The EPA is reviewing comments on proposed revisions to the preconstruction permitting regulations that apply to modifications at existing major stationary sources in the New Source Review (NSR) program under the Clean Air Act (CAA).  The proposed revisions include:

 

• Revising the definition of “project” in the NSR regulations;
• Adding additional recordkeeping and reporting requirements applicable to minor modifications at existing major stationary sources; and
• Proposing to require that decreases accounted for in the Step 1 significant emissions increase calculation be enforceable.

The NSR program requires certain stationary sources of air pollution to obtain permits before construction. The major NSR program applies to new construction and modifications of existing sources that emit “regulated NSR pollutants” over certain thresholds. New or modified sources that emit regulated NSR pollutants at levels under those thresholds may be subject to minor NSR requirements or may be excluded from the NSR altogether.

According to a Lexology article by Beveridge & Diamond P.C., analysts are critical of the proposed changes for the following reasons:

• “EPA offers no evidence justifying the proposed revisions. EPA claims that existing NSR rules may be susceptible to industry misuse. However, EPA admits that it has no data to support its analysis. … So, EPA defaults to a ‘qualitative assessment of the potential benefits and costs of the proposal.’ … That is arbitrary rulemaking.
• The proposal undermines the 2020 Project Emissions Accounting rule and reverses EPA’s position on denying a petition for reconsideration of that rule. EPA admits that it denied a 2021 petition for reconsideration filed by environmental advocates on the same issues raised here but then goes on, in this proposal, to reverse its position and implement the changes requested in that petition.
• Permitting major projects and expansions will take more time and money. The proposed rule will increase the time it takes to complete the NSR permitting process and, thus, the projects themselves.
• The proposed revisions will result in expanded scrutiny of operational and business decisions. The proposed revisions will further expose sources and permitting authorities to heightened scrutiny by EPA and other stakeholders inclined to challenge industry’s operational and business decisions.”

Redefining ‘project’

The EPA currently defines “project” as “a physical change in, or change in the method of operation of, an existing major stationary source.”

The Agency proposes to narrow the definition to “a discrete physical change in, or change in the method of operation of, an existing major stationary source, or a discrete group of such changes (occurring during the same time at the same major stationary source) that are substantially related to each other. Such changes are substantially related if they are dependent on each other to be economically or technically viable.”

Additional recordkeeping and reporting requirements

To enhance owner/operator accountability and facilitate compliance with the NSR applicability requirements, the EPA is proposing revisions to the recordkeeping and reporting requirements in the NSR regulations’ “reasonable possibility” provisions that apply to projects at major stationary sources that are evaluated using the actual-to-projected-actual applicability test.

The “reasonable possibility” provisions apply in those circumstances when the owner/operator uses projected actual emissions to determine that the project doesn’t qualify as a major modification but  there’s a “reasonable possibility” that the project may nonetheless result in a significant emissions increase. A “reasonable possibility” exists when there’s a projected actual emissions increase of at least 50 percent of the amount that’s a “significant emissions increase” for that regulated NSR pollutant. In such a case, specific pre- and post-project monitoring, recordkeeping, and reporting requirements are triggered and must be satisfied.

The EPA is proposing changes to clarify when the “reasonable possibility” monitoring, recordkeeping, and reporting requirements apply, including making them applicable when the owner/operator accounts for a decrease in emissions when determining that the project isn’t a major modification, regardless of the projected actual emissions increase.

Enforceable Step 1 emissions reductions

“[The] EPA also proposes that emissions decreases associated with a project under Step 1 be legally and practicably enforceable, which EPA [defines as] ‘enforceable as a practical matter,’” Beveridge & Diamond says. 

“[The] EPA states that it is proposing this change to ensure that emissions decreases included in the NSR applicability process will occur and be maintained.  EPA further states that this is consistent with [the CAA Section 110] requirement that ‘each implementation plan submitted by a State include enforceable emission limitations’ and ‘regulation of the modification and construction of any stationary source within the areas covered by the plan as necessary to assure that national ambient air quality standards are achieved, including a permit program as required in parts C and D of this subchapter.’ This new requirement would require Step 1 emissions decreases to be ‘creditable’—meaning that a decrease can only be accounted for in Step 1 if it meets the creditability requirements for decreases in the existing ‘significant net emissions increase’ definition (Step 2).”

Get informed

Any existing major stationary sources across all industry categories and all state, local, and tribal air pollution control agencies responsible for issuing preconstruction permits pursuant to the major NSR programs will be impacted by the proposed rule and are advised to carefully review the many nuances of the proposed rule.