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U.S. EPA Clarifies NSR Emissions Projections and its Role in the Review Process

Posted: February 14th, 2018

Authors: Rebekah B. 

U.S. EPA published a policy memo on ‘New Source Review Preconstruction Permitting Requirements:  Enforceability and Use of the Actual-to-Projected-Actual Applicability Test in Determining Major Modification Applicability’ on December 7, 2017.  This is a hefty title, but it aptly describes the intention of the memo, which is to clarify what current U.S. EPA policy is with respect to new source review (NSR) applicability for the actual-to-projected-actual applicability test.

The actual-to-projected-actual applicability test is one of the options for major stationary sources to evaluate modifications for NSR applicability. This option allows source operators to calculate the expected emissions increases in actual emissions from a proposed modification to existing emissions units to determine whether the proposed project is a major modification, and therefore whether NSR permitting applies.  The policy memo addresses situations where the actual-to-projected-actual emissions test is applied, and does not cover potential to emit (PTE) emissions that would apply to new emissions units.

The Actual-to-Projected-Actual Applicability Test

The actual-to-projected-actual applicability test requires a source operator that wishes to make a modification to existing emissions units to calculate whether the emissions increase associated with the project is major or not under the prevention of significant deterioration (PSD) or the non-attainment NSR permitting rules (the emissions evaluation would also apply to emissions units that are not physically modified but that are “affected” by the proposed project).

The pre-project actual emissions are determined from the “Baseline Actual Emissions” (BAE).  U.S. EPA’s policy memo does not address BAE, rather it focuses on post-project emissions estimates.  The post-project emissions are calculated as Projected Actual Emissions (PAE) rates and are calculated based on the expected emissions during the five-year (or sometimes a 10-year) period following completion of the project and should include emissions that the equipment could have accommodated during the selected baseline emissions period.  The PAE rates may be calculated based on an expected increase to production or throughput for a given emissions unit.  The regulation expects the owner or operator to consider all relevant information when making their projection, and the projection should involve business projections relevant to the project and the facility.

PSD applicability is evaluated based on subtracting the BAE rates from the PAE rates, and excluding the emissions that the source could have accommodated during the baseline period that are unrelated to any emissions increase that would result from the proposed project.  The resulting emissions increases are compared to the significant threshold for each NSR pollutant as listed at 40 CFR §52.21(b)(23).  Projects with calculated emissions increases that do not exceed the significant threshold for any NSR pollutant are not considered major.

Emissions Reporting and Recordkeeping

Although the projected emissions increase from a project may not be major, it may be considered to have a ‘reasonable possibility’ of resulting in a significant emissions increase of an NSR pollutant.  What constitutes a reasonable possibility may vary according to the relevant State Implementation Plan, and so it’s important to know where your Facility might stand with respect to this threshold.  Where there is a reasonable possibility of a significant emissions increase, the source owner or operator is expected to keep a pre-project record of NSR applicability, then calculate and record actual emissions versus PAE and in certain instances report those actual emissions in the future.  If a project is subject to a 5-year tracking requirement, then after five years it is assumed that any emissions increases after the 5-year period would be unrelated to the project.

Highlights from the Memo

The policy memo stresses that U.S. EPA will not review or “second guess” PAE rates provided by an applicant.  The memo states “the EPA intends to focus on the fact that it is the obligation of source owners or operators to perform pre-project NSR applicability analyses and document and maintain records of such analyses as required by the regulations.”  Given this, U.S. EPA will not review or question the pre-construction emissions calculations, as the onus is on the owner/operator to properly determine their own actual and projected actual emissions such that they will not exceed the significant thresholds, assuming that the project does not trigger NSR requirements.  U.S. EPA will only get involved if actual emissions that are related to the project exceed PAE rates from the original application submittal such that an NSR avoidance project is shown to trigger NSR obligations after completion and implementation of the project.

It’s important to note that the policy memo does not represent any new legislation or regulatory requirements.  It serves as a clarification of current U.S. EPA policy with respect to NSR applicability evaluations.  The memo was prompted by an important need to communicate current policy considering recent court decisions that might raise concerns or confusion with how U.S. EPA might approach NSR permitting going forward.

The other important aspect of the policy memo addresses information that can be used to develop PAE.  The current definition of PAE contains a provision that “all relevant information” be used to develop PAE estimates.  U.S. EPA states their position that developing PAE emissions rates that are in part designed to avoid NSR applicability is an acceptable approach in that NSR avoidance is part of “all relevant information” that must be considered.  The previous administration interpreted the rule to read that NSR avoidance could not factor into PAE estimates, only future PTE estimates when the actual-to-PTE application test was being used.

The takeaway:  facilities should continue to develop PAE estimates as they always have considering as much relevant information as they can.  If nothing else, this policy memo allows facilities to develop PAE estimates with the confidence that the decisions reached through the local regulatory agency review process will not be called into question by U.S. EPA during the permit application and review process.

If you have any questions about NSR permitting, PSD applicability, non-attainment NSR permitting, or really any aspect of the NSR program, don’t hesitate to contact our team of air quality professionals here at ALL4.  We have many years of experience with obtaining permits under the NSR program, and can provide strategic guidance as a you may be considering a major modification.  If you have any questions, please contact me at rbowlds@all4inc.com or at 678.460.0324 extension 214, and I would be happy to help!


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