[Federal Register: November 13, 2007 (Volume 72, Number 218)]
[Proposed Rules]
[Page 63850-63866]
[DOCID:fr13no07-21]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[EPA-HQ-OAR-2004-0014, FRL-8494-4]
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: Proposed rule; notice of reconsideration of final rule.

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SUMMARY: On December 31, 2002, we (the EPA) issued our final New Source
Review (NSR) Improvement Rule which, among other things, requires all
sources to include ``fugitive emissions'' in assessing whether a
proposed physical or operational change qualifies as a ``major
modification'' that is subject to review under major NSR. On July 11,
2003, we received a petition for reconsideration on behalf of Newmont
USA Limited, dba Newmont Mining Corporation (``Newmont'') arguing that
the December 31, 2002 final rule failed to comply with the Clean Air
Act (Act) requirement that EPA conduct a rulemaking to list source
categories for which fugitive emissions must be included in computing a
source's emissions to determine whether it is a ``major stationary
source.'' In January 2004, we agreed to reconsider this issue. In this
action, we are proposing to revise the provisions of the December 2002
final rules related to the treatment of fugitive emissions for purposes
of determining whether a physical or operational change at an existing
major source qualifies as a major modification. We request public
comment on the proposed revisions. In this action, we are also
providing guidelines for determining when and how emissions are to be
considered fugitive for NSR and Title V permitting.

DATES: Comments. Comments must be received on or before January 14,
2008.
    Public Hearing. If anyone contacts us requesting to speak at a
public hearing on or before December 3, 2007, we will hold a public
hearing approximately 30 days after publication in the Federal
Register.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2004-0014 by one of the following methods:
     http://www.regulations.gov: Follow the on-line

instructions for submitting comments.
     E-mail<EMAIL_ADDRESS>attention Docket No. EPA-
HQ-OAR-2004-0014.
     Fax:<PHONE_NUMBER>.
     Mail: Attention Docket ID No. EPA-HQ-OAR-2004-0014, U.S.
Environmental Protection Agency, EPA West (Air Docket), Mail code
2822T, 1200 Pennsylvania Avenue, Northwest, Washington, DC 20460.
Please include a total of 2 copies.
     Hand Delivery: U.S. Environmental Protection Agency, EPA
West (Air Docket), Room 3334, 1301 Constitution Avenue, Northwest,
Washington, DC 20004, Attention Docket ID No. EPA-HQ-OAR-2004-0014.
Such deliveries are only accepted during the Docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2004-0014. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business

Information (CBI) or other information whose disclosure is restricted
by statute. Do not submit information that you consider to be CBI or
otherwise protected through regulations.gov or e-mail. The http://www.regulations.gov
 Web site is an (anonymous access( system, which

means EPA will not know your identity or contact information unless you
provide it in the body of your comment. If you send an e-mail comment
directly to EPA without going through http://www.regulations.gov, your

e-mail address will be automatically captured and included as part of
the comment that is placed in the public docket and made available on
the Internet. If you submit an electronic comment, EPA recommends that
you include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit. If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses. For additional
information about EPA(s public docket visit the EPA Docket Center
homepage at http://www.epa.gov/epahome/dockets.htm. For additional

instructions on submitting comments, go to section I.B of the
SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the http://www.regulations.gov
 index. Although listed in the index, some

information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in http://www.regulations.gov
 or in hard copy at the U.S. Environmental

Protection Agency, EPA West (Air Docket), Room 3334, 1301 Constitution
Avenue, Northwest, Washington, DC, Attention Docket ID No. EPA-HQ-OAR-
2004-0014. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m.,
Monday through Friday, excluding legal holidays. The telephone number
for the Public Reading Room is<PHONE_NUMBER>, and the telephone number
for the Air Docket is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Ms. Lynn Hutchinson, Air Quality
Policy Division (C504-03), U.S. Environmental Protection Agency,
Research Triangle Park, NC 27711, telephone number:<PHONE_NUMBER>, fax
number:<PHONE_NUMBER>, or electronic mail at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    Entities potentially affected by this proposed 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. What should I consider as I prepare my comments for EPA?

    1. Submitting CBI. Do not submit information that you consider to
be CBI electronically through http://www.regulations.gov or e-mail.

Clearly mark the part or all of the information that you claim to be
CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark
the outside of the disk or CD-ROM as CBI and then identify
electronically within the disk or CD-ROM the specific information that
is claimed as CBI. In addition to one complete version of the comment
that includes information claimed as CBI, a copy of the comment that
does not contain the information claimed as CBI must be submitted for
inclusion in the public docket. Information so marked will not be
disclosed except in accordance with procedures set forth in 40 CFR part
2. Also, send an additional copy clearly marked as above not only to
the Air docket but to: Roberto Morales, c/o OAQPS Document Control
Officer, (C339-03), U.S. Environmental Protection Agency, Research
Triangle Park, NC 27711, Attention Docket ID No. EPA-HQ-OAR-2004-0014.
    2. Tips for Preparing Your Comments. When submitting comments,
remember to:
     Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date and
page number).
     Follow directions--The agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives
and substitute language for your requested changes.
     Describe any assumptions and provide any technical
information and/or data that you used.
     If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.

     Provide specific examples to illustrate your concerns, and
suggest alternatives.
     Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
     Make sure to submit your comments by the comment period
deadline identified.

C. How can I find information about a possible public hearing?

    Persons interested in presenting oral testimony should contact Ms.
Pamela S. Long, New Source Review Group, Air Quality Policy Division
(C504-03), U.S. Environmental Protection Agency, Research Triangle
Park, NC 27711, telephone number<PHONE_NUMBER>, at least 2 days in
advance of the public hearing. Persons interested in attending the
public hearing should also contact Ms. Long to verify the time, date,
and location of the hearing. The public hearing will provide interested
parties the opportunity to present data, views, or arguments concerning
these proposed changes.

D. 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. What should I consider as I prepare my comments for EPA?
    C. How can I find information about a possible public hearing?
    D. 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 is EPA reconsidering this aspect of the December 2002 NSR
Improvement final rulemaking?
III. This Action
    A. What are the results of EPA's reconsideration?
    B. How is EPA proposing to revise the major NSR regulations?
    C. What is the effect of this action on the minor NSR program?
    D. What is the rationale for this action?
    1. The Newmont petition
    2. Proposed action
IV. When would these proposed changes take effect in the Federal PSD
Program, and Must States revise their State Implementation Plans
(SIPs) to incorporate this proposed action?
V. Guiding Principles for Determining Fugitive Emissions
VI. 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
VII. 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 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 part 51, appendix S.

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 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 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\
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    \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.
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     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 it is in 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's source category. 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 this action we propose to modify this aspect
of the 2002 NSR rules. We propose to take a consistent approach as to
the inclusion of fugitive emissions in threshold major source and
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 proposed 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 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.) 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. (Again, see 45 FR 52691.) 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 an 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.) 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.)
    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. Sec.  52.21(b)(4) and (i)(4)(vii)
as promulgated in 1980 at 45 FR 52736 and 52739, 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.) A similar exclusion applied in the
nonattainment major NSR context. (See Sec.  51.18(j)(4), 45 FR 52746.)
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) we affirmed the interpretation
that we had stated in the 1980 NSR rulemaking. (See 49 FR 43208.) 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.)
    In a companion notice published on October 26, 1984 (49 FR 43211),
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.)
---------------------------------------------------------------------------

    \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), 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 for this proposal are captured in legacy docket A-84-33.
    On November 28, 1989 (see 54 FR 48870), we finalized our 1984
interpretation and concluded that the section 302(j) limitation on
including fugitive emissions applies to the threshold 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.)
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.) 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.) 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), we promulgated final rules consistent with our November
1989 final interpretive ruling. There, 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. (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 is EPA reconsidering 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. This Action

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

    We are proposing to revise the provisions of the December 2002 NSR
Improvement final rules related to the treatment of fugitive emissions
for purposes of determining whether a physical or operational change at
an existing major source qualifies as a major modification. We propose
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 propose to adopt the same approach to fugitive
emissions currently used for determining whether a source is major, for
determining whether a change is a major modification. We solicit
comment on this proposed approach.

B. How is EPA proposing to revise the major NSR regulations?

    To implement our new approach to fugitive emissions, in this action
we propose to revise all four portions of the major NSR program
regulations: Sec.  51.165, Sec.  51.166, Sec.  52.21, and appendix S of
part 51. This notice includes specific proposed revisions for
Sec. Sec.  51.165, 51.166, and 52.21. The proposed revisions are nearly
identical for these regulations because they contain nearly identical
provisions related to major modifications. We are not proposing
specific revisions for appendix S in this action, but we propose to
revise it with regulatory text consistent with the changes that we
ultimately finalize for Sec.  51.165.
    For Sec. Sec.  51.165, 51.166, and 52.21, we propose to modify a
number of definitions. In addition, we propose a minor change in the
provisions for plantwide applicability limitations (PALs) to preserve
the existing treatment of fugitive emissions for PALs. We are proposing
to modify 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. We are proposing a minor revision in
the provisions on monitoring and reporting for physical and operational
changes that are found not to be major modifications. Finally, we are
proposing to delete as unnecessary the paragraph that provides for a
generalized exemption related to fugitive emissions and repeats the
section 302(j) list. These proposed rule revisions are discussed in
more detail below.
    We are proposing 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 proposed 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); and Sec.  52.21(b)(48)(i)(a),
(ii)(a), and (iii). 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), and Sec.  52.21(b)(41)(ii)(b) and (d).
Note that the proposed language refers to emissions units that are in a
source category on the section 302(j) list, as well as the listing
status of the entire major stationary sources that belong to one of the
listed source categories. This language addresses those situations
where an emissions unit that is included in one of the listed source
categories is located within a parent source whose primary activity is
not on the list. 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. We propose similar language throughout this
proposed rule. See section III.D below for additional discussion of the
rationale for this proposed language.
    We also propose to revise the 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 simply 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.) We
therefore do not believe we can exempt fugitive emissions from being
included when setting a PAL. Consequently, we are proposing to revise
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 proposed revision is found in

Sec. Sec.  51.165(1)(a)(xxxv)(D), 51.166(b)(47)(iv), and
52.21(b)(48)(iv).
    To reinforce our intentions for PALs, we are proposing 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),
and 52.21(aa)(4)(i)(d).
    We are proposing to revise the definition of ``major modification''
to mirror the existing definition of ``major stationary source.''
Specifically, we propose to add 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''].

This new language is proposed for Sec. Sec.  51.165(a)(1)(v)(G),
51.166(b)(2)(v), and 52.21(b)(2)(v).
    We are proposing to revise 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 or operational changes. Accordingly, we propose to add the
following language regarding ``creditable'' emissions increases and
decreases at Sec. Sec.  51.165(a)(1)(vi)(C)(4), 51.166(b)(3)(iii)(d),
and 52.21(b)(3)(iii)(c):

    For an increase or decrease in fugitive emissions (to the extent
quantifiable), it occurs at 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 the
major stationary source belongs to one of the listed source
categories.

    The final definition change we are proposing in this action is for
``fugitive emissions.'' For this term, we propose to add 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 proposed for Sec. Sec.
51.165(a)(1)(ix), 51.166(b)(20), and 52.21(b)(20).
    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. In this action we are proposing revisions to
the provisions for Step 1 to clarify that fugitive emissions (to the
extent quantifiable) are only included for listed emissions units and
source categories. (Clarifications for Step 2 are handled in the
proposed revisions to the definitions that are discussed above.) The
proposed revision appears in Sec. Sec.  51.165(a)(2)(ii)(B),
51.166(a)(7)(iv)(b), and 52.21(a)(2)(iv)(b).
    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. We
are proposing 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. The proposed revision affects
Sec. Sec.  51.165(a)(6)(iii) and (iv), 51.166(r)(6)(iii) and (iv), and
52.21(r)(6)(iii) and (iv).
    Finally, we are proposing to delete a paragraph in each of the
major NSR regulations that is no longer necessary. These 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 the section 302(j) list, and we finalized our
policy (proposed to be reversed 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 our
proposal to make uniform the approach to fugitive emissions for major
source and major modification determinations, these paragraphs have
become completely unnecessary. Accordingly, in this action we propose
to remove and reserve these paragraphs, Sec. Sec.  51.165(a)(4),
51.166(i)(1)(ii), and 52.21(i)(vii).

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

    Major NSR programs are very similar across the United States,
prescribed 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 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 request comment on this topic. How do existing
State and local minor NSR programs address fugitive emissions? Do these
programs clearly specify how fugitive emissions are to be considered
for all aspects of the program (e.g., applicability, control technology
requirements, impacts analysis, etc.)?
---------------------------------------------------------------------------

    \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, we propose in this action 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 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.) 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. Since we

will be explicitly addressing fugitive emissions in the final minor NSR
rule in Indian country, we will be acting consistently with the
approach for minor NSR programs that we are proposing in this action.
    We solicit comment on all aspects of our proposal regarding minor
NSR. We also solicit 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.

D. What is the rationale for this action?

1. The Newmont Petition
    The thrust of Newmont's petition for reconsideration is twofold:
     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.''
     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 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 petition on both counts.
    We now believe, however, that the absence of reference to ``major
modification'' in section 302(j) simply does not dispose of the issue.
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, 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.''
2. Proposed Actions
    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. 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. Moreover, although no authoritative conference or
committee report addresses the issue of how fugitive emissions should
be covered, 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 state implementation plan 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 purpose 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 noted above, EPA's
earliest, most nearly contemporaneous construction of the statute in
the 1980 rules took it for granted that the treatment of fugitive
emissions for purposes of modification calculations would be addressed
identically with the same issue for major source determinations.
    For policy and programmatic reasons, we now believe that it is
better to adopt a uniform approach to these threshold determinations.
Analyzing 302(j) functionally, we conclude that it is reasonable to
interpret section 302(j) to require EPA to conduct rulemaking to
identify source categories that should include their fugitive emissions
for all threshold applicability purposes. The concerns appearing in the
legislative history relating to fugitive emissions are the same when
evaluating whether a project at an existing source is a modification as
they are when evaluating whether a source is a major source. Our
current, differentiated approach can lead to incongruous results. For
example, at an existing source in a source category not on the section
302(j) list that is undergoing a physical or operational change, the
fugitive emissions from the source would not be counted in determining
whether the source is a major source (the first major NSR applicability
criterion), yet the increase in fugitive emissions resulting from the
change

would be counted to determine whether the project qualifies as a major
modification (the second criterion). Furthermore, if an existing major
source in a source category not listed under section 302(j) engages in
a physical or operational change that creates a significant volume of
fugitive emissions, consideration of its fugitive emissions when
calculating whether the change constitutes a modification may be a
crucial factor in the determination. Thus, we believe our assertion in
the 1984 notice (see 49 FR 43213-14) 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
modification.
    In summary, the proposed rules that we are publishing in this
action eliminate the existing requirement that fugitive emissions be
counted in major modification determinations for all source categories,
whether or not listed pursuant to section 302(j). We are proposing that
only source categories that we list pursuant to section 302(j) would be
required to count fugitive emissions when evaluating whether a project
is a major modification. We solicit comment on all aspects of this
proposed approach and our rationale for it.

IV. When would these proposed changes take effect in the Federal PSD
Program, and Must States revise their State Implementation Plans (SIPs)
to incorporate this proposed action?

    We propose that these changes take effect in the Federal PSD permit
program within 60 days from when we promulgate the final rule. This
means that we would 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.
    We also propose to establish these proposed requirements as minimum
program elements of the PSD and nonattainment NSR programs.
Notwithstanding this requirement, it may not be necessary for a State
or local authority to revise its SIP 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 language in the
approved SIP without the need to revise the SIP.
---------------------------------------------------------------------------

    \5\ Currently, there are no tribal permitting agencies with an
approved 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 would revise their SIPs to adopt these changes, the
changes would not be effective in such areas until we approve the SIP
revision. We propose to require 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 a final rule
within 3 years after the rule's promulgation date. We also propose that
State and local authorities may maintain NSR program elements that have
the effect of making their regulations more stringent than the final
rules, but that a State and local authority submit an explanation for
that conclusion to EPA by the SIP submission deadline.
    We also propose to require that State, local, and subject tribal
authorities 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. We further propose to
require State, local, and subject tribal authorities to submit this
information within 3 years from the promulgation date of the final
rule.
    We acknowledge that some States and localities may need to regulate
additional fugitive emissions under the 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. Our proposed action would not prohibit a reviewing authority
from requiring control of fugitive emissions 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 solicit comment on this proposal for revising implementation
plans and specifically on the ability of State, local, and tribal
authorities to implement this approach through interpretation, without
rulemaking.

V. 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
proposes to 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 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.
    We believe that the three overarching principles represent our
existing policy on defining fugitive emissions. Moreover, we believe
that these proposed expansions on these basic concepts represent a
reasonable interpretation of our existing regulatory language to be
applied to future fugitive emission determinations. Accordingly, we are
not proposing specific changes to the existing regulatory language to
accommodate this proposal. Nonetheless, we request comment on the
specific ideas expressed in our expanded explanations, and on whether
this approach should be implemented under the existing regulatory
language, or whether regulatory changes to the specific definition of
fugitive emissions are needed or desired to implement this proposal.
    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 posses a limited
ability to establish presumptions through guidance. See e.g. General
Elec. Co. v. EPA, 290 F.3d 377 (D.C. 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).
---------------------------------------------------------------------------

    In conducting this analysis, we expect that a reviewing authority
could reach different conclusions depending on whether it conducts the
analysis for a new or existing emissions unit. For example, costs and
technical feasibility may outweigh the consideration that other sources
in the source category are subject to a national emissions standard or
regulation as outlined in criteria 2(b) above, and a reviewing
authority could conclude that such emissions are fugitive for an
existing source even when they would find that they are non-fugitive at
a new source.
    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 is more available or
more easily calculated than cost data on collection or capture alone.
    Thus, we propose 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 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

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. 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.

VI. 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.'' This action 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 an information collection burden under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
We are not promulgating any new paperwork requirements (e.g.,
monitoring, reporting, recordkeeping) as part of this proposed action.
The 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, EPA ICR number 1230.17.
A copy of the OMB approved Information Collection Request (ICR) may be
obtained from Susan Auby, Collection Strategies Division; U.S.
Environmental Protection Agency (2822T); 1200 Pennsylvania Avenue, NW.,
Washington, DC 20460 or by calling<PHONE_NUMBER>.
    Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (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 proposed 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; or (3) a small organization that is any
not-for-profit enterprise that is independently owned and operated and
is not dominant in its field.
    After considering the economic impacts of this proposed action on
small entities, I certify that this action will not have a significant
economic impact on 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 proposed rule changes in this proposed rule 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 proposed rule will not affect sources,
including small businesses, that are included in the section 302(j)
list; regulatory requirements for these sources will be unchanged.
    The proposed rule 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 the proposed rule changes
will be to improve the operational flexibility of unlisted major
sources. We have therefore concluded that this proposed action will
relieve regulatory burden for all affected small entities. We continue
to be interested in the potential impacts of the proposed rule on small
entities and welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L.
104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan.
    The plan must provide for notifying potentially affected small
governments, enabling officials of affected small governments to have
meaningful and timely input in the development of EPA regulatory
proposals with significant Federal intergovernmental mandates, and
informing, educating, and advising small governments on compliance with
the regulatory requirements.
    The EPA has determined that this rule does not contain a Federal
mandate that may result in expenditures of $100 million or more for
State, local, and tribal governments, in the aggregate, or the private
sector in any 1 year. 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). In
addition, we believe the proposed rules 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, this proposed action is
not subject to the requirements of sections 202 and 205 of the UMRA.
    EPA has determined that this rule contains no regulatory
requirements that might significantly or uniquely affect small
governments, for the same reasons stated above.

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 proposed 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 the
proposed rule 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 solicits comment on this proposed rule from State and
local officials.

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

    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 proposed rule does not
have tribal implications, as specified in Executive Order 13175.
    These proposed changes will benefit reviewing authorities and the
regulated community, including any major source owned by a tribal
government or located in or near tribal land, by providing increased
certainty as to when to count fugitive emissions within the NSR
program. In addition, some physical or operational changes that would
be considered major modifications under the existing rules may not be
treated as such under the revised rules, providing greater operational
flexibility to sources.
    We anticipate that the changes in this proposed rule will result in
a small decrease in the burden imposed upon reviewing authorities.
These revisions will ultimately provide greater operational flexibility
to permitted sources, which will in turn reduce the overall burden of
the program on permitting authorities by reducing the number of
required major NSR permits for major modifications. 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 rule.
    EPA specifically solicits additional comment on this proposed rule
from tribal officials.

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

    Executive Order 13045: ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997), applies
to any rule that: (1) Is determined to be ``economically significant''
as defined under Executive Order 12866; and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, the Agency must evaluate the environmental health
or safety effects of the planned rule on children, and explain why the
planned regulation is preferable to other potentially effective and
reasonably feasible alternatives considered by the Agency.
    This proposed rule is not subject to the Executive Order because it
is not economically significant as defined in Executive Order 12866,
and because the Agency does not have reason to believe the
environmental health or safety risks addressed by this action present a
disproportionate risk to children.

H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use

    This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR
28355, 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 proposed rule changes 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 No. 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 (e.g.,
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 proposed rulemaking does not involve technical standards.
Therefore, EPA is not considering the use of any voluntary consensus
standards.

VII. 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, Intergovernmental relations, Lead, Nitrogen dioxide,
Ozone, Particulate matter, Reporting and recordkeeping requirements,
Sulfur oxides, Transportation, Volatile organic compounds, Fugitive
emissions.

40 CFR Part 52

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

    Dated: November 5, 2007.
Stephen L. Johnson,
Administrator.
    For the reasons set out in the preamble, title 40, chapter I of the
Code of Federal Regulations is proposed to be amended as follows:

PART 51--[AMENDED]

    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]

    2. Section 51.165 is amended as follows:
    a. By adding paragraph (a)(1)(v)(G).
    b. By removing the period at the end of paragraph (a)(1)(vi)(C)(3)
and adding ``; and'' in its place.
    c. By adding paragraph (a)(1)(vi)(C)(4).
    d. By revising paragraph (a)(1)(ix).
    e. By revising paragraphs (a)(1)(xxviii)(B)(2) and
(a)(1)(xxviii)(B)(4).
    f. By revising paragraphs (a)(1)(xxxv)(A)(1), (a)(1)(xxxv)(B)(1),
(a)(1)(xxxv)(C), and (a)(1)(xxxv)(D).
    g. By revising paragraph (a)(2)(ii)(B).
    h. By removing and reserving paragraph (a)(4).
    i. By revising paragraphs (a)(6)(iii) and (a)(6)(iv).
    j. By revising paragraph (f)(4)(i)(D).
    The revisions and additions read as follows:

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) * * *
    (4) For an increase or decrease in fugitive emissions (to the
extent quantifiable), it occurs at an emissions unit that belongs to
one of the source categories listed in paragraph (a)(1)(iv)(C) of this
section or the major stationary source belongs to one of the listed
source categories.
* * * * *
    (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 unit or stationary source belongs to one of the source categories
listed in paragraph (a)(1)(iv)(C) of this section. (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
belongs to one of the source categories listed in paragraph
(a)(1)(iv)(C) of this section or the major stationary source belongs to
one of the listed source categories. (See paragraph (a)(1)(vi)(C)(4) 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 belongs to one of the source categories listed in
paragraph (a)(1)(iv)(C) of this section or is located at a major
stationary source that belongs to one of the listed source categories.
(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 belongs to one of the source categories listed in paragraph
(a)(1)(iv)(C) of this section or 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. (See paragraphs (a)(1)(xxx)(A)(1), (a)(1)(xxx)(B)(1),
(a)(1)(xxx)(C), and (a)(1)(xxx)(D) of this section.)
    (E) In calculating whether a project will cause a significant
emissions increase, fugitive emissions are included only for those
emissions units that belong to one of the source categories listed in
paragraph (a)(1)(iv)(C) of this section, or for all emissions units if
the major stationary source belongs to one of the listed source
categories. (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 belong to one

of the source categories listed in paragraph (a)(1)(iv)(C) of this
section, or for all emissions units if the major stationary source
belongs to one of the listed source categories. (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 belongs to one of the
source categories listed in paragraph (a)(1)(iv)(C) of this section or
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 belongs to one of the source categories listed in
paragraph (a)(1)(iv)(C) of this section or 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
belongs to one of the source categories listed in paragraph
(a)(1)(iv)(C) of this section or 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
belongs to one of the source categories listed in paragraph
(a)(1)(iv)(C) of this section or 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
belongs to one of the source categories listed in paragraph
(a)(1)(iv)(C) of this section or 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 belongs to
one of the source categories listed in paragraph (a)(1)(iv)(C) of this
section or the major stationary source 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 in 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 belongs to one of the source categories listed in
paragraph (a)(1)(iv)(C) of this section or the major stationary source
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 (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.
* * * * *
    3. Section 51.166 is amended as follows:
    a. By revising paragraph (a)(7)(iv)(b).
    b. By adding paragraph (b)(2)(v).
    c. By removing the period at the end of paragraph (b)(3)(iii)(c)
and adding ``; and'' in its place.
    d. By adding paragraph (b)(3)(iii)(d).
    e. By revising paragraph (b)(20).
    f. By revising paragraphs (b)(40)(ii)(b) and (b)(40)(ii)(d).
    g. By revising paragraphs (b)(47)(i)(a), (b)(47)(ii)(a),
(b)(47)(iii), and (b)(47)(iv).
    h. By removing and reserving paragraph (i)(1)(ii).
    i. By revising paragraphs (r)(6)(iii) and (r)(6)(iv).
    j. By revising paragraph (w)(4)(i)(d).
    The revisions and additions read as follows:

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 belongs to
one of the source categories listed in paragraph (b)(1)(iii) of this
section or the major stationary source 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 in 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) For an increase or decrease in fugitive emissions (to the
extent quantifiable), it occurs at an emissions unit that belongs to
one of the source categories listed in paragraph (b)(1)(iii) of this
section or the major stationary source 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 belong to one of the source categories listed in
paragraph (b)(1)(iii) of this section, or for all emissions units if
the major stationary source belongs to one of the listed source
categories. (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 unit or stationary source belongs to one of the source categories
listed in paragraph (b)(1)(iii) of this section. (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
belongs to one of the source categories listed in paragraph (b)(1)(iii)
of this section or the major stationary source belongs to one of the
listed source categories. (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 belongs to one of the source categories listed in
paragraph (b)(1)(iii) of this section or is located at a major
stationary source that belongs to one of the listed source categories.
(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 belongs to one of the source categories listed in paragraph
(b)(1)(iii) of this section or 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. (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 belong to one of the
source categories listed in paragraph (b)(1)(iii) of this section, or
for all emissions units if the major stationary source belongs to one
of the listed source categories. (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 belongs to one of the
source categories listed in paragraph (b)(1)(iii) of this section or 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 belongs to one of the source categories listed in paragraph
(b)(1)(iii) of this section or 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
belongs to one of the source categories listed in paragraph (b)(1)(iii)
of this section or 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
belongs to one of the source categories listed in paragraph (b)(1)(iii)
of this section or 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
belongs to one of the source categories listed in paragraph (b)(1)(iii)
of this section or 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 belongs to one of the source categories listed in
paragraph (b)(1)(iii) of this section or the major stationary source
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.
* * * * *

PART 52--[AMENDED]

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

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

Subpart A--[Amended]

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

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 belongs to
one of the source categories listed in paragraph (b)(1)(iii) of this
section or the major stationary source 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 in 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) For an increase or decrease in fugitive emissions (to the
extent quantifiable), it occurs at an emissions unit that belongs to
one of the source categories listed in paragraph (b)(1)(iii) of this
section or the major stationary source 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 belong to one of the source categories listed in
paragraph (b)(1)(iii) of this section, or for all emissions units if
the major stationary source belongs to one of the listed source
categories. (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 unit or stationary source belongs to one of the source categories
listed in paragraph (b)(1)(iii) of this section. (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
belongs to one of the source categories listed in paragraph (b)(1)(iii)
of this section or the major stationary source belongs to one of the
listed source categories. (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 belongs to one of the source categories listed in
paragraph (b)(1)(iii) of this section or is located at a major
stationary source that belongs to one of the listed source categories.
(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 belongs to one of the source categories listed in paragraph
(b)(1)(iii) of this section or 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. (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 belong to one of the
source categories listed in paragraph (b)(1)(iii) of this section, or
for all emissions units if the major stationary source belongs to one
of the listed source categories. (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 belongs to one of the
source categories listed in paragraph (b)(1)(iii) of this section or 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 belongs to one of the source categories listed in paragraph
(b)(1)(iii) of this section or 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
belongs to one of the source categories listed in paragraph (b)(1)(iii)
of this section or 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
belongs to one of the source categories listed in paragraph (b)(1)(iii)
of this section or 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
belongs to one of the source categories listed in paragraph (b)(1)(iii)
of this section or 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 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 belongs to one of the source categories listed in
paragraph (b)(1)(iii) of this section or the major stationary source
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. E7-22131 Filed 11-9-07; 8:45 am]

BILLING CODE 6560-50-P