EPA’s Interpretation of “Begin Actual Construction” Under the New Source Review Preconstruction Permitting Regulations
This EPA guidance addresses EPA’s interpretation of when an owner or operator must obtain an NSR permit for a major stationary source or major modification before the start of actual construction on the facility. Currently, EPA considers almost every physical on-site construction activity that is of a permanent nature to constitute the beginning of “actual construction,” even where that activity does not involve construction “on an emissions unit.”
The interpretation fails to give meaning to the distinction between an emissions unit and a major stationary source. As such, it tends to prevent source owners/operators from engaging in a wide range of preparatory activities they might otherwise desire to undertake before obtaining an NSR permit. For this reason, EPA is adopting a revised interpretation that is more consistent with the regulatory text.
The proposed revised interpretation will stipulate that a source owner or operator may, prior to obtaining an NSR permit, undertake physical on-site activities – including activities that may be costly, that may significantly alter the site, and/or are permanent in nature – provided that those activities do not constitute physical construction on an emissions unit.
Begin actual construction means, in general, initiation of physical on-site construction activities on an emissions unit, which are of a permanent nature. Such activities include, but are not limited to, installation of building supports and foundations, laying underground pipework and construction of permanent storage structures.
EPA does not find it plausible that NSR permit applicants undertaking significant on-site construction activities prior to permit issuance will allow them to gain leverage with respect to the outcome of the permitting process. Stationary source owners or operators cannot expect that any site activities prior to permitting will alter or influence the BACT analysis for an emissions unit or other elements of a permitting decision. Permit applicants that choose to undertake on-site construction activities in advance of permit issuance do so at their own risk.
EPA is providing an opportunity for interested stakeholders to review and comment on the draft guidance titled, Interpretation of “Begin Actual Construction” Under the New Source Review Preconstruction Permitting Regulations through May 11, 2020. For any questions concerning this memorandum, please contact Juan Santiago, Associate Division Director of the Air Quality Policy Division, Office of Air Quality Planning and Standards at (919) 541-1084 or .
Submit comments using the form at https://www.epa.gov/nsr/forms/draft-guidance-interpretation-begin-actual-construction-under-new-source-review. EPA will consider the comments received and complete a revised version of the guidance.
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WASHINGTON (Dec. 3, 2019) — Today, the U.S. Environmental Protection Agency (EPA) is announcing several actions to clarify and improve New Source Review (NSR) permitting requirements. These Clean Air Act actions are part of a suite of measures EPA is taking to modernize and streamline the NSR process, without impeding the Agency’s ongoing efforts to maintain and enhance the nation’s air quality. These actions will improve regulatory certainty and remove unnecessary obstacles to projects aiming to improve the reliability, efficiency, and safety of facilities while maintaining air quality standards.
“NSR reforms are a key component of President Trump’s agenda to revitalize American manufacturing and grow our economy while continuing to protect and improve the environment,” said EPA Administrator Andrew Wheeler. “NSR regularly discouraged companies from investing in and deploying the cleanest and most efficient technologies. Through the Trump Administration’s efforts, EPA is providing clarity to permitting requirements, improving the overall process, and incentivizing investments in the latest energy technologies.”
“For too long, New Source Review permitting requirements stifled job creation, hampered innovation and slowed the ability to modernize critical energy infrastructure. Worse, in previous administrations, the permits were weaponized, so liberal activists could delay key projects,” said U.S. Senator Jim Inhofe (OK). “New Source Review hasn’t been updated in over four decades—making it hard to integrate new technologies into our energy infrastructure. I’ve worked for years to modernize the review process, and applaud today’s action by President Trump and Administrator Wheeler to streamline the NSR permitting process.”
“One of my consistent frustrations with New Source Review is what seems to be a perverse incentive away from innovation. Thank you to Administrator Wheeler and the Trump Administration for recognizing this and finalizing these positive reforms,” said U.S. Senator Kevin Cramer (ND). “The EPA’s actions provide certainty while restoring the proper scope of the Clean Air Act.”
“I applaud the EPA for taking further steps to reform the New Source Review permitting program. NSR’s burdensome process can impede upgrades that would actually increase efficiency and improve air quality. The EPA is moving toward a better NSR program that streamlines the process without sacrificing environmental protections,” said U.S. Representative Morgan Griffith (VA-09).
“I applaud Administrator Wheeler for implementing a strong regulatory reform agenda at the EPA. Today’s actions are a solid first step in the right direction to reform the NSR permitting program. I look forward to continue working with the Trump Administration to further reform NSR and allow America’s industry to make their units more reliable and efficient, while maintaining strong environmental standards,” said U.S. Representative Andy Biggs (AZ-05).
“President Donald Trump continues to deliver on his promise to cut burdensome regulations that strangle American manufacturing and energy development. These improvements to the New Source Review (NSR) permitting requirements will protect our air quality, while incentivizing businesses to grow and expand. I look forward to continuing to work with President Trump and Administrator Wheeler to cut needless regulations and create American jobs,” said U.S. Representative Alex X. Mooney (WV-02).
“This Administration is clearing the path for manufacturers to invest in more energy efficient technologies that conserve energy, reduce emissions, and keep U.S. manufacturers competitive,” said Portland Cement Association President and CEO Mike Ireland. “For energy-intensive industries like cement, strategic investment in energy efficiency and emissions reduction are key components of any long-term climate and sustainability strategy, and EPA’s New Source Review reforms announced today help unlock new opportunities for sustainable operation.”
Final Guidance: Revised Policy on Exclusions from “Ambient Air”
After considering public comments, EPA is issuing final guidance, identifying the sort of measures which EPA may take account of in determining whether a source owner or operator has precluded the general public from having access to its property. Where access is precluded, the portion of the atmosphere above that property is not considered “ambient air” for the purpose of conducting air quality analyses under the Clean Air Act. The guidance updates EPA’s policy to recognize that a variety of measures may be considered effective in keeping the public off a source owner/operator’s property. These measures, which account for advances in surveillance and monitoring, depend on site-specific circumstances and continue to include, but are now not solely limited to, fences or other physical barriers. State, local and tribal permitting authorities have the discretion to apply this guidance on a case-by-case basis. The regulatory definition of “ambient air,” as stated in 40 CFR § 50.1(e) to mean “that portion of the atmosphere, external to buildings, to which the general public has access,” remains unchanged.
Final Guidance: Interpreting “Adjacent” for New Source Review and Title V Source Determinations in All Industries other than Oil and Gas
EPA has also recently issued a final guidance that revises the agency’s interpretation of when multiple air pollution-emitting activities are located on sufficiently “adjacent” properties to one another that they should be considered a single source for the purposes of permitting. To determine what activities comprise a single source under the NSR and Title V air permitting programs, three factors must be satisfied: the activities must be under common control; they must be located on contiguous or adjacent properties; and they must fall under the same major group standard industrial classification (SIC) code. In this guidance, for all industries other than oil and natural gas production and processing for which there is a separate set of rules and to which this guidance does not apply, EPA adopts an interpretation of “adjacent” that is based on physical proximity only. The concept of “functional interrelatedness” would not be considered by EPA when determining whether activities are located on adjacent properties. This interpretation should help clarify and streamline the permitting process.
Additional NSR Proposals
EPA also recently issued a proposal to address minor errors that have accumulated over time in four NSR regulations. While these minor errors, such as outdated cross references and typographical errors, have not materially impeded the effective operation of the NSR program, EPA believes that it is important to remove such errors from the regulations in order to provide regulatory certainty and clarity. The proposed corrections are all considered to be non-substantive and are intended to provide clarity and precision to the NSR regulations without altering any NSR policy or changing the NSR program as a whole.
EPA is also proposing to remove from the NSR regulations various provisions, such as certain “grandfathering” provisions, that, with the passage of time, no longer serve any practical function or purpose. EPA will be taking comment on this proposal, which will be published in the Federal Register.
More information on these actions and other NSR improvements are available at: https://www.epa.gov/nsr
Coming Soon: Revisions to Petition Provisions of Title V Permitting Program
EPA is currently working to take final action on a 2016 proposal for revisions to the title V regulations. This proposal would streamline and clarify processes related to the submittal and review of title V petitions.
The proposed rule would bring more certainty for all stakeholders, including the sources required to obtain and maintain title V permits; more focused petitions; better title V permit records which are expected to result in fewer petitions; and reduced administrative burden in the EPA’s review of petitions in a tight timeframe.
Congress established New Source Review as a preconstruction permitting program in the 1977 Clean Air Act Amendments. The program intended to ensure the maintenance of air quality standards around the country and that state of the art technology is installed at new plants or existing plants undergoing major modifications.
Under the NSR program, before constructing a new stationary emission source or major modification of an existing source, the source operator must determine whether the new source will emit or the project will increase air emissions above certain thresholds. If so, the operator may need to get a permit from a state government or EPA that may require installation of pollution control technology or other measures.
Contract your SCS project manager, or if you have questions about the impact of these recent actions.