4 The record articles

New Source Review – What Could Possibly Be Lurking Out There?

Posted: March 1st, 2012

Author: All4 Staff 

If you have been reading 4 The Record, then you are, without doubt, very cognizant of the rapid and profound changes that are occurring with regard to air quality regulations in the United States.  Without getting into the gory details, we have the 4 Rules, Utility MACT, Utility NSPS, CASPR, various industry NESHAP RTRs, short term SO2 and NOX NAAQS, revised PM2.5 NAAQS, “affirmative defense” vs. SSM, and a laundry list of industry-specific NSPS and NESHAP revisions.  While there is more than enough going on to keep facility environmental managers on their toes, it sometime makes sense to slow down and take a close look at what is happening with regard to the dreaded New Source Review (NSR) regulations.  NSR regulations include the Prevention of Significant Deterioration (PSD) regulations and the Nonattainment New Source Review (NNSR) regulations.  To check in on the status of NSR-related activity, we referred to U.S. EPA’s Fall 2011 Regulatory Agenda and found four interesting tidbits that we had not thought about for some time.   The final resolution of each of the issues identified below could impact portions of the NSR regulations.  It is interesting to note that three of the four items identified are actually remnants of late term proposals under the previous administration and date as far back as 2006.

Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Reasonable Possibility in Recordkeeping; Reconsideration

The “reasonable possibility” provision identifies the criteria under which an owner or operator of a major stationary source undergoing a minor modification (i.e., a physical change or change in the method of operation that does not trigger major NSR permitting requirements) must keep associated records and specifies the recordkeeping and reporting requirements for such sources. The reasonable possibility rule was promulgated in response to a remand by the U.S. Court of Appeals for the District of Columbia Circuit in New York v. EPA in 2005 to clarify the reasonable possibility recordkeeping and reporting standards under NSR.  After a review of issues raised by the State of New Jersey by petition and letter dated February 15, 2008, U.S. EPA decided to exercise discretion and conduct a reconsideration of the final rule and will be reopening the public comment period for the rule.  New Jersey alleged that U.S. EPA failed to solicit comment on certain aspects of the rule and that the lack of post-change recordkeeping renders the rule unenforceable. Administrator Johnson originally denied New Jersey’s petition for reconsideration on January 14, 2009.  A notice of public rulemaking (NPRM) is expected in June 2012.  The rule will remain in effect during the reconsideration.

Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Reconsideration of Inclusion of Fugitive Emissions; Reconsideration

The December 9, 2008 “fugitive emissions” rule requires that fugitive emissions be included in determining whether a physical or operational change results in a major modification only for “listed” 100 ton sources (i.e., source categories that have been designated through rulemaking pursuant to section 302(j) of the Clean Air Act (CAA)). On February 17, 2009, the Natural Resources Defense Council (NRDC) petitioned U.S. EPA for reconsideration of the December 2008 final rule and on April 24, 2009, U.S. EPA agreed to reconsider the rule. Several subsequent stays of the rule have been initiated by U.S. EPA.  An 18 month stay of the rule was finalized by U.S. EPA on March 24, 2010. An interim fugitives rule was finalized on March 30, 2011 that specified the affected paragraphs of the rule and extended the stay until U.S. EPA completes its reconsideration.  U.S. EPA will be proposing a rule based on the results of its reconsideration of the December 9, 2008 final fugitives rule. In this action U.S. EPA will consider the petition for reconsideration, public comments, and information contained in the rulemaking docket to reach a decision on the reconsideration and finalize the fugitives rule.  An NMPR was expected in January 2012.

Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule Step 3

Hot off the press, U.S. EPA Administrator Jackson signed the proposed “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule Step 3, GHG Plantwide Applicability Limitations and GHG Synthetic Minor Limitations” on February 24, 2012.  U.S. EPA states “The EPA is proposing to leave the GHG major source thresholds unchanged from the Step 2 level at this time. We have found that the capabilities of the state permitting authorities have not improved to the extent necessary for additional sources to be brought into the system.”  Good news for the moment pending the outcome of the any adverse public comments and anticipated challenges. However, note the presence of “at this time” in their statement.  The proposal also addresses Plantwide Applicability Limits (PALs) and synthetic minor provisions for GHG pollutants.  Stay tuned for more details in a forthcoming 4 The Record “Extra” edition.

Reconsideration of the Prevention of Significant Deterioration and Nonattainment New Source Review (NNSR): Aggregation

The aggregation issue dates back to September 8, 2006 when U.S. EPA first proposed a revision to the NSR regulations to address aggregation, debottlenecking, and project netting.  Jumping ahead to January 15, 2009, U.S. EPA decided to retain the aggregation language from the September 2006 proposal and to take no further action on the issue of debottlenecking and project netting.  The proposed aggregation language includes provisions to aggregate emissions from projects that are “substantially related” and included a presumptive aggregation exclusion of three years.  The proposed revisions would provide needed structure and certainty for facilities when determining when to aggregate emissions increases from independent facility projects.  Following the January 15, 2009 promulgation of the NSR Aggregation final rule, the Natural Resources Defense Council (NRDC) submitted a petition for reconsideration as provided for in the Clean Air Act (CAA). In response to NRDC’s petition, on February 9, 2009, U.S. EPA stayed the effective date of the final rule that modifies the NSR Program’s policy on the term “aggregation.” On May 18, 2009, U.S. EPA proposed to delay the effective date of the Aggregation rule and, as a result, the new effective date of the rule was changed to May 18, 2010. On March 29, 2010 U.S. EPA proposed again to reconsider the Aggregation rule and on April 15, 2010, proposed to revoke its final NSR Aggregation rule because of concerns that the rule “may have introduced ambiguities that could reduce the effectiveness of the Agency’s aggregation policy”.  U.S. EPA has delayed the effective date of the final aggregation rule under the authority of the administrative procedures act (APA) until the proceeding for judicial review of the rule is complete or U.S. EPA completes its reconsideration of the rule. According to the regulatory agenda, final action on this issue is anticipated in April 2012.


A recurring concern expressed by the regulated community since the inception of the NSR rules is that they are comprised primarily of a long list of definitions that are implemented by policy, guidance, and interpretive memoranda.  Three of the items addressed above (aggregation, fugitive emissions, and reasonable possibility) attempt to provide a bit of certainty around specific aspects of the rule. As expected, attempts to clarify NSR rule requirements are usually challenged, delayed, and ultimately diluted or abandoned.  Time will tell.


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