Under the Clean Air Act, sources frequently must undergo “New Source Review” (NSR) permitting, which is a pre-construction permitting program. NSR establishes requirements for new or modified sources prior to initiating construction. The goal of NSR is to ensure that newly constructed or modified sources consider their air emissions and protect the air quality of the geographic area in which they are located. To that end, there are two types of NSR permits: PSD (prevention of significant deterioration) and NNSR (nonattainment new source review). PSD permits are for those sources located in areas that are attaining National Ambient Air Quality Standards (NAAQS), and therefore the permit is designed to prevent significant deterioration of air quality. Alternatively, NNSR permits are for those sources located in areas that are not achieving the NAAQS and are considered to be in non-attainment of air quality standards.
For purposes of this article, it is assumed a source is located in an area in attainment for the NAAQS, and therefore the source is subject to NSR PSD permitting.
When a new source undergoes NSR PSD permitting, the source is further classified, based on its potential to emit regulated NSR air pollutants, as either (1) a major source (>250 tpy or 100 tpy depending on source), (2) a minor source, or (3) a synthetic minor source. Moreover, existing sources may have to undergo NSR permitting as a major source when a modification occurs – and the triggers for that permitting depend on whether the existing source is classified as major source, a minor source, or a synthetic minor source.
The following FAAQs provide insight into synthetic minor sources, including information on what these sources are, what benefits can be derived from being permitted as a synthetic minor source, and how to avoid potential pitfalls for synthetic minor sources including sham permitting.
Q: What is a synthetic minor source?
A: A synthetic minor source is a source that accepts enforceable limits restricting its potential to emit NSR regulated air pollutants to a level below the threshold limits set for a major source under the Clean Air Act. The namesake “synthetic minor” refers to the fact that the source has the capacity to be a major source of emissions but is choosing to operate “synthetically” as a minor source.
Q: What is the difference between a synthetic minor source and a true minor source?
A: A true minor source has the potential to emit NSR regulated pollutants in amounts that are less than the major source thresholds. In other words, even without enforceable limits the source cannot exceed the major source thresholds—it is physically not able to do so. A synthetic minor source, on the other hand, is a source that otherwise has the potential to emit regulated NSR pollutants in amounts that are at or above the thresholds for major sources but has taken a restriction so that its potential to emit falls below those thresholds. In other words, in the absence of enforceable limits, a synthetic minor source would exceed the major source thresholds and otherwise be considered a major source.
Q: What are the “enforceable limits” synthetic minor sources use to limit their potential to emit?
A: Enforceable limits or enforceable restrictions are conditions in a permit that limit a source’s potential to emit air emissions. These conditions generally fall into three categories.
- Production Limits: These are restrictions on the amount of final output that can be produced or manufactured at a source.
- Emission Limits: These are restrictions over a given period of time that limit the amount of pollutants that may be emitted from a source.
- Operation Limits: This is a catch-all category for all other restrictions on how a source will operate, including limits on hours of operation, amount of raw material consumed, or fuel allowed to be combusted. This category also includes conditions that outline what add-on controls must be installed and maintained at a source, and what its emission rate or efficiency is required to be.
It is important to note that these limitations must be both federally and practically enforceable. Federally enforceable essentially means that it is contained in a permit issued pursuant to an EPA-approved program or directly by the EPA or has been submitted to EPA as a revision to a State Implementation Plan (SIP). Practically enforceable relates to whether the EPA or a state agency can monitor compliance with those restrictions and determine if a source has been operating as a synthetic minor source or as a major source. For example, if a permit limits the hours of operation for a source, in order for that limit to be practically enforceable, the permit should also include separate recordkeeping requirements that log the hours in which the source was operating. As a result, the permitting agency will be able to check a source’s compliance with the hours of operation restriction by reviewing the source’s log of its hours.
Q: Do synthetic minor permits undergo public comment?
A: Synthetic minor permits should engage in a public comment period. In a 2021 EPA Inspector General Audit Report, the agency confirmed that synthetic minor source programs in each state must allow the public to participate in the permitting process. The Report further recommended that EPA work with all state, local, and tribal agencies that do not provide the opportunity for public comment on synthetic minor source permits, to assure opportunities for public participation occur—as required by law.
Q: What are some advantages to being a synthetic minor source?
A: Overall, the permitting process for a synthetic minor source is less demanding than the permitting process for a major source. Moreover, because a NSR permit is required prior to construction, a synthetic minor permit may allow a source to initiate construction sooner—as major source permits require more of an exacting review process, so it takes longer for the issuing agency to finalize the permit.
In addition, major sources are subject to more stringent control measures, so a source may desire to be a synthetic minor source to avoid the costs of complying with those measures. Major PSD NSR sources are required to include best available control technology (BACT) measures in their operations. BACT determinations balance energy, environmental, and economic impacts and these determinations can require a source to undergo equipment modifications, incorporate new combustion techniques, or comply with various operational standards, design standards, or work practices. These BACT determinations must be made for each regulated NSR pollutant that the source would have the potential to emit in "significant" amounts, and complying with BACT can be burdensome.
Q: Does a major modification at an existing synthetic minor source trigger major PSD NSR permitting?
A: No. A major modification is any physical change in or change in the method of operation of a major stationary source that would result in a "significant emissions increase" of any regulated NSR pollutant, and a "significant net emissions increase" of that pollutant. A major modification at an existing facility will require a source to undergo the more exacting NSR permitting process for major sources, and BACT may be required for those pollutants for which there is a “significant net emissions increase” of. Nevertheless, only major sources can undergo major modifications; consequently, a synthetic minor permittee could potentially increase its emissions of a pollutant in “significant” amounts while avoiding triggering major PSD NSR permitting.
Q: What happens when a minor synthetic source undergoes a modification and now has the potential to emit at major source levels?
A: Imagine an existing synthetic minor source has accepted limits to reduce its emissions of an NSR pollutant to 190 tons per year and has decided to expand its facility and add 65 tons per year to its potential to emit. Thus, the source is now expected to emit 255 tons per year of an NSR pollutant. While the source would be considered a "major source" if it was proposing a new facility with a potential to emit, it would not need to undergo major PSD NSR permitting for this proposed expansion. Critically, now that it is emitting at a major source level, the triggers for NSR PSD permitting are now the same triggers that apply to an existing major source. In other words, the next time this source undergoes a modification, it will be evaluated under the triggers for a major source – such as a major modification.
Q: When is major PSD NSR permitting triggered at a synthetic minor source?
A: While a major modification does not trigger major PSD NSR permitting at an existing synthetic minor source, there are other circumstances where a synthetic minor source will have to undergo the more exacting permitting process of a major source prior to modifying its facility. These circumstances include:
- Major source size modification: If a synthetic minor source undergoes a physical change that would constitute a major stationary source by itself (i.e., an emissions increase of 100 or 250 tons per year depending on the source type), this modification will require the synthetic minor permittee to undergo the major PSD NSR permitting process.
- Relaxation of synthetic minor limits: 40 CFR § 52.21(r)(4), sometimes referred to as the Source Obligation Rule, provides that when a source becomes a major source solely by virtue of a relaxation in any enforceable limitation, then the source must undergo PSD NSR major source permitting as if construction has not yet commenced at the source. For example, imagine a synthetic minor source has a limit on its hours of operation that keeps its emissions under major source thresholds. If that source seeks a modification that relaxes its hours of operation limit (increases the hours its permitted to operate) and the source’s emissions now exceed major source thresholds, the synthetic minor source will have to undergo major source PSD NSR permitting.
These two scenarios provide some context to the discussion of one-time doubling below.
Q: What is one-time doubling?
A: One-time doubling refers to the concept that a minor source can undergo a modification and essentially double its emissions, without having to undergo major source permitting—so long as the increase is not the size of a major source itself (100 tpy or 250 tpy depending on source type). In practice, this means that a minor source with a potential to emit 200 tpy of a pollutant could increase its potential to emit to 400 tpy without undergoing major source permitting.
There has been some controversy over whether one-time doubling is permitted at a synthetic minor source or if it is only allowed at true minor sources. There have been several reasons proffered on why synthetic minor sources cannot double their emissions like true minor sources. First, the regulations do not explicitly identify when a modification at a synthetic minor source triggers PSD NSR major source permitting. Synthetic minor sources do not fit in either bucket (true minor source vs. major source) perfectly. Consequently, it’s not entirely clear if the major source size modification applies to synthetic minor sources. The regulation states it applies to all sources that do not otherwise qualify as a major source—but technically synthetic minor sources do have the potential to emit as a major source but for the enforceable limits they agree to in their permit. Second, is the argument that the Source Obligation Rule governs modifications at synthetic minor sources – and if a synthetic minor source is doubling its emissions, it seems likely that it is relaxing the limits it previously agreed to, and thereby running afoul of the Source Obligation Rule.
It does not appear a synthetic minor permittee has yet to be successfully prevented from one-time doubling for either of these reasons. The EPA recently addressed this issue in response to a Petition relating to the permitting of the Salt River Project Agricultural Improvement and Power District Coolidge Generation Station (9/11/2024). EPA noted that major NSR permitting is not triggered by a modification of an existing minor source—whether true or synthetic—unless the modification would constitute a major source by itself. Further, EPA added that a minor source is not a major source—"regardless of whether it is a true minor source due to its natural, unrestricted physical or operational design or a synthetic minor source due to enforceable restrictions.”
EPA also noted that the Source Obligation Rule is merely an additional, separate type of major NSR permitting trigger, which exists independent of the triggers for minor sources and major sources. Nevertheless, EPA emphasized that a large increase in emissions does not necessarily run afoul of the Source Obligation Rule—so long as the increases in emissions are tied to new equipment or new sources of emissions and no relaxation on the existing limitations is occurring.
Ultimately, it appears that one-time doubling is still an option for a synthetic minor source, unless and until EPA adopts additional regulations or guidance governing this issue or the question of applicability comes before a court.
Q: What is sham permitting?
A: EPA has historically been concerned about the issue of a source improperly seeking and receiving a synthetic minor permit, constructing its facility subject to less demanding permitting requirements, and shortly thereafter relaxing its permit limits and actually operating at major source levels of pollution. EPA refers to such synthetic minor permits as "sham permits."
One of the primary concerns relating to sham permitting are the practical pollution control consequences of constructing under a synthetic minor permit and then changing your operations to those of a major source shortly thereafter. When developing BACT at a major source, economics and need are also considered. And as a general rule, it is more expensive to retrofit existing equipment with pollution control measures than to install new equipment with better pollution control measures. In other words, old plants are treated "more leniently" than ones not yet constructed. Consequently, even if a synthetic minor source that becomes a major source goes through the major PSD NSR permitting at a later time, it may be allowed to install less stringent pollution control technologies than it would have if it had originally sought a major source permit from the very beginning. In other words, a relaxed synthetic minor permittee that is now a major source might get benefits, such as quicker permitting timelines coupled with laxer control technology, solely based on its decision to become a synthetic minor source in the first instance.
Sham permitting is not intended to penalize sources that accept emissions limitations in pursuit of legitimate business purposes and in good faith later seek a relaxation of those limitations. Nevertheless, synthetic minor sources should be cognizant of what sham permitting is, the factors agencies will consider when evaluating a potential sham permit, and ensure that they intend to genuinely operate (viably) as synthetic minor sources for a period of time prior to undergoing expansion or increasing their output, throughput, or hours of operation, so as to avoid enforcement. Potential enforcement actions for a sham permit includes injunctive relief, civil penalties, and criminal sanctions dating all the way back to the beginning of the actual construction.
Q: Is an agency required to review sham permitting concerns at the initial permitting stage?
A: When a new source first seeks a synthetic minor source from an agency, it is unlikely that an agency is required to review for sham permitting issues in the first instance—unless state law specifically states it is required to do. In 2021, the Minnesota Supreme Court considered this question when a synthetic minor source was challenged on sham permitting grounds, as the permittee’s own report anticipated operating at higher throughput levels at some point in the future. The court noted that EPA’s enforcement of sham permits is “entirely retrospective.” In particular, the court highlighted that EPA previously noted that it would seek remedies “where it believes it could show to the satisfaction of a court that a source . . . had obtained a minor source permit with the purpose of obtaining, after construction, a major source permit, so as to evade preconstruction review.” The court added that, additionally, nowhere in the primary EPA guidance document governing synthetic minor sources does it direct that a permitting agency must investigate sham permitting at the synthetic minor source application stage. The court also highlighted that the guidance document suggested that states may wish to adopt more stringent review procedures, meaning that an agency “could, if it so desired, investigate sham permitting during the synthetic minor source permit application process, but it is not required [federally] to do so.” For the court’s full analysis, See In re Issuance of Air Emissions Permit No. 13700345-101 for PolyMet Mining, Inc., 955 N.W.2d 258, 268 (Minn. 2021).
Q: What evidence is considered in determining if a source has obtained a sham permit?
A: When a minor synthetic source decides to seek a major source permit, an agency will look to various factors to determine if the initial permit was a sham. Some of the evidence the agency will look to includes whether the facility would not be economically viable for any appreciable period of time if it were restricted to emitting at minor levels, how a project's projected level of operation was portrayed to lending institutions, and if the facility applies for a major source and minor source permit around the same time—the closer the two permitting actions are, the more suspicious the permitting agency will be.
