EPA published a proposed rule in the Federal Register on August 9, 2019 that addresses how facilities undertaking a project involving multiple air emission units are to account for emission increases and decreases associated with the project. The proposed rule incorporates an interpretation of EPA’s New Source Review (NSR) regulations originally advanced in a March 2018 guidance document from Administrator Scott Pruitt entitled “Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program.”
Under the NSR program, existing sources that undertake a “major modification” are subject to certain preconstruction permitting requirements. In order to constitute a major modification, a project must result in both a “significant emissions increase” and a “significant net emissions increase.” According to NSR reform rules adopted in 2002, a source must first determine whether the project under review alone will cause a significant emissions increase (commonly referred to as “Step 1,” or what EPA is currently calling the “project emissions accounting” phase of the analysis). If so, only then would a source proceed to determining whether there would be a significant net emissions increase after considering all projects over the preceding five years (commonly referred to as “Step 2,” or the “netting” phase of the analysis).
EPA’s August 9th proposal interprets the current regulations as providing that both emissions increases and decreases from a project should be considered at Step 1 in determining whether the project alone will result in an emissions increase from the source. EPA asserts that this proposal responds to longstanding uncertainty among state and local air agencies and the regulated community regarding whether emissions decreases associated with a project can be considered at Step 1 or instead must be considered at Step 2 as if the decreases were a separate project to be considered with all other “contemporaneous” projects. While EPA explains that its proposed interpretation is based on the current wording of the NSR regulations, the Agency does point out language in the regulations applicable to projects involving both new and existing emission units that confuses the issue. Accordingly, EPA has proposed revised regulatory language to “end any confusion and clarify that project emissions accounting is allowed for all project categories, including multiple types of emission units.”
EPA’s proposal requests comments on whether emissions decreases must be “substantially related” to the project under review to be considered at Step 1. The Agency also solicited feedback on whether the post-project reporting requirements of its “reasonable possibility” rule are sufficient to track emissions increases and decreases relied on in Step 1, as well as whether its proposed revisions to the NSR regulations should be considered minimum program elements for states implementing the federal program. Comments are due on the proposal by October 8, 2019.