NSR Reform 2.0: What to Expect

EM—August 2019: In this month's issue, we look at the potential benefits and downsides of the latest efforts to reform the New Source Review program.

by Brian Noel

The New Source Review (NSR) program is considered by many to be one of the most complex, litigated, and contentious regulations to stem from the U.S. Clean Air Act. The basic premise of NSR is that future emissions that result from a physical or operational change at a single stationary source of industrial air emissions (i.e., the “project”) must be reviewed to ensure that the project would not result in a significant deterioration of air quality. Both the Prevention of Significant Deterioration (PSD) program for facilities located in areas that are attaining the U.S. National Ambient Air Quality Standards (NAAQS) and the Nonattainment New Source Review (NNSR) program for facilities located in areas that are not attaining the NAAQS are covered under the umbrella of NSR.

NSR was introduced as a preconstruction permitting program in the 1977 Clean Air Act Amendments and it has evolved since that time. There have been numerous court cases that have shaped the NSR regulations through court-required vacaturs and various other revisions. Even in the absence of an official change in the NSR rules, court decisions may also affect interpretation of NSR regulations and policy. There has also been a considerable amount of guidance written by the U.S. Environmental Protection Agency (EPA) regarding NSR. Landmark guidance documents and memos issued by EPA to individual facilities are well known within the community of air regulatory professionals and they commonly dictate important precedent when evaluating the nuances of NSR requirements for a particular project.

In addition, a key issue of the current NSR reform effort being undertaken by EPA is that EPA's own position has shifted over the years, which arguably has caused confusion and inconsistency in the implementation of NSR permitting. And, finally, aside from these challenges at the federal level, the NSR program is largely implemented at the state level as most states' NSR programs have been approved by EPA. As a result, the distinctions between NSR regulations in two neighboring states can result in a different level of pollution control required for two projects that are essentially the same but situated across state lines from one another.

The first significant NSR reform effort was completed during the early 2000s under the Bush Administration's EPA. Perhaps the most significant impact from that round of NSR reform that remains in place today was the allowance to evaluate the NSR applicability of a project at an existing facility, and the associated level of emission control required, using the projected actual emissions of the project rather than the potential emissions from that project. In effect, this change reduced the number of projects subject to the NSR program.

The current round of NSR reform, or what this issue of EM is dubbing “NSR reform 2.0,” evolved from the Trump Administration's focus on regulatory reform. Notably, two Executive Orders—Executive Orders 137171 (82 Fed. Regist. 9339, February 3, 2017) and 13777 (82 Fed. Regist. 12285, March 1, 2017)—required federal agencies to take several steps to reduce regulatory “burden,” including evaluating current and future regulations, establishing Regulatory Reform Task Forces, and implementing revisions to current regulations. Following this stakeholder input process, EPA has moved forward issuing memorandums, providing clarification and guidance on specific permitting situations, and publishing clarifications in the Federal Register in an effort to modernize the NSR program.

All of these measures may have an effect on the implementation of the NSR program for the foreseeable future. Although a survey of the comments and verbal testimony illustrates stakeholder input that is balanced between continued/further environmental protection and economic priorities, the focus of many of EPA's actions appears to favor economic priorities.

In this issue of EM, our authors evaluate the potential benefits and negative impacts of NSR reform 2.0 from varied perspectives, and discuss specific policies and guidance issued by EPA.

Continue reading the full August 2019 issue of EM.