81_FR_35729 81 FR 35622 - Source Determination for Certain Emission Units in the Oil and Natural Gas Sector

81 FR 35622 - Source Determination for Certain Emission Units in the Oil and Natural Gas Sector

ENVIRONMENTAL PROTECTION AGENCY

Federal Register Volume 81, Issue 107 (June 3, 2016)

Page Range35622-35634
FR Document2016-11968

The U.S. Environmental Protection Agency (EPA) is finalizing a revision to regulations applicable to permitting of stationary sources of air pollution under the New Source Review (NSR) and title V programs in the Clean Air Act (CAA or Act). For sources in the oil and natural gas sector, this rule clarifies the meaning of the term ``adjacent'' that is used to determine the scope of a ``stationary source'' for purposes of the Prevention of Significant Deterioration (PSD) and Nonattainment NSR (NNSR) preconstruction permitting programs and the scope of a ``major source'' in the title V operating permit program in the onshore oil and natural gas sector. The revised definitions are based on the proximity of emitting activities and consideration of whether the activities share equipment. We believe that this clarification will provide greater certainty for the regulated community and for permitting authorities, and will result in more consistent determinations of the scope of a source in this sector. The EPA is adopting this revised definition in the regulations that apply to permits issued by the EPA and states to which the EPA has delegated federal authority to administer these programs. Other state and local permitting authorities with EPA-approved programs may also revise their permit programs to adopt this definition, but are not required to do so.

Federal Register, Volume 81 Issue 107 (Friday, June 3, 2016)
[Federal Register Volume 81, Number 107 (Friday, June 3, 2016)]
[Rules and Regulations]
[Pages 35622-35634]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-11968]



[[Page 35622]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, 70, and 71

[EPA-HQ-OAR-2013-0685; FRL-9946-55-OAR]
RIN 2060-AS06


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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The U.S. Environmental Protection Agency (EPA) is finalizing a 
revision to regulations applicable to permitting of stationary sources 
of air pollution under the New Source Review (NSR) and title V programs 
in the Clean Air Act (CAA or Act). For sources in the oil and natural 
gas sector, this rule clarifies the meaning of the term ``adjacent'' 
that is used to determine the scope of a ``stationary source'' for 
purposes of the Prevention of Significant Deterioration (PSD) and 
Nonattainment NSR (NNSR) preconstruction permitting programs and the 
scope of a ``major source'' in the title V operating permit program in 
the onshore oil and natural gas sector. The revised definitions are 
based on the proximity of emitting activities and consideration of 
whether the activities share equipment. We believe that this 
clarification will provide greater certainty for the regulated 
community and for permitting authorities, and will result in more 
consistent determinations of the scope of a source in this sector. The 
EPA is adopting this revised definition in the regulations that apply 
to permits issued by the EPA and states to which the EPA has delegated 
federal authority to administer these programs. Other state and local 
permitting authorities with EPA-approved programs may also revise their 
permit programs to adopt this definition, but are not required to do 
so.

DATES:  This final rule is effective on August 2, 2016.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-2060-2013-0685. All documents in the docket are 
listed on the http://www.regulations.gov Web site. Although listed in 
the index, some information is not publicly available, e.g., 
Confidential Business Information or other information whose disclosure 
is restricted by statute. Certain other material, such as copyrighted 
material, is not placed on the Internet and will be publicly available 
only in hard copy form. Publicly available docket materials are 
available electronically through http://www.regulations.gov.

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; or 
Mr. Greg Nizich, Office of Air Quality Planning and Standards (C504-
03), U.S. Environmental Protection Agency, by phone at (919) 54l-3078, 
or by email at nizich.greg@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

A. Does this action apply to me?

    Entities potentially affected directly by this final action include 
owners or operators of sources of new and modified operations within 
the oil and natural gas production and processing segments of the oil 
and gas sector (herein after referred to as ``oil and natural gas 
operations''). Such entities are expected to be in the groups indicated 
in the following table. In addition, state, local and tribal 
governments may be affected by the rule if they update state rules to 
adopt the changes being made to federal permit program rules.

------------------------------------------------------------------------
             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.
Federal Government.....................  May Be Affected.
State/Local/Tribal Government..........  May Be Affected.
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B. 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 document will be posted at: http://www3.epa.gov/airquality/oilandgas/actions.html. Upon its publication in the Federal Register, 
only the published version may be considered the final official version 
of the notice, and will govern in the case of any discrepancies between 
the Federal Register published version and any other version.
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    \1\ North American Industry Classification System (NAICS). The 
table refers to the more commonly used NAICS code. However, the 
four-digit SIC codes 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 mains 
the list of SIC codes for references. We have retained the SIC codes 
in the regulation.
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C. How is this document organized?

    The information presented in this document is organized as follows:

I. General Information
    A. Does this action apply to me?
    B. Where can I get a copy of this document and other related 
information?
    C. How is this document organized?
II. Background for Final Rulemaking
III. Summary of the Final Rule Requirements
IV. Responses to Significant Comments on the Proposed Rule
    A. General Comments
    B. Comments on Option 1
    C. Comments on Option 2
    D. Implementation Issues
V. Environmental Justice Considerations
VI. 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 (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    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. Congressional Review Act (CRA)
    L. Judicial Review
Statutory Authority

II. Background for Final Rulemaking

    This action affects the determination of what constitutes a 
``stationary source'' for the PSD and NNSR preconstruction permit 
programs under title I of the CAA, and the determination what 
constitutes a ``major source'' for the title V operating permit 
program. Under the PSD and NNSR programs, a ``stationary source'' is 
defined as a ``building, structure, facility, or installation'' that 
emits or may emit a ``regulated NSR pollutant.'' \2\ 40 CFR 
51.165(a)(1)(i), 51.166(b)(5). In turn, a

[[Page 35623]]

``building, structure, facility, or installation'' is defined as ``all 
of the pollutant-emitting activities'' that satisfy three prongs: they 
``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).'' 40 CFR 
51.165(a)(1)(ii); 51.166(b)(6). Under the title V program, ``stationary 
source'' is defined similarly, but with reference to a different set of 
pollutants; however, the term ``building, structure, facility, or 
installation'' is not defined. Instead, the same three-prong test is 
incorporated into the definition of ``major source.'' 40 CFR 70.2; 
71.2. We \3\ use the term ``source determination'' to describe a case-
specific examination of particular pollutant-emitting activities to see 
whether, under the definitions just discussed, they are collectively a 
``stationary source'' for purposes of the PSD or NNSR programs or are 
potentially (depending on their level of emissions) a ``major source'' 
for the purposes of the title V program.
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    \2\ The term ``regulated NSR pollutant'' is defined differently 
for the two programs, consistent with their separate purposes. 40 
CFR 51.165(a)(1); 51.166(b)(49).
    \3\ In this preamble, the term ``we'' and ``our'' refers to the 
EPA.
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    On September 18, 2015, the EPA proposed two options for clarifying 
the meaning of the term ``adjacent'' in the second prong discussed in 
the previous paragraph as applied to oil and gas sources, under both 
the preconstruction and operating permits programs. Source 
Determination for Certain Emission Units in the Oil and Natural Gas 
Sector. See 80 FR 56579, September 18. 2015. The preamble to the 
proposal provided a discussion of the history of making source 
determinations generally, and for these segments specifically, the 
previous guidance we have issued and the litigation that resulted. We 
explained our rationale for the two options we proposed for clarifying 
the term ``adjacent'' as it is used in determining the scope of a 
source for purposes of air permitting for these segments. The EPA's 
preferred option, referred to as Option 1, would have required 
permitting authorities to aggregate, for permitting purposes, all 
onshore oil and natural gas emitting equipment \4\ that are within the 
two-digit Standard Industrial Classification (SIC) code 13 \5\ 
(hereafter referred to as ``oil and natural gas operations''), are 
under common control of a single person (or persons under common 
control), and that are located within \1/4\ mile of each other. We 
believed that establishing a ``bright line'' based on the proximity of 
the equipment (in this case, \1/4\ mile), as several oil and gas-
producing states seemed to have done, would simplify permitting because 
it would avoid a more detailed case-by-case evaluation based on the 
relationship of the emitting equipment. We also proposed a second 
option, Option 2, which would have aggregated all emitting equipment 
within \1/4\ mile but would also have allowed permitting authorities to 
aggregate emitting equipment located beyond \1/4\ mile based on the 
relationship between the operations. The EPA described this 
relationship as ``exclusive functional interrelatedness,'' but 
requested comment on more specific ways to describe a relationship that 
meets the common sense notion of a plant. Finally, we requested comment 
on whether some combination of these two options might be preferable. 
This final rulemaking notice does not repeat all of the discussion, but 
refers interested readers to the preamble of the proposed rule for 
additional background.
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    \4\ Within this document the terms ``emitting equipment'' and 
``emitting activities'' are used interchangeably.
    \5\ The description for Major Group 13: Oil and Gas Extraction 
can be found at https://www.osha.gov/pls/imis/sic_manual.display?id=8&tab=group. This major group includes 
establishments primarily engaged in: (1) Producing crude petroleum 
and natural gas; (21 extracting oil from oil sands and oil shale; 
(3) producing natural gasoline and cycle condensate; and (4) 
producing gas and hydrocarbon liquids from coal at the mine site. 
Types of activities included are exploration, drilling, oil and gas 
well operation and maintenance, the operation of natural gasoline 
and cycle plants, and the gasification, liquefaction, and pyrolysis 
of coal at the mine site. This major group also includes such basic 
activities as emulsion breaking and desilting of crude petroleum in 
the preparation of oil and gas customarily done at the field site. 
Pipeline transportation of petroleum, gasoline, and other petroleum 
products (except crude petroleum field gathering lines) is 
classified in Transportation and Public Utilities, Major Group 46, 
and of natural gas in Major Group 49.
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III. Summary of the Final Rule Requirements

    This section provides a brief summary of the requirements of the 
final rule. Further discussion of the basis for these requirements and 
summaries of our responses to significant comments are provided in the 
next section.
    Based on the range and substance of the comments received, the EPA 
has made two revisions to the proposed definition of ``adjacent'' that 
are reflected in the final rule. As discussed in the proposal, we 
proposed that pollutant-emitting activities from onshore oil and 
natural gas operations that are located on the same ``surface site,'' 
as defined in 40 CFR 63.761,\6\ or on surface sites located within \1/
4\ mile of each other, would be considered ``adjacent'' for purposes of 
determining the source. We selected \1/4\ mile as a ``bright line'' 
distance for clarifying the meaning of ``adjacent'' based on proximity 
to be consistent with those states that also use a ``bright line'' 
approach as a way of delineating sources in this category. This also 
was, in our view, a reasonable distance within which sources in oil and 
natural gas operations are likely to be interconnected. However, we 
received comments from several entities that said that we misunderstood 
the states' approach. According to them, several states that use the 
\1/4\ mile boundary do not aggregate everything within it, as we 
proposed. Rather they use the \1/4\ mile boundary to define an area 
beyond which they would not consider pollutant emitting equipment to be 
adjacent and part of a single source. Within \1/4\ mile, these states 
determine on a case-by-case basis which equipment should be considered 
a single source because it meets the ``common sense notion of a 
plant.''
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    \6\ 40 CFR 63.761 defines surface sites 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.
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    For the reasons discussed more fully later in this notice, we have 
decided to modify the proposed definition in response to the 
recommendations made by commenters. As we proposed under both Option 1 
and Option 2, emitting equipment in the oil and natural gas production 
and processing segments located at a single onshore surface site will 
be considered ``adjacent'' under the final rule and, thus, part of a 
single stationary source, assuming the equipment is also under the 
control of one person (or persons under common control) and belongs to 
the two-digit SIC code 13. Also, as we proposed in Option 1, we are 
finalizing a definition that equipment on separate surface sites 
located more than \1/4\ mile apart is not ``adjacent'' and, therefore, 
is not part of the same stationary source. However, in this final rule, 
we are modifying Option 1 by incorporating an element from Option 2 and 
the state policies on which we modeled Option 1. Specifically, we would 
not require that all emitting equipment located on separate surface 
sites within \1/4\ mile of each other be considered ``adjacent.'' 
Instead, emitting equipment located on separate surface sites within 
\1/4\ mile of each other would only be aggregated as a single 
stationary source if the emitting equipment also have a relationship 
that meets the ``common sense notion of a plant.''
    This expression, the ``common sense notion of a plant,'' has been a 
criterion by which we have made source determinations for sources in 
all industries since our PSD rules were

[[Page 35624]]

revised in 1980 (45 FR 52676, August 7, 1980) in response to the D.C. 
Circuit Court of Appeals Alabama Power decision. Alabama Power Co. v. 
Costle, 636 F. 2d 323, 397 (D.C. Cir. 1979). In the onshore oil and 
natural gas production and processing segments, the ``plant'' is not as 
easy to discern as it is for other industrial operations, such as an 
electric utility generating plant or an oil refinery. Unlike these 
industrial operations, onshore oil and natural gas operations may not 
have an obvious boundary and may be located on property owned and 
controlled by others.
    As explained in our proposal, one way in which we historically have 
evaluated whether activities meet the common sense notion of a plant 
was through the use of ``functional interrelatedness'' or ``operational 
dependence.'' See 80 FR 56581, September 18. 2015. Our proposed Option 
2 would have looked for ``exclusive functional interrelatedness'' of 
emitting equipment outside the \1/4\ mile radius. See 80 FR 56587, 
September 18. 2015. We asked for comment on whether we should further 
define ``exclusive functional interrelatedness'' to give additional 
clarity to regulators and the regulated community.
    Rather than looking for ``functional interrelatedness'' in oil and 
natural gas operations and giving this term more specific definition, 
we have decided in this final rule that it is preferable to look for 
``shared equipment'' to determine when emitting activities in oil and 
natural gas operations have a relationship that meets the ``common 
sense notion of a plant.'' The EPA has applied the generalized notion 
of ``functional interrelatedness'' in other ways in other source 
categories, in some cases, at the request of the source. However, for 
oil and natural gas operations, we find it preferable to use a term 
that will give a more precise and clear criterion for defining when 
emitting activities within a \1/4\ mile proximity are sufficiently 
related to be considered adjacent, in line with the objectives of the 
proposal.
    For onshore oil and natural gas production, this final rule 
establishes that, where separate surface sites located within \1/4\ 
mile of each other include shared equipment necessary to process or 
store oil or natural gas, these surface sites will be aggregated. The 
EPA has concluded that equipment satisfying these criteria will meet 
the common sense notion of a plant. Under this final rule, separate 
surface sites that do not include shared emitting equipment, even if 
within \1/4\ mile, will not be aggregated.
    For example, an owner or operator proposing to construct a new well 
site should draw a \1/4\ mile circle from the center of the proposed 
new well site. If there is commonly-controlled emitting equipment 
located within that \1/4\ mile circle and within major SIC code 13, and 
that equipment is used to process or store the oil, natural gas or the 
byproducts of production that will come from the new well site, then 
the emissions from that equipment should be included in determining 
whether the new well site is a major source. Examples of shared 
equipment include, but are not limited to, produced fluids storage 
tanks, phase separators, natural gas dehydrators or emissions control 
devices. In this example, the shared equipment is necessary for the 
operation of the new well site, and should be considered part of the 
same source because together all of the equipment operates as a 
``plant.'' However, under the terms of this rule, we would not consider 
two well sites that feed to a common pipeline to be part of the same 
stationary source if they do not share any processing or storage 
equipment between them.
    We believe this change from the proposed rule is responsive to both 
the comments that we received from several states about the burden of 
aggregating individual surface sites, and from the industry about the 
independent nature of many, if not most, surface sites.
    We proposed to clarify the meaning of ``adjacent'' in all of the 
permitting rules, both the rules that apply to the EPA and delegated 
states as the permitting authority, as well as the rules that apply to 
state, local or tribal permitting authorities. However, we requested 
comment on whether we should require state, local and tribal permitting 
authorities to make this proposed change to their regulations. Several 
states, including both those with oil and natural gas operations and 
those without, expressed a desire to retain their existing approach to 
source determinations in permitting. These states, particularly those 
with oil and natural gas operations, expressed concern about the 
increased burden of the EPA's proposed Option 1. After reviewing the 
comments, the EPA has decided to adopt this change in its permitting 
rules, but to not require state, local and tribal permitting 
authorities to adopt this change. However, if they choose to do so, 
state, local and tribal permitting authorities may adopt the EPA's 
revised definition and submit their revised program to the EPA for 
approval.

IV. Responses to Significant Comments on the Proposed Rule

    The EPA received more than 19,000 comments on the proposed rule. In 
this section we summarize the major comments and our responses. For 
details of all the significant comments and our responses, please refer 
to the Response to Comments document in the docket for this rulemaking.

A. General Comments

1. Need for Clear Guidance
a. Summary of Proposal
    In the proposed rule, the EPA described the history and the current 
status of making source determinations for onshore oil and natural gas 
operations. We described the guidance that had been issued, the source 
determinations that have been made and the lack of clarity that has 
often resulted. We proposed two options for clarifying the term 
``adjacent'' when making source determinations for onshore oil and 
natural gas operations.
b. Brief Summary of Comments
    Several commenters stated that providing clear and reasonable 
definitions in rulemaking would benefit the regulated community, 
regulators and other stakeholders by providing needed certainty. The 
current lack of clarity, according to commenters, has resulted in 
increased costs due to permitting delays and litigation following the 
issuance of a permit. Several commenters also supported our decision to 
provide this clarification through rulemaking, rather than by 
additional guidance.
    Other commenters did not believe that a rulemaking is necessary. 
These commenters stated that the rulemaking is not necessary because 
the term ``adjacent'' is unambiguous, that it is synonymous with 
``contiguous,'' i.e., that ``adjacent' means touching, sharing a 
border, or abutting. These commenters pointed to the dictionary 
definition of the word ``adjacent'' as being ``contiguous.'' Some of 
these commenters went on to say that the meaning of the term 
``adjacent'' has been clearly established in relevant case law, citing 
Summit Petroleum Corp. v. EPA, 690 F.3d 733, 742 (6th Cir. 2012). And 
some commenters questioned our authority to adopt the two meanings of 
the term that we proposed, claiming that the proposed definitions 
violated the D.C. Circuit Court of Appeals' holdings in Alabama Power 
or that the EPA simply lacked authority to define the term ``adjacent'' 
in a way that, according to commenters, conflicted with the dictionary 
definition and/or the

[[Page 35625]]

decision of the Sixth Circuit Court of Appeals in Summit Petroleum.
c. EPA Response
    We agree with the commenters who stated that a rulemaking is the 
best way to provide clarity in permitting. However, we recognize that 
most permits are issued by states, and that some states have 
substantial experience in making source determinations for oil and 
natural gas operations. Accordingly, in recognition of this state 
expertise, and in response to many comments, we are making the meaning 
of ``adjacent'' adopted in this rule mandatory only for the permit 
programs administered by the EPA or delegated states, while leaving to 
other states the decision of whether to make a similar change to their 
approved permitting.
    We disagree with commenters who claim that the EPA lacks authority 
to define adjacent by regulation or that state the rulemaking is 
unnecessary because of the dictionary meaning of ``adjacent'' and the 
Summit Petroleum decision. These commenters are mistaken that the EPA 
cannot define ``adjacent'' by rule to mean all emitting equipment 
within a specified radius.\7\ Commenters gave two reasons for this: 
first, that to do so would not comport with Alabama Power, and second, 
that the EPA's authority to give a meaning to ``adjacent'' that varies 
from its dictionary definition is foreclosed by the Summit Petroleum 
decision.
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    \7\ Although we are not finalizing an option (such as our 
proposed Option 2) that would potentially include emitting 
activities outside a \1/4\ mile radius, commenters are also mistaken 
(for similar reasons) in asserting that we could not have finalized 
such an option.
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    Regarding the first point, the CAA affords the EPA discretion in 
the permitting context to provide a more specific meaning to the term 
``stationary source'' that is used in the Act. See, Chevron USA, Inc. 
v. NRDC, 467 U.S. 837 (1984) (discussing the meaning of the term 
stationary source under the CAA). Through a rulemaking process, we are 
defining the statutory term ``stationary source'' for a particular 
context: the PSD, NNSR and title V programs as applied to oil and 
natural gas operations. The definition of the term ``stationary 
source'' in section 302(z) of the Act, the related definition in 
section 111(a)(3), the structure of the Act, and its legislative 
history do not supply a clear meaning of ``stationary source'' in this 
context. Thus, it is permissible for the agency, in a rulemaking 
process, to apply a reasonable interpretation of the statute that 
resolves an ambiguity.\8\ It is also permissible for the EPA to create 
a rule using a ``bright line,'' as we are doing here, for purposes of 
better administering the Act, see Emily's List v. Fed. Election Comm'n, 
581 F.3d 1, 22 n.20 (D.C. Cir. 2002).
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    \8\ In fact, the Supreme Court in Chevron reversed the D.C. 
Circuit Court of Appeals' judgment that the EPA had impermissibly 
interpreted ``stationary source,'' stating that the Circuit Court 
erred by ``read[ing] the statute inflexibly'' and not deferring to 
the EPA's reasonable interpretation.
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    As to the second point, while the Summit Petroleum decision is a 
motivating factor for this action, the decision, and the Court's 
reference to the dictionary meaning of ``adjacent'' in that decision, 
are not preclusive of our authority to take the action. The Summit 
Petroleum Court addressed the issue of whether, in the absence of a 
rule defining the term ``adjacent,'' the EPA had permissibly 
interpreted the term in a particular source determination. The Court 
looked to the dictionary definition of ``adjacent'' to determine 
whether the EPA's interpretation of this term would ``permit the 
agency, under the guise of interpreting a regulation, to create de 
facto a new regulation.'' Summit Petroleum, 690 F.3d at 740 (quoting 
Christensen v. Harris Cnty., 529 U.S. 576, 588 (2000)). In this 
rulemaking action, the EPA is not interpreting the term ``adjacent'' in 
the existing regulation; instead we are assigning a meaning to the term 
by going through a rulemaking process. When an agency is defining a 
word by rule, the agency is free to give specialized meaning to the 
word without being bound to hew precisely to a particular dictionary 
definition. See Stenberg v. Carhart, 530 U.S. 914, 942 (2000) (noting 
that an ``explicit definition'' can permissibly ``vary from the term's 
ordinary meaning''). And in fact, the PSD regulations in 40 CFR 51.166 
are replete with such specialized meanings, for example in the 
definitions of ``significant'' and ``process unit.'' \9\
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    \9\ For similar reasons, comments that cite case law about 
agency interpretations of statutes and that refer to the dictionary 
definition of ``adjacent'' are off target: the statutory term we are 
interpreting is ``stationary source'' (and the related definition in 
section 111(a)(3)), not ``adjacent.'' We are defining the term 
``adjacent'' in order to give meaning to our reasonable 
interpretation of the statutory term ``stationary source.''
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    Even if commenters were correct--and they are not--that the EPA is 
bound by a particular dictionary definition of ``adjacent'' when 
defining the term for specialized use, commenters are mistaken about 
the meaning of the term. While many dictionary definitions of 
``adjacent'' include ``contiguous'' as one definition, this is not the 
only definition of the word ``adjacent.'' For example, one online 
dictionary defines ``adjacent'' to mean ``lying near, close, or 
contiguous; adjoining; neighboring.'' \10\ Another dictionary provides 
the following ``Synonym Discussion of Adjacent'': ``Adjacent may or may 
not imply contact but always implies absence of anything of the same 
kind in between . . .'' \11\ This dictionary makes a further 
distinction in its ``Synonym Discussion'', stating that the word 
``adjoining'' definitely implies meeting and touching at some point or 
line.'' \12\ So, while we agree that ``adjacent'' can mean contiguous, 
we do not agree that it unambiguously must. We are finalizing this rule 
to provide a bright line distance beyond which pollutant-emitting 
operations in the onshore oil and natural gas production and processing 
segments are not considered ``adjacent.'' The decision to use both 
words ``contiguous'' and ``adjacent'' in our PSD rules was a deliberate 
choice, designed to include emitting equipment that is on property that 
is touching (contiguous) with equipment that may not be contiguous, but 
still meets the common sense notion of a plant. Had we intended 
``adjacent'' to mean exactly the same as ``contiguous,'' we would not 
have included the word ``adjacent.''
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    \10\ Dictionary.com http://dictionary.reference.com/browse/adjacent?s=t accessed February 22, 2016.
    \11\ Thus, two surface sites separated by \1/4\ mile may be 
``adjacent,'' if there is no surface site in between them.
    \12\ Merriam-Webster Dictionary, http://www.merriam-webster.com/dictionary/adjacent accessed February 22, 2016.
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    Finally, we disagree with commenters who argue the Summit Petroleum 
Court provided sufficient guidance on the meaning of ``adjacent'' to 
obviate the need for this rulemaking. The Court's decision is binding 
only in the Sixth Circuit, which leaves the issue unresolved 
elsewhere.\13\ The Court also did not provide guidance on how 
``nearby'' sources must be to consider them ``adjacent'' for purposes 
of permitting. This is the question that we have taken up in this 
rulemaking, specific to onshore oil and natural gas operations. We have 
clarified that ``adjacent'' for these segments means within \1/4\ mile 
and having shared equipment.
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    \13\ While the D.C. Circuit Court of Appeals has held that the 
EPA is bound by our regional consistency regulations, the Court also 
suggested that we could revise them in order ``to account for 
regional variances created by a judicial decision or circuit 
splits.'' Nat'l Envt'l Dev. Ass'n's Clean Air Proj. v. EPA, 752 F.3d 
999, 1010 (D.C. Cir. 2014). We have proposed to do so. 80 FR 63935 
(October 22, 2015).

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[[Page 35626]]

B. Comments on Option 1

1. Support for Option 1
a. Summary of Proposal
    In Option 1, the EPA proposed that the meaning of ``adjacent,'' for 
purposes of determining the scope of a source in the oil and natural 
gas production and processing segments, should be based solely on the 
distance between pollutant emitting activities. Under this option, 
emitting equipment at a single surface site would be considered to be 
adjacent, and emitting equipment at two or more surface sites would be 
considered ``adjacent'' if they are located within \1/4\ mile of each 
other. We stated in the proposal that we believed this option to be the 
most consistent with the ``common sense notion of a plant.'' We chose 
the distance, \1/4\ mile, because it is the distance we found in 
permitting guidance issued by a number of oil and natural gas producing 
states. The EPA also considered this distance reasonable to use for the 
types of equipment used in this industry.
b. Brief Summary of Comments
    Several commenters supported Option 1 as written. These commenters 
preferred Option 1 over Option 2 because they believed it is the least 
ambiguous and reflects the plain meaning of the word ``adjacent.'' One 
commenter stated that this approach would streamline the determination 
of the scope of a ``stationary source'' and would reduce the time it 
takes to get a permit.
    Other commenters, while supporting Option 1 over Option 2, 
recommended revisions to Option 1. Many of these commenters offered 
different distances within which emitting equipment or operations 
should be considered one source. The suggested distances ranged from a 
requirement that operations be physically touching or abutting to be 
considered ``adjacent'' to distances of up to one mile.
    Finally, many state and industry commenters recommended a 
particular revision to Option 1. These commenters recommended that the 
EPA consider emitting activities located on separate surface sites 
within \1/4\ mile to be adjacent only if they also meet the ``common 
sense notion of a plant'' that the EPA has used since 1980 when 
determining the scope of a source for permitting purposes. Two state 
commenters told us that while their state has guidance that includes 
\1/4\ mile as the distance for determining the source, they do not use 
the distance as a bright line. Rather, they use it as an outer 
boundary, within which they assess whether emitting equipment should be 
considered a single source for purposes of permitting, but beyond which 
they do not consider emitting equipment to be adjacent.
c. EPA Response
    We are adopting the approach recommended by several commenters: to 
require that pollutant-emitting equipment on separate surface sites be 
considered one source only if the sites are within \1/4\ mile of each 
other and the equipment is considered by the permitting authority to 
meet the common sense notion of a plant. More specifically, the 
language in the final rule treats certain oil and gas-related 
pollutant-emitting activities as a plant based on ``shared equipment.'' 
Operations located on the same surface site would continue to be 
considered part of the same source provided that they are also within 
the same two-digit SIC code and are under common control of the same 
person (or persons under common control). While we do not agree with 
comments that argue that a particular dictionary definition of 
``adjacent'' and/or the Summit Petroleum and Alabama Power decisions 
compel this outcome, we agree with the comments that this approach 
better achieves the purpose of the rule: to reduce permitting burdens, 
as explained later in this notice.
2. Do Not Support Option 1
a. Brief Summary of Comments
    Some commenters did not support Option 1. One concern raised was 
that, while the Option 1 approach would streamline permitting, it would 
not provide sufficient flexibility to consider and address local air 
quality concerns. Other commenters were concerned that the Option 1 
approach would result in the aggregation of sources that should not be 
treated as one source. Another commenter was concerned that the Option 
1 approach would allow the oil and gas industry to avoid major source 
regulation under the CAA. This commenter went on to say that Option 1 
would not approximate a ``common sense notion of a plant'' or fit 
within the ordinary meaning of facility or installation as used in the 
definition of source.
b. EPA Response
    In response to concerns raised by commenters about the need for 
permitting authorities to be able to address local air quality 
concerns, we are not requiring that EPA-approved state and local 
programs adopt the approach that the EPA is finalizing for permits 
issued by the EPA and delegated states. This will allow state and local 
permitting authorities with EPA-approved programs to continue to use 
their discretion to make source determinations for this industry in the 
manner that they believe best addresses their local air quality 
concerns. For example, those local programs in California that have a 
long history of permitting oil and natural gas operations on contiguous 
leases as single sources under their approved programs will be able to 
continue to do so, without having to submit an equivalency 
demonstration showing that their programs are at least as stringent as 
the program adopted by the EPA. Because the EPA is not requiring states 
with approved programs to apply our meaning of the term ``adjacent,'' 
and our rule changes make clear that for approved programs this change 
is optional, these approved programs already comply with our PSD, NNSR 
and title V rules, without these changes. States also remain free to 
adopt more stringent requirements in order to address local air quality 
concerns.
    Those states that administer PSD permitting programs under a 
delegation of federal authority by the EPA will have to follow the 
approach that we are finalizing, or develop their own permitting 
programs and have them approved by the EPA as a revision to a state 
implementation plan (SIP). We did not receive adverse comments 
regarding delegated PSD programs having to use this approach. Those 
state and local programs that are approved, not delegated, that 
incorporate the EPA's program by reference, may incorporate the 
definition of ``adjacent'' for onshore oil and natural gas operations 
in 40 CFR 52.21(b)(6)(ii), and/or 40 CFR appendix S to part 51; or they 
may specifically exclude this paragraph from their incorporation when 
they next update it.
    There may be state and local governments with approved programs 
that wish to clarify the meaning of adjacent for oil and natural gas 
operations, as the EPA has done in its own permitting rules. Those 
state and local governments would be able to do so, but would not be 
required to do so on any particular schedule. We believe, after careful 
review of the comments received, that this approach offers the best 
resolution for the lack of clarity that has existed for this industry, 
particularly when we have been the permitting authority, but does not 
increase the burden on approved states by requiring them to revise 
their permitting programs (or to develop an equivalency demonstration) 
and submit the changes to us as SIP revisions.

[[Page 35627]]

3. Response to the EPA's Question on the Appropriate Distance
a. Summary of Proposal
    We requested comments on whether some distance other than the 
proposed \1/4\ mile would be a more appropriate distance within which 
emitting equipment should be considered ``adjacent.'' See 80 FR 56579, 
September 18, 2015.
b. Brief Summary of Comments
    Commenters provided a range of responses to this question, ranging 
from 44 feet, which the commenter said was consistent with guidance 
from the Bureau of Land Management, to one mile, which the commenter 
suggested is consistent with the largest manufacturing plant that is 
considered one source. Other commenters recommended that a ``city 
block'' be used as the basis for determining the sources. However, 
these commenters did not agree on the dimensions of a city block. Other 
suggestions included distances based on the size of the lease, or some 
combination of leases, and a distance based on the well spacing in a 
particular field or state.
c. EPA Response
    The EPA is retaining the proposed \1/4\ mile distance in the final 
rule. This distance was originally selected to be consistent with those 
states that also use a specific distance. In addition, as commenters 
mention, it is a commonly-used distance in oil and gas development for 
well spacing. Well spacing is typically set by a state agency such as 
an oil and gas conservation commission, and is intended to develop the 
oil and gas resource fairly and efficiently. One-quarter of a mile 
corresponds to a 40-acre lease. We think that a variable distance, such 
as one based on an individual lease or combination of leases held by an 
entity would complicate permitting, contrary to the purpose of this 
rule. And, while a city block might have some meaning in an urban area, 
we were not persuaded that it has any more meaning than \1/4\ mile in 
the areas where the majority of oil and natural gas development is 
taking place.
4. Response to the EPA's Question on ``Daisy Chaining''
a. Summary of Proposal
    We requested comments on whether sources within \1/4\ mile of each 
other should be ``daisy chained.'' We described a series of emissions 
units as being ``daisy chained'' when each individual emitting unit is 
located within \1/4\ mile of the next unit, but where the last unit is 
separated from the first unit by a much larger distance. See 80 FR 
56587, September 18, 2015.
b. Brief Summary of Comments
    Most commenters expressed opposition to ``daisy chaining.'' 
Commenters were concerned that by ``daisy chaining'' emitting 
equipment, sources could extend for dozens of miles, or could even 
bring in equipment connected by a pipeline which would be inconsistent 
with the EPA's previous statements on source in the 1980 PSD rule 
preamble. In that rule, we stated that we did not intend ``stationary 
source'' to encompass activities that would be many miles apart along a 
long line operation (45 FR 52676, August 7, 1980).
c. EPA Response
    After reviewing the comments we received, the EPA has determined 
that ``daisy chaining'' of emitting equipment would not provide the 
additional clarity that we seek through this rulemaking. We agree with 
commenters who said it could extend sources over many miles, perhaps 
even into the jurisdiction of multiple permitting authorities and in 
some instances beyond any common sense notion of a plant. This would 
increase the permitting burden for federal, state, local and tribal 
permitting authorities but we do not believe that it would provide 
additional air quality benefits beyond those that will occur as a 
result of the emission controls provided under the various New Source 
Performance Standards (NSPS), National Emission Standards for Hazardous 
Air Pollutants (NESHAP), and state and federal minor source programs, 
as explained later in this notice. We are, therefore, not adopting a 
requirement to include ``daisy chained'' equipment as part of a single 
source.
    To illustrate how we intend this process to work in order to avoid 
``daisy chaining'', we provide the following example. On surface site 
``A'', there is an existing collection of equipment consisting of 
several tanks, a pump jack, a heater-treater and a flare. The owner/
operator of site A decides to drill a new well within \1/4\ mile of 
site A, called site ``B.'' Site B feeds its produced water to the tanks 
on site A. Site B must consider the emissions from site A in 
determining whether site B is a major source because sites A and B are 
part of the same stationary source. At a later date, the same owner/
operator decides to drill a third well, ``C,'' within \1/4\ mile of 
site B but more than \1/4\ mile from site A. Sites C and B do not share 
any equipment. Therefore, site C is a single stationary source. Site C 
is not included with sites A and B (just because of proximity to B), 
and, therefore, there is no daisy chain created. If site C feeds 
material to the storage tanks at site A, then it would still not be 
considered part of the stationary source that includes site A, because 
it is located more than \1/4\ mile away from site A.
    Now, assume that the same owner/operator drills a fourth well, 
``D,'' within \1/4\ mile of site A, but more than \1/4\ mile from sites 
B and C. Site D will also feed its produced water to site A. Site D 
must be treated as a modification to the source that is made up of 
sites A and B. In this case, site A may be viewed as a ``hub'' and 
sites B and D are the spokes. The new source consists of sites A, B and 
D because sites B and D are within \1/4\ mile of the site at which the 
shared equipment exists. However, site C is not part of this source 
because site C is more than \1/4\ from the surface site with which it 
shares equipment. New sites would not be included within the source 
that includes sites A, B and D if they were beyond \1/4\ mile, so there 
would be no daisy chain.
    We believe that the permitting authority can make these source 
determinations, on a case-by-case basis, based on the clarifications 
that the EPA has provided. We do not believe that it is possible to 
eliminate all case-by-case source determinations. However, we believe 
we have provided sufficient guidance to ensure that such determinations 
are made consistently, and with more certainty for both permitting 
authorities and sources.
5. Response to the EPA's Question on What To Use as the Starting Point 
for Measuring the Radius of the Source
a. Summary of Proposal
    We requested comment on whether to use the edge or some other 
feature of the oil or natural gas operation as the starting point of 
the \1/4\ mile measurement radius when determining the source.
b. Brief Summary of Comments
    Commenters generally supported defining the point from which the 
distance between pollutant-emitting equipment is measured. However, 
there was disagreement on whether the center of the emitting equipment 
or the property boundary should be used. Several state commenters 
recommended that the property boundary be the starting point for 
determining the distance between operations because this distance is 
most relevant for purposes of air quality. However several commenters 
in the oil and gas industry

[[Page 35628]]

recommended that the geographic center of the site for purposes of 
establishing the \1/4\ mile distance, because property boundaries may 
be difficult to determine. Unlike sites in other industries, oil and 
natural gas operations frequently do not have fences, so the property 
boundaries are not always easily distinguished. Emitting equipment, 
such as may be found at a well site, can be and often is easily 
identified by Global Positioning System coordinates.
c. EPA Response
    The EPA has decided to establish the \1/4\ mile boundary from the 
center of the equipment at the new or modified source for construction 
permits. At an oil or natural gas well, that may be the wellhead; on a 
surface site, it should be established from the center of the emitting 
activities. We believe the center of the emitting activities is the 
easiest to establish for purposes of permitting, and the easiest to 
observe for purposes of enforcement. This best achieves our goal of 
providing greater clarity for permitting authorities and permittees, 
improving permitting, compliance and enforcement. For title V permits, 
the center of the equipment on each surface site(s) being permitted 
should be used.
6. Permitting Burden Under Option 1
a. Summary of Proposal
    We requested 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.
b. Brief Summary of Comments
    Several state commenters expressed concern that Option 1, as 
proposed, would increase the administrative burden of issuing permits. 
This is primarily because they believe that the proposed requirement to 
aggregate emitting equipment within \1/4\ mile would require them to 
reassess prior source determinations. This is particularly a concern 
when wells change ownership. The commenters stated that each 
transaction would require permitting authorities to reanalyze one or 
more previously-permitted sources to determine which equipment should 
be included in the source after the purchase or sale. Another commenter 
stated that while they expect an increase in minor source permitting 
under the EPA's proposed Option 1, they already have in place a number 
of streamlining options, such as general permits, which expedite 
regulatory timelines.
c. EPA Response
    As discussed in Section IV.D.3 in this document, this rule will 
apply prospectively and will not require a reassessment of permits that 
have been completed. Furthermore, the EPA has revised the approach to 
source determination in the final rule to address concerns about burden 
raised by commenters. Instead of requiring that all activities within a 
\1/4\ mile radius be aggregated, the EPA would instead only aggregate 
those activities within a \1/4\ mile radius that share equipment. In 
many cases, this would result in the wells being permitted separately, 
reducing the administrative burden of transferring or modifying permits 
when wells change ownership. In addition, the EPA is not requiring that 
state, local, and tribal permitting authorities adopt the approach 
being finalized by us, so those permitting authorities that are 
concerned there would be an increased burden from our approach (which 
we do not expect) would not have to follow it.
    We believe that the overall effect of this rule will be to reduce 
the permitting burden for permits issued by the EPA. The permitting 
burden for state, local and tribal permitting will differ depending on 
whether those permitting authorities choose to adopt these changes, and 
will depend on how any revised procedures differ from their current 
permitting practices. In some jurisdictions, the burden may be 
unchanged, either because the permitting authority chooses not to adopt 
the changes, or because the changes the EPA is finalizing do not 
substantially differ from the permitting authority's current practices.
7. Environmental Impact of Option 1
a. Summary of Proposal
    We requested comment on whether there would be adverse air quality 
impacts, including effects on National Ambient Air Quality Standard 
(NAAQS) compliance, as a result of Option 1.
b. Brief Summary of Comments
    One commenter expressed concern that the EPA's proposal would 
adversely affect the environment because it would encourage development 
of oil and gas resources over a larger area in order to avoid being 
within \1/4\ mile. This would increase the footprint of operations, and 
have an adverse impact on landowners and communities. Other commenters 
stated that the aggregation of oil and gas operations would not result 
in environmental benefits because the emissions are already controlled 
by multiple NSPS and NESHAP standards as well as state minor source 
permitting programs. Finally, one commenter stated that oil and gas 
development is the largest industrial source of volatile organic 
compounds and a significant source of sulfur dioxide and nitrogen oxide 
pollution in many areas, and that failure to subject these sources to 
PSD and NNSR would frustrate attempts to ensure NAAQS compliance.
c. EPA Response
    The EPA is finalizing several rules applicable to oil and natural 
gas operations, including an NSPS that will require pollution controls 
for oil well completions, equipment leaks and pneumatic controllers, 
among others, and a control techniques guideline (CTG) that will 
similarly define presumptive controls for the CAA's reasonably 
available control technology (RACT) requirements for certain areas. The 
additional emissions control requirements of the NSPS (and the CTG when 
adopted in RACT SIPs) make it less likely that these sources will be 
major sources, with or without the meaning of ``adjacent'' that we are 
adopting in this rule. This is because the threshold for permitting is 
based on the potential-to-emit of the source and the potential-to-emit 
may be reduced by enforceable limitations, such as those imposed by the 
NSPS. These restrictions, along with enforceable restrictions imposed 
by the states, reduce both the actual and potential emissions of the 
sources, reducing the likelihood that they will trigger major NSR or 
title V permitting. These control requirements will also ensure that 
new and modified operations emit substantially less air pollution which 
would contribute to local air quality. To the extent that NSPS 
requirements for these sources are insufficient to protect the NAAQS in 
attainment or unclassifiable areas--which we do not expect--the federal 
or state minor NSR program is intended to address that issue. For 
nonattainment areas, if the CTG presumptive controls are not sufficient 
to attain the NAAQS, then other emission reductions will be required in 
order to attain the standards.
    We do not believe that this final rule is likely to result in 
decisions by companies to locate farther apart to avoid major source 
permitting. We believe that the location of the underground mineral 
assets, advances in drilling technology that allow multiple wells to be 
drilled from one surface site, restrictions on well spacing imposed by 
a state agency such as an oil and gas conservation commission, and the 
restrictions imposed by the owner of the surface land are more likely 
to affect siting decisions than a desire to avoid

[[Page 35629]]

major source permitting. As discussed earlier in this document, we 
believe the combined effect of the emission control standards already 
in place and the additional controls now being finalized is that fewer 
oil and natural gas operations will be major.

C. Comments on Option 2

1. Support for Option 2
a. Summary of Proposal
    In Option 2, the EPA proposed that all equipment within \1/4\ mile 
would be considered a single source and would allow equipment beyond 
\1/4\ mile to be included in the source if it was ``exclusively 
functionally interrelated.'' See 80 FR 56579, September 18, 2015.
b. Brief Summary of Comments
    Several commenters representing permitting authorities supported 
Option 2 because they believed that it is the option most similar to 
the way they make source determinations for this industry and others 
under their existing, SIP-approved programs.
c. EPA Response
    The EPA is not adopting the ``functional interrelatedness'' 
criterion in the final rule, but we are incorporating one aspect of 
Option 2 into the final rule. In addition, the EPA is including its 
final approach only in the regulations that apply to the EPA and 
delegated states. This means that the states that prefer to use an 
approach like Option 2 will be able to continue to do so.
2. Do Not Support Option 2
a. Brief Summary of Comments
    Oil and gas industry commenters were uniformly opposed to Option 2. 
These commenters stated that the use of ``functionality'' has no 
support in the CAA, is inconsistent with the plain meaning of the term 
``adjacent,'' and results in sources that do not resemble in any way a 
``plant.'' In addition, they stated that the use of such a test 
resulted in significant uncertainty because of the subjective nature of 
the analysis involved in determining which emissions units are part of 
the source. Several state permitting authority commenters echoed these 
sentiments and added that the interrelatedness test adds layers of 
analysis that is not productive. Several commenters expressed concern 
about the permitting burden of adopting Option 2. Commenters noted that 
in two cases where the EPA attempted to assess ``functional 
interrelatedness,'' the source determinations took several years, were 
litigated, and ultimately ended in decisions not to aggregate the 
various surface sites.
b. EPA Response
    Because of the difficulty of applying a ``functional 
interrelatedness'' criterion to oil and natural gas operations, the EPA 
is not adopting this criterion as part of the final rule. We do not 
agree with all of the comments opposed to Option 2, in particular those 
that stated Option 2 was beyond the EPA's authority, for similar 
reasons that we disagree with comments that Option 1 was beyond our 
authority. We do agree with those that stated applying a ``functional 
interrelatedness'' criterion by itself would not reduce permitting 
burdens for oil and natural gas operations to the same degree as a 
proximity test alone under Option 1. However, because of concerns 
discussed above with applying a proximity criterion alone, we are 
combining the proximity criterion in Option 1 with the element of 
Option 2 that involves considering whether equipment is related in a 
manner that meets the common sense notion of a plant. Our selected 
approach combines these elements by limiting aggregation to pollutant 
emitting equipment within \1/4\ mile of each other, but requires that 
these sources also have shared equipment. We believe that this 
approach, unlike applying ``functional interrelatedness'' outside of a 
specific perimeter, will limit the amount of analysis required for 
permitting in the oil and natural gas production and processing 
segments. By providing a clear limit on the distance within which we 
would require analysis of the relationship of the equipment, we believe 
permitting will proceed more quickly, and with more certainty for 
permitting authorities and the regulated community.
3. Environmental Impact Under Option 2
a. Summary of Proposal
    We specifically requested comments on whether there might be any 
environmental harm or benefit resulting from adopting Option 2.
b. Brief Summary of Comments
    One state commenter expressed concern that a strict application of 
the plain meaning of the term ``adjacent'' could allow oil and gas 
companies to manipulate their operations to avoid being considered a 
major source. Another commenter stated that without aggregation, oil 
and gas operations are subject to widely varying and less stringent 
standards under state minor source programs. This commenter believes 
that subjecting these operations to major source permitting would 
provide substantial public health and environmental benefits. This 
commenter believes that the emission control provided by the NSPS is 
not sufficient because it only addresses new or modified equipment and 
does not cover all equipment or activities encompassed by the industry 
and does not address local or regional air quality issues.
    Other commenters stated that the proposal would have little to no 
impact on air emissions because the control technology required if 
equipment is aggregated into major sources will likely be identical to 
what is required of minor sources. One commenter listed the numerous 
federal and state standards that already apply to oil and gas sources, 
regardless of whether the sources are determined to be major or minor, 
as evidence that the industry is already subject to stringent emissions 
control requirements.
c. EPA Response
    It is important to understand that even if equipment beyond a \1/4\ 
mile distance is aggregated under something like Option 2, only new or 
modified equipment would be subject to the control requirements of Best 
Available Control Technology under PSD or Lowest Achievable Emission 
Rate under the NNSR permitting program. Most new equipment would also 
be subject to limitations under the NSPS, whether the source is 
considered major or minor. Emission control requirements under state 
and federal minor source programs apply in addition to any requirements 
of the NSPS. These requirements may be more stringent than the NSPS, 
and in some states apply to new as well as to existing sources. Title V 
permitting generally does not result in new control requirements, it 
only compiles the requirements that exist in the underlying standards, 
such as the NSPS or NESHAP into one permit.
    For these reasons, we believe that aggregating equipment into major 
sources for title V, PSD or NNSR permitting under Option 2 would result 
in little environmental benefit over the approach adopted today. In our 
judgement, Option 2 would be more likely to result in delays in 
permitting and greater uncertainty for the permitting authorities and 
regulated community alike.

D. Implementation Issues

1. Requirements for States To Adopt
a. Summary of Proposal
    We proposed changes to the permitting rules that would have

[[Page 35630]]

applied both to the EPA, as the permitting authority, to delegated 
states, and to state, local and tribal permitting authorities. We 
invited comment on whether states should be required to adopt the 
proposed changes.
b. Brief Summary of Comments
    We received comments from several state and local permitting 
authorities, including those with and without oil and gas operations, 
requesting that their programs be allowed to continue to make 
determinations of ``adjacent'' on a case-by-case basis without being 
required to adopt the approach finalized by the EPA. This was 
particularly true for local programs in California, which have a long 
history of regulating oil and gas operations. A commenter representing 
the oil and gas industry operating in California echoed the comment 
that the existing program should not be disrupted.
c. EPA Response
    We agree with commenters who expressed the view that state and 
local permitting authorities should have the ability to make source 
determinations under their existing permitting programs. Once their 
programs are approved by the EPA, state and local governments are given 
the responsibility to make permitting decisions, and we do not intend 
any changes in this balance of responsibilities. We, therefore, are 
adopting these changes in our rules, but not requiring that state and 
local permitting authorities with approved programs also adopt the new 
definitions. These permitting authorities may, but are not required to, 
adopt these definitions, as discussed earlier in this document. This 
approach has a number of advantages. First, it is responsive to states' 
concerns that they have much experience making source determinations 
and they do not see the need to make changes to their existing 
approach. Second, it would not trigger an obligation for approved 
states, particularly those states without oil and gas development, to 
revise their state rules and submit a SIP revision, or to provide a 
demonstration that their existing rules are of equivalent stringency.
    With regard to title V permitting, we are also only adopting these 
changes in the rules that apply to the EPA and delegated programs. 
States and local agencies with approved programs may adopt a similar 
provision in their title V rules at their discretion.
2. Applicability to Other Industries
a. Summary of Proposal
    In the proposed rule, we stated that we intended to define 
``adjacent'' only for onshore oil and natural gas operations covered by 
two-digit SIC Major Group 13, for reasons that are discussed more fully 
in the preamble to the proposed rule. See 80 FR 56586, September 18, 
2015.
b. Brief Summary of Comments
    We received comments both asking us to and asking us not to apply 
the definition developed for oil and natural gas operations to all 
industries. One state commenter stated that permitting authorities and 
regulated sources in all categories should be subject to the same 
definition developed for the oil and natural gas industry. A commenter 
from an industry outside the oil and natural gas industry asked that 
the EPA confirm that proximity is the only basis on which the EPA will 
make determinations of adjacency. We also received comments from the 
transmission and distribution segments of the oil and natural gas 
sector requesting that the EPA clarify how this rule applies to these 
segments of the industry.
c. EPA Response
    The EPA did not propose this approach for other industries, and, 
therefore, we are not finalizing this approach for any industry other 
than onshore oil and natural gas extraction and production within two-
digit SIC Major Group 13. It does not apply to the transmission or 
distribution of oil or natural gas, which is covered under two-digit 
SIC Major Group 49. We continue to believe, as we stated in our 
proposal, that the nature of this industry poses unique challenges for 
making these source determinations, so this approach is warranted for 
this industry category. Source determinations for other industries will 
continue to be made on a case-by-case basis.
3. Applicability to Previously Issued Permits
a. Summary of Proposal
    The EPA did not discuss the application of the proposed options to 
previously issued permits in the preamble to the proposed rule.
b. Brief Summary of Comments
    Several commenters stated that any new rule that the EPA adopts 
should not be applied retroactively. One commenter urged the EPA to 
both make it clear that new federal language will be implemented only 
on a prospective basis, but at the same time asked that any previous 
decisions made to aggregate sources should be subject to new source 
determinations under the language finally adopted. Another commenter 
said that with a new definition of an existing term, some previous 
determinations will be consistent with the new definition, but others 
will not. This commenter specifically requested that the EPA include 
anti-backsliding language in the final rule to minimize the impact on 
previous determinations. In particular, under this rule surface sites 
that do not share equipment with other surface sites will not be 
aggregated, which will simplify permit actions when an independent 
surface site changes ownership.
c. EPA Response
    Historically, the EPA's rules are generally adopted on a 
prospective basis. That is, a new rule applies only after that rule is 
effective, and is not be applied retroactively to previous actions. 
This rule is no different. The EPA intends that this rule will be 
applied from August 2, 2016 forward. Previous source determinations and 
issued permits, whether sources were aggregated or not, should not be 
affected by this new definition of ``adjacent''.

V. Environmental Justice Considerations

    This document 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 oil and natural gas 
operations. This clarification will assist permitting authorities and 
permit applicants in making source determinations for the oil and 
natural gas industry, and is not intended to result in less 
environmental protection for human health and the environment. It is 
being finalized as a part of a comprehensive strategy to addresses 
emissions from the oil and natural gas sector which includes new (or 
lower) emission standards or requirements for a number of types of 
emitting equipment. As explained earlier in this document and in detail 
in our response to comments, the EPA does not anticipate that this rule 
will create a significant issue for attainment and maintenance of the 
NAAQS. Therefore, the EPA believes this action will not have a 
disproportionately high and adverse human health or environmental 
effects on minority populations or low-income populations.

[[Page 35631]]

VI. Statutory and Executive Order Reviews

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

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

B. Paperwork Reduction Act (PRA)

    This action does not impose any new information collection burden. 
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 action finalizes a definition 
that clarifies the permitting requirements applicable to new and 
modified oil and natural gas sources. This final action is not likely 
to increase the burden associated with permitting. It is likely to 
decrease the burden of permitting for the EPA, when it is the 
permitting authority. The extent to which it will change the permitting 
burden for other permitting authorities will depend on whether state or 
local permitting authorities adopt the changes, and the extent to which 
these changes are different from the current practice.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. 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 a rule relieves regulatory burden, has no 
net burden or otherwise has a positive economic effect on the small 
entities subject to the rule. This final rule will not impose any 
additional requirements on small entities. This action clarifies 
existing requirements, and, by limiting the area in which an oil and 
gas source's operations must be analyzed for consideration as a single 
source, limits the burden on the sources and permitting authorities. 
Entities potentially affected directly by this final rule include 
state, local and tribal governments and none of these governments are 
small entities.

D. Unfunded Mandates Reform Act (UMRA)

    This 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.

E. Executive Order 13132: Federalism

    This 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. The 
requirement to obtain permits for new major sources is imposed by the 
CAA. This rule would interpret those requirements as they apply to oil 
and natural gas operations. Thus, Executive Order 13132 does not apply 
to these regulation revisions. Finally, the EPA is not requiring that 
states adopt these changes.

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 Tribal 
Implementation Plan that allows it to issue NSR permits and, in any 
case, we are not requiring any permitting authority other than the EPA 
and delegated states to adopt these changes. Furthermore, this 
regulation does 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 characterizing air quality and 
developing plans to attain the NAAQS, and this regulation does nothing 
to modify that relationship. Thus, Executive Order 13175 does not apply 
to this action.
    Consistent with the EPA Policy on Consultation and Coordination 
with Indian tribes, the EPA held several meetings with tribal 
environmental professionals to discuss issues associated with this 
rule, including a presentation on a National Tribal Air Association 
policy call on September 10, 2015, and an outreach call to state, local 
and tribal permitting authorities on September 15, 2015. These meetings 
discussed several related oil and gas rules, including this Source 
Determination rule. Summaries of these meetings are included in the 
docket for this rule.
    The EPA also offered consultation during the rulemaking process, 
but received no requests. The EPA provided an opportunity for tribes 
and stakeholders to provide written comments on the proposed rule. One 
tribe did submit comments and these comments are included in the docket 
for this rule.

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

    The EPA interprets Executive Order 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, per the definition of ``covered regulatory action'' in 
section 2-202 of the Executive Order. This action is not subject to 
Executive Order 13045 because it does not directly involve an 
environmental health risk or safety risk.

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

    This 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. The EPA is finalizing this clarification 
to its permitting rules and 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 oil and 
natural gas sources.

I. National Technology Transfer and Advancement Act

    This action does not involve technical 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 action will not have potential disproportionately high and 
adverse human health or environmental effects on any population, 
including any minority, low-income or indigenous populations, because 
it does not affect the level of protection provided to human health or 
the environment. The results of the evaluation of

[[Page 35632]]

environmental justice considerations is contained in Section V of this 
preamble titled, ``Environmental Justice Considerations.''

K. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule 
report to each House of the Congress and to the Comptroller General of 
the United States. This action is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

L. Judicial Review

    Under section 307(b)(1) of the CAA, petitions for judicial review 
of any nationally applicable regulation, or any action the 
Administrator ``finds and publishes'' as based on a determination of 
nationwide scope or effect must be filed in the United States Court of 
Appeals for the District of Columbia Circuit within 60 days of the date 
the promulgation, approval, or action appears in the Federal Register. 
This action is nationally applicable, as it revises the rules governing 
all PSD, NNSR and title V programs, in 40 CFR 51.166, 40 CFR 51.165, 40 
CFR 52.21, 40 CFR part 70 and 40 CFR part 71. The Administrator also 
finds that this action is based on a determination of nationwide scope 
and effect, as it revises the EPA's direct implementation of the PSD 
and title V programs, which is in effect in multiple Circuits. As a 
result, petitions for review of this regulation must be filed in the 
United States Court of Appeals for the District of Columbia Circuit 
within August 2, 2016. Filing a petition for reconsideration by the 
Administrator of this final action does not affect the finality of this 
action for the purposes of judicial review nor does it extend the time 
within which a petition for judicial review must be filed, and shall 
not postpone the effectiveness of this action.

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

    Dated: May 12, 2016.
Gina McCarthy,
Administrator.

    For the reasons stated in the preamble, title 40, chapter I of the 
Code of Federal Regulations is 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) * * *
    (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) 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 4101-0065 and 003-005-00176-0, 
respectively).
    (B) The plan may include the following provision: Notwithstanding 
the provisions of paragraph (a)(1)(ii)(A) of this section, building, 
structure, facility, or installation means, for onshore activities 
under Standard Industrial Classification (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 if 
they are located on surface sites that are located within \1/4\ mile of 
one another (measured from the center of the equipment on the surface 
site) and they share equipment. Shared equipment includes, but is not 
limited to, produced fluids storage tanks, phase separators, natural 
gas dehydrators or emissions control devices. Surface site, as used in 
this paragraph (a)(1)(ii)(B), has the same meaning as in 40 CFR 63.761.
* * * * *

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) * * *
    (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) The plan may include the following provision: 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 if they are located on surface sites that are located 
within \1/4\ mile of one another (measured from the center of the 
equipment on the surface site) and they share equipment. Shared 
equipment includes, but is not limited to, produced fluids storage 
tanks, phase separators, natural gas dehydrators or emissions control 
devices. Surface site, as used in this paragraph (b)(6)(ii), has the 
same meaning as in 40 CFR 63.761.
* * * * *

[[Page 35633]]


0
4. In appendix S to part 51, revise section II.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. * * *
    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.A.2(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 if they are located on surface sites that are located 
within \1/4\ mile of one another (measured from the center of the 
equipment on the surface site) and they share equipment. Shared 
equipment includes, but is not limited to, produced fluids storage 
tanks, phase separators, natural gas dehydrators or emissions 
control devices. Surface site, as used in this paragraph II.A.2(ii), 
has the same meaning as in 40 CFR 63.761.
* * * * *

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) * * *
    (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 Standard Industrial Classification (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 if they are located on surface sites that are located 
within \1/4\ mile of one another (measured from the center of the 
equipment on the surface site) and they share equipment. Shared 
equipment includes, but is not limited to, produced fluids storage 
tanks, phase separators, natural gas dehydrators or emissions control 
devices. Surface site, as used in this paragraph (b)(6)(ii), has the 
same meaning as in 40 CFR 63.761.
* * * * *

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 introductory text of the definition for 
``Major source'' to read as follows:


Sec.  70.2  Definitions.

* * * * *
    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. State programs may adopt the following provision: For 
onshore activities belonging to Standard Industrial Classification 
(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 if they are located on surface sites that are located 
within \1/4\ mile of one another (measured from the center of the 
equipment on the surface site) and they share equipment. Shared 
equipment includes, but is not limited to, produced fluids storage 
tanks, phase separators, natural gas dehydrators or emissions control 
devices. Surface site, as used in the introductory text of this 
definition, has the same meaning as in 40 CFR 63.761.
* * * * *

PART 71--FEDERAL OPERATING PERMIT PROGRAMS

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

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

Subpart A--Operating Permits

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


Sec.  71.2  Definitions.

* * * * *
    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 Standard Industrial 
Classification (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 if they are located on surface sites that are 
located within \1/4\ mile of one another (measured from the center of 
the equipment on the surface site) and they share equipment.

[[Page 35634]]

Shared equipment includes, but is not limited to, produced fluids 
storage tanks, phase separators, natural gas dehydrators or emissions 
control devices. Surface site, as used in the introductory text of this 
definition, has the same meaning as in 40 CFR 63.761.
* * * * *
[FR Doc. 2016-11968 Filed 6-2-16; 8:45 am]
 BILLING CODE 6560-50-P



                                                35622                 Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations

                                                ENVIRONMENTAL PROTECTION                                form. Publicly available docket                        actions.html. Upon its publication in
                                                AGENCY                                                  materials are available electronically                 the Federal Register, only the published
                                                                                                        through http://www.regulations.gov.                    version may be considered the final
                                                40 CFR Parts 51, 52, 70, and 71                         FOR FURTHER INFORMATION CONTACT: For                   official version of the notice, and will
                                                [EPA–HQ–OAR–2013–0685; FRL–9946–55–                     further general information on this                    govern in the case of any discrepancies
                                                OAR]                                                    rulemaking, contact Ms. Cheryl Vetter,                 between the Federal Register published
                                                                                                        Office of Air Quality Planning and                     version and any other version.
                                                RIN 2060–AS06
                                                                                                        Standards (C504–03), U.S.                              C. How is this document organized?
                                                Source Determination for Certain                        Environmental Protection Agency, by
                                                                                                        phone at (919) 541–4391, or by email at                  The information presented in this
                                                Emission Units in the Oil and Natural                                                                          document is organized as follows:
                                                Gas Sector                                              vetter.cheryl@epa.gov; or Mr. Greg
                                                                                                        Nizich, Office of Air Quality Planning                 I. General Information
                                                AGENCY:  Environmental Protection                       and Standards (C504–03), U.S.                             A. Does this action apply to me?
                                                Agency (EPA).                                           Environmental Protection Agency, by                       B. Where can I get a copy of this document
                                                                                                                                                                     and other related information?
                                                ACTION: Final rule.                                     phone at (919) 54l–3078, or by email at
                                                                                                                                                                  C. How is this document organized?
                                                                                                        nizich.greg@epa.gov.                                   II. Background for Final Rulemaking
                                                SUMMARY:    The U.S. Environmental                      SUPPLEMENTARY INFORMATION:                             III. Summary of the Final Rule Requirements
                                                Protection Agency (EPA) is finalizing a                                                                        IV. Responses to Significant Comments on
                                                revision to regulations applicable to                   I. General Information                                       the Proposed Rule
                                                permitting of stationary sources of air                 A. Does this action apply to me?                          A. General Comments
                                                pollution under the New Source Review                                                                             B. Comments on Option 1
                                                (NSR) and title V programs in the Clean                    Entities potentially affected directly                 C. Comments on Option 2
                                                Air Act (CAA or Act). For sources in the                by this final action include owners or                    D. Implementation Issues
                                                oil and natural gas sector, this rule                   operators of sources of new and                        V. Environmental Justice Considerations
                                                                                                        modified operations within the oil and                 VI. Statutory and Executive Order Reviews
                                                clarifies the meaning of the term                                                                                 A. Executive Order 12866: Regulatory
                                                ‘‘adjacent’’ that is used to determine the              natural gas production and processing
                                                                                                                                                                     Planning and Review and Executive
                                                scope of a ‘‘stationary source’’ for                    segments of the oil and gas sector                           Order 13563: Improving Regulation and
                                                purposes of the Prevention of                           (herein after referred to as ‘‘oil and                       Regulatory Review
                                                Significant Deterioration (PSD) and                     natural gas operations’’). Such entities                  B. Paperwork Reduction Act (PRA)
                                                Nonattainment NSR (NNSR)                                are expected to be in the groups                          C. Regulatory Flexibility Act (RFA)
                                                preconstruction permitting programs                     indicated in the following table. In                      D. Unfunded Mandates Reform Act
                                                                                                        addition, state, local and tribal                            (UMRA)
                                                and the scope of a ‘‘major source’’ in the                                                                        E. Executive Order 13132: Federalism
                                                title V operating permit program in the                 governments may be affected by the rule
                                                                                                        if they update state rules to adopt the                   F. Executive Order 13175: Consultation
                                                onshore oil and natural gas sector. The                                                                              and Coordination With Indian Tribal
                                                revised definitions are based on the                    changes being made to federal permit                         Governments
                                                proximity of emitting activities and                    program rules.                                            G. Executive Order 13045: Protection of
                                                consideration of whether the activities                                                                              Children From Environmental Health
                                                                                                               Industry group              NAICS code 1              and Safety Risks
                                                share equipment. We believe that this
                                                clarification will provide greater                                                                                H. Executive Order 13211: Actions
                                                                                                        Oil and Gas Extraction ....      21111.                      Concerning Regulations That
                                                certainty for the regulated community                   Crude Petroleum and Nat-         211111.                     Significantly Affect Energy Supply,
                                                and for permitting authorities, and will                  ural Gas Extraction.                                       Distribution, or Use
                                                result in more consistent determinations                Natural Gas Liquid Ex-           211112.                  I. National Technology Transfer and
                                                of the scope of a source in this sector.                  traction.                                                  Advancement Act
                                                The EPA is adopting this revised                        Drilling Oil and Gas Wells       213111.                  J. Executive Order 12898: Federal Actions
                                                definition in the regulations that apply                Support Activities for Oil       213112.                     To Address Environmental Justice in
                                                to permits issued by the EPA and states                   and Gas.                                                   Minority Populations and Low-Income
                                                                                                        Federal Government ........      May Be Affected.            Populations
                                                to which the EPA has delegated federal                  State/Local/Tribal Govern-       May Be Affected.         K. Congressional Review Act (CRA)
                                                authority to administer these programs.                   ment.                                                   L. Judicial Review
                                                Other state and local permitting                                                                               Statutory Authority
                                                authorities with EPA-approved                           B. Where can I get a copy of this
                                                programs may also revise their permit                                                                          II. Background for Final Rulemaking
                                                                                                        document and other related
                                                programs to adopt this definition, but                  information?                                              This action affects the determination
                                                are not required to do so.                                                                                     of what constitutes a ‘‘stationary
                                                DATES: This final rule is effective on
                                                                                                          In addition to being available in the                source’’ for the PSD and NNSR
                                                August 2, 2016.                                         docket, an electronic copy of this                     preconstruction permit programs under
                                                                                                        document will be posted at: http://                    title I of the CAA, and the determination
                                                ADDRESSES: The EPA has established a
                                                                                                        www3.epa.gov/airquality/oilandgas/                     what constitutes a ‘‘major source’’ for
                                                docket for this action under Docket ID
                                                No. EPA–2060–2013–0685. All                                                                                    the title V operating permit program.
                                                                                                          1 North American Industry Classification System
                                                documents in the docket are listed on                                                                          Under the PSD and NNSR programs, a
                                                                                                        (NAICS). The table refers to the more commonly
                                                the http://www.regulations.gov Web                      used NAICS code. However, the four-digit SIC           ‘‘stationary source’’ is defined as a
                                                site. Although listed in the index, some                codes was the only code system in use at the time      ‘‘building, structure, facility, or
mstockstill on DSK3G9T082PROD with RULES




                                                information is not publicly available,                  our rules were developed. This classification          installation’’ that emits or may emit a
                                                                                                        system has since been replaced by the six-digit        ‘‘regulated NSR pollutant.’’ 2 40 CFR
                                                e.g., Confidential Business Information                 NAICS, which was developed with Canada and
                                                or other information whose disclosure is                Mexico, and is used for classifying North American     51.165(a)(1)(i), 51.166(b)(5). In turn, a
                                                restricted by statute. Certain other                    businesses. While the SIC codes are no longer
                                                                                                        updated, the United States Department of Labor’s         2 The term ‘‘regulated NSR pollutant’’ is defined
                                                material, such as copyrighted material,                 Occupational Safety and Health Administration still    differently for the two programs, consistent with
                                                is not placed on the Internet and will be               mains the list of SIC codes for references. We have    their separate purposes. 40 CFR 51.165(a)(1);
                                                publicly available only in hard copy                    retained the SIC codes in the regulation.              51.166(b)(49).



                                           VerDate Sep<11>2014   21:04 Jun 02, 2016   Jkt 238001   PO 00000   Frm 00042   Fmt 4700   Sfmt 4700   E:\FR\FM\03JNR1.SGM   03JNR1


                                                                       Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations                                              35623

                                                ‘‘building, structure, facility, or                        ‘‘oil and natural gas operations’’), are                 on surface sites located within 1⁄4 mile
                                                installation’’ is defined as ‘‘all of the                  under common control of a single                         of each other, would be considered
                                                pollutant-emitting activities’’ that satisfy               person (or persons under common                          ‘‘adjacent’’ for purposes of determining
                                                three prongs: they ‘‘belong to the same                    control), and that are located within 1⁄4                the source. We selected 1⁄4 mile as a
                                                industrial grouping’’; ‘‘are located on                    mile of each other. We believed that                     ‘‘bright line’’ distance for clarifying the
                                                one or more contiguous or adjacent                         establishing a ‘‘bright line’’ based on the              meaning of ‘‘adjacent’’ based on
                                                properties’’; and ‘‘are under the control                  proximity of the equipment (in this                      proximity to be consistent with those
                                                of the same person (or persons under                       case, 1⁄4 mile), as several oil and gas-                 states that also use a ‘‘bright line’’
                                                common control).’’ 40 CFR                                  producing states seemed to have done,                    approach as a way of delineating
                                                51.165(a)(1)(ii); 51.166(b)(6). Under the                  would simplify permitting because it                     sources in this category. This also was,
                                                title V program, ‘‘stationary source’’ is                  would avoid a more detailed case-by-                     in our view, a reasonable distance
                                                defined similarly, but with reference to                   case evaluation based on the                             within which sources in oil and natural
                                                a different set of pollutants; however,                    relationship of the emitting equipment.                  gas operations are likely to be
                                                the term ‘‘building, structure, facility, or               We also proposed a second option,                        interconnected. However, we received
                                                installation’’ is not defined. Instead, the                Option 2, which would have aggregated                    comments from several entities that said
                                                same three-prong test is incorporated                      all emitting equipment within 1⁄4 mile                   that we misunderstood the states’
                                                into the definition of ‘‘major source.’’ 40                but would also have allowed permitting                   approach. According to them, several
                                                CFR 70.2; 71.2. We 3 use the term                          authorities to aggregate emitting                        states that use the 1⁄4 mile boundary do
                                                ‘‘source determination’’ to describe a                     equipment located beyond 1⁄4 mile                        not aggregate everything within it, as we
                                                case-specific examination of particular                    based on the relationship between the                    proposed. Rather they use the 1⁄4 mile
                                                pollutant-emitting activities to see                       operations. The EPA described this                       boundary to define an area beyond
                                                whether, under the definitions just                        relationship as ‘‘exclusive functional                   which they would not consider
                                                discussed, they are collectively a                         interrelatedness,’’ but requested                        pollutant emitting equipment to be
                                                ‘‘stationary source’’ for purposes of the                  comment on more specific ways to                         adjacent and part of a single source.
                                                PSD or NNSR programs or are                                describe a relationship that meets the                   Within 1⁄4 mile, these states determine
                                                potentially (depending on their level of                   common sense notion of a plant.                          on a case-by-case basis which
                                                emissions) a ‘‘major source’’ for the                      Finally, we requested comment on                         equipment should be considered a
                                                purposes of the title V program.                           whether some combination of these two                    single source because it meets the
                                                   On September 18, 2015, the EPA                          options might be preferable. This final                  ‘‘common sense notion of a plant.’’
                                                proposed two options for clarifying the                    rulemaking notice does not repeat all of                    For the reasons discussed more fully
                                                meaning of the term ‘‘adjacent’’ in the                    the discussion, but refers interested                    later in this notice, we have decided to
                                                second prong discussed in the previous                     readers to the preamble of the proposed                  modify the proposed definition in
                                                paragraph as applied to oil and gas                        rule for additional background.                          response to the recommendations made
                                                sources, under both the preconstruction                                                                             by commenters. As we proposed under
                                                and operating permits programs. Source                     III. Summary of the Final Rule                           both Option 1 and Option 2, emitting
                                                Determination for Certain Emission                         Requirements                                             equipment in the oil and natural gas
                                                Units in the Oil and Natural Gas Sector.                      This section provides a brief summary                 production and processing segments
                                                See 80 FR 56579, September 18. 2015.                       of the requirements of the final rule.                   located at a single onshore surface site
                                                The preamble to the proposal provided                      Further discussion of the basis for these                will be considered ‘‘adjacent’’ under the
                                                a discussion of the history of making                      requirements and summaries of our                        final rule and, thus, part of a single
                                                source determinations generally, and for                   responses to significant comments are                    stationary source, assuming the
                                                these segments specifically, the                           provided in the next section.                            equipment is also under the control of
                                                previous guidance we have issued and                          Based on the range and substance of                   one person (or persons under common
                                                the litigation that resulted. We                           the comments received, the EPA has                       control) and belongs to the two-digit SIC
                                                explained our rationale for the two                        made two revisions to the proposed                       code 13. Also, as we proposed in Option
                                                options we proposed for clarifying the                     definition of ‘‘adjacent’’ that are                      1, we are finalizing a definition that
                                                term ‘‘adjacent’’ as it is used in                         reflected in the final rule. As discussed                equipment on separate surface sites
                                                determining the scope of a source for                      in the proposal, we proposed that                        located more than 1⁄4 mile apart is not
                                                purposes of air permitting for these                       pollutant-emitting activities from                       ‘‘adjacent’’ and, therefore, is not part of
                                                segments. The EPA’s preferred option,                      onshore oil and natural gas operations                   the same stationary source. However, in
                                                referred to as Option 1, would have                        that are located on the same ‘‘surface                   this final rule, we are modifying Option
                                                required permitting authorities to                         site,’’ as defined in 40 CFR 63.761,6 or                 1 by incorporating an element from
                                                aggregate, for permitting purposes, all                                                                             Option 2 and the state policies on which
                                                onshore oil and natural gas emitting                       liquids from coal at the mine site. Types of             we modeled Option 1. Specifically, we
                                                equipment 4 that are within the two-                       activities included are exploration, drilling, oil and   would not require that all emitting
                                                digit Standard Industrial Classification                   gas well operation and maintenance, the operation        equipment located on separate surface
                                                                                                           of natural gasoline and cycle plants, and the            sites within 1⁄4 mile of each other be
                                                (SIC) code 13 5 (hereafter referred to as                  gasification, liquefaction, and pyrolysis of coal at
                                                                                                           the mine site. This major group also includes such       considered ‘‘adjacent.’’ Instead, emitting
                                                  3 In this preamble, the term ‘‘we’’ and ‘‘our’’ refers
                                                                                                           basic activities as emulsion breaking and desilting      equipment located on separate surface
                                                to the EPA.                                                of crude petroleum in the preparation of oil and gas     sites within 1⁄4 mile of each other would
                                                  4 Within this document the terms ‘‘emitting              customarily done at the field site. Pipeline             only be aggregated as a single stationary
                                                equipment’’ and ‘‘emitting activities’’ are used           transportation of petroleum, gasoline, and other
                                                                                                                                                                    source if the emitting equipment also
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                                                interchangeably.                                           petroleum products (except crude petroleum field
                                                  5 The description for Major Group 13: Oil and Gas        gathering lines) is classified in Transportation and     have a relationship that meets the
                                                Extraction can be found at https://www.osha.gov/           Public Utilities, Major Group 46, and of natural gas     ‘‘common sense notion of a plant.’’
                                                pls/imis/sic_manual.display?id=8&tab=group. This           in Major Group 49.                                          This expression, the ‘‘common sense
                                                major group includes establishments primarily                 6 40 CFR 63.761 defines surface sites as any
                                                                                                                                                                    notion of a plant,’’ has been a criterion
                                                engaged in: (1) Producing crude petroleum and              combination of one or more graded pad sites, gravel
                                                natural gas; (21 extracting oil from oil sands and oil     pad sites, foundations, platforms, or the immediate
                                                                                                                                                                    by which we have made source
                                                shale; (3) producing natural gasoline and cycle            physical location upon which equipment is                determinations for sources in all
                                                condensate; and (4) producing gas and hydrocarbon          physically affixed.                                      industries since our PSD rules were


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                                                35624                 Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations

                                                revised in 1980 (45 FR 52676, August 7,                 equipment, even if within 1⁄4 mile, will               IV. Responses to Significant Comments
                                                1980) in response to the D.C. Circuit                   not be aggregated.                                     on the Proposed Rule
                                                Court of Appeals Alabama Power                             For example, an owner or operator                     The EPA received more than 19,000
                                                decision. Alabama Power Co. v. Costle,                  proposing to construct a new well site                 comments on the proposed rule. In this
                                                636 F. 2d 323, 397 (D.C. Cir. 1979). In                 should draw a 1⁄4 mile circle from the                 section we summarize the major
                                                the onshore oil and natural gas                         center of the proposed new well site. If               comments and our responses. For
                                                production and processing segments,                     there is commonly-controlled emitting                  details of all the significant comments
                                                the ‘‘plant’’ is not as easy to discern as              equipment located within that 1⁄4 mile                 and our responses, please refer to the
                                                it is for other industrial operations, such             circle and within major SIC code 13,                   Response to Comments document in the
                                                as an electric utility generating plant or              and that equipment is used to process                  docket for this rulemaking.
                                                an oil refinery. Unlike these industrial                or store the oil, natural gas or the
                                                operations, onshore oil and natural gas                 byproducts of production that will come                A. General Comments
                                                operations may not have an obvious                      from the new well site, then the                       1. Need for Clear Guidance
                                                boundary and may be located on                          emissions from that equipment should
                                                property owned and controlled by                        be included in determining whether the                 a. Summary of Proposal
                                                others.                                                 new well site is a major source.                          In the proposed rule, the EPA
                                                   As explained in our proposal, one                    Examples of shared equipment include,                  described the history and the current
                                                way in which we historically have                       but are not limited to, produced fluids                status of making source determinations
                                                evaluated whether activities meet the                   storage tanks, phase separators, natural               for onshore oil and natural gas
                                                common sense notion of a plant was                      gas dehydrators or emissions control                   operations. We described the guidance
                                                through the use of ‘‘functional                         devices. In this example, the shared                   that had been issued, the source
                                                interrelatedness’’ or ‘‘operational                     equipment is necessary for the operation               determinations that have been made and
                                                dependence.’’ See 80 FR 56581,                          of the new well site, and should be                    the lack of clarity that has often
                                                September 18. 2015. Our proposed                        considered part of the same source                     resulted. We proposed two options for
                                                Option 2 would have looked for                          because together all of the equipment                  clarifying the term ‘‘adjacent’’ when
                                                ‘‘exclusive functional interrelatedness’’               operates as a ‘‘plant.’’ However, under                making source determinations for
                                                of emitting equipment outside the 1⁄4                   the terms of this rule, we would not                   onshore oil and natural gas operations.
                                                mile radius. See 80 FR 56587,                           consider two well sites that feed to a
                                                                                                        common pipeline to be part of the same                 b. Brief Summary of Comments
                                                September 18. 2015. We asked for
                                                                                                        stationary source if they do not share                    Several commenters stated that
                                                comment on whether we should further
                                                                                                        any processing or storage equipment                    providing clear and reasonable
                                                define ‘‘exclusive functional
                                                                                                        between them.                                          definitions in rulemaking would benefit
                                                interrelatedness’’ to give additional
                                                                                                           We believe this change from the                     the regulated community, regulators and
                                                clarity to regulators and the regulated
                                                                                                        proposed rule is responsive to both the                other stakeholders by providing needed
                                                community.
                                                                                                        comments that we received from several                 certainty. The current lack of clarity,
                                                   Rather than looking for ‘‘functional                 states about the burden of aggregating                 according to commenters, has resulted
                                                interrelatedness’’ in oil and natural gas               individual surface sites, and from the                 in increased costs due to permitting
                                                operations and giving this term more                    industry about the independent nature                  delays and litigation following the
                                                specific definition, we have decided in                 of many, if not most, surface sites.                   issuance of a permit. Several
                                                this final rule that it is preferable to look              We proposed to clarify the meaning of               commenters also supported our decision
                                                for ‘‘shared equipment’’ to determine                   ‘‘adjacent’’ in all of the permitting rules,           to provide this clarification through
                                                when emitting activities in oil and                     both the rules that apply to the EPA and               rulemaking, rather than by additional
                                                natural gas operations have a                           delegated states as the permitting                     guidance.
                                                relationship that meets the ‘‘common                    authority, as well as the rules that apply                Other commenters did not believe
                                                sense notion of a plant.’’ The EPA has                  to state, local or tribal permitting                   that a rulemaking is necessary. These
                                                applied the generalized notion of                       authorities. However, we requested                     commenters stated that the rulemaking
                                                ‘‘functional interrelatedness’’ in other                comment on whether we should require                   is not necessary because the term
                                                ways in other source categories, in some                state, local and tribal permitting                     ‘‘adjacent’’ is unambiguous, that it is
                                                cases, at the request of the source.                    authorities to make this proposed                      synonymous with ‘‘contiguous,’’ i.e.,
                                                However, for oil and natural gas                        change to their regulations. Several                   that ‘‘adjacent’ means touching, sharing
                                                operations, we find it preferable to use                states, including both those with oil and              a border, or abutting. These commenters
                                                a term that will give a more precise and                natural gas operations and those                       pointed to the dictionary definition of
                                                clear criterion for defining when                       without, expressed a desire to retain                  the word ‘‘adjacent’’ as being
                                                emitting activities within a 1⁄4 mile                   their existing approach to source                      ‘‘contiguous.’’ Some of these
                                                proximity are sufficiently related to be                determinations in permitting. These                    commenters went on to say that the
                                                considered adjacent, in line with the                   states, particularly those with oil and                meaning of the term ‘‘adjacent’’ has
                                                objectives of the proposal.                             natural gas operations, expressed                      been clearly established in relevant case
                                                   For onshore oil and natural gas                      concern about the increased burden of                  law, citing Summit Petroleum Corp. v.
                                                production, this final rule establishes                 the EPA’s proposed Option 1. After                     EPA, 690 F.3d 733, 742 (6th Cir. 2012).
                                                that, where separate surface sites                      reviewing the comments, the EPA has                    And some commenters questioned our
                                                located within 1⁄4 mile of each other                   decided to adopt this change in its                    authority to adopt the two meanings of
                                                include shared equipment necessary to                   permitting rules, but to not require state,            the term that we proposed, claiming that
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                                                process or store oil or natural gas, these              local and tribal permitting authorities to             the proposed definitions violated the
                                                surface sites will be aggregated. The                   adopt this change. However, if they                    D.C. Circuit Court of Appeals’ holdings
                                                EPA has concluded that equipment                        choose to do so, state, local and tribal               in Alabama Power or that the EPA
                                                satisfying these criteria will meet the                 permitting authorities may adopt the                   simply lacked authority to define the
                                                common sense notion of a plant. Under                   EPA’s revised definition and submit                    term ‘‘adjacent’’ in a way that, according
                                                this final rule, separate surface sites that            their revised program to the EPA for                   to commenters, conflicted with the
                                                do not include shared emitting                          approval.                                              dictionary definition and/or the


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                                                                       Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations                                                     35625

                                                decision of the Sixth Circuit Court of                   that resolves an ambiguity.8 It is also                  of the word ‘‘adjacent.’’ For example,
                                                Appeals in Summit Petroleum.                             permissible for the EPA to create a rule                 one online dictionary defines
                                                                                                         using a ‘‘bright line,’’ as we are doing                 ‘‘adjacent’’ to mean ‘‘lying near, close,
                                                c. EPA Response                                          here, for purposes of better                             or contiguous; adjoining;
                                                   We agree with the commenters who                      administering the Act, see Emily’s List v.               neighboring.’’ 10 Another dictionary
                                                stated that a rulemaking is the best way                 Fed. Election Comm’n, 581 F.3d 1, 22                     provides the following ‘‘Synonym
                                                to provide clarity in permitting.                        n.20 (D.C. Cir. 2002).                                   Discussion of Adjacent’’: ‘‘Adjacent may
                                                However, we recognize that most                             As to the second point, while the                     or may not imply contact but always
                                                permits are issued by states, and that                   Summit Petroleum decision is a                           implies absence of anything of the same
                                                some states have substantial experience                  motivating factor for this action, the                   kind in between . . .’’ 11 This dictionary
                                                in making source determinations for oil                  decision, and the Court’s reference to                   makes a further distinction in its
                                                and natural gas operations. Accordingly,                 the dictionary meaning of ‘‘adjacent’’ in                ‘‘Synonym Discussion’’, stating that the
                                                in recognition of this state expertise,                  that decision, are not preclusive of our                 word ‘‘adjoining’’ definitely implies
                                                and in response to many comments, we                     authority to take the action. The Summit                 meeting and touching at some point or
                                                are making the meaning of ‘‘adjacent’’                   Petroleum Court addressed the issue of                   line.’’ 12 So, while we agree that
                                                adopted in this rule mandatory only for                  whether, in the absence of a rule                        ‘‘adjacent’’ can mean contiguous, we do
                                                the permit programs administered by                      defining the term ‘‘adjacent,’’ the EPA                  not agree that it unambiguously must.
                                                the EPA or delegated states, while                       had permissibly interpreted the term in                  We are finalizing this rule to provide a
                                                leaving to other states the decision of                  a particular source determination. The                   bright line distance beyond which
                                                                                                         Court looked to the dictionary definition                pollutant-emitting operations in the
                                                whether to make a similar change to
                                                                                                         of ‘‘adjacent’’ to determine whether the                 onshore oil and natural gas production
                                                their approved permitting.
                                                                                                         EPA’s interpretation of this term would                  and processing segments are not
                                                   We disagree with commenters who                       ‘‘permit the agency, under the guise of                  considered ‘‘adjacent.’’ The decision to
                                                claim that the EPA lacks authority to                    interpreting a regulation, to create de                  use both words ‘‘contiguous’’ and
                                                define adjacent by regulation or that                    facto a new regulation.’’ Summit                         ‘‘adjacent’’ in our PSD rules was a
                                                state the rulemaking is unnecessary                      Petroleum, 690 F.3d at 740 (quoting                      deliberate choice, designed to include
                                                because of the dictionary meaning of                     Christensen v. Harris Cnty., 529 U.S.                    emitting equipment that is on property
                                                ‘‘adjacent’’ and the Summit Petroleum                    576, 588 (2000)). In this rulemaking                     that is touching (contiguous) with
                                                decision. These commenters are                           action, the EPA is not interpreting the                  equipment that may not be contiguous,
                                                mistaken that the EPA cannot define                      term ‘‘adjacent’’ in the existing                        but still meets the common sense notion
                                                ‘‘adjacent’’ by rule to mean all emitting                regulation; instead we are assigning a                   of a plant. Had we intended ‘‘adjacent’’
                                                equipment within a specified radius.7                    meaning to the term by going through a                   to mean exactly the same as
                                                Commenters gave two reasons for this:                    rulemaking process. When an agency is                    ‘‘contiguous,’’ we would not have
                                                first, that to do so would not comport                   defining a word by rule, the agency is                   included the word ‘‘adjacent.’’
                                                with Alabama Power, and second, that                     free to give specialized meaning to the                     Finally, we disagree with commenters
                                                the EPA’s authority to give a meaning to                 word without being bound to hew                          who argue the Summit Petroleum Court
                                                ‘‘adjacent’’ that varies from its                        precisely to a particular dictionary                     provided sufficient guidance on the
                                                dictionary definition is foreclosed by                   definition. See Stenberg v. Carhart, 530                 meaning of ‘‘adjacent’’ to obviate the
                                                the Summit Petroleum decision.                           U.S. 914, 942 (2000) (noting that an                     need for this rulemaking. The Court’s
                                                   Regarding the first point, the CAA                    ‘‘explicit definition’’ can permissibly                  decision is binding only in the Sixth
                                                affords the EPA discretion in the                        ‘‘vary from the term’s ordinary                          Circuit, which leaves the issue
                                                permitting context to provide a more                     meaning’’). And in fact, the PSD                         unresolved elsewhere.13 The Court also
                                                specific meaning to the term ‘‘stationary                regulations in 40 CFR 51.166 are replete                 did not provide guidance on how
                                                source’’ that is used in the Act. See,                   with such specialized meanings, for                      ‘‘nearby’’ sources must be to consider
                                                Chevron USA, Inc. v. NRDC, 467 U.S.                      example in the definitions of                            them ‘‘adjacent’’ for purposes of
                                                837 (1984) (discussing the meaning of                    ‘‘significant’’ and ‘‘process unit.’’ 9                  permitting. This is the question that we
                                                the term stationary source under the                        Even if commenters were correct—                      have taken up in this rulemaking,
                                                CAA). Through a rulemaking process,                      and they are not—that the EPA is bound                   specific to onshore oil and natural gas
                                                we are defining the statutory term                       by a particular dictionary definition of                 operations. We have clarified that
                                                ‘‘stationary source’’ for a particular                   ‘‘adjacent’’ when defining the term for                  ‘‘adjacent’’ for these segments means
                                                context: the PSD, NNSR and title V                       specialized use, commenters are                          within 1⁄4 mile and having shared
                                                programs as applied to oil and natural                   mistaken about the meaning of the term.                  equipment.
                                                gas operations. The definition of the                    While many dictionary definitions of
                                                term ‘‘stationary source’’ in section                    ‘‘adjacent’’ include ‘‘contiguous’’ as one                 10 Dictionary.com http://

                                                302(z) of the Act, the related definition                definition, this is not the only definition              dictionary.reference.com/browse/adjacent?s=t
                                                in section 111(a)(3), the structure of the                                                                        accessed February 22, 2016.
                                                                                                            8 In fact, the Supreme Court in Chevron reversed        11 Thus, two surface sites separated by 1⁄4 mile
                                                Act, and its legislative history do not
                                                                                                         the D.C. Circuit Court of Appeals’ judgment that the     may be ‘‘adjacent,’’ if there is no surface site in
                                                supply a clear meaning of ‘‘stationary                   EPA had impermissibly interpreted ‘‘stationary           between them.
                                                source’’ in this context. Thus, it is                    source,’’ stating that the Circuit Court erred by          12 Merriam-Webster Dictionary, http://

                                                permissible for the agency, in a                         ‘‘read[ing] the statute inflexibly’’ and not deferring   www.merriam-webster.com/dictionary/adjacent
                                                rulemaking process, to apply a                           to the EPA’s reasonable interpretation.                  accessed February 22, 2016.
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                                                                                                            9 For similar reasons, comments that cite case law      13 While the D.C. Circuit Court of Appeals has
                                                reasonable interpretation of the statute
                                                                                                         about agency interpretations of statutes and that        held that the EPA is bound by our regional
                                                                                                         refer to the dictionary definition of ‘‘adjacent’’ are   consistency regulations, the Court also suggested
                                                  7 Although we are not finalizing an option (such       off target: the statutory term we are interpreting is    that we could revise them in order ‘‘to account for
                                                as our proposed Option 2) that would potentially         ‘‘stationary source’’ (and the related definition in     regional variances created by a judicial decision or
                                                include emitting activities outside a 1⁄4 mile radius,   section 111(a)(3)), not ‘‘adjacent.’’ We are defining    circuit splits.’’ Nat’l Envt’l Dev. Ass’n’s Clean Air
                                                commenters are also mistaken (for similar reasons)       the term ‘‘adjacent’’ in order to give meaning to our    Proj. v. EPA, 752 F.3d 999, 1010 (D.C. Cir. 2014).
                                                in asserting that we could not have finalized such       reasonable interpretation of the statutory term          We have proposed to do so. 80 FR 63935 (October
                                                an option.                                               ‘‘stationary source.’’                                   22, 2015).



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                                                35626                 Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations

                                                B. Comments on Option 1                                 assess whether emitting equipment                      delegated states. This will allow state
                                                                                                        should be considered a single source for               and local permitting authorities with
                                                1. Support for Option 1
                                                                                                        purposes of permitting, but beyond                     EPA-approved programs to continue to
                                                a. Summary of Proposal                                  which they do not consider emitting                    use their discretion to make source
                                                   In Option 1, the EPA proposed that                   equipment to be adjacent.                              determinations for this industry in the
                                                the meaning of ‘‘adjacent,’’ for purposes               c. EPA Response                                        manner that they believe best addresses
                                                of determining the scope of a source in                                                                        their local air quality concerns. For
                                                                                                           We are adopting the approach                        example, those local programs in
                                                the oil and natural gas production and                  recommended by several commenters:
                                                processing segments, should be based                                                                           California that have a long history of
                                                                                                        to require that pollutant-emitting                     permitting oil and natural gas
                                                solely on the distance between pollutant                equipment on separate surface sites be
                                                emitting activities. Under this option,                                                                        operations on contiguous leases as
                                                                                                        considered one source only if the sites                single sources under their approved
                                                emitting equipment at a single surface                  are within 1⁄4 mile of each other and the
                                                site would be considered to be adjacent,                                                                       programs will be able to continue to do
                                                                                                        equipment is considered by the                         so, without having to submit an
                                                and emitting equipment at two or more                   permitting authority to meet the
                                                surface sites would be considered                                                                              equivalency demonstration showing
                                                                                                        common sense notion of a plant. More                   that their programs are at least as
                                                ‘‘adjacent’’ if they are located within 1⁄4             specifically, the language in the final
                                                mile of each other. We stated in the                                                                           stringent as the program adopted by the
                                                                                                        rule treats certain oil and gas-related                EPA. Because the EPA is not requiring
                                                proposal that we believed this option to                pollutant-emitting activities as a plant
                                                be the most consistent with the                                                                                states with approved programs to apply
                                                                                                        based on ‘‘shared equipment.’’                         our meaning of the term ‘‘adjacent,’’ and
                                                ‘‘common sense notion of a plant.’’ We                  Operations located on the same surface
                                                chose the distance, 1⁄4 mile, because it                                                                       our rule changes make clear that for
                                                                                                        site would continue to be considered                   approved programs this change is
                                                is the distance we found in permitting                  part of the same source provided that
                                                guidance issued by a number of oil and                                                                         optional, these approved programs
                                                                                                        they are also within the same two-digit                already comply with our PSD, NNSR
                                                natural gas producing states. The EPA                   SIC code and are under common control
                                                also considered this distance reasonable                                                                       and title V rules, without these changes.
                                                                                                        of the same person (or persons under                   States also remain free to adopt more
                                                to use for the types of equipment used                  common control). While we do not
                                                in this industry.                                                                                              stringent requirements in order to
                                                                                                        agree with comments that argue that a                  address local air quality concerns.
                                                b. Brief Summary of Comments                            particular dictionary definition of
                                                                                                        ‘‘adjacent’’ and/or the Summit                            Those states that administer PSD
                                                   Several commenters supported                         Petroleum and Alabama Power                            permitting programs under a delegation
                                                Option 1 as written. These commenters                   decisions compel this outcome, we                      of federal authority by the EPA will
                                                preferred Option 1 over Option 2                        agree with the comments that this                      have to follow the approach that we are
                                                because they believed it is the least                   approach better achieves the purpose of                finalizing, or develop their own
                                                ambiguous and reflects the plain                        the rule: to reduce permitting burdens,                permitting programs and have them
                                                meaning of the word ‘‘adjacent.’’ One                   as explained later in this notice.                     approved by the EPA as a revision to a
                                                commenter stated that this approach                                                                            state implementation plan (SIP). We did
                                                would streamline the determination of                   2. Do Not Support Option 1                             not receive adverse comments regarding
                                                the scope of a ‘‘stationary source’’ and                a. Brief Summary of Comments                           delegated PSD programs having to use
                                                would reduce the time it takes to get a                                                                        this approach. Those state and local
                                                                                                           Some commenters did not support                     programs that are approved, not
                                                permit.
                                                                                                        Option 1. One concern raised was that,                 delegated, that incorporate the EPA’s
                                                   Other commenters, while supporting                   while the Option 1 approach would
                                                Option 1 over Option 2, recommended                                                                            program by reference, may incorporate
                                                                                                        streamline permitting, it would not
                                                revisions to Option 1. Many of these                                                                           the definition of ‘‘adjacent’’ for onshore
                                                                                                        provide sufficient flexibility to consider
                                                commenters offered different distances                                                                         oil and natural gas operations in 40 CFR
                                                                                                        and address local air quality concerns.
                                                within which emitting equipment or                                                                             52.21(b)(6)(ii), and/or 40 CFR appendix
                                                                                                        Other commenters were concerned that
                                                operations should be considered one                                                                            S to part 51; or they may specifically
                                                                                                        the Option 1 approach would result in
                                                source. The suggested distances ranged                                                                         exclude this paragraph from their
                                                                                                        the aggregation of sources that should
                                                from a requirement that operations be                                                                          incorporation when they next update it.
                                                                                                        not be treated as one source. Another
                                                physically touching or abutting to be                   commenter was concerned that the                          There may be state and local
                                                considered ‘‘adjacent’’ to distances of up              Option 1 approach would allow the oil                  governments with approved programs
                                                to one mile.                                            and gas industry to avoid major source                 that wish to clarify the meaning of
                                                   Finally, many state and industry                     regulation under the CAA. This                         adjacent for oil and natural gas
                                                commenters recommended a particular                     commenter went on to say that Option                   operations, as the EPA has done in its
                                                revision to Option 1. These commenters                  1 would not approximate a ‘‘common                     own permitting rules. Those state and
                                                recommended that the EPA consider                       sense notion of a plant’’ or fit within the            local governments would be able to do
                                                emitting activities located on separate                 ordinary meaning of facility or                        so, but would not be required to do so
                                                surface sites within 1⁄4 mile to be                     installation as used in the definition of              on any particular schedule. We believe,
                                                adjacent only if they also meet the                     source.                                                after careful review of the comments
                                                ‘‘common sense notion of a plant’’ that                                                                        received, that this approach offers the
                                                the EPA has used since 1980 when                        b. EPA Response                                        best resolution for the lack of clarity that
                                                determining the scope of a source for                      In response to concerns raised by                   has existed for this industry,
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                                                permitting purposes. Two state                          commenters about the need for                          particularly when we have been the
                                                commenters told us that while their                     permitting authorities to be able to                   permitting authority, but does not
                                                state has guidance that includes 1⁄4 mile               address local air quality concerns, we                 increase the burden on approved states
                                                as the distance for determining the                     are not requiring that EPA-approved                    by requiring them to revise their
                                                source, they do not use the distance as                 state and local programs adopt the                     permitting programs (or to develop an
                                                a bright line. Rather, they use it as an                approach that the EPA is finalizing for                equivalency demonstration) and submit
                                                outer boundary, within which they                       permits issued by the EPA and                          the changes to us as SIP revisions.


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                                                                      Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations                                        35627

                                                3. Response to the EPA’s Question on                    where the last unit is separated from the              stationary source. Site C is not included
                                                the Appropriate Distance                                first unit by a much larger distance. See              with sites A and B (just because of
                                                a. Summary of Proposal                                  80 FR 56587, September 18, 2015.                       proximity to B), and, therefore, there is
                                                                                                                                                               no daisy chain created. If site C feeds
                                                   We requested comments on whether                     b. Brief Summary of Comments
                                                                                                                                                               material to the storage tanks at site A,
                                                some distance other than the proposed                      Most commenters expressed                           then it would still not be considered
                                                1⁄4 mile would be a more appropriate
                                                                                                        opposition to ‘‘daisy chaining.’’                      part of the stationary source that
                                                distance within which emitting                          Commenters were concerned that by                      includes site A, because it is located
                                                equipment should be considered                          ‘‘daisy chaining’’ emitting equipment,                 more than 1⁄4 mile away from site A.
                                                ‘‘adjacent.’’ See 80 FR 56579, September                sources could extend for dozens of                        Now, assume that the same owner/
                                                18, 2015.                                               miles, or could even bring in equipment                operator drills a fourth well, ‘‘D,’’
                                                b. Brief Summary of Comments                            connected by a pipeline which would                    within 1⁄4 mile of site A, but more than
                                                                                                        be inconsistent with the EPA’s previous                1⁄4 mile from sites B and C. Site D will
                                                   Commenters provided a range of                       statements on source in the 1980 PSD
                                                responses to this question, ranging from                                                                       also feed its produced water to site A.
                                                                                                        rule preamble. In that rule, we stated                 Site D must be treated as a modification
                                                44 feet, which the commenter said was                   that we did not intend ‘‘stationary
                                                consistent with guidance from the                                                                              to the source that is made up of sites A
                                                                                                        source’’ to encompass activities that                  and B. In this case, site A may be
                                                Bureau of Land Management, to one                       would be many miles apart along a long
                                                mile, which the commenter suggested is                                                                         viewed as a ‘‘hub’’ and sites B and D are
                                                                                                        line operation (45 FR 52676, August 7,                 the spokes. The new source consists of
                                                consistent with the largest                             1980).
                                                manufacturing plant that is considered                                                                         sites A, B and D because sites B and D
                                                one source. Other commenters                            c. EPA Response                                        are within 1⁄4 mile of the site at which
                                                recommended that a ‘‘city block’’ be                       After reviewing the comments we                     the shared equipment exists. However,
                                                used as the basis for determining the                   received, the EPA has determined that                  site C is not part of this source because
                                                sources. However, these commenters                      ‘‘daisy chaining’’ of emitting equipment               site C is more than 1⁄4 from the surface
                                                did not agree on the dimensions of a                    would not provide the additional clarity               site with which it shares equipment.
                                                city block. Other suggestions included                  that we seek through this rulemaking.                  New sites would not be included within
                                                distances based on the size of the lease,               We agree with commenters who said it                   the source that includes sites A, B and
                                                or some combination of leases, and a                    could extend sources over many miles,                  D if they were beyond 1⁄4 mile, so there
                                                distance based on the well spacing in a                 perhaps even into the jurisdiction of                  would be no daisy chain.
                                                particular field or state.                              multiple permitting authorities and in                    We believe that the permitting
                                                                                                        some instances beyond any common                       authority can make these source
                                                c. EPA Response                                                                                                determinations, on a case-by-case basis,
                                                                                                        sense notion of a plant. This would
                                                   The EPA is retaining the proposed 1⁄4                increase the permitting burden for                     based on the clarifications that the EPA
                                                mile distance in the final rule. This                   federal, state, local and tribal permitting            has provided. We do not believe that it
                                                distance was originally selected to be                  authorities but we do not believe that it              is possible to eliminate all case-by-case
                                                consistent with those states that also use              would provide additional air quality                   source determinations. However, we
                                                a specific distance. In addition, as                    benefits beyond those that will occur as               believe we have provided sufficient
                                                commenters mention, it is a commonly-                   a result of the emission controls                      guidance to ensure that such
                                                used distance in oil and gas                            provided under the various New Source                  determinations are made consistently,
                                                development for well spacing. Well                      Performance Standards (NSPS),                          and with more certainty for both
                                                spacing is typically set by a state agency              National Emission Standards for                        permitting authorities and sources.
                                                such as an oil and gas conservation                     Hazardous Air Pollutants (NESHAP),                     5. Response to the EPA’s Question on
                                                commission, and is intended to develop                  and state and federal minor source                     What To Use as the Starting Point for
                                                the oil and gas resource fairly and                     programs, as explained later in this                   Measuring the Radius of the Source
                                                efficiently. One-quarter of a mile                      notice. We are, therefore, not adopting
                                                corresponds to a 40-acre lease. We think                a requirement to include ‘‘daisy                       a. Summary of Proposal
                                                that a variable distance, such as one                   chained’’ equipment as part of a single                  We requested comment on whether to
                                                based on an individual lease or                         source.                                                use the edge or some other feature of the
                                                combination of leases held by an entity                    To illustrate how we intend this                    oil or natural gas operation as the
                                                would complicate permitting, contrary                   process to work in order to avoid ‘‘daisy              starting point of the 1⁄4 mile
                                                to the purpose of this rule. And, while                 chaining’’, we provide the following                   measurement radius when determining
                                                a city block might have some meaning                    example. On surface site ‘‘A’’, there is               the source.
                                                in an urban area, we were not persuaded                 an existing collection of equipment
                                                that it has any more meaning than 1⁄4                   consisting of several tanks, a pump jack,              b. Brief Summary of Comments
                                                mile in the areas where the majority of                 a heater-treater and a flare. The owner/                 Commenters generally supported
                                                oil and natural gas development is                      operator of site A decides to drill a new              defining the point from which the
                                                taking place.                                           well within 1⁄4 mile of site A, called site            distance between pollutant-emitting
                                                4. Response to the EPA’s Question on                    ‘‘B.’’ Site B feeds its produced water to              equipment is measured. However, there
                                                ‘‘Daisy Chaining’’                                      the tanks on site A. Site B must consider              was disagreement on whether the center
                                                                                                        the emissions from site A in                           of the emitting equipment or the
                                                a. Summary of Proposal                                  determining whether site B is a major                  property boundary should be used.
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                                                   We requested comments on whether                     source because sites A and B are part of               Several state commenters recommended
                                                sources within 1⁄4 mile of each other                   the same stationary source. At a later                 that the property boundary be the
                                                should be ‘‘daisy chained.’’ We                         date, the same owner/operator decides                  starting point for determining the
                                                described a series of emissions units as                to drill a third well, ‘‘C,’’ within 1⁄4 mile          distance between operations because
                                                being ‘‘daisy chained’’ when each                       of site B but more than 1⁄4 mile from site             this distance is most relevant for
                                                individual emitting unit is located                     A. Sites C and B do not share any                      purposes of air quality. However several
                                                within 1⁄4 mile of the next unit, but                   equipment. Therefore, site C is a single               commenters in the oil and gas industry


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                                                35628                 Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations

                                                recommended that the geographic                         c. EPA Response                                        programs. Finally, one commenter
                                                center of the site for purposes of                         As discussed in Section IV.D.3 in this              stated that oil and gas development is
                                                establishing the 1⁄4 mile distance,                     document, this rule will apply                         the largest industrial source of volatile
                                                because property boundaries may be                      prospectively and will not require a                   organic compounds and a significant
                                                difficult to determine. Unlike sites in                 reassessment of permits that have been                 source of sulfur dioxide and nitrogen
                                                other industries, oil and natural gas                   completed. Furthermore, the EPA has                    oxide pollution in many areas, and that
                                                operations frequently do not have                       revised the approach to source                         failure to subject these sources to PSD
                                                fences, so the property boundaries are                  determination in the final rule to                     and NNSR would frustrate attempts to
                                                not always easily distinguished.                        address concerns about burden raised                   ensure NAAQS compliance.
                                                Emitting equipment, such as may be                      by commenters. Instead of requiring that               c. EPA Response
                                                found at a well site, can be and often is               all activities within a 1⁄4 mile radius be
                                                easily identified by Global Positioning                                                                           The EPA is finalizing several rules
                                                                                                        aggregated, the EPA would instead only                 applicable to oil and natural gas
                                                System coordinates.                                     aggregate those activities within a 1⁄4                operations, including an NSPS that will
                                                c. EPA Response                                         mile radius that share equipment. In                   require pollution controls for oil well
                                                                                                        many cases, this would result in the                   completions, equipment leaks and
                                                   The EPA has decided to establish the                 wells being permitted separately,
                                                 ⁄ mile boundary from the center of the
                                                14                                                                                                             pneumatic controllers, among others,
                                                                                                        reducing the administrative burden of                  and a control techniques guideline
                                                equipment at the new or modified                        transferring or modifying permits when
                                                source for construction permits. At an                                                                         (CTG) that will similarly define
                                                                                                        wells change ownership. In addition,                   presumptive controls for the CAA’s
                                                oil or natural gas well, that may be the                the EPA is not requiring that state, local,
                                                wellhead; on a surface site, it should be                                                                      reasonably available control technology
                                                                                                        and tribal permitting authorities adopt                (RACT) requirements for certain areas.
                                                established from the center of the                      the approach being finalized by us, so
                                                emitting activities. We believe the                                                                            The additional emissions control
                                                                                                        those permitting authorities that are                  requirements of the NSPS (and the CTG
                                                center of the emitting activities is the                concerned there would be an increased
                                                easiest to establish for purposes of                                                                           when adopted in RACT SIPs) make it
                                                                                                        burden from our approach (which we do                  less likely that these sources will be
                                                permitting, and the easiest to observe for              not expect) would not have to follow it.
                                                purposes of enforcement. This best                                                                             major sources, with or without the
                                                                                                           We believe that the overall effect of               meaning of ‘‘adjacent’’ that we are
                                                achieves our goal of providing greater                  this rule will be to reduce the permitting
                                                clarity for permitting authorities and                                                                         adopting in this rule. This is because the
                                                                                                        burden for permits issued by the EPA.                  threshold for permitting is based on the
                                                permittees, improving permitting,                       The permitting burden for state, local
                                                compliance and enforcement. For title V                                                                        potential-to-emit of the source and the
                                                                                                        and tribal permitting will differ                      potential-to-emit may be reduced by
                                                permits, the center of the equipment on                 depending on whether those permitting
                                                each surface site(s) being permitted                                                                           enforceable limitations, such as those
                                                                                                        authorities choose to adopt these                      imposed by the NSPS. These
                                                should be used.                                         changes, and will depend on how any                    restrictions, along with enforceable
                                                6. Permitting Burden Under Option 1                     revised procedures differ from their                   restrictions imposed by the states,
                                                                                                        current permitting practices. In some                  reduce both the actual and potential
                                                a. Summary of Proposal                                  jurisdictions, the burden may be                       emissions of the sources, reducing the
                                                  We requested comment on whether                       unchanged, either because the                          likelihood that they will trigger major
                                                the potentially smaller scope of each                   permitting authority chooses not to                    NSR or title V permitting. These control
                                                source could result in an unacceptable                  adopt the changes, or because the                      requirements will also ensure that new
                                                permitting burden by creating a larger                  changes the EPA is finalizing do not                   and modified operations emit
                                                number of smaller sources.                              substantially differ from the permitting               substantially less air pollution which
                                                                                                        authority’s current practices.                         would contribute to local air quality. To
                                                b. Brief Summary of Comments
                                                                                                        7. Environmental Impact of Option 1                    the extent that NSPS requirements for
                                                  Several state commenters expressed                                                                           these sources are insufficient to protect
                                                concern that Option 1, as proposed,                     a. Summary of Proposal                                 the NAAQS in attainment or
                                                would increase the administrative                          We requested comment on whether                     unclassifiable areas—which we do not
                                                burden of issuing permits. This is                      there would be adverse air quality                     expect—the federal or state minor NSR
                                                primarily because they believe that the                 impacts, including effects on National                 program is intended to address that
                                                proposed requirement to aggregate                       Ambient Air Quality Standard (NAAQS)                   issue. For nonattainment areas, if the
                                                emitting equipment within 1⁄4 mile                      compliance, as a result of Option 1.                   CTG presumptive controls are not
                                                would require them to reassess prior                                                                           sufficient to attain the NAAQS, then
                                                source determinations. This is                          b. Brief Summary of Comments                           other emission reductions will be
                                                particularly a concern when wells                          One commenter expressed concern                     required in order to attain the standards.
                                                change ownership. The commenters                        that the EPA’s proposal would adversely                   We do not believe that this final rule
                                                stated that each transaction would                      affect the environment because it would                is likely to result in decisions by
                                                require permitting authorities to                       encourage development of oil and gas                   companies to locate farther apart to
                                                reanalyze one or more previously-                       resources over a larger area in order to               avoid major source permitting. We
                                                permitted sources to determine which                    avoid being within 1⁄4 mile. This would                believe that the location of the
                                                equipment should be included in the                     increase the footprint of operations, and              underground mineral assets, advances
                                                source after the purchase or sale.                      have an adverse impact on landowners                   in drilling technology that allow
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                                                Another commenter stated that while                     and communities. Other commenters                      multiple wells to be drilled from one
                                                they expect an increase in minor source                 stated that the aggregation of oil and gas             surface site, restrictions on well spacing
                                                permitting under the EPA’s proposed                     operations would not result in                         imposed by a state agency such as an oil
                                                Option 1, they already have in place a                  environmental benefits because the                     and gas conservation commission, and
                                                number of streamlining options, such as                 emissions are already controlled by                    the restrictions imposed by the owner of
                                                general permits, which expedite                         multiple NSPS and NESHAP standards                     the surface land are more likely to affect
                                                regulatory timelines.                                   as well as state minor source permitting               siting decisions than a desire to avoid


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                                                                      Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations                                          35629

                                                major source permitting. As discussed                   ended in decisions not to aggregate the                believes that subjecting these operations
                                                earlier in this document, we believe the                various surface sites.                                 to major source permitting would
                                                combined effect of the emission control                                                                        provide substantial public health and
                                                                                                        b. EPA Response
                                                standards already in place and the                                                                             environmental benefits. This commenter
                                                additional controls now being finalized                    Because of the difficulty of applying               believes that the emission control
                                                is that fewer oil and natural gas                       a ‘‘functional interrelatedness’’ criterion            provided by the NSPS is not sufficient
                                                operations will be major.                               to oil and natural gas operations, the                 because it only addresses new or
                                                                                                        EPA is not adopting this criterion as                  modified equipment and does not cover
                                                C. Comments on Option 2                                 part of the final rule. We do not agree                all equipment or activities encompassed
                                                1. Support for Option 2                                 with all of the comments opposed to                    by the industry and does not address
                                                                                                        Option 2, in particular those that stated              local or regional air quality issues.
                                                a. Summary of Proposal                                  Option 2 was beyond the EPA’s                             Other commenters stated that the
                                                   In Option 2, the EPA proposed that all               authority, for similar reasons that we                 proposal would have little to no impact
                                                equipment within 1⁄4 mile would be                      disagree with comments that Option 1                   on air emissions because the control
                                                considered a single source and would                    was beyond our authority. We do agree                  technology required if equipment is
                                                allow equipment beyond 1⁄4 mile to be                   with those that stated applying a                      aggregated into major sources will likely
                                                included in the source if it was                        ‘‘functional interrelatedness’’ criterion              be identical to what is required of minor
                                                ‘‘exclusively functionally interrelated.’’              by itself would not reduce permitting                  sources. One commenter listed the
                                                See 80 FR 56579, September 18, 2015.                    burdens for oil and natural gas                        numerous federal and state standards
                                                b. Brief Summary of Comments                            operations to the same degree as a                     that already apply to oil and gas
                                                                                                        proximity test alone under Option 1.                   sources, regardless of whether the
                                                   Several commenters representing                      However, because of concerns discussed                 sources are determined to be major or
                                                permitting authorities supported Option                 above with applying a proximity                        minor, as evidence that the industry is
                                                2 because they believed that it is the                  criterion alone, we are combining the                  already subject to stringent emissions
                                                option most similar to the way they                     proximity criterion in Option 1 with the               control requirements.
                                                make source determinations for this                     element of Option 2 that involves
                                                industry and others under their existing,               considering whether equipment is                       c. EPA Response
                                                SIP-approved programs.                                  related in a manner that meets the                        It is important to understand that
                                                c. EPA Response                                         common sense notion of a plant. Our                    even if equipment beyond a 1⁄4 mile
                                                                                                        selected approach combines these                       distance is aggregated under something
                                                   The EPA is not adopting the                          elements by limiting aggregation to                    like Option 2, only new or modified
                                                ‘‘functional interrelatedness’’ criterion               pollutant emitting equipment within 1⁄4
                                                in the final rule, but we are                                                                                  equipment would be subject to the
                                                                                                        mile of each other, but requires that                  control requirements of Best Available
                                                incorporating one aspect of Option 2
                                                                                                        these sources also have shared                         Control Technology under PSD or
                                                into the final rule. In addition, the EPA
                                                                                                        equipment. We believe that this                        Lowest Achievable Emission Rate under
                                                is including its final approach only in
                                                                                                        approach, unlike applying ‘‘functional                 the NNSR permitting program. Most
                                                the regulations that apply to the EPA
                                                                                                        interrelatedness’’ outside of a specific               new equipment would also be subject to
                                                and delegated states. This means that                   perimeter, will limit the amount of
                                                the states that prefer to use an approach                                                                      limitations under the NSPS, whether the
                                                                                                        analysis required for permitting in the                source is considered major or minor.
                                                like Option 2 will be able to continue                  oil and natural gas production and
                                                to do so.                                                                                                      Emission control requirements under
                                                                                                        processing segments. By providing a                    state and federal minor source programs
                                                2. Do Not Support Option 2                              clear limit on the distance within which               apply in addition to any requirements of
                                                                                                        we would require analysis of the                       the NSPS. These requirements may be
                                                a. Brief Summary of Comments
                                                                                                        relationship of the equipment, we                      more stringent than the NSPS, and in
                                                   Oil and gas industry commenters                      believe permitting will proceed more                   some states apply to new as well as to
                                                were uniformly opposed to Option 2.                     quickly, and with more certainty for                   existing sources. Title V permitting
                                                These commenters stated that the use of                 permitting authorities and the regulated               generally does not result in new control
                                                ‘‘functionality’’ has no support in the                 community.                                             requirements, it only compiles the
                                                CAA, is inconsistent with the plain                                                                            requirements that exist in the
                                                meaning of the term ‘‘adjacent,’’ and                   3. Environmental Impact Under Option
                                                                                                        2                                                      underlying standards, such as the NSPS
                                                results in sources that do not resemble                                                                        or NESHAP into one permit.
                                                in any way a ‘‘plant.’’ In addition, they               a. Summary of Proposal                                    For these reasons, we believe that
                                                stated that the use of such a test resulted                We specifically requested comments                  aggregating equipment into major
                                                in significant uncertainty because of the               on whether there might be any                          sources for title V, PSD or NNSR
                                                subjective nature of the analysis                       environmental harm or benefit resulting                permitting under Option 2 would result
                                                involved in determining which                           from adopting Option 2.                                in little environmental benefit over the
                                                emissions units are part of the source.                                                                        approach adopted today. In our
                                                Several state permitting authority                      b. Brief Summary of Comments
                                                                                                                                                               judgement, Option 2 would be more
                                                commenters echoed these sentiments                         One state commenter expressed                       likely to result in delays in permitting
                                                and added that the interrelatedness test                concern that a strict application of the               and greater uncertainty for the
                                                adds layers of analysis that is not                     plain meaning of the term ‘‘adjacent’’                 permitting authorities and regulated
                                                productive. Several commenters                          could allow oil and gas companies to                   community alike.
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                                                expressed concern about the permitting                  manipulate their operations to avoid
                                                burden of adopting Option 2.                            being considered a major source.                       D. Implementation Issues
                                                Commenters noted that in two cases                      Another commenter stated that without                  1. Requirements for States To Adopt
                                                where the EPA attempted to assess                       aggregation, oil and gas operations are
                                                ‘‘functional interrelatedness,’’ the                    subject to widely varying and less                     a. Summary of Proposal
                                                source determinations took several                      stringent standards under state minor                     We proposed changes to the
                                                years, were litigated, and ultimately                   source programs. This commenter                        permitting rules that would have


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                                                35630                 Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations

                                                applied both to the EPA, as the                         2. Applicability to Other Industries                   basis, but at the same time asked that
                                                permitting authority, to delegated states,              a. Summary of Proposal                                 any previous decisions made to
                                                and to state, local and tribal permitting                                                                      aggregate sources should be subject to
                                                authorities. We invited comment on                         In the proposed rule, we stated that                new source determinations under the
                                                                                                        we intended to define ‘‘adjacent’’ only                language finally adopted. Another
                                                whether states should be required to
                                                                                                        for onshore oil and natural gas
                                                adopt the proposed changes.                                                                                    commenter said that with a new
                                                                                                        operations covered by two-digit SIC
                                                                                                                                                               definition of an existing term, some
                                                b. Brief Summary of Comments                            Major Group 13, for reasons that are
                                                                                                        discussed more fully in the preamble to                previous determinations will be
                                                  We received comments from several                     the proposed rule. See 80 FR 56586,                    consistent with the new definition, but
                                                state and local permitting authorities,                 September 18, 2015.                                    others will not. This commenter
                                                including those with and without oil                                                                           specifically requested that the EPA
                                                                                                        b. Brief Summary of Comments                           include anti-backsliding language in the
                                                and gas operations, requesting that their
                                                programs be allowed to continue to                         We received comments both asking us                 final rule to minimize the impact on
                                                make determinations of ‘‘adjacent’’ on a                to and asking us not to apply the                      previous determinations. In particular,
                                                case-by-case basis without being                        definition developed for oil and natural               under this rule surface sites that do not
                                                required to adopt the approach finalized                gas operations to all industries. One                  share equipment with other surface sites
                                                by the EPA. This was particularly true                  state commenter stated that permitting                 will not be aggregated, which will
                                                for local programs in California, which                 authorities and regulated sources in all               simplify permit actions when an
                                                                                                        categories should be subject to the same               independent surface site changes
                                                have a long history of regulating oil and
                                                                                                        definition developed for the oil and                   ownership.
                                                gas operations. A commenter
                                                                                                        natural gas industry. A commenter from
                                                representing the oil and gas industry                                                                          c. EPA Response
                                                                                                        an industry outside the oil and natural
                                                operating in California echoed the                      gas industry asked that the EPA confirm
                                                comment that the existing program                                                                                 Historically, the EPA’s rules are
                                                                                                        that proximity is the only basis on
                                                should not be disrupted.                                                                                       generally adopted on a prospective
                                                                                                        which the EPA will make
                                                                                                                                                               basis. That is, a new rule applies only
                                                c. EPA Response                                         determinations of adjacency. We also
                                                                                                                                                               after that rule is effective, and is not be
                                                                                                        received comments from the
                                                   We agree with commenters who                         transmission and distribution segments                 applied retroactively to previous
                                                expressed the view that state and local                 of the oil and natural gas sector                      actions. This rule is no different. The
                                                permitting authorities should have the                  requesting that the EPA clarify how this               EPA intends that this rule will be
                                                ability to make source determinations                   rule applies to these segments of the                  applied from August 2, 2016 forward.
                                                                                                        industry.                                              Previous source determinations and
                                                under their existing permitting
                                                                                                                                                               issued permits, whether sources were
                                                programs. Once their programs are                       c. EPA Response                                        aggregated or not, should not be affected
                                                approved by the EPA, state and local
                                                                                                           The EPA did not propose this                        by this new definition of ‘‘adjacent’’.
                                                governments are given the responsibility
                                                                                                        approach for other industries, and,
                                                to make permitting decisions, and we do                                                                        V. Environmental Justice
                                                                                                        therefore, we are not finalizing this
                                                not intend any changes in this balance                                                                         Considerations
                                                                                                        approach for any industry other than
                                                of responsibilities. We, therefore, are                 onshore oil and natural gas extraction
                                                adopting these changes in our rules, but                                                                          This document is intended to clarify
                                                                                                        and production within two-digit SIC                    the definition of ‘‘adjacent’’ used to
                                                not requiring that state and local                      Major Group 13. It does not apply to the
                                                permitting authorities with approved                                                                           determine the source to be permitted
                                                                                                        transmission or distribution of oil or                 within the existing PSD, NNSR and title
                                                programs also adopt the new                             natural gas, which is covered under
                                                definitions. These permitting authorities                                                                      V programs as it applies to oil and
                                                                                                        two-digit SIC Major Group 49. We                       natural gas operations. This clarification
                                                may, but are not required to, adopt these               continue to believe, as we stated in our
                                                definitions, as discussed earlier in this                                                                      will assist permitting authorities and
                                                                                                        proposal, that the nature of this industry
                                                document. This approach has a number                                                                           permit applicants in making source
                                                                                                        poses unique challenges for making
                                                of advantages. First, it is responsive to                                                                      determinations for the oil and natural
                                                                                                        these source determinations, so this
                                                states’ concerns that they have much                    approach is warranted for this industry                gas industry, and is not intended to
                                                experience making source                                category. Source determinations for                    result in less environmental protection
                                                determinations and they do not see the                  other industries will continue to be                   for human health and the environment.
                                                                                                        made on a case-by-case basis.                          It is being finalized as a part of a
                                                need to make changes to their existing
                                                                                                                                                               comprehensive strategy to addresses
                                                approach. Second, it would not trigger                  3. Applicability to Previously Issued                  emissions from the oil and natural gas
                                                an obligation for approved states,                      Permits                                                sector which includes new (or lower)
                                                particularly those states without oil and
                                                                                                        a. Summary of Proposal                                 emission standards or requirements for
                                                gas development, to revise their state
                                                                                                           The EPA did not discuss the                         a number of types of emitting
                                                rules and submit a SIP revision, or to
                                                                                                        application of the proposed options to                 equipment. As explained earlier in this
                                                provide a demonstration that their                                                                             document and in detail in our response
                                                existing rules are of equivalent                        previously issued permits in the
                                                                                                        preamble to the proposed rule.                         to comments, the EPA does not
                                                stringency.                                                                                                    anticipate that this rule will create a
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                                                   With regard to title V permitting, we                b. Brief Summary of Comments                           significant issue for attainment and
                                                are also only adopting these changes in                    Several commenters stated that any                  maintenance of the NAAQS. Therefore,
                                                the rules that apply to the EPA and                     new rule that the EPA adopts should not                the EPA believes this action will not
                                                delegated programs. States and local                    be applied retroactively. One                          have a disproportionately high and
                                                agencies with approved programs may                     commenter urged the EPA to both make                   adverse human health or environmental
                                                adopt a similar provision in their title V              it clear that new federal language will be             effects on minority populations or low-
                                                rules at their discretion.                              implemented only on a prospective                      income populations.


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                                                                      Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations                                          35631

                                                VI. Statutory and Executive Order                       permitting authorities. Entities                       local and tribal permitting authorities
                                                Reviews                                                 potentially affected directly by this final            on September 15, 2015. These meetings
                                                                                                        rule include state, local and tribal                   discussed several related oil and gas
                                                A. Executive Order 12866: Regulatory
                                                                                                        governments and none of these                          rules, including this Source
                                                Planning and Review and Executive
                                                                                                        governments are small entities.                        Determination rule. Summaries of these
                                                Order 13563: Improving Regulation and
                                                Regulatory Review                                       D. Unfunded Mandates Reform Act                        meetings are included in the docket for
                                                                                                        (UMRA)                                                 this rule.
                                                   This action is a significant regulatory                                                                        The EPA also offered consultation
                                                action that was submitted to the Office                   This action does not contain an                      during the rulemaking process, but
                                                of Management and Budget (OMB) for                      unfunded mandate of $100 million or                    received no requests. The EPA provided
                                                review because it raises novel policy                   more as described in the Unfunded                      an opportunity for tribes and
                                                issues regarding one of the President’s                 Mandates Reform Act of 1995 (UMRA),                    stakeholders to provide written
                                                priorities. Any changes made in                         2 U.S.C. 1531–1538, and does not                       comments on the proposed rule. One
                                                response to OMB recommendations                         significantly or uniquely affect small                 tribe did submit comments and these
                                                have been documented in the docket.                     governments.                                           comments are included in the docket for
                                                B. Paperwork Reduction Act (PRA)                        E. Executive Order 13132: Federalism                   this rule.
                                                  This action does not impose any new                      This action does not have federalism                G. Executive Order 13045: Protection of
                                                information collection burden. The                      implications. It will not have substantial             Children From Environmental Health
                                                OMB has previously approved the                         direct effects on the states, on the                   and Safety Risks
                                                information collection requirements                     relationship between the national                        The EPA interprets Executive Order
                                                contained in the existing regulations for               government and the states, or on the                   13045 as applying only to those
                                                PSD (40 CFR 52.21) and title V (40 CFR                  distribution of power and                              regulatory actions that concern
                                                parts 70 and 71) under the provisions of                responsibilities among the various                     environmental health or safety risks that
                                                the Paperwork Reduction Act, 44 U.S.C.                  levels of government. The requirement                  the EPA has reason to believe may
                                                3501 et seq. and has assigned OMB                       to obtain permits for new major sources                disproportionately affect children, per
                                                control numbers 2060–0003, 2060–0336                    is imposed by the CAA. This rule would                 the definition of ‘‘covered regulatory
                                                and 2060–0243. The OMB control                          interpret those requirements as they                   action’’ in section 2–202 of the
                                                numbers for the EPA’s regulations in 40                 apply to oil and natural gas operations.               Executive Order. This action is not
                                                CFR are listed in 40 CFR part 9. Instead                Thus, Executive Order 13132 does not                   subject to Executive Order 13045
                                                of new information collection burdens,                  apply to these regulation revisions.                   because it does not directly involve an
                                                this action finalizes a definition that                 Finally, the EPA is not requiring that                 environmental health risk or safety risk.
                                                clarifies the permitting requirements                   states adopt these changes.
                                                applicable to new and modified oil and                                                                         H. Executive Order 13211: Actions
                                                natural gas sources. This final action is               F. Executive Order 13175: Consultation                 Concerning Regulations That
                                                not likely to increase the burden                       and Coordination With Indian Tribal                    Significantly Affect Energy Supply,
                                                associated with permitting. It is likely to             Governments                                            Distribution, or Use
                                                decrease the burden of permitting for                     This action does not have tribal                       This action is not a ‘‘significant
                                                the EPA, when it is the permitting                      implications, as specified in Executive                energy action’’ because it is not likely to
                                                authority. The extent to which it will                  Order 13175. It would not have a                       have a significant adverse effect on the
                                                change the permitting burden for other                  substantial direct effect on one or more               supply, distribution or use of energy.
                                                permitting authorities will depend on                   Indian tribes, since no tribe has                      The EPA is finalizing this clarification
                                                whether state or local permitting                       developed a Tribal Implementation Plan                 to its permitting rules and we believe
                                                authorities adopt the changes, and the                  that allows it to issue NSR permits and,               this action is not likely to have any
                                                extent to which these changes are                       in any case, we are not requiring any                  adverse energy effects because it will
                                                different from the current practice.                    permitting authority other than the EPA                not increase, and may decrease, the
                                                                                                        and delegated states to adopt these                    permitting burden on owners and
                                                C. Regulatory Flexibility Act (RFA)                     changes. Furthermore, this regulation                  operators of oil and natural gas sources.
                                                   I certify that this action will not have             does not affect the relationship or
                                                a significant economic impact on a                      distribution of power and                              I. National Technology Transfer and
                                                substantial number of small entities                    responsibilities between the federal                   Advancement Act
                                                under the RFA. In making this                           government and Indian tribes. The CAA                     This action does not involve technical
                                                determination, the impact of concern is                 and the Tribal Air Rule establish the                  standards.
                                                any significant adverse economic                        relationship of the federal government
                                                impact on small entities. An agency may                 and tribes in characterizing air quality               J. Executive Order 12898: Federal
                                                certify that a rule will not have a                     and developing plans to attain the                     Actions To Address Environmental
                                                significant economic impact on a                        NAAQS, and this regulation does                        Justice in Minority Populations and
                                                substantial number of small entities if a               nothing to modify that relationship.                   Low-Income Populations
                                                rule relieves regulatory burden, has no                 Thus, Executive Order 13175 does not                      The EPA believes the human health or
                                                net burden or otherwise has a positive                  apply to this action.                                  environmental risk addressed by this
                                                economic effect on the small entities                     Consistent with the EPA Policy on                    action will not have potential
                                                subject to the rule. This final rule will               Consultation and Coordination with                     disproportionately high and adverse
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                                                not impose any additional requirements                  Indian tribes, the EPA held several                    human health or environmental effects
                                                on small entities. This action clarifies                meetings with tribal environmental                     on any population, including any
                                                existing requirements, and, by limiting                 professionals to discuss issues                        minority, low-income or indigenous
                                                the area in which an oil and gas source’s               associated with this rule, including a                 populations, because it does not affect
                                                operations must be analyzed for                         presentation on a National Tribal Air                  the level of protection provided to
                                                consideration as a single source, limits                Association policy call on September                   human health or the environment. The
                                                the burden on the sources and                           10, 2015, and an outreach call to state,               results of the evaluation of


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                                                35632                 Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations

                                                environmental justice considerations is                 Intergovernmental relations, Major                     under common control). Pollutant
                                                contained in Section V of this preamble                 source, Oil and gas.                                   emitting activities shall be considered
                                                titled, ‘‘Environmental Justice                                                                                adjacent if they are located on the same
                                                                                                        40 CFR Part 70
                                                Considerations.’’                                                                                              surface site; or if they are located on
                                                                                                          Environmental protection, Air                        surface sites that are located within 1⁄4
                                                K. Congressional Review Act (CRA)                       pollution control, Intergovernmental                   mile of one another (measured from the
                                                  This action is subject to the CRA, and                relations, Major source, Oil and gas,                  center of the equipment on the surface
                                                the EPA will submit a rule report to                    Operating permit.                                      site) and they share equipment. Shared
                                                each House of the Congress and to the                                                                          equipment includes, but is not limited
                                                Comptroller General of the United                       40 CFR Part 71
                                                                                                                                                               to, produced fluids storage tanks, phase
                                                States. This action is not a ‘‘major rule’’               Environmental protection, Air                        separators, natural gas dehydrators or
                                                as defined by 5 U.S.C. 804(2).                          pollution control, Intergovernmental                   emissions control devices. Surface site,
                                                                                                        relations, Major source, Oil and gas,                  as used in this paragraph (a)(1)(ii)(B),
                                                L. Judicial Review
                                                                                                        Operating permit.                                      has the same meaning as in 40 CFR
                                                   Under section 307(b)(1) of the CAA,
                                                                                                          Dated: May 12, 2016.                                 63.761.
                                                petitions for judicial review of any
                                                                                                        Gina McCarthy,                                         *      *    *      *     *
                                                nationally applicable regulation, or any
                                                action the Administrator ‘‘finds and                    Administrator.                                         ■ 3. In § 51.166, revise paragraph (b)(6)
                                                publishes’’ as based on a determination                   For the reasons stated in the                        to read as follows:
                                                of nationwide scope or effect must be                   preamble, title 40, chapter I of the Code
                                                                                                                                                               § 51.166 Prevention of significant
                                                filed in the United States Court of                     of Federal Regulations is amended as                   deterioration of air quality.
                                                Appeals for the District of Columbia                    follows:
                                                Circuit within 60 days of the date the                                                                         *       *    *     *     *
                                                promulgation, approval, or action                       PART 51—REQUIREMENTS FOR                                  (b) * * *
                                                appears in the Federal Register. This                   PREPARATION, ADOPTION, AND                                (6)(i) Building, structure, facility, or
                                                action is nationally applicable, as it                  SUBMITTAL OF IMPLEMENTATION                            installation means all of the pollutant-
                                                revises the rules governing all PSD,                    PLANS                                                  emitting activities which belong to the
                                                NNSR and title V programs, in 40 CFR                                                                           same industrial grouping, are located on
                                                51.166, 40 CFR 51.165, 40 CFR 52.21, 40                 ■ 1. The authority citation for part 51                one or more contiguous or adjacent
                                                CFR part 70 and 40 CFR part 71. The                     continues to read as follows:                          properties, and are under the control of
                                                Administrator also finds that this action                 Authority: 23 U.S.C. 101; 42 U.S.C. 7401–            the same person (or persons under
                                                is based on a determination of                          7671q.                                                 common control) except the activities of
                                                nationwide scope and effect, as it                                                                             any vessel. Pollutant-emitting activities
                                                                                                        ■ 2. In § 51.165, revise paragraph
                                                revises the EPA’s direct implementation                                                                        shall be considered as part of the same
                                                                                                        (a)(1)(ii) to read as follows:
                                                of the PSD and title V programs, which                                                                         industrial grouping if they belong to the
                                                is in effect in multiple Circuits. As a                 § 51.165    Permit requirements.                       same Major Group (i.e., which have the
                                                result, petitions for review of this                      (a) * * *                                            same two-digit code) as described in the
                                                regulation must be filed in the United                    (1) * * *                                            Standard Industrial Classification
                                                States Court of Appeals for the District                  (ii)(A) Building, structure, facility, or            Manual, 1972, as amended by the 1977
                                                of Columbia Circuit within August 2,                    installation means all of the pollutant-               Supplement (U.S. Government Printing
                                                2016. Filing a petition for                             emitting activities which belong to the                Office stock numbers 4101–0066 and
                                                reconsideration by the Administrator of                 same industrial grouping, are located on               003–005–00176–0, respectively).
                                                this final action does not affect the                   one or more contiguous or adjacent                        (ii) The plan may include the
                                                finality of this action for the purposes of             properties, and are under the control of               following provision: Notwithstanding
                                                judicial review nor does it extend the                  the same person (or persons under                      the provisions of paragraph (b)(6)(i) of
                                                time within which a petition for judicial               common control) except the activities of               this section, building, structure, facility,
                                                review must be filed, and shall not                     any vessel. Pollutant emitting activities              or installation means, for onshore
                                                postpone the effectiveness of this action.              shall be considered as part of the same                activities under SIC Major Group 13: Oil
                                                                                                        industrial grouping if they belong to the              and Gas Extraction, all of the pollutant-
                                                Statutory Authority                                     same Major Group (i.e., which have the                 emitting activities included in Major
                                                   The statutory authority for this action              same two-digit code) as described in the               Group 13 that are located on one or
                                                is provided by sections 101; 111; 114;                  Standard Industrial Classification                     more contiguous or adjacent properties,
                                                116, 160–165, 169, 173, 301, 302, 501                   Manual, 1972, as amended by the 1977                   and are under the control of the same
                                                and 502 of the CAA, as amended (42                      Supplement (U.S. Government Printing                   person (or persons under common
                                                U.S.C. 7401; 42 U.S.C. 7411; 42 U.S.C.                  Office stock numbers 4101–0065 and                     control). Pollutant emitting activities
                                                7414; 42 U.S.C. 7416; 7470–7475, 7479,                  003–005–00176–0, respectively).                        shall be considered adjacent if they are
                                                7503, 7601, 7602, 7661, and 7662.                         (B) The plan may include the                         located on the same surface site; or if
                                                                                                        following provision: Notwithstanding                   they are located on surface sites that are
                                                List of Subjects                                                                                               located within 1⁄4 mile of one another
                                                                                                        the provisions of paragraph (a)(1)(ii)(A)
                                                40 CFR Part 51                                          of this section, building, structure,                  (measured from the center of the
                                                  Environmental protection, Air                         facility, or installation means, for                   equipment on the surface site) and they
                                                pollution control, Construction permit,                 onshore activities under Standard                      share equipment. Shared equipment
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                                                Intergovernmental relations, Major                      Industrial Classification (SIC) Major                  includes, but is not limited to, produced
                                                source, Oil and gas.                                    Group 13: Oil and Gas Extraction, all of               fluids storage tanks, phase separators,
                                                                                                        the pollutant-emitting activities                      natural gas dehydrators or emissions
                                                40 CFR Part 52                                          included in Major Group 13 that are                    control devices. Surface site, as used in
                                                  Environmental protection, Air                         located on one or more contiguous or                   this paragraph (b)(6)(ii), has the same
                                                pollution control, Construction permit,                 adjacent properties, and are under the                 meaning as in 40 CFR 63.761.
                                                Incorporation by reference,                             control of the same person (or persons                 *       *    *     *     *


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                                                                       Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations                                                35633

                                                ■ 4. In appendix S to part 51, revise                    any vessel. Pollutant-emitting activities              Major Group (i.e., all have the same two-
                                                section II.A.2. to read as follows:                      shall be considered as part of the same                digit code) as described in the Standard
                                                                                                         industrial grouping if they belong to the              Industrial Classification Manual, 1987.
                                                Appendix S to Part 51—Emission Offset
                                                                                                         same ‘‘Major Group’’ (i.e., which have                 State programs may adopt the following
                                                Interpretative Ruling
                                                                                                         the same first two digit code) as                      provision: For onshore activities
                                                *       *     *       *      *                           described in the Standard Industrial                   belonging to Standard Industrial
                                                II. Initial Screening Analyses and                       Classification Manual, 1972, as                        Classification (SIC) Major Group 13: Oil
                                                Determination of Applicable Requirements                 amended by the 1977 Supplement (U.S.                   and Gas Extraction, pollutant emitting
                                                   A. * * *                                              Government Printing Office stock                       activities shall be considered adjacent if
                                                   2. (i) Building, structure, facility or               numbers 4101–0066 and 003–005–                         they are located on the same surface
                                                installation means all of the pollutant-                 00716–0, respectively).                                site; or if they are located on surface
                                                emitting activities which belong to the same                (ii) Notwithstanding the provisions of              sites that are located within 1⁄4 mile of
                                                industrial grouping, are located on one or               paragraph (b)(6)(i) of this section,                   one another (measured from the center
                                                more contiguous or adjacent properties, and              building, structure, facility, or                      of the equipment on the surface site)
                                                are under the control of the same person (or             installation means, for onshore                        and they share equipment. Shared
                                                persons under common control) except the
                                                activities of any vessel. Pollutant-emitting
                                                                                                         activities under Standard Industrial                   equipment includes, but is not limited
                                                activities shall be considered as part of the            Classification (SIC) Major Group 13: Oil               to, produced fluids storage tanks, phase
                                                same industrial grouping if they belong to the           and Gas Extraction, all of the pollutant-              separators, natural gas dehydrators or
                                                same ‘‘Major Group’’ (i.e., which have the               emitting activities included in Major                  emissions control devices. Surface site,
                                                same two digit code) as described in the                 Group 13 that are located on one or                    as used in the introductory text of this
                                                Standard Industrial Classification Manual,               more contiguous or adjacent properties,                definition, has the same meaning as in
                                                1972, as amended by the 1977 Supplement                  and are under the control of the same                  40 CFR 63.761.
                                                (U.S. Government Printing Office stock                   person (or persons under common
                                                numbers 4101–0066 and 003–005–00176–0,
                                                                                                                                                                *      *      *    *     *
                                                                                                         control). Pollutant emitting activities
                                                respectively).
                                                   (ii) Notwithstanding the provisions of
                                                                                                         shall be considered adjacent if they are               PART 71—FEDERAL OPERATING
                                                paragraph II.A.2(i) of this section, building,           located on the same surface site; or if                PERMIT PROGRAMS
                                                structure, facility or installation means, for           they are located on surface sites that are
                                                onshore activities under SIC Major Group 13:             located within 1⁄4 mile of one another                 ■ 9. The authority citation for part 71
                                                Oil and Gas Extraction, all of the pollutant-            (measured from the center of the                       continues to read as follows:
                                                emitting activities included in Major Group              equipment on the surface site) and they                    Authority: 42 U.S.C. 7401, et seq.
                                                13 that are located on one or more contiguous            share equipment. Shared equipment
                                                or adjacent properties, and are under the                includes, but is not limited to, produced              Subpart A—Operating Permits
                                                control of the same person (or persons under             fluids storage tanks, phase separators,
                                                common control). Pollutant emitting                                                                             ■ 10. In § 71.2, revise the introductory
                                                activities shall be considered adjacent if they
                                                                                                         natural gas dehydrators or emissions
                                                                                                                                                                text of the definition for ‘‘Major
                                                are located on the same surface site; or if they         control devices. Surface site, as used in
                                                                                                                                                                sources’’ to read as follows:
                                                are located on surface sites that are located            this paragraph (b)(6)(ii), has the same
                                                within 1⁄4 mile of one another (measured                 meaning as in 40 CFR 63.761.                           § 71.2    Definitions.
                                                from the center of the equipment on the                  *       *   *     *     *                              *     *     *     *     *
                                                surface site) and they share equipment.                                                                           Major source means any stationary
                                                Shared equipment includes, but is not                    PART 70—STATE OPERATING PERMIT                         source (or any group of stationary
                                                limited to, produced fluids storage tanks,               PROGRAMS
                                                phase separators, natural gas dehydrators or
                                                                                                                                                                sources that are located on one or more
                                                emissions control devices. Surface site, as                                                                     contiguous or adjacent properties, and
                                                                                                         ■ 7. The authority citation for part 70
                                                used in this paragraph II.A.2(ii), has the same                                                                 are under common control of the same
                                                                                                         continues to read as follows:
                                                meaning as in 40 CFR 63.761.                                                                                    person (or persons under common
                                                                                                             Authority: 42 U.S.C. 7401, et seq.                 control)), belonging to a single major
                                                *       *     *       *      *
                                                                                                         ■ 8. In § 70.2, revise the introductory                industrial grouping and that are
                                                PART 52—APPROVAL AND                                     text of the definition for ‘‘Major source’’            described in paragraph (1), (2), or (3) of
                                                PROMULGATION OF                                          to read as follows:                                    this definition. For the purposes of
                                                IMPLEMENTATION PLANS                                                                                            defining ‘‘major source,’’ a stationary
                                                                                                         § 70.2   Definitions.                                  source or group of stationary sources
                                                ■ 5. The authority citation for part 52                  *     *     *     *     *                              shall be considered part of a single
                                                continues to read as follows:                              Major source means any stationary                    industrial grouping if all of the pollutant
                                                    Authority: 42 U.S.C. 7401 et seq.                    source (or any group of stationary                     emitting activities at such source or
                                                ■ 6. In § 52.21, revise paragraph (b)(6) to              sources that are located on one or more                group of sources on contiguous or
                                                read as follows:                                         continuous or adjacent properties, and                 adjacent properties belong to the same
                                                                                                         are under common control of the same                   Major Group (i.e., all have the same two-
                                                § 52.21 Prevention of significant                        person (or persons under common                        digit code) as described in the Standard
                                                deterioration of air quality.                            control)) belonging to a single major                  Industrial Classification Manual, 1987.
                                                *     *     *     *     *                                industrial grouping and that are                       For onshore activities belonging to
                                                  (b) * * *                                              described in paragraph (1), (2), or (3) of             Standard Industrial Classification (SIC)
                                                  (6)(i) Building, structure, facility, or               this definition. For the purposes of                   Major Group 13: Oil and Gas Extraction,
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                                                installation means all of the pollutant-                 defining ‘‘major source,’’ a stationary                pollutant emitting activities shall be
                                                emitting activities which belong to the                  source or group of stationary sources                  considered adjacent if they are located
                                                same industrial grouping, are located on                 shall be considered part of a single                   on the same surface site; or if they are
                                                one or more contiguous or adjacent                       industrial grouping if all of the pollutant            located on surface sites that are located
                                                properties, and are under the control of                 emitting activities at such source or                  within 1⁄4 mile of one another (measured
                                                the same person (or persons under                        group of sources on contiguous or                      from the center of the equipment on the
                                                common control) except the activities of                 adjacent properties belong to the same                 surface site) and they share equipment.


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                                                35634                 Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations

                                                Shared equipment includes, but is not                   listed in the index, some information                  infrastructure SIP submission may vary
                                                limited to, produced fluids storage                     may not be publicly available, i.e.,                   depending upon the data and analytical
                                                tanks, phase separators, natural gas                    Confidential Business Information or                   tools available to the state, as well as the
                                                dehydrators or emissions control                        other information whose disclosure is                  provisions already contained in the
                                                devices. Surface site, as used in the                   restricted by statute. Certain other                   state’s implementation plan at the time
                                                introductory text of this definition, has               material, such as copyrighted material,                in which the state develops and submits
                                                the same meaning as in 40 CFR 63.761.                   is not placed on the Internet and will be              the submission for a new or revised
                                                *     *     *    *      *                               publicly available only in hard copy                   NAAQS.
                                                [FR Doc. 2016–11968 Filed 6–2–16; 8:45 am]              form. Publicly available docket                           Section 110(a)(2)(D) has two
                                                BILLING CODE 6560–50–P                                  materials are available either                         components: 110(a)(2)(D)(i) and
                                                                                                        electronically through http://                         110(a)(2)(D)(ii). Section 110(a)(2)(D)(i)
                                                                                                        www.regulations.gov or in hard copy at                 includes four distinct components,
                                                ENVIRONMENTAL PROTECTION                                the Air Regulatory Management Section,                 commonly referred to as ‘‘prongs,’’ that
                                                AGENCY                                                  Air Planning and Implementation                        must be addressed in infrastructure SIP
                                                                                                        Branch, Air, Pesticides and Toxics                     submissions. The first two prongs,
                                                40 CFR Part 52                                          Management Division, U.S.                              which are codified in section
                                                                                                        Environmental Protection Agency,                       110(a)(2)(D)(i)(I), are provisions that
                                                [EPA–R04–OAR–2016–0072; FRL–9947–22–                                                                           prohibit any source or other type of
                                                Region 4]                                               Region 4, 61 Forsyth Street SW.,
                                                                                                        Atlanta, Georgia 30303–8960. EPA                       emissions activity in one state from
                                                Air Plan Approval; North Carolina;                      requests that if at all possible, you                  contributing significantly to
                                                Prong 4—2008 Ozone, 2010 NO2, SO2,                      contact the person listed in the FOR                   nonattainment of the NAAQS in another
                                                and 2012 PM2.5                                          FURTHER INFORMATION CONTACT section to                 state (prong 1) and from interfering with
                                                                                                        schedule your inspection. The Regional                 maintenance of the NAAQS in another
                                                AGENCY:  Environmental Protection                       Office’s official hours of business are                state (prong 2). The third and fourth
                                                Agency.                                                 Monday through Friday 8:30 a.m. to                     prongs, which are codified in section
                                                ACTION: Final rule.                                     4:30 p.m., excluding federal holidays.                 110(a)(2)(D)(i)(II), are provisions that
                                                                                                                                                               prohibit emissions activity in one state
                                                                                                        FOR FURTHER INFORMATION CONTACT:
                                                SUMMARY:   The Environmental Protection                                                                        from interfering with measures required
                                                Agency (EPA) is approving portions of                   Sean Lakeman of the Air Regulatory
                                                                                                                                                               to prevent significant deterioration of air
                                                revisions to the North Carolina State                   Management Section, Air Planning and
                                                                                                                                                               quality in another state (prong 3) or
                                                Implementation Plan (SIP), submitted                    Implementation Branch, Air, Pesticides
                                                                                                                                                               from interfering with measures to
                                                by the North Carolina Department of                     and Toxics Management Division, U.S.
                                                                                                                                                               protect visibility in another state (prong
                                                Environment and Natural Resources (NC                   Environmental Protection Agency,                       4). Section 110(a)(2)(D)(ii) requires SIPs
                                                DENR), addressing the Clean Air Act                     Region 4, 61 Forsyth Street SW.,                       to include provisions ensuring
                                                (CAA or Act) visibility transport (prong                Atlanta, Georgia 30303–8960. Mr.                       compliance with sections 115 and 126
                                                4) infrastructure SIP requirements for                  Lakeman can be reached by telephone at                 of the Act, relating to interstate and
                                                the 2008 8-hour Ozone, 2010 1-hour                      (404) 562–9043 or via electronic mail at               international pollution abatement.
                                                Nitrogen Dioxide (NO2), 2010 1-hour                     lakeman.sean@epa.gov.                                     North Carolina’s November 2, 2012,
                                                Sulfur Dioxide (SO2), and 2012 annual                   SUPPLEMENTARY INFORMATION:                             2008 8-hour Ozone submission; August
                                                Fine Particulate Matter (PM2.5) National                I. Background                                          23, 2013, 2010 1-hour NO2 submission;
                                                Ambient Air Quality Standards                                                                                  March 18, 2014, 2010 1-hour SO2
                                                (NAAQS). The CAA requires that each                        By statute, SIPs meeting the                        submission; and December 4, 2015,
                                                state adopt and submit a SIP for the                    requirements of sections 110(a)(1) and                 2012 Annual PM2.5 submission cite to
                                                implementation, maintenance, and                        (2) of the CAA are to be submitted by                  the State’s regional haze SIP as
                                                enforcement of each NAAQS                               states within three years after                        satisfying prong 4 requirements.
                                                promulgated by EPA, commonly                            promulgation of a new or revised                       However, at those dates, EPA had not
                                                referred to as an ‘‘infrastructure SIP.’’               NAAQS to provide for the                               yet fully approved North Carolina’s
                                                Specifically, EPA is approving the prong                implementation, maintenance, and                       regional haze SIP because the SIP relied
                                                4 portions of North Carolina’s November                 enforcement of the new or revised                      on the Clean Air Interstate Rule (CAIR)
                                                2, 2012, 2008 8-hour Ozone                              NAAQS. EPA has historically referred to                to satisfy the nitrogen oxides (NOX) and
                                                infrastructure SIP submission; August                   these SIP submissions made for the                     SO2 Best Available Retrofit Technology
                                                23, 2013, 2010 1-hour NO2                               purpose of satisfying the requirements                 (BART) requirements for the CAIR-
                                                infrastructure SIP submission; March                    of sections 110(a)(1) and 110(a)(2) as                 subject electric generating units (EGUs)
                                                18, 2014, 2010 1-hour SO2 infrastructure                ‘‘infrastructure SIP’’ submissions.                    in the State and the requirement for a
                                                SIP submission; and December 4, 2015,                   Sections 110(a)(1) and (2) require states              long-term strategy (LTS) sufficient to
                                                2012 Annual PM2.5 infrastructure SIP                    to address basic SIP elements such as                  achieve the state-adopted reasonable
                                                submission. All other applicable                        the requirements for monitoring, basic                 progress goals.1
                                                infrastructure requirements for these SIP               program requirements, and legal                           EPA demonstrated that CAIR
                                                submissions have been or will be                        authority that are designed to assure                  achieved greater reasonable progress
                                                addressed in separate rulemakings.                      attainment and maintenance of the                      toward the national visibility goal than
                                                                                                        newly established or revised NAAQS.
                                                DATES: This rule is effective July 5,
                                                                                                        More specifically, section 110(a)(1)                      1 CAIR, promulgated in 2005, required 27 states
                                                2016.
mstockstill on DSK3G9T082PROD with RULES




                                                                                                        provides the procedural and timing                     and the District of Columbia to reduce emissions of
                                                                                                                                                               NOX and SO2 that significantly contribute to, or
                                                ADDRESSES:   EPA has established a                      requirements for infrastructure SIPs.                  interfere with maintenance of, the 1997 NAAQS for
                                                docket for this action under Docket                     Section 110(a)(2) lists specific elements              fine particulates and/or ozone in any downwind
                                                Identification No. EPA–R04–OAR–                         that states must meet for the                          state. CAIR imposed specified emissions reduction
                                                                                                                                                               requirements on each affected State, and
                                                2016–0072. All documents in the docket                  infrastructure SIP requirements related                established an EPA-administered cap and trade
                                                are listed on the http://                               to a newly established or revised                      program for EGUs in which States could join as a
                                                www.regulations.gov Web site. Although                  NAAQS. The contents of an                              means to meet these requirements.



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Document Created: 2018-02-08 07:29:32
Document Modified: 2018-02-08 07:29:32
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesThis final rule is effective on August 2, 2016.
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]; or Mr. Greg Nizich, Office of Air Quality Planning and Standards (C504- 03), U.S. Environmental Protection Agency, by phone at (919) 54l-3078, or by email at [email protected]
FR Citation81 FR 35622 
RIN Number2060-AS06
CFR Citation40 CFR 51
40 CFR 52
40 CFR 70
40 CFR 71
CFR AssociatedEnvironmental Protection; Air Pollution Control; Construction Permit; Intergovernmental Relations; Major Source; Oil and Gas; Incorporation by Reference and Operating Permit

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