[Federal Register Volume 80, Number 181 (Friday, September 18, 2015)]
[Proposed Rules]
[Pages 56579-56592]
[FR Doc No: 2015-21026]

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

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ENVIRONMENTAL PROTECTION AGENCY

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

[EPA-HQ-OAR-2013-0685; FRL-9931-97-OAR]
RIN 2060-AS06

Source Determination for Certain Emission Units in the Oil and
Natural Gas Sector

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The U.S. Environmental Protection Agency (EPA) is proposing to
clarify the term ``adjacent'' in the definitions of: ``building,
structure, facility or installation'' used to determine the
``stationary source'' for purposes of the Prevention of Significant
Deterioration (PSD) and Nonattainment New Source Review (NNSR) programs
and ``major source'' in the title V program as applied to the oil and
natural gas sector. The EPA has previously issued guidance on how to
assess ``adjacency'' for this industry, but the use of the guidance has
been challenged, resulting in uncertainty for the regulated community
and for permitting authorities. The EPA is proposing to clarify how
properties in the oil and natural gas sector are determined to be
adjacent in order to assist permitting authorities and permit
applicants in making consistent source determinations for this sector.
In this action, the EPA is proposing two options for determining
whether two or more properties in the oil and natural gas sector are
``adjacent'' for purposes of defining the ``stationary source'' in the
PSD and NNSR programs, and ``major source'' for the title V program
(referred to collectively as ``source''). The preferred option would
define ``adjacent'' for the oil and natural gas sector in terms of
proximity. The EPA is co-proposing and taking comment on an alternative
option to define ``adjacent'' in terms of proximity or functional
interrelatedness.

DATES: Comments. Comments must be received on or before November 17,
2015.
    Public Hearing. The EPA will hold public hearings on the proposal.
Details will be announced in a separate document.

ADDRESSES: Comments. Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2013-0685, to the Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting
comments. Once submitted, comments cannot be edited or withdrawn. The
EPA may publish any comment received to its public docket. Do not
submit electronically any information you consider to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. If you need to include CBI as part of your
comment, please visit http://www.epa.gov/dockets/comments.html for
instructions. Multimedia submissions (audio, video, etc.) must be
accompanied by a written comment. The written comment is considered the
official comment and should include discussion of all points you wish
to make. For additional submission methods, the full EPA public comment
policy, and general guidance on making effective comments, please visit
http://www.epa.gov/dockets/comments.html. For additional instructions
on submitting comments, go to the SUPPLEMENTARY INFORMATION section of
this document.

FOR FURTHER INFORMATION CONTACT: For further general information on
this rulemaking, contact Ms. Cheryl Vetter, Office of Air Quality
Planning and Standards (C504-03), U.S. Environmental Protection Agency,
by phone at<PHONE_NUMBER>, or by email at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this proposal apply to me?

    Entities potentially affected directly by this proposal include
owners and operators of sources of new and modified oil and gas sector
operations. Such entities are expected to be in the groups indicated
below. In addition, state, local and tribal governments may be affected
by the rule if they update state rules to adopt these changes.
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    \1\ North American Industry Classification System (NAICS).

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            Industry group                       NAICS Code\1\
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Oil and Gas Extraction...............  21111.
Crude Petroleum and Natural Gas        211111.
 Extraction.
Natural Gas Liquid Extraction........  211112.
Drilling Oil and Gas Wells...........  213111.
Support Activities for Oil and Gas...  213112.
Natural Gas Distribution.............  221210.
Pipeline Distribution of Crude Oil...  486110.
Pipeline Distribution of Natural Gas.  486210.
Federal Government...................  May Be Affected.
State/Local/Tribal Government........  May Be Affected.
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B. What should I consider as I prepare my comments for the EPA?

    When submitting comments, remember to:
     Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date and
page number).
     Follow directions--The agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives
and substitute language for your requested changes.
     Describe any assumptions and provide any technical
information and/or data that you used.
     If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
     Provide specific examples to illustrate your concerns, and
suggest alternatives.
     Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
     Make sure to submit your comments by the comment period
deadline identified.

C. Where can I get a copy of this document and other related
information?

    In addition to being available in the docket, an electronic copy of
this action will be posted at http://www.epa.gov/airquality/oilandgas/actions.html.

D. How is this document organized?

    The information presented in this document is organized as follows:

I. General Information
    A. Does this proposal apply to me?
    B. What should I consider as I prepare my comments for the EPA?
    C. Where can I get a copy of this document and other related
information?
    D. How is this document organized?
II. Statutory, Regulatory and Policy Background for Proposal
    A. Statutory and Regulatory Background
    B. How has the EPA applied the statutory and regulatory
definitions?
    C. Oil and Natural Gas Sector
    D. What are the air emissions resulting from the oil and natural
gas sector?
    E. How does the EPA regulate air emissions from the oil and
natural gas sector?
    F. How has the EPA defined the source for the oil and natural
gas sector previously?
    G. What approaches has the EPA taken recently regarding
implementation of NSR and title V permitting for oil and natural gas
sector sources?
    H. What is the purpose of this proposed action?
    I. Policy Discussion
    J. Why is the EPA proposing this action at this time?
    K. What is the effect of this proposed rulemaking on other
industries?
    L. What is the effect of this proposed rulemaking on permitting
authorities?
III. What are the options that the EPA is considering?
    A. Define Source Based on Proximity (Similar to the NESHAP)
    B. Define Source To Include Exclusively Functionally
Interrelated Equipment
    C. Impacts of the Options on Air Permitting
    D. Proposal is Limited to Onshore Oil and Gas Operations
IV. Environmental Justice Considerations
V. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    K. Determination Under Section 307(d)
    Statutory Authority

 II. Statutory, Regulatory and Policy Background for Proposal

A. Statutory and Regulatory Background

    The major New Source Review (NSR) programs found in parts C and D
of Title I of the Clean Air Act (CAA or Act) are preconstruction review
and permitting programs that apply to new and modified major stationary
sources of air pollutants subject to regulation under the Act. In areas
where air quality does not meet the primary or secondary National
Ambient Air Quality Standards (NAAQS) for a given pollutant and in the
ozone transport region (OTR), which includes states in the Northeast
and Mid-Atlantic regions, the program is implemented under part D of
title I of the Act. This is called the ``nonattainment'' NSR (NNSR)
program. In areas that meet the NAAQS, or ``attainment'' areas, or
where we \2\ cannot determine whether those standards are met, or
``unclassifiable'' areas, the requirements under part C of title I of
the Act apply. This program is called the PSD program. The regulations
for these two NSR programs are found in 40 CFR 51.165, 51.166, 52.21,
52.24 and part 51, appendix S.
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    \2\ In this preamble, the term ``we'' and ``our'' refers to the
EPA.
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    The NSR permitting programs are primarily implemented by state and
local permitting authorities either through programs in their approved
State Implementation Plans (SIPs) or through delegation of the federal
program by the EPA. The EPA implements the federal PSD program and the
NNSR program directly in reservation areas of Indian country and non-
reservation areas of Indian country over which a tribe or the EPA has
demonstrated that a tribe has jurisdiction, unless a tribe has
developed a Tribal Implementation Plan (TIP). The EPA may also
implement the federal PSD program directly in areas where the state or
local area has not developed a SIP-approved program or has not
requested delegation of the program by the EPA. States are also
required to have legally enforceable procedures that will allow them to
prevent the construction or modification of a source that will
interfere with attainment or maintenance of a NAAQS. In addition to the
major source permitting programs, this is typically accomplished
through a state or local ``minor'' new source permitting program. The
EPA implements a minor source permitting program in all reservation
areas of Indian country, unless a tribe has developed a TIP and in any
non-reservation areas of Indian country for which a tribe, or the EPA
acting in the tribe's place, has demonstrated that the tribe has
jurisdiction.
    The NSR program applies to new and modified stationary sources of
emissions. The CAA generally defines the term ``stationary source'' as
``any source of an air pollutant'' except those emissions from certain
mobile sources or engines under CAA section 216 [CAA section 302(z)].
The Act also defines some other terms that form the basis of specific
NSR programs. So, for example, the PSD program requires a
preconstruction permit for any ``major emitting facility'' constructed
after a particular date [CAA section 164(a)], and defines a ``major
emitting facility'' as a ``stationary source'' emitting or with the
potential to emit more than a certain amount of air pollutants [CAA
section 169(1)].
    Adhering to the statutory language in CAA section 111(a)(3), we
have defined the term ``stationary source'' to mean ``any building,
structure, facility, or installation which emits or may emit a
regulated NSR pollutant'' [40 CFR 52.21(b)(5); 40 CFR 51.165(a)(1)(i);
40 CFR 51.166(b)(5)]. We have then further defined the four statutory
terms ``building, structure, facility, or installation'' collectively
in our NSR regulations to mean ``all of the pollutant-emitting
activities which belong to the same industrial grouping, are located on
one or more contiguous or adjacent properties, and are under the
control of the same person (or persons under common control),'' where
the ``same industrial grouping'' refers to the two-digit Standard
Industrial Classification code [40 CFR 52.21(b)(6); 40 CFR
51.165(a)(1)(ii); 40 CFR 51.166(b)(6)].\3\ These three regulatory
factors: (1) Same industrial grouping; (2) location on contiguous or
adjacent properties; and (3) under the control of the same person or
persons must be evaluated on a case-by-case basis for each permitting
decision.
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    \3\ The four-digit SIC code was the only code system in use at
the time our rules were developed. This classification system has
since been replaced by the six-digit NAICS, which was developed with
Canada and Mexico, and is used for classifying North American
businesses. While the SIC codes are no longer updated, the United
States Department of Labor's Occupational Safety and Health
Administration still maintains the list of SIC codes for reference.
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    In addition to the pre-construction permitting requirements of the
NSR

program, title V of the CAA also requires a ``major source'' to obtain
an operating permit, known as a title V permit [CAA section 501(2); CAA
502]. The title V definition of major source refers to the definitions
in other sections of the Act, including the definition of major source
for hazardous air pollutants (CAA section 112), the general CAA
definition of major stationary source (CAA section 302) and the
definition of major stationary source under the NNSR program. Each of
these programs set different numerical emissions thresholds at which
permitting requirements apply, which then become the basis for the
major source determination in the title V program.
    Our operating permit regulations define major source as ``any
stationary source (or group of stationary sources that are located on
one or more contiguous or adjacent properties, and are under common
control of the same person (or persons under common control)) belonging
to a single major industrial grouping . . .'' (40 CFR 70.2, 71.2). As
in the NSR programs, we have defined industrial grouping to refer to
the two-digit SIC code (40 CFR 70.2, 71.2). Many state and local
permitting authorities have approved title V permitting programs that
have adopted similar definitions.

B. How has the EPA applied the statutory and regulatory definitions?

    Source owner/operators and permitting authorities assess the three
regulatory factors--same industrial grouping, location on contiguous or
adjacent property, and under common control--on a case-by-case basis to
determine which pollutant-emitting activities should be included as
part of a single source when determining applicability of the NSR and
title V permitting requirements. In the original promulgation and later
application of these three factors, we have been mindful of the
direction the D.C. Circuit Court of Appeals provided that the
``source'' for permitting purposes should comport with the ``common
sense notion of a plant'' (45 FR 52694, August 7, 1980 citing Alabama
Power v. Costle). In the Alabama Power decision, the Court said that
EPA cannot treat contiguous and commonly owned units as a single source
unless they ``fit within the four statutory terms . . .'' (i.e., the
terms building, structure, facility and installation). The Court said
that we should ``. . . provide for the aggregation, where appropriate,
of industrial activities according to considerations such as proximity
and ownership.'' Alabama Power Co. v. Costle, 636 F. 2d 323, 397 (D.C.
Cir. 1979). Examples of the case-by-case determinations made by the
EPA, or by permitting authorities with the EPA's input, applying these
principles over several decades of NSR permitting are available at
http://www.epa.gov/region07/air/nsr/nsrindex.htm.
    The EPA later promulgated the title V major source definition found
at 40 CFR 70.2 (57 FR 32250, July 21, 1992) and 71.2 (61 FR 34202,
34210, July 1, 1996). Not only were these definitions consistent with
each other, but EPA was also clear that the language and application of
the title V definition was to be consistent with the language and
application of the PSD definition contained in section 52.21 (61 FR
34210, July 1, 1996). Examples of case-by-case source determinations
made by the EPA, or by permitting authorities with the EPA's input,
that apply the title V definitions are available at http://www.epa.gov/region7/air/title5/t5index.htm.
    Reviewing both the NSR and title V guidance regarding source
determinations, it is clear that we have used the term ``contiguous or
adjacent'' to mean that the land associated with the source (i.e.,
building, structure, facility or installation) is connected to (i.e.,
contiguous) or nearby (i.e., adjacent) another source. In response to
the Alabama Power decision, the EPA promulgated the 1980 PSD rule,
including the definitions used to determine the scope of the source for
permitting purposes (45 FR 52676, August 7, 1980). We explained that
the 3-part test (same industrial grouping, location on contiguous or
adjacent property, and under common control) would comply with the
court decision by reasonably comporting with the purposes of the PSD
program, approximating the common sense notion of a plant, and avoiding
aggregating pollutant-emitting activities that would not fit within the
ordinary meaning of building, structure, facility or installation (45
FR at 52694, August 7, 1980). In so doing, we considered but chose not
to add a fourth factor or ``functional interrelationship'' test to the
criteria for defining a source, as at that time, we believed that such
a test would ``embroil[] the Agency in numerous fine-grained analyses''
(45 FR 52695, August 7, 1980). In the same rulemaking, we said that we
did not intend ``source'' to include activities that are many miles
apart along something like a pipeline or transmission line as a single
source, but also noted that we were ``unable to say precisely at this
point how far apart activities must be in order to be treated
separately'' (45 FR 52695, August 7, 1980).
    Even though our regulations use the term ``adjacent,'' they do not
define ``adjacent.'' Similarly, even though the EPA's historic
interpretation is that ``adjacent'' means ``nearby,'' neither our
regulations nor our historic interpretations set a specific distance
that we would consider ``nearby.'' Over the years, the EPA has
considered both the distance between two or more sources and whether
they share an operational dependence or functional interrelatedness to
determine whether they are ``adjacent.'' Even though our regulations do
not explicitly define ``adjacent,'' we have provided policy
interpretations of ``adjacency'' over time in the context of individual
permitting actions many times because we were asked by permitting
authorities to advise them on how to define a source within a specific
permitting action. As is the case for most permitting-related
decisions, these determinations were made on a case-by-case basis,
considering the specific facts in each instance. In many of these cases
and as explained in the examples below, we cited the principle of the
``common sense notion of a plant'' in making a determination regarding
the scope of the source.
    In one example, we determined that two aluminum smelting operations
within the same SIC code (3334), located approximately 3.4 miles apart
and commonly owned by Alcoa, should be considered a single source for
purposes of NSR applicability. Alcoa requested confirmation of this
single source determination after it purchased one of the plants from
another company, allowing both operations to share common control and
management as well as a single SIC code. The EPA determined that the
two operations should be considered adjacent because of the shared
materials and personnel and the company's assertion that the two plants
would be operated as one facility.\4\
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    \4\ Riva, Steven C. ``Alcoa Messena Modernization Project and
Request for a Single Source Determination.'' March 9, 2009. EPA
Region 7 Air Program New Source Review Program Policy & Guidance
Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/alcoany.pdf and in the docket for this rulemaking.
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    In one case specific to the oil and natural gas sector, the EPA
determined, in a letter issued by EPA Region 5 to Summit Petroleum
Corporation, that an oil and gas sweetening plant and approximately 100
oil and gas wells located within the boundaries of the Saginaw Chippewa
Band's Isabella Reservation in Michigan were a single

major source for purposes of the title V operating permit program.\5\
The EPA based its decision on its evaluation that the sweetening plant
and wells share the same two-digit SIC code and are under common
control (Summit Corporation). In addition, the EPA concluded that the
plant and the wells were adjacent and, thus, a single source given
their proximity and exclusive interdependence as demonstrated by the
following facts: All of the wells are located within an 8-mile radius
of the sweetening plant; all are connected by a dedicated system of
pipes; and all oil and gas from the wells must be processed through the
sweetening plant before it can be marketed. That determination was
later challenged and overturned, as will be discussed later in this
notice.
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    \5\ Newton, Cheryl. ``Summit Petroleum Corporation Single Source
Determination.'' October 18, 2010. EPA Region 7 Air Program New
Source Review Program Policy & Guidance Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/singler5.pdf and in the docket
for this rulemaking.
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    Finally, in another example involving the oil and natural gas
sector, the EPA determined that two natural gas compressor stations
(Florida River and Wolf Point) and the numerous well sites owned or
operated by BP and located within the Northern San Juan Basin should
not be considered a single stationary source. In that situation, unlike
the Summit Petroleum case discussed previously, there was no dedicated
interrelationship between the wells and the compressor stations that
would indicate that they should be treated as a single ``plant.'' Gas
from the individual wells could flow to the two BP compressor stations,
or other compressor stations. Gas production from BP's wells would not
have to stop if one or both of the BP compressor stations were shut
down. Additionally, the gathering pipeline between the wells and the
stations co-mingled gas from operators other than BP and the compressor
stations likewise accepted gas from other operators. The EPA's
determination that this complex, dynamic system did not resemble a
``common sense notion of a plant'' was also challenged, and was
settled.\6\
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    \6\ Videtich, Callie. ``BP American Production Company's Florida
River Compression Facility Single Source Determination.'' October
18, 2010. EPA Region 7 Air Program New Source Review Program Policy
& Guidance Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/singler8.pdf and in the docket for this rulemaking. The
Environmental Appeals Board (EAB) docket for CAA Appeal No. 10-04 is
available at http://yosemite.epa.gov/oa/EAB_Web_Docket.nsf/77355bee1a56a5aa8525711400542d23/2c6cf712eac2d7b38525788b00545227!OpenDocument&Highlight=2,CAA,10-04.
The petition for review by the EAB, EPA Region 8's response, and the
reply by petitioner are available in the docket for this rulemaking.
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    In each of these examples, the EPA based its opinion on an analysis
of the specific facts in the individual case. We have not established a
``bright-line'' distance beyond which we would always consider
operations to be separate sources. Neither have we established a
distance within which we would always consider operations to be one
source. We have also not established that certain operations must
always (or never) be considered together for permitting purposes.

C. Oil and Natural Gas Sector

    The United States Census Bureau's North American Industry
Classification System (NAICS) describes the Oil and Gas Extraction
industry (NAICS Code 2111) as including activities such as
``exploration for crude petroleum and natural gas; drilling,
completing, and equipping wells; operation of separators, emulsion
breakers, de-silting equipment, and field gathering lines for crude
petroleum and natural gas; and all other activities in the preparation
of oil and gas up to the point of shipment from the producing
property.'' \7\ This definition includes activities such as natural gas
processing and liquids extraction, and sulfur recovery from natural
gas. Pipeline transmission and distribution of oil and natural gas, and
storage of natural gas are included in NAICS subsector 486 Pipeline
Transportation.
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    \7\ U.S. Department of Commerce, United States Census Bureau,
North American Industry Classification System, 2012 NAICS
Definition, Sector 21--Mining, Quarrying, and Oil and Gas
Extraction, 21111 Oil and Gas Extraction http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=21111&search=2012 accessed 12/03/2013.
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    The EPA has previously described in the preamble to its proposed
New Source Performance Standard (NSPS) for the oil and natural gas
sector that this sector includes operations in the extraction and
production of oil and natural gas, and the processing, transmission and
distribution of natural gas. For oil, we described the sector as
including ``all operations from the well to the point of custody
transfer at a petroleum refinery.'' For natural gas, we described it as
including all operations from the well to the customer (76 FR 52738,
52744, August 20, 2011).
    For purposes of this proposed action, we are primarily interested
in the first two of these: Oil and natural gas production, and natural
gas processing, or what may be referred to in the industry as
``upstream'' and ``midstream'' operations. For reasons that will be
explained later in this notice, we do not intend to apply the proposed
clarification to operations that take place offshore. Onshore
production operations include ``the wells and all related processes
used in the extraction, production, recovery, lifting, stabilization,
separation, or treating of oil and/or natural gas (including
condensate). Production components may include, but are not limited to,
wells and related casing head, tubing head and ``Christmas tree''
piping, as well as pumps, compressors, heater treaters, separators,
storage vessels, pneumatic devices and dehydrators. Production
operations also include the well drilling, completion and workover
processes, and include all the portable non-self-propelled apparatus
associated with those operations. Production sites include not only the
``pads'' where the wells are located, but also include standalone sites
where oil, condensate, produced water and gas from several wells may be
separated, stored and treated. The production sector also includes the
low pressure, small diameter, gathering pipelines and related
components that collect and transport the oil, gas and other materials
and wastes from the wells to the refineries or natural gas processing
plants (76 FR 52744, August 20, 2011).
    Natural gas processing operations are aimed at removing impurities
and other by-products from the extracted gas. Natural gas consists
primarily of methane. It may also contain water vapor, hydrogen sulfide
(H2S), carbon dioxide (CO2), helium, nitrogen and
other compounds. It commonly exists in mixtures with other
hydrocarbons, referred to as natural gas liquids (NGL). Natural gas
must be processed to remove these other compounds and gases before the
gas is considered pipeline quality suitable for transmission and
distribution. Natural gas processing removes and recovers the liquids,
and non-methane gases, all or some of which may be sold.

 D. What are the air emissions resulting from the oil and natural gas
sector?

    Emissions from the oil and natural gas sector include volatile
organic compounds (VOC), greenhouse gases (including methane),
H2S, sulfur dioxide (SO2), carbon monoxide (CO)
and nitrogen oxides (NOX). VOCs, including some hazardous
air pollutants (HAP), are generally emitted during well completions,
from equipment leaks and from storage tanks. Emissions of the
greenhouse gas methane may also come from these sources while emissions
of the greenhouse gas CO2 come primarily from combustion
sources, such as flares, engines and compressors. Emissions of

NOX and CO are also a result of these combustion operations.
Emissions of sulfur compounds come from production and processing
operations that treat ``sour gas,'' that is, natural gas with an
H2S content of greater than 0.25 gr/100 scf.

E. How does the EPA regulate air emissions from the oil and natural gas
sector?

    In addition to the source-specific permitting required by the NSR
and title V programs, air emissions from the oil and natural gas sector
are also regulated through other CAA-based rules. The EPA first listed
crude oil and natural gas production for NSPS development in 1979 (44
FR 49222, August 21, 1979). An NSPS, 40 CFR part 60, subpart KKK, was
promulgated in 1985 that addressed VOC emissions from leaking
components at onshore natural gas processing facilities (50 FR 26122,
June 24, 1985). A second NSPS, regulating SO2 emissions from
natural gas processing plants, 40 CFR part 60, subpart LLL, was
promulgated in 1985 (50 FR 40158, October 1, 1985). In 2012, the EPA
finalized revisions to these NSPS and established standards in 40 CFR
part 60, subpart OOOO, limiting VOC emissions from gas wells,
centrifugal compressors, reciprocating compressors, pneumatic
controllers and storage vessels (77 FR 49490, August 16, 2012). In 2013
and 2014, the EPA made certain amendments to the 2012 NSPS standards in
order to improve implementation of the standards (78 FR 58416,
September 23, 2013 and 79 FR 79018, December 31, 2014). Separately, the
EPA is proposing to expand the NSPS (subpart OOOO) to regulate several
additional categories of emitting equipment in this sector.
    The EPA has also regulated emissions of HAP from certain oil and
natural gas sector processes through use of National Emissions
Standards for Hazardous Air Pollutants (NESHAP), specifically the Oil
and Natural Gas Production NESHAP (40 CFR part 63, subpart HH) and
Natural Gas Transmission and Storage NESHAP (40 CFR part 63, subpart
HHH). These regulations were first promulgated in 1999 (64 FR 32610,
June 17, 1999) and were amended in 2012 (77 FR 49490, August 16, 2012).

F. How has the EPA defined the source for the oil and natural gas
sector previously?

    As discussed in the previous section, selected equipment and
emitting activities involved in oil and gas production are regulated
under both the NSPS and NESHAP programs. The NSPS and NESHAP focus on
technology-based standards for industrial source categories, and do not
approach the regulation of stationary sources in the same way as
required for NSR permitting.
    The definition of a major source in the NESHAP program is similar
to, but distinguishable from, the definition of stationary source used
in the NSR permitting programs. The NESHAP program defines a major
source as a stationary source or a group of stationary sources ``within
a contiguous area'' (40 CFR 63.2). This ``major source'' definition
differs from the definition of stationary source used in the NSR
permitting programs because it does not include ``adjacent properties''
[e.g., 40 CFR 52.21(b)(5)]. A major source under CAA section 112 is
further defined as any stationary source or group of stationary sources
``that emits or has the potential to emit considering controls, in the
aggregate 10 tons per year (tpy) or more of any HAP or 25 tpy or more
of any combination of HAP.'' [CAA section 112(a)(1)]. An area source of
HAP is one that is not a major source of HAP.
    When Congress revised CAA section 112 in 1990, however, it included
a specific provision discussing how oil and gas wells and pipeline
facilities were to be treated with respect to regulating emissions of
HAP [CAA section 112(n)(4)(A)]. This section provides that
``notwithstanding'' the definitions of major source in section 112, the
emissions from any oil or gas exploration or production well (with its
associated equipment) and emissions from any pipeline compressor or
pump station ``shall not be aggregated with emissions from other
similar units'' to determine whether the units or stations are major
sources. Congress specified this whether the units are in a contiguous
area or under common control. In the case of any oil or gas exploration
or production well (with its associated equipment), such emissions
``shall not be aggregated for any purpose under this section.''
    In the NESHAP for Oil and Natural Gas Production Facilities, the
EPA defines the affected source consistent with this requirement of the
Act, including which associated equipment should be part of the
facility, which associated equipment could potentially be aggregated,
and which cannot be aggregated as per CAA section 112(n)(4)(A) [40 CFR
63.760(b)]. The EPA defines this associated equipment to include
``equipment associated with an oil or natural gas exploration or
production well, and includes all equipment from the wellbore to the
point of custody transfer'' (40 CFR 63.761). The EPA defines the
facility for purposes of the NESHAP to mean ``the grouping of equipment
where hydrocarbon liquids are processed, upgraded (i.e., remove
impurities or other constituents to meet contract specifications), or
stored prior to the point of custody transfer'' or where natural gas is
``processed, upgraded, or stored'' prior to natural gas transmission
and storage. For the purpose of the NESHAP major source determination,
facility (including a building, structure, or installation) means oil
and natural gas production and processing equipment that is located
within the boundaries of an individual surface site as defined in the
NESHAP (40 CFR 63.761).
    Furthermore, the EPA defines surface site as ``any combination of
one or more graded pad sites, gravel pad sites, foundations, platforms,
or the immediate physical location upon which equipment is physically
affixed'' (40 CFR 63.761). The effect of these definitions is to define
the affected facility based on the emissions from equipment and
activities that are in close proximity to each other. The EPA stated
that its intent in defining affected facility in this way was both to
comply with the specific language in CAA section 112(n)(4), and to
reduce the burden on owners and operators in making source
determinations. The EPA stated at that time its belief that it was not
reasonable to aggregate emissions from surface sites that are located
on the same lease, but are at great distances from each other, even
though they would be under common control (64 FR 32618, June 17, 1999).

G. What approaches has the EPA taken recently regarding implementation
of NSR and title V permitting for oil and natural gas sector sources?

    As was the case with other industry categories, the EPA initially
approached permitting decisions in the oil and natural gas sector on a
case-by-case basis without any specific guidance until 2007. At that
time, because of an increase in oil and gas development, and an
increase in permit activity, the EPA issued the first guidance document
specific to this industry. The EPA built on the idea of using the
surface site, as defined in 40 CFR 63.761, and the proximity of surface
sites to each other in permitting guidance, when it issued a guidance
document titled ``Source Determinations for Oil and Gas Industries'' in
2007.\8\ This 2007 memo is

relevant to our proposed action because it acknowledged that source
determinations within the oil and gas industry may not be as
straightforward as those within other regulated industries. We note
that even in cases that clearly meet the tests of same SIC code and
common control, the nature of oil and gas exploration and production
operations may require a detailed evaluation to determine whether
sources are on contiguous or adjacent properties. Production fields,
even if under the control of a single operator, may cover large areas.
Unlike many other industries, however, the expanse of land on which
these commonly-controlled operations are located is frequently not
owned or controlled by the owner/operator of the oil and gas activity.
Instead, the producers may control only the surface area that holds the
well and associated production equipment.
---------------------------------------------------------------------------

    \8\ Wehrum, William. ``Source Determinations for Oil and Gas
Industries.'' January 12, 2007. EPA Region 7 Air Program New Source
Review Program Policy & Guidance Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/oilgas.pdf and in the docket
for this rulemaking.
---------------------------------------------------------------------------

    As discussed earlier in this notice, EPA has previously said that
it would not consider all facilities along a pipeline to be one source.
The 2007 memo built upon that idea to conclude that, for the oil and
gas production industry, ``we do not believe determining whether two
activities are operationally dependent drives the determination as to
whether two properties are contiguous or adjacent, because it would
embroil the Agency in precisely the fine-grained analysis we intended
to avoid and would potentially lead to results which do not adhere to
the common sense notion of a plant.'' Thus, the 2007 memo acknowledged
that permitting authorities may consider proximity, and not operational
dependence, as the most informative factor in determining the scope of
a source, and recommended the approach used in CAA section 112 and the
NESHAP for Oil and Natural Gas Production Facilities (the ``surface
site'') as the starting point for determining the boundaries of the
source for NSR and title V. Beyond the surface site, the memo
recommends that permitting authorities consider aggregating multiple
surface sites if they are in close proximity, i.e., physically adjacent
or separated by no more than a short distance. However, consistent with
the EPA's overall permitting practice, the 2007 memo concluded that the
decision of whether a permitting authority should aggregate two or more
pollutant-emitting activities into a single source for permitting
remains a case-by-case decision taking into consideration the factors
relevant to the specific case.
    In 2009, the EPA withdrew the 2007 memo.\9\ In doing so, we
reinstated the use of the fundamental criteria for making source
determinations for the oil and natural gas sector based on the use of
the three factors contained in our regulations; same SIC code, common
control, and location on contiguous or adjacent property. This fact-
specific examination is consistent with the EPA's historical practice
in other industries, and is in contrast to the simplified approach of
relying principally on proximity that was the focus of the 2007
memorandum. From 2009 forward, the EPA recommended that permitting
authorities conduct each source determination based on a case-by-case
evaluation of the emissions activities at each building, structure,
facility or installation. The 2009 memo acknowledged that proximity
might well serve as the overwhelming factor in a permitting authority's
source determination decision, but the conclusion could only be
justified after examining all relevant factors, consistent with
regulatory requirements and historical practice.
---------------------------------------------------------------------------

    \9\ McCarthy, Gina. ``Withdrawal of William Wehrum's January 12
2007 Issued Guidance Memo `Source Determinations for Oil and Gas
Industries'.'' September 22, 2009. EPA Region 7 Air Program New
Source Review Program Policy & Guidance Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/oilgaswithdrawal.pdf and in
the docket for this rulemaking.
---------------------------------------------------------------------------

    The EPA has had direct experience as the permitting authority in
making source determinations for onshore oil and gas operations in
Indian country. The 2010 permit for compressor stations located on the
Southern Ute Indian Reservation (Florida River and Wolf Point) and the
Summit Petroleum permits are two examples discussed in detail
previously. In these cases, the EPA conducted a fact-specific
examination of the three factors in determining which emitting
activities should be included in title V permits. In both of these
cases, the source determinations were challenged.
    The EPA was challenged on its source determinations for the Florida
River permit by WildEarth Guardians. They challenged the EPA's decision
not to aggregate certain wells into a single source in the title V
permit renewal. EPA entered into a settlement agreement with the
petitioner and agreed to undertake a ``pilot'' program to gather
additional information ``for the purpose of studying, improving and
streamlining oil and gas source determinations in new or renewal Title
V permits.'' \10\ The EPA has collected data from several permit
applicants, but has not yet issued permits based on that data, due to
uncertainties created by court decisions discussed later in this
proposal.
---------------------------------------------------------------------------

    \10\ U.S. Environmental Protection Agency. February 20, 2012.
Motion for Dismissal. In re: BP America Production Company, Florida
River Compression Facility, Permit No. V-SU-0022-05.00. Available at
http://yosemite.epa.gov/oa/EAB_Web_Docket.nsf/(Filings)/
E340610E897366E1852579AB005443C4/$File/
Motion%20for%20Dismissal...41.pdf and in the docket for this
rulemaking.
---------------------------------------------------------------------------

    In the case of Summit Petroleum's operations in Rosemont, Michigan,
also discussed previously, the EPA determined in 2010 that the
company's gas sweetening facility and associated wells were under
common control and in the same major industrial grouping. In addition,
the EPA determined that they were adjacent because of the functional
interrelatedness of the operations. The EPA determined that the source
must get a title V operating permit.
    Summit appealed that determination to the United States Court of
Appeals for the Sixth Circuit, which issued a decision that overturned
the EPA's title V applicability determination. Summit Petroleum Corp.
v. U.S. Environmental Protection Agency, 690 F.3d 733 (6th Cir. 2012).
In the decision, the Court said that the EPA's use of interrelatedness
in determining whether sources were ``adjacent'' is unreasonable and
contrary to the plain meaning of the term as currently used in EPA's
regulations. The two judges in the majority found that the term
``adjacent'' was unambiguous and its plain meaning related only to
physical proximity, and thus could not include consideration of
functional interrelatedness. The EPA sought rehearing of the Court's
decision, but that request was denied.
    In a memorandum, EPA Headquarters then instructed its Regional Air
Directors that the agency intended to apply the outcome of the Sixth
Circuit decision only in the states under the jurisdiction of the Sixth
Circuit and that we would continue to make stationary source
determinations for title V and PSD permitting consistent with the
agency's long-standing interpretations of its regulations in the rest
of the country.\11\
---------------------------------------------------------------------------

    \11\ Page, Stephen. ``Applicability of the Summit Decision to
EPA Title V and NSR Source Determinations.'' December 21, 2012. EPA
Region 7 Air Program New Source Review Program Policy & Guidance
Index available at http://www.epa.gov/region07/air/nsr/nsrmemos/inter2012.pdf and in the docket for this rulemaking.
---------------------------------------------------------------------------

    The EPA's guidance memo to its regional offices was challenged by
the National Environmental Development Association's Clean Air Project
(NEDA/CAP) in the D.C. Circuit Court of

Appeals. National Environmental Development Association's Clean Air
Project v. Environmental Protection Agency, 752 F.3d 999 (D.C. Cir.
2014). NEDA/CAP alleged that the memorandum violated the EPA's Regional
Consistency regulations by establishing inconsistent permit criteria in
different parts of the country. The D.C. Circuit agreed and held that
the memo conflicted with EPA regulations that promote uniform national
regulatory policies. 752 F.3d at 1009 (discussing 40 CFR part 56). In
essence, the Court found that EPA bound itself to consistency with the
Summit decision through its own regulations. In issuing the decision,
the D.C. Circuit indicated that the EPA could have avoided a conflict
between its December 2012 memo and the Regional Consistency regulations
by revising the source determination regulations to explicitly require
consideration of functional interrelatedness.

H. What is the purpose of this proposed action?

    The purpose of this action is to request comment on the best
approach to define ``adjacent'' for the onshore oil and natural gas
sector.\12\ We believe it is important to address this industry
separately because permitting decisions are difficult and time-
consuming. Providing this guidance will promote a consistent regulatory
treatment for this industry. In addition, this industry continues to
grow at a rapid pace, and the sheer number of determinations that need
to be made heightens the need for guidance in the near term.
---------------------------------------------------------------------------

    \12\ We note that the EPA Administrator signed a separate
proposal on August 5, 2015 to amend the Regional Consistency
Regulations to address consistency issues resulting from judicial
decisions. See Environmental Protection Agency, RIN 2060-AS53
available at http://www.epa.gov/nsr/actions.html.
---------------------------------------------------------------------------

    We also believe it is important to address this issue through a
rulemaking. The oil and gas source determination guidance provided by
the EPA on two separate occasions, in 2007 and 2009, was issued in the
form of a memo, with no opportunity for public notice and comment.
Then, as discussed above, the subsequent onshore oil and gas permitting
decisions made by EPA were challenged, and both guidance memos were
referenced or relied upon by the parties in those challenges. The EPA
is interested in addressing any uncertainty by providing additional
clarity through rulemaking and seeking comment on the best approach for
defining the term ``adjacent'' specific to the onshore oil and natural
gas sector.

I. Policy Discussion

    An important consideration in deciding how to define the stationary
source for oil and gas operations is the environmental protection that
is achieved by aggregating multiple pollutant-emitting activities into
a single source. Under the PSD and NNSR programs, new major sources or
major modifications at major sources for a given pollutant are subject
to either Best Available Control Technology (BACT) or Lowest Achievable
Emissions Reduction (LAER) controls, depending on the air quality
designation status for that pollutant of the area in which the source
is located. These controls may be more stringent than controls required
at minor sources. Because major source BACT or LAER controls may be
continually improving, permitting authorities must assess and sources
must install the best technology at the time a permit is issued,
instead of what was the best the last time an NSPS or NESHAP was
updated. Therefore, these case-by-case controls required for major
sources or major modifications at major sources are often more
stringent than controls required under NSPS or NESHAP, if those
standards have not been recently updated, because control technology
tends to improve over time.
    In addition, if the source is or will be located in an area that is
designated nonattainment, emissions reductions, known as offsets, may
be required in higher ratios to compensate for the proposed emissions
increase. Therefore, aggregating activities into major sources may
result in more oil and gas sources being subject to greater control
under LAER, in addition to having to obtain offsets, resulting in
greater environmental protection.
    Aggregating facilities is also more likely to result in sources
being subject to operating permitting requirements under title V of the
Act. While this does not result in any additional control requirements,
it may result in additional monitoring and reporting requirements that
provide more information on the operation of the source to the
regulators and interested citizens. The title V permitting process
includes opportunities for public participation, EPA oversight, and
citizens' rights to petition the EPA to object to permits. These
opportunities exist at both the initial permit issuance, and at permit
renewal, which occurs every 5 years. The title V process provides more
opportunities for public participation than minor source permitting,
which generally includes public participation only at the time of
initial construction or modification, and under processes that vary
according to the permitting authority.
    Aggregating activities may also provide facility owners/operators
with greater flexibility to modify operations without triggering
additional permitting requirements. A source consisting of multiple
emitting activities may be able to ``net out'' of further PSD or NNSR
permit review by reducing emissions in one part of a source in order
that emissions at another part of the source may increase. This allows
sources to avoid additional permitting requirements for modifications
to an existing facility under PSD and NNSR by taking credit for
reductions that have already occurred within the facility. A smaller
source offers less opportunity to ``net out'' because there are fewer
emitting activities that can be reduced if a modification results in an
increase. Finally, netting is usually not available under minor NSR
programs, so smaller minor sources would likely not be able to take
advantage of netting to avoid minor NSR permitting requirements.
    Another approach to achieving environmental protection is to
require controls by direct federal regulation through the NSPS or
NESHAP programs. The NSPS program results in significant control and is
applicable to new, modified and reconstructed sources. The NSPS also
includes monitoring and recordkeeping requirements. The NESHAP program
also results in significant control of HAP, many of which are also
VOCs, and is applied to both new and existing sources. Each of the
emissions standards established pursuant to these programs must be
reviewed and revised, if necessary, at least every eight years to take
into account developments in practices, processes and control
technologies. These standards apply to affected facilities independent
of the need for an NSR permit. Separately, the EPA is proposing
revisions to 40 CFR part 60, subpart OOOO, the NSPS for the oil and
natural gas sector.
    Additional controls may be required for sources located in
nonattainment areas, including minor sources, through a SIP, or through
a Federal Implementation Plan (FIP) in areas where EPA is the
regulatory authority, such as in certain areas of Indian country. The
CAA requires implementation of reasonable available control technology
(RACT) for major sources in moderate and above ozone nonattainment
areas and in the Ozone Transport Region (OTR). The EPA develops Control
Techniques Guidelines (CTGs) to inform a state's RACT determinations.
Separately, the

EPA is proposing a CTG for the oil and natural gas sector.
    All of these programs (NSPS, NESHAP, RACT and state SIP/EPA FIP
requirements) typically apply to emitting equipment, irrespective of
the total emissions of the source at which the equipment is located,
although there may be thresholds for individual types of equipment. An
advantage of applying environmental control through these programs is
that the administrative burden of applying for, obtaining, and
maintaining major source permits can be reduced for sources because
these limitations establish enforceable limits on the sources'
potential to emit, and can keep a source from being considered major.
The burden of reviewing and issuing major source permits is likewise
reduced for permitting authorities.
    The biggest advantage to sources, particularly in this industry, is
that controlling emissions through NSPS, NESHAP or emission control
standards imposed by states through their SIPs does not require case-
by-case pre-approval as do the controls determined through major source
permitting. This provides greater certainty to the source owners and
operators without the delays associated with such permitting.
Communities can also be certain of the controls sources are required to
install and operate because the sources do not have the opportunity to
``net out'' of controls through a permitting process. Compliance and
enforcement are also enhanced because the control, monitoring and
recordkeeping requirements are consistent for each type of equipment
and do not differ from site to site, or in the case of federal
controls, state to state.
    For the oil and gas industry, where source owners/operators must
obtain the right to drill in a particular location and only hold those
rights for a limited period of time, the ability to proceed quickly is
important. For communities and air regulators, the ability to protect
air quality and public health is important. A major source permit
typically takes a year or more to process. If there is uncertainty
about what should be included as part of that permitted source, the
time to issue a permit can take longer. We believe that the most
important result of a major or minor permit for all stakeholders,
including the regulated industry, the community in which the source is
located, and the permitting authority, is the requirement to install
control technology to minimize air emissions and protect public health
and the environment. We think that providing clarity about the scope of
the source through this rule, and the emissions control requirements
associated with other rules being proposed by the EPA serves the
interests of all stakeholders.

J. Why is the EPA proposing this action at this time?

    One reason for taking this action is to resolve the uncertainty
that the litigation over the Summit Petroleum source determination and
resulting guidance has created for both permitting authorities and for
owners/operators of regulated sources. Another reason is to develop a
coordinated approach to regulating emissions from oil and gas sources
under the variety of regulatory mechanisms available to state and
federal regulatory agencies. There has been an increase in oil and gas
production resulting from the rise in use of unconventional methods of
extraction (e.g., the use of hydraulic fracturing), and this production
is taking place in more areas and at a faster pace than in the recent
past. We believe this justifies a new look at the best way to regulate
and permit these operations. In separate notices, the EPA is proposing
to require additional controls for the emissions from the oil and
natural gas sector. Those requirements include additional requirements
for new sources under the NSPS, requirements for minor sources at oil
and gas operations in Indian country, and a CTG that will inform RACT
determinations for existing major VOC sources located in moderate or
above ozone nonattainment areas and in the OTR.
    We believe that the additional emissions controls required for new
sources under the revised NSPS makes it less likely that major source
permitting would result in substantial additional pollution control. In
commenting on this proposal, commenters are encouraged to consider how
emission controls being proposed in separate EPA notices may impact the
preferred option in this proposal.

K. What is the effect of this proposed rulemaking on other industries?

    At this time, the EPA is proposing to clarify the definition of
``adjacent'' used to determine the source to be permitted within the
PSD, NNSR and title V programs as it applies to the oil and natural gas
sector for the reasons discussed earlier in this proposal. The EPA
believes that the unique characteristics of this industry--such as the
underground mineral rights versus surface land ownership, widespread
operations and interconnectedness via pipeline, etc.--warrant an
industry-specific definition that will streamline the assessment of
which operations should be considered to be on contiguous or adjacent
properties. For other industries, we continue to believe that a case-
by-case assessment of the three factors remains the appropriate method
of making source determinations. For these industries, as discussed
previously, we believe it is generally less difficult to determine the
scope of the source, because the operations already take place at
facilities that more clearly match the common sense notion of a plant.

L. What is the effect of this proposed rulemaking on permitting
authorities?

    We are proposing to make changes to both the PSD and NNSR programs
in this rulemaking. We believe that it may be possible for some states
to interpret their existing state rules consistent with this rulemaking
(when final) and may not need to revise SIPs to incorporate these
changes. However, we intend to encourage states to revise their SIPs to
adopt these changes, when final. Similarly, states would be expected to
make conforming changes to their operating permit programs. While we
are proposing changes to both the federal programs and the requirements
for state programs, we invite comment on whether states should be
required to adopt these changes.

III. What are the options that the EPA is considering?

    In this proposal, the EPA is proposing and requesting comment on
two options for clarifying the definition used to determine the source
to be permitted within the NSR and title V programs as it applies to
the oil and natural gas sector. As we stated before, any determination
of the scope of a source requires a fact-specific inquiry into each of
the three regulatory factors, i.e., whether emitting activities share
the same SIC code, are under common control, and are contiguous or
adjacent. We are not proposing to change or take comment on this
inquiry or the three factors. However, in this notice, the EPA is
taking comment on how the term ``adjacent'' in the third factor should
be applied specifically to emission units in the oil and natural gas
sector.

A. Define Source Based on Proximity (Similar to the NESHAP)

    Under the first, and currently preferred, option for which the EPA
is taking comment, the EPA proposes to define ``adjacent'' such that
the source is similar to that in the NESHAP for this industry, Subpart
HH, National Emissions Standards for Hazardous Air Pollutants From Oil
and Natural Gas Production Facilities (40 CFR 63.760). Under this
option, the ``source'' for oil

and natural gas sector activities is presumed to be limited to the
emitting activities at the surface site, and other emitting activities
will be considered ``adjacent'' if they are proximate. Thus, under this
first option, two or more surface sites must be considered as a single
source if they share the same SIC code, are under common control, and
are contiguous or are located within a short distance of one another.
    We prefer this option because we believe that a definition that
centers on a surface site is familiar to the industry and the
regulators because of the current NESHAP requirements, so it will
streamline permitting. We also believe that a definition focused on a
surface site most closely represents the common sense notion of a plant
for this industry category. Surface sites that are not in close
proximity to one another may be on a separate lease which may not align
with the common sense notion of a single plant. In addition, we believe
that this definition is consistent with Congress' intent, at least as
they expressed it with regard to HAPs, as discussed previously.
    Under this option, as we are proposing it, the source owner/
operator would not be required, and would not be allowed, to include
additional emitting activities in a permit beyond those in the source
as defined. This could mean that an owner/operator must obtain more
individual construction permits and possibly more operating permits.
However, these would be more likely to be minor source permits. If
finalized, owner/operators could lose the benefits of being able to net
emissions over a larger source, which could be a disadvantage,
particularly for sources in nonattainment areas. We request comment on
this more limited concept of source for this industry, specifically
whether limiting the scope of the source in this way provides
sufficient guidance for sources and permitting authorities to permit
these sources in a consistent and efficient manner.
    In addition, we request comment on whether it is appropriate to
establish a specific distance within which to consider multiple surface
sites as a single source, and if so, what that distance should be. Some
states, such as Texas, Oklahoma, Louisiana and Pennsylvania, have
issued guidance that presumes that operations within \1/4\ mile should
be considered a single source. We believe that it will be helpful to
prescribe a distance in this rule, given that this question has
generated significant confusion and uncertainty in the past. The EPA is
proposing to adopt a distance of \1/4\ mile but is asking for comment
on whether another distance, such as \1/2\ mile, is an appropriate
distance to consider for defining a single source even if on separate
surface sites (i.e., operations beyond that distance would not be
considered for aggregation).
    Louisiana's guidance further specifies that facilities should not
be ``daisy-chained'' together to establish a single contiguous
source.\13\ A series of emission units are ``daisy-chained'' when each
individual unit is located within the specified ``contiguous or
adjacent'' distance from the next unit, but where the last unit is
separated from the first unit by a much larger distance. We request
comment on whether the EPA should make a similar distinction if we
adopt this proximity-focused source definition. Louisiana's guidance
goes on to specify that the geographic center of the site's emissions
defines the center for purposes of establishing the \1/4\ mile distance
used to determine the boundary of the single source. We request comment
on whether the center or some other feature, such as the boundary of
the surface site, is more appropriate to use as the starting point of
the measurement radius when determining the source.
---------------------------------------------------------------------------

    \13\ Louisiana Department of Environmental Quality.
Interpretation of Contiguous for Oil & Gas Production Facilities.
http://www.deq.louisiana.gov/portal/DIVISIONS/AirPermitsEngineeringandPlanning/AirPermitsProceduresandGuidance/ContiguityandOilandGasProduction.aspx. March 2015.
---------------------------------------------------------------------------

    We also request comment on whether there are instances where
setting such a bright-line distance could increase or limit permitting
authority oversight of these sources because they would be more likely
to be subject to minor source permitting. We also request comment on
whether the potentially smaller scope of each source could result in an
unacceptable permitting burden (by creating a larger number of smaller
sources) on the regulated community or on permitting authorities.
    While the EPA does not expect there would be adverse air quality
impacts as a result of this approach, we are interested in whether
there might be any environmental effect, including effects on NAAQS
compliance from this approach, with either benefit or harm resulting.
Finally, we request comment on whether there are circumstances in which
an owner/operator would prefer to combine surface sites or other
operations that are beyond the presumptive distance, e.g., \1/4\ mile,
and seek a PSD or NNSR permit, and whether the EPA should preserve this
option. If so, should the option to seek a major source permit be
limited to the owner or operator's discretion, or should a permitting
authority be able to make this determination, and under what
circumstances?

B. Define Source To Include Exclusively Functionally Interrelated
Equipment

    Under the second option, the EPA proposes to define the ``source''
for the oil and natural gas sector to include all of the interrelated
equipment that is under common control, is in the two-digit SIC (Code
13 Oil and Gas Extraction), and is on contiguous or adjacent property,
where the EPA would presume that equipment in an oil and gas field is
``adjacent'' if it is proximate, or if it is exclusively functionally
interrelated. Exclusive functional interrelatedness might be shown by
connection via a pipeline or other means, because of the physical
connection between the equipment. Other examples of factors that could
be assessed to determine interrelatedness include exclusive delivery of
product from one group of equipment to the other via truck or train and
facts such as whether one group of equipment would be able to operate
if the other group of equipment was not operating. The EPA and states
would make a determination of adjacency based on a consideration of the
interrelatedness of emitting activities in addition to the distance
between them. So, for the oil and natural gas sector, pollutant-
emitting activities will be considered adjacent if one of the following
circumstances apply: (1) The pollutant-emitting activities are
separated by a distance of \1/4\ mile or more and there is an exclusive
functional interrelatedness; or (2) the pollutant-emitting activities
are separated by a distance of less than \1/4\ mile.
    The consideration of interrelatedness is consistent with the EPA's
current and historical practice for other industries and its
longstanding practice for oil and natural gas sector activities. The
EPA is requesting comment on this approach to better understand the
perspective of various stakeholders. What are the advantages and
disadvantages to this approach? Are there characteristics related to
the oil and natural gas sector that would make this approach more or
less difficult to implement than the preferred alternative, such as
need to examine various interrelatedness criteria or the
interconnectedness of the operations through pipelines? Should the EPA
further define exclusive functional interrelatedness for this sector to
provide additional clarity to regulators and the regulated community?
For example, should the

EPA limit exclusive functional interrelatedness for this sector to
emitting equipment that is configured in a ``hub and spoke'' model,
where oil or gas produced from one or more wells has a dedicated flow
(via a pipeline or other delivery method) to only one possible
downstream point for further compression, processing or storage? Are
there other configurations specific to this industry that the EPA
should consider to be exclusively functionally interrelated?
    In addition, is there any environmental benefit or harm that might
result from this approach? For example, could this approach create a
disincentive to building pipelines, and what would be the environmental
effect of those decisions? Finally, the EPA requests comment on whether
there is a specific distance beyond which sources in the oil and gas
industry should not be considered interrelated, even if interconnected
by pipeline.

C. Impacts of the Options on Air Permitting

    The EPA expects that the combined effect of all the rules being
proposed, including the proposed changes to the NSPS, the proposed rule
for oil and gas sources in Indian country, and the CTG, will be to
reduce the number of major oil and gas sources, even if we finalize
Option 2. The proposed rules add requirements for enforceable controls,
thereby decreasing potential emissions and making it less likely that
major source permitting will be required. This is because a source's
potential emissions are determined after taking into account controls
that are enforceable as a practical matter, such as those required in
the NSPS and a SIP adopting the CTG.
    The two options presented in this rule differ primarily in the
permitting burden placed on sources and permitting authorities. In the
EPA's experience, it takes significantly longer to apply for and review
a PSD application than it does to apply for and review a minor NSR
permit. Option 1 can be expected to result in fewer major sources than
Option 2, but more minor sources. Option 2 can be expected to result in
more major sources, as some otherwise minor sources could be combined
into a smaller number of major sources.
    Because the EPA would benefit from public comment on all of these
issues, the EPA is co-proposing these two approaches and, following
review of public comments on the issues raised by each approach,
anticipates adopting one of the approaches in the final rule. We
welcome comments on these two discrete options, or some combination of
these, and other options for determining the source for permitting oil
and natural gas sector operations.

D. Proposal is Limited to Onshore Oil and Gas Operations

    The EPA is proposing to limit this rulemaking to onshore oil and
gas operations for a number of reasons. First, the CAA already contains
a specific definition of ``outer continental shelf source'' which
includes any ``equipment activity, or facility which emits or has the
potential to emit any air pollutant'' specifically including ``platform
and drill ship exploration, construction, development, production,
processing, and transportation.'' In addition, ``emissions from any
vessel servicing or associated with an outer continental shelf (OCS)
source, including emissions while at the OCS source or en route to or
from the OCS source within 25 miles of the OCS source'' must be
included when determining the OCS source [CAA section 328(a)(4)(C)]. In
our permitting experience, these OCS sources are more likely than
onshore operations to be stand-alone major PSD sources. The EPA has
issued permits for exploration rigs to operate as portable PSD sources,
allowing them to operate in a number of locations under one permit. We
believe that this current approach provides sufficient streamlining for
both sources and permitting authorities and propose to continue the
existing case-by-case approach for offshore sources.

IV. Environmental Justice Considerations

    This proposal is intended to clarify the definition of adjacent
used to determine the source to be permitted within the existing PSD,
NNSR and title V programs as it applies to the oil and natural gas
sector. This clarification will assist permitting authorities and
permit applicants in making source determinations for the oil and gas
industry and is not intended to result in less environmental protection
for human health and the environment. It is being proposed as a part of
a comprehensive strategy to reduce emissions from the oil and natural
gas production sector which includes new (or lower) emission standards
or requirements for a number of types of emitting equipment. It,
therefore, is not expected to have a disproportionately high and
adverse human health or environmental effects on minority populations
or low-income populations. However, the permitting process,
particularly under the major source programs, NSR and title V, may
provide opportunities for public participation at individual sources
that may be of interest to minority or low-income populations.

V. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review

    This proposed action is a significant regulatory action that was
submitted to the Office of Management and Budget (OMB) for review
because it raises novel legal and policy issues arising out of the
President's priorities. Any changes made in response to OMB
recommendations have been documented in the docket.

B. Paperwork Reduction Act

    This proposed action would not impose any new information
collection burden. However, the OMB has previously approved the
information collection requirements contained in the existing
regulations for PSD (40 CFR 52.21) and title V (40 CFR parts 70 and 71)
under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et
seq and has assigned OMB control numbers 2060-0003, 2060-0336 and 2060-
0243. The OMB control numbers for the EPA's regulations in 40 CFR are
listed in 40 CFR part 9. Instead of new information collection burdens,
this proposed action proposes proffers options that clarify the
existing permitting requirements applicable to new and modified oil and
natural gas sector sources. This proposed action is not likely to
increase the burden associated with permitting, and may reduce it.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any regulation subject
to notice and comment rulemaking requirements under the Administrative
Procedures Act or any other statute unless the agency certifies the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations and small governmental jurisdictions.
    For purposes of assessing the impacts of this proposed rule on
small entities, small entity is defined as: (1) A small business as
defined in the Small Business Administration's (SBA) regulations at 13
CFR 121.201; (2) a small governmental jurisdiction that is a government
of a city, county, town,

school district or special district with a population of less than
50,000; and (3) a small organization that is any not-for-profit
enterprise which is independently owned and operated and is not
dominant in its field.
    After considering the economic impacts of this proposed rule on
small entities, I certify that this proposed action will not have a
significant economic impact on a substantial number of small entities.
In making this determination, the impact of concern is any significant
adverse economic impact on small entities. An agency may certify that a
rule will not have a significant economic impact on a substantial
number of small entities if the rule relieves regulatory burden, has no
net burden or otherwise has a positive economic effect on the small
entities subject to the rule. Entities potentially affected directly by
this proposal include sources in the oil and natural gas sector. We
intend with this proposal to clarify the existing requirements for
permitting new and existing sources in the oil and natural gas sector.
We believe that any option finalized after notice and comment
rulemaking will not increase, and may decrease, the administrative
burden for permitting these sources, including those that may be small
entities. We have, therefore, concluded that this proposed action will
have no net regulatory burden for all directly regulated small
entities.
    We continue to be interested in the potential impacts of the
proposed rule on small entities and welcome comments on issues related
to such impacts.

D. Unfunded Mandates Reform Act

    This proposed action does not contain an unfunded mandate of $100
million or more as described in the Unfunded Mandates Reform Act of
1995 (UMRA), 2 U.S.C. 1531-1538, and does not significantly or uniquely
affect small governments. This action imposes no enforceable duty on
any state, local or tribal governments or the private sector. The CAA
imposes the obligation for private sector sources to obtain permits
prior to construction. Many states and some local governments choose to
implement those requirements. In other areas, the EPA implements those
requirements. In this proposal, the EPA is taking comment on the most
appropriate way to implement those requirements for an industry
category. Therefore, this proposed action is not subject to the
requirements of sections 202, 203 and 205 of the UMRA.

E. Executive Order 13132: Federalism

    This proposed action does not have federalism implications. It will
not have substantial direct effects on the states, on the relationship
between the national government and the states, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132. The requirement to obtain
permits for new major sources is imposed by the CAA. This proposed
rule, if made final, would interpret those requirements as they apply
to the oil and natural gas sector. Thus, Executive Order 13132 does not
apply to these proposed regulation revisions.
    In the spirit of Executive Order 13132 and consistent with the EPA
policy to promote communications between the EPA and state and local
governments, the EPA specifically solicits comments on this proposed
action from state and local officials.

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

    This action does not have tribal implications as specified in
Executive Order 13175. It would not have a substantial direct effect on
one or more Indian tribes, since no tribe has developed a TIP that
allows it to issue NSR permits. Furthermore, these proposed regulation
revisions do not affect the relationship or distribution of power and
responsibilities between the federal government and Indian tribes. The
CAA and the Tribal Air Rule establish the relationship of the federal
government and tribes in developing plans to implement NSR permitting,
and this proposal does nothing to modify that relationship. Thus,
Executive Order 13175 does not apply to this action.
    The EPA has concluded that this action will not have tribal
implications because it doesn't impose a significant cost to tribal
governments. However, there are significant tribal interests because of
the growth of the oil and gas production industry in Indian country.
Although Executive Order 13175 does not apply to this action, the EPA
has offered consultation to tribal officials in developing this action.
Meeting summaries will be included in the docket for this rulemaking.
    The EPA specifically solicits additional comment on this proposed
action from tribal officials.

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

    The EPA interprets EO 13045 as applying only to those regulatory
actions that concern environmental health or safety risks that the EPA
has reason to believe may disproportionately affect children. This
action is not subject to EO 13045 because it is not intended to
establish an environmental standard intended to mitigate health or
safety risks. The proposal requests comments on the appropriate
definition of a source as it applies to one source category for
purposes of permitting under the requirements of the CAA.

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

    This proposed action is not a ``significant energy action'' because
it is not likely to have a significant adverse effect on the supply,
distribution or use of energy. We believe this action is not likely to
have any adverse energy effects because it will not increase, and may
decrease, the permitting burden on owners and operators of sources in
the oil and natural gas sector.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272
note) directs the EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods,
sampling procedures and business practices) that are developed or
adopted by voluntary consensus standards bodies. NTTAA directs the EPA
to provide Congress, through OMB, explanations when the agency decides
not to use available and applicable voluntary consensus standards.
    This proposed rulemaking does not involve technical standards.
Therefore, the EPA is not considering the use of any voluntary
consensus standards.

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

    The EPA believes the human health or environmental risk addressed
by this proposed action will not have disproportionately high and
adverse human health or environmental effects on minority, low-income
populations or indigenous populations. The proposal requests comment on
the appropriate definition of the source as it applies to one industry
category for purposes of

permitting under the CAA. As such, it does not adversely affect the
health or safety of minority or low-income populations. The results of
this evaluation are contained in Section IV of this preamble.

K. Determination Under Section 307(d)

    Pursuant to sections 307(d)(1)(J) and 307(d)(1)(V) of the CAA, the
Administrator determines that this action is subject to the provisions
of section 307(d). Under section 307(d)(1)(J), the provisions of
section 307(d) apply to revisions to regulations relating to PSD. Under
section 307(d)(1)(V), the provisions of section 307(d) apply to ``such
other actions as the Administrator may determine.''

Statutory Authority

    The statutory authority for this action is provided by sections
101; 111; 114; 116, 160-165, 169, 173, 301, 302, 501 and 502 of the
CAA, as amended (42 U.S.C. 7401; 42 U.S.C. 7411; 42 U.S.C. 7414; 42
U.S.C. 7416; 7470-7475, 7479, 7503, 7601, 7602, 7661, and 7662.

List of Subjects

40 CFR Part 51

    Environmental protection, Air pollution control, Construction
permit, Intergovernmental relations, Major source, Oil and gas.

40 CFR Part 52

    Environmental protection, Air pollution control, Construction
permit, Incorporation by reference, Intergovernmental relations, Major
source, Oil and gas.

40 CFR Part 70

    Environmental protection, Air pollution control, Intergovernmental
relations, Major source, Oil and gas, Operating permit.

40 CFR Part 71

    Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Major source,
Operating permit.

    Dated: August 18, 2015.
Gina McCarthy,
Administrator.
    For the reasons stated in the preamble, Title 40, Chapter I of the
Code of Federal Regulations is proposed to be amended as follows:

PART 51--REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF
IMPLEMENTATION PLANS

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

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

0
2. In Sec.  51.165, revise paragraph (a)(1)(ii) to read as follows:

Sec.  51.165  Permit requirements.

    (a) * * *
    (1) * * *

 [PROPOSED REGULATORY TEXT FOR OPTION 1]

    (ii) (A) Building, structure, facility, or installation means all
of the pollutant-emitting activities which belong to the same
industrial grouping, are located on one or more contiguous or adjacent
properties, and are under the control of the same person (or persons
under common control). Pollutant emitting activities shall be
considered as part of the same industrial grouping if they belong to
the same Major Group (i.e., which have the same two-digit code) as
described in the Standard Industrial Classification Manual, 1972, as
amended by the 1977 Supplement (U.S. Government Printing Office stock
numbers 4101-0065 and<PHONE_NUMBER>6-0, respectively).
    (B) Notwithstanding the provisions of paragraph (a)(1)(ii)(A) of
this section, building, structure, facility, or installation means, for
onshore activities under SIC Major Group 13: Oil and Gas Extraction,
all of the pollutant-emitting activities included in Major Group 13
that are located on one or more contiguous or adjacent properties, and
are under the control of the same person (or persons under common
control). Pollutant emitting activities shall be considered adjacent if
they are located on the same surface site, or on surface sites that are
located within \1/4\ mile of one another, where a surface site has the
same meaning as in 40 CFR 63.761.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

    (ii) (A) Building, structure, facility, or installation means all
of the pollutant-emitting activities which belong to the same
industrial grouping, are located on one or more contiguous or adjacent
properties, and are under the control of the same person (or persons
under common control). Pollutant emitting activities shall be
considered as part of the same industrial grouping if they belong to
the same Major Group (i.e., which have the same two-digit code) as
described in the Standard Industrial Classification Manual, 1972, as
amended by the 1977 Supplement (U.S. Government Printing Office stock
numbers 4101-0065 and<PHONE_NUMBER>6-0, respectively).
    (B) Notwithstanding the provisions of paragraph (a)(1)(ii)(A) of
this section, building, structure, facility, or installation means, for
onshore activities in SIC Major Group 13: Oil and Gas Extraction, all
of the pollutant-emitting activities included in Major Group 13, are
located on one or more contiguous or adjacent properties, and are under
the control of the same person (or persons under common control).
Pollutant-emitting activities shall be considered adjacent if one of
the following circumstances apply:
    (1) The pollutant-emitting activities are separated by a distance
of \1/4\ mile or more and there is an exclusive functional
interrelatedness; or
    (2) The pollutant-emitting activities are separated by a distance
of less than \1/4\ mile.
* * * * *
0
3. In Sec.  51.166, revise paragraph (b)(6) to read as follows:

Sec.  51.166  Prevention of significant deterioration of air quality.

* * * * *
    (b) * * *

 [PROPOSED REGULATORY TEXT FOR OPTION 1]

    (6)(i) Building, structure, facility, or installation means all of
the pollutant-emitting activities which belong to the same industrial
grouping, are located on one or more contiguous or adjacent properties,
and are under the control of the same person (or persons under common
control) except the activities of any vessel. Pollutant-emitting
activities shall be considered as part of the same industrial grouping
if they belong to the same Major Group (i.e., which have the same two-
digit code) as described in the Standard Industrial Classification
Manual, 1972, as amended by the 1977 Supplement (U.S. Government
Printing Office stock numbers 4101-0066 and<PHONE_NUMBER>6-0,
respectively).
    (ii) Notwithstanding the provisions of paragraph (b)(6)(i) of this
section, building, structure, facility, or installation means, for
onshore activities under SIC Major Group 13: Oil and Gas Extraction,
all of the pollutant-emitting activities included in Major Group 13
that are located on one or more contiguous or adjacent properties, and
are under the control of the same person (or persons under common
control). Pollutant emitting activities shall be considered adjacent if
they are

located on the same surface site, or on surface sites that are located
within \1/4\ mile of one another, where a surface site has the same
meaning as in 40 CFR 63.761.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

    (6)(i) Building, structure, facility, or installation means all of
the pollutant-emitting activities which belong to the same industrial
grouping, are located on one or more contiguous or adjacent properties,
and are under the control of the same person (or persons under common
control) except the activities of any vessel. Pollutant-emitting
activities shall be considered as part of the same industrial grouping
if they belong to the same Major Group (i.e., which have the same two-
digit code) as described in the Standard Industrial Classification
Manual, 1972, as amended by the 1977 Supplement (U.S. Government
Printing Office stock numbers 4101-0066 and<PHONE_NUMBER>6-0,
respectively).
    (ii) Notwithstanding the provisions of paragraph (b)(6)(i) of this
section, building, structure, facility, or installation means, for
onshore activities in SIC Major Group 13: Oil and Gas Extraction, all
of the pollutant-emitting activities included in Major Group 13, are
located on one or more contiguous or adjacent properties, and are under
the control of the same person (or persons under common control).
Pollutant-emitting activities shall be considered adjacent if one of
the following circumstances apply:
    (A) The pollutant-emitting activities are separated by a distance
of \1/4\ mile or more and there is an exclusive functional
interrelatedness; or
    (B) The pollutant-emitting activities are separated by a distance
of less than \1/4\ mile.
* * * * *
0
4. In appendix S to part 51, revise section A.2. to read as follows:

APPENDIX S TO PART 51--EMISSION OFFSET INTERPRETATIVE RULING

* * * * *

II. Initial Screening Analyses and Determination of Applicable
Requirements

    A. * * *

[PROPOSED REGULATORY TEXT FOR OPTION 1]

    2. (i) Building, structure, facility or installation means all
of the pollutant-emitting activities which belong to the same
industrial grouping, are located on one or more contiguous or
adjacent properties, and are under the control of the same person
(or persons under common control) except the activities of any
vessel. Pollutant-emitting activities shall be considered as part of
the same industrial grouping if they belong to the same ``Major
Group'' (i.e., which have the same two digit code) as described in
the Standard Industrial Classification Manual, 1972, as amended by
the 1977 Supplement (U.S. Government Printing Office stock numbers
4101-0066 and<PHONE_NUMBER>6-0, respectively).
    (ii) Notwithstanding the provisions of paragraph II.2.(i) of
this appendix, building, structure, facility or installation means,
for onshore activities under SIC Major Group 13: Oil and Gas
Extraction, all of the pollutant-emitting activities included in
Major Group 13 that are located on one or more contiguous or
adjacent properties, and are under the control of the same person
(or persons under common control). Pollutant emitting activities
shall be considered adjacent if they are located on the same surface
site, or on surface sites that are located within \1/4\ mile of one
another, where a surface site has the same meaning as in 40 CFR
63.761.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

    2. (i) Building, structure, facility or installation means all
of the pollutant-emitting activities which belong to the same
industrial grouping, are located on one or more contiguous or
adjacent properties, and are under the control of the same person
(or persons under common control) except the activities of any
vessel. Pollutant-emitting activities shall be considered as part of
the same industrial grouping if they belong to the same ``Major
Group'' (i.e., which have the same two digit code) as described in
the Standard Industrial Classification Manual, 1972, as amended by
the 1977 Supplement (U.S. Government Printing Office stock numbers
4101-0066 and<PHONE_NUMBER>6-0, respectively).
    (ii) Notwithstanding the provisions of paragraph II.2.(i) of
this appendix, building, structure, facility or installation means,
for onshore activities in SIC Major Group 13: Oil and Gas
Extraction, all of the pollutant-emitting activities included in
Major Group 13, are located on one or more contiguous or adjacent
properties, and are under the control of the same person (or persons
under common control). Pollutant-emitting activities shall be
considered adjacent if one of the following circumstances apply:
    (A) The pollutant-emitting activities are separated by a
distance of \1/4\ mile or more and there is an exclusive functional
interrelatedness; or
    (B) The pollutant-emitting activities are separated by a
distance of less than \1/4\ mile.
* * * * *

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
5. The authority citation for part 52 continues to read as follows:

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

0
6. In Sec.  52.21, revise paragraph (b)(6) to read as follows:

Sec.  52.21  Prevention of significant deterioration of air quality.

* * * * *
    (b)* * *

[PROPOSED REGULATORY TEXT FOR OPTION 1]

    (6)(i) Building, structure, facility, or installation means all of
the pollutant-emitting activities which belong to the same industrial
grouping, are located on one or more contiguous or adjacent properties,
and are under the control of the same person (or persons under common
control) except the activities of any vessel. Pollutant-emitting
activities shall be considered as part of the same industrial grouping
if they belong to the same ``Major Group'' (i.e., which have the same
first two digit code) as described in the Standard Industrial
Classification Manual, 1972, as amended by the 1977 Supplement (U.S.
Government Printing Office stock numbers 4101-0066 and<PHONE_NUMBER>6-0,
respectively.
    (ii) Notwithstanding the provisions of paragraph (b)(6)(i) of this
section, building, structure, facility, or installation means, for
onshore activities under SIC Major Group 13: Oil and Gas Extraction,
all of the pollutant-emitting activities included in Major Group 13
that are located on one or more contiguous or adjacent properties, and
are under the control of the same person (or persons under common
control). Pollutant emitting activities shall be considered adjacent if
they are located on the same surface site, or on surface sites that are
located within \1/4\ mile of one another, where a surface site has the
same meaning as in 40 CFR 63.761.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

    (6)(i) Building, structure, facility, or installation means all of
the pollutant-emitting activities which belong to the same industrial
grouping, are located on one or more contiguous or adjacent properties,
and are under the control of the same person (or persons under common
control) except the activities of any vessel. Pollutant-emitting
activities shall be considered as part of the same industrial grouping
if they belong to the same ``Major Group'' (i.e., which have the same
first two digit code) as described in the Standard Industrial
Classification Manual, 1972, as amended by the 1977 Supplement (U.S.
Government Printing Office stock numbers 4101-0066 and<PHONE_NUMBER>6-0,
respectively.
    (ii) Notwithstanding the provisions of paragraph (b)(6)(i) of this
section, building, structure, facility, or installation means, for
onshore activities in SIC Major Group 13: Oil and Gas Extraction, all
of the pollutant-

emitting activities included in Major Group 13, are located on one or
more contiguous or adjacent properties, and are under the control of
the same person (or persons under common control). Pollutant-emitting
activities shall be considered adjacent if one of the following
circumstances apply:
    (A) The pollutant-emitting activities are separated by a distance
of \1/4\ mile or more and there is an exclusive functional
interrelatedness; or
    (B) The pollutant-emitting activities are separated by a distance
of less than \1/4\ mile.
* * * * *

PART 70--STATE OPERATING PERMIT PROGRAMS

0
7. The authority citation for part 70 continues to read as follows:

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

0
8. In Sec.  70.2, revise the undesignated text of the definition for
``Major source'' to read as follows:

Sec.  70.2  Definitions.

 [PROPOSED REGULATORY TEXT FOR OPTION 1]

* * * * *
    Major source means any stationary source (or any group of
stationary sources that are located on one or more continuous or
adjacent properties, and are under common control of the same person
(or persons under common control)) belonging to a single major
industrial grouping and that are described in paragraph (1), (2), or
(3) of this definition. For the purposes of defining ``major source,''
a stationary source or group of stationary sources shall be considered
part of a single industrial grouping if all of the pollutant emitting
activities at such source or group of sources on contiguous or adjacent
properties belong to the same Major Group (i.e., all have the same two-
digit code) as described in the Standard Industrial Classification
Manual, 1987. For onshore activities belonging to SIC Major Group 13:
Oil and Gas Extraction, pollutant emitting activities shall be
considered adjacent if they are located on the same surface site, or
are on surface sites that are located within \1/4\ mile of one another,
where a surface site has the same meaning as in 40 CFR 63.761.
* * * * *
0
9. In Sec.  70.2, revise the undesignated text, and paragraphs 1 and 2
of the definition for ``Major source'' to read as follows:

Sec.  70.2  Definitions.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

* * * * *
    Major source means any stationary source (or any group of
stationary sources that are located on one or more continuous or
adjacent properties, and are under common control of the same person
(or persons under common control)) belonging to a single major
industrial grouping and that are described in paragraph (1), (2), or
(3) of this definition. For the purposes of defining ``major source,''
a stationary source or group of stationary sources shall be considered
part of a single industrial grouping if all of the pollutant emitting
activities at such source or group of sources on contiguous or adjacent
properties belong to the same Major Group (i.e., all have the same two-
digit code) as described in the Standard Industrial Classification
Manual, 1987. For onshore activities belonging to SIC Major Group 13:
Oil and Gas Extraction, pollutant emitting activities shall be
considered adjacent if one of the following circumstances apply:
    (1) The pollutant-emitting activities are separated by a distance
of \1/4\ mile or more and there is an exclusive functional
interrelatedness; or
    (2) The pollutant-emitting activities are separated by a distance
of less than \1/4\ mile.
* * * * *

PART 71--FEDERAL OPERATING PERMIT PROGRAMS

0
10. The authority citation for part 71 continues to read as follows:

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

Subpart A--Operating Permits

0
11. In Sec.  71.2, revise the undesignated text of the definition for
``Major sources'' to read as follows:

Sec.  71.2  Definitions.

[PROPOSED REGULATORY TEXT FOR OPTION 1]

* * * * *
    Major source means any stationary source (or any group of
stationary sources that are located on one or more contiguous or
adjacent properties, and are under common control of the same person
(or persons under common control)), belonging to a single major
industrial grouping and that are described in paragraph (1), (2), or
(3) of this definition. For the purposes of defining ``major source,''
a stationary source or group of stationary sources shall be considered
part of a single industrial grouping if all of the pollutant emitting
activities at such source or group of sources on contiguous or adjacent
properties belong to the same Major Group (i.e., all have the same two-
digit code) as described in the Standard Industrial Classification
Manual, 1987. For onshore activities belonging to SIC Major Group 13:
Oil and Gas Extraction, pollutant emitting activities shall be
considered adjacent if they are located on the same surface site, or
are on surface sites that are located within \1/4\ mile of one another,
where a surface site has the same meaning as in 40 CFR 63.761.
* * * * *
0
12. In Sec.  71.2, revise the undesignated text, and paragraphs 1 and 2
of the definition for ``Major sources'' to read as follows:

Sec.  71.2  Definitions.

[PROPOSED REGULATORY TEXT FOR OPTION 2]

* * * * *
    Major source means any stationary source (or any group of
stationary sources that are located on one or more contiguous or
adjacent properties, and are under common control of the same person
(or persons under common control)), belonging to a single major
industrial grouping and that are described in paragraph (1), (2), or
(3) of this definition. For the purposes of defining ``major source,''
a stationary source or group of stationary sources shall be considered
part of a single industrial grouping if all of the pollutant emitting
activities at such source or group of sources on contiguous or adjacent
properties belong to the same Major Group (i.e., all have the same two-
digit code) as described in the Standard Industrial Classification
Manual, 1987. For onshore activities belonging to SIC Major Group 13:
Oil and Gas Extraction, pollutant emitting activities shall be
considered adjacent if one of the following circumstances apply:
    (1) The pollutant-emitting activities are separated by a distance
of \1/4\ mile or more and there is an exclusive functional
interrelatedness; or
    (2) The pollutant-emitting activities are separated by a distance
of less than \1/4\ mile.
* * * * *
[FR Doc. 2015-21026 Filed 9-17-15; 8:45 am]
BILLING CODE 6560-50-P