EPA Memo on Project Emissions Accounting For New Source Review (NSR) Program

EPA Administrator E. Scott Pruitt released a memo on March 13, 2018, announcing a significant shift in interpretation of project emission accounting procedures for its NSR program (also referred to as preconstruction permitting) under the Clean Air Act. 

In the memo, Administrator Pruitt notes that the process of determining whether a project is a major modification at an existing major source consists of two steps with the project emissions determined in Step 1, and if a significant emission increase is determined, the process proceeds to Step 2 to determine if there is a significant net emissions increase.  In the past, agency interpretation has been that emission reductions occurring as part of a project may only be considered at Step 2, along with all other facility emission increases and decreases occurring within a contemporaneous period (five years generally) from the date that the project commences.  The Administrator points to comments from interested parties that this process has prevented or delayed projects that would not result in significant emissions increases.  The Administrator also notes EPA’s own “lack of clarity” and confusion on this issue within the regulated community, and points to the lack of a

Administrator Pruitt stated the intent of the memo was

“…  to communicate EPA’s interpretation that its current NSR regulations provide that emissions decreases as well as increases are to be considered at Step 1 of the NSR applicability process, provided they are part of a single project.”

As noted above, previous agency interpretations have held that only emission increases are considered at Step 1 in determining whether the project emissions are significant under the NSR program. 

This change in methodology of determining a project’s emissions increase is expected to expedite the preconstruction permitting process, reduce the likelihood that many projects will need to be reviewed under either the Prevention of Significant Deterioration (PSD) or nonattainment NSR program, and speed projects to implementation.

The memo concludes with a foreshadowing that comments on “project aggregation” will be coming soon.  Project aggregation is the grouping of what many sources consider to be separate projects into a single construction permit action if the agency believes they are related, occur close in time (generally within 2 to 3 years), may have been planned together, have been presented to shareholders or the financial world as part of a common plan, or have some relationship either physically with respect to production or are otherwise reliant on one another for production of one or more common products.  EPA’s intent with project aggregation is preventing sources from circumventing the major source permitting program by separating a project into two or more individual projects.

David F. Seitz, P.E. (WI, SC), TRC Environmental Corporation, dseitz@trcsolutions.com