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New Fugitive Emissions Proposal


On October 14, 2022, EPA published for both the PSD and NNSR programs a proposed rule entitled “Reconsideration of Fugitive Emissions Rule.” 87 Fed. Reg. 62322. The proposed rule would repeal the 2008 Fugitive Emissions Rule that was stayed by the subsequent administration. EPA now proposes to finalize the repeal of that provision and to repeal an exemption from the definition of “major modification” that exempts modifications “that would be considered major solely due to the inclusion of fugitive emissions.” The net effect is to require consideration of fugitive emissions in determining a “major modification” by all major stationary sources regardless of category.


ANALYSIS


History. The proposed rule recites the history of the PSD and NNSR program implementation of fugitive emissions. It recounts that fugitive emissions were first included; that inclusion was reversed in the Alabama Power v. Costle, 636 F.2d 322 (D.C. Cir. 1979) decision; EPA promulgated the 1980 rules which exempted fugitive emissions from both the major source and major modification calculations. In 1984, EPA proposed a revision that dropped the requirement for major sources to calculate and then exclude fugitives in favor of just excluding them. EPA did not make a change in the major modification treatment but issued an “interpretive ruling” “reevaluating and reversing the EPA’s prior assumption that fugitive emissions should be treated the same in major source and major modification contexts.” Instead, EPA proposed to require that all emissions – fugitive and non-fugitive alike – be considered. Included in the “interpretive ruling” was a proposal to remove the 1980 exemption. In 1986, the agency solicited comment again on the proposals. In 1989, EPA retained and reaffirmed the 1984 interpretive ruling in an action finalizing certain other rule revisions – but did not remove the 1980 exemption language, which the EPA characterizes as “inadvertent.” In 2002, EPA issued the NSR Reform Rule, which explicitly required the inclusion of fugitive emissions in calculating emissions increases but “the EPA again inadvertently left the 1980 exemption in the CFR.” In 2003, the EPA received a petition from Newmont Mining to reconsider the handling of fugitives, which resulted in a 2007 proposal finalized in 2008. The 2008 rule reversed the 1984 “interpretation” and its 1989 “reaffirmation” and required only sources in the listed categories to consider fugitive emissions in determining whether a major modification has occurred. The 2008 rule removed the 1980 exemption because it was no longer necessary in light of the new language. In 2009, the NRDC petitioned for reconsideration of the 2008 rule. The EPA accepted the petition and issued a series of stays and an interim rule, the effect of which was to reestablish the 1980 exemption.


EPA’s proposed action. EPA proposes to reaffirm its “longstanding interpretation” that “the language in CAA 32(j) regarding fugitive emissions applies only in the major source context and not in the major modification context” and that EPA “proposes to interpret CAA section 111(a)(4) to require that all sources consider increases in all types of emissions (including fugitive emissions) in determining whether a proposed change would constitute a major modification.” 87 Fed. Reg. at 62327. EPA also proposes to remove the 1980 exemption. EPA proposes to retain the changes from the March 2011 interim rule and to remove the “interim” label. EPA proposes to lift the stay on the seven stayed subsections (40 CFR 51.165(a)(1)(v)(G), 51.165(a)(1)(vi)(C)(3), 51.166(b)(2)(v), 51.166(B)(3)(iii)(d), part 51 app. S II.A.5(vii), 52.21(b)(2)(v) and 52.21(b)(3)(iii)(c) and then repeal them concurrently. EPA requests comment on whether these actions “will fully effectuate the repeal of the Fugitive Emissions Rule and conform the EPA’s regulations to the interpretation described in Section IV.C of this preamble.”


Basis for EPA’s current interpretation. First, the EPA notes that in the Alabama Power litigation, all parties assumed that the CAA Section 302(j) requirement applied to both the determination of “major sources” and “major modifications” and that upon first looking at this issue in 1984, EPA realized that Section 302(j) applies only to “major sources” while Section 111(a)(4) applies to “modifications.” EPA also notes that in 1984 it took the position that the practical effect would likely be minimal because sources that “were predominantly fugitive” emissions would not be major stationary sources and not subject to PSD or NNSR. EPA also suggests that eliminating fugitive emissions calculations from the determination of “major modification” may streamline PSD processing because “major sources in non-listed categories would no longer have to distinguish between fugitive and non-fugitive emissions … [and] removing this potentially complicating and contentious step … would provide greater certainty for sources.”


EPA’s proposed clarification of the definition of “fugitive emissions.” EPA states that it is reaffirming its historic definition and interpretive approach for fugitive emissions: (1) emissions that “actually pass through a stack, chimney, vent or other functionally equivalent opening” are non-fugitive; and (2) emissions that currently do not pass require an evaluation of “whether such emissions could reasonably pass.” EPA notes that relevant considerations include: whether and to what extent similar facilities collect or capture similar emissions, whether EPA has established a national emissions standard or regulation that requires some sources to collect or capture emissions, and the technical/economic feasibility (cost) of collecting or capturing emissions. EPA states that the “cost of control” is not part of the relevant factors. EPA states that it may or may not promulgate changes to the definition of fugitives.


COMMENTARY


EPA is undoubtedly correct when it states that it “has inadvertently fostered uncertainty” about the role of fugitives “through its rulemaking actions and omissions,including repeated “inadvertent” failures to correct regulatory text on this highly controversial topic. The proposed action should be helpful in closing the book, at least for this administration, on this issue.


There are three potential concerns with EPA’s proposal.


  • Applicability to “past” changes. EPA does not address how it intends to handle “changes” made in the past that may have excluded fugitive emissions from the modification determination. Where a state program still includes the 1980 rule language, there should be no question and EPA should state this affirmatively. Where a state program has followed EPA in moving from the original 1980 language to the somewhat ambiguous 1984 formulation, EPA should, in the interest of administrative finality, recommend that such applicability decisions are not “reopened” by this change and that the change is prospective only from the date that the state makes the required program change or declaration that no change is needed. This will avoid a wave of challenges to prior permits that allegedly applied the fugitive rules “wrongly.” State authorities and sources should not be forced to bear the consequences of EPA inaction.

  • Meaning of “increase” in fugitive emissions. In the fugitive context “physical change or change in the method of operation” is much more amorphous. Fugitive emissions are usually estimated based on broad calculations using estimated emissions based on assumptions of vehicle type, vehicle weight, vehicle speed, soil moisture, and silt content. All of these will vary over the life of the source and calculated fugitive emissions may gyrate substantially from year to year. EPA should be clear that changes that do not materially change the underlying bases are not a “change.” EPA would do well to reiterate its guidance from the surface coal mining proposal that changes that are discussed in an application, addressed in a mine plan, or similarly planned and permitted evolution of a facility are not “changes” that trigger a major NSR modification.

  • Clarification of “fugitive emission.” EPA states that any emission that passes through a stack, chimney, vent or other functionally equivalent opening is “non-fugitive.” This seems like a truism but it shouldn’t be taken lightly. Taken literally, it could mean that where any “structure” exists and emissions exit, those emissions are now non-fugitive. This creates problems for large, relatively open structures which do not, as a practical matter, have control over where emissions go, with emissions drifting around within the building and exiting the structure through an every changing combination of doors, windows or openings depending upon weather conditions (is a barn or warehouse door a “functionally equivalent” opening to a stack?). The test is “reasonably could” pass through a stack or functionally equivalent opening. The definition, read in its totality, requires that a capture system could be constructed that would reliably and regularly capture an emission and route it consistently through a stack or functionally equivalent opening. NSR Law Blog is also troubled by EPA’s insistence that “cost of control” should not be considered as this leaves the “reasonable” test untethered to anything. The “reason” for installation of a capture system is relevant. Just because one could put a control system around a welding station doesn’t mean it is appropriate to do so unless there is a reason, such as employee comfort or well-being, that provides a reasonable basis for capturing and routing an emission in the first place.

The comment deadline is December 13, 2022.

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