Seyfarth Synopsis:  Consistent with guidance issued by the Environmental Protection Agency (EPA) in March 2018, the Agency has now proposed to codify changes to the New Source Review (NSR) applicability regulations to clarify the requirements that apply to sources proposing to undertake a physical or operational change under the NSR PSD preconstruction permitting program.  The proposal would “make it clear that both emissions increases and decreases from a major modification at an existing source are to be considered during Step 1 of the two-step NSR applicability test.”  The process is known as “project emissions accounting” (previously known as project netting).

EPA Administrator Andrew Wheeler, in his related announcement, said that the Agency’s new rule “is an important step towards President Trump’s goal of reforming the elements of NSR that regularly discouraged facilities from upgrading and deploying the latest energy efficient technologies.”  “By simplifying the permitting process and implementing a common-sense interpretation of our NSR rules, we will remove a major obstacle to the construction of cleaner and more efficient facilities.”

In the March 2018 guidance memorandum, then Administrator Scott Pruitt explained that “EPA’s current NSR rules were reasonably interpreted to provide that, at the outset of the process to determine NSR applicability, emissions decreases projected to result from a proposed project could be taken into account along with any projected emissions increases.”  The proposed rule would codify and implement Pruitt’s 2018 guidance memorandum by making minor revisions to the text of the NSR permitting rules, to provide clarity, and to deliver more certainty to the regulated community.

This rulemaking is an important step in ensuring the guidance becomes law, providing industry important opportunities to accelerate the air permitting process.

EPA will accept public comment on the proposal for 60 days after it is published in the Federal Register.