Document ID: EPA-HQ-OAR-2004-0014-0054
Agency: epa
Document Type: Rule
Title: Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR): Reconsideration of Inclusion of Fugitive Emissions
Posted Date: 2008-12-19T05:00Z

[Federal Register: December 19, 2008 (Volume 73, Number 245)]
[Rules and Regulations]               
[Page 77881-77902]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19de08-16]                         

[[Page 77881]]

-----------------------------------------------------------------------

Part II

Environmental Protection Agency

-----------------------------------------------------------------------

40 CFR Parts 51 and 52

Prevention of Significant Deterioration (PSD) and Nonattainment New 
Source Review (NSR): Reconsideration of Inclusion of Fugitive 
Emissions; Final Rule

[[Page 77882]]

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[EPA-HQ-OAR-2004-0014, FRL-8752-4]
RIN 2060-AM91

 
Prevention of Significant Deterioration (PSD) and Nonattainment 
New Source Review (NSR): Reconsideration of Inclusion of Fugitive 
Emissions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The EPA is finalizing revisions to the December 31, 2002 New 
Source Review (NSR) Improvement rules to change the requirements of the 
major NSR programs regarding the treatment of fugitive emissions. 
Specifically, this final rule requires that fugitive emissions be 
included in determining whether a physical or operational change 
results in a major modification only for sources in the source 
categories that have been designated through rulemaking pursuant to 
section 302(j) of the Clean Air Act (Act). Also, this action elaborates 
on guiding principles for determining fugitive emissions for purposes 
of NSR and title V permitting.

DATES: This final rule is effective January 20, 2009.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Mangino, Air Quality Policy 
Division, Office of Air Quality Planning and Standards (C504-03), 
Environmental Protection Agency, Research Triangle Park, NC 27711, 
telephone number: (919) 541-9778; fax number: (919) 541-5509, e-mail 
address: mangino.joseph@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

A. Does this action apply to me?

    Entities potentially affected by this action include sources in all 
industry groups. The majority of sources potentially affected are 
expected to be in the following groups.

------------------------------------------------------------------------
         Industry group                 SIC \a\            NAICS \b\
------------------------------------------------------------------------
Electric Services...............  491...............  221111, 221112,
                                                       221113, 221119,
                                                       221121, 221122
Petroleum Refining..............  291...............  324110
Industrial Inorganic Chemicals..  281...............  325181, 325120,
                                                       325131, 325182,
                                                       211112, 325998,
                                                       331311, 325188
Industrial Organic Chemicals....  286...............  325110, 325132,
                                                       325192, 325188,
                                                       325193, 325120,
                                                       325199
Miscellaneous Chemical Products.  289...............  325520, 325920,
                                                       325910, 325182,
                                                       325510
Natural Gas Liquids.............  132...............  211112
Natural Gas Transport...........  492...............  486210, 221210
Pulp and Paper Mills............  261...............  322110, 322121,
                                                       322122, 322130
Paper Mills.....................  262...............  322121, 322122
Automobile Manufacturing........  371...............  336111, 336112,
                                                       336211, 336992,
                                                       336322, 336312,
                                                       336330, 336340,
                                                       336350, 336399,
                                                       336212, 336213
Pharmaceuticals.................  283...............  325411, 325412,
                                                       325413, 325414
Mining..........................  211, 212, 213.....  21
Agriculture, Fishing and Hunting  111, 112, 113, 115  11
------------------------------------------------------------------------
\a\ Standard Industrial Classification.
\b\ North American Industry Classification System.

    Entities potentially affected by the subject rule for this proposed 
action also include state, local, and tribal governments.

B. How Is This Preamble Organized?

    The information presented in this preamble is organized as follows:

I. General Information
    A. Does this action apply to me?
    B. How is this preamble organized?
II. Background
    A. What is major New Source Review?
    B. What sources are subject to major NSR?
    C. What are fugitive emissions, and how do they figure into 
major NSR applicability?
    D. What is the basis for and history of EPA's treatment of 
fugitive emissions in major NSR applicability determinations?
    E. Why did EPA reconsider this aspect of the December 2002 NSR 
Improvement final rulemaking?
III. What is included in this final action?
    A. What are the results of EPA's reconsideration?
    B. What are EPA's revisions to the major NSR regulations?
    C. What is the effect of this action on the minor NSR program?
IV. What is the rationale for this final action?
    A. The Newmont Petition
    B. Policy and Legal Rationale
V. When will these changes take effect in the federal PSD Program 
and will states be required to revise their State Implementation 
Plans (SIPs) to incorporate this proposed action?
VI. What are the guiding principles for determining fugitive 
emissions?
VII. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Analysis
    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 That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12899: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
VIII. Judicial Review
IX. Statutory Authority

II. Background

A. What is Major New Source Review?

    The major NSR program is mandated by parts C and D of title I of 
the Act. Major NSR is a preconstruction review and permitting program 
applicable to new or modified major stationary sources (major sources) 
of air pollutants regulated under the Act. In areas not meeting 
National Ambient Air Quality Standards (NAAQS) and in ozone transport 
regions (OTR), the program is implemented under the requirements of 
part D of title I of the Act. We call this program the 
``nonattainment'' major NSR program. In areas meeting NAAQS 
(``attainment'' areas) or for which there is insufficient information 
to determine whether they meet the NAAQS (``unclassifiable'' areas), 
the NSR requirements under part C of title I of

[[Page 77883]]

the Act apply. We call this program the Prevention of Significant 
Deterioration (PSD) program. Collectively, we also commonly refer to 
these programs as the major NSR program. These regulations are 
contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and appendix S to 
part 51.

B. What sources are subject to major NSR?

    Major NSR applies to (1) construction of new major sources, and (2) 
major modifications at existing major sources. In either case, the 
initial step in assessing applicability is to determine whether the 
source in question qualifies as a ``major source.'' A proposed or 
existing source qualifies as a major source if it ``emits or has the 
potential to emit'' a regulated NSR pollutant in an amount greater than 
the specified annual threshold. We define ``potential to emit'' (PTE) 
as the maximum capacity of a source to emit a pollutant under its 
physical and operational design, taking into account any physical or 
operational limitations on the source that are enforceable as a 
practical matter. (See, for example, Sec.  52.21(b)(4) for the full 
definition of PTE.)
    If a proposed new source's PTE is greater than the applicable major 
source threshold for one or more regulated NSR pollutants, it is 
subject to preconstruction review under major NSR. For the PSD program, 
the major source threshold is 100 tons per year (tpy) for sources in 
any of 28 source categories listed in the regulations, and 250 tpy for 
any other type of source. (See Sec. Sec.  51.166(b)(1) and 52.21(b)(1) 
for the full definition of ``major stationary source'' under PSD.) The 
major source threshold under nonattainment major NSR is generally 100 
tpy, but is lower for some pollutants in nonattainment areas classified 
as serious, severe, or extreme. (See Sec.  51.165(a)(1)(iv) for the 
full definition of ``major stationary source'' under nonattainment 
major NSR.) These same major source thresholds also apply to 
modifications at existing minor sources where the modification by 
itself has potential emissions in excess of the applicable threshold.
    If an existing major source (i.e., an existing source with actual 
emissions and/or PTE greater than the applicable major source 
threshold) is planning a physical or operational change, the project is 
subject to review under major NSR if it is a ``major modification.'' A 
physical or operational change is a major modification if it meets both 
of the following two criteria: \1\
---------------------------------------------------------------------------

    \1\ On October 20, 2005, we proposed different major NSR 
applicability procedures for modifications at electric generating 
units. (See 70 FR 61081.) Our rulemaking effort for such units is 
ongoing.
---------------------------------------------------------------------------

     The physical or operational change, taken by itself, would 
result in a significant increase in emissions of a regulated NSR 
pollutant; and
     The physical or operational change, taken together with 
other, contemporaneous emissions increases and decreases at the source, 
would result in a significant net emissions increase.
    The level of emissions that is considered ``significant'' varies by 
pollutant and, in some cases, by a nonattainment area's classification. 
For example, an increase of 40 tpy is significant for sulfur dioxide, 
while 0.6 tpy of lead is considered a significant increase. (See 
Sec. Sec.  51.166(b)(23) and 52.21(b)(23) for the full definition of 
``significant'' under PSD and Sec.  51.165(a)(1)(x) for the full 
definition under nonattainment major NSR.) In determining the increase 
in emissions from a physical or operational change, new emissions units 
are evaluated at their PTE, while existing and replacement units are 
generally evaluated by comparing their baseline actual emissions before 
the physical or operational change to their projected actual emissions 
after the change.

C. What are fugitive emissions, and how do they figure into major NSR 
applicability?

    For purposes of major NSR, we define ``fugitive emissions'' as 
emissions that could not reasonably pass through a stack, chimney, 
vent, or other functionally equivalent opening. (See, for example, 
Sec.  52.21(b)(20).) Examples of fugitive emissions include windblown 
dust from surface mines and volatile organic compounds (VOCs) emitted 
from leaking pipes and fittings at petroleum refineries.
    Quantifiable fugitive emissions are included in a stationary 
source's PTE when determining whether the source is a major source only 
if they are emitted from one of the source categories specifically 
listed in the major NSR regulations. This is consistent with section 
302(j) of the Act, and is made clear in the definition of ``major 
stationary source'' that is found in the major NSR regulations. (See, 
for example, Sec.  52.21(b)(1)(iii).)
    Conversely, under the 2002 NSR rules, fugitive emissions, to the 
extent quantifiable, are included in determining whether a physical or 
operational change is a major modification (i.e., in calculating the 
resulting emissions increase and net emissions increase), regardless of 
the source category that the emission source belongs to. This is the 
case because the definitions of the terms ``projected actual 
emissions'' and ``baseline actual emissions'' under the 2002 NSR rules, 
which are the definitions used to calculate emission increases at 
existing units, include quantifiable fugitive emissions. (See 
Sec. Sec.  52.21(b)(41)(ii)(b) and 52.21(b)(48)(ii)(a).) In our 
November 13, 2007 (72 FR 63850, November 13, 2007) notice we proposed 
to modify this aspect of the current NSR rules to take a consistent 
approach as to the inclusion of fugitive emissions in threshold major 
source and major modification determinations.

D. What is the basis for and history of EPA's treatment of fugitive 
emissions in major NSR applicability determinations?

    Section 302(j) of the Act sets out the definition of ``major 
stationary source'' that, along with several other provisions of the 
Act, provides the basis for the definitions used in the major NSR 
regulations. The definition in section 302(j) specifies that fugitive 
emissions are included in major source determinations only for source 
categories that EPA specifies through rulemaking. As discussed below, 
EPA enacted regulations pursuant to section 302(j) that specify the 
source categories for which fugitive emissions are included in the 
major source determination and has listed these source categories in 
the ``major stationary source'' definitions. However, the Act is silent 
regarding the treatment of fugitive emissions for purposes of 
determining whether a physical or operational change is a major 
modification. Below, we discuss the history of this issue leading up to 
this final action.
    We first created the list of source categories for which fugitive 
emissions are included in major source determinations (the ``section 
302(j) list'') in the final PSD and nonattainment major NSR rules 
issued in 1980 on remand from the DC Circuit. (See 45 FR 52676, August 
7, 1980.) The court remanded our initial major NSR rules for a variety 
of reasons, including our failure to follow the requirements of section 
302(j) in promulgating a partial exemption for fugitive dust. (See 
Alabama Power v. Costle, 636 F.2d 323, 369-370 (DC Cir. 1979).)
    The promulgated section 302(j) list included the source categories 
listed in section 169(1) of the Act, which is the definition of ``major 
emitting facility'' for purposes of PSD. Under that definition, the 
major source threshold

[[Page 77884]]

for the listed source categories is 100 tpy, rather than the 250 tpy 
threshold that applies to other categories of sources. In the preamble 
to the 1980 major NSR rules, we noted that the Alabama Power court 
stated that ``Congress'' intention, in establishing the list of source 
categories in section 169(1) of the Act, was to identify facilities 
which, due to their size, are financially able to bear the substantial 
regulatory costs imposed by the PSD provisions and which, as a group, 
are primarily responsible for emission of the deleterious pollutants 
that befoul our nation's air.'' (See 45 FR 52691, August 7, 1980.) In 
light of that intent, we determined that as a matter of policy, it 
would be appropriate to count all emissions-including fugitive 
emissions-in threshold calculations of major NSR applicability for 
those source categories. (Again, see 45 FR 52691, August 7, 1980.) In 
doing so, we indicated that our listing decisions would be based on 
whether sources in the category have the potential to degrade air 
quality significantly. We also indicated that we would consider 
information raised by commenters that showed that unreasonable 
socioeconomic impacts relative to the benefits would result from 
subjecting the sources to the relevant PSD or nonattainment programs.
    In addition to the source categories listed in section 169(1), 
based on application of these criteria, we included on the section 
302(j) list ``any other stationary source category which, as of August 
7, 1980, is being regulated under section 111 or 112 of the Act.'' We 
noted in the 1980 preamble that categories of sources are regulated 
under section 111 (New Source Performance Standards or NSPS) or 112 
(National Emission Standards for Hazardous Air Pollutants or NESHAP) on 
the basis of a determination that their emissions seriously and 
adversely impact ambient air quality. We therefore determined that it 
was appropriate to include their fugitive emissions in the threshold 
calculations for purposes of major NSR applicability. We included the 
August 7, 1980 cutoff date because we believed that sources not 
regulated by NSPS or NESHAP before the promulgation date of the major 
NSR rules could not have been afforded a meaningful opportunity to 
comment on the inclusion of their fugitive emissions in threshold 
applicability determinations for the source category.
    In the preamble to the 1980 NSR rules, we explained that the 
Alabama Power court determined that the ``substantive preconstruction 
review and permitting requirements of section 165 `apply with equal 
force to fugitive emissions and emissions from industrial point 
sources,' '' but went on to explain that this meant only that ``section 
165 requires that fugitive emissions be taken into account in 
determinations of whether NAAQS or allowable increments will be 
violated * * * and that fugitive emissions be subjected to BACT 
requirements * * *.'' (See 45 FR 52691, August 7, 1980.) Thus, in the 
preamble to the 1980 rules, we analytically grouped fugitive emissions 
for purposes of the major source definition and major modifications 
under the rubric of ``threshold calculations.'' (See 45 FR 52690-91, 
August 7, 1980.)
    However, the 1980 NSR regulations on their face require fugitive 
emissions to be included in threshold applicability determinations for 
any project, but then exempt from the relevant PSD or nonattainment 
requirements any project that (1) would be ``major'' only if fugitive 
emissions were included and (2) does not belong to one of the 
categories specifically listed pursuant to the section 302(j) 
rulemaking. (See, for example, Sec.  52.21(i)(4)(vii) as promulgated in 
1980 at 45 FR 52739, August 7, 1980, respectively. See also the 
discussion at 49 FR 43204, October 26, 1984.) Thus, in the 1980 rules, 
we included the section 302(j) list in a provision that exempted from 
PSD permitting requirements ``a particular major stationary source or 
major modification, if * * * [t]he source or modification would be a 
major stationary source or major modification only if fugitive 
emissions, to the extent quantifiable, are considered in calculating 
the potential to emit of the stationary source or modification and the 
source does not belong to [any of the categories in the section 302(j) 
list].'' (See Sec. Sec.  52.21(i)(4), (i)(4)(vii), 45 FR 52738-52739, 
August 7, 1980.) A similar exclusion applied in the nonattainment major 
NSR context. (See Sec.  51.18(j)(4), 45 FR 52746, August 7, 1980.) In 
our response to a petition for reconsideration of the 1980 rules 
submitted on behalf of the American Mining Congress, we continued this 
approach, stating that ``EPA * * * intended to establish that any 
source which would be `major' only if fugitive emissions were taken 
into account is not to be considered `major' for any PSD purpose, 
unless the source belongs to one of the categories on the list which 
now appears in [Sec.  ]52.21(i)(4)(vii). Similarly, EPA intended to 
establish that any modification that would be `major' only if fugitive 
emissions were taken into account is not to be considered `major' for 
any PSD purpose, unless the source * * * belongs to one of the 
categories on that list.'' Further, we committed to amend the 
regulations to conform them to these intentions. (See letter from 
Douglas M. Costle, EPA Administrator, to Robert T. Connery, Holland & 
Hart, January 19, 1981.)
    On October 26, 1984 (49 FR 43202, October 26, 1984) we affirmed the 
interpretation that we had stated in the 1980 NSR rulemaking. (See 49 
FR 43208, October 26, 1984.) We also added NSR regulatory provisions 
that the fugitive emissions of a stationary source shall not be 
included in the threshold determination of whether it is a major 
stationary source unless the source belongs to one of the categories of 
sources identified by EPA in its section 302(j) rulemaking. (See 49 FR 
43209-10, October 26, 1984.)
    In a companion notice published on October 26, 1984 (49 FR 43211, 
October 26, 1984), we solicited public comment on an ``interpretive 
ruling'' regarding section 302(j) of the Act as it relates to the 
review of physical or operational changes involving fugitive 
emissions.\2\ In this notice, we observed that in our 1980 NSR 
rulemaking and when proposing amendments in 1983, we had assumed that 
the rulemaking requirement in section 302(j) regarding source 
categories for which fugitive emissions should be considered applies to 
modification determinations as well as to threshold major source 
determinations. However, in this 1984 interpretive proposal, we stated 
that we believed our prior assumption in this regard was incorrect. We 
proposed to include fugitive emissions for sources in all source 
categories, to the extent quantifiable, when determining whether a 
physical or operational change meets the significance thresholds for a 
modification for purposes of major NSR. (See 49 FR 43213-14, October 
26, 1984.)
---------------------------------------------------------------------------

    \2\ This was an ``interpretive ruling'' in that we proposed to 
change our previous interpretation of the Act. To put the 
interpretive ruling into effect, we chose not to finalize the 
proposed revision to the major modification definition.
---------------------------------------------------------------------------

    On February 28, 1986 (see 51 FR 7090, February 28, 1986), we 
reopened the comment period to receive further comment on several of 
the issues addressed in our October 26, 1984 proposal. The comment 
period ended April 9, 1986. Comments on this proposal are captured in 
legacy docket A-84-33.
    On November 28, 1989 (see 54 FR 48870, November 28, 1989), we 
finalized our 1984 interpretation and concluded that the section 302(j) 
limitation on including fugitive emissions applies to the threshold

[[Page 77885]]

determination of whether a source is a major source, but not to the 
threshold determination of whether a physical or operational change 
constitutes a major modification. We pointed out that the language of 
section 302(j) explicitly attaches the rulemaking requirements only to 
existing or proposed major sources, and says nothing about major 
modifications to existing sources. We also noted that the PSD and 
nonattainment major NSR definitions of ``modification'' in section 
169(2)(C) and section 171(4) of the Act, respectively, merely cross-
reference section 111(a)(4) of the Act, which is the definition of 
``modification'' in the NSPS provisions. Because section 111(a)(4) 
defines modification solely in terms of the total amount of pollution 
that a change at a source would produce, we believed that Congress 
intended to establish no qualitative distinction between stack and 
fugitive emissions. Moreover, we stated that the legislative history on 
section 302(j) does not refer directly to major modifications, although 
the conference report on the PSD construction and modification 
definitions in section 169(2)(C) does provide that Congress' general 
intent was ``to conform to usage in other parts of the Act'' [123 Cong. 
Rec. H 11957, col. 3 (daily ed.) (November 1, 1977)]. We reasoned that 
this passage referred not only to section 111(a)(4), but to usage of 
these terms in existing EPA regulations under the NSPS and NSR 
programs, which did not distinguish between fugitive and stack 
emissions. We concluded that an interpretation of section 302(j) to 
exempt fugitive emissions from modification calculations ran counter to 
EPA's longstanding practice, and that if Congress intended a 
legislative change as to major modifications, it would have said so 
explicitly. (See 54 FR 48882-83, November 28, 1989.) We further 
concluded that EPA's longstanding practice of considering the fugitive 
emissions of all sources, not just those on the section 302(j) list, 
when determining whether a major modification had occurred was 
reasonable. (See 54 FR 48883, November 28, 1989.) In addition, we 
related that our interpretation likely would not impose new regulatory 
burdens because fugitive emissions from physical or operational changes 
would still be excluded from applicability determinations unless the 
changes occurred at a major source. We reasoned that under the Act and 
EPA regulations, a modification is ``major'' and subject to review only 
if the source at which it would occur is also ``major.'' Hence, a 
modification to a source of predominantly fugitive emissions that does 
not belong to a currently listed category could not be subject to 
review, even if its fugitive emissions were taken into account, because 
the source would not be ``major.'' (See 49 FR 43213-14, October 26, 
1984.) Based on this reasoning, our November 28, 1989 final action 
reaffirmed our October 1984 proposed interpretation that the list of 
fugitive emissions sources created pursuant to section 302(j) does not 
apply to major modifications and that fugitive emissions for sources in 
all source categories must be included when determining whether a 
physical or operational change meets the significance thresholds for 
purposes of major NSR.
    In October 1990, we issued the draft ``New Source Review Workshop 
Manual,'' \3\ in which we stated that under the federal PSD 
regulations, fugitive emissions ``are included in the potential to emit 
(and increases in the same due to modification)'' if they occur at one 
of the source categories listed pursuant to section 302(j). (See page 
A.9 of the Manual, which may be found at http://www.epa.gov/ttn/nsr/
gen/wkshpman.pdf.) This phrasing seemingly contradicts our November 
1989 final interpretive ruling, although we did not intend to change 
our policy in this area.
---------------------------------------------------------------------------

    \3\ The ``New Source Review Workshop Manual'' is in draft form 
and the Agency chose not to finalize this manual.
---------------------------------------------------------------------------

    In the NSR Improvement final rulemaking published December 31, 2002 
(67 FR 80186, December 31, 2002), we promulgated final rules consistent 
with our November 1989 final interpretive ruling. In that rulemaking, 
we required the inclusion of fugitive emissions in calculating 
emissions increases for purposes of determining whether a particular 
physical or operational change constitutes a major modification 
requiring a PSD or nonattainment major NSR permit for all major 
sources, regardless of source category. (See, for example, Sec.  
52.21(b)(41)(ii)(b), which includes fugitive emissions, to the extent 
quantifiable, in the definition of ``projected actual emissions'' and 
Sec.  52.21(b)(48)(i)(a), which includes fugitive emissions, to the 
extent quantifiable, in the definition of ``baseline actual 
emissions.'')

E. Why did EPA reconsider this aspect of the December 2002 NSR 
Improvement final rulemaking?

    On July 11, 2003, we received a petition for reconsideration of the 
December 2002 NSR Improvement final rules from Newmont USA Ltd., dba 
Newmont Mining Corporation (Newmont). Newmont argued that we failed to 
comply with the requirements of section 302(j) of the Act in requiring 
fugitive emissions to be counted for purposes of determining whether a 
physical or operational change constitutes a major modification for 
sources in source categories not listed pursuant to section 302(j). 
Newmont also argued that we failed to provide notice and an opportunity 
for comment on this issue. The EPA Assistant Administrator for Air and 
Radiation granted Newmont's petition by letter in January 2004.

III. What is included in this final action?

A. What are the results of EPA's reconsideration?

    Based on our review and consideration of comments received on the 
issue regarding whether fugitive emissions are to be counted for 
purposes of determining whether a physical or operational change 
constitutes a major modification, we are revising the provisions of the 
December 2002 NSR Improvement final rules related to the treatment of 
fugitive emissions. We have decided to reverse our existing policy and 
include fugitive emissions in determining whether a physical or 
operational change results in a major modification only for sources in 
the source categories that have been designated through rulemaking 
pursuant to section 302(j) of the Act. In other words, we have decided 
to adopt the same approach to fugitive emissions for determining 
whether a change is a major modification as is currently used for 
determining whether a source is major.

B. What are EPA's revisions to major NSR regulations?

    To implement our new approach to fugitive emissions, in this final 
action we are revising all four main portions of the major NSR program 
regulations: Sec.  51.165, Sec.  51.166, Sec.  52.21, and appendix S to 
part 51. The revisions are nearly identical for these regulations 
because they contain nearly identical provisions related to major 
modifications. As indicated at proposal, we are including specific 
revisions for appendix S to part 51 in this action consistent with the 
changes that we proposed and are finalizing for Sec.  51.165.
    For Sec. Sec.  51.165, 51.166, 52.21, and appendix S to part 51, we 
are modifying a number of definitions. In addition, we are finalizing 
the following:

[[Page 77886]]

    (1) A minor change in the provisions for plantwide applicability 
limitations (PALs) to preserve the existing treatment of fugitive 
emissions for PALs.
    (2) A modification to the paragraph in each rule that explains how 
to calculate whether a significant emissions increase will occur as the 
result of a physical or operational change.
    (3) A minor revision in the provisions on monitoring and reporting 
for physical and operational changes that are found not to be major 
modifications.
    (4) Deletion of a now unnecessary paragraph that provides for a 
generalized exemption related to fugitive emissions and repeats the 
section 302(j) source category list.
    We are also finalizing revisions to the definitions of ``baseline 
actual emissions'' and ``projected actual emissions.'' As noted in the 
Newmont petition, these definitions (which figure in determining the 
increase associated with a physical or operational change) currently 
require that fugitive emissions be included, to the extent 
quantifiable, without regard to source category. Our revisions will 
qualify this requirement so that fugitive emissions (to the extent 
quantifiable) must be included for an emissions unit that ``belongs to 
one of the source categories listed in [the section 302(j) list that 
appears in the definition of `major stationary source'] or is located 
at a major stationary source that belongs to one of the listed source 
categories.'' For baseline actual emissions, this revision appears in 
Sec.  51.165(a)(1)(xxxv)(A)(1), (B)(1), and (C); Sec.  
51.166(b)(47)(i)(a), (ii)(a), and (iii); Sec.  52.21(b)(48)(i)(a), 
(ii)(a), and (iii); and, II.A.30(i)(a), (ii)(a), and (iii) of appendix 
S to part 51. For projected actual emissions, the revision appears in 
Sec.  51.165(a)(1)(xxviii)(B)(2) and (4), Sec.  51.166(b)(40)(ii)(b) 
and (d), Sec.  52.21(b)(41)(ii)(b) and (d), and II.A.24(ii)(b) and (d) 
of appendix S to part 51.
    Note that the final language refers to emissions units that are, 
themselves, in a source category on the section 302(j) list, as well as 
the 302(j) listing status of the entire major stationary source at 
which the emission unit is located. An emissions unit under NSR means 
any part of a stationary source that emits or has the potential to emit 
any regulated NSR pollutant. If either the emissions unit or the parent 
source is in a source category on the section 302(j) list, the emission 
unit's fugitive emissions, to the extent quantifiable, must be included 
for purposes of determining whether a physical or operational change 
constitutes a modification. This treatment of fugitives from emission 
units in making major modification determinations is thereby consistent 
with the treatment of fugitives from emissions units in making major 
source threshold determinations. We are also finalizing similar 
language throughout this rule. See section IV of this preamble below 
for additional discussion of the rationale for this language.
    The following example illustrates how to consider fugitive 
emissions from an emission unit within a facility. A fossil-fueled 
boiler unit that exceeds 250 million British thermal units per hour 
heat input (MMBtu/hr), and thus meets the definition of a 302(j) listed 
source category by itself, may be located at an industrial facility 
whose primary activity is not represented by one of the source 
categories listed pursuant to section 302(j). In this case, threshold 
determinations for major modifications at the facility would need to 
consider fugitive emissions, to the extent quantifiable, from the 
boiler unit but not from other non-302(j) emissions units at the 
facility. Alternatively, if a boiler unit did not exceed the 250 MMBtu/
hr heat input level, and thus did not meet the definition of a 302(j) 
listed source category by itself, but was located at a facility 
represented by a source category on the section 302(j) list due to the 
facility's primary activity classification, the boiler unit's fugitive 
emissions, to the extent quantifiable, must be included for purposes of 
determining whether a physical or operational change constitutes a 
modification.
    We are also finalizing our proposed definition of ``baseline actual 
emissions'' to maintain the current requirements for PALs. Plantwide 
applicability limitations are an alternative means of determining the 
applicability of major NSR to changes at an existing major stationary 
source. Instead of evaluating each physical or operational change 
individually, the source tracks total emissions from the source to be 
sure that they remain below the level of its PAL. Baseline actual 
emissions are used in setting the level of the PAL.
    We continue to believe that it is appropriate to include fugitive 
emissions (to the extent quantifiable) in setting the level of the PAL 
and in tracking compliance with it, regardless of the source category. 
In the preamble to the December 2002 NSR Improvement rules, we 
explained that the benefit of PALs to the public and the environment is 
that PALs are designed ``to assure local communities that air emissions 
from your major stationary source will not exceed the facility-wide cap 
set forth in the permit unless you first meet the major NSR 
requirements.'' We further explained that a PAL ``provides a more 
complete perspective to the public because in setting a PAL, your 
reviewing authority accounts for all current processes and all 
emissions units together and reflects the long-term maximum amount of 
emissions it would allow from your source.'' (See 67 FR 80206, December 
31, 2002.) We therefore do not believe we can exempt fugitive emissions 
from being included when setting a PAL. Consequently, we are revising 
the subparagraph of this definition that addresses PALs to ensure that 
fugitive emissions continue to be included for the purposes of PALs for 
all source categories. This revision is found in Sec. Sec.  
51.165(a)(1)(xxxv)(D), 51.166(b)(47)(iv), 52.21(b)(48)(iv), and 
II.A.30(iv) of appendix S to part 51.
    To reinforce our intentions for PALs, we are finalizing a minor 
revision to the provisions for PALs to state clearly that a PAL is to 
include fugitive emissions, to the extent quantifiable, ``regardless of 
whether the emissions unit or major stationary source belongs to one of 
the source categories listed in [the section 302(j) list].'' This 
revision is found in Sec. Sec.  51.165(f)(4)(i)(D), 51.166(w)(4)(i)(d), 
52.21(aa)(4)(i)(d), and IV.K.4(i)(d) of appendix S to part 51.
    We are also finalizing a revision to the definition of ``major 
modification'' to mirror the existing definition of ``major stationary 
source.'' Specifically, we are adding a subparagraph to this definition 
saying:

    Fugitive emissions shall not be included in determining for any 
of the purposes of this section whether a physical change in or 
change in the method of operation of a major stationary source is a 
major modification, unless the source belongs to one of the source 
categories listed in [the section 302(j) list that appears in the 
definition of ``major stationary source'' for the rule] of this 
section.

This new language is in Sec. Sec.  51.165(a)(1)(v)(G), 51.166(b)(2)(v), 
52.21(b)(2)(v), and II.A.5(vii) of appendix S to part 51.
    This action also finalizes a revision to the definition of ``net 
emissions increase'' to preclude an unlisted major source from 
including contemporaneous increases and decreases in fugitive emissions 
in the ``netting analysis'' for a physical or operational change. We do 
not believe that an unlisted source (which does not include fugitive 
emissions in determining the increase in emissions from the current 
physical or operational change) should be able to use decreases in 
fugitive emissions to ``net out'' of major NSR. Rather, we believe that 
unlisted sources should treat fugitive emissions consistently for all 
purposes related to determining the applicability of major NSR to 
physical

[[Page 77887]]

or operational changes. Accordingly, we are adding language at 
Sec. Sec.  51.165(a)(1)(vi)(C)(3), 51.166(b)(3)(iii)(d), 
52.21(b)(3)(iii)(c), and II.A.6(iii) of appendix S to part 51 that 
states that in order for an increase or decrease in fugitive emissions 
(to the extent quantifiable) to be considered ``creditable'' in netting 
analyses, it must occur at an emissions unit that belongs to one of the 
section 302(j) listed source categories or is located at a major 
stationary source that belongs to one of section 302(j) listed source 
categories.
    The final definitional changes made in this action ensure 
consistent treatment of fugitives where fugitive emissions are 
referenced in other steps in the major NSR program. For this purpose, 
we are adding subparagraphs to summarize how fugitive emissions are to 
be addressed in each section and to refer the reader to the relevant 
provisions. We believe that the added subparagraphs will aid 
understanding of our intentions regarding fugitive emissions. These 
revisions are made in Sec. Sec.  51.165(a)(1)(ix), 51.166(b)(20), 
52.21(b)(20), and II.A.9 of appendix S to part 51.
    The December 2002 NSR Improvement rulemaking added provisions to 
the major NSR regulations to clarify the two-step process for 
determining whether a physical or operational change is a major 
modification. Step 1 is the evaluation of the proposed change to 
determine whether it will cause a significant increase in emissions of 
a regulated NSR pollutant. If so, the source goes on to Step 2, which 
is a ``netting analysis'' to determine whether the change will result 
in a significant net emissions increase when taken together with any 
contemporaneous, creditable emissions increases or decreases that have 
occurred at the source. This action revises the provisions for Step 1 
to clarify that fugitive emissions (to the extent quantifiable) are 
only included for section 302(j) listed emissions units and source 
categories. (Clarifications for Step 2 are handled in our revisions to 
the definitions that are discussed above.) This revision appears in 
Sec. Sec.  51.165(a)(2)(ii)(B), 51.166(a)(7)(iv)(b), 
52.21(a)(2)(iv)(b), and IV.I.1(ii) of appendix S to part 51.
    The December 2002 NSR Improvement rulemaking also added provisions 
for monitoring and reporting the emissions that actually occur after a 
physical or operational change in cases where the change was 
determined, prior to construction, not to be a major modification. This 
action makes minor revisions to these provisions to be explicit that 
fugitive emissions (to the extent quantifiable) need only be monitored 
and reported if the emissions unit or major stationary source in 
question is on the section 302(j) list. This revision provides for 
consistent treatment of fugitive emissions before and after the 
physical or operational change. This revision affects Sec. Sec.  
51.165(a)(6)(iii) and (iv), 51.166(r)(6)(iii) and (iv), 
52.21(r)(6)(iii) and (iv), and IV.J.3 and IV.J.4 of appendix S to part 
51.
    Finally, we are deleting a paragraph in each of the major NSR 
regulations that is no longer necessary. The paragraphs deleted were 
the original paragraphs placed in the rules to implement section 302(j) 
of the Act. However, after the definition of ``major stationary 
source'' was revised to include only the section 302(j) list, and we 
later adopted a policy (reversed now by this action) that fugitive 
emissions must be counted for all source categories in major 
modification determinations, these paragraphs tended to confuse the 
issue. With this action, we provide a uniform approach to fugitive 
emissions for major source and major modification determinations, and 
these paragraphs have now become completely unnecessary. Accordingly, 
in this action we are removing and reserving the following paragraphs: 
Sec. Sec.  51.165(a)(4), 51.166(i)(1)(ii), 52.21(i)(1)(vii), and II.F. 
of appendix S to part 51.

C. What is the effect of this action on the minor NSR program?

    Major NSR programs are very similar across the United States, 
prescribed in significant detail as they are by the Act and the 
implementing federal regulations. In contrast, state and local minor 
NSR programs are subject only to general requirements under Sec. Sec.  
51.160-164 and, as a consequence, may vary significantly from area to 
area.\4\ As a result, we do not know, with certainty, how such programs 
typically address fugitive emissions in minor NSR permitting. We 
requested comment on this topic.
---------------------------------------------------------------------------

    \4\ There are currently no approved tribal minor NSR programs.
---------------------------------------------------------------------------

    We believe that it is important for minor NSR programs to be clear 
regarding the treatment of fugitive emissions in all areas of the 
program. This will afford all sources consistent treatment and a 
``level playing field.'' In addition, a common understanding of program 
requirements from the outset is important to avoid controversy and 
wasted resources during the permitting process. In light of the 
importance of clear requirements regarding the treatment of fugitive 
emissions, this action requires that each implementation plan as a 
minimum element must be explicit in specifying how fugitive emissions 
are to be accounted for in all aspects of the minor NSR program. We 
discuss this requirement more specifically in section V of this 
preamble.
    We recently proposed minor NSR and nonattainment major NSR 
regulations for sources in those areas of Indian country where tribes 
do not have an EPA-approved implementation plan. (See 71 FR 48696.) We 
proposed in the minor NSR rule to require minor sources to include 
fugitive emissions to the extent quantifiable for applicability 
purposes for all sources, or include them only for source categories 
listed pursuant to section 302(j), or exclude them for all sources. In 
the final tribal minor NSR rule, we will adopt one of these proposed 
approaches. When we finalize the minor NSR rule for Indian country, we 
expect to address the treatment of fugitive emissions consistent with 
this final rule.
    We solicited comment on all aspects of our proposal regarding minor 
NSR. We also solicited comment on whether we should include rule 
language in 40 CFR 51.160 (for example, at Sec.  51.160(e)) to require 
state, local, and tribal minor NSR programs to directly address 
fugitive emissions in minor NSR rules.
    The comments received on the minor NSR program aspects of the 
proposed rule generally split into two groups: (1) Those that agreed 
with EPA that it is important for minor NSR programs to be clear 
regarding the treatment of fugitive emissions and that these 
requirements should be explicitly stated in a state's implementation 
plan, and (2) those who felt state and local permitting authorities 
should not be required to provide an explicit description of how they 
treat fugitive emissions in their minor NSR programs.
    Several commenters from the second group questioned whether EPA can 
require state and local agencies to specify explicitly how they will 
treat fugitive emissions in all aspects of their minor NSR programs. 
They argued that states have latitude to customize their programs and 
that EPA does not have the authority to require states to include this 
clarification as a minimal element of their minor NSR program. These 
commenters were generally concerned that EPA, by requesting information 
on how fugitives were being treated in minor NSR programs, was trying 
to extend aspects of the proposed rule to minor NSR programs and thus 
extend their authority beyond major NSR program requirements.

[[Page 77888]]

    We disagree with commenters that believe EPA is attempting, with 
this rule, to establish minimal state minor NSR requirements for 
fugitive emissions. The purpose of this rule is not to prescribe 
specific requirements or dictate how minor NSR programs should be 
constructed and operated to address fugitive emission sources. We fully 
recognize that states have considerable latitude to customize their 
minor NSR programs as long as they meet the basic purpose of ensuring 
that construction and modification of minor sources does not interfere 
with attainment and maintenance of the NAAQS.
    We do believe, however, that it is important for minor NSR programs 
to be clear regarding the treatment of fugitive emissions in all areas 
of the program. We disagree with commenters that our requirement in 
this action for state, local, and subject tribal authorities to provide 
an explanation of how they treat fugitives in their implementation 
plans falls outside our authority. Section 110(a)(2)(C) of the Act and 
our responsibility to review implementation plans provides us with 
authority to specify the inclusion of this minimum element in state, 
local, and tribal minor NSR programs. We believe a common understanding 
of program requirements from the outset is important to reviewing 
program objectives and avoiding controversy and wasted resources during 
the permitting process.

IV. What is the rationale for this final action?

A. The Newmont Petition

    The thrust of Newmont's petition for reconsideration is two-fold:
    1. The EPA did not comply with the requirements of section 302(j) 
of the Act when we included fugitive emissions in the definitions of 
``baseline actual emissions'' and ``projected actual emissions'' for 
purposes of determining whether a change at a facility constitutes a 
``major modification.''
    2. The EPA did not provide notice or an opportunity for comment on 
this approach, since these definitions were not proposed in the 1996 
proposed major NSR revisions. (See 61 FR 38250, July 23, 1996).
    As we noted in the 1984 and 1989 Federal Register notices where we 
proposed and finalized the interpretive ruling that established our 
existing approach to fugitive emissions for major modifications, the 
language of the Act does not resolve the issue of whether the fugitive 
emissions provisions of section 302(j) were intended by Congress to 
apply to major modifications as well as major sources. On its face, 
section 302(j) mandates rulemaking only for determining whether a new 
source is to be considered a ``major stationary source,'' and does not 
explicitly address major modifications. Neither does the definition of 
``modification'' in section 111(a)(4) address the issue. As discussed 
above, in our 1989 notice we also noted that interpreting section 
302(j) to exempt fugitive emissions from modification calculations ran 
counter to our longstanding practice, and reasoned that if Congress 
meant the section 302(j) rulemaking provision to cover major 
modifications, it would have said so. We believe this interpretation 
remains a permissible construction of the statute, and that since the 
time we finalized the interpretive ruling in 1989, we required that 
fugitive emissions be included in major modification determinations. 
For these reasons, we disagree with the petition on the two counts 
summarized above.
    As stated in our proposal, we now believe, however, that the 
absence of reference to ``major modification'' in section 302(j) simply 
does not dispose of the issue to reconsider the inclusion of fugitive 
emissions in determining major modifications. For PSD at least, 
Congress only added major modifications to the program in ``technical 
and conforming amendments'' after enacting the 1977 Clean Air Act 
Amendments and even as to nonattainment major NSR, defined 
``modification'' only by cross-reference. Similarly, we believe the 
legislative history is scant; Congress simply adverted to its desire to 
``conform [the PSD definition of construction] to usage in other parts 
of the Act.'' (See 123 Cong. Rec. 36331 (Nov. 1, 1977).) We cannot 
conclude from the statutory text or the legislative history what 
Congress explicitly intended on this point; the evidence is simply too 
ambiguous. Accordingly, we believe that we continue to have discretion 
under the second prong of Chevron, USA v. NRDC, 467 U.S. 837, 842-43 
(1984), to adopt ``a permissible construction of the statute.''

B. Policy and Legal Rationale

    We believe that section 302(j) evinces, at a minimum, an intent by 
Congress to require a special look at fugitive emissions for purposes 
of calculating a source's emissions for NSR purposes. The statute is 
silent or ambiguous on the applicability of section 302(j) to the 
question of whether a physical or operational change is a modification. 
That is, we do not believe that the Act precludes us from applying the 
section 302(j) restrictions on counting fugitive emissions to the 
methodology for determining whether a physical and operation change 
constitutes a major modification for NSR purposes. Moreover, although 
no authoritative conference or committee report addresses the issue of 
how fugitive emissions should be addressed in NSR permitting, there are 
numerous examples in committee hearings on the bills that led up to the 
1977 Amendments of industry testimony to the effect that in many cases 
fugitive emissions would not be susceptible to control or would be 
exceedingly costly to control, or would be infeasible to measure. See 
e.g., Hearings on Clean Air Act Amendments of 1977, Subcomm. on Health 
and the Environment, House Comm. on Interstate and Foreign Commerce, 
March 11, 1977, H.R. Rep. No. 95-59 at 1327 (statement of Earl Mallick, 
American Iron and Steel Inst.) (high costs of controlling fugitive 
emissions); Id., Part 2, March 18, 1975, H.R. Rept. No. 94-25 at 690 
(testimony of Fred Tucker, National Steel Corp.) (impossible to comply 
with SIP limits on fugitive emissions); Hearings on Implementation of 
the Clean Air Act--1975, Subcomm. on Environmental Pollution, Sen. 
Comm. on Public Works, Apr. 22, 1975, S. Rept. No. 94-H10, Pt. 1 at 757 
(statement of David M. Anderson, Bethlehem Steel Corp. to effect that 
control of fugitive emissions would be enormously costly but would have 
``a net negative environmental impact''); Id., Pt. 2, App. A at 2026 
(statement of Cast Metals Federation) (fugitive emissions control at 
nonferrous metals smelters extremely costly with adverse energy impacts 
and no improvement in air quality). But see Id., App. B at 2232-33 (EPA 
written responses to Committee questions) (for some industries fugitive 
control can be critical to attainment of standards).
    In light of this legislative history, it is reasonable to read 
section 302(j) of the Act as reflecting a decision by Congress that it 
simply did not know enough to make the critical decisions regarding the 
extent to which fugitive emissions should be included in threshold 
applicability determinations both for purposes of determining whether a 
source is a major source, and whether a physical or operational change 
constitutes a modification. Rather, we believe Congress assigned the 
resolution of these complex issues to EPA.
    As stated in the proposal, for policy and programmatic reasons, we 
now believe that it is better to adopt a uniform approach to these 
threshold determinations as they relate to fugitive emissions. We feel 
that this final action is most consistent with EPA's earliest

[[Page 77889]]

and most nearly contemporaneous construction of the statute contained 
in the 1980 NSR rules, which required that sources count fugitive 
emissions when determining whether an emissions increase qualifies as a 
major modification only if the source belonged to a section 302(j) 
listed category. By returning to a procedure that removes 
differentiation in the treatment of fugitive emissions for major source 
and modification threshold determinations, we provide a more uniform 
approach that we believe more accurately represents the original intent 
of Congress in establishing the section 302(j) provisions and the 
resultant 1980 rules that followed.
    In addition, with this final action we believe we now have 
addressed the additional regulatory burden that was not adequately 
recognized in the 1984 notice. (49 FR 43213-14, October 26, 1984.) We 
believe our assertion in the 1984 notice (see 49 FR 43213-14, October 
26, 1984) that the interpretation that we proposed then ``likely would 
not impose new regulatory burdens'' was not correct; our interpretation 
proposed in 1984 and finalized in 1989 imposed a new regulatory burden 
on major sources in a source category not on the section 302(j) list, 
since their fugitive emissions would be counted in determining whether 
they had made a change constituting a major modification and thus 
possibly subjecting those modifications to NSR review.
    Some commenters supported EPA's proposed exclusion of fugitive 
emissions in threshold determinations for major modifications at non-
section 302(j) listed sources under the PSD and nonattainment NSR 
programs. They believe that EPA's current policy of including these 
emissions in such determinations conflicts with EPA's historical policy 
of excluding fugitive emissions in applicability determinations for 
sources not included on the section 302(j) list and creates confusion 
in the permitting process by providing for differential treatment of 
fugitive emissions.
    Many of those who commented that they support the proposed rule 
also argued that EPA's 1989 interpretive ruling, which includes 
fugitive emissions in applicability determinations for all sources, was 
based on a misreading of section 302(j) and that EPA adopted (in 2002 
NSR Improvement final rules) the interpretive ruling policy into its 
regulations without notice or comment. They felt that we did not 
accurately describe our historical policy in the proposed rule by 
failing to state that our previous treatment of fugitives, as read 
under the 1989 interpretive ruling and as codified in the 2002 NSR 
Improvement final rules, were incorrect interpretations.
    We disagree with commenters that there were inaccuracies in 
describing our past decisions and discretion to include fugitives in 
NSR rule interpretations and guidance materials. While we acknowledge 
that our position on inclusion of fugitive emissions for determining 
major modifications for all sources has changed over the years, we do 
not agree with commenters that any previous interpretations or rulings 
were not permissible constructions of the statute. We cannot conclude 
from the statutory text at 302(j) or the legislative history what 
Congress explicitly intended in regards to inclusion of fugitive 
emissions for calculating major modifications. As a result, we believe 
that we have used our discretion under the second prong of Chevron, USA 
v. NRDC, 467 U.S. 837, 842-43 (1984), to adopt ``a permissible 
construction of the statute.'' We have similarly exercised our 
discretion to do so with this final action.
    Other commenters generally opposed EPA excluding fugitive emissions 
from non-section 302(j) listed sources in threshold determinations for 
major modifications under the NSR programs and believed that the 
proposed revisions to the NSR rules incorrectly implement section 
302(j) provisions and are not consistent with past practice and 
guidance regarding the treatment of fugitive emissions. They argued 
that EPA's own past finding as to the Congressional intent regarding 
treatment of fugitive emissions under the NSR program (54 FR 48870, 
November 28, 1989) show that section 111(a)(4) of the Act ``defines 
modification solely in terms of the total amount of pollution that a 
change at a source would produce,'' thus leading the EPA to conclude 
that Congress intended to establish no qualitative distinction between 
stack and fugitive emissions (72 FR 63854, November 13, 2007). These 
commenters urged EPA to reverse the proposed action and to retain the 
current policy regarding treatment of fugitives as included in the 2002 
NSR Improvement rules.
    We disagree with comments that these revisions to the NSR rules 
incorrectly implement section 302(j) and that our construction of the 
statute included in the 2002 NSR Improvement rules should be considered 
the correct interpretation of the Section 302(j) provisions. We believe 
now that the absence of reference to ``major modification'' in section 
302(j) simply does not dispose of the issue of whether there was 
Congressional intent to limit inclusion of fugitive emissions in 
threshold applicability determinations for major modifications to 
listed section 302(j) sources. Accordingly, we believe that we continue 
to have discretion under the second prong of Chevron, USA v. NRDC, 467 
U.S. 837, 842-43 (1984), to adopt ``a permissible construction of the 
statute.'' As such, we do not believe that the Act precludes us from 
applying the section 302(j) restrictions on counting fugitive emissions 
to the methodology for determining whether a physical and operation 
change constitutes a major modification.
    We feel that this final action is most consistent with EPA's 
earliest, most nearly contemporaneous construction of the statute in 
the 1980 rules, which required that sources count fugitive emissions 
when determining whether an emissions increase qualifies as a major 
modification only if the source belonged to a section 302(j) listed 
category. By returning to a procedure that removes differentiation in 
the treatment of fugitive emissions for major source and modification 
threshold determinations, we provide a more uniform approach that we 
believe more accurately represents the original intent of Congress in 
establishing the section 302(j) provisions and the resultant 1980 rules 
that followed.

V. When will these changes take effect in the federal PSD Program, and 
will states be required to revise their State Implementation Plans 
(SIPs) to incorporate this final action?

    We are requiring that these changes take effect in the Federal PSD 
permit program by February 17, 2009. This means that we will apply 
these rules in any area without a SIP-approved PSD Program for which we 
are the reviewing authority, or for which we delegated our authority to 
issues permits to a state, local or tribal reviewing authority on that 
date.
    We are also requiring that the requirements of this final action be 
established as minimum program elements of the PSD and nonattainment 
NSR programs approved by EPA as part of SIPs. Notwithstanding this 
requirement, it may not be necessary for a state or local authority to 
revise its SIP to begin to implement these changes.\5\ Some state or 
local authorities may be able to adopt these changes through a change 
in interpretation of existing

[[Page 77890]]

language in the approved SIP without the need to revise their SIP.
---------------------------------------------------------------------------

    \5\ Currently, there are no tribal permitting agencies with an 
approved Tribal Implementation Plan (TIP) to implement the major NSR 
permitting program.
---------------------------------------------------------------------------

    For any state or local authority that can implement the changes 
without revising its approved SIP, we propose that the changes become 
effective when the reviewing authority publicly announces that it 
accepts these changes by interpretation. Although no SIP change may be 
necessary in certain areas that adopt these changes by interpretation, 
we encourage state and local authorities in such areas to make such SIP 
changes in the future to enhance the clarity of the existing rules.
    For areas that need to revise their SIPs to adopt these changes, 
these changes would not be effective in such areas until we approve the 
SIP revision. We are requiring that such state and local authorities 
submit revisions to SIPs to reflect requirements that are at least as 
stringent as the minimum program elements we adopt in this final rule 
within 3 years after the rule's promulgation date. We are also allowing 
state and local authorities to maintain NSR program elements that have 
the effect of meeting the minimum program elements of this rule, but 
that, in these cases, the state and local authority must submit an 
explanation for that conclusion to EPA by the SIP submission deadline.
    We are also requiring state, local, and subject tribal authorities 
to explicitly specify in their implementation plans how the reviewing 
authority will treat fugitive emissions in all aspects of their minor 
NSR program. Section 110(a)(2)(C) of the Act provides us with authority 
to specify the inclusion of this minimum element in state, local, and 
tribal minor NSR programs. Therefore, we are requiring state, local, 
and subject tribal authorities to specify this in their implementation 
plan within 3 years from the promulgation date of this action.
    We received comments in the proposal on establishing the 
requirements of this action as minimum program elements for SIP-
approved PSD programs. One commenter stated that they believed EPA 
could not lawfully make the proposed requirements a minimum program 
element for SIP-approved PSD programs. Other commenters provided that 
section 116 of the Act stipulates that states are free to adopt air 
pollution control requirements that are more stringent than those 
required by the Act or EPA regulation and therefore should not be 
required to adopt any minimum program requirements in the proposal. One 
commenter stated that California state law specifically prevents the 
relaxation of NSR programs and that forcing California to adopt rule 
amendments that are less stringent would require California air 
pollution control districts to violate state law.
    We disagree with commenters who believe we do not have authority to 
establish the revisions to the treatment of fugitive emissions under 
the major NSR program, as finalized in this action, as minimum program 
elements of the NSR programs. The basis for establishing minimum 
program elements is rooted in well established statutory authority and 
interpretations for implementing the federal NSR program. We interpret 
the requirements of section 110 of the Act to require states to meet a 
certain minimum set of requirements that we specify, consistent with 
the Act, before any SIP can be approved by the Administrator, while 
section 116 does not allow states to adopt or enforce any SIP 
requirements less stringent than any minimum program element we specify 
through rulemaking. Moreover, the minimum program elements we establish 
in the NSR programs in no way precludes the development of more 
stringent major NSR programs by California, or any other state or local 
agencies in areas covered by SIP-approved PSD Programs.
    We also received comments on the impact of the proposed fugitive 
emission requirements on state and local air quality implementation 
plans. Several commenters opposed the EPA's proposal and 
reconsideration on the treatment of fugitives primarily because they 
believe it would impede their efforts to achieve attainment of health 
standards for ozone and PM2.5 and their ability to prevent 
significant deterioration in attainment areas. Some of these commenters 
argued that the proposal makes NSR applicability less stringent by 
exempting fugitive emissions from major modification applicability 
determinations which would result in an increase in fugitive emissions 
from non-listed sources when determining whether NAAQS or allowable 
increments will be violated.
    We agree with commenters that this action could result in some 
sources (those not on the section 302(j) list) not having to go through 
NSR review for major modifications; however, we disagree that this 
action will provide a blanket exemption to fugitive emissions from non-
section 302(j) sources. This action does not prohibit in any way a 
reviewing authority from requiring control of fugitive emissions by 
emission standards or limitations or modeling of quantifiable fugitive 
emissions, regardless of source category, where such measures might be 
considered necessary for compliance with a NAAQS or for other 
environmental protection purposes. We fully recognize that some states 
and localities may need to regulate additional fugitive emissions under 
their implementation plan for attainment purposes. We do not intend to 
preclude such regulation in either major or minor NSR where necessary 
to achieve the purposes of the Act. This rule only affects the 
treatment of fugitives in threshold applicability tests to determine 
what constitutes a major modification. If a source is determined to be 
either a major source or major modification due to its non-fugitive 
emissions, then all applicable pollutant emissions at the source, 
including fugitive, are subject to subsequent NSR review steps (e.g., 
BACT/LAER review, air quality impacts) according to NSR program 
requirements.
    This action in no way prevents reviewing authorities from 
controlling fugitive emissions through their SIP rules (e.g., minor 
source NSR program), through any other requirements under the Act 
(e.g., MACT standards), or state and local permitting programs that 
would control these emissions. We also specifically include, and 
reemphasize in this action (see section VI of this preamble), 
consideration to surrounding air quality (e.g., nonattainment areas) as 
a criteria in determining if it is reasonable to collect, capture, and 
control fugitive emissions.
    We also believe by returning to the original 1980 NSR rule 
construction regarding fugitives, we have kept intact the air quality 
goals of the statute. In the preamble to the 1980 major NSR rules, we 
noted that the Alabama Power court stated that ``Congress'' intention, 
in establishing the list of source categories in section 169(1) of the 
Act, was to identify facilities which, due to their size, are 
financially able to bear the substantial regulatory costs imposed by 
the PSD provisions and which, as a group, are primarily responsible for 
emission of the deleterious pollutants that befoul our nation's air.'' 
(See 45 FR 52691, August 7, 1980.) In light of that intent, we 
determined that as a matter of policy, it would be appropriate to count 
all emissions--including fugitive emissions--in threshold calculations 
of applicability for those source categories. In doing so, we indicated 
that our listing decisions would be based on whether sources in the 
category have the potential to degrade air quality significantly. We 
believe that the section 302(j) listing continues to address the air 
quality impacts from major emitting facilities and that this action 
preserves the intended air quality improvement strategies under the 
major NSR program.

[[Page 77891]]

VI. What are the guiding principles for determining fugitive emissions?

    In our major NSR and title V permit rules, ``fugitive emissions'' 
means ``those emissions which could not reasonably pass through a 
stack, chimney, vent, or other functionally equivalent opening.'' In 
practice, we interpret the phrase ``could not reasonably pass'' by 
determining whether such emissions can be reasonably collected or 
captured (e.g., enclosures or hoods). Under this interpretation, it is 
axiomatic that any emissions actually collected or captured by the 
source are non-fugitive emissions. The answer is less clear when the 
source is not currently collecting or capturing the emissions. In these 
circumstances, we make case-by-case determinations as to whether a 
source could reasonably collect or capture such emissions.
    Our past determinations articulate a number of principles we use in 
making these case-by-case determinations, though none may express the 
entirety of our policy. Moreover, some EPA memoranda, when viewed in 
isolation, may appear to provide divergent positions. Accordingly, we 
rearticulate our guiding principles in making these case-by-case 
determinations, and expand the explanation of these principles to 
enhance the understanding of the regulated community. Specifically, EPA 
will use the following guiding principles in determining whether 
emissions qualify as fugitive:
    1. Determining which emissions could ``reasonably pass'' is a case-
by-case decision based on whether or not the emissions can be 
reasonably collected or captured.
    2. Because another similar facility collects, captures, or controls 
emissions does not mean that it is reasonable for others to do the 
same, but it is a factor in each consideration.
    (a) If a source already collects or captures and discharges the 
emissions through a stack, chimney, vent or other functionally 
equivalent opening, then such emissions are non-fugitive at that 
source.
    (b) If we establish a national emissions standard or regulation 
that requires some sources in the source category to collect or capture 
and control such emissions, then this weighs heavily towards a finding 
that the emissions are non-fugitive at other sources in this category; 
and
    (c) The more common collection or capture of such emissions is by 
other similar sources, the more heavily this factor should weigh toward 
a finding that collection is reasonable.
    3. The cost to collect or capture and control emissions is a factor 
when considering what is ``reasonable.''
    (a) The combined costs to collect or capture and control emissions 
can be used as an alternative measure for the costs of emissions 
capture or collection alone in the case-by-case analysis;
    (b) The surrounding air quality (e.g., nonattainment areas) is a 
consideration when deciding if costs (collection, capture, control) are 
reasonable, and
    (c) If it is not technically or economically feasible to control 
the emissions, then collection or capture of such emissions may not be 
reasonable.
    As we stated at proposal, we believe that these three overarching 
principles represent our existing policy on defining fugitive 
emissions. Moreover, we believe that these elaborations on these basic 
principles represent a reasonable interpretation of our existing 
regulatory language to be applied to future fugitive emissions 
determinations. Accordingly, we do not propose specific changes to the 
existing regulatory language to accommodate this final action.
    Our second principle relates to a concept we established in one of 
our initial guidance memorandums defining fugitive emissions. 
Specifically, we indicated that a consideration in the case-by-case 
analysis is whether emissions are ``ordinarily'' collected or captured 
by other sources in the source category. In subsequent memoranda, we 
interchanged the term ``ordinarily'' for ``commonly.'' \6\ In a more 
recent memorandum, we describe this element in terms of a 
presumption.\7\ We view these presumptions as no more than suggesting a 
starting point for the case-by-case analysis.\8\ These guiding 
principles recognize that our existing guidance does not establish a 
non-rebuttable presumption, and does not attempt to establish a 
specific methodology states must use in conducting the case-by-case 
analysis. However, the expanded principles explain how states should 
weigh collection or capture of emissions by other similar sources in 
that analysis.
---------------------------------------------------------------------------

    \6\ Compare Memo from Gerald A. Emison, Director, Office of Air 
Quality Planning and Standards to David P. Howekamp, Director, Air 
Management Division, Region IX, Emissions from Landfills (Oct. 6, 
1987) (landfills are not ordinarily constructed with gas collection 
systems) to Memo from John S. Seitz, Director, Office of Air Quality 
Planning and Standards, to Director, Air, Pesticides and Toxics 
Management Division, Region I and V, et al., Classification of 
Emissions from Landfills for NSR Applicability Purposes (Oct. 21, 
1994) (* * * use of systems has become more common).
    \7\ See e.g., Memo from Thomas C. Curran, Director, Information 
Transfer and Program Integration Division, to Judith M. Katz, 
Director, Air Protection Division, Interpretation of the Definition 
of Fugitive Emissions in Parts 70 and 71 (Feb. 10, 1999).
    \8\ Recent case law suggests that the Agencies possess a limited 
ability to establish presumptions through guidance. See e.g. General 
Elec. Co. v. EPA, 290 F.3d 377 (DC Cir. 2002) (document stating 
without qualification that a certain value may be used to satisfy 
regulation was substantive rule; created norm or safe harbor that 
private parties can rely on).
---------------------------------------------------------------------------

    Although costs have always been a consideration in determining 
whether emissions are fugitive, we historically focused on the cost of 
collection or capture and not the cost of control. Notwithstanding our 
past practice, we believe that it is reasonable to consider the cost 
and economic feasibility of control in determining whether emissions 
can be reasonably captured or collected. For example, the cost of 
controlling emissions may be helpful in the analysis if cost data on 
collection, capture and control in the aggregate are more available or 
more easily calculated than cost data on collection or capture alone.
    Thus, with this action, we are allowing that the reviewing 
authority may consider the reasonableness of the combined costs of 
capture or collection and control as an alternative to considering only 
the cost of collection or capture. Notably, however, we expect 
permitting authorities to find higher costs reasonable when considering 
combined costs as an alternative compared to what would be reasonable 
if considering capture or collection costs alone. We also believe that 
accounting for the differences in attainment status is appropriate, 
because permitting authorities tend to accept higher collection, 
capture, and control costs as reasonable in areas where air quality 
problems are more severe.
    Finally, as technology improved, the technical feasibility to 
collect or capture virtually any source of emissions likewise evolved. 
For example, it is technically feasible to build a large capture device 
to collect virtually any type of process emissions. Yet, these captured 
emissions may contain air pollutants in such small concentrations that 
there is no technically or economically-feasible method to control the 
emissions once captured. Yet, under a strict interpretation of whether 
emissions are ``reasonably collected,'' we could find that such 
emissions are non-fugitive because they are reasonably collectable. 
Nonetheless this would fail to provide meaning to the term ``fugitive 
emissions'' as intended by Congress.
    As expressed by the Alabama Power court,

    ``In the general definitional section of the Act, section 
302(j), Congress employed the term `fugitive emissions' to refer to 
one manner of emission of any air pollutant. As

[[Page 77892]]

commonly understood, emissions, from an `industrial point source' 
include emissions emanating from a stack or from a chimney. By 
contrast, `fugitive emissions' are emissions from a facility that 
escape from other than from a point source.'' \9\
---------------------------------------------------------------------------

    \9\ Alabama Power v. Costle, 636 F.2d at 368.

    In our proposed 1979 major NSR rule, we followed this common 
understanding of the term ``fugitive emissions.'' When we finalized our 
rule in 1980, we changed the definition of fugitive emissions from 
those emissions ``which do not reasonably pass'' through a stack or 
vent, to those that ``could not reasonably pass'' to avoid creating a 
disincentive for a source to collect and control emissions when 
technically and economically feasible. It was not our intent to 
interpret the term in a way that could eliminate the distinction 
between fugitive and non-fugitive emissions. Accordingly, we believe 
that when the only reason to collect or capture such emissions would be 
to control the emissions, and there is no technical or economically 
feasible means to control the emissions, then collecting the emissions 
is nonsensical, and thus, may not be reasonable.
    Although this aspect of our principles may expand on how we 
historically considered costs in a case-by-case analysis, we believe 
that this interpretation remains fully consistent with Congress' intent 
in distinguishing fugitive emissions from non-fugitive emissions in the 
Act. The promulgated section 302(j) list includes the source categories 
listed in section 169(1) of the Act, which is the definition of ``major 
emitting facility'' for purposes of PSD. In the preamble to the 1980 
major NSR rules, we noted that the Alabama Power court stated that 
Congress' intention in establishing the list of source categories in 
section 169(1) of the Act was to identify facilities which, due to 
their size, are financially able to bear the substantial regulatory 
costs imposed by the PSD provisions and which, as a group, are 
primarily responsible for emission of the deleterious pollutants that 
befoul our nation's air.'' (45 FR 52691, August 7, 1980). Thus, the 
purpose of the fugitive emissions inquiry is to determine which 
emissions should count for determining source size with a view towards 
requiring large sources to install pollution controls. If the emissions 
cannot be controlled, then it is reasonable to consider this factor in 
determining whether such emissions can be ``reasonably'' collected or 
captured.
    We received several comments on our proposed elaborated guidelines 
for determining fugitive emissions. Several commenters supported EPA's 
guiding principles for determining fugitive emissions and for the 
inclusion of control costs as one of the case-by-case criteria that 
could be used for determining fugitive emissions. Two commenters, 
however, disagreed with the addition of ``cost of control'' to ``cost 
of capture or collection'' as one of the cost criteria that reviewing 
authorities may consider in determining whether emissions could 
reasonably pass through a stack, chimney, vent, or other functionally 
equivalent opening. One of these commenters stated that the presumption 
of the elaborated guidance in the proposed rule is that if it is not 
technically or economically feasible to control the emissions--
regardless of the technical or economic feasibility of capture--then it 
is not reasonable to capture them and they are therefore fugitive. The 
same commenter also felt that this new cost criterion could require 
permitting authorities to do additional upfront cost analyses prior to 
permit application, thereby increasing demand on limited resources.
    Another commenter supported the use of costs for either capture or 
collection and control or just for capture and collection, and also 
supports allowing permitting authorities to account for attainment 
status when considering the cost of collection, capture and control as 
higher costs may be found acceptable in ``dirtier'' areas.
    We disagree with the comments that guidance should not allow the 
reviewing authority to consider the cost of control. We believe that in 
some cases it is beneficial to consider the cost and economic 
feasibility of control in determining whether emissions can be 
reasonably captured or collected. For example, the cost of controlling 
emissions may be helpful in the analysis if cost data on collection, 
capture and control in the aggregate are more available or more easily 
calculated than cost data on collection or capture alone.
    Further, this guidance provides that the reviewing authority may 
consider the reasonableness of the combined costs of capture or 
collection and control as an alternative to considering only the cost 
of collection or capture. This elaboration on guidance does not place a 
regulatory requirement on the reviewing authority to take any specific 
approach to considering cost in determining fugitive emissions. 
Therefore, this alternative clearly identifies the cost factor, among 
many other case-specific factors, as an interpretive tool that a 
reviewing authority may use in determining whether fugitive emission 
can be reasonably collected or captured.

VII. Statutory and Executive Order Reviews

A. Executive Order 12866--Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), 
this action is a ``significant regulatory action'' because it is likely 
to raise novel legal or policy issues arising out of legal mandates, 
the President's priorities, or the principles set forth in the 
Executive Order. Accordingly, EPA submitted this action to the Office 
of Management and Budget (OMB) for review under EO 12866 and any 
changes made in response to OMB recommendations have been documented in 
the docket for this action.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
We are not promulgating any new paperwork requirements (e.g., 
monitoring, reporting, recordkeeping) as part of this proposed action. 
However, OMB has previously approved the information collection 
requirements contained in the existing regulations (40 CFR parts 51 and 
52) under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 
et seq., and has assigned OMB control number 2060-0003. The OMB control 
numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Analysis

    The Regulatory Flexibility Analysis (RFA) generally requires an 
agency to prepare a regulatory flexibility analysis of any rule subject 
to notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that 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 action on small 
entities, small entity is defined as: (1) A small business as defined 
by 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, school district, or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    After considering the economic impacts of this final action on 
small entities, I certify that this action will not have a significant 
economic impact on

[[Page 77893]]

a substantial number of small entities. In determining whether a rule 
has a significant economic impact on a substantial number of small 
entities, the impact of concern is any significant adverse economic 
impact on small entities, since the primary purpose of the regulatory 
flexibility analyses is to identify and address regulatory alternatives 
``which minimize any significant economic impact of the rule on small 
entities.'' 5 U.S.C. 603 and 604. Thus, 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, or 
otherwise has a positive economic effect on all of the small entities 
subject to the rule.
    A Regulatory Flexibility Act Screening Analysis (RFASA) developed 
as part of a 1994 draft Regulatory Impact Analysis (RIA) and 
incorporated into the September 1995 ICR renewal analysis, showed that 
the changes to the NSR program due to the 1990 Clean Air Act Amendments 
would not have an adverse impact on small entities. This analysis 
encompassed the entire universe of applicable major sources that were 
likely to also be small businesses (approximately 50 ``small business'' 
major sources). Because the administrative burden of the NSR program is 
the primary source of the NSR program's regulatory costs, the analysis 
estimated a negligible ``cost to sales'' (regulatory cost divided by 
the business category mean revenue) ratio for this source group. 
Currently, and as reported in the current ICR, there is no economic 
basis for a different conclusion.
    We believe the changes in this final action will reduce the 
regulatory burden associated with the major NSR program for sources, 
including small businesses, that are not included in the section 302(j) 
list. The requirements of this final action will not affect sources, 
including small businesses, that are included in the section 302(j) 
list; regulatory requirements for these sources will be unchanged.
    These changes will improve the clarity of the requirements for 
unlisted major sources, and may prevent some physical or operational 
changes at such sources from qualifying as major modifications when 
they would have been major modifications under the currently existing 
rules. Thus, the effect of these final changes will be to improve the 
operational flexibility of unlisted major sources. We have therefore 
concluded that this final action will relieve regulatory burden for all 
affected small entities.

D. Unfunded Mandates Reform Act

    This action contains no federal mandates under the provisions of 
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 
1531-1538 for state, local, or tribal governments or the private 
sector. The changes required by this final action are expected to 
result in a small, one-time increase in the burden imposed upon 
reviewing authorities in order for the revised rules to be included in 
the state's SIP (except in states that determine that they can 
implement the approach in this proposed action without a SIP revision). 
In addition, we believe these changes will actually reduce the 
regulatory burden associated with the major NSR program by improving 
the operational flexibility of owners and operators (with an attendant 
decrease in the number of major modification applications that 
reviewing authorities must process). Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.
    This action is also not subject to the requirements of section 203 
of the UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. As discussed above, 
this final rule does not impose any new requirements on small 
governments.

E. Executive Order 13132--Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by state and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that 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.''
    This final rule 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. In addition, we believe these 
final changes will actually reduce the regulatory burden associated 
with the major NSR program by improving the operational flexibility of 
owners and operators, with an attendant decrease in the number of major 
modification applications that reviewing authorities must process. 
Thus, Executive Order 13132 does not apply to this rule.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and state and local 
governments, EPA specifically solicited comment on the proposed rule 
from state and local officials.
    In response to the proposed rule, two commenters stated that the 
workload for them will increase significantly if permitting authorities 
are required to undertake the task of segregating fugitive emissions 
from NSR applicability calculations. They asserted that they anticipate 
disputes and appeals of their determinations on fugitive emissions. 
They argued that including all emissions for all sources is less 
resource-intensive for permitting authorities than making case-by-case 
determinations of whether to include fugitive emissions.
    While the change in this rule is expected to result in a small, 
one-time increase in the burden imposed upon reviewing authorities in 
order for the revised rules to be included in the state's SIP (except 
in states that determine that they can implement the approach in this 
proposed action without a SIP revision), we disagree with comments that 
the burden will increase significantly for permitting authorities. 
Calculations and identification of fugitive emissions are prepared by 
the permit applicants and submitted for review and approval by the 
permitting authorities. We believe the proposed rule changes could 
actually reduce the regulatory burden associated with the major NSR 
program by improving the operational flexibility of owners and 
operators, with an attendant decrease in the number of major 
modification applications that reviewing authorities must process.

F. Executive Order 13175--Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications, as specified in 
Executive Order 13175 (65 FR 67249, November 9, 2000). No tribal 
government currently has an approved tribal implementation plan (TIP) 
under the Act to implement the NSR program; therefore the federal 
government is currently the NSR reviewing authority in Indian country. 
Thus, tribal governments should not experience added burden from this 
proposed rule, nor should their laws be affected with respect to 
implementation of this rule. Thus, Executive Order 13175 does not apply 
to this action.

[[Page 77894]]

    Although Executive Order 13175 does not apply to this action, EPA 
solicited comments from tribal officials in developing this action. A 
summary of the concerns raised during that solicitation and EPA's 
response to those concerns is provided below.
    Two tribal authorities commented that there was not adequate 
consultation with the tribes on the proposed rule and how it 
corresponds with the proposed Tribal Minor Source NSR Permitting Rule. 
Also, they believe that the statement in the preamble of the proposed 
rule soliciting tribal input does not reach the type of outreach and 
consultation that is needed and required. Because they view the 
consultation as inadequate, the commenters believe that EPA's statement 
that the proposed rule will not put undue burden onto tribes because 
the EPA is the reviewing authority in tribal territories is 
presumptuous and not reflective of the consultation process.
    We disagree with the commenters that adequate consultation with the 
tribes on the proposed rule did not take place. EPA specifically 
solicited additional comment on this proposed rule from tribal 
officials. While Executive Order 13175, entitled ``Consultation and 
Coordination with Indian Tribal Governments'' (65 FR 67249, November 9, 
2000), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by tribal officials in the development of 
regulatory policies that have tribal implications,'' this rule does not 
have tribal implications. No tribal government currently has an 
approved TIP under the Act to implement the NSR program; therefore the 
federal government is currently the NSR reviewing authority in Indian 
country. In addition, this rule has no tribal implications on title V 
rules (part 71 and part 70) because only one tribe has a delegated part 
71 program and no tribe has a part 70 program (the delegated program 
uses the guidance as proposed by EPA). Also, because this rule only 
provides interpretive guidance relative to the fugitive source 
definition of those rules, no permitting authorities would likely need 
to update their title V program or rules to implement this federal 
rule. Thus, tribal governments should not experience added burden from 
this proposed rule, nor should their laws be affected with respect to 
implementation of this rule. Thus, Executive Order 13175 does not apply 
to this rule.
    Regarding the Tribal Minor Source NSR Permitting Rule, we recently 
proposed minor NSR and nonattainment major NSR regulations for sources 
in those areas of Indian country where tribes do not have an EPA-
approved implementation plan. (See 71 FR 48703, August 21, 2006.) We 
proposed in the minor NSR rule to require minor sources to include 
fugitive emissions to the extent quantifiable for applicability 
purposes for all sources, or include them only for source categories 
listed pursuant to section 302(j), or exclude them for all sources. In 
the final tribal minor NSR rule, we will adopt one of these proposed 
approaches and we expect to address the treatment of fugitive emissions 
consistent with this final rule. The question of how the requirements 
of E.O. 13175 have been met for the tribal minor NSR permitting rule 
will be addressed when that rule is finalized.

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

    EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying 
only to those regulatory actions that concern health or safety risks, 
such that the analysis required under section 5-501 of the EO has the 
potential to influence the regulation. This action is not subject to EO 
13045 because it does not establish an environmental standard intended 
to mitigate health or safety risks.

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

    This action is not a ``significant energy action'' as defined in 
Executive Order 13211 (66 FR 18355, May 22, 2001), because it is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. We believe the changes set out in this 
final action may actually reduce the regulatory burden associated with 
the major NSR program, and may therefore have a positive effect on the 
supply, distribution, or use of energy, by improving the operational 
flexibility of owners and operators.

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, 12(d) (15 U.S.C. 272 note), 
directs 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 (for example, materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    This action does not involve technical standards. Therefore, EPA 
did not consider the use of any voluntary consensus standards.

J. Executive Order 12898--Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this final rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it does not 
affect the level of protection provided to human health or the 
environment. This final action, in conjunction with other existing 
programs, would not relax the control measures on sources regulated by 
the rule and therefore would not cause emissions increases from these 
sources.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective January 20, 2009.

[[Page 77895]]

VIII. Judicial Review

    Under section 307(b)(1) of the Act, judicial review of today's 
final action is available by filing of a petition for review in the 
U.S. Court of Appeals for the District of Columbia Circuit by February 
17, 2009. Any such judicial review is limited to only those objections 
that are raised with reasonable specificity in timely comments. Under 
section 307(b)(2) of the Act, the requirements of this final action may 
not be challenged later in civil or criminal proceedings brought by us 
to enforce these requirements.

IX. Statutory Authority

    The statutory authority for this action is provided by sections 
101, 107, 110, and 301 of the Act as amended (42 U.S.C. 7401, 7407, 
7410, and 7601).

List of Subjects

40 CFR Part 51

    Administrative practice and procedure, Air pollution control, 
Carbon monoxide, Fugitive emissions, Intergovernmental relations, Lead, 
Nitrogen dioxide, Ozone, Particulate matter, Reporting and 
recordkeeping requirements, Sulfur oxides, Transportation, Volatile 
organic compounds.

40 CFR Part 52

    Administrative practice and procedure, Air pollution control, 
Carbon monoxide, Fugitive emissions, Intergovernmental relations, Lead, 
Nitrogen dioxide, Ozone, Particulate matter, Reporting and 
recordkeeping requirements, Sulfur oxides, Transportation, Volatile 
organic compounds.

    Dated: December 10, 2008.
Stephen L. Johnson,
Administrator.

0
For the reasons set out in the preamble, title 40, chapter I of the 
Code of Federal Regulations is amended as follows:

PART 51--[AMENDED]

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Subpart I--[Amended]

0
2. Section 51.165 is amended as follows:
0
a. By adding paragraph (a)(1)(v)(G).
0
b. By adding paragraph (a)(1)(vi)(C)(3).
0
c. By revising paragraph (a)(1)(ix).
0
d. By revising paragraphs (a)(1)(xxviii)(B)(2) and 
(a)(1)(xxviii)(B)(4).
0
e. By revising paragraphs (a)(1)(xxxv)(A)(1), (a)(1)(xxxv)(B)(1), 
(a)(1)(xxxv)(C), and (a)(1)(xxxv)(D).
0
f. By revising paragraph (a)(2)(ii)(B).
0
g. By removing and reserving paragraph (a)(4).
0
h. By revising paragraphs (a)(6)(iii) and (a)(6)(iv).
0
i. By revising paragraph (f)(4)(i)(D).

Sec.  51.165  Permit requirements.

    (a) * * *
    (1) * * *
    (v) * * *
    (G) Fugitive emissions shall not be included in determining for any 
of the purposes of this section whether a physical change in or change 
in the method of operation of a major stationary source is a major 
modification, unless the source belongs to one of the source categories 
listed in paragraph (a)(1)(iv)(C) of this section.
    (vi) * * *
    (C) * * *
    (3) As it pertains to an increase or decrease in fugitive emissions 
(to the extent quantifiable), it occurs at an emissions unit that is 
part of one of the source categories listed in paragraph (a)(1)(iv)(C) 
of this section or it occurs at an emissions unit that is located at a 
major stationary source that belongs to one of the listed source 
categories. Fugitive emission increases or decreases are not creditable 
for those emissions units located at a facility whose primary activity 
is not represented by one of the source categories listed in paragraph 
(a)(1)(iv)(C) of this section and that are not, by themselves, part of 
a listed source category.
* * * * *
    (ix) Fugitive emissions means those emissions which could not 
reasonably pass through a stack, chimney, vent or other functionally 
equivalent opening. Fugitive emissions, to the extent quantifiable, are 
addressed as follows for the purposes of this section:
    (A) In determining whether a stationary source or modification is 
major, fugitive emissions from an emissions unit are included only if 
the emissions unit is part of one of the source categories listed in 
paragraph (a)(1)(iv)(C) of this section or the emissions unit is 
located at a stationary source that belongs to one of the source 
categories listed in paragraph (a)(1)(iv)(C) of this section. Fugitive 
emissions are not included for those emissions units located at a 
facility whose primary activity is not represented by one of the source 
categories listed in paragraph (a)(1)(iv)(C) of this section and that 
are not, by themselves, part of a listed source category. (See 
paragraphs (a)(1)(iv)(C) and (a)(1)(v)(G) of this section.)
    (B) For purposes of determining the net emissions increase 
associated with a project, an increase or decrease in fugitive 
emissions is creditable only if it occurs at an emissions unit that is 
part of one of the source categories listed in paragraph (a)(1)(iv)(C) 
of this section or if the emission unit is located at a major 
stationary source that belongs to one of the listed source categories. 
Fugitive emission increases or decreases are not creditable for those 
emissions units located at a facility whose primary activity is not 
represented by one of the source categories listed in paragraph 
(a)(1)(iv)(C) of this section and that are not, by themselves, part of 
a listed source category. (See paragraph (a)(1)(vi)(C)(3) of this 
section.)
    (C) For purposes of determining the projected actual emissions of 
an emissions unit after a project, fugitive emissions are included only 
if the emissions unit is part of one of the source categories listed in 
paragraph (a)(1)(iv)(C) of this section or if the emission unit is 
located at a major stationary source that belongs to one of the listed 
source categories. Fugitive emissions are not included for those 
emissions units located at a facility whose primary activity is not 
represented by one of the source categories listed in paragraph 
(a)(1)(iv)(C) of this section and that are not, by themselves, part of 
a listed source category. (See paragraph (a)(1)(xxviii)(B)(2) of this 
section.
    (D) For purposes of determining the baseline actual emissions of an 
emissions unit, fugitive emissions are included only if the emissions 
unit is part of one of the source categories listed in paragraph 
(a)(1)(iv)(C) of this section or if the emission unit is located at a 
major stationary source that belongs to one of the listed source 
categories, except that, for a PAL, fugitive emissions shall be 
included regardless of the source category. With the exception of PALs, 
fugitive emissions are not included for those emissions units located 
at a facility whose primary activity is not represented by one of the 
source categories listed in paragraph (a)(1)(iv)(C) of this section and 
that are not, by themselves, part of a listed source category. (See 
paragraphs (a)(1)(xxxv)(A)(1), (a)(1)(xxxv)(B)(1), (a)(1)(xxxv)(C), and 
(a)(1)(xxxv)(D) of this section.)
    (E) In calculating whether a project will cause a significant 
emissions increase, fugitive emissions are

[[Page 77896]]

included only for those emissions units that are part of one of the 
source categories listed in paragraph (a)(1)(iv)(C) of this section, or 
for any emissions units that are located at a major stationary source 
that belongs to one of the listed source categories. Fugitive emissions 
are not included for those emissions units located at a facility whose 
primary activity is not represented by one of the source categories 
listed in paragraph (a)(1)(iv)(C) of this section and that are not, by 
themselves, part of a listed source category. (See paragraph 
(a)(2)(ii)(B) of this section.)
    (F) For purposes of monitoring and reporting emissions from a 
project after normal operations have been resumed, fugitive emissions 
are included only for those emissions units that are part of one of the 
source categories listed in paragraph (a)(1)(iv)(C) of this section, or 
for any emissions units that are located at a major stationary source 
that belongs to one of the listed source categories. Fugitive emissions 
are not included for those emissions units located at a facility whose 
primary activity is not represented by one of the source categories 
listed in paragraph (a)(1)(iv)(C) of this section and that are not, by 
themselves, part of a listed source category. (See paragraphs 
(a)(6)(iii) and (iv) of this section.)
    (G) For all other purposes of this section, fugitive emissions are 
treated in the same manner as other, non-fugitive emissions. This 
includes, but is not limited to, the treatment of fugitive emissions 
for offsets (see paragraph (a)(3) of this section) and for PALs (see 
paragraph (f)(4)(i)(D) of this section).
* * * * *
    (xxviii) * * *
    (B) * * *
    (2) Shall include emissions associated with startups, shutdowns, 
and malfunctions; and, for an emissions unit that is part of one of the 
source categories listed in paragraph (a)(1)(iv)(C) of this section or 
for an emissions unit that is located at a major stationary source that 
belongs to one of the listed source categories, shall include fugitive 
emissions (to the extent quantifiable); and
* * * * *
    (4) In lieu of using the method set out in paragraphs 
(a)(1)(xxviii)(B)(1) through (3) of this section, may elect to use the 
emissions unit's potential to emit, in tons per year, as defined under 
paragraph (a)(1)(iii) of this section. For this purpose, if the 
emissions unit is part of one of the source categories listed in 
paragraph (a)(1)(iv)(C) of this section or if the emissions unit is 
located at a major stationary source that belongs to one of the listed 
source categories, the unit's potential to emit shall include fugitive 
emissions (to the extent quantifiable).
* * * * *
    (xxxv) * * *
    (A) * * *
    (1) The average rate shall include emissions associated with 
startups, shutdowns, and malfunctions; and, for an emissions unit that 
is part of one of the source categories listed in paragraph 
(a)(1)(iv)(C) of this section or for an emissions unit that is located 
at a major stationary source that belongs to one of the listed source 
categories, shall include fugitive emissions (to the extent 
quantifiable).
* * * * *
    (B) * * *
    (1) The average rate shall include emissions associated with 
startups, shutdowns, and malfunctions; and, for an emissions unit that 
is part of one of the source categories listed in paragraph 
(a)(1)(iv)(C) of this section or for an emissions unit that is located 
at a major stationary source that belongs to one of the listed source 
categories, shall include fugitive emissions (to the extent 
quantifiable).
* * * * *
    (C) For a new emissions unit, the baseline actual emissions for 
purposes of determining the emissions increase that will result from 
the initial construction and operation of such unit shall equal zero; 
and thereafter, for all other purposes, shall equal the unit's 
potential to emit. In the latter case, fugitive emissions, to the 
extent quantifiable, shall be included only if the emissions unit is 
part of one of the source categories listed in paragraph (a)(1)(iv)(C) 
of this section or if the emissions unit is located at a major 
stationary source that belongs to one of the listed source categories.
    (D) For a PAL for a major stationary source, the baseline actual 
emissions shall be calculated for existing electric utility steam 
generating units in accordance with the procedures contained in 
paragraph (a)(1)(xxxv)(A) of this section, for other existing emissions 
units in accordance with the procedures contained in paragraph 
(a)(1)(xxxv)(B) of this section, and for a new emissions unit in 
accordance with the procedures contained in paragraph (a)(1)(xxxv)(C) 
of this section, except that fugitive emissions (to the extent 
quantifiable) shall be included regardless of the source category.
* * * * *
    (2) * * *
    (ii) * * *
    (B) The procedure for calculating (before beginning actual 
construction) whether a significant emissions increase (i.e., the first 
step of the process) will occur depends upon the type of emissions 
units being modified, according to paragraphs (a)(2)(ii)(C) through (F) 
of this section. For these calculations, fugitive emissions (to the 
extent quantifiable) are included only if the emissions unit is part of 
one of the source categories listed in paragraph (a)(1)(iv)(C) of this 
section or if the emissions unit is located at a major stationary 
source that belongs to one of the listed source categories. Fugitive 
emissions are not included for those emissions units located at a 
facility whose primary activity is not represented by one of the source 
categories listed in paragraph (a)(1)(iv)(C) of this section and that 
are not, by themselves, part of a listed source category. The procedure 
for calculating (before beginning actual construction) whether a 
significant net emissions increase will occur at the major stationary 
source (i.e., the second step of the process) is contained in the 
definition in paragraph (a)(1)(vi) of this section. Regardless of any 
such preconstruction projections, a major modification results if the 
project causes a significant emissions increase and a significant net 
emissions increase.
* * * * *
    (4) [Reserved]
* * * * *
    (6) * * *
    (iii) The owner or operator shall monitor the emissions of any 
regulated NSR pollutant that could increase as a result of the project 
and that is emitted by any emissions units identified in paragraph 
(a)(6)(i)(B) of this section; and calculate and maintain a record of 
the annual emissions, in tons per year on a calendar year basis, for a 
period of 5 years following resumption of regular operations after the 
change, or for a period of 10 years following resumption of regular 
operations after the change if the project increases the design 
capacity or potential to emit of that regulated NSR pollutant at such 
emissions unit. For purposes of this paragraph (a)(6)(iii), fugitive 
emissions (to the extent quantifiable) shall be monitored if the 
emissions unit is part of one of the source categories listed in 
paragraph (a)(1)(iv)(C) of this section or if the emissions unit is 
located at a major stationary source that belongs to one of the listed 
source categories.
    (iv) If the unit is an existing electric utility steam generating 
unit, the owner or operator shall submit a report to the reviewing 
authority within 60 days after

[[Page 77897]]

the end of each year during which records must be generated under 
paragraph (a)(6)(iii) of this section setting out the unit's annual 
emissions, as monitored pursuant to paragraph (a)(6)(iii) of this 
section, during the year that preceded submission of the report.
* * * * *
    (f) * * *
    (4) * * *
    (i) * * *
    (D) The PAL shall include fugitive emissions, to the extent 
quantifiable, from all emissions units that emit or have the potential 
to emit the PAL pollutant at the major stationary source, regardless of 
whether the emissions unit or major stationary source belongs to one of 
the source categories listed in paragraph (a)(1)(iv)(C) of this 
section.
* * * * *

0
3. Section 51.166 is amended as follows:
0
a. By revising paragraph (a)(7)(iv)(b).
0
b. By adding paragraph (b)(2)(v).
0
c. By removing the period at the end of paragraph (b)(3)(iii)(c) and 
adding ``; and'' in its place.
0
d. By adding paragraph (b)(3)(iii)(d).
0
e. By revising paragraph (b)(20).
0
f. By revising paragraphs (b)(40)(ii)(b) and (b)(40)(ii)(d).
0
g. By revising paragraphs (b)(47)(i)(a), (b)(47)(ii)(a), (b)(47)(iii), 
and (b)(47)(iv).
0
h. By removing and reserving paragraph (i)(1)(ii).
0
i. By revising paragraphs (r)(6)(iii) and (r)(6)(iv).
0
j. By revising paragraph (w)(4)(i)(d).

Sec.  51.166  Prevention of significant deterioration of air quality.

    (a) * * *
    (7) * * *
    (iv) * * *
    (b) The procedure for calculating (before beginning actual 
construction) whether a significant emissions increase (i.e., the first 
step of the process) will occur depends upon the type of emissions 
units being modified, according to paragraphs (a)(7)(iv)(c) through (f) 
of this section. For these calculations, fugitive emissions (to the 
extent quantifiable) are included only if the emissions unit is part of 
one of the source categories listed in paragraph (b)(1)(iii) of this 
section or if the emission unit is located at a major stationary source 
that belongs to one of the listed source categories. Fugitive emissions 
are not included for those emissions units located at a facility whose 
primary activity is not represented by one of the source categories 
listed in paragraph (b)(1)(iii) of this section and that are not, by 
themselves, part of a listed source category. The procedure for 
calculating (before beginning actual construction) whether a 
significant net emissions increase will occur at the major stationary 
source (i.e., the second step of the process) is contained in the 
definition in paragraph (b)(3) of this section. Regardless of any such 
preconstruction projections, a major modification results if the 
project causes a significant emissions increase and a significant net 
emissions increase.
* * * * *
    (b) * * *
    (2) * * *
    (v) Fugitive emissions shall not be included in determining for any 
of the purposes of this section whether a physical change in or change 
in the method of operation of a major stationary source is a major 
modification, unless the source belongs to one of the source categories 
listed in paragraph (b)(1)(iii) of this section.
    (3) * * *
    (iii) * * *
    (d) As it pertains to an increase or decrease in fugitive emissions 
(to the extent quantifiable), it occurs at an emissions unit that is 
part of one of the source categories listed in paragraph (b)(1)(iii) of 
this section or it occurs at an emission unit that is located at a 
major stationary source that belongs to one of the listed source 
categories. Fugitive emission increases or decreases are not included 
for those emissions units located at a facility whose primary activity 
is not represented by one of the source categories listed in paragraph 
(b)(1)(iii) of this section and that are not, by themselves, part of a 
listed source category.
* * * * *
    (20) Fugitive emissions means those emissions which could not 
reasonably pass through a stack, chimney, vent, or other functionally 
equivalent opening. Fugitive emissions, to the extent quantifiable, are 
addressed as follows for the purposes of this section:
    (i) In calculating whether a project will cause a significant 
emissions increase, fugitive emissions are included only for those 
emissions units that are part of one of the source categories listed in 
paragraph (b)(1)(iii) of this section, or for any emissions units that 
are located at a major stationary source that belongs to one of the 
listed source categories. Fugitive emissions are not included for those 
emissions units located at a facility whose primary activity is not 
represented by one of the source categories listed in paragraph 
(b)(1)(iii) of this section and that are not, by themselves, part of a 
listed source category. (See paragraph (a)(7)(iv)(b) of this section.)
    (ii) In determining whether a stationary source or modification is 
major, fugitive emissions from an emissions unit are included only if 
the emissions unit is part of one of the stationary source categories 
listed in paragraph (b)(1)(iii) of this section or the emissions unit 
is located at a stationary source that belongs to one of the source 
categories listed in paragraph (b)(1)(iii) of this section. Fugitive 
emissions are not included for those emissions units located at a 
facility whose primary activity is not represented by one of the source 
categories listed in paragraph (b)(1)(iii) of this section and that are 
not, by themselves, part of a listed source category. (See paragraphs 
(b)(1)(iii) and (b)(2)(v) of this section.)
    (iii) For purposes of determining the net emissions increase 
associated with a project, an increase or decrease in fugitive 
emissions is creditable only if it occurs at an emissions unit that is 
part of one of the source categories listed in paragraph (b)(1)(iii) of 
this section or if the emissions unit is located at a major stationary 
source that belongs to one of the listed source categories. Fugitive 
emission increases or decreases are not included for those emissions 
units located at a facility whose primary activity is not represented 
by one of the source categories listed in paragraph (b)(1)(iii) of this 
section and that are not, by themselves, part of a listed source 
category. (See paragraph (b)(3)(iii)(d) of this section.)
    (iv) For purposes of determining the projected actual emissions of 
an emissions unit after a project, fugitive emissions are included only 
if the emissions unit is part of one of the source categories listed in 
paragraph (b)(1)(iii) of this section or if the emissions unit is 
located at a major stationary source that belongs to one of the listed 
source categories. Fugitive emissions are not included for those 
emissions units located at a facility whose primary activity is not 
represented by one of the source categories listed in paragraph 
(b)(1)(iii) of this section and that are not, by themselves, part of a 
listed source category. (See paragraph (b)(40)(ii)(b) and (d) of this 
section.
    (v) For purposes of determining the baseline actual emissions of an 
emissions unit, fugitive emissions are included only if the emissions 
unit is part of one of the source categories listed in paragraph 
(b)(1)(iii) of this section or if the emissions unit is located at a 
major stationary source that belongs to one of the listed source 
categories, except that, for a PAL,

[[Page 77898]]

fugitive emissions shall be included regardless of the source category. 
With the exception of PALs, fugitive emissions are not included for 
those emissions units located at a facility whose primary activity is 
not represented by one of the source categories listed in paragraph 
(b)(1)(iii) of this section and that are not, by themselves, part of a 
listed source category. (See paragraphs (b)(47)(i)(a), (b)(47)(ii)(a), 
(b)(47)(iii), and (b)(47)(iv) of this section.)
    (vi) For purposes of monitoring and reporting emissions from a 
project after normal operations have been resumed, fugitive emissions 
are included only for those emissions units that are part of one of the 
source categories listed in paragraph (b)(1)(iii) of this section, or 
for any emissions units that are located at a major stationary source 
that belongs to one of the listed source categories. Fugitive emissions 
are not included for those emissions units located at a facility whose 
primary activity is not represented by one of the source categories 
listed in paragraph (b)(1)(iii) of this section and that are not, by 
themselves, part of a listed source category. (See paragraphs 
(r)(6)(iii) and (iv) of this section.)
    (vii) For all other purposes of this section, fugitive emissions 
are treated in the same manner as other, non-fugitive emissions. This 
includes, but is not limited to, the treatment of fugitive emissions 
for the application of best available control technology (see paragraph 
(j) of this section), source impact analysis (see paragraph (k) of this 
section), additional impact analyses (see paragraph (o) of this 
section), and PALs (see paragraph (w)(4)(i)(d) of this section).
* * * * *
    (40) * * *
    (ii) * * *
    (b) Shall include emissions associated with startups, shutdowns, 
and malfunctions; and, for an emissions unit that is part of one of the 
source categories listed in paragraph (b)(1)(iii) of this section or 
for an emissions unit that is located at a major stationary source that 
belongs to one of the listed source categories, shall include fugitive 
emissions (to the extent quantifiable); and
* * * * *
    (d) In lieu of using the method set out in paragraphs 
(b)(40)(ii)(a) through (c) of this section, may elect to use the 
emissions unit's potential to emit, in tons per year, as defined under 
paragraph (b)(4) of this section. For this purpose, if the emissions 
unit is part of one of the source categories listed in paragraph 
(b)(1)(iii) of this section or if the emissions unit is located at a 
major stationary source that belongs to one of the listed source 
categories, the unit's potential to emit shall include fugitive 
emissions (to the extent quantifiable).
* * * * *
    (47) * * *
    (i) * * *
    (a) The average rate shall include emissions associated with 
startups, shutdowns, and malfunctions; and, for an emissions unit that 
is part of one of the source categories listed in paragraph (b)(1)(iii) 
of this section or for an emissions unit that is located at a major 
stationary source that belongs to one of the listed source categories, 
shall include fugitive emissions (to the extent quantifiable).
* * * * *
    (ii) * * *
    (a) The average rate shall include emissions associated with 
startups, shutdowns, and malfunctions; and, for an emissions unit that 
is part of one of the source categories listed in paragraph (b)(1)(iii) 
of this section or for an emissions unit that is located at a major 
stationary source that belongs to one of the listed source categories, 
shall include fugitive emissions (to the extent quantifiable).
* * * * *
    (iii) For a new emissions unit, the baseline actual emissions for 
purposes of determining the emissions increase that will result from 
the initial construction and operation of such unit shall equal zero; 
and thereafter, for all other purposes, shall equal the unit's 
potential to emit. In the latter case, fugitive emissions, to the 
extent quantifiable, shall be included only if the emissions unit is 
part of one of the source categories listed in paragraph (b)(1)(iii) of 
this section or if the emissions unit is located at a major stationary 
source that belongs to one of the listed source categories.
    (iv) For a PAL for a major stationary source, the baseline actual 
emissions shall be calculated for existing electric utility steam 
generating units in accordance with the procedures contained in 
paragraph (b)(47)(i) of this section, for other existing emissions 
units in accordance with the procedures contained in paragraph 
(b)(47)(ii) of this section, and for a new emissions unit in accordance 
with the procedures contained in paragraph (b)(47)(iii) of this 
section, except that fugitive emissions (to the extent quantifiable) 
shall be included regardless of the source category.
* * * * *
    (i) * * *
    (1) * * *
    (ii) [Reserved]
* * * * *
    (r) * * *
    (6) * * *
    (iii) The owner or operator shall monitor the emissions of any 
regulated NSR pollutant that could increase as a result of the project 
and that is emitted by any emissions unit identified in paragraph 
(r)(6)(i)(b) of this section; and calculate and maintain a record of 
the annual emissions, in tons per year on a calendar year basis, for a 
period of 5 years following resumption of regular operations after the 
change, or for a period of 10 years following resumption of regular 
operations after the change if the project increases the design 
capacity or potential to emit of that regulated NSR pollutant at such 
emissions unit. For purposes of this paragraph (r)(6)(iii), fugitive 
emissions (to the extent quantifiable) shall be monitored if the 
emissions unit is part of one of the source categories listed in 
paragraph (b)(1)(iii) of this section or if the emissions unit is 
located at a major stationary source that belongs to one of the listed 
source categories.
    (iv) If the unit is an existing electric utility steam generating 
unit, the owner or operator shall submit a report to the reviewing 
authority within 60 days after the end of each year during which 
records must be generated under paragraph (r)(6)(iii) of this section 
setting out the unit's annual emissions, as monitored pursuant to 
paragraph (r)(6)(iii) of this section, during the calendar year that 
preceded submission of the report.
* * * * *
    (w) * * *
    (4) * * *
    (i) * * *
    (d) The PAL shall include fugitive emissions, to the extent 
quantifiable, from all emissions units that emit or have the potential 
to emit the PAL pollutant at the major stationary source, regardless of 
whether the emissions unit or major stationary source belongs to one of 
the source categories listed in paragraph (b)(1)(iii) of this section.
* * * * *

Appendix S to Part 51--[Amended]

0
4. Appendix S to Part 51 is amended as follows:
0
a. By adding paragraph II.A.5(vii).
0
b. By revising paragraph II.A.6(iii).
0
c. By revising paragraph II.A.9.
0
d. By revising paragraphs II.A.24(ii)(b) and II.A.24(ii)(d).
0
e. By revising paragraphs II.A.30(i)(a), II.A.30(ii)(a), II.A.30(iii), 
and II.A.30(iv).
0
f. By removing and reserving paragraph II.F.

[[Page 77899]]

0
g. By revising paragraph IV.I.1(ii).
0
h. By revising paragraphs IV.J.3. and IV.J.4.
0
i. By revising paragraph IV.K.4(i)(d).

Appendix S to Part 51--Emission Offset Interpretative Ruling

* * * * *
    II. * * *
    A. * * *
    5. * * *
    (vii) Fugitive emissions shall not be included in determining 
for any of the purposes of this Ruling whether a physical change in 
or change in the method of operation of a major stationary source is 
a major modification, unless the source belongs to one of the source 
categories listed in paragraph II.A.4(iii) of this Ruling.
    6. * * *
    (iii) An increase or decrease in actual emissions is creditable 
only if:
    (a) The reviewing authority has not relied on it in issuing a 
permit for the source under this Ruling, which permit is in effect 
when the increase in actual emissions from the particular change 
occurs; and
    (b) As it pertains to an increase or decrease in fugitive 
emissions (to the extent quantifiable), it occurs at an emissions 
unit that is part of one of the source categories listed in 
paragraph II.A.4(iii) of this Ruling or it occurs at an emissions 
unit that is located at a major stationary source that belongs to 
one of the listed source categories.
* * * * *
    9. Fugitive emissions means those emissions which could not 
reasonably pass through a stack, chimney, vent or other functionally 
equivalent opening. Fugitive emissions, to the extent quantifiable, 
are addressed as follows for the purposes of this Ruling:
    (i) In determining whether a stationary source or modification 
is major, fugitive emissions from an emissions unit are included 
only if the emissions unit is part of one of the source categories 
listed in paragraph II.A.4(iii) of this Ruling or the emissions unit 
is located at a stationary source that belongs to one of the source 
categories listed in paragraph II.A.4(iii) of this Ruling. (See 
paragraphs II.A.4(iii) and II.A.5(vii) of this Ruling.)
    (ii) For purposes of determining the net emissions increase 
associated with a project, an increase or decrease in fugitive 
emissions is creditable only if it occurs at an emissions unit that 
is part of one of the source categories listed in paragraph 
II.A.4(iii) of this Ruling or if the emission unit is located at a 
major stationary source that belongs to one of the listed source 
categories. Fugitive emission increases or decreases are not 
included for those emissions units located at a facility whose 
primary activity is not represented by one of the source categories 
listed in paragraph II.A.4(iii) of this Ruling and that are not, by 
themselves, part of a listed source category. (See paragraph 
II.A.6(iii) of this Ruling.)
    (iii) For purposes of determining the projected actual emissions 
of an emissions unit after a project, fugitive emissions are 
included only if the emissions unit is part of one of the source 
categories listed in paragraph II.A.4(iii) of this Ruling or if the 
emission unit is located at a major stationary source that belongs 
to one of the listed source categories. Fugitive emissions are not 
included for those emissions units located at a facility whose 
primary activity is not represented by one of the source categories 
listed in paragraph II.A.4(iii) of this Ruling and that are not, by 
themselves, part of a listed source category. (See paragraph 
II.A.24(ii)(b) of this Ruling.)
    (iv) For purposes of determining the baseline actual emissions 
of an emissions unit, fugitive emissions are included only if the 
emissions unit is part of one of the source categories listed in 
paragraph II.A.4(iii) of this Ruling or if the emission unit is 
located at a major stationary source that belongs to one of the 
listed source categories, except that, for a PAL, fugitive emissions 
shall be included regardless of the source category. With the 
exception of PALs, fugitive emissions are not included for those 
emissions units located at a facility whose primary activity is not 
represented by one of the source categories listed in paragraph 
II.A.4(iii) of this Ruling and that are not, by themselves, part of 
a listed source category. (See paragraphs II.A.30(i)(a), 
II.A.30(ii)(a), II.A.30(iii), and II.A.30(iv) of this Ruling.)
    (v) In calculating whether a project will cause a significant 
emissions increase, fugitive emissions are included only for those 
emissions units that are part of one of the source categories listed 
in paragraph II.A.4(iii) of this Ruling, or for any emissions units 
that are located at a major stationary source that belongs to one of 
the listed source categories. Fugitive emissions are not included 
for those emissions units located at a facility whose primary 
activity is not represented by one of the source categories listed 
in paragraph II.A.4(iii) of this Ruling and that are not, by 
themselves, part of a listed source category. (See paragraph 
IV.I.1(ii) of this Ruling.)
    (vi) For purposes of monitoring and reporting emissions from a 
project after normal operations have been resumed, fugitive 
emissions are included only for those emissions units that are part 
of one of the source categories listed in paragraph II.A.4(iii) of 
this Ruling, or for any emissions units that are located at a major 
stationary source that belongs to one of the listed source 
categories. Fugitive emissions are not included for those emissions 
units located at a facility whose primary activity is not 
represented by one of the source categories listed in paragraph 
II.A.4(iii) of this Ruling and that are not, by themselves, part of 
a listed source category. (See paragraphs IV.J.3 and IV.J.4 of this 
Ruling.)
    (vii) For all other purposes of this Ruling, fugitive emissions 
are treated in the same manner as other, non-fugitive emissions. 
This includes, but is not limited to, the treatment of fugitive 
emissions for offsets (see paragraph IV.C of this Ruling) and for 
PALs (see paragraph IV.K.4(i)(d) of this Ruling).
* * * * *
    24. * * *
    (ii) * * *
    (b) Shall include emissions associated with startups, shutdowns, 
and malfunctions; and, for an emissions unit that is part of one of 
the source categories listed in paragraph II.A.4(iii) of this Ruling 
or for an emissions unit that is located at a major stationary 
source that belongs to one of the listed source categories, shall 
include fugitive emissions (to the extent quantifiable); and
* * * * *
    (d) In lieu of using the method set out in paragraphs 
II.A.24(ii)(a) through (c) of this Ruling, may elect to use the 
emissions unit's potential to emit, in tons per year, as defined 
under paragraph II.A.3 of this Ruling. For this purpose, if the 
emissions unit is part of one of the source categories listed in 
paragraph II.A.4(iii) of this Ruling or if the emissions unit is 
located at a major stationary source that belongs to one of the 
listed source categories, the unit's potential to emit shall include 
fugitive emissions (to the extent quantifiable).
* * * * *
    30. * * *
    (i) * * *
    (a) The average rate shall include emissions associated with 
startups, shutdowns, and malfunctions; and, for an emissions unit 
that is part of one of the source categories listed in paragraph 
II.A.4(iii) of this Ruling or for an emissions unit that is located 
at a major stationary source that belongs to one of the listed 
source categories, shall include fugitive emissions (to the extent 
quantifiable).
* * * * *
    (ii) * * *
    (a) The average rate shall include emissions associated with 
startups, shutdowns, and malfunctions; and, for an emissions unit 
that is part of one of the source categories listed in paragraph 
II.A.4(iii) of this Ruling or for an emissions unit that is located 
at a major stationary source that belongs to one of the listed 
source categories, shall include fugitive emissions (to the extent 
quantifiable).
* * * * *
    (iii) For a new emissions unit, the baseline actual emissions 
for purposes of determining the emissions increase that will result 
from the initial construction and operation of such unit shall equal 
zero; and thereafter, for all other purposes, shall equal the unit's 
potential to emit. In the latter case, fugitive emissions, to the 
extent quantifiable, shall be included only if the emissions unit is 
part of one of the source categories listed in paragraph II.A.4(iii) 
of this Ruling or if the emissions unit is located at a major 
stationary source that belongs to one of the listed source 
categories.
    (iv) For a PAL for a major stationary source, the baseline 
actual emissions shall be calculated for existing electric utility 
steam generating units in accordance with the procedures contained 
in paragraph II.A.30(i) of this Ruling, for other existing emissions 
units in accordance with the procedures contained in paragraph 
II.A.30(ii) of this Ruling, and for a new emissions unit in 
accordance with the procedures contained in paragraph II.A.30(iii) 
of this Ruling, except that fugitive emissions (to the extent

[[Page 77900]]

quantifiable) shall be included regardless of the source category.
* * * * *
    F. [Reserved]
* * * * *
    IV. * * *
    I. * * *
    1. * * *
    (ii) The procedure for calculating (before beginning actual 
construction) whether a significant emissions increase (i.e., the 
first step of the process) will occur depends upon the type of 
emissions units being modified, according to paragraphs II.I.1(iii) 
through (v) of this Ruling. For these calculations, fugitive 
emissions (to the extent quantifiable) are included only if the 
emissions unit is part of one of the source categories listed in 
paragraph II.A.4(iii) of this Ruling or if the emissions unit is 
located at a major stationary source that belongs to one of the 
listed source categories. The procedure for calculating (before 
beginning actual construction) whether a significant net emissions 
increase will occur at the major stationary source (i.e., the second 
step of the process) is contained in the definition in paragraph 
II.A.6 of this Ruling. Regardless of any such preconstruction 
projections, a major modification results if the project causes a 
significant emissions increase and a significant net emissions 
increase.
* * * * *
    J. * * *
    3. The owner or operator shall monitor the emissions of any 
regulated NSR pollutant that could increase as a result of the 
project and that is emitted by any emissions units identified in 
paragraph IV.J.1(ii) of this Ruling; and calculate and maintain a 
record of the annual emissions, in tons per year on a calendar year 
basis, for a period of 5 years following resumption of regular 
operations after the change, or for a period of 10 years following 
resumption of regular operations after the change if the project 
increases the design capacity or potential to emit of that regulated 
NSR pollutant at such emissions unit. For purposes of this paragraph 
IV.J.3, fugitive emissions (to the extent quantifiable) shall be 
monitored if the emissions unit is part of one of the source 
categories listed in paragraph II.A.4(iii) of this Ruling or if the 
emissions unit is located at a major stationary source that belongs 
to one of the listed source categories.
    4. If the unit is an existing electric utility steam generating 
unit, the owner or operator shall submit a report to the reviewing 
authority within 60 days after the end of each year during which 
records must be generated under paragraph IV.J.3 of this Ruling 
setting out the unit's annual emissions, as monitored pursuant to 
paragraph IV.J.3 of this Ruling, during the year that preceded 
submission of the report.
* * * * *
    K. * * *
    4. * * *
    (i) * * *
    (d) The PAL shall include fugitive emissions, to the extent 
quantifiable, from all emissions units that emit or have the 
potential to emit the PAL pollutant at the major stationary source, 
regardless of whether the emissions unit or major stationary source 
belongs to one of the source categories listed in paragraph 
II.A.4(iii) of this Ruling.
* * * * *

PART 52--[AMENDED]

    5. The authority citation for part 52 continues to read as follows:

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

Subpart A--[Amended]

0
6. Section 52.21 is amended as follows:
0
a. By revising paragraph (a)(2)(iv)(b).
0
b. By adding paragraph (b)(2)(v).
0
c. By removing the period at the end of paragraph (b)(3)(iii)(b) and 
adding ``; and'' in its place.
0
d. By adding paragraph (b)(3)(iii)(c).
0
e. By revising paragraph (b)(20).
0
f. By revising paragraphs (b)(41)(ii)(b) and (b)(41)(ii)(d).
0
g. By revising paragraphs (b)(48)(i)(a), (b)(48)(ii)(a), (b)(48)(iii), 
and (b)(48)(iv).
0
h. By removing and reserving paragraph (i)(1)(vii).
0
i. By revising paragraphs (r)(6)(iii) and (r)(6)(iv).
0
j. By revising paragraph (aa)(4)(i)(d).

Sec.  52.21  Prevention of significant deterioration of air quality.

    (a) * * *
    (2) * * *
    (iv) * * *
    (b) The procedure for calculating (before beginning actual 
construction) whether a significant emissions increase (i.e., the first 
step of the process) will occur depends upon the type of emissions 
units being modified, according to paragraphs (a)(2)(iv)(c) through (f) 
of this section. For these calculations, fugitive emissions (to the 
extent quantifiable) are included only if the emissions unit is part of 
one of the source categories listed in paragraph (b)(1)(iii) of this 
section or if the emission unit is located at a major stationary source 
that belongs to one of the listed source categories. Fugitive emissions 
are not included for those emissions units located at a facility whose 
primary activity is not represented by one of the source categories 
listed in paragraph (b)(1)(iii) of this section and that are not, by 
themselves, part of a listed source category. The procedure for 
calculating (before beginning actual construction) whether a 
significant net emissions increase will occur at the major stationary 
source (i.e., the second step of the process) is contained in the 
definition in paragraph (b)(3) of this section. Regardless of any such 
preconstruction projections, a major modification results if the 
project causes a significant emissions increase and a significant net 
emissions increase.
* * * * *
    (b) * * *
    (2) * * *
    (v) Fugitive emissions shall not be included in determining for any 
of the purposes of this section whether a physical change in or change 
in the method of operation of a major stationary source is a major 
modification, unless the source belongs to one of the source categories 
listed in paragraph (b)(1)(iii) of this section.
    (3) * * *
    (iii) * * *
    (c) As it pertains to an increase or decrease in fugitive emissions 
(to the extent quantifiable), it occurs at an emissions unit that is 
part of one of the source categories listed in paragraph (b)(1)(iii) of 
this section or it occurs at an emission unit that is located at a 
major stationary source that belongs to one of the listed source 
categories.
* * * * *
    (20) Fugitive emissions means those emissions which could not 
reasonably pass through a stack, chimney, vent, or other functionally 
equivalent opening. Fugitive emissions, to the extent quantifiable, are 
addressed as follows for the purposes of this section:
    (i) In calculating whether a project will cause a significant 
emissions increase, fugitive emissions are included only for those 
emissions units that are part of one of the source categories listed in 
paragraph (b)(1)(iii) of this section, or for any emissions units that 
are located at a major stationary source that belongs to one of the 
listed source categories. Fugitive emissions are not included for those 
emissions units located at a facility whose primary activity is not 
represented by one of the source categories listed in paragraph 
(b)(1)(iii) of this section and that are not, by themselves, part of a 
listed source category. (See paragraph (a)(2)(iv)(b) of this section.)
    (ii) In determining whether a stationary source or modification is 
major, fugitive emissions from an emissions unit are included only if 
the emissions unit is part of one of the source categories listed in 
paragraph (b)(1)(iii) of this section or if the emission unit is 
located at a stationary source that belongs to one of the source 
categories listed in paragraph (b)(1)(iii) of this section. Fugitive 
emissions are not included for those emissions units located at a 
facility whose primary activity is not represented by one of the source 
categories listed in paragraph

[[Page 77901]]

(b)(1)(iii) of this section and that are not, by themselves, part of a 
listed source category. (See paragraphs (b)(1)(iii) and (b)(2)(v) of 
this section.)
    (iii) For purposes of determining the net emissions increase 
associated with a project, an increase or decrease in fugitive 
emissions is creditable only if it occurs at an emissions unit that is 
part of one of the source categories listed in paragraph (b)(1)(iii) of 
this section or if the emission unit is located at a major stationary 
source that belongs to one of the listed source categories. Fugitive 
emission increases or decreases are not included for those emissions 
units located at a facility whose primary activity is not represented 
by one of the source categories listed in paragraph (b)(1)(iii) of this 
section and that are not, by themselves, part of a listed source 
category. (See paragraph (b)(3)(iii)(c) of this section.)
    (iv) For purposes of determining the projected actual emissions of 
an emissions unit after a project, fugitive emissions are included only 
if the emissions unit is part of one of the source categories listed in 
paragraph (b)(1)(iii) of this section or if the emission unit is 
located at a major stationary source that belongs to one of the listed 
source categories. Fugitive emissions are not included for those 
emissions units located at a facility whose primary activity is not 
represented by one of the source categories listed in paragraph 
(b)(1)(iii) of this section and that are not, by themselves, part of a 
listed source category. (See paragraph (b)(41)(ii)(b) and (d) of this 
section.
    (v) For purposes of determining the baseline actual emissions of an 
emissions unit, fugitive emissions are included only if the emissions 
unit is part of one of the source categories listed in paragraph 
(b)(1)(iii) of this section or if the emission unit is located at a 
major stationary source that belongs to one of the listed source 
categories, except that, for a PAL, fugitive emissions shall be 
included regardless of the source category. With the exception of PALs, 
fugitive emissions are not included for those emissions units located 
at a facility whose primary activity is not represented by one of the 
source categories listed in paragraph (b)(1)(iii) of this section and 
that are not, by themselves, part of a listed source category. (See 
paragraphs (b)(48)(i)(a), (b)(48)(ii)(a), (b)(48)(iii), and (b)(48)(iv) 
of this section.)
    (vi) For purposes of monitoring and reporting emissions from a 
project after normal operations have been resumed, fugitive emissions 
are included only for those emissions units that are part of one of the 
source categories listed in paragraph (b)(1)(iii) of this section, or 
for any emissions units that are located at a major stationary source 
that belongs to one of the listed source categories. Fugitive emissions 
are not included for those emissions units located at a facility whose 
primary activity is not represented by one of the source categories 
listed in paragraph (b)(1)(iii) of this section and that are not, by 
themselves, part of a listed source category. (See paragraphs 
(r)(6)(iii) and (iv) of this section.)
    (vii) For all other purposes of this section, fugitive emissions 
are treated in the same manner as other, non-fugitive emissions. This 
includes, but is not limited to, the treatment of fugitive emissions 
for the application of best available control technology (see paragraph 
(j) of this section), source impact analysis (see paragraph (k) of this 
section), additional impact analyses (see paragraph (o) of this 
section), and PALs (see paragraph (aa)(4)(i)(d) of this section).
* * * * *
    (41) * * *
    (ii) * * *
    (b) Shall include emissions associated with startups, shutdowns, 
and malfunctions; and, for an emissions unit that is part of one of the 
source categories listed in paragraph (b)(1)(iii) of this section or 
for an emissions unit that is located at a major stationary source that 
belongs to one of the listed source categories, shall include fugitive 
emissions (to the extent quantifiable); and
* * * * *
    (d) In lieu of using the method set out in paragraphs 
(b)(41)(ii)(a) through (c) of this section, may elect to use the 
emissions unit's potential to emit, in tons per year, as defined under 
paragraph (b)(4) of this section. For this purpose, if the emissions 
unit is part of one of the source categories listed in paragraph 
(b)(1)(iii) of this section or if the emission unit is located at a 
major stationary source that belongs to one of the listed source 
categories, the unit's potential to emit shall include fugitive 
emissions (to the extent quantifiable).
* * * * *
    (48) * * *
    (i) * * *
    (a) The average rate shall include emissions associated with 
startups, shutdowns, and malfunctions; and, for an emissions unit that 
is part of one of the source categories listed in paragraph (b)(1)(iii) 
of this section or for an emissions unit that is located at a major 
stationary source that belongs to one of the listed source categories, 
shall include fugitive emissions (to the extent quantifiable).
* * * * *
    (ii) * * *
    (a) The average rate shall include emissions associated with 
startups, shutdowns, and malfunctions; and, for an emissions unit that 
is part of one of the source categories listed in paragraph (b)(1)(iii) 
of this section or for an emissions unit that is located at a major 
stationary source that belongs to one of the listed source categories, 
shall include fugitive emissions (to the extent quantifiable).
* * * * *
    (iii) For a new emissions unit, the baseline actual emissions for 
purposes of determining the emissions increase that will result from 
the initial construction and operation of such unit shall equal zero; 
and thereafter, for all other purposes, shall equal the unit's 
potential to emit. In the latter case, fugitive emissions, to the 
extent quantifiable, shall be included only if the emissions unit is 
part of one of the source categories listed in paragraph (b)(1)(iii) of 
this section or if the emissions unit is located at a major stationary 
source that belongs to one of the listed source categories.
    (iv) For a PAL for a major stationary source, the baseline actual 
emissions shall be calculated for existing electric utility steam 
generating units in accordance with the procedures contained in 
paragraph (b)(48)(i) of this section, for other existing emissions 
units in accordance with the procedures contained in paragraph 
(b)(48)(ii) of this section, and for a new emissions unit in accordance 
with the procedures contained in paragraph (b)(48)(iii) of this 
section, except that fugitive emissions (to the extent quantifiable) 
shall be included regardless of the source category.
* * * * *
    (i) * * *
    (1) * * *
    (vii) [Reserved]
* * * * *
    (r) * * *
    (6) * * *
    (iii) The owner or operator shall monitor the emissions of any 
regulated NSR pollutant that could increase as a result of the project 
and that is emitted by any emissions unit identified in paragraph 
(r)(6)(i)(b) of this section; and calculate and maintain a record of 
the annual emissions, in tons per year on a calendar year basis, for a 
period of 5 years following resumption of regular operations after the 
change, or for a period of 10 years following resumption of regular 
operations after the change if

[[Page 77902]]

the project increases the design capacity or potential to emit of that 
regulated NSR pollutant at such emissions unit. For purposes of this 
paragraph (r)(6)(iii), fugitive emissions (to the extent quantifiable) 
shall be monitored if the emissions unit is part of one of the source 
categories listed in paragraph (b)(1)(iii) of this section or if the 
emissions unit is located at a major stationary source that belongs to 
one of the listed source categories.
    (iv) If the unit is an existing electric utility steam generating 
unit, the owner or operator shall submit a report to the Administrator 
within 60 days after the end of each year during which records must be 
generated under paragraph (r)(6)(iii) of this section setting out the 
unit's annual emissions, as monitored pursuant to paragraph (r)(6)(iii) 
of this section, during the calendar year that preceded submission of 
the report.
* * * * *
    (aa) * * *
    (4) * * *
    (i) * * *
    (d) The PAL shall include fugitive emissions, to the extent 
quantifiable, from all emissions units that emit or have the potential 
to emit the PAL pollutant at the major stationary source, regardless of 
whether the emissions unit or major stationary source belongs to one of 
the source categories listed in paragraph (b)(1)(iii) of this section.
* * * * *
[FR Doc. E8-29998 Filed 12-18-08; 8:45 am]

BILLING CODE 6560-50-P