June 17, 2024

NSR Project Emissions Accounting Proposal

Per EPA’s fact sheet, and in the simplest sense, the CAA’s new source review (NSR) program is a set of preconstruction permitting regulations requiring industrial facilities to install modern air pollution control equipment when built or when making a change that significantly increases emissions. Since its inception in 1977, the NSR program has been subject to numerous revisions, court challenges, and addendums, a complete history of which is beyond the scope of this article. On May 3, 2024, EPA proposed additional NSR revisions, this time applicable to major modifications at existing major stationary sources. [89 FR 36870]

A major modification is a two-step determination: step 1) a project results in a significant increase of a regulated NSR pollutant, and step 2) a significant net increase of a regulated NSR pollutant occurs during the project’s contemporaneous period. The concept of project emissions accounting means both emission increases and decreases are considered in step 1. The agency’s proposal would make three changes tied to the concept of project emissions accounting:

While what ultimately constitutes an NSR project is a case-by-case decision that is site-specific and fact-driven, the definition of “project” would be changed to guard against circumvention of the NSR applicability process. The current definition of “project” at §52.21(b)(52) definition reads:

“A physical change in, or change in the method of operation of, an existing major stationary source.”

The definition would change to read:

“A discrete physical change in, or change in the method of operation of, an existing major stationary source, or a discrete group of such changes (occurring contemporaneously at the same major stationary source) that are substantially related to each other. Such changes are substantially related if they are dependent on each other to be economically or technically viable.”

Currently, a project with a “reasonable possibility” that it is not part of a major modification but may still result in a significant emissions increase of a regulated NSR pollutant is subject to administrative requirements in §52.21(r)(6). Additional language would be added to clarify the definition of “reasonable possibility” in §52.21(r)(6)(vi) and to strengthen the associated reporting and recordkeeping requirements for sources crediting step 1 emission decreases.
Under the existing NSR regulations, projected actual emissions are not required to be made enforceable, regardless of whether the result of the emissions calculation is an increase or decrease. Consequently, a facility could claim an emissions decrease in step 1 but not maintain that decrease. The proposal would require step 1 emission decreases to be legally and practicably enforceable by revising the step 1 emissions calculation provision at §52.21(a)(2)(iv)(g) to read:

“The ‘sum of the difference’ as used in [§52.21(a)(2)(iv)(c), (d), and (f)] shall include both increases and decreases in emissions calculated in accordance with those paragraphs. A decrease may only be accounted for in the significant emissions increase determination if it meets the requirements under 40 CFR 52.21(b)(3)(vi)(b).”

This third portion of the proposal is considered distinct and severable from the first two portions, meaning EPA may finalize it separately from the others.

Comments may be submitted on the proposal through July 2, 2024 via Docket ID No. EPA-HQ-OAR-2022-0381. Those seeking general guidance on NSR can review EPA’s NSR policy and guidance document index.

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This document addresses issues of a general nature related to the federal environmental regulations. Persons evaluating specific circumstances dealing with the environmental regulations should review state and local laws and regulations, which may be more stringent than federal requirements. In addition, the assistance of a qualified professional should be enlisted to address any site-specific circumstances.