Good News on New Source Review

Author: Amy Marshall

As we’ve described in several articles, the United States Environmental Protection Agency (U.S. EPA) has been active in New Source Review (NSR) related guidance and regulatory activity over the past two years. One of the current administration’s priorities is easing the burden of permitting. They revoked the previous administration’s 2024 proposed revisions to the project emissions accounting (PEA) rule that would have narrowed its use. That action allowed litigation on the 2020 PEA rule to proceed. Environmental groups had petitioned for review of the 2020 PEA rule and the U.S. Court of Appeals for the District of Columbia Circuit Court (D.C. Circuit Court) issued a decision on July 28, 2026 denying their petition and upholding PEA.

As a reminder, PEA involves counting both emissions increases and decreases from a project at Step 1 of the applicability analysis to determine if a project causes a significant emissions increase. For example, if a project involved installing gas-fired combustion equipment to replace coal-fired combustion equipment, a facility can take “credit” in “Step 1” for the emissions reductions associated with shutting down the coal-fired equipment as part of the project (without going through “Step 2” netting) and not trigger major NSR. Petitioners argued that PEA was not lawful but the D.C. Circuit Court did not accept their arguments, finding that U.S. EPA was allowed to evaluate a project’s emissions changes at Step 1, not just the emissions increases.

What does this mean?

In states with NSR rules that allow PEA, those rules remain lawful and permittees can continue to use PEA. This ruling is especially important now that we seem to be living under an annual National Ambient Air Quality Standard (NAAQS) for fine particulate that is very close to ambient background values. Facilities will be more and more interested in designing projects so they do not result in a significant emissions increase at Step 1 and therefore do not trigger major NSR and associated air dispersion modeling.

What’s next from U.S. EPA?

The 2026 U.S. EPA regulatory agenda has been published and it includes the following permitting-related actions:

• Final rule on Begin Actual Construction in NSR
• Final rule on Title V applicable requirements
• Direct final rule to correct paragraph references in the Prevention of Significant Deterioration (PSD) rules
• Final rule on public participation requirements for minor NSR

ALL4 is tracking these actions – look for future articles on permitting rulemaking and guidance activity.

Need help with permitting strategy or preparing an air permit application?

ALL4 has a team of air permitting and modeling experts who will help you develop optimal permitting and compliance strategies to implement changes that improve the sustainability of your operations and allow flexibility in how operations are permitted. Reach out to your ALL4 project manager or Amy Marshall for more information.