EPA recently issued new Guidance for determining whether a proposed new or modified source of air pollutants would cause a significant increase in emissions, requiring a major source permit. See Memorandum from Administrator Pruitt to Regional Administrators re: Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program (March 13,2018).
To date, EPA has employed a two-step process for evaluating projected emissions for major source status. Under step 1, the agency determines whether the project by itself – including emission controls – would cause a significant increase in emissions. Under step 2, the agency then looks at other “contemporaneous” projects at the facility – defined as those constructed within the past two years – to determine whether all of the projects combined would result in a “significant net increase” in emissions from the entire facility. If so the facility will require a major source permit.
With a few brief exceptions, the agency throughout its history has not allowed consideration of emissions decreases in step 1. The emissions baseline for the new project is set at zero, and offsets for emissions decreases are not considered until step 2. The practical effect has been to require all major sources to model both steps, even though the modeling in step 1 might show a decrease at that point, precluding the need to move to step 2 (e.g., the project includes new emission controls and also involves shutting down other emissions sources within the plant to produce an emissions decrease).
The new Guidance, effective immediately, revises EPA’s approach to allow consideration of net emissions decreases in step 1. The agency now believes that the prior approach had the practical effect of preventing some projects from proceeding and significantly delaying others, even though those projects would not have resulted in a significant emissions increase. The agency also recognizes that the increased efficiency of new production technologies can result in emission reductions even while expanding production. In such situations, the complexities associated with modeling multi-year contemporaneous netting under Step 2 at a large facility have dissuaded some meritorious projects. The new interpretation is designed to correct this, and the agency believes it is consistent with the relevant language of the Clean Air Act and current NSR regulations.