                                                     would be more likely to be minor source                 comment on whether the potentially                    adjacent if one of the following
                                                     permits. If finalized, owner/operators                  smaller scope of each source could                    circumstances apply: (1) The pollutant-
                                                     could lose the benefits of being able to                result in an unacceptable permitting                  emitting activities are separated by a
                                                     net emissions over a larger source,                     burden (by creating a larger number of                distance of 1⁄4 mile or more and there is
                                                     which could be a disadvantage,                          smaller sources) on the regulated                     an exclusive functional interrelatedness;
                                                     particularly for sources in                             community or on permitting authorities.               or (2) the pollutant-emitting activities
                                                     nonattainment areas. We request                            While the EPA does not expect there                are separated by a distance of less than
                                                                                                                                                                   1⁄4 mile.
                                                     comment on this more limited concept                    would be adverse air quality impacts as
                                                     of source for this industry, specifically               a result of this approach, we are                        The consideration of interrelatedness
                                                     whether limiting the scope of the source                interested in whether there might be any              is consistent with the EPA’s current and
                                                     in this way provides sufficient guidance                environmental effect, including effects               historical practice for other industries
                                                     for sources and permitting authorities to               on NAAQS compliance from this                         and its longstanding practice for oil and
                                                     permit these sources in a consistent and                approach, with either benefit or harm                 natural gas sector activities. The EPA is
                                                     efficient manner.                                       resulting. Finally, we request comment                requesting comment on this approach to
                                                        In addition, we request comment on                   on whether there are circumstances in                 better understand the perspective of
                                                     whether it is appropriate to establish a                which an owner/operator would prefer                  various stakeholders. What are the
                                                     specific distance within which to                       to combine surface sites or other                     advantages and disadvantages to this
                                                     consider multiple surface sites as a                    operations that are beyond the                        approach? Are there characteristics
                                                     single source, and if so, what that                     presumptive distance, e.g., 1⁄4 mile, and             related to the oil and natural gas sector
                                                     distance should be. Some states, such as                                                                      that would make this approach more or
                                                                                                             seek a PSD or NNSR permit, and
                                                     Texas, Oklahoma, Louisiana and                                                                                less difficult to implement than the
                                                                                                             whether the EPA should preserve this
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                                                     Pennsylvania, have issued guidance that                                                                       preferred alternative, such as need to
                                                                                                             option. If so, should the option to seek
                                                     presumes that operations within 1⁄4 mile                                                                      examine various interrelatedness
                                                     should be considered a single source.                     13 Louisiana Department of Environmental            criteria or the interconnectedness of the
                                                     We believe that it will be helpful to                   Quality. Interpretation of Contiguous for Oil & Gas   operations through pipelines? Should
                                                     prescribe a distance in this rule, given                Production Facilities. http://                        the EPA further define exclusive
                                                     that this question has generated                        www.deq.louisiana.gov/portal/DIVISIONS/               functional interrelatedness for this
                                                                                                             AirPermitsEngineeringandPlanning/
                                                     significant confusion and uncertainty in                AirPermitsProceduresandGuidance/
                                                                                                                                                                   sector to provide additional clarity to
                                                     the past. The EPA is proposing to adopt                 ContiguityandOilandGasProduction.aspx. March          regulators and the regulated
                                                     a distance of 1⁄4 mile but is asking for                2015.                                                 community? For example, should the


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                                                     56588                 Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules

                                                     EPA limit exclusive functional                          discrete options, or some combination                 opportunities for public participation at
                                                     interrelatedness for this sector to                     of these, and other options for                       individual sources that may be of
                                                     emitting equipment that is configured in                determining the source for permitting                 interest to minority or low-income
                                                     a ‘‘hub and spoke’’ model, where oil or                 oil and natural gas sector operations.                populations.
                                                     gas produced from one or more wells
                                                                                                             D. Proposal is Limited to Onshore Oil                 V. Statutory and Executive Order
                                                     has a dedicated flow (via a pipeline or
                                                                                                             and Gas Operations                                    Reviews
                                                     other delivery method) to only one
                                                     possible downstream point for further                      The EPA is proposing to limit this                 A. Executive Order 12866: Regulatory
                                                     compression, processing or storage? Are                 rulemaking to onshore oil and gas                     Planning and Review and Executive
                                                     there other configurations specific to                  operations for a number of reasons.                   Order 13563: Improving Regulation and
                                                     this industry that the EPA should                       First, the CAA already contains a                     Regulatory Review
                                                     consider to be exclusively functionally                 specific definition of ‘‘outer continental
                                                                                                             shelf source’’ which includes any                       This proposed action is a significant
                                                     interrelated?
                                                        In addition, is there any                            ‘‘equipment activity, or facility which               regulatory action that was submitted to
                                                     environmental benefit or harm that                      emits or has the potential to emit any air            the Office of Management and Budget
                                                     might result from this approach? For                    pollutant’’ specifically including                    (OMB) for review because it raises novel
                                                     example, could this approach create a                   ‘‘platform and drill ship exploration,                legal and policy issues arising out of the
                                                     disincentive to building pipelines, and                 construction, development, production,                President’s priorities. Any changes
                                                     what would be the environmental effect                  processing, and transportation.’’ In                  made in response to OMB
                                                     of those decisions? Finally, the EPA                    addition, ‘‘emissions from any vessel                 recommendations have been
                                                     requests comment on whether there is a                  servicing or associated with an outer                 documented in the docket.
                                                     specific distance beyond which sources                  continental shelf (OCS) source,                       B. Paperwork Reduction Act
                                                     in the oil and gas industry should not                  including emissions while at the OCS
                                                     be considered interrelated, even if                     source or en route to or from the OCS                   This proposed action would not
                                                     interconnected by pipeline.                             source within 25 miles of the OCS                     impose any new information collection
                                                                                                             source’’ must be included when                        burden. However, the OMB has
                                                     C. Impacts of the Options on Air                        determining the OCS source [CAA                       previously approved the information
                                                     Permitting                                              section 328(a)(4)(C)]. In our permitting              collection requirements contained in the
                                                        The EPA expects that the combined                    experience, these OCS sources are more                existing regulations for PSD (40 CFR
                                                     effect of all the rules being proposed,                 likely than onshore operations to be                  52.21) and title V (40 CFR parts 70 and
                                                     including the proposed changes to the                   stand-alone major PSD sources. The                    71) under the provisions of the
                                                     NSPS, the proposed rule for oil and gas                 EPA has issued permits for exploration                Paperwork Reduction Act, 44 U.S.C.
                                                     sources in Indian country, and the CTG,                 rigs to operate as portable PSD sources,              3501 et seq and has assigned OMB
                                                     will be to reduce the number of major                   allowing them to operate in a number of               control numbers 2060–0003, 2060–0336
                                                     oil and gas sources, even if we finalize                locations under one permit. We believe                and 2060–0243. The OMB control
                                                     Option 2. The proposed rules add                        that this current approach provides                   numbers for the EPA’s regulations in 40
                                                     requirements for enforceable controls,                  sufficient streamlining for both sources              CFR are listed in 40 CFR part 9. Instead
                                                     thereby decreasing potential emissions                  and permitting authorities and propose                of new information collection burdens,
                                                     and making it less likely that major                    to continue the existing case-by-case                 this proposed action proposes proffers
                                                     source permitting will be required. This                approach for offshore sources.                        options that clarify the existing
                                                     is because a source’s potential emissions                                                                     permitting requirements applicable to
                                                     are determined after taking into account                IV. Environmental Justice                             new and modified oil and natural gas
                                                                                                             Considerations                                        sector sources. This proposed action is
                                                     controls that are enforceable as a
                                                     practical matter, such as those required                  This proposal is intended to clarify                not likely to increase the burden
                                                     in the NSPS and a SIP adopting the                      the definition of adjacent used to                    associated with permitting, and may
                                                     CTG.                                                    determine the source to be permitted                  reduce it.
                                                        The two options presented in this rule               within the existing PSD, NNSR and title
                                                                                                             V programs as it applies to the oil and               C. Regulatory Flexibility Act
                                                     differ primarily in the permitting
                                                     burden placed on sources and                            natural gas sector. This clarification will              The Regulatory Flexibility Act (RFA)
                                                     permitting authorities. In the EPA’s                    assist permitting authorities and permit              generally requires an agency to prepare
                                                     experience, it takes significantly longer               applicants in making source                           a regulatory flexibility analysis of any
                                                     to apply for and review a PSD                           determinations for the oil and gas                    regulation subject to notice and
                                                     application than it does to apply for and               industry and is not intended to result in             comment rulemaking requirements
                                                     review a minor NSR permit. Option 1                     less environmental protection for                     under the Administrative Procedures
                                                     can be expected to result in fewer major                human health and the environment. It is               Act or any other statute unless the
                                                     sources than Option 2, but more minor                   being proposed as a part of a                         agency certifies the rule will not have a
                                                     sources. Option 2 can be expected to                    comprehensive strategy to reduce                      significant economic impact on a
                                                     result in more major sources, as some                   emissions from the oil and natural gas                substantial number of small entities.
                                                     otherwise minor sources could be                        production sector which includes new                  Small entities include small businesses,
                                                     combined into a smaller number of                       (or lower) emission standards or                      small organizations and small
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                                                     major sources.                                          requirements for a number of types of                 governmental jurisdictions.
                                                        Because the EPA would benefit from                   emitting equipment. It, therefore, is not                For purposes of assessing the impacts
                                                     public comment on all of these issues,                  expected to have a disproportionately                 of this proposed rule on small entities,
                                                     the EPA is co-proposing these two                       high and adverse human health or                      small entity is defined as: (1) A small
                                                     approaches and, following review of                     environmental effects on minority                     business as defined in the Small
                                                     public comments on the issues raised by                 populations or low-income populations.                Business Administration’s (SBA)
                                                     each approach, anticipates adopting one                 However, the permitting process,                      regulations at 13 CFR 121.201; (2) a
                                                     of the approaches in the final rule. We                 particularly under the major source                   small governmental jurisdiction that is a
                                                     welcome comments on these two                           programs, NSR and title V, may provide                government of a city, county, town,


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                                                                           Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules                                          56589

                                                     school district or special district with a              E. Executive Order 13132: Federalism                  actions that concern environmental
                                                     population of less than 50,000; and (3)                   This proposed action does not have                  health or safety risks that the EPA has
                                                     a small organization that is any not-for-               federalism implications. It will not have             reason to believe may
                                                     profit enterprise which is independently                substantial direct effects on the states,             disproportionately affect children. This
                                                     owned and operated and is not                           on the relationship between the national              action is not subject to EO 13045
                                                     dominant in its field.                                  government and the states, or on the                  because it is not intended to establish an
                                                        After considering the economic                       distribution of power and                             environmental standard intended to
                                                                                                             responsibilities among the various                    mitigate health or safety risks. The
                                                     impacts of this proposed rule on small
                                                                                                             levels of government, as specified in                 proposal requests comments on the
                                                     entities, I certify that this proposed
                                                                                                             Executive Order 13132. The                            appropriate definition of a source as it
                                                     action will not have a significant
                                                                                                             requirement to obtain permits for new                 applies to one source category for
                                                     economic impact on a substantial
                                                                                                             major sources is imposed by the CAA.                  purposes of permitting under the
                                                     number of small entities. In making this
                                                                                                             This proposed rule, if made final, would              requirements of the CAA.
                                                     determination, the impact of concern is
                                                     any significant adverse economic                        interpret those requirements as they                  H. Executive Order 13211: Actions
                                                     impact on small entities. An agency may                 apply to the oil and natural gas sector.              Concerning Regulations That
                                                     certify that a rule will not have a                     Thus, Executive Order 13132 does not                  Significantly Affect Energy Supply,
                                                     significant economic impact on a                        apply to these proposed regulation                    Distribution, or Use
                                                     substantial number of small entities if                 revisions.
                                                                                                               In the spirit of Executive Order 13132                 This proposed action is not a
                                                     the rule relieves regulatory burden, has                                                                      ‘‘significant energy action’’ because it is
                                                     no net burden or otherwise has a                        and consistent with the EPA policy to
                                                                                                             promote communications between the                    not likely to have a significant adverse
                                                     positive economic effect on the small                                                                         effect on the supply, distribution or use
                                                                                                             EPA and state and local governments,
                                                     entities subject to the rule. Entities                                                                        of energy. We believe this action is not
                                                                                                             the EPA specifically solicits comments
                                                     potentially affected directly by this                                                                         likely to have any adverse energy effects
                                                                                                             on this proposed action from state and
                                                     proposal include sources in the oil and                                                                       because it will not increase, and may
                                                                                                             local officials.
                                                     natural gas sector. We intend with this                                                                       decrease, the permitting burden on
                                                     proposal to clarify the existing                        F. Executive Order 13175: Consultation                owners and operators of sources in the
                                                     requirements for permitting new and                     and Coordination With Indian Tribal                   oil and natural gas sector.
                                                     existing sources in the oil and natural                 Governments
                                                     gas sector. We believe that any option                                                                        I. National Technology Transfer and
                                                                                                                This action does not have tribal                   Advancement Act
                                                     finalized after notice and comment                      implications as specified in Executive
                                                     rulemaking will not increase, and may                   Order 13175. It would not have a                         Section 12(d) of the National
                                                     decrease, the administrative burden for                 substantial direct effect on one or more              Technology Transfer and Advancement
                                                     permitting these sources, including                     Indian tribes, since no tribe has                     Act of 1995 (NTTAA), Public Law 104–
                                                     those that may be small entities. We                    developed a TIP that allows it to issue               113, section 12(d) (15 U.S.C. 272 note)
                                                     have, therefore, concluded that this                    NSR permits. Furthermore, these                       directs the EPA to use voluntary
                                                     proposed action will have no net                        proposed regulation revisions do not                  consensus standards in its regulatory
                                                     regulatory burden for all directly                      affect the relationship or distribution of            activities unless to do so would be
                                                     regulated small entities.                               power and responsibilities between the                inconsistent with applicable law or
                                                        We continue to be interested in the                  federal government and Indian tribes.                 otherwise impractical. Voluntary
                                                     potential impacts of the proposed rule                  The CAA and the Tribal Air Rule                       consensus standards are technical
                                                     on small entities and welcome                           establish the relationship of the federal             standards (e.g., materials specifications,
                                                     comments on issues related to such                      government and tribes in developing                   test methods, sampling procedures and
                                                     impacts.                                                plans to implement NSR permitting, and                business practices) that are developed or
                                                                                                             this proposal does nothing to modify                  adopted by voluntary consensus
                                                     D. Unfunded Mandates Reform Act                         that relationship. Thus, Executive Order              standards bodies. NTTAA directs the
                                                                                                             13175 does not apply to this action.                  EPA to provide Congress, through OMB,
                                                        This proposed action does not contain                   The EPA has concluded that this                    explanations when the agency decides
                                                     an unfunded mandate of $100 million or                  action will not have tribal implications              not to use available and applicable
                                                     more as described in the Unfunded                       because it doesn’t impose a significant               voluntary consensus standards.
                                                     Mandates Reform Act of 1995 (UMRA),                     cost to tribal governments. However,                     This proposed rulemaking does not
                                                     2 U.S.C. 1531–1538, and does not                        there are significant tribal interests                involve technical standards. Therefore,
                                                     significantly or uniquely affect small                  because of the growth of the oil and gas              the EPA is not considering the use of
                                                     governments. This action imposes no                     production industry in Indian country.                any voluntary consensus standards.
                                                     enforceable duty on any state, local or                 Although Executive Order 13175 does
                                                     tribal governments or the private sector.                                                                     J. Executive Order 12898: Federal
                                                                                                             not apply to this action, the EPA has                 Actions To Address Environmental
                                                     The CAA imposes the obligation for                      offered consultation to tribal officials in
                                                     private sector sources to obtain permits                                                                      Justice in Minority Populations and
                                                                                                             developing this action. Meeting                       Low-Income Populations
                                                     prior to construction. Many states and                  summaries will be included in the
                                                     some local governments choose to                        docket for this rulemaking.                              The EPA believes the human health or
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                                                     implement those requirements. In other                     The EPA specifically solicits                      environmental risk addressed by this
                                                     areas, the EPA implements those                         additional comment on this proposed                   proposed action will not have
                                                     requirements. In this proposal, the EPA                 action from tribal officials.                         disproportionately high and adverse
                                                     is taking comment on the most                                                                                 human health or environmental effects
                                                     appropriate way to implement those                      G. Executive Order 13045: Protection of               on minority, low-income populations or
                                                     requirements for an industry category.                  Children From Environmental Health                    indigenous populations. The proposal
                                                     Therefore, this proposed action is not                  and Safety Risks                                      requests comment on the appropriate
                                                     subject to the requirements of sections                   The EPA interprets EO 13045 as                      definition of the source as it applies to
                                                     202, 203 and 205 of the UMRA.                           applying only to those regulatory                     one industry category for purposes of


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                                                     56590                 Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules

                                                     permitting under the CAA. As such, it                   PART 51—REQUIREMENTS FOR                              described in the Standard Industrial
                                                     does not adversely affect the health or                 PREPARATION, ADOPTION, AND                            Classification Manual, 1972, as
                                                     safety of minority or low-income                        SUBMITTAL OF IMPLEMENTATION                           amended by the 1977 Supplement (U.S.
                                                     populations. The results of this                        PLANS                                                 Government Printing Office stock
                                                     evaluation are contained in Section IV                                                                        numbers 4101–0065 and 003–005–
                                                     of this preamble.                                       ■ 1. The authority citation for part 51               00176–0, respectively).
                                                                                                             continues to read as follows:                            (B) Notwithstanding the provisions of
                                                     K. Determination Under Section 307(d)                     Authority: 23 U.S.C. 101; 42 U.S.C. 7401–           paragraph (a)(1)(ii)(A) of this section,
                                                                                                             7671q.                                                building, structure, facility, or
                                                       Pursuant to sections 307(d)(1)(J) and                                                                       installation means, for onshore
                                                                                                             ■ 2. In § 51.165, revise paragraph
                                                     307(d)(1)(V) of the CAA, the                                                                                  activities in SIC Major Group 13: Oil
                                                                                                             (a)(1)(ii) to read as follows:
                                                     Administrator determines that this                                                                            and Gas Extraction, all of the pollutant-
                                                     action is subject to the provisions of                  § 51.165    Permit requirements.                      emitting activities included in Major
                                                     section 307(d). Under section                               (a) * * *                                         Group 13, are located on one or more
                                                     307(d)(1)(J), the provisions of section                     (1) * * *                                         contiguous or adjacent properties, and
                                                     307(d) apply to revisions to regulations                [PROPOSED REGULATORY TEXT FOR                         are under the control of the same person
                                                     relating to PSD. Under section                          OPTION 1]                                             (or persons under common control).
                                                     307(d)(1)(V), the provisions of section                                                                       Pollutant-emitting activities shall be
                                                     307(d) apply to ‘‘such other actions as                   (ii) (A) Building, structure, facility, or          considered adjacent if one of the
                                                     the Administrator may determine.’’                      installation means all of the pollutant-              following circumstances apply:
                                                                                                             emitting activities which belong to the                  (1) The pollutant-emitting activities
                                                     Statutory Authority                                     same industrial grouping, are located on              are separated by a distance of 1⁄4 mile or
                                                                                                             one or more contiguous or adjacent                    more and there is an exclusive
                                                        The statutory authority for this action              properties, and are under the control of
                                                     is provided by sections 101; 111; 114;                                                                        functional interrelatedness; or
                                                                                                             the same person (or persons under                        (2) The pollutant-emitting activities
                                                     116, 160–165, 169, 173, 301, 302, 501                   common control). Pollutant emitting                   are separated by a distance of less than
                                                     and 502 of the CAA, as amended (42                      activities shall be considered as part of             1⁄4 mile.
                                                     U.S.C. 7401; 42 U.S.C. 7411; 42 U.S.C.                  the same industrial grouping if they
                                                     7414; 42 U.S.C. 7416; 7470–7475, 7479,                                                                        *      *    *      *    *
                                                                                                             belong to the same Major Group (i.e.,                 ■ 3. In § 51.166, revise paragraph (b)(6)
                                                     7503, 7601, 7602, 7661, and 7662.                       which have the same two-digit code) as                to read as follows:
                                                                                                             described in the Standard Industrial
                                                     List of Subjects
                                                                                                             Classification Manual, 1972, as                       § 51.166 Prevention of significant
                                                     40 CFR Part 51                                          amended by the 1977 Supplement (U.S.                  deterioration of air quality.
                                                                                                             Government Printing Office stock                      *       *    *    *    *
                                                       Environmental protection, Air                         numbers 4101–0065 and 003–005–                            (b) * * *
                                                     pollution control, Construction permit,                 00176–0, respectively).
                                                     Intergovernmental relations, Major                        (B) Notwithstanding the provisions of               [PROPOSED REGULATORY TEXT FOR
                                                                                                             paragraph (a)(1)(ii)(A) of this section,              OPTION 1]
                                                     source, Oil and gas.
                                                                                                             building, structure, facility, or                       (6)(i) Building, structure, facility, or
                                                     40 CFR Part 52                                          installation means, for onshore                       installation means all of the pollutant-
                                                                                                             activities under SIC Major Group 13: Oil              emitting activities which belong to the
                                                       Environmental protection, Air
                                                                                                             and Gas Extraction, all of the pollutant-             same industrial grouping, are located on
                                                     pollution control, Construction permit,
                                                                                                             emitting activities included in Major                 one or more contiguous or adjacent
                                                     Incorporation by reference,
                                                                                                             Group 13 that are located on one or                   properties, and are under the control of
                                                     Intergovernmental relations, Major                                                                            the same person (or persons under
                                                                                                             more contiguous or adjacent properties,
                                                     source, Oil and gas.                                                                                          common control) except the activities of
                                                                                                             and are under the control of the same
                                                     40 CFR Part 70                                          person (or persons under common                       any vessel. Pollutant-emitting activities
                                                                                                             control). Pollutant emitting activities               shall be considered as part of the same
                                                       Environmental protection, Air                         shall be considered adjacent if they are              industrial grouping if they belong to the
                                                     pollution control, Intergovernmental                    located on the same surface site, or on               same Major Group (i.e., which have the
                                                     relations, Major source, Oil and gas,                   surface sites that are located within 1⁄4             same two-digit code) as described in the
                                                     Operating permit.                                       mile of one another, where a surface site             Standard Industrial Classification
                                                                                                             has the same meaning as in 40 CFR                     Manual, 1972, as amended by the 1977
                                                     40 CFR Part 71                                                                                                Supplement (U.S. Government Printing
                                                                                                             63.761.
                                                       Environmental protection,                                                                                   Office stock numbers 4101–0066 and
                                                                                                             [PROPOSED REGULATORY TEXT FOR                         003–005–00176–0, respectively).
                                                     Administrative practice and procedure,                  OPTION 2]                                               (ii) Notwithstanding the provisions of
                                                     Air pollution control, Intergovernmental
                                                                                                               (ii) (A) Building, structure, facility, or          paragraph (b)(6)(i) of this section,
                                                     relations, Major source, Operating
                                                                                                             installation means all of the pollutant-              building, structure, facility, or
                                                     permit.                                                 emitting activities which belong to the               installation means, for onshore
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                                                       Dated: August 18, 2015.                               same industrial grouping, are located on              activities under SIC Major Group 13: Oil
                                                     Gina McCarthy,                                          one or more contiguous or adjacent                    and Gas Extraction, all of the pollutant-
                                                     Administrator.                                          properties, and are under the control of              emitting activities included in Major
                                                                                                             the same person (or persons under                     Group 13 that are located on one or
                                                       For the reasons stated in the                         common control). Pollutant emitting                   more contiguous or adjacent properties,
                                                     preamble, Title 40, Chapter I of the Code               activities shall be considered as part of             and are under the control of the same
                                                     of Federal Regulations is proposed to be                the same industrial grouping if they                  person (or persons under common
                                                     amended as follows:                                     belong to the same Major Group (i.e.,                 control). Pollutant emitting activities
                                                                                                             which have the same two-digit code) as                shall be considered adjacent if they are


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                                                                           Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules                                         56591

                                                     located on the same surface site, or on                 same ‘‘Major Group’’ (i.e., which have the               (b)* * *
                                                     surface sites that are located within 1⁄4               same two digit code) as described in the
                                                                                                             Standard Industrial Classification Manual,            [PROPOSED REGULATORY TEXT FOR
                                                     mile of one another, where a surface site
                                                                                                             1972, as amended by the 1977 Supplement               OPTION 1]
                                                     has the same meaning as in 40 CFR
                                                                                                             (U.S. Government Printing Office stock                  (6)(i) Building, structure, facility, or
                                                     63.761.                                                 numbers 4101–0066 and 003–005–00176–0,
                                                                                                                                                                   installation means all of the pollutant-
                                                     [PROPOSED REGULATORY TEXT FOR                           respectively).
                                                                                                                (ii) Notwithstanding the provisions of             emitting activities which belong to the
                                                     OPTION 2]                                                                                                     same industrial grouping, are located on
                                                                                                             paragraph II.2.(i) of this appendix, building,
                                                        (6)(i) Building, structure, facility, or             structure, facility or installation means, for        one or more contiguous or adjacent
                                                     installation means all of the pollutant-                onshore activities under SIC Major Group 13:          properties, and are under the control of
                                                     emitting activities which belong to the                 Oil and Gas Extraction, all of the pollutant-         the same person (or persons under
                                                     same industrial grouping, are located on                emitting activities included in Major Group           common control) except the activities of
                                                     one or more contiguous or adjacent                      13 that are located on one or more contiguous         any vessel. Pollutant-emitting activities
                                                                                                             or adjacent properties, and are under the             shall be considered as part of the same
                                                     properties, and are under the control of                control of the same person (or persons under
                                                     the same person (or persons under                       common control). Pollutant emitting
                                                                                                                                                                   industrial grouping if they belong to the
                                                     common control) except the activities of                activities shall be considered adjacent if they       same ‘‘Major Group’’ (i.e., which have
                                                     any vessel. Pollutant-emitting activities               are located on the same surface site, or on           the same first two digit code) as
                                                     shall be considered as part of the same                 surface sites that are located within 1⁄4 mile        described in the Standard Industrial
                                                     industrial grouping if they belong to the               of one another, where a surface site has the          Classification Manual, 1972, as
                                                     same Major Group (i.e., which have the                  same meaning as in 40 CFR 63.761.                     amended by the 1977 Supplement (U.S.
                                                     same two-digit code) as described in the                [PROPOSED REGULATORY TEXT FOR                         Government Printing Office stock
                                                     Standard Industrial Classification                      OPTION 2]                                             numbers 4101–0066 and 003–005–
                                                     Manual, 1972, as amended by the 1977                                                                          00716–0, respectively.
                                                                                                                2. (i) Building, structure, facility or
                                                     Supplement (U.S. Government Printing                    installation means all of the pollutant-
                                                                                                                                                                     (ii) Notwithstanding the provisions of
                                                     Office stock numbers 4101–0066 and                      emitting activities which belong to the same          paragraph (b)(6)(i) of this section,
                                                     003–005–00176–0, respectively).                         industrial grouping, are located on one or            building, structure, facility, or
                                                        (ii) Notwithstanding the provisions of               more contiguous or adjacent properties, and           installation means, for onshore
                                                     paragraph (b)(6)(i) of this section,                    are under the control of the same person (or          activities under SIC Major Group 13: Oil
                                                     building, structure, facility, or                       persons under common control) except the              and Gas Extraction, all of the pollutant-
                                                                                                             activities of any vessel. Pollutant-emitting          emitting activities included in Major
                                                     installation means, for onshore
                                                                                                             activities shall be considered as part of the         Group 13 that are located on one or
                                                     activities in SIC Major Group 13: Oil                   same industrial grouping if they belong to the
                                                     and Gas Extraction, all of the pollutant-                                                                     more contiguous or adjacent properties,
                                                                                                             same ‘‘Major Group’’ (i.e., which have the
                                                     emitting activities included in Major                   same two digit code) as described in the              and are under the control of the same
                                                     Group 13, are located on one or more                    Standard Industrial Classification Manual,            person (or persons under common
                                                     contiguous or adjacent properties, and                  1972, as amended by the 1977 Supplement               control). Pollutant emitting activities
                                                     are under the control of the same person                (U.S. Government Printing Office stock                shall be considered adjacent if they are
                                                     (or persons under common control).                      numbers 4101–0066 and 003–005–00176–0,                located on the same surface site, or on
                                                                                                             respectively).                                        surface sites that are located within 1⁄4
                                                     Pollutant-emitting activities shall be
                                                                                                                (ii) Notwithstanding the provisions of             mile of one another, where a surface site
                                                     considered adjacent if one of the                       paragraph II.2.(i) of this appendix, building,
                                                     following circumstances apply:                                                                                has the same meaning as in 40 CFR
                                                                                                             structure, facility or installation means, for
                                                        (A) The pollutant-emitting activities                onshore activities in SIC Major Group 13: Oil         63.761.
                                                     are separated by a distance of 1⁄4 mile or              and Gas Extraction, all of the pollutant-             [PROPOSED REGULATORY TEXT FOR
                                                     more and there is an exclusive                          emitting activities included in Major Group           OPTION 2]
                                                     functional interrelatedness; or                         13, are located on one or more contiguous or
                                                        (B) The pollutant-emitting activities                adjacent properties, and are under the control          (6)(i) Building, structure, facility, or
                                                     are separated by a distance of less than                of the same person (or persons under                  installation means all of the pollutant-
                                                     1⁄4 mile.                                               common control). Pollutant-emitting                   emitting activities which belong to the
                                                                                                             activities shall be considered adjacent if one        same industrial grouping, are located on
                                                     *       *    *     *     *                              of the following circumstances apply:
                                                     ■ 4. In appendix S to part 51, revise
                                                                                                                                                                   one or more contiguous or adjacent
                                                                                                                (A) The pollutant-emitting activities are
                                                     section A.2. to read as follows:                                                                              properties, and are under the control of
                                                                                                             separated by a distance of 1⁄4 mile or more
                                                                                                             and there is an exclusive functional                  the same person (or persons under
                                                     APPENDIX S TO PART 51—EMISSION                          interrelatedness; or                                  common control) except the activities of
                                                     OFFSET INTERPRETATIVE RULING                               (B) The pollutant-emitting activities are          any vessel. Pollutant-emitting activities
                                                     *      *     *       *      *                           separated by a distance of less than 1⁄4 mile.        shall be considered as part of the same
                                                     II. Initial Screening Analyses and                      *       *     *      *       *                        industrial grouping if they belong to the
                                                     Determination of Applicable Requirements                                                                      same ‘‘Major Group’’ (i.e., which have
                                                                                                             PART 52—APPROVAL AND                                  the same first two digit code) as
                                                        A. * * *
                                                                                                             PROMULGATION OF                                       described in the Standard Industrial
                                                     [PROPOSED REGULATORY TEXT FOR                           IMPLEMENTATION PLANS                                  Classification Manual, 1972, as
                                                     OPTION 1]                                                                                                     amended by the 1977 Supplement (U.S.
                                                                                                             ■ 5. The authority citation for part 52
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                                                       2. (i) Building, structure, facility or                                                                     Government Printing Office stock
                                                     installation means all of the pollutant-                continues to read as follows:                         numbers 4101–0066 and 003–005–
                                                     emitting activities which belong to the same                Authority: 42 U.S.C. 7401 et seq.                 00716–0, respectively.
                                                     industrial grouping, are located on one or                                                                      (ii) Notwithstanding the provisions of
                                                     more contiguous or adjacent properties, and             ■ 6. In § 52.21, revise paragraph (b)(6) to
                                                     are under the control of the same person (or            read as follows:                                      paragraph (b)(6)(i) of this section,
                                                     persons under common control) except the                                                                      building, structure, facility, or
                                                     activities of any vessel. Pollutant-emitting            § 52.21 Prevention of significant                     installation means, for onshore
                                                     activities shall be considered as part of the           deterioration of air quality.                         activities in SIC Major Group 13: Oil
                                                     same industrial grouping if they belong to the          *       *     *      *       *                        and Gas Extraction, all of the pollutant-


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                                                     56592                 Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Proposed Rules

                                                     emitting activities included in Major                   § 70.2   Definitions.                                 defining ‘‘major source,’’ a stationary
                                                     Group 13, are located on one or more                    [PROPOSED REGULATORY TEXT FOR                         source or group of stationary sources
                                                     contiguous or adjacent properties, and                  OPTION 2]                                             shall be considered part of a single
                                                     are under the control of the same person                                                                      industrial grouping if all of the pollutant
                                                     (or persons under common control).                      *      *    *     *     *                             emitting activities at such source or
                                                     Pollutant-emitting activities shall be                     Major source means any stationary                  group of sources on contiguous or
                                                     considered adjacent if one of the                       source (or any group of stationary                    adjacent properties belong to the same
                                                     following circumstances apply:                          sources that are located on one or more               Major Group (i.e., all have the same two-
                                                        (A) The pollutant-emitting activities                continuous or adjacent properties, and                digit code) as described in the Standard
                                                     are separated by a distance of 1⁄4 mile or              are under common control of the same                  Industrial Classification Manual, 1987.
                                                     more and there is an exclusive                          person (or persons under common                       For onshore activities belonging to SIC
                                                     functional interrelatedness; or                         control)) belonging to a single major                 Major Group 13: Oil and Gas Extraction,
                                                        (B) The pollutant-emitting activities                industrial grouping and that are                      pollutant emitting activities shall be
                                                     are separated by a distance of less than                described in paragraph (1), (2), or (3) of            considered adjacent if they are located
                                                     1⁄4 mile.                                               this definition. For the purposes of                  on the same surface site, or are on
                                                     *      *    *     *    *                                defining ‘‘major source,’’ a stationary               surface sites that are located within 1⁄4
                                                                                                             source or group of stationary sources                 mile of one another, where a surface site
                                                     PART 70—STATE OPERATING PERMIT                          shall be considered part of a single                  has the same meaning as in 40 CFR
                                                     PROGRAMS                                                industrial grouping if all of the pollutant           63.761.
                                                                                                             emitting activities at such source or                 *      *    *      *     *
                                                     ■ 7. The authority citation for part 70                 group of sources on contiguous or
                                                     continues to read as follows:                           adjacent properties belong to the same                ■ 12. In § 71.2, revise the undesignated
                                                         Authority: 42 U.S.C. 7401, et seq.                  Major Group (i.e., all have the same two-             text, and paragraphs 1 and 2 of the
                                                                                                             digit code) as described in the Standard              definition for ‘‘Major sources’’ to read as
                                                     ■ 8. In § 70.2, revise the undesignated                                                                       follows:
                                                     text of the definition for ‘‘Major source’’             Industrial Classification Manual, 1987.
                                                     to read as follows:                                     For onshore activities belonging to SIC               § 71.2   Definitions.
                                                                                                             Major Group 13: Oil and Gas Extraction,
                                                     § 70.2   Definitions.                                   pollutant emitting activities shall be                [PROPOSED REGULATORY TEXT FOR
                                                                                                             considered adjacent if one of the                     OPTION 2]
                                                     [PROPOSED REGULATORY TEXT FOR
                                                     OPTION 1]                                               following circumstances apply:                        *      *    *     *     *
                                                                                                                (1) The pollutant-emitting activities                 Major source means any stationary
                                                     *      *    *      *     *                              are separated by a distance of 1⁄4 mile or
                                                       Major source means any stationary                                                                           source (or any group of stationary
                                                                                                             more and there is an exclusive                        sources that are located on one or more
                                                     source (or any group of stationary                      functional interrelatedness; or
                                                     sources that are located on one or more                                                                       contiguous or adjacent properties, and
                                                                                                                (2) The pollutant-emitting activities              are under common control of the same
                                                     continuous or adjacent properties, and                  are separated by a distance of less than
                                                     are under common control of the same                                                                          person (or persons under common
                                                                                                             1⁄4 mile.
                                                     person (or persons under common                                                                               control)), belonging to a single major
                                                     control)) belonging to a single major                   *      *    *     *     *                             industrial grouping and that are
                                                     industrial grouping and that are                                                                              described in paragraph (1), (2), or (3) of
                                                                                                             PART 71—FEDERAL OPERATING                             this definition. For the purposes of
                                                     described in paragraph (1), (2), or (3) of              PERMIT PROGRAMS
                                                     this definition. For the purposes of                                                                          defining ‘‘major source,’’ a stationary
                                                     defining ‘‘major source,’’ a stationary                 ■ 10. The authority citation for part 71              source or group of stationary sources
                                                     source or group of stationary sources                   continues to read as follows:                         shall be considered part of a single
                                                     shall be considered part of a single                                                                          industrial grouping if all of the pollutant
                                                                                                                 Authority: 42 U.S.C. 7401, et seq.                emitting activities at such source or
                                                     industrial grouping if all of the pollutant
                                                     emitting activities at such source or                   Subpart A—Operating Permits                           group of sources on contiguous or
                                                     group of sources on contiguous or                                                                             adjacent properties belong to the same
                                                     adjacent properties belong to the same                  ■ 11. In § 71.2, revise the undesignated              Major Group (i.e., all have the same two-
                                                     Major Group (i.e., all have the same two-               text of the definition for ‘‘Major                    digit code) as described in the Standard
                                                     digit code) as described in the Standard                sources’’ to read as follows:                         Industrial Classification Manual, 1987.
                                                     Industrial Classification Manual, 1987.                                                                       For onshore activities belonging to SIC
                                                                                                             § 71.2   Definitions.                                 Major Group 13: Oil and Gas Extraction,
                                                     For onshore activities belonging to SIC
                                                     Major Group 13: Oil and Gas Extraction,                 [PROPOSED REGULATORY TEXT FOR                         pollutant emitting activities shall be
                                                     pollutant emitting activities shall be                  OPTION 1]                                             considered adjacent if one of the
                                                     considered adjacent if they are located                                                                       following circumstances apply:
                                                                                                             *     *     *     *     *
                                                     on the same surface site, or are on                       Major source means any stationary                      (1) The pollutant-emitting activities
                                                     surface sites that are located within 1⁄4               source (or any group of stationary                    are separated by a distance of 1⁄4 mile or
                                                     mile of one another, where a surface site               sources that are located on one or more               more and there is an exclusive
                                                     has the same meaning as in 40 CFR                       contiguous or adjacent properties, and                functional interrelatedness; or
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                                                     63.761.                                                 are under common control of the same                     (2) The pollutant-emitting activities
                                                     *      *    *      *     *                              person (or persons under common                       are separated by a distance of less than
                                                                                                                                                                   1⁄4 mile.
                                                     ■ 9. In § 70.2, revise the undesignated                 control)), belonging to a single major
                                                     text, and paragraphs 1 and 2 of the                     industrial grouping and that are                      *      *    *     *     *
                                                     definition for ‘‘Major source’’ to read as              described in paragraph (1), (2), or (3) of            [FR Doc. 2015–21026 Filed 9–17–15; 8:45 am]
                                                     follows:                                                this definition. For the purposes of                  BILLING CODE 6560–50–P




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Document Created: 2015-12-15 09:28:05
Document Modified: 2015-12-15 09:28:05
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionProposed rule.
DatesComments. Comments must be received on or before November 17, 2015.
ContactFor further general information on this rulemaking, contact Ms. Cheryl Vetter, Office of Air Quality Planning and Standards (C504-03), U.S. Environmental Protection Agency, by phone at (919) 541-4391, or by email at [email protected]
FR Citation80 FR 56579 
RIN Number2060-AS06
CFR Citation40 CFR 49
40 CFR 51
40 CFR 52
40 CFR
CFR AssociatedEnvironmental Protection; Air Pollution Control; Construction Permit; Intergovernmental Relations; Major Source; Oil and Gas; Incorporation by Reference; Operating Permit and Administrative Practice and Procedure

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