## Support of the Definitions for Urbanized Area / Urban Cluster

& Regulatory Precedent in 40 CFR 63 Subparts HH

Issue Paper

Prepared for:

American Petroleum Institute 1220 L Street, NW Washington, DC 20005

Prepared by:

Innovative Environmental Solutions, Inc.

P.O. Box 177 Cary, IL 60013

May 2009 Rev 0May 2010

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EXECUTIVE SUMMARY The Clean Air Act (CAA) required EPA to identify hazardous air pollutants (HAPs) from area sources that present the greatest threat to public health in the largest number of urban areas and to develop a strategy to reduce these emissions. The CAA does not provide a definition of "urban". To spatially allocate emissions on an urban and rural basis, Census Bureau statistical data and classifications are relied upon. Urban/rural designations from the 1990 census data were referenced in the U.S. Environmental Protection Agency (EPA) National Air Toxics Program: The Integrated Urban Strategy (64 FR 38706, July 19, 1999). These definitions included “Urban-1” and “Urban-2” designations for areas. A key provision of the Urban Air Toxics Strategy (UATS) is that, per §112(d)(5), area source regulations can be addressed based on generally available control technology(GACT) standards that include work practices, rather than MACT, which is required for major sources. Subsequent to release of EPA’s UATS, new definitions for urban areas were developed after the 2000 census was completed. In the January 3, 2007 Final Rule to regulate area source Oil and Natural Gas Production facilities (ONG NESHAP), addressed gas dehydration equipment. EPA relied on data and definitions from Census 2000 to better represent the geographic distribution of oil and natural gas facilities, and did not use the “Urban-2” definition. EPA concluded that since the CAA does not define “urban”, the agency has discretion in differentiating between urban and rural areas. API agrees and does not believe that EPA is precluded from applying the improved Census 2000 approach which uses Urbanized Areas (UAs) and Urban Clusters (UCs). The ONG NESHAP did not address combustion equipment used in ONG production, and those sources are to be addressed under the respective combustion standard (e.g., reciprocating internal combustion engines (RICE), boilers). The UATS strategy document simply relied upon the common contemporary 1990 Census Bureau definitions, and there is no compelling reason to ignore subsequent improvements in the knowledge base. For example, outdated emission factors or emissions technology should not be used in a 2010 rule simply because it was the 1990’s point of reference for the UATS. The majority of area source gas-fired RICE are located at ONG production facilities. Thus, lacking a compelling reason for an alternative approach, consistent definitions should be used to designate an area as “rural” or “urban” for the ONG NESHAP and RICE NESHAP. The ONG NESHAP area source regulations made a concerted effort to address the geographic distribution of emission sources and properly considered source proximity to urban areas. API recommends that EPA use the identical definitions for area sources affected by the RICE NESHAP, as this represents the “best” available Census data and urban/rural classification technique and more appropriately designates a geographical area as urban or rural. Additionally, it would be confusing to EPA, state agencies and industry for dehydrators at a facility to be classified as rural under the Subpart HH definitions of UA/UC, while RICE at the same facility may be classified as urban under the UATS definitions of U1/U2. API estimates that the majority of the natural gas RICE would be designated as rural using the Oil and Gas NESHAP definitions of urban vs. rural (UA plus offset and UC). API bases this estimate on the fact that most natural gas RICE operate in the ONG industry and these units are collocated or sited in relative proximity to the gas dehydrators affected by the ONG NESHAP, 40 CFR Part 63May 2010

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Subpart HH. In the ONG NESHAP, EPA found that only 50 of the 2,222 affected area source dehydrators were located within urban areas (UA plus offset and UC, definitions detailed below). This white paper presents a discussion of the CAA background associated with area source regulations under the urban air toxics strategy and the progression of the Census Bureau urban/rural classification schemes. This white paper also addresses the regulatory precedent established in the ONG NESHAP, 40 CFR 63 Subpart HH, and the need to maintain regulatory consistency.

BACKGROUND Section 112(k) of the 1990 Clean Air Act (CAA) Amendments defines the required area source program and requirements. Under section 112(k)(3), EPA is required to develop a comprehensive strategy to control emissions of hazardous air pollutants (HAPs) from area sources in urban areas. EPA addressed this requirement through the promulgation of the National Air Toxics Program: The Integrated Urban Strategy (UATS) [64 FR 38706, July 19, 1999] that was intended to identify and address risks to the public in urban areas, which is principally an urban risk-driven requirement. The Act defines a “major source” as a stationary facility emitting  10 tons per year (TPY) of a single listed hazardous air pollutant (HAP) or  25 tons per year (TPY) of aggregate HAPs. An area source is any source of HAP that is not a major source. As part of the Strategy, EPA is required to identify categories and subcategories of sources of hazardous air pollutants (HAPs) in urban areas that pose a threat to human health. Specifically, the EPA must identify area sources of at least 30 HAPs that present the greatest threat to urban populations, and assure that sources that account for 90 percent or more of the aggregate emissions are subject to regulation. Importantly, the Act does not require these sources to be subject to the same level of regulation required for major sources (i.e. MACT standards), but specifically authorizes the Agency to meet this requirement by imposing management practices or other generally available control technology (GACT) standards. Key provisions of the UATS are outlined below. 1) Identify the 30 Worst HAPs . Subparagraph 112(k)(3)(B)(i) of the CAA requires EPA to “identify not less than 30 hazardous air pollutants which, as the result of emissions from area sources, present the greatest threat to public health in the largest number of urban areas.” 2) List the Area Sources representing at least 90 percent of the emissions of these 30 HAPs

. Paragraph 112(c)(3) of the CAA requires EPA to “list . . . area sources to ensure that area sources representing 90 percent of the area source emissions of the 30 hazardous air pollutants that present the greatest threat to public health in the largest number of urban areas are subject to regulation under this section.” 3) Regulate the Listed Area Sources . Paragraphs 112(c)(3) and 112(k)(3)(B)(ii) both require that the listed area sources are to be subject to standards pursuant to subsection 112(d). Clean Air Act section 112(k)(1) states the purpose of area source standards:

3The Congress finds that emissions of hazardous air pollutants from area sources may individually, or in the aggregate, present significant risks to public health in urban areas

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Considering the large number of persons exposed and the risks of carcinogenic and other adverse health effects from hazardous air pollutants, ambient concentrations characteristic of large urban areas should be reduced to levels substantially below those currently experienced. It is the purpose of this subsection to achieve a substantial reduction in emissions of hazardous air pollutants from area sources and an equivalent reduction in the public health risks associated with such sources including a reduction of not less than 75 per centum in the incidence of cancer attributable to emissions from such sources.” [emphasis added] The statutory language in Section 112(k) requires the identification of HAPs that are presenting a public health threat in urban areas. However, the CAA does not provide a definition of "urban". To spatially allocate emissions on an urban and rural basis, Bureau of the Census statistical data were used. Although EPA's UATS acknowledges that the CAA provides the discretion to implement either MACT or GACT to satisfy CAA urban area source air toxic emission standards, it recognizes that EPA "expect[s] most sources will be subject to GACT standards developed in accordance with section 112(d)(5)." UATS at 38723. All RICE will be regulated by either the MACT or GACT standard under EPA’s current regulatory concepts.

1990 CENSUS BUREAU URBAN/RURAL CLASSIFICATION The Bureau of the Census has designated urban and rural areas within every county in the United States. The criteria used include population density and total population. Urban/rural designations from 1990 census data were referenced in the U.S. Environmental Protection Agency (EPA) National Air Toxics Program: The Integrated Urban Strategy (64 FR 38706, July 19, 1999). Using population data and urban/rural designations for 1990, every county in the United States was classified as one of the following categories:
Urban-1 (U1) counties which include a metropolitan statistical area (MSA) with a population greater than 250,000;
Urban-2 (U2) counties that do not include a MSA with a population greater than 250,000, but the Bureau of the Census designates more than 50 percent of the county population as "urban." These counties include areas which comprise one or more central places and adjacent densely settled surrounding urban fringe. The urban fringe consists of continguous territory having a density of at least 1,000 persons per square mile. Rural (R) counties that do not include a MSA with a population greater than 250,000, and the Bureau of the Census designates more than 50 percent of the county population as "rural." If any part of a county contained an Urban-1 area, then the whole county was classified as Urban-1. For all remaining counties, if greater than 50 percent of the population was classified as rural, then that county was considered Rural. Counties not designated as Urban-1 or Rural were classified as Urban-2. The Urban-1 and Urban-2 counties were combined and listed as urban.May 2010

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EVOLUTION OF URBAN/RURAL AREA CLASSIFICATION SCHEME BASED ON THE 2000 CENSUS Before each decennial census, the Census Bureau reviews the criteria for delineating urban areas and extended cities. The Census Bureau updated the 1990 definitions of urbanized areas using the criteria published in the Federal Register on March 15, 2002 (67 FR 11663). These Census 2000 updates are more refined and include significant changes in the universe of urbanized areas compared to those defined based on the 1990 Census and criteria, especially for areas that previously were within the Urban-2 category. The 2000 Census refined the 1990 urbanized areas (UAs) by incorporating urban clusters (UCs). Urbanized areas and urban clusters combined constitute "urban areas”. The Census Bureau delineates UA’s/UC’s to provide a better separation of urban and rural territory, population, and housing. The urban cluster concept, which further delineates an urbanized area, was not created until a decade after Congress had used the term “urban areas” in the CAA Amendments of 1990. However, as definitions are refined and improved, the CAA does not preclude the use of updated definitions because it does not define “urban”. The Federal Register Notice documenting Qualifying Urban Areas for Census 2000 (Federal Register / Vol. 67, No. 84 / Wednesday, May 1, 2002 / Notices) contains a list of:

• 2000 Census urban areas (UAs) and their populations;

• New UAs based on Census 2000;

• 1990 census UAs that were combined or split;

• 1990 census UAs that have had significant changes; and

• 1990 census UAs that have had name changes. For Census 2000, the Census Bureau classifies as "urban" all territory, population, and housing units located within an urbanized area (UA) or an urban cluster (UC). It delineates UA and UC boundaries to encompass densely settled territory, which consists of:

• core census block groups or blocks that have a population density of at least 1,000 people per square mile and

• surrounding census blocks that have an overall density of at least 500 people per square mile PRIMARY ADVANCEMENTS OF THE CENSUS 2000 URBAN AREA CRITERIA The following paragraphs provide a summary of the most significant differences between the 1990 census and Census 2000 urban criteria and illustrate the improvements and refinements that occurred during the 10 year period. DzThese criteria revisions over the years reflect the Census Bureau’s desire to improve the classification of urban and rural population by refining the criteria to take advantage of improvements in data collection and reporting methodologies as well as advancements in technology” (66 FR 17018). Since the 1990 census, significant technological advancements, together with already existing nationwide block numbering (which was initiated with the 1990 census), has made it possible to classify urban and rural territory on a uniform basis. The following provides a summary of the most important differences between the 1990 census UAMay 2010

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criteria and the urban area criteria for Census 2000. These summaries were taken from the US Census Bureau website: http://www.census.gov/geo/www/ua/uac2k_90.html :

• Technological advances in the field of geographic information systems (GIS) during the 10 years period between 1990 and 2000 allowed the Census Bureau to automate the urban and rural delineation process for the first time in Census Bureau history.

• The Census Bureau did not automatically recognize previously existing UA territory as part of the Census 2000 UA delineation process. There was no "grandfathering" of areas that qualified based on the results of earlier censuses.

• For Census 2000, the Census Bureau used the territory designated as UCs, rather than the entity of places that have a specified population, to determine the total urban population outside of UAs. Previously, place boundaries generally were used to determine the urban or rural classification of territory outside of UAs. With the creation of UCs, place boundaries became "invisible" when creating and classifying the cores of densely settled population agglomerations.

• The extended city criteria were modified extensively for Census 2000. Any place that is divided by a UA or UC boundary is referred to as an extended place. Previously, the extended city criteria included only sparsely settled territory within incorporated places and relied on density and area measurements to determine whether or not portions of an incorporated place were excluded from the UA. The new urban area criteria, based solely on the population density of census Block Groups (BGs) and census blocks, provide a continuum of urban areas for Census 2000.

• The Census 2000 criteria increased the allowable jump distance from 1.5 to 2.5 miles to appropriately recognize urbanization spread over broader areas. The increase in the jump distance was proposed as a means to recognize improvements in the transportation network, and the associated changes in development patterns that reflect these improvements, coupled with governmental influence to provide additional "green space" between developments.

• New criteria enabled the Census Bureau to use an automated methodology that reduced the chances of incorrectly classifying sparsely settled territory along the fringe of a core as urban. For Census 2000, the area of an indentation in qualifying territory had to be four times the area of a circle with a diameter equal to the closure line of the indentation for the territory to be included in a UA or UC. Previously, an indentation only had to be two times longer than the distance across the mouth.

• The uninhabitable jump criteria were revised for Census 2000 to be more restrictive regarding the types of terrain over which an uninhabitable jump could be made. For Census 2000, only water, military reservations, national parks, and qualifying floodplains were deemed to be "exempted territory," which replaced undevelopable as the term applied to these areas.

• The UA central place and title criteria no longer follow standards predefined by other federal agencies. Previously, many UA central places and titles were based on metropolitan area (MA) central city definitions set forth by the Office of Management and Budget.May 2010

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The new MA criteria will be, and always have been, applied later than the UA criteria. To avoid creating a situation in which the 2000 UA or UC central places and titles would need to follow MA central city definitions that were established in the early 1990s, the Census 2000 criteria create an objective, zero-based approach.
REGULATORY PRECEDENT & NEED FOR CONSISTENCY In developing the area source ONG NESHAP, EPA requested comment on retaining older definitions or integrating newer definitions for urban areas. The Census 2000 improvements were thoughtfully considered and incorporated into the Final Rule. Thus, the NESHAP for area source dehydrators (40 CFR 63, Subpart HH) provides regulatory precedent for consideration. The July 19, 1999 Notice (64 FR 38724), the National Air Toxics Program, Integrated Urban Strategy indicates that, "For those area source categories where the standards only apply in urban areas, we'll look to the consolidated metropolitan statistical area (C/MSA) boundaries as a starting point to define the urban area. Although we used the urban 1 and urban 2 definitions for the development of the inventory to support the HAPs and source category analysis, we believe the C/MSAs are more appropriate for defining applicability of area source standards because the C/MSAs better reflect the nature of population density, commercial development, area growth, and air emissions that represent urban areas. Although we generally believe that urban areas are those C/MSAs with populations of more than 50,000[emphasis added], we recognize that the appropriate area in which standards should apply may vary among area source categories. Consequently, we believe the determination of the area in which standards will apply should be made separately for each source category.” Although the Urban Strategy indicates that the area of applicability should be considered for each source category, it also includes a logical discussion of what constitutes an urban area – and notes that a population of more than 50,000 is appropriate. This is consistent with the Census 2000 approach that stated an urbanized area (UA) will consist of a densely settled core of census block groups (BGs) and census blocks 2 that meet minimum population density requirements, along with adjacent densely settled surrounding census blocks that together encompass a population of at least 50,000 people. Pertinent definitions from 40 CFR Part 63 Subpart HH - National Emission Standards for Hazardous Air Pollutants From Oil and Natural Gas Production Facilities follow: § 63.761 Definitions UA plus offset and UC is defined as the area occupied by each urbanized area, each urban cluster that contains at least 10,000 people, and the area located two miles or less from each urbanized area boundary. Urban-1 County is defined as a county that contains a part of a Metropolitan Statistical Area with a population greater than 250,000, based on the Office of Management and Budget'sMay 2010

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Standards for defining Metropolitan and Micropolitan Statistical Areas (December 27, 2000), and Census 2000 Data released by the U.S. Census Bureau.
Urbanized area refers to Census 2000 Urbanized Area, which is defined in the Urban Area Criteria for Census 2000 (March 15, 2002). Essentially, an urbanized area consists of densely settled territory with a population of at least 50,000 people.
Urban cluster refers to a Census 2000 Urban Cluster, which is defined in the Urban Area Criteria for Census 2000 (March 15, 2002). Essentially, an urban cluster consists of densely settled territory with at least 2,500 people but fewer than 50,000 people. The final Subpart HH requirements for area sources allow an owner or operator of an affected unit to determine whether the source is located within an urban area based on proximity to an "urban area" or an "urban cluster". Proximity is based on the U.S. Census Bureau's definition of urban area, urban cluster and most current decennial census data (i.e. TEG dehydrators located in Urbanized Areas (UA), plus a two-mile buffer zone (Offset) around each Urbanized Area, plus Urban Clusters (UC) containing 10,000 people). As is appropriate for an area source rule with emphasis on urban impacts, requirements and implementation deadlines differ depending upon location, and “non-urban” area source dehydrators comply via a management practice in all cases. U.S. Census Bureau defines Urban Cluster as an urban area containing 2,500 persons. Accordingly, the U.S. Census Bureau does not provide maps for Urban Cluster data in the “EPA 10,000 person” format. EPA, however, developed regulatory guidance documents to identify ONG sources in the UA plus offset UC areas. See the link Locating Urban Areas on Census Websitesand other EPA guidance information as found on http://www.epa.gov/ttn/atw/oilgas/oilgaspg.html. Subpart HH was developed by the EPA Sector Policies and Programs division responsible for the RICE NESHAP and its conclusions should have bearing on the 40 CFR Part 63, Subpart ZZZZ Proposed Rule. Because of the implication for affected sources, rule consistency should be retained unless there is a compelling basis for an alternative approach. For the area source RICE NESHAP, a determination based on urban proximity could be implemented for RICE area sources and submitted in the initial notification. API believes that the vast majority of the natural gas-fired and diesel engines used for oil and gas E&P will be designated as rural using the Oil and Gas NESHAP definitions of urban vs. rural.

SUMMARY In summary, the Census Bureau evolution of the urban / rural classification scheme has exploited Geographic Information System (GIS) technology and leveraged population data to improve and refine definitions over time. API does not believe that EPA is limited to the narrow outdated definitions of U1 and U2 from the 1990 Census approach referenced in the UATS, instead the UATS recognized that urban areas would evolve by proposing that “the area in which standards will apply should be made separately for each source category.” The UATS simply relied upon the common contemporary Census Bureau definitions, and there is no compelling reason to ignore subsequent improvements in the knowledge base. For example, outdated emission factors or emissions technology should not be used in a 2010 rule simply because it was the 1990’s point of reference for the UATS. Similarly, the best information available from Census 2000 should be used to differentiate rural from urban areas.May 2010

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Further, the reliance on the Census 2000 approach in 40 CFR 63 Subpart HH illustrate the need for consistency and continued advancements including better definitions. For example, relying on the 1990 Census classification scheme and urban-1 / urban-2 definitions would classify many counties in oil and natural gas production locations like Wyoming as “urban”. To further illustrate this point, based upon the urban-2 definition, many areas in remote western and mountain-west regions would be classified as urban, with urban designation applying to: • 14 of 23 counties in Wyoming; • 20 of 33 counties in New Mexico; • 10 or 17 counties in Nevada; and • 17 of 56 counties in Montana An urban designation for the majority of the counties within these states is not a reasonable classification of the area. This illustrates and highlights the deficiencies associated with U1 and U2 categorization and further supports the rationale for improving the classification approach in the Census 2000. API estimates that the vast majority of the natural gas RICE would be designated as rural using the Oil and Gas NESHAP definitions of urban vs. rural (UA plus offset and UC). API bases this estimate on the fact that most natural gas RICE are operated in the O&G industry and these units are parallel to the gas dehydrators in the ONG GACT, Subpart HH. In the ONG GACT, EPA found that only 50 of the 2,222 affected dehydrators were located within urban areas (UA plus offset and UC).