UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

SEP 22 2009 

MEMORANI>VM 

SUBJECT: 

FROM: 

TO: 

Withdrawal of Sour 

Gina McCarthy 

Assistant dmi v 

Regional Admi 

Regions I - X 

eterminations for Oil and Gas Industries 

OFFICE OF 

AIR AND RADIATION 

The purpose of this memorandum is to communicate to you that I am 

withdrawing a recent memo concerning the application of Clean Air Act permitting 

programs to the oil and gas industri es. On January 12, 2007, Acting Assistant 

Administrator William Wehrum issued a guidance memorandum entitled "Source 

Determinations for Oil and Gas Industri es." ] The stated purpose of the 2007 guidance 

was to assist permitting authorities in making major stationary source determinations for 

the oil and gas industries. The memorandum did not mandate application of a particular 

approach but instead was a non-binding policy statement that set forth a possible 

methodology for making source determinations in these industries. The memorandum 

aimed to simplify the process for determining when permitting authoriti es should 

consider two or more pollutant-emitting activities in these industries to be a single 

stationary source for purposes of the New Source Review (NSR) and Title V permitting 

programs. Today, by this memorand um, I am withdrawing this previously issued 

guidance and instead re-emphasizing the fundamental criteria for making source 

determinations as specified in our existing NSR regul ations, expl ained in the preamble to 

our 1980 promulgation of those regulations and demonstrated through historical practice 

in making source determinations in these programs. 

r recognize that source determinations within the oil and gas industries will 

continue to be complex, involving in some cases in-depth analyses of ownership and 

operational issues. The previous memorandum attempted to simplify this analysis by 

focusing on one of the three regulatory criteria for source detenninations - whether 

activities are "adjacent or contiguous." It emphasized proximity in addressing this 

criterion. In practice, however, I find indi vidual facts warrant a closer examination of all 

three criteria identified in those regulations to arrive at a reasoned decision, and therefore, 

the simplified approach provided in the memorandum should not be relied on by 

permitting authorities as a sufficient endpoint in the decision-making process. 

'See EPA docket EPA-HQ-OAR-2007-0629. 

Inlernet Address (URL) • hltp:ffwww.epa.gov 

Recycled/Recyclable _ Printed with Vegetable Oil Based Inks on 100% Postconsumer. Process Chlorine Free Recycled Paper 
Permitting authorities should therefore rely foremost on the three regulatory 

criteria for identifying emissions activities that belong to the same "building," "structure," 

"facility," or "installation. " These are (1) whether the activities are under the control of 

the same person (or person under common control); (2) whether the activities are located 

on one or more contiguous or adjacent properties; and (3) whether the activities belong to 

the same industrial grouping. 40 C.F .R. 52.21 (b)(6). In applying these criteria, 

permitting authorities should also remain mindful of the explanation we provided in the 

1980 preamble. See 45 FR 52676, 52694-95 (August 7,1980). In addition, over the past 

two decades, Regional Offices have applied these regulatory criteria in making source 

determinations in EPA permitting actions, and in providing guidance to other permitting 

authorities making such detenninations (available al 

hIt p ;/lwww.epa.gov/region07IprogramslaNcVajrlpoljcylsearch.hlm).Co11 ect i ve I y, these 

numerous case-by-case determinations illustrate the kind of reasoned decision-making 

that is necessary to justify adequately a permitting authority's source determination 

decision. Nonetheless, these case-by-case source determinations represent highly factspecific decisions, and while informative of the necessary analytical process, no single 

determination can serve as an adequate justification for how to treat any other source 

determination for pollutant-emitting activities with different fact-specific circumstances. 

I agree with the previous memorandum's conclusion that whether or not a 

permitting authority should aggregate two or more pollutant-emitting activities into a 

single major stationary source for purposes of NSR and Title V remains a case-by-case 

decision in which permitting authorities retain the discretion to consider the factors 

relevant to the specifi c circumstances of the permitted activities. After conducting the 

necessary analysis, it may be that, in some cases, "proximity"may serve as the 

overwhelming factor in a permitting authority's source determination decision. However, 

such a conclusion can only be justified through reasoned decision making after 

examining whether other factors are relevant to the analysis. 

Accordingly, I withdraw the guidance memorandum dated January 12, 2007, 

entitled "Source Determinations for Oil and Gas Industries," and direct permitting 

authorities to the three criteria for making source determinations specified in the existing 

NSR regulations. Regional Offices should continue to review and comment on source 

determinations to assure that permitting authorities conduct fully-reasoned source 

determinations that remain consistent with existing regulatory requirements and historical 

permitting practice.