83_FR_57545 83 FR 57324 - Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Aggregation; Reconsideration

83 FR 57324 - Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Aggregation; Reconsideration

ENVIRONMENTAL PROTECTION AGENCY

Federal Register Volume 83, Issue 221 (November 15, 2018)

Page Range57324-57333
FR Document2018-24820

In this action, the Environmental Protection Agency (EPA) is concluding the reconsideration of an earlier action that the EPA published on January 15, 2009, titled ``Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR): Aggregation and Project Netting.'' The 2009 action--hereafter referred to as ``2009 NSR Aggregation Action''--clarified implementation of the New Source Review (NSR) permitting program under the Clean Air Act (CAA or Act) with respect to treating related physical or operational changes as a single ``modification'' for the purpose of determining NSR applicability at a stationary source. On April 15, 2010, the EPA proposed to revoke the 2009 NSR Aggregation Action. After a review of the public comments received on that proposal, the EPA has now decided to not revoke the 2009 NSR Aggregation Action. The EPA is, therefore, retaining the interpretation set forth in the 2009 NSR Aggregation Action, while not adopting any changes to the relevant rule text. At the same time, the EPA is using this present action to clarify the implications of the 2009 NSR Aggregation Action for EPA-approved permitting programs. This action also lifts the administrative stay and announces the effective date of the 2009 NSR Aggregation Action.

Federal Register, Volume 83 Issue 221 (Thursday, November 15, 2018)
[Federal Register Volume 83, Number 221 (Thursday, November 15, 2018)]
[Rules and Regulations]
[Pages 57324-57333]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-24820]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[EPA-HQ-OAR-2003-0064; FRL-9986-47-OAR]
RIN 2060-AP80


Prevention of Significant Deterioration (PSD) and Nonattainment 
New Source Review (NNSR): Aggregation; Reconsideration

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final action; lifting of administrative stay and announcement 
of effective date.

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SUMMARY: In this action, the Environmental Protection Agency (EPA) is 
concluding the reconsideration of an earlier action that the EPA 
published on January 15, 2009, titled ``Prevention of Significant 
Deterioration (PSD) and Nonattainment New Source Review (NSR): 
Aggregation and Project Netting.'' The 2009 action--hereafter referred 
to as ``2009 NSR Aggregation Action''--clarified implementation of the 
New Source Review (NSR) permitting program under the Clean Air Act (CAA 
or Act) with respect to treating related physical or operational 
changes as a single ``modification'' for the purpose of determining NSR 
applicability at a stationary source. On April 15, 2010, the EPA 
proposed to revoke the 2009 NSR Aggregation Action. After a review of 
the public comments received on that proposal, the EPA has now decided 
to not revoke the 2009 NSR Aggregation Action. The EPA is, therefore, 
retaining the interpretation set forth in the 2009 NSR Aggregation 
Action, while not adopting any changes to the relevant rule text. At 
the same time, the EPA is using this present action to clarify the 
implications of the 2009 NSR Aggregation Action for EPA-approved 
permitting programs. This action also lifts the administrative stay and 
announces the effective date of the 2009 NSR Aggregation Action.

DATES: This action is effective on November 15, 2018.

ADDRESSES: The EPA has established a docket for this action, identified 
by Docket ID No. EPA-HQ-OAR-2003-0064. All documents in the docket are 
listed in the http://www.regulations.gov website. Although listed in 
the index, some information may not be 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. Publicly available docket materials are available 
electronically in http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For further general information on 
this action, contact Mr. Dave Svendsgaard, Office of Air Quality 
Planning and Standards (OAQPS), Air Quality Policy Division, U.S. EPA, 
Mail Code 504-03, 109 T.W. Alexander Drive, Research Triangle Park, NC 
27711; by telephone at (919) 541-2380; or by email at 
svendsgaard.dave@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

A. Does this action apply to me?

    Entities potentially affected directly by this action include 
sources in all industry categories. Entities potentially affected by 
this action also include state, local and tribal air pollution control 
agencies (air agencies) responsible for permitting sources pursuant to 
the NSR program.

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 Federal Register document will be posted at https://www.epa.gov/nsr.

[[Page 57325]]

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
    A. What is New Source Review?
    B. What is project aggregation?
    C. Regulatory History
III. This Action
    A. Overview
    B. Retaining the 2009 NSR Aggregation Action
    C. Completing the Reconsideration Proceeding
    D. Lifting the Administrative Stay; Announcement of Effective 
Date
IV. Environmental Justice Considerations
V. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
VI. Judicial Review
VII. Statutory Authority

II. Background

A. What is New Source Review?

    The NSR program is a preconstruction permitting program that 
requires certain stationary sources of air pollution to obtain permits 
prior to beginning construction. The NSR permitting program applies 
both to new construction and to modifications of existing sources, 
regardless of whether the source is in an area where the national 
ambient air quality standards (NAAQS) have been exceeded (nonattainment 
area) or if the source is in an area where the NAAQS have not been 
exceeded (attainment or unclassifiable area). New construction and 
modifications that emit ``regulated NSR pollutants'' \1\ over certain 
thresholds are subject to major NSR requirements, while smaller 
emitting sources and modifications may be subject to minor NSR 
requirements or be excluded from NSR altogether.
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    \1\ 40 CFR 51.165(a)(1)(xxxvii), 40 CFR 51.166(b)(49), 40 CFR 
52.21(b)(50).
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    Major NSR permits for sources that are located in attainment or 
unclassifiable areas are referred to as Prevention of Significant 
Deterioration (PSD) permits. These permits can also cover pollutants 
for which there are no NAAQS. Major NSR permits for sources located in 
nonattainment areas and that emit pollutants above the specified 
thresholds for which the area is in nonattainment are referred to as 
nonattainment NSR (NNSR) permits. The pollutant(s) at issue and the air 
quality designation of the area where the facility is located or 
proposed to be built determine the specific permitting requirements. 
The CAA requires sources subject to PSD to meet emission limits based 
on Best Available Control Technology (BACT) as specified by CAA section 
165(a)(4), and sources subject to NNSR to meet Lowest Achievable 
Emissions Rate (LAER) pursuant to CAA section 173(a)(2). Other 
requirements to obtain a major NSR permit vary depending on whether it 
is a PSD or NNSR permit.
    A new stationary source is subject to major NSR requirements if its 
potential to emit (PTE) a regulated NSR pollutant exceeds statutory 
emission thresholds.\2\ If it exceeds the applicable threshold, the NSR 
regulations define it as a ``major stationary source.'' \3\ An existing 
major stationary source triggers major NSR permitting requirements when 
it undergoes a ``major modification,'' which occurs when a source 
undertakes a physical change or change in method of operation (i.e., a 
``project'') that would result in (1) a significant emissions increase 
from the project, and (2) a significant net emissions increase from the 
source (i.e., a source-wide ``netting'' analysis that considers 
creditable emission increases and decreases occurring at the source as 
a result of other projects over a 5-year contemporaneous period). See, 
e.g., 40 CFR 52.21(b)(2)(i) and 40 CFR 52.21(b)(52). For this two-step 
process, the NSR regulations define what emissions rate constitutes 
``significant'' for each NSR pollutant. See 40 CFR 51.165(a)(1)(x), 40 
CFR 51.166(b)(23), and 40 CFR 52.21(b)(23).
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    \2\ For PSD, the statute uses the term ``major emitting 
facility'' which is defined as a stationary source that emits, or 
has a PTE, at least 100 tons per year (TPY) if the source is in one 
of 28 listed source categories--or at least 250 TPY if the source is 
not--of ``any air pollutant.'' CAA 169(1). For NNSR, the emissions 
threshold for a major stationary source is 100 TPY, although lower 
thresholds may apply depending on the degree of the nonattainment 
problem and the pollutant. 40 CFR 51.165(a)(1)(iv)(A).
    \3\ 40 CFR 51.165(a)(1)(iv), 40 CFR 51.166(b)(1)(i), 40 CFR 
52.21(b)(1)(i).
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    In many cases, these requirements of the major NSR program (or 
equivalent requirements) are formally adopted by a state or local air 
agency, and the agency submits a revised state implementation plan 
(SIP) to the EPA for approval. The EPA's regulations provide for the 
minimum requirements of these programs. Upon EPA approving the SIP, the 
air agency becomes the ``permitting authority'' for major NSR permits 
for sources within its boundaries. When a state or local air agency is 
not the permitting authority, either the EPA issues the major NSR 
permits or a state or local air agency issues the major NSR permits on 
behalf of the EPA by way of a delegation agreement. For sources located 
in Indian country, the EPA is currently the only permitting authority 
for major NSR. Currently, state and local air agencies issue the vast 
majority of major NSR permits each year.
    New sources and modifications that do not require a major NSR 
permit may instead require a minor NSR permit prior to construction. 
Minor NSR permits are almost exclusively issued by state and local air 
agencies, although the EPA issues minor NSR permits in some areas of 
Indian country. Minor NSR requirements are approved into a SIP in order 
to achieve and maintain the NAAQS. See CAA section 110(a)(2)(C). The 
CAA and EPA's regulations are less prescriptive regarding minimum 
requirements for minor NSR, so air agencies generally have more 
flexibility in designing their minor NSR programs.

B. What is project aggregation?

    As described in the preceding section, the EPA's implementing 
regulations for NSR establish a two-step process for determining major 
NSR applicability for projects at stationary sources. To be subject to 
major NSR requirements, the project must result in both (1) a 
significant emissions increase from the project (the determination of 
which is called ``Step 1'' of the NSR applicability analysis, or 
``project emissions accounting''); and (2) a significant net emissions 
increase at the stationary source, taking account of emission increases 
and emission decreases attributable to other projects undertaken at the 
stationary source within a specific time frame (called ``Step 2'' of 
the NSR applicability analysis, or ``contemporaneous netting''). This 
approach to applicability makes it necessary to accurately define what 
constitutes the ``project'' under review to ensure that the proper 
emissions increase resulting from the project is used when comparing it 
with the applicable NSR significance threshold at Step 1 of the NSR 
applicability analysis.\4\ Otherwise, a source could

[[Page 57326]]

conceivably carve up a higher-emitting project into two or more lower-
emitting ``projects'' and avoid triggering major NSR requirements.\5\ 
``Project aggregation,'' therefore, ensures that nominally-separate 
projects occurring at a source are treated as a single project for NSR 
applicability purposes where it is unreasonable not to consider them a 
single project.\6\
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    \4\ In this notice, we use the terms ``project,'' ``changes,'' 
and ``activities'' interchangeably in referring to physical or 
operational changes that occur at a facility. In some cases, 
particularly in using the term ``activities,'' we are actually 
referring to ``sub-projects'' that are nominally separate in scope 
but are nevertheless related to other sub-projects such that they 
all are part of a larger single project when determining NSR 
applicability. It is important to note that our use of the term 
``activities'' in this notice is not intended to imply that every 
``activity'' at a plant is a physical or operational change. The EPA 
recognizes that there are numerous activities undertaken at a 
facility, of which only a subset will constitute ``changes'' under 
the NSR regulations.
    \5\ Emission changes from separate projects (not included under 
Step 1 as falling within the project under review) are considered at 
Step 2 if they are ``contemporaneous'' and ``otherwise creditable'' 
under the NSR regulations. See 40 CFR 52.21(b)(3).
    \6\ It is not permissible to seek to circumvent NSR by securing 
several minor NSR permits for individual projects with the effect of 
avoiding major NSR requirements for what is actually a single 
project.
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    As with certain other aspects of the NSR program, determining what 
constitutes the ``project'' is a case-by-case decision that is both 
site-specific and fact-driven. There is no pre-determined list of 
activities that should be aggregated for a given industry or 
industries. It is, therefore, necessary to establish criteria for 
determining when nominally-separate activities are considered one 
project under NSR. The EPA has specifically sought to develop 
principles for aggregating changes such that a project is appropriately 
defined by the source, so that the emission increases attributable to 
the project are accurately quantified for purposes of analyzing NSR 
applicability. Over the years, the EPA articulated its policy on 
project aggregation through a series of statutory and regulatory 
interpretations contained in EPA letters and memoranda, the most 
commonly cited being a 1993 EPA memorandum regarding NSR applicability 
for activities that had occurred at a 3M facility in Minnesota.\7\
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    \7\ Memorandum from John B. Rasnic, Director, Stationary Source 
Compliance Division, OAQPS, to George T. Czerniak, Chief, Air 
Enforcement Branch, EPA Region 5, titled, ``Applicability of New 
Source Review Circumvention Guidance to 3M--Maplewood, Minnesota'' 
(June 17, 1993) (hereinafter ``3M Memorandum'').
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    To date, the EPA's focus in formulating criteria for project 
aggregation has been to ensure that NSR is not circumvented through 
some artificial separation of activities at Step 1 of the NSR 
applicability analysis where it would be unreasonable for the source to 
consider them to be separate projects. However, in a March 13, 2018, 
memorandum \8\ on the topic of ``project emissions accounting,'' the 
EPA broached the question of whether it might also somehow be possible 
for a source to circumvent NSR through some wholly artificial grouping 
of activities to include decreases in emissions as part of Step 1 of 
the NSR applicability analysis--i.e., assessing whether a project by 
itself results in a significant emissions increase before reaching Step 
2, where one then determines whether there will be a significant net 
emissions increase by taking into account all contemporaneous increases 
and decreases across the source. While we \9\ have been mindful of this 
question in deciding to employ the project aggregation criteria 
described in this action, we intend to address more fully this scenario 
in the context of a subsequent rulemaking action on the topic of 
project emissions accounting.
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    \8\ Memorandum from E. Scott Pruitt, Administrator, to Regional 
Administrators, titled, ``Project Emissions Accounting Under the New 
Source Review Preconstruction Permitting Program'' (March 13, 2018) 
(hereinafter ``Project Emissions Accounting Memorandum'').
    \9\ In this preamble, the terms ``we'', ``our'' and ``us'' refer 
to the EPA.
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C. Regulatory History

1. The 2009 NSR Aggregation Action
    On January 15, 2009, the EPA published a final action--which we are 
calling the ``2009 NSR Aggregation Action''--that described the 
principles of project aggregation that we would apply when determining 
whether a source had unreasonably segregated a single project into 
multiple projects, thereby circumventing the NSR permitting 
requirements.\10\ We had initially proposed in 2006 to establish 
principles for project aggregation through an amendment to the NSR 
regulations.\11\ However, because of the difficulty of creating a 
bright line to determine when activities should be aggregated, we 
ultimately decided not to adopt the proposed changes to the regulations 
and elected instead to pursue a less prescriptive approach by 
describing, in the 2009 action, the EPA's interpretation of the 
existing regulations and a policy for applying that interpretation 
going forward.
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    \10\ Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NSR): Aggregation and Project 
Netting (74 FR 2376; January 15, 2009).
    \11\ Prevention of Significant Deterioration (PSD) and 
Nonattainment New Source Review (NSR): Debottlenecking, Aggregation, 
and Project Netting (71 FR 54235; September 14, 2006).
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    The 2009 NSR Aggregation Action called for sources and reviewing 
authorities to aggregate emissions from nominally-separate activities 
when they are ``substantially related'' for the purpose of determining 
whether they are a single modification resulting in a significant 
emissions increase under NSR at Step 1.\12\ This ``substantially 
related'' criterion is based on an interpretation of the term 
``project'' contained in the major NSR regulations.\13\ The action also 
included a statement that the EPA would, as a matter of policy, 
establish a rebuttable presumption that activities that occurred more 
than three years apart are not ``substantially related'' and therefore, 
generally, should not be aggregated for purposes of determining whether 
they are a single modification at Step 1.
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    \12\ See 74 FR 2378 (``When there is no technical or economic 
relationship between activities or where the relationship is not 
substantial, their emissions need not be aggregated for NSR 
purposes.'' (emphasis added)). That is, mere relatedness is not 
sufficient to upend the source's definition of its project, but 
sources cannot circumvent NSR by artificially separating a series of 
emissions-increasing projects into separate projects that fall below 
the significance thresholds.
    \13\ See, e.g., 40 CFR 52.21(b)(52).
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    The 2009 NSR Aggregation Action retained the existing rule text 
defining the term ``project''--i.e., ``a physical change in, or change 
in method of operation of, an existing major stationary source''--and 
interpreted this rule text to mean that sources and permitting 
authorities should combine emissions only when nominally-separate 
changes are ``substantially related.'' While acknowledging the case-
specific nature of a project aggregation determination, the 2009 NSR 
Aggregation Action described the factors that should be considered when 
evaluating whether changes are substantially related, including 
technical or economic dependence. It also offered examples of what it 
means to be substantially related, and it referenced examples provided 
in EPA's 2006 proposed rule on project aggregation to further amplify 
EPA's meaning of the term. Thus, in many respects, the ``substantially 
related'' interpretation in the 2009 NSR Aggregation Action was 
intended to encompass principles for aggregating projects that were 
similar to those that the EPA had proposed in 2006, but ultimately 
concluded should not be prescriptively defined in a regulation because 
of the difficulty of developing a bright line for determining when 
activities should be aggregated.
    The 2009 NSR Aggregation Action specifically addressed the timing 
element of project aggregation decisions in multiple ways. It affirmed 
that timing alone should not be a basis for aggregating projects 
because the appropriate basis for aggregation is whether there is a 
substantial technical or economic relationship. It further explained 
that activities that occur simultaneously should not be presumed to be 
substantially related, although it is reasonable to presume that 
activities

[[Page 57327]]

closer in time are more likely to be substantially related than 
activities separated by larger time frames. Thus, it affirmed that the 
timing between activities remains important from a standpoint of 
framing the analysis of whether a substantial technical or economic 
relationship exists.
    The 2009 NSR Aggregation Action also expressed that the farther 
apart projects are timed, the less likely they are to be substantially 
related, since the activities would likely be part of distinct planning 
and capital-funding cycles. It stated ``the passage of time provides a 
fairly objective indicator of nonrelatedness between physical or 
operational changes. Specifically, the greater the time period between 
activities, the less likely that a deliberate decision was made by the 
source to split an otherwise `significant' activity into two or more 
smaller, non-major activities.'' 74 FR 2380.
    To this end, the 2009 NSR Aggregation Action affirmed that timing 
could be a basis to not aggregate separate projects, and it established 
a policy of applying a rebuttable presumption against aggregating 
projects that occur 3 or more years apart. The EPA justified its 
selection of 3 years as the presumptive timeframe in part by reasoning 
that it ``is long enough to ensure a reasonable likelihood that the 
presumption of independence will be valid, but is short enough to 
maintain a useful separation between relevant construction cycles, 
consistent with industry practice. For example, in the case of electric 
utilities, a commenter explained that companies plan and schedule major 
turbine outages every four to five years.'' Id. However, the EPA did 
note that this presumptive timeframe may be rebutted in certain 
circumstances. For instance, the 2009 NSR Aggregation Action noted that 
where there is ``evidence that a company intends to undertake a phased 
capital improvement project'' where the activities ``have a substantial 
economic relationship,'' this would likely overcome the presumption 
that those activities should not be aggregated. Id.
    With regard to implementing the 3-year presumption, the EPA stated 
``the time period separating physical or operational changes should be 
calculated based on time of approval (i.e., minor NSR permit issuance). 
If a permit has not been, or will not be, issued for the physical or 
operational changes, the time period should be based on when 
construction commences on the changes.'' 74 FR 2381.
    The EPA also explained that a statement within the 3M Memorandum 
was potentially vulnerable to misapplication and did not properly 
reflect the ``substantially related'' criterion. The 3M Memorandum 
stated the following:

    Some minimum level of research activity and commensurate 
emissions, source-wide, perhaps could be expected from year to year, 
as would be expected to keep the 3M plant productive or operable. 
These emissions and thereby modifications cannot be presumed to be 
independent given the plant's overall basic purpose to support a 
variety of research and development activities. Therefore, even 
though each research project may have been individually conceived 
and separately funded, it is appropriate to look at the overall 
expected research activity in assessing NSR applicability and 
enforcement. 3M Memorandum at 5 (emphasis added).

    In the 2009 NSR Aggregation Action, the EPA expressed concern with 
this statement from the 3M Memorandum, saying ``it could be interpreted 
to imply that almost any activity is related to any other activity at 
that source simply because they are both capital investments and 
support the company's goal to make a profit.'' 74 FR 2376, 2379. The 
suggestion that all changes consistent with the ``overall basic 
purpose'' of the plant can and should be aggregated is inconsistent 
with the interpretation of ``project'' to include only those changes 
that have a substantial relationship. While the EPA did not, in the 
2009 NSR Aggregation Action, find such a broad approach to project 
aggregation was often applied after the 3M determination, we 
nevertheless had concerns that it did not represent an appropriate 
criterion for aggregating projects for NSR purposes and could be 
misapplied. Thus, in the 2009 NSR Aggregation Action, we maintained 
that two nominally separate projects are not substantially related if 
they are only related to the extent that they both support the source's 
``overall basic purpose.''
    In summarizing what it means for projects to be substantially 
related, the 2009 NSR Aggregation Action provided that ``in most cases, 
activities occurring in unrelated portions of a major stationary source 
(e.g., a plant that makes two separate products and has no equipment 
shared among the two processing lines) will not be substantially 
related. The test of a substantial relationship centers around the 
interrelationship and interdependence of the activities, such that 
substantially related activities are likely to be jointly planned 
(i.e., part of the same capital improvement project or engineering 
study), and occur close in time and at components that are functionally 
interconnected.'' 74 FR 2378. The 2009 NSR Aggregation Action added, 
``[t]o be `substantially related,' there should be an apparent 
interconnection--either technically or economically--between the 
physical and/or operational changes, or a complementary relationship 
whereby a change at a plant may exist and operate independently, 
however its benefit is significantly reduced without the other 
activity. We note that these factors are not necessarily determinative 
of a substantial relationship, but are merely indicators that may 
suggest that two or more activities are likely to be substantially 
related and, therefore, candidates for aggregation.'' Id.
2. Reconsideration and Administrative Stay
    On January 30, 2009, the Natural Resources Defense Council (NRDC) 
submitted a petition for reconsideration of the 2009 NSR Aggregation 
Action (the ``NRDC Petition''). In response to the NRDC Petition, on 
February 13, 2009, the EPA convened a proceeding for reconsideration as 
provided for under the CAA section 307(d)(7)(B), finding that the 
petitioner had raised objections to the action that arose after the 
comment period and that were of central relevance to the action.
    To allow time to complete the reconsideration prior to the 2009 NSR 
Aggregation Action becoming effective, the EPA announced a 90-day 
administrative stay of the action. See 74 FR 7284 (February 13, 2009). 
The EPA subsequently completed an action to further delay the effective 
date until May 18, 2010. See 74 FR 22693 (May 14, 2009). On May 18, 
2010, the EPA invoked APA section 705 to stay the action indefinitely 
pending the proceedings for judicial review or the completion of 
reconsideration. These stays were intended to allow the EPA the time to 
take comment on issues that were in question and complete any revisions 
of the action that became necessary as a result of the reconsideration 
process.
    As part of the reconsideration proceeding, on April 15, 2010, the 
EPA published a proposed reconsideration of the 2009 NSR Aggregation 
Action (the ``2010 Reconsideration Proposal'').\14\ 75 FR 19567. At the 
time, the EPA considered whether some of the points

[[Page 57328]]

raised by the NRDC petition might demonstrate potential flaws in the 
process and with fundamental aspects of the 2009 NSR Aggregation 
Action, including the legal basis, state adoption and implementation, 
and the clarity of the ``substantially related'' criterion. In the 2010 
Reconsideration Proposal, we expressed agreement with the petitioner on 
a number of fronts, invited comment on all issues raised in the NRDC 
petition, and proposed a preferred option to revoke the 2009 NSR 
Aggregation Action. The 2010 Reconsideration Proposal also referenced a 
number of the past determinations on project aggregation. See 75 FR 
19570-1.
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    \14\ In the 2010 Reconsideration Proposal, the EPA described the 
2009 action as the ``NSR Aggregation Amendments.'' However, since 
this action did not ``amend'' the NSR regulations, but rather laid 
out an interpretation of our current regulations and described a 
policy on timing for aggregation, the 2009 action is more 
appropriately described, as it is described herein, as the 2009 NSR 
Aggregation Action.
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    The EPA received a total of 27 comments on our 2010 Reconsideration 
Proposal. Of those commenters, 20 represented industry parties, three 
represented state and local air agencies, one represented a tribal 
government agency, one represented a federal agency, one represented an 
environmental advocacy group, and one was a private citizen.
3. Characterizing the 2009 NSR Aggregation Action
    In the history of actions that the EPA has taken regarding its 
project aggregation policy since 2006, the EPA has variously described 
the 2009 NSR Aggregation Action as a ``rule,'' ``interpretation,'' and 
``policy.'' However, we are now mindful that these terms may be used to 
refer to three distinct types of agency action that have varying 
degrees of legal effect and can be changed through different types of 
procedures. National Mining Association v. McCarthy, 758 F.3d 243, 251-
52 (D.C. Cir. 2014). As is explained below, the distinction between the 
proper procedures for changing rules, interpretations, and policies 
were not as clear to the agency in 2009 and 2010 as they are today. 
Recent court decisions have provided more clarity regarding the 
distinction between these types of actions and the means through which 
an agency can change them. In order to clarify how state and local 
permitting authorities may apply the principles for project aggregation 
that the EPA articulated in 2009, in this final action we seek to 
address any confusion regarding the nature of that 2009 action.
    We begin by defining what we understand each of these terms to mean 
when they are used in the discussion that follows. We use the term 
``rule'' to describe a ``legislative rule,'' which is ``[a]n agency 
action that purports to impose legally binding obligations or 
prohibitions on regulated parties--and that would be the basis for an 
enforcement action for violations of those obligations or 
requirements.'' National Mining, 758 F.3d at 251-52. We use the term 
``interpretation'' to describe ``an agency action that merely 
interprets a prior statute or regulation, and does not itself purport 
to impose new obligations or prohibitions or requirements on regulated 
parties.'' Id. Following the language in the APA, courts have used the 
term ``interpretive rule'' to describe this type of action. Id. Here, 
however, we use the term ``interpretation'' to more clearly distinguish 
such an action from a legislative rule. Finally, a ``policy'' or 
``statement of policy'' is ``an agency action that merely explains how 
the agency will enforce a statute or regulation--in other words, how it 
will exercise its broad enforcement discretion or permitting discretion 
under some extant statute or rule.'' Id.
    In 2006, we proposed a rule (meaning a legislative rule) that would 
have changed the text in the Code of Federal Regulations. We included 
in the preamble an explanation of what we intended that proposed 
regulatory text to mean. 71 FR 54235 (September 14, 2006). In that 
Federal Register document, we referred to the action as a ``proposed 
rule.'' Id.; see also 71 FR at 54245 (``We are proposing to add our 
aggregation policy to our NSR regulations . . .'').
    In 2009, we took ``final action'' in the matter. That is, we 
completed the action begun in 2006, while not changing the regulatory 
text itself. 74 FR 2376. In retaining the existing regulatory text 
defining the term ``project,'' we said that the action we were taking 
``interprets that rule text.'' Id. The interpretation offered in the 
2009 NSR Aggregation Action was that a ``project,'' which the 
regulatory text defines to mean ``a physical change in, or change in 
the method of operation of, an existing major stationary source,'' 40 
CFR 52.21(b)(53) (emphasis added), includes those activities that are 
``substantially related.'' 74 FR 2377. This portion of the 2009 NSR 
Aggregation Action was an interpretation.\15\ Although we had proposed 
to adopt a legislative rule in 2006 and to reflect that in amended 
regulatory text, we made a final decision in 2009 not to adopt any 
legislative rule or to amend the text of the NSR regulations. Instead, 
we chose to announce an interpretation of the existing regulations that 
drew from EPA's prior experience on the topic of project aggregation, 
but which to some degree altered the aggregation policy that the EPA 
had previously articulated in past guidance memoranda and letters.
---------------------------------------------------------------------------

    \15\ As explained above, courts follow the APA in referring to 
this type of action as an ``interpretive rule,'' but we refer to it 
herein simply as an ``interpretation'' to more clearly distinguish 
such an action from a legislative rule.
---------------------------------------------------------------------------

    In 2009, we also discussed our intention to apply a rebuttable 
presumption that activities separated by more than 3 years would not be 
considered substantially related. This section of the action is best 
understood as a statement of policy, as we were describing how we 
intended to exercise our discretion under the NSR regulations, as we 
interpreted them. We justified the 3-year presumption as a commonsense 
approach, in that we believed that in practice once 3 years had passed, 
``it is difficult to argue that th[e activities] are substantially 
related and constitute a single project.'' 74 FR 2380. But recognizing 
that there may be situations that would warrant an exception to this 
approach, we indicated that the 3-year presumption would be rebuttable. 
We indicated our view that it would be allowable and appropriate for 
other permitting authorities to ``also adopt this presumptive timeframe 
as guidance for their sources.'' 74 FR 2381.
    The 2009 action, thus, contained both an interpretation of the 
existing regulations and a statement of policy on how we intended to 
implement that interpretation. It is for this reason that we refer to 
it as the 2009 NSR Aggregation Action. However, when reconsidering that 
2009 action, we were not sufficiently clear in the 2010 Reconsideration 
Proposal regarding the nature of the action we were reconsidering. At 
times, we described the 2009 action as a ``final rule,'' and called it 
the ``NSR Aggregation Amendments,'' which could be read to suggest that 
we considered the 2009 NSR Aggregation Action, despite the lack of 
regulatory text changes, to somehow be a legislative rule, or something 
that ``amended'' the existing regulations.
    Much of the confusion stemmed from the fact that at the time we 
took these actions, judicial precedent in the United States Court of 
Appeals for District of Columbia Circuit (D.C. Circuit) provided that, 
where an agency had given a definitive interpretation to one of its own 
legislative rules, the agency could not thereafter change that 
interpretation without providing notice and an opportunity to comment. 
Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d 579 (D.C. 
Cir. 1997). In part because of this precedent, we were persuaded in 
2010 that we should provide an opportunity for the public to comment on 
the 2009 interpretation, which could have been viewed as a

[[Page 57329]]

change from the interpretation that the EPA had articulated in 2006 and 
earlier. In addition, since we understood the Paralyzed Veterans 
opinion to require a notice-and-comment rulemaking process when an 
agency wished to change a regulatory interpretation (which, under the 
APA, would constitute the issuance of an ``interpretive rule,'' or, as 
we refer to it herein, an ``interpretation''), and because the 2009 NSR 
Aggregation Action had completed a notice-and-comment rulemaking 
process that had originally proposed to amend rule text, we chose in 
the 2010 Reconsideration Proposal to apply the procedures for 
reconsidering a ``legislative rule.''
    The United States Supreme Court has since abrogated the Paralyzed 
Veterans doctrine, ruling that it was inconsistent with the APA, which 
by its plain terms does not require agencies to go through a notice-
and-comment process in issuing an interpretive rule. Perez v. Mortgage 
Bankers Association, 135 S. Ct. 1199 (2015). Because the 2009 NSR 
Aggregation Action did not impose legally binding obligations or 
prohibitions on regulated entities or state permitting authorities, it 
was not a legislative rule. Since the 2009 NSR Aggregation Action was a 
combination of interpretation and policy statement, it could have been 
issued by the EPA without following notice-and-comment rulemaking 
procedures. 5 U.S.C. 553(b); 42 U.S.C. 7607(d)(1). Further, to the 
extent the interpretation reflected therein is a change from a prior 
interpretation, after the Supreme Court decision in Mortgage Bankers, 
it is now clear that an agency may also change such an interpretation 
of its regulations without the need to publish notice in the Federal 
Register and solicit public comment. However, because the EPA has been 
using notice-and-comment rulemaking procedures up to this point, the 
EPA believes it is prudent, but not required, in order to retain the 
interpretation of the NSR regulations with regard to project 
aggregation that we published in 2009, that we publish this document in 
the Federal Register. This procedure also allows us to complete the 
reconsideration proceeding and lift the indefinite administrative stay 
of the 2009 NSR Aggregation Action. We also believe that it is prudent 
to respond to those comments we received during the reconsideration 
process.

III. This Action

A. Overview

    In this action, we are taking final action on reconsideration of 
the issues for which we asked for comment in the 2010 Reconsideration 
Proposal. The proposal invited comment on all issues alleged in the 
petition for reconsideration, including the following: Lack of adequate 
opportunity for notice and comment on the final action; legal 
inconsistency with a prior court decision; lack of demonstrated need 
for a policy change; and lack of clarity over state plan adoption of 
the action.
    This action addresses all of the petitioner's issues. Moreover, to 
the extent that commenters lacked an adequate notice-and-comment 
opportunity in the development of the 2009 NSR Aggregation Action, the 
reconsideration process has addressed this deficiency by inviting 
comment in 2010 on the issues raised by the petitioner. This action (1) 
takes final action on the 2010 Reconsideration Proposal and retains the 
2009 NSR Aggregation Action without adopting any changes to the rule 
text or the interpretation and statement of policy contained therein; 
(2) completes the CAA section 307 reconsideration proceeding on the 
2009 NSR Aggregation Action to address any potential notice-and-comment 
deficiency; and (3) lifts the APA section 705 stay of the 2009 NSR 
Aggregation Action. The conclusions reached and expressed in this final 
action are based on careful review of the public comments on the 2010 
Reconsideration Proposal.\16\
---------------------------------------------------------------------------

    \16\ In the docket for this action, we are making available a 
document, ``Response to Public Comments for Prevention of 
Significant Deterioration (PSD) and Nonattainment New Source Review 
(NSR): Aggregation; Reconsideration'', in which the EPA responds to 
the public comments received on the 2010 Reconsideration Proposal.
---------------------------------------------------------------------------

    This final decision on reconsideration of the 2009 NSR Aggregation 
Action does not finalize the 2010 Reconsideration Proposal's preferred 
option to revoke the 2009 NSR Aggregation Action's interpretation and 
policy. Upon reviewing public comments, after further deliberation, and 
taking account of the Administration's priorities and policy goals, the 
EPA has concluded that the interpretation and policy in the 2009 NSR 
Aggregation Action should be retained.\17\ We believe the 2009 NSR 
Aggregation Action articulates a reasonable standard for aggregating 
related projects and is consistent with the CAA and our regulations.
---------------------------------------------------------------------------

    \17\ See Presidential Memorandum on Streamlining Permitting and 
Reducing Regulatory burdens for Domestic Manufacturing (82 FR 8667; 
January 24, 2017); Executive Order 13777 on Enforcing the Regulatory 
Reform Agenda (82 FR 12285, March 1, 2017).
---------------------------------------------------------------------------

    With regard to the petitioner's concern about how the 2009 NSR 
Aggregation Action applies to EPA-approved permitting programs, we 
affirm our decision in 2009 not to revise the current rule text, and 
instead to conclude that the terms ``project'' and ``a physical change 
in, or change in method of operation of'' in the existing NSR 
regulations can be reasonably interpreted as already incorporating the 
``substantially related'' test set forth in the 2009 preamble. Because 
the 2009 NSR Aggregation Action did not amend the rule text, state and 
local air agencies with approved state implementation plans (SIPs) are 
not required to amend those plans to adopt this interpretation that 
projects should be aggregated when ``substantially related.'' If state 
and local agencies want to adopt this interpretation, we believe that 
in most cases this interpretation can be applied without formal 
adoption into their rules. We encourage state and local air agencies to 
follow this interpretation to ensure greater national consistency in 
making NSR applicability determinations, though state and local air 
agencies with approved SIPs can continue to apply their own 
interpretation of the scope of a ``project.''
    Consistent with comments received on the EPA's 2006 proposed rule, 
commenters on the 2010 Reconsideration Proposal raised concerns with 
the clarity of our prior policy on project aggregation, which was 
developed over time through a number of post hoc site-specific 
applicability determinations. We anticipate the 2009 NSR Aggregation 
Action will reduce any confusion over our past policy and provide 
sources and regulators with increased clarity when determining whether 
projects should be aggregated for NSR purposes. The EPA believes the 
principles outlined in the 2009 NSR Aggregation Action will not only 
help to achieve greater national consistency in project aggregation 
determinations but will also streamline NSR permitting by reducing the 
time needed to assess whether nominally-separate physical and 
operational changes should be aggregated for NSR applicability 
purposes.
    As this action officially completes our reconsideration proceeding, 
we are also lifting the APA section 705 stay and announcing the 
effective date of the 2009 NSR Aggregation.

[[Page 57330]]

B. Retaining the 2009 NSR Aggregation Action

1. An Interpretation Is Needed
    As explained earlier in this document, the EPA's past position on 
project aggregation--prior to the 2009 NSR Aggregation Action--was not 
established through a rule or through a single, comprehensive policy 
statement. Rather, the policy had been articulated by the EPA through a 
number of site-specific determinations, many of which were issued after 
the activities subject to the determination had already occurred. 
Navigating this collection of EPA statements, capturing their salient 
points, and determining whether and how to apply their rationale to new 
determinations with different fact patterns was arguably a challenge 
for sources and permitting authorities over the years. Such an approach 
lacked clarity for sources and permitting authorities, making it 
sometimes difficult to understand the overall policy so they could 
effectively apply it prospectively.
    There is a substantive distinction between making case-by-case 
determinations after-the-fact and making case-by-case determinations 
prospectively--i.e., as part of a permitting applicability review--for 
NSR purposes. Many post hoc determinations are made with an eye to 
determining whether the requirements of NSR were circumvented, whereas 
prospective determinations are made with the purpose of giving sources 
an opportunity to evaluate modifications during the planning or 
preconstruction phase in order to determine whether a planned or 
proposed modification requires a PSD or NNSR permit, so as not to 
circumvent the NSR process. While the underlying criteria for assessing 
whether to group multiple activities as a single project should be the 
same regardless of whether the determination is prospective or post 
hoc, a post hoc determination is often very specific to the industry 
and the individual fact pattern under consideration, and therefore 
applying the determination's rationale prospectively, while potentially 
informative, could be misapplied to situations involving different 
industries or having different fact patterns. The 2009 NSR Aggregation 
Action also recognized the limitations of having a policy that is based 
on the specific fact patterns of past determinations: ``the decision to 
aggregate or disaggregate activities is highly case-dependent, such 
that letters and memoranda that opine on whether to aggregate a 
particular set of activities at one facility are not necessarily 
transferable to a decision to aggregate a similar set of activities but 
with a slightly different set of circumstances at a different plant.'' 
74 FR 2377.
    Previous agency statements can be taken out of context or 
misunderstood when reviewing projects having a different set of facts. 
For example, while the 3M Memorandum was considered by some as the 
EPA's guiding policy on project aggregation, parties could certainly 
misconstrue portions of that statement to suggest that all projects 
occurring within the same timeframe should be aggregated, or that all 
projects occurring at a facility should be aggregated as long as they 
contribute to the source's ``overall basic purpose.'' Such an 
approach--i.e., to aggregate projects simply because they may occur 
close in time or may support the same overall purpose of the facility--
fails to take proper account of the actual interrelationship of 
activities. Meanwhile, in other parts of the 3M Memorandum, the EPA's 
statements clearly indicate that, in order to justify aggregating 
activities for purposes of major NSR, the reasonable approach is to 
determine whether those activities are related in some meaningful way: 
e.g., ``[a]uthorities should scrutinize [permit] applications that 
relate to the same process or units . . .''; ``two or more related 
minor changes over a short time period should be studied for possible 
circumvention.'' 3M Memorandum at 3 (emphasis added). We consequently 
do not believe that a broader approach to aggregating activities--i.e., 
based on their contribution to a plant's overall purpose--is an 
accurate characterization of the EPA's view at the time of the 3M 
determination. Furthermore, we do not believe it reflects EPA's view in 
any other statement made by the agency over the years.
    We noted in the 2010 Reconsideration Proposal that ``in reviewing 
the record for the NSR Aggregation Amendments, we find that the only 
factual support for the contention that our historic approach caused 
confusion was anecdotal,'' and that the ``parties supporting a change 
in policy failed to provide us with any characterization of the overall 
level of uncertainty or other problems resulting from the existing 
policy on aggregation.'' 75 FR 19572. However, after further 
consideration, the EPA finds this to be an insufficient basis for 
changing or revoking the 2009 NSR Aggregation Action. So-called 
``anecdotal'' evidence is nevertheless still evidence of which the 
agency can properly take account if, in its judgment, it finds it to be 
meaningful. Indeed, the criticism of relying on ``anecdotes'' suggests 
that examples of problems offered in public comments should be ignored. 
The EPA is required to take into account the comments submitted. 
Furthermore, merely because the overall level of uncertainty 
demonstrated by public comments cannot be characterized--a given entity 
would not necessarily know whether others were as uncertain as they 
were--does not serve to demonstrate that the 2009 NSR Aggregation 
Action was unwarranted. We believe that the evidence before the EPA in 
2009 and the agency's own extensive permitting experience, coupled with 
statements from public commenters in this reconsideration proceeding, 
clearly indicates that the EPA's prior policy on project aggregation 
lacked clarity and promoted confusion. The 2009 NSR Aggregation Action 
provides a more concise formulation for how to interpret the scope of a 
project and provides clarity for permitting authorities, regulated 
entities, and the public.
    Finally, the 2010 Reconsideration Proposal states that ``[w]hile 
the [2009 NSR Aggregation Action] may, in some respects, appear clearer 
than our previous policy, we are not convinced that it achieved enough 
additional clarity to improve the process of making aggregation 
assessments by sources and reviewing authorities. . . .'' 75 FR 19573. 
After further consideration, we now believe that providing clarity in a 
single document is a better approach than continuing the previous 
policy that was based on a host of EPA letters and memoranda, which 
collectively provided less clarity. We recognize there will continue to 
be ``gray areas'' that sources and permitting authorities will 
ultimately have to work through in deciding whether or not to aggregate 
a set of changes at a facility. But this is attributable to the 
inherent nature of such decisions, not to some deficiency in the 2009 
NSR Aggregation Action. That does not mean that the EPA should abandon 
the clarity it attempted to provide in that action.
2. ``Substantially Related'' Is an Appropriate Standard
    As noted above, the EPA continues to believe that there is a need 
for some criteria for determining when nominally-separate changes 
should be considered a single ``project'' for purposes of determining 
NSR applicability. It remains necessary to draw a line between those 
activities that are to be considered a single ``physical or operational 
change'' and those that are not. In this action, we are affirming that 
the 2009 NSR Aggregation Action's

[[Page 57331]]

``substantially related'' test is an appropriate standard for project 
aggregation.
    As explained elsewhere in this document, the nature of the project 
aggregation determination is case-specific, which means it is 
inherently difficult to establish a bright line standard: Such a 
standard may be reasonable when conducting an evaluation of project 
scope in one situation, but could prove to be unreasonable or 
unworkable when applied in other situations. This case-by-case aspect 
necessitates that the EPA establish a reasonable general principle to 
apply, and we believe the ``substantially related'' criterion is an 
appropriate principle for concluding that claimed separate projects are 
a single project for NSR applicability purposes. We believe the 
substantially related criterion is sound from a policy and 
implementation perspective.
    The 2009 NSR Aggregation Action effectively addresses certain past 
EPA statements in relation to implementing the ``substantially 
related'' test for future project aggregation determinations. The 2009 
NSR Aggregation Action outlined the role of timing--specifically, that 
timing alone is not determinative of whether activities are 
substantially related and that, as a policy matter, activities 
separated in time by three or more years may be presumed to be not 
substantially related. The 2009 NSR Aggregation Action also rejected 
the use of an ``overall basic purpose'' criterion for aggregating 
physical or operational changes, since it could have been read to 
constitute an open-ended standard, resulting in the unreasonable or 
improper aggregation of unrelated activities.
    Importantly, we do not believe the 2009 NSR Aggregation Action 
reflects a major shift in policy from EPA's prior policy on project 
aggregation. To the contrary, we believe that in many ways the 2009 NSR 
Aggregation Action clarifies and supplements previous statements of 
policy. For example, in the case of timing, the 3M Memorandum suggested 
that when minor NSR permit applications occur ``over a short time 
period (e.g., 1 year or 18 months), the modifications may require major 
new source review.'' 3M Memorandum at 4 (emphasis added). Thus, the 3M 
Memorandum never said timing was the sole criterion or otherwise 
conclusive. Rather, timing was a reason to look more closely at the 
relevant activities' ``intrinsic relationship with each other (physical 
proximity, stages of production process, etc.) and their impact on 
economic viability of the plant (scheduling down time in light of 
production targets, economies of scale, etc.).'' Id. Similarly, the 
2009 NSR Aggregation Action said that ``whether a physical or 
operational change is dependent on another for its viability is still a 
relevant factor in assessing whether the changes should be 
aggregated,'' and ``substantially related activities are likely to be 
jointly planned (i.e., part of the same capital improvement project or 
engineering study), and occur close in time and at components that are 
functionally interconnected.'' 74 FR 2378.
    In addition, the ``substantially related'' criterion is not 
materially different from the factors the agency has considered in 
previous project aggregation decisions. Over time, the EPA has used 
various terms and phrases--e.g., ``intrinsic relationship'' as was used 
in the 3M Memorandum--to describe the basis for why multiple nominally-
separate changes at a source should be treated as a single project for 
NSR applicability purposes. The term ``substantially related'' is, 
therefore, little more than a functional synonym for other terms that 
the EPA has historically used to characterize its project aggregation 
policy. While sources and permitting authorities making project 
aggregation determinations may continue to use the EPA's previous 
terms, and may rely on other terms or phrases going forward, we believe 
that the terminology used should ultimately express a standard for 
determining whether the activities are or are not substantially 
related. Thus, we believe ``substantially related'' works effectively 
as an umbrella term to include these previous descriptors for analyzing 
the relationship between projects that warrant aggregation.
    Finally, the matter of defining the scope of a project was raised, 
in a different context, in the Project Emissions Accounting Memorandum 
issued on March 13, 2018. There, we observed that, as general matter, 
the source itself is responsible for defining the scope of its own 
project, subject to the limitation that the source cannot seek to 
circumvent NSR by characterizing the proposed project in a way that 
would separate a single project into multiple projects. We further 
pointed out that, ``[s]ubject to the equivalent understanding that it 
might be possible [for a source] to circumvent NSR through some wholly 
artificial grouping of activities, the EPA does not interpret its NSR 
regulations as directing the agency to preclude a source from 
reasonably defining its proposed project broadly, to reflect multiple 
activities.'' \18\
---------------------------------------------------------------------------

    \18\ Project Emissions Accounting Memorandum at 9 (emphasis 
added).
---------------------------------------------------------------------------

    In the Project Emissions Accounting Memorandum, we noted that EPA 
was then evaluating whether to undertake a future notice-and-comment 
rulemaking to implement, through changes to the regulatory text itself, 
the interpretation of the NSR applicability provisions set forth in the 
memorandum. At such time as we proceed with that rulemaking, we will 
look to provide further guidance with respect to properly accounting 
for the scope of a project in which a source is seeking to take account 
of emission decreases at Step 1 of the NSR applicability analysis. 
Meanwhile, in advance of that rulemaking, we take the opportunity here 
to clarify that, as a general matter, it is neither necessary nor 
appropriate to take into consideration such matters as whether emission 
decreases attributable to a particular activity are ``integral'' to the 
overall project, as had once been proposed by a petroleum refinery to 
the EPA.\19\ Our current view is that the concerns regarding the real 
possibility that NSR might be circumvented through some artificial 
separation of activities where it would be unreasonable to consider 
them separate projects--i.e., the concerns which the 2009 NSR 
Aggregation Action is intended to address--are not so obviously 
presented by the situation where a source itself is choosing to group 
together, as a single project, activities to which a projected 
emissions decrease is attributable.\20\ In a future rulemaking to 
clarify, through regulatory text changes, the interpretation set forth 
in the Project Emissions Accounting Memorandum, the EPA will be taking 
comment on whether our current view of this issue is reasonable, 
whether the ``substantially related'' criterion described here may 
speak to this issue, and other related matters.
---------------------------------------------------------------------------

    \19\ Letter from Steven C. Riva, U.S. EPA Region 2, to Kathleen 
Antoine, HOVENSA, LLC, ``Re: Emission Decreases Integral to 
Projects'' (June 7, 2010) (``EPA, by this letter, is not opining on 
the merits of HOVENSA's analysis regarding the underlying basis for 
`integral to the project' approach.'').
    \20\ Indeed, the EPA views this latter situation as one where 
sources could potentially be incentivized to seek out emission 
reductions that might otherwise be foregone entirely--e.g., because 
of perceived complexity with contemporaneous netting under Step 2 of 
the NSR applicability analysis.
---------------------------------------------------------------------------

3. Legal Basis Is Sound
    We believe the 2009 NSR Aggregation Action is legally supportable 
and makes sense for sometimes difficult case-by-

[[Page 57332]]

case determinations required for assessing whether to aggregate 
nominally-separate projects. Contrary to the petitioner's argument, the 
use of the term ``substantially related'' would not create a carve-out 
from the scope of the statutory definition of ``modification.''
    Drawing on arguments made by NRDC in its petition, in 2010 we had 
postulated, while ``[m]uch of the emphasis'' of New York v. EPA, 443 
F.3d 880 (D.C. Cir. 2006) (New York II) and other cases had been on 
whether the EPA ``could exclude small changes from being considered 
potential modifications as defined in the Act,'' the court's reasoning 
in New York II also applies to a rule that would split apart one change 
into separate changes in order to limit the applicability of NSR.'' 75 
FR 19571. The D.C. Circuit's New York II decision had focused on 
whether the EPA's amendment to the ``routine maintenance, repair and 
replacement'' provision of the NSR regulations which provided that a 
specifically defined category of ``equipment replacement'' projects did 
not constitute a ``physical change or change in the method of 
operation,'' was lawful. The court in New York II held that it was not 
lawful, opining that the EPA ``must apply NSR whenever a source 
conducts an emissions-increasing activity that fits within one of the 
ordinary meanings of physical change.'' 443 F.3d at 885.
    In the 2010 Reconsideration Proposal, we said we then read the D.C. 
Circuit's opinion as ``requir[ing] EPA to aggregate any group of small 
changes'' that were ``sufficiently related to `fit[] within one of the 
ordinary meanings of `physical change.' '' 75 FR 19571. In this regard, 
we said that we ``agree[d] with [NRDC's] contention that, to the extent 
that our `substantially related' interpretation,'' as set forth in the 
2009 NSR Aggregation Action, would ``exclude meanings that fit within a 
reasonable understanding of the ordinary meaning of `any physical 
change,' '' that interpretation would ``impermissibly narrow the scope 
of CAA section 111(a)(4).'' Id. We sought comment on this analysis of 
the statute and New York II.
    Upon further consideration and after reviewing the public comments 
on this reconsideration proposal, the agency does not read New York II 
as supportive of the notion that the ``substantially related'' 
interpretation set forth in the 2009 NSR Aggregation Action is somehow 
contrary to the language of CAA section 111(a)(4). While we had 
previously suggested that there might be some weight to NRDC's argument 
that the `` `aggregation of nominally separate changes that are not 
substantially related' also may be within an ordinary meaning of 
physical change,'' 75 FR 19571, citing NRDC Petition at 5-6 (emphasis 
in original), we do not now perceive any merit in NRDC's assertion.
    With NRDC's arguments in mind, the agency at one point read New 
York II as suggesting that the CAA ``prohibits EPA from picking and 
choosing among meanings of the phrase `any physical change . . . or 
change in the method of operation' if it would result in omitting a 
common meaning that would subject an emission increase to review.'' 75 
FR 19571. Based on this, we were concerned that, ``[i]f `substantially 
related' would omit an ordinary, common meaning of physical change that 
would bring an emissions-increasing project under review, then the 
definition would eliminate a type of physical change that Congress 
intended to cover (i.e., the change that consists of the group of 
nominally-separate changes that comprise a project but do not qualify 
as `substantially related').'' Id. Thus, we reasoned at the time 
``that, to the extent that [the] `substantially related' interpretation 
would exclude meanings that fit within a reasonable understanding of 
the ordinary meaning of `any physical change,' '' then the 2009 NSR 
Aggregation Action ``would impermissibly narrow the scope of CAA Sec.  
111(a)(4).'' Id.
    We now believe that such concerns were unwarranted. Upon further 
consideration, we do not view New York II, properly understood, as 
providing support for the proposition that a ``common meaning'' of a 
single ``change'' would include multiple changes, much less multiple, 
separate changes that are not substantially related, such as changes 
which are undertaken at a source at different times, or undertaken for 
different purposes, or which are otherwise unrelated to each other. 
That is, the EPA's current view is that nothing in New York II 
supports, much less compels, a reading of the CAA under which all 
``nominally-separate changes'' are deemed to ``comprise'' a single 
``project,'' where those changes are not substantially related. 
Nevertheless, under the interpretation reflected in the 2009 NSR 
Aggregation Action, multiple changes that are ``substantially related'' 
are to be considered to be one project for purposes of determining NSR 
applicability.
    Finally, to the extent that NRDC argues that the aggregation of 
activities that are not substantially related into one activity that 
fits within the ordinary meaning of a physical change--and not 
aggregating those changes to compare to the significance level would 
violate New York II--it has provided no examples where that may be the 
case and have not followed the reasoning of their argument to its 
logical conclusion. This argument would require the EPA to prove a 
negative: That whatever interpretation or policy on aggregation we 
adopted would not exclude any level of aggregated activities that fit 
within the ordinary meaning of a physical change. This impossible task 
would mean that even the EPA aggregation policy prior to the 2009 NSR 
Aggregation Action was in violation of New York II because it allowed a 
facility to sometimes disaggregate activities when, if aggregated, they 
would fall within the ordinary meaning of physical change. A better 
approach to defining the scope of the ordinary meaning of physical 
change is to provide, as we did in the 2009 NSR Aggregation Action, a 
principle for source owners or operators to follow, here the 
``substantially related'' principle, when defining the scope of ``a 
physical change in, or change in method of operation of,'' pursuant to 
40 CFR 52.21(b)(52), in a particular case.
4. Adoption Is Not Mandatory
    We acknowledge that, by not making any changes to the regulatory 
text, as had been proposed, it may have been somewhat unclear to some 
whether state and local air agencies have to adopt or implement the 
elements of the 2009 NSR Aggregation Action, and, if so, how they 
should do so. In the 2010 Reconsideration Proposal, we expressed our 
agreement with ``NRDC's assertion that the state and local 
implementation requirements of the NSR Aggregation Amendments are 
unclear,'' and that the ``question of whether a SIP amendment is 
required when the CFR remains unchanged is likely to cause confusion 
for reviewing authorities and other stakeholders.'' 75 FR 19572. Taking 
account of this confusion, the agency considered that it ``added 
support for our preferred position in this notice, which is to revoke'' 
the 2009 NSR Aggregation Action. Id.
    We now find such concerns over potential ``confusion'' to have been 
overstated. In the Response to Comments document for the 2009 NSR 
Aggregation Action (2009 RTC), the agency had specifically noted that 
``[s]ince we are not promulgating the proposed rule regulatory changes, 
we are not adding NSR minimum program elements that would require 
states to modify their SIP.'' 2009 RTC at 56. The agency continued that 
it would ``begin applying the interpretations laid out in the final 
action to activities that postdate actions after the effective date of 
the final rulemaking notice.'' Id. ``At

[[Page 57333]]

that time,'' the EPA explained, states ``may also begin applying EPA's 
interpretations to the extent they do not conflict with their approved 
SIPs.'' Id. We now believe it is likely that state and local permitting 
authorities would have understood this straightforward explanation.
    Further, as previously discussed, determining whether a source has 
sought to circumvent NSR by failing to treat nominally-separate 
activities as a single project is inherently case-specific and fact-
dependent. Given this, it is not reasonable to imagine that perfect 
clarity could ever be achieved. To the extent, however, that the 2009 
NSR Aggregation Action, in setting forth both the ``substantially 
related'' interpretation and the EPA's policy for applying that 
interpretation, provides some meaningful guidance to sources and to 
state and local permitting authorities, we fail to understand how 
revoking the 2009 NSR Aggregation Action would serve to promote 
clarity.
    Indeed, in this regard, we believe in most cases that sources and 
state and local air agencies already implement a standard that is 
similar to the substantially related standard. To the extent that a 
state or local air agency desires to formally adopt the 2009 NSR 
Aggregation Action, the EPA will provide support to those agencies to 
process SIP submittals and issue approvals, as warranted. In most 
cases, however, we do not think changes in state plans would be needed 
to implement this interpretation.

C. Completing the Reconsideration Proceeding

    We believe that this final action addresses the concerns raised by 
the petitioner with respect to the 2009 NSR Aggregation Action--e.g., 
adequate notice and logical outgrowth, the legal underpinnings of the 
action, state adoption, and our need to change or clarify our 
aggregation policy. Accordingly, this action concludes the 
reconsideration proceeding of the 2009 NSR Aggregation Action.

D. Lifting the Administrative Stay; Announcement of Effective Date

    On May 18, 2010, after a series of temporary administrative stays 
of the 2009 NSR Aggregation Action, the EPA exercised the provisions of 
the APA section 705 to postpone the effectiveness of the action ``until 
judicial review is no longer pending or the EPA completes the 
reconsideration process.'' 75 FR 27644. Since this action concludes the 
reconsideration proceeding, and we have affirmed the legal consistency 
and policy appropriateness of the 2009 NSR Aggregation Action, we are 
hereby lifting the indefinite administrative stay and announcing the 
effective date of the action. The effective date of the 2009 NSR 
Aggregation Action, published in the Federal Register on January 15, 
2009 (74 FR 2376), and delayed on February 13, 2009 (74 FR 7284), May 
14, 2009 (74 FR 22693), and May 18, 2010 (75 FR 27643), begins again on 
November 15, 2018.

IV. Environmental Justice Considerations

    We believe that this action does not have any effect on 
environmental justice communities. Through this action, the EPA is 
affirming its interpretation that its current NSR regulations allow for 
the 2009 NSR Aggregation Action and, as such, no increased burden is 
expected for source owners, permitting authorities, or environmental 
justice communities.

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

    This action is a significant action that was submitted to the 
Office of Management and Budget (OMB) for review. Any changes made in 
response to OMB recommendations have been documented in the docket.

VI. Judicial Review

    Section 307(b)(1) of the CAA indicates which Federal Courts of 
Appeal have venue for petitions of review of final agency actions by 
the EPA under the CAA. This section provides, in part, that petitions 
for review must be filed in the U.S. Court of Appeals for the District 
of Columbia Circuit (i) when the agency action consists of ``nationally 
applicable regulations promulgated, or final actions taken, by the 
Administrator'' or (ii) when such action is locally or regionally 
applicable, if ``such action is based on a determination of nationwide 
scope or effect and if in taking such action the Administrator finds 
and publishes that such action is based on such a determination.''
    This action completes the reconsideration proceeding and makes 
effective the 2009 NSR Aggregation Action. The 2009 NSR Aggregation 
Action is an interpretation of NSR rule language that applies in every 
state and territory in the United States where EPA is the permitting 
authority. Therefore, to the extent that this action is a ``final 
action,'' it is ``nationally applicable'' within the meaning of CAA 
section 307(b)(1).
    Under section 307(b)(1) of the Act, to the extent that this action 
is judicially reviewable, petitions for judicial review of this action 
must be filed in the United States Court of Appeals for the District of 
Columbia Circuit by January 14, 2019.

VII. Statutory Authority

    The statutory authority for this action is provided by section 
301(a) of the CAA as amended (42 U.S.C. 7601(a)). This document is also 
subject to section 307(d) of the CAA (42 U.S.C. 7407(d)).

    Dated: November 7, 2018.
Andrew R. Wheeler,
Acting Administrator.
[FR Doc. 2018-24820 Filed 11-14-18; 8:45 am]
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                                             57324            Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations

                                             PART 165—REGULATED NAVIGATION                            representative via Channel 16 (VHF–                   April 15, 2010, the EPA proposed to
                                             AREAS AND LIMITED ACCESS AREAS                           FM) or (207) 767–0303 (Sector Northern                revoke the 2009 NSR Aggregation
                                                                                                      New England Command Center).                          Action. After a review of the public
                                             ■ 1. The authority citation for part 165                   (3) During periods of enforcement,                  comments received on that proposal, the
                                             continues to read as follows:                            any person or vessel permitted to enter               EPA has now decided to not revoke the
                                               Authority: 33 U.S.C. 1231; 50 U.S.C. 191;              the safety zone must comply with all                  2009 NSR Aggregation Action. The EPA
                                             33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5;                lawful orders or directions given to                  is, therefore, retaining the interpretation
                                             Department of Homeland Security Delegation               them by the COTP or the COTP’s                        set forth in the 2009 NSR Aggregation
                                             No. 0170.1.                                              designated representative.                            Action, while not adopting any changes
                                             ■ 2. Add § 165.T01–0849 to read as                         (e) Penalties. Those who violate this               to the relevant rule text. At the same
                                             follows:                                                 section are subject to the penalties set              time, the EPA is using this present
                                                                                                      forth in 33 U.S.C. 1232.                              action to clarify the implications of the
                                             § 165.T01–0849 Safety Zone; The Gut,                       (f) Notification. Coast Guard Sector                2009 NSR Aggregation Action for EPA-
                                             South Bristol, ME.                                       Northern New England will give notice                 approved permitting programs. This
                                                (a) Location. The following area is a                 through the Local Notice to Mariners                  action also lifts the administrative stay
                                             safety zone: All waters of The Gut, a                    and Broadcast Notice to Mariners for the              and announces the effective date of the
                                             waterway between Rutherford Island                       purpose of enforcement of temporary                   2009 NSR Aggregation Action.
                                             and Bristol Neck in South Bristol, ME,                   safety zone. Coast Guard Sector
                                             from surface to bottom, encompassed by                   Northern New England will also notify                      This action is effective on
                                                                                                                                                            DATES:
                                             a 50-yard radius from the center point                   the public to the greatest extent possible            November 15, 2018.
                                             of The Gut Bridge at position 43°51.720′                 of any period in which the Coast Guard                ADDRESSES:   The EPA has established a
                                             N, 069°33.480′ W (NAD 83).                               will suspend enforcement of this safety               docket for this action, identified by
                                                (b) Definitions. As used in this                      zone.                                                 Docket ID No. EPA–HQ–OAR–2003–
                                             section:                                                                                                       0064. All documents in the docket are
                                                                                                        Dated: November 8, 2018.
                                                Designated representative means any                                                                         listed in the http://www.regulations.gov
                                             Coast Guard commissioned, warrant,                       B.J. LeFebvre,
                                                                                                                                                            website. Although listed in the index,
                                             petty officer, or designated Patrol                      Captain, U.S. Coast Guard, Captain of the
                                                                                                                                                            some information may not be publicly
                                             Commander of the U.S. Coast Guard                        Port, Sector Northern New England.
                                                                                                                                                            available, e.g., Confidential Business
                                             who has been designated by the Captain                   [FR Doc. 2018–24899 Filed 11–14–18; 8:45 am]
                                                                                                                                                            Information or other information whose
                                             of the Port, Sector Northern New                         BILLING CODE 9110–04–P
                                                                                                                                                            disclosure is restricted by statute.
                                             England (COTP), to act on his or her                                                                           Certain other material, such as
                                             behalf. The designated representative                                                                          copyrighted material, is not placed on
                                             may be on an official patrol vessel or                   ENVIRONMENTAL PROTECTION                              the internet and will be publicly
                                             may be on shore and will communicate                     AGENCY                                                available only in hard copy. Publicly
                                             with vessels via VHF–FM radio or                                                                               available docket materials are available
                                             loudhailer. In addition, members of the                  40 CFR Parts 51 and 52                                electronically in http://
                                             Coast Guard Auxiliary may be present to                  [EPA–HQ–OAR–2003–0064; FRL–9986–47–                   www.regulations.gov.
                                             inform vessel operators of this                          OAR]
                                             regulation.                                                                                                    FOR FURTHER INFORMATION CONTACT:    For
                                                Official patrol vessels means any                     RIN 2060–AP80                                         further general information on this
                                             Coast Guard, Coast Guard Auxiliary,                                                                            action, contact Mr. Dave Svendsgaard,
                                                                                                      Prevention of Significant Deterioration               Office of Air Quality Planning and
                                             state, or local law enforcement vessels                  (PSD) and Nonattainment New Source
                                             assigned or approved by the COTP to                                                                            Standards (OAQPS), Air Quality Policy
                                                                                                      Review (NNSR): Aggregation;                           Division, U.S. EPA, Mail Code 504–03,
                                             enforce this section.                                    Reconsideration
                                                (c) Enforcement period. This rule is                                                                        109 T.W. Alexander Drive, Research
                                             effective without actual notice from                     AGENCY:   Environmental Protection                    Triangle Park, NC 27711; by telephone
                                             November 15, 2018 through 11:59 p.m.                     Agency (EPA).                                         at (919) 541–2380; or by email at
                                             on March 31, 2019. For the purposes of                   ACTION: Final action; lifting of                      svendsgaard.dave@epa.gov.
                                             enforcement, actual notice will be used                  administrative stay and announcement                  SUPPLEMENTARY INFORMATION:
                                             from 12:01 a.m. on November 8, 2018                      of effective date.
                                             through November 15, 2018. The rule                                                                            I. General Information
                                             will only be enforced during active                      SUMMARY:    In this action, the                       A. Does this action apply to me?
                                             bedrock removal operations or other                      Environmental Protection Agency (EPA)
                                             instances which may cause a hazard to                    is concluding the reconsideration of an                  Entities potentially affected directly
                                             navigation, or when deemed necessary                     earlier action that the EPA published on              by this action include sources in all
                                             by the Captain of the Port (COTP),                       January 15, 2009, titled ‘‘Prevention of              industry categories. Entities potentially
                                             Northern New England.                                    Significant Deterioration (PSD) and                   affected by this action also include state,
                                                (d) Regulations. When this safety zone                Nonattainment New Source Review                       local and tribal air pollution control
                                             is enforced, the following regulations,                  (NSR): Aggregation and Project                        agencies (air agencies) responsible for
                                             along with those contained in § 165.23                   Netting.’’ The 2009 action—hereafter                  permitting sources pursuant to the NSR
                                             apply:                                                   referred to as ‘‘2009 NSR Aggregation                 program.
                                                (1) No person or vessel may enter or                  Action’’—clarified implementation of
                                                                                                                                                            B. Where can I get a copy of this
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                                             remain in the safety zone described in                   the New Source Review (NSR)
                                                                                                                                                            document and other related
                                             paragraph (a) of this section unless                     permitting program under the Clean Air
                                                                                                                                                            information?
                                             authorized by the COTP or the COTP’s                     Act (CAA or Act) with respect to
                                             designated representative.                               treating related physical or operational                In addition to being available in the
                                                (2) To obtain permission required by                  changes as a single ‘‘modification’’ for              docket, an electronic copy of this
                                             this regulation, individuals may reach                   the purpose of determining NSR                        Federal Register document will be
                                             the COTP or the COTP’s designated                        applicability at a stationary source. On              posted at https://www.epa.gov/nsr.


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                                                              Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations                                                     57325

                                             C. How is this document organized?                       built determine the specific permitting                 permits on behalf of the EPA by way of
                                               The information presented in this                      requirements. The CAA requires sources                  a delegation agreement. For sources
                                             document is organized as follows:                        subject to PSD to meet emission limits                  located in Indian country, the EPA is
                                                                                                      based on Best Available Control                         currently the only permitting authority
                                             I. General Information                                   Technology (BACT) as specified by CAA                   for major NSR. Currently, state and local
                                                A. Does this action apply to me?
                                                B. Where can I get a copy of this document
                                                                                                      section 165(a)(4), and sources subject to               air agencies issue the vast majority of
                                                   and other related information?                     NNSR to meet Lowest Achievable                          major NSR permits each year.
                                                C. How is this document organized?                    Emissions Rate (LAER) pursuant to CAA                     New sources and modifications that
                                             II. Background                                           section 173(a)(2). Other requirements to                do not require a major NSR permit may
                                                A. What is New Source Review?                         obtain a major NSR permit vary                          instead require a minor NSR permit
                                                B. What is project aggregation?                       depending on whether it is a PSD or                     prior to construction. Minor NSR
                                                C. Regulatory History                                 NNSR permit.                                            permits are almost exclusively issued by
                                             III. This Action                                            A new stationary source is subject to
                                                A. Overview
                                                                                                                                                              state and local air agencies, although the
                                                                                                      major NSR requirements if its potential                 EPA issues minor NSR permits in some
                                                B. Retaining the 2009 NSR Aggregation                 to emit (PTE) a regulated NSR pollutant
                                                   Action                                                                                                     areas of Indian country. Minor NSR
                                                C. Completing the Reconsideration
                                                                                                      exceeds statutory emission thresholds.2                 requirements are approved into a SIP in
                                                   Proceeding                                         If it exceeds the applicable threshold,                 order to achieve and maintain the
                                                D. Lifting the Administrative Stay;                   the NSR regulations define it as a                      NAAQS. See CAA section 110(a)(2)(C).
                                                   Announcement of Effective Date                     ‘‘major stationary source.’’ 3 An existing              The CAA and EPA’s regulations are less
                                             IV. Environmental Justice Considerations                 major stationary source triggers major                  prescriptive regarding minimum
                                             V. Executive Order 12866: Regulatory                     NSR permitting requirements when it                     requirements for minor NSR, so air
                                                   Planning and Review and Executive                  undergoes a ‘‘major modification,’’
                                                   Order 13563: Improving Regulation and
                                                                                                                                                              agencies generally have more flexibility
                                                                                                      which occurs when a source undertakes                   in designing their minor NSR programs.
                                                   Regulatory Review                                  a physical change or change in method
                                             VI. Judicial Review                                      of operation (i.e., a ‘‘project’’) that                 B. What is project aggregation?
                                             VII. Statutory Authority
                                                                                                      would result in (1) a significant                          As described in the preceding section,
                                             II. Background                                           emissions increase from the project, and                the EPA’s implementing regulations for
                                                                                                      (2) a significant net emissions increase                NSR establish a two-step process for
                                             A. What is New Source Review?                            from the source (i.e., a source-wide
                                               The NSR program is a preconstruction                                                                           determining major NSR applicability for
                                                                                                      ‘‘netting’’ analysis that considers
                                             permitting program that requires certain                                                                         projects at stationary sources. To be
                                                                                                      creditable emission increases and
                                             stationary sources of air pollution to                                                                           subject to major NSR requirements, the
                                                                                                      decreases occurring at the source as a
                                             obtain permits prior to beginning                                                                                project must result in both (1) a
                                                                                                      result of other projects over a 5-year
                                             construction. The NSR permitting                                                                                 significant emissions increase from the
                                                                                                      contemporaneous period). See, e.g., 40
                                             program applies both to new                                                                                      project (the determination of which is
                                                                                                      CFR 52.21(b)(2)(i) and 40 CFR
                                             construction and to modifications of                                                                             called ‘‘Step 1’’ of the NSR applicability
                                                                                                      52.21(b)(52). For this two-step process,
                                             existing sources, regardless of whether                                                                          analysis, or ‘‘project emissions
                                                                                                      the NSR regulations define what
                                             the source is in an area where the                                                                               accounting’’); and (2) a significant net
                                                                                                      emissions rate constitutes ‘‘significant’’
                                             national ambient air quality standards                                                                           emissions increase at the stationary
                                                                                                      for each NSR pollutant. See 40 CFR
                                             (NAAQS) have been exceeded                                                                                       source, taking account of emission
                                                                                                      51.165(a)(1)(x), 40 CFR 51.166(b)(23),
                                             (nonattainment area) or if the source is                                                                         increases and emission decreases
                                                                                                      and 40 CFR 52.21(b)(23).
                                             in an area where the NAAQS have not                                                                              attributable to other projects undertaken
                                                                                                         In many cases, these requirements of
                                             been exceeded (attainment or                                                                                     at the stationary source within a specific
                                                                                                      the major NSR program (or equivalent
                                             unclassifiable area). New construction                                                                           time frame (called ‘‘Step 2’’ of the NSR
                                                                                                      requirements) are formally adopted by a
                                             and modifications that emit ‘‘regulated                                                                          applicability analysis, or
                                                                                                      state or local air agency, and the agency
                                             NSR pollutants’’ 1 over certain                                                                                  ‘‘contemporaneous netting’’). This
                                                                                                      submits a revised state implementation
                                             thresholds are subject to major NSR                                                                              approach to applicability makes it
                                                                                                      plan (SIP) to the EPA for approval. The
                                             requirements, while smaller emitting                                                                             necessary to accurately define what
                                                                                                      EPA’s regulations provide for the
                                             sources and modifications may be                                                                                 constitutes the ‘‘project’’ under review
                                                                                                      minimum requirements of these
                                             subject to minor NSR requirements or be                                                                          to ensure that the proper emissions
                                                                                                      programs. Upon EPA approving the SIP,
                                             excluded from NSR altogether.                                                                                    increase resulting from the project is
                                                                                                      the air agency becomes the ‘‘permitting
                                               Major NSR permits for sources that                                                                             used when comparing it with the
                                                                                                      authority’’ for major NSR permits for
                                             are located in attainment or                                                                                     applicable NSR significance threshold at
                                                                                                      sources within its boundaries. When a
                                             unclassifiable areas are referred to as                                                                          Step 1 of the NSR applicability
                                                                                                      state or local air agency is not the
                                             Prevention of Significant Deterioration                                                                          analysis.4 Otherwise, a source could
                                                                                                      permitting authority, either the EPA
                                             (PSD) permits. These permits can also                    issues the major NSR permits or a state
                                                                                                                                                                 4 In this notice, we use the terms ‘‘project,’’
                                             cover pollutants for which there are no                  or local air agency issues the major NSR                ‘‘changes,’’ and ‘‘activities’’ interchangeably in
                                             NAAQS. Major NSR permits for sources                                                                             referring to physical or operational changes that
                                             located in nonattainment areas and that                     2 For PSD, the statute uses the term ‘‘major
                                                                                                                                                              occur at a facility. In some cases, particularly in
                                             emit pollutants above the specified                      emitting facility’’ which is defined as a stationary    using the term ‘‘activities,’’ we are actually referring
                                                                                                      source that emits, or has a PTE, at least 100 tons      to ‘‘sub-projects’’ that are nominally separate in
                                             thresholds for which the area is in                      per year (TPY) if the source is in one of 28 listed     scope but are nevertheless related to other sub-
                                             nonattainment are referred to as
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                                                                                                      source categories—or at least 250 TPY if the source     projects such that they all are part of a larger single
                                             nonattainment NSR (NNSR) permits.                        is not—of ‘‘any air pollutant.’’ CAA 169(1). For        project when determining NSR applicability. It is
                                             The pollutant(s) at issue and the air                    NNSR, the emissions threshold for a major               important to note that our use of the term
                                                                                                      stationary source is 100 TPY, although lower            ‘‘activities’’ in this notice is not intended to imply
                                             quality designation of the area where                    thresholds may apply depending on the degree of         that every ‘‘activity’’ at a plant is a physical or
                                             the facility is located or proposed to be                the nonattainment problem and the pollutant. 40         operational change. The EPA recognizes that there
                                                                                                      CFR 51.165(a)(1)(iv)(A).                                are numerous activities undertaken at a facility, of
                                               1 40 CFR 51.165(a)(1)(xxxvii), 40 CFR                     3 40 CFR 51.165(a)(1)(iv), 40 CFR 51.166(b)(1)(i),   which only a subset will constitute ‘‘changes’’
                                             51.166(b)(49), 40 CFR 52.21(b)(50).                      40 CFR 52.21(b)(1)(i).                                  under the NSR regulations.



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                                             57326            Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations

                                             conceivably carve up a higher-emitting                   might also somehow be possible for a                   related’’ criterion is based on an
                                             project into two or more lower-emitting                  source to circumvent NSR through some                  interpretation of the term ‘‘project’’
                                             ‘‘projects’’ and avoid triggering major                  wholly artificial grouping of activities to            contained in the major NSR
                                             NSR requirements.5 ‘‘Project                             include decreases in emissions as part                 regulations.13 The action also included
                                             aggregation,’’ therefore, ensures that                   of Step 1 of the NSR applicability                     a statement that the EPA would, as a
                                             nominally-separate projects occurring at                 analysis—i.e., assessing whether a                     matter of policy, establish a rebuttable
                                             a source are treated as a single project                 project by itself results in a significant             presumption that activities that
                                             for NSR applicability purposes where it                  emissions increase before reaching Step                occurred more than three years apart are
                                             is unreasonable not to consider them a                   2, where one then determines whether                   not ‘‘substantially related’’ and
                                             single project.6                                         there will be a significant net emissions              therefore, generally, should not be
                                                As with certain other aspects of the                  increase by taking into account all                    aggregated for purposes of determining
                                             NSR program, determining what                            contemporaneous increases and                          whether they are a single modification
                                             constitutes the ‘‘project’’ is a case-by-                decreases across the source. While we 9                at Step 1.
                                             case decision that is both site-specific                 have been mindful of this question in                     The 2009 NSR Aggregation Action
                                             and fact-driven. There is no pre-                        deciding to employ the project                         retained the existing rule text defining
                                             determined list of activities that should                aggregation criteria described in this                 the term ‘‘project’’—i.e., ‘‘a physical
                                             be aggregated for a given industry or                    action, we intend to address more fully                change in, or change in method of
                                             industries. It is, therefore, necessary to               this scenario in the context of a                      operation of, an existing major
                                             establish criteria for determining when                  subsequent rulemaking action on the                    stationary source’’—and interpreted this
                                             nominally-separate activities are                        topic of project emissions accounting.                 rule text to mean that sources and
                                             considered one project under NSR. The                                                                           permitting authorities should combine
                                             EPA has specifically sought to develop                   C. Regulatory History                                  emissions only when nominally-
                                             principles for aggregating changes such                  1. The 2009 NSR Aggregation Action                     separate changes are ‘‘substantially
                                             that a project is appropriately defined                                                                         related.’’ While acknowledging the case-
                                             by the source, so that the emission                        On January 15, 2009, the EPA                         specific nature of a project aggregation
                                             increases attributable to the project are                published a final action—which we are                  determination, the 2009 NSR
                                             accurately quantified for purposes of                    calling the ‘‘2009 NSR Aggregation                     Aggregation Action described the factors
                                             analyzing NSR applicability. Over the                    Action’’—that described the principles                 that should be considered when
                                             years, the EPA articulated its policy on                 of project aggregation that we would                   evaluating whether changes are
                                             project aggregation through a series of                  apply when determining whether a                       substantially related, including
                                             statutory and regulatory interpretations                 source had unreasonably segregated a                   technical or economic dependence. It
                                             contained in EPA letters and                             single project into multiple projects,                 also offered examples of what it means
                                             memoranda, the most commonly cited                       thereby circumventing the NSR                          to be substantially related, and it
                                             being a 1993 EPA memorandum                              permitting requirements.10 We had                      referenced examples provided in EPA’s
                                             regarding NSR applicability for                          initially proposed in 2006 to establish                2006 proposed rule on project
                                             activities that had occurred at a 3M                     principles for project aggregation                     aggregation to further amplify EPA’s
                                             facility in Minnesota.7                                  through an amendment to the NSR                        meaning of the term. Thus, in many
                                                To date, the EPA’s focus in                           regulations.11 However, because of the                 respects, the ‘‘substantially related’’
                                             formulating criteria for project                         difficulty of creating a bright line to                interpretation in the 2009 NSR
                                             aggregation has been to ensure that NSR                  determine when activities should be                    Aggregation Action was intended to
                                             is not circumvented through some                         aggregated, we ultimately decided not to               encompass principles for aggregating
                                             artificial separation of activities at Step              adopt the proposed changes to the                      projects that were similar to those that
                                             1 of the NSR applicability analysis                      regulations and elected instead to                     the EPA had proposed in 2006, but
                                             where it would be unreasonable for the                   pursue a less prescriptive approach by                 ultimately concluded should not be
                                             source to consider them to be separate                   describing, in the 2009 action, the EPA’s              prescriptively defined in a regulation
                                             projects. However, in a March 13, 2018,                  interpretation of the existing regulations             because of the difficulty of developing
                                             memorandum 8 on the topic of ‘‘project                   and a policy for applying that                         a bright line for determining when
                                             emissions accounting,’’ the EPA                          interpretation going forward.                          activities should be aggregated.
                                             broached the question of whether it                        The 2009 NSR Aggregation Action                         The 2009 NSR Aggregation Action
                                                                                                      called for sources and reviewing                       specifically addressed the timing
                                                5 Emission changes from separate projects (not
                                                                                                      authorities to aggregate emissions from                element of project aggregation decisions
                                             included under Step 1 as falling within the project      nominally-separate activities when they
                                             under review) are considered at Step 2 if they are
                                                                                                                                                             in multiple ways. It affirmed that timing
                                             ‘‘contemporaneous’’ and ‘‘otherwise creditable’’         are ‘‘substantially related’’ for the                  alone should not be a basis for
                                             under the NSR regulations. See 40 CFR 52.21(b)(3).       purpose of determining whether they                    aggregating projects because the
                                                6 It is not permissible to seek to circumvent NSR     are a single modification resulting in a               appropriate basis for aggregation is
                                             by securing several minor NSR permits for                significant emissions increase under
                                             individual projects with the effect of avoiding major
                                                                                                                                                             whether there is a substantial technical
                                             NSR requirements for what is actually a single
                                                                                                      NSR at Step 1.12 This ‘‘substantially                  or economic relationship. It further
                                             project.                                                                                                        explained that activities that occur
                                                                                                         9 In this preamble, the terms ‘‘we’’, ‘‘our’’ and
                                                7 Memorandum from John B. Rasnic, Director,
                                                                                                                                                             simultaneously should not be presumed
                                             Stationary Source Compliance Division, OAQPS, to         ‘‘us’’ refer to the EPA.
                                                                                                         10 Prevention of Significant Deterioration (PSD)
                                                                                                                                                             to be substantially related, although it is
                                             George T. Czerniak, Chief, Air Enforcement Branch,
                                             EPA Region 5, titled, ‘‘Applicability of New Source      and Nonattainment New Source Review (NSR):             reasonable to presume that activities
                                                                                                      Aggregation and Project Netting (74 FR 2376;
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                                             Review Circumvention Guidance to 3M—
                                             Maplewood, Minnesota’’ (June 17, 1993)                   January 15, 2009).                                     emissions need not be aggregated for NSR
                                             (hereinafter ‘‘3M Memorandum’’).                            11 Prevention of Significant Deterioration (PSD)    purposes.’’ (emphasis added)). That is, mere
                                                8 Memorandum from E. Scott Pruitt,                    and Nonattainment New Source Review (NSR):             relatedness is not sufficient to upend the source’s
                                             Administrator, to Regional Administrators, titled,       Debottlenecking, Aggregation, and Project Netting      definition of its project, but sources cannot
                                             ‘‘Project Emissions Accounting Under the New             (71 FR 54235; September 14, 2006).                     circumvent NSR by artificially separating a series of
                                             Source Review Preconstruction Permitting                    12 See 74 FR 2378 (‘‘When there is no technical     emissions-increasing projects into separate projects
                                             Program’’ (March 13, 2018) (hereinafter ‘‘Project        or economic relationship between activities or         that fall below the significance thresholds.
                                             Emissions Accounting Memorandum’’).                      where the relationship is not substantial, their         13 See, e.g., 40 CFR 52.21(b)(52).




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                                                              Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations                                               57327

                                             closer in time are more likely to be                     misapplication and did not properly                   2378. The 2009 NSR Aggregation Action
                                             substantially related than activities                    reflect the ‘‘substantially related’’                 added, ‘‘[t]o be ‘substantially related,’
                                             separated by larger time frames. Thus, it                criterion. The 3M Memorandum stated                   there should be an apparent
                                             affirmed that the timing between                         the following:                                        interconnection—either technically or
                                             activities remains important from a                        Some minimum level of research activity             economically—between the physical
                                             standpoint of framing the analysis of                    and commensurate emissions, source-wide,              and/or operational changes, or a
                                             whether a substantial technical or                       perhaps could be expected from year to year,          complementary relationship whereby a
                                             economic relationship exists.                            as would be expected to keep the 3M plant             change at a plant may exist and operate
                                                The 2009 NSR Aggregation Action                       productive or operable. These emissions and           independently, however its benefit is
                                             also expressed that the farther apart                    thereby modifications cannot be presumed to           significantly reduced without the other
                                             projects are timed, the less likely they                 be independent given the plant’s overall              activity. We note that these factors are
                                             are to be substantially related, since the               basic purpose to support a variety of research        not necessarily determinative of a
                                             activities would likely be part of distinct              and development activities. Therefore, even
                                                                                                      though each research project may have been
                                                                                                                                                            substantial relationship, but are merely
                                             planning and capital-funding cycles. It                                                                        indicators that may suggest that two or
                                                                                                      individually conceived and separately
                                             stated ‘‘the passage of time provides a                  funded, it is appropriate to look at the overall      more activities are likely to be
                                             fairly objective indicator of                            expected research activity in assessing NSR           substantially related and, therefore,
                                             nonrelatedness between physical or                       applicability and enforcement. 3M                     candidates for aggregation.’’ Id.
                                             operational changes. Specifically, the                   Memorandum at 5 (emphasis added).
                                             greater the time period between                                                                                2. Reconsideration and Administrative
                                                                                                         In the 2009 NSR Aggregation Action,                Stay
                                             activities, the less likely that a
                                                                                                      the EPA expressed concern with this
                                             deliberate decision was made by the                                                                               On January 30, 2009, the Natural
                                                                                                      statement from the 3M Memorandum,
                                             source to split an otherwise ‘significant’                                                                     Resources Defense Council (NRDC)
                                                                                                      saying ‘‘it could be interpreted to imply
                                             activity into two or more smaller, non-                                                                        submitted a petition for reconsideration
                                                                                                      that almost any activity is related to any
                                             major activities.’’ 74 FR 2380.                                                                                of the 2009 NSR Aggregation Action (the
                                                To this end, the 2009 NSR                             other activity at that source simply
                                                                                                      because they are both capital                         ‘‘NRDC Petition’’). In response to the
                                             Aggregation Action affirmed that timing                                                                        NRDC Petition, on February 13, 2009,
                                             could be a basis to not aggregate                        investments and support the company’s
                                                                                                      goal to make a profit.’’ 74 FR 2376,                  the EPA convened a proceeding for
                                             separate projects, and it established a                                                                        reconsideration as provided for under
                                             policy of applying a rebuttable                          2379. The suggestion that all changes
                                                                                                      consistent with the ‘‘overall basic                   the CAA section 307(d)(7)(B), finding
                                             presumption against aggregating                                                                                that the petitioner had raised objections
                                             projects that occur 3 or more years                      purpose’’ of the plant can and should be
                                                                                                      aggregated is inconsistent with the                   to the action that arose after the
                                             apart. The EPA justified its selection of                                                                      comment period and that were of
                                             3 years as the presumptive timeframe in                  interpretation of ‘‘project’’ to include
                                                                                                      only those changes that have a                        central relevance to the action.
                                             part by reasoning that it ‘‘is long enough                                                                        To allow time to complete the
                                             to ensure a reasonable likelihood that                   substantial relationship. While the EPA
                                                                                                      did not, in the 2009 NSR Aggregation                  reconsideration prior to the 2009 NSR
                                             the presumption of independence will                                                                           Aggregation Action becoming effective,
                                             be valid, but is short enough to maintain                Action, find such a broad approach to
                                                                                                      project aggregation was often applied                 the EPA announced a 90-day
                                             a useful separation between relevant                                                                           administrative stay of the action. See 74
                                             construction cycles, consistent with                     after the 3M determination, we
                                                                                                      nevertheless had concerns that it did                 FR 7284 (February 13, 2009). The EPA
                                             industry practice. For example, in the                                                                         subsequently completed an action to
                                             case of electric utilities, a commenter                  not represent an appropriate criterion
                                                                                                      for aggregating projects for NSR                      further delay the effective date until
                                             explained that companies plan and                                                                              May 18, 2010. See 74 FR 22693 (May 14,
                                             schedule major turbine outages every                     purposes and could be misapplied.
                                                                                                      Thus, in the 2009 NSR Aggregation                     2009). On May 18, 2010, the EPA
                                             four to five years.’’ Id. However, the
                                                                                                      Action, we maintained that two                        invoked APA section 705 to stay the
                                             EPA did note that this presumptive
                                                                                                      nominally separate projects are not                   action indefinitely pending the
                                             timeframe may be rebutted in certain
                                                                                                      substantially related if they are only                proceedings for judicial review or the
                                             circumstances. For instance, the 2009
                                                                                                      related to the extent that they both                  completion of reconsideration. These
                                             NSR Aggregation Action noted that
                                                                                                      support the source’s ‘‘overall basic                  stays were intended to allow the EPA
                                             where there is ‘‘evidence that a
                                                                                                      purpose.’’                                            the time to take comment on issues that
                                             company intends to undertake a phased
                                                                                                         In summarizing what it means for                   were in question and complete any
                                             capital improvement project’’ where the
                                                                                                      projects to be substantially related, the             revisions of the action that became
                                             activities ‘‘have a substantial economic
                                                                                                      2009 NSR Aggregation Action provided                  necessary as a result of the
                                             relationship,’’ this would likely
                                                                                                      that ‘‘in most cases, activities occurring            reconsideration process.
                                             overcome the presumption that those
                                                                                                      in unrelated portions of a major                         As part of the reconsideration
                                             activities should not be aggregated. Id.
                                                With regard to implementing the 3-                    stationary source (e.g., a plant that                 proceeding, on April 15, 2010, the EPA
                                             year presumption, the EPA stated ‘‘the                   makes two separate products and has no                published a proposed reconsideration of
                                             time period separating physical or                       equipment shared among the two                        the 2009 NSR Aggregation Action (the
                                             operational changes should be                            processing lines) will not be                         ‘‘2010 Reconsideration Proposal’’).14 75
                                             calculated based on time of approval                     substantially related. The test of a                  FR 19567. At the time, the EPA
                                             (i.e., minor NSR permit issuance). If a                  substantial relationship centers around               considered whether some of the points
                                             permit has not been, or will not be,                     the interrelationship and
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                                                                                                                                                               14 In the 2010 Reconsideration Proposal, the EPA
                                             issued for the physical or operational                   interdependence of the activities, such               described the 2009 action as the ‘‘NSR Aggregation
                                             changes, the time period should be                       that substantially related activities are             Amendments.’’ However, since this action did not
                                             based on when construction commences                     likely to be jointly planned (i.e., part of           ‘‘amend’’ the NSR regulations, but rather laid out
                                             on the changes.’’ 74 FR 2381.                            the same capital improvement project or               an interpretation of our current regulations and
                                                                                                                                                            described a policy on timing for aggregation, the
                                                The EPA also explained that a                         engineering study), and occur close in                2009 action is more appropriately described, as it
                                             statement within the 3M Memorandum                       time and at components that are                       is described herein, as the 2009 NSR Aggregation
                                             was potentially vulnerable to                            functionally interconnected.’’ 74 FR                  Action.



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                                             57328            Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations

                                             raised by the NRDC petition might                        enforcement action for violations of                     project aggregation, but which to some
                                             demonstrate potential flaws in the                       those obligations or requirements.’’                     degree altered the aggregation policy
                                             process and with fundamental aspects                     National Mining, 758 F.3d at 251–52.                     that the EPA had previously articulated
                                             of the 2009 NSR Aggregation Action,                      We use the term ‘‘interpretation’’ to                    in past guidance memoranda and letters.
                                             including the legal basis, state adoption                describe ‘‘an agency action that merely                     In 2009, we also discussed our
                                             and implementation, and the clarity of                   interprets a prior statute or regulation,                intention to apply a rebuttable
                                             the ‘‘substantially related’’ criterion. In              and does not itself purport to impose                    presumption that activities separated by
                                             the 2010 Reconsideration Proposal, we                    new obligations or prohibitions or                       more than 3 years would not be
                                             expressed agreement with the petitioner                  requirements on regulated parties.’’ Id.                 considered substantially related. This
                                             on a number of fronts, invited comment                   Following the language in the APA,                       section of the action is best understood
                                             on all issues raised in the NRDC                         courts have used the term ‘‘interpretive                 as a statement of policy, as we were
                                             petition, and proposed a preferred                       rule’’ to describe this type of action. Id.              describing how we intended to exercise
                                             option to revoke the 2009 NSR                            Here, however, we use the term                           our discretion under the NSR
                                             Aggregation Action. The 2010                             ‘‘interpretation’’ to more clearly                       regulations, as we interpreted them. We
                                             Reconsideration Proposal also                            distinguish such an action from a                        justified the 3-year presumption as a
                                             referenced a number of the past                          legislative rule. Finally, a ‘‘policy’’ or               commonsense approach, in that we
                                             determinations on project aggregation.                   ‘‘statement of policy’’ is ‘‘an agency                   believed that in practice once 3 years
                                             See 75 FR 19570–1.                                       action that merely explains how the                      had passed, ‘‘it is difficult to argue that
                                               The EPA received a total of 27                         agency will enforce a statute or                         th[e activities] are substantially related
                                             comments on our 2010 Reconsideration                     regulation—in other words, how it will                   and constitute a single project.’’ 74 FR
                                             Proposal. Of those commenters, 20                        exercise its broad enforcement                           2380. But recognizing that there may be
                                             represented industry parties, three                      discretion or permitting discretion                      situations that would warrant an
                                             represented state and local air agencies,                under some extant statute or rule.’’ Id.                 exception to this approach, we
                                             one represented a tribal government                         In 2006, we proposed a rule (meaning                  indicated that the 3-year presumption
                                             agency, one represented a federal                        a legislative rule) that would have                      would be rebuttable. We indicated our
                                             agency, one represented an                               changed the text in the Code of Federal                  view that it would be allowable and
                                             environmental advocacy group, and one                    Regulations. We included in the                          appropriate for other permitting
                                             was a private citizen.                                   preamble an explanation of what we                       authorities to ‘‘also adopt this
                                                                                                      intended that proposed regulatory text                   presumptive timeframe as guidance for
                                             3. Characterizing the 2009 NSR
                                                                                                      to mean. 71 FR 54235 (September 14,                      their sources.’’ 74 FR 2381.
                                             Aggregation Action                                                                                                   The 2009 action, thus, contained both
                                                                                                      2006). In that Federal Register
                                                In the history of actions that the EPA                document, we referred to the action as                   an interpretation of the existing
                                             has taken regarding its project                          a ‘‘proposed rule.’’ Id.; see also 71 FR at              regulations and a statement of policy on
                                             aggregation policy since 2006, the EPA                   54245 (‘‘We are proposing to add our                     how we intended to implement that
                                             has variously described the 2009 NSR                     aggregation policy to our NSR                            interpretation. It is for this reason that
                                             Aggregation Action as a ‘‘rule,’’                        regulations . . .’’).                                    we refer to it as the 2009 NSR
                                             ‘‘interpretation,’’ and ‘‘policy.’’                         In 2009, we took ‘‘final action’’ in the              Aggregation Action. However, when
                                             However, we are now mindful that these                   matter. That is, we completed the action                 reconsidering that 2009 action, we were
                                             terms may be used to refer to three                      begun in 2006, while not changing the                    not sufficiently clear in the 2010
                                             distinct types of agency action that have                regulatory text itself. 74 FR 2376. In                   Reconsideration Proposal regarding the
                                             varying degrees of legal effect and can                  retaining the existing regulatory text                   nature of the action we were
                                             be changed through different types of                    defining the term ‘‘project,’’ we said that              reconsidering. At times, we described
                                             procedures. National Mining                              the action we were taking ‘‘interprets                   the 2009 action as a ‘‘final rule,’’ and
                                             Association v. McCarthy, 758 F.3d 243,                   that rule text.’’ Id. The interpretation                 called it the ‘‘NSR Aggregation
                                             251–52 (D.C. Cir. 2014). As is explained                 offered in the 2009 NSR Aggregation                      Amendments,’’ which could be read to
                                             below, the distinction between the                       Action was that a ‘‘project,’’ which the                 suggest that we considered the 2009
                                             proper procedures for changing rules,                    regulatory text defines to mean ‘‘a                      NSR Aggregation Action, despite the
                                             interpretations, and policies were not as                physical change in, or change in the                     lack of regulatory text changes, to
                                             clear to the agency in 2009 and 2010 as                  method of operation of, an existing                      somehow be a legislative rule, or
                                             they are today. Recent court decisions                   major stationary source,’’ 40 CFR                        something that ‘‘amended’’ the existing
                                             have provided more clarity regarding                     52.21(b)(53) (emphasis added), includes                  regulations.
                                             the distinction between these types of                   those activities that are ‘‘substantially                   Much of the confusion stemmed from
                                             actions and the means through which an                   related.’’ 74 FR 2377. This portion of the               the fact that at the time we took these
                                             agency can change them. In order to                      2009 NSR Aggregation Action was an                       actions, judicial precedent in the United
                                             clarify how state and local permitting                   interpretation.15 Although we had                        States Court of Appeals for District of
                                             authorities may apply the principles for                 proposed to adopt a legislative rule in                  Columbia Circuit (D.C. Circuit) provided
                                             project aggregation that the EPA                         2006 and to reflect that in amended                      that, where an agency had given a
                                             articulated in 2009, in this final action                regulatory text, we made a final decision                definitive interpretation to one of its
                                             we seek to address any confusion                         in 2009 not to adopt any legislative rule                own legislative rules, the agency could
                                             regarding the nature of that 2009 action.                or to amend the text of the NSR                          not thereafter change that interpretation
                                                We begin by defining what we                          regulations. Instead, we chose to                        without providing notice and an
                                             understand each of these terms to mean                   announce an interpretation of the                        opportunity to comment. Paralyzed
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                                             when they are used in the discussion                     existing regulations that drew from                      Veterans of America v. D.C. Arena L.P.,
                                             that follows. We use the term ‘‘rule’’ to                EPA’s prior experience on the topic of                   117 F.3d 579 (D.C. Cir. 1997). In part
                                             describe a ‘‘legislative rule,’’ which is                                                                         because of this precedent, we were
                                             ‘‘[a]n agency action that purports to                       15 As explained above, courts follow the APA in
                                                                                                                                                               persuaded in 2010 that we should
                                             impose legally binding obligations or                    referring to this type of action as an ‘‘interpretive    provide an opportunity for the public to
                                                                                                      rule,’’ but we refer to it herein simply as an
                                             prohibitions on regulated parties—and                    ‘‘interpretation’’ to more clearly distinguish such an   comment on the 2009 interpretation,
                                             that would be the basis for an                           action from a legislative rule.                          which could have been viewed as a


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                                                              Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations                                         57329

                                             change from the interpretation that the                  for which we asked for comment in the                 related projects and is consistent with
                                             EPA had articulated in 2006 and earlier.                 2010 Reconsideration Proposal. The                    the CAA and our regulations.
                                             In addition, since we understood the                     proposal invited comment on all issues                   With regard to the petitioner’s
                                             Paralyzed Veterans opinion to require a                  alleged in the petition for                           concern about how the 2009 NSR
                                             notice-and-comment rulemaking                            reconsideration, including the                        Aggregation Action applies to EPA-
                                             process when an agency wished to                         following: Lack of adequate opportunity               approved permitting programs, we
                                             change a regulatory interpretation                       for notice and comment on the final                   affirm our decision in 2009 not to revise
                                             (which, under the APA, would                             action; legal inconsistency with a prior
                                             constitute the issuance of an                                                                                  the current rule text, and instead to
                                                                                                      court decision; lack of demonstrated                  conclude that the terms ‘‘project’’ and
                                             ‘‘interpretive rule,’’ or, as we refer to it             need for a policy change; and lack of
                                             herein, an ‘‘interpretation’’), and                                                                            ‘‘a physical change in, or change in
                                                                                                      clarity over state plan adoption of the
                                             because the 2009 NSR Aggregation                                                                               method of operation of’’ in the existing
                                                                                                      action.
                                             Action had completed a notice-and-                                                                             NSR regulations can be reasonably
                                                                                                         This action addresses all of the                   interpreted as already incorporating the
                                             comment rulemaking process that had
                                             originally proposed to amend rule text,                  petitioner’s issues. Moreover, to the                 ‘‘substantially related’’ test set forth in
                                             we chose in the 2010 Reconsideration                     extent that commenters lacked an                      the 2009 preamble. Because the 2009
                                             Proposal to apply the procedures for                     adequate notice-and-comment                           NSR Aggregation Action did not amend
                                             reconsidering a ‘‘legislative rule.’’                    opportunity in the development of the                 the rule text, state and local air agencies
                                                The United States Supreme Court has                   2009 NSR Aggregation Action, the                      with approved state implementation
                                             since abrogated the Paralyzed Veterans                   reconsideration process has addressed                 plans (SIPs) are not required to amend
                                             doctrine, ruling that it was inconsistent                this deficiency by inviting comment in                those plans to adopt this interpretation
                                             with the APA, which by its plain terms                   2010 on the issues raised by the                      that projects should be aggregated when
                                             does not require agencies to go through                  petitioner. This action (1) takes final               ‘‘substantially related.’’ If state and local
                                             a notice-and-comment process in                          action on the 2010 Reconsideration                    agencies want to adopt this
                                             issuing an interpretive rule. Perez v.                   Proposal and retains the 2009 NSR                     interpretation, we believe that in most
                                             Mortgage Bankers Association, 135 S.                     Aggregation Action without adopting
                                                                                                                                                            cases this interpretation can be applied
                                             Ct. 1199 (2015). Because the 2009 NSR                    any changes to the rule text or the
                                                                                                                                                            without formal adoption into their rules.
                                             Aggregation Action did not impose                        interpretation and statement of policy
                                                                                                                                                            We encourage state and local air
                                             legally binding obligations or                           contained therein; (2) completes the
                                                                                                                                                            agencies to follow this interpretation to
                                             prohibitions on regulated entities or                    CAA section 307 reconsideration
                                                                                                      proceeding on the 2009 NSR                            ensure greater national consistency in
                                             state permitting authorities, it was not a
                                                                                                      Aggregation Action to address any                     making NSR applicability
                                             legislative rule. Since the 2009 NSR
                                                                                                      potential notice-and-comment                          determinations, though state and local
                                             Aggregation Action was a combination
                                             of interpretation and policy statement, it               deficiency; and (3) lifts the APA section             air agencies with approved SIPs can
                                             could have been issued by the EPA                        705 stay of the 2009 NSR Aggregation                  continue to apply their own
                                             without following notice-and-comment                     Action. The conclusions reached and                   interpretation of the scope of a
                                             rulemaking procedures. 5 U.S.C. 553(b);                  expressed in this final action are based              ‘‘project.’’
                                             42 U.S.C. 7607(d)(1). Further, to the                    on careful review of the public                          Consistent with comments received
                                             extent the interpretation reflected                      comments on the 2010 Reconsideration                  on the EPA’s 2006 proposed rule,
                                             therein is a change from a prior                         Proposal.16                                           commenters on the 2010
                                             interpretation, after the Supreme Court                     This final decision on reconsideration             Reconsideration Proposal raised
                                             decision in Mortgage Bankers, it is now                  of the 2009 NSR Aggregation Action                    concerns with the clarity of our prior
                                             clear that an agency may also change                     does not finalize the 2010                            policy on project aggregation, which
                                             such an interpretation of its regulations                Reconsideration Proposal’s preferred                  was developed over time through a
                                             without the need to publish notice in                    option to revoke the 2009 NSR                         number of post hoc site-specific
                                             the Federal Register and solicit public                  Aggregation Action’s interpretation and               applicability determinations. We
                                             comment. However, because the EPA                        policy. Upon reviewing public                         anticipate the 2009 NSR Aggregation
                                             has been using notice-and-comment                        comments, after further deliberation,                 Action will reduce any confusion over
                                             rulemaking procedures up to this point,                  and taking account of the                             our past policy and provide sources and
                                             the EPA believes it is prudent, but not                  Administration’s priorities and policy                regulators with increased clarity when
                                             required, in order to retain the                         goals, the EPA has concluded that the                 determining whether projects should be
                                             interpretation of the NSR regulations                    interpretation and policy in the 2009                 aggregated for NSR purposes. The EPA
                                             with regard to project aggregation that
                                                                                                      NSR Aggregation Action should be                      believes the principles outlined in the
                                             we published in 2009, that we publish
                                                                                                      retained.17 We believe the 2009 NSR                   2009 NSR Aggregation Action will not
                                             this document in the Federal Register.
                                                                                                      Aggregation Action articulates a                      only help to achieve greater national
                                             This procedure also allows us to
                                                                                                      reasonable standard for aggregating                   consistency in project aggregation
                                             complete the reconsideration
                                             proceeding and lift the indefinite                                                                             determinations but will also streamline
                                             administrative stay of the 2009 NSR
                                                                                                        16 In the docket for this action, we are making
                                                                                                                                                            NSR permitting by reducing the time
                                                                                                      available a document, ‘‘Response to Public
                                             Aggregation Action. We also believe that                 Comments for Prevention of Significant
                                                                                                                                                            needed to assess whether nominally-
                                             it is prudent to respond to those                        Deterioration (PSD) and Nonattainment New Source      separate physical and operational
                                                                                                                                                            changes should be aggregated for NSR
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                                             comments we received during the                          Review (NSR): Aggregation; Reconsideration’’, in
                                                                                                      which the EPA responds to the public comments         applicability purposes.
                                             reconsideration process.                                 received on the 2010 Reconsideration Proposal.
                                             III. This Action                                           17 See Presidential Memorandum on Streamlining         As this action officially completes our
                                                                                                      Permitting and Reducing Regulatory burdens for        reconsideration proceeding, we are also
                                             A. Overview                                              Domestic Manufacturing (82 FR 8667; January 24,       lifting the APA section 705 stay and
                                                                                                      2017); Executive Order 13777 on Enforcing the
                                               In this action, we are taking final                    Regulatory Reform Agenda (82 FR 12285, March 1,       announcing the effective date of the
                                             action on reconsideration of the issues                  2017).                                                2009 NSR Aggregation.


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                                             57330            Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations

                                             B. Retaining the 2009 NSR Aggregation                    necessarily transferable to a decision to             Indeed, the criticism of relying on
                                             Action                                                   aggregate a similar set of activities but             ‘‘anecdotes’’ suggests that examples of
                                                                                                      with a slightly different set of                      problems offered in public comments
                                             1. An Interpretation Is Needed
                                                                                                      circumstances at a different plant.’’ 74              should be ignored. The EPA is required
                                                As explained earlier in this document,                FR 2377.                                              to take into account the comments
                                             the EPA’s past position on project                          Previous agency statements can be                  submitted. Furthermore, merely because
                                             aggregation—prior to the 2009 NSR                        taken out of context or misunderstood                 the overall level of uncertainty
                                             Aggregation Action—was not                               when reviewing projects having a                      demonstrated by public comments
                                             established through a rule or through a                  different set of facts. For example, while            cannot be characterized—a given entity
                                             single, comprehensive policy statement.                  the 3M Memorandum was considered                      would not necessarily know whether
                                             Rather, the policy had been articulated                  by some as the EPA’s guiding policy on                others were as uncertain as they were—
                                             by the EPA through a number of site-                     project aggregation, parties could                    does not serve to demonstrate that the
                                             specific determinations, many of which                   certainly misconstrue portions of that                2009 NSR Aggregation Action was
                                             were issued after the activities subject to              statement to suggest that all projects                unwarranted. We believe that the
                                             the determination had already occurred.                  occurring within the same timeframe                   evidence before the EPA in 2009 and the
                                             Navigating this collection of EPA                        should be aggregated, or that all projects            agency’s own extensive permitting
                                             statements, capturing their salient                      occurring at a facility should be                     experience, coupled with statements
                                             points, and determining whether and                      aggregated as long as they contribute to              from public commenters in this
                                             how to apply their rationale to new                      the source’s ‘‘overall basic purpose.’’               reconsideration proceeding, clearly
                                             determinations with different fact                       Such an approach—i.e., to aggregate                   indicates that the EPA’s prior policy on
                                             patterns was arguably a challenge for                    projects simply because they may occur                project aggregation lacked clarity and
                                             sources and permitting authorities over                  close in time or may support the same                 promoted confusion. The 2009 NSR
                                             the years. Such an approach lacked                       overall purpose of the facility—fails to              Aggregation Action provides a more
                                             clarity for sources and permitting                       take proper account of the actual                     concise formulation for how to interpret
                                             authorities, making it sometimes                         interrelationship of activities.                      the scope of a project and provides
                                             difficult to understand the overall                      Meanwhile, in other parts of the 3M                   clarity for permitting authorities,
                                             policy so they could effectively apply it                Memorandum, the EPA’s statements                      regulated entities, and the public.
                                             prospectively.                                           clearly indicate that, in order to justify               Finally, the 2010 Reconsideration
                                                There is a substantive distinction                    aggregating activities for purposes of                Proposal states that ‘‘[w]hile the [2009
                                             between making case-by-case                              major NSR, the reasonable approach is                 NSR Aggregation Action] may, in some
                                             determinations after-the-fact and                        to determine whether those activities                 respects, appear clearer than our
                                             making case-by-case determinations                       are related in some meaningful way:                   previous policy, we are not convinced
                                             prospectively—i.e., as part of a                         e.g., ‘‘[a]uthorities should scrutinize               that it achieved enough additional
                                             permitting applicability review—for                      [permit] applications that relate to the              clarity to improve the process of making
                                             NSR purposes. Many post hoc                              same process or units . . .’’; ‘‘two or               aggregation assessments by sources and
                                             determinations are made with an eye to                   more related minor changes over a short               reviewing authorities. . . .’’ 75 FR
                                             determining whether the requirements                     time period should be studied for                     19573. After further consideration, we
                                             of NSR were circumvented, whereas                        possible circumvention.’’ 3M                          now believe that providing clarity in a
                                             prospective determinations are made                      Memorandum at 3 (emphasis added).                     single document is a better approach
                                             with the purpose of giving sources an                    We consequently do not believe that a                 than continuing the previous policy that
                                             opportunity to evaluate modifications                    broader approach to aggregating                       was based on a host of EPA letters and
                                             during the planning or preconstruction                   activities—i.e., based on their                       memoranda, which collectively
                                             phase in order to determine whether a                    contribution to a plant’s overall                     provided less clarity. We recognize
                                             planned or proposed modification                         purpose—is an accurate characterization               there will continue to be ‘‘gray areas’’
                                             requires a PSD or NNSR permit, so as                     of the EPA’s view at the time of the 3M               that sources and permitting authorities
                                             not to circumvent the NSR process.                       determination. Furthermore, we do not                 will ultimately have to work through in
                                             While the underlying criteria for                        believe it reflects EPA’s view in any                 deciding whether or not to aggregate a
                                             assessing whether to group multiple                      other statement made by the agency                    set of changes at a facility. But this is
                                             activities as a single project should be                 over the years.                                       attributable to the inherent nature of
                                             the same regardless of whether the                          We noted in the 2010 Reconsideration               such decisions, not to some deficiency
                                             determination is prospective or post                     Proposal that ‘‘in reviewing the record               in the 2009 NSR Aggregation Action.
                                             hoc, a post hoc determination is often                   for the NSR Aggregation Amendments,                   That does not mean that the EPA should
                                             very specific to the industry and the                    we find that the only factual support for             abandon the clarity it attempted to
                                             individual fact pattern under                            the contention that our historic                      provide in that action.
                                             consideration, and therefore applying                    approach caused confusion was
                                             the determination’s rationale                            anecdotal,’’ and that the ‘‘parties                   2. ‘‘Substantially Related’’ Is an
                                             prospectively, while potentially                         supporting a change in policy failed to               Appropriate Standard
                                             informative, could be misapplied to                      provide us with any characterization of                  As noted above, the EPA continues to
                                             situations involving different industries                the overall level of uncertainty or other             believe that there is a need for some
                                             or having different fact patterns. The                   problems resulting from the existing                  criteria for determining when
                                             2009 NSR Aggregation Action also                         policy on aggregation.’’ 75 FR 19572.                 nominally-separate changes should be
                                             recognized the limitations of having a                   However, after further consideration,                 considered a single ‘‘project’’ for
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                                             policy that is based on the specific fact                the EPA finds this to be an insufficient              purposes of determining NSR
                                             patterns of past determinations: ‘‘the                   basis for changing or revoking the 2009               applicability. It remains necessary to
                                             decision to aggregate or disaggregate                    NSR Aggregation Action. So-called                     draw a line between those activities that
                                             activities is highly case-dependent, such                ‘‘anecdotal’’ evidence is nevertheless                are to be considered a single ‘‘physical
                                             that letters and memoranda that opine                    still evidence of which the agency can                or operational change’’ and those that
                                             on whether to aggregate a particular set                 properly take account if, in its                      are not. In this action, we are affirming
                                             of activities at one facility are not                    judgment, it finds it to be meaningful.               that the 2009 NSR Aggregation Action’s


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                                                              Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations                                               57331

                                             ‘‘substantially related’’ test is an                     production targets, economies of scale,               proposed project broadly, to reflect
                                             appropriate standard for project                         etc.).’’ Id. Similarly, the 2009 NSR                  multiple activities.’’ 18
                                             aggregation.                                             Aggregation Action said that ‘‘whether a                 In the Project Emissions Accounting
                                                As explained elsewhere in this                        physical or operational change is                     Memorandum, we noted that EPA was
                                             document, the nature of the project                      dependent on another for its viability is             then evaluating whether to undertake a
                                             aggregation determination is case-                       still a relevant factor in assessing                  future notice-and-comment rulemaking
                                             specific, which means it is inherently                   whether the changes should be                         to implement, through changes to the
                                             difficult to establish a bright line                     aggregated,’’ and ‘‘substantially related             regulatory text itself, the interpretation
                                             standard: Such a standard may be                         activities are likely to be jointly planned           of the NSR applicability provisions set
                                             reasonable when conducting an                            (i.e., part of the same capital                       forth in the memorandum. At such time
                                             evaluation of project scope in one                                                                             as we proceed with that rulemaking, we
                                                                                                      improvement project or engineering
                                             situation, but could prove to be                                                                               will look to provide further guidance
                                                                                                      study), and occur close in time and at
                                             unreasonable or unworkable when                                                                                with respect to properly accounting for
                                                                                                      components that are functionally
                                             applied in other situations. This case-                                                                        the scope of a project in which a source
                                             by-case aspect necessitates that the EPA                 interconnected.’’ 74 FR 2378.                         is seeking to take account of emission
                                             establish a reasonable general principle                    In addition, the ‘‘substantially                   decreases at Step 1 of the NSR
                                             to apply, and we believe the                             related’’ criterion is not materially                 applicability analysis. Meanwhile, in
                                             ‘‘substantially related’’ criterion is an                different from the factors the agency has             advance of that rulemaking, we take the
                                             appropriate principle for concluding                     considered in previous project                        opportunity here to clarify that, as a
                                             that claimed separate projects are a                     aggregation decisions. Over time, the                 general matter, it is neither necessary
                                             single project for NSR applicability                     EPA has used various terms and                        nor appropriate to take into
                                             purposes. We believe the substantially                   phrases—e.g., ‘‘intrinsic relationship’’ as           consideration such matters as whether
                                             related criterion is sound from a policy                 was used in the 3M Memorandum—to                      emission decreases attributable to a
                                             and implementation perspective.                          describe the basis for why multiple                   particular activity are ‘‘integral’’ to the
                                                The 2009 NSR Aggregation Action                       nominally-separate changes at a source                overall project, as had once been
                                             effectively addresses certain past EPA                   should be treated as a single project for             proposed by a petroleum refinery to the
                                             statements in relation to implementing                   NSR applicability purposes. The term                  EPA.19 Our current view is that the
                                             the ‘‘substantially related’’ test for future            ‘‘substantially related’’ is, therefore,              concerns regarding the real possibility
                                             project aggregation determinations. The                  little more than a functional synonym                 that NSR might be circumvented
                                             2009 NSR Aggregation Action outlined                     for other terms that the EPA has                      through some artificial separation of
                                             the role of timing—specifically, that                    historically used to characterize its                 activities where it would be
                                             timing alone is not determinative of                     project aggregation policy. While                     unreasonable to consider them separate
                                             whether activities are substantially                                                                           projects—i.e., the concerns which the
                                                                                                      sources and permitting authorities
                                             related and that, as a policy matter,                                                                          2009 NSR Aggregation Action is
                                                                                                      making project aggregation
                                             activities separated in time by three or                                                                       intended to address—are not so
                                                                                                      determinations may continue to use the
                                             more years may be presumed to be not                                                                           obviously presented by the situation
                                             substantially related. The 2009 NSR                      EPA’s previous terms, and may rely on
                                                                                                                                                            where a source itself is choosing to
                                             Aggregation Action also rejected the use                 other terms or phrases going forward,
                                                                                                                                                            group together, as a single project,
                                             of an ‘‘overall basic purpose’’ criterion                we believe that the terminology used                  activities to which a projected emissions
                                             for aggregating physical or operational                  should ultimately express a standard for              decrease is attributable.20 In a future
                                             changes, since it could have been read                   determining whether the activities are                rulemaking to clarify, through
                                             to constitute an open-ended standard,                    or are not substantially related. Thus,               regulatory text changes, the
                                             resulting in the unreasonable or                         we believe ‘‘substantially related’’ works            interpretation set forth in the Project
                                             improper aggregation of unrelated                        effectively as an umbrella term to                    Emissions Accounting Memorandum,
                                             activities.                                              include these previous descriptors for                the EPA will be taking comment on
                                                Importantly, we do not believe the                    analyzing the relationship between                    whether our current view of this issue
                                             2009 NSR Aggregation Action reflects a                   projects that warrant aggregation.                    is reasonable, whether the
                                             major shift in policy from EPA’s prior                      Finally, the matter of defining the                ‘‘substantially related’’ criterion
                                             policy on project aggregation. To the                    scope of a project was raised, in a                   described here may speak to this issue,
                                             contrary, we believe that in many ways                   different context, in the Project                     and other related matters.
                                             the 2009 NSR Aggregation Action                          Emissions Accounting Memorandum
                                             clarifies and supplements previous                                                                             3. Legal Basis Is Sound
                                                                                                      issued on March 13, 2018. There, we
                                             statements of policy. For example, in                    observed that, as general matter, the                    We believe the 2009 NSR Aggregation
                                             the case of timing, the 3M Memorandum                                                                          Action is legally supportable and makes
                                                                                                      source itself is responsible for defining
                                             suggested that when minor NSR permit                                                                           sense for sometimes difficult case-by-
                                                                                                      the scope of its own project, subject to
                                             applications occur ‘‘over a short time
                                                                                                      the limitation that the source cannot
                                             period (e.g., 1 year or 18 months), the                                                                           18 Project Emissions Accounting Memorandum at
                                                                                                      seek to circumvent NSR by                             9 (emphasis added).
                                             modifications may require major new
                                             source review.’’ 3M Memorandum at 4                      characterizing the proposed project in a                 19 Letter from Steven C. Riva, U.S. EPA Region 2,

                                                                                                      way that would separate a single project              to Kathleen Antoine, HOVENSA, LLC, ‘‘Re:
                                             (emphasis added). Thus, the 3M                                                                                 Emission Decreases Integral to Projects’’ (June 7,
                                             Memorandum never said timing was the                     into multiple projects. We further                    2010) (‘‘EPA, by this letter, is not opining on the
                                             sole criterion or otherwise conclusive.                  pointed out that, ‘‘[s]ubject to the                  merits of HOVENSA’s analysis regarding the
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                                             Rather, timing was a reason to look                      equivalent understanding that it might                underlying basis for ‘integral to the project’
                                                                                                      be possible [for a source] to circumvent              approach.’’).
                                             more closely at the relevant activities’                                                                          20 Indeed, the EPA views this latter situation as

                                             ‘‘intrinsic relationship with each other                 NSR through some wholly artificial                    one where sources could potentially be incentivized
                                             (physical proximity, stages of                           grouping of activities, the EPA does not              to seek out emission reductions that might
                                             production process, etc.) and their                      interpret its NSR regulations as                      otherwise be foregone entirely—e.g., because of
                                                                                                      directing the agency to preclude a                    perceived complexity with contemporaneous
                                             impact on economic viability of the                                                                            netting under Step 2 of the NSR applicability
                                             plant (scheduling down time in light of                  source from reasonably defining its                   analysis.



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                                             57332            Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations

                                             case determinations required for                         meaning of physical change,’’ 75 FR                   where that may be the case and have not
                                             assessing whether to aggregate                           19571, citing NRDC Petition at 5–6                    followed the reasoning of their
                                             nominally-separate projects. Contrary to                 (emphasis in original), we do not now                 argument to its logical conclusion. This
                                             the petitioner’s argument, the use of the                perceive any merit in NRDC’s assertion.               argument would require the EPA to
                                             term ‘‘substantially related’’ would not                    With NRDC’s arguments in mind, the                 prove a negative: That whatever
                                             create a carve-out from the scope of the                 agency at one point read New York II as               interpretation or policy on aggregation
                                             statutory definition of ‘‘modification.’’                suggesting that the CAA ‘‘prohibits EPA               we adopted would not exclude any level
                                                Drawing on arguments made by NRDC                     from picking and choosing among                       of aggregated activities that fit within
                                             in its petition, in 2010 we had                          meanings of the phrase ‘any physical                  the ordinary meaning of a physical
                                             postulated, while ‘‘[m]uch of the                        change . . . or change in the method of               change. This impossible task would
                                             emphasis’’ of New York v. EPA, 443                       operation’ if it would result in omitting             mean that even the EPA aggregation
                                             F.3d 880 (D.C. Cir. 2006) (New York II)                  a common meaning that would subject                   policy prior to the 2009 NSR
                                             and other cases had been on whether                      an emission increase to review.’’ 75 FR               Aggregation Action was in violation of
                                             the EPA ‘‘could exclude small changes                    19571. Based on this, we were                         New York II because it allowed a facility
                                             from being considered potential                          concerned that, ‘‘[i]f ‘substantially                 to sometimes disaggregate activities
                                             modifications as defined in the Act,’’                   related’ would omit an ordinary,                      when, if aggregated, they would fall
                                             the court’s reasoning in New York II also                common meaning of physical change                     within the ordinary meaning of physical
                                             applies to a rule that would split apart                 that would bring an emissions-                        change. A better approach to defining
                                             one change into separate changes in                      increasing project under review, then                 the scope of the ordinary meaning of
                                             order to limit the applicability of NSR.’’               the definition would eliminate a type of              physical change is to provide, as we did
                                             75 FR 19571. The D.C. Circuit’s New                      physical change that Congress intended                in the 2009 NSR Aggregation Action, a
                                             York II decision had focused on whether                  to cover (i.e., the change that consists of           principle for source owners or operators
                                             the EPA’s amendment to the ‘‘routine                     the group of nominally-separate changes               to follow, here the ‘‘substantially
                                             maintenance, repair and replacement’’                    that comprise a project but do not                    related’’ principle, when defining the
                                             provision of the NSR regulations which                   qualify as ‘substantially related’).’’ Id.            scope of ‘‘a physical change in, or
                                             provided that a specifically defined                     Thus, we reasoned at the time ‘‘that, to              change in method of operation of,’’
                                             category of ‘‘equipment replacement’’                    the extent that [the] ‘substantially                  pursuant to 40 CFR 52.21(b)(52), in a
                                             projects did not constitute a ‘‘physical                 related’ interpretation would exclude                 particular case.
                                             change or change in the method of                        meanings that fit within a reasonable
                                             operation,’’ was lawful. The court in                    understanding of the ordinary meaning                 4. Adoption Is Not Mandatory
                                             New York II held that it was not lawful,                 of ‘any physical change,’ ’’ then the 2009               We acknowledge that, by not making
                                             opining that the EPA ‘‘must apply NSR                    NSR Aggregation Action ‘‘would                        any changes to the regulatory text, as
                                             whenever a source conducts an                            impermissibly narrow the scope of CAA                 had been proposed, it may have been
                                             emissions-increasing activity that fits                  § 111(a)(4).’’ Id.                                    somewhat unclear to some whether state
                                             within one of the ordinary meanings of                      We now believe that such concerns                  and local air agencies have to adopt or
                                             physical change.’’ 443 F.3d at 885.                      were unwarranted. Upon further                        implement the elements of the 2009
                                                In the 2010 Reconsideration Proposal,                 consideration, we do not view New                     NSR Aggregation Action, and, if so, how
                                             we said we then read the D.C. Circuit’s                  York II, properly understood, as                      they should do so. In the 2010
                                             opinion as ‘‘requir[ing] EPA to aggregate                providing support for the proposition                 Reconsideration Proposal, we expressed
                                             any group of small changes’’ that were                   that a ‘‘common meaning’’ of a single                 our agreement with ‘‘NRDC’s assertion
                                             ‘‘sufficiently related to ‘fit[] within one              ‘‘change’’ would include multiple                     that the state and local implementation
                                             of the ordinary meanings of ‘physical                    changes, much less multiple, separate                 requirements of the NSR Aggregation
                                             change.’ ’’ 75 FR 19571. In this regard,                 changes that are not substantially                    Amendments are unclear,’’ and that the
                                             we said that we ‘‘agree[d] with [NRDC’s]                 related, such as changes which are                    ‘‘question of whether a SIP amendment
                                             contention that, to the extent that our                  undertaken at a source at different                   is required when the CFR remains
                                             ‘substantially related’ interpretation,’’ as             times, or undertaken for different                    unchanged is likely to cause confusion
                                             set forth in the 2009 NSR Aggregation                    purposes, or which are otherwise                      for reviewing authorities and other
                                             Action, would ‘‘exclude meanings that                    unrelated to each other. That is, the                 stakeholders.’’ 75 FR 19572. Taking
                                             fit within a reasonable understanding of                 EPA’s current view is that nothing in                 account of this confusion, the agency
                                             the ordinary meaning of ‘any physical                    New York II supports, much less                       considered that it ‘‘added support for
                                             change,’ ’’ that interpretation would                    compels, a reading of the CAA under                   our preferred position in this notice,
                                             ‘‘impermissibly narrow the scope of                      which all ‘‘nominally-separate changes’’              which is to revoke’’ the 2009 NSR
                                             CAA section 111(a)(4).’’ Id. We sought                   are deemed to ‘‘comprise’’ a single                   Aggregation Action. Id.
                                             comment on this analysis of the statute                  ‘‘project,’’ where those changes are not                 We now find such concerns over
                                             and New York II.                                         substantially related. Nevertheless,                  potential ‘‘confusion’’ to have been
                                                Upon further consideration and after                  under the interpretation reflected in the             overstated. In the Response to
                                             reviewing the public comments on this                    2009 NSR Aggregation Action, multiple                 Comments document for the 2009 NSR
                                             reconsideration proposal, the agency                     changes that are ‘‘substantially related’’            Aggregation Action (2009 RTC), the
                                             does not read New York II as supportive                  are to be considered to be one project for            agency had specifically noted that
                                             of the notion that the ‘‘substantially                   purposes of determining NSR                           ‘‘[s]ince we are not promulgating the
                                             related’’ interpretation set forth in the                applicability.                                        proposed rule regulatory changes, we
                                             2009 NSR Aggregation Action is                              Finally, to the extent that NRDC                   are not adding NSR minimum program
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                                             somehow contrary to the language of                      argues that the aggregation of activities             elements that would require states to
                                             CAA section 111(a)(4). While we had                      that are not substantially related into               modify their SIP.’’ 2009 RTC at 56. The
                                             previously suggested that there might be                 one activity that fits within the ordinary            agency continued that it would ‘‘begin
                                             some weight to NRDC’s argument that                      meaning of a physical change—and not                  applying the interpretations laid out in
                                             the ‘‘ ‘aggregation of nominally separate                aggregating those changes to compare to               the final action to activities that
                                             changes that are not substantially                       the significance level would violate New              postdate actions after the effective date
                                             related’ also may be within an ordinary                  York II—it has provided no examples                   of the final rulemaking notice.’’ Id. ‘‘At


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                                                              Federal Register / Vol. 83, No. 221 / Thursday, November 15, 2018 / Rules and Regulations                                            57333

                                             that time,’’ the EPA explained, states                   appropriateness of the 2009 NSR                         Under section 307(b)(1) of the Act, to
                                             ‘‘may also begin applying EPA’s                          Aggregation Action, we are hereby                     the extent that this action is judicially
                                             interpretations to the extent they do not                lifting the indefinite administrative stay            reviewable, petitions for judicial review
                                             conflict with their approved SIPs.’’ Id.                 and announcing the effective date of the              of this action must be filed in the United
                                             We now believe it is likely that state and               action. The effective date of the 2009                States Court of Appeals for the District
                                             local permitting authorities would have                  NSR Aggregation Action, published in                  of Columbia Circuit by January 14, 2019.
                                             understood this straightforward                          the Federal Register on January 15,
                                             explanation.                                                                                                   VII. Statutory Authority
                                                                                                      2009 (74 FR 2376), and delayed on
                                                Further, as previously discussed,                     February 13, 2009 (74 FR 7284), May 14,                  The statutory authority for this action
                                             determining whether a source has                         2009 (74 FR 22693), and May 18, 2010                  is provided by section 301(a) of the CAA
                                             sought to circumvent NSR by failing to                   (75 FR 27643), begins again on                        as amended (42 U.S.C. 7601(a)). This
                                             treat nominally-separate activities as a                 November 15, 2018.                                    document is also subject to section
                                             single project is inherently case-specific                                                                     307(d) of the CAA (42 U.S.C. 7407(d)).
                                             and fact-dependent. Given this, it is not                IV. Environmental Justice
                                                                                                      Considerations                                         Dated: November 7, 2018.
                                             reasonable to imagine that perfect                                                                             Andrew R. Wheeler,
                                             clarity could ever be achieved. To the                      We believe that this action does not               Acting Administrator.
                                             extent, however, that the 2009 NSR                       have any effect on environmental justice
                                             Aggregation Action, in setting forth both                                                                      [FR Doc. 2018–24820 Filed 11–14–18; 8:45 am]
                                                                                                      communities. Through this action, the
                                             the ‘‘substantially related’’                            EPA is affirming its interpretation that
                                                                                                                                                            BILLING CODE 6560–50–P

                                             interpretation and the EPA’s policy for                  its current NSR regulations allow for the
                                             applying that interpretation, provides                   2009 NSR Aggregation Action and, as
                                             some meaningful guidance to sources                                                                            ENVIRONMENTAL PROTECTION
                                                                                                      such, no increased burden is expected                 AGENCY
                                             and to state and local permitting                        for source owners, permitting
                                             authorities, we fail to understand how                   authorities, or environmental justice                 40 CFR Part 180
                                             revoking the 2009 NSR Aggregation                        communities.
                                             Action would serve to promote clarity.                                                                         [EPA–HQ–OPP–2017–0744; FRL–9985–45]
                                                Indeed, in this regard, we believe in                 V. Executive Order 12866: Regulatory
                                             most cases that sources and state and                    Planning and Review and Executive                     Azoxystrobin; Pesticide Tolerances
                                             local air agencies already implement a                   Order 13563: Improving Regulation and                 AGENCY:  Environmental Protection
                                             standard that is similar to the                          Regulatory Review                                     Agency (EPA).
                                             substantially related standard. To the
                                                                                                        This action is a significant action that            ACTION: Final rule.
                                             extent that a state or local air agency
                                                                                                      was submitted to the Office of
                                             desires to formally adopt the 2009 NSR                                                                         SUMMARY:   This regulation establishes
                                                                                                      Management and Budget (OMB) for
                                             Aggregation Action, the EPA will                                                                               tolerances for residues of azoxystrobin
                                                                                                      review. Any changes made in response
                                             provide support to those agencies to                                                                           in or on beet, sugar, roots and vegetable,
                                                                                                      to OMB recommendations have been
                                             process SIP submittals and issue                                                                               root, except sugar beet, subgroup 1B.
                                                                                                      documented in the docket.
                                             approvals, as warranted. In most cases,                                                                        Syngenta Crop Protection, LLC
                                             however, we do not think changes in                      VI. Judicial Review                                   requested these tolerances under the
                                             state plans would be needed to                                                                                 Federal Food, Drug, and Cosmetic Act
                                                                                                         Section 307(b)(1) of the CAA indicates
                                             implement this interpretation.                                                                                 (FFDCA).
                                                                                                      which Federal Courts of Appeal have
                                             C. Completing the Reconsideration                        venue for petitions of review of final                DATES: This regulation is effective
                                             Proceeding                                               agency actions by the EPA under the                   November 15, 2018. Objections and
                                               We believe that this final action                      CAA. This section provides, in part, that             requests for hearings must be received
                                             addresses the concerns raised by the                     petitions for review must be filed in the             on or before January 14, 2019, and must
                                             petitioner with respect to the 2009 NSR                  U.S. Court of Appeals for the District of             be filed in accordance with the
                                             Aggregation Action—e.g., adequate                        Columbia Circuit (i) when the agency                  instructions provided in 40 CFR part
                                             notice and logical outgrowth, the legal                  action consists of ‘‘nationally applicable            178 (see also Unit I.C. of the
                                             underpinnings of the action, state                       regulations promulgated, or final actions             SUPPLEMENTARY INFORMATION).
                                             adoption, and our need to change or                      taken, by the Administrator’’ or (ii)                 ADDRESSES: The docket for this action,
                                             clarify our aggregation policy.                          when such action is locally or regionally             identified by docket identification (ID)
                                             Accordingly, this action concludes the                   applicable, if ‘‘such action is based on              number EPA–HQ–OPP–2017–0744, is
                                             reconsideration proceeding of the 2009                   a determination of nationwide scope or                available at http://www.regulations.gov
                                             NSR Aggregation Action.                                  effect and if in taking such action the               or at the Office of Pesticide Programs
                                                                                                      Administrator finds and publishes that                Regulatory Public Docket (OPP Docket)
                                             D. Lifting the Administrative Stay;                      such action is based on such a                        in the Environmental Protection Agency
                                             Announcement of Effective Date                           determination.’’                                      Docket Center (EPA/DC), West William
                                                On May 18, 2010, after a series of                       This action completes the                          Jefferson Clinton Bldg., Rm. 3334, 1301
                                             temporary administrative stays of the                    reconsideration proceeding and makes                  Constitution Ave. NW, Washington, DC
                                             2009 NSR Aggregation Action, the EPA                     effective the 2009 NSR Aggregation                    20460–0001. The Public Reading Room
                                             exercised the provisions of the APA                      Action. The 2009 NSR Aggregation                      is open from 8:30 a.m. to 4:30 p.m.,
                                             section 705 to postpone the                              Action is an interpretation of NSR rule               Monday through Friday, excluding legal
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                                             effectiveness of the action ‘‘until                      language that applies in every state and              holidays. The telephone number for the
                                             judicial review is no longer pending or                  territory in the United States where EPA              Public Reading Room is (202) 566–1744,
                                             the EPA completes the reconsideration                    is the permitting authority. Therefore, to            and the telephone number for the OPP
                                             process.’’ 75 FR 27644. Since this action                the extent that this action is a ‘‘final              Docket is (703) 305–5805. Please review
                                             concludes the reconsideration                            action,’’ it is ‘‘nationally applicable’’             the visitor instructions and additional
                                             proceeding, and we have affirmed the                     within the meaning of CAA section                     information about the docket available
                                             legal consistency and policy                             307(b)(1).                                            at http://www.epa.gov/dockets.


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Document Created: 2018-11-15 04:00:41
Document Modified: 2018-11-15 04:00:41
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 action; lifting of administrative stay and announcement of effective date.
DatesThis action is effective on November 15, 2018.
ContactFor further general information on this action, contact Mr. Dave Svendsgaard, Office of Air Quality Planning and Standards (OAQPS), Air Quality Policy Division, U.S. EPA, Mail Code 504-03, 109 T.W. Alexander Drive, Research Triangle Park, NC 27711; by telephone at (919) 541-2380; or by email at [email protected]
FR Citation83 FR 57324 
RIN Number2060-AP80
CFR Citation40 CFR 51
40 CFR 52

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