OAQPS Lays Out NSR Policy Priorities

At a recent briefing, Anna Marie Wood, Director, Air Quality Policy Division of OAQPS, laid out the Trump Administration’s priorities for NAAQS and various implementation issues, including NSR. Topics that the Administration hopes to address include: the actual-to-projected-actual applicability test, project emissions accounting, ambient air guidance, biomass, PM2.5 and Ozone SILs, aggregation, and routine maintenance, repair and replacement. It is a full agenda.

ANALYSIS

Actual-to-Projected-Actual-Emissions Applicability Test

Ms. Wood began by highlighting the release of “New Source Review Preconstruction Permitting Requirements: Enforceability and Use of the Actual-to-Projected-Actual Applicability Test in Determining Major Modification Applicability” signed by Administrator Pruitt on December 17, 2017. She summarized the critical aspects of this memo in three bullets as follows:

Where a source projects an insignificant emissions increase, the level of actual emissions after the project governs applicability
Projections may reflect the intent to actively manage post-project operations in order to prevent a significant emissions increase from occurring
EPA will not second guess NSR applicability analyses that comply with the procedural

As noted in an earlier edition of NSR Law Blog, this memorandum seeks to address the Sixth Circuit’s holding in DTE Energy. Ms. Wood’s comments emphasize, however, the shift in EPA policy to allow a source to “actively manage” post-project emissions.

See the December 11, 2017 issue of NSR Law Blog for further analysis of this memo.

Project Emissions Accounting

Ms. Wood next turned to “Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program” released on March 30, 2018. She stated that this memo “communicates EPA’s interpretation that the current NSR regulations provide that emissions decreases as well as increases are to be considered at Step 1 of the NSR applicability process, i.e., determining whether a project will result in a significant emissions increase.” She further stated that EPA construes this memo as applying to existing units, new units, and projects involving a mixture of new and existing units. She also announced that EPA intends to issue a proposed rule to codify the interpretation.

See the March 18, 2018 issue of NSR Law Blog for further analysis of this memo.

Source Aggregation

Ms. Wood noted that the definition of “stationary source” applies to all pollutant-emitting activities that are: located on one or more contiguous or adjacent properties and are under common control of one person (or persons under common control), and belong to the same major industrial grouping, citing 40 CFR 52.21(b)(1) and (5) [and also 40 CFR 70.2 in the Title V program]. The scope of this definition has evolved over time, with the most recent rulemaking change seen in the 2016 oil and gas source definition, which clarified that “adjacent operations are limited to those within one-quarter mile with shared equipment.” She indicated that EPA is “evaluating whether/how to further refine the factors that must be assessed,” but intends to address both “adjacent” and “common control” in upcoming actions.

Project Aggregation

Ms. Wood noted that in 2009, EPA has issued a rule that established a “substantially related” criterion for determining when projects should be aggregated, including a 3-year rebuttable presumption against aggregating. NRDC petitioned EPA for reconsideration and also sued. EPA granted reconsideration, stayed the 2009 rule, and in 2010, proposed reconsideration with a preference to revoke the 2009 rule. EPA now plans to take final action on that reconsideration in the summer of 2018.

Ambient Air

Ms. Wood noted that “ambient air” is defined in 40 CFR 50.1(e) as “that portion of the atmosphere, external to buildings, to which the general public has access.” Since 1980, EPA has followed the Costle letter that “the atmosphere over land that is owned or controlled by the source and to which public access is precluded by a fence or other physical barriers” does not need to be considered “ambient air.” EPA is now evaluating defining “general public,” “access” and “buildings” to determine whether additional flexibility may be appropriate. Action is anticipated in late spring 2018.

At the 2017 A&WMA Conference, Raj Rao, EPA’s NSR chief, indicated that EPA was also looking at whether technology, in addition to fencing, may be an appropriate consideration. See the June 19, 2017 issue of NSR Law Blog for a report on Mr. Rao’s comments.

PM2.5 and Ozone SILs

Ms. Wood reported that EPA is working on both a PM2.5 significant impact level (SIL) and a new Ozone SIL to streamline the air dispersion modeling process. The final package will be comprised of three parts: a policy memorandum, a technical document and legal support document. She added that:

All three are intended to be referenced and included in any permit record where the recommended SILs are used by a permitting authority
The guidance is not a final agency action and is not binding for industry, permitting

The guidance at OMB for review and is expected to be signed in late Spring 2018.

Routine Maintenance, Repair and Replacement

Ms. Wood acknowledged the substantial industry interest in this topic, but stated only that “EPA is evaluating the need to clarify the interpretation and appropriate application of the RMRR provision under the NSR regulations.” She stated that EPA anticipates taking any action in mid-2018.

COMMENTARY

Administrator Pruitt and his policy staff have set an ambitious agenda for reforming the NSR program. In contrast to the last major round of NSR reform, which was codified in a major rule in December 2002, this round is focused initially on changes to guidance and agency practice, rather than rulemaking. This preference may reflect the reality that some significant pieces of earlier NSR reform efforts (such as clean units, pollution control projects, and a regulatory “safe harbor” for some routine maintenance, repair and replacement) did not survive judicial scrutiny. The guidance first approach enables the Administration to implement changes more rapidly, but is subject to revocation and review in subsequent Administrations. However, there is also a fair amount of inertia in the regulatory process, so some of the Administration’s changes will likely stay in place.

The most significant changes thus far have been EPA’s announcements that (1) it will not second guess projected actual emissions estimates from sources and that it will allow management of emissions to conform to predictions; and (2) the project emissions accounting memorandum, which allows decreases as a result of a project to be counted in Step 1. The changes to ambient air guidance are becoming increasingly important as the NAAQS become more stringent and sources are split into separate business units, which makes modeling more difficult. On the remaining issues, the Administration has not yet shown its hand. Stay tuned for an interesting year.