Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR): Reconsideration of Inclusion of Fugitive Emissions, 63850-63866 [E7-22131]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 72, Number 218 (Tuesday, November 13, 2007)]
[Proposed Rules]
[Pages 63850-63866]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-22131]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 52

[EPA-HQ-OAR-2004-0014, FRL-8494-4]
RIN 2060-AM91


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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule; notice of reconsideration of final rule.

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

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

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2004-0014 by one of the following methods:
     https://www.regulations.gov: Follow the on-line 
instructions for submitting comments.
     E-mail: a-and-r-Docket@epa.gov, attention Docket No. EPA-
HQ-OAR-2004-0014.
     Fax: 202-566-9744.
     Mail: Attention Docket ID No. EPA-HQ-OAR-2004-0014, U.S. 
Environmental Protection Agency, EPA West (Air Docket), Mail code 
2822T, 1200 Pennsylvania Avenue, Northwest, Washington, DC 20460. 
Please include a total of 2 copies.
     Hand Delivery: U.S. Environmental Protection Agency, EPA 
West (Air Docket), Room 3334, 1301 Constitution Avenue, Northwest, 
Washington, DC 20004, Attention Docket ID No. EPA-HQ-OAR-2004-0014. 
Such deliveries are only accepted during the Docket's normal hours of 
operation, and special arrangements should be made for deliveries of 
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2004-0014. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
https://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be 
Confidential Business

[[Page 63851]]

Information (CBI) or other information whose disclosure is restricted 
by statute. Do not submit information that you consider to be CBI or 
otherwise protected through regulations.gov or e-mail. The https://
www.regulations.gov Web site is an (anonymous access( system, which 
means EPA will not know your identity or contact information unless you 
provide it in the body of your comment. If you send an e-mail comment 
directly to EPA without going through https://www.regulations.gov, your 
e-mail address will be automatically captured and included as part of 
the comment that is placed in the public docket and made available on 
the Internet. If you submit an electronic comment, EPA recommends that 
you include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA(s public docket visit the EPA Docket Center 
homepage at https://www.epa.gov/epahome/dockets.htm. For additional 
instructions on submitting comments, go to section I.B of the 
SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the https://
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically in https://
www.regulations.gov or in hard copy at the U.S. Environmental 
Protection Agency, EPA West (Air Docket), Room 3334, 1301 Constitution 
Avenue, Northwest, Washington, DC, Attention Docket ID No. EPA-HQ-OAR-
2004-0014. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., 
Monday through Friday, excluding legal holidays. The telephone number 
for the Public Reading Room is (202) 566-1744, and the telephone number 
for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Ms. Lynn Hutchinson, Air Quality 
Policy Division (C504-03), U.S. Environmental Protection Agency, 
Research Triangle Park, NC 27711, telephone number: (919) 541-5795, fax 
number: (919) 541-4028, or electronic mail at hutchinson.lynn@epa.gov.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

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

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

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

B. What should I consider as I prepare my comments for EPA?

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

[[Page 63852]]

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

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

    Persons interested in presenting oral testimony should contact Ms. 
Pamela S. Long, New Source Review Group, Air Quality Policy Division 
(C504-03), U.S. Environmental Protection Agency, Research Triangle 
Park, NC 27711, telephone number (919) 541-0641, at least 2 days in 
advance of the public hearing. Persons interested in attending the 
public hearing should also contact Ms. Long to verify the time, date, 
and location of the hearing. The public hearing will provide interested 
parties the opportunity to present data, views, or arguments concerning 
these proposed changes.

D. How is this preamble organized?

    The information presented in this preamble is organized as follows:

I. General Information
    A. Does this action apply to me?
    B. What should I consider as I prepare my comments for EPA?
    C. How can I find information about a possible public hearing?
    D. How is this preamble organized?
II. Background
    A. What is major New Source Review?
    B. What sources are subject to major NSR?
    C. What are fugitive emissions, and how do they figure into 
major NSR applicability?
    D. What is the basis for and history of EPA's treatment of 
fugitive emissions in major NSR applicability determinations?
    E. Why is EPA reconsidering this aspect of the December 2002 NSR 
Improvement final rulemaking?
III. This Action
    A. What are the results of EPA's reconsideration?
    B. How is EPA proposing to revise the major NSR regulations?
    C. What is the effect of this action on the minor NSR program?
    D. What is the rationale for this action?
    1. The Newmont petition
    2. Proposed action
IV. When would these proposed changes take effect in the Federal PSD 
Program, and Must States revise their State Implementation Plans 
(SIPs) to incorporate this proposed action?
V. Guiding Principles for Determining Fugitive Emissions
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Analysis
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
VII. Statutory Authority

II. Background

A. What is major New Source Review?

    The major NSR program is mandated by parts C and D of title I of 
the Act. Major NSR is a preconstruction review and permitting program 
applicable to new or modified major stationary sources (major sources) 
of air pollutants regulated under the Act. In areas not meeting 
National Ambient Air Quality Standards (NAAQS) and in ozone transport 
regions (OTR), the program is implemented under the requirements of 
part D of title I of the Act. We call this program the 
``nonattainment'' major NSR program. In areas meeting NAAQS 
(``attainment'' areas) or for which there is insufficient information 
to determine whether they meet the NAAQS (``unclassifiable'' areas), 
the NSR requirements under part C of title I of the Act apply. We call 
this program the Prevention of Significant Deterioration (PSD) program. 
Collectively, we also commonly refer to these programs as the major NSR 
program. These regulations are contained in 40 CFR 51.165, 51.166, 
52.21, 52.24, and part 51, appendix S.

B. What sources are subject to major NSR?

    Major NSR applies to (1) construction of new major sources, and (2) 
major modifications at existing major sources. In either case, the 
initial step in assessing applicability is to determine whether the 
source in question qualifies as a ``major source.'' A proposed or 
existing source qualifies as a major source if it ``emits or has the 
potential to emit'' a regulated NSR pollutant in an amount greater than 
the specified annual threshold. We define ``potential to emit'' (PTE) 
as the maximum capacity of a source to emit a pollutant under its 
physical and operational design, taking into account any physical or 
operational limitations on the source that are enforceable as a 
practical matter. (See, for example, Sec.  52.21(b)(4) for the full 
definition of PTE.)
    If a proposed new source's PTE is greater than the applicable major 
source threshold for one or more regulated NSR pollutants, it is 
subject to preconstruction review under major NSR. For the PSD program, 
the major source threshold is 100 tons per year (tpy) for sources in 
any of 28 categories listed in the regulations, and 250 tpy for any 
other type of source. (See Sec. Sec.  51.166(b)(1) and 52.21(b)(1) for 
the full definition of ``major stationary source'' under PSD.) The 
major source threshold under nonattainment major NSR is generally 100 
tpy, but is lower for some pollutants in nonattainment areas classified 
as serious, severe, or extreme. (See Sec.  51.165(a)(1)(iv) for the 
full definition of ``major stationary source'' under nonattainment 
major NSR.) These same major source thresholds also apply to 
modifications at existing minor sources where the modification by 
itself has potential emissions in excess of the applicable threshold.
    If an existing major source (i.e., an existing source with actual 
emissions and/or PTE greater than the applicable major source 
threshold) is planning a physical or operational change, the project is 
subject to major NSR if it is a ``major modification.'' A physical or 
operational change is a major modification if it meets both of the 
following two criteria: \1\
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    \1\ On October 20, 2005, we proposed different major NSR 
applicability procedures for modifications at electric generating 
units. (See 70 FR 61081.) Our rulemaking effort for such units is 
ongoing.
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     The physical or operational change, taken by itself, would 
result in a significant increase in emissions of a regulated NSR 
pollutant; and
     The physical or operational change, taken together with 
other, contemporaneous emissions increases and decreases at the source, 
would result in a significant net emissions increase.
    The level of emissions that is considered ``significant'' varies by 
pollutant and, in some cases, by a nonattainment area's classification. 
For example, an increase of 40 tpy is significant for sulfur dioxide, 
while 0.6 tpy of lead is considered a significant increase. (See 
Sec. Sec.  51.166(b)(23) and 52.21(b)(23) for the full definition of 
``significant'' under PSD and Sec.  51.165(a)(1)(x) for the full 
definition under nonattainment major NSR.) In determining the increase 
in emissions from a physical or operational change, new emissions units 
are evaluated at their PTE, while existing and replacement units are 
generally evaluated by comparing their baseline actual emissions before 
the physical or operational change to their projected actual emissions 
after the change.

[[Page 63853]]

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

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

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

    Section 302(j) of the Act sets out the definition of ``major 
stationary source'' that, along with several other provisions of the 
Act, provides the basis for the definitions used in the major NSR 
regulations. The definition in section 302(j) specifies that fugitive 
emissions are included in major source determinations only for source 
categories that EPA specifies through rulemaking. As discussed below, 
EPA enacted regulations pursuant to section 302(j) that specify the 
source categories for which fugitive emissions are included in the 
major source determination and has listed these source categories in 
the ``major stationary source'' definitions. However, the Act is silent 
regarding the treatment of fugitive emissions for purposes of 
determining whether a physical or operational change is a major 
modification. Below we discuss the history of this issue leading up to 
this proposed action.
    We first created the list of source categories for which fugitive 
emissions are included in major source determinations (the ``section 
302(j) list'') in the final PSD and nonattainment major NSR rules 
issued in 1980 on remand from the DC Circuit. (See 45 FR 52676, August 
7, 1980.) The court remanded our initial major NSR rules for a variety 
of reasons, including our failure to follow the requirements of section 
302(j) in promulgating a partial exemption for fugitive dust. (See 
Alabama Power v. Costle, 636 F.2d 323, 369-370 (DC Cir. 1979).)
    The promulgated section 302(j) list included the source categories 
listed in section 169(1) of the Act, which is the definition of ``major 
emitting facility'' for purposes of PSD. Under that definition, the 
major source threshold for the listed source categories is 100 tpy, 
rather than the 250 tpy threshold that applies to other categories of 
sources. In the preamble to the 1980 major NSR rules, we noted that the 
Alabama Power court stated that ``Congress' intention, in establishing 
the list of source categories in section 169(1) of the Act, was to 
identify facilities which, due to their size, are financially able to 
bear the substantial regulatory costs imposed by the PSD provisions and 
which, as a group, are primarily responsible for emission of the 
deleterious pollutants that befoul our nation's air.'' (See 45 FR 
52691.) In light of that intent, we determined that as a matter of 
policy, it would be appropriate to count all emissions--including 
fugitive emissions--in threshold calculations of applicability for 
those source categories. (Again, see 45 FR 52691.) In doing so, we 
indicated that our listing decisions would be based on whether sources 
in the category have the potential to degrade air quality 
significantly. We also indicated that we would consider information 
raised by commenters that showed that unreasonable socioeconomic 
impacts relative to the benefits would result from subjecting the 
sources to the relevant PSD or nonattainment programs.
    In addition to the source categories listed in section 169(1), 
based on application of these criteria, we included on the section 
302(j) list ``any other stationary source category which, as of August 
7, 1980, is being regulated under section 111 or 112 of the Act.'' We 
noted in the 1980 preamble that categories of sources are regulated 
under section 111 (New Source Performance Standards or NSPS) or 112 
(National Emission Standards for Hazardous Air Pollutants or NESHAP) on 
the basis of a determination that their emissions seriously and 
adversely impact ambient air quality. We therefore determined that it 
was appropriate to include their fugitive emissions in the threshold 
calculations for purposes of major NSR applicability. We included the 
August 7, 1980 cutoff date because we believed that sources not 
regulated by an NSPS or NESHAP before the promulgation date of the 
major NSR rules could not have been afforded a meaningful opportunity 
to comment on the inclusion of their fugitive emissions in threshold 
applicability determinations for the source category.
    In the preamble to the 1980 NSR rules, we explained that the 
Alabama Power court determined that the ``substantive preconstruction 
review and permitting requirements of section 165 `apply with equal 
force to fugitive emissions and emissions from industrial point 
sources,''' but went on to explain that this meant only that ``section 
165 requires that fugitive emissions be taken into account in 
determinations of whether NAAQS or allowable increments will be 
violated * * * and that fugitive emissions be subjected to BACT 
requirements * * *.'' (See 45 FR 52691.) Thus, in the preamble to the 
1980 rules, we analytically grouped fugitive emissions for purposes of 
the major source definition and major modifications under the rubric of 
``threshold calculations.'' (See 45 FR 52690-91.)
    However, the 1980 NSR regulations on their face require fugitive 
emissions to be included in threshold applicability determinations for 
any project, but then exempt from the relevant PSD or nonattainment 
requirements any project that (1) would be ``major'' only if fugitive 
emissions were included and (2) does not belong to one of the 
categories specifically listed pursuant to the section 302(j) 
rulemaking. (See, for example, Sec. Sec.  52.21(b)(4) and (i)(4)(vii) 
as promulgated in 1980 at 45 FR 52736 and 52739, respectively. See also 
the discussion at 49 FR 43204, October 26, 1984.) Thus, in the 1980 
rules, we included the section 302(j) list in a provision that exempted 
from PSD permitting requirements ``a particular major stationary source 
or major modification, if * * * [t]he source or modification would be a 
major stationary source or major modification

[[Page 63854]]

only if fugitive emissions, to the extent quantifiable, are considered 
in calculating the potential to emit of the stationary source or 
modification and the source does not belong to [any of the categories 
in the section 302(j) list].'' (See Sec. Sec.  52.21(i)(4), 
(i)(4)(vii), 45 FR 52738-52739.) A similar exclusion applied in the 
nonattainment major NSR context. (See Sec.  51.18(j)(4), 45 FR 52746.) 
In our response to a petition for reconsideration of the 1980 rules 
submitted on behalf of the American Mining Congress, we continued this 
approach, stating that ``EPA * * * intended to establish that any 
source which would be `major' only if fugitive emissions were taken 
into account is not to be considered `major' for any PSD purpose, 
unless the source belongs to one of the categories on the list which 
now appears in [Sec.  ]52.21(i)(4)(vii). Similarly, EPA intended to 
establish that any modification that would be `major' only if fugitive 
emissions were taken into account is not to be considered `major' for 
any PSD purpose, unless the source * * * belongs to one of the 
categories on that list.'' Further, we committed to amend the 
regulations to conform them to these intentions. (See letter from 
Douglas M. Costle, EPA Administrator, to Robert T. Connery, Holland & 
Hart, January 19, 1981.)
    On October 26, 1984 (49 FR 43202) we affirmed the interpretation 
that we had stated in the 1980 NSR rulemaking. (See 49 FR 43208.) We 
also added NSR regulatory provisions that the fugitive emissions of a 
stationary source shall not be included in the threshold determination 
of whether it is a major stationary source unless the source belongs to 
one of the categories of sources identified by EPA in its section 
302(j) rulemaking. (See 49 FR 43209-10.)
    In a companion notice published on October 26, 1984 (49 FR 43211), 
we solicited public comment on an ``interpretive ruling'' regarding 
section 302(j) of the Act as it relates to the review of physical or 
operational changes involving fugitive emissions.\2\ In this notice, we 
observed that in our 1980 NSR rulemaking and when proposing amendments 
in 1983, we had assumed that the rulemaking requirement in section 
302(j) regarding source categories for which fugitive emissions should 
be considered applies to modification determinations as well as to 
threshold major source determinations. However, in this 1984 
interpretive proposal, we stated that we believed our prior assumption 
in this regard was incorrect. We proposed to include fugitive emissions 
for sources in all source categories, to the extent quantifiable, when 
determining whether a physical or operational change meets the 
significance thresholds for a modification for purposes of major NSR. 
(See 49 FR 43213-14.)
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    \2\ This was an ``interpretive ruling'' in that we proposed to 
change our previous interpretation of the Act. To put the 
interpretive ruling into effect, we chose not to finalize the 
proposed revision to the major modification definition.
---------------------------------------------------------------------------

    On February 28, 1986 (see 51 FR 7090), we reopened the comment 
period to receive further comment on several of the issues addressed in 
our October 26, 1984 proposal. The comment period ended April 9, 1986. 
Comments for this proposal are captured in legacy docket A-84-33.
    On November 28, 1989 (see 54 FR 48870), we finalized our 1984 
interpretation and concluded that the section 302(j) limitation on 
including fugitive emissions applies to the threshold determination of 
whether a source is a major source, but not to the threshold 
determination of whether a physical or operational change constitutes a 
major modification. We pointed out that the language of section 302(j) 
explicitly attaches the rulemaking requirements only to existing or 
proposed major sources, and says nothing about major modifications to 
existing sources. We also noted that the PSD and nonattainment major 
NSR definitions of ``modification'' in section 169(2)(C) and section 
171(4) of the Act, respectively, merely cross-reference section 
111(a)(4) of the Act, which is the definition of ``modification'' in 
the NSPS provisions. Because section 111(a)(4) defines modification 
solely in terms of the total amount of pollution that a change at a 
source would produce, we believed that Congress intended to establish 
no qualitative distinction between stack and fugitive emissions. 
Moreover, we stated that the legislative history on section 302(j) does 
not refer directly to major modifications, although the conference 
report on the PSD construction and modification definitions in section 
169(2)(C) does provide that Congress' general intent was ``to conform 
to usage in other parts of the Act'' [123 Cong. Rec. H 11957, col. 3 
(daily ed.) (November 1, 1977)]. We reasoned that this passage referred 
not only to section 111(a)(4), but to usage of these terms in existing 
EPA regulations under the NSPS and NSR programs, which did not 
distinguish between fugitive and stack emissions. We concluded that an 
interpretation of section 302(j) to exempt fugitive emissions from 
modification calculations ran counter to EPA's longstanding practice, 
and that if Congress intended a legislative change as to major 
modifications, it would have said so explicitly. (See 54 FR 48882-83.) 
We further concluded that EPA's longstanding practice of considering 
the fugitive emissions of all sources, not just those on the section 
302(j) list, when determining whether a major modification had occurred 
was reasonable. (See 54 FR 48883.) In addition, we related that our 
interpretation likely would not impose new regulatory burdens because 
fugitive emissions from physical or operational changes would still be 
excluded from applicability determinations unless the changes occurred 
at a major source. We reasoned that under the Act and EPA regulations, 
a modification is ``major'' and subject to review only if the source at 
which it would occur is also ``major.'' Hence, a modification to a 
source of predominantly fugitive emissions that does not belong to a 
currently listed category could not be subject to review, even if its 
fugitive emissions were taken into account, because the source would 
not be ``major.'' (See 49 FR 43213-14.) Based on this reasoning, our 
November 28, 1989 final action reaffirmed our October 1984 proposed 
interpretation that the list of fugitive emissions sources created 
pursuant to section 302(j) does not apply to major modifications and 
that fugitive emissions for sources in all source categories must be 
included when determining whether a physical or operational change 
meets the significance thresholds for purposes of major NSR.
    In October 1990, we issued the draft ``New Source Review Workshop 
Manual,'' \3\ in which we stated that under the federal PSD 
regulations, fugitive emissions ``are included in the potential to emit 
(and increases in the same due to modification)'' if they occur at one 
of the source categories listed pursuant to section 302(j). (See page 
A.9 of the Manual, which may be found at https://www.epa.gov/ttn/nsr/
gen/wkshpman.pdf.) This phrasing seemingly contradicts our November 
1989 final interpretive ruling, although we did not intend to change 
our policy in this area.
---------------------------------------------------------------------------

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

    In the NSR Improvement final rulemaking published December 31, 2002 
(67 FR 80186), we promulgated final rules consistent with our November 
1989 final interpretive ruling. There, we required the inclusion of 
fugitive emissions in calculating emissions increases for purposes of 
determining whether a particular

[[Page 63855]]

physical or operational change constitutes a major modification 
requiring a PSD or nonattainment major NSR permit. (See, for example, 
Sec.  52.21(b)(41)(ii)(b), which includes fugitive emissions, to the 
extent quantifiable, in the definition of ``projected actual 
emissions'' and Sec.  52.21(b)(48)(i)(a), which includes fugitive 
emissions, to the extent quantifiable, in the definition of ``baseline 
actual emissions.'')

E. Why is EPA reconsidering this aspect of the December 2002 NSR 
Improvement final rulemaking?

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

III. This Action

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

    We are proposing to revise the provisions of the December 2002 NSR 
Improvement final rules related to the treatment of fugitive emissions 
for purposes of determining whether a physical or operational change at 
an existing major source qualifies as a major modification. We propose 
to reverse our existing policy and include fugitive emissions in 
determining whether a physical or operational change results in a major 
modification only for sources in the source categories that have been 
designated through rulemaking pursuant to section 302(j) of the Act. In 
other words, we propose to adopt the same approach to fugitive 
emissions currently used for determining whether a source is major, for 
determining whether a change is a major modification. We solicit 
comment on this proposed approach.

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

    To implement our new approach to fugitive emissions, in this action 
we propose to revise all four portions of the major NSR program 
regulations: Sec.  51.165, Sec.  51.166, Sec.  52.21, and appendix S of 
part 51. This notice includes specific proposed revisions for 
Sec. Sec.  51.165, 51.166, and 52.21. The proposed revisions are nearly 
identical for these regulations because they contain nearly identical 
provisions related to major modifications. We are not proposing 
specific revisions for appendix S in this action, but we propose to 
revise it with regulatory text consistent with the changes that we 
ultimately finalize for Sec.  51.165.
    For Sec. Sec.  51.165, 51.166, and 52.21, we propose to modify a 
number of definitions. In addition, we propose a minor change in the 
provisions for plantwide applicability limitations (PALs) to preserve 
the existing treatment of fugitive emissions for PALs. We are proposing 
to modify the paragraph in each rule that explains how to calculate 
whether a significant emissions increase will occur as the result of a 
physical or operational change. We are proposing a minor revision in 
the provisions on monitoring and reporting for physical and operational 
changes that are found not to be major modifications. Finally, we are 
proposing to delete as unnecessary the paragraph that provides for a 
generalized exemption related to fugitive emissions and repeats the 
section 302(j) list. These proposed rule revisions are discussed in 
more detail below.
    We are proposing revisions to the definitions of ``baseline actual 
emissions'' and ``projected actual emissions.'' As noted in the Newmont 
petition, these definitions (which figure in determining the increase 
associated with a physical or operational change) currently require 
that fugitive emissions be included, to the extent quantifiable, 
without regard to source category. Our proposed revisions will qualify 
this requirement so that fugitive emissions (to the extent 
quantifiable) must be included for an emissions unit that ``belongs to 
one of the source categories listed in [the section 302(j) list that 
appears in the definition of `major stationary source'] or is located 
at a major stationary source that belongs to one of the listed source 
categories.'' For baseline actual emissions, this revision appears in 
Sec.  51.165(a)(1)(xxxv)(A)(1), (B)(1), and (C); Sec.  
51.166(b)(47)(i)(a), (ii)(a), and (iii); and Sec.  52.21(b)(48)(i)(a), 
(ii)(a), and (iii). For projected actual emissions, the revision 
appears in Sec.  51.165(a)(1)(xxviii)(B)(2) and (4), Sec.  
51.166(b)(40)(ii)(b) and (d), and Sec.  52.21(b)(41)(ii)(b) and (d). 
Note that the proposed language refers to emissions units that are in a 
source category on the section 302(j) list, as well as the listing 
status of the entire major stationary sources that belong to one of the 
listed source categories. This language addresses those situations 
where an emissions unit that is included in one of the listed source 
categories is located within a parent source whose primary activity is 
not on the list. If either the emissions unit or the parent source is 
in a source category on the section 302(j) list, the emission unit's 
fugitive emissions, to the extent quantifiable, must be included for 
purposes of determining whether a physical or operational change 
constitutes a modification. We propose similar language throughout this 
proposed rule. See section III.D below for additional discussion of the 
rationale for this proposed language.
    We also propose to revise the definition of ``baseline actual 
emissions'' to maintain the current requirements for PALs. Plantwide 
applicability limitations are an alternative means of determining the 
applicability of major NSR to changes at an existing major stationary 
source. Instead of evaluating each physical or operational change 
individually, the source simply tracks total emissions from the source 
to be sure that they remain below the level of its PAL. Baseline actual 
emissions are used in setting the level of the PAL.
    We continue to believe that it is appropriate to include fugitive 
emissions (to the extent quantifiable) in setting the level of the PAL 
and in tracking compliance with it, regardless of the source category. 
In the preamble to the December 2002 NSR Improvement rules, we 
explained that the benefit of PALs to the public and the environment is 
that PALs are designed ``to assure local communities that air emissions 
from your major stationary source will not exceed the facility-wide cap 
set forth in the permit unless you first meet the major NSR 
requirements.'' We further explained that a PAL ``provides a more 
complete perspective to the public because in setting a PAL, your 
reviewing authority accounts for all current processes and all 
emissions units together and reflects the long-term maximum amount of 
emissions it would allow from your source.'' (See 67 FR 80206.) We 
therefore do not believe we can exempt fugitive emissions from being 
included when setting a PAL. Consequently, we are proposing to revise 
the subparagraph of this definition that addresses PALs to ensure that 
fugitive emissions continue to be included for the purposes of PALs for 
all source categories. This proposed revision is found in

[[Page 63856]]

Sec. Sec.  51.165(1)(a)(xxxv)(D), 51.166(b)(47)(iv), and 
52.21(b)(48)(iv).
    To reinforce our intentions for PALs, we are proposing a minor 
revision to the provisions for PALs to state clearly that a PAL is to 
include fugitive emissions, to the extent quantifiable, ``regardless of 
whether the emissions unit or major stationary source belongs to one of 
the source categories listed in [the section 302(j) list].'' This 
revision is found in Sec. Sec.  51.165(f)(4)(i)(D), 51.166(w)(4)(i)(d), 
and 52.21(aa)(4)(i)(d).
    We are proposing to revise the definition of ``major modification'' 
to mirror the existing definition of ``major stationary source.'' 
Specifically, we propose to add a subparagraph to this definition 
saying:

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

This new language is proposed for Sec. Sec.  51.165(a)(1)(v)(G), 
51.166(b)(2)(v), and 52.21(b)(2)(v).
    We are proposing to revise the definition of ``net emissions 
increase'' to preclude an unlisted major source from including 
contemporaneous increases and decreases in fugitive emissions in the 
``netting analysis'' for a physical or operational change. We do not 
believe that an unlisted source (which does not include fugitive 
emissions in determining the increase in emissions from the current 
physical or operational change) should be able to use decreases in 
fugitive emissions to ``net out'' of major NSR. Rather, we believe that 
unlisted sources should treat fugitive emissions consistently for all 
purposes related to determining the applicability of major NSR to 
physical or operational changes. Accordingly, we propose to add the 
following language regarding ``creditable'' emissions increases and 
decreases at Sec. Sec.  51.165(a)(1)(vi)(C)(4), 51.166(b)(3)(iii)(d), 
and 52.21(b)(3)(iii)(c):

    For an increase or decrease in fugitive emissions (to the extent 
quantifiable), it occurs at an emissions unit that belongs to one of 
the source categories listed in [the section 302(j) list that 
appears in the definition of ``major stationary source''] or the 
major stationary source belongs to one of the listed source 
categories.

    The final definition change we are proposing in this action is for 
``fugitive emissions.'' For this term, we propose to add subparagraphs 
to summarize how fugitive emissions are to be addressed in each section 
and to refer the reader to the relevant provisions. We believe that the 
added subparagraphs will aid understanding of our intentions regarding 
fugitive emissions. These revisions are proposed for Sec. Sec.  
51.165(a)(1)(ix), 51.166(b)(20), and 52.21(b)(20).
    The December 2002 NSR Improvement rulemaking added provisions to 
the major NSR regulations to clarify the two-step process for 
determining whether a physical or operational change is a major 
modification. Step 1 is the evaluation of the proposed change to 
determine whether it will cause a significant increase in emissions of 
a regulated NSR pollutant. If so, the source goes on to Step 2, which 
is a ``netting analysis'' to determine whether the change will result 
in a significant net emissions increase when taken together with any 
contemporaneous, creditable emissions increases or decreases that have 
occurred at the source. In this action we are proposing revisions to 
the provisions for Step 1 to clarify that fugitive emissions (to the 
extent quantifiable) are only included for listed emissions units and 
source categories. (Clarifications for Step 2 are handled in the 
proposed revisions to the definitions that are discussed above.) The 
proposed revision appears in Sec. Sec.  51.165(a)(2)(ii)(B), 
51.166(a)(7)(iv)(b), and 52.21(a)(2)(iv)(b).
    The December 2002 NSR Improvement rulemaking also added provisions 
for monitoring and reporting the emissions that actually occur after a 
physical or operational change in cases where the change was 
determined, prior to construction, not to be a major modification. We 
are proposing minor revisions to these provisions to be explicit that 
fugitive emissions (to the extent quantifiable) need only be monitored 
and reported if the emissions unit or major stationary source in 
question is on the section 302(j) list. This revision provides for 
consistent treatment of fugitive emissions before and after the 
physical or operational change. The proposed revision affects 
Sec. Sec.  51.165(a)(6)(iii) and (iv), 51.166(r)(6)(iii) and (iv), and 
52.21(r)(6)(iii) and (iv).
    Finally, we are proposing to delete a paragraph in each of the 
major NSR regulations that is no longer necessary. These were the 
original paragraphs placed in the rules to implement section 302(j) of 
the Act. However, after the definition of ``major stationary source'' 
was revised to include the section 302(j) list, and we finalized our 
policy (proposed to be reversed by this action) that fugitive emissions 
must be counted for all source categories in major modification 
determinations, these paragraphs tended to confuse the issue. With our 
proposal to make uniform the approach to fugitive emissions for major 
source and major modification determinations, these paragraphs have 
become completely unnecessary. Accordingly, in this action we propose 
to remove and reserve these paragraphs, Sec. Sec.  51.165(a)(4), 
51.166(i)(1)(ii), and 52.21(i)(vii).

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

    Major NSR programs are very similar across the United States, 
prescribed as they are by the Act and the implementing federal 
regulations. In contrast, State and local minor NSR programs are 
subject only to general requirements and, as a consequence, may vary 
significantly from area to area.\4\ As a result, we do not know with 
certainty how such programs typically address fugitive emissions in 
minor NSR permitting. We request comment on this topic. How do existing 
State and local minor NSR programs address fugitive emissions? Do these 
programs clearly specify how fugitive emissions are to be considered 
for all aspects of the program (e.g., applicability, control technology 
requirements, impacts analysis, etc.)?
---------------------------------------------------------------------------

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

    We believe that it is important for minor NSR programs to be clear 
regarding the treatment of fugitive emissions in all areas of the 
program. This will afford all sources consistent treatment and a 
``level playing field.'' In addition, a common understanding of program 
requirements from the outset is important to avoid controversy and 
wasted resources during the permitting process. In light of the 
importance of clear requirements, we propose in this action that each 
implementation plan as a minimum element must be explicit in specifying 
how fugitive emissions are to be accounted for in all aspects of the 
minor NSR program.
    We recently proposed minor NSR and nonattainment major NSR 
regulations for sources in those areas of Indian country where tribes 
do not have an EPA-approved implementation plan. (See 71 FR 48703.) We 
proposed in the minor NSR rule to require minor sources to include 
fugitive emissions to the extent quantifiable for applicability 
purposes for all sources, or include them only for source categories 
listed pursuant to section 302(j), or exclude them for all sources. In 
the final tribal minor NSR rule, we will adopt one of these proposed 
approaches. Since we

[[Page 63857]]

will be explicitly addressing fugitive emissions in the final minor NSR 
rule in Indian country, we will be acting consistently with the 
approach for minor NSR programs that we are proposing in this action.
    We solicit comment on all aspects of our proposal regarding minor 
NSR. We also solicit comment on whether we should include rule language 
in 40 CFR 51.160 (for example, at Sec.  51.160(e)) to require State, 
local, and tribal minor NSR programs to directly address fugitive 
emissions in minor NSR rules.

D. What is the rationale for this action?

1. The Newmont Petition
    The thrust of Newmont's petition for reconsideration is twofold:
     The EPA did not comply with the requirements of section 
302(j) of the Act when we included fugitive emissions in the 
definitions of ``baseline actual emissions'' and ``projected actual 
emissions'' for purposes of determining whether a change at a facility 
constitutes a ``major modification.''
     The EPA did not provide notice or an opportunity for 
comment on this approach, since these definitions were not proposed in 
the 1996 proposed major NSR revisions (see 61 FR 38250, July 23, 1996).
    As we noted in the 1984 and 1989 Federal Register notices where we 
proposed and finalized the interpretive ruling that established our 
existing approach to fugitive emissions for major modifications, the 
language of the Act does not resolve the issue of whether the fugitive 
emissions provisions of section 302(j) were intended by Congress to 
apply to major modifications as well as major sources. On its face, 
section 302(j) mandates rulemaking only for determining whether a new 
source is to be considered a ``major stationary source,'' and does not 
explicitly address major modifications. Neither does the definition of 
``modification'' in section 111(a)(4) address the issue. As discussed 
above, in our 1989 notice we also noted that interpreting section 
302(j) to exempt fugitive emissions from modification calculations ran 
counter to our longstanding practice, and reasoned that if Congress 
meant the 302(j) rulemaking provision to cover major modifications, it 
would have said so. We believe this interpretation remains a 
permissible construction of the statute, and that since the time we 
finalized the interpretive ruling in 1989, we required that fugitive 
emissions be included in major modification determinations. For these 
reasons, we disagree with petition on both counts.
    We now believe, however, that the absence of reference to ``major 
modification'' in section 302(j) simply does not dispose of the issue. 
For PSD at least, Congress only added major modifications to the 
program in ``technical and conforming amendments'' after enacting the 
1977 Clean Air Act Amendments and even as to nonattainment major NSR, 
defined ``modification'' only by cross-reference. Similarly, the 
legislative history is scant; Congress simply adverted to its desire to 
``conform [the PSD definition of construction] to usage in other parts 
of the Act.'' (See 123 Cong. Rec. 36331 (Nov. 1, 1977).) We cannot 
conclude from the statutory text or the legislative history what 
Congress explicitly intended on this point; the evidence is simply too 
ambiguous. Accordingly, we believe that we continue to have discretion 
under the second prong of Chevron, USA v. NRDC, 467 U.S. 837, 842-43 
(1984), to adopt ``a permissible construction of the statute.''
2. Proposed Actions
    We believe that Section 302(j) evinces, at a minimum, an intent by 
Congress to require a special look at fugitive emissions for purposes 
of calculating a source's emissions. The statute is silent or ambiguous 
on the applicability of section 302(j) to the question of whether a 
physical or operational change is a modification. That is, we do not 
believe that the Act precludes us from applying the section 302(j) 
restrictions on counting fugitive emissions to the methodology for 
determining whether a physical and operation change constitutes a major 
modification. Moreover, although no authoritative conference or 
committee report addresses the issue of how fugitive emissions should 
be covered, there are numerous examples in committee hearings on the 
bills that led up to the 1977 Amendments of industry testimony to the 
effect that in many cases fugitive emissions would not be susceptible 
to control or would be exceedingly costly to control, or would be 
infeasible to measure. See e.g Hearings on Clean Air Act Amendments of 
1977, Subcomm. on Health and the Environment, House Comm. on Interstate 
and Foreign Commerce, March 11, 1977, H.R. Rep. No. 95-59 at 1327 
(statement of Earl Mallick, American Iron and Steel Inst.) (high costs 
of controlling fugitive emissions); id., Part 2, March 18, 1975, H.R. 
Rept. No. 94-25 at 690 (testimony of Fred Tucker, National Steel Corp.) 
(impossible to comply with state implementation plan limits on fugitive 
emissions); Hearings on Implementation of the Clean Air Act--1975, 
Subcomm. on Environmental Pollution, Sen. Comm. on Public Works, Apr. 
22, 1975, S. Rept. No. 94-H10, Pt. 1 at 757 (statement of David M. 
Anderson, Bethlehem Steel Corp. to effect that control of fugitive 
emissions would be enormously costly but would have ``a net negative 
environmental impact''); id., Pt. 2, App. A at 2026 (statement of Cast 
Metals Federation) (fugitive emissions control at nonferrous metals 
smelters extremely costly with adverse energy impacts and no 
improvement in air quality). But see id., App. B at 2232-33 (EPA 
written responses to Committee questions) (for some industries fugitive 
control can be critical to attainment of standards).
    In light of this legislative history, it is reasonable to read 
section 302(j) of the Act as reflecting a decision by Congress that it 
simply did not know enough to make the critical decisions regarding the 
extent to which fugitive emissions should be included in threshold 
applicability determinations both for purpose of determining whether a 
source is a major source, and whether a physical or operational change 
constitutes a modification. Rather, we believe Congress assigned the 
resolution of these complex issues to EPA. As noted above, EPA's 
earliest, most nearly contemporaneous construction of the statute in 
the 1980 rules took it for granted that the treatment of fugitive 
emissions for purposes of modification calculations would be addressed 
identically with the same issue for major source determinations.
    For policy and programmatic reasons, we now believe that it is 
better to adopt a uniform approach to these threshold determinations. 
Analyzing 302(j) functionally, we conclude that it is reasonable to 
interpret section 302(j) to require EPA to conduct rulemaking to 
identify source categories that should include their fugitive emissions 
for all threshold applicability purposes. The concerns appearing in the 
legislative history relating to fugitive emissions are the same when 
evaluating whether a project at an existing source is a modification as 
they are when evaluating whether a source is a major source. Our 
current, differentiated approach can lead to incongruous results. For 
example, at an existing source in a source category not on the section 
302(j) list that is undergoing a physical or operational change, the 
fugitive emissions from the source would not be counted in determining 
whether the source is a major source (the first major NSR applicability 
criterion), yet the increase in fugitive emissions resulting from the 
change

[[Page 63858]]

would be counted to determine whether the project qualifies as a major 
modification (the second criterion). Furthermore, if an existing major 
source in a source category not listed under section 302(j) engages in 
a physical or operational change that creates a significant volume of 
fugitive emissions, consideration of its fugitive emissions when 
calculating whether the change constitutes a modification may be a 
crucial factor in the determination. Thus, we believe our assertion in 
the 1984 notice (see 49 FR 43213-14) that the interpretation that we 
proposed then ``likely would not impose new regulatory burdens'' was 
not correct; our interpretation proposed in 1984 and finalized in 1989 
imposed a new regulatory burden on major sources in a source category 
not on the section 302(j) list, since their fugitive emissions would be 
counted in determining whether they had made a change constituting a 
modification.
    In summary, the proposed rules that we are publishing in this 
action eliminate the existing requirement that fugitive emissions be 
counted in major modification determinations for all source categories, 
whether or not listed pursuant to section 302(j). We are proposing that 
only source categories that we list pursuant to section 302(j) would be 
required to count fugitive emissions when evaluating whether a project 
is a major modification. We solicit comment on all aspects of this 
proposed approach and our rationale for it.

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

    We propose that these changes take effect in the Federal PSD permit 
program within 60 days from when we promulgate the final rule. This 
means that we would apply these rules in any area without a SIP-
approved PSD Program for which we are the reviewing authority, or for 
which we delegated our authority to issues permits to a State, local or 
tribal reviewing authority.
    We also propose to establish these proposed requirements as minimum 
program elements of the PSD and nonattainment NSR programs. 
Notwithstanding this requirement, it may not be necessary for a State 
or local authority to revise its SIP begin to implement these 
changes.\5\ Some State or local authorities may be able to adopt these 
changes through a change in interpretation of existing language in the 
approved SIP without the need to revise the SIP.
---------------------------------------------------------------------------

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

    For any State or local authority that can implement the changes 
without revising its approved SIP, we propose that the changes become 
effective when the reviewing authority publicly announces that it 
accepts these changes by interpretation. Although no SIP change may be 
necessary in certain areas that adopt these changes by interpretation, 
we encourage State and local authorities in such areas to make such SIP 
changes in the future to enhance the clarity of the existing rules.
    For areas that would revise their SIPs to adopt these changes, the 
changes would not be effective in such areas until we approve the SIP 
revision. We propose to require that such State and local authorities 
submit revisions to SIPs to reflect requirements that are at least as 
stringent as the minimum program elements we adopt in a final rule 
within 3 years after the rule's promulgation date. We also propose that 
State and local authorities may maintain NSR program elements that have 
the effect of making their regulations more stringent than the final 
rules, but that a State and local authority submit an explanation for 
that conclusion to EPA by the SIP submission deadline.
    We also propose to require that State, local, and subject tribal 
authorities explicitly specify in their implementation plans how the 
reviewing authority will treat fugitive emissions in all aspects of 
their minor NSR program. Section 110(a)(2)(C) of the Act provides us 
with authority to specify the inclusion of this minimum element in 
State, local, and tribal minor NSR programs. We further propose to 
require State, local, and subject tribal authorities to submit this 
information within 3 years from the promulgation date of the final 
rule.
    We acknowledge that some States and localities may need to regulate 
additional fugitive emissions under the implementation plan for 
attainment purposes. We do not intend to preclude such regulation in 
either major or minor NSR where necessary to achieve the purposes of 
the Act. Our proposed action would not prohibit a reviewing authority 
from requiring control of fugitive emissions or modeling of 
quantifiable fugitive emissions, regardless of source category, where 
such measures might be considered necessary for compliance with a NAAQS 
or for other environmental protection purposes.
    We solicit comment on this proposal for revising implementation 
plans and specifically on the ability of State, local, and tribal 
authorities to implement this approach through interpretation, without 
rulemaking.

V. Guiding Principles for Determining Fugitive Emissions

    In our major NSR and Title V permit rules, ``fugitive emissions'' 
means ``those emissions which could not reasonably pass through a 
stack, chimney, vent, or other functionally equivalent opening.'' In 
practice, we interpret the phrase ``could not reasonably pass'' by 
determining whether such emissions can be reasonably collected or 
captured (e.g. enclosures or hoods). Under this interpretation, it is 
axiomatic that any emissions actually collected or captured by the 
source are non-fugitive emissions. The answer is less clear when the 
source is not currently collecting or capturing the emissions. In these 
circumstances, we make case-by-case determinations as to whether a 
source could reasonably collect or capture such emissions.
    Our past determinations articulate a number of principles we use in 
making these case-by-case determinations, though none may express the 
entirety of our policy. Moreover, some EPA memoranda, when viewed in 
isolation, may appear to provide divergent positions. Accordingly, we 
rearticulate our guiding principles in making these case-by-case 
determinations, and expand the explanation of these principles to 
enhance the understanding of the regulated community. Specifically, EPA 
proposes to use the following guiding principles in determining whether 
emissions qualify as fugitive:
    1. Determining which emissions could ``reasonably pass'' is a case-
by-case decision based on whether or not the emissions can be 
reasonably collected or captured.
    2. Because another similar facility collects, captures, or controls 
emissions does not mean that it is reasonable for others to do the 
same, but it is a factor in each consideration.
    (a) If a source already collects or captures and discharges the 
emissions through a stack, chimney,