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

1North American Industry Classification System 

(NAICS). 

ENVIRONMENTAL PROTECTION 

AGENCY 

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

[EPA–HQ–OAR–2013–0685; FRL–9931–97– 

OAR] 

RIN 2060–AS06 

Source Determination for Certain 

Emission Units in the Oil and Natural 

Gas Sector 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: The U.S. Environmental 

Protection Agency (EPA) is proposing to 

clarify the term ‘‘adjacent’’ in the 

definitions of: ‘‘building, structure, 

facility or installation’’ used to 

determine the ‘‘stationary source’’ for 

purposes of the Prevention of 

Significant Deterioration (PSD) and 

Nonattainment New Source Review 

(NNSR) programs and ‘‘major source’’ in 

the title V program as applied to the oil 

and natural gas sector. The EPA has 

previously issued guidance on how to 

assess ‘‘adjacency’’ for this industry, but 

the use of the guidance has been 

challenged, resulting in uncertainty for 

the regulated community and for 

permitting authorities. The EPA is 

proposing to clarify how properties in 

the oil and natural gas sector are 

determined to be adjacent in order to 

assist permitting authorities and permit 

applicants in making consistent source 

determinations for this sector. In this 

action, the EPA is proposing two 

options for determining whether two or 

more properties in the oil and natural 

gas sector are ‘‘adjacent’’ for purposes of 

defining the ‘‘stationary source’’ in the 

PSD and NNSR programs, and ‘‘major 

source’’ for the title V program (referred 

to collectively as ‘‘source’’). The 

preferred option would define 

‘‘adjacent’’ for the oil and natural gas 

sector in terms of proximity. The EPA 

is co-proposing and taking comment on 

an alternative option to define 

‘‘adjacent’’ in terms of proximity or 

functional interrelatedness. 

DATES: Comments. Comments must be 

received on or before November 17, 

2015. 

Public Hearing. The EPA will hold 

public hearings on the proposal. Details 

will be announced in a separate 

document. 

ADDRESSES: Comments. Submit your 

comments, identified by Docket ID No. 

EPA–HQ–OAR–2013–0685, to the 

Federal eRulemaking Portal: http://

www.regulations.gov. Follow the online 

instructions for submitting comments. 

Once submitted, comments cannot be 

edited or withdrawn. The EPA may 

publish any comment received to its 

public docket. Do not submit 

electronically any information you 

consider to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

If you need to include CBI as part of 

your comment, please visit http://

www.epa.gov/dockets/comments.html 

for instructions. Multimedia 

submissions (audio, video, etc.) must be 

accompanied by a written comment. 

The written comment is considered the 

official comment and should include 

discussion of all points you wish to 

make. For additional submission 

methods, the full EPA public comment 

policy, and general guidance on making 

effective comments, please visit http:// 

www.epa.gov/dockets/comments.html. 

For additional instructions on 

submitting comments, go to the 

SUPPLEMENTARY INFORMATION section of 

this document. 

FOR FURTHER INFORMATION CONTACT: For 

further general information on this 

rulemaking, contact Ms. Cheryl Vetter, 

Office of Air Quality Planning and 

Standards (C504–03), U.S. 

Environmental Protection Agency, by 

phone at (919) 541-4391, or by email at 

vetter.cheryl@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

A. Does this proposal apply to me? 

Entities potentially affected directly 

by this proposal include owners and 

operators of sources of new and 

modified oil and gas sector operations. 

Such entities are expected to be in the 

groups indicated below. In addition, 

state, local and tribal governments may 

be affected by the rule if they update 

state rules to adopt these changes. 

Industry group NAICS Code1

Oil and Gas Extraction .............................................................................................................................................................. 21111. 

Crude Petroleum and Natural Gas Extraction .......................................................................................................................... 211111. 

Natural Gas Liquid Extraction ................................................................................................................................................... 211112. 

Drilling Oil and Gas Wells ......................................................................................................................................................... 213111. 

Support Activities for Oil and Gas ............................................................................................................................................. 213112. 

Natural Gas Distribution ............................................................................................................................................................ 221210. 

Pipeline Distribution of Crude Oil .............................................................................................................................................. 486110. 

Pipeline Distribution of Natural Gas .......................................................................................................................................... 486210. 

Federal Government .................................................................................................................................................................. May Be Affected. 

State/Local/Tribal Government .................................................................................................................................................. May Be Affected. 

B. What should I consider as I prepare 

my comments for the EPA? 

When submitting comments, 

remember to: 

• Identify the rulemaking by docket 

number and other identifying 

information (subject heading, Federal 

Register date and page number). 

• Follow directions—The agency may 

ask you to respond to specific questions 

or organize comments by referencing a 

Code of Federal Regulations (CFR) part 

or section number. 

• Explain why you agree or disagree; 

suggest alternatives and substitute 

language for your requested changes. 

• Describe any assumptions and 

provide any technical information and/ 

or data that you used. 

• If you estimate potential costs or 

burdens, explain how you arrived at 

your estimate in sufficient detail to 

allow for it to be reproduced. 

• Provide specific examples to 

illustrate your concerns, and suggest 

alternatives. 

• Explain your views as clearly as 

possible, avoiding the use of profanity 

or personal threats. 

• Make sure to submit your 

comments by the comment period 

deadline identified. 

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

2 In this preamble, the term ‘‘we’’ and ‘‘our’’ refers 

to the EPA. 

3The four-digit SIC code was the only code 

system in use at the time our rules were developed. 

This classification system has since been replaced 

by the six-digit NAICS, which was developed with 

Canada and Mexico, and is used for classifying 

North American businesses. While the SIC codes 

are no longer updated, the United States 

Department of Labor’s Occupational Safety and 

Health Administration still maintains the list of SIC 

codes for reference. 

C. Where can I get a copy of this 

document and other related 

information? 

In addition to being available in the 

docket, an electronic copy of this action 

will be posted at http://www.epa.gov/

airquality/oilandgas/actions.html. 

D. How is this document organized? 

The information presented in this 

document is organized as follows: 

I. General Information 

A. Does this proposal apply to me? 

B. What should I consider as I prepare my 

comments for the EPA? 

C. Where can I get a copy of this document 

and other related information? 

D. How is this document organized? 

II. Statutory, Regulatory and Policy 

Background for Proposal 

A. Statutory and Regulatory Background 

B. How has the EPA applied the statutory 

and regulatory definitions? 

C. Oil and Natural Gas Sector 

D. What are the air emissions resulting 

from the oil and natural gas sector? 

E. How does the EPA regulate air emissions 

from the oil and natural gas sector? 

F. How has the EPA defined the source for 

the oil and natural gas sector previously? 

G. What approaches has the EPA taken 

recently regarding implementation of 

NSR and title V permitting for oil and 

natural gas sector sources? 

H. What is the purpose of this proposed 

action? 

I. Policy Discussion 

J. Why is the EPA proposing this action at 

this time? 

K. What is the effect of this proposed 

rulemaking on other industries? 

L. What is the effect of this proposed 

rulemaking on permitting authorities? 

III. What are the options that the EPA is 

considering? 

A. Define Source Based on Proximity 

(Similar to the NESHAP) 

B. Define Source To Include Exclusively 

Functionally Interrelated Equipment 

C. Impacts of the Options on Air Permitting 

D. Proposal is Limited to Onshore Oil and 

Gas Operations 

IV. Environmental Justice Considerations 

V. Statutory and Executive Order Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132: Federalism 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

and Safety Risks 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

I. National Technology Transfer and 

Advancement Act 

J. Executive Order 12898: Federal Actions 

To Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

K. Determination Under Section 307(d) 

Statutory Authority 

II. Statutory, Regulatory and Policy 

Background for Proposal 

A. Statutory and Regulatory Background 

The major New Source Review (NSR) 

programs found in parts C and D of Title 

I of the Clean Air Act (CAA or Act) are 

preconstruction review and permitting 

programs that apply to new and 

modified major stationary sources of air 

pollutants subject to regulation under 

the Act. In areas where air quality does 

not meet the primary or secondary 

National Ambient Air Quality Standards 

(NAAQS) for a given pollutant and in 

the ozone transport region (OTR), which 

includes states in the Northeast and 

Mid-Atlantic regions, the program is 

implemented under part D of title I of 

the Act. This is called the 

‘‘nonattainment’’ NSR (NNSR) program. 

In areas that meet the NAAQS, or 

‘‘attainment’’ areas, or where we 2

cannot determine whether those 

standards are met, or ‘‘unclassifiable’’ 

areas, the requirements under part C of 

title I of the Act apply. This program is 

called the PSD program. The regulations 

for these two NSR programs are found 

in 40 CFR 51.165, 51.166, 52.21, 52.24 

and part 51, appendix S. 

The NSR permitting programs are 

primarily implemented by state and 

local permitting authorities either 

through programs in their approved 

State Implementation Plans (SIPs) or 

through delegation of the federal 

program by the EPA. The EPA 

implements the federal PSD program 

and the NNSR program directly in 

reservation areas of Indian country and 

non-reservation areas of Indian country 

over which a tribe or the EPA has 

demonstrated that a tribe has 

jurisdiction, unless a tribe has 

developed a Tribal Implementation Plan 

(TIP). The EPA may also implement the 

federal PSD program directly in areas 

where the state or local area has not 

developed a SIP-approved program or 

has not requested delegation of the 

program by the EPA. States are also 

required to have legally enforceable 

procedures that will allow them to 

prevent the construction or modification 

of a source that will interfere with 

attainment or maintenance of a NAAQS. 

In addition to the major source 

permitting programs, this is typically 

accomplished through a state or local 

‘‘minor’’ new source permitting 

program. The EPA implements a minor 

source permitting program in all 

reservation areas of Indian country, 

unless a tribe has developed a TIP and 

in any non-reservation areas of Indian 

country for which a tribe, or the EPA 

acting in the tribe’s place, has 

demonstrated that the tribe has 

jurisdiction. 

The NSR program applies to new and 

modified stationary sources of 

emissions. The CAA generally defines 

the term ‘‘stationary source’’ as ‘‘any 

source of an air pollutant’’ except those 

emissions from certain mobile sources 

or engines under CAA section 216 [CAA 

section 302(z)]. The Act also defines 

some other terms that form the basis of 

specific NSR programs. So, for example, 

the PSD program requires a 

preconstruction permit for any ‘‘major 

emitting facility’’ constructed after a 

particular date [CAA section 164(a)], 

and defines a ‘‘major emitting facility’’ 

as a ‘‘stationary source’’ emitting or with 

the potential to emit more than a certain 

amount of air pollutants [CAA section 

169(1)]. 

Adhering to the statutory language in 

CAA section 111(a)(3), we have defined 

the term ‘‘stationary source’’ to mean 

‘‘any building, structure, facility, or 

installation which emits or may emit a 

regulated NSR pollutant’’ [40 CFR 

52.21(b)(5); 40 CFR 51.165(a)(1)(i); 40 

CFR 51.166(b)(5)]. We have then further 

defined the four statutory terms 

‘‘building, structure, facility, or 

installation’’ collectively in our NSR 

regulations to mean ‘‘all of the 

pollutant-emitting activities which 

belong to the same industrial grouping, 

are located on one or more contiguous 

or adjacent properties, and are under the 

control of the same person (or persons 

under common control),’’ where the 

‘‘same industrial grouping’’ refers to the 

two-digit Standard Industrial 

Classification code [40 CFR 52.21(b)(6); 

40 CFR 51.165(a)(1)(ii); 40 CFR 

51.166(b)(6)].3 These three regulatory 

factors: (1) Same industrial grouping; (2) 

location on contiguous or adjacent 

properties; and (3) under the control of 

the same person or persons must be 

evaluated on a case-by-case basis for 

each permitting decision. 

In addition to the pre-construction 

permitting requirements of the NSR 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

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

4Riva, Steven C. ‘‘Alcoa Messena Modernization 

Project and Request for a Single Source 

Determination.’’ March 9, 2009. EPA Region 7 Air 

Program New Source Review Program Policy & 

Guidance Index available at http://www.epa.gov/

region07/air/nsr/nsrmemos/alcoany.pdf and in the 

docket for this rulemaking. 

program, title V of the CAA also 

requires a ‘‘major source’’ to obtain an 

operating permit, known as a title V 

permit [CAA section 501(2); CAA 502]. 

The title V definition of major source 

refers to the definitions in other sections 

of the Act, including the definition of 

major source for hazardous air 

pollutants (CAA section 112), the 

general CAA definition of major 

stationary source (CAA section 302) and 

the definition of major stationary source 

under the NNSR program. Each of these 

programs set different numerical 

emissions thresholds at which 

permitting requirements apply, which 

then become the basis for the major 

source determination in the title V 

program. 

Our operating permit regulations 

define major source as ‘‘any stationary 

source (or group of stationary sources 

that are located on one or more 

contiguous or adjacent properties, and 

are under common control of the same 

person (or persons under common 

control)) belonging to a single major 

industrial grouping . . .’’ (40 CFR 70.2, 

71.2). As in the NSR programs, we have 

defined industrial grouping to refer to 

the two-digit SIC code (40 CFR 70.2, 

71.2). Many state and local permitting 

authorities have approved title V 

permitting programs that have adopted 

similar definitions. 

B. How has the EPA applied the 

statutory and regulatory definitions? 

Source owner/operators and 

permitting authorities assess the three 

regulatory factors—same industrial 

grouping, location on contiguous or 

adjacent property, and under common 

control—on a case-by-case basis to 

determine which pollutant-emitting 

activities should be included as part of 

a single source when determining 

applicability of the NSR and title V 

permitting requirements. In the original 

promulgation and later application of 

these three factors, we have been 

mindful of the direction the D.C. Circuit 

Court of Appeals provided that the 

‘‘source’’ for permitting purposes should 

comport with the ‘‘common sense 

notion of a plant’’ (45 FR 52694, August 

7, 1980 citing Alabama Power v. Costle). 

In the Alabama Power decision, the 

Court said that EPA cannot treat 

contiguous and commonly owned units 

as a single source unless they ‘‘fit within 

the four statutory terms . . .’’ (i.e., the 

terms building, structure, facility and 

installation). The Court said that we 

should ‘‘. . . provide for the 

aggregation, where appropriate, of 

industrial activities according to 

considerations such as proximity and 

ownership.’’ Alabama Power Co. v. 

Costle, 636 F. 2d 323, 397 (D.C. Cir. 

1979). Examples of the case-by-case 

determinations made by the EPA, or by 

permitting authorities with the EPA’s 

input, applying these principles over 

several decades of NSR permitting are 

available at http://www.epa.gov/

region07/air/nsr/nsrindex.htm. 

The EPA later promulgated the title V 

major source definition found at 40 CFR 

70.2 (57 FR 32250, July 21, 1992) and 

71.2 (61 FR 34202, 34210, July 1, 1996). 

Not only were these definitions 

consistent with each other, but EPA was 

also clear that the language and 

application of the title V definition was 

to be consistent with the language and 

application of the PSD definition 

contained in section 52.21 (61 FR 

34210, July 1, 1996). Examples of caseby-case source determinations made by 

the EPA, or by permitting authorities 

with the EPA’s input, that apply the title 

V definitions are available at http://

www.epa.gov/region7/air/title5/

t5index.htm. 

Reviewing both the NSR and title V 

guidance regarding source 

determinations, it is clear that we have 

used the term ‘‘contiguous or adjacent’’ 

to mean that the land associated with 

the source (i.e., building, structure, 

facility or installation) is connected to 

(i.e., contiguous) or nearby (i.e., 

adjacent) another source. In response to 

the Alabama Power decision, the EPA 

promulgated the 1980 PSD rule, 

including the definitions used to 

determine the scope of the source for 

permitting purposes (45 FR 52676, 

August 7, 1980). We explained that the 

3-part test (same industrial grouping, 

location on contiguous or adjacent 

property, and under common control) 

would comply with the court decision 

by reasonably comporting with the 

purposes of the PSD program, 

approximating the common sense 

notion of a plant, and avoiding 

aggregating pollutant-emitting activities 

that would not fit within the ordinary 

meaning of building, structure, facility 

or installation (45 FR at 52694, August 

7, 1980). In so doing, we considered but 

chose not to add a fourth factor or 

‘‘functional interrelationship’’ test to the 

criteria for defining a source, as at that 

time, we believed that such a test would 

‘‘embroil[] the Agency in numerous 

fine-grained analyses’’ (45 FR 52695, 

August 7, 1980). In the same 

rulemaking, we said that we did not 

intend ‘‘source’’ to include activities 

that are many miles apart along 

something like a pipeline or 

transmission line as a single source, but 

also noted that we were ‘‘unable to say 

precisely at this point how far apart 

activities must be in order to be treated 

separately’’ (45 FR 52695, August 7, 

1980). 

Even though our regulations use the 

term ‘‘adjacent,’’ they do not define 

‘‘adjacent.’’ Similarly, even though the 

EPA’s historic interpretation is that 

‘‘adjacent’’ means ‘‘nearby,’’ neither our 

regulations nor our historic 

interpretations set a specific distance 

that we would consider ‘‘nearby.’’ Over 

the years, the EPA has considered both 

the distance between two or more 

sources and whether they share an 

operational dependence or functional 

interrelatedness to determine whether 

they are ‘‘adjacent.’’ Even though our 

regulations do not explicitly define 

‘‘adjacent,’’ we have provided policy 

interpretations of ‘‘adjacency’’ over time 

in the context of individual permitting 

actions many times because we were 

asked by permitting authorities to 

advise them on how to define a source 

within a specific permitting action. As 

is the case for most permitting-related 

decisions, these determinations were 

made on a case-by-case basis, 

considering the specific facts in each 

instance. In many of these cases and as 

explained in the examples below, we 

cited the principle of the ‘‘common 

sense notion of a plant’’ in making a 

determination regarding the scope of the 

source. 

In one example, we determined that 

two aluminum smelting operations 

within the same SIC code (3334), 

located approximately 3.4 miles apart 

and commonly owned by Alcoa, should 

be considered a single source for 

purposes of NSR applicability. Alcoa 

requested confirmation of this single 

source determination after it purchased 

one of the plants from another company, 

allowing both operations to share 

common control and management as 

well as a single SIC code. The EPA 

determined that the two operations 

should be considered adjacent because 

of the shared materials and personnel 

and the company’s assertion that the 

two plants would be operated as one 

facility.4

In one case specific to the oil and 

natural gas sector, the EPA determined, 

in a letter issued by EPA Region 5 to 

Summit Petroleum Corporation, that an 

oil and gas sweetening plant and 

approximately 100 oil and gas wells 

located within the boundaries of the 

Saginaw Chippewa Band’s Isabella 

Reservation in Michigan were a single 

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

5Newton, Cheryl. ‘‘Summit Petroleum 

Corporation Single Source Determination.’’ October 

18, 2010. EPA Region 7 Air Program New Source 

Review Program Policy & Guidance Index available 

at http://www.epa.gov/region07/air/nsr/nsrmemos/

singler5.pdf and in the docket for this rulemaking. 

6 Videtich, Callie. ‘‘BP American Production 

Company’s Florida River Compression Facility 

Single Source Determination.’’ October 18, 2010. 

EPA Region 7 Air Program New Source Review 

Program Policy & Guidance Index available at 

http://www.epa.gov/region07/air/nsr/nsrmemos/

singler8.pdf and in the docket for this rulemaking. 

The Environmental Appeals Board (EAB) docket for 

CAA Appeal No. 10–04 is available at http://

yosemite.epa.gov/oa/EAB_Web_Docket.nsf/

77355bee1a56a5aa8525711400542d23/2c6cf712eac

2d7b38525788b00545227!OpenDocument&High

light=2,CAA,10-04. The petition for review by the 

EAB, EPA Region 8’s response, and the reply by 

petitioner are available in the docket for this 

rulemaking. 7U.S. Department of Commerce, United States 

Census Bureau, North American Industry 

Classification System, 2012 NAICS Definition, 

Sector 21—Mining, Quarrying, and Oil and Gas 

Extraction, 21111 Oil and Gas Extraction http://

www.census.gov/cgi-bin/sssd/naics/

naicsrch?code=21111&search=2012 accessed 12/

03/2013. 

major source for purposes of the title V 

operating permit program.5 The EPA 

based its decision on its evaluation that 

the sweetening plant and wells share 

the same two-digit SIC code and are 

under common control (Summit 

Corporation). In addition, the EPA 

concluded that the plant and the wells 

were adjacent and, thus, a single source 

given their proximity and exclusive 

interdependence as demonstrated by the 

following facts: All of the wells are 

located within an 8-mile radius of the 

sweetening plant; all are connected by 

a dedicated system of pipes; and all oil 

and gas from the wells must be 

processed through the sweetening plant 

before it can be marketed. That 

determination was later challenged and 

overturned, as will be discussed later in 

this notice. 

Finally, in another example involving 

the oil and natural gas sector, the EPA 

determined that two natural gas 

compressor stations (Florida River and 

Wolf Point) and the numerous well sites 

owned or operated by BP and located 

within the Northern San Juan Basin 

should not be considered a single 

stationary source. In that situation, 

unlike the Summit Petroleum case 

discussed previously, there was no 

dedicated interrelationship between the 

wells and the compressor stations that 

would indicate that they should be 

treated as a single ‘‘plant.’’ Gas from the 

individual wells could flow to the two 

BP compressor stations, or other 

compressor stations. Gas production 

from BP’s wells would not have to stop 

if one or both of the BP compressor 

stations were shut down. Additionally, 

the gathering pipeline between the wells 

and the stations co-mingled gas from 

operators other than BP and the 

compressor stations likewise accepted 

gas from other operators. The EPA’s 

determination that this complex, 

dynamic system did not resemble a 

‘‘common sense notion of a plant’’ was 

also challenged, and was settled.6

In each of these examples, the EPA 

based its opinion on an analysis of the 

specific facts in the individual case. We 

have not established a ‘‘bright-line’’ 

distance beyond which we would 

always consider operations to be 

separate sources. Neither have we 

established a distance within which we 

would always consider operations to be 

one source. We have also not 

established that certain operations must 

always (or never) be considered together 

for permitting purposes. 

C. Oil and Natural Gas Sector 

The United States Census Bureau’s 

North American Industry Classification 

System (NAICS) describes the Oil and 

Gas Extraction industry (NAICS Code 

2111) as including activities such as 

‘‘exploration for crude petroleum and 

natural gas; drilling, completing, and 

equipping wells; operation of 

separators, emulsion breakers, de-silting 

equipment, and field gathering lines for 

crude petroleum and natural gas; and all 

other activities in the preparation of oil 

and gas up to the point of shipment 

from the producing property.’’ 7 This 

definition includes activities such as 

natural gas processing and liquids 

extraction, and sulfur recovery from 

natural gas. Pipeline transmission and 

distribution of oil and natural gas, and 

storage of natural gas are included in 

NAICS subsector 486 Pipeline 

Transportation. 

The EPA has previously described in 

the preamble to its proposed New 

Source Performance Standard (NSPS) 

for the oil and natural gas sector that 

this sector includes operations in the 

extraction and production of oil and 

natural gas, and the processing, 

transmission and distribution of natural 

gas. For oil, we described the sector as 

including ‘‘all operations from the well 

to the point of custody transfer at a 

petroleum refinery.’’ For natural gas, we 

described it as including all operations 

from the well to the customer (76 FR 

52738, 52744, August 20, 2011). 

For purposes of this proposed action, 

we are primarily interested in the first 

two of these: Oil and natural gas 

production, and natural gas processing, 

or what may be referred to in the 

industry as ‘‘upstream’’ and 

‘‘midstream’’ operations. For reasons 

that will be explained later in this 

notice, we do not intend to apply the 

proposed clarification to operations that 

take place offshore. Onshore production 

operations include ‘‘the wells and all 

related processes used in the extraction, 

production, recovery, lifting, 

stabilization, separation, or treating of 

oil and/or natural gas (including 

condensate). Production components 

may include, but are not limited to, 

wells and related casing head, tubing 

head and ‘‘Christmas tree’’ piping, as 

well as pumps, compressors, heater 

treaters, separators, storage vessels, 

pneumatic devices and dehydrators. 

Production operations also include the 

well drilling, completion and workover 

processes, and include all the portable 

non-self-propelled apparatus associated 

with those operations. Production sites 

include not only the ‘‘pads’’ where the 

wells are located, but also include 

standalone sites where oil, condensate, 

produced water and gas from several 

wells may be separated, stored and 

treated. The production sector also 

includes the low pressure, small 

diameter, gathering pipelines and 

related components that collect and 

transport the oil, gas and other materials 

and wastes from the wells to the 

refineries or natural gas processing 

plants (76 FR 52744, August 20, 2011). 

Natural gas processing operations are 

aimed at removing impurities and other 

by-products from the extracted gas. 

Natural gas consists primarily of 

methane. It may also contain water 

vapor, hydrogen sulfide (H2S), carbon 

dioxide (CO2), helium, nitrogen and 

other compounds. It commonly exists in 

mixtures with other hydrocarbons, 

referred to as natural gas liquids (NGL). 

Natural gas must be processed to 

remove these other compounds and 

gases before the gas is considered 

pipeline quality suitable for 

transmission and distribution. Natural 

gas processing removes and recovers the 

liquids, and non-methane gases, all or 

some of which may be sold. 

D. What are the air emissions resulting 

from the oil and natural gas sector? 

Emissions from the oil and natural gas 

sector include volatile organic 

compounds (VOC), greenhouse gases 

(including methane), H2S, sulfur 

dioxide (SO2), carbon monoxide (CO) 

and nitrogen oxides (NOX). VOCs, 

including some hazardous air pollutants 

(HAP), are generally emitted during well 

completions, from equipment leaks and 

from storage tanks. Emissions of the 

greenhouse gas methane may also come 

from these sources while emissions of 

the greenhouse gas CO2 come primarily 

from combustion sources, such as flares, 

engines and compressors. Emissions of 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2

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

8Wehrum, William. ‘‘Source Determinations for 

Oil and Gas Industries.’’ January 12, 2007. EPA 

Continued 

NOX and CO are also a result of these 

combustion operations. Emissions of 

sulfur compounds come from 

production and processing operations 

that treat ‘‘sour gas,’’ that is, natural gas 

with an H2S content of greater than 0.25 

gr/100 scf. 

E. How does the EPA regulate air 

emissions from the oil and natural gas 

sector? 

In addition to the source-specific 

permitting required by the NSR and title 

V programs, air emissions from the oil 

and natural gas sector are also regulated 

through other CAA-based rules. The 

EPA first listed crude oil and natural gas 

production for NSPS development in 

1979 (44 FR 49222, August 21, 1979). 

An NSPS, 40 CFR part 60, subpart KKK, 

was promulgated in 1985 that addressed 

VOC emissions from leaking 

components at onshore natural gas 

processing facilities (50 FR 26122, June 

24, 1985). A second NSPS, regulating 

SO2 emissions from natural gas 

processing plants, 40 CFR part 60, 

subpart LLL, was promulgated in 1985 

(50 FR 40158, October 1, 1985). In 2012, 

the EPA finalized revisions to these 

NSPS and established standards in 40 

CFR part 60, subpart OOOO, limiting 

VOC emissions from gas wells, 

centrifugal compressors, reciprocating 

compressors, pneumatic controllers and 

storage vessels (77 FR 49490, August 16, 

2012). In 2013 and 2014, the EPA made 

certain amendments to the 2012 NSPS 

standards in order to improve 

implementation of the standards (78 FR 

58416, September 23, 2013 and 79 FR 

79018, December 31, 2014). Separately, 

the EPA is proposing to expand the 

NSPS (subpart OOOO) to regulate 

several additional categories of emitting 

equipment in this sector. 

The EPA has also regulated emissions 

of HAP from certain oil and natural gas 

sector processes through use of National 

Emissions Standards for Hazardous Air 

Pollutants (NESHAP), specifically the 

Oil and Natural Gas Production 

NESHAP (40 CFR part 63, subpart HH) 

and Natural Gas Transmission and 

Storage NESHAP (40 CFR part 63, 

subpart HHH). These regulations were 

first promulgated in 1999 (64 FR 32610, 

June 17, 1999) and were amended in 

2012 (77 FR 49490, August 16, 2012). 

F. How has the EPA defined the source 

for the oil and natural gas sector 

previously? 

As discussed in the previous section, 

selected equipment and emitting 

activities involved in oil and gas 

production are regulated under both the 

NSPS and NESHAP programs. The 

NSPS and NESHAP focus on 

technology-based standards for 

industrial source categories, and do not 

approach the regulation of stationary 

sources in the same way as required for 

NSR permitting. 

The definition of a major source in the 

NESHAP program is similar to, but 

distinguishable from, the definition of 

stationary source used in the NSR 

permitting programs. The NESHAP 

program defines a major source as a 

stationary source or a group of 

stationary sources ‘‘within a contiguous 

area’’ (40 CFR 63.2). This ‘‘major 

source’’ definition differs from the 

definition of stationary source used in 

the NSR permitting programs because it 

does not include ‘‘adjacent properties’’ 

[e.g., 40 CFR 52.21(b)(5)]. A major 

source under CAA section 112 is further 

defined as any stationary source or 

group of stationary sources ‘‘that emits 

or has the potential to emit considering 

controls, in the aggregate 10 tons per 

year (tpy) or more of any HAP or 25 tpy 

or more of any combination of HAP.’’ 

[CAA section 112(a)(1)]. An area source 

of HAP is one that is not a major source 

of HAP. 

When Congress revised CAA section 

112 in 1990, however, it included a 

specific provision discussing how oil 

and gas wells and pipeline facilities 

were to be treated with respect to 

regulating emissions of HAP [CAA 

section 112(n)(4)(A)]. This section 

provides that ‘‘notwithstanding’’ the 

definitions of major source in section 

112, the emissions from any oil or gas 

exploration or production well (with its 

associated equipment) and emissions 

from any pipeline compressor or pump 

station ‘‘shall not be aggregated with 

emissions from other similar units’’ to 

determine whether the units or stations 

are major sources. Congress specified 

this whether the units are in a 

contiguous area or under common 

control. In the case of any oil or gas 

exploration or production well (with its 

associated equipment), such emissions 

‘‘shall not be aggregated for any purpose 

under this section.’’ 

In the NESHAP for Oil and Natural 

Gas Production Facilities, the EPA 

defines the affected source consistent 

with this requirement of the Act, 

including which associated equipment 

should be part of the facility, which 

associated equipment could potentially 

be aggregated, and which cannot be 

aggregated as per CAA section 

112(n)(4)(A) [40 CFR 63.760(b)]. The 

EPA defines this associated equipment 

to include ‘‘equipment associated with 

an oil or natural gas exploration or 

production well, and includes all 

equipment from the wellbore to the 

point of custody transfer’’ (40 CFR 

63.761). The EPA defines the facility for 

purposes of the NESHAP to mean ‘‘the 

grouping of equipment where 

hydrocarbon liquids are processed, 

upgraded (i.e., remove impurities or 

other constituents to meet contract 

specifications), or stored prior to the 

point of custody transfer’’ or where 

natural gas is ‘‘processed, upgraded, or 

stored’’ prior to natural gas transmission 

and storage. For the purpose of the 

NESHAP major source determination, 

facility (including a building, structure, 

or installation) means oil and natural 

gas production and processing 

equipment that is located within the 

boundaries of an individual surface site 

as defined in the NESHAP (40 CFR 

63.761). 

Furthermore, the EPA defines surface 

site as ‘‘any combination of one or more 

graded pad sites, gravel pad sites, 

foundations, platforms, or the 

immediate physical location upon 

which equipment is physically affixed’’ 

(40 CFR 63.761). The effect of these 

definitions is to define the affected 

facility based on the emissions from 

equipment and activities that are in 

close proximity to each other. The EPA 

stated that its intent in defining affected 

facility in this way was both to comply 

with the specific language in CAA 

section 112(n)(4), and to reduce the 

burden on owners and operators in 

making source determinations. The EPA 

stated at that time its belief that it was 

not reasonable to aggregate emissions 

from surface sites that are located on the 

same lease, but are at great distances 

from each other, even though they 

would be under common control (64 FR 

32618, June 17, 1999). 

G. What approaches has the EPA taken 

recently regarding implementation of 

NSR and title V permitting for oil and 

natural gas sector sources? 

As was the case with other industry 

categories, the EPA initially approached 

permitting decisions in the oil and 

natural gas sector on a case-by-case 

basis without any specific guidance 

until 2007. At that time, because of an 

increase in oil and gas development, 

and an increase in permit activity, the 

EPA issued the first guidance document 

specific to this industry. The EPA built 

on the idea of using the surface site, as 

defined in 40 CFR 63.761, and the 

proximity of surface sites to each other 

in permitting guidance, when it issued 

a guidance document titled ‘‘Source 

Determinations for Oil and Gas 

Industries’’ in 2007.8 This 2007 memo is 

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

Region 7 Air Program New Source Review Program 

Policy & Guidance Index available at http://

www.epa.gov/region07/air/nsr/nsrmemos/oilgas.pdf 

and in the docket for this rulemaking. 

9McCarthy, Gina. ‘‘Withdrawal of William 

Wehrum’s January 12 2007 Issued Guidance Memo 

‘Source Determinations for Oil and Gas Industries’.’’ 

September 22, 2009. EPA Region 7 Air Program 

New Source Review Program Policy & Guidance 

Index available at http://www.epa.gov/region07/air/ 

nsr/nsrmemos/oilgaswithdrawal.pdf and in the 

docket for this rulemaking. 

10U.S. Environmental Protection Agency. 

February 20, 2012. Motion for Dismissal. In re: BP 

America Production Company, Florida River 

Compression Facility, Permit No. V–SU–0022– 

05.00. Available at http://yosemite.epa.gov/oa/

EAB_Web_Docket.nsf/(Filings)/

E340610E897366E1852579AB005443C4/$File/

Motion%20for%20Dismissal...41.pdf and in the 

docket for this rulemaking. 

11Page, Stephen. ‘‘Applicability of the Summit 

Decision to EPA Title V and NSR Source 

Determinations.’’ December 21, 2012. EPA Region 7 

Air Program New Source Review Program Policy & 

Guidance Index available at http://www.epa.gov/

region07/air/nsr/nsrmemos/inter2012.pdf and in 

the docket for this rulemaking. 

relevant to our proposed action because 

it acknowledged that source 

determinations within the oil and gas 

industry may not be as straightforward 

as those within other regulated 

industries. We note that even in cases 

that clearly meet the tests of same SIC 

code and common control, the nature of 

oil and gas exploration and production 

operations may require a detailed 

evaluation to determine whether 

sources are on contiguous or adjacent 

properties. Production fields, even if 

under the control of a single operator, 

may cover large areas. Unlike many 

other industries, however, the expanse 

of land on which these commonlycontrolled operations are located is 

frequently not owned or controlled by 

the owner/operator of the oil and gas 

activity. Instead, the producers may 

control only the surface area that holds 

the well and associated production 

equipment. 

As discussed earlier in this notice, 

EPA has previously said that it would 

not consider all facilities along a 

pipeline to be one source. The 2007 

memo built upon that idea to conclude 

that, for the oil and gas production 

industry, ‘‘we do not believe 

determining whether two activities are 

operationally dependent drives the 

determination as to whether two 

properties are contiguous or adjacent, 

because it would embroil the Agency in 

precisely the fine-grained analysis we 

intended to avoid and would potentially 

lead to results which do not adhere to 

the common sense notion of a plant.’’ 

Thus, the 2007 memo acknowledged 

that permitting authorities may consider 

proximity, and not operational 

dependence, as the most informative 

factor in determining the scope of a 

source, and recommended the approach 

used in CAA section 112 and the 

NESHAP for Oil and Natural Gas 

Production Facilities (the ‘‘surface site’’) 

as the starting point for determining the 

boundaries of the source for NSR and 

title V. Beyond the surface site, the 

memo recommends that permitting 

authorities consider aggregating 

multiple surface sites if they are in close 

proximity, i.e., physically adjacent or 

separated by no more than a short 

distance. However, consistent with the 

EPA’s overall permitting practice, the 

2007 memo concluded that the decision 

of whether a permitting authority 

should aggregate two or more pollutantemitting activities into a single source 

for permitting remains a case-by-case 

decision taking into consideration the 

factors relevant to the specific case. 

In 2009, the EPA withdrew the 2007 

memo.9 In doing so, we reinstated the 

use of the fundamental criteria for 

making source determinations for the oil 

and natural gas sector based on the use 

of the three factors contained in our 

regulations; same SIC code, common 

control, and location on contiguous or 

adjacent property. This fact-specific 

examination is consistent with the 

EPA’s historical practice in other 

industries, and is in contrast to the 

simplified approach of relying 

principally on proximity that was the 

focus of the 2007 memorandum. From 

2009 forward, the EPA recommended 

that permitting authorities conduct each 

source determination based on a caseby-case evaluation of the emissions 

activities at each building, structure, 

facility or installation. The 2009 memo 

acknowledged that proximity might 

well serve as the overwhelming factor in 

a permitting authority’s source 

determination decision, but the 

conclusion could only be justified after 

examining all relevant factors, 

consistent with regulatory requirements 

and historical practice. 

The EPA has had direct experience as 

the permitting authority in making 

source determinations for onshore oil 

and gas operations in Indian country. 

The 2010 permit for compressor stations 

located on the Southern Ute Indian 

Reservation (Florida River and Wolf 

Point) and the Summit Petroleum 

permits are two examples discussed in 

detail previously. In these cases, the 

EPA conducted a fact-specific 

examination of the three factors in 

determining which emitting activities 

should be included in title V permits. In 

both of these cases, the source 

determinations were challenged. 

The EPA was challenged on its source 

determinations for the Florida River 

permit by WildEarth Guardians. They 

challenged the EPA’s decision not to 

aggregate certain wells into a single 

source in the title V permit renewal. 

EPA entered into a settlement agreement 

with the petitioner and agreed to 

undertake a ‘‘pilot’’ program to gather 

additional information ‘‘for the purpose 

of studying, improving and streamlining 

oil and gas source determinations in 

new or renewal Title V permits.’’ 10 The 

EPA has collected data from several 

permit applicants, but has not yet issued 

permits based on that data, due to 

uncertainties created by court decisions 

discussed later in this proposal. 

In the case of Summit Petroleum’s 

operations in Rosemont, Michigan, also 

discussed previously, the EPA 

determined in 2010 that the company’s 

gas sweetening facility and associated 

wells were under common control and 

in the same major industrial grouping. 

In addition, the EPA determined that 

they were adjacent because of the 

functional interrelatedness of the 

operations. The EPA determined that 

the source must get a title V operating 

permit. 

Summit appealed that determination 

to the United States Court of Appeals for 

the Sixth Circuit, which issued a 

decision that overturned the EPA’s title 

V applicability determination. Summit 

Petroleum Corp. v. U.S. Environmental 

Protection Agency, 690 F.3d 733 (6th 

Cir. 2012). In the decision, the Court 

said that the EPA’s use of 

interrelatedness in determining whether 

sources were ‘‘adjacent’’ is unreasonable 

and contrary to the plain meaning of the 

term as currently used in EPA’s 

regulations. The two judges in the 

majority found that the term ‘‘adjacent’’ 

was unambiguous and its plain meaning 

related only to physical proximity, and 

thus could not include consideration of 

functional interrelatedness. The EPA 

sought rehearing of the Court’s decision, 

but that request was denied. 

In a memorandum, EPA Headquarters 

then instructed its Regional Air 

Directors that the agency intended to 

apply the outcome of the Sixth Circuit 

decision only in the states under the 

jurisdiction of the Sixth Circuit and that 

we would continue to make stationary 

source determinations for title V and 

PSD permitting consistent with the 

agency’s long-standing interpretations of 

its regulations in the rest of the 

country.11

The EPA’s guidance memo to its 

regional offices was challenged by the 

National Environmental Development 

Association’s Clean Air Project (NEDA/ 

CAP) in the D.C. Circuit Court of 

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12We note that the EPA Administrator signed a 

separate proposal on August 5, 2015 to amend the 

Regional Consistency Regulations to address 

consistency issues resulting from judicial decisions. 

See Environmental Protection Agency, RIN 2060– 

AS53 available at http://www.epa.gov/nsr/

actions.html. 

Appeals. National Environmental 

Development Association’s Clean Air 

Project v. Environmental Protection 

Agency, 752 F.3d 999 (D.C. Cir. 2014). 

NEDA/CAP alleged that the 

memorandum violated the EPA’s 

Regional Consistency regulations by 

establishing inconsistent permit criteria 

in different parts of the country. The 

D.C. Circuit agreed and held that the 

memo conflicted with EPA regulations 

that promote uniform national 

regulatory policies. 752 F.3d at 1009 

(discussing 40 CFR part 56). In essence, 

the Court found that EPA bound itself 

to consistency with the Summit 

decision through its own regulations. In 

issuing the decision, the D.C. Circuit 

indicated that the EPA could have 

avoided a conflict between its December 

2012 memo and the Regional 

Consistency regulations by revising the 

source determination regulations to 

explicitly require consideration of 

functional interrelatedness. 

H. What is the purpose of this proposed 

action? 

The purpose of this action is to 

request comment on the best approach 

to define ‘‘adjacent’’ for the onshore oil 

and natural gas sector.12 We believe it 

is important to address this industry 

separately because permitting decisions 

are difficult and time-consuming. 

Providing this guidance will promote a 

consistent regulatory treatment for this 

industry. In addition, this industry 

continues to grow at a rapid pace, and 

the sheer number of determinations that 

need to be made heightens the need for 

guidance in the near term. 

We also believe it is important to 

address this issue through a rulemaking. 

The oil and gas source determination 

guidance provided by the EPA on two 

separate occasions, in 2007 and 2009, 

was issued in the form of a memo, with 

no opportunity for public notice and 

comment. Then, as discussed above, the 

subsequent onshore oil and gas 

permitting decisions made by EPA were 

challenged, and both guidance memos 

were referenced or relied upon by the 

parties in those challenges. The EPA is 

interested in addressing any uncertainty 

by providing additional clarity through 

rulemaking and seeking comment on the 

best approach for defining the term 

‘‘adjacent’’ specific to the onshore oil 

and natural gas sector. 

I. Policy Discussion 

An important consideration in 

deciding how to define the stationary 

source for oil and gas operations is the 

environmental protection that is 

achieved by aggregating multiple 

pollutant-emitting activities into a 

single source. Under the PSD and NNSR 

programs, new major sources or major 

modifications at major sources for a 

given pollutant are subject to either Best 

Available Control Technology (BACT) 

or Lowest Achievable Emissions 

Reduction (LAER) controls, depending 

on the air quality designation status for 

that pollutant of the area in which the 

source is located. These controls may be 

more stringent than controls required at 

minor sources. Because major source 

BACT or LAER controls may be 

continually improving, permitting 

authorities must assess and sources 

must install the best technology at the 

time a permit is issued, instead of what 

was the best the last time an NSPS or 

NESHAP was updated. Therefore, these 

case-by-case controls required for major 

sources or major modifications at major 

sources are often more stringent than 

controls required under NSPS or 

NESHAP, if those standards have not 

been recently updated, because control 

technology tends to improve over time. 

In addition, if the source is or will be 

located in an area that is designated 

nonattainment, emissions reductions, 

known as offsets, may be required in 

higher ratios to compensate for the 

proposed emissions increase. Therefore, 

aggregating activities into major sources 

may result in more oil and gas sources 

being subject to greater control under 

LAER, in addition to having to obtain 

offsets, resulting in greater 

environmental protection. 

Aggregating facilities is also more 

likely to result in sources being subject 

to operating permitting requirements 

under title V of the Act. While this does 

not result in any additional control 

requirements, it may result in additional 

monitoring and reporting requirements 

that provide more information on the 

operation of the source to the regulators 

and interested citizens. The title V 

permitting process includes 

opportunities for public participation, 

EPA oversight, and citizens’ rights to 

petition the EPA to object to permits. 

These opportunities exist at both the 

initial permit issuance, and at permit 

renewal, which occurs every 5 years. 

The title V process provides more 

opportunities for public participation 

than minor source permitting, which 

generally includes public participation 

only at the time of initial construction 

or modification, and under processes 

that vary according to the permitting 

authority. 

Aggregating activities may also 

provide facility owners/operators with 

greater flexibility to modify operations 

without triggering additional permitting 

requirements. A source consisting of 

multiple emitting activities may be able 

to ‘‘net out’’ of further PSD or NNSR 

permit review by reducing emissions in 

one part of a source in order that 

emissions at another part of the source 

may increase. This allows sources to 

avoid additional permitting 

requirements for modifications to an 

existing facility under PSD and NNSR 

by taking credit for reductions that have 

already occurred within the facility. A 

smaller source offers less opportunity to 

‘‘net out’’ because there are fewer 

emitting activities that can be reduced if 

a modification results in an increase. 

Finally, netting is usually not available 

under minor NSR programs, so smaller 

minor sources would likely not be able 

to take advantage of netting to avoid 

minor NSR permitting requirements. 

Another approach to achieving 

environmental protection is to require 

controls by direct federal regulation 

through the NSPS or NESHAP 

programs. The NSPS program results in 

significant control and is applicable to 

new, modified and reconstructed 

sources. The NSPS also includes 

monitoring and recordkeeping 

requirements. The NESHAP program 

also results in significant control of 

HAP, many of which are also VOCs, and 

is applied to both new and existing 

sources. Each of the emissions standards 

established pursuant to these programs 

must be reviewed and revised, if 

necessary, at least every eight years to 

take into account developments in 

practices, processes and control 

technologies. These standards apply to 

affected facilities independent of the 

need for an NSR permit. Separately, the 

EPA is proposing revisions to 40 CFR 

part 60, subpart OOOO, the NSPS for 

the oil and natural gas sector. 

Additional controls may be required 

for sources located in nonattainment 

areas, including minor sources, through 

a SIP, or through a Federal 

Implementation Plan (FIP) in areas 

where EPA is the regulatory authority, 

such as in certain areas of Indian 

country. The CAA requires 

implementation of reasonable available 

control technology (RACT) for major 

sources in moderate and above ozone 

nonattainment areas and in the Ozone 

Transport Region (OTR). The EPA 

develops Control Techniques 

Guidelines (CTGs) to inform a state’s 

RACT determinations. Separately, the 

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EPA is proposing a CTG for the oil and 

natural gas sector. 

All of these programs (NSPS, 

NESHAP, RACT and state SIP/EPA FIP 

requirements) typically apply to 

emitting equipment, irrespective of the 

total emissions of the source at which 

the equipment is located, although there 

may be thresholds for individual types 

of equipment. An advantage of applying 

environmental control through these 

programs is that the administrative 

burden of applying for, obtaining, and 

maintaining major source permits can 

be reduced for sources because these 

limitations establish enforceable limits 

on the sources’ potential to emit, and 

can keep a source from being considered 

major. The burden of reviewing and 

issuing major source permits is likewise 

reduced for permitting authorities. 

The biggest advantage to sources, 

particularly in this industry, is that 

controlling emissions through NSPS, 

NESHAP or emission control standards 

imposed by states through their SIPs 

does not require case-by-case preapproval as do the controls determined 

through major source permitting. This 

provides greater certainty to the source 

owners and operators without the 

delays associated with such permitting. 

Communities can also be certain of the 

controls sources are required to install 

and operate because the sources do not 

have the opportunity to ‘‘net out’’ of 

controls through a permitting process. 

Compliance and enforcement are also 

enhanced because the control, 

monitoring and recordkeeping 

requirements are consistent for each 

type of equipment and do not differ 

from site to site, or in the case of federal 

controls, state to state. 

For the oil and gas industry, where 

source owners/operators must obtain 

the right to drill in a particular location 

and only hold those rights for a limited 

period of time, the ability to proceed 

quickly is important. For communities 

and air regulators, the ability to protect 

air quality and public health is 

important. A major source permit 

typically takes a year or more to process. 

If there is uncertainty about what 

should be included as part of that 

permitted source, the time to issue a 

permit can take longer. We believe that 

the most important result of a major or 

minor permit for all stakeholders, 

including the regulated industry, the 

community in which the source is 

located, and the permitting authority, is 

the requirement to install control 

technology to minimize air emissions 

and protect public health and the 

environment. We think that providing 

clarity about the scope of the source 

through this rule, and the emissions 

control requirements associated with 

other rules being proposed by the EPA 

serves the interests of all stakeholders. 

J. Why is the EPA proposing this action 

at this time? 

One reason for taking this action is to 

resolve the uncertainty that the 

litigation over the Summit Petroleum 

source determination and resulting 

guidance has created for both permitting 

authorities and for owners/operators of 

regulated sources. Another reason is to 

develop a coordinated approach to 

regulating emissions from oil and gas 

sources under the variety of regulatory 

mechanisms available to state and 

federal regulatory agencies. There has 

been an increase in oil and gas 

production resulting from the rise in use 

of unconventional methods of extraction 

(e.g., the use of hydraulic fracturing), 

and this production is taking place in 

more areas and at a faster pace than in 

the recent past. We believe this justifies 

a new look at the best way to regulate 

and permit these operations. In separate 

notices, the EPA is proposing to require 

additional controls for the emissions 

from the oil and natural gas sector. 

Those requirements include additional 

requirements for new sources under the 

NSPS, requirements for minor sources at 

oil and gas operations in Indian country, 

and a CTG that will inform RACT 

determinations for existing major VOC 

sources located in moderate or above 

ozone nonattainment areas and in the 

OTR. 

We believe that the additional 

emissions controls required for new 

sources under the revised NSPS makes 

it less likely that major source 

permitting would result in substantial 

additional pollution control. In 

commenting on this proposal, 

commenters are encouraged to consider 

how emission controls being proposed 

in separate EPA notices may impact the 

preferred option in this proposal. 

K. What is the effect of this proposed 

rulemaking on other industries? 

At this time, the EPA is proposing to 

clarify the definition of ‘‘adjacent’’ used 

to determine the source to be permitted 

within the PSD, NNSR and title V 

programs as it applies to the oil and 

natural gas sector for the reasons 

discussed earlier in this proposal. The 

EPA believes that the unique 

characteristics of this industry—such as 

the underground mineral rights versus 

surface land ownership, widespread 

operations and interconnectedness via 

pipeline, etc.—warrant an industryspecific definition that will streamline 

the assessment of which operations 

should be considered to be on 

contiguous or adjacent properties. For 

other industries, we continue to believe 

that a case-by-case assessment of the 

three factors remains the appropriate 

method of making source 

determinations. For these industries, as 

discussed previously, we believe it is 

generally less difficult to determine the 

scope of the source, because the 

operations already take place at 

facilities that more clearly match the 

common sense notion of a plant. 

L. What is the effect of this proposed 

rulemaking on permitting authorities? 

We are proposing to make changes to 

both the PSD and NNSR programs in 

this rulemaking. We believe that it may 

be possible for some states to interpret 

their existing state rules consistent with 

this rulemaking (when final) and may 

not need to revise SIPs to incorporate 

these changes. However, we intend to 

encourage states to revise their SIPs to 

adopt these changes, when final. 

Similarly, states would be expected to 

make conforming changes to their 

operating permit programs. While we 

are proposing changes to both the 

federal programs and the requirements 

for state programs, we invite comment 

on whether states should be required to 

adopt these changes. 

III. What are the options that the EPA 

is considering? 

In this proposal, the EPA is proposing 

and requesting comment on two options 

for clarifying the definition used to 

determine the source to be permitted 

within the NSR and title V programs as 

it applies to the oil and natural gas 

sector. As we stated before, any 

determination of the scope of a source 

requires a fact-specific inquiry into each 

of the three regulatory factors, i.e., 

whether emitting activities share the 

same SIC code, are under common 

control, and are contiguous or adjacent. 

We are not proposing to change or take 

comment on this inquiry or the three 

factors. However, in this notice, the EPA 

is taking comment on how the term 

‘‘adjacent’’ in the third factor should be 

applied specifically to emission units in 

the oil and natural gas sector. 

A. Define Source Based on Proximity 

(Similar to the NESHAP) 

Under the first, and currently 

preferred, option for which the EPA is 

taking comment, the EPA proposes to 

define ‘‘adjacent’’ such that the source 

is similar to that in the NESHAP for this 

industry, Subpart HH, National 

Emissions Standards for Hazardous Air 

Pollutants From Oil and Natural Gas 

Production Facilities (40 CFR 63.760). 

Under this option, the ‘‘source’’ for oil 

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13Louisiana Department of Environmental 

Quality. Interpretation of Contiguous for Oil & Gas 

Production Facilities. http://

www.deq.louisiana.gov/portal/DIVISIONS/

AirPermitsEngineeringandPlanning/

AirPermitsProceduresandGuidance/

ContiguityandOilandGasProduction.aspx. March 

2015. 

and natural gas sector activities is 

presumed to be limited to the emitting 

activities at the surface site, and other 

emitting activities will be considered 

‘‘adjacent’’ if they are proximate. Thus, 

under this first option, two or more 

surface sites must be considered as a 

single source if they share the same SIC 

code, are under common control, and 

are contiguous or are located within a 

short distance of one another. 

We prefer this option because we 

believe that a definition that centers on 

a surface site is familiar to the industry 

and the regulators because of the current 

NESHAP requirements, so it will 

streamline permitting. We also believe 

that a definition focused on a surface 

site most closely represents the common 

sense notion of a plant for this industry 

category. Surface sites that are not in 

close proximity to one another may be 

on a separate lease which may not align 

with the common sense notion of a 

single plant. In addition, we believe that 

this definition is consistent with 

Congress’ intent, at least as they 

expressed it with regard to HAPs, as 

discussed previously. 

Under this option, as we are 

proposing it, the source owner/operator 

would not be required, and would not 

be allowed, to include additional 

emitting activities in a permit beyond 

those in the source as defined. This 

could mean that an owner/operator 

must obtain more individual 

construction permits and possibly more 

operating permits. However, these 

would be more likely to be minor source 

permits. If finalized, owner/operators 

could lose the benefits of being able to 

net emissions over a larger source, 

which could be a disadvantage, 

particularly for sources in 

nonattainment areas. We request 

comment on this more limited concept 

of source for this industry, specifically 

whether limiting the scope of the source 

in this way provides sufficient guidance 

for sources and permitting authorities to 

permit these sources in a consistent and 

efficient manner. 

In addition, we request comment on 

whether it is appropriate to establish a 

specific distance within which to 

consider multiple surface sites as a 

single source, and if so, what that 

distance should be. Some states, such as 

Texas, Oklahoma, Louisiana and 

Pennsylvania, have issued guidance that 

presumes that operations within 1⁄4 mile 

should be considered a single source. 

We believe that it will be helpful to 

prescribe a distance in this rule, given 

that this question has generated 

significant confusion and uncertainty in 

the past. The EPA is proposing to adopt 

a distance of 1⁄4 mile but is asking for 

comment on whether another distance, 

such as 1⁄2 mile, is an appropriate 

distance to consider for defining a single 

source even if on separate surface sites 

(i.e., operations beyond that distance 

would not be considered for 

aggregation). 

Louisiana’s guidance further specifies 

that facilities should not be ‘‘daisychained’’ together to establish a single 

contiguous source.13 A series of 

emission units are ‘‘daisy-chained’’ 

when each individual unit is located 

within the specified ‘‘contiguous or 

adjacent’’ distance from the next unit, 

but where the last unit is separated from 

the first unit by a much larger distance. 

We request comment on whether the 

EPA should make a similar distinction 

if we adopt this proximity-focused 

source definition. Louisiana’s guidance 

goes on to specify that the geographic 

center of the site’s emissions defines the 

center for purposes of establishing the 

1⁄4 mile distance used to determine the 

boundary of the single source. We 

request comment on whether the center 

or some other feature, such as the 

boundary of the surface site, is more 

appropriate to use as the starting point 

of the measurement radius when 

determining the source. 

We also request comment on whether 

there are instances where setting such a 

bright-line distance could increase or 

limit permitting authority oversight of 

these sources because they would be 

more likely to be subject to minor 

source permitting. We also request 

comment on whether the potentially 

smaller scope of each source could 

result in an unacceptable permitting 

burden (by creating a larger number of 

smaller sources) on the regulated 

community or on permitting authorities. 

While the EPA does not expect there 

would be adverse air quality impacts as 

a result of this approach, we are 

interested in whether there might be any 

environmental effect, including effects 

on NAAQS compliance from this 

approach, with either benefit or harm 

resulting. Finally, we request comment 

on whether there are circumstances in 

which an owner/operator would prefer 

to combine surface sites or other 

operations that are beyond the 

presumptive distance, e.g., 1⁄4 mile, and 

seek a PSD or NNSR permit, and 

whether the EPA should preserve this 

option. If so, should the option to seek 

a major source permit be limited to the 

owner or operator’s discretion, or 

should a permitting authority be able to 

make this determination, and under 

what circumstances? 

B. Define Source To Include Exclusively 

Functionally Interrelated Equipment 

Under the second option, the EPA 

proposes to define the ‘‘source’’ for the 

oil and natural gas sector to include all 

of the interrelated equipment that is 

under common control, is in the twodigit SIC (Code 13 Oil and Gas 

Extraction), and is on contiguous or 

adjacent property, where the EPA would 

presume that equipment in an oil and 

gas field is ‘‘adjacent’’ if it is proximate, 

or if it is exclusively functionally 

interrelated. Exclusive functional 

interrelatedness might be shown by 

connection via a pipeline or other 

means, because of the physical 

connection between the equipment. 

Other examples of factors that could be 

assessed to determine interrelatedness 

include exclusive delivery of product 

from one group of equipment to the 

other via truck or train and facts such 

as whether one group of equipment 

would be able to operate if the other 

group of equipment was not operating. 

The EPA and states would make a 

determination of adjacency based on a 

consideration of the interrelatedness of 

emitting activities in addition to the 

distance between them. So, for the oil 

and natural gas sector, pollutantemitting activities will be considered 

adjacent if one of the following 

circumstances apply: (1) The pollutantemitting activities are separated by a 

distance of 1⁄4 mile or more and there is 

an exclusive functional interrelatedness; 

or (2) the pollutant-emitting activities 

are separated by a distance of less than 

1⁄4 mile. 

The consideration of interrelatedness 

is consistent with the EPA’s current and 

historical practice for other industries 

and its longstanding practice for oil and 

natural gas sector activities. The EPA is 

requesting comment on this approach to 

better understand the perspective of 

various stakeholders. What are the 

advantages and disadvantages to this 

approach? Are there characteristics 

related to the oil and natural gas sector 

that would make this approach more or 

less difficult to implement than the 

preferred alternative, such as need to 

examine various interrelatedness 

criteria or the interconnectedness of the 

operations through pipelines? Should 

the EPA further define exclusive 

functional interrelatedness for this 

sector to provide additional clarity to 

regulators and the regulated 

community? For example, should the 

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EPA limit exclusive functional 

interrelatedness for this sector to 

emitting equipment that is configured in 

a ‘‘hub and spoke’’ model, where oil or 

gas produced from one or more wells 

has a dedicated flow (via a pipeline or 

other delivery method) to only one 

possible downstream point for further 

compression, processing or storage? Are 

there other configurations specific to 

this industry that the EPA should 

consider to be exclusively functionally 

interrelated? 

In addition, is there any 

environmental benefit or harm that 

might result from this approach? For 

example, could this approach create a 

disincentive to building pipelines, and 

what would be the environmental effect 

of those decisions? Finally, the EPA 

requests comment on whether there is a 

specific distance beyond which sources 

in the oil and gas industry should not 

be considered interrelated, even if 

interconnected by pipeline. 

C. Impacts of the Options on Air 

Permitting 

The EPA expects that the combined 

effect of all the rules being proposed, 

including the proposed changes to the 

NSPS, the proposed rule for oil and gas 

sources in Indian country, and the CTG, 

will be to reduce the number of major 

oil and gas sources, even if we finalize 

Option 2. The proposed rules add 

requirements for enforceable controls, 

thereby decreasing potential emissions 

and making it less likely that major 

source permitting will be required. This 

is because a source’s potential emissions 

are determined after taking into account 

controls that are enforceable as a 

practical matter, such as those required 

in the NSPS and a SIP adopting the 

CTG. 

The two options presented in this rule 

differ primarily in the permitting 

burden placed on sources and 

permitting authorities. In the EPA’s 

experience, it takes significantly longer 

to apply for and review a PSD 

application than it does to apply for and 

review a minor NSR permit. Option 1 

can be expected to result in fewer major 

sources than Option 2, but more minor 

sources. Option 2 can be expected to 

result in more major sources, as some 

otherwise minor sources could be 

combined into a smaller number of 

major sources. 

Because the EPA would benefit from 

public comment on all of these issues, 

the EPA is co-proposing these two 

approaches and, following review of 

public comments on the issues raised by 

each approach, anticipates adopting one 

of the approaches in the final rule. We 

welcome comments on these two 

discrete options, or some combination 

of these, and other options for 

determining the source for permitting 

oil and natural gas sector operations. 

D. Proposal is Limited to Onshore Oil 

and Gas Operations 

The EPA is proposing to limit this 

rulemaking to onshore oil and gas 

operations for a number of reasons. 

First, the CAA already contains a 

specific definition of ‘‘outer continental 

shelf source’’ which includes any 

‘‘equipment activity, or facility which 

emits or has the potential to emit any air 

pollutant’’ specifically including 

‘‘platform and drill ship exploration, 

construction, development, production, 

processing, and transportation.’’ In 

addition, ‘‘emissions from any vessel 

servicing or associated with an outer 

continental shelf (OCS) source, 

including emissions while at the OCS 

source or en route to or from the OCS 

source within 25 miles of the OCS 

source’’ must be included when 

determining the OCS source [CAA 

section 328(a)(4)(C)]. In our permitting 

experience, these OCS sources are more 

likely than onshore operations to be 

stand-alone major PSD sources. The 

EPA has issued permits for exploration 

rigs to operate as portable PSD sources, 

allowing them to operate in a number of 

locations under one permit. We believe 

that this current approach provides 

sufficient streamlining for both sources 

and permitting authorities and propose 

to continue the existing case-by-case 

approach for offshore sources. 

IV. Environmental Justice 

Considerations 

This proposal is intended to clarify 

the definition of adjacent used to 

determine the source to be permitted 

within the existing PSD, NNSR and title 

V programs as it applies to the oil and 

natural gas sector. This clarification will 

assist permitting authorities and permit 

applicants in making source 

determinations for the oil and gas 

industry and is not intended to result in 

less environmental protection for 

human health and the environment. It is 

being proposed as a part of a 

comprehensive strategy to reduce 

emissions from the oil and natural gas 

production sector which includes new 

(or lower) emission standards or 

requirements for a number of types of 

emitting equipment. It, therefore, is not 

expected to have a disproportionately 

high and adverse human health or 

environmental effects on minority 

populations or low-income populations. 

However, the permitting process, 

particularly under the major source 

programs, NSR and title V, may provide 

opportunities for public participation at 

individual sources that may be of 

interest to minority or low-income 

populations. 

V. Statutory and Executive Order 

Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

This proposed action is a significant 

regulatory action that was submitted to 

the Office of Management and Budget 

(OMB) for review because it raises novel 

legal and policy issues arising out of the 

President’s priorities. Any changes 

made in response to OMB 

recommendations have been 

documented in the docket. 

B. Paperwork Reduction Act 

This proposed action would not 

impose any new information collection 

burden. However, the OMB has 

previously approved the information 

collection requirements contained in the 

existing regulations for PSD (40 CFR 

52.21) and title V (40 CFR parts 70 and 

71) under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 

3501 et seq and has assigned OMB 

control numbers 2060–0003, 2060–0336 

and 2060–0243. The OMB control 

numbers for the EPA’s regulations in 40 

CFR are listed in 40 CFR part 9. Instead 

of new information collection burdens, 

this proposed action proposes proffers 

options that clarify the existing 

permitting requirements applicable to 

new and modified oil and natural gas 

sector sources. This proposed action is 

not likely to increase the burden 

associated with permitting, and may 

reduce it. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to prepare 

a regulatory flexibility analysis of any 

regulation subject to notice and 

comment rulemaking requirements 

under the Administrative Procedures 

Act or any other statute unless the 

agency certifies the rule will not have a 

significant economic impact on a 

substantial number of small entities. 

Small entities include small businesses, 

small organizations and small 

governmental jurisdictions. 

For purposes of assessing the impacts 

of this proposed rule on small entities, 

small entity is defined as: (1) A small 

business as defined in the Small 

Business Administration’s (SBA) 

regulations at 13 CFR 121.201; (2) a 

small governmental jurisdiction that is a 

government of a city, county, town, 

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school district or special district with a 

population of less than 50,000; and (3) 

a small organization that is any not-forprofit enterprise which is independently 

owned and operated and is not 

dominant in its field. 

After considering the economic 

impacts of this proposed rule on small 

entities, I certify that this proposed 

action will not have a significant 

economic impact on a substantial 

number of small entities. In making this 

determination, the impact of concern is 

any significant adverse economic 

impact on small entities. An agency may 

certify that a rule will not have a 

significant economic impact on a 

substantial number of small entities if 

the rule relieves regulatory burden, has 

no net burden or otherwise has a 

positive economic effect on the small 

entities subject to the rule. Entities 

potentially affected directly by this 

proposal include sources in the oil and 

natural gas sector. We intend with this 

proposal to clarify the existing 

requirements for permitting new and 

existing sources in the oil and natural 

gas sector. We believe that any option 

finalized after notice and comment 

rulemaking will not increase, and may 

decrease, the administrative burden for 

permitting these sources, including 

those that may be small entities. We 

have, therefore, concluded that this 

proposed action will have no net 

regulatory burden for all directly 

regulated small entities. 

We continue to be interested in the 

potential impacts of the proposed rule 

on small entities and welcome 

comments on issues related to such 

impacts. 

D. Unfunded Mandates Reform Act 

This proposed action does not contain 

an unfunded mandate of $100 million or 

more as described in the Unfunded 

Mandates Reform Act of 1995 (UMRA), 

2 U.S.C. 1531–1538, and does not 

significantly or uniquely affect small 

governments. This action imposes no 

enforceable duty on any state, local or 

tribal governments or the private sector. 

The CAA imposes the obligation for 

private sector sources to obtain permits 

prior to construction. Many states and 

some local governments choose to 

implement those requirements. In other 

areas, the EPA implements those 

requirements. In this proposal, the EPA 

is taking comment on the most 

appropriate way to implement those 

requirements for an industry category. 

Therefore, this proposed action is not 

subject to the requirements of sections 

202, 203 and 205 of the UMRA. 

E. Executive Order 13132: Federalism 

This proposed action does not have 

federalism implications. It will not have 

substantial direct effects on the states, 

on the relationship between the national 

government and the states, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. The 

requirement to obtain permits for new 

major sources is imposed by the CAA. 

This proposed rule, if made final, would 

interpret those requirements as they 

apply to the oil and natural gas sector. 

Thus, Executive Order 13132 does not 

apply to these proposed regulation 

revisions. 

In the spirit of Executive Order 13132 

and consistent with the EPA policy to 

promote communications between the 

EPA and state and local governments, 

the EPA specifically solicits comments 

on this proposed action from state and 

local officials. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This action does not have tribal 

implications as specified in Executive 

Order 13175. It would not have a 

substantial direct effect on one or more 

Indian tribes, since no tribe has 

developed a TIP that allows it to issue 

NSR permits. Furthermore, these 

proposed regulation revisions do not 

affect the relationship or distribution of 

power and responsibilities between the 

federal government and Indian tribes. 

The CAA and the Tribal Air Rule 

establish the relationship of the federal 

government and tribes in developing 

plans to implement NSR permitting, and 

this proposal does nothing to modify 

that relationship. Thus, Executive Order 

13175 does not apply to this action. 

The EPA has concluded that this 

action will not have tribal implications 

because it doesn’t impose a significant 

cost to tribal governments. However, 

there are significant tribal interests 

because of the growth of the oil and gas 

production industry in Indian country. 

Although Executive Order 13175 does 

not apply to this action, the EPA has 

offered consultation to tribal officials in 

developing this action. Meeting 

summaries will be included in the 

docket for this rulemaking. 

The EPA specifically solicits 

additional comment on this proposed 

action from tribal officials. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

and Safety Risks 

The EPA interprets EO 13045 as 

applying only to those regulatory 

actions that concern environmental 

health or safety risks that the EPA has 

reason to believe may 

disproportionately affect children. This 

action is not subject to EO 13045 

because it is not intended to establish an 

environmental standard intended to 

mitigate health or safety risks. The 

proposal requests comments on the 

appropriate definition of a source as it 

applies to one source category for 

purposes of permitting under the 

requirements of the CAA. 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This proposed action is not a 

‘‘significant energy action’’ because it is 

not likely to have a significant adverse 

effect on the supply, distribution or use 

of energy. We believe this action is not 

likely to have any adverse energy effects 

because it will not increase, and may 

decrease, the permitting burden on 

owners and operators of sources in the 

oil and natural gas sector. 

I. National Technology Transfer and 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (NTTAA), Public Law 104– 

113, section 12(d) (15 U.S.C. 272 note) 

directs the EPA to use voluntary 

consensus standards in its regulatory 

activities unless to do so would be 

inconsistent with applicable law or 

otherwise impractical. Voluntary 

consensus standards are technical 

standards (e.g., materials specifications, 

test methods, sampling procedures and 

business practices) that are developed or 

adopted by voluntary consensus 

standards bodies. NTTAA directs the 

EPA to provide Congress, through OMB, 

explanations when the agency decides 

not to use available and applicable 

voluntary consensus standards. 

This proposed rulemaking does not 

involve technical standards. Therefore, 

the EPA is not considering the use of 

any voluntary consensus standards. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

The EPA believes the human health or 

environmental risk addressed by this 

proposed action will not have 

disproportionately high and adverse 

human health or environmental effects 

on minority, low-income populations or 

indigenous populations. The proposal 

requests comment on the appropriate 

definition of the source as it applies to 

one industry category for purposes of 

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permitting under the CAA. As such, it 

does not adversely affect the health or 

safety of minority or low-income 

populations. The results of this 

evaluation are contained in Section IV 

of this preamble. 

K. Determination Under Section 307(d) 

Pursuant to sections 307(d)(1)(J) and 

307(d)(1)(V) of the CAA, the 

Administrator determines that this 

action is subject to the provisions of 

section 307(d). Under section 

307(d)(1)(J), the provisions of section 

307(d) apply to revisions to regulations 

relating to PSD. Under section 

307(d)(1)(V), the provisions of section 

307(d) apply to ‘‘such other actions as 

the Administrator may determine.’’ 

Statutory Authority 

The statutory authority for this action 

is provided by sections 101; 111; 114; 

116, 160–165, 169, 173, 301, 302, 501 

and 502 of the CAA, as amended (42 

U.S.C. 7401; 42 U.S.C. 7411; 42 U.S.C. 

7414; 42 U.S.C. 7416; 7470–7475, 7479, 

7503, 7601, 7602, 7661, and 7662. 

List of Subjects 

40 CFR Part 51 

Environmental protection, Air 

pollution control, Construction permit, 

Intergovernmental relations, Major 

source, Oil and gas. 

40 CFR Part 52 

Environmental protection, Air 

pollution control, Construction permit, 

Incorporation by reference, 

Intergovernmental relations, Major 

source, Oil and gas. 

40 CFR Part 70 

Environmental protection, Air 

pollution control, Intergovernmental 

relations, Major source, Oil and gas, 

Operating permit. 

40 CFR Part 71 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Intergovernmental 

relations, Major source, Operating 

permit. 

Dated: August 18, 2015. 

Gina McCarthy, 

Administrator. 

For the reasons stated in the 

preamble, Title 40, Chapter I of the Code 

of Federal Regulations is proposed to be 

amended as follows: 

PART 51—REQUIREMENTS FOR 

PREPARATION, ADOPTION, AND 

SUBMITTAL OF IMPLEMENTATION 

PLANS 

■ 1. The authority citation for part 51 

continues to read as follows: 

Authority: 23 U.S.C. 101; 42 U.S.C. 7401– 

7671q. 

■ 2. In § 51.165, revise paragraph 

(a)(1)(ii) to read as follows: 

§ 51.165 Permit requirements. 

(a) * * * 

(1) * * * 

[PROPOSED REGULATORY TEXT FOR 

OPTION 1] 

(ii) (A) Building, structure, facility, or 

installation means all of the pollutantemitting activities which belong to the 

same industrial grouping, are located on 

one or more contiguous or adjacent 

properties, and are under the control of 

the same person (or persons under 

common control). Pollutant emitting 

activities shall be considered as part of 

the same industrial grouping if they 

belong to the same Major Group (i.e., 

which have the same two-digit code) as 

described in the Standard Industrial 

Classification Manual, 1972, as 

amended by the 1977 Supplement (U.S. 

Government Printing Office stock 

numbers 4101–0065 and 003–005– 

00176–0, respectively). 

(B) Notwithstanding the provisions of 

paragraph (a)(1)(ii)(A) of this section, 

building, structure, facility, or 

installation means, for onshore 

activities under SIC Major Group 13: Oil 

and Gas Extraction, all of the pollutantemitting activities included in Major 

Group 13 that are located on one or 

more contiguous or adjacent properties, 

and are under the control of the same 

person (or persons under common 

control). Pollutant emitting activities 

shall be considered adjacent if they are 

located on the same surface site, or on 

surface sites that are located within 1⁄4

mile of one another, where a surface site 

has the same meaning as in 40 CFR 

63.761. 

[PROPOSED REGULATORY TEXT FOR 

OPTION 2] 

(ii) (A) Building, structure, facility, or 

installation means all of the pollutantemitting activities which belong to the 

same industrial grouping, are located on 

one or more contiguous or adjacent 

properties, and are under the control of 

the same person (or persons under 

common control). Pollutant emitting 

activities shall be considered as part of 

the same industrial grouping if they 

belong to the same Major Group (i.e., 

which have the same two-digit code) as 

described in the Standard Industrial 

Classification Manual, 1972, as 

amended by the 1977 Supplement (U.S. 

Government Printing Office stock 

numbers 4101–0065 and 003–005– 

00176–0, respectively). 

(B) Notwithstanding the provisions of 

paragraph (a)(1)(ii)(A) of this section, 

building, structure, facility, or 

installation means, for onshore 

activities in SIC Major Group 13: Oil 

and Gas Extraction, all of the pollutantemitting activities included in Major 

Group 13, are located on one or more 

contiguous or adjacent properties, and 

are under the control of the same person 

(or persons under common control). 

Pollutant-emitting activities shall be 

considered adjacent if one of the 

following circumstances apply: 

(1) The pollutant-emitting activities 

are separated by a distance of 1⁄4 mile or 

more and there is an exclusive 

functional interrelatedness; or 

(2) The pollutant-emitting activities 

are separated by a distance of less than 

1⁄4 mile. 

* * * * * 

■ 3. In § 51.166, revise paragraph (b)(6) 

to read as follows: 

§ 51.166 Prevention of significant 

deterioration of air quality. 

* * * * * 

(b) * * * 

[PROPOSED REGULATORY TEXT FOR 

OPTION 1] 

(6)(i) Building, structure, facility, or 

installation means all of the pollutantemitting activities which belong to the 

same industrial grouping, are located on 

one or more contiguous or adjacent 

properties, and are under the control of 

the same person (or persons under 

common control) except the activities of 

any vessel. Pollutant-emitting activities 

shall be considered as part of the same 

industrial grouping if they belong to the 

same Major Group (i.e., which have the 

same two-digit code) as described in the 

Standard Industrial Classification 

Manual, 1972, as amended by the 1977 

Supplement (U.S. Government Printing 

Office stock numbers 4101–0066 and 

003–005–00176–0, respectively). 

(ii) Notwithstanding the provisions of 

paragraph (b)(6)(i) of this section, 

building, structure, facility, or 

installation means, for onshore 

activities under SIC Major Group 13: Oil 

and Gas Extraction, all of the pollutantemitting activities included in Major 

Group 13 that are located on one or 

more contiguous or adjacent properties, 

and are under the control of the same 

person (or persons under common 

control). Pollutant emitting activities 

shall be considered adjacent if they are 

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located on the same surface site, or on 

surface sites that are located within 1⁄4

mile of one another, where a surface site 

has the same meaning as in 40 CFR 

63.761. 

[PROPOSED REGULATORY TEXT FOR 

OPTION 2] 

(6)(i) Building, structure, facility, or 

installation means all of the pollutantemitting activities which belong to the 

same industrial grouping, are located on 

one or more contiguous or adjacent 

properties, and are under the control of 

the same person (or persons under 

common control) except the activities of 

any vessel. Pollutant-emitting activities 

shall be considered as part of the same 

industrial grouping if they belong to the 

same Major Group (i.e., which have the 

same two-digit code) as described in the 

Standard Industrial Classification 

Manual, 1972, as amended by the 1977 

Supplement (U.S. Government Printing 

Office stock numbers 4101–0066 and 

003–005–00176–0, respectively). 

(ii) Notwithstanding the provisions of 

paragraph (b)(6)(i) of this section, 

building, structure, facility, or 

installation means, for onshore 

activities in SIC Major Group 13: Oil 

and Gas Extraction, all of the pollutantemitting activities included in Major 

Group 13, are located on one or more 

contiguous or adjacent properties, and 

are under the control of the same person 

(or persons under common control). 

Pollutant-emitting activities shall be 

considered adjacent if one of the 

following circumstances apply: 

(A) The pollutant-emitting activities 

are separated by a distance of 1⁄4 mile or 

more and there is an exclusive 

functional interrelatedness; or 

(B) The pollutant-emitting activities 

are separated by a distance of less than 

1⁄4 mile. 

* * * * * 

■ 4. In appendix S to part 51, revise 

section A.2. to read as follows: 

APPENDIX S TO PART 51—EMISSION 

OFFSET INTERPRETATIVE RULING 

* * * * * 

II. Initial Screening Analyses and 

Determination of Applicable Requirements 

A. * * * 

[PROPOSED REGULATORY TEXT FOR 

OPTION 1] 

2. (i) Building, structure, facility or 

installation means all of the pollutantemitting activities which belong to the same 

industrial grouping, are located on one or 

more contiguous or adjacent properties, and 

are under the control of the same person (or 

persons under common control) except the 

activities of any vessel. Pollutant-emitting 

activities shall be considered as part of the 

same industrial grouping if they belong to the 

same ‘‘Major Group’’ (i.e., which have the 

same two digit code) as described in the 

Standard Industrial Classification Manual, 

1972, as amended by the 1977 Supplement 

(U.S. Government Printing Office stock 

numbers 4101–0066 and 003–005–00176–0, 

respectively). 

(ii) Notwithstanding the provisions of 

paragraph II.2.(i) of this appendix, building, 

structure, facility or installation means, for 

onshore activities under SIC Major Group 13: 

Oil and Gas Extraction, all of the pollutantemitting activities included in Major Group 

13 that are located on one or more contiguous 

or adjacent properties, and are under the 

control of the same person (or persons under 

common control). Pollutant emitting 

activities shall be considered adjacent if they 

are located on the same surface site, or on 

surface sites that are located within 1⁄4 mile 

of one another, where a surface site has the 

same meaning as in 40 CFR 63.761. 

[PROPOSED REGULATORY TEXT FOR 

OPTION 2] 

2. (i) Building, structure, facility or 

installation means all of the pollutantemitting activities which belong to the same 

industrial grouping, are located on one or 

more contiguous or adjacent properties, and 

are under the control of the same person (or 

persons under common control) except the 

activities of any vessel. Pollutant-emitting 

activities shall be considered as part of the 

same industrial grouping if they belong to the 

same ‘‘Major Group’’ (i.e., which have the 

same two digit code) as described in the 

Standard Industrial Classification Manual, 

1972, as amended by the 1977 Supplement 

(U.S. Government Printing Office stock 

numbers 4101–0066 and 003–005–00176–0, 

respectively). 

(ii) Notwithstanding the provisions of 

paragraph II.2.(i) of this appendix, building, 

structure, facility or installation means, for 

onshore activities in SIC Major Group 13: Oil 

and Gas Extraction, all of the pollutantemitting activities included in Major Group 

13, are located on one or more contiguous or 

adjacent properties, and are under the control 

of the same person (or persons under 

common control). Pollutant-emitting 

activities shall be considered adjacent if one 

of the following circumstances apply: 

(A) The pollutant-emitting activities are 

separated by a distance of 1⁄4 mile or more 

and there is an exclusive functional 

interrelatedness; or 

(B) The pollutant-emitting activities are 

separated by a distance of less than 1⁄4 mile. 

* * * * * 

PART 52—APPROVAL AND 

PROMULGATION OF 

IMPLEMENTATION PLANS 

■ 5. The authority citation for part 52 

continues to read as follows: 

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

■ 6. In § 52.21, revise paragraph (b)(6) to 

read as follows: 

§ 52.21 Prevention of significant 

deterioration of air quality. 

* * * * * 

(b)* * * 

[PROPOSED REGULATORY TEXT FOR 

OPTION 1] 

(6)(i) Building, structure, facility, or 

installation means all of the pollutantemitting activities which belong to the 

same industrial grouping, are located on 

one or more contiguous or adjacent 

properties, and are under the control of 

the same person (or persons under 

common control) except the activities of 

any vessel. Pollutant-emitting activities 

shall be considered as part of the same 

industrial grouping if they belong to the 

same ‘‘Major Group’’ (i.e., which have 

the same first two digit code) as 

described in the Standard Industrial 

Classification Manual, 1972, as 

amended by the 1977 Supplement (U.S. 

Government Printing Office stock 

numbers 4101–0066 and 003–005– 

00716–0, respectively. 

(ii) Notwithstanding the provisions of 

paragraph (b)(6)(i) of this section, 

building, structure, facility, or 

installation means, for onshore 

activities under SIC Major Group 13: Oil 

and Gas Extraction, all of the pollutantemitting activities included in Major 

Group 13 that are located on one or 

more contiguous or adjacent properties, 

and are under the control of the same 

person (or persons under common 

control). Pollutant emitting activities 

shall be considered adjacent if they are 

located on the same surface site, or on 

surface sites that are located within 1⁄4

mile of one another, where a surface site 

has the same meaning as in 40 CFR 

63.761. 

[PROPOSED REGULATORY TEXT FOR 

OPTION 2] 

(6)(i) Building, structure, facility, or 

installation means all of the pollutantemitting activities which belong to the 

same industrial grouping, are located on 

one or more contiguous or adjacent 

properties, and are under the control of 

the same person (or persons under 

common control) except the activities of 

any vessel. Pollutant-emitting activities 

shall be considered as part of the same 

industrial grouping if they belong to the 

same ‘‘Major Group’’ (i.e., which have 

the same first two digit code) as 

described in the Standard Industrial 

Classification Manual, 1972, as 

amended by the 1977 Supplement (U.S. 

Government Printing Office stock 

numbers 4101–0066 and 003–005– 

00716–0, respectively. 

(ii) Notwithstanding the provisions of 

paragraph (b)(6)(i) of this section, 

building, structure, facility, or 

installation means, for onshore 

activities in SIC Major Group 13: Oil 

and Gas Extraction, all of the pollutantmstockstill on DSK4VPTVN1PROD with PROPOSALS2

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

emitting activities included in Major 

Group 13, are located on one or more 

contiguous or adjacent properties, and 

are under the control of the same person 

(or persons under common control). 

Pollutant-emitting activities shall be 

considered adjacent if one of the 

following circumstances apply: 

(A) The pollutant-emitting activities 

are separated by a distance of 1⁄4 mile or 

more and there is an exclusive 

functional interrelatedness; or 

(B) The pollutant-emitting activities 

are separated by a distance of less than 

1⁄4 mile. 

* * * * * 

PART 70—STATE OPERATING PERMIT 

PROGRAMS 

■ 7. The authority citation for part 70 

continues to read as follows: 

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

■ 8. In § 70.2, revise the undesignated 

text of the definition for ‘‘Major source’’ 

to read as follows: 

§ 70.2 Definitions. 

[PROPOSED REGULATORY TEXT FOR 

OPTION 1] 

* * * * * 

Major source means any stationary 

source (or any group of stationary 

sources that are located on one or more 

continuous or adjacent properties, and 

are under common control of the same 

person (or persons under common 

control)) belonging to a single major 

industrial grouping and that are 

described in paragraph (1), (2), or (3) of 

this definition. For the purposes of 

defining ‘‘major source,’’ a stationary 

source or group of stationary sources 

shall be considered part of a single 

industrial grouping if all of the pollutant 

emitting activities at such source or 

group of sources on contiguous or 

adjacent properties belong to the same 

Major Group (i.e., all have the same twodigit code) as described in the Standard 

Industrial Classification Manual, 1987. 

For onshore activities belonging to SIC 

Major Group 13: Oil and Gas Extraction, 

pollutant emitting activities shall be 

considered adjacent if they are located 

on the same surface site, or are on 

surface sites that are located within 1⁄4

mile of one another, where a surface site 

has the same meaning as in 40 CFR 

63.761. 

* * * * * 

■ 9. In § 70.2, revise the undesignated 

text, and paragraphs 1 and 2 of the 

definition for ‘‘Major source’’ to read as 

follows: 

§ 70.2 Definitions. 

[PROPOSED REGULATORY TEXT FOR 

OPTION 2] 

* * * * * 

Major source means any stationary 

source (or any group of stationary 

sources that are located on one or more 

continuous or adjacent properties, and 

are under common control of the same 

person (or persons under common 

control)) belonging to a single major 

industrial grouping and that are 

described in paragraph (1), (2), or (3) of 

this definition. For the purposes of 

defining ‘‘major source,’’ a stationary 

source or group of stationary sources 

shall be considered part of a single 

industrial grouping if all of the pollutant 

emitting activities at such source or 

group of sources on contiguous or 

adjacent properties belong to the same 

Major Group (i.e., all have the same twodigit code) as described in the Standard 

Industrial Classification Manual, 1987. 

For onshore activities belonging to SIC 

Major Group 13: Oil and Gas Extraction, 

pollutant emitting activities shall be 

considered adjacent if one of the 

following circumstances apply: 

(1) The pollutant-emitting activities 

are separated by a distance of 1⁄4 mile or 

more and there is an exclusive 

functional interrelatedness; or 

(2) The pollutant-emitting activities 

are separated by a distance of less than 

1⁄4 mile. 

* * * * * 

PART 71—FEDERAL OPERATING 

PERMIT PROGRAMS 

■ 10. The authority citation for part 71 

continues to read as follows: 

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

Subpart A—Operating Permits 

■ 11. In § 71.2, revise the undesignated 

text of the definition for ‘‘Major 

sources’’ to read as follows: 

§ 71.2 Definitions. 

[PROPOSED REGULATORY TEXT FOR 

OPTION 1] 

* * * * * 

Major source means any stationary 

source (or any group of stationary 

sources that are located on one or more 

contiguous or adjacent properties, and 

are under common control of the same 

person (or persons under common 

control)), belonging to a single major 

industrial grouping and that are 

described in paragraph (1), (2), or (3) of 

this definition. For the purposes of 

defining ‘‘major source,’’ a stationary 

source or group of stationary sources 

shall be considered part of a single 

industrial grouping if all of the pollutant 

emitting activities at such source or 

group of sources on contiguous or 

adjacent properties belong to the same 

Major Group (i.e., all have the same twodigit code) as described in the Standard 

Industrial Classification Manual, 1987. 

For onshore activities belonging to SIC 

Major Group 13: Oil and Gas Extraction, 

pollutant emitting activities shall be 

considered adjacent if they are located 

on the same surface site, or are on 

surface sites that are located within 1⁄4

mile of one another, where a surface site 

has the same meaning as in 40 CFR 

63.761. 

* * * * * 

■ 12. In § 71.2, revise the undesignated 

text, and paragraphs 1 and 2 of the 

definition for ‘‘Major sources’’ to read as 

follows: 

§ 71.2 Definitions. 

[PROPOSED REGULATORY TEXT FOR 

OPTION 2] 

* * * * * 

Major source means any stationary 

source (or any group of stationary 

sources that are located on one or more 

contiguous or adjacent properties, and 

are under common control of the same 

person (or persons under common 

control)), belonging to a single major 

industrial grouping and that are 

described in paragraph (1), (2), or (3) of 

this definition. For the purposes of 

defining ‘‘major source,’’ a stationary 

source or group of stationary sources 

shall be considered part of a single 

industrial grouping if all of the pollutant 

emitting activities at such source or 

group of sources on contiguous or 

adjacent properties belong to the same 

Major Group (i.e., all have the same twodigit code) as described in the Standard 

Industrial Classification Manual, 1987. 

For onshore activities belonging to SIC 

Major Group 13: Oil and Gas Extraction, 

pollutant emitting activities shall be 

considered adjacent if one of the 

following circumstances apply: 

(1) The pollutant-emitting activities 

are separated by a distance of 1⁄4 mile or 

more and there is an exclusive 

functional interrelatedness; or 

(2) The pollutant-emitting activities 

are separated by a distance of less than 

1⁄4 mile. 

* * * * * 

[FR Doc. 2015–21026 Filed 9–17–15; 8:45 am] 

BILLING CODE 6560–50–P 

mstockstill on DSK4VPTVN1PROD with PROPOSALS2