New Source Review

Project Emissions Accounting: May 3, 2024 EPA published its proposal to revise preconstruction permitting regulations. Specifically, the proposed changes would (1) “add detail” to the definition of “project” to “guard against circumvention of the NSR applicability process”, (2) add additional recordkeeping and reporting requirements applicable to minor modifications at existing major stationary sources, and (3) require that decreases accounted for in Step 1 significant emissions increase determination be legally and practicably enforceable “to ensure that emissions decreases that are accounted for in the NSR applicability process will occur and be maintained.”

Project Emissions Accounting: Feb. 22, 2024 EPA Administrator Regan issued a draft rule proposing revisions to the preconstruction permitting regulations that apply to modifications at existing major stationary sources in the NSR program. The changes were aimed at improving implementation and enforceability of the program, while toughening air pollution permit requirements.

Jan. 10, 2024 EPA published a proposed rule that aimed to clarify the relationship between the Clean Air Act’s title V permit program and NSR requirements. The proposed changes were expected to reduce EPA review and oversight of NSR decisions in the title V permit process. 

“Second Guessing” Policy: Dec. 9, 2022 EPA rescinded “in its entirety” the Trump-era memo that barred EPA from “second-guessing” modified sources’ emissions projections when determining whether NSR air permits are required.

Oct. 14, 2022 EPA published a proposed rule that would allow EPA to consider fugitive emissions when reviewing Title V air operating permits.

“Second Guessing” Policy: Sept. 27, 2022 Administrator Regan denied Sierra Club’s request to enforce a stricter air permit for PacifiCorp’s Hunter coal-fired power plant in Utah but in doing so, also discarded the Trump administration’s “second-guessing” policy by thoroughly analyzing the application’s assumptions. In the order denying Sierra Club’s petition, Administrator Regan relied on the Appleton Coated case, which established the standard of review prior to the “second-guessing” policy, to reach his conclusion.

Aug. 31, 2022 The Eight Circuit rejected a challenge to EPA’s decision to not aggregate two adjacent facilities (a coal plant and its associated coal mine) for purposes of its NSR analysis, thereby maintaining the Trump-era policies. By not combining the facilities for NSR, they did not trigger “major source” emissions control requirements. Casey Voigt v. EPA, No. 21-1970 (8th Cir.).

July 29, 2022 EPA published guidance for modeling precursors in NSR preconstruction permit review. The new policy directed regulators to holistically evaluate the impact of all relevant precursors, even if only one is significant.

July 14, 2022 EPA published a report in response to the Public Employees for Environmental Responsibility (PEER) complaint alleging that Colorado’s new source review air permit program failed to ensure synthetic minor emissions sources comply with Colorado’s SIP. 

Mar. 3, 2022 The DC Circuit consolidated Environmental Defense Fund et al. v. EPA (Docket No. 21-1038) and State of New Jersey, et al v. EPA, et al (Docket No. 21-01033) under Docket (No. 21-01033). Both cases continued to be held in abeyance.

Project Emissions Accounting: Dec. 10, 2021 Environmental groups challenge EPA’s Oct. 18 decision to retain the Trump-era Project Emissions Accounting Rule. Env. Defense Fund, et al., v. EPA, No. 21-1259 (D.C. Cir.).

Project Emissions Accounting: Oct. 18, 2021 Administrator Regan denied a petition from environmental groups to reconsider or stay the Trump administration’s change to NSR permitting regulations, but stated that EPA plans to initiate a rulemaking process to revisit the change. Regan also stated EPA would consider revoking or revising Administrator Pruitt’s related 2018 memo.

“Reasonable Possibility” Recordkeeping Rule: March 5, 2021 The DC Circuit rejected New Jersey’s challenge to the 2007 New Source Review rule, almost ten years after the original suit was filed. The rule specified thresholds for when modifications to a major stationary source trigger additional record-keeping requirements. Judge Walker dissented, arguing that the court should have rejected the suit on the grounds that New Jersey lacked standing to appeal the case. New Jersey v. EPA, No. 08-01065 (D.C. Cir.).

Project Emissions Accounting: Jan. 22, 2021 Environmental groups sued EPA over its Nov. 24, 2020 rule that allowed emitters to include both emission increases and decreases at Step 1. Environmental Defense Fund et al. v. EPA, No. 21-1039 (DC Cir.).

Project Emissions Accounting: Oct. 22, 2020 EPA issued a final rule allowing companies to consider both decreases and increases in emissions at Step 1, i.e. when assessing whether a proposed project will result in a “significant emissions increase” of a regulated NSR pollutant. Previously, decreases were only considered at Step 2. Nov. 24, 2020 EPA published the final rule revising NSR applicability regulations to clarify that increases and decreases in emissions resulting from a proposed project can be considered in Step 1 of the major NSR major modification applicability test. 

March 25, 2020 EPA released a draft guidance memo narrowing the definition of “begin actual construction” in the NSR regulations. The pertinent regulation states “no new major stationary source or major modification…shall begin actual construction without a permit…” (emphasis added) and refers to “construction activities on an emissions unit.” Under EPA’s prior definition, the phrase “begin actual construction” applied to any on-site construction activities of a permanent nature. This meant that owners/operators needed to obtain an NSR permit before starting most construction. Under EPA’s new proposal, “begin actual construction” would apply only to construction on an emissions unit. Businesses could begin construction activities without first obtaining an NSR permit, so long as the construction does not modify or build a new emissions unit. In the draft guidance, EPA clarified that this was a narrow definition and did not include construction of an “installation necessary to accommodate” the emissions unit.

Plantwide Applicability Limitation (PAL): Feb. 13, 2020 EPA released draft guidance regarding plantwide applicability limitation (PAL) provisions.  PAL permits offer flexibility to plants by establishing plantwide emissions limits, rather than limits for individual sources within the plant. EPA’s guidance memo addressed multiple aspects of PAL permitting, including renewal, termination, and monitoring requirements. In the memo, EPA also interpreted the NSR regulations related to how the agency calculates baseline annual emissions for units that have been replaced. This calculation is important for determining the plant’s allowable emissions level. For example, a facility may replace an old heater with a more efficient, lower-emitting heater. Rather than integrate the annual emissions of the replacement heater, EPA appeared to be interpreting the NSR regulations to allow facilities to continue using the older heater’s annual emissions. This could allow facilities to report higher annual emissions and receive a higher plant-wide emissions level as a result.  Aug. 4, 2020 EPA finalized PAL guidance. 

Feb. 12, 2020 EPA stated that it would not retroactively apply its revised guidance on New Source Review determinations. For example, if EPA previously determined that multiple facilities constituted a single source for the purposes of New Source Review, those facilities cannot apply to change that determination based on EPA’s new definition of “adjacent” or “common control”. EPA announced this policy in a response letter to Eastman Chemical Company’s request that EPA reconsider a prior determination.

Exclusions from “Ambient Air”: Dec. 2, 2019 EPA published final guidance expanding the exclusions to ambient air. The guidance re-defined ambient air as excluding ambient air “where the source employs measures, which may include physical barriers, that are effective in precluding access to the land by the general public.” 

“Adjacent” Definition: Nov. 26, 2019 EPA published final guidance that “interprets the term ‘adjacent’ to entail physical proximity between property,” such as a common boundary or border. EPA recommended that the guidance apply prospectively and did not recommend retroactively applying the decision to completed permitting actions.

“Reasonable Possibility” Recordkeeping Rule: Nov. 5, 2019 After 11 years, EPA declined a 2008 petition from New Jersey to reconsider a final rule on New Source Review record-keeping. The rule, finalized in 2007, specified thresholds for when modifications to a major stationary source trigger additional record-keeping requirements. EPA’s decision ended the D.C. Circuit’s hold on New Jersey’s petition, restarting litigation in the case. The court was scheduled to hear oral arguments on Nov. 2, 2020. New Jersey v. EPA, No. 08-01065 (D.C. Cir.).

Project Emissions Accounting: Aug. 9, 2019 EPA published a draft rule intended to relax the two step review process. Under the proposal, EPA would allow regulated entities to consider “both emissions increases and emissions decreases that result from a given proposed project” at Step 1. This could fundamentally change the NSR accounting process, which previously studied whether a modification by itself would result in significant emissions increases at Step 1, with no consideration of other decreases. This rule formalized the March 13, 2018 guidance.

Project Aggregation: Nov. 15, 2018 EPA published a final rule removing the stay on the 2009 emissions aggregation rule and retaining the 2009 policy. The action was effective upon publication, meaning that EPA and facilities returned to the “substantially related” test when determining whether emissions from multiple modifications must be combined for NSR Step 1 emissions accounting. If EPA determines that modifications are not substantially related, then the modifications will be considered separately under Step 1. This could result in fewer modifications being subject to major NSR permitting requirements. 

Exclusions from “Ambient Air”: Nov. 9, 2018 EPA published draft guidance proposing to broaden exclusions to the definition of ambient air – the air that Clean Air Act permitting covers. When analyzing a stationary source’s emissions, EPA looked only to the impact on the ambient air, which is defined as “that portion of the atmosphere, external to buildings, to which the general public has access.” 40 CFR § 50.1(e). Previously, “ambient air” did not include air over land owned by the source if the public was excluded from the land by a fence or other physical barrier. EPA proposed to exclude air over privately-owned land that deters the public from entering through “other methods,” such as surveillance and monitoring. The change could mean that air pollution levels over the land would not be measured for permitting purposes, even if the public could easily access the property. 

“Adjacent” Definition: Sept. 5, 2018 EPA issued draft guidance for the definition of “adjacent” when determining what constitutes operations at a single stationary source for the purpose of NSR pre-construction permitting. Generally, the regulations defined sources to mean buildings, structures, facilities, or installations that have three characteristics: (1) located on contiguous or adjacent properties; (2) are a part of the same industrial grouping; and (3) are under common control. Historically, EPA interpreted adjacent in the first requirement to mean more than just physical adjacency and to include operations that were interrelated enough to be functionally proximate. For industries other than oil and gas, EPA would now exclusively consider physical proximity when determining adjacency. This could allow nearby structures that are connected but not physically adjacent to avoid the stringent NSR permit requirements by counting as two minor sources, rather than one major source. The action also applied to Clean Air Act Title V operating permits.

Aug. 21, 2018 EPA proposed the Affordable Clean Energy Rule (ACE) for power plants. The proposed rule included an amendment to change the method for calculating whether NSR applies to modifications at power plants. It proposed adding an hourly emissions test to determine whether emissions will increase sufficiently to trigger NSR before the existing annual emissions test. EPA acknowledged that this creates a more lenient NSR regime than the current annual emissions test. If finalized, this rule could mean that facilities could significantly increase their annual emissions of harmful pollutants without being subject to NSR simply by operating for more hours each year but ensuring that hourly emissions are not significantly increased.

For more information on the proposed rule’s changes to NSR, see EELP’s Memorandum on EPA’s Proposed Changes to New Source Review in ACE.

For a comprehensive discussion of Trump EPA’s changes to the NSR program, see our white paper EPA’s Attack on New Source Review and Other Air Quality Protection Tools

April 30, 2018 In a letter to the Pennsylvania Department of Environmental Protection, EPA established a new method for determining whether facilities are under “common control” for the purpose of NSR permitting. In the letter, EPA narrowed the determination of “common control” to focus on “the power or authority of one entity to dictate decisions of the other that could affect the applicability of, or compliance with, relevant air pollution regulatory requirements.” The “common control” determination ensured that jointly-managed facilities were treated as one source under NSR and Title V permitting. A narrowed interpretation could result in fewer sources being subject to NSR requirements, because the facilities’ emissions would be considered separately rather than jointly when determining NSR applicability.

Project Emissions Accounting: March 29, 2018 A coalition of environmental groups filed a petition for review of the March 2018 memo in the D.C. Court of Appeals, Environmental Defense Fund v. EPA, No. 18-1149.

Project Emissions Accounting: March 13, 2018 EPA released a memo outlining changes to its method for calculating emissions projections at Step 1 of the NSR process. EPA took the position that any emissions decrease that might result from the proposed project should be considered at Step 1, whereas the agency previously only considered emissions increases at units that are a part of the project. Including decreases in this calculation, which previously were not considered until Step 2, could reduce the number of modifications that are subject to NSR. 

“Second Guessing” Policy: Dec. 7, 2017 EPA released a policy memo stating that it would no longer re-examine — or second guess — industry’s projections of the emissions increases that would result from a modification at a facility. This essentially leaves it to industry to ensure the accuracy of its emissions projections. The memo also stated EPA’s intent to not pursue legal enforcement options based on industry’s projections; instead, EPA would wait until multiple years of emissions data could be analyzed. The new policy was in tension with a 6th Circuit case earlier in the year that upheld EPA’s authority to review industry’s calculations of projected emissions.

This change in EPA’s procedures meant that the agency would not actively ensure the accuracy of industry’s projections of increased emissions, even though these emissions projections determined the level of pollution control technology that a facility must operate under NSR. For more information on the significance of this change, see EELP’s New Source Review Enforcement Memorandum.