On December 7, 2017, EPA Administrator Scott Pruitt issued a memorandum explaining EPA’s future approach concerning enforcement of the New Source review program, considering the uncertainty created by the Sixth Circuit’s decisions in the DTE NSR cases (U.S. v. DTE Energy Co., 711 F.3d 643 (6th Cir. 2013) and U.S. v. DTE, 845 F.3d 735 (6th Cir. 2017)). NSR requires new major sources and major modifications at existing sources to obtain a permit before construction commences. In determining whether a permit is needed for a major modification, owners or operators are required to conduct a pre-construction applicability analysis to determine whether the proposed project would cause a significant emission increase, calculated using the actual-to-projected-actual applicability test that compares past actual emissions to future projected emissions. The memorandum’s main focus is on circumstances where sources have used that test in determining NSR applicability and the pre- and post-project source obligations.

The memorandum explains that a source’s plan to manage future emissions from exceeding significant emissions level can now be considered when making an emissions projection to determine whether an NSR permit is required for a project. In addition, the memorandum also states that EPA will not substitute its judgment for the source by “second guessing” the source’s emissions predictions, unless there is clear error indicating that the source erroneously performs a pre-project NSR applicability analysis or violates the recordkeeping and notification requirements in the regulations. Furthermore, the memorandum reveals that EPA intends to exercise its enforcement discretion and will only initiate enforcement actions in situations where a significant emissions increase actually occurs post-project. Thus, even when a pre-project applicability analysis indicates that no emissions increase will occur, the EPA may pursue enforcement if the level of actual emissions during the 5- or 10-year post-project recordkeeping period shows that the project caused an emissions increase greater than the threshold that triggers permitting requirements.