March 8, 1994






MEMORANDUM

SUBJECT:  Consideration of Fugitive Emissions
          in Major Source Determinations

FROM:     Lydia Wegman, Deputy Director  /s/
          Office of Air Quality Planning and Standards  (MD-10)

TO:       Director, Air, Pesticides and Toxics
            Management Division, Regions I and IV
          Director, Air and Waste Management Division,
            Region II
          Director, Air, Radiation and Toxics Division,
            Region III
          Director, Air and Radiation Division,
            Region V
          Director, Air, Pesticides and Toxics Division,
            Region VI
          Director, Air and Toxics Division,
            Regions VII, VII, IX, and X


     This memorandum summarizes the Environmental Protection
Agency's (EPA's) policy regarding the consideration of fugitive
emissions for the purpose of determining whether a source is
major under the Clean Air Act (Act).  As explained below, EPA
will revisit, in a future revision to the part 70 regulations
("Operating Permit Programs"), the requirement to consider
fugitives from sources subject to national emission standard for
hazardous air pollutants (NESHAP) and new source performance
standards (NSPS) promulgated after August 7, 1980, when
determining whether a source is major under section 302(j) of the
Act.  For the present time, State operating permits programs that
do not require consideration of fugitives for these sources will
be eligible for interim approval.  States must require
consideration of fugitives for purposes of determining whether a
source is major under section 112, but need not require
consideration of fugitives for purposes of the new major source
definitions in part D of title I of the Act.
I.  Background:  Statutory and Regulatory Provisions Affected

    A.  Section 302(j) and Section 169(1)

     The Act's primary definition of "major stationary source"
and "major emitting facility" is found in section 302(j) in the
general definitions portion of the Act.  It reads:

     Except as otherwise provided, the terms "major
     stationary source" and "major emitting facility"
     mean any stationary facility or source of air
     pollutants which directly emits, or has the
     potential to emit, 100 tons per year (tpy) or
     more of any air pollutant (including any major
     emitting facility or source of fugitive emissions
     of any such pollutant, as determined by rule by 
     the Administrator). 

     The section 302(j) definition was added to the Act in 1977. 
Another definition of "major emitting facility" was added in 1977
in section 169(1).  It sets a higher 250 tpy threshold for
certain source categories for purposes of part C preconstruction
review. 

     B.  Lower Threshold Definitions Added by the
         1990 Amendments to the Act 

     The 1990 Amendments added nine new definitions of "major
source" or "major stationary source."  Seven of these definitions
appear in part D of title I and expand the set of "major
stationary sources" of volatile organic compounds, particles with
an aerodynamic diameter less than or equal to a nominal 10
micrometers (PM-10), and CO for nonattainment areas by lowering
the tonnage threshold below the 100 tpy specified in 
section 302(j).  
     The other two new definitions are found in section 112(a)(1)
and title V.  Section 112 provides a definition of "major
source" similar to the definition of "major stationary source"
and "major emitting facility" in part D of title I only tailored
to the new hazardous air pollutants (HAP) provisions.  The
title V definition incorporates by reference all of the other
"major source" and "major stationary source" definitions.

     C.  "Major Source" Definitions in Part 70

     The definition of "major source" in section 70.2 of the
permits rule divides into three parts, corresponding to the
section 112 definition, the section 302(j) definition, and the
lower tpy thresholds in the title I nonattainment provisions,
respectively.  The second definition, corresponding to section
302(j), requires the counting of fugitive emissions only for
certain listed source categories.  The other two part 70
definitions are silent on the issue of when fugitive emissions
must be considered.
  
     The section 302(j) definition lists 27 categories of sources
for which fugitive emissions must be considered in determining
whether a source is major for purposes of section 302(j).  The
twenty-seventh category requires that fugitive emissions be
considered for:

     All other stationary source categories regulated by a
     standard promulgated under section 111 or 112 of the
     Act, but only with respect to those air pollutants that
     have been regulated for that category.

For present purposes, this should be contrasted with the
corresponding provisions in the prevention of significant
deterioration (PSD) and new source review (NSR) regulations
(see, e.g., 40 CFR 51.165(a)(1)(iv)(C)), which refer to:

     Any other stationary source category which, as of
     August 7, 1980, is being regulated under section 111 or
     112 of the Act.

     Regarding the first and third parts of the part 70 "major
source" definition, the question of when fugitive emissions must
be considered for applicability purposes was addressed directly 
in the response to comments document for the part 70 rulemaking. 
Section 3.5 of the response document states that the Act requires
fugitives to be considered for purposes of determining whether a
source is major under any of the part D or the section 112
definitions.

II.  Summary of EPA Policy

     In response to questions raised following promulgation of
part 70, EPA has reconsidered the treatment of fugitives for
purposes of making major source determinations.  The EPA's
decisions regarding the relevant provisions is summarized below
in three parts.
     
     A.  Sources Subject to NSPS or NESHAP Standards Promulgated
after August 7, 1980  

     The designation in the part 70 rules of sources subject to
NSPS and NESHAP promulgated after August 7, 1980 as sources for
which fugitives must be counted for purposes of major source
determinations did not follow the procedural steps necessary for
a proper rulemaking under section 302(j).  As a result, EPA
believes it would be inappropriate for the Agency to require
States to count fugitives from these sources in making section
302(j) major source determinations.  In the absence of a legally-
sound Federal requirement, a State may choose to exercise its own
legal authority to require that fugitives from sources subject to
the post-1980 standards be considered in determining major source
status under section 302(j).  However, a State need not require
that fugitives from these sources be so counted in order to
obtain interim approval of its title V program.

     The EPA intends to revisit this aspect of the rule in a
revision to part 70 to occur sometime in 1994.  The EPA believes
that it may, in the mean time, grant interim approval to programs
that do not require fugitives to be considered in determining the
status of sources subject to post-1980 NSPS and NESHAP standards. 
However, until the rule is revised with respect to sources
subject to the post-1980 standards, EPA may not grant full
approval to a State program that does not include the post-1980
standards.  Programs adhering to the language in the current rule
will be eligible for full approval provided, as is the case for
any element of part 70, the State has provided adequate legal
authority for that element of its program.

     Note that the policy articulated in section C below
regarding the section 112 major source definition operates
independently of a State's decision to list the post-1980 NESHAP
standards for purposes of determining whether a source is major
under the section 302(j) definition.  Therefore, in determining
whether a source is major for section 112 purposes, a source must
consider fugitive emissions of HAP listed pursuant to section
112(b) regardless of whether the source is in a category
designated through rulemaking under section 302(j).

     B.   Definitions of "Major Stationary Source" in Part D
          of Title I 

     The EPA has revised its interpretation of the Act from that
stated in the response to comments document.  The EPA now
believes the Act does not require fugitives to be considered for
purposes of determining major source status in these
nonattainment areas, except as provided pursuant to rulemaking
under section 302(j).  State programs that follow this revised
interpretation will be eligible for full approval, as will
programs that follow the more inclusive policy articulated in the
response to comments document, provided the more inclusive
program is supported by adequate State law authority.

     The legal rationale for this position is that nothing in the
statute or the legislative history of the Part D definitions
indicates an intent to depart from the section 302(j) requirement
that rulemaking be done before fugitives are included for
applicability purposes in nonattainment areas.  To the contrary,
the explicit reference in most of these Part D definitions back
to section 302(j), and the fact that these provisions address a
broad universe of sources emitting a particular pollutant or
class of pollutants, suggests that the section 302(j) rulemaking
requirement carries over to these definitions.  It is therefore
permissible to read the Act not to require the consideration of
fugitive emissions for these purposes.

     C.  Definition of "Major Source" in Section 111 

     The EPA continues to believe the Act requires that fugitive
emissions, to the extent quantifiable, must be considered in
determining major source status for all section 112 purposes. 
This policy applies to a source of any of the section 112(b)
listed pollutants whether or not the source in question is in a
category listed pursuant to section 112(c).  The EPA expects
States to comply with this policy in their operating permits
program submittals.

     The section 112 "major source" definition is distinguishable
legally from the Part D definitions in some important respects.   
Section 112 uses the term "major source" as opposed to "major
stationary source," and legislative history indicates an intent
to treat this definition as distinct from the section 302(j)
"major stationary source" definition.  Moreover, section 112
establishes a new regulatory program wherein Congress has
narrowed the regulatory concern to specific pollutants at specific source categories to be determined by EPA.  All of this
suggests that the section 302(j) rulemaking requirement does not
apply in the context of section 112, and that fugitive emissions
must therefore be included for purposes of determining whether a
source is major under section 112.

     D.  Collocation of Sources

     Questions have also been raised regarding the treatment of
fugitive emissions where sources in categories listed pursuant to
section 302(j) are collocated with sources that are not in any of
the listed categories.  The EPA intends to follow the policies
established in implementation of the PSD and NSR programs.  Only
the fugitive emissions from the listed source are required to be
counted for purposes of determining major source status.  Where
there is a collocated source that is not on the source category
list and where the nonlisted source is the primary activity at
the site, fugitive emissions would not need to be counted from
the collocated, nonlisted source.  The EPA will issue case
examples to help clarify application of this principle in the
near future.

     For further information, please contact Kirt Cox, Operating
Permits Policy Section, at (919) 541-5399, or Adan Schwartz,
Office of General Counsel, at (202) 260-7632.  

cc:  Air Branch Chief, Regions I-X
     Regional Counsel, Regions I-X
     M. Winer
     M. Miller
     K. Stein

OAQPS:AQMD:PPB:OPPS:K.Cox/C.Bradsher(541-5399/MU)3/7/94.
File = a:\fugit.22